IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
K.SURENDER, J.
N. Madhusudhan Gupta – Appellant
Versus
S.A. Kaleem & another - Respondents
Criminal Appeal No. 795 of 2010
Decided on : 14-06-2023
Negotiable Instruments Act, 1881 - Section 138 - Cheques returned unpaid - Funds insufficient - Cheques, when presented for clearance, were returned unpaid for reason of 'funds insufficient' - Legal notice was sent to accused, who failed to make good payment covered by cheques, for which reason, complaint was filed - Held, Initial burden in present facts of case was discharged by complainant to raise presumption under Section 139 of Act - On basis of different ink and writings on cheque as admitted during cross-examination on observation by complainant, it cannot be said that cheque was not issued by accused and it amounts to material alteration - It is not case of accused that writings in cheque are not that of his and he also failed to send cheque to an expert to deny his writings on cheque - Learned Magistrate was apparently wrong in recording order of acquittal on basis of his findings regarding non service of notice, material alteration in cehque and not proving debt or outstanding - Accordingly, finding of learned Magistrate has to be reversed - Criminal Appeal allowed.
JUDGMENT :
1. This Criminal Appeal is filed aggrieved by the judgment of acquittal for the offence under section 138 of NI Act, recorded by the learned XIV Additional Judge-cum-XVIII Additional Chief Metropolitan Magistrate at Hyderabad vide judgment in C.C.No.224 of 2008, dated 07.09.2009.
2. Briefly, the case of the appellant/complainant is that the appellant filed case under Section 138 of the Negotiable Instruments Act against the respondent/accused stating that the accused was his family friend. accused requested to advance loan amount of Rs.2.00 lakhs and promised to repay in the month of June, 2007. The said amount of Rs.2.00 lakhs was given on 12.02.2006. On 02.08.2007, when the demand was made to repay the said amount, two cheques Exs.P1 and P2 for Rs.1.00 lakh each were given. The said cheques, when presented for clearance, were returned unpaid for the reason of ‘funds insufficient’. Legal notice was sent to the accused, who failed to make good the payment covered by the cheques, for which reason, complaint was filed before the learned Magistrate.
3. Learned Magistrate examined the complainant as P.W.1 and marked Exs.P1 to P9. He found that the major discrepancy in the case of the complainant was non service of mandatory legal notice, copy of which is Ex.P4. According to Exs.P7 and P8 acknowledgements, they did not contain the signature of the accused, as such, there was no proper compliance of service of mandatory notice. Though, it is stated that the accused has given reply notice dated 06.09.2007 to the complainant, the same is not filed into the Court. No satisfactory explanation was offered by the complainant for not filing reply notice sent by the accused, as such, adverse inference was drawn against the complainant’s case. The learned Magistrate further found that there is a difference of ink in respect of date, name of the payee and the amount in words in Exs.P1 and P2, for which reason, learned Magistrate found that there was material alteration of the negotiable instrument. Further, Ex.P9, which is a cheque return memo does not bear the signature and date on it. Accordingly, on the said basis, learned Magistrate recorded acquittal.
4. Learned counsel appearing for the appellant would submit that the Magistrate had erred in recording the acquittal when all the ingredients of Section 138 of the Act were proved. If the case of the accused is that he has sent reply notice that itself would indicate that he has received the notice. As such, the question of not complaining that the mandatory provision under Section 138-B of the Act does not arise. He relied on the judgment of this Court in the case of G.K.Jaya Raman v. Nambur Laboratories, 2012 (1) ALD (Crl.) 166 (AP), wherein this Court was dealing with the issue whether the cheques were issued in blank and also whether any material alterations were made if the blanks were filled up. It was held that use of different ink and different writing does not mean material alteration in the cheque.
5. In the case of A.Brahmananda Reddy v. State of Andhra Pradesh and another, 2012 (2) ALD (Crl.) 941 (AP), this Court held that when the signature on the cheque was not denied nor the existence of debt or liability, reversed the order of acquittal.
6. In the case of Mohanan v. Bibhukumar, 2003 LawSuit (Ker) 309, the High Court of Kerala held that a person handing over a blank cheque gives an authority to fill up the relevant details and only for the reason of entries in the cheque were with different writings does not mean that the cheque is invalid and that there is no legally enforceable debt.
7. Having perused the record, it is the specific case of the accused that he sent reply notice. It can be safely inferred that the notice in question was received by the accused and for the said reason reply notice was sent by the accused. The finding of the learned Magistrate that there was no compliance of the statutory requirement under Section 138-B of the Act for issuance of mandatory
The legal principle established is the need for a liberal interpretation of the provisions related to the service of notice under Section 138 of the NI Act to protect the interests of the payee and p....
The burden of proof shifts to the complainant once the presumption under Section 139 of the NI Act is rebutted by the accused.
Material alterations in a negotiable instrument void the instrument unless consented to by all parties involved.
The presumption of issuance for repayment under Section 139 of the N.I. Act can be rebutted by the accused with sufficient evidence.
The main legal point established in the judgment is the onus on the accused to raise a probable defense and the requirements for rebutting the presumption under Section 139 of the Negotiable Instrume....
The essential requirement of sending a notice in writing to the drawer of the cheque and the receipt of information by the drawer from the bank regarding the return of the cheque as unpaid is crucial....
The cheque amount exceeding the borrowed amount negates the applicability of Section 138 of the Negotiable Instruments Act, requiring the Complainant to establish a legally enforceable debt.
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