M/S. BUSINESS CHITTY FUND (ASRAMAM) PVT LTD v STATE OF KERALA & JOHN POULOSE

IN THE HIGH COURT OF KERALA AT ERNAKULAM THE HONOURABLE MR. JUSTICE V.K.MOHANAN WEDNESDAY, THE 29TH OCTOBER 2008 / 7TH KARTHIKA 1930 ## **CRL.A.No. 199 of 2003** (CC.235/1998 of JUDL.MAGISTRATE OF FIRST CLASS-I, KOLLAM) .................... APPELLANT/COMPLAINANT: ---------------------------------- M/S.BUSINESS CHITTY FUND (ASRAMAM) PVT LTD, A COMPANY INCORPORATED UNDER INDIAN COMPANIES ACT 1956, HAVING ITS ADMINISTRATIVE OFFICE AT BUSINESS BLDGS BEACH ROAD KOLLAM, REP. BY ITS M.D M.K.VIJAYAKUMARAN PILLAI, AGED 50, S/O.LATE MADHAVAN PILLAI RESIDING AT'RETNAGIRI'ASRAMAM,KLM BY ADV. SRI.V.VENUGOPALAN NAIR RESPONDENTS/ACCUSED: -------------------------------- 1. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. 2. JOHN POULOSE, PUTHENPURA, KANNANALLOOR P.O., KOLLAM. ADV. SRI.S.ABDUL RAZZAK FOR R2 BY PUBLIC PROSECUTOR SMT.LAKSHMI RANI, FOR R1. THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 29/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **V.K.MOHANAN, J. --------------------------------------------Crl.A.No. 199 of 2003 A --------------------------------------------Dated this the 29[th] day of October, 2008** ## **J U D G M E N T** Aggrieved by the order of acquittal under Section 255(1) of the Code of Criminal Procedure, the complainant, in a prosecution for offence under Section 138 of the Negotiable Instruments Act, prefers this appeal. 2. The case of the appellant is that the accused availed of a loan of Rs.25,000/- on 27.4.1997 and towards the discharge of the said debt, he had issued Ext.P2 cheque dated 10.7.1997 which was presented for encashment, but dishonoured on 18.7.1997 as per Ext.P3 memo, subsequently the complainant caused to send Ext.P5 lawyer notice dated 14.8.1997. As the accused failed to repay the amount in spite of the demand made as per Ext.P5 notice, the complainant approached the court below by filing a complaint upon which the court below took cognizance and instituted C.C.No.235 of 1998. On appearance of the accused, particulars were read over and explained to him to which he pleaded not guilty. Subsequently, during the trial, the Power of Attorney Holder of the complainant was examined as PW1 and Exts.P1 to P11 documents were marked. When the accused was examined under Section 313 Cr.P.C., he ## **CRL.A. NO.199 of 2003** ## **:-2-:** denied all the incriminating circumstances came out through evidence and he challenged the entire case of the complainant. According to him, there was a chitty business between the accused and the complainant and when he got the chitty price, he had issued Ext.P2 cheque as security and subsequently, he had remitted all the instalments and thus, according to the accused, he did not avail of any loan as claimed by the complainant and no cheque was issued towards the discharge of such debt. On the other hand, the complainant had misused the cheque which was entrusted with him at the time of chitty transaction. From the side of the defence, though no witness was examined, Exts.D1 and D2 were marked as defence exhibits. The accused has also taken a contention that there was no statutory notice. On the basis of the pleading, mainly two questions were formulated by the court below. The first question is whether there was a statutory notice and after considering the entire materials on evidence, that question was found in favour of the complainant. The second question was whether the accused has committed the offence punishable under Section 138 of the N.I.Act and under this point, the court found that the complainant had failed to establish the case under Section 138 against the accused and therefore, it was found that the accused was not guilty and accordingly he was ## **CRL.A. NO.199 of 2003** ## **:-3-:** acquitted. It is the above acquittal, challenged in this appeal. 3. I have heard Mr.V.Venugopalan Nair, learned counsel appearing for the appellant and Sri.Abdul Razzak, counsel appearing for the second respondent/accused. 4. The specific case of the complainant is that the accused availed of a loan on 27.4.1997 from the complainant and towards the discharge of the said debt, the accused issued Ext.P2 cheque dated 10.7.1997. On the other hand, the case of the accused is to the effect that Ext.P2 cheque was not issued to the complainant towards the discharge of any debt and according to the defence, the same was issued in connection with the chitty transaction with the complainant in 1992. The trial court on the basis of the materials observed that “In spite of the specific contention of the accused from 1997 onwards as seen from Ext.P8 that Ext.P2 was entrusted with the complainant in blank after putting his signature as security for the chitty transaction started in 1992, the complainant has not cared to produce the registers and ledgers admittedly available with them to prove that the accused availed of a loan of Rs.25,000/- on 27.4.1997.” After making the above observation, the trial court had also found that the complainant was a company engaged in money lending business ## **CRL.A. NO.199 of 2003** ## **:-4-:** and it was improbable to take that a company engaged in money lending business was not maintaining registers pertaining to its loan transactions. It was also observed that PW1, the Power of Attorney Holder of the complainant had admitted that registers and ledgers, evidencing the loan availed of by the accused on 27.4.1997 for the discharge of which Ext.P2 was issued, were available. According to the court below, even though the complainant had admitted and they were having the concerned records, nothing was produced. Therefore, relying upon the decision of the Apex Court reported in **Ranjeet Singh** v. **State of Rajasthan** [1988(1) SCC 633] and **Patel Naranbhai Marghabhai** v. **Dhulabhai Galbabhai** [AIR 1992 SC 2009], the trial court held that adverse inference can be drawn against the party to the proceedings who withheld the best evidence available notwithstanding the burden of proof. Thus, the trial court found that it was the duty of the complainant to prove that Ext.P2 was issued to discharge the subsisting liability. The specific contention of the accused is that the complainant has not cared to prove the document available with them to prove the loan transaction as alleged. 5. In the decision reported in **Krishna Janardhan Bhat** v. ## **CRL.A. NO.199 of 2003** ## **:-5-:** **Dattatraya.G.Hegde** [2008(1) KLT 425 (SC), the Apex Court had held that the existence of legally recoverable debt is not a matter of presumption under Section 139 of the N.I.Act and it does not raise a presumption regarding the existence of a debt also. In view of the above decision, it is for the holder of the cheque to establish that the cheque in question was executed and issued towards the discharge of a debt. In the present case, the specific case set up by the defence from the very beginning is that Ext.P2 cheque was not issued towards the discharge of any debt due to the complainant and he did not avail any loan as claimed by the complainant. Further, it is the case of the defence that the said cheque leaf was entrusted with the complainant as a security during the time of transaction between the complainant and the accused connected with the chitty loan. The accused has produced Ext.D1 pass book and series of receipts to substantiate the above contention. Through Ext.P9 document, it is substantiated that Ext.P2 cheque was relating to a bunch of cheque or cheque book issued from the bank of the accused on 23.9.1992 and by the year 1997, he was using the fourth cheque book and thus, according to the accused, there was no reason for keeping Ext.P2 cheque leaf alone. Hence the case of the accused is that Ext.P2 cheque leaf was obtained from his bank during the year 1992 and ## **CRL.A. NO.199 of 2003** ## **:-6-:** Ext.P2 cheque leaf was given to the complainant connected with the chitty transaction. The Apex Court in the very same decision cited supra had also held that the prosecution must prove the guilt of an accused beyond any reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is preponderance of probabilities. It was also held that inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies. The Apex Court had further held that once the accused was found to discharge his initial burden, it shifted to the complainant. Similarly in **M.S.Narayana Menon** v. **State of Kerala** (2006(3) KLT 464 SC), it was held that the accused was only to discharge the initial onus of proof and he was not required to disprove the prosecution case. It was also held that the question as to Whether the initial burden has been discharged is a question of fact and then the burden shifts and the presumption disappears. On examination of the facts and circumstances involved in the present case in the light of the above decisions, it can be seen that by making out a probable case, the accused has discharged his initial onus of proof and it is for the complainant to establish his case beyond reasonable doubt. As indicated earlier, it was already deposed by ## **CRL.A. NO.199 of 2003** ## **:-7-:** PW1 that the complainant was having the details and documents regarding the alleged transaction, but that was not produced. So the trial court had rightly drawn presumption against the complainant and finally came to the conclusion that the complainant has failed to establish the offence under Section 138 of the N.I.Act against the accused. I find no reason to interfere with the finding as the finding arrived on by the court below is absolutely legal and perfect. 6. Learned counsel for the appellant submits that by the impugned judgment, the trial court had issued direction to proceed against the complainant under Section 250(1) of the Cr.P.C. for having made false accusation against the accused. Going by the facts and circumstances involved in the case, it can be seen that the parties have frequently entered into transaction either by way of loan or by way of chitty and the present complaint was filed on the basis of one of such transactions. But the complainant could not establish his case beyond reasonable doubt and he failed to prove the case so as to attract the essential ingredient of Section 138 of the N.I.Act. That does not mean that the complaint was filed with the mala fide intention or false accusation. Therefore, according to me, the direction issued by the trial court under Section 250(1) of Cr.P.C. Is not warranted. The facts and circumstances involved in the case are ## **CRL.A. NO.199 of 2003** ## **:-8-:** not justified in issuing such a direction. Thus the direction issued by the court below under Section 250(1) of Cr.P.C. against the complainant is set aside. In the result, this appeal is dismissed while confirming the order of acquittal passed by the court below, but setting aside the direction issued against the complainant under Section 250(1) of Cr.P.C. No order as to costs. **V.K.Mohanan, Judge** MBS/ ## **CRL.A. NO.199 of 2003** ## **:-9-:** **V.K.MOHANAN, J.** -------------------------------------------Crl.A.NO. 199 OF 2003 ------------------------------------------J U D G M E N T DATED: 29-10-2008 ## **CRL.A. NO.199 of 2003** **:-10-:**