Dismissed

George Mathew v. T.a.M.Pookkoya Thangal

Kerala HC24 Jan 2020WA/125/2020

Case brief

AI extract

What is this about?

The High Court of Kerala, in an Article 226W appeal, dismissed the challenge to the interim relief in a writ petition. The writ court rightly declined to stay the Section 138 NI Act proceedings merely because the appellant challenged the constitutional validity of Section 143A, as the burden of proving unconstitutionality lies on the challenger.

What did the court decide?

The writ appeal filed against the W.P.(C) order denying interim stay was dismissed. No costs awarded.

George Mathew Vs T.a.M.Pookkoya Thangal — Cheque Dishonour | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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FRIDAY, THE 24TH DAY OF JANUARY 2020 / 4TH MAGHA, 1941

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WA.No.125 OF 2020

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AGAINST THE ORDER DATED 10.04.2015 IN WP(C) NO.257/2020(F) OF HIGH COURT OF KERALA

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APPELLANT/PETITIONER:

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GEORGE MATHEW, AGED 59 YEARS VRINDAVAN HOUSE (PUTHENPURAYIL), RAROTH, THAMARASSERY P.O., KOZHIKODE-673573.

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BY ADVS. SRI.P.BABU KUMAR SRI.P.YADHU KUMAR VISHNU BABU

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RESPONDENTS/RESPONDENTS:

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1 T.A.M.POOKKOYA THANGAL, AGED 65 YEARS, S/O.AKKOTTU MALIYEKAL ATTAKKOYA THANGAL, JILANI MANZIL, PERUVAYAL P.O., KOZHIKODE-673008.

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2 UNION OF INDIA, REPRESENTED BY SECRETARY, COMMERCE DEPARTMENT, CENTRAL SECRETARIAT, NEW DELHI-110001.

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R2 BY ADV.SRI.JAGADEESH LAKSHMAN, CGC

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 24.01.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.A.No.125 of 2020

“C.R”

JUDGMENT

Dated this the 24^th day of January, 2020

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S.Manikumar, CJ.

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Instant writ appeal is filed against the order in W.P.(C) No.257 of 2020 dated 09.01.2020, by which the writ court declined to grant the interim relief sought for in the writ petition by holding that an order staying the operation of the order 24.08.2019 passed by the Judicial First Class Magistrate Court, Kunnamangalam, under Section 143A of the Negotiable Instruments Act, 1881 cannot be granted merely on the basis of a challenge made to the validity of that provision.

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Short facts leading to the appeal are as under:

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Appellant is the accused in S.T. No.394 of 2019 on the file of Judicial First Class Magistrate Court, Kunnamangalam. The offence alleged against him is under Section 138 of the Negotiable Instruments Act, 1881. He executed an agreement taking over liability of his wife. The agreement was in connection with sale of a property. Thereafter, counsel for the 1^st respondent issued a lawyer's notice dated 29.01.2019 (Exhibit-P4) to the appellant. On receipt of notice from the court below, the appellant appeared and took bail on 24.08.2019. However, the learned Magistrate directed the appellant to deposit a sum of Rs.5.2 lakhs. In compliance of

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W.A.No.125 of 2020

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the said direction, the appellant paid Rs.5.2 lakhs. In the complaint it was stated that, as per agreement dated 12.10.2015 between appellant's wife and respondent No.1, she accepted an advance amount of Rs.50 lakhs from respondent No.1, in connection with sale of an immovable property. Since the 1^st respondent could not collect the entire sale consideration, both parties agreed to cancel the agreement and return the money. Altogether, Rs.68 lakhs was paid to respondent No.1, which is admitted in the complaint. However, the cheque, which was given as security, was presented before the Bank and prosecution proceedings have been initiated. Hence, writ petition has been filed seeking for the following reliefs:

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“i. Issue a declaration that Section 143A is unconstitutional and against the canons of imparting criminal justice and Exhibit-P5 order dated 24.08.2019 in S.T. No.394 of 2019 is abinitio void.

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ii. Issue a declaration that passing an order directing to pay an amount in a 138 proceedings without affording an opportunity of hearing to the accused in a complaint is illegal.

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iii. To quash Exhibit-P1 complaint filed by the 1^st respondent dated 22.03.2019.”

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After hearing the learned counsel for the parties, on 9.1.2020 in

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W.P.(C) No.257 of 2020, the writ court ordered as hereunder:

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W.A.No.125 of 2020

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“6. The prayer for granting an interim order staying all further proceedings in the case is made by the petitioner only on the ground of the challenge made by him to the constitutional validity of the provision contained in Section 143A of the Act. It is well settled that there is always a presumption in favour of the constitutional validity of any legislation unless the same is set aside for breach of the provisions of the Constitution. It is for the person who challenges the validity of the provision to establish that it is not constitutionally valid. In such circumstances, merely on the basis of a challenge made to the constitutional validity of the provision contained in Section 143A of the Act, the proceedings in the case against the petitioner, pending in the court below, cannot be stayed.

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It is also pertinent here to note that the interim relief prayed for by the petitioner is not to stay the operation of the order dated 24.08.2019 passed by the learned Magistrate under Section 143A of the Act. The petitioner has prayed for staying the entire proceedings in the case which is pending against him in the court below. There is no basis for seeking such an interim relief for staying all proceedings in the case against the petitioner.

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Even an order staying the operation of the order dated 24.08.2019 passed by the learned Magistrate under Section 143A of the Act cannot be granted merely on the basis of a challenge made to the validity of that provision.

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Consequently, the interim relief prayed for in the writ petition is declined.”

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Being aggrieved, this appeal is filed on the grounds, inter alia, that, the writ court found that the prayer for staying the complaint is only

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W.A.No.125 of 2020

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on the ground of challenging the constitutional validity of Section l43A of N.I.Act is not true. Now, the complaint is filed claiming Rs.26 lakhs by misusing the security cheque given to the 1^st respondent. Appellant has further contented that there is no legally recoverable debt and, therefore, the complaint is not maintainable. He has further contended that only Rs.16 lakhs is due, but the cheque is for Rs.26 lakhs and that there is no explanation for that. Even in the so-called agreement based on which the complaint is lodged, there is no mention about the issuance of cheque.

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Heard learned counsel for the parties and have perused the material available on record.

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The question to be considered in this appeal is, whether merely on the basis of a challenge made to the constitutional validity of Section 143A of the Negotiable Instruments Act, 1881 (hereinafter referred to as, 'the Act') the entire proceedings initiated under Section 138 of the Act, have to be stayed or not. Section 138 of the Act reads thus:

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“ 138. Dishonour of cheque for insufficiency, etc., of funds in the accounts —

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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

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W.A.No.125 of 2020

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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 be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 [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:

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PROVIDED that nothing contained in this section shall apply unless—

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(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;

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(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, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

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(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.

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Explanation .— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.”

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Section 143A of the Act is reproduced as hereunder:

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‘‘143A. Power to direct interim compensation

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(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Court trying an

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W.A.No.125 of 2020

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offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant—

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(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and

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(b) in any other case, upon framing of charge

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(2) The interim compensation under sub-section (1) shall not exceed twenty per cent of the amount of the cheque.

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(3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.

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(4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial year, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

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(5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973.

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(6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973, shall be reduced by the amount paid or recovered as interim compensation under this section.’’

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W.A.No.125 of 2020

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Validity of Section 143A of the Act is under challenge. Let us consider a few decisions of the Honble Supreme Court on the presumption of constitutionality of a statute.

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“(i) A Full Bench of the Hon'ble Supreme Court in Shri Ram Krishna Dalmia v. Shri Justice S.R.Tendolkar reported in AIR 1958 SC 538, has carved out the principles as follows:

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"(b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles;

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(c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds;

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(d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest ;

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(e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and

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(f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the

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W.A.No.125 of 2020

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presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation."

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(ii) In Mohd. Hanif Quareshi v. The State of Bihar reported in 1958 AIR 731, the Hon'ble Supreme Court observed as follows :-

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"The pronouncements of this Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles. The courts, it is accepted, must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation."

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(iii) In Mahant Moti Das v. S.P.Sahi, the Special Officer In Charge of Hindu Religious Trust & Ors. reported in AIR 1959 SC 942, the Hon'ble Supreme Court, held as follows:

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"The decisions of this Court further establish that there is a presumption in favour of the constitutionality of an enactment

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W.A.No.125 of 2020

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and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional guarantee; that it must be presumed that the legislature understands and correctly appreciates the needs of its own people and that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; and further that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest......"

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(iv) In State of Uttar Pradesh v. Kartar Singh reported in AIR 1964 SC 1135, the Constitution Bench of the Hon'ble Supreme Court held that where a party seeks to impeach the validity of a rule on the ground of such rule offending Article 14, the burden is on him to plead and prove infirmity. This Court said :

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"......... if the rule has to be struck down as imposing unreasonable or discriminatory standards, it could not be done merely on any a priori reasoning but only as a result of materials placed before the Court by way of scientific analysis. It is obvious that this can be done only when the party invoking the protection of Article 14 makes averments with details to sustain such a plea and leads evidence to establish his allegations. That where a party seeks to impeach the validity of a rule made by a competent authority on the ground that the rules offend Art. 14 the burden is on him to plead and prove the infirmity is too well established to need elaboration. If, therefore, the respondent desired to challenge the validity of the rule on the ground either of its unreasonableness or its discriminatory nature, he had to lay a foundation for it by setting out the facts necessary to sustain such a plea and

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W.A.No.125 of 2020

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adduce cogent and convincing evidence to make out his case, for there is a presumption that every factor which is relevant or material has been taken into account in formulating the classification of the zones and the prescription of the minimum standards to each zone, and where we have a rule framed with the assistance of a committee containing experts such as the one constituted under Section 3 of the Act, that presumption is strong, if not overwhelming........."

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(v) In A.C.Aggarwal, Sub-Divisional Magistrate, Delhi v. Mst.Ram Kali (AIR 1968 SC 1), the Constitution Bench of the Hon'ble Supreme Court reiterated the legal position thus :

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"........The presumption is always in favour of the constitutionality of an enactment, since it must be assumed that the legislature understands and correctly appreciates the needs of its own people, and its laws are directed to problems made manifest by experience and its discriminations are based on adequate grounds."

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(vi) In Pathumma and Others v. State of Kerala reported in AIR 1978 SC 771 = 1978 SCR (2) 537, a Constitutional Bench of the Hon'ble Supreme Court held as follows:

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"It is obvious that the legislature is in the best position to understand and appreciate the needs of the people as enjoined by the Constitution to bring about social reforms for the upliftment of the backward and the weak-or sections of the society and for the improvement of the lot of poor people. The Court will therefore, interfere in this process only when the statute is clearly violative of the right conferred on the citizen under Part III of the Constitution or when the Act is beyond the legislative competence of the legislature or such

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W.A.No.125 of 2020

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other grounds. It is for this reason that the Courts have recognised that there is always a presumption in favour of the constitutionality of a statute and the onus to prove its invalidity lies on the party which assails the same."

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(vii) In M.L.Kamra v. Chairman-Cum-Managing Director, New India Assurance Co. Ltd. , reported in 1992 AIR 1072 : 1992 SCR (1) 220, the Hon'ble Supreme Court held as follows:

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"It is settled law that there is a presumption of constitutionality of the rule. The court ought not to interpret the statutory provisions, unless compelled by their language, in such a manner as would involve its unconstitutionality, Since the legislature of the rule making authority is presumed to enact a law which does not contravene or violate the constitutional provisions. Therefore, there is a presumption in favour of constitutionality of a legislation or statutory rule unless ex facie it violates the fundamental rights guaranteed under Part III of the constitution."

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(viii) In Peoples Union for Civil Liberties v. Union of India reported in (2004) 2 SCC 476, the Hon'ble Supreme Court held that a statute carries with it a presumption of constitutionality and such a presumption extends also to a law which has been enacted for imposing reasonable restrictions in the fundamental right. It is further held that a further presumption may also be drawn that the statutory authority would not exercise the power arbitrarily.

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(ix) In Karnataka Bank Limited v. State of Andhra Pradesh reported in (2008) 2 SCC 254 , the Hon'ble Supreme Court held as follows:

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W.A.No.125 of 2020

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"19. The rules that guide the constitutional courts in discharging their solemn duty to declare laws passed by a legislature unconstitutional are well known. There is always a presumption in favour of constitutionality, and a law will not be declared unconstitutional unless the case is so clear as to be free from doubt; “to doubt the constitutionality of a law is to resolve it in favour of its validity”. Where the validity of a statute is questioned and there are two interpretations, one of which would make the law valid and the other void, the former must be preferred and the validity of law upheld. In pronouncing on the constitutional validity of a statute, the court is not concerned with the wisdom or unwisdom, the justice or injustice of the law. If that which is passed into law is within the scope of the power conferred on a legislature and violates no restrictions on that power, the law must be upheld whatever a court may think of it. (See State of Bombay v. F.N.Balsara [AIR 1951 SC 318])”

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(x) In Government of Andhra Pradesh & Ors. v Smt.P.Laxmi Devi reported in (2008) 4 SCC 720, the Hon'ble Supreme Court has considered few decisions, on the presumption in favour of the constitutionality, as follows:

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"58. The U.S. Supreme Court enunciated the principle that there is a presumption in favour of the constitutionality of Statute, and the burden is always upon the person who attacks it to show that there has been a clear transgression of a constitutional provision. This view was adopted by the Constitution Bench of this Court in Charanjit Lal Chowdhury v. Union of India and others [AIR 1951 SC 41 (para 10)], which observed:

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"Prima facie, the argument appears to be a plausible one, but it requires a careful examination, and while examining it, two principles have to be borne in mind:

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(1) that a law may be constitutional even through it relates to a single individual, in those cases where on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself;

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(2) that it is the accepted doctrine of the American Courts, which I consider to be well-founded on principle, that the presumption is always in favour of the constitutionality of an enactment, and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. A clear enunciation of this latter doctrine is to be found in Middleton vs. Texas Power and L. Company , (248 U.S. 152 and 157), in which the relevant passage runs as follows:

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It must be presumed that a legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by expression and that its discriminations are based upon adequate grounds." This view has been consistently followed thereafter.

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Thus in M/s. B.R. Enterprises v. State of U.P. and others AIR 1999 SC 1867 this Court observed :

W.A.No.125 of 2020

which they consider to be reasonable for the purpose for which they are enacted. Presumption is, therefore, in favour of the constitutionality of an enactment, vide Charanjit Lal Chaowdhury v. Union of India , (AIR 1951 SC 41); State of Bombay v. F.N.Bulsara , (AIR 1951 SC 318), Mahant Moti Das v. S.P.Sahi (AIR 1959 SC 942)".

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The following passage in Seervai, Constitutional Law of India (3rd Edn.) page 119 found approval in Delhi Transport Corporation v. D.T.C.Mazdoor Congress , 1991 (Supp) 1 SCC 600 : (AIR 1991 SC 101). The Court held:

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"Seervai in his book Constitutional Law of India (3rd Edn) has stated at page 119 that:

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"the courts are guided by the following rules in discharging their solemn duty to declare laws passed by a legislature unconstitutional:

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There is a presumption in favour of constitutionality and a law will not be declared unconstitutional unless the case is so clear as to be free from doubt; 'to doubt the constitutionality of a law is to resolve it in favour of its validity'.

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A statute cannot be declared unconstitutional merely because in the opinion of the court it violates one or more of the principles of liberty, of the spirit of the Constitution, unless such principles and that spirit are found in the terms of the Constitution" (emphasis supplied)

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Similarly, in Union of India v. Elphinstone Spinning and Weaving Co. Ltd. and Another , [AIR 2001 SC 724] (vide para 9) a Constitution Bench of this Court observed :

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"There is always a presumption that the legislature does not exceed its jurisdiction and the burden of establishing that

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the legislature has transgressed constitutional mandates such as, those relating to fundamental rights is always on the person who challenges its vires. Unless it becomes clear beyond reasonable doubt that the legislation in question transgresses the limits laid down by the organic law of the Constitution it must be allowed to stand as the true expression of the national will Shell Company of Australia v. Federal Commissioner of Taxation , 1931 AC 275 (Privy Council). The aforesaid principle, however, is subject to one exception that if a citizen is able to establish that the legislation has invaded his fundamental rights then the State must justify that the law is saved. It is also a cardinal rule of construction that if one construction being given the statute will become ultra vires the powers of the legislature whereas on another construction which may be open, the statute remains effective and operative, then the Court will prefer the latter, on the ground that the legislature is presumed not to have intended an excess of jurisdiction". (emphasis supplied)

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In State of Bihar and others v. Bihar Distillery Ltd. , AIR 1997 SC 1511 (vide para 18) a Constitution Bench of the Hon'ble Supreme Court observed:

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"The approach of the Court, while examining the challenge to the constitutionality of an enactment, is to start with the presumption of constitutionality. The Court should try to sustain its validity to the extent possible. It should strike down the enactment only when it is not possible to sustain it. The Court should not approach the enactment with a view to pick holes or to search for defects of drafting, much less in exactitude of language employed. Indeed, any such defects of drafting should be ironed out as part of the attempt to sustain

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the validity/constitutionality of the enactment. After all, an Act made by the Legislature represents the will of the people and that cannot be lightly interfered with. The unconstitutionality must be plainly and clearly established before an enactment is declared as void."

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The same view has been taken by the Constitution Bench of this Court in Hamdard Dawakhana and another v. Union of India , AIR 1960 SC 554 (vide para 9) which observed:

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"Another principle which has to be borne in mind in examining the constitutionality of a statute is that it must be assumed that the legislature understands and appreciates the need of the people, that the laws it enacts are directed to problems which are made manifest by experience, and that the elected representatives assembled in a legislature enact laws which they consider to be reasonable for the purpose for which they are enacted. Presumption is, therefore, in favour of the constitutionality of an enactment. Charanjit Lal v. Union of India , 1950 SCR 869: (AIR 1951 SC 41); State of Bombay v. F.N.Baulsara , 1951 SCR 682 at p.708; (AIR 1951 SC 318 at p. 326); AIR 1959 SC 942."

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(xi) In Namit Sharma v. Union Of India reported in (2013) 1 SCC 745, the Hon'ble Supreme Court, held as follows:

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"46. To examine constitutionality of a statute in its correct perspective, we have to bear in mind certain fundamental principles as afore-recorded. There is presumption of constitutionality in favour of legislation. The Legislature has the power to carve out a classification which is based upon intelligible differentia and has rational nexus to the object of the Act. The burden to prove that the enacted law offends any

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of the Articles under Part III of the Constitution is on the one who questions the constitutionality and shows that despite such presumption in favour of the legislation, it is unfair, unjust and unreasonable."

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The appellant has not even sought for a stay of the order of the learned Magistrate directing him to deposit a sum of Rs.5.2 lakhs. He has complied with the order. Whereas, he seeks for a stay of entire proceedings on the premise that Section 143A of the Act, which is under challenge, is stayed. If the entire proceedings have to be stayed, it would be amounting to stay of the provision itself. Writ court, on the principles of presumption of validity of statutes, has rightly rejected the relief sought for. The fact as to whether the appellant has paid the entire amount has to be proved by adducing evidence before the Criminal Court.

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No grounds are made out for reversing the order dated 09.01.2020 in W.P.(C) No.257 of 2020. Writ appeal is dismissed. No costs.

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Sd/-

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S.MANIKUMAR CHIEF JUSTICE

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Sd/SHAJI P.CHALY JUDGE

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Krj.21/1

George Mathew v. T.a.M.Pookkoya Thangal

Case brief

What is this about?

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George Mathew v. T.a.M.Pookkoya Thangal

Case brief

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