IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR TUESDAY, THE 4TH NOVEMBER 2008 / 13TH KARTHIKA 1930 Crl.Rev.Pet.No. 3415 of 2008() ------------------------------ CRA.170/2007 of SESSIONS COURT, PATHANAMTHITTA CC.1012/2004 of JUDL.MAGISTRATE OF FIRST CLASS COURT-I, PATHANAMTHITTA .................... REVN. PETITIONER(S):ACCUSED ------------------------------------ SAJI P. CHACKO, PALLITHAZATHU HOUSE, ANICADU.P.O, PAMBADY, KOTTAYAM. BY ADV. SRI.M.V.THAMBAN SRI.R.REJI SMT.THARA THAMBAN SRI.B.BIPIN RESPONDENT(S): STATE AND COMPLAINANT ------------------------------------------------ 1. STATE OF KERALA, REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. 2. P.M. PHILIPOSE, MANAGING PARTNER, LOYAL BANKERS, KOZHENCHERRY, (PULIKATHARAYIL HOUSE, CHERUKOLE) REPRESENTED BY HIS POWER OF ATTORNEY HOLDER, K.R. SIVANKUTTY, S/O. RAMAKRIHNAN, KANJIRATHUMPARAYIL HOUSE, CHERUKOLE. BY PUBLIC PROSECUTOR SRI.C.M. KAMAPPU FOR R1 THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 04/11/2008 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.SASIDHARAN NAMBIAR,J. =========================== Crl.R.P. NO.3415 OF 2008 =========================== Dated this the 4th day of November,2008 ORDER Revision petitioner is the accused and second respondent the complainant in C.C.1012/2004 on the file of Judicial First Class Magistrate-I, Pathanamthitta. Second respondent lodged the complaint contending that towards repayment of Rs.2,50,000/- due from the petitioner, he issued Ext.P1 cheque drawn in his account maintained in Pampady Branch of State Bank of Tranvancore on 30.7.2004. When it was presented for encashment, it was dishonoured under Ext.P2 for want of sufficient funds. Ext.P5 notice was issued demanding the amount covered under Ext.P1. It was received by petitioner under Ext.P6. He did not pay the amount and thereby committed the offence under section 138 of Negotiable Instruments Act. Petitioner pleaded not guilty. Second respondent was examined as PW1. Exts.P1 to P7 were marked. CRRP 3415/2008 2 Petitioner did not adduce any evidence. The stand taken by the petitioner while cross examining PW1 and questioning him under section 313 of Code of Criminal Procedure was that he had borrowed only Rs.1 lakh and issued a cheque as security and Rs.2,50,000/- was not due and therefore he is not liable for conviction. 2. Learned Magistrate on the evidence accepted the case of second respondent and found the petitioner guilty. He was convicted and sentenced to simple imprisonment for six months and a compensation of Rs.2,50,000/- and in default simple imprisonment for three months. Petitioner challenged the conviction and sentence before Sessions Court, Pathanamthitta in Crl.A.170/2007. Learned Sessions Judge on reappreciation of evidence confirmed the conviction but modified the sentence to imprisonment till rising of court and a compensation of Rs.2,50,000/- and in default simple imprisonment for three months. Revision is filed challenging the conviction and sentence. CRRP 3415/2008 3 3. Learned counsel appearing for petitioner was heard. 4. The argument of the learned counsel is that petitioner had borrowed only Rs.1 lakh and Ext.P1 cheque was issued as security for the debt and he is not liable to pay Rs.2,50,000/- and therefore conviction of the petitioner for the offence under section 138 of Negotiable Instruments Act is not sustainable as Ext.P1 cheque was not issued towards the payment of legally recoverable debt. Learned counsel argued that Section 269SS of Income Tax Act, 1961 prohibits granting of a loan or acceptance of a loan above Rs.20,000/- except by way of an account payee cheque and therefore the loan granted by second respondent is hit by the provisions of Income Tax Act and therefore it is not legally recoverable debt and an offence under section 138 of N.I.Act is not attracted. 5. Learned Magistrate and learned Sessions Judge elaborately considered and analysed the evidence. Even according to petitioner, he had CRRP 3415/2008 4 borrowed amount from second respondent. But his case was that the amount borrowed was not Rs.2,50,000/- but only Rs.1,00,000/-. As PW1 second respondent deposed that the amount borrowed by the revision petitioner was Rs.2,50,000/-. No material was placed to disbelieve that version of PW1. Courts below entered a factual finding that the amount borrowed was Rs.2,50,000/-. I find no reason to interfere with that factual finding. 6. Though learned counsel argued that the loan is hit by the provisions of Section 269SS of Income Tax Act and therefore it is not a legally recoverable debt, I do not find that this contention was raised by the petitioner before the courts below. Eventhough Section 269SS prohibits accepting a loan from any person or granting a loan other than by an account payee cheque or account payee bank draft, if the amount exceeds Rs.20,000/- second proviso provides that the provision shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted CRRP 3415/2008 5 and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chrageable to tax under the Act. Therefore to press the bar provided under section 269SS of the Income Tax Act, 1961 it must be shown that second proviso to Section 269SS is not attracted. When these aspects were not raised before the courts below and PW1 was not asked anything on this, petitioner is not entitled to contend at the revisional stage that the bar provided under section 269SS of Income Tax Act applies and therefore it is not a legally recoverable debt. Evidence establish that Ext.P1 cheque was issued by the petitioner towards repayment of the amount borrowed. Evidence also establish that cheque was dishonoured for want of sufficient funds. It is also proved that second respondent has complied with all the statutory formalities provided under sections 138 and 142 of Negotiable Instruments Act. Conviction of the petitioner for the offence under section 138 of CRRP 3415/2008 6 N.I.Act is legal and warrants no interference. 7. Then the only question is with regard to the sentence. Learned Sessions Judge had modified the sentence to imprisonment till rising of the court and confirmed the compensation awarded by the learned Magistrate. But when compensation is awarded under sub section (3) of Section 357 of Code of Criminal Procedure default sentence cannot be part of the sentence. But that defect could be cured by modifying the sentence to imprisonment till rising of the court and a fine of Rs.2,50,000/- and in default simple imprisonment for two months. Revision is partly allowed. Conviction of the petitioner for the offence under section 138 of Negotiable Instruments Act is confirmed. Sentence is modified to imprisonment till rising of the court and a fine of Rs.2,50,000/- to be paid within two months from today and in default simple imprisonment for two months. On realisation of the fine, it shall be paid to second respondent as CRRP 3415/2008 7 compensation under seciton357(1) of the Code of Criminal Procedure. Petitioner is directed to appear before the Judicial First Class Magistrate, Pathanamthitta on the expiry of two months from today. M.SASIDHARAN NAMBIAR JUDGE tpl/- M.SASIDHARAN NAMBIAR, J. --------------------- W.P.(C).NO. /06 --------------------- JUDGMENT SEPTEMBER,2006