Sree Gokulam Chit and Finance Company Pvt. Ltd. v Rasheed P.S and State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM ## PRESENT THE HONOURABLE MR.JUSTICE ZIYAD RAHMAN A.A. SATURDAY, THE 4TH DAY OF DECEMBER 2021 / 13TH AGRAHAYANA, 1943 ## CRL.A NO. 207 OF 2015 [AGAINST THE JUDGMENT DATED 4.11.2014 IN S.T.No. 44/2012 OF THE JUDICIAL FIRST CLASS MAGISTRATE-IV, PUNALUR] [Crl.L.P. 43/2015 OF HIGH COURT OF KERALA] ## APPELLANT/COMPLAINANT: SREE GOKULAM CHIT AND FINANCE COMPANY PVT. LTD SREE GOKULAM TOWERS, NO. 66, ARCOT ROAD, CHENNAI, REPRESENTED BY ITS AUTHORISED REPRESENTATIVE: A.OMANAKKUTTAN, S/O.ACHUTHAN, AGED 43 YEARS,ASSISTANT BUSINESS MANAGER, RESIDING AT THUNDIL VEEDU, PANAVELI P.O., VETTIKKAVALA VILLAGE, KOTTARAKKARA TALUK, KOLLAM - 691 544. BY ADV SRI.MAHESH V RAMAKRISHNAN ## RESPONDENTS/ACCUSED & STATE: 1 RASHEED P.S AGED 51 YEARS S/O.SAINUDHEEN, RAUTHAR, THADATHIL VILAYIL, PAZHAKULAM P.O., ADOOR (BHARATH TAXTILES ANCHAL), PATHANAMTHITTA - 691 527. 2 STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. R1 BY ADV SRI.MANU ROY R2 BY SRI.ARAVIND V. MATHEW, PP THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 24.11.2021 THE COURT ON 4.12.2021 DELIVERED THE FOLLOWING: CRL.APPEAL No.207 of 2015 2 ## JUDGMENT The appellant is the complainant in S.T No.44 of 2012 on the file of the Judicial First Class Magistrate Court-IV, Punalur. The aforesaid complaint was filed alleging offence punishable under Section 138 of the Negotiable Instruments Act against the 1[st] respondent herein. 2. The case of the appellant/complainant is that it is a private Company registered under the Companies Act, 1956 and is engaged in the business of chits and financing. The 1[st] respondent/accused had subscribed two chits from the Anchal branch of the appellant Company each having the sala value of Rs.1,00,000/-. The chits were prized by the accused in the month of July, 2007 and the amount was received by him. However, he defaulted the payments towards prize chits and as on 11.4.2011 an amount of Rs.1,88,900/- become due. In discharge of the said liability, the 1[st] respondent issued a cheque bearing No.518046 for CRL.APPEAL No.207 of 2015 3 Rs.1,88,900/- drawn on Indian Overseas Bank, Adoor branch. However, the said cheque was dishonoured when presented for collection through North Malabar Gramin Bank, Anchal branch on the reason that the funds were insufficient. Thereupon, statutory notice was sent by the appellant to the accused but he failed to pay the amount or sent any reply. The complaint was submitted in such circumstances. 3. In support of the contention put forward by the appellant/complainant, PWs. 1 and 2 who are Assistant Business Manager and the Manager of Anchal branch of the appellant Company were examined. Exhibits P1 to P9 were marked and from the side of the 1[st] respondent Ext.D1 was marked. No oral evidence was adduced from the side of the 1[st] accused. 4. After the trial, the learned Magistrate dismissed the said complaint as per the judgment dated 4.11.2014 on the ground that the appellant CRL.APPEAL No.207 of 2015 4 failed to prove the allegations against the 1[st] respondent and accordingly the 1[st] respondent was acquitted. This appeal is filed in the above circumstances. 5. Heard the learned counsel for the appellant, the learned counsel for the 1[st] respondent and the learned Public Prosecutor for the 2[nd] respondent. 6. The main contention put forward by the learned counsel for the appellant is that, the learned Magistrate failed to appreciate the fact that the appellant was having a presumption under Section 139 as well as Section 118 of the Negotiable Instruments Act with regard to the existence of the legally enforceable debt. Despite the above, the learned Magistrate arrived at a finding that the appellant failed to prove the transactions whereas the appellant has examined two witnesses in support of the same and Exhibits P8 and P9 series would clearly indicate the CRL.APPEAL No.207 of 2015 5 transactions between the appellant and the 1[st] respondent-accused. The learned counsel also placed reliance upon Bir Singh v. Mukesh Kumar [2019(1)KHC 774(SC)]. 7. On the other hand, the learned counsel for the 1[st] respondent opposes the said contention by pointing out that the judgment rendered by the learned Magistrate is legally sustainable and it does not suffer from any legal infirmity warranting any interference of this Court. 8. Section 118 of the Negotiable Instruments Act contemplates a presumption that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred. The aforesaid provision reads as follows: **“Section 118 in The Negotiable Instruments Act, 1881** 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, CRL.APPEAL No.207 of 2015 6 negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration; (b) as to date —that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance —that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer —that every transfer of a negotiable instrument was made before its maturity; (e) as to order of indorsements —that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) as to stamps —that a lost promissory note, bill of exchange or cheque was duly stamped; (g) that holder is a holder in due course —that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.” Similarly, another presumption contemplated under Section 139 of the Negotiable Instrument Act is that, unless contrary is proved, 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. Therefore, once it is proved that a negotiable instrument has been executed and handed over to the payee thereof the presumption as contemplated under the aforesaid provision comes into play. Unless the said presumption is rebutted by the accused by adducing some evidence, the court has CRL.APPEAL No.207 of 2015 7 to proceed on the basis of existence of a legal liability towards the complainant. In Bir Singh’ s case (supra) this Court observed as follows: _“36. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under S.139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of S.138 of the Negotiable Instruments Act._ _37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, S.20, S.87 and S.139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of S.138 would be attracted._ _38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence._ _39. It is not the case of the respondent - accused that he either signed the cheque or parted_ CRL.APPEAL No.207 of 2015 8 _with it under any threat or coercion. Nor is it the case of the respondent - accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under S.139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative._ _40. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under S.139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”_ 9. In this case, the defence put forward by the 1[st] respondent is that the cheque which was collected by the appellant as part of the chitty transaction at an earlier point of time and it was later misused by the appellant by entering figures therein. It was specifically contended by the 1[st] respondent that the said cheque was issued only for the security for the chitty transaction and was never intended to be presented for collection. However, the crucial aspect to be noticed is that even going by the case of the 1[st] respondent, the CRL.APPEAL No.207 of 2015 9 signature of the cheque is admitted. There is no dispute as to the fact that, the 1[st] respondent was a subscriber of two chits which were prized. Exhibit P8 series are the account statements of the aforesaid two chits which were duly proved by PW2. The aforesaid account statement indicates the transactions between the parties and it reveals the details of the amounts due. The learned Magistrate rejected the case of the appellant on the ground that the specific figure that is found mentioned in the cheque is not contained in Annexure P8 series account statements. In my view, that by itself cannot be treated as a ground for rejecting the said contention. Firstly the cheque was issued for discharging the liability towards both the said transactions together. Therefore, the exact figure may not find a place in those statements as the amount mentioned in Ext.P2 cheque is the aggregate of the total arrears. Apart from the above, in the light of presumption under Section 139 of the Negotiable Instruments CRL.APPEAL No.207 of 2015 10 Act, the appellant is entitled to succeed. In this case, the 1[st] respondent could not make out any case by adducing any evidence or otherwise to rebut the presumption available in favour of the appellant. As held in Bir Singh’ s case (supra) in the absence of any such evidence rebutting the said presumption, it has to be held that Ext.P2 cheque was drawn in discharge of an existing liability. Thus in the light of the presumption under Section 139 which stands unrebutted and also the supporting materials in the form of Exts.P8 and P9 series, I find that the cheque was issued in discharge of a legal liability towards the appellant herein. 10. The legal requirements for attracting the offence under Section 138 of the Negotiable Instruments Act regarding the issuance of notice and timeline to be followed before initiating the proceedings are seen duly complied with. In such circumstances, considering the materials available on record, I am of the view CRL.APPEAL No.207 of 2015 11 that the offence under Section 138 of the Negotiable Instruments Act is clearly established and the finding entered into by the Judicial First Class Magistrate Court-IV, Punalur contrary to the same is liable to be set aside. In the result: i) The appeal is allowed; ii) The judgment passed by the Judicial First Class Magistrate Court-IV, Punalur in S.T.No.44 of 2012 dated 4.11.2014 is hereby set aside; iii) The 1[st] respondent/accused is found guilty under Section 138 of the Negotiable Instruments Act and he is convicted for the said offence; iv) The 1[st] respondent/accused is sentenced to undergo imprisonment, till rising of the court and a fine of Rs.1,88,900/- (Rupees One Lakh Eighty eight thousand and Nine hundred only). In default of payment of the CRL.APPEAL No.207 of 2015 12 same, the accused is directed to undergo simple imprisonment for four months. v) If the fine amount is realized, the entire amount shall be paid to the appellant/complainant as per Section 357(1) of the Code of Criminal Procedure. _Sd/-_ ZIYAD RAHMAN A.A. JUDGE pkk