THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY
Criminal Revision Case No.240 of 2004
Matta Rambabu R/o Vijayarai, West Godavari District.
State of A.P., rep. by the Public Prosecutor, High Court of A.P.,
Counsel for the Petitioner: Sri D.V.Madhusudhan Rao
Counsel for the 1st Respondent: Public Prosecutor
This revision is directed against the judgment dated 4.2.2004 passed in Criminal Appeal No.102 of 2002 on the file of V Additional District & Sessions Judge, Fast Track Court, West Godavari at Eluru, whereby and whereunder, the learned Sessions Judge while confirming the conviction of the accused Matta Rambabu for the offence under Section 138 of the Negotiable Instruments Act passed in C.C.No.142 of 2001 on the file of the II Additional Judicial First Class Magistrate, at Eluru reduced the sentence of imprisonment from one year to six months and imposed a fine of Rs.1,000/- in addition to sentence of imprisonment.
2. Brief facts of the case, in a nutshell, are:-
The 2nd respondent is the complainant and the petitioner is accused in C.C.No.142 of 2001. The complainant presented a complaint before II Additional Judicial First Class Magistrate, Eluru for the offences under Sections 138 and 142 of N.I. Act alleging inter alia that the accused borrowed an amount of Rs.60,000/- from him on 01.4.2000 for the purpose of his family necessities and executed a promissory note agreeing to repay the same with interest at Rs.2/- per hundred per month. On demand, the accused gave a cheque dated 6.12.2000 for Rs.52,000/- towards part satisfaction of the amount under the promissory note. He presented the cheque drawn on State Bank of India, Vijayarai through his banker-Bank of Baroda, Eluru. The cheque came to be returned on 22.12.2000 with an endorsement "insufficient funds". Thereafter, the complainant issued a statutory notice to the accused on 04.01.2001 demanding the accused to make good the amount covered under the cheque. The accused received the notice on 10.1.2001 and issued a reply notice dated 20.01.2001. Hence, the complainant presented a complaint before the II Additional Judicial First Class Magistrate, Eluru.
3. The learned Magistrate took the complaint on file as C.C.No.142 of 2001 and issued summons to the accused. In response to the summons; the accused entered appearance and denied the accusations levelled against him on examination under Section 251 Cr.P.C., for the offence under Section 138 of N.I.Act.
4. To bring home the guilt of the accused for the offence under Section 138 of N.I.Act, the complainant got himself examined as Pw.1 and examined the Branch Manager, State Bank of India, Vijayarai as Pw.2 and marked six documents as Exs.P-1 to P-6. The plea of the accused is that the complainant conducted a private chit and in that connection made him to issue blank cheque and made use of the same to foist a case against him.
5. On behalf of the accused, he marked memo issued by State Bank of India, Vijayarai as Ex.D-1. The learned Magistrate, on considering the evidence brought on record and on hearing the counsel appearing for the complainant and the accused, came to the conclusion that the accused issued Ex.P-2 cheque to discharge legally enforceable liability and therefore, he is liable for punishment consequent on dishonour of the same for the offence under Section 138 of N.I.Act and accordingly, convicted him and sentenced him to suffer R.I for one year, by judgment dated 25.7.2002.
6. Assailing the judgment of conviction and sentence passed in C.C.No.142 of 2001, the accused filed Criminal Appeal No.102 of 2002 on the file of the V Additional Sessions Judge, Fast Track Court, West Godavari at Eluru. The learned Additional Sessions Judge, on reappraisal of the evidence brought on record and on hearing the counsel appearing for the parties, came to the conclusion that the appellant-accused failed to make out any valid ground to interfere with the conviction and sentence passed by the trial Court and accordingly dismissed the appeal, by judgment dated 4.2.2004. Hence, this revision by the accused.
7. Heard learned counsel appearing for the petitioner/accused and learned Additional Public Prosecutor appearing for the 1st respondent-State. Despite service of notice to the 2nd respondent-complainant, he neither appeared in person nor through a counsel.
8. Learned counsel appearing for the petitioner submits that the notice in question issued under proviso (b)to Section 138 of the N.I.Act is not valid and therefore, the conviction and sentence of the petitioner/accused for the offence under Section 138 of the N.I.Act is liable to be set aside and he is to be acquitted of the same. According to the learned counsel appearing for the petitioner, a demand in the statutory notice must be in respect of the amount covered under the cheque in question and a mere demand of the amount due under the promissory note cannot be construed as a demand of the amount covered under the cheque in question, in which case, Ex.P-4 notice, wherein a demand has been made for payment of the pro note amount cannot be construed as a notice within the proviso (b) to Section 138 of the N.I.Act. In support of his contentions, reliance has been placed on the decisions in Suman Sethi v. Ajay Churiwal1 and K.R.Indira v. Dr.G.Adinarayana2. Learned counsel took me to the contents of Ex.P-4 notice, which came to be issued consequent on dishonour of the cheque in question. For better appreciation, I may refer the notice issued to the accused, copy of which has been exhibited as Ex.P-4 on the dishonour of Ex.P-2 cheque.
" Under the instructions of my client Panthada Ravi S/o Panthada Satyanarayana, Resident of Eluru, I am issuing the legal notice to you. You borrowed an amount of Rs.60,000/- from my client on 1.4.2000 and executed a pronote in his favour agreeing to repay the same with an interest of Rs.2/- per hundred per month. Later on demand you issued a cheque Dt.6.12.2000 for Rs.52,000/- towards the part satisfaction of the amount due under the pronote and the cheque bearing No393010, Dt.6.12.2000 drawn on the State Bank of India, Vijayarai and my client presented the said cheque for collection through his account Bank of Baroda, Eluru. But the said cheque was returned with an endorsement Dt.22.12.2000 stating `insufficient funds’. Hence the cheque issued by you is dishonoured.
2. You issued the said cheque to my client with a deliberate intention to cheat my client and fully knowing about the consequence of the dishonour of the cheque.
3. Therefore, you are herewith asked to repay the Rs.60,000/- and the costs of this legal notice of Rs.100/- for the dishonoured cheque within 15 days after receipt of this notice by you. Otherwise my client will be constrained to file a criminal case against you u/S 138 of Negotiable Instrument Act apart from other actions."
9. It is evident from the above referred notice that what is demanded by the complainant is payment of the amount due under the pro note dated 6.12.2000. Whether the demand of the amount under the promissory note can be construed as a demand of the payment of the cheque in question? What is contemplated under Section 138 of N.I.Act is demand of the amount covered under the cheque. Sections 138 and 139 of the N.I.Act need to be noted and they are thus:- "Section 138 – Dishonour of cheque for insufficient, 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 extend to one year, 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- (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 fifteen 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. Section 139- Presumption in favour of holder.-
It shall be presumed, unless the contrary is proved, that the holder of cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability".
10. The interpretation of the above-referred sections fell for consideration in Suman Sethi v. Ajay Churiwal (1 supra). In the cited judgment, it has been held that if in a notice any other sum is indicated in addition to the said amount the notice cannot be faulted. In K.R.Indira v. Dr.G.Adinarayana (2nd supra), it has been held that what is necessary is making of a demand for the amount covered by the bounced cheque and if it is conspicuously absent in the notice, it is to be treated as imperfect notice. The object of the notice is to give a chance to the drawer of the cheque to rectify his omission. The demand in the notice has to be in relation to `said amount of money’ as described in the provision. The expression " payment of any amount of money" as appearing in the main portion of Section 138 of the Act goes to show that it needs to be established that the cheque was drawn for the purpose of discharging in whole or in part of any debt or any liability, even though the notice as contemplated may involve demands for compensation, costs, interest etc. The drawer of the cheque stands absolved from his liability under Section 138 of the Act if he makes the payment of the amount covered by the cheque of which he was the drawer within 15 days from the date of receipt of notice or before the complaint is filed.
11. The offence under section 138 of the Act can be completed only with the concatenation of a number of acts. The following are the acts which are components of the said offence: (1) drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for discharge in whole/part any debt or liability, (2) presentation of the cheque by the payee or the holder in due course to the bank, (3) returning the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque, (4) giving notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount, (5) failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.
12. Though no formal notice is prescribed in the provision, the statutory provision indicates in unmistakable terms as to what should be clearly indicated in the notice and what manner of demand it should make. What is necessary is making of a demand for the amount covered by the bounced cheque, which is conspicuously absent in the notice issued in this case.
13. The text of the notice has been referred above. What is demanded by the complainant is pro note amount and not the bounced cheque amount. Therefore, Ex.P-4 notice cannot be construed as a valid notice within proviso (b) to Section 138 of the N.I. Act, in which case, prosecution of the petitioner/accused for the offence under Section 138 of the Act suffers from legal infirmity. Therefore, conviction of the petitioner/accused for the offence under Section 138 of N.I.Act is not valid and legal and the same is liable to be set aside.
14. In the result, the Criminal Revision Case is allowed setting aside the conviction and sentences of the petitioner/accused for the offence under Section 138 of N.I.Act. Consequently, the petitioner/accused is acquitted of the same. The bail bonds furnished by him shall stand cancelled. The fine amount, if any, paid by the petitioner/accused is ordered to be refunded to him.