IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.K.MOHANAN MONDAY, THE 21ST MARCH 2011 / 30TH PHALGUNA 1932 Crl.Rev.Pet.No. 2830 of 2010() ------------------------------ CRA.649/2008 of II ADDL. SESSIONS COURT, TRIVANDRUM ST.2402/2006 of JUDL. MAGISTRATE OF FIRST CLASS-IV (MOBILE), TRIVANDRUM .................... REVN. PETITIONERS(S): APPELLANTS ------------------------------- 1. M/S.LAKE VIEW AYURVEDIC RESORTS & RESEARCH CENTRE PRIVATE LIMITED, JEEVA BHAVAN, KALAYANADU, PLACHERY.P.O.,PUNALUR, KOLLAM DISTRICT REPRESENTED BY ITS MANAGING DIRECTOR,BABU GEORGE. 2. BABU GEORGE, S/O.T.M.GEORGE, MANAGING DIRECTOR, M/S.LAKE VIEW AYURVEDIC RESORTS & RESEARCH CENTRE PRIVATE LIMITED, JEEVA BHAVAN, KALAYANADU, PLACHERY.P.O.,PUNALUR, KOLLAM DISTRICT 3. DR.K.SIVA DAS, S/O.KUTTAPPAN, DIRECTOR, M/S.LAKE VIEW AYURVEDIC RESORTS & RESEARCH CENTRE PRIVATE LIMITED, PLACHERY.P.O., PUNALUR, KOLLAM DISTRICT. BY ADV. SRI.BABU VARGHESE, SENIOR ADVOCATE SRI.KAPPILLIL ANILKUMAR SRI.JOHNSON T. JOHN RESPONDENT(S): RESPONDENTS -------------------------- 1. KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD., REGISTERED OFFICE AT KELTRON ROAD, KOWDIAR, THIRUVANANTHAPURAM, REPRESENTED BY ITS LEGAL ASSISTANT S.UMADEVI. 2. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. ADV. SRI.SAJI VARGHESE FOR R1 SMT.MARIAM MATHAI FOR R1 R2 BY PUBLIC PROSECUTOR SMT.REKHA.C.NAYAR. THIS CRIMINAL REVISION PETITION HAVING COME UP FOR ADMISSION ON 28/02/2011, ALONG WITH CRRP NO. 2831 OF 2010 & CONNECTED CASES, THE COURT ON 21/03/2011 PASSED THE FOLLOWING: V.K.MOHANAN,J. ---------------------------------------------------------- Crl.R.P.Nos. 2830, 2831, 2832 & 2833 of 2010 ---------------------------------------------------------- Dated this the 21st day of March,2011. O R D E R All the above Criminal Revision Petitions are filed by the same accused, who faced the prosecution for the offence under Section 138 of the N.I.Act, challenging their conviction and sentence imposed by the trial court viz., the Judicial First Class Magistrate Court-IV (Mobile Court), Thiruvananthapuram and the judgment of the appellate court, i.e., the court of Additional Sessions Judge-II, Thiruvananthapuram confirming the conviction, but slightly modifying the sentence awarded by the trial court. As the parties to all the above Criminal Revision Petitions are one and the same, and in all the cases, the transaction is connected with availing of loan and as all the judgments challenged in these revision petitions are of the same courts, particularly the facts and circumstances and the question of law involved are identical, the above Criminal Revision Petitions are heard together and being disposed of by this common order. 2. In all the cases, the trial court has found that all the accused are Crl.R.PNos.2830/2010 & connected cases :-2-: guilty of the offence under Section 138 of the N.I.Act and accused Nos.2 and 3 are sentenced to undergo simple imprisonment for six months each. In addition to that, all the accused are directed to pay fine to the tune of Rs.7 lakhs and in default, accused Nos.2 and 3 are directed to undergo simple imprisonment for one month each. It is also ordered that the fine amount, if realised, shall be paid to the complainant under Section 357(1) of the Cr.P.C. In all the appeals preferred against the above conviction and sentence, the appellate court modified the substantive sentence of imprisonment imposed against accused Nos.2 and 3 and reduced the same to imprisonment till the rising of the court. The appellate court, while confirming the sentence to pay fine, enhanced the default sentence and directed accused Nos.2 and 3 to suffer imprisonment for six months each. The appellate court has also confirmed the direction issued by the learned Magistrate directing to pay compensation to the complainant under Section 357(1) of the Cr.P.C. on realisation of the fine amount. In all the above cases, the first respondent herein is the complainant, which is a company registered under the Indian Companies Act and fully owned by the Crl.R.PNos.2830/2010 & connected cases :-3-: Government of Kerala and it is a State Enterprises. The revision petitioners are respectively accused Nos.1 to 3 in the complaint. The second petitioner/second accused is the Managing Director and the third petitioner/third accused is one of the Directors of the first petitioner/first accused/company. The allegation against the revision petitioners/accused in all the above cases is that the first accused/company approached the complainant/Corporation for a loan and thus, the complainant/Corporation sanctioned the loan and disbursed a total loan amount of Rs.248 lakhs to the first accused/company to set up an Ayurvedic Resort at Thenmala in Kollam District of Kerala and the accused had agreed to repay the same. Thus, according to the complainant, towards part payment of the loan, the first accused issued a cheque for an amount of Rs.7 lakhs which is signed by accused Nos.2 and 3. According to the complainant, when the said cheque was presented for encashment, the same was returned as dishonoured for the reason that funds insufficient in the account maintained by the accused and though a formal statutory notice was sent to all the accused and in spite of the receipt of the same, no amount was paid Crl.R.PNos.2830/2010 & connected cases :-4-: and therefore, the accused had committed the offence punishable under Section 138 of the N.I.Act. 3. With the above allegation, the complainant approached the Chief Judicial Magistrate Court, Thiruvananthapuram and filed four separate complaints for the offence punishable under Section 138 of the N.I.Act, upon which (in Crl.R.P.No.2830 of 2010) cognizance was taken and instituted S.T.No.99 of 2006 and subsequently, the said case was made over to the court of Judicial First Class Magistrate -IV (Mobile Court), Thiruvananthapuram wherein the case is renumbered as S.T.No.2402 of 2006 and the said case is with respect to a cheque dated 15.10.2005 for an amount of R.7 lakhs. Similarly, (in Crl.R.P.No.2831 of 2010) with respect to cheque dated 15.9.2005 for an amount of Rs.7 lakhs, S.T.No.98 of 2006 was filed and subsequently, the same was renumbered as S.T.No.2401 of 2006 in the trial court. In Crl.R.P.No.2832 of 2010, the cheque dated 15.11.2005 for an amount of Rs.7 lakhs is the subject matter of S.T.No.32 of 2006 which was subsequently numbered as S.T.No.2478 of 2006 in the trial court. Similarly, in Crl.R.P.No.2833 of 2010, S.T.No.2235 of 2005 Crl.R.PNos.2830/2010 & connected cases :-5-: was instituted in the court of the Chief Judicial Magistrate, Thiruvananthapuram, connected with the cheque dated 15.8.2005 which is subsequently made over to the present trial court wherein the case is renumbered as S.T.No.2397 of 2006. 4. In all the above cases, except Crl.R.P.No.2833 of 2010 and subject to variation regarding the date of the cheque in question, the witnesses of both the prosecution and for the defence as well as the documentary evidence of the prosecution (Exts.P1 to P6) and defence (Exts.D1 to D11) are one and the same. In Crl.R.P.No.2833 of 2010, the main difference is with respect to the number of documentary evidence marked on the side of the defence i.e., Exts.D1 to D6. 5. Based upon the above evidence and materials, and on the basis of the discussion of the courts below, after having reference to the allegations in the complaint and the defence, both the courts have concurrently found that the cheque in question in each of the cases marked as Ext.P2 was issued by the accused towards the discharge of the monetary liability due to the complainant connected with the loan availed of by the revision Crl.R.PNos.2830/2010 & connected cases :-6-: petitioners/accused from the complainant. It is the above concurrent findings challenged in this Crl.R.P. 6. I have heard Sri.Babu Varghese, learned Senior Counsel for the revision petitioners and Sri.Saji Varghese, learned counsel appearing for the first respondent/complainant and Sri.Tek Chand, learned Public Prosecutor for second respondent. I have carefully perused the judgments of the courts below and gone through the evidence and materials on record, after obtaining the same from the courts below, though these revisions are not admitted. 7. Besides the arguments advanced by the learned counsel for the revision petitioners, at the time of hearing of the matter, learned counsel submitted an argument note dated 4.11.2010. I have also considered the said argument note. Counsel for the first respondent also has filed an argument note mainly in Crl.R.P.No,.2832 of 2010. 8. Learned counsel for the revision petitioner vehemently submitted that the judgments of the courts below and the order convicting the revision petitioners are liable to be set aside and the revision petitioners are Crl.R.PNos.2830/2010 & connected cases :-7-: entitled to get an order of acquittal, especially on the ground that the trial court as well as the appellate court committed serious wrong in holding that the cheques in question were issued towards the discharge of the liability due to the complainant and also for the reason that the courts below miserably failed to appreciate the defence contention that the cheques in question were not issued towards the payment of the loan, but the same were only post-dated cheques given as security as demanded by the complainant for reschedule of the loan transaction. In order to substantiate the above argument, as evident from the arguments note submitted by the learned counsel, several other grounds are also raised. 9. The first ground taken is to the effect that the trial court has no jurisdiction to try the case for the reason that no cause of action arises within the territorial jurisdiction of the trial court since mere issuance of legal notice is not sufficient to constitute and give rise to a cause of action. In support of the above contention, the learned counsel placed reliance upon the decision of the Hon'ble Apex Court in Harman Electronics (P) Ltd. v. National Panasonic Indian (P) Ltd. [(2009)1 SCC 720]. The Crl.R.PNos.2830/2010 & connected cases :-8-: second ground taken by the counsel is that the judgments of the courts below are liable to be set aside imposing conviction and sentence against the revision petitioners since the same are vitiated by non-application of mind and such finding is against the legal positions settled through the Apex Court decisions. As the argument note submitted by the learned counsel is part and parcel of these Crl.R.Ps., I am not proposed to recite those contentions in this order. The other ground is to the effect that the guilt of the accused is not legally proved and therefore, the conviction and sentence are liable to be set aside. According to the learned counsel, the trial court as well as the appellate court, instead of considering the proof in support of the prosecution and its sufficiency and legality, banked upon 313 statement of the accused to find guilt against the revision petitioners and for the said proposition, the learned counsel placed reliance upon the decision of the Honourable Supreme Court reported in Kalpnath Rai v. State (through CBI) [(1997)8 SCC 732]. The fourth ground is to the effect that as the findings of the courts below are perverse and against the settled law, the conviction and sentence imposed by the courts below are Crl.R.PNos.2830/2010 & connected cases :-9-: unsustainable. The above submission is made on the basis of the decision of the Hon'ble Apex Court in Babu v. State of Kerala [2010(2) KLD 327 (SC)]. 10. Another ground taken by the counsel is that the courts below committed an error in drawing presumption and acting on proof and approached the case from a wrong angle viz., wrong application of legal principles and therefore, the conviction and sentence are liable to be set aside. In support of the above ground, learned counsel placed reliance upon the decisions of the Apex Court reported in M.S.Narayana Menon @ Mani v. State of Kerala and Another [(2006)6 SCC 39], Krishna Janardhan Bhat v. Dattatraya Hegde [2008(1) KLT 425(SC)], Jose v. Joy [2008(3) KLT 512], Sharad Birdhichand Sarda v. State of Maharashtra [(1984) 4 SCC 116], Mohan Singh v. Prem Singh & Anr. [(2002)10 SCC 236] and Kamala v. Vidyadharan [2007(3) KLT 861 (SC)]. It is also the submission of the learned counsel on the strength of the decisions in Shaju N.I. v. T.K.Poulose [2009(3) KHC 626] and Bhaskaran Nair v. Mohanan [2009(3) KLT 580] that the High Court can Crl.R.PNos.2830/2010 & connected cases :-10-: interfere and re-appreciate evidence by exercising the revisional jurisdiction in a case whereupon illegality, mis-construction of law and perverse findings have resulted in conviction and sentence. It is also the contention of the learned counsel that since the appellate court refused to consider the additional documents produced by the accused, resulted in serious prejudice to the accused. In order to substantiate the above point, the learned counsel placed reliance upon the decisions reported in Rambhau v. State of Maharashtra (AIR 2001 SC 2120) and Ramakrishna Urban Co-operative Credit Society Ltd. v. Shri Rajendra Bhagchand Warma (Crl.Appln.No.898 of 2009). 11. The last ground taken by the counsel for the petitioner is that the conviction and sentence imposed against the revision petitioners is an abuse of process of law and court since the complainant has not disclosed about other complaints filed under Section 138 of the N.I.Act. Such a point is raised on the basis of the decision of the Honourable Apex Court in (2010) 5 SCC 663. Thus, according to the learned counsel, the judgments of the courts below and the conviction and sentence imposed Crl.R.PNos.2830/2010 & connected cases :-11-: against the revision petitioners are liable to be set aside. 12. Learned counsel for the contesting respondent submitted that there is no dispute regarding the availing of loan of Rs.248 lakhs by the accused from the complainant/company. It is the submission of the learned counsel that the loan was disbursed on 9.7.2001 and the principal amount was to be repaid in 24 quarterly instalments commencing after the moratorium of two years from the date of disbursement of the loan. According to the loan conditions, the first instalment of the loan should have been paid on 9.10.2003 and the last instalment on 9.7.2009 and the interest due was to be paid every quarter right from the beginning. According to the learned counsel, the revision petitioners/accused defaulted the payment of loan and interest. Even after rescheduling the loan more than once, there was again default and thus, huge amounts are still outstanding. Learned counsel for the respondents strenuously submitted that there is no dispute from the part of the revision petitioners/accused regarding the availing of loan of Rs.245 lakhs from the complainant and the accused have no case that the liability, out of the loan Crl.R.PNos.2830/2010 & connected cases :-12-: transaction, is discharged and there is no dispute that the amount is still due. It is further pointed out that in spite of the receipt of legal notice by the accused, no amount was paid thereafter also. It is also submitted by the learned counsel that no contention was taken by any of the accused to the effect that the first accused has not availed of loan and the fact that the second accused and third accused are respectively the Managing Director and one of the Directors of the first accused/company. After inviting the contentions raised by the revision petitioners in the trial court as well as the appellate court, the learned counsel for the contesting respondent submitted that the accused have admitted the execution and issuance of the cheques in question, but, according to them, those cheques are among the 10 postdated cheques issued during the year 2003 for reschedule of the loan. Learned counsel submitted that in view of Sections 118 and 139 of the N.I.Act, the burden is on the accused to rebut the presumption, especially when the accused have admitted issuance and execution of cheques and in support of the above contention, learned counsel placed reliance upon the decisions of the Honourable Apex Court reported in Crl.R.PNos.2830/2010 & connected cases :-13-: Rangappa v. Mohan [2010(2) KLT 682(SC)]. On the basis of the findings arrived on by the courts below, it is the submission of the learned counsel that the revision petitioners have miserably failed to show that they have entrusted with the complainant the so-called postdated cheques. According to the learned counsel, such a false and baseless defence is taken only at the time of trial and no reply was given to the statutory notice which was received by the accused from the complainant. In paragraph 8 of the argument note, after furnishing certain facts and referring to the evidence on record, it is the further case of the contesting respondent that the case of the revision petitioners that the cheques in question were issued as postdated cheques is baseless and not supported by any materials or evidence. On the strength of the decision of the Division Bench of this Court in Thressiamma v. State of Kerala (2010(4) KLT 598), the counsel for the respondents submitted that the contention regarding the lack of jurisdiction, which is taken for the first time before the revisional court, cannot be entertained especially after submitting themselves to the jurisdiction of the C.J.M.Court, Thiruvananthapuram. It is also the Crl.R.PNos.2830/2010 & connected cases :-14-: contention of the leaned counsel for the respondents that even according to the decision reported in Harman Electronics (P) Ltd. (cited supra) relied on by the counsel for the revision petitioners, the trial court has got jurisdiction not merely on the basis of the fact that the notice was issued from Thiruvananthapuram, but for other reasons stated in the argument note. It is also the submission that the transaction had taken place at Thiruvananthapuram including the availing of loan and execution of agreement etc. According to the learned counsel, the contention that no details are given in the notice as well as in the complaint, is not sustainable. The evidence on record, adduced from the side of the complainant as well as from the side of the defence, would show the transaction between the complainant and the revision petitioner and further that the cheque in question was issued towards the repayment of the loan within the territorial jurisdiction of the trial court and the cheque in question is not the one among the postdated cheques allegedly given by the revision petitioners/accused. Thus, according to the learned counsel for the respondents, the trial court as well as the appellate court, after careful Crl.R.PNos.2830/2010 & connected cases :-15-: consideration of the evidence and materials on record, found that the revision petitioners are guilty under Section 138 of the N.I.Act and the conviction and sentence imposed against them are proper and legal and therefore, no interference is warranted. 13. I have carefully considered the arguments advanced at the time of hearing by the counsel for the revision petitioners as well as the contesting respondents and also gone through the argument note. I have repeatedly gone through the judgments of the courts below and also the materials and evidence on record. I have thoroughly considered the authorities cited by the counsel for the revision petitioners as well as the counsel for the respondents. 14. The complainant/company is fully owned by the Government of Kerala as the name indicates, the company is formed for the development of industries in the State of Kerala and for the above purpose, it appears that a huge amount of Rs.248 lakhs is sanctioned and given in favour of the revision petitioners/accused to set up an Ayurvedic resort at Thenmala in Kollam District of Kerala. On the basis of evidence and materials on Crl.R.PNos.2830/2010 & connected cases :-16-: record and as found by the trial court as well as the appellate court, the fact beyond dispute is that the revision petitioners had availed of the said loan for setting up an Ayurvedic resort and the said liability is not discharged. According to the complainant, Ext.P2, the cheque in question in each case was issued towards the part payment of the loan availed of by the revision petitioners. The execution of the cheque and issuance of the same are admitted by the revision petitioners/accused though not in terms of the averments and allegations contained in the complaint. The revision petitioners have no dispute that the first accused/company has availed of a loan and the revision petitioners 2 and 3 are the Managing Director and Director of the said company. They have also no case that no loan amount was received from the complainant. They are also not having a case to the effect that the amount availed of as loan has been repaid and no amount is due out of such loan transaction. According to the defence, the specific contention taken by them, while admitting the availing of loan, is to the effect that after availing of the loan through negotiation with the complainant/management, the complainant and officials have agreed for Crl.R.PNos.2830/2010 & connected cases :-17-: rescheduling the loan amount and insisted the accused to issue post-dated cheques and thus, the accused have issued 10 post-dated cheques and the four cheques produced in these cases are among the 10 post dated cheques so issued by the accused. Thus, according to the revision petitioners, the cheque in question was not issued towards the discharge of the liability out of the loan transaction. Connected with the above contention, the counsel for the revision petitioners submitted that the complainant has not materialised their offer regarding the rescheduling of the amount and as such, the revision petitioners are not bound by the decision arrived in the meeting as per Ext.D1(b). Therefore, there is no passing of consideration based upon the cheque in question and as such, no offence is attracted under Section 138 of the N.I.Act. The trial court as well as the appellate court rejecting the above contention of the revision petitioners/accused, on the basis of the evidence adduced by the complainant as well as the accused, came to a conclusion that the complainant has succeeded in proving that the cheques in question in these cases were issued towards the discharge of the legally enforceable debt and the same were dishonoured Crl.R.PNos.2830/2010 & connected cases :-18-: due to insufficiency of fund and no amount was paid in spite of legal notice and thus, the revision petitioners have committed the offence punishable under Section 138 of the N.I.Act. 15. In the light of the above findings of the courts below and in view of the rival contentions, the question to be considered is whether the courts below are justified in its finding that the complainant has established its case against the revision petitioners/accused and whether such findings,conviction and sentence imposed against the revision petitioners are liable to be interfered with as the same are illegal, improper and incorrect. 16. At the outset, it is to be noted that as indicated earlier, regarding the loan transaction, i.e, the availing of loan by the accused from the complainant/Corporation, there is no dispute at all. It is also beyond dispute that the revision petitioners 2 and 3, who are accused Nos.2 and 3, are the Managing Directors and the Director of the first revision petitioner/first accused/company. The accused have also no case that they have repaid the entire loan amount and the liability in terms of the loan Crl.R.PNos.2830/2010 & connected cases :-19-: agreement. There is also no dispute that the loan amount of Rs.248 lakhs was disbursed on 9.7.2009 and as per the terms of the loan, the principal amount was to be repaid in 24 quarterly instalments. According to the complainant, the first instalment should have been paid on 9.10.2003 and the last instalment on 9.7.2009. According to the prosecution and as per their evidence, the first accused/company issued Ext.P2 cheques in all these cases and those cheques which are marked as Ext.P2 bearing the dates as 15.8.2005,15.9.2005,15.10.2005 and 15.11.2005 and the same contained the signature of A2 and A3. The evidence produced from the side of the prosecution proves that when the above cheques were presented for encashment, the same were dishonoured as there was no sufficient fund in the account of the revision petitioners and the revision petitioners miserably failed to pay the amount in spite of the intimation given to them regarding the dishonour of the cheque and in spite of the demand for the payment of the cheque amount. Though the second accused took a contention regarding the correctness of the signature contained in the cheque in question, such contention was not pressed further. According to