Section 138 NI Act | Judgment Of Civil Court Is Binding On Criminal Court To Prove Legally Enforceable Debt: Andhra Pradesh High Court

The Andhra Pradesh High Court has upheld the acquittal of an accused under Section 138 Negotiable Instrument Act criminal case since the civil court had adjudicated that only Rs. 25,000/- was due but the cheque dishonored was of Rs. 75,000/-. As a consequence, important link was missing in evidence to connect the cheque amount of Rs. 75,000/- with that of legally enforceable debt pertaining to chit transaction.

The case of the complainant was that accused joined as a subscriber in one of the Chits conducted by complainant for the chit value of Rs. 1 lakh. It was alleged that accused did not pay instalments after receiving prize money in the auction. Subsequently, on several demands, the accused issued a cheque for Rs. 70,000/- towards part payment of chit due to complainant but it was dishonored as ‘Exceeds Arrangement’.

It was further alleged that after the Complainant issued the legal notice, the accused requested that the criminal case be not filed and issued another cheque of Rs. 75,000/- but that also got dishonored with the same endorsement. The Complainant sent the legal notice again but the accused failed to pay the due amount. As a consequence, the complaint under Section 138 of Negotiable Instrument Act was filed.

The Magistrate found the accused not guilty of offence under Section 138 of NI Act. The unsuccessful complainant filed the appeal challenging the judgment.

Before the appellate court, the Counsel for Appellant/Complainant N Siva Reddy contended that the Magistrate erroneously held that there was no legally enforceable debt. However, the Counsel for respondent/accused K Kanaka Raju submitted that the complainant did not file account copy before the trial Court to show the amount due by the accused and moreover, the suit filed by the complainant before the Civil Court was adjudicated by holding that the amount due was only Rs. 25,000/- and if that be the case, issuance of cheque for Rs. 75,000/- was highly doubtful.

Perusing the material on record, Justice AV Ravindra Babu observed that when the complainant filed a suit seeking a huge amount, only an amount of Rs. 25,000/- was held to be due by the accused to the complainant’s company. There was no favorable order in civil appeal as well.

The court pointed out that that the judgment of Civil Court was binding on the Criminal Court and the complainant could not establish that the cheque was issued towards discharge of a legally enforceable debt.

In the result the Criminal Appeal was dismissed.

Case Title: M/s. Kakinada Chit Funds (P) Ltd v. Sri Chukkala Satyanarayana & Anr.

Counsel for Appellant/Complainant: N Siva Reddy

Counsel for respondent/accused: K Kanaka Raju

Click Here To Read/Download Judgment