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High Court of Judicature at Madras
R. MALA, J.
G. Thiagarajan
Versus
A. Annadurai
Crl. A. Nos. 806 & 807 of 2009
Decided On : 01-08-2012
Negotiable Instruments Act - Dishonoured Cheque - Section 138 - 138 Proviso (b)
Fact of the Case:
The appellant filed a complaint under Section 138 of the Negotiable Instruments Act, alleging that the accused issued two post-dated cheques which were dishonoured. The trial court acquitted the accused, stating that the complainant failed to prove the cheques were issued for a legally enforceable debt and that the notice was not sent to the correct address.
Finding of the Court:
The court found that the appellant failed to prove that the cheques were issued for a legally enforceable debt and that the notice was not sent to the correct address, thus no cause of action arose for the complaint under Section 138 of the Negotiable Instruments Act.
Issues: The issues revolved around whether the cheques were issued for a legally enforceable debt and if the notice was sent to the correct address under Section 138 of the Negotiable Instruments Act.
Ratio Decidendi: The court held that the appellant failed to prove that the cheques were issued for a legally enforceable debt and that the notice was not sent to the correct address, thus no cause of action arose for the complaint under Section 138 of the Negotiable Instruments Act.
Final Decision: The appeal was dismissed, and the Judgment of the trial Court passed under Section 138 of the Negotiable Instruments Act was confirmed.
Based on the provided legal document, the key points are as follows:
To successfully invoke Section 138 of the Negotiable Instruments Act, the complainant must establish that the cheques were issued for a legally enforceable debt and that the notice regarding dishonour was sent to the correct address [judgement_subject][judgement_act_referred].
In the case discussed, the appellant failed to prove that the cheques were issued in discharge of a legally enforceable debt. The appellant's own evidence indicated that the cheques were obtained from the respondent in connection with a police complaint, rather than a direct loan or debt agreement (!) (!) .
The notice issued to the respondent was not sent to the correct address, which is a crucial requirement under Section 138 Proviso (b). The address mentioned in the notice was incorrect, and the notice was returned as "not claimed." This failure to send the notice to the correct address means no cause of action was established (!) (!) .
The issuance of the cheque was different from its execution; the cheques were obtained by the complainant from the respondent only after a police complaint, not as a result of a direct transaction or legally enforceable debt. This undermines the presumption that the cheques were issued for a debt (!) (!) .
The court confirmed that because the complainant did not prove that the cheques were issued for a legally enforceable debt and because the notice was improperly sent, the legal requirements under Section 138 were not satisfied. Consequently, the trial court's judgment of acquittal was upheld, and the appeal was dismissed (!) (!) .
Overall, the judgment emphasizes the importance of proving a debt and proper notice to establish a cause of action under Section 138 of the Negotiable Instruments Act. Failure in either aspect leads to the dismissal of the complaint and the confirmation of acquittal (!) (!) .
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1. This appeal arises out of the Judgment of acquittal dated 18.12.2007 made in C.C.No.178 of 2007 on the file of learned Judicial Magistrate No.1, Erode.
2. The appellant as a complainant preferred a private complaint under Section 138 of the Negotiable Instruments Act stating that he is doing Grocery business under the name and style of “Angalamman Maligai Stores” at Dharmapuri Main road, New bus stand, Mecheri Post in Salem District. The accused is employed at Coimbatore and the complainant is known to him for the past several years. On 14.01.2006, the accused borrowed a sum of Rs.1,25,000/- for his urgent expenses from the complainant promising to pay the same within 6 months. To discharge the same, he issued two post dated cheques bearing No.253575 for a sum of Rs.25,000/- drawn on Central Bank of India, Peelamedu, Coimbatore Branch dated 14.02.2006 in favour of the complainant and another cheque bearing No.253576 for a sum of Rs.1,00,000/- drawn on Central Bank of India, Peelamedu, Coimbatore Branch dated 14.07.2006 in favour of the complainant. When the complainant presented the cheque dated 14.02.2006 before the Indian Bank, Mecheri Branch, on 20.02.2006, the same was dishonoured. Therefore, the complainant filed a complaint before the Judicial Magistrate No.1, Erode, which was taken on file in C.C.No.579 of 2006 and the same is pending. On 03.08.2006, the complainant presented Ex.P1-cheque dated 14.07.2006, bearing No.253576, for encashment before the Indian Bank, Mecheri and the same was dishonoured and returned under Ex.P2-return memo with an endorsement “insufficient funds” on 07.08.2006. Therefore, the complainant issued Ex.P3-registered notice dated 28.08.2006 to the accused and the same was returned on 06.09.2006 as unserved and not claimed and the returned cover was marked as Ex.P4 and the postal receipt was marked as Ex.P5. The accused issued the cheque after knowing fully well that there is no sufficient funds in his account to honour the cheque, thereby, committed offence under Section 138 of the Negotiable Instruments Act.
3. The learned Judicial Magistrate, after following the procedure, questioned the accused. But, the accused pleaded not guilty. Therefore, the learned Judicial Magistrate, examined the complainant as P.W.1 and marked the documents as Exs.P1 to P5. On the side of the accused, Exs.D1 to D5 were marked. After considering the oral and documentary evidence, the learned Magistrate, dismissed the complaint holding that the complainant has not proved that the disputed cheque was issued for discharging the legally enforceable debt. Further, it was held that the notice was not issued under Section 138 Proviso (b) of the Negotiable Instruments Act. Aggrieved the same, the present appeal has been filed.
4. Challenging the Judgment of acquittal, the learned counsel for the appellant submitted that the respondent had admitted that the cheque had been issued at Police Station on the basis of the complaint given by P.W.1. So, the appellant is entitled for invoking the presumption under Section 139 of the Negotiable Instruments Act that Ex.P1-Cheque was issued for discharging the legally enforceable debt. The appellant had also issued registered notice, but the same was returned indicating as “Not claimed”. Therefore, the notice was sent under Section 138 of the Negotiable Instruments Act and the returned cover and postal cover were marked as Exs.P4 and P5 before the Court. But, the trial Court committed an error in dismissing the complainant and acquitting the accused. Hence, he prayed for setting aside the Judgment of acquittal.
5. Resisting the same, the learned counsel for the respondent submitted that there was no cause of action and no notice under Section 138 of the Negotiable Instruments Act. He further submitted that in the notice, the address of the respondent had wrongly been mentioned and the same had been admitted by P.W.1 in his cross examination. Since notice had not been sent
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