IN THE HIGH COURT OF KERALA AT ERNAKULAM
CRL A No. 668 of 2000(A)
1. G.GOPAN
... Petitioner
Vs
1. TONNY VARGHESE
... Respondent
For Petitioner :SRI.B.RAMACHANDRAN
For Respondent :SRI.GEORGE ABRAHAM
The Hon'ble MR. Justice V.K.MOHANAN
Dated :12/11/2007
O R D E R
V.K.MOHANAN, J. (C.R)
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Crl..A.No. 668 of 2000
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Dated this the 12th day of November, 2007
J U D G M E N T
The appellant herein is the complainant in
C.C.No.297 of 1996 on the files of the Judicial First Class
Magistrate Court-II, Aluva which is a case instituted upon
a private complaint for an offence under Section 138 of
the Negotiable Instruments Act (hereinafter referred to for
short as ‘the N.I.Act’ only). As per the judgment dated
19.9.1998 in C.C.No.297 of 1996 of the trial court, the
accused was found guilty under Section 138 of the N.I.Act
and he was sentenced to undergo simple imprisonment for
six months. Challenging the above conviction and
sentence, the accused preferred an appeal as Crl.Appeal
No.5 of 1999 (originally it was numbered as
Crl.A.No.387/98 of the Sessions Court, Ernakulam). As
per the judgment dated 1.6.2000 in Crl.Appeal No.5 of
1999, the Additional Sessions Judge, North Paravur
allowed the appeal setting aside the conviction and
sentence of the trial court. Challenging the above order of
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the lower Appellate Court, the complainant initially filed
Crl.M.C.No.4122 of 2000 for leave of this Court which
was granted on 11.8.2000 and thus, this appeal is
preferred against the judgment of the lower Appellate
Court.
2. The case of the appellant/complainant is that
the accused borrowed a sum of Rs.2 lakhs from the
complainant promising to repay the same amount on
demand for which Ext.P1 cheque dated 10.11.1995 was
issued. The cheque was drawn from the account
maintained by the accused in the Angamaly Branch of
Federal Bank Limited. On presentation of the cheque
for encashment, the same was returned on 12.12.1995
for the reason ‘funds insufficient’. Consequently, the
complainant had caused to send a lawyer notice on
22.12.1995 which was received by the accused. Then
the accused sent a reply denying the transaction and
according to the complainant, it was only false allegation
and contention. Thus, according to the complainant,
though a statutory notice was issued, no payment was
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effected within the statutory period and hence the
accused has committed the offence punishable under
Section 138 of the N.I.Act. Therefore, he approached
the trial court by filing complaint under Section 138 of
the N.I.Act.
3. During trial, Pws.1 to 3 were examined as
prosecution witnesses and Exts.P1 to P7 were marked as
documentary evidence on the side of the complainant.
On the side of defence, Dws.1 and 2 were examined and
Exts. D1 and D2 were marked as documentary evidence.
After appreciation of the evidence and materials on
records, the trial court was of the opinion that Ext.P1
cheque was issued in discharge of the debt, but the
same was returned for want of sufficient fund and the
complainant had complied with all legal formalities and
therefore, it was found that the accused is guilty of the
offence under Section 138 of the N.I.Act.
4. On appeal, at the instance of the accused, the
lower Appellate Court had found that the complainant
had miserably failed to prove the passing of
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consideration and merely because of the admission of
signature in the cheque, it could not be said that the
execution of cheque was proved. Relying upon certain
decisions, the lower Appellate Court had held that
though the accused had admitted his signature in the
cheque, in all other respect it was a blank cheque, and
what was admitted was the signature alone and thus,
that would amount to denial of execution of cheque. In
support of the above conclusion, the lower Appellate
Court had relied upon certain materials which are
available on record. On analysis and application of
Section 118(a) of the N.I.Act, in the facts and
circumstances of the case, the lower Appellate Court
had come to a conclusion that the appellant/complanant
had failed to discharge the initial burden regarding the
execution of the cheque and therefore, the presumption
under Section 118(a) of the N.I.Act was not available to
him. Further, on an appreciation of the evidence and on
the basis of materials on record, the lower Appellate
Court had held that since the very execution of the
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cheque was denied by the accused, the complainant
could not seek the aid of presumption available under
Section 139 of the N.I.Act. It was also found by the
court below that the complainant/appellant would not
come within the meaning of ‘holder’ of promissory note,
bill of exchange or cheque as two conditions mentioned
in Section 8 of the N.I.Act had not been satisfied
conjunctively. The lower Appellate Court had
specifically found that there was no evidence that the
said cheque was issued for payment of any amount to
the complainant in discharge of any debt or liability.
Therefore, it was found that Ext.P1 cannot be termed as
a cheque of the nature referred to under Section 138 of
the N.I.Act. Hence, according to the court below, the
complainant is not entitled to the presumption available
under Section 139 of the N.I.Act. The lower Appellate
Court had also found that the dishonour of Ext.P1
cheque for want of sufficient funds in the account on
which it was drawn, issuance of notice demanding
payment of Ext.P1 cheque, non-payment of the amount
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even after receipt of notice by the accused etc. did not
assume any importance in the light of the earlier
findings of the court. Thus, the lower Appellate Court
had specifically found that the complainant had failed to
make out a case punishable under Section 138 of the
N.I. Act and accordingly, the conviction and sentence
imposed against the accused had been set aside.
Aggrieved by the above findings, appellant/complainant
has filed this appeal.
5. I have heard the learned counsel for the
appellant, the learned counsel for the first respondent as
also the learned Public Prosecutor.
6. Learned counsel appearing for the appellant
strenuously submits that the lower Appellate Court
erred in acquitting the accused on the basis of the
decisions which were referred to in the judgment since
those judgments were pertaining to the period before
the amendment brought to the N.I.Act. According to
counsel, Chapter XVII is newly introduced, incorporating
penal provision and therefore, all the decisions referred
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to by the lower court are not useful as those decisions
were prior to the newly introduced chapter mentioned
above. Going by the memorandum of Appeal also, it
appears that the main ground is ground No.(B) which
says that the lower Appellate Court went wrong in
finding that Ext.P1 cheque is not properly executed and
it is further stated that the court came to such
conclusion relying on decision prior to the amendment
of N.I.Act incorporating penal provisions to punish for
issuing cheque without keeping the sufficient funds. All
other grounds in the memorandum of appeal are
general. The appellant’s counsel further submits that
the statutory presumption under Section 118(a) and 139
are in favour of the complainant/appellant and those
presumptions were not rebutted by the accused by
cogent evidence. Hence, it is argued that on the failure
of the accused to rebut the presumption, as rightly done
by the trial court, the lower Appellate Court ought to
have confirmed the conviction and the sentence instead
of acquitting him. In support of the above contentions,
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the counsel for the appellant placed reliance on various
decisions.
7. After an elaborate consideration of the entire
materials available on record, the Sessions Court had
held that the benefits of presumption available under
Section 118(a) and 139 were not available to the
complainant, simply for the reason that Ext.P1 cheque
contained the signature of the accused, especially when
the complainant failed to establish the execution of the
cheque and also the passing of consideration. The lower
Appellate Court also held that the complainant could not
be termed as a holder. Thus the lower Appellate Court
came to a conclusion that no offence under Section 138
of the N.I.Act is established against the accused and
therefore, the order of conviction and sentence passed
by the trial court were set aside and the accused was
accordingly acquitted.
8. It is the above order of acquittal challenged
in this appeal and it is argued that the above order of
acquittal shall be set aside and the order of conviction
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and sentence passed by the trial court shall be
confirmed.
9. Before going into the above legal question, it
would be beneficial to examine the facts involved in the
case so as to appreciate the legal question in its correct
perspective.
10. The only case put forwarded by the
complainant in his complaint is that the accused had
borrowed a sum of Rs.2 lakhs from the complainant for
his business purpose with a promise that the amount
would be repaid on demand by the complainant and
thus, the cheque in question was issued, which was
dishonoured when presented for encashment for the
reason that ‘funds insufficient’. Thus according to the
complainant, statutory notice was sent, which was also
not honoured and no amount was paid within the
stipulated time and therefore, he approached the trial
court by filing the complaint. During his chief
examination, nothing more was stated and he had
strictly deposed only in accordance with the versions
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contained in the complaint. During the cross-
examination, he had made certain improvements and
stated that he had acquaintance with the accused for 4
to 5 years through one Viswan at Angamaly and they
were in good relations. On further cross-examination,
he had deposed that the accused had started a company
viz., New India Credit Capitals Investment Private
Limited. On a pointed question as to whether the
complainant was the Director of the company, he
answered positively. The company was started as
Manchiyam company. To several questions regarding
the company, the complainant had answered that the
company is not working at present and it is in a
standstill. They have decided to give back the share to
the share holders. To the specific question as to
whether the company has sufficient asset for repaying
the share value to the share holders, the answer was
‘not known’. To another question as to whether a motor
bike was pledged for Rs.5000/- for the company purpose,
he stated, he did not know.
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11. The specific case put forwarded by the
accused is that he was the Managing Director of the
above company and the complainant was one of the
Directors. In order to meet the monetary need of the
company, they have decided to pledge a motor bike in a
financial institution at Perumbavoor for Rs.5000/- and
towards the security for the said transaction, the
accused had entrusted a blank cheque i.e., Ext.P1 with
the complainant, which is referred to in the above
complaint. From the above facts, it is crystal clear that
both the complainant as well as accused are not
strangers or they are not belonging to rival business
groups, but they were having much acquaintance with
each other and they were together in a company of
which the complainant is one of the Directors and the
accused was the Managing Director of the same
company. The entire transaction alleged in the
complaint has to be examined in the above factual back
ground. It is pertinent to note that the complainant did
not mention any of those facts in the complaint and even
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during his chief examination. The case of the
complainant is that Ext.P1 cheque, bearing the signature
of the accused, was dishonoured when it was presented
for encashment and no amount was paid within the
statutory period though a formal demand was made and
therefore, the accused has committed the offence under
Section 138 of the N.I.Act.
12. It is true that when the cheque in question
contained the signature of the account holder, it is for
the accused to explain the same, but merely because
Ext.P1 cheque contained the signature of the account
holder or the accused, it cannot be said that the same
was executed by him. In this case, it is relevant to note
that the accused has specifically denied the execution of
the cheque and the case advanced by him is that Ext.P1
cheque was entrusted with the complainant and the
cheque contained nothing more than his signature. So,
on the basis of the above admission, counsel for the
appellant/complainant submits that the complainant is
entitled to get the benefit of presumption envisaged by
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Sections 118(a) and 139 of the N.I.Act. On the other
hand, counsel for the respondent/accused submitted that
the presumption regarding consideration can be drawn
under Section 118(a) only when the execution is proved
and therefore, it is clear that passing of consideration
and the existence of debt are not proved by the
complainant. No doubt, it is the duty of the complainant
to establish all that ingredients of Section 138 of the
N.I.Act in order to canvass a conviction against the
accused. Section 138 contained in Chapter XVII of the
N.I.Act reads thus:-
“138. Dishonour of cheque for
insufficiency, etc., of funds in the
account.- Where any cheque drawn by a
person on an account maintained by him
with a banker for payment of any amount
of money to another person from out of
that account for the discharge, in whole
or in part, of any debt or other liability, is
returned by the bank unpaid, either
because of the amount of money standing
to the credit of that account is
insufficient to honour the cheque or that
it exceeds the amount arranged to be
paid from that account by an agreement
made with that bank, such person shall beCrl.A.No.668 of 2000
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deemed to have committed an offence
and shall, without prejudice to any other
provisions of this Act, be punished with
imprisonment for [a term which may be
extended to two years], or with fine
which may extend to twice the amount of
the cheque, or with both:
Provided that nothing contained in
this section shall apply unless–
(a) the cheque has been presented
to the bank within a period of six
months from the date on which it is
drawn or within the period of its
validity, whichever is earlier;
(b) the payee or the holder in due
course of the cheque, as the case
may be, makes a demand for the
payment of the said amount of
money by giving a notice in writing,
to the drawer of the cheque,
[within thirty days] of the receipt
of information by him from the
bank regarding the return of the
cheque as unpaid; and
(c) the drawer of such cheque fails
to make the payment of the said
amount of money to the payee or,
as the case may be, to the holder in
due course of the cheque, within
fifteen days of the receipt of the
said notice.”
Explanation.–For the purposes of this
section, “debt or other liability” means
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a legally enforceable debt or other
liability.]
Going by Section 138 of the N.I.Act, it can be seen that
‘a drawing of cheque’ by a person on an account
maintained by him with the banker for payment of any
amount of money to another person from out of that
account ‘for the discharge’, in whole or in part, ‘of any
debt or other liability’ are two important ingredients,
especially in the background of this case. In the
decision reported in Ch.Birbal Singh v. Harphool
Khan (AIR 1976 Allahabad 23), it was held that
execution of documents consists of signing of the
document written out, read over and understood and
does not consist of merely signing of a blank paper. In
another decision reported in Thakurlal v. Ramadhar
(1968 ALJ 480), it had been held that mere admission of
putting of signature and thumb mark on a blank
sheet of paper is not admission of execution of the
document. In the present case, the accused did
not dispute the signature in Ext.P1 cheque,
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but his specific case is that he had entrusted with the
complainant Ext.P1 blank cheque which contained his
signature. It is brought out through evidence that the
complainant does not remember that when Ext.P1
cheque was given to the accused. According to him, the
amount and the date shown in the cheque might have
been written by any member of the family of the accused
or his friend. The complainant is also not aware as in
whose handwriting, the cheque was written. Therefore,
it is crystal clear that the complainant is not aware of
the execution of Ext.P1 cheque. When the execution of
the cheque is denied by the accused, it is for the
complainant to establish the same. In the absence of
any positive evidence regarding the execution of the
cheque by the accused, it is to be held that the accused
had issued only blank cheque and the same was not
executed by him. Simply because the cheque contained
the signature of the accused, it cannot be said that the
cheque was drawn by the accused as contemplated by
Section 138 of the N.I.Act.
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13. The contentions of the appellant that the
decisions referred to and relied on by the court below
are of prior to the amendment to the N.I.Act and hence
the court below has committed a wrong, are not legally
correct and not acceptable. It is beyond the scope of
debate that the mode of execution of an instrument and
its legal validity and sanctity including the presumption
under Section 118 of the N.I.Act are same, whether it is
executed before or after the introduction of the new
Chapter, namely Chapter XVII into the N.I.Act.
14. It is also relevant to note that the
complainant has miserably failed to prove the passing of
any consideration and also any legally enforceable debt
or liability.
15. It is pertinent to note that going by the
provision namely, Section 138 of the N.I.Act, it can be
seen that the legislature has employed certain words
cautiously and not without any meaning. The word
employed in Section 138 viz., ‘drawn’, ‘discharge of any
debt or other liability’ are conveying the message of the
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legislature, through which we can understand the
intention of the legislature. So while interpreting the
provisions or the word, the court has to give effect the
intention of legislature. At any stretch of imagination, it
cannot be said that putting signature on the blank
cheque is equivalent to the word ‘drawn’ used in Section
138 of the N.I.Act. Therefore, the word ‘drawn’ used in
Section 138 has to be understood as ‘execution’ of
cheque. In a decision reported in Johnson Scaria v.
State of Kerala (2006(4) KLT 290), this Court has held
“the burden is always on the prosecution to prove the offence
against an indictee in all prosecutions and a prosecution u/s.
138 of the N.I.Act is no exception to that general rule.
Execution and issue of the cheque have to be proved to draw
the presumption under S.139 and S.139 does not shift the
burden to prove execution and issue of the cheque.” In the
same decision, it is further held that “admission of
signature in a cheque goes a long way to prove due execution.
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Possession of the cheque by the complainant similarly goes a
long way to prove issue of the cheque. The burden rests on
the complainant to prove execution and issue. But, under
S.114 of the Evidence Act , appropriate inferences and
presumptions can be drawn in each case on the question of
execution and issue of the cheque depending on the evidence
available and explanations offered.” In the present case, on
an appreciation of entire factual situation and the
materials on record, it cannot be said that the
complainant has discharged his burden in proving the
execution of Ext.P1 cheque and therefore, I am fully
endorsing the reason given by the lower appellate court
for coming to the conclusion that the complainant has
failed to prove the execution of Ext.P1 cheque.
16. Another point argued by counsel for the
appellant is that he is entitled to get the benefit of
presumption envisaged by Section 118 of the N.I.Act.
Stressing on the admission at the side of the defence
regarding the signature on Ext.P1 cheque, the counsel
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argued that under Section 118(a) of the N.I.Act, it is to
be presumed that consideration has passed during the
transaction and therefore, the reasoning given by the
court below is unacceptable and liable to be rejected. In
the present case, PW-1 himself was not aware of the
actual transaction. He does not know who filled up the
blank cheque. He does not know the author of the hand
writing appeared in Ext.P1 cheque. He does not know
when Ext.P1 cheque was issued. Only in the cross
examination, he has stated regarding the payment made
by 2,3 instalments. Neither in the complaint nor during
chief examination, the complainant has got a case that
the consideration was passed by way of instalments. On
the basis of the above materials on evidence, we have to
examine the execution of the cheque as stated earlier,
PW-1 complainant has miserably failed to prove the
execution of the cheque itself and therefore, the
presumption under Section 118(a) of the N.I.Act
regarding the consideration is not available to the
appellant/complainant. On the basis of the decision
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reported in General Auto Sales v. Vijayalakshmi
(2005(1) KLT 478), the counsel for the appellant argued
that even if a blank cheque has been given towards the
liability or even as security, when liability is assessed
and quantified, if cheque is filled up and presented to
Bank, the person who had drawn cheque cannot avoid
the criminal liability arising out of Section 138 of the
N.I.Act.
17. The facts involved in the above case is
entirely different from the present one. In that case, it is
relevant to note that there was a settlement between the
complainant and the accused and the cheque was drawn
for a fixed amount towards the amount due as found in
the settlement. Here the transaction itself is denied and
the case set up by the accused is that the cheque was
given for security for availing loan by pledging a bike of
the company. Therefore, the above decision is not
helpful for the appellant. Another decision relied on by
the counsel for the petitioner is reported in
R.Sivaraman v. The State of Kerala and Others
Crl.A.No.668 of 2000
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(2006(3) KLJ 92) wherein this Court has held “the Court
has to presume that the cheque had been issued for a
debt or liability. It is also held in the very decision that
the presumption is rebuttable, the burden of proving
that the cheque had not been issued in discharge of a
debt or liability is on the accused. In the present case,
first of all, the execution of the cheque was not proved
and therefore, the presumption under Section 139 is not
available in favour of the complainant/appellant. The
materials available on records are not sufficient to show
the discharge of the initial burden on the
complainant/appellant to establish a presumption under
Section 139. The burden of rebutting the presumption
will be shifted to the accused only when the
complainant/appellant has discharged his initial burden.
A decision reported in Johnson Scaria v. State of
Kerala (2006(4) KLT 290) is cited by the appellant for
canvassing the proposition that law does not mandate
proof of original transaction or existence of original
consideration and the Courts are not bound to
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adjudicate on the liability under the cheque in dispute.
It is true that the court is not bound to adjudicate on the
liability under the cheque in dispute, but when the
court is confronted with the question regarding the
penal liability arising under Section 138 of the N.I.Act,
especially when the execution of the cheque itself is
disputed and not proved, the court has to consider the
transaction for arriving at a safe conclusion. In the
present case, the execution itself is not proved by the
complainant and therefore, the presumption under
Section 139 is not available to him. Even if the initial
burden is discharged by the complainant, the accused
can rebut the presumption either by adducing direct
evidence or even by relying on broad improbabilities of
the prosecution case including the improbable evidence
of the prosecution. Therefore, all the factual
circumstances involved in a particular case could have
relied on by the accused to discharge his burden. The
Apex Court, in a decision reported in Kamala.S. v.
Vidhydharan.M.J. and another [(2007) 5 SCC 264],
Crl.A.No.668 of 2000
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has held that presumption under Sections 139 and 118
(a) is rebuttable and further held that burden on
accused to rebut the presumption can be discharged by
preponderance of probabilities and Court can draw
inference from material brought on record as well as
circumstances relied upon by the accused. In the
present case, going by the materials and evidence on
record and particularly the facts involved in the case, I
am of the view that the appellant/complainant has
miserably failed to establish his case beyond doubt.
18. As I stated earlier, this is an appeal
preferred against the order of acquittal of the lower
Appellate court. This Court while exercising the
appellate jurisdiction cannot merely substitute a view
unless there is sufficient reason to improbablise the
finding of the lower Appellate Court or any patent
illegality. In the facts and circumstances involved in the
present case and the materials and findings on record, I
have no hesitation to hold that the reasoning assigned
by the lower Appellate Court for acquitting the accused
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is perfectly legal and valid and I find no reason to
interfere with such order of acquittal. In this case, it is
relevant to note that the parties were having prior
acquaintance and they were part and parcel of one
establishment and it cannot be ruled out, the
possibilities of vexatious litigation due to personal
animosity. I am constrained to draw such a presumption
on the fact that though in the complaint, the allegation
was for non-payment of Rs.2 lakhs and though the trial
court has awarded only imprisonment as a sentence, the
appellant/complainant has not chosen to prefer appeal
against the insufficiency of sentence, in other words,
there was no move from his side for realising the
amount by way of fine or compensation by filing an
appeal.
In the light of the above facts and circumstances,
there is no merit in the appeal and accordingly, the
appeal is dismissed.
V.K.MOHANAN,
Mbs/ Judge
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V.K.MOHANAN, J.
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Crl.A.NO.668 OF 2000
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J U D G M E N T
DATED: -11-2007
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