Pen Books Pvt. Ltd. (Now Liquidation) v. Dileesh T.D. and State of Kerala

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR.JUSTICE C.S.DIAS`** ``` FRIDAY, THE 29[TH] DAY OF SEPTEMBER 2023 / 7TH ASWINA, 1945 CRL.REV.PET NO. 2836 OF 2011 ``` ``` AGAINST THE ORDER/JUDGMENT CRA 82/2010 OF ADDITIONAL SESSIONS ``` ## **`COURT (ADHOC)-II, ERNAKULAM`** ``` ST 1310/2008 OF JUDICIAL MAGISTRATE OF FIRST CLASS - IV, ERNAKULAM ``` ## **`REVISION PETITIONER/S:`** ``` PEN BOOKS PVT.LTD., (NOW LIQUIDATION), REPRESENTED BY ITS DIRECTOR,, SHIBY POLY, AGED 40 YEARS, W/O.SRI.POLY.K., AYYAMPILLY, P.B.NO.143, PALACE ROAD,, ALUVA-683 101, ERNAKULAM. BY ADVS. SRI.ANIL XAVIER SMT.K.INDU POURNAMI SRI.M.RISHIKESH SHENOY SRI.M.SHAHEED AHMAD ``` ## **`RESPONDENT/S:`** ``` 1DILEESH T.D. S/O.T.K.DIVAKARAN,, THAMARAMPARAMBIL HOUSE, U.C.COLLEGE P.O.,, ALUVA, ERNAKULAM-682 047. 2STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR,, HIGH COURT OF KERALA, ERNAKULAM-682 031. ``` ## **`OTHER PRESENT:`** ``` SRI.P.RAJENDRAN, R1 ``` ``` SMT.Pushpalatha M.K, SENIOR PUBLIC PROSECUTOR - R2 ``` ``` THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 29.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` CRL.REV.PET NO. 2836 OF 2011 ``` 2 ## **C. S. DIAS, J.** **`-------------------------` Crl.R.P. No.2836 of 2011** **`-------------------------` Dated this the 29[th] day of September, 2023** ## **ORDER** The revision petitioner calls in question the legality and propriety of the judgment of the Court of the Additional Sessions Judge (Adhoc-II), Ernakulam (Appellate Court) in Crl.Appeal No.82/2010, which in turn confirmed the judgment of the Judicial First Class Magistrate Court No.IV, Ernakulam (Trial Court) in S.T.No.1310/2008, convicting and sentencing the revision petitioner for the offence under Section 138 of the Negotiable Instruments Act (for brevity, “N.I.Act”). The revision petitioner was the 2[nd] accused and the 1[st] respondent was the complainant before the Trial Court. The parties, for the sake of convenience, are referred to as per the status before the Trial Court. ``` CRL.REV.PET NO. 2836 OF 2011 ``` 3 ## The facts in brief: 2. The complainant had filed the complaint against the accused (1[st] accused company represented by its Managing Director and 2[nd] accused Director ) alleging them to have committed the offence under Section 138 of the N.I.Act. The case of the complainant was that in discharge of the liability of the 1[st] accused company, the accused 1 and 2 had issued Ext.P1 cheque for an amount of Rs.10,00,000/- to him. The cheque, on presentation to the bank for collection, was returned by Ext.P2 memorandum due to “insufficient funds” in the account of the 1[st] accused company. Although the complainant issued Ext P3 statutory lawyer notice to the accused, they refused to pay the demanded amount. Hence, the accused have committed the offences under Sections 138 of the N.I.Act. 3. The 1[st] accused did not appear through any representative because it was under liquidation. Only the 2[nd] accused appeared through counsel and ``` CRL.REV.PET NO. 2836 OF 2011 ``` 4 consequently, the case against the first accused was split up. The 2[nd] accused pleaded not guilty to the substance of accusation read against her. ## Trial 4. The complainant was examined as PW1 and Exts.P1 to P9 were marked in evidence through him. The 2[nd] accused denied the incriminating circumstances put to her in the questioning under Section 313 of the Cr.P.C. The 2[nd] accused let in defence evidence and was examined as DW1 and marked Exts D1 to D4 in evidence. ## Trial Court Judgment 5. The Trial Court, after analysing the materials on record, found the 2[nd] accused guilty and convicted her for the offence under Section 138 of the N.I.Act and sentenced her to undergo simple imprisonment for a period of six months and to pay Rs.10,00,000/- as compensation to the complainant under Sec.357(3) of ``` CRL.REV.PET NO. 2836 OF 2011 ``` 5 the Cr.P.C, and in default to undergo simple imprisonment for a further period of three months. 6. Aggrieved by the said judgment, the revision petitioner/2[nd] accused filed Criminal Appeal No.82/2010 before the Appellate Court. ## Appellate Court judgment 7. The Appellate Court, after re-appreciating the materials on record, by the impugned judgment, confirmed the conviction, but modified the sentence by directing the 2[nd] accused to undergo simple imprisonment for one day (till the rising of the Court) and to pay compensation of Rs.11,00,000/- to the complainant and in default to undergo simple imprisonment for a further period of three months. 8. It is assailing the concurrent findings in the judgments passed by the courts below, the revision petition is filed. 9. Heard; Sri.Anil Xavier, the learned Counsel ``` CRL.REV.PET NO. 2836 OF 2011 ``` 6 appearing for the revision petitioner; Sri.P.Rajendran, the learned Counsel appearing for the 1[st] respondent and Smt.M.K Pushpalatha, the learned Senior Public Prosecutor appearing for the 2[nd] respondent. 10. Is there and any illegality, impropriety irregularity in the judgments of the courts below. 11.The revisional jurisdiction of this Court under Secs.397 to 401 of the Cr.P.C. is fairly well settled in a catena of precedents, which state that the power is to be sparingly exercised and 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. 12. 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 the powers under Secs.397 to 401 of the Cr.P.C. It is apposite to extract the revisional ``` CRL.REV.PET NO. 2836 OF 2011 ``` 7 ## 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 non- consideration 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 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.”_ 13. Now, coming back to the facts of the case at hand. 14. The revision petitioner's cardinal contention is that there is no material on record to establish that she was in charge and responsible for the day to day affairs of the 1[st] accused company. It is without such material that the courts below have concluded that the revision ``` CRL.REV.PET NO. 2836 OF 2011 ``` 8 petitioner/3[rd] accused is guilty for the offence under Sections 138 and 142 of the N.I.Act. 15. In _**S.P.Mani and Mohan vs. Dairy Dr.Snehalatha Elangovan** [2022 (6) KHC 215]_ , the Honourable Supreme Court, after a survey of all the earlier pronouncements on Section 141 of the N.I.Act, has succinctly summarized the law thus: _“47. Our final conclusions may be summarised as under: a.) The primary responsibility of the complainant is to make specific averments in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no legal requirement for the complainant to show that the accused partner of the firm was aware about each and every transaction. On the other hand, the first proviso to subsection (1) of Section 141 of the Act clearly lays down that if the accused is able to prove to the satisfaction of the Court that the offence was committed without his/her knowledge or he/she had exercised due diligence to prevent the commission of such offence, he/she will not be liable of punishment._ _b.) The complainant is supposed to know only generally as to who were in charge of the affairs of the company or firm, as the case may be. The other administrative matters would be within the special knowledge of the company or the firm and those who are in charge of it. In such circumstances, the complainant is expected to allege that the persons named in the complaint are in charge of the affairs of the company/firm. It is only the Directors of the company or the partners of the firm, as the case may be, who have the special knowledge about the role they had played in the company or the partners in a firm to show before the court that at the relevant point of time they were not in charge of the affairs of the company. Advertence to Sections 138 and Section 141 respectively of the NI Act shows that on the other elements of an_ ``` CRL.REV.PET NO. 2836 OF 2011 ``` 9 _offence under Section 138 being satisfied, the burden is on the Board of Directors or the officers in charge of the affairs of the company/partners of a firm to show that they were not liable to be convicted. The existence of any special circumstance that makes them not liable is something that is peculiarly within their knowledge and it is for them to establish at the trial to show that at the relevant time they were not in charge of the affairs of the company or the firm._ _c.) Needless to say, the final judgement and order would depend on the evidence adduced. Criminal liability is attracted only on those, who at the time of commission of the offence, were in charge of and were responsible for the conduct of the business of the firm. But vicarious criminal liability can be inferred against the partners of a firm when it is specifically averred in the complaint about the status of the partners ‘qua’ the firm. This would make them liable to face the prosecution but it does not lead to automatic conviction. Hence, they are not adversely prejudiced if they are eventually found to be not guilty, as a necessary consequence thereof would be acquittal._ _d.) If any Director wants the process to be quashed by filing a petition under Section 482 of the Code on the ground that only a bald averment is made in the complaint and that he/she is really not concerned with the issuance of the cheque, he/she must in order to persuade the High Court to quash the process either furnish some sterling incontrovertible material or acceptable circumstances to substantiate his/her contention. He/she must make out a case that making him/her stand the trial would be an abuse of process of Court._ 16. The law propounded above only casts the primary responsibility on the complainant to aver in the complaint that the accused were in charge and responsible for the conduct of the business of the firm when the offence was committed. Nevertheless, the complainant is not obliged to establish that the accused ``` CRL.REV.PET NO. 2836 OF 2011 ``` 10 were aware of every transaction. 17. In the case at hand, the complainant has specifically averred that the accused were the Managing Director and Director of the 1[st] accused company and were responsible for the management and conduct of the business of the 1[st] accused company, and they were the signatories of the cheque in question. Hence, the accused are liable to be proceeded with and tried under Section 141 of the N.I.Act. 18. Irrefutably, Ext.P1 cheque was signed by the accused. The complainant examined himself as PW1 and marked Exts P1 to P9 in evidence. The 2[nd] accused examined as DW1 and marked Exts D1 to D4 through her. It was her case that as per Exts D1 to D4 documents, out of Rs.10,00,000/borrowed, Rs.9,00,000/- was already paid and there was only a balance of Rs.1,00,000/- to be paid. Therefore, the cheque which was presented for Rs.10,00,000/- is invalid. ``` CRL.REV.PET NO. 2836 OF 2011 ``` 11 19. The courts below, after appreciating the oral testimonies of PW1 and DW1 and Exts on record found that there were many transactions between the parties and the plea of discharge was with respect to other transactions between them. Admittedly, there is no record to substantiate that the amount that was paid as per Exts D2 to D4 were the amounts that were covered by Ext P1 cheque. Accordingly, the courts below declined to accept the defence set up by the accused. 20. A negotiable instrument, which includes a cheque, carries the presumption of consideration 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_ ``` CRL.REV.PET NO. 2836 OF 2011 ``` 12 _any debt or other liability”._ 21. 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 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_ ``` CRL.REV.PET NO. 2836 OF 2011 ``` 13 _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._ _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”._ ## 22. Recently, a three-Judge Bench of the Hon’ble ``` CRL.REV.PET NO. 2836 OF 2011 ``` 14 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).”_ 23. In the case at hand, although the accused set up plea of discharge, Exts.D2 to D4 do not show that the receipts were issued in respect of Ext P1 cheque. Admittedly, there were other transactions between the parties. Thus, it is only be inferred that the revision petitioner/accused did not let in any evidence to rebut the reverse onus of proof laid down under Section 139 of the N.I.Act. ``` CRL.REV.PET NO. 2836 OF 2011 ``` 15 24. In _**Rangappa**_ (supra), the Honourable Supreme Court has held that, once a cheque is dishonoured, a reverse onus of proof is cast on the accused under Section 139 of the N.I.Act. And, if the accused fail to reply to the statutory lawyer notice issued under Section 138 of the N.I.Act, then an inference has to be drawn in favour of the complainant. 25. The courts below, after appreciating the materials on record, have concluded that the revision petitioner/3[rd] accused is guilty for the offence charged against her. I do not find any error, illegality or impropriety in the concurrent findings of the courts below to take a contrary view that the revision petitioner has not committed the offence under Section 138 of the N.I.Act. Thus, I confirm the concurrent convictions of the courts below and the sentence imposed by the Appellate Court. 26. At the said point of time, the learned Counsel appearing for the revision petitioner prayed that the ``` CRL.REV.PET NO. 2836 OF 2011 ``` 16 revision petitioner may be granted two months' time to pay the fine amount. As the revision petition is of the year 2011 and the fact that this Court had suspended the execution of sentence on 7.6.2012, I find the present submission to be reasonable and justifiable. Hence, I am inclined to accept the said submission. 27. 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 29.11.2023, to undergo the substantive sentence and to pay the compensation amount; - (iv) Needless to mention, if the revision petitioner has already deposited any amount towards the fine amount, only the balance amount need be deposited; ``` CRL.REV.PET NO. 2836 OF 2011 ``` **==> picture [13 x 9] intentionally omitted <==** - (v) In case of failure of the revision petitioner to appear before the Trial Court, the Trial Court shall execute the sentence and recover the fine amount from the revision petitioner, in accordance with law. - (vi) The execution of the sentence shall stand deferred till 29.11.2023. - (vii) The Registry is directed to forthwith forward a of this order to the Trial Court for - copy compliance. SD/- **C.S.DIAS JUDGE** sks/29.09.23