Pharma Kuries (P) Ltd. v. Anto Chalakkal and The State of Kerala

``` CRL.A NO. 1140 OF 20071 ``` ## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH WEDNESDAY, THE 17[TH] DAY OF NOVEMBER 2021 / 26TH KARTHIKA, 1943 CRL.A NO. 1140 OF 2007 ``` ``` (FROM THE JUDGMENT DATED 26-08-2006 OF THE ADDITIONAL SESSIONS COURT, THRISSUR (FAST TRACK COURT NO.II-ADHOC) IN CRL.A.NO. 252/2005 IN ST.NO.98/2002 OF THE JUDICIAL FIRST CLASS MAGISTRATE COURT-II, THRISSUR) ``` ## **`APPELLANT/RESPONDENT/COMPLAINANT:`** ``` PHARAMA KURIES (P) LTD.,THRISSUR, REP. BY MANAGING DIRECTOR, SEBASTIAN THOMAS,, REPRESENTED BY POWER OF ATTORNEY HOLDER, C.K.VARGHESE, S/O. CHUNKATH KOCHUDEVASSY, PALAZHY DESOM, MANALUR VILLAGE, THRISSUR. BY ADV SRI.DILIP J. AKKARA ``` ## **`RESPONDENTS/APPELLANT/2ND RESPONDENT/ACCUSED:`** ``` 1ANTO CHALAKKAL, CHALAKKAL VEETTIL HOUSE, PURANATTUKARA VILLAGE,, DESOM, THRISSUR. 2THE STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. BY ADVS. SRI.P.M.RAFIQ SRI.P.VIJAYA BHANU ``` ## **`OTHER PRESENT:`** ``` SRI SANAL P RAJ,PP ``` ``` THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON 17.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` CRL.A NO. 1140 OF 2007 ``` ``` 2 ``` ## JUDGMENT Dated this the 17[th] day of November, 2021 This is an appeal filed under Section 378(4) of Cr.P.C against the judgment dated 26.8.2006 passed by the Additional Sessions Court, (Fast Track Court No.II-Adhoc), Thrissur in Crl.A No.252/2005, (for short, the appellate court) reversing the judgment dated 10.3.2005 passed by the Judicial First Class Magistrate Court II, Thrissur (for short, the trial court) in S.T. No.98/2002. 2. The appellant herein is the complainant in S.T.No.98/2002, which was initiated under Section 138 of the Negotiable Instruments Act (for short 'the N.I Act') against the 1[st] respondent herein. The parties are referred to in the judgment as they were shown in the judgment of the trial court ie. the complainant and the accused. 3. The complainant is a private limited company engaged in conducting chitties. According to the complainant, one Mr.Mohandas subscribed a chit conducted by it and the accused stood as a guarantor to the said transaction. It is alleged that Mr.Mohandas auctioned the ``` CRL.A NO. 1140 OF 20073 ``` chit and received the chit amount but defaulted to repay the monthly instalments. When the complainant demanded Mr.Mohandas to remit the defaulted amount, the accused being the guarantor came to the office of the complainant and issued Ext.P3 cheque in discharge of the liability towards the chit transaction. The cheque on presentation was returned as dishonoured for want of sufficient funds and statutory notice issued by the complainant to the accused under Section 138B of the N.I Act was not heeded to. Hence, the prosecution was launched under Section 138 of the N.I Act against the accused at the trial court. 4. On appearance of the accused, the trial court read over the particulars of the offence to the accused who pleaded not guilty. The power of attorney holder of the complainant company was examined as PW1 and Exts.P1 to P9 were marked on the side of the complainant. Exts.D1 to D5 were marked on the side of the defence. The trial court on appreciation of evidence found that the accused has committed an offence punishable under Section 138 of the N.I Act and he was convicted for the said offence. The accused was sentenced to undergo simple imprisonment for one day till rising of the court and to pay a ``` CRL.A NO. 1140 OF 20074 ``` compensation of Rs.1,95,960/- to the complainant under Section 357(3) Cr.P.C. In appeal, the appellate court found that the complainant failed to make out a case under Section 138 of the N.I Act against the accused and accordingly the conviction and sentence passed by the trial court was set aside and the accused was acquitted. Challenging the judgment of the appellate court, the complainant has preferred this appeal. 5. I have heard Sri.Dilip J.Akkara, the learned counsel for the appellant, Sri.Rahul Sunil, the learned counsel for the 1[st] respondent and Sri.Sanal P.Raj, the learned Public Prosecutor. 6. The appellate court pointed out certain discrepancies in the complaint as well as in the evidence of PW1 as to the status of the accused. The appellate court found that the complainant did not have a consistent case as to the nature of the original liability of the accused. In complaint as well as in the evidence of PW1, the accused was shown both as subscriber and as surety, observed the appellate court. It is true that there is some discrepancies as held by the appellate court. However, in Ext.P9 reply notice, the accused has admitted that Mr.Mohandas subscribed a chit conducted by the complainant company and he stood as a `CRL.A NO. 1140 OF 2007 5` guarantor to the said chit transaction. Thus, the status of the accused as a guarantor to the chit subscribed by Mr.Mohandas stands admitted. The case of the complainant company is that towards the amount due in the above chit transaction, the accused came to the office and issued Ext.P3 cheque. On the other hand, the defence set up by the accused is that at the time he stood as guarantor, the complainant company obtained a signed blank cheque from him as security and the said cheque was misused by the complainant company and a false complaint was filed. 7. The trial court found that the evidence tendered by PW1 regarding execution of Ext.P3 cheque is believable and that the accused being a guarantor, is equally liable to discharge the debt of the subscribed chit. The trial court also found that the testimony of PW1 is free from any material infirmities and the presumption under Section 139 of the N.I Act is available to the complainant and the accused failed to rebut the said presumption. The appellate court in appeal found that the complainant did not have a consistent case as to the nature of the original liability of the accused. The appellate court also found that by 31.1.2000 the entire claim of the complainant as per the chit transaction ``` CRL.A NO. 1140 OF 2007 ``` ``` 6 ``` became barred by limitation and inasmuch as the cheque was issued on 11.3.2001, the debt under the cheque was not a legally enforceable one to attract the penal consequence under Section 138 of the N.I Act. A civil suit was filed by the complainant against the accused and Mr.Mohandas at the civil court for realisation of the amount due under the chit transaction. Exts.D1 to D5 are the pleadings, decree and judgment in respect of the civil suit. The plaint of the said civil suit happened to be rejected for non payment of balance court fee. The rejection was on 30.11.1999. The appellate court found that there was no probability for the accused in approaching the complainant and issuing Ext.P3 cheque after the dismissal of the suit. For these reasons, the appellate court reversed the finding of the trial court and acquitted the accused. 8. The law as it stands now is settled that a cheque issued for discharge of a time barred debt will fall within the purview of Section 138 of the N.I Act. A Division Bench of this Court in Ramakrishnan v. Parthasaradhy (2003 (2) KLT 613) held that when a person issues cheques to another, it is an acknowledgment of a legally enforceable liability and ``` CRL.A NO. 1140 OF 20077 ``` therefore he cannot plead that at the time of the issuance of the cheque the claim was barred by limitation and, thus, he is not liable to be punished under Section 138 of the N.I Act. The said decision was followed by a Single Bench of this Court in Ramakrishnan v. Gangadharan Nair and another (2006 KHC 1024). Thus, now it is trite that a cheque drawn for discharge of a time barred liability also would fall within the purview of Section 138 of N.I Act. Hence the finding of the court below based on the limitation cannot be sustained. 9. As stated already, the accused admits that he was the guarantor to the chit subscribed by Mr.Mohandas from the complainant company. The accused also admits the signature and issuance of Ext.P3 cheque. His only case is that he issued it in blank as a security at the time when he stood as the guarantor. The Apex Court in Bir Singh v. Mukesh Kumar (2019 (1) KHC 774) has held that a blank cheque leaf voluntarily signed and handed over by accused, which is towards some payment, would attract the presumption under Section 139 of N.I Act, in the absence of any cogent evidence to show that cheque was not issued in discharge of a debt. It was further held that a mere filling up of cheque ``` CRL.A NO. 1140 OF 20078 ``` by payee would not invalidate the cheque. Recently, the Apex Court in Sripati Singh (since deceased) through his son Gaurav Singh v. State of Jharkhand and another (2021 (6) KHC 207) has held that if in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. Thus, when the accused issues a signed blank cheque as security while he stood as a guarantor, the complainant company is free to fill up and present the same at the bank provided the subscriber or the guarantor defaulted the chit instalment. However, the crucial question here is whether there is acceptable evidence to show that the subscriber auctioned or received the chit amount and he committed default in repayment of the chit amount. Apart from the oral testimony of PW1, there is absolutely nothing on record to substantiate the same. The accused has disputed even the ``` CRL.A NO. 1140 OF 20079 ``` bidding of the chit and receipt of the chit amount by the subscriber. He has also denied the case of the complainant that amount covered by the chit is due from the subscriber towards the chit transaction. Still, the complainant has not chosen to produce any document to substantiate its case. According to the complainant company, the subscriber and the accused paid only 18 instalments upto the instalment on 11.6.1996 and defaulted the subsequent instalments. Definitely, there will be documentary evidence to show that the chit was auctioned by the subscriber and he received the chit amount. There will also be documentary evidence, such as ledger, accounts etc.. to show that as on the date of Ext.P3 cheque, the amount covered by the cheque was actually due from the subscriber and the accused to the complainant company. Those documents were not produced. However, the facts remain that the accused has admitted that he stood as the guarantor and that he has signed Ext.P3 cheque. In these circumstances, I am of the view that for the mere reason that the complainant failed to produce necessary documents to substantiate its case, the case of the complainant cannot be discarded in toto. I am of the view that the complainant ``` CRL.A NO. 1140 OF 200710 ``` should be given an opportunity to substantiate its case by producing necessary documents. Hence the matter requires remand. For the reasons stated above, I set aside the judgment of the appellate court and the case is remanded to the trial court for fresh disposal. The trial court shall give an opportunity to the complainant to adduce further evidence. Needless to say the accused shall also be given an opportunity to adduce evidence, if any. Thereafter, the court below shall dispose of the matter on merits, in accordance with law. The parties shall appear at the trial court on 21.12.2021. ``` Sd/- ``` ``` DR. KAUSER EDAPPAGATH JUDGE ``` ab