Biju K. Babu v. SREENARAYANA TRADERS AND FINANCIERS LTD. and STATE OF KERALA

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.ANIL KUMAR** **THURSDAY, THE 26TH DAY OF NOVEMBER 2020/ 5TH AGRAHAYANA, 1942** ## **Crl.Rev.Pet.No.1494 OF 2009** **AGAINST THE JUDGMENT IN CRA 429/2006 DATED 08-04-2009 OF ADDITIONAL SESSIONS COURT (ADHOC) FAST TRACK-II, PATHANAMTHITTA** **ST 474/2003 DATED 26-10-2006 OF CHIEF JUDICIAL MAGISTRATE COURT, PATHANAMTHITTA** ## **REVISION PETITIONER/APPELLANT/ACCUSED:** **BIJU K.BABU, KOZHIKKUNNATHU HOUSE, MALAYALAPUZHA, THAZHAM P.O., PATHANAMTHITTA.** **BY ADV. SRI.M.T. SURESHKUMAR** ## **RESPONDENTS/RESPONDENTS/COMPLAINANT:** - **1 M/S.SREENARAYANA TRADERS AND FINANCIERS LTD., THAVALATHIL BUILDINGS, PATHANAMTHITTA, REP.BY ITS MANAGING DIRECTOR M.K.DIVAKARAN, MINI SADANAM,KANNAMKARA, PATHANAMTHITTA, MANAGING DIRECTOR IS REP.BY ITS POWER OF ATTORNEY HOLDER, M.K.VARADARAJAN, (MANAGER, SREE NARAYANA TRADERS AND FINANCIERS LTD.)** - **2 STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.** **R1 BY ADV. SRI.K.MONI R1 BY ADV. SRI.C.S.MANILAL R2 BY SENIOR PUBLIC PROSECUTOR SRI.M.S.BREEZ** **THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 24-11-2020, THE COURT ON 26-11-2020 PASSED THE FOLLOWING:** Crl.R.P.No.1494 of 2009 **==> picture [22 x 8] intentionally omitted <==** ## **ORDER** This criminal revision petition is directed against the judgment dated 08.04.2009 rendered by the Additional Sessions Court (Ad hoc) Fast Track-II, Pathanamthitta in Crl.Appeal No.429/2006, whereby the learned Additional Sessions Judge dismissed the appeal, confirming the conviction and sentence under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the N.I.Act') rendered by the trial court against the accused to undergo simple imprisonment for a period of six months and also to pay a compensation of Rs.7,68,750/- to the complainant under Section 357(3) of the Cr.P.C. 2. The revision petitioner was the accused in S.T.No.474/2003 on the file of the Chief Judicial Magistrate Court, Pathanamthitta and the appellant in Crl.Appeal No.429/2006 on the file of the Additional Crl.R.P.No.1494 of 2009 ..3.. Sessions Court, (Ad hoc), Fast Track-II, Pathanamthitta. The 1[st] respondent filed a complaint before the trial court alleging commission of the offence punishable under Section 138 read with Section 142 of the N.I.Act against the accused. Upon consideration of the complaint, the learned Magistrate is _prima facie_ satisfied that the case is made out against the accused. Hence, the learned Magistrate took cognizance of the offence under Section 138 read with Section 142 of the N.I.Act and the case was taken on file as S.T.No.474/2003. Parties are hereinafter referred to as the 'complainant' and 'accused' according to their status in the court below unless otherwise stated. 3. It is the case of the complainant that the accused approached the complainant company and asked for an amount of Rs.7,50,000/- as loan. Accepting the request of the accused, the complainant had issued a cash cheque for the said amount and the accused had accepted Crl.R.P.No.1494 of 2009 **==> picture [22 x 8] intentionally omitted <==** the amount by encashing the cheque dated 05.07.2003. For discharging the above said liability including the interest, the accused had issued a cheque drawn on SBT, Malayalapuzha Branch for Rs.7,68,750/- dated 23.8.2003. The complainant presented the cheque for encashment through the Indian Bank, Pathanamthitta Branch, but, the cheque was dishonoured for the reason 'insufficient funds'. Statutory notice was issued on 16.9.2003 to the accused calling upon him to pay the amount. The accused received the notice. However, he had neither sent a reply nor paid the amount covered under the cheque. Hence, the complaint. 4. On service of summons, the accused appeared before the trial court. Particulars of the offence were read over and explained to the accused, to which the accused pleaded not guilty. Thereafter, PWs.1 and 2 were examined and marked Exts.P1 to P14 on prosecution side. Crl.R.P.No.1494 of 2009 **==> picture [22 x 8] intentionally omitted <==** After PWs.1 and 2 had been examined, the accused was questioned under Section 313(1)(b) of the Code of Criminal Procedure for the purpose of enabling him to explain any circumstance appearing in the evidence against him. He denied all the incriminating circumstances. No oral evidence was adduced from the side of the defence. However Exts.D1 to D6 were marked on the side of the defence. 5. On appreciation of the evidence, the learned Magistrate held that the execution of the cheque was proved by the complainant and that the cheque was dishonoured for the reason insufficient funds. The complainant issued statutory notice calling upon the accused to pay the amount within fifteen days from the date of receipt of the statutory notice. It has come out in evidence that the accused failed to pay the amount covered under the cheque within fifteen days from the Crl.R.P.No.1494 of 2009 **==> picture [22 x 8] intentionally omitted <==** date of receipt of the statutory notice. All other statutory formalities have been complied with. Hence, the learned Magistrate concluded that the cheque was issued by the accused for the discharge of debt or liability. 6. Heard Sri.M.T.Suresh Kumar, the learned counsel for the revision petitioner, Sri.C.S.Manilal, the learned counsel for the 1[st] respondent and Sri.M.S.Breez, the learned Senior Public Prosecutor for the 2[nd] respondent-State. 7. In order to determine the question whether the offence punishable under Section 138 of the N.I.Act is made out against the accused, it is necessary to examine the penal provision of Section 138 of the N.I.Act and the presumptions to be raised as envisaged by the provisions of Sections 118 and 139 of the N.I.Act. Section 118 of the N.I.Act provides certain presumptions to be raised laying down some special rules of evidence relating to Crl.R.P.No.1494 of 2009 **==> picture [22 x 8] intentionally omitted <==** presumptions. The presumption, therefore, is a matter of principle to infuse credibility to negotiable instruments including cheque and to encourage and promote the use of negotiable instruments in financial transactions. Section 118 of the N.I.Act provides presumptions to be raised until the contrary is proved, (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of indorsements, (vi) as to appropriate stamp, and (vii) as to holder being a holder in due course. That apart, Section 139 of the N.I.Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 of the N.I.Act for the discharge, in whole or in part, of any debt or other liability. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the N.I.Act, it becomes evident Crl.R.P.No.1494 of 2009 ..8.. that in a trial under Section 138 of the N.I.Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. Needless to say that as and when the complainant discharges the burden to prove that the cheque was executed by the accused, the rules of presumptions under Sections 118 and 139 of the N.I.Act are very much available to the complainant and the burden shifts on the accused. However, this presumption is rebuttable. Under the circumstances, it is the duty of the accused before the court by adducing evidence to show that the cheque was not supported by consideration and that there was no debt or liability to be discharged as alleged. It is necessary on the part of the accused to set up a probable defence for getting the burden of proof Crl.R.P.No.1494 of 2009 **==> picture [22 x 8] intentionally omitted <==** shifted to the complainant. Once such rebuttable evidence is adduced and accepted by the court, the burden shifts back to the complainant. 8. In this case, in order to prove the case of the complainant, PWs.1 and 2 were examined. PW1 is the power of attorney holder of the complainant company. Ext.P1 is the power of attorney in which PW1 had been authorised to represent the Managing Director of the complainant company. Ext.P2 is the copy of the resolution of the Director Board of the complainant authorizing the Managing Director to appoint the Power of Attorney for prosecuting the case. PW1 availed a loan of Rs.7,50,000/and the amount was given to the accused drawn through the Indian Bank, Pathanamthitta Branch. Ext.P3 is the voucher signed by the accused at the time of availing loan amount of Rs.7,50,000/-. Consequently, the accused issued Ext.P4 cheque dated 23.8.2003 to the complainant Crl.R.P.No.1494 of 2009 **==> picture [28 x 8] intentionally omitted <==** towards the amount with interest for a period of 1½ months. Ext.P4 was for an amount of Rs.7,68,750/- which on presentation through the Indian Bank, Pathanamthitta was dishonoured as per Exts.P5 and P6 for the reason 'insufficient funds'. The complainant issued statutory notice on 16.9.2003 by Ext.P7. The accused accepted the notice on 18.9.2003 as per Ext.P9 postal acknowledgment card. Since the accused did not pay the amount covered under the cheque, the prosecution was initiated. 9. PW2 is the Manager of the Indian Bank, Pathanamthitta Branch. He stated before court that as per Ext.P14 copy of the ledger, the accused received an amount of Rs.7,50,000/- as per Ext.P13 cheque issued by the complainant. 10. It is contended that PW1 is not competent to prosecute the case on the strength of Ext.P1 power of attorney. It is further contended that PW1 had no direct Crl.R.P.No.1494 of 2009 **==> picture [28 x 8] intentionally omitted <==** knowledge of the monetary transaction between the accused and the complainant. According to the learned counsel for the revision petitioner, Ext.P4 cheque was not supported by consideration and the same was not issued for a legally enforceable debt. 11. It is clear from Ext.P2 that the Managing Director was authorised to appoint a power of attorney for legal proceedings. Hence, Ext.P1 power of attorney executed by the Managing Director of the company in favour of PW1 is valid. Ext.P10 memorandum of association of the company and Ext.P11 certified copy of the articles of association also supported the version of PW1. Ext.D3 is the copy of the annual report in the year 2003-2004. Ext.D4 is the certified copy of the cheque involved in C.C.No.222/2003 and Ext.D5 is the certified copy of the cheque involved in C.C.No.360/2003 respectively. It is contended that the brother of the Crl.R.P.No.1494 of 2009 **==> picture [28 x 8] intentionally omitted <==** accused Manoj.K.Babu availed a loan from the complainant company for which the accused issued a signed blank cheque in favour of the complainant. The main contention of the accused is that Ext.D3 does not indicate that such a huge amount was credited in the account of the complainant during the financial year 200304. Based on the above, it is contended that, the blank cheque issued as security for the debt due to the complainant from the brother of the accused Manoj K.Babu, was utilised by the complainant to file this frivolous case against the accused. Relying on **Saraswath** **Films & Ors. v. A.V.Mithra Devi alias Mithra.R.Rao [2007 (1) KHC 796]** , the learned counsel for the revision petitioner contended that any statement, intimation or notice recorded or noted in the Register of Firms has to be taken to be conclusive proof as against any person who has signed it. The sum and substance of Crl.R.P.No.1494 of 2009 **==> picture [28 x 8] intentionally omitted <==** the contention is that the annual report of the year 200304 does not indicate the amount covered under the cheque and it cannot be acted upon. 12. The facts and circumstances in this case are entirely different. The accused received the amount from the complainant by way of a cheque. PW2 adduced evidence to show that the accused encashed the cheque and received the consideration thereon. The fact that the accused received the amount from the complainant by way of cheque is proved. No explanation was offered as to how the accused received such a huge amount from the complainant by way of cheuqe and encashed the same. Merely because Ext.D3 copy of the annual report in the year 2003-04 does not contain the amount covered under Ext.P4 cheque, the same itself is not a ground to rebut the presumptions contemplated under Sections 118 and 139 of the N.I.Act. In case any manipulation is done in the Crl.R.P.No.1494 of 2009 **==> picture [28 x 8] intentionally omitted <==** accounts maintained by the complainant, it is for the appropriate authorities to take action in accordance with law. Manipulation of accounts, if any, by the complainant is not a ground to escape from the criminal liability under Section 138 of the N.I.Act. Separate mechanism is provided under various fiscal statutes to initiate appropriate action against the complainant in accordance with law. It is for the Statutory Authorities to set the law in motion in this regard. The said defence is not available to the accused in a proceeding under Section 138 of the N.I.Act. 13. It is well settled law that when concurrent findings of facts rendered by the trial court and the appellate court are sought to be set aside in revision, the High Court does not, in the absence of perversity, upset factual findings arrived at by the two courts below. It is not for the revisional court to re-analyse and reinterpret Crl.R.P.No.1494 of 2009 **==> picture [28 x 8] intentionally omitted <==** the evidence on record in a case, where the trial court has come to a probable conclusion. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the N.I.Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that the cheque had been lost irrecoverably or stolen. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability. 14. The learned counsel for the revision petitioner contended that issuance of a blank signed cheque would not amount to issuance of cheque and the issuance of a blank cheque can only be treated as a cheque leaf. In **Bir Singh** v. **Mukesh Kumar** [(2019) 4 SCC 197], the Crl.R.P.No.1494 of 2009 ..16.. Supreme Court held that in view of Section 139 of the NI Act read with Section 118 of the NI Act thereof, the Court has to presume that the cheque has been issued for discharging a debt or liability. Paragraphs 39 and 40 of the above case are relevant in this context and the same is extracted below for convenience of reference:- _“39. It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondentaccused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative._ _40. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”_ Crl.R.P.No.1494 of 2009 ..17.. 15. In view of the above, both the trial court and the appellate court rightly held that the burden was on the accused to disprove the initial presumption under Sections 118 and 139 of the N.I.Act. The burden is not discharged rightly. The complaint was filed before the trial court in the year 2003. The complainant has been prosecuting this case for the last 17 years. 16. Coming to the question of sentence, Ext.P4 cheque was executed as early as on 23.8.2003. The accused has been conducting this criminal case for the last 17 years. In **Kaushalya Devi Massand** v. **Roopkishore Khore** [2011 KHC 281], the Apex Court held that jail sentence is not mandatory in an offence under Section 138 of the N.I.Act. Considering the facts and circumstances, it is just and proper to modify the sentence awarded by the two courts below by sustaining the conviction imposed. Crl.R.P.No.1494 of 2009 ..18.. 17. In the result, the criminal revision petition is partly allowed. The conviction against the accused under Section 138 of the N.I.Act is confirmed. The sentence is modified as follows:- The accused is sentenced to pay a fine of Rs.7,68,750/- (Rupees Seven lakh sixty eight thousand seven hundred and fifty only) and in default of payment of fine to undergo simple imprisonment for a period of six months. In view of the situation prevailing in the country due to Covid-19 pandemic, the accused is given six months time from today to pay the fine amount. In case the fine amount is deposited by the accused before the trial court as ordered, the same shall be disbursed to the complainant as compensation in accordance with rules. In the event of failure to pay the fine amount, the trial court shall execute the sentence in accordance with law. Crl.R.P.No.1494 of 2009 **==> picture [28 x 8] intentionally omitted <==** Registry is directed to send back the records to the trial court for execution of sentence. Sd/- **N.ANIL KUMAR, JUDGE** skj