Kerala Malanad Karshaka Produce Co-operative Marketing Society Ltd v Jelly Sebastian & Vazhakattu Enterprises & State of Kerala

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE P.G. AJITHKUMAR** **THURSDAY, THE 23[RD] DAY OF NOVEMBER 2023/2ND AGRAHAYANA, 1945** **CRL.APPEAL NO. 1284 OF 2019** **AGAINST THE JUDGMENT DATED 28.01.2019 IN ST 659/2016 OF JUDICIAL MAGISTRATE OF FIRST CLASS -II, THAMARASSERY (Crl.L.P. 190/2019 OF HIGH COURT OF KERALA)** ## **APPELLANT/COMPLAINANT:** **KERALA MALANAD KARSHAKA PRODUCE CO-OPERATIVE MARKETING SOCIETY LTD NO.F 1777, THIRUVAMBADY.P.O., KOZHIKODE-673603, REPRESENTED BY ITS SECRETARY, PRASANTH KUMAR P.N.** **BY ADVS. T.R.HARIKUMAR SRI.ADITHYA RAJEEV** ## **RESPONDENTS/ACCUSED & STATE:** - **1 JELLY SEBASTIAN, S/O.SEBASTIAN, PROPRIETOR, VAZHAKATTU ENTERPRISES, THIRUVAMBADY POST, KOZHIKODE DISTRICT, PIN-673603.** - **2 VAZHAKATTU ENTERPRISES, CHURCH ROAD, THIRUVAMBADY POST, KOZHIKODE DISTRICT, PIN-673603.** - **3 STATE OF KERALA,** - **REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, KOCHI-682031.** ## **R3 BY SMT.SEENA C., PUBLIC PROSECUTOR** **THIS CRIMINAL APPEAL HAVING COME UP FOR FINAL HEARING ON 23.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** 2 Crl.Appeal No.1284 of 2019 ## **P.G. AJITHKUMAR, J.** **-----------------------------------------------------------** **Crl.Appeal No.1284 of 2019** **----------------------------------------------------------Dated this the 23[rd] day of November, 2023** ## **JUDGMENT** This is an appeal filed under Section 378(4) of the Code of Criminal Procedure, 1973 (Code). The appellant-Society, who is the complainant in S.T.No.659 of 2016, assails the judgment acquitting respondents 1 and 2. The offence alleged is one punishable under Section 138 of the Negotiable Instruments Act, 1881 (N.I.Act). 2. Heard the learned counsel for the petitioner and the learned Public Prosecutor. Despite service of notice, respondents No.1 and 2 did not choose to appear before this Court. 3. The case of the appellant is that the 2[nd] respondent, a proprietary concern run by the 1[st] respondent, availed a loan from the appellant and in order to make payment of the amount outstanding in that account, Ext.P2 cheque dated 18.06.2016 for an amount of Rs.2,17,751/- was 3 Crl.Appeal No.1284 of 2019 issued by the 1[st] respondent. The said cheque was presented for encashment, but it was returned for insufficiency of funds in the account of the 1[st] respondent. A notice demanding payment of the amount due under the cheque was issued, but respondents 1 and 2 did not make the payment. 4. Before the court below, respondents 1 and 2 appeared and denied the accusation. So the appellant examined PWs.1 and 2 and produced Exts.P1 to P14. Respondents 1 and 2 were examined under Section 313(1)(b) of the Code. Ext.D1 was brought on record by respondents 1 and 2, which is a notice issued by the petitioner to the 1[st] respondent. The court below, after considering the said evidence, held that execution of the cheque was not duly proved and that there is discrepancy in evidence regarding the loan transaction. It was found that statutory requirements for initiation of a prosecution under Section 138 of the N.I.Act were complied with. In the light of the finding that execution of the cheque was not duly proved and the discrepancy in the evidence with respect to the loan transaction, especially 4 Crl.Appeal No.1284 of 2019 concerning the date of sanctioning of the loan, the court below proceeded to acquit respondents No.1 and 2. The court below placed reliance on **Divakaran v. State of Kerala [2016 (4) KLT 233]** in order to find that the admission of signature in the cheque by the 1[st] respondent by itself is not enough to prove its execution and also that the lack of mentioning of all necessary details regarding execution of the cheque and the transaction in question in the complaint are fatal to the prosecution case. 5. The learned counsel for the appellant would submit that the finding of the court below concerning lack of proof for execution of the cheque, in the light of law laid down in **Divakaran [2016 (4) KLT 233]** is incorrect. It is submitted that the version of PW1 in court that the 1[st] respondent came with the cheque with all the columns filled in and he signed it before PW1 is sufficient to prove the execution of the cheque. Similarly, it is contended that the plea regarding lack of pleadings with respect to the execution of the cheque and the transaction in question are untenable, for necessary details are stated in the complaint. 5 Crl.Appeal No.1284 of 2019 6. It is true that if it is a case where the plea of the complainant is that a blank cheque with signature alone was issued and nothing more about authorisation is established, there cannot be a finding that a cheque in discharge of a debt or a legally enforceable liability was issued. In that case the prosecution must prove passing of consideration. 7. In **Divakaran [2016 (4) KLT 233]** , the principle laid down is that once it is proved by evidence that the cheque was issued in blank, the complainant is cast the burden to prove its due execution and also that it is supported by consideration. Whereas, if the evidence shows that the cheque was voluntarily issued even though it was a signed blank one with authorisation to fill in, that is enough to draw a presumption under Section 139 of the N.I.Act. ## 8. In paragraph No.18, the court below observed that,- “18. xx xx A careful reading of the proof affidavit of PW1 will clearly go to show that the complainant has no case that Ext.P2 cheque was executed in front of him. In proof affidavit the case of the complainant is that the accused came with Ext.P2 cheque and the column in Ext.P2 cheque were already filled up and the accused signed in his presence.” 6 Crl.Appeal No.1284 of 2019 When the court below believed the said version of PW1, which is to the effect that the cheque was filled in all other respects while the petitioner signed it in front of PW1. If so, the issuance of the cheque is not in blank form, but a cheque filled in every respect. Therefore, the proposition of law laid down in **Divakaran [2016 (4) KLT 233]** will not fail the prosecution. 9. In **Bir Singh v. Mukesh Kumar [(2019) 4 SCC 197]** the Apex Court considered the situation where a presumption under Section 139 of the N.I.Act is available. It was considered if the cheque was issued with signature alone voluntarily by the drawer, there would be a presumption in favour of the payee. The Apex Court held,- “37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, S.20, S.87 and S.139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly 7 Crl.Appeal No.1284 of 2019 signed by the drawer. If the cheque is otherwise valid, the penal provisions of S.138 would be attracted. 38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.” 10. From the evidence of PW1 and also from the contentions of respondents No.1 and 2, it is evident that Ext.P2 cheque was issued voluntarily. The evidence of PW1 that the 1[st] respondent brought a filled in cheque and ascribed his signature in front of him is sufficient to prove its due execution. In such circumstances, the finding of the court below that the cheque was issued in blank and in the absence of sufficient pleadings with respect to the execution of the cheque as well as the transaction underlying the cheque in the complaint, the prosecution cannot succeed, is incorrect. The said findings are liable to be reversed. 11. The discrepancy pointed out by the court below is that while the complainant asserted that the 1[st] respondent obtained loan on 25.06.2015, the order sanctioning the loan, 8 Crl.Appeal No.1284 of 2019 Ext.P3, would show that the date of sanction was 26.06.2015. Certainly, the same is a discrepancy. But when availing of the loan by respondents 1 and 2 from the appellant, which is a Co-operative Society, is otherwise proved the said discrepancy, cannot be a reason to reject the case of the appellant altogether. Once the loan transaction is proved and execution and issuance of Ext.P2 cheque is also proved, the said inconsistency is insufficient either to find that the presumption available under Section 139 of the N.I.Act is rebutted or that Ext.P2 is no supported by consideration. Therefore, the said finding is also unsustainable. 12. In the above circumstances, the judgment of acquittal dated 28.01.2019 by the court below in S.T.No.659 of 2016 is liable to be set aside. Accordingly, respondents 1 and 2 are found guilty of the offence punishable under Section 138 of the N.I.Act and are convicted. Since the 1[st] respondent, who is the proprietor of the 2[nd] respondent-proprietary concern, sentencing of the 1[st] respondent alone is sufficient. Hence, the 1[st] respondent is sentenced to pay a fine of 9 Crl.Appeal No.1284 of 2019 Rs.2,50,000/- (Rupees two lakhs fifty thousand only). In the event of realisation of the fine amount, the same shall be paid to the appellant as compensation. Sd/- **P.G. AJITHKUMAR, JUDGE** dkr