Full payment of the cheque amount prior to appellate decision can negate conviction under Section 138 of the Negotiable Instruments Act.

ORDER :

M.NIRMAL KUMAR, J.

The petitioner/A3 in C.C.No.2840 of 2010 was convicted by the trial Court along with two others, by judgment dated 27.04.2019 for offence under Section 138 of the Negotiable Instruments Act ('N.I. Act') and sentenced the petitioner to undergo six months simple imprisonment and directed all the accused jointly or severally to pay compensation to pay a sum of Rs.80,00,000/- as compensation, in default, to undergo further period of two weeks simple imprisonment. Aggrieved against the same, the petitioner/A3 preferred an appeal before the XVI Additional Sessions Judge, Chennai in Crl.A.No.286 of 2019. The learned Sessions Judge, by judgment dated 27.08.2021, partly allowed the appeal by modifying the simple imprisonment of six months to three months, against which, the present revision filed.

2.The complaint against the petitioner is that the respondent is a Banking Company. The first accused, M/s.Pyramad Saimira Theatre Ltd., represented by the second accused, P.S.Saminathan and petitioner as Directors of the first accused-company. The petitioner and other Director/A2, who are looking after the day-to-day business of the company, approached the respondent-Bank and requested to grant Cash Credit Facility to the tune of Rs.25 Crores and by way of sanctioned letters dated 04.11.2008, 13.11.2008 and 22.09.2009, the amount was sanctioned. Out of Rs.25 Crores, the petitioner’s company availed the facility to the tune of Rs.12.5 Crores. Thereafter, there was no repayment and there was an overdue of Rs.13,50,15,975.54. The respondent-Bank requested to clear the over dues and the accused company issued cheque bearing No.352940 dated 29.09.2009 drawn on Corporation Bank, Mylapore Branch for a sum of Rs.40,00,000/-. When the cheque was presented for realisation on 06.10.2009, the same was returned for the reason ‘Funds Insufficient’. On 15.10.2009, statutory notice issued. The petitioner and other accused neither paid the cheque amount nor sent any reply. Thereafter complaint filed.

3.During trial, on the side of the complainant, PW1 and PW2 examined and Exs.P1 to P5 marked, viz., Ex.P1-Authorisation dated 22.06.2012, Ex.P2-Cheque dated 29.09.2009, Ex.P3-Bank return memo dated 06.10.2009, Ex.P4/Statutory notice dated 15.10.2009 and Ex.P5-Reply notice dated 28.10.2009. On the side of the defence, one V.Santhanam examined as DW1 and Exs.D1 and D2 marked. On conclusion of trial, the trial Court convicted the petitioner and others and the Lower Appellate Court modified the sentence as stated above.

4.The contention of the learned counsel for petitioner is that A1-company was sanctioned with Cash Credit Facility for a loan amount of Rs.25 Crores and the A1-company availed loan facility only to a sum of Rs.12.5 Crores. The cheque/Ex.P2 in this case not issued by the A1-company in discharge of loan liability as claimed by the respondent-bank. Further, as on 29.09.2009, there was no liability to the petitioner and other accused to pay the cheque amount. A1-company was under a financial crisis and there was income tax issues at the relevant point of time. The Income Tax Department attached bank account of A1-company, hence, the Directors of the company were unable to answer for notice. Further, A1-company under liquidation even prior to the date of the cheque. Ex.P2 is dated 29.09.2009 and the same dishonoured on 06.10.2009, which are prior to the appointment of Official Liquidator for A1-company. For the dishonour of the cheque, it is the Official Liquidator, who ought to have been made as a party in this case.

5.The learned counsel further submitted that the petitioner is only a seco