Shrachi Securities Ltd. v. A. Unnikrishnan

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MRS. JUSTICE SOPHY THOMAS TUESDAY, THE 31[ST] DAY OF OCTOBER 2023 / 9TH KARTHIKA, 1945`** ## **`CRL.REV.PET NO. 154 OF 2007`** ``` AGAINSTTHEJUDGMENTDATED04.11.2003INCC117/2002OF JUDICIALFIRSTCLASSMAGISTRATE-IV(MOBILE), THIRUVANANTHAPURAM. ``` ## **`CRA 549/2003 OF II ADDITIONAL SESSIONS COURT, THIRUVANANTHAPURAM`** ## **`REVISION PETITIONER/APPELLANT/ACCUSED:`** ``` A.UNNIKRISHNAN,KRISHNAVILASOM, VENMANNOR,ANAKOTTOOR,NEDUVATHOOR,KOTTARAKKARA, KOLLAMDISTRICT. ``` ## **`BY ADV SRI.B.MOHANLAL`** ## **`RESPONDENT/RESPONDENT/COMPLAINANT & STATE:`** ``` 1SHRACHISECURITIESLTD.,TODIMANSION, ``` ``` P-15,INDIANEXCHANGEPALACEEXTENSION,KOLKOTA 700073HAVINGBRANCHOFFICEAT,TC14/599PAROSROAD, OPP.VALSALANURSINGHOME,REPRESENTEDBYITSFIELD OFFICERS.SUNILKUMAR. ``` ## **`2 STATE OF KERALA`** ``` REPRESENTEDBYTHEPUBLICPROSECUTOR, HIGHCOURTOFKERALA,ERNAKULAM. ``` ## **`SHRI RENJIT GEORGE SENIOR PUBLIC PROSECUTOR`** ``` THISCRIMINALREVISIONPETITIONHAVINGBEENFINALLY HEARDON26.10.2023,THECOURTON31.10.2023DELIVEREDTHE FOLLOWING: ``` Crl.R.P.No.154 of 2007 2 ## **O R D E R** This revision is at the instance of the accused in CC No.117 of 2002 on the file of the Judicial First Class Magistrate-IV (Mobile), Thiruvananthapuram, assailing the judgment in Crl. Appeal No.549 of 2003 on the file of IInd Additional Sessions Judge, Thiruvananthapuram, upholding his conviction under Section 138 of the Negotiable Instruments Act, though modified and reduced the sentence to certain extent. 2. CC No.117 of 2002 was based on a complaint filed by M/s.Shrachi Securities Ltd.-the 1st respondent herein, against the revision petitioner herein alleging an offence punishable under Section 138 of the Negotiable Instruments Act. The complainant/1st respondent was a company registered under the Companies Act engaged in various businesses including hire purchase. The revision petitioner availed hire purchase loan of Rs.1,00,000/- from the complainant company for purchasing KL-01/C-8209 mini bus. The amount was agreed to be repaid in 24 monthly installments. The revision petitioner defaulted the repayments, and so, the complainant issued notice to him, and in response, he reached the office of the complainant on 06.02.2002 and issued a cheque for the balance amount due,i.e., Rs.1,24,500/-. When that cheque was presented for collection, it was returned dishonoured for the reason Crl.R.P.No.154 of 2007 3 “insufficient funds”. A registered lawyer notice was sent on 22.02.2002, calling upon the revision petitioner to pay the amount. Though he received the same on 28.02.2002, no reply was sent and no repayment was made. Hence the complainant/1st respondent preferred the complaint and learned Magistrate took cognizance under Section 138 of the Negotiable Instruments Act, and summons was issued to the revision petitioner. 3. On appearance, particulars of offence was read over, to which the revision petitioner pleaded not guilty, and claimed to be tried. PW1 was examined and Exts.P1 to P6 were marked from the side of the complainant/1st respondent. The revision petitioner denied the incriminating circumstances brought out in evidence, and he contended that though the signature in the cheque belongs to him, it was not issued towards discharge of any legally enforceable debt. It was given as a blank cheque affixing his signature only, as a security for the loan amount availed by him, at the time of availing the loan in the year 1997. Misusing that cheque, a false case was foisted against him. He got examined himself as DW1 and marked Ext.D1 from his side. 4. On an anxious consideration of the rival contentions and on analysing the facts and evidence, the trial court found the revision petitioner guilty under Section 138 of the Negotiable Crl.R.P.No.154 of 2007 4 Instruments Act and he was convicted and sentenced to undergo simple imprisonment for three months and to pay Rs.1,24,500/- as compensation under Section 357(3) of Cr.P.C., and in default to undergo simple imprisonment for one month. He was also directed to pay Rs.1,000/- as cost under Section 359 of the Cr.P.C., and in default to undergo simple imprisonment for ten days. 5. Aggrieved by the conviction and sentence, the revision petitioner preferred Crl. Appeal No.549 of 2003. The appellate court found that the vehicle covered by the hire purchase agreement was seized by the complainant/1st respondent and it was sold. It was further found that Rs.57,000/- was already paid by the revision petitioner towards the loan amount, in ten monthly installments. The appellate court was of the view that after adjusting the monthly installments already paid, and also the sale price of the vehicle received by the the complainant/1st respondent, the revision petitioner was not liable for compensation to the tune of Rs.1,24,500/as ordered by the trial court, and so the compensation amount was reduced to Rs.75,000/-, and the substantive sentence of three months imposed by the trial court was reduced to imprisonment till rising of the court. 6. The revision petitioner is assailing the judgment of the appellate court mainly on two grounds. The first ground is that Crl.R.P.No.154 of 2007 5 Ext.P3 cheque was not issued towards discharge of any legally enforceable debt and it was given only as a security at the time of availing the hire purchase loan, in the year 1997. The second ground is that the vehicle covered by the hire purchase loan agreement was already seized by the complainant/1st respondent and it was sold out for profit, and so no complaint was maintainable against him. 7. Though notice was served to the 1st respondent through paper publication, they opted to remain absent. Heard learned counsel for the revision petitioner. 8. In this revision petition, this Court is called upon to verify the legality, propriety and correctness of the decision taken by the appellate court. 9. The revision petitioner is admitting his signature in Ext.P3 cheque. But according to him, it was given as a security when he availed the hire purchase loan in the year 1997. In order to substantiate that fact, he would point out that the cheque was not written in hand, and it was typewritten. If that cheque was given by the revision petitioner, towards discharge of a debt due from him, in normal course, he may fill up the cheque in his own hand writing, specifying the date and amount. PW1-the power of attorney holder of the 1st respondent deposed before the trial court that, on receipt Crl.R.P.No.154 of 2007 6 of notice sent from the company, the revision petitioner reached their office and he himself typed the cheque at the office. That statement is difficult to be believed as there is no chance for a common man to fill up his cheque by typewriting, at the office of the financier. Moreover, PW1 admitted that the hire purchase transaction was in the year 1997. The cheque is dated 06.02.2002. It is further admitted by PW1 that on 30.07.1998, the vehicle was seized by the company and it was sold. PW1 has not stated the amount for which that vehicle was sold, and no records whatsoever have been produced to prove its sale price. In the witness box, PW1 stated that to his memory the vehicle was sold out for Rs.25,000/-, for which no scrap of paper has been produced by him. He admitted that the revision petitioner repaid Rs.57,000/- in ten installments towards the loan amount of Rs.1,00,000/-. DW1-the revision petitioner contended that the vehicle was sold by the 1st respondent for an amount of Rs.75,000/-. Since the 1st respondent sold out that vehicle, it was their burden to prove the actual sale price of that vehicle, to show the balance due from the revision petitioner. Though the vehicle was sold in the year 1998, PW1 would say that they sent a notice to the revision petitioner to pay the balance amount and accordingly the revision petitioner reached the office of the 1st respondent and issued Ext.P3 cheque Crl.R.P.No.154 of 2007 7 for discharging that debt. But the notice sent to the revision petitioner in the year 2002 was not produced by him to substantiate his contention. The revision petitioner when examined before court as DW1, submitted that he received Ext.D1 notice from the 1st respondent after seizing the vehicle and that notice is dated 07.08.1998. Ext.D1 notice says that the vehicle was seized on 30.06.1998 and if he is not interested in releasing it, he has to forward its RC Book. When he reached their office, in the year 1998, in pursuance to Ext.D1 notice, the respondent asked for Rs.5,000/- to close that matter, but it was not paid by him. He never went to the office of the 1st respondent in the year 2002, and never issued Ext.P3 cheque dated 06.02.2002, after typewriting the contents. There is nothing to show issuance of any notice in the year 2002, or to show that the revision petitioner went to the office of the 1st respondent in the year 2002. The fact that seizure and sale of the vehicle covered by the hire purchase agreement was suppressed in the complaint, and the fact that the cheque was a typewritten one, are sufficient to doubt the case of the 1st respondent. Those facts will substantiate the case of the revision petitioner that the said cheque was issued as a blank one affixing his signature only, as a security for the hire purchase loan availed by him in the year 1997. After seizing and selling that vehicle, Crl.R.P.No.154 of 2007 8 without producing any materials to show the sale price of that vehicle, the 1st respondent filled up that cheque by typewriting, and presented it before bank, and got it dishonoured. 10. According to PW1, Ext.P3 cheque was issued on 06.02.2002 and it was bearing the same date as 06.02.2002. The learned counsel for the revision petitioner would contend that if the revision petitioner was having the amount covered by the cheque in his bank account as on 06.02.2002, he need not have issued a cheque, and instead he could have directly paid that amount in cash. That argument also assumes significance from the facts of the case. 11. Learned counsel for the revision petitioner relied on the decision **Sudha Beevi v. State of Kerala** reported in **[2004 (2) KLT 746]** to say that the hirer of a motor vehicle cannot be prosecuted under section 138 of the Negotiable Instruments Act. When cheque was issued towards the hire purchase loan amount and thereafter the vehicle was repossessed even before the cheque was presented for encashment, it was held that there was no doubt about the fact that by effecting seizure of the vehicle, the owner had exercised the option availed to him under the agreement. the post-dated cheques in the hands of the owner will become instruments, for which consideration had failed. Paragraphs 20 and Crl.R.P.No.154 of 2007 9 ## 21 of the decision **Sudha Beevi’s case** cited _(Supra)_ read thus: “20. A perusal of various clauses in Annexure A8 agreement, in particular clauses 8 and 9, would clearly show that the owner is not entitled to present any of the post dated cheques for encashment after termination of the agreement, especially after the vehicle was re-possessed by him. Even though the post dated cheques issued by the hirer were supported by consideration at the time when they were issued, they had ceased to be so when the vehicle was re-possessed. The consideration had failed subsequently. Therefore, I have no hesitation to hold that the cheque dated September 5, 1999 which was the subject matter of Annexure A1 complaint was not supported by any consideration, since the agreement had stood "determined _ipso facto_ " and also since the owner had admittedly re-possessed the vehicle even before the cheque was presented for encashment. Thus, there is no doubt that by effecting seizure of the vehicle, the owner had exercised the option available to him under the agreement. The post-dated cheques in the hands of the owner had become instruments for which consideration had failed. In that view of the matter, no offence punishable under S.138 of the Act would be attracted, since it is trite that in order to attract the above penal provision, the "debt or other liability" must be a "legally enforceable debt or liability". If the negotiable instrument is not supported by consideration, there is no question of the provisions of S.138 of the Act being attracted. 21. There is yet another reason to take the above view in this case. It is admitted by the complainant that Crl.R.P.No.154 of 2007 10 the seized vehicle was sold later and the sale price was adjusted towards the liability payable by the hirer. It is on record that respondent No.2/ complainant has already filed a suit before the High Court of Madras (Annexure A9) for recovery of a total sum of Rs.1284503/- with interest and costs. The plaint claim includes the alleged balance amount payable under the agreement after adjusting the sale proceeds of the vehicle and all other expenses in connection with the transaction between the parties. Thus it is clear that the complainant/owner has already initiated steps to recover the liabilities from the hirer as provided under clause 9 of the agreement. In that view of the matter, the criminal proceedings initiated against the petitioner cannot be sustained.” 12. In the case cited _supra_ the seizure and sale of the vehicle was after issuance of the cheque. But in the case on hand, the facts are different. Here the case of the 1st respondent is that the cheque was issued after seizure and sale of the vehicle, and after adjusting the sale price towards the loan amount. But PW1 admitted that Rs.57,000/- was already repaid in ten installments and the vehicle was seized and sold, and to his memory, the sale price was Rs.25,000/-. But he has not produced any scrap of paper to show that the balance amount was calculated as Rs.1,24,500/-. No notice was seen issued to the revision petitioner intimating the balance due, and asking him to remit that amount. The vehicle was seized and sold in the year 1998. The cheque is dated 06.02.2002. There Crl.R.P.No.154 of 2007 11 is nothing to show that in the year 2002, the revision petitioner reached the office of the 1st respondent to issue Ext.P3 cheque. No evidence is there to prove that Ext.P3 cheque was issued towards the balance amount due, after adjusting the sale price. 13. From the facts and circumstances narrated above, it is clear that Ext.P3 cheque was issued not towards discharge of any legally enforceable debt. The case put forward by the revision petitioner that it was issued as a blank one as a security affixing his signature only, at the time of availing the hire purchase loan in the year 1997 is amply proved. Hence the judgment rendered by the appellate court as well as the trial court are liable to be set aside. In the result, the revision petition is allowed and the conviction and sentence imposed on the revision petitioner under Section 138 of the Negotiable Instruments Act is set aside. His bail bond is canceled and he is set at liberty forthwith. Sd/- **SOPHY THOMAS JUDGE** DSV/-