C. Bhaskaran Nair v. B. Mohanan and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN** **TUESDAY, THE 2ND JUNE 2009 / 12TH JYAISHTA 1931** ## **CRL.A.No. 885 of 2001()** **----------------------CC.402/1997 of CHIEF JUDICIAL MAGISTRATE, KALPETTA** **....................** ## **APPELLANT/COMPLAINANT:** **-----------------------------------------** ## **C. BHASKARAN NAIR, VINDHAVAN, VATTATHUVAYAL, P.O. VADUVANCHAL, VYTHIRI TALUK.** **BY ADV. MR.PHILIP M.VARUGHESE** ## **RESPONDENTS/ACCUSED/STATE:** **-------------------------------------------------** **1. B. MOHANAN, CHEROORTHODI HOUSE, P.O.MEPPADI, MOOPPAINADU, VYTHIRI TALUK.** **2. STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH CORT OF KERALA, ERNAKULAM.** **R2 BY PUBLIC PROSECUTOR SMT.PUSHPALATHA M.K. R1 BY ADV. MR.KALEESWARAM RAJ** **THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 03/04/2009,THE COURT ON 02/06/2009 DELIVERED THE FOLLOWING:** **Rs/** ## **S.S.SATHEESACHANDRAN, J. ------------------------------CRL.A.NO.885 OF 2001 () ----------------------------------Dated this the 2[nd] day of June, 2009** ## **J U D G M E N T** Complainant is the appellant. His complaint against the 1[st] respondent, hereinafter referred to as the 'accused', for the offence punishable under Section 138 of the Negotiable Instruments Act, for short, the 'N.I.Act', after trial, ended in acquittal of the accused. Aggrieved by the judgment of acquittal, questioning its legality, propriety and correctness, he has preferred this appeal. 2. The case of the complainant is that the accused issued Ext.P1 cheque for a sum of Rs.3,50,000/- towards discharge of a loan for the above sum, availed one month earlier, promising its encashment on presentation before the bank in due course. The cheque presented, was however, dishonoured due to insufficiency of funds in the account of the accused. Statutory notice issued intimating the dishonour of the cheque and CRA.885/01 2 demanding the sum covered by the instrument was responded with Ext.P6 reply notice, raising untenable contentions. The complainant thereupon launched prosecution against the accused for the offence punishable under Section 138 of the N.I.Act. 3. The accused, on appearance, pleaded not guilty when the particulars of the offence were made known. Complainant examined himself as PW1 and got marked Exts.P1 to P6 to prove his case. The accused in his reply notice, Ext.P6, had contended that he had no transaction with the complainant but only with his son to whom he had given two cheques as security. He had further contended in the reply that one of the two cheques had been misused by the complainant in collusion with his son to set up a false case against him. During the cross examination of the complainant, examined as PW1, the version presented in the reply notice was set up as the defence of the accused. When questioned under Section 313 of the Cr.P.C., he maintained his innocence. No defence evidence was adduced. CRA.885/01 3 4. The learned Magistrate, after appreciating the materials produced, found the case of the complainant that he had a loan transaction with the accused and Ext.P1 cheque was issued towards discharge of the liability under that loan was not established, and to the contrary, the defence version that Ext.P1 cheque had been given to the son of the complainant as security in respect of a loan transaction with him was more probable. In that view of the matter, the accused was found not guilty and acquitted of the indictment. 5. I heard the counsel of both sides. The learned counsel for the complainant assailed the judgment of acquittal submitting that the learned Magistrate had misappreciated the facts, and evidence tendered in the case. It is the submission of the learned counsel that there was no denial of execution of Ext.P1 cheque by the accused but only a dispute as to having had no loan transaction with the complainant and issuing of Ext.P1 cheque to him towards discharge of a debt or liability. When execution of Ext.P1 cheque was not denied, but only the liability thereunder, and the cheque had been CRA.885/01 4 dishonoured due to insufficiency of funds in the account of the accused, according to the counsel, unless the contrary is proved, the complainant, payee under the cheque, is entitled to bank upon the presumption under Section 139 of the N.I.Act, that the cheque had been issued towards discharge in whole or in part of any debt or other liability of the drawer of that instrument. Complainant, who was examined as PW1, had sworn to his case alleged in complaint, and the accused other than raising a false defence disputing the loan transaction did not let in any counter evidence to rebut the presumption under Section 139 of the N.I.Act, submits the counsel. The learned Magistrate disbelieved the case of the complainant, according to the counsel, for the reason that he had not established by convincing evidence the loan transaction, which was disputed, relating to the issue of Ext.P1 cheque. No burden was cast upon the complainant in the given facts and circumstances of the case to prove the loan transaction, according to the counsel, where the execution of the cheque had been admitted by the accused, of course, with a dispute that the instrument had been given as security to CRA.885/01 5 another. It is for the accused to rebut the presumption under the Statute in favour of the holder of the instrument leading cogent and convincing evidence substantiating the defence canvassed that the cheque had been issued as security, as contended, to another and not handed over to the complainant, submits the counsel. Inviting my attention to the statements of the accused on his questioning under Section 313 of Cr.P.C., drawing his attention to the incriminating circumstances appearing in the prosecution evidence, the learned counsel submitted that other than making a bald assertion that the circumstances presented by the complainant in his evidence were not correct, and that he was innocent, he had not even referred to the defence set up in his reply notice and also when the complainant was subjected to cross examination. The accused did not mount the box to swear in support of his defence, nor produce any material in support of the defence canvassed, submits the counsel. The burden is on the accused to rebut the presumption under Section 139 of the N.I.Act, which was not discharged. In view of the specific plea taken by him that the cheque had been issued to the son of the CRA.885/01 6 complainant in support of a different transaction, as security, according to the counsel, the burden was on him under Section 103 of the Evidence Act to show atleast the defence so canvassed was probable. The accused had miserably failed to discharge that burden cast upon him, is the submission of the counsel. The materials produced by the complainant with the presumption available under the Statute in his favour, in the given facts of the case, according to the counsel, is more than sufficient to establish the guilt of the accused for the offence imputed, and so much so, it is urged that in reversal of the judgment of acquittal, the accused be convicted of the offence under Section 138 of the N.I.Act. On the other hand, the learned counsel appearing for the accused contended that no interference with the judgment of acquittal arises for consideration in the proved facts and circumstances of the case. Relying on **Kumar Exports v. Sharma Carpets (2009 (2) SCC 513)** , the learned counsel for the accused contended that the accused need not examine himself to prove the non existence of consideration or debt or liability as he can do so from the materials tendered by the complainant itself. He CRA.885/01 7 need only bring to the notice of the court such facts and circumstances from the materials tendered by the complainant itself or by letting in evidence of his own so that the court may believe that the defence version set up by him is probable and the presumption under Section 139 of the N.I.Act had been rebutted shifting the burden on the holder of the instrument, the complainant, to prove the transaction and the existing debt or liability under that instrument, to sustain the prosecution under Section 138 of the N.I.Act. Inviting my attention to the evidence of the complainant, PW1, wherein he has admitted that he is a partner in the firm in which his son is the managing partner and the business of the firm is money lending, the learned counsel for the accused submitted that this was a case where better evidence from the complainant was required to prove the transaction alleged with the accused when he had contended that he had no transaction with him but only with his son and the cheque had been issued as security for the money transaction with his son. The execution of the cheque, according to the counsel, has not been admitted, but, on the contrary, disputed when the CRA.885/01 8 accused canvassed a defence that a cheque in blank form with signature alone was given as security, and that too in respect of a transaction to another and not to the complainant. In such a case, the question as to whether any presumption under Section 139 of the N.I.Act is available to the holder of the cheque without proving due execution of the instrument or even otherwise, whether such presumption stood rebutted or not must be determined keeping in view of the entire materials produced in the case. In a case of this nature, it is the submission of the counsel, mounting the witness box by the accused to swear in support of his defence is not the vital factor but analysing of the totality of the proved facts and circumstances brought on record through the materials produced, whether it be by the complainant or the accused. The background facts and conduct of the parties, the circumstances brought out in evidence, all these have to be weighed to consider whether the accused is guilty of the offence imputed or whether the defence pleaded by him is probable to hold that he has to be absolved of the crime. The standard of proof to prove the defence on the part of the CRA.885/01 9 accused is preponderance of probabilities as different from the prosecution which must prove the guilt of the accused beyond the shadow of reasonable doubt. So much so, the conclusion formed by the learned Magistrate after appreciating the materials produced in the case that the defence case is probable and, thus, rendering a judgment of acquittal in favour of him, in the proved facts and circumstances of the case, according to his counsel, deserves to be upheld, and the appeal deserves only a dismissal. 6. I have perused the records of the case giving consideration to the submissions of the counsel. First of all, it is to be noted that the case of the complainant is that a sum of Rs.3,50,000/- was advanced to the accused for one month without any security and after the period was over, when he demanded the money, Ext.P1 cheque for the sum was issued. The loan transaction, according to the complainant, took place on 10.6.1997 and later on demand, the cheque was handed over on 10.7.1997, exactly one month later. The allegation in the complaint and also the evidence of the CRA.885/01 10 complainant as PW1 would show that the loan was availed agreeing to repay the amount within one month. The case of the complainant on the loan transaction is accepted, then, it goes without saying that the accused did not repay the amount within the agreed period of one month, but, immediately on expiry of that period, on demand, he issued Ext.P1 cheque for the sum. Naturally, the veracity of the loan transaction and issue of Ext.P1 cheque in discharge of the liability under that loan as alleged by the complainant has to be examined with reference to the materials tendered by him in his case, when the transaction is disputed and handing over of the cheque in discharge of the loan is impeached contending that the accused had issued the cheque as security not to him but to his son in respect of a different transaction. Admittedly, as borne out by the evidence of the complainant, he is a partner of a financing firm, namely, “Vrindavan Financiers”, wherein his son, Saseendran, is the managing partner. The evidence of the complainant would show that “Vrindavan Financiers” is a registered firm under the Kerala Money Lender's Act, and it had been issued a licence for carrying out money lending CRA.885/01 11 business. On the date when the complainant was examined as PW1, as evidenced from his testimony, his son was also present in the court. It was further shown that his son had already filed another cheque case, presumably, for the offence under Section 138 of the N.I.Act against the accused. The definite case set up by the accused is that he had a loan transaction with the financing concern of the son of the complainant and two cheques had been collected from him as security for the loan and one of the cheques had been used for filing the present complaint. The complainant, who is a partner in a financing concern, which had been issued a licence under the Money Lenders Act to do money lending business, if his version is to be believed, advanced a loan of Rs.3,50,000/- to the accused without getting any security from him. A loan transaction beyond the sum of Rs.20,000/otherwise than by cheque or draft, it has to be noted, is interdicted under Sections 269SS of the Income tax Act, which had come into force from 1.4.1984, and any infraction thereof liable to be penalised under Section 217 (d) of the above Act. In that context, it has to be again noted that CRA.885/01 12 complainant is not a layman but a partner of a financing concern operating its business after obtaining licence under the Money Lenders Act. Whether the complainant, a partner of the firm doing money lending business, can carry such lending business independently otherwise than through the firm after licence had been obtained in the name of the firm also deserves to be taken note of. When the complainant had been questioned with respect to his interest in the financing concern and also the loan transaction alleged by him for the issue of Ext.P1 cheque, it is noticed he would advance a case that the entire loan was paid in cash, that is, Rs.3,50,000/and he had such cash in hand as collected from the agricultural income by sale of coffee, pepper etc. How far the case set up by the complainant on the loan transaction alleged is credible has to be tested in the background of his statements in evidence that his son, the managing partner of the firm would not disclose to him the disbursement of the funds of the concern and only when he informed his son that the accused had not refunded the sum availed as loan, his son told him that the firm had also given loan, which too was not CRA.885/01 13 repaid. To a specific question whether both the father and son had presented the cheques on the same date before the bank, the complainant pleaded ignorance. To another specific question whether his son had already issued an advocate notice to the accused on the date of the alleged advancement of the loan of Rs.3,50,000/-, his answer is most eloquent that he was not then aware of the issue of the notice. When the evidence of the complainant as pointed out above cause serious doubts on the veracity of his case relating to the loan transaction alleged and also make probable the defence canvassed by the accused that he had money transaction only with the son of the complainant and in that transaction, he had handed over two cheques as security, the question emerges for consideration whether the presumption under Section 139 of the N.I.Act stood rebutted. It is seen that in Ext.P6 reply notice, the accused has not specifically contended that the cheques had been issued in blank form, but, only that two cheques had been given to the son of the complainant in respect of a loan transaction with him when he disputed of having any transaction with the complainant and handing him CRA.885/01 14 any cheque. The cheques were issued in blank form was canvassed only when complainant was examined as PW1. But that does not assume much significance where the transaction with the complainant itself was denied setting up an alternate case that the transaction was with his son and the cheques were given as security. Even to bank upon the presumption under Section 139 of the N.I.Act in favour of the complainant, in the light of the denial of the transaction and also handing over of the cheque to him by the accused, due execution of Ext.P1 cheque must be proved to shift the burden on the accused to prove his defence that the instrument was not supported by consideration and it had not been issued towards discharge of a debt or liability. The conclusion formed by the learned Magistrate after meticulous and careful scrutiny of the materials tendered in the case, that on the available evidence, it cannot be found that the accused had issued Ext.P1 cheque for a legally enforceable liability to the complainant, cannot at all be found fault with. The order of acquittal rendered in favour of the accused, absolving him of the offence under Section 138 of the N.I.Act, on the facts and CRA.885/01 15 circumstances of the case, is found to be proper and correct. 7. The learned counsel for the complainant has relied on **Vijayee Singh and others v. State of U.P. (AIR 1990 SC 1459)** that the burden is on the accused when he pleads of an exception. Reliance was also placed on Section 103 of the Evidence Act to contend that the accused, who disputed the transaction with the complainant, but, without denying the execution of Ext.P1 cheque was bound to place cogent and convincing materials to rebut the presumption under Section 139 of the N.I.Act in favour of the complainant that the cheque had been issued towards discharge of a debt or liability. The decision relied by the counsel, placing support on Section 103 of the Evidence Act, on the premise that there was no denial of execution of Ext.P1 cheque but only a denial of transaction with the complainant is found to be not worthy of any merit. The accused has denied the transaction with the complainant and also disputed the execution of Ext.P1 cheque, contending that the instrument had been given in blank form with signature alone as security for a loan availed from a financing CRA.885/01 16 company, managed by the son of the complainant. Even the presumption under Section 139 of the N.I.Act would arise only where due execution of the cheque is established. When execution is denied, the burden is on the complainant to prove that the instrument was duly executed by the maker. Presumptions covered by Section 118 and 139 of the N.I.Act can be canvassed only where the execution of the instrument is either proved or admitted. Such presumptions, of course, are rebuttable and it can survive if only the contrary is not proved by the accused that the cheque was not issued for consideration or for discharge of any debt or liability. A presumption is not in itself evidence, but it only enables the party, in whose favour it exists, to show that he has a prima facie case. There is absolutely no merit in the case of the complainant that in the given facts of the case, the burden was on the accused to show that there was no transaction with the complainant and the cheque was not duly executed by him. It is trite law that the accused can remain silent through out the trial, but that will not relieve the prosecution from proving its case. Onus is always on the prosecution to prove its case, and CRA.885/01 17 it never shifts. Accused has a constitutional right to remain silent. To rebut his statutory presumption or even to discharge a burden of proof placed upon him under law, he need not examine himself. He can do so on the available materials in the case. In this context, it is appropriate to take note of the observations made by the apex court in **Kumar exports v. Sharma Carpets ((2009) 2 SCC 513)** , which reads thus: “To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstance so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions CRA.885/01 18 arising under Sections 118 and 139 of the Act. The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant, and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue.” 8. Before concluding, it may be proper and necessary to point out that the amendment brought in the N.I.Act, penalising the dishonour of cheques, to give more sanctity to commercial transactions involving cheques have given way, rather leverage to unscrupulous money lenders to squeeze their debtors through the instrumentality of the court by resorting to prosecution against such debtors on dishonoured cheques which are very often collected in blank form with CRA.885/01 19 signature alone as security. True, the maker of the instrument, who signs such a instrument in blank form, invites the risk of prosecution and sometimes penal consequences, on inflated claims later incorporated in the instrument without his knowledge and consent. He has taken such risk while signing the instrument in blank form is only a lame excuse and that will not relieve the court the instrumentality of Justice from examining the genuineness of the transaction covered by the instrument. A court is expected to examine whether the transaction covered by the cheque is genuine and bona fide. In a case where the materials produced disclose of suspicious circumstances surrounding the transaction unless satisfactory explanation removing such suspicion is tendered by the holder of the instrument no conviction is legally permissible solely banking upon the statutory presumptions. A demand for a pound of flesh by a 'Shylock' through the aid of the court demand strict scrutiny and a conviction against the person proceeded against at his instance on a dishonoured cheque, most often collected as a security in blank form with signature alone, is permissible only if it is shown that the transaction CRA.885/01 20 relating to the instrument is genuine and bona fide. Appeal is found to be devoid of any merit, and, it is dismissed. **S.S.SATHEESACHANDRAN JUDGE** prp ## **S.S.SATHEESACHANDRAN, J.** **--------------------------------------------------------** **CRL.A.NO.885 OF 2001 ()** **---------------------------------------------------------** **J U D G M E N T** **---------------------------------------------------------** **2[nd] June, 2009**