Point of law: Dishonour of cheque - Discrepancy in the amount - Discrepancy in the amount reflected in the cheque and the actual amount due by the accused, the accused cannot be proceeded under section 138 of the N.I. Act.

JUDGMENT :

JOHN MICHAEL CUNHA, J.

When the legally enforceable debt due by the accused is less than the amount of the dishonoured cheque, whether he could be convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881?

The question that arises for consideration in this appeal.

1. The facts giving rise to the above question are as follows:

The appellant filed a complaint before the V Additional I Civil Judge and JMFC, Mysuru, under section 200 read with section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as N.I. Act) alleging that the respondent (hereinafter referred to as the “accused”) approached him for financial assistance for his oats feeds (horse feeds) business and borrowed a sum of Rs. 8,00,000/- on 18.10.2007 through cheque bearing No. 488842 of State Bank of India agreeing to repay the same with interest at 18% per annum within 3 or 4 months. The accused did not return the loan amount within the stipulated time, instead again approached the complainant in the first week of June, 2008 seeking further financial assistance to the tune of Rs. 25,00,000/-. As per the assurance given by the accused to repay the same along with the previous loan amount within one year along with interest, the complainant lent another sum of Rs. 20,00,000/- to the accused on 08.06.2008 through cheques bearing Nos. 065793 and 065794 of State Bank of India. In repayment of the said amount, the accused issued a cheque bearing No. 273840 drawn on Syndicate Bank for a sum of Rs. 46,74,000/- dated 17.5.2010 being the principal amount with upto date interest. The said cheque when presented for encashment was returned unpaid for “funds insufficient.” The complainant issued a legal notice on 08.06.2010 and initiated action against the accused under section 138 of N.I. Act.

2. Before the trial court, the complainant examined himself as PW-1 and produced in evidence the original cheque Ex.P1, Bank Memo Ex.P2, Copy of legal notice Ex.P3, Postal acknowledgement Ex.P5, Cheque returned register extract Ex.P6 and Bank account extract Ex.P7. He also examined PW-2 Sri. G. Jairam.

3. In rebuttal, the accused examined himself as DW-1. In his evidence, while admitting the receipt of Rs. 8,00,000/- from the complainant, the accused took up a plea that on 06.12.2007, the complainant purchased a property and at that time, he refunded Rs. 8,00,000/- and further paid another sum of Rs. 10,00,000/- to the complainant. After few days, the complainant returned Rs. 10,00,000/- and thus he was due only a sum of Rs. 10,00,000/-. He further contended that for recovery of the said amount, the complainant filed a civil suit. As the complainant promised to withdraw the said suit, the accused paid him another sum of Rs. 5,00,000/- and thus, in his evidence, the accused took up a stand that he owed only a sum of Rs. 5,00,000/- to the complainant. Further he deposed that during the above transaction, the complainant had taken eight blank cheques and eight blank stamp papers from him and the same have been used by the complainant to lay a false claim and thus sought to dismiss the complaint.

In the course of cross-examination, the accused admitted receipt of Rs. 28,00,000/- from the complainant on 22.10.2007 and 10.06.2008 by way of cheques.

4. Considering the above evidence, learned Magistrate dismissed the complaint returning a finding that the complainant failed to prove the legal liability due by the accused as on the date of issuance of the cheque, for the reason that in his legal notice as well as in his evidence, the complainant asserted that the accused had borrowed the aforesaid amount from him undertaking to repay the same with interest at 18% per annum, if so, the total amount due to the complainant as on the date of the cheque would come to Rs. 38,62,000/- and not Rs. 46,74,000/- as reflected in the cheque. Thus concluding that there was no legally enforceable debt of Rs. 46,74,000/- as on the date of presentation of the cheque, l