U. Sasidharan (Proprietor, Ullattil Cine Media) v. M. N. Thankachan (Proprietor, M/s Egma Films) & State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE V.K.MOHANAN TUESDAY, THE 8TH DAY OF OCTOBER, 2013/16TH ASWINA, 1935 CRL.A.No. 72 of 2007 (D) -----------------------[AGAINST THE JUDGMENT IN ST 108/2004 of J.M.F.C. - III, KOCHI DATED 24-11-2006] APPELLANT(S)/COMPLAINANT: ------------------------- U.SASIDHARAN PROPRIETOR, ULLATTIL CINE MEDIA, CC.41/1579 ARANGATH ROAD, COCHIN-682 018. BY ADVS.SRI.JOY GEORGE SMT.PRAICY JOSEPH RESPONDENTS(S)/RESPONDENTS: -------------------------- 1. MR.M.N.THANKACHAN PROPRIETOR, M/S. EGMA FILMS, MUTTATH HOUSE OLD SEMINARY ROAD, CHUNGAM, KOTTAYAM. 2. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA ERNAKULAM. R2 BY PUBLIC PROSECUTOR SMT.M.T.SHEEBA. R1 BY ADV. SRI.V.G.ARUN R1 BY ADV. SRI.T.R.HARIKUMAR THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 08-10-2013, ALONG WITH CRA.NO. 79/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **V.K.MOHANAN, J.** **---------------------------------------CRL.A.Nos. 72 and 79 of 2007 ----------------------------------------** Dated this the 8[th] day of October, 2013 ## **J U D G M E N T** As the above two appeals arose out of a common judgment dated 24.11.2006 in S.T.Nos.107 and 108 of 2004 of the court of the Judicial First Class Magistrate-III, Kochi and particularly, when the parties to the above appeals are one and the same, the above appeals are heard together and being disposed of by this common judgment. 2. The appellant in the above appeals is the complainant in two separate prosecutions launched against the first respondent/accused for the offence punishable under Section 138 of the Negotiable Instruments Act,1881 (for short 'the N.I.Act'). The appellant is aggrieved by the above common judgment since the accused is acquitted under Section 255(1) of the Cr.P.C. in both the above cases by the above common judgment. Crl.A.Nos. 72 and 79 Of 2007 :-2-: 3. The above cases were tried together and S.T.No.107 of 2004 was treated as the leading case. The allegation in S.T.No.107 of 2004 is that the complainant is a film distributor by name M/s. Ullattil Cine Media represented by its Proprietor Mr.U.Sasidharan whereas the accused is a film producer company by name M/s.Egna Films represented by its Managing Director and the sole proprietor Mr. M.N.Thankachan. As per the case of the complainant, the accused entered into an agreement with the complainant firm on 18.12.2003, for the selling the rights of distribution, exhibition and exploitation of the motion picture namely 'Symphony'. The areas of distribution are in Malabar District and Kochi, consisting of seven districts of the State of Kerala and the period of distribution is five years from the date of release of the film. As per the agreement, `20 lakhs is fixed as the consideration for the distribution right and as per the terms, a sum of `2 lakhs is paid on the date of execution of the agreement itself and another amount of `18 lakhs is agreed to be paid on the delivery of Crl.A.Nos. 72 and 79 Of 2007 :-3-: the first copy and clearing the censorship and lab settlement and thus, according to the complainant, a total sum of `20 lakhs is paid to the accused, but the film produced by the accused and distributed by the complainant was a flop and therefore, the complainant could not collect the advance amount of `20 lakhs and therefore, in terms of the various clauses contained in the agreement, the accused issued a cheque dated 20.5.2004 for an amount of `20 lakhs in favour of the complainant, which when presented for encashment, was dishonoured for the reason that no sufficient money in the account maintained by the accused and therefore, the accused has committed the offence punishable under Section 138 of the N.I.Act. 4. The allegation in S.T.No.108 of 2004 is that the very same accused borrowed a sum of `3 lakhs from the very same complainant on 2.2.2004 and towards the repayment of the amount, the accused issued a cheque bearing date as 20.5.2004 for `3 lakhs, which when presented for encashment, was dishonoured due to insufficiency of Crl.A.Nos. 72 and 79 Of 2007 :-4-: fund and the accused has not repaid the amount in spite of a formal demand made by a statutory notice. Thus, according to the appellant/complainant, the accused has committed the offence punishable under Section 138 of the N.I.Act in the above case. 5. During the trial of the case, the complainant was examined as PW1 and produced Exts.P1 to P11. From the side of the defence, the accused was examined as DW1 and produced Ext.D1 affidavit of the complainant. 6. The trial court, on the basis of the averments in the complaint and on the basis of the evidence and materials on record and considering the arguments advanced, framed five issues for its consideration. The first and second issues respectively covered by S.T.Nos.107 and 108 of 2004 are as to whether the complainant succeeded in proving that Exts.P2 and P8 cheques are issued in discharge of a legally enforceable debt or liability. The trial court finally held that Ext.P2 or P8 cannot be treated as issued towards full Crl.A.Nos. 72 and 79 Of 2007 :-5-: and final settlement of the amounts due between the complainant and the accused and so, the complainant failed to prove that the accused issued Exts.P2 and P8 cheques for discharge of a legally enforceable debt or liability and it is found that the accused is not guilty under Section 138 of the N.I.Act and accordingly, he is acquitted under Section 255(1) of the Cr.P.C. It is the above finding and order of acquittal challenged by filing the above two separate appeals. 7. Heard Sri.Joy George, learned counsel for the appellant and Sri.V.G.Arun, learned counsel for the first respondent. 8. Learned counsel for the appellant, after taking me through Ext.P1 agreement and the deposition of PW1, submitted that the finding of the court below, particularly contained in paragraph 18 of the impugned judgment that the complainant, who is entitled to boom, shall also bear bane, is factually and legally incorrect. It is also the contention of the learned counsel that the trial court has erroneously found that as per Ext.P1, the complainant is also bound to bear the Crl.A.Nos. 72 and 79 Of 2007 :-6-: loss sustained in the joint venture, who has purchased the dealership on payment of consideration and now, he cannot turn around and contend that the film is a flop and he is entitled to his advance. According to the learned counsel for the appellant, a conjoint reading of Ext.P1 agreement and the evidence of PW1 would show that there was a valid agreement between the complainant and the accused and the terms of liabilities of the parties to Ext.P1 agreement are governed by the terms contained therein and in the present case, Ext.P7 would show there was no sufficient collection even though the film was released on 20.2.2004 and therefore, in terms of clause (7) and subclause thereto, of Ext.P1, the accused is bound to repay the amount advanced to him and fully in terms of such agreement, the accused, after due execution of Ext.P2 cheque, issued the same in favour of the complainant which when presented for encashment, dishonoured. According to the learned counsel, the other legal formalities connected with the prosecution have already been complied with and therefore, Crl.A.Nos. 72 and 79 Of 2007 **==> picture [21 x 9] intentionally omitted <==** the findings of the court below are factually and legally incorrect with respect to Ext.P2 cheque. It is also the contention of the learned counsel that Ext.P8 cheque was issued connected with totally independent transaction and in that case also, the evidence of PW1 is sufficient to prove the transaction between the complainant and the accused and due execution and issuance of Ext.P2 cheque, but the trial court, without assigning a proper reason, simply found that the complainant failed to prove that the accused issued Ext.P8 cheque in discharge of a legally enforceable debt. Therefore, the counsel for the appellant submitted that the order of acquittal recorded by the trial court is against the facts and evidence on record, which are liable to be interfered with and the accused is liable to be punished for the offence under Section 138 of the N.I.Act. 9. Per contra, Sri.V.G.Arun, the learned counsel for the accused, after inviting my attention to Ext.P1 agreement and the evidence of PW1, strenuously submitted that the validity of the agreement is for Crl.A.Nos. 72 and 79 Of 2007 :-8-: five years and the liability of the accused, as stipulated in clause (7), would arise, if it is shown that the film was a flop, after one year from the date of its release. It is also the contention of the learned counsel that the evidence of PW1/the complainant goes against the averment in the complaint that Ext.P2 cheque was issued at the time of execution of the agreement. It is also the contention of the counsel that no satisfactory evidence is produced by the complainant about the payment of the consideration of the cheque in question and the entire transaction claimed by the complainant is not proved properly and the trial court is perfectly correct in its finding and acquitting the accused. 10. I have carefully considered the arguments advanced by the learned counsel for the appellant and the learned counsel for the respondents. I have carefully perused the impugned judgment and the evidence and materials on record. 11. In the light of the rival contentions advanced by counsel for the appellant as well as the respondents and the evidence and materials Crl.A.Nos. 72 and 79 Of 2007 :-9-: on record, the question to be considered is whether the trial court is justified in its finding that the complainant has failed to prove that Exts.P2 and P8 cheques were issued in discharge of the legally eneforceable debt or liability and whether the acquittal recorded by the trial court requires any interference. 12. Recently, the Honourable Apex Court in the decision in Mokkiah & Anr. v. State, Rep. by the Inspector of Police, Tamil Nadu [2013 (1) Supreme 88], while laying down the general principles regarding the powers of the appellate court when dealing with an appeal against an order of acquittal, has held in paragraph 8 as follows:- “ _8. In a recent decision in Murugesan & Ors. vs. State Through Inspector of Police, 2012 (10) SCC 383, one of us Ranjan Gogoi, J. elaborately considered the broad principles of law governing the power of the High Court under Section 378 of the Code of Criminal Procedure while hearing the appeal against an order of acquittal passed by the trial Judge. After adverting to the principles of law laid down in Sheo Swarup vs. King Emperor, AIR 1934 PC 227 (2) and series of subsequent pronouncements in para 21 summarized various principles as found in para 42 of Chandrappa & Ors. vs. State of Karnataka,_ Crl.A.Nos. 72 and 79 Of 2007 :-10-: _(2007) 4 SCC 415 as under:_ _“21. xxxxxxxxxx_ _42. From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge:_ _(1) An appellate court has full power to review, re-appreciate and re-consider the evidence upon which the order of acquittal is founded._ _(2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law._ _(3) Various expressions, such as, 'substantial and compelling reasons', 'good and sufficient grounds', very strong circumstances', 'distorted conclusions', 'glaring mistakes', etc. are not intended to curtail extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of 'flourishes of language' to emphasise the reluctance of an appellate court to interfere with acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion._ _(4) An appellate court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court._ Crl.A.Nos. 72 and 79 Of 2007 **==> picture [27 x 9] intentionally omitted <==** _(5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.”_ 13. Now let us examine the findings of the court below and the contentions advanced in the light of the aforesaid decision of the Apex Court. As far as the first case is concerned, the whole transaction claimed by the appellant/complainant is based upon Ext.P1 agreement in which Ext.P2 cheque was allegedly issued by the accused towards the discharge of liability of `20 lakhs. The trial court, after considering the evidence on record, found that the complainant has failed to prove that Ext.P2 cheque was issued towards the discharge of any liability due to the complainant from the accused. In the light of the contentions advanced, it is beneficial to refer to the averments contained in the complaint in S.T.No.107/2004. After extracting the various clauses contained in Ext.P1, in paragraph 5, it is stated that the motion picture 'Symphony 'was released on 20.2.2004, but the film was a flop and did not collect and the complainant could not recover Crl.A.Nos. 72 and 79 Of 2007 :-12-: the advance amount of rupees twenty lakhs from the distribution of the film 'Symphony'. So as per clause 7 of the agreement dated 18.12.2003, the accused issued a cheque No.488306 for `20 lakhs dated 20.5.2004 drawn on Indian Overseas Bank, Kottayam Branch. There is no specific averment in the complaint, on which date, Ext.P2 cheque was executed and issued. On a perusal of clause (7) of Ext.P1 agreement, it is seen recorded as follows:- “ _7. While the success of the motion picture SYMPHONY,solely rests with the PRODUCER, the Producer and Distributor hereby agree that the Producer shall supplement by post-dated cheques (dated three months from the premiere release of the motion picture SYMPHONY) all advances made to them or any expense incurred by the Distributor on behalf of the Producer. ..._ ...........” From the above clause of Ext.P1, it is crystal clear that the complainant has obtained more than one cheque from the accused. The said fact is not disputed by the counsel for the appellant. But, during the cross-examination, PW1 has stated as follows:- “Ext.P2 cheque-ല പറഞ പപക�ര� 20 ലക� ര�പ ന�ങള ! തര�ന�ല# എന& പപത� പറയ&ന& . ( Q) Crl.A.Nos. 72 and 79 Of 2007 :-13-: പണ� ശര�യല#.(A) പപത� & വ.ണ� ച2ല.� �യ�ട4ണ!. അത�ന&ള വരഖകള എച8ങ�ല&� വക�ടത�യ�ല ഹ�ജര� �യ�ട4വണ� (Q). ഇല# (A). രണ! ച2 &കള4� Exts.P2 & P8 എചB . മ&നപ�ല ച.ച! എഴ&ത� ഒപ�ട! തന�ട4ളത�ണ ദ�.സ� തനതല പട� രണ&� ഒവര #. ച2യ4നത�ന& രണ! ദ�.സ� മ&നM Ext.P2 തന&. 19.2.04-ല Ext.P8 തന&.” Further, during the cross-examination, PW1 has stated as follows:- . “Ext.P1 എഴ&ത�യവപ�ള cheque-കള ഒന&� തന�ട�ല# അത�ല ആ .�.ര� എഴ&ത�യ�ട4ണ !. ച2 ! ചക�ട&ത സമയത! Travancore Area -യ�ല പട� release ച2യ�ന സ�മത�ക ബ&ദ�മ&ട! ഉളത ക�രണ� .�യപയ�യ� മ�ന& ലക� ര�പ .�ങ�ച4. ഒര�ഴ2 &ള�ല ത�ര�ച4 തര�ചമന&ള .b.സയ�ല�ണ. അത�ന Ext.P8 തന&. Ext.P8 ചക�ട&ത& എന& ക�ണ� &ന വരഖകള ഉണ! . അത വക�ടത�യ�ല ഹ�ജര� ��.” So the above evidence of PW1, during his cross-examination, goes against Ext.P1 document, which is a contemporary document signed by both the complainant and the accused. Though during crossexamination, PW1 has stated that no cheque is obtained at the time of execution of Ext.P1 agreement in the complaint, there is no whisper as to on which date, Exts.P2 and P8 cheques are executed and issued. Crl.A.Nos. 72 and 79 Of 2007 :-14-: Similarly, during cross-examination, PW1 has stated as follows:- “Ext.P1 agreement-ന& വശഷ� 18 ലക� ര�പ� ചക�ട&ത& എനത�ന& വരഖകള .ല#ത&മ&വണ� (Q) വരഖ എചBകക.ശ� ഉണ! . വക�ടത�യ�ല ഹ�ജര� �യ�ട4വണ� എനറ�യ�ല#(A)” It is further deposed during cross-examination that he is an income tax assessee and the entire cash transaction will find a place in the account and there are proper entries in the account. But, no evidence is produced by the complainant for the payment of `18 lakhs as well as `3 lakhs covered by Exts.P2 and P8 respectively. In this juncture, it is relevant to note that in paragraph 23 of the impugned judgment, the learned Magistrate has observed and stated as follows:- _“23. PW1 deposed that he is in possession of document evidencing payment of total amount of Rs.23 lakhs. Thereafter, the accused moved Crl.M.P.941/2006 directing the complainant to produce the document before this Court. As early as on 16.8.2006, this Court directed the complainant to produce document or file affidavit. So far no document is produced to prove payment. So an adverse inference is drawn against the complainant.”_ From the above discussion, it can be seen that absolutely no evidence is produced by the complainant to prove that he had paid `18 lakhs as Crl.A.Nos. 72 and 79 Of 2007 **==> picture [27 x 9] intentionally omitted <==** well as `3 lakhs, including the amount of `2 lakhs initially which is said to have given and covered by Ext.P1, towards the discharge of which Exts.P2 and P8 cheques were issued. The complainant has also failed to prove beyond reasonable doubt about the due execution and issuance of Exts.P2 and P8 cheques. 14. The further question to be considered is whether the claim of the complainant about the circumstances under which Ext.P2 cheque was issued is correct or not. According to the complainant, as the film was a flop, the accused, in terms of clause contained in Ext.P1, executed and issued the cheque. I have already found that the claim of the complainant that he had given the amount in favour of the accused, has not been proved properly. The complainant has, as per Ext.P1, acknowledged the receipt of cheques. Going by Ext.P1 agreement, we can see the contingency clause under which the complainant will get the right to present the cheque, particularly by virtue of clause (7) of the agreement. The three contingencies mentioned in sub-clauses (a) Crl.A.Nos. 72 and 79 Of 2007 :-16-: to (c) in clause (7) of the agreement, are the conditions precedent to fix the liability upon the accused and the right of the complainant to present the cheques. It is pertinent to note that in Ext.P1 agreement, the period of contract was for five years and clauses (10) and (11) of Ext.P1 agreement read as follows:- “ _10. The DISTRIBUTORS shall deduct from the net realisation or the collection of the picture the distribution commission first then the publicity amount if any, then the distribution advance._ _11. If there remains any balance to be realised after twelve months from the date of the premier release of the picture covered by this agreement, the PRODUCER shall pay the whole of such balance to the DISTRIBUTORS forthwith. If there is failure in the matter of payment partly or wholly of the amounts as covenanted in this agreement, the PRODUCER will have to pay interest @ 24% for the delayed period.”_ In view of clause (10), after release of the film, the distributors shall deduct from the net realisation or the collection of the picture, the distribution commission first, then the publicity amount if any, and only finally and thirdly, the amount towards the advance made can be collected. As per clause (11), after the realisation of the amount in the Crl.A.Nos. 72 and 79 Of 2007 :-17-: order prescribed in clause (10) and still any amount remains, the same can be realised after twelve months from the date of the premier release of the picture in question. But, in the present case, except Ext.P7, which is a document prepared by the complainant himself, no independent evidence is produced to show that the film was a flop. It is relevant to note that in order to attract the contingencies prescribed in clause (7), no time limit is fixed and therefore, the time fixed as per clause (11) will become relevant and applicable. So, the liability in terms of various clauses contained in Ext.P1 on the accused to compensate or give back the advance amount, will arise after 12 months from the date of the release of the film and particularly, when it is shown supported by evidence that the collection was not up to the expectation or the film was a flop. According to me, in the absence of any independent and credible evidence in this regard, no liability can be fixed upon the accused so as to issue the cheques in question, as claimed by the appellant/complainant. So, according to Crl.A.Nos. 72 and 79 Of 2007 :-18-: me, the complainant has miserably failed to show that any legally enforceable debt was due from the accused towards the complainant and towards the discharge of such debt, the accused issued Ext.P2 cheque so as to attract the penal liability under Section 138 of the N.I.Act. 15. Similarly, it is equally important to note that for the issuance of Ext.P8 cheque and the transaction connected therewith, no independent or acceptable evidence is adduced except the bear claim of the complainant. According to the complainant, the accused borrowed `3 lakhs on 2.2.2004 and towards the discharge of the said liability, the accused issued Ext.P8 cheque dated 20.5.2004. On going into the averments contained in the complaint, it appears that according to the complainant, the cheque was issued simultaneously. In paragraph 3, it is stated that the accused borrowed a sum of `3 lakhs from the complainant on 2.2.2004 and towards the repayment of the said amount, the accused issued a cheque No. 488307 dated Crl.A.Nos. 72 and 79 Of 2007 :-19-: 20.5.2004 for `3 lakhs drawn on Indian Overseas Bank, Kottayam Branch. But, there is no specific averment as to when the cheque was issued. On perusal of Ext.P8 cheque, it can be seen that the same bears the date as 20.5.2004. Suffice to say, Ext.P2 cheque covered by S.T.No.107 of 2004 also bears the same date. 16. The said facts are sufficient to create doubt in the mind of the court about the veracity of the claim of the complainant. More over, the accused has succeeded in making out a probable case as to how Exts.P2 and P8 cheques reached in the possession of the complainant, particularly in view of clause(7) and sub-clauses in Ext.P1 agreement and the oral evidence of PW1, which is in conflict with his own averment in the complaint. In the light of the above discussion and evidence and materials referred to above, I am of the view that the trial court is fully justified in its finding that the complainant has failed to prove that Exts.P2 and P8 cheques were issued towards the discharge of any legally enforceable debt. Crl.A.Nos. 72 and 79 Of 2007 :-20-: 17. In the given set of facts and the evidence and materials referred to above and in the light of the decision cited supra, according to me, I find no perversity in the finding of the court below, which is a condition precedent to interfere with an order of acquittal recorded by the trial court in favour of the accused. From the above discussion, it can be seen that the findings arrived on by the court below are plausible and there is no illegality in the appreciation of evidence and to come into a different finding. Thus, according to me, there is no compelling and substantial reason to interfere with the acquittal recorded by the trial court in favour of the respondent/accused. In the result, the above appeals are devoid of any merit and accordingly, the same are dismissed. **V.K.MOHANAN, Judge** MBS/ Crl.A.Nos. 72 and 79 Of 2007 :-21-: