Allowed

K.I.Jacob v. K.E.Philip

Kerala HC22 Jun 2021CRL.A/880/2012

Case brief

AI extract

What is this about?

The High Court allowed the criminal appeal against the acquittal of the respondent in a cheque bounce case. The court held that the respondent failed to rebut the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act regarding the cheque's validity and consideration, setting aside the trial court's order.

What did the court decide?

The appellant's appeal was allowed; the first respondent convicted under Section 138 and sentenced to pay Rs.1,50,000 or undergo simple imprisonment for four months.

K.I.Jacob Vs K.E.Philip — Money Laundering | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE K.HARIPAL

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TUESDAY, THE 22^ND DAY OF JUNE 2021 / 1ST ASHADHA, 1943

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CRL.A NO. 880 OF 2012

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AGAINST THE JUDGMENT DATED 30.03.2012 IN ST 237/2009 OF JUDICIAL

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FIRST CLASS MAGISTRATE COURT - III, KOLLAM

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APPELLANT/PETITOINER:

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K.I.JACOB S/O IDICULA, KARINJAPPALLIL VEEDU, KUREEPUZHA, KAVANAD P.O., KOLLAM DISTRICT. BY ADVS. SRI.B.MOHANLAL SRI.T.PRASAD

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RESPONDENTS/RESPONDENTS:

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1 K.E.PHILIP S/O MR.ESSO, PROPRIETOR, PHOEBE ENTERPRISES, NEAR KADAVOOR CHUR, MATHILIL P.O., KOLLAM, PIN-691601.

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2 STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM.

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R1 BY ADV M.T.SURESHKUMAR R2 BY SRI. M.S.BREEZ, SENIOR PUBLIC PROSECUTOR

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THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 25.03.2021, THE COURT ON 22.06.2021 DELIVERED THE FOLLOWING:

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Crl.Appeal No. 880 of 2012 2

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JUDGMENT

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The appellant is the complainant in S.T. 237/2009 of Judicial First Class Magistrate - III Kollam. That complaint was instituted on 15.05.2007, alleging offence punishable under Section 138 of the Negotiable Instruments Act, hereinafter referred to as the Act. According to the complainant/appellant, the first respondent had borrowed an amount of Rs.1,50,000/- from him on 20.02.2007, for the discharge of the same, a cheque bearing No.422420 of Kollam branch of Karnataka Bank was issued bearing date 20.03.2007, that is a post dated cheque, promising to repay the amount after one month. According to the complainant, he presented the cheque through Anandavalleeswaram Branch of the Canara Bank on 21.03.2007, but it was returned with a direction that it should be re-presented. Thereafter, he re-presented the cheque on 02.04.2007 and then also it was returned dishonored with the endorsement that it exceeds arrangement. He received back the cheque on 03.04.2007. Then by a lawyer notice dated 11.04.2007, the first respondent was called upon to pay the amount; even though the notice was served on the first respondent on 17.04.2007, he did not repay the amount and on that

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Crl.Appeal No. 880 of 2012 3

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cause of action he filed the complaint before the court with the above allegation.

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On receipt of summons, the first respondent entered appearance and pleaded not guilty. Thereafter two witnesses were examined on the side of the appellant and Exts.P1 to P8 were marked. After closing the prosecution evidence, when examined under Section 313(1)(b) of the Criminal Procedure Code, hereinafter referred to as the 'Cr.P.C.', he denied the allegation. He took the contention that such a cheque was issued in consideration of a loan transaction between himself and the appellant in 2005, when he had borrowed an amount of Rs. 25,000/-, which was duly repaid, still the signed blank cheque which was given as security was not returned, which has been misused and thus a cause of action has been created. Thereafter, three witnesses were examined on the side of the defence. All the three are bank officials. Exts. D1 to D7 were also marked. After hearing counsel on both sides, by the impugned judgment, the learned Magistrate dismissed the complaint and acquitted the first respondent under Section 255(1) of the Cr.P.C. Aggrieved by the same, the appellant moved this Court with Special Leave under Section 378(4) of the Cr.P.C. and after granting Special Leave, this appeal was taken on file.

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I heard the learned counsel on both sides in detail. The

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trial court records were summoned and perused. According to the learned counsel for the appellant, the trial court has not analysed the evidence of PWs 1 and 2 and also Exts.P1 to P8 documents in a proper manner and that the order of acquittal is liable to be interfered with. According to learned counsel, there is absolutely no basis in the contention that he had no financial capacity to lend that much amount. The appellant is running a photostat shop near the Collectorate, Kollam, he had been in Persian Gulf for more than 20 years, there was also previous loan transaction between the two. The first respondent was a friend of him, there was long standing acquaintance between them and he was introduced to the appellant by PW2, who was an employee under him. According to the learned counsel, the first respondent was a regular visitor to his shop, he had close acquaintance with the appellant and there were previous monetary transactions between them. According to him, by the oral testimony of PWs 1 and 2, the execution and issue of Ext.P1 cheque has been properly proved and thus the appellant is entitled to draw the presumptions under Sections 118 and 139 of the Act. But the trial court was carried away by the argument of the first respondent that he had no financial

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capacity, that there was difference in the signatures of the appellant in Ext.P1 cheque etc. There is also no basis in the contention that there is suppression of material facts. On the other hand, according to the learned counsel for the first respondent, the Ext.P1 was handed over to the appellant in the year 2005 in connection with Ext.D7 transaction, when the first respondent had borrowed an amount of Rs.25,000/from the appellant, such a signed blank cheque was given as security which has been misused by the appellant. There is also suppression of material facts. The appellant had no capacity to arrange an amount of Rs.1,50,000/- on the alleged date of transaction and according to learned counsel, there is absolutely nothing to interfere with the judgment in question.

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The complainant gave evidence as PW1. One L. Nepthali, who was an employee under the complainant during the period of the alleged transaction gave evidence as PW2. Both PWs 1 and 2 have supported the contentions in the complaint. According to them, in February 2007, the first respondent had approached the appellant and sought a financial arrangement of Rs.1,50,000/-. Then the appellant agreed to pay the amount on 20.02.2007, by the time the amount was arranged and handed over to the first respondent. At that time the

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Ext.P1 cheque was given to the appellant. The first respondent had promised that the amount will be repaid after one month. Accordingly, on 21.03.2007 he presented the cheque, but it was returned dishonoured. At that time, he contacted the first respondent over phone and then the first respondent requested him to re-present the cheque, promising to arrange the money in the meantime. According to PW1, on that basis the cheque was again presented on 02.04.2007, then also it returned with the endorsement 'exceeding the arrangement'. That made him to cause to issue a lawyer notice, which was duly served on the first respondent, but that was not responded and that was how the complaint was presented before the court.

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After hearing rival contentions and evidence, by the

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impugned judgment, the complaint was dismissed and the first respondent was acquitted mainly on three considerations. Firstly, that there is difference in the signature of the first respondent in the Ext.P1 cheque, secondly that there is suppression of material facts, the earlier loan transaction between them was not stated in the complaint and thirdly, the version of the first respondent is more probable. On these considerations, the first respondent was acquitted by the trial

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court.

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The principle governing the subject is that once the execution and issue of the cheque is admitted or proved, then the complainant is entitled to draw the presumptions under Sections 118 and 139 of the Act. Those are rebuttable presumptions. If presumptions are drawn on the basis of initial evidence tendered by the complainant, it is for the accused to rebut the same. If the accused let in probable evidence, even by a lesser degree of probability that the cheque was not issued in discharge of a legally enforceable liability, then the matter will go back to the court of the complainant and then he is expected to adduce positive evidence regarding the execution of the cheque, consideration etc. Here, the complainant has a definite case that Ext.P1 cheque was issued when an amount of Rs.1,50,000/was borrowed by the first respondent on 20.02.2007. According to him, on the promised date, he presented the cheque, it was returned with a direction to re-present the same. The complainant as PW1 has stated that when the cheque was about to be returned, he had contacted the first respondent over phone and that was how it was returned with an endorsement to re-present the same. Such a version is tried to be proved through Exts.P2 and P3 documents. According to the complainant, he again represented the cheque on 02.04.2007, then

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also it returned dishonored and that was how he derived a cause of action for prosecuting the first respondent.

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As mentioned earlier, the trial court has disbelieved the version of the appellant and said that the cheque might have been given in a different context and that the appellant has not proved his financial capacity on the date of transaction. But after revisiting the evidence, I do not find my way to disbelieve the version of the appellant.

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Firstly, the finding of the trial court that there is difference in the signatures of PW1 in Ext.P1, in my reading, does not stand to reason. The Ext.P1 was shown to have been issued on 20.03.2007. On the face of the document, it was issued in favour of K.I. Jacob, the appellant, in consideration of Rs.1,50,000/-. The document bears the signature of the first respondent in the appropriate place. There is also the seal of the first respondent in his capacity as the proprietor of Phoebe Enterprises. But the name of the appellant K.I. Jacob, was shown initially as T.I. Jacob, which was struck off by putting a line across the name where also signature of the first respondent has been put. That signature has been denied by the first respondent. To support this version, he has relied on the version of DW1, the

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Manager of the Bank also. But after going through the entire materials and documents, I do not find reason to uphold the finding of the trial court that there is difference in the signatures of the first respondent on Ext.P1. On the very face of the document, both the signatures at the appropriate place in the cheque and on left top, that is put when the name of T.I. Jacob was struck, appear similar. Secondly, I have gone through the admitted signatures of the first respondent in Exts. D1, D3, especially at pages 25 and 32 of D3, D5 and on the reverse of Ext. D7. All the signatures are apparently uniform. In fact, the courts are expected to make such comparisons. Even though the court is not an expert on the field, comparison can be made. I do not find any apparent dissimilarity between the signatures of the first respondent found on Ext.P1. Both the signatures seem to have been put by the same person.

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The second contention of the learned counsel based on the impugned judgment is that there is suppression of material facts. I do not find any reason to uphold this argument also. It is the specific case of the appellant that there was earlier monetary transaction between them, that is evident from his statement. Secondly, he has stated that there was long standing acquaintance between them. The

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first respondent was first introduced to the appellant by PW2, who was then an employee under him. Then onwards there were monetary transactions between them. In fact, the documents produced by the first respondent including Ext.D7 supports the version of the appellant that there was another transaction. It is not known as to how suppression of this transaction that had allegedly taken place in 2005 would advance the case of the first respondent and shatter the case of the appellant. The appellant as the complainant is not expected to give such details in the complaint. Only necessary minimum particulars need be shown in a complaint whenever offence under Section 138 of the Act is alleged. Here the allegation is not based on the original cause of action. But he says that in discharge of a legally enforceable liability, the first respondent had given him a cheque. Then the court should confine to the genuineness of that transaction and genuineness of the subject cheque. Therefore, the contention that there is suppression of material facts also does not hold good.

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The third aspect which prompted the court to acquit the first respondent is that the version of the first respondent is not probable. In my opinion that finding also is faulty. The first respondent wanted to convince the court that the Ext.P1 was given as

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a security document in a loan transaction that had taken place in 2005. The argument and the document produced by the first respondent itself are sufficient to disbelieve this version. The Ext.D7 clearly indicates that there was some loan transaction between the appellant and the first respondent. The first respondent had borrowed an amount of Rs. 25,000/-, from the appellant in December, 2005. But the Ext.D4 document produced by the first respondent clearly indicates that series of cheques in which the Ext.P1 formed part were issued from the Bank only on 04.04.2006. That is evident from the cheque leaf status of the first respondent. It is not known as to how such a document could be handed over as security in a transaction in 2005, when it is clear that the cheque was issued from the bank only on 04.04.2006. This aspect alone is sufficient to discount the claim of the first respondent.

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Now I shall turn to the contention of the appellant with regard to the genuineness of the Ext. P1 document. I have already noticed that the signatures of the first respondent found on Ext.P1 appear similar on the face of the document. I also noticed that the admitted signatures of the first respondent in other documents produced by DWs 1 to 3 also indicate that the signatures found on

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Ext.P1 are similar. The first respondent has admitted his signature on the right bottom of Ext.P1. That cannot be denied also, because it bears his seal as well. Now the disputed portion is the signature found on the top left side of the cheque. As indicated earlier, that was put when the name of the payee was shown bit different, especially the initial was shown differently in the cheque; when that was struck and the real name was incorporated, naturally he might have put his signature. At that portion, for the reason that the seal was not put, the genuineness of the document cannot be doubted.

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Secondly, both PWs 1 and 2 have given a uniform version with regard to the execution and issue of the cheque. PW1 has a clear case that he did not see the first respondent incorporating the relevant portions in the cheque. According to him, the cheque was brought prepared and then signed in his presence. That has been affirmed by PW2 also. After going through the oral testimony of PWs 1 and 2, I do not find any reason to disbelieve them. PW2 was an employee under PW1 and according to PW2 both himself and the first respondent had worked together in a Chartered Accountant's office and that there were long standing association between them. Even though the first respondent wanted to impress the court that PW2 is

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totally stranger to him, PW2 has asserted that both of them had worked together and that they were having long standing acquaintance. In my reading, the testimony of PWs 1 and 2 could not be shaken in cross examination. This together with the fact that Ext.P1 bears the signature of the first respondent takes the case a long way.

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I have already discounted the version of the first respondent that the Ext.P1 was given as a security document in a signed blank form in 2005. Ext.P1 cheque was issued from the bank only in 2006. This aspect proved through the evidence of the respondent alone is sufficient to belie his version. Secondly, the argument that it was given as security also cannot stand to reason. Such an argument cannot be accepted at all. The learned counsel for the respondent strained to impress the court that the appellant had no financial capacity to lend so much amount. But such an argument is not impressive. Firstly, it is the specific case of the appellant that he had been working abroad for more than two decades and that he is also running a photostat shop and typewriting institute near the Collectorate. There are also reasons to believe that he was also employing others for running the shop. In fact the claim of the appellant that he had been working abroad for long is not disputed at

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all. In the complaint also it is stated that he is a gulf returnee. In such a circumstance, normally for the mere reason that such so much amount was involved, the financial capacity of the appellant cannot be doubted.

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Secondly, much analysis is not necessary to disbelieve the version that the Ext.P1 was issued as a security. I have already stated that that version does not stand to reason. The oral testimony of PWs 1 and 2 and associate circumstances clearly indicate that the Ext.P1 was issued by the first respondent in consideration of a loan transaction. In fact the first respondent was trying to confuse the transaction with something that had happened in 2005. Even though it is claimed that the amount lent under Ext.D7 document has already been repaid, the Ext.P1 was retained etc., that has not been attempted to be proved. It is a clear plea of discharge. When a case of discharge is alleged or stated, it is for the person to prove discharge. Whatever it may be, the appellant has no such case. According to him, it is a totally different transaction and the totality of the circumstances are in favour of that argument.

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After having admitted the signature in Ext. P1 document, the first respondent cannot be heard to say that it was issued as a

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security. The hon'ble Supreme Court in Bir Sing v. Mukesh Kumar [AIR 2019 SC 2446] has held in paragraphs 37 and 38 as follows:-

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“37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, S. 20, S.87 and S.139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of S. 138 would be attracted.

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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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This decision has been reiterated and followed in

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Kalamani Tex and Another v. Balasubramanian P. [ILR 2021 (1)

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Kerala 855] . In that decision, the court has gone further and said that even if the argument that only a blank cheque and signed blank stamp

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papers were given to the first respondent, yet the statutory presumptions cannot be obliterated. Here, on evidence the argument that the Ext.P1 was issued in a signed form as security cannot stand to reason. Once the first respondent does not give plausible and satisfactory explanation as to how such a cheque was issued to the appellant it is for him to rebut the presumption. But the argument

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taken by him or the oral testimony of DWs 1 to 3, officials of the bank are not capable of rebutting the presumptions that has already been drawn in favour of the appellant by proving Ext.P1 and other associate documents.

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The first respondent has admitted the receipt of Ext.P6 notice on 11.04.2007. When that was specifically put, he parried the question. It is not known as to why he did not reply the notice. In fact that was the earliest possible opportunity made available to him to give his version of the transaction. Such an opportunity has not been used and later only at the time of trial that he came with the version that it was given as security. That version cannot be accepted.

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What I wanted to highlight is that after having proved the execution of Ext. P1 cheque and so long as presumptions under Sections 118 and 139 of the Act are available in favour of the appellant complainant and without rebutting the presumptions, an argument that the appellant had no financial capacity to lend so much money cannot be accepted. Here, the financial capacity of the appellant need not be doubted at all. He had been abroad for more than two decades. Moreover, he is running a business of his own, even by employing others. In a similar case, the Hon'ble Supreme Court in

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APS Forex Services Pvt. Ltd. v. Sakthi International Fashion Linkers and Others [AIR 2020 SC 945] held that whenever the accused has questioned the financial capacity of the complainant in support of his probable defence, despite the presumption under Section 139 of the Act about the presumption of legally enforceable debt and such presumption is rebuttable. Thereafter, the onus shifts back to the complainant to prove his financial capacity and at that stage only the complainant is required to lead evidence to prove the financial capacity, more particularly when it is a case of giving loan by cash and thereafter issue of a cheque. Here also this observation of the Hon'ble Supreme Court is quite appropriate. Here, the appellant by proving the genuineness of the Ext.P1 has made out a prima facie case in his favour. That would make himself entitled to draw the presumptions under Sections 118 and 139 of the Act. That presumptions have not been rebutted at all. Unless and until that is rebutted, the appellant is not expected to give evidence with regard to his financial capacity. Secondly, as noted earlier, in the circumstance, so long as it is not disputed that he had been working abroad for more than 20 years, mere argument that he had no financial capacity cannot be accepted on its face value.

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To sum up, the first respondent has failed to lead any evidence to rebut the statutory presumptions available in favour of the appellant. But the trial court did not consider these vital aspects in proper perspective and was carried away by irrelevant considerations and that led to the acquittal of the first respondent. In my opinion, the trial court has gone wrong in acquitting the first respondent . The Ext.P1 cheque appears to be a genuine one and therefore, drawing the presumptions it can be held that it is supported by consideration and therefore, it can be concluded that an amount of Rs. 1,50,000/- was borrowed by the first respondent and the cheque was issued in consideration of repayment of the same. Inspite of issuance of the notice, it was not repaid and thus the appellant approached the court following the statutory time table. He is justified in seeking prosecution of the first respondent under Section 138 of the Act. Therefore, in reversal of the order of acquittal, I find that the appellant is entitled to succeed.

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In the result, the appeal is allowed and the first respondent is convicted under Section 138 of the Act and sentenced to pay an amount of Rs.1,50,000/-, (Rupees one lakh and fifty thousand only) in default to undergo simple imprisonment for four months. When the

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amount is realised it will be paid as compensation to the appellant.

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The appeal is allowed as above.

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Sd/-

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K.HARIPAL JUDGE

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DCS/31.05.2021

K.I.Jacob v. K.E.Philip

Case brief

What is this about?

What did the court decide?

K.I.Jacob v. K.E.Philip

Case brief

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