Heard Mr B. Ragunath, learned counsel for the appellant and Mr. S. Nagamuthu, learned senior counsel for the respondent.
Appeal against the Hon’ble High Court judgment
3. The present appeal arises out of the Final Judgment dated 29.01.2020 (hereinafter referred to as the “impugned judgment”), passed by the learned Single Judge of the High Court of Judicature at Madras (hereinafter referred to as the “High Court”) in Criminal Appeal No.582/ 2012, whereby the appeal filed by the appellant was dismissed and the judgment dated 20.06.2012 of the Vth Additional District and Sessions Judge, Coimbatore (hereinafter referred to as the “Appellate Court”) in Criminal Appeal No.186/2010, was upheld.
Brief facts
4. The sole Respondent (hereinafter also referred to as the “accused”), being a subscriber of the Appellant-chitfund company (hereinafter also referred to as the “complainant”), borrowed loan amounts on several dates from the Appellant over a period of about two years which swelled to a sum of Rs.21,09,000/- (Rupees Twenty One Lakhs and Nine Thousand) including interest, after eight years. The loans were advanced in the following manner: Rs.1,50,000/- (Rupees One Lakh and Fifty Thousand) was given on 09.03.1995; Rs.6,00,000/- (Rupees Six Lakhs) on 29.12.1995; Rs.1,00,000/- (Rupees One Lakh) on 22.03.1995; Rs.3,00,000/- (Rupees Three Lakhs) on 11.03.1996; Rs.1,00,000/- (Rupees One Lakh) on 09.04.1997; and finally, Rs.2,00,000/- (Rupees Two Lakhs) on 24.04.1997. In order to partly discharge the aforesaid loan amounts, Cheque No.0150573 dated 03.02.2003 was issued by the accused for a sum of Rs.19,00,000/- (Rupees Nineteen Lakhs) in favour of the complainant drawn on Indian Overseas Bank, District Court Extension Counter, Coimbatore. The complainant, on 04.02.2003, presented the cheque in Bank of India, Kurichi Industrial Estate Branch, Coimbatore which came to be returned on 05.02.2003 with the endorsement ‘Account Closed’. Thereafter, a statutory notice was issued by the complainant on 20.02.2003, reply to which was issued by the accused on 27.02.2003 repudiating the debt. Aggrieved, the complainant filed C.C.No.379/2003 before the Judicial Magistrate Court No.VII, Coimbatore (hereinafter referred to as the “Trial Court”) for the offence under Section 1381 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the “N.I. Act”).
Trial and sentencing
5. Before the learned Trial Court, on behalf of the complainant, the manager of the chit-fund company was examined as PW1 and nineteen exhibits were marked. On behalf of the accused, no witness was examined, however, five exhibits were marked. The learned Trial Court, after perusing the evidence on record and hearing the parties, passed judgment dated 16.08.2010 whereby it convicted the accused for the offence under Section 138, N.I. Act and sentenced him to undergo one year simple imprisonment and to pay a fine of Rs.38,00,000/- (Rupees Thirty Eight Lakhs) as compensation to the complainant.
Section 391 Cr.P.C and defence witness
6. The accused filed Criminal Appeal No.186/2010 in the Appellate Court, challenging the conviction and sentence, along with a petition under Section 3912 of the Code of Criminal Procedure (hereinafter referred to as the “Code”), for letting in additional evidence. The Appellate Court allowed the petition filed under Section 391 of the Code. This order was challenged by the complainant before the High Court, which negatived such challenge and confirmed the order passed by the Appellate Court to let in additional evidence. Before the Appellate Court, the accused examined himself as DW1 and marked thirteen exhibits in order to show that substantial amounts were repaid by him to the complainant.
Hon’ble High Court acquitted the accused
7. The Appellate Court, by judgment dated 20.06.2012, allowed the accused’s appeal and acquitted the respondent holding that the cheque was not issued towards a legally enforceable liability. The appellant filed Criminal Appeal No.582/2012 in the High Court impugning the judgment passed by the Appellate Court. The High Court dismissed such appeal vide the impugned judgment.
Analysis, Reasoning and Conclusion
14. Having considered the rival contentions, we find that the impugned judgment upholding the order of the Appellate Court requires interference.
Accused contentions: Before trial court is no loan transactions between parties, but before the Appellate court marked receipts to show the re-payment of loan
15. This Court in Dashrath Rupsingh Rathod v State of Maharashtra, (2014) 9 SCC 129 held that “An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank.” The fact that the cheque was issued as a consequence of failure to repay the loan taken by the respondent from the appellant to which the interest was added would more or less settle the issue. However, in the present case, a discrepancy apropos the rate of interest, whether it be 1.8%, 2.4% or 3% per month was not sufficient to disbelieve the claim of the appellant. Though the respondent before the learned Trial Court had contended that there was no loan transaction between the parties, but still, before the Appellate Court, by way of additional evidence, he marked receipts to show the re-payment of loan. Even there, the respondent did not produce all the receipts showing total discharge of the loan amount, as was noted by the Appellate Court, and only the difference in the rates of interest as well as the finding that substantial amount has been repaid led to the acquittal of the respondent.
Closure of the bank accounts within a few weeks of issuance of the cheque raises serious questions about the conduct and intent of the respondent
16. On this issue, we would like to indicate that neither in the pronotes nor in the Statement of Accounts, the principal amount has been disputed and the amount arrived at, as reflected in the cheque whether it is in respect of 1.8% interest or 3% interest per month cannot be given undue importance for the reason that the pronotes indicated that under normal circumstances, when there would be repayment by the respondent, the rate would be 1.8% per month but in the event of non-repayment, how much interest by way of an added burden would lie on the respondent has not been specified. Thus, if the rate of interest of 3% instead of 1.8% per month has been added on the principal amount and the amount in the cheques reflects the same, it cannot be said that the cheques were not for repayment of the principal amount, totalling Rs.14,50,000/- (Rupees Fourteen Lakhs and Fifty Thousand). When the respondent does not dispute that he has handed over the cheques or signed on them, it was incumbent upon him, the moment he claims the amount(s) were repaid to the appellant to have either taken back the cheques or instructed the bank concerned to not honour the concerned cheques. However, closure of the bank accounts within a few weeks of issuance of the cheque raises serious questions about the conduct and intent of the respondent. The learned Trial Court, in our view, has meticulously gone into each and every issue while holding in favour of the appellant and the Appellate Court as also the High Court have only gone by scrutiny of the interest amount mentioned on the pronote and effected in the Statement of Accounts of the appellant and the evidence produced before the Appellate Court by the respondent to indicate that some repayment(s) was/were made. This, according to us, is erroneous and cannot be sustained.
The respondent is not a layman and subscriber to a chitfund company and is expected to be aware of the laws what is beneficial for him
17. Furthermore, the reasoning given by the Appellate Court, having taken note of the Tamil Nadu Act, fails to appreciate that even going by what has been written on the pronote i.e., 1.8% per month would lead to the interest being 21.6% per annum, which also is above the cap of 12% per annum prescribed in the Tamil Nadu Act. Thus, if the parties amongst themselves, agreed to a rate which is not in conformity with the Tamil Nadu Act, it was for the respondent to raise an objection or move the appropriate forum for getting the same corrected/taken care of, so that the interest rate did not exceed 1% per month but having agreed to a rate of 1.8% per month, the subsequent amount of interest calculated @ 3% per month does not have much force for it was upon the respondent to challenge the rate of interest. The respondent also cannot be said to be a layman, and being a subscriber to a chitfund company, he is expected to be aware of the laws and also of what is beneficial for him. Having issued the pronotes, he cannot now take a plea in these collateral proceedings under the N.I. Act to contend that the rate of interest was more than what was permissible under the Tamil Nadu Act.
Appeal allowed and due to age only sentence is waived but compensation imposed
18. For reasons aforesaid, the Appellate Court’s order as also the impugned judgment are set aside. The order of the learned Trial Court 13 stands restored albeit with certain modifications. It is considered appropriate to direct the respondent to pay fine amounting to one and a half (1½) times the amount mentioned in the cheque. Accordingly, the respondent is held liable to pay an amount of Rs.28,50,000/- (Rupees Twenty Eight Lakhs and Fifty Thousand). Further, as has been averred by the respondent in his compliance affidavit that he is 86 years old and living with his wife who is also advanced in age and without issue, the sentence of imprisonment is waived, however, subject to payment, in terms of the present judgment within eight months from today, failing which such sentence of simple imprisonment for one year shall stand revived.
Appeal allowed.
Party
Sri Sujies Benefit Funds Limited …Appellant versus M. Jaganathuan … Respondent – Criminal Appeal No. 3369 Of 2024 [ @ Special Leave Petition (Crl.) No.4022 Of 2022] – 2024 INSC 602 – August 13, 2024.
Sri Sujies Benefit Funds Limited vs. M. Jaganathuan 101932022_2024-08-13
