Sree Gokulam Chit & Finance Co. (P) Ltd v. Thomas V. A & State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **WEDNESDAY, THE 28TH DAY OF JUNE 2017/7TH ASHADHA, 1939** **Crl.L.P..No. 7 of 2017 ()** **-------------------------ST 64/2013 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-II, SULTHAN BATHERY ------** **PETITIONER/COMPLAINANT:** **----------------------** **SREE GOKULAM CHIT & FINANCE COMPANY (P)LTD, KIZHAKKEBAGATH COMPLES, S.BATHERY, REP. BY IS AUTHORISED REPRESENTATIVE SR.K.N.SUNIL S/O NARAYANAN, AGED 49 YEARS, KANDMACHIRAYIL HOUSE, MYLAMBADI, PURAKKADI AMSOM, APPATT DESOM S.BATHERY TALUK, WAYANAD** **BY ADVS.SRI.K.S.BABU SRI.BABU SHANKAR SMT.NICHU WILLINGTON SMT.N.SUDHA** ## **RESPONDENT(S)/ACCUSED & STATE:** **-------------------------------** **1. THOMAS V.A, AGED 42 YEARS , S/O AUGUSTINE, VALLIYIL (H) KENICHIRA P.O, KENICHIRA WAYANAD.PIN 673502.** **2. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM** **BY PUBLIC PROSECUTOR SRI SAIGI JACOB PALATTY** **THIS CRIMINAL LEAVE PETITION HAVING BEEN FINALLY HEARD ON 13-01-2017, THE COURT ON 28.6.2017 PASSED THE FOLLOWING:** **K.V.** ALEXANDER THOMAS, J. ----------------------------- Crl.L.P.No.7 Of 2017 --------------------------------- Dated this the 28th day of June, 2017. ## J U D G M E N T This is an application filed by the complainant chit company seeking special leave of this Court under Sec.378(4) of the Cr.P.C to prosecute Criminal Appeal in order to impugn the judgment dated 7.5.2016 of the trial court concerned (Court of Judicial First Class Magistrate-II, Sulthan Bathery), in S.T.No.64/2013, whereby the accused therein (R-1 herein) has been acquitted of the offence punishable under Sec.138 of the N.I.Act. The complainant is a chit company. Alleging that in respect of a defaulted amount due from the principal subscriber of the chit company, the accused, as surety of the said subscriber, has voluntarily approached the complainant and had given the instant Ext.P-1 cheque dated 9.11.2012 for Rs.1,17,996/-, after being satisfied that the statement of accounts regarding the alleged liability said to be owed to the complainant by the subscriber concerned. The appellate court has clearly found that the complaint has been duly filed after satisfying the requisite statutory demand notice as contemplated in Sec.138 of the Negotiable Instruments Act. That further, PW-1, the power of attorney holder of the company, has locus ::2:: Crl.L.P.No.7 Of 2017 standi to prosecute the instant complaint for and on behalf of the company through the said power of attorney. The appellant is fully satisfied with those findings as it is in his favour and there is no necessity to consider the correctness or otherwise of those findings. 2. The basic defence set up by the accused (surety) as fortified by the version of DW-1 (subscriber) is that the accused had only given the instant cheque as a blank signed cheque as security at the time of the commencement of the chit transaction and that the accused has never voluntarily come forward to execute the said cheque on 9.11.2012 as projected by the complainant, etc. Thus, since the accused has admitted that the signature in Ext.P-1 cheque is that that of the accused and that the cheque has been drawn from an account maintained by the accused, in view of the legal principles laid down in a catena of decisions by various High Courts as well as by the Apex Court as in T.Vasanthakumar v. Vijayakumari reported in 2015 (8) SCC 378 that the complainant is entitled to draw statutory presumption under Sec.139 of the N.I. Act in this case. 3. However on a meticulous and careful analysis of the various evidentiary aspects and materials on record, the trial court has been fully satisfied that the accused in this case has strongly and ::3:: Crl.L.P.No.7 Of 2017 effectively rebutted the said statutory presumption and that thereafter the presumption has disappeared after that the complainant has not been able to prove his case, etc., and that the accused is entitled for the benefit of acquittal. Those crucial findings of the trial court are based on the following aspects:- (A) DW-1 (Sri.Santhosh K.J), is the subscriber of the chit transaction in question with the complainant chit company. DW-1 has deposed that at the time of the commencement of the chit transaction due to insistence of the complainant, he had made available the accused as surety to the said transaction and that at that time due to the insistence of the complainant the accused had to give the instant cheque as a signed blank one as security to the complainant. Further the accused, during the examination of PW-1, has put up the defence case that except the signature all the other written entries in Ext.P-1 cheque are not made by him and he took the bold steps to request the trial court to subject the other written entries in Ext.P-1 for scientific examination by experts in the Forensic Science Laboratory (FSL). Accordingly, the trial court send the cheque for expert analysis and the competent scientific expert of the FSL has stated that they are not in a position to give a specific opinion about the entries in Ext.P-1 cheque. However, it ::4:: Crl.L.P.No.7 Of 2017 is reported by the FSL expert that they cannot give any authoritative opinion as to the hand written entries in Ext.P-1 are that of the accused. Therefore, the trial court has held that since even the scientific expert could not so sure as to whether the written entries in the cheque belongs to the accused, the benefit of doubt should certainly go the accused. Coupled with this aspect, that even DW-1 (subscriber) has clearly stated that what was handed over at the time of the commencement of the transaction by the accused to the complainant was a blank signed cheque as security. This has constrained the trial court to take the view that the version of the accused that he had only given a blank signed cheque and he had not voluntarily come forward so as to handover the cheque to the complainant on 9.11.2012 is believable and probable version. (B) The chitty variyola as well as the agreement was never produced by the complainant company either with the complaint or along with the proof affidavit. The chit agreement alone was produced subsequently as Ext.P-10. As per the version projected by the complainant, Ext.P-10 was executed on 13.8.2010 and if it is a genuine document then certainly it was available with the complainant at the time of filing of the complaint on 15.1.2013 and at the time of giving evidence on 28.12.2013. It was never produced during those times and ::5:: Crl.L.P.No.7 Of 2017 it was produced for the first time before this Court only subsequently. The trial court viewed that the said conduct on the part of the complainant was highly suspicious and that it creates a big question mark regarding the credibility and genuineness of Ext.P-10 document. Further DW-1 (subscriber) has deposed that except the signature in Ext.P-10, he had never occasion to see the contents of the blank signed paper that was taken from him and that the contents might have been inserted thereafter in that blank signed paper so as to create Ext.P-10 and that he had never occasion to see a document like Ext.P-10 before. From these circumstances, the trial court was of the considered view that the credibility and genuineness of Ext.P-10 is to be highly suspected. All these clinching material aspects and circumstances have been considered by the trial court to take a considered view that the cumulative evidence on record clearly show that the preponderance of probability is heavily in favour of the case projected by the defence and that the version of the complainant that the accused had voluntarily come forward to execute the cheque, etc., is not a probable and credible version. It is only on the basis of Ext.P-10 that the complainant would state that they have charged 24% interest on the defaulted amount so as to arrive at the liability figure shown in the cheque. The trial court has noted that Sec.61 of the Madras Chitty Funds Act clearly ::6:: Crl.L.P.No.7 Of 2017 mandate that interest could be charged only up to 12% of the amount and further that the petitioner could not establish as to whether the said chit transaction with the chit company whose corporate Head Quarters is at Chennai, would show that their transactions are covered by the Indian Chitties Act. Further in the judgment dated 26.3.2013 in Crl.A.No.26/2010 involving the very same chit company as a complainant therein (Sree Gokulam Chits & Finance Co. Ltd., v. State of Kerela & ors.), it has been held by this Court that the complainant company could not succeed in a case under Sec.138 of N.I. Act, if no documents are produced by the complainant company to show that they are entitled to claim interest @ 18% p.a. as was claimed in that case. Since the complainant company in the case could not produce any document to show that they are entitled to claim interest as claimed in the impugned judgment, this Court held in that judgment that the complainant cannot succeed in proving the liability of the accused. Ext.P-10 is the only document on the basis on which the complainant would argue that they are entitled to charge interest @ 24%, which has been charged in the instant case for arriving at the liability figure. Since the very credibility and genuineness of Ext.P-10 was to be highly suspected, the trial court held that the complainant is not in a position ::7:: Crl.L.P.No.7 Of 2017 to convince the trial court that they are legally entitled to charge 24% interest in this case and on this basis held that the very substratum of the liability figure (which is inclusive of 24% interest on the due amount) was found to be crumbled down. (C). Further the trial court found that the crucial and relevant material particulars regarding the date on which the aforesaid amount became due has not been stated anywhere in the complaint as well as in the proof affidavit. Such non-disclosure of relevant aspects was held to be vitiated. The relevant aspects in this regard could be made from the legal principles laid down in the decision in K.K.Divakaran v. State of Kerala, reported in 2016 (4) KLT 233, wherein this Court has held that such non-disclosure of details regarding the alleged liability would be depriving the accused of his precious right of fair trial guaranteed under Article 21 of the Constitution of India. (D). Further PW-1 has stated that after the entire amount became due, the company had demanded entire dues from the accused and no such document was produced by PW-1 or the alleged demand letter or its copy before the trial court. Further as per the evidence of PW-1, the accused has voluntarily come to the office of the complainant company and voluntarily issued cheque dated 9.11.2012 for ::8:: Crl.L.P.No.7 Of 2017 Rs.1,17,996/-. Further according to PW-1, if the cheque is given to the company as stated above, then a receipt would be issued to the accused and that there would be a counter foil explaining the details of the cheque. No materials regarding any such alleged receipt or its counter foil has been produced by the company before the trial court. Even the date on which the accused had allegedly given the cheque to the complainant company for verification of the alleged accounts are stated in the complaint or in the proof affidavit and PW-1 has not stated any reason for the same. Further the trial court also found that PW-1 has not stated the circumstances under which the complainant company decided to approach the accused, who was only a surety for paying the amount without taking any steps to collect the amounts due from the subscriber. None of these aspects has been stated by PW-1 in his evidence. (E). As noted hereinabove, DW-1 has clearly stated that accused was directed to give a blank signed cheque to the complainant and that the said cheque was within the custody of the complainant, etc. The trial court found that there is no specific challenge made by the complainant against the above evidence given by DW-1. Further PW-1 has also deposed that Ext.P-10 document was blank and after obtaining ::9:: Crl.L.P.No.7 Of 2017 the signature, he had no occasion to see the contents therein and what was collected from him was only a blank signed paper. There is no challenge whatsoever about the evidence given by PW-1. For all these reasons, the trial court found that coupled with late production of Ext.P-10 before the court give a clear indication that the aforesaid version given by the accused is more probable and credible. 4. Learned counsel for the petitioner-complainant has argued on the basis of the judgment of the Supreme Court in Don Ayengia v. State of Assam & anr. reported in (2016) 3 SCC 1 and Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited reported in (2016) 10 SCC 458 as well as the judgment of this Court in Justin P. v. Sree Gokulam Chits & Finance Pvt. Ltd. & anr. reported in (2012) 2 KLD 83 and contended that even if it is accepted by this court that a blank signed cheque was given as security by the accused to the complainant at the time of the commencement of the chit transaction, it is perfectly lawful for the complainant company to utilise that cheque and present the same for encashment as the tendering of the blank signed cheque is a conduct on the part of the accused in granting implied authority to the complainant to fill up blank cheque and present it for encashment, etc. The facts in the judgments of the Apex Court in Don Ayengia v. State of Assam & anr., reported in (2016) 3 ::10:: Crl.L.P.No.7 Of 2017 SCC 1 and Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited, reported in (2016) 10 SCC 458, stand on an entirely different footing. The specific allegation in the complaint, which the accused was called upon to answer, is that after the default by the subscriber, the complainant company had demanded the due amounts from the accused, as surety to the principal subscriber, who then voluntarily come forward to verify the accounts and being satisfied with the accounts he has voluntarily issued the cheque in question on 9.11.2012. In a criminal trial the accused is called upon to answer the gravamen of charges and allegations raised in the complaint. The complainant is obliged to establish that the said factual incidents alleged by them in the complaint, which led to the issuance of the cheque, are true and correct. If the trial court is convinced that the said factual incidents alleged in the complaint are not believable or probable and that the alleged issuance of the cheque would not have happened in the manner as specifically alleged by the complainant, then it is elementary that the entire substratum of prosecution case would collapse which would lead to the acquittal of the accused. Therefore, in the facts and circumstances of this case and in the light of the specific allegations that were raised by the complainant, it is only to be held that ::11:: Crl.L.P.No.7 Of 2017 the complainant has not been able to satisfy the trial court about the correctness of his version whereas the trial court has been convinced that the version projected by the accused is quite probable and credible. Therefore, the aforesaid judgments relied on by the learned counsel for the petitioner have no application to the facts of this case and the said contention of the petitioner stands overruled. 9. Moreover, the specific case of the complainant in answer to the challenge made at the time of cross-examination of PW-1 is to the effect that the complainant company has never taken Ext.P-1 cheque as a blank signed one from the accused at the time of the commencement of the chit transaction and further that after the default by the subscriber the accused surety has voluntarily come forward and handed over the cheque much later on 9.11.2012. 10. On a meticulous consideration of all relevant aspects of the matter, this Court would opine that the said view taken by the trial court on the basis of the aforedelineated aspects on the basis of which the trial court has rendered the judgment of acquittal cannot be said to be unreasonable or perverse. The said factual appreciation and conclusions reached by the trial court are based on just and proper analysis of the various essential aspects on record. ::12:: Crl.L.P.No.7 Of 2017 11. In the case State of Rajasthan v. Darshan Singh @ Darshan Lal reported in (2012) 5 SCC 789 = 2012(4) Supreme 72, the Apex Court has held as follows:- “In exceptional cases where there are compelling circumstances and the judgment under appeal is found to be perverse, the appellate court can interfere with the order of acquittal. The appellate court should bear in mind the presumption of innocence of the accused and further that the trial court's acquittal bolsters the presumption of his innocence.” Further, in the case Pudhu Raja and another Vs. State reported in (2012) 11 SCC 196 = (2013) 1 SCC (Cri) 430, the Apex Court has held that, “The Appellate court can interfere only in exceptional cases where there are compelling circumstances and the judgment in appeal is found to be perverse. The Appellate court should bear in mind the presumption of innocence of the accused and further that the trial court's order of acquittal bolsters the presumption of innocence”. In the light of the legal principles laid down by the Apex Court, this Court is of the view that even if the the appeal is entertained there is not much scope to overturn the judgment of acquittal rendered by the trial court. Accordingly, it is ordered that the petition is bereft of any merit and the plea for grant of special leave will stand dismissed. ALEXANDER THOMAS, Judge. bkn/-