The revision is directed against the judgment of conviction recorded by the learned VII Metropolitan Magistrate, George Town, Chennai in the proceedings initiated under section 138 of the Negotiable Instruments Act as against the petitioner herein and confirmed by the learned Additional District and Sessions Judge (Fast Track Court III), Chennai.
2. The respondent/complainant laid the complaint as against the petitioner herein with the following allegations:-
The respondent/complainant entered into a property development agreement on 13.3.1991 and paid an advance of Rs.12,50,000/= to the petitioner/accused. As the agreement between the parties did not materialize, the complainant filed a civil suit before this court in C.S.No.1186 of 1995 claiming recovery of Rs.87,14,000/= with future compensation of Rs.1,00,000/= per month. A settlement was reached between the complainant and the accused. The compromise clinched by the parties was recorded by this court. The accused agreed to pay a sum of rupees one crore to the complainant and created a first charge on certain receivables of the accused. Thereafter, in the month of January 1999, the husband of the accused borrowed a sum of Rs.50,000/= and in June 1999, the accused herself borrowed a sum of Rs.65,000/= towards her daughter's medical treatment. An undated cheque bearing No.438302 drawn on Andhra bank was signed by the accused and sent to the complainant through her late husband. The complainant, having come to know that the accused has received funds, presented the cheque for Rs.1,15,00,000/=. It was also informed to the accused through letter correspondence on 17.7.2002 that the cheque for the aforesaid amount would be deposited for collection on 20.7.2002. Accordingly, the complainant presented the cheque signed by the accused but, it was returned dishonoured by the bankers of the accused on 23.7.2002 for the reason "insufficient fund and payment stopped by the drawer". Statutory notice dated 5.8.2002 was issued to the accused and the same was received by her on 7.8.2002. No payment towards the cheque was made by the accused within the period stipulated by law. Hence, the complaint under section 138 of the Negotiable Instruments Act.
3. The Trial Court as well as the appellate court, having adverted to the evidence on record, returned a finding that the subject cheque in blank signed by the accused was issued for the legally enforceable debt. It has also been held by the courts below that the complainant was authorised to fill up the contents of the cheque. Therefore, there can be no allegation of material alteration in the facts and circumstances of the case. The Trial Court chose to compare the disputed signature with the admitted signature of the accused found in the reply notice and arrived at a decision that the signature found in the disputed cheque was that of the accused. Though the appellate court referred to various authorities submitted before it by the complainant as well as by the accused, it chose to confirm the verdict of the Trial Court without actually adverting to the authorities cited.
4. Learned Senior Counsel appearing for the petitioner/accused would vehemently submit that there was no legally enforceable debt payable by the accused to the complainant inasmuch as the debt alleged to have been incurred by the accused was hopelessly barred by limitation. It is his further submission that the memo of compromise alleged to have been produced before the court which gave rise to the recording of memo of compromise by this court was not at all produced by the complainant. Further, this court, while dismissing the suit filed by the complainant on the basis of the alleged compromise, struck by the parties, has not chosen to give any direction to the parties to adhere to the terms of compromise. In fact, the suit was dismissed as settled out of court. It is his further submission that when there is no decree passed on the terms arrived at between the parties, the complainant cannot contend that a legally enforceable debt has been recognized by this court in the order of dismissal of the suit.
5. Learned counsel appearing for the respondent would contend that a fresh agreement was entered into between the parties as on the date of disposal of the suit filed by the complainant. Further, charge was created on the receivables of the accused. Only when the charge created on the receivables of the accused becomes due, the limitation would start. Therefore, the cheque has been issued within time for the legally enforceable debt, he submits.
6. There is no dispute to the fact that a suit was filed before this court by the complainant praying a sum of Rs.87,14,000/= with interest and cost. It is very much relevant to refer to the order of dismissal of the suit by this court as settled out of court, recording the memo of compromise filed by the parties. In the said order, Ex.P1, this court chose to incorporate the entire contents of the memo of compromise while dismissing the suit as settled out of court. The relevant portion of the compromise entered into between the parties would read as follows:-
"The defendant states that she has filed O.P.No.1 of 1995 before the Chief Judge, City Civil Court, Hyderabad in which she has claimed a sum of Rs.95,770/= Crores, (Rupees Ninety Five Crores and Seventy Lakhs only) and the defendant agrees that the plaintiff shall have a first charge on my accounts received by her as her share on account of O.P.No.1 of 1995 before the City Civil Court, Hyderabad or from the respondents therein by way of settlement to the extent of Rs.1,00,00,000/= (Rupees one Crore only)"
7. It appears that the accused, who had claimed a sum of Rs.95.77 lakhs in the original petition laid before the Chief Judge, City Civil Court, Hyderabad agreed that the complainant herein shall have a first charge on any amount that would be received by the accused towards her share in O.P.No.1 of 1995 then pending before the City Civil Court, Hyderabad to an extent of rupees one crore.
8. When this court, having been satisfied with the consensus arrived at between the parties, recorded the memo of compromise reduced into writing by the parties and put an end to the lis between the parties as settled out of court, there is no necessity for the complainant to produce a copy of the memo of compromise filed into the court. As rightly pointed out by the learned counsel appearing for the complainant, a fresh agreement creating the charge over the receivables of the accused has been created as on 13th November 1996. The subject cheque Ex.P4 is dated 20.7.2002. About five years and nine months have lapsed from the date of the agreement between the parties creating charge over the receivables of the accused till the date of issuance of cheque viz., 20.7.2002.
9. It is not a simple case of agreement between the parties to pay a debt. A specific charge has been created over the property as per the compromise clinched between the parties. The limitation will begin only when there is a refusal to make payment out of the receivables by the debtor for the demand made by the creditor. The complainant, through his letter dated 17.7.2002 marked as Ex.P5, made a demand, but, the demand was refused by the accused through her letter, Ex.P7 dated 25.7.2002. The subject cheque is dated 20.7.2002. The cheque dated 20.7.2002 is not at all barred by limitation. Therefore, the court finds that both the courts below have rightly held that the subject cheque has been issued only for the legally enforceable debt.
10. No direction need to be issued by the court to adhere to the terms of the compromise while terminating the lis laid by the complainant as against the accused. The memo of compromise giving rise to creation of charge over the receivables is independent of the verdict passed by this court. In other words, the termination of the lis between the parties was only the consequence of the agreement reached between the parties to create charge over the receivables of the accused. Therefore, lack of direction from this court to the parties to adhere to the terms of compromises does not take away the right of the complainant to enforce the terms of agreement clinched with the accused.
11. The learned Senior Counsel appearing for the accused would submit that a sum of Rs.50,000/= was allegedly borrowed by the husband, but, the said amount also was included as consideration for the issuance of the cheque by the accused. It is his further submission that the cheque issued for the said sum of Rs.50,000/= alleged to have been borrowed by the husband of the accused loses its encashability. In other words, it can be construed that the subject cheque was forged with respect to the said component of Rs.50,000/=, he contends.
12. The learned counsel appearing for the respondent, referring to
section 44 of the Negotiable Instruments Act, would submit that partial absence of the considerations for the cheque issued will not take away the right of the complainant to enforce the subject cheque. PW1 has categorically stated that it was only the husband of the accused who delivered the cheque signed by the accused. The accused, being the wife of the person who received a sum of Rs.50,000/= independently from the complainant, would have given an authority to the complainant to fill up the cheque for the total amount due not only from her but also from her husband. But, at any rate, partial absence of money considerations will not take away the right of the complainant to enforce the cheque issued by the accused as per
section 44 of the Negotiable Instruments Act. Therefore, the court finds that the cheque issued by the accused cannot be termed as a forged or fabricated one, first because it forms part of the amount of Rs.50,000/= paid by the complainant to the husband of the accused.
13. It is contended by the learned Senior Counsel appearing for the accused that
section 20 of the Negotiable Instruments Act will not come to the rescue of the complainant inasmuch as a cheque does not fall under the classification of inchoate instrument referred to therein.
14.
Section 20 speaks about a stamped, incomplete, inchoate instrument delivered to any person with prima facie authority to complete the instrument and encash the same.
15. The Lahore High Court in A.R. DOWER v. SOHAN LAL (AIR 1937 Lahore 816) has held that
section 20 relating to the encashability of the inchoate stamped instrument will not apply to the cheque as it does not require stamp. Following the aforesaid ratio, a Division Bench of the Kerala High Court in C.T.JOSEPH v. I.V.PHILIP (AIR 2001 KERALA 300) has observed that
section 20 of the Negotiable Instruments Act will not apply to the cheque which does not require any stamp under the Stamp Act and the aforesaid provision would apply to other incomplete, inchoate instruments which require stamp under the Stamp Act.
16. This court in S.GOPAL v. D.BALACHANDRAN (2008(1) CTC 491) has observed that a bare reading of
section 20 of the Negotiable Instruments Act would go to show that it would apply only to a stamped instrument viz., pronote and bill of exchange and not to the cheques. Therefore,
section 20 will have no application to the cheques issued after signing by the drawer. It has been further observed therein as follows:-
" .... there is no law which prescribes that a cheque shall be filled up by the drawer himself. If such proposition is accepted, no unlettered person, who knows only to sign his name, can ever be a drawer of a cheque. Further, a person who is physically incapacitated to fill up the cheque cannot also draw a cheque and negotiate it. Of course, as far as the other negotiable instruments viz., pronotes and bills of exchange, there is a clear mandate under
section 20 of the Negotiable Instruments Act to the effect that such an instrument can be negotiated by the maker thereof by simply signing and delivering the same to the holder in due course giving thereby ample authority to the latter to fill up the content of the instrument as intended by the maker thereof.
10. Even in case of a cheque, as there is no clear provision in the Negotiable Instruments Act, in the light of the above discussion, the court finds that if a drawer of a cheque gives authority to the payee or holder in due course or a stranger for that matter to fill up the cheque signed by him, such an instrument also is valid in the eye of law. There is no bar for the drawer of a cheque to give authority to a third person to fill up the cheque signed by him for the purpose of negotiating the same."
17. It has been established in this case that there is a legally enforceable liability. Both the courts below, on facts, have come to the conclusion that the subject cheque was issued only by the accused to the complainant. In such circumstances, presumption arises as to the authority given by the accused to the complainant to fill up the content of the cheque and encash the same. Though
section 20 of the Negotiable Instruments Act does not apply to the inchoate cheques, the blank cheques given by the drawer can very well be filled up on authority being given and encash the same. On facts, it has been established that only on such authority given to the complainant by the accused, the cheque was filled up and put to collection by the complainant.
18. It is further submitted on the side of the accused that non-production of the vital document viz., memo of compromise would derail the contention of the complainant that a charge was created on the movables of the accused in the aftermath of the compromise clinched between the parties.
19. In M.S.NARAYANA MENON @ MANI v. STATE OF KERALA AND ANOTHER (2006-2-LW(Crl.) 918), the Supreme Court has observed as follows:-
" 46. Two adverse inferences in the instant case are liable to be drawn against the second respondent:
(i) He deliberately has not produced his books of accounts. (ii) He had not been maintaining the statutory books of accounts and other registers in terms of the bye-laws of Cochin Stock Exchange.
47. Moreover, the onus on an accused is not as heavy as that of the prosecution. It may be compared with a defendant in a civil proceeding."
20. That was a case where the books of accounts maintained by the complainants as required by the statute to indicate that the legally enforceable liability is subsisting was wantonly not produced. In such circumstances, the Supreme Court held that the presumption that would arise on account of the non-production of the books of accounts that the same was not produced as it was in favour of the complainant would be sufficient to rebut the presumption that would arise under section 118 of the Negotiable Instruments Act in favour of the complainant.
21. The Supreme Court in KRISHNA JANARDHAN BHAT v. DATTATRAYA G.HEDGE ((2008) 1 MLJ (CRL.) 1149(SC)) was pleased to observe as follows:-
"An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on records. An accused had a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different."
22. Of course, in this case, the accused was not examined to rebut the presumption that the cheque was issued only for the subsisting legally enforceable debt. But, the question is whether the complainant shall suffer for the non-production of the original memo of compromise filed before this court. Firstly, the original memo of compromise based on which the lis was terminated would be only on the file of this court. Secondly, this court put an end to the litigation between the complainant and the accused only after satisfying itself with the memo of compromise produced by the parties. Normally, the court does not incorporate the memo of compromise entered into between the parties outside the court. But, unusually the court had thought it fit to incorporate the memo of compromise entered into between the parties outside the precincts of the court. When the court had incorporated such a memo of compromise and the same has given rise to the present prosecution, following the cheque issued for the liability adverted to over there, the non-production of a copy of the above memo of compromise will have no bearing on this case. The question of production of any account book or any other document would not arise as the entire prosecution based on the cheque issued by the accused in favour of the complainant has arisen out of the compromise entered into between the parties outside the court.
23. The materials on record go to establish that the subject cheque was handed over by the accused after putting her signature over there through her husband for the legally enforceable liability arisen out of the agreement between the parties to create charge over the receivables of the accused and the same was filled up only with the authority of the accused and was put to collection, but, unfortunately, it was returned dishonoured. The statutory notice issued by the complainant to the accused was negatively responded by the accused.
24. The learned counsel appearing for the complainant would bring to the notice of this court that a sum of Rs.10,00,000/= awarded as compensation for the cheque issued by the accused for Rs.1,01,15,000/= is grossly inadequate and therefore, this court may be pleased to substantially enhance the compensation payable by the accused.
25. The Trial Court sentenced the accused to undergo rigorous imprisonment for one year and to pay a compensation of Rs.10,00,000/= to the complainant. The same was confirmed in the appeal preferred by the accused. Considering the scope and ambit of the Negotiable Instruments Act, and the value of the cheque for the whopping amount of Rs.1,01,15,000/=, the court finds that the compensation imposed on the accused will have to be substantially enhanced.
26. Therefore, sustaining the conviction of the accused under section 138 of the Negotiable Instruments Act and the rigorous imprisonment for one year awarded to her, the compensation directed to be paid by the accused is set aside as it is totally inadequate and instead, the accused is imposed with a fine of rupees one crore payable within two months and the same shall be paid as compensation to the complainant and in default of payment of the aforesaid fine by the accused, the accused shall undergo a further period of one year simple imprisonment. With the above said modification with respect to the sentence, the revision stands dismissed.
ssk.
To
1. The Additional District and Sessions Judge (Fast Track Court III), Chennai.
2. The VII Metropolitan Magistrate, G.T. Chennai