Yogendra Gupta vs Renu Agrawal

Anil Sharma, J.—Petitioner has filed this revision petition under Sections 397 and 401 of Code of Criminal Procedure, 1973 against the order dated 30.7.2009 passed by learned Second Additional Sessions Judge in Criminal Appeal No. 181 of 2009 whereby the sentence of 6 months'' imprisonment and payment of Rs. 35,000/- compensation for the offence u/s 138 of Negotiable Instruments Act has been modified to RI for 1 month and fine of Rs. 1,50,000, out of which Rs. 1,30,000 have to be paid as compensation and Rs. 20,000 as fine.

The brief facts of the case in narrow compass are that the complainant/ Respondent Smt. Renu Agrawal has extended the loan facility of Rs. 1,00,000 to the firm Gangaram Bhagwandas which is a partnership firm of which Petitioner/accused is partner alongwith Omprakash Gupta. Smt. Indu Gupta and Sint. Mamta Gupta for repayment of said loan amount cheque No. 020333 of Rs. 1,00,000 dated 23.12.2005 was issued by the Petitioner/accused to the Respondent/complainant.

The cheque issued by Petitioner/accused was returned by the bank alongwith the note that cheque could not be honoured because of "death of partner". Thereafter, the complainant has issued the notice to the Petitioner/accused on 5.6.2006. Even after receiving the notice, no amount has been paid despite lapse of notice period, therefore, the complainant has preferred the complaint before the Trial Court.

After framing the charges, learned Trial Court proceeded with the trial of the case and held the Petitioner/accused alongwith other accused persons (partners of the firm) guilty for commission of offence punishable u/s 138 of Negotiable Instruments Act and sentenced them for 6 months'' RI and directed the accused persons to pay Rs. 35,000 each (Rs. 1,40,000 as compensation) within 15 days.

Against the judgment dated 15.5.2009 of the Trial Court, the Petitioner/accused and other accused persons filed appeal No. 181 of 2009,179 of 2009,174 of 2009 and 178 of 2009. All these appeals were disposed of by a common judgment dated 30.7.2009 by reducing the sentence of Petitioner/accused to 1 month RI and imposed fine of Rs. 1,50,000 and acquitted other accused Sint. Indu Gupta, Omprakash Gupta and Smt. Mamta Gupta for the offence punishable u/s 138 of Negotiable Instruments Act, 1881. Aggrieved by the judgments passed by learned both the Courts below, Petitioner has filed this revision petition.

The present revision petition has been filed by the Petitioner on the ground that the disputed cheque No. 020333 dated 23.12.2005 has been returned by the bank with the note that cheque could not be honoured because of "death of partner". That does not fall under the purview of Section 138 of Negotiable Instruments Act because u/s 138 of Negotiable Instruments Act the often is made only when the payment of cheque has been stopped or there is insufficient amount in the account to honour the cheque or the cheque amount-exceeds the amount available with the bank in the account of the person issuing clue. Petitioner has, never directed the bank for stopping the payment,. cheque has Mot been returned for insufficiency of fund in the account and for returning the cheque on the ground of death of partner, Petitioner cannot be held responsible, therefore, he could not have been punished u/s 138 of Negotiable Instruments Act.

Further the lower appellate Court has committed the error in imposing fine of Rs. 1,50,000 thereby enhanced the amount of compensation (i.e. Rs. 35,000). The order of the Trial Court has been passed without giving any notice of enhancement and it is against the provisions of Section 357 of Code of Criminal Procedure.

Learned Counsel for the Respondent has submitted that u/s 138 of Negotiable Instruments Act, every kind of dishonour of cheque is punishable because even after giving notice to the Petitioner/accused he has failed to pay the cheque amount within the stipulated time.

Learned Counsel for the Petitioner drew attention of this Court to the provisions of Section 138 of Ne-gotiable Instruments Act and cited the judgment of Apex Court passed in the case of Raj Kumar Khurana Vs. State of (NCT of Delhi) and Another, in which the scope of u/s 138 of Negotiable Instruments Act, 1881 has been considered while allowing the appeal and it has been observed that:

Section 138 of the Act reads as under:

Dishonour of cheque for insufficiency, etc. of funds, in the account. - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due '' course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.

Explanation - For the purposes of this section, ''debt or other liability'' means a legally enforceable debt or other liability.

A bare perusal of the aforementioned provision would clearly go to show that by reason thereof a legal fiction has been created. A legal fiction, as is well known although is required to be given full effect has its own limitation. It cannot be taken recourse to for any purpose other than the one mentioned in the statute itself. In State of A.P. v. A.P. Pensioners'' Association, this Court held:

30....In other words, all the consequences ordinarily flowing from a rule would be given effect to if the rule otherwise does not limit the operation thereof. If the rule itself provides a limitation on its operation, the consequences flowing from the legal fiction have to be understood in the light of the limitations prescribed. Thus, it is not possible to construe the legal fiction as simply as suggested by Mr. Lalit.

Section 138 of Act moreover provides for a penal provision. A penal provision created by reason of a legal fiction must receive strict construction. Such a penal provision, enacted in terms of the legal fiction drawn would be attracted when a cheque is returned by the bank unpaid. Such non-payment may either be:

(i) because of the amount of money standing to the credit of that account is insufficient to honour the cheque, or (ii) it exceeds the amount arranged to be paid from the that account by an agreement made with that bank.

Before a proceeding thereunder is initiated, all the legal requirements therefore must be complied with. The Court must be satisfied that all the ingredients of commission of an offence under the said provision have been complied with.

the parameters for invoking the provisions of Section 138 of the Act, thus, being limited, we are of the Opinion that refusal on the part of the bank to honour the cheque would not bring me matter within the mischief of the provisions of Section 138 of the Act.

Learned Counsel for the Petitioner has also cited the judgment of Apex Court in the case of Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. 2001 (1) R.C.R. (Cri) 834 : 2001 (1) MPV 272 : 2009 (1) NIJ 21 (SC) (NOC] in which it has been held that, Section 138 of Negotiable Instruments Act create an offence and the law relating to the penar provisions has to be interpreted strictly, so that no one cap ingeniously or insidiously or guilefully or strategically be prosecuted. On the point of right of accused for fair trial as envisaged under Article 21 of Constitution of India, learned Counsel for the Petitioner cited the judgment passed by Apex Court in the case of T. Nagappa Vs. Y.R. Muralidhar, and in case The State of Punjab Vs. Jagir Singh, Baljit Singh and Karam Singh, .

On the other hand learned Counsel for the Respondent has Cited the judgment of this Court passed in the case of Devendra Singh v. Varinder Singh 1999 (4) R.C.R. (Cri) 373 : 1998 (II) MPWN 60 : 2010 (1) NIJ 43 (MP)/NOCJ which it has been held that for an offence punishable u/s 138 of Negotiable Instruments Act, the ground of rejection of cheque is only relevant, in that Case, first cheque has been returned by the bank on the ground that the signatures of the drawer do not telly with his specimen signature available with the bank.

Learned Counsel for the Respondent has cited the judgment of this Court in the matter of Yogendra Gupta v. Ramprakash Agarawal 2007 (2) MPHT 184 : 2007 (2) NU 344 (MP) in which it has been held that the cheque was returned by the bank with the note "present again" and despite notice of payment of cheque, the amount was not paid by the Petitioner/accused. The provisions of Section 138 of Negotiable Instruments Act shall be attracted and drawer of the cheque can be held responsible u/s 138 of Negotiable Instruments Act.

It is clear form the bare reading of Section 138 of Negotiable Instruments Act, it is necessary for the payee or holder of the cheque on receiving the information from the bank regarding return of the cheque an unpaid to make demand for the payment of the said amount of money by giving notice in writing within 30 days. Therefore, giving notice u/s 138 proviso (3) is the second part of offence made punishable under that Section just to follow dishonour of cheque but for constituting the offence u/s 138 of Negotiable Inst5ruments Act, firstly it is necessary that cheque should be returned by the bank on the ground either because of the amount of money standing credit of that account is insufficient to honour of cheque or it exceeds the amount arranged to be paid from the account by an agreement made within the bank. The disputed cheque (Ex.P/1) has not been returned on any of these grounds, therefore, the judgment of Apex Court passed in case of Raj Kumar Khuranas (supra) shall apply to the present case because the disputed cheque has not been returned on the ground of insufficiency of amount or on the ground that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.

The Bank Officer, namely, Mahesh Saxena (PW 2) has been examined by the complainant. He has admitted in his cross-examination that cheque was not accepted by the bank because after death of partner of the firm cheque book was not surrendered even after writing the letter to the Petitioner/accused but he has also admitted in his evidence that according to account details (Ex.P/16), account was operated from 1.9.2004 to 19.1.2007. The disputed cheque has been issued on 23.12.2005, therefore, at that time the said account was in operation, hence, it could not have been procured by him will be dishonoured by the bank. The stoppage of payment of the disputed cheque amount seems to be only unilateral decision of the bank of which the Petitioner/accused was not party. Therefore, looking to the judgment of Apex Court in the case of Raj Kumar Khurana, no criminal liability can be saddled on the Petitioner/accused for the unilateral act of the bank.

Since dishonour of cheque on the ground of death of partner with intention to force the Petitioner/accused for doing necessary formalities on the death of partner cannot make the Petitioner liable for punishment u/s 138 of Negotiable Instruments Act because the ground on which the cheque has been dishonoured by the bank does not fall within the purview of Section 138 of Negotiable Instruments Act.

The judgment cited by the learned Counsel for the Respondent have been passed before pronouncement of judgment passed in the case of Raj Kumar Khurana (supra) by the Apex Court, therefore, they are impliedly overruled by the judgment of Raj Kumar Khurana (supra).

Learned Counsel for the Respondents has cited the judgments passed in the matter of Vinod Kumar Gupta v. Jai Paul 2009 (2) R.C.R. (Cri) 633 : 2009 (1) Crimes 189 (J&K) : 2009 (2) NIJ 122 (J&K) which relates to dishonour of cheque on intimation that cheque was stolen, judgment passed by Chhattisgarh High Court in the case of Bhikham Chandrakar v. Amor Nath Tamrakar 2008 (1) NU 38 (Chh) : 2008 (2) DCR 391 on the ground of stop payment, judgment passed by Delhi High Court in the matter of Ravi Chopra v. State and Anr. 2008 (2) DCR 235 on the ground of account closed, judgment passed by the Allahabad High Court in the matter of Amit Yadav v. State of U.P. and Anr. 2008 (2) NIJ 263 (All) ; 2008 (2) DCR 90 relating to notice u/s 138 of Negotiable Instruments Act are not applicable in this case in the light of judgment passed in the case of Raj Kumar Khurana (supra):

Learned Counsel for the Respondent has also cited the judgment of Apex Court in the matter of V. Raja Kumari Vs. P. Subbarama Naidu and Another, , which relates to dishonour on the ground of insufficiency of, fund which is not the point come for adjudication before this Court.

The other ground raised by the learned Counsel for the Petitioner regarding power of learned lower appellate Court to enhance the fine amount and to order compensation, need no consideration because the offence punishable u/s 138 of Negotiable Instruments Act is not made out against the Petitioner/accused.

Resultantly, the petition filed by the Petitioner/accused is allowed since dishonour of cheque issued by the Petitioner/accused does not fall within the ambit and scope of Section 138 of Negotiable Instruments Act, in view of the judgment of Apex Court passed in the case of Raj Kumar Khurana (supra). Petitioner/accused is acquitted from the charge of offence punishable u/s 138 of Negotiable Instruments Act The amount if any deposited by the Petitioner as fine or as compensation will be refunded to him by the learned Trial Court. The Petitioner is on bail, his bail bonds are hereby discharged.