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2017 Supreme(HP) 923
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
Chander Bhusan Barowalia, J.
V.L. Snatu – Petitioner
Versus
State of Himachal Pradesh and Others – Respondents
Cr. Revision No. 4060 of 2013
Decided On : 22-09-2017
For the Petitioners: Mr. R.K. Bawa with Mr. Ajay Kumar Sharma.
For the Respondents: Mr. Pushpinder Jaswal, Mr. Rajat Chauhan, Mr. Ashwani Pathak and Mr. V.S. Rathore.
The main legal point established in the judgment is the presumption in favor of the holder of the cheque and the burden of proof on the accused to disprove the existence of a legally recoverable debt or liability.
Headnote:
Negotiable Instruments Act - Conviction under Section 138 - 138 - Summary of Acts and Sections: Negotiable Instruments Act, 1881, Section 138 - The court discussed the presumption in favor of the holder of the cheque, the enforceability of cheques issued as security, and the burden of proof on the accused to disprove the existence of a legally recoverable debt or liability. The court also referred to the judgments in Sudhir Kumar Bhalla vs. Jagdish Chand and Others, 2008 (7) SCC 137 and Kumar Exports vs. Sharma Carpets, (2009) 2 SCC 513 to support its decision.
Fact of the Case:
The accused, a bank manager, transferred funds from the complainant's account to another account and issued a cheque to the complainant, which was dishonored. The accused claimed the cheque was issued as security, while the complainant argued it was for consideration.
Finding of the Court:
The court found that the accused had unlawfully transferred funds from the complainant's account and issued the cheque for a legally enforceable claim. The court held that the complainant had proved its case beyond a shadow of reasonable doubt.
Issues: The key issues were whether the cheque was issued for consideration or as security, and whether the accused had unlawfully transferred funds from the complainant's account.
Ratio Decidendi: The court relied on the presumption in favor of the holder of the cheque, the enforceability of cheques issued as security, and the burden of proof on the accused to disprove the existence of a legally recoverable debt or liability.
Final Decision: The court dismissed the revision petition, upholding the judgment of conviction passed by the trial court and affirmed by the lower appellate court.
Case Overview
- Criminal Revision Petition under Sections 397/401 CrPC against conviction under Section 138 NI Act for issuing a cheque of Rs. 12,00,000/- that was dishonoured due to insufficient funds. [18000219410001][18000219410002]
- Petitioner (accused) was Branch Manager of H.P. State Co-operative Bank Ltd., Taklech Branch; convicted to 1 year RI and compensation of Rs. 16,00,000/- by trial court, upheld on appeal. [18000219410001]
Facts of the Case
- Complainant had cash credit facility of Rs. 1 crore against FDRs of Rs. 75 lakhs and Rs. 25 lakhs; accused unlawfully transferred Rs. 22,96,000/- from complainant's account to Ram Kumar's account without consent or written request. [18000219410001][18000219410006][18000219410007]
- Upon confrontation, accused admitted the transfer, apologized, and issued cheque No. 5555558 dated 1.11.2007 for Rs. 12,00,000/- (part of liability including interest) in discharge of the amount; cheque presented, dishonoured with "Exceeds Arrangements", legal notice issued but no payment made. [18000219410001][18000219410006][18000219410007][18000219410008]
- Bank witness confirmed no written request for transfer, only complainant authorized to withdraw; amount used to create FDRs in Ram Kumar's name, pledged as security for contract, interest paid to Ram Kumar. [18000219410006]
Arguments
- Accused: Cheque issued as security, no consideration; transfer authorized; money/FDRs still with bank, belongs to complainant; bank should return FDRs. [18000219410002][18000219410004]
- Complainant: Cheque for legally enforceable debt due to unauthorized transfer; presumption under NI Act favours holder; even security cheques enforceable if for discharge of liability. [18000219410003]
Court's Findings and Ratio
- Presumption under Sections 118/139 NI Act that cheque issued for consideration and discharge of debt/liability; execution admitted, burden shifts to accused to rebut by preponderance of probability. [18000219410006][18000219410007][18000219410011][18000219410013][18000219410015]
- Accused failed to rebut presumption: no evidence of authorization for transfer, admitted issuance of cheque, no proof it was mere security without consideration; transfer unauthorized misuse of position created enforceable liability. [18000219410006][18000219410007][18000219410008][18000219410013]
- Cheque enforceable even if claimed as security, as issued to discharge liability from misappropriated funds; accused's account lacked funds, notice served timely, complaint within limitation. [18000219410003][18000219410008]
- Complainant proved case beyond reasonable doubt; civil suit dismissal irrelevant to criminal liability under NI Act. [18000219410015]
Decision
- Revision petition dismissed; conviction and sentence upheld, no interference warranted. [18000219410016][18000219410017]
Chander Bhusan Barowalia, J.
1. The present Criminal Revision Petition under Section 397 read with Section 401 of the Code of Criminal Procedure, is maintained against the judgment dated 21.6.2013, passed by learned Sessions Judge, (Forests) Shimla, in Criminal Appeal No. 1-S/10 of 13/10, dismissing the appeal of the petitioner and confirming the judgment of conviction and sentence passed by learned Judicial Magistrate 1st Class, Court No. I, Shimla, District Shimla, in Case No. 143/3 of 2008, dated 8.6.2010, whereby the petitioner was convicted and sentenced to suffer rigorous imprisonment for a period of one year for the offence punishable under Section 138 of the Negotiable Instruments Act and to pay compensation to the tune of Rs. 16,00,000/- to the complainant.
2. The key facts, giving rise to the present petition are that the complainant/respondent (hereinafter referred to as the ‘complainant’) maintained the complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘Act’) against the accused/petitioner (hereinafter referred to as the ‘accused’). As per the complainant, on 31.5.2007, accused being Branch Manager of H.P. State Co-operative Bank Ltd. Taklech Branch, had unlawfully transferred a sum of Rs. 22,96,000/- from the account of complainant to the account of Ram Kumar, without the consent and written request of the complainant and when the complainant confronted the accused qua his illegal transfer of amount from his account, he admitted transfer of such amount and assured the complainant to repay the amount. The accused issued cheque bearing Nos. 5555558 dated 1.11.2007, amounting to Rs. 12,00,000/- in favour of the complainant in discharge of his aforesaid liability against his account in the same Bank i.e. H.P. State Co-Operative Bank Ltd. Taklech Branch. The said cheque was presented and was dishonoured with the remarks ‘Exceeds Arrangements’. The accused was issued legal notice dated 26.5.2008, Ex.CW1/D, to pay the cheque amount, however, despite receipt of notice, accused failed to make the payment of cheque amount. Hence, the complaint was maintained before the learned Trial Court under the aforesaid Section to proceed against the accused.
3. Mr. R.K. Bawa, learned Senior Counsel appearing on behalf of the accused has argued that the judgment of conviction passed by the learned Trial Court and affirmed by the learned lower Appellate Court is without appreciating the facts, which have come on record to its true perspective. He has argued that the learned Trial Court has failed to take into consideration the fact that the cheque was issued as a security and there was no consideration for issuance of cheque ignoring all these aspects, so the judgment of conviction passed by the learned Trial Court and affirmed by the learned lower Appellate Court is required to be set aside. He has further argued that even the holder of FDRs, Ram Kumar, has stated before the learned Magistrate that FDRs do not belong to him. He has argued that it is for the Bank to return the FDRs to the complainant and so, the accused cannot be held guilty.
4. On the other hand, Mr. Ashwani Pathak, learned Senior Counsel appearing on behalf of the complainant has vehemently argued that under Section 138 of the Negotiable Instruments Act, there is a presumption in favour of the holder of the cheque. The cheque was issued for consideration, as the accused has taken away money from the Bank account of the complainant and prepared the FDRs in the name of some other person, which other person used, as a security with the Government for obtaining the contract from the PWD authorities, when this came to the notice of complainant, accused issued cheque to the complainant for returning the amount. He has further argued that the cheque was issued for consideration, but for the sake of arguments, even if it is taken that the cheque was issued, as a security then also it is enforceable and it is for consideratio
