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2012 Supreme(Mad) 4464
High Court of Judicature at Madras
C.S. KARNAN, J.
K. Veeraiah
Versus
Ganesh Credits, Rep. by its Proprietor, R. Babu
Crl. R.C. No. 208 of 2010
Decided on : 01-11-2012
For the Petitioner:S.N. Amarnath, Advocate.
For the Respondent:A.R. Sakthivel, Advocate.
Headnote:
Negotiable Instruments Act - Cheque Bounce - Section 138 - [GUARANTOR LIABILITY] - [Section 138 of Negotiable Instruments Act] - The court discussed the liability of a guarantor under Section 138 of the Negotiable Instruments Act and the legal enforceability of the debt. The court also considered the circumstances under which a cheque is issued and the implications of such issuance in relation to a legally enforceable debt. Key legal provisions such as Section 138 of the Negotiable Instruments Act were interpreted to determine the liability of the accused as a guarantor and the enforceability of the debt.
Fact of the Case:
The accused and his son stood as guarantors for a loan. The accused issued a cheque for part payment of the loan, which was later returned. The complainant filed a complaint under Section 138 of the Negotiable Instruments Act. The accused contested the complaint, claiming that the cheque issuance was under duress and not for a legally enforceable debt.
Finding of the Court:
The court found the accused guilty under Section 138 of the Negotiable Instruments Act and sentenced him to six months imprisonment and ordered compensation. The appellate court upheld the decision.
Issues: The issues revolved around the liability of the accused as a guarantor, the enforceability of the debt, and the circumstances under which the cheque was issued.
Ratio Decidendi: The court held that the accused's issuance of the cheque constituted a legally enforceable debt under Section 138 of the Negotiable Instruments Act. The court also considered the circumstances under which the cheque was issued and the implications of such issuance in relation to a legally enforceable debt.
Final Decision: The court reduced the sentence to two months imprisonment and the compensation to Rs.30,000, directing the accused to pay the amount or undergo imprisonment.
1. The revision petitioner/appellant/accused has preferred the present revision in Crl.R.C.No.208 of 2010 against the judgment made in C.A.No.66 of 2009, on the file of IV Additional Sessions Judge, Chennai, confirming the conviction and sentence passed in C.C.No.200 of 2007, on the file of XIII Metropolitan Magistrate, Egmore, Chennai.
2. The respondent/complainant's case is as follows:-
The accused, along with his son has stood as guarantor for repayment of a sum of Rs.2,00,000/- financed by the complainant for hire purchase of car, a Ford Icon bearing registration No.TN-10C-1408. In order to discharge the said debt, the accused had issued a cheque dated 02.03.2003 for Rs.60,000/-bearing No.826415 drawn on Indian Overseas Bank, Perambur, Chennai-11 towards part payment of the said loan. The complainant presented the said cheque with his bankers, viz., Union Bank, Triplicane Branch, Chennai-5 on 09.04.2003 and the cheque was returned on 10.04.2003 with an endorsement of "payment stopped by drawer". The complainant was intimated about return of cheque on 11.04.2003. The complainant issued a legal notice dated 09.05.2003, which was received by the accused on 11.05.2003. As the accused failed to pay the cheque amount, the complainant had filed a complaint against the accused for an offence under Section 138 of Negotiable Instruments Act before the XIII Metropolitan Magistrate, Egmore, Chennai.
3. On being questioned, the accused pleaded not guilty and hence trial was conducted. On the complainant's side, one witness was examined and nine documents were marked as Exs.P1 to P9, viz., Ex.P1-letter dated 02.03.2002 of K.V. Varaprasad to the complainant, Ex.P2-letter dated 22.04.2002 of K.V. Prasad to the complainant, Ex.P3-letter dated 25.04.2002 of the accused to the complainant, Ex.P4-cheque dated 02.03.2003 for Rs.60,000/-, Ex.P5-return memo of I.O.B., Perambur Branch, Ex.P6-debit advice, Ex.P7-copy of legal notice dated 09.05.2003, Ex.P8-postal receipt and Ex.P9-acknowledgment card. On the side of the accused, no witness, no documents.
4. P.W.1, in his proof affidavit had deposed that he is the Proprietor of the complainant concern, viz., M/s. Ganesh Credits and that he is carrying on the business of lending loans for two wheelers and four wheelers on the security of R.C.Book. He deposed that one Paul Vincent along with K.V. Varaprasad, son of the accused herein and one Sasikumar, an employee under Paul Vincent approached him and requested him to lend Rs.2,00,000/- as H.P. loan for Ford Icon Car No.TN-10C-1408, owned by Paul Vincent, on the security of its R.C.Book. He deposed that he lent a sum of Rs.2,00,000/-to Paul Vincent on 25.01.2002, after receiving the R.C. book, and that the said Varaprasad and Sasikumar stood as security for the due repayment of the said loan. During February 2002, when the said R.C.book was sent to the R.T.O. authorities for endorsement of the hire purchase favouring his concern, it was found that the said R.C. book was not original, but a fabricated and forged one. P.W.1 deposed that he had tried to contact Paul Vincent, but he had vacated his house and his whereabouts were not known. When he was about to lodge a police complaint, K.V. Varaprasad and Sasikumar admitted that they had conspired together with Paul Vincent to forge and fabricate the said R.C. book for the purpose of using the same to obtain loan from him and to cheat him. They also pleaded not to lodge any police complaint and they promised that they would settle the loan amount immediately. K.V. Varaprasad acknowledged his liability through his letter dated 02.03.2002 to him and promised to settle the loan. The said letter was marked as Ex.P1. He also admitted his involvement in the forgery and fabrication of the said R.C.book through his letter dated 22.04.2002. The said letter dated 22.04.2002 is Ex.P2. The accused herein, taking the responsibility of repayment of loan, stood guarantee through his letter dated 25.04.200
