Prabhakar K. Prabhu vs Ganapathi A. Prabhu

K. Ramanna, J.—This appeal is filed by appellant-complainant u/s 378[4] of Cr.P.C to set aside the judgment and order of dismissal of C.C. No. 51/2000 passed by the JMFC [IV Court) Mangalore, dated 22-8-2000 praying to convict the respondent for an offence punishable u/s 138 of N.I. Act.

The case of the appellant in nutshell is that the respondent has issued the post dated cheque-Ex. P.2 dated 31-3-1998 for Rs. 21,800 drawn on Canara Bank, Mazagaon, Mumbai, when it was presented for encashment it came to be dishonoured on the ground that payment stopped by the drawer, to that effect the banker of the appellant had issued endorsement dated 16-4-1998, therefore he got issued demand notice, inspite of service of notice he neither paid the amount nor sent any reply therefore, a private complaint came to be filed. In pursuance to the summons issued, respondent appeared through counsel. To prove his case appellant was examined himself as P.W.1 and also examined one M. Panduranga Kamath as P.W.2, where as the respondent examined himself as D.W.1 and got marked two documents, Certified copy of the order in S.C. 3093/1971 and the decree passed therein, as Ex.D.1 and D.2 respectively. After recording 313 statement and considering the evidence of both parties, trial court dismissed the complaint filed against the respondent, on the ground that amount covered under the cheque is time barred and that issuance of cheque will not save the limitation unless there is an acknowledgment of the debt. Hence this appeal.

Heard the arguments of the learned Counsel appearing on both sides and perused the documents placed on record.

It is contended by counsel for appellant that though the notice was duty served on the respondent be has failed to comply with the demand made in the same, the endorsement issued by the banker marked at Ex.P.3 that the respondent himself issued the letter stop payment letter therefore the banker did not encashed the cheque. It is argued that there is no specific reply sent by the respondent and he has taken the defence only during trial. It is argued that the defence taken during the trial court that he lost the cheque therefore he has sent a letter to stop payment. The respondent did not dispute his liability to make payment as covered under the cheque the conclusion arrived by the trial court without taking into consideration the admissions made by the respondent and the finding recorded by the trial court that it is a time barred debt is totally incorrect, perverse and illegal. Hence it is prayed to allow the appeal.

While arguing the case the learned Counsel for the appellant has relied on the number of decision namely

In case of A.V. Murthy v. B.S. Nagabasavanna ILR 2002 SC 985 it has been held thus:

Dishonour of cheque - Complaint alleging that cheque was drawn to pay back amount advanced by complainant 4 years back -Dismissal at threshold on ground that as amount was advanced 4 years prior there was no legally enforceable debt - Not proper -Consideration for cheque is presumed under Sections 118, 139 - Moreover drawer in his balance sheet prepared for every year, had shown the amount as deposits from friend - This may amount to acknowledgement - Dismissal complaint on ground that cheque drawn was in respect of a debt or liability, which was not legally enforceable - Is illegal and erroneous.

In case of M/S Modi Cements Limited Vs. Shri Kuchil Kumar Nandi, it has been held thus:

Dishonour of cheque - Presumption u/s 139 in favour of holder is followed once -Cheque is issued by drawer - Notice by drawer to drawee or to bank for stoppage of payment -Would not preclude action u/s 138 by drawee.

In case of K.N. Beena Vs. Muniyappan and Another, wherein, it has been held thus:

Cheque dishonour complaint - Burden of proving that cheque had not been issued for any debt or liability - Is on the accused -Denial/averments in reply by accused are not sufficient in shift burden of proof onto the complainant - Accused has to prove in trial by leading cogent evidence that there was no debt or liability - Setting aside of conviction on basis of some formal evidence led by accused - Not proper.

In case of Hiten P. Dalal Vs. Bratindranath Banerjee, it has been held thus: -

Presumption that cheque was drawn for discharge of liability of drawer - Is presumption of law - Ought to be raised by Court in every case - Rebuttal evidence - Nature - Mere plausible explanation is not sufficient - Proof of explanation is necessary.

It is submitted that liability to pay royalty is a continuous liability therefore the question of limitation does not arise. Therefore, the judgment and order of dismissal of complaint and acquitting the respondent for the offence u/s 138 of N.I. Act is liable to be set aside and he be convicted for the same.

As against this the learned Counsel for respondent submitted that the royalty to be payable to the appellant-complainant by the respondent as a managing partner of JAGANNIVASA RESTAURANT, since the appellant was a shareholder therefore the royalty to be payable to him cannot become a debt to attract the provision of Section 138 of N.I. Act. Therefore the trial court rightly come to the conclusion that it is a time barred debt. The payment if any made by way of cheque cannot be considered as a cheque. It is argued that as per the evidence of P.W.1 he is entitled to get monthly royalty at Rs. 200/- per month, but the same does not corroborate with the cheque-Ex. P.2. Even otherwise the appellant is entitled to recover at the rate of Rs. 200/- p.m for the period of 3 years. There is no acknowledgment as such made by the respondent to recover such a debt. Therefore he prays for dismissal of appeal.

Having heard the arguments for counsel for both parties the point that arises for consideration is whether the trial court is justified in holding that amount covered under the cheque Ex. P.2 is not legally enforceable and the same is time barred?

Admittedly respondent is the cousin of the appellant. The cheque Ex.P-2 belong to the respondent. The same came to be dishonoured when presented for encashment with shara ''payment stopped by the drawer''. The signature and the amount found in the cheque is not in dispute. According to appellant, the respondent issued the said cheque towards payment of share of appellant and his brother out of the amount collected by respondent as royalty of Jagan Nivas restaurant, Bombay. However, the respondent disputes the same and he claimed that the cheque in question was lost when the same was kept signed in his house and that the appellant who is the relative of respondent and frequently coming to his house has stolen the said cheque and filed false complaint against him. The respondent had not sent any reply to the demand notice sent by the appellant in spite of service of the same. Even in examination-in-chief before the Court, respondent has not stated anything about theft, of the cheque in question. Only during cross examination, he has come up with the theory that the cheque has been stolen. The respondent does not dispute his liability to pay appellant his share in the royalty collected by him in respect of Jagan Nivas Restaurant situated in Bombay, which was originally owned by the fathers of appellant and respondent According to appellant, from the year 1960, the father of appellant was paying royalty of Rs. 200/- to the appellant; that the father of appellant died during 1952, father of respondent died during 1990. Thereafter, the respondent being the Managing partner, was receiving royally from 1990. The trial Court though come to the conclusion that the cheque in question came to be issued by respondent to the appellant towards payment of his share in the royalty, dismissed the complaint holding that since respondent is entitled to a sum of Rs. 200/- per month towards his share in the royalty, the amount covered in the cheque would come over to 9 years and 1 month and that appellant cannot recover from the respondent any amount more than 3 years prior to date of cheque and thus held that amount covered in the cheque is partly barred by limitation and the appellant cannot recover the same. Thus, come to the conclusion that there is no legally enforceable debt or liability under the cheque Ex.P-2.

According to appellant, the respondent was collecting the royalty as a Managing partner and he issued the cheque Ex.P-2 towards payment of share of himself and his brothers. Though respondent has put his defence, that he has lost the cheque-Ex. P. 2, he has not filed any police complaint to that effect. As such, his theory cannot be believed. When once the signature and contents of the cheque is not disputed, burden is on the respondent to prove under what circumstances he issued the said cheque. There is always a presumption available in favour of the holder of the cheque that the drawer of the said cheque issued the same towards payment of legally recoverable debt or liability. In the instant case, the respondent though put his defence has not substantiated the same by producing documentary evidence to that effect. Mere denial of the case of the appellant and putting forward a new case will not constitute rebuttal of appellant''s evidence. The trial Court without carefully scrutinising the material evidence placed on record, come to the conclusion that respondent had rebutted the presumption available in favour of appellant-complainant Of course, the Jagan Nivas Restaurant was sold during December 2000 and the safe proceeds have been divided among appellant, respondent and others. But the cheque in question is prior to the said date. The respondent has failed to rebut the evidence of appellant that there is legally recoverable debt under the said cheque. The amount covered under the cheque is the share of the appellant and his brothers, out of the royalty collected by the respondent in respect of Jagan Nivas Restaurant, it is not a loan lent or debt which was covered under the said cheque. The share of the royalty which was accumulated and was with the respondent who was the managing partner of Jagan Nivas Restaurant, to which appellant was also a partner was given to appellant which cannot be termed as time barred debt, though it relates to periods more than 3 years from the date of issuance of the cheque. The amount accrued to the share of appellant is a recurring amount and it does not require any subsequent acknowledgment as that of a debt Therefore, the trial Court erred in holding that the amount covered under the cheque-Ex.P-2 is partly time barred. Thus, the order of acquittal passed by the trial Court is liable to be set aside.

Therefore, this appeal is allowed in part. The judgment and order of acquittal passed by trial Court is hereby set aside. The respondent is convicted for the offence punishable u/s 138 of N.I. Act and is sentenced to pay a fine of Rs. 30,000/-, in default, to undergo simple imprisonment for three months. After deposit of the fine amount Rs. 28,000/- shall be payable to the appellant as compensation and the balance of Rs. 2,000/- shall be credited to the state exchequer.