S. Subhash v. State of Kerala and Alappuzha District Co-operative Bank Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE S.SIRI JAGAN** **WEDNESDAY, THE 12TH DAY OF DECEMBER 2012/21ST AGRAHAYANA 1934** **Crl.Rev.Pet.No. 2255 of 2012 () ------------------------------CRA.553/2011 of ADDL.SESSIONS COURT-I,MAVELIKKARA CC.40/2009 of J.M.F.C., KAYAMKULAM** ## **REVISION PETITIONER(S)/APPELLANT/ACCUSED:** **----------------------------------------** **S.SUBHASH, S/O.P.S. GANGADHARAN, PALLICKAL, GOVINDAMUTTOM PO, KAYAMKULAM.** **BY ADVS.SRI.GEORGE VARGHESE(PERUMPALLIKUTTIYIL) SRI.A.R.DILEEP** ## **RESPONDENTS/RESPONDENTS/STATE AND COMPLAINANT:** **----------------------------------------------** **1. STATE OF KERALA** **REPRESENTED BY THE PUBLIC PROSECUTORHIGH COURT OF KERALA.** **2. ALAPPUZHA DISTRICT CO-OPERATIVE BANK LTD., KAYAMKULAM MAIN BRANCH REPRESENTED BY ITS BRANCH MANAGER - 690 502.** **R2 BY ADV. SMT.K.N.RAJANI, SC, ALAPPUZHA DIST.CO.OP.BANK LTD. R1 BY ADV. SRI. BIJU MEENATTOOR - PUBLIC PROSECUTOR** **THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 12-12-2012, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** acd ## **S. SIRI JAGAN, J.** ------------------------------------------- ## Crl.R.P. No.2255 of 2012 ---------------------------------------------Dated this the 12[th] day of December, 2012 ## **ORDER** The petitioner is the accused in Calendar Case No.40 of 2009 before the Judicial First Class Magistrate's Court, Kayamkulam. He was prosecuted for an offence punishable under Section 138 of the Negotiable Instruments Act at the instance of the 2[nd] respondent herein, which is the Alappuzha District Co-operative Bank Limited. The case of the complainant was as follows: “The accused availed a trade loan from the complainant bank and in discharge of the liability arising therein, the accused issued a cheque dated 31.10.08 drawn on State Bank of Travancore, Kayamkulam branch for Rs.63,651/-. On presentation the cheque was returned unpaid for the reason “funds insufficient”. On receipt of dishonour memo, complainant caused to issue a demand notice calling upon the accused to pay back the cheque amount. The accused received the notice, but failed to repay the cheque amount within the statutory period.” 2. The complainant examined PWs 1 and 2, who are the former and the present Managers of the bank. They also marked Exts.P1 to P8 documents. The petitioner did not adduce any Crl. R.P.No.2255/12 2 evidence. After considering the evidence adduced by the complainant, the Magistrate convicted the petitioner and sentenced him to undergo simple imprisonment for one month and to pay a fine of Rs.64,000/- with a default sentence of simple imprisonment for two months. The amount of fine was directed to be paid to the complainant under Section 357 of the Cr.P.C. The petitioner filed Criminal Appeal No.553/2011 before the Additional Sessions Judge-I, Mavelikkara, who confirmed the conviction, but, reduced the substantive sentence of simple imprisonment for one month to one till the rising of the court. But, the fine amount and default sentence were confirmed. The petitioner is challenging the judgments of the courts below. 3. The petitioner's contention is that the petitioner has sufficiently rebutted the presumption under Section 139 of the Negotiable Instruments Act by the materials produced by the complainant themselves. It is submitted that from the beginning, as is evident from Ext.P8 reply by the petitioner to the statutory notice issued by the complainant, the definite case of the petitioner was that the petitioner had not executed 3 Crl. R.P.No.2255/12 the cheque, but, it was given only in a blank form as security for the due repayment of the loan amount taken by the petitioner from the complainant bank. It is his case that he had been paying instalment amounts in the loan account and the balance due was only Rs.20,000/-. His case is that the bank themselves had filled up the blank cheque given as security putting the figure of Rs.63,651/- and presented the same for encashment. According to the learned counsel for the complainant, this is clear from the document produced by the petitioner themselves, namely Ext.P7 folio from the loan register of the Bank. It is pointed out that in Ext.P7 folio of the loan register maintained by the complainant bank in the name of the petitioner, the last entry is dated 16.3.2007, as per which the balance outstanding amount is Rs.71,728/-, no further entries are made therein. But, a general endorsement is made at the bottom to the effect that the arrears as in October 2008 is Rs.57,843/- as principal and Rs.5,808/- as interest, totalling Rs.63,651/-. The petitioner submits that the payments made by the petitioner subsequent to 16.3.2007 had not been properly accounted for. He reads out the cross Crl. R.P.No.2255/12 4 examination of PW1, the Manager of the bank, who deposed to the effect that the petitioner had made payments even after 16.3.2007 and that the same are not reflected in Ext.P7 loan register folio. On the other hand, PW2, who was the previous Manager of the bank, would state in cross examination that after 16.3.2007, the petitioner did not make any payments whatsoever. But, he is unable to explain the difference between the balance outstanding as on 16.3.2007 namely, Rs.71,728/- and the amount demanded as arrears as in October 2008 as Rs.63,651/-. Therefore, according to the learned counsel for the petitioner, by the materials placed before the court by the complainant themselves, it is clear that their accounts are not reliable. That probablises his case that the cheque was given as blank signed cheque towards security for due repayment of the loan amount due from the petitioner to the bank. This is further proved by the fact that PWs 1 and 2 frankly admits in cross examination that the handwriting in the cheque does not tally with that of the signatory of the cheque. Therefore, according to the petitioner, the petitioner has probabilised the defence so as to rebut the presumption Crl. R.P.No.2255/12 5 sought to be made out by the complainant by the evidence adduced by them. Consequently, the petitioner is entitled to acquittal is the contention raised. The petitioner also relies on the decision of the Supreme Court in _**Kumar Exports**_ v. _**Sharma Carpets**_ [2009 (1) KLT 197 (SC)], wherein in a similar situation, the Supreme Court held that it is perfectly open to the accused to rebut the presumption under Section 139 of the Negotiable Instruments Act by relying on the materials placed before the court by the complainant himself. 4. In answer to the contentions raised by the petitioner, the learned counsel for the bank would contend that the fact that the handwriting in the cheque differs from the handwriting in the signature in the cheque does not lead to the presumption that it was given as a blank signed cheque. It is not the law that the person, who signs the cheque himself should fill up the cheque as well. It is perfectly open to the person, who executed the cheque, to get the cheque filled up somebody else and to sign the same in execution of the cheque. According to the learned counsel for the bank, that is what happened in this case. There is no evidence to show Crl. R.P.No.2255/12 6 that the bank has taken any blank cheque as security. PWs 1 and 2 have denied the case of the petitioner that the Vyapari Vyavasayi Ekopana Samithi was a guarantor to the loan transaction between the complainant and the petitioner. The case of the petitioner is that he issued the blank cheque as security through the Vyapari Vyavasayi Ekopana Samithi, who stood as surety. But, he has not chosen to examine anybody from the Vyapari Vyavasayi Ekopana Samithi to prove the said defence. He did not adduce any evidence whatsoever in support of his contention. Therefore, according to the learned counsel for the bank, the presumption under Section 139, which has become available to the complainant by examining PWs 1 and 2 and producing the documents in support of their contention, stands unrebutted and therefore, the petitioner is not entitled to acquittal as claimed by the petitioner. 5. I have considered the rival contentions in detail. 6. It is settled law that the onus of proof is different for a complainant and an accused in a criminal case including one under Section 138 of the Negotiable Instruments Act. The complainant has to prove his case beyond any reasonable Crl. R.P.No.2255/12 7 doubt. But, the accused need only to prove his defence by broad probabilities. The case at hand has to be considered in the light of the said settled law. Of course, the accused has not adduced any evidence before the trial court except to cross examine the witnesses of the complainant. He has sought to prove broad probabilities of his case by relying on Ext.P7 document produced by the complainant themselves and the admission made by the witnesses examined on behalf of the complainant in cross examination. I am appalled on seeing the copy of Ext.P7 loan register of the complainant. The complainant claims to be a District Co-operative Bank, which deals with money belonging to the middle and poor sections of the Society. They are expected to safeguard the interests of the depositors and consumers of the bank. Therefore, their accounts should be kept perfectly up-to-date. In any event the same should contain all payments date-wise. But, it does not need any hairsplitting examination of the document to show that Ext.P7 is not one kept accurate. The regular entries in Ext.P7 is only up to 16.3.2007. As on that date, going by the regular entries in Ext.P7, the balance amount outstanding Crl. R.P.No.2255/12 8 in the loan account of the petitioner is Rs.71,728/-. But, even going by the case of the complainant, the balance amount due from the petitioner as in October 2008 is Rs.63,651/comprising of Rs.57,843/- as principal and Rs.5,808/- as interest. Of course, at the bottom of the page there is a general endorsement that arrears as on October 2008 is Rs.63,651/-. But, it is abundantly clear from that document itself that the payments made by the petitioner between 16.3.2007 and October 2008 which is evident from the general endorsement of the balance do not find a place date-wise in that loan register. I am at a loss to understand how a Co-operative Bank can, without proper entries regarding payment, admit that a borrower has paid amounts in the loan account. The contention of the petitioner is fortified by the evidence of PWs 1 and 2. The cross examination of PW1, a copy of which has been read out by the learned counsel for the petitioner, which is not disputed by the learned counsel for the bank, discloses that the petitioner had infact made further payments after 16.3.2007 and that those payments have not been recorded in Ext.P7 loan register. Quite contrary to that, Crl. R.P.No.2255/12 9 PW1, the former Manager says that the petitioner did not pay any amount after 16.3.2007. If that is correct, he has a duty to explain how the balance amount due has been reduced to Rs.63,651/-. No explanation is forthcoming for this discrepancy. It is in this context, the defence of the petitioner has to be appreciated. His defence from the point of replying to the statutory notice is that the cheque was issued in blank as security. Both PWs 1 and 2 admit that the handwriting in the cheque differs from the signature in the cheque. The same coupled with the glaring discrepancies in Ext.P7 loan register proves the case of the petitioner by broad probabilities, which is what is expected of an accused in a criminal case. Therefore the petitioner has succeeded in rebutting the presumption under Section 139 of the Negotiable Instruments Act, by putting serious doubts regarding the execution of the cheque. The consequence is that the complainant has failed to prove their case beyond a reasonable doubt. Consequently, the petitioner is entitled to the benefit of doubt at least. Therefore, the petitioner is entitled to succeed in this Criminal Revision Petition. 10 Crl. R.P.No.2255/12 7. Accordingly, the judgments of the courts below are set aside. The petitioner is acquitted of the offence charged against him by giving him the benefit of doubt. His bail bond is cancelled and he is set at liberty. The Criminal Revision Petition is allowed. 8. Before parting with this case, I must comment upon the way in which the Co-operative banks in this State conducts business as exemplified by the documents produced by the complainant in this case, which is a District Co-operative Bank. The Co-operative banks are established to cater to the banking needs of the middle and poor strata of the society. Writ petitions are aplenty by depositors of Co-operative Banks complaining that they are unable to get back the deposits made by them in the Co-operative banks. I myself have dealt with more than 30 writ petitions filed by depositors of various Co-operative Banks in the State complaining that the Banks are refusing to repay deposits for want of money in the Banks. One of the reasons could very well be mismanagement as is evident by Ext.P7 in this case. Ext.P7 shows the very shabby way in which a District Co-operative bank maintains its Crl. R.P.No.2255/12 11 accounts. It shows that the bank had no track of the amounts coming in and going out in the loan account of a borrower. Naturally, the same will affect the investors of the bank as well. I am surprised that the Registrar and other officers of the bank, who are expected to safeguard the interests of the public by making periodic inspections and auditing of the accounts of the bank, have not been able to detect this particular lapses on the part of the complainant bank. Perhaps, that may be one reason why the number of Cooperative banks, who are unable to return the deposits to depositors, is steadily increasing. I am of opinion that this is a fit case where the authorities concerned should start a beginning by making this bank as an example. Accordingly, I direct that a copy of this judgment be forwarded to the Registrar of Co-operative Societies, who shall cause an enquiry to be conducted into the way in which this particular bank maintains its accounts with particular reference to Ext.P7 produced in this case. The Registrar shall also bestow his attention to the question as to how the auditors, who were auditing the accounts of this bank, did not notice this Crl. R.P.No.2255/12 12 discrepancy. A comprehensive report on the enquiry conducted shall be placed before this court within a period of one month. Post this case for the purpose of production of that report after a month. **S. SIRI JAGAN, JUDGE** acd Crl. R.P.No.2255/12 13