Cheque Dishonourment Case: Judgment Of Civil Court Is Binding On Criminal Court For Proving Legally Enforceable Debt- Andhra Pradesh HC

The Andhra Pradesh High Court in a cheque dishonourment case has held that the judgment of the Civil Court is binding on the Criminal Court for proving the legally enforceable debt.

The unsuccessful complainant had filed a criminal appeal against the judgment wherein the Magistrate found the respondent/accused not guilty of the offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) and acquitted him under Section 255(1) CrPC.

A Single Bench of Justice A.V. Ravindra Babu observed, “Needless to point out here that the judgment of the Civil Court is binding on the Criminal Court. The learned Magistrate elaborately discussed all these aspects. So, it is quite clear that the claim of the complainant before a competent Senior Civil Judge claiming huge amount of Rs.75,000/- was disbelieved by holding the amount due was only Rs.25,000/-. So, in such circumstances, it is really doubtful as to whether accused could have issued Ex.P-1 for a sum of Rs.75,000/-.”

The Bench said that the important link is missing in the evidence to connect the case with that of a legally enforceable debt pertaining to the chit transaction.

Advocate N. Siva Reddy appeared on behalf of the appellant/complainant while Advocate K. Kanaka Raju appeared on behalf of the respondent/accused.

Factual Background -

The case of the complainant was that the accused joined as a subscriber in one of the Chits conducted by the complainant in a Chit Group for the chit value of Rs. 1,00,000/- payable in 25 monthly instalments at the rate of Rs.4,000/- per month. It was alleged that the accused paid some instalments, participated in auction, and became highest bidder and he agreed to forego a sum of Rs. 36,500/- and received prize money of Rs. 63,500/- from the complainant but did not pay the instalments to the complainant in spite of repeated requests and demands except some instalments. It was further alleged that on the demand of complainant officials, accused issued a cheque for Rs.70,000/- towards part payment of chit due to the complainant.

Complainant presented the aforesaid cheque for encashment but it was dishonoured with an endorsement ‘Exceeds Arrangement’. Hence, he issued a legal notice calling upon the accused to make payment due under the cheque. On receipt of notice, the accused approached the complainant company and requested it not to file a case and took away the dishonoured cheque and issued another cheque assuring the complainant that it will be honoured. Believing the words, complainant presented the said cheque and the same was also dishonoured. The Magistrate on hearing both sides and after considering the oral and documentary evidence on record, found the accused not guilty of the charge for the offence under Section 138 of the NI Act, being aggrieved by which the complainant was before the Court.

The High Court in the above context noted, “Though, there is no dispute about the factum of dishonor of cheque but the complainant has to establish that it was issued towards discharge of a legally enforceable debt. The evidence on record would not at all prove all those aspects. This Appeal is against an order of acquittal. Having gone through the judgment of the trial Court, as above, it cannot be held that the learned III Additional Judicial Magistrate of First Class decided the matter with any unreasonable grounds.”

The Court further said that there are no reasons to interfere with the judgment of the Magistrate and that the complainant miserably failed to prove the offence under Section 138 of the NI Act against the respondent/accused beyond reasonable doubt.

Accordingly, the High Court dismissed the appeal and confirmed the judgment of the Magistrate.

Case Number- CRIMINAL APPEAL No.853 OF 2007

Click here to read/download the Judgment