M/s Vertex Securities Ltd. v. P.V. Mathew

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN** **FRIDAY, THE 8TH FEBRUARY 2008 / 19TH MAGHA 1929** **CRL.A.No.107 of 2001(A)** **------------------------------** **C.C.1087/96 OF ADDL. CHIEF JUDICIAL MAGISTRATE'S COURT, ERNAKULAM** **....................** **APPELLANT:** **--------------** **M/s VERTEX SECURITIES LTD., THOTTATHIL TOWERS, 2ND FLOOR, MARKET ROAD, ERNAKULAM, REP. BY ITS SENIOR EXECUTIVE, SRI.K.J.THOMAS.** **BY ADV. SRI.TOMY SEBASTIAN** **RESPONDENT:** **-----------------** **SRI.P.V.MATHEW, VARGHESE COTTAGE, VADAPPURAM P.O., MUMPAD, MALAPPURAM DISTRICT- 676542.** ## **BY ADV. SRI.PHILIP T.VARGHESE SRI.THOMAS T.VARGHESE PUBLIC PROSECUTOR SRI.T.J.AMBOOKAN** **THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 08/02/2008, ALONG WITH Crl. Appeal Nos.626, 842 & 1165 of 2002, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## K.P.BALACHANDRAN, J. ----------------------------------------------------------------Crl. Appeal Nos.107 of 2001, 626, 842 & 1165 of 2002 -----------------------------------------------------------------Dated this the 8[th] day of February, 2008 ## **JUDGMENT** The appellants and the respondents in all these Criminal Appeals are the same. Criminal Appeal No.107/01 arises out of C.C.1087/96 on the file of the Additional Chief Judicial Magistrate's Court, Ernakulam and the other three Criminal Appeals arise out of common judgment passed in C.C.411/99, C.C.429/99 and C.C.428/99 by the Additional Chief Judicial Magistrate (Economic Offences), Ernakulam. All these appeals are filed with leave assailing the acquittal of the first respondent of offence punishable under Section 138 of the N.I. Act in complaints filed by the appellant. 2. The appellant M/s Vertex Securities Ltd. is a public limited company incorporated under the Companies Act with its registered office at Ernakulam and is a member of the National Stock Exchange and doing business as Crl. A. Nos.107 of 2001 & co. cases -2- share brokers. The first respondent has been transacting business in purchase and sale of shares through the appellant. It is the case of the appellant that the accused owed an amount of Rs.4,41,821.50/- to them on account of purchase and sale of shares through them and towards part payment of liability thereunder he issued three cheques for Rs.1 lakh each drawn on the Pallimukku branch of the Indian Bank dt.19/06/96 and another cheque for Rs.1 lakh on the same bank with date 20/04/96 and all the cheques on presentation were dishonoured for want of funds in the account of the first respondent and despite intimation given and demand made through notices the first respondent has not cared to pay up the amounts either within the statutory period or ever thereafter and thereby he has committed an offence punishable under Section 138 of the N.I. Act. Crl. A. Nos.107 of 2001 & co. cases -3- 3. The first respondent entered appearance in the court below pursuant to receipt of summons. Thereupon, the learned Additional Chief Judicial Magistrate served copies of all relevant documents in the case to the first respondent and questioned him reading over the particulars of the offence and explaining it to him. Thereupon, he pleaded not guilty and consequently, a trial of the case was conducted. Separate trial was being conducted in C.C.1087/96 which was pending before the Additional Chief Judicial Magistrate's Court, Ernakulam and a joint trial of C.C. Nos.411, 428 and 429/99 was being conducted before the Additional Chief Judicial Magistrate's Court (Economic Offences), Ernakulam. In cases tried in both the courts, both sides adduced evidence both oral and documentary. The Additional Chief Judicial Magistrate, Ernakulam in C.C.1087/96 and the Additional Chief Judicial Magistrate Crl. A. Nos.107 of 2001 & co. cases -4- (Economic Offences), Ernakulam in the other three cases tried jointly, came to the conclusion that the appellant has failed to make out a case for conviction for an offence under Sections 138 of the N.I. Act for the reason that there is no evidence to find that the first respondent had issued the cheques to the appellant towards discharge of any debt or other liability and consequently, acquitted the first respondent of offence under Section 138 of the N.I. Act. 4. Counsel for the first respondent submits that the first respondent has no case that all statutory formalities which are prerequisites for the maintainability of a complaint under Section 138 of the N.I. Act do not stand satisfied in the instant case as want of proper notice contended in the court below was found against; and that the first respondent has also no case that the cheques were being dishonoured not for want of Crl. A. Nos.107 of 2001 & co. cases -5- sufficient funds in his account to honour the cheques. 5. Counsel for the appellant submits that the appellant had not produced all the necessary documents to establish the company's claim that the cheques are issued in discharge of any debt or other liability as they were relying on the presumption available under Section 139 of the N.I. Act but that in view of the decision of the Apex Court in _Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008(1) KHC 410 SC),_ existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act and further that Section 139 does not give rise to a presumption that there existed a debt and consequently, the presumption that is available under Section 139 of the Act may only be that the cheque was issued for consideration as is the presumption that is available under Section 118 of the N.I. Act and that therefore, an opportunity be afforded -6- Crl. A. Nos.107 of 2001 & co. cases to the appellant to establish the appellant's case that there existed a legally recoverable debt and that it was in discharge of a portion of that debt; that the cheques which are subject matter of complaint in the calendar cases filed in the courts below were issued. Though an attempt has been made by the counsel for the first respondent to show that PW1 examined on the side of the appellant has given evidence that records are not available with them to show the details of the accounts between them and the first respondent, on going through the testimony of PW1, I am convinced that PW1 has avoided production of documents available with them and as contended by the counsel for the appellant they were relying on the presumption available under Section 139 of the N.I Act. In the circumstances, I am of the view that the order of acquittal assailed in all these appeals has to be set aside and the cases Crl. A. Nos.107 of 2001 & co. cases -7- remanded to one court affording opportunity for both sides to adduce all further evidence they would desire to adduce to establish their contentions. 6. In the result, I set aside the orders of acquittal assailed in all these appeals and remit all these cases to the Additional Chief Judicial Magistrate's Court, Ernakulam. Both sides shall appear in the court of the Additional Chief Judicial Magistrate, Ernakulam for these cases on 24/03/08. The Additional Chief Judicial Magistrate, Ernakulam shall afford opportunity for both sides to adduce such further evidence as they may desire to adduce, to establish their rival contentions and dispose of the case as early as possible, the cases being of the year 1996. K.P.BALACHANDRAN, JUDGE kns/-