Production of the account books/cash book not relevant in the criminal case filed under Section 138 of NI Act

Harshit Sharma | Amity Law School, Madhya Pradesh | 8th February 2020

D.K. Chandel V/s. M/S. Wockhardt Ltd. & Anr. CRIMINAL APPEAL NO(S). 132 OF 2020

FACTS OF THE CASE

1. This appeal arises out of judgment and order dated 20.12.2017 passed by the High Court of Punjab and Haryana at Chandigarh in CRA-S-1717-SBA of 2005 in and by which the High Court has set aside the Order of the First Appellate Court and restored the judgment of the Trial Court and thereby convicting the appellant under Section 138 of the Negotiable Instruments Act and sentencing him to undergo imprisonment for six months and also imposing fine of Rs.4,17,148/-.
2. The case is that the appellant-accused purchased the pesticides on credit from the respondent-company and made part payments. Both the appellant and the respondent were maintaining the running accounts. In lieu of payment due and payable to the respondent, the appellant has issued a cheque on 30.04.1999 of Rs.4,17,148/- drawn on State Bank of India at Bathinda (Punjab). When the said cheque was presented for collection the same was returned with the endorsement “insufficient funds”. The intimation of dishonoured of cheque was received by the respondent on 26.05.1999. Since no payment was made and the amount was not forthcoming, the respondent filed a complaint against the appellant under Section 138 of the N.I. Act.
3. The High Court in the impugned judgment held that “the reason given by the lower Appellate Court that he did not bring the cash book or order book etc. could well be understood, if civil suit is tried” but on the contrary the order passed by the lower Appellate Court is in the criminal case filed under Section 138 of the N.I. Act. Insofar as the authorisation in favour of the respondent to file the complaint is concerned, the High Court held that the Resolution of the company dated 22.04.1999 empowered the complainant to file a complaint in all such cases and therefore has no relevant to the date of the cheque i.e. 30.04.1999.

ISSUES RAISED

1. Whether production of account books/cash book is necessary in cases u/s. 138 of the Negotiable Instruments Act 1881 (hereinafter referred as NI Act)? 

RULING OF THE COURT/THE COURT HELD THAT

Upholding the judgment of the Hon’ble High Court and Ld. Trial Court of conviction, the Hon’ble Apex Court have made the following observations: 

1. “As held by the Trial Court as well as by the High Court that the cheque was issued towards the amount due and payable by the appellant for purchase of pesticides. As rightly observed by the High Court production of the account books/cash book may be relevant in the civil court; but may not be so in the criminal case filed under Section 138 of the N. I. Act. This is because of the presumption raised in favour of the holder of the cheque. In view of the concurrent findings recorded by the Trial Court as well as by the High Court we do not see any ground warranting interference with the conviction of the appellant under Section 138 of the N. I. Act.”
2. “So far as the question of sentence is concerned, the cheque was issued by the appellant, for discharge of the debt, way back in the year 1999. Considering the fact that the cheque was issued in the year 1999 and having regard to the other facts and circumstances of the case and in the interest of justice we deem it appropriate to modify the sentence of imprisonment imposed upon the appellant and also the fine amount of Rs.4,17,148/-.”
3. “In the result, the impugned judgment is modified and the appeal is partly allowed to the extent indicated below. For the conviction under Section 138 of the N. I. Act, the appellant is imposed upon only fine amount of Rs.4,17,148/- and the sentence of imprisonment imposed upon the appellant is set aside.”