P.O. Sebastian v. K.K. Ramdas and State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: ## THE HONOURABLE MR. JUSTICE A.HARIPRASAD MONDAY, THE 10TH DAY OF MARCH 2014/19TH PHALGUNA, 1935 CRL.A.No. 109 of 2004 ( ) -------------------------ST 124/2000 of JUDICIAL FIRST CLASS MAGISTRATE COURT-II,THRISSUR APPELLANT(S)/COMPLAINANT: ----------------------------------------------- P.O.SEBASTIAN, S/O..OUSEPH, PADIKKALATH HOUSE, PATTIKAD, THRISSUR DISTRICT. BY ADV. SRI.P.VIJAYA BHANU (SENIOR ADVOCATE) RESPONDENT(S)/RESPONDENTS: ------------------------------------------------ ## 1. K.K.RAMDAS, S/O.KRISHNANKUTTY NAIR, KELANGATHU HOUSE, PATTIKAD, THRISSUR DISTRICT. 2. STATE OF KERALA, REPRESENTED BY PUBLIC PROSECUTOR HIGH COURT OF KERALA, ERNAKULAM. R2 BY PUBLIC PROSECUTOR SHRI K.K.RAJEEV THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 10-03-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **A.HARIPRASAD, J.** ## **-------------------------------------Crl.Appeal No.109 of 2004** **-------------------------------------Dated this the 10[th] day of March, 2014.** ## **JUDGMENT** Appeal filed under Section 378(4) of the Code of Criminal Procedure (for short, “Cr.P.C.”). 2. Complaint under Section 138 of the Negotiable Instruments Act (for short, “the Act”) filed by the appellant was dismissed by the trial court mainly for two reasons. Firstly, the trial court found that the version of the appellant/complainant was improbable. Secondly, the version projected by the 1[st] respondent/accused was found to be more probable. These findings are attacked by the appellant/complainant in this appeal. 3. Shorn off unnecessary details, facts are as follows: It is averred in the complaint that the accused borrowed a sum of `90,000/- from the complainant and in discharge of that liability, Ext.P1 cheque was issued. When the cheque was presented for collection, it was dishonoured due to insufficiency of funds. This fact is evident from Exts.P2 and P3 memos. Thereafter, a lawyer notice was issued. Accused issued a reply notice. However, he failed to make payment within the time stipulated in the statute. Hence the complaint was filed. Crl.Appeal No.109/2004 2 4. At the time of evidence, PW1 and DWs 1 to 3 were examined. Exts.P1 to P5 and D1 to D5 marked. 5. Heard the learned counsel for the appellant. In spite of the fact that the 1[st] respondent/accused was served, there was no representation for him at the time of hearing. I have carefully perused the records. 6. PW1 is the complainant. Court below noticed a discrepancy regarding the pleadings in the complaint and testimony of PW1. Case pleaded in the complaint is that an amount of `90,000/- was borrowed by the accused from the complainant and in discharge of that liability, Ext.P1 cheque was issued. However, when complainant testified as PW1, he would say that the accused borrowed a total sum of `1,75,000/- from him and he issued two cheques to discharge that liability. Complainant had initiated legal action under Section 138 of the Act in respect of another cheque for `85,000/- drawn by the accused in his name. This case is regarding the cheque issued by the accused to the complainant for `90,000/-. Court below found that this case of the complainant developed at the time of evidence is incongruous to the pleadings in the complaint. Learned counsel for the appellant contended that the trial court lost sight of the settled law that the entire case regarding the transaction need not be pleaded in the complaint. What is essentially required is a pleading 3 Crl.Appeal No.109/2004 regarding the advancement of money by the complainant and issuance of a cheque in discharge of that liability by the accused. It is also submitted that the dishonour of cheque and compliance of statutory requirements must find a place in the complaint. Apart from that PW1 has explained in cross-examination that he has filed another case in relation to the dishonour of a cheque issued by the accused for `85,000/-. It is seen from the cross-examination of PW1 that no dispute had been raised regarding the filing of a case in respect of a cheque issued by the accused for `85,000/- to the complainant. In other words, the accused has no case that there was no cheque issued by him to the complainant for `85,000/- and relating to that, there is no case pending. In fact, questions in crossexamination would only show as to whether the complainant had mentioned about the issuance of this cheque in the other case. Learned counsel for the appellant contended that this aspect was not considered by the court below and the probability of the case pleaded by the complainant was not at all considered by the trial court. There is some force in the argument. Court below has only stated that there is incongruity between the pleadings in the complaint and testimony of PW1. Facts asserted by PW1 that he had filed another case against the accused for dishonouring latter's cheque for `85,000/- had not been denied by the accused. Therefore, I do not find any reason to throw out the case of the 4 Crl.Appeal No.109/2004 complainant on this score. 7. Next reason stated by the court below is that testimony of DWs 2 and 3 would show that the case of the complainant is improbable. DW2 and accused (DW3) are known to each other. Case of the accused is that he borrowed money from Pappai, who is the elder brother of the complainant, in 1992 to a tune of `20,000/-. At that time, as insisted by Pappai, he issued two signed blank cheques and certain documents. Accused further contended that he discharged the liability that was outstanding with Pappai before 1996. It is the case of the accused that the signed blank cheques were issued to Pappai in the year 1992. Accused, at the time of examination as DW1 and also in the reply notice contended that after initial transaction with Pappai, he used to introduce prospective borrowers to Pappai and used to get commission for the transaction. DW3 stated that rate of interest collected by Pappai for the transaction was 7% per month, out of which, 1 ½% is used to be given to the accused. It is the version of DW3 that since they were together having dealings with others, he never insisted for return of cheques issued to him. According to the accused, these cheques were misused by Pappai through his brother. 8. In order to buttress this contention, accused relied on the testimony of DW2. DW2 stated that he had financial transactions with Pappai. He issued signed cheques and other documents and also gave 5 Crl.Appeal No.109/2004 the title deed of a land admeasuring 25 cents belonging to his wife. Thereafter, the complainant misused the document at the instance of his brother Pappai and filed a civil case against DW2. It is an admitted case that the civil case between the complainant and DW2 had been settled by paying off money to the tune of `40,000/-. DW2 would say that for paying off the complainant, he adjusted `40,000/- from DW3, the accused. Court below found that all these would probabilise the case of the accused. Per contra, learned counsel for the appellant would contend that the court below lost sight of the fact that this evidence would probabilise the case of the complainant. According to the learned counsel for the appellant, if DW2 was not owing any money to the complainant, he would not have taken money from the accused herein and paid off to the complainant. Instead, he would have contested the civil case and seen that the civil case reached a logical conclusion. Settlement of the civil dispute between the complainant and DW2 is an indication of admitting his liability towards the complainant, contended the learned counsel for the appellant. The complaint of the appellant is that this aspect was not considered by the court below. 9. Learned counsel for the appellant would contend that the court below did not consider the scope of presumption under Sections 118 and 139 of the Act. Learned counsel for the appellant placed reliance on a 6 Crl.Appeal No.109/2004 three Judge Bench decision of the Apex Court in **Rangappa v. Mohan (2010 (2) KLT 682)** . Facts therein would show that there was a dispute raised by the accused regarding the legally enforceable nature of the claim raised by the complainant. In that context, Supreme Court held the following proposition of law in paragraph 14 of the decision: _“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_ 7 Crl.Appeal No.109/2004 _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.”_ 8 Crl.Appeal No.109/2004 10. Learned counsel for the appellant contended that in the light of the proposition of law stated by the Supreme Court and also on the probabilities deducible from the evidence of DWs 2 and 3 in favour of the complainant, the court below was not justified in dismissing the complaint. Further, there is no legal infirmity in the case of the complainant in stating that Ext.P1 is only one of the cheques issued to discharge a total liability of `1,75,000/-. My attention is drawn to the testimony of DW1, the bank manager, who has been cited to prove that Ext.P1 cheque was issued long prior to the alleged transaction. DW1 himself admitted that there are certain pages missing in the register maintained by the bank regarding the issuance of cheque books. It is not possible to infer from the testimony of DW1 that the cheque was issued in the year 1992 as claimed by the accused. Therefore, considering the entire evidence, I am of the view that the testimony of PW1 coupled with the presumptions under Sections 118 and 139 of the Act will support the case of the complainant. Principles in **Rangappa** ' s case cited supra also show that the court below did not consider the scope of the presumptions in appreciating the probability of the complainant's case. Therefore, I find that the dismissal of the complaint and acquittal of the accused was not legally justifiable. In the result, the appeal is allowed. The dismissal of S.T.No.124 of 2000 on the file of the Judicial First Class Magistrate Court- 9 Crl.Appeal No.109/2004 II, Thrissur is hereby set aside. 1[st] respondent/accused is convicted for an offence under Section 138 of the Negotiable Instruments Act. He shall undergo imprisonment till the rising of the court below and pay a compensation of `90,000/- (Rupees ninety thousand only) under Section 357(3) Cr.P.C. to the appellant/complainant. If the amount is not paid, it shall be recovered as provided under Section 431 Cr.P.C. All pending interlocutory applications will stand dismissed. ## **A. HARIPRASAD, JUDGE.** ## **cks**