Paul Varghese v. Kerala Vyapari Vyavasayi Ekopana Samithi and State of Kerala

1 Crl R.P No. 1661 of 2011 ## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` TUESDAY, THE 26[TH] DAY OF SEPTEMBER 2023 / 4TH ASWINA, 1945 CRL.REV.PET NO. 1661 OF 2011 AGAINST THE ORDER/JUDGMENT CRA 395/2010 OF ADDITIONAL SESSIONS COURT (ADHOC)-II, ERNAKULAM AGAINST ORDER/JUDGMENT IN ST 855/2008 OP THE COURT OF THE JUDICIAL FIRST CLASS MAGISTRATE-IV, KOCHI ``` ## **`REVISION PETITIONER/S:`** ``` PAUL VARGHESE AGED 45 YEARS, ANTHIKKADU HOUSE, ELOOR SOUTH,, UDHYOGAMANDAL, KOCHI-683 501. ``` ``` BY ADV SRI.ABRAHAM MATHEW (VETTOOR) ``` ## **`RESPONDENT/S:`** ``` 1M/S KERALA VYAPARI VYAVASAYI EKOPANA SAMITHI SAMITHI, PALARIVATTOM UNIT, REPRESENTED BY ITS, PRESIDENT, C.RAMACHANDRAN, S/O.SHANKARAN NAIR,, VENNALA.P.O., KOCHI. 2STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR,, HIGH COURT OF KERALA, ERNAKULAM. ``` ``` BY ADV SRI.MATHEW SKARIA -R1 ``` ``` Smt. Seetha S, Public Prosecutor - R2 ``` ``` THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 26.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` 2 Crl R.P No. 1661 of 2011 ## **C.S DIAS,J.** **--------------------------Crl R.P No. 1661 of 2011 ----------------------------Dated this the 26[th] day of September, 2023 ORDER** The revision petitioner is directed against the judgment passed by the Court of the Additional Sessions Judge (Adhoc-II), Ernakulam (Appellate Court) in Crl.A No.395/2010, confirming the conviction and sentence of the revision petitioner for an offence under Sec.138 of the Negotiable Instruments Act ( in short, ‘N.I Act’) imposed by the Judicial First Class Magistrate-IV, Kochi, (Trial Court) in ST No.855/2008. The revision petitioner 3 Crl R.P No. 1661 of 2011 was the accused and the first respondent was the complainant before the Trial Court. **The facts in brief** 2. The first respondent had filed the complaint before the Trial Court alleging that the revision petitioner was a member of the first respondent/Samithi. The revision petitioner had availed financial assistance from the first respondent, for the purpose of conducting a supermarket. He had availed a loan of Rs.4,50,000/- and in discharge of the outstanding amount of Rs.2,72,000/- he had issued Ext P1 cheque. The cheque on presentation to bank got dishonoured by Ext P2 memorandum, due to ‘insufficiency of funds’ in the account of the revision petitioner. Although the first respondent had issued 4 Crl R.P No. 1661 of 2011 Ext P4 statutory lawyer notice to the revision petitioner, who acknowledged the same, he failed to pay the demanded amount. Hence, the revision petitioner committed the offence under Sec.138 of the N.I Act ## **Trial** 3. The revision petitioner pleaded not guilty to the substance of accusation read over to him. In the trial, the first respondent examined its President as PW1 and marked Exts P1 to P11 in evidence. The revision petitioner denied the incriminating circumstances put to him in the questioning under Sec.313 of the Cr.P.C. Thereafter, in the defence evidence, the revision petitioner got himself examined as DW1. 5 Crl R.P No. 1661 of 2011 ## **Trial Court judgment** 4. The Trial Court, after analysing the materials on record, found the revision petitioner guilty and convicted him for an offence under Sec.138 of the N.I Act, and sentenced him to undergo simple imprisonment for a period of three months and to pay a fine of Rs.2,75,000/- and in default to undergo simple imprisonment for a further period of three months. 5. Aggrieved by the said judgment, the revision petitioner preferred Crl.A No.395/2010 before the Appellate Court. 6 Crl R.P No. 1661 of 2011 ## **Appellate Court judgment** 6. The Appellate Court, after re-appreciating the materials on record, confirmed the conviction, but modified the sentence by ordering the revision petitioner to undergo simple imprisonment till the rising of Court and to pay an amount of Rs.2,80,000/as compensation to the first respondent under Sec.357(3) of the Cr.P.C and in default to undergo simple imprisonment for a further period of three months. 7. It is questioning the concurrent judgments of the courts below, the present revision petition is filed. 8. Heard; Sri.Abraham Mathew, the learned counsel appearing for the revision petitioner, Sri.Mathew Scaria, the learned counsel appearing for 7 Crl R.P No. 1661 of 2011 the first respondent and Smt.Seetha.S, the learned Public Prosecutor appearing for the second respondent. 9. The learned counsel appearing for the revision petitioner argued that the first respondent has mischievously made use of the blank cheques that were handed over as security at the time of availing the loan. In fact, the transaction was between 19992002 and Ext P1 cheque was made use of by the first respondent towards the time barred debt, which is not a legally enforceable debt. The courts below have miserably failed to appreciate the said contention. Therefore, the concurrent findings may be set aside by allowing the revision petition. 8 Crl R.P No. 1661 of 2011 10. The learned counsel appearing for the first respondent defended the judgments of the courts below by arguing that the cheque was issued by the revision petitioner only on 16.6.2007, in discharge of his liability to the first respondent. The revision petitioner’s contention is untenable and without any material. Hence, the revision petition may be dismissed, confirming the judgments of the courts below. 11. The point is whether there is any illegality, impropriety or irregularity in the judgments of the courts below. 12. Before I delve into the legality and correctness of the impugned judgments, this Court reminds itself of the scope and purport of the 9 Crl R.P No. 1661 of 2011 revisional jurisdiction of this Court under Secs.397 to 401 of the Cr.P.C. 13. There is a profusion of precedential authority that the revisional power of this Court is to be sparingly exercised only in cases of exceptional rarity. The power is more in the nature of a supervisory jurisdiction, to correct patent errors, manifest illegality and when there is total miscarriage of justice. Nonetheless, the revisional power of this Court cannot be equated to Appellate/Second Appellate power. Merely because a different view is possible, the revisional Court shall not substitute the views taken by the Trial/Appellate Court, unless and until the court below has misread 10 Crl R.P No. 1661 of 2011 the records and taken a view that is shocking to the conscience of the Court. 14. In **Sanjaysinh Ramrao Chavan vs Dattatray Gulabrao Phalke & Anr** [(2015) 3 SCC 123], the Hon’ble Supreme Court has succinctly laid down the scope and purport of powers under Secs.397 to 401 of the Cr.P.C. It is apposite to extract the revisional declaration of law, which reads as follows: “14. In the case before us, the learned Magistrate went through the entire records of the case, not limiting to the report filed by the police and has passed a reasoned order holding that it is not a fit case to take cognizance for the purpose of issuing process to the appellant. Unless the order passed by the Magistrate is perverse or the view taken by the court is wholly unreasonable or there is nonconsideration of any relevant material or there is palpable misreading of records, the Revisional Court is not justified in setting aside the order, merely because another view is possible. The Revisional Court is not meant to act as an appellate court. The whole purpose of the revisional jurisdiction is to preserve the power in the court to do justice in accordance with the principles of criminal 11 Crl R.P No. 1661 of 2011 jurisprudence. The revisional power of the court under Sections 397 to 401 CrPC is not to be equated with that of an appeal. Unless the finding of the court, whose decision is sought to be revised, is shown to be perverse or untenable in law or is grossly erroneous or glaringly unreasonable or where the decision is based on no material or where the material facts are wholly ignored or where the judicial discretion is exercised arbitrarily or capriciously, the courts may not interfere with decision in exercise of their revisional jurisdiction.” ## 15. Now, coming back to the facts of the instant case. 16. The cardinal contention of the revision petitioner is that he had borrowed money from the first respondent between the period 1999-2002. It is only in the year 2007 that the first respondent made use of a blank security cheque and launched the prosecution to realise a stale debt. 17. A negotiable instrument, which includes a cheque, carries the presumption of consideration 12 Crl R.P No. 1661 of 2011 ## 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. ## 18. 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 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 13 Crl R.P No. 1661 of 2011 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 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. 14 Crl R.P No. 1661 of 2011 15. Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the 'stop payment' instructions to his bank. Furthermore, the instructions to 'stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under S.138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant - accused was not able to contest the existence of a legally enforceable debt or liability. The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction - related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction - expenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant. 15 Crl R.P No. 1661 of 2011 19. 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 legal position and doctrine of the reverse onus. It is apposite to extract the relevant paragraphs, which declares 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’ 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).” ## 20. Similarly, in **M/s.Shree Daneshwari** ## **Traders vs Sanjay Jain** [2019 (4) KHC 495], the Hon’ble Supreme Court has held as follows: 16 Crl R.P No. 1661 of 2011 “16. Under Section 138 of the Negotiable Instruments Act, once the cheque is issued by the drawer, a presumption under Section 139 of the Negotiable Instruments Act in favour of the holder would be attracted. Section 139 creates a statutory presumption that a cheque received in the nature referred to under Section 138 of the Negotiable Instruments Act is for the discharge in whole or in part of any debt or other liability. The initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt. 17. It is for the accused to adduce evidence of such facts and circumstances to rebut the presumption that such debt does not exist or that the cheques are not supported by consideration. Considering the scope of the presumption to be raised under Section 139 of the Act and the nature of evidence to be adduced by the accused to rebut the presumption.” 21. Indisputably, the revision petitioner has admitted that he had borrowed an amount of Rs.4,50,000/- from the first respondent. Furthermore, the revision petitioner has failed to send any reply notice to Ext P4 lawyer notice issued by the first respondent. Even in the cross examination of PW1, 17 Crl R.P No. 1661 of 2011 his oral testimony as DW1 and the questioning under Section 313 of the Cr.PC, the revision petitioner has not set up a defence that he had not executed Ext.P1 cheque. His only case is that Ext.P1 cheque has been made use of by the first respondent to realise a stale claim. 22. In **Rangappa** (supra), the Honourable Supreme Court has categorically held that the reverse onus of proof is cast on the accused under Section 139 of the N.I.Act. It is for the accused to set up a probable defence that the cheque was not issued towards a legally enforceable debt. Also, if the accused fails to send a reply to the statutory notice, an inference is to be drawn in favour of the complainant's version. Even a slight discrepancy in 18 Crl R.P No. 1661 of 2011 the complainant's version cannot dispel the reverse onus of proof. 23. In **Kalamani Tex** (supra), it is held that, even if a signed blank cheque was allegedly entrusted by the accused to the complainant, the statutory presumption under Section 139 of the N.I.Act cannot be obliterated. 24. The courts below, after appreciating the materials on record, particularly Ext.P1 cheque and Exts.P7 to P11 receipts, have concurrently concluded that Ext.P1 cheque was issued in discharge of a legally enforceable debt and not a time barred debt, as alleged by the revision petitioner. 25. It is pertinent to note that in **Ramakrishnan** **vs. Parthasaradhy** [2003 (2) KLT 613], a Division 19 Crl R.P No. 1661 of 2011 Bench of this Court after referring to Section 25(3) of the Indian Contract Act, 1872, has held that even assuming that a civil suit is barred by law of limitation, a subsequent promise by way of a cheque, is a written which matures into an promise enforceable contract. In the event of the cheque getting dishonored, the drawer of the cheque can be prosecuted for an offence under Section 138 of the N.I.Act. The execution of the cheque is an acknowledgment of a legally enforceable debt. 26. On a comprehensive appreciation of the materials on record and the law, this Court is of the firm view that the courts below have rightly found the revision petitioner guilty for the offence under Section 138 of the N.I.Act. 20 Crl R.P No. 1661 of 2011 27. There is no illegality, irregularity and impropriety in the concurrent findings of the courts below. I have also found the sentence imposed by the Appellate Court to be reasonable and justifiable and in line with the law laid down by the Honourable Supreme Court. 28. At the said point of time, the learned Counsel for the revision petitioner submitted that the revision petitioner may be granted at least two months' time to pay the compensation amount and undergo the sentence. As the revision petition is of the year 2011 and the fact that this Court had suspended the execution of sentence on 04.07.2011, by directing the revision petitioner to deposit an amount of Rs.1,00,000/- before the Trial Court within 21 Crl R.P No. 1661 of 2011 a period of four weeks from the date of order, I find the present submission to be reasonable and justifiable. Hence, I am inclined to accept the said submission. 29. In the result; - (i) The revision petition is dismissed; (ii) The conviction imposed by the courts below and the sentence imposed by the Appellate Court are confirmed; (iii) The revision petitioner is directed to appear before the Trial Court on or before 27.11.2023, to undergo the modified sentence and to pay the compensation amount. - (iv) Needless to mention, if the revision petitioner has paid any amount, as directed by this Court, 22 Crl R.P No. 1661 of 2011 only the balance amount need to be remitted as compensation. - (v) In case of failure of the revision petitioner to appear before the Trial Court and pay the compensation amount as ordered above, the Trial Court shall execute the sentence and recover the compensation amount, in accordance with law. - (vi) The execution of the sentence shall stand deferred till 27.11.2023. - (vii) The Registry is directed to forthwith forward a copy of this order to the Trial Court for compliance. sd/- sks/26.9.2023 **C.S.DIAS, JUDGE**