M/S. Seven Ocean Maritime Agencies v. Mannamparambl John Job & State of Kerala

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **TUESDAY, THE 12[TH] DAY OF SEPTEMBER 2023/21ST BHADRA, 1945** **CRL.REV.PET NO. 964 OF 2018** **AGAINST THE JUDGMENT DATED 30.11.2017 IN CRL.APPEAL NO.105/2016 ON THE FILE OF THE ADDITIONAL SESSIONS COURT VII, ERNAKULAM AND JUDGMENT DATED 16.02.2016 IN C.C NO.46/2013 ON THE FILE OF THE JUDICIAL FIRST CLASS MAGISTRATE COURT – II, KOCHI.** ## **REVISION PETITIONER/APPELLANT/ACCUSED:** **M/S. SEVEN OCEAN MARITIME AGENCIES, REPRESENTED BY ITS PROPRIETOR , A.H.AJITHKUMAR, S/O.LATE A.S.HAREENDRA NATH, SHANTHI NIVAS, CHULLICKAL, KOCHI - 682 005, KANNUR DISTRICT.** **BY ADV SRI.C.P.PEETHAMBARAN** ## **RESPONDENTS/COMPLAINANT AND STATE :** **1 MANNAMPARAMBIL JOHN JOB, S/O. LATE M.V. JOHN, MANNAMPARAMBIL HOUSE, PARAVOOR, PUNNAPRA, ALAPPUZHA - 688 004.** **2 STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM - 682 031.** **BY ADVS. SRI.M.P.PRASANTH, PUBLIC PROSECUTOR SRI.PEEYUS A.KOTTAM** **THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 12.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Crl. R.P. No.964/2018 : 2 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` Crl. R.P. No.964 of 2018 ````````````````````````````````````````````````````````````` _Dated this the 12[th] day of September, 2023_ ## **O R D E R** ~ ~ ~ ~ ~ ~ The revision petitioner is accused in CC No.45/2013 and CC No.46/2013 on the files of the Judicial First Class Magistrate's Court-II, Kochi for offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The petitioner is before this Court invoking Section 307 and 401 of the Code of Criminal Procedure seeking to set aside the judgment dated 30.11.2017 in Crl. A. No.105/2016 on the files of the Additional Sessions Judge-VII, Ernakulam arising from the conviction and sentence in the common judgment dated 16.02.2016 in CC No.46/2013 on the files of the JFCM-II, Kochi. Crl. A. Crl. R.P. No.964/2018 : 3 : No.104/2013 was allowed by the Additional Sessions Judge in favour of the revision petitioner and the said case was remanded to the Magistrate's Court. 2. The petitioner states that he is the accused and is the sole Proprietor of M/s.Seven Ocean Maritime Agencies and Excel Trans, Ernakulam. Towards balance sale consideration consequent to a property assignment, two cheques, one for ₹1,48,30,000/- dated 20.09.2004 drawn on Overseas Bank and another cheque dated 29.09.2011 for ₹15 lakhs drawn on Axis Bank, were issued. On presentation, the cheques were returned unpaid for want of funds. The 1[st] respondent thereupon issued notice demanding payment and thereafter filed CC Nos.45/2013 and 46/2013. 3. The petitioner states that on an erroneous appreciation of evidence, the trial court found the petitioner guilty and the petitioner was convicted and sentenced to undergo simple imprisonment for three months and a fine of ₹15 lakhs with a default sentence of one month's simple Crl. R.P. No.964/2018 : 4 : imprisonment in C.C. No.46/2013. Though the revision petitioner filed Criminal Appeal No.105/2016 before the Sessions Court, Ernakulam, the Additional Sessions JudgeVII, Ernakulam dismissed the appeal. 4. The petitioner submitted that the complainant has sold 9.12 Acres of property in Paravoor Village of Alappuzha District to the petitioner, his wife and brother-in-law executing two sale deeds. The total sale consideration as indicated in the sale deeds was ₹19 lakhs and ₹1,50,000/-, totalling ₹20,50,000/-. 5. The complainant alleged that the actual sale price is ₹2,65,00,000/-, that the petitioner paid ₹1,01,70,000/- and the balance amount payable was ₹1,63,30,000/-. It was alleged that the petitioner issued two cheques in discharge of the liability; one for ₹1,48,30,000/- and the other for ₹15 lakhs. 6. The counsel for the petitioner argued that the claim of the complainant is based on sale of properties which were effected through two sale deeds for a total Crl. R.P. No.964/2018 : 5 : consideration of ₹20,50,000/-. However, the complainant relied on Ext.P8 Letter of Acknowledgment dated 20.01.2011 executed between the parties in order to contend that the petitioner is liable to pay balance amount of ₹1,63,30,000/-. The actual sale consideration being much more than what is stated in the registered Sale Deeds, the claim based on Ext.P8 Letter of Acknowledgment is legally not enforceable, contended the counsel for the petitioner. 7. The counsel for the petitioner argued that as per Explanation under Section 138 of the NI Act, “debt” means legally enforceable debt. The counsel pointed out that in _**Krishna Janardhan Bhat v. Dattatraya Hegde** [2018 (1) KLT 425 (SC)],_ the Hon'ble Apex Court has held that for constituting an offence, existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. 8. The counsel for the petitioner further argued that an enforceable debt has to be pleaded and proved. As per Section 23 of the Indian Contract Act, 1872, the consideration or object of an agreement is lawful unless it is Crl. R.P. No.964/2018 : 6 : forbidden by law or is of such a nature that, if permitted, it would defeat the provisions of any law. The consideration or object of an agreement should not be immoral or opposed to public policy. As per Section 28 of the Kerala Stamp Act, 1959, the consideration, if any, the fair value of the land and all other facts and circumstances affecting the chargeability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth in the instrument. Section 28(2) mandates that in the case of instruments relating to immovable property chargeable with an ad valorem duty on the fair value of the land and property and not on the value set forth in the instrument or consideration, such instrument shall fully and truly set forth the value of all other properties. As per Section 30 of the Stamp Act, the expenses of stamp is to be borne by the purchaser of the property. Section 62 provides for penalty also, for undervaluation. Therefore, undervaluation of the property is a penal offence and for the said reason, Ext.P8 Letter of Acknowledgment is unenforceable. Crl. R.P. No.964/2018 : 7 : 9. Relying on the judgment of this Court in _**Sasseriyil Joseph v. Devassia** [2001 Crl.LJ 24]_ , the counsel for the petitioner argued that a debt contemplated under Section 138 of the Negotiable Instruments Act should be one legally recoverable. The counsel also relied on the judgment of the Apex Court in _**N. Harihara Krishnan v. J. Thomas** [AIR 2017 SC 4125]_ to contend that even if the debt is legally due, a cheque can be unenforceable. 10. The counsel for the petitioner, relying on the judgment of the Apex Court in _**Amrit Banaspati Company Limited and others v. State of Punjab and others** [AIR 1992 SC 1075],_ argued that any agreement against public policy would be unenforceable. The counsel also relied on the judgment of the High Court of Allahabad in _**Nutan Kumar and others v. Second Additional District Judge, Banda and others** [AIR 1994 All 298]_ , to urge the point. As the debt, if any, under Ext.P8 is not legally enforceable, no proceedings under Section 138 can be initiated against the petitioner. Both the trial court and appellate court ignored Crl. R.P. No.964/2018 : 8 : these crucial aspects while convicting the petitioner, contended the counsel for the petitioner. 11. The counsel for the 1[st] respondent/complainant resisted the revision petition. On behalf of the 1[st] respondent, it is pointed out that the issuance of cheque by the petitioner is admitted. The signature contained in the cheque is not disputed. The liability incurred by the petitioner towards the 1[st] respondent is also admitted. Therefore, the revision petitioner cannot wriggle out of his liability now and that too after the trial court and the Sessions Court found the petitioner guilty of the offence under Section 138 of the Negotiable Instruments Act. 12. As regards the merit of the claim of the 1[st] respondent, the counsel for the 1[st] respondent pointed out that the 1[st] respondent had already approached the competent civil court and the civil court has granted a decree in favour of the 1[st] respondent for an amount of ₹1,63,30,000/-. Furthermore, if there is any undervaluation of the property, it is the purchaser who is the beneficiary of Crl. R.P. No.964/2018 : 9 : undervaluation. The arguments of the petitioner is therefore without any force. 13. I have heard the learned counsel for the petitioner and the learned counsel appearing for the 1[st] respondent. I have also heard the learned Public Prosecutor representing the 2[nd] respondent. 14. CC No.46/2013 from which the revision petition arises has been filed when a cheque for ₹15 lakhs issued by the revision petitioner was not honoured. The JFCM-II, Kochi found that the 1[st] respondent has filed complaint after complying with all statutory formalities and within the stipulated time. The cheque was dishonoured for insufficiency of funds. The petitioner has not disputed the documents executed. In such circumstances, the Magistrate's Court convicted the petitioner under Section 255(2) of the Code of Criminal Procedure for the offence under Section 138 of the Negotiable Instruments Act and sentenced the petitioner to undergo simple imprisonment for three months and to pay a fine of ₹15 lakhs. It was also Crl. R.P. No.964/2018 : 10 : ordered that in case of default, the petitioner shall undergo a further period of simple imprisonment for one month. 15. The petitioner filed Criminal Appeal No.105/2016 aggrieved by the said judgment. The Additional Sessions Judge dismissed the Criminal Appeal No.105/2016. The strenuous argument made on behalf of the revision petitioner is that an agreement, the consideration or object of which is forbidden by law and if permitted, it would defeat the provisions of any law, cannot be a debt as contemplated under the Explanation to Section 138 of the Negotiable Instruments Act. The debt is based on Ext.P8 Letter of Acknowledgment executed between the parties and since the sale agreement and Ext.P8 Letter of Acknowledgment are executed to undervalue a property, any debt arising therefrom cannot be subject matter of proceedings under Section 138 of the Negotiable Instruments Act. 16. Though at the first blush the argument would appear to be impressive, the facts of the case would prove otherwise. Crl. R.P. No.964/2018 : 11 : 17. The revision petitioner, his wife and the brother-inlaw executed two sale deeds to purchase property of the 1[st] respondent/complainant. Two sale deeds were executed in which the total consideration was shown as ₹20,50,000/-. The revision petitioner entered into yet another agreement described as Letter of Acknowledgment with the 1[st] respondent which made the revision petitioner liable to pay ₹2,65,00,000/- as consideration. Though there is undervaluation in the sale deeds, it is to be noted that it was a mutual agreement entered into between the parties with consensus ad idem. Ext.P8 might have been executed to escape from payment of due stamp duty. As per the Kerala Stamp Act, it is the revision petitioner who has the liability to pay stamp duty. In other words, the revision petitioner is the beneficiary of Ext.P8 acknowledgment letter and of the undervaluation. 18. After failing to honour the cheque issued in consideration of the purchase of property, now the petitioner cannot be heard to contend that the debt is not a legally Crl. R.P. No.964/2018 : 12 : enforceable debt and a proceeding under Section 138 is not maintainable. 19. Transaction is admitted. Issuance of cheque is not disputed. The 1[st] respondent has not violated any procedure prescribed in Sections 138 and 139 of the Negotiable Instruments Act. In the facts of the case, the 1[st] respondent cannot be heard to contend that the debt is not enforceable through Section 138 proceedings. The criminal revision petition therefore fails and it is dismissed. Sd/- **N. NAGARESH, JUDGE** aks/08.09.2023