Crl.A No. 1097 of 2011, against the judgment in ST 516/2007 of Chief Judicial Magistrate, Kottayam

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` THURSDAY, THE 12[TH] DAY OF OCTOBER 2023 / 20TH ASWINA, 1945 ``` ``` CRL.A NO. 1097 OF 2011 ``` ``` AGAINST THE JUDGMENT IN ST 516/2007 OF CHIEF JUDICIAL ``` ## **`MAGISTRATE ,KOTTAYAM`** ## **`Crl.L.P. 515/2011 OF HIGH COURT OF KERALA`** ## **`APPELLANT/COMPLAINANT:`** ``` C.B.SHAJI @ KAINAKARI SHAJI S/O.K.VASU, "SIVA", KARAPPUZHA P.O., KOTTAYAM VILLAGE, KOTTAYAM TALUK. ``` ``` BY ADV SRI.P.C.HARIDAS ``` ## **`RESPONDENTS/ACCUSED:`** ``` 1L.P.PRAKASH, PROPRIETOR KEERTHY GAS, NJALLANADU HOUSE,, KIZHUKKUNNU, COLLECTORATE P.O., KOTTAYAM-2, KOTTAYAM TALUK. 2STATE OF KERALA REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. ``` ``` BY ADV PUBLIC PROSECUTOR SMT SEETHA S ``` ``` THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON 12.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` Crl.A NO. 1097 OF 2011 2 ``` ## **Dated this the 12[th] day of October, 2023** ## **JUDGMENT** The appeal is filed questioning the legality and correctness of the judgment passed by the Court of the Chief Judicial Magistrate, Kottayam, in S.T.No.516/2007, holding the accused in the above case (first respondent in the appeal) not guilty for the offence under Section 138 of the Negotiable Instruments Act (in short, ‘N.I.Act’) and consequently acquitting the accused. The appellant was the complainant and the first respondent was the accused in the above case. For the sake of convenience, the parties are, referred to as per the status before the Trial Court. ## Factual narrative 2. The complaint was filed against the first respondent alleging that he had issued Ext.P1 cheque in favour of the complainant for an amount of Rs.3,00,000/in discharge of a legally enforceable debt. The cheque, ## **`Crl.A NO. 1097 OF 2011 3`** on presentation to the bank for collection, by Ext.P3 memorandum got dishonoured due to ‘insufficiency of funds’ in the accused’s bank account. Despite the complainant issuing Ext.P4 statutory lawyer notice to the accused, he failed to pay the demanded amount. Hence, the accused committed the above offence. 3. The learned Magistrate took cognizance of the offence. The accused pleaded not guilty to the substance of accusation read over to him. In the trial, the complainant and a witness were examined as PWs 1 and 2 and Exts. P1 to P6 were marked in evidence. The accused denied the incriminating circumstances appearing against him in the evidence in the questioning under Section 313 of the Code of Criminal Procedure(in short, ‘Code’). In the defence evidence, the accused examined an independent witness as DW1. ## : Trial Court judgment 4. The learned Magistrate, after analysing the materials on record, found the accused not guilty for the offence. Consequently, the accused was acquitted under ## **`Crl.A NO. 1097 OF 2011 4`** Section 255(1) of the Code. 5. It is assailing the said judgment, the present appeal is filed. 6. Heard; Sri. P.C. Haridas, the learned counsel appearing for the appellant and Smt.S.Seetha, the learned Senior Public Prosecutor appearing for the second respondent. Even though notice was served on the first respondent/accused, there is no appearance for him. 7. The point is whether there is any illegality or error in the judgment passed by the court below. 8. It is very well settled by a host of precedents that this Court should be slow and circumspect in interfering with an order of acquittal. It is only when the conclusions arrived at by the Trial Court are manifestly erroneous and wrong, this Court should take a contrary view. 9. Recently, in **Rupesh Manger (Thapa ) v. State of Sikkim** [MANU/SC/1014/2023], the Honourable Supreme Court has held that the Appellate Court should reverse an order of acquittal only if it is so perverse and ## **`Crl.A NO. 1097 OF 2011 5`** the conclusions are not plausible. Just because another view is possible, on the re-appreciation of evidence, the Appellate Court shall not disturb the findings of acquittal and substitute the findings of the Trial Court to convict the accused. 10. Keeping the above principles in mind, this Court proceeds to decide the appeal. 11. The complainant's case is that, the accused had in discharge of a legally enforceable debt issued Ext.P1 cheque for an amount of Rs.3,00,000/-, which on presentation to the bank, got dishonoured by Ext.P3 memorandum due to insufficiency of funds in the bank account of the accused. Despite issuing Ext.P4 statutory lawyer notice, the accused failed to pay the said amount. Hence, the accused committed the above offence. 12. Indisputably, the accused did not send any reply notice. In Section 313 questioning under the Code, the accused denied all the incriminating circumstances put against him. In the defence evidence, the accused examined an independent witness (DW1) who testified ## **`Crl.A NO. 1097 OF 2011 6`** that Ext.P1 cheque was executed by the accused, but was given to Muraleedharan. It was DW1 who collected the cheque from the accused and handed over to Muraleedharan. However, the complainant misused the cheque and filed the false complaint. Actually, the accused had no transaction with the complainant, and therefore, there was no legally enforceable debt. 13. The learned Magistrate, after analysing the materials on record, particularly taking note of the inconsistencies in the oral testimonies of complainant (PW1) and his nephew (PW2) as regards the date of payment of Rs.3,00,000/- i.e., PW1 testified that the amount was handed over to the accused in February,2005, whereas PW2 deposed that the amount was handed over in August, 2005, concluded that the complainant had failed to establish that Ext.P1 cheque was issued towards a legally enforceable debt. 14.The learned Magistrate relied on the decision of this Court in **Kamalammal v. Mohanan** [2006 (3) KLT 972], wherein this Court had held that the courts cannot ## **`Crl.A NO. 1097 OF 2011 7`** presume that a cheque is issued, executed and drawn by an accused in order to draw the presumption under Section 139 of the N.I.Act, which are matters to be proved by the complainant. 15. A negotiable instrument, which includes a cheque, carries the presumption of consideration under Secs.118(a) and 139 of the N.I Act. It is profitable to extract the said relevant provisions: **“118. Presumptions as to negotiable instruments** – Until the contrary is proved, the following presumptions shall be made;- (a) **of consideration** -that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration; 139. **Presumption in favour of holder** . —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, for the discharge, in whole or in part, of any debt or other liability. 16. A three-Judge Bench of the Hon’ble Supreme Court in **Rangappa vs. Sri.Mohan** [2010 KHC 4325], while dealing with Sec.139 of the N.I Act has ## **`Crl.A NO. 1097 OF 2011 8`** ## conceptualised the doctrine of ‘reverse onus’, by holding ## thus: “ 18. In light of these extracts, we are in agreement with the respondent - claimant that the presumption mandated by S.139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. **However, there can be no doubt that there is an initial presumption which favours the complainant. S.139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments.** While S.138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under S.139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by S.138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. **In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused / defendant cannot be expected to discharge** ## **`Crl.A NO. 1097 OF 2011 9`** **an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under S.139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.** As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his / her own. (emphasis given) 17. Recently, a three-Judge Bench of the Hon’ble Supreme Court in **Kalamani Tex and Anr vs. P. Balasubramanian** [2021 (2) KHC 517] has reiterated the above legal position and doctrine of the reverse onus. It is apposite to extract the relevant paragraphs, which declare the law on the point in the following terms: “14. Adverting to the case in hand, we find on a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. **The Statute mandates that once the signature (s) of an accused on the cheque/negotiable instrument are established, then these ‘reverse onus’** ``` Crl.A NO. 1097 OF 2011 10 ``` **clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystalized by this Court in Rohitbhai Jivanlal Patel v. State of Gujarat (2019 (2) KHC 243).”** (emphasis supplied) 18. Indisputably, the first respondent has admitted the execution of Ext.P1 cheque. He has not sent any reply notice to Ext.P4 statutory lawyer notice or let in defence evidence 19. In the light of the exposition of law in **Rangappa** and **Kalamani Tex,** the reverse onus of proof is cast on the accused under Section 139 of the N.I.Act., once the complainant proves the concomitants constituting the offence under Section 138 of the N.I.Act. 20. In the case on hand, the complainant and his nephew (PWs1 and 2) have testified that an amount of Rs.3,00,000/- was given to the accused, who in discharge of the liability had issued Ext.P1 cheque, which got dishonoured due to insufficiency of funds in the accused’s bank account and he refused to pay the demanded amount, despite receipt of Ext.P4 lawyer notice. On ## **`Crl.A NO. 1097 OF 2011 11`** establishing the said concatenation, the onus of proof had shifted to the accused to set up a probable defence that the prosecution case is false. 21. In **Rangappa’s case** (supra), the Hon'ble Supreme Court held that, if the accused fails to send a reply to the statutory lawyer notice issued by the complainant under Section 138 of the N.I. Act, then an inference has to be drawn in favour of the complainant. 22. In **Kalamani Tex’s case** (supra), the Hon’ble Supreme Court has held that, even if a blank cheque is voluntarily signed and handed over by the accused towards some payment, the statutory presumption under Section 139 of the N.I. Act cannot be obliterated, unless a probable defence is set up. 23. A reading of the oral testimony of DW1 would reveal the accused admitted the execution of Ext.P1 cheque. All that DW1 states in his defence version is that Ext.P1 cheque was executed for the purpose of being handed over to Muraleedharan. There is nothing on record to link Muraleedharan with the complainant and ## **`Crl.A NO. 1097 OF 2011 12`** the accused. It is a sole interested testimony of DW1 that has brought the character of Muraleedharan into the picture. 24. The decision of this Court, was relied on by the learned Magistrate, is no longer good law in view of the categoric declaration by the Hon'ble Supreme Court in **Rangappa** and **Kalamani Tex** (supra), wherein the doctrine of reverse onus of proof has been expounded. 25. In **Rangappa** (supra), the Hon'ble Supreme Court has also held that a mere inconsistency in the materials in the prosecution cannot dispel the statutory presumption under Section 139 of the N.I. Act. 26. Therefore, just because there is an inconsistency in the testimonies of PWs 1 and 2 regarding the months cannot rebut the presumption under Section 139 of the N.I.Act. 27. On a comprehensive re-appreciation of the materials on record and the law on the point, I am of the definite view that the conclusion arrived at by the learned Magistrate that the first respondent/accused has not ## **`Crl.A NO. 1097 OF 2011 13`** committed the offence under Section 138 of N.I. Act is manifestly erroneous and wrong. Therefore, I allow the appeal and set aside the impugned judgment and consequentially, convict and sentence the first respondent/accused for the offence under Section 138 of the N.I. Act. In the result, (i) The impugned judgment is set aside. (ii) The first respondent/accused in S.T.No.516/2007 is convicted for an offence under Section 138 of the N.I. Act. (iii) The first respondent/accused is sentenced to undergo imprisonment for one day (till the rising of the court) and deposit a fine of Rs.3,50,000/- before the Trial Court within sixty days from today, and in default to undergo simple imprisonment for a period of three months. (iv) If the fine amount is realised, the same shall be paid as compensation to the appellant/complainant under Section 357(1) (b) of the Code. ## **`Crl.A NO. 1097 OF 2011 14`** (v) The first respondent/ accused is directed to appear before the learned Magistrate on 14.12.2023 to undergo the sentence and pay the fine amount. (vi) In case of failure of the first respondent/accused to appear before the Trial Court, as ordered above, the learned Magistrate shall execute the sentence and recover the fine amount from the first respondent/accused, if not implement the default sentence. (vii) The execution of the sentence shall stand deferred till 14.12.2023. (viii) The Registry is directed to forthwith forward a copy of this judgment to the Trial court for compliance. **SD/-** **C.S.DIAS, JUDGE** rmm12/10/2023