Sisco Kuries and Loans (P) Ltd. v. Aravindakshan and State of Kerala

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ``` PRESENT ``` ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` MONDAY, THE 27[TH] DAY OF NOVEMBER 2023 / 6TH AGRAHAYANA, 1945 ``` ``` CRL.A NO. 287 OF 2011 AGAINST THE JUDGMENT DATED 30.08.2010 IN CRA 791/2008 OF ADDITIONAL DISTRICT COURT, FAST TRACK NO.I, THRISSUR ``` ``` Crl.L.P. 1213/2010 OF HIGH COURT OF KERALA ``` ``` AGAINST THE JUDGMENT DATED 29.10.2008 IN C.C.NO.1012/2005 OF THE JUDICIAL FIRST CLASS MAGISTRATE, KUNNAMKULAM ``` ## `APPELLANT/FIRST RESPONDENT/COMPLAINANT:` ``` SISCO KURIES AND LOANS (P) LTD., REPRESENTED BY ITS MANAGER MANI YESUDAS, S/O.PHILIP, ANTHIKKAD HOUSE, (PO) KUNNAMKULAM, THRISSUR. ``` ``` BY ADVS.SRI.K.A.SATHEESA BABU MAHESH V MENON ``` ## `RESPONDENTS/ APPELLANT AND SECOND RESPONDENT/ACCUSED:` ``` 1ARAVINDAKSHAN, S/O.SANKARAN, KAITHAKKAL HOUSE, (PO) KANDANASSERY, THRISSUR (DT.), PIN 680 001 2THE STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. ``` ``` BY ADVS.SRI.U.K.DEVIDAS ``` ``` OTHER PRESENT: ``` ``` SR PP SMT SEETHA S ``` ``` THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON 27.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` Crl.A.No.287/2011 ``` ``` -:2:- ``` Dated this the 27[th] day of November,2023 ## **J U D G M E N T** This appeal is filed questioning the correctness and legality of the judgment in Crl.A. No.791/2008 passed by the Court of the Additional Sessions Judge, (Fast Track Court No.I), Thrissur (Appellate Court), finding the first respondent/accused not guilty for the offence under Section 138 of the Negotiable Instruments Act, 1988 (for brevity, ‘N.I. Act’) and consequentially acquitting him and, thereby, setting aside the conviction and sentence in C.C.No.1012/2005 of the Court of the Judicial First Class Magistrate, Kunnamkulam (Trial Court). The appellant was the complainant and the first respondent was the accused before the Trial Court. For the sake of convenience, the parties are referred to as per the status before the Trial Court. ``` Crl.A.No.287/2011 ``` ``` -:3:- ``` ## **Brief facts:** 2. The complaint was filed asserting that the complainant was doing financial business. The accused had availed a hire purchase loan from the complainant to purchase a motorcycle bearing registration No.KL-8-A-2673. The accused agreed to repay the loan amount in instalments of Rs.2,480/- per month. However, the accused defaulted in repayment of the instalments. Subsequently, the accused issued Ext P1 cheque in favour of the complainant in discharge of his liability. The cheque, on presentation to the Bank for collection, got returned by Ext P2 memorandum due to ‘insufficient funds’ in the bank account of the accused. Although the complainant had issued Ext P4 statutory lawyer notice, and the accused receiving the same, he refused to pay the demanded amount. Instead, he sent Ext P7 reply notice and stating that he is not liable to pay any amount. Hence, the accused has committed ``` Crl.A.No.287/2011 ``` ``` -:4:- ``` the above offence. 3. The learned Magistrate took cognizance of the offence and issued process to the accused. The accused entered appearance and pleaded not guilty to the substance of accusation read over to him. In the trial, the complainant examined a witness as PW1 and marked Exts P1 to P11 in evidence. The accused denied the incriminating circumstances appearing against him in the evidence in the questioning under Section 313 of the Code of Criminal Procedure, 1973 (‘Code’, in short). The accused did not let in any defence evidence. ## **Trial Court judgment:** 4. The Trial Court, after analysing the materials placed on record, found the accused guilty and convicted him for the offence under Section 138 of the N.I. Act, and sentenced him to pay a fine of Rs.49,600/-, and in default of payment of fine to ``` Crl.A.No.287/2011 ``` ``` -:5:- ``` undergo simple imprisonment for a further period of three months. If the fine amount was realised, the same to be paid to the complainant as compensation under Section 357(1) (b) of the Code. 5. Aggrieved by the said judgment, the accused preferred Crl.A.No.791/2008 before the Appellate Court. ## **Appellate Court judgment:** 6. The Appellate Court, after re-appreciating the materials placed on record, by the impugned judgment, found the accused not guilty and consequentially acquitted him. 7. Challenging the said judgment; the complainant is in appeal. 8. Heard; Sri. Mahesh V. Menon, the learned counsel appearing for the appellant; Sri. U.K. Devidas, the learned counsel appearing for the first respondent and Smt. Seetha. S, the learned Senior Public ``` Crl.A.No.287/2011 ``` ``` -:6:- ``` – Prosecutor appearing for the second respondent State. 9. Is there or error in the any illegality impugned judgment. 10. It is well-settled in a plethora of precedents of the Hon’ble Supreme Court and this Court that, the Appellate Court should be slow in interfering with an order of acquittal, unless the conclusion arrived at by the Trial Court is patently wrong and erroneous. 11. In **Jafarudeen vs. State of Kerala** [2022 KHC 6449], the Honourable Supreme Court, after referring to its earlier judgments, has laid down the broad principles to deal with appeals against orders of acquittal. It is apposite to refer to the relevant portion of the judgment, which reads as follows: “25. Scope of Appeal filed against the Acquittal: While dealing with an appeal against acquittal by invoking S.378 of the Cr.PC, the Appellate Court has to consider whether the Trial Court's view can be considered a possible one, ``` Crl.A.No.287/2011 ``` ``` -:7:- ``` particularly when evidence on record has been analyzed. The reason is that an order of acquittal adds up to the presumption of innocence in favour of the accused. Thus, the Appellate Court has to be relatively slow in reversing the order of the Trial Court rendering acquittal. Therefore, the presumption in favour of the accused does not get weakened but only strengthened. Such a double presumption that enures in favour of the accused has to be disturbed only by thorough scrutiny on the accepted legal parameters 12. Recently, in **Rupesh Manger (Thapa) vs.** **State of Sikkim** (MANU/SC/1014/2023), the Honourable Supreme Court has observed that an Appellate Court may reverse an order of acquittal if it is so perverse and the conclusion is not plausible. Just because another view is possible, on re-appreciation of the evidence, the Appellate Court shall not disturb the finding of acquittal and substitute its findings to convict the accused. 13. At the same time, it is trite, this Court has the power of re-appreciation of the materials on record while hearing an appeal against acquittal. ``` Crl.A.No.287/2011 ``` ``` -:8:- ``` 14. With the above observation in mind, I proceed to examine the materials on record. 15. The complainant’s case was that the accused had availed financial assistance to purchase a motorcycle. In discharge of the said liability, the accused had issued Ext P1 cheque for an amount of Rs.49,600/-, which on presentation to the Bank, got dishonoured due to 'insufficient funds’ in the bank account of the accused. Despite the receipt of the statutory lawyer notice, the accused failed to pay the demanded amount. Hence, he had committed the offence. 16. In order to substantiate the complainant’s case, PW1 was examined and Exts P1 to P11 documents were marked through him in evidence. The accused denied the incriminating circumstances appearing against him in the questioning under Section 313 of the Code. The accused did not let in ``` Crl.A.No.287/2011 ``` ``` -:9:- ``` any defence evidence. 17. The Trial Court, on finding that the accused had failed to discharge the reverse onus of proof and Ext P9 hire purchase agreement, whereby the accused had agreed to repay the loan amount in twenty four equated monthly instalments of Rs.2,480/-, held the accused guilty and consequently convicted and sentenced the accused. 18. In the appeal, the Appellate Court went on to hold that since the transaction was of the year 1998 and that the cheque was allegedly issued in 2004, that too, was a signed blank cheque, held the accused not guilty of the offence and accordingly acquitted the accused. 19. A negotiable instrument, which includes a cheque, carries the presumption of consideration under Secs.118(a) and 139 of the N.I Act. It is profitable to extract the said relevant provisions: ``` Crl.A.No.287/2011 ``` ``` -:10:- ``` “ **118. Presumptions as to negotiable instruments** – Until the contrary is proved, the following presumptions shall be made;- (a) of consideration-that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration; **139. Presumption in favour of holder.** —It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138, for the discharge, in whole or in part, of any debt or other liability”. 20. A three-Judge Bench of the Hon’ble Supreme Court in **Rangappa vs. Sri.Mohan** [2010 KHC 4325], while dealing with Sec.139 of the N.I Act has conceptualised the doctrine of ‘reverse onus’, by holding thus: “ 18. 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 presumption under S.139 is a device to prevent undue delay in the course of litigation. However, it ``` Crl.A.No.287/2011 ``` ``` -:11:- ``` 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. 21. Recently, a three-Judge Bench of the Hon’ble Supreme Court in **Kalamani Tex and Anr vs. P. Balasubramanian** [2021 (2) KHC 517] has reiterated the legal position and the doctrine of the reverse onus. It is apposite to extract the relevant paragraphs, which declares the law on the point in the following terms: “14. Adverting to the case in hand, we find on a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The Statute mandates that once the signature (s) of an accused on the cheque/negotiable instrument are established, then these ‘reverse onus’ clauses become operative. In such a situation, obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystalized by this Court in ``` Crl.A.No.287/2011 ``` ``` -:12:- ``` Rohitbhai Jivanlal Patel v. State of Gujarat (2019 (2) KHC 243).” 22. Indisputably, the accused has admitted the execution of Ext P1 cheque. His defence is two fold: - (i) The debt is time barred; - (ii) The cheque was a signed blank cheque. 23. This Court in **Ramakrishnan v. Parthasaradhy** [2003 (3 ) KLT 613, after adverting to Section 25(3) of the Indian Contract Act, 1872, has held that even assuming a civil suit is barred by law of limitation a subsequent promise by way of cheque, is a written promise and matures into an enforceable contract. In the event of such a cheque getting dishonoured, the drawer of the cheque can be prosecuted for the offence under Section 138 of the N.I. Act. The execution of the cheque is an acknowledgment of a legally enforceable debt. 24. In the light of the above exposition of law and ``` Crl.A.No.287/2011 ``` ``` -:13:- ``` the fact that the accused had admitted the execution of Ext P1 cheque, which is dated 03.12.2004, it is only to be held that Ext P1 cheque was issued towards the acknowledgment of a legally enforceable debt. Therefore, I reject the first defence of the accused/first respondent. 25. Now coming to the second defence with regard to the issuing of signed blank cheque. 26. In **Bir Singh v. Mukesh Kumar** [2019 (1) KHC 774 SC], the Hon'ble Supreme Court has emphatically held that, even if a signed blank cheque is voluntarily singed and handed over by the accused towards some payment, the same would attract the presumption under Section 139 of the N.I. Act, unless the accused lets in any cogent evidence to prove that the cheque was not issued towards a legally enforceable debt. It is further observed that, it is immaterial that the cheque may be filled by any person ``` Crl.A.No.287/2011 ``` ``` -:14:- ``` other than a drawer. The onus of proof would be on the accused to prove that the cheque was not issued in discharge of a debt. 27. In the case on hand, other than for taking a defence in the cross-examination of PW1, that the cheque was issued towards a time-barred debt, the accused has not let in any evidence to rebut the reverse onus of proof casted on his shoulders under Section 139 of the N.I. Act. 28. In the above background, I am of the definite view that the Appellate Court has gone wrong in reversing the finding of the Trial Court and holding the accused not guilty and consequently, acquitting the accused. Thus, I hold that the first respondent/accused is guilty for the offence under Section 138 of the N.I. Act and he is liable to be convicted and sentenced for the said offence. 29. Now coming to the question of sentence. ``` Crl.A.No.287/2011 ``` ``` -:15:- ``` 30. In **Sasikumar v. Ushadevi** [2023(6) KHC 444] this Court after referring the earlier decisions on the point on the question of sentencing policy under Section 138 of the N.I. Act has held that the Courts while passing a sentence under Section 138 has to keep the compensatory aspect in mind rather than the punitive aspect, and the same has to be commensurate to the cheque amount, but not to exceed twice the amount. 31. In the above conspectus, I uphold the conviction of the Trial Court and sentence the first respondent/accused as per the law laid down in the afore-cited decision. 32. In the result, - (i) The appeal is allowed; - (ii) The impugned judgment in Crl.A. No.791/2008 is set aside; - (iii) The conviction of the first respondent/accused ``` Crl.A.No.287/2011 ``` ``` -:16:- ``` rendered by the Trial Court in C.C.No.1012/2005, for the offence under Section 138 of the N.I. Act, is confirmed; - (iv) The accused is sentenced to undergo imprisonment for one day (till the rising of the court) and to pay a compensation of Rs.55,000/(Rupees fifty five thousand only) within a period of sixty days from today, and in default to undergo simple imprisonment for a period of three months; - (v) The first respondent `/` accused is directed to appear before the Trial Court on or before 27.01.2024, to undergo the sentence and pay the compensation amount and in default to undergo the default sentence; - (vi) In case of failure of the first respondent/accused to appear before the learned Magistrate, as ordered above, the learned Magistrate shall execute the sentence and recover the compensation amount and also implement the default sentence, in accordance with law. ``` Crl.A.No.287/2011 ``` ``` -:17:- ``` - (vii) The execution of the sentence of the first respondent/accused shall stand deferred till 26.01.2024; - (viii) If the compensation amount is realised, the same shall be paid to the appellant/complainant in accordance with law. - (ix) The Registry is directed to forthwith forward a copy of the judgment to the Trial Court for compliance. Sd/- ## **C.S.DIAS,JUDGE** DST/27.11.23 //True copy// P.A. To Judge