Sibi Mathew v. M.C. Rajan and State of Kerala

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MRS. JUSTICE C.S. SUDHA** **FRIDAY, THE 26[TH] DAY OF JULY 2024 / 4TH SRAVANA, 1946** **CRL.A NO. 758 OF 2006** **AGAINST THE JUDGMENT DATED 31.01.2002 IN CC NO.1511 OF 1999 OF ADDITIONAL CHIEF JUDICIAL MAGISTRATE (ECONOMIC** **OFFENCES), ERNAKULAM.** ## **APPELLANT/COMPLAINANT:** **SIBI MATHEW, JOSEPH VILLA, AZAD ROAD, TRIPLUNITHURA, ERNAKULAM DISTRICT. BY ADV SRI.S.SREEKUMAR** ## **RESPONDENTS/ACCUSED:** |**1**|**M.C.RAJAN,**| |---|---| ||**PROPRIETOR, M/S. RAJU ASSOCIATES,**| ||**POOMTHOTTATHIL HOUSE, CHOTTANIKKARA.**| |**2**|**STATE OF KERALA,**| ||**REPRESENTED BY PUBILC PRROSECUTOR,**| ||**HIGH COURT OF KERALA, ERNAKULAM.**| ||**BY ADVS.**| ||**SANAL P.RAJ, PUBLIC PROSECUTOR**| ||**SRI.GEO PAUL**| **THIS CRIMINAL APPEAL HAVING COME UP FOR FIANL HEARING** **ON 19.07.2024, THE COURT ON 26.07.2024 DELIVERED THE FOLLOWING:** 2 Crl.A.No.758 of 2006 ## **C.S.SUDHA, J.** **----------------------------------------------Criminal Appeal No.758 of 2006 ------------------------------------------------Dated this the 26th day of July 2024** ## **J U D G M E N T** This appeal under Section 378(4) Cr.P.C. has been filed by the appellant/complainant in C.C.No.1511/1999 on the file of the Additional Chief Judicial Magistrate (Economic Offences), Ernakulam aggrieved by the judgment dated 31/01/2002 by which the first respondent/accused was acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (the NI Act). 2. The complainant, is an independent share broker. The accused, proprietor of share broker firm by name 'M/s.Raju Associates', is a member of the Cochin Stock Exchange. During 1992-1993, the accused was doing business in the name of M/s. Raju Associates. The complainant joined in the firm of the accused on 06/03/1992, at which time as directed by the accused, he had 3 Crl.A.No.758 of 2006 deposited an amount of ₹50,000/- as security and an amount of ₹6,200/- as fees with the firm on a condition that it would be returned as and when required by the complainant. The complainant worked with the firm till October 1996. During the said period the share business was quite bad. The accused settled the account of the complainant. When the accounts were prepared and it was found that an amount of ₹1,48,594/- was due to the complainant as business profit and towards the value of the share certificates. The accused had also promised to repay the deposit amount of ₹56,200/-. The accused convinced the complainant that he was in heavy financial difficulty and that he would be able to raise the amount only by the end of February 1997. Thus, in discharge of the liability of ₹1,48,594/-, the accused issued Ext.P1 cheque dated 01/10/1996 drawn on the Syndicate Bank, Cochin Stock Exchange Branch, Ernakulam. Another cheque for ₹56,200/drawn on the same bank was also issued in favour of the complainant. Ext.P1 cheque was first presented for encashment on 19/02/1997. The cheque was returned due to insufficient funds in the account of the accused to honour the cheque. The complainant 4 Crl.A.No.758 of 2006 issued a statutory notice to the accused. However, the name of the accused had been mistakenly typed as 'Reji' instead of 'Rajan' and hence the notice returned unserved. The accused knowing about the fact of the dishonour of the cheque threatened and warned the complainant from presenting the cheque in the bank. When the complainant insisted for payment of the amount due to him, the accused filed a false private complaint and got it forwarded under Section 156(3) Cr.P.C. to the S.I.of Police, Central Police Station alleging the commission of the offence under Section 468 IPC. The complainant was able to get anticipatory bail, which all the more agitated the accused. His intention was to get the custody of the complainant illegally by influencing the police and to create false documents. After the complainant got anticipatory bail, the accused continued to harass the complainant in one way or the other. 2.1. After the presentation of Ext.P1 cheque on 19/02/1997, the accused filed several false complaints before different police stations and courts. On 29/03/1997, the complainant again presented the cheque for encashment through the same bank. Then 5 Crl.A.No.758 of 2006 also the cheque was dishonoured on the ground of insufficient funds. On the same day the complainant caused to issue a statutory notice to the accused informing him of the dishonour of the cheque. The accused accepted the notice and sent a reply raising false and baseless contentions. Hence, the complaint. 3. After recording the sworn statement of the complainant, the case was taken on file as C.C.503/97 by the jurisdictional Magistrate. The accused appeared before the court on receipts of summons. The substance of the accusation was read over and explained to the accused, to which he pleaded not guilty. The complainant was examined as PW1 and Exts.P1 to P7 were marked. After closing the evidence of the complainant, the accused was duly questioned under Section 313(1)(b) Cr.P.C. He denied the entire allegations and pleaded innocence. DW1 was examined and Exts.D1 to D9 were marked on the side of the accused. 4. The trial court on a consideration of the oral and documentary evidence and after hearing both sides, found the accused not guilty of the offence punishable under Section 138 of 6 Crl.A.No.758 of 2006 the N.I. Act and hence acquitted him under Section 255(1) Cr.P.C. Aggrieved, the complainant has come up in appeal. 5. The only point that arises for consideration in this appeal is whether the finding of acquittal of the accused requires any interference by this Court. 6. Heard both sides. 7. The signature in Ext.P1 cheque is admitted. It is also admitted that the cheque had been issued from the account of the accused. Exts.P2 to P4 and P6 will show that the cheque was dishonoured due to insufficient funds in the account of the accused and that statutory notice was also issued to the accused within the stipulated time and that the compliance was also filed within time. Therefore, the initial burden has been discharged by the complainant and the presumption under Sections 118 and 139 comes into play. The onus then shifted to the accused to rebut the presumption contained under the Sections. According to the accused, no amount was due to the complainant and that the complainant, his authorized agent, had misused one of his cheques 7 Crl.A.No.758 of 2006 and has filed the false complaint. In support of this stand he relies on the testimony of DW1, another authorized agent of the accused. The testimony of DW1 only shows that for conducting the business, the accused had authorized both his authorized agents, that is, the complainant as well as DW1 to use the signed cheques that were kept in the office for the purpose of transacting the stockbroking business. That would not automatically lead to the conclusion that the complainant had stolen one of the cheques and has misused the same. 8. The trial court disbelieved the case of the complainant as it was found that Ext.P5 statement of accounts had not been proved. According to the complainant, Ext.P5 is the full and final settlement of the accounts between the parties and that on settling the accounts it was found that the accused owed him an amount of ₹1,48,594/- and hence Ext.P1 cheque was issued. Ext.P5 is disputed by the accused. It is true that the complainant did not take any steps to examine Geetha, the accountant of the accused, who is stated to have prepared Ext.P5. It was also found that in case of bad 8 Crl.A.No.758 of 2006 delivery of shares due to the fault of the authorized agent, the risk and the liability would be still with the broker, that is, the accused. Exts.D3, D4 and D5 showed that share certificates were returned for bad delivery. It was admitted by the complainant when examined as PW1 that the transactions in Exts.D3, D4 and D5 had been done by him. According to PW1, he had no prior information of the bad delivery of the shares; that he had never been informed by the accused and that he was ready to take steps to amend and rectify the same. Therefore, finding that amounts were due from the complainant under the aforesaid head to the accused, the trial court held that Ext.P5 could not be taken as the full and final settlement of the accounts between the parties as alleged by the complainant. The trial court therefore concluded that Ext.P1 cheque could not be said to have been issued for the amounts due from the accused to the complainant when the business of the former was stopped and the accounts settled between the parties. Though evidence has come on record regarding bad delivery of shares, it is admitted that till date no demand has been made by the accused to the complainant to make good the loss alleged to have been suffered by 9 Crl.A.No.758 of 2006 him due to the act(s) of the complainant. 9. Under Section 118 of the Act unless the contrary is proved, it has to be presumed that the cheque had been made or drawn for consideration. Under Section 139 the Court has to presume, unless the contrary is proved that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus in complaints under Section 138, the Court has to presume that the cheque had been issued for a debt or liability, which presumption is rebuttable. The burden of proving that a cheque had not been issued for a debt or liability is on the accused. (See **Beena v. Muniyappan, AIR 2001 SC 2895 : 2001 KHC 832** and **Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16** ). 10. Here, apart from the testimony of DW1 and Exts. D3 to D5, the accused has not led in any evidence to rebut the presumption contained under Sections 118 and 139 of the Act. As noticed earlier, the testimony of DW1 would only show that the complainant and DW1 were authorized agents of the accused and that they were authorized to use the signed cheques of the accused 10 Crl.A.No.758 of 2006 for transacting the business. That would not automatically lead to the conclusion that the complainant had misused the cheque especially when the accused though contends that amounts were due to him on the basis of Exts.D3 to D5 bad deliveries, till date has not take any steps to recover the amounts from the complainant. Mere denial by the accused is not sufficient to rebut the presumption contained under the aforesaid sections. As held in **Beena** (Supra) the accused has to prove in the trial by leading cogent evidence that there was no debt or liability. The accused not having led any evidence could not be said to have discharge the burden cast on him. The accused not having discharged the burden of proving that the cheque had not been issued for a debt or liability is certainly liable under section 138 of the Act. 11. It has come in evidence that the accused had given a civil case against the complainant claiming a decree for an amount of ₹97,000/- and obtained a decree in his favor. It is also admitted that the decree was an _ex parte_ one. The application to set aside the _ex parte_ decree filed by the complainant was dismissed. PW1 deposed that he had filed a CMA against the said order and that the 11 Crl.A.No.758 of 2006 same was pending. It was submitted during the course of the arguments that the said CMA had been allowed and thereafter the accused never prosecuted the case and hence the suit resulted in a dismissal. 12. It is true that the accused had sent Ext.D1 lawyer notice dated 08/03/1997 to the complainant contending that he had given some signed blank cheque leafs to the complainant in his capacity as the authorized agent of the former ; that the unused cheque leafs had not been returned despite several demands and therefore, demanded the return of the cheque leafs and the signed blank letter heads. The endorsement in Ext.P1 cheque dated 01/10/1996 shows that it was presented before the Dhanalakshmi Bank, Shanmukham Road, Ernakulam on 19/02/1997. According to the complainant, the cheque on the first presentation was dishonoured due to insufficient funds in the account of the accused. Thereafter he had presented the cheque for the second time on 29/03/1997 which again resulted in its dishonor due to insufficient funds in the account of the accused. It is true that the complainant has not adduced any evidence to 12 Crl.A.No.758 of 2006 show that the cheque had been presented twice on 19/02/1997 and thereafter on 29/03/1997. However, in the Ext.P4 reply notice dated 08/04/1997, the allegation of the complainant in Ext.P3 notice that the cheque had been presented on 29/03/1997 is not seen disputed. Ext.P2 memo dated 29/03/1997, Ext.P3 notice dated 29/03/1997 and Ext.P4 reply notice dated 08/04/1997 are admitted. Therefore, it is probable as submitted on behalf of the complainant that the accused coming to know the former had initiated steps on the basis of Ext.P1 cheque, issued Ext.D1 letter raising false contentions. This I say so because, it has come out from the materials on record that the accused had set the criminal law in motion by complaining to the police alleging the commission of the offence punishable under section 468 IPC by the complainant. It was submitted during the course of the arguments that the said case was referred by the police and that no protest complaint or other steps had been taken by the accused. It is true that the complainant has not produced any evidence to show that the crime had been referred. However, the accused has also not produced any evidence to show that such criminal proceedings are still pending. 13 Crl.A.No.758 of 2006 13. The evidence on record shows that Ext.P1 cheque has been dishonoured for insufficient funds in the accounts of the accused and that all the statutory formalities required to be fulfilled have been complied with in the case. A mere denial of the transaction is not sufficient and the accused has to show cogent evidence to show that in all probability there was no passing of consideration at all. No such circumstances have been brought in. Hence, the trial court went wrong in acquitting the accused. In the result, the appeal is allowed. The impugned judgment is set aside. The accused is found guilty of the offence punishable under Section 138 of the Act. Hence, he is sentenced to imprisonment for a day till the rising of the court and to a fine of ₹1,50,000/- (the cheque amount of ₹1,48,594/- rounded to ₹1,50,000/-) and in default simple imprisonment for three months. Interlocutory applications, if any pending, shall stand closed. **==> picture [241 x 43] intentionally omitted <==** **Sd/-** **C.S.SUDHA JUDGE** ak