Sri Prasanna Vs Sabu Scaria

THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) CODE OF CRIMINAL PROCEDURE, PRAYING TO SET ASIDE THE JUDGMENT DATED 07.04.2015 IN C.C. NO.7/2011 PRINCIPAL CIVIL JUDGE AND JMFC, KARKALA. SENTENCING THE ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT.

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THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR

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ORAL JUDGMENT

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This appeal is filed by the appellant – complainant challenging the order of acquittal dated 07.04.2015 passed in C.C.No.7/2011 by the Principal Civil Judge and J.M.F.C, Karkala, whereunder, the respondent - accused had been acquitted of the offence under Section 138 of the Negotiable Instruments Act, 1881 (for short hereinafter referred to as “N.I.Act”) .

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Case of the appellant – complainant in brief is as

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under;

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The appellant - complainant and the respondent - accused were well known to each other. On 27.02.2010, the respondent - accused borrowed a sum of Rs.3,00,000/- from the appellant - complainant for his necessities, agreeing to repay the same within a short period. In discharge of the said loan, the respondent –

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accused had issued a cheque bearing No.315612 dated 07.05.2010 of Corporation Bank, Mala Branch for Rs.3,00,000/- in favour of the appellant - complainant. The appellant - complainant presented the said cheque for encashment and it came to be dishonoured with an endorsement “insufficient funds”. The appellant - complainant got issued legal notice dated 01.06.2010 calling upon the respondent - accused to pay the cheque amount. The said notice had been served on the respondent - accused on 05.06.2010. The respondent - accused did not pay the cheque amount. Therefore, the appellant - complainant filed a private complaint against the respondent - accused for the offence under Section 138 of the N.I.Act. The learned Magistrate took cognizance and registered a case in C.C.No.7/2011 against the respondent – accused for the offence under Section 138 of the N.I.Act. The plea of the respondent – accused has been recorded. The appellant – complainant in order to prove his case, got examined himself as PW1 and got marked Ex.P1 to P6. The statement of the respondent –

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accused has been recorded under Section 313 of Cr.P.C. The respondent – accused examined himself as DW1 and got marked Exs.D1 and D2. After hearing the arguments on both sides, the learned Magistrate has formulated the points for consideration and passed the judgment of acquittal. The said judgment of acquittal has been challenged by the appellant - complainant in this appeal.

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Heard learned counsel for the appellant – complainant and learned counsel for the respondent – accused.

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Learned counsel for the appellant – complainant would contend that the respondent – accused has admitted his signature on the cheque – Ex.P1 and therefore, a presumption has to be drawn under Section 139 of the N.I.Act. The said presumption has not been rebutted by the respondent – accused. The respondent - accused had taken up the defence that he had lost the cheque and he had intimated regarding the same to his Banker, but he has not produced any iota of document in

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that regard. The appellant - complainant in order to establish his capacity to lend money, has produced his bank pass book at Ex.P5, wherein the entries dated 14.07.2009, 19.08.2009 and 21.01.2010 would indicate that the appellant - complainant had drawn cash from his bank account which is more than Rs.3,00,000/-. Therefore, the appellant - complainant had cash of Rs.3,00,000/- on 27.02.2010. Learned counsel for the appellant - complainant submits that once the presumption is not rebutted, the respondent - accused requires to be convicted for the offence under Section 138 of the N.I.Act. On the points urged, learned counsel for the appellant - complainant has placed reliance on the following decisions;

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(i) Kalamani Tex and Another Vs. P. Balasubramanian, reported in (2021)5 SCC 283

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(ii) Bir Singh Vs. Mukesh Kumar, reported in (2019) 4 SCC 197

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(iii) Rohitbhai Jivanlal Patel Vs. State of Gujarat and Another, reported in (2019) 18 SCC 106

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On these grounds, learned counsel for the appellant - complainant prayed to allow the appeal and convict the respondent - accused for the offence under Section 138 of the N.I.Act.

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Learned counsel for the respondent – accused would contend that the respondent - accused has taken up the defence that he had lost the cheque and he had intimated the same to his Banker and the same has been stated by DW1 in his chief examination and also in the cross examination. Ex.P1 – cheque is a bearer cheque and it is not an Account Payee cheque or the crossed cheque and it bears the signature of the respondent - accused on the back page of the said cheque which itself would indicate that it was kept signed for the other purpose and it had been misused by the appellant - complainant. The bank account of the appellant - complainant did not have sufficient balance of Rs.3,00,000/- as on 27.02.2010 to lend the same to the respondent - accused. Considering all these aspects, the respondent - accused has rebutted

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the presumption. Considering the said aspects, the learned Magistrate has rightly acquitted the respondent - accused of the offence under Section 138 of the N.I.Act. With this, he prayed for dismissal of the appeal.

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Having heard the learned counsels, this Court has perused the impugned judgment and the Trial Court records. Considering the grounds urged, the following point arises for consideration;

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“Whether the Trial Court has erred in acquitting the respondent - accused for the offence under Section 138 of the N.I.Act ? ”

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My answer to the above point is in the affirmative , for the following reasons;

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It is the specific case of the appellant – complainant that, on 27.02.2010, he had lent Rs.3,00,000/- by cash to the respondent - accused and the respondent - accused in order to repay the said amount borrowed had issued a cheque – Ex.P1 dated 07.05.2010 for Rs.3,00,000/- in

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favour of the appellant - complainant. The respondent - accused has admitted his signature on Ex.P1 – cheque. As the respondent - accused has admitted his signature on the cheque, a presumption arises under Section 139 of the N.I.Act that the cheque was issued for discharge of the debt. The said presumption is a rebuttable presumption. The standard of proof for rebutting the said presumption is preponderance of probability.

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It is the defence of the respondent - accused that he had kept the signed cheque and it had been lost and the same had been misused by the appellant - complainant. The respondent - accused had been served with the statutory notice demanding payment of the amount of dishonoured cheque as per Ex.P3. Inspite of service of the said notice, the respondent - accused did not choose to give any reply putting forth his defence. The respondent - accused who has been examined as DW1 has stated that

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when he had gone to Cochin, he had given the blank signed cheque to one Mr.Jose, who is his employee, in

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order to look after the expenses of his agricultural land and it was kept in the house and he came to know regarding misuse of the said cheque by the appellant - complainant when he had received the notice got issued by the appellant - complainant. DW1 in his cross examination has stated that he had intimated the loss of Ex.P1 – cheque to his Banker and the said intimation was given in writing and it was sent through Mr.Jose and it was available in the records of the Bank. In order to establish the said defence, the respondent - accused did not place on record any document or evidence. Even the respondent

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accused has not examined the said Mr.Jose, who is his employee. The said defence of the respondent - accused has not been established.

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The appellant – complainant has placed on record Ex.P5 - his bank account pass book which would indicate that he had drawn cash of Rs.1,38,500/- on 14.07.2009, Rs.1,18,500/- on 19.08.2009 and Rs.1,20,000/- on 21.01.2010. The amount of Rs.3,00,000/- lent by the

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appellant - complainant to the respondent - accused was on 27.02.2010 Six months prior to the said date of lending, the appellant - complainant had cash of more than Rs.3,00,000/-. Ex.D1 – bank account statement of respondent - accused would indicate that he had sent some money to the appellant – complainant. The appellant - complainant has stated that those money sent by the respondent - accused to him were towards payment of the amount borrowed earlier. The respondent - accused has contended that he is financially well off and he is having the land and Estate, but on looking to his statement of account which is at Ex.D1 does not indicate that he is financially well off. Considering all these aspects, the respondent - accused has failed to rebut the presumption drawn under Section 139 of the N.I.Act.

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10. The Hon’ble Apex Court in the case of Bir Singh Vs.

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Mukesh Kumar , reported in (2019) 4 SCC 197, has held as under;

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“ 34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

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36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”

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The Hon’ble Apex Court in the case of Rohitbhai Jivanlal Patel Vs. State of Gujarat and Another , reported in (2019) 18 SCC 106 , has held as under;

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“17. On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasised that though there may not be sufficient

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negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged under Sections 118 and 139 of the NI Act. This Court stated the principles in Kumar Exports as follows: (SCC pp. 520-21, paras 20-21)

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“20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that

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bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.

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21. The accused has also an option to prove the non-existence of consideration and debt or

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liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, therefore, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue.

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18. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of

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probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence appellant-accused. The aspect relevant for consideration had been as to whether the appellant-accused has brought on record such facts/ materials/circumstances which could be of a reasonably probable defence.”

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12. The Hon’ble Apex Court in the case of Kalamani

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Tex and Another Vs. P. Balasubramanian , reported in (2021)5 SCC 283 has held as under;

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“13. 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 crystallised by this Court in Rohitbhai Jivanlal Patel v. State of Gujarat in the following words: (SCC pp. 120-21, para 18)

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"18. In the case at hand, even after purportedly drawing the presumption under

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Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing

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on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused."

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15. No doubt, and as correctly argued by the Senior Counsel for the appellants, the presumptions raised under Section 118 and Section 139 are rebuttable in nature. As held in M.S. Narayana Menon v. State of Kerala, which was relied upon in Basalingappas, a probable defence needs to be raised, which must meet the standard of "preponderance of probability", and not mere possibility. These principles were also affirmed in Kumar Exports, wherein it was further

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held that a bare denial of passing of consideration would not aid the case of the accused.

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17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where this Court held that: (SCC p. 209, para 36)

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"36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

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Even after purportedly drawing the presumption under Section 139 of N.I.Act, the Trial Court has proceeded to question the want of evidence on the part of the appellant - complainant as regards the source of funds for advancing the loan to the respondent - accused. This approach of the Trial Court had been at variance with the principles of presumption in law. As the respondent -

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accused has failed to rebut the presumption, the presumption is in favour of the appellant - complainant that cheque – Ex.P1 had issued for discharging the debt. Considering the evidence of record, the appellant - complainant has satisfied all the ingredients of the offence under Section 138 of the Act. The cheque had been dishonoured for the reason “insufficient funds” in the account of the respondent - accused as per the bank endorsement – Ex.P2 dated 10.05.2010. The statutory notice had been issued as per Ex.P3 on 01.06.2010 and it had been served on the respondent - accused and the postal acknowledgment is at Ex.P4 and it is served on the respondent - accused on 05.06.2010. The complaint had been filed within the statutory period from the date of cause of action. Considering the said aspects, the judgment of acquittal passed by the Trial Court requires to be set-aside and the respondent - accused is required to be convicted for the offence under Section 138 of the N.I.Act. In the result, the following;

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ORDER

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The appeal is allowed . The impugned judgment of acquittal dated 07.04.2015 passed in C.C.No.7/2011 by the Principal Civil Judge and J.M.F.C, Karkala is set-aside. The respondent - accused is convicted for the offence under Section 138 of the N.I.Act and he is sentenced to pay fine of Rs.3,10,000/- (Rupees three lakh ten thousand only) and in default of payment of the said fine amount, the respondent – accused shall undergo simple imprisonment for a period of six months. Out of the fine amount Rs.3,00,000/- (Rupees three lakh only) is ordered to be paid to the appellant - complainant as compensation. The respondent – accused shall deposit the fine amount within two months from this day.

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Sd/(SHIVASHANKAR AMARANNAVAR) JUDGE

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GH

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List No.: 1 Sl No.: 22

Sri Prasanna v. Sabu Scaria

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Sri Prasanna v. Sabu Scaria

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