IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN TUESDAY, THE 12TH FEBRUARY 2008 / 23RD MAGHA 1929 CRL.A.No.1169 of 2002 (D) ------------------------------- CC.95/1998 of JUDL. MAGISTRATE OF FIRST CLASS-IV (MOBILE COURT), TRIVANDRUM .................... APPELLANT: COMPLAINANT: ----------------------- K. MOHAN DAS, MANAGING PARTNER, M/S. YAMINI ASSOCIATES, THAKARAPARAMBU ROAD, THIRUVANANTHAPURAM. BY ADV. SRI.M.RAMASWAMY PILLAI RESPONDENTS: ACCUSED & STATE: ----------------------------------------- 1. G. RAVEENDRAN NAIR, T.C.37/892, THINKAL KALA, SOUTH NADA STREET, FORT, THIRUVANANTHAPURAM. 2. STATE OF KERALA REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. BY ADV. SRI.V.N.GOPALAKRISHNAN NAIR SRI.G.SURARSHAN PUBLIC PROSECUTOR SRI.P.RAVINDRA BABU THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 12/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.P.BALACHANDRAN, J. ------------------------------------------------ Crl. Appeal No.1169 of 2002 ------------------------------------------------ Dated this the 12th day of February, 2008 JUDGMENT This appeal with leave is filed by the complainant in C.C.95/98 on the file of the Judicial First Class Magistrate's Court-IV (Mobile Court), Thiruvananthapuram challenging the acquittal of the first respondent of offence under Section 138 of the N.I. Act under Section 255(1) of the Cr.P.C. The appellant filed complaint in the court below alleging that he is the Managing Partner of M/s.Thushara Traders, Neyyattinkara and also M/s Yamini Associates, Thakaraparambu Road, Thiruvananthapuram; that the first respondent has business dealings with him and to discharge the liability to the appellant, the first respondent issued Ext.P2 cheque to him for an amount of Rs.24,26,960/- drawn on the Thiruvananthapuram main branch of the South Indian Bank Ltd.; that he presented the cheque Crl. Appeal No.1169 of 2002 -2- for collection through his bankers viz. the Powerhouse branch of Indian Overseas Bank, Thiruvananthapuram, but the said cheque was returned dishonoured by the drawee bank under Ext.P4 memo assigning the reason “funds insufficient”; that the said memo along with Ext.P2 cheque was returned to him by his bankers on 26/09/97 under the original of Ext.P3 letter; that thereupon, the original of Ext.P5 notice was caused to be issued through lawyer on 01/10/97 by registered post with acknowledgment due intimating the first respondent of the dishonour of the cheque and calling upon him to make payment of the amount covered by the cheque; that the said notice was received by the first respondent on 07/10/97 under Ext.P6 postal acknowledgment card, but he has not cared to make payment of the amounts covered by Ext.P2 cheque either within the statutory period or ever thereafter and thus, he has committed an offence Crl. Appeal No.1169 of 2002 -3- punishable under Section 138 of the N.I. Act. 2. On appearance of the first respondent in the court below pursuant to receipt of summons he was served with copies of all relevant records in the case and he was questioned by the learned Magistrate reading over the particulars of the offence and explaining it to him. Thereupon, he pleaded not guilty and consequently, a trial of the case was conducted by the court below. 3. On the side of the appellant his power of attorney holder is examined as PW1; the Manager of the drawee bank was examined as PW2 and the appellant got himself examined as PW3 and documentary evidence Exts.P1 to P7 were got marked. On the appellant closing his evidence, the first respondent was questioned under Section 313 Cr.P.C. Thereupon, he admitted the purchases made by him as alleged from the business concern of the appellant, but denied of having issued any cheque; Crl. Appeal No.1169 of 2002 -4- admitted of having received Ext.P5 notice under Ext.P6 acknowledgment card and stated that he has issued Ext.P7 reply thereto. He also admitted that Ext.P2 cheque is one issued in account No.1268 in the current account maintained by him in the name of his business concern “Thinkal Kala” at the Spencer Junction branch of the South Indian Bank and that the cheque was being dishonoured under Ext.P4 memorandum for reason of “insufficiency of funds” in his account. He also admitted finally that in Ext.P2 cheque he himself has signed as proprietor. He further stated that the cheque was issued by him by way of security; that the appellant had promised him that the requisite time would be granted to avail of loan from bank and to make payment and accordingly, supply was effected to him of 155 numbers of T.V., four V.C.P and two audio systems and by way of security he was made to deliver signed plain paper, stamp paper as Crl. Appeal No.1169 of 2002 -5- also documents obtained from K.T.D.C in relation to the supply order and also obtained two cheques from him of which one is Ext.P2; that he made all attempts to secure loan from bank but he did not get it and that was for reason of the appellant himself, as he had taken documents in relation to eight and a half acres of property owned by him. 4. On the defence side the first respondent got himself examined as DW1 and another witness as DW2 and got marked in evidence Exts.D1 to D4. The court below considered the case in the light of the evidence adduced as aforesaid; found that the cheque was being issued by way of security and consequently, held on the strength of the decisions in Srinivasan v. State of Kerala (1999(3) KLT 849) that the cheque issued by way of security does not attract Section 138 of the N.I. Act and consequently, acquitted the first respondent of offence under Section 138 of the N.I. Act. Crl. Appeal No.1169 of 2002 -6- 5. It is vehemently contended before me by the learned counsel for the appellant that the decision relied on by the court below is no longer good in law as it has been held by the Apex Court and by this Court in several subsequent decisions that cheque issued by way of security also attracts the penal provisions contained in Section 138 of the N.I. Act. As rightly contended by the counsel for the appellant a cheque issued by way of security for due discharge of debt or other liability also attracts provisions of Section 138 of the N.I. Act. In the instant case, the case of the first respondent is only that Ext.P2 cheque was being issued by way of security. Inability for him to raise loan to pay up the amounts is not a defence. The case of the first respondent that he could not avail of loan as the appellant had received from him documents in relation to eight and a half acres of property owned by him is not evidenced except Crl. Appeal No.1169 of 2002 -7- that it has been so mentioned in Ext.P7 reply notice and in Ext.D1 notice. If at all documents were so entrusted with the appellant then certainly some receipt should have been obtained in evidence thereof. There is no receipt or other record obtained evidencing delivery of title deeds in relation to eight and a half acres of property belonging to the first respondent to the appellant and the mention in Ext.P7 and Ext.D1 notices cannot serve the purpose. Apart from raising the above contentions, the first respondent has no case that statutory formalities which are prerequisites for the maintainability of a complaint under Section 138 of the N.I. Act do not stand satisfied in the instant case or that the dishonour of Ext.P2 cheque was not for reason of “insufficiency of funds” in his account to honour the cheque, but for any other reason. Consequently, therefore, the offence under Section 138 of the N.I. Act Crl. Appeal No.1169 of 2002 -8- stands proved and the acquittal of the first respondent of the said offence by the court below is incorrect and deserves to be set aside and reversed. 6. In the result, allowing this appeal, I set aside the order of acquittal passed by the court below and convict the first respondent/ accused of offence under Section 138 of the N.I. Act. Adjourned for questioning the first respondent regarding sentence as desired by the counsel for the first respondent to 25/02/08. K.P.BALACHANDRAN, JUDGE kns/-