Victory Press (P) Ltd. v. U.V. Louis and The State of Kerala

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` TUESDAY, THE 26[TH] DAY OF SEPTEMBER 2023 / 4TH ASWINA, 1945 ``` ``` CRL.A NO. 1339 OF 2011 ``` ``` AGAINST THE JUDGMENT IN CRA 322/2010 OF THE ADDITIONAL SESSIONS JUDGE – FAST TRACK COURT- 1, THRISSUR ``` ## **`IN C.C. NO.269/2007 OF THE JUDICIAL FIRST CLASS MAGISTRATE COURT,`** ## **`KUNNAMKULAM`** ## **`Crl.L.P. 609/2011 OF HIGH COURT OF KERALA`** ## **`APPELLANT/1ST RESPONDENT/COMPLAINANT:`** ``` VICTORY PRESS (P) LTD. REP.BY ITS SALES ASSISTANT T.M.LAZAR,, S/O.MATEHW,THOLATH HOUSE, KURUKANPARA DESOM,, KUNNAMKULAM ``` ``` BY ADVS. SRI.G.SREEKUMAR (CHELUR) SMT.PREETHY KARUNAKARAN SRI.K.RAVI PARIYARATH ``` ## **`RESPONDENTS/APPELLANT/ACCUSED AND STATE OF KERALA:`** ``` 1U.V.LOUIS , MANAGING PARTNER GOKAN PAPER AND BOARD HIGH ROAD, THRISSUR-680001 ``` ``` 2THE STATE OF KERALA REP.BY THE PUBLIC PROSECUTOR,, HIGH COURT OF KERALA, ERNAKULAM ``` ``` BY ADVS. SMT.R.RAJITHA SRI.P.SANTHOSH PODUVAL SRI.K.D.SREEVISAKH ``` ``` SR PUBLIC PROSECUTOR SMT SEETHA S ``` ``` THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON 26.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` Crl.A NO. 1339 OF 2011 2 ``` ## **Dated this the 26[th] day of September, 2023 ORDER** The appeal is directed against the judgment of the Court of the Additional Sessions Judge, Fast Track Court -I, Thrissur (Appellate Court) in Crl.A.No.322/2010, holding the first respondent not guilty for an offence under Section 138 of the Negotiable Instruments Act ( in short, ‘N.I.Act’) and setting aside the judgment of the Judicial First Class Magistrate, Kunnamkulam (Trial Court) in C.C. No.269/2007. The parties are, for the sake of convenience, referred to as per their status before the Trial Court. ## The facts in brief: 2. The complainant had filed the above complaint before the Trial Court alleging that it was a company engaged in the sale of paper. The accused had approached the complainant and had purchased paper on ## **`Crl.A NO. 1339 OF 2011 3`** credit. In discharge of the outstanding amount, the accused issued Ext.P1 cheque dated 2.6.2006 for an amount of Rs.75,000/-. The cheque, on presentation before the bank for collection, was dishonoured due to ‘insufficient funds’ in the account of the accused. The complainant issued Ext.P4 lawyer notice to the accused. The accused failed to pay the demanded amount. Hence, the accused committed the offence under Sec.138 of the N.I Act. ## Trial 3. The accused pleaded not guilty to the substance of acquisition read over to him. In the trial, the sales assistant of the complainant was examined as PW1 and Exts.P1 to P9 were marked in evidence. The accused denied the incriminating circumstances put to him in the questioning under Section 313 of the Code of Criminal Procedure (in short, ‘Cr.P.C.’). The accused did not let in any defence evidence. ## Trial Court Judgment 4. The Trial Court, after analysing the materials on ## **`Crl.A NO. 1339 OF 2011 4`** record, found the accused guilty and convicted him for the offence under Section 138 of the N.I.Act and sentenced him to undergo simple imprisonment for a period of three months and to pay a compensation of Rs.75,000/- to the complainant under Section 357 (3) of the Cr.P.C., and in default to undergo simple imprisonment for a further period of three months under Section 255(2) of the Cr.P.C. 5. Aggrieved by the said judgment, the accused preferred Crl.A. No.322/2010 before the Appellate Court. ## Appellate Court Judgment 6. The Appellate Court, after re-appreciating the materials on record, allowed the appeal and set aside the judgment of the Trial Court, and found the accused not guilty for the offence under Section 138 of the N.I. Act and consequently, acquitted the accused. 7. Aggrieved by the judgment of the Appellate Court, the complainant has preferred the present appeal. 8. Heard; Sri. Sreekumar G.(Chelur), the learned counsel appearing for the appellant; Sri.Santhosh ## **`Crl.A NO. 1339 OF 2011 5`** Poduval, the learned counsel appearing for the first respondent and Smt.S.Seetha, the learned Senior Public Prosecutor appearing for the second respondent. 9. The learned counsel appearing for the appellant strenuously argued that the Appellate Court had gone wrong in concluding that the accused is not guilty for the offence under Section 138 of the N.I. Act, solely for the reason that the writings on Ext.P1 cheque were in different inks and handwriting. The Appellate Court has not appreciated the law laid down by the Honourable Supreme Court in **Bir Singh v. Mukesh Kumar** [(2019) 4 SCC 197], wherein it is held that even a blank cheque voluntarily signed and handed over by the accused would attract the presumption under Section 139 of the N.I.Act. In the case on hand, the accused had not sent a reply notice or let in any evidence to rebut the reverse onus of proof cast on him under Section 139 of the N.I.Act. Hence, the impugned judgment is perverse and is in total disregard to the settled law laid down by the Honourable Supreme Court. Therefore, the appeal is to be allowed. ## **`Crl.A NO. 1339 OF 2011 6`** 10. The learned counsel appearing for the first respondent supported the judgment and submitted that this Court should be slow in interfering with an order of acquittal as per the broad principles laid down by the Honourable Supreme Court and this Court. The Appellate Court has rightly concluded that Ext.P1 cheque was not issued towards a legally enforceable debt. Hence, the appeal may be dismissed. 11. Is the impugned judgment sustainable in law or not ? 12. The case of the complainant was that the accused used to purchase paper from it on credit. In discharge of the outstanding amount payable by the accused to the complainant, the accused issued Ext.P1 cheque. On presentation of the cheque to the bank for collection, the same got dishonoured due to insufficiency of funds in the bank account of the accused. Even though the complainant had issued Ext.P4 statutory lawyer notice, the accused failed to pay the demanded amount. Ext.P8 is the invoice pertaining to the purchase of paper made ## **`Crl.A NO. 1339 OF 2011 7`** by the accused and Ext.P9 is the debit note. 13. The Trial Court, after appreciating the materials on record, held that the accused was guilty for the offence under Section 138 of the N.I.Act. However, in appeal filed by the accused, the Appellate Court reversed the above finding and held that Ext.P1 cheque was not issued in discharge of the legally enforceable debt, principally for the reason that the entries made on Ext.P1 were by different ink and handwriting. 14. This Court is remindful of the fact that in an appeal from an order of acquittal, unless the findings are so very perverse, this Court has not interfere with the same. In other words, if the conclusion of the Trial Court is a plausible one, 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 own findings to convict the accused. (read **State of Rajasthan v. Abdul Mannan** [(2011) 8 SCC 65], **Rupesh Manger (Thapa ) v. State of Sikkim** [MANU/SC/1014/2023]and **Jafarudheen v. State of** ## **`Crl.A NO. 1339 OF 2011 8`** **Kerala** [2022 KHC 6449]. 15. 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: **“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. 16. 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 ## **`Crl.A NO. 1339 OF 2011 9`** 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 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 ## **`Crl.A NO. 1339 OF 2011 10`** 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. 15. Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the 'stop payment' instructions to his bank. Furthermore, the instructions to 'stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under S.138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant - accused was not able to contest the existence of a legally enforceable debt or liability. The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction - related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction - expenses. Since ## **`Crl.A NO. 1339 OF 2011 11`** the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant. 17. 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 doctrine of the reverse onus. It is apposite to extract the relevant paragraphs, which declare 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, the 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).” 18. In **Kalamani Tex** (supra), the Hon'ble Supreme Court after referring to the judgment in **Bir Singh v. Mukesh Kumar** (supra), has gone on to hold that even ## **`Crl.A NO. 1339 OF 2011 12`** if a blank cheque is issued by the accused, the statutory presumption under Section 139 of the N.I. Act will not get obliterated. 19. In **Rangappa vs. Sri.Mohan(** supra), the Hon'ble Supreme Court has held that the reverse onus of proof is cast on the accused to rebut the statutory presumption under Section 139 of the N.I.Act. Unless the accused raises a probable defence, the said statutory presumption cannot be dispelled. Furthermore, if the accused fails to send a reply to the statutory notice, the same leads to the inference that there is merit in the complainant’s version. 20. In the case at hand, undisputably, the accused has not sent a reply notice to Ext P4 lawyer notice sent by the complainant. Even in a questioning under Section 313 of the Cr.P.C., the accused has only denied the incriminating circumstances put against him. The accused has also not let in any defence evidence. 21. The Trial Court, after analysing the materials on record, arrived at the conclusion that the accused has failed to discharge the reverse onus of proof under ## **`Crl.A NO. 1339 OF 2011 13`** Section 139 of the N.I. Act. 22. Unfortunately, the Appellate Court, in total disregard to the well settled principles of law in a plethora of judgments, especially in **Bir singh’s** case(supra), has gone on to hold that, since the entries in Ext P1 cheque are in different inks and handwriting, it is only to be perceived that Ext P1 was mischievously and fraudulently made use of by the first respondentcompany. 23. The Appellate Court has failed to appreciate the oral testimony of PW1, corroborated by Ext P1 cheque, Ext P8 invoice and Ext P9 debit note, which all prove that there was a commercial transaction between the complainant and the accused and the cheque was issued in discharge of a legally enforceable liability. The Appellate Court solely for the reason that the entries on the cheque were in different inks and handwriting, without any contra evidence being let, has arrived at the above finding. I find the finding to be perverse and patently erroneous, which warrants to be interfered by ## **`Crl.A NO. 1339 OF 2011 14`** this Court by setting aside the order of acquittal restoring the finding of guilt and conviction of the Trial Court. Thus, invoking the appellate powers of this Court under Section 378 of the Cr.P.C., I am inclined to allow the appeal and set aside the judgment of the Appellate Court. In the result, - (i) The appeal is allowed. (ii) The impugned judgment passed by the Appellate Court in Crl.A. No.322/2010 is set aside. (iii) The finding of guilt and conviction found by the Trial Court in C.C. No.269/2007 is restored. (iv) The first respondent/accused is convicted for an offence under Section 138 of the N.I. Act and is sentenced to undergo simple imprisonment for one day(till the rising of the court) and directed to pay a compensation of Rs.75,000/- to the appellant/complainant under Section 357 of the Cr.P.C., and in default of payment of the compensation, to undergo simple imprisonment for a further period of six months under ``` Crl.A NO. 1339 OF 2011 15 ``` Section 255(2) Cr.P.C. (v) The first respondent is directed to appear before the Trial Court on 27.11.2023 to undergo the modified sentence and to pay the compensation amount. (vi) In case of failure of the first respondent/accused to appear before the Trial Court to undergo the sentence and pay the compensation amount, the Trial Court is directed to execute the sentence, in accordance with law. (vii) The Registry is directed to forthwith forward a copy of this order to the Trial Court for compliance. **Sd/-** **C.S.DIAS, JUDGE** rmm27/9/2023