Difference between revisions of "RANGAPPA VS SRI MOHAN on 7 MAY, 2010"

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(Created page with "'''IN THE SUPREME COURT OF INDIA CRIMINAL APPEAL NO. 1020 OF 2010 Rangappa ....Appellant Vs Sri Mohan ...Respondent''' '''QUESTION OF LAW:''' this case is related to the...")
 
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Section 138 of the Act talks about the dishonour of cheque in case of insufficiency of funds or the said amount exceeds the amount in the account, it will be deemed to have been an offence committed by the person who had drawn such cheque and shall be punished with imprisonment for a term which may extend to two years or with fine which may be twice the amount of the dishonoured cheque or with both, provided that nothing in the section shall apply unless :
 
Section 138 of the Act talks about the dishonour of cheque in case of insufficiency of funds or the said amount exceeds the amount in the account, it will be deemed to have been an offence committed by the person who had drawn such cheque and shall be punished with imprisonment for a term which may extend to two years or with fine which may be twice the amount of the dishonoured cheque or with both, provided that nothing in the section shall apply unless :
 +
 
● The cheque has been presented to a bank within a period of six months from date of its drawn.
 
● The cheque has been presented to a bank within a period of six months from date of its drawn.
 +
 
● The holder/payee makes a demand for payment of the money by giving a notice to the drawer of cheque within thirty days of receipt of information received from the bank regarding the return of unpaid cheque.
 
● The holder/payee makes a demand for payment of the money by giving a notice to the drawer of cheque within thirty days of receipt of information received from the bank regarding the return of unpaid cheque.
 +
 
● The drawer of the cheque failed to make payment of the amount to the payee or to the holder (as the case maybe) within fifteen days of said notice.<ref>The Negotiable Instrument Act, 1881 (Act No. 26 of 1881), s. 138</ref>
 
● The drawer of the cheque failed to make payment of the amount to the payee or to the holder (as the case maybe) within fifteen days of said notice.<ref>The Negotiable Instrument Act, 1881 (Act No. 26 of 1881), s. 138</ref>
  
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● The accused (appellant) raised the defence that the cheque in question was a blank cheque which was lost by him and it was later found by the respondent (complainant) who tried to misuse it. The accused (appellant) was of the opinion that there was no legally enforceable debt between the parties as he had not even asked for the loan amount from the respondent (complainant).
 
● The accused (appellant) raised the defence that the cheque in question was a blank cheque which was lost by him and it was later found by the respondent (complainant) who tried to misuse it. The accused (appellant) was of the opinion that there was no legally enforceable debt between the parties as he had not even asked for the loan amount from the respondent (complainant).
 +
 
● The trial court judge acquitted the accused (appellant) as there were some discrepancies in the respondent’s (complainant) version of facts. In the cross examination, the respondent (complainant) was not sure about the date when the cheque was issued.
 
● The trial court judge acquitted the accused (appellant) as there were some discrepancies in the respondent’s (complainant) version of facts. In the cross examination, the respondent (complainant) was not sure about the date when the cheque was issued.
 +
 
● Also it was noted that the respondent (complainant) had given Rs. 45,000 in cash as loan but in the cross examination it appeared that the respondent had spent this amount during the construction of the house & the accused (appellant) had realised the liability after
 
● Also it was noted that the respondent (complainant) had given Rs. 45,000 in cash as loan but in the cross examination it appeared that the respondent had spent this amount during the construction of the house & the accused (appellant) had realised the liability after
 
auditing the costs on completion of the house. It was also noted that the accused (appellant) used to pay a monthly salary for the services.
 
auditing the costs on completion of the house. It was also noted that the accused (appellant) used to pay a monthly salary for the services.
 +
 
● The trial judge held that there were no material fact that the accused (appellant) had issued a cheque for a legal debt and also the notice sent to him does not attract the presumption under Section139 of the Act as the respondent (complainant) failed to prove that he had given a cash loan to the accused (appellant).
 
● The trial judge held that there were no material fact that the accused (appellant) had issued a cheque for a legal debt and also the notice sent to him does not attract the presumption under Section139 of the Act as the respondent (complainant) failed to prove that he had given a cash loan to the accused (appellant).
  
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● On appeal against the order of the trial court, the high court reversed the judgment given by the trial court, hence making the accused (appellant) liable for the offence and directing him to pay a fine of Rs. 75,000 failing to which he would have to go under a
 
● On appeal against the order of the trial court, the high court reversed the judgment given by the trial court, hence making the accused (appellant) liable for the offence and directing him to pay a fine of Rs. 75,000 failing to which he would have to go under a
 
three months simple imprisonment.
 
three months simple imprisonment.
 +
 
● The court noted that the accused admitted that the sign on the cheque was his, therefore Section 139 of the Act mandates a presumption that the cheque pertained to a legal debt.
 
● The court noted that the accused admitted that the sign on the cheque was his, therefore Section 139 of the Act mandates a presumption that the cheque pertained to a legal debt.
 +
 
● The court also noted that the defence raised by the accused (appellant) that the blank cheque was lost was not probable as when he contacted the bank for stopping the payment, he did not mention anything about the lost cheque. Also in cross examination when the accused (appellant) told that the lost cheque was in custody of the respondent (complainant) it indicates that the accused (appellant) was aware about the lost cheque thereby weakening his defence.
 
● The court also noted that the defence raised by the accused (appellant) that the blank cheque was lost was not probable as when he contacted the bank for stopping the payment, he did not mention anything about the lost cheque. Also in cross examination when the accused (appellant) told that the lost cheque was in custody of the respondent (complainant) it indicates that the accused (appellant) was aware about the lost cheque thereby weakening his defence.
  
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The main contention before the High Court was the proper interpretation of Section 118(a), Section 138 & Section 139 of the Act.
 
The main contention before the High Court was the proper interpretation of Section 118(a), Section 138 & Section 139 of the Act.
 +
 
● It was noted that the Section 138 of the Act can be attracted if a cheque is dishonoured on account of instructions of ‘stop payment’ sent by the accused (appellant) to his bank, this was clarified in the case of ''Goa Plast (Pvt.) Ltd. vs Chico Ursula D’Souza'' ,<ref>Appeal (crl.) 1969 of 1996</ref> the court held that the provisions of Section 138 to 142 of the Act were intended to discourage people from not honouring their commitment of paying the money through cheques. Therefore, a post dated cheque will lose its acceptability & credibility if its payment is stopped.
 
● It was noted that the Section 138 of the Act can be attracted if a cheque is dishonoured on account of instructions of ‘stop payment’ sent by the accused (appellant) to his bank, this was clarified in the case of ''Goa Plast (Pvt.) Ltd. vs Chico Ursula D’Souza'' ,<ref>Appeal (crl.) 1969 of 1996</ref> the court held that the provisions of Section 138 to 142 of the Act were intended to discourage people from not honouring their commitment of paying the money through cheques. Therefore, a post dated cheque will lose its acceptability & credibility if its payment is stopped.
 +
 
● The respondent (complainant) submitted that the existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. They stated that in the case of ''Hiten P. Dala vs Bratindranath Banerjee'' ,<ref>Appeal (crl.) 688 of 1995 (2001) 6 SCC 16</ref> it was held that both Section138 & 139 require the court to ‘shall presume’ the liability of a drawer of cheques drawn, it is obligatory for the court to raise presumption in every case where the factual basis for the raising of presumption has been established. It also creates an exception to the general rule of the burden of proof in criminal cases and shifts the onus on the accused.
 
● The respondent (complainant) submitted that the existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. They stated that in the case of ''Hiten P. Dala vs Bratindranath Banerjee'' ,<ref>Appeal (crl.) 688 of 1995 (2001) 6 SCC 16</ref> it was held that both Section138 & 139 require the court to ‘shall presume’ the liability of a drawer of cheques drawn, it is obligatory for the court to raise presumption in every case where the factual basis for the raising of presumption has been established. It also creates an exception to the general rule of the burden of proof in criminal cases and shifts the onus on the accused.
 +
 
● The respondent (complainant) also referred to the case of ''Mallavarapu Kasivisweswara Rao vs Thadikonda Ramulu Firm & Ors.'' ,<ref>2008 (8) SCALE 680</ref> where it was observed that under Section 118(a) of the Act, the court if obliged to presume that the promissory note was made for consideration until the contrary is proved.
 
● The respondent (complainant) also referred to the case of ''Mallavarapu Kasivisweswara Rao vs Thadikonda Ramulu Firm & Ors.'' ,<ref>2008 (8) SCALE 680</ref> where it was observed that under Section 118(a) of the Act, the court if obliged to presume that the promissory note was made for consideration until the contrary is proved.
  
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● Not happy with the decision of the High Court, the accused (appellant) approached the Hon’ble Supreme court by way of a petition seeking special leave to appeal.
 
● Not happy with the decision of the High Court, the accused (appellant) approached the Hon’ble Supreme court by way of a petition seeking special leave to appeal.
 +
 
● The Supreme Court also noted that the defence of loss of blank cheque by the accused (appellant) was not probable as they had mentioned a different date in the ‘stop payment’ instructions given to his bank.
 
● The Supreme Court also noted that the defence of loss of blank cheque by the accused (appellant) was not probable as they had mentioned a different date in the ‘stop payment’ instructions given to his bank.
 +
 
● Furthermore, regarding the fact that accused had failed to comply with the statutory notice under Section 138 of the Act, the accused (appellant) failed to contest the existence of a legal debt and also he did admit in the cross examination that the sign on the cheque was his, so the statutory presumption comes into play which was not rebutted even with regards to the material facts submitted by the complainant.
 
● Furthermore, regarding the fact that accused had failed to comply with the statutory notice under Section 138 of the Act, the accused (appellant) failed to contest the existence of a legal debt and also he did admit in the cross examination that the sign on the cheque was his, so the statutory presumption comes into play which was not rebutted even with regards to the material facts submitted by the complainant.
 +
 
● The Hon’ble Supreme Court upheld the decision of the High Court and convicted the accused (appellant) of the offence. Thereby, disposing the present appeal.
 
● The Hon’ble Supreme Court upheld the decision of the High Court and convicted the accused (appellant) of the offence. Thereby, disposing the present appeal.
  

Revision as of 20:11, 2 August 2020

IN THE SUPREME COURT OF INDIA CRIMINAL APPEAL NO. 1020 OF 2010

Rangappa ....Appellant

Vs

Sri Mohan ...Respondent


QUESTION OF LAW: this case is related to the proper interpretation of Section 139 of the Negotiable Instrument Act, 1881 which shifts the burden of proof on the accused in case of cheque bounces under Section 138 of the act.

Section 138 of the Act talks about the dishonour of cheque in case of insufficiency of funds or the said amount exceeds the amount in the account, it will be deemed to have been an offence committed by the person who had drawn such cheque and shall be punished with imprisonment for a term which may extend to two years or with fine which may be twice the amount of the dishonoured cheque or with both, provided that nothing in the section shall apply unless :

● The cheque has been presented to a bank within a period of six months from date of its drawn.

● The holder/payee makes a demand for payment of the money by giving a notice to the drawer of cheque within thirty days of receipt of information received from the bank regarding the return of unpaid cheque.

● The drawer of the cheque failed to make payment of the amount to the payee or to the holder (as the case maybe) within fifteen days of said notice.[1]

Section 139 states that unless proven contrary, it shall be presumed that the holder of cheque received the cheque of nature mentioned in Section 138 for discharge (in whole or part) of any debt or liability.[2]

Section 118(a) states that until proven contrary, a presumption be made as to negotiable instruments was made for consideration and every such instrument, when it has been endorsed, accepted, transferred or negotiated was done for consideration.[3]


FACTS:

1. The appellant (accused) and the respondent (complainant), both are the residents of Ranebennur, Karnataka. The appellant, a mechanic who had sought the services of the respondent, a civil engineer, for supervising the construction of his house in Ranebennur. The construction of the house was to be completed on 20 October, 1998 which indicates that the parties were well acquainted with each other. 2. According to the respondent, the facts disclosed in the manner as in October 1998, the accused (appellant) had requested a loan of Rs. 45,000 from him for completing the construction of his house, which the respondent had provided the same in cash. 3. On receiving the said amount the accused (appellant) assured that he will repay the loan amount by October 1999. However due to the failure to pay the amount in October, the accused (appellant) sought an extra time till December 2000. 4. The accused, on 8 February, 2001 issued a cheque bearing no. 0886322 for an amount of Rs. 45,000 drawn on Syndicate Bank, Kudremukh Branch. On the same day, the respondent (complainant) presented the same cheque through the Karnataka Bank, Ranebennur for encashment. 5. However on 16 February, 2001, the said bank issued a memo stating that ‘payment has been stopped by the drawer’ and the memo was handed to the respondent (complainant) on 21 February, 2001. 6. On 26 february, 2001, the respondent (complainant) then issued a notice to the accused (appellant) in regard with the memo received from the bank. 7. On receiving the said notice, the accused (appellant) failed to honor the cheque within the prescribed period and also he did not comply with the notice sent to him under Section 138 of the Negotiable Instrument Act, 1881. 8. The respondent (complainant) then filed a complaint under Section 200 of the Code of Criminal Procedure against the accused (appellant) for an offence punishable under Section 138 of the Act.


TRIAL COURT FINDINGS:

● The accused (appellant) raised the defence that the cheque in question was a blank cheque which was lost by him and it was later found by the respondent (complainant) who tried to misuse it. The accused (appellant) was of the opinion that there was no legally enforceable debt between the parties as he had not even asked for the loan amount from the respondent (complainant).

● The trial court judge acquitted the accused (appellant) as there were some discrepancies in the respondent’s (complainant) version of facts. In the cross examination, the respondent (complainant) was not sure about the date when the cheque was issued.

● Also it was noted that the respondent (complainant) had given Rs. 45,000 in cash as loan but in the cross examination it appeared that the respondent had spent this amount during the construction of the house & the accused (appellant) had realised the liability after auditing the costs on completion of the house. It was also noted that the accused (appellant) used to pay a monthly salary for the services.

● The trial judge held that there were no material fact that the accused (appellant) had issued a cheque for a legal debt and also the notice sent to him does not attract the presumption under Section139 of the Act as the respondent (complainant) failed to prove that he had given a cash loan to the accused (appellant).


HIGH COURT FINDINGS:

● On appeal against the order of the trial court, the high court reversed the judgment given by the trial court, hence making the accused (appellant) liable for the offence and directing him to pay a fine of Rs. 75,000 failing to which he would have to go under a three months simple imprisonment.

● The court noted that the accused admitted that the sign on the cheque was his, therefore Section 139 of the Act mandates a presumption that the cheque pertained to a legal debt.

● The court also noted that the defence raised by the accused (appellant) that the blank cheque was lost was not probable as when he contacted the bank for stopping the payment, he did not mention anything about the lost cheque. Also in cross examination when the accused (appellant) told that the lost cheque was in custody of the respondent (complainant) it indicates that the accused (appellant) was aware about the lost cheque thereby weakening his defence.


CONTENTIONS:

The main contention before the High Court was the proper interpretation of Section 118(a), Section 138 & Section 139 of the Act.

● It was noted that the Section 138 of the Act can be attracted if a cheque is dishonoured on account of instructions of ‘stop payment’ sent by the accused (appellant) to his bank, this was clarified in the case of Goa Plast (Pvt.) Ltd. vs Chico Ursula D’Souza ,[4] the court held that the provisions of Section 138 to 142 of the Act were intended to discourage people from not honouring their commitment of paying the money through cheques. Therefore, a post dated cheque will lose its acceptability & credibility if its payment is stopped.

● The respondent (complainant) submitted that the existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. They stated that in the case of Hiten P. Dala vs Bratindranath Banerjee ,[5] it was held that both Section138 & 139 require the court to ‘shall presume’ the liability of a drawer of cheques drawn, it is obligatory for the court to raise presumption in every case where the factual basis for the raising of presumption has been established. It also creates an exception to the general rule of the burden of proof in criminal cases and shifts the onus on the accused.

● The respondent (complainant) also referred to the case of Mallavarapu Kasivisweswara Rao vs Thadikonda Ramulu Firm & Ors. ,[6] where it was observed that under Section 118(a) of the Act, the court if obliged to presume that the promissory note was made for consideration until the contrary is proved.


SUPREME COURT DECISION:

● Not happy with the decision of the High Court, the accused (appellant) approached the Hon’ble Supreme court by way of a petition seeking special leave to appeal.

● The Supreme Court also noted that the defence of loss of blank cheque by the accused (appellant) was not probable as they had mentioned a different date in the ‘stop payment’ instructions given to his bank.

● Furthermore, regarding the fact that accused had failed to comply with the statutory notice under Section 138 of the Act, the accused (appellant) failed to contest the existence of a legal debt and also he did admit in the cross examination that the sign on the cheque was his, so the statutory presumption comes into play which was not rebutted even with regards to the material facts submitted by the complainant.

● The Hon’ble Supreme Court upheld the decision of the High Court and convicted the accused (appellant) of the offence. Thereby, disposing the present appeal.


  • References*
  • The Negotiable Instrument Act, 1881 (Act No. 26 of 1881), s. 138
  • The Negotiable Instrument Act, 1881 (Act No. 26 of 1881), s.139
  • The Negotiable Instrument Act, 1881 (Act No. 26 of 1881), s.118(a)
  • Appeal (crl.) 1969 of 1996
  • Appeal (crl.) 688 of 1995 (2001) 6 SCC 16
  • 2008 (8) SCALE 680