T.H. Muhammed Kunju v. K.M. Jacob and The State of Kerala

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ``` PRESENT ``` ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` MONDAY, THE 4[TH] DAY OF DECEMBER 2023 / 13TH AGRAHAYANA, 1945 ``` ``` CRL.A NO. 255 OF 2012 AGAINST THE JUDGMENT DATED 23.11.2011 IN CRA 519/2010 OF ADDITIONAL SESSIONS COURT (SPECIAL COURT)-II, KOTTAYAM, KOTTAYAM ``` ``` Crl.L.P. 63/2012 OF HIGH COURT OF KERALA ``` ## `APPELLANT/1ST RESPONDENT/COMPLAINANT:` ``` T.H.MUHAMMED KUNJU, THEKKEKARA, KUTTAMPUZHA P.O., THIRUVALLA, (NOW RESIDING AT MALLIYATH HOUSE, P.C.KAVALA P.O., PAIPPADU, CHANGANACHERRY. ``` ``` BY ADV SRI.M.P.MADHAVANKUTTY ``` ## `RESPONDENTS/ACCUSED AND 2ND RESPONDENT IN THE APPEAL IN TEH ADDITIONAL SESSIONS COURT:` ``` 1K.M.JACOB KURAYIL PLAVILA, PERUMANOOR P.O., VAIKOM, KOLLAM DISTRICT. 691532. ``` ``` 2THE STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. 682031. ``` ``` BY ADVS.SMT.K.JASMIN BABY SMT.LIJITTA G.MATHEW SRI.SHAJI P.CHALY SRI.R.SANJITH ``` ## `OTHER PRESENT:` ``` SR PP SMT SEETHA S ``` ``` THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON 04.12.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` Crl.A.No.255/2012 ``` ``` -:2:- ``` ## Dated this the 4[th] day of December,2023 ## **J U D G M E N T** The appeal is directed against the judgment in Crl.A.No.519/2010 of the Court of the Additional Sessions Judge, (Special), Kottayam (Appellate Court) holding 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, setting aside the conviction and sentence imposed against the first respondent in S.T.No.334/2007 of the Court of the Judicial First Class Magistrate-II, Changanacherry (Trial Court) and acquitting the accused. 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. 2. The complainant had filed the complaint ``` Crl.A.No.255/2012 ``` ``` -:3:- ``` alleging that the accused had issued Ext P1 cheque to him in discharge of a legally enforceable debt of Rs.15,00,000/-. The cheque, on presentation to the Bank got dishonoured by Ext P2 memorandum, due to ‘insufficient funds’ in the bank account of the accused. Although the complainant issued Ext P6 statutory lawyer notice dated 24.12.2005 to the accused and on receiving the same, he failed to pay the demanded amount. Hence, he committed the above offence. 3. The learned Magistrate took cognizance of the offence and issued process to the accused. The accused denied the substance of accusation read over to him. In the trial, the complainant and a witness were examined as PWs 1 & 2 and Exts P1 to P8 were marked through them in evidence. The accused denied the incriminating circumstances appearing in evidence against him in the questioning under Section 313 of the Code of Criminal Procedure, 1973(in short, ‘Code’). The accused and the ``` Crl.A.No.255/2012 ``` ``` -:4:- ``` Managing Director of his erstwhile company were examined as DWs 1 & 2 and Exts D1 to D1(a) were marked through them. . 4. The Trial Court, after appreciating the materials on record, by the impugned judgment, found the accused guilty and convicted him for the offence under Section 138 of the N.I. Act and sentenced him to undergo imprisonment for a period of three months and to pay a fine of Rs.15,00,000/-, and in default to undergo simple imprisonment for a further period of three months. 5. Aggrieved by the said judgment, the accused preferred Crl.A.No.519/2010 before the Appellate Court. 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. ``` Crl.A.No.255/2012 ``` ``` -:5:- ``` 7. It is assailing the said judgment; the present appeal is filed. 8. Heard; Sri. M.P. Madhavankutty, the learned counsel appearing for the appellant; Sri. R. Sanjith, the learned counsel appearing for the first respondent and and Smt.Seetha S., the learned Senior Public Prosecutor appearing for the second respondent – State. 9. 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. 10. 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 ``` Crl.A.No.255/2012 ``` ``` -:6:- ``` ## 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, 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. 11. 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 ``` Crl.A.No.255/2012 ``` ``` -:7:- ``` the accused. 12. At the same time, it is trite, this Court has the power to re-appreciate the materials on record while hearing an appeal against acquittal. 13. With the above observation in mind, I proceed to examine the materials on record. 14. The complainant's case is that the accused had in discharge of a legally enforceable debt issued Ext P1 cheque to him, which on presentation to the Bank, got dishonoured due to 'insufficiency of funds’ in the bank account of the accused. Despite receipt of the statutory lawyer notice, the accused failed to pay the demanded amount. Hence, he committed the above offence. 15. In the cross-examination of PWs 1 & 2, the accused set up a defence that Ext P1 cheque was issued as security for the handing over shop rooms to the complainant covered by Ext D1 agreement ``` Crl.A.No.255/2012 ``` ``` -:8:- ``` executed between the complainant and DW2 – the Managing Director of CVP Real Estate Private Limited. In other words, it was to ensure the conditions in the agreement, Ext P1 cheque was issued as security. He took the same stand in his questioning under Section 313 of the Code and while giving defence evidence as DW1. However, while the accused examined his Managing Director(DW2) – one of the executants to Ext D1(a) agreement, as his own witness. DW2 bluntly denied the defence version. DW2 testified that he had not entrusted any matter to the accused relating to Ext D1(a) agreement and had not asked him to issue the cheque. 16. A perusal of Ext D1(a) agreement would reveal that, it was an agreement executed between the complainant and DW2 on 10.09.2017, whereby DW2 had agreed to construct and give the shop room bearing No.B/31 for a consideration of Rs.8,25,125/-. ``` Crl.A.No.255/2012 ``` ``` -:9:- ``` 17. Surprisingly, on page No.15 of Ext D1(a) agreement, an endorsement is seen made by hand purportedly written by the complainant agreeing to withdraw the false cheque case filed against the accused. But, the date on which the said endorsement was made is not discernible in the agreement. Nonetheless, DW2 denied the endorsement and stated that Ext D1(a) is only a copy of the agreement and he does not know how the agreement reached the hands of the accused, who was never entrusted with the matter. 18. It is pertinent to note that the accused had initially denied the execution of Ext P1 cheque. Nevertheless, subsequent to the opinion of the expert (PW2), who proved Ext P8 report, the accused admitted the execution of Ext P1 cheque. It is thereafter, the accused took the present defence that the cheque was issued as a security for the fulfillment of the terms and conditions of Ext D1(a) agreement. ``` Crl.A.No.255/2012 ``` ``` -:10:- ``` 19. On a perusal of the materials placed on record, I find the defence set up by the accused to be highly improbable. Firstly, it is to be seen that Ext D1(a) agreement was executed on 10.09.2007. It was the defence of the accused that Ext P1 cheque was entrusted to the complainant on the date the agreement was executed between the parties. However, Ext P1 cheque is dated 25.05.2005 i.e., nearly two years prior to the execution of Ext D1(a) agreement. Secondly, the accused has admitted in his cross-examination that he had received an amount of Rs.5,00,000/- from the complainant as part consideration of Ext D1(a) agreement. Therefore, the above circumstances establish beyond doubt that Ext P1 cheque was issued by the accused to the complainant towards a legally enforceable debt. 20. A negotiable instrument, which includes a cheque, carries the presumption of consideration under ``` Crl.A.No.255/2012 ``` ``` -:11:- ``` Sections 118(a) and 139 of the N.I Act. It is profitable to extract the said relevant provisions: “ **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”. 21. A three-Judge Bench of the Hon’ble Supreme Court in **Rangappa vs. Sri.Mohan** [2010 KHC 4325], while dealing with Section 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 ``` Crl.A.No.255/2012 ``` ``` -:12:- ``` 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 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. 22. Recently, a three-Judge Bench of the Hon’ble Supreme Court in **Kalamani Tex and Anr vs. P.** ``` Crl.A.No.255/2012 ``` ``` -:13:- ``` **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 Rohitbhai Jivanlal Patel v. State of Gujarat (2019 (2) KHC 243).” 23. The accused has admitted the execution of Ext P1 cheque and he has failed to send any reply notice to the statutory lawyer notice. Furthermore, the accused has failed to give any explanation as to how Ext D1(a) agreement came to his possession, and his own witness namely DW2 has deposed against the defence version. Thus, I am of the definite view that the accused has failed to rebut the ‘reverse onus’ of proof as provided ``` Crl.A.No.255/2012 ``` ``` -:14:- ``` under Section 139 of the N.I. Act and laid down in **Rangappa** and **Kalamani Tex** (supra). 24. On a re-appreciation of the oral testimonies of the witnesses and the other materials placed on record, I am of the definite view that Ext P1 cheque was issued by the accused to the complainant in discharge of a legally enforceable debt. The Trial Court has rightly concluded that the accused has committed the offence, which was erroneously overruled by the Appellate Court by the impugned judgment. 25. In view of the discussions rendered above, I hold that the findings of the Appellate Court is erroneous and wrong, and is liable to be set aside. Consequently, I set aside the judgment of the Appellate Court and uphold the judgment of the Trial Court finding the accused guilty for the offence under Section 138 of the N.I. Act and convict him for the above offence. ``` Crl.A.No.255/2012 ``` ``` -:15:- ``` 26. Now coming to the question of sentence. 27. It is well-settled that an offence under Section 138 of the N.I.Act is quasi-criminal in nature. The intention of the legislation is to provide credibility to commercial transactions and compensate the complainant by way of compensatory reliefs rather than incarcerating him. It is the compensatory aspect that has to be kept in mind rather than the punitive aspect. Thus, I am of the view that, complete justice will be done by ordering the first respondent/accused to undergo imprisonment for one day (till the rising of the Court) and pay a fine of Rs.15,00,000/- and in default to undergo simple imprisonment for a period of six months, and if the fine amount is realised, the same to be paid to the complainant as compensation under Section 357(1)(b) of the Code. 28. In the result, - (i) The appeal is allowed; ``` Crl.A.No.255/2012 ``` ``` -:16:- ``` - (ii) The impugned judgment of the Appellate Court is set aside; - (iii) The judgment of the Trial Court in S.T. No.334/2007 is upheld and confirmed. - (iv) The first respondent/accused is found guilty and is convicted for the offence under Section 138 of the N.I. Act. - (v) The first respondent/accused is sentenced to undergo simple imprisonment for a day (till the rising of Court) and to pay a fine of Rs.15,00,000/-(Rupees fifteen lakh only) within a period of sixty days from today and in default to undergo simple imprisonment for a period of six months; - (vi) The first respondent/accused is directed to appear before the Trial Court on or before 04.02.2024 to undergo the sentence and pay the fine amount, and in default to undergo the default sentence; (vii) In case of failure of the first ``` Crl.A.No.255/2012 ``` ``` -:17:- ``` respondent/accused to appear before the Trial Court as ordered above, the learned Magistrate shall execute the sentence and recover the fine amount, failing which to implement the default sentence; - (viii) The execution of the sentence of the first respondent/accused shall stand deferred till 03.02.2024; - (ix) If the fine amount is realised, the same shall be released to the appellant/complainant under Section 357 (1) (b) of the Code as compensation. - (x) The Registry is directed to forthwith forward a copy of the judgment to the Trial Court for compliance. Sd/- ## **C.S.DIAS,JUDGE** DST/04.12.23 //True copy// P.A.To Judge