IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN FRIDAY, THE 10TH JULY 2009 / 19TH ASHADHA 1931 Crl.Rev.Pet.No. 840 of 2001() ------------------------------------------ CRA.NO.75/98 OF SESSIONS COURT, PALAKKAD S.T.CASE NO.2459/97 OF JUDICIAL FIRST CLASS MAGISTRATE,CHITTUR. ............ PETITIONER(S): APPELLANT:ACCUSED: ------------------------------------------------------------ NARAYANAN, S/O.KUTTIKRISHNAN NAIR, KIZHAKKEGRAMAM, HOUSE NO.21/72, THATHAMANGALAM, CHITTUR, PALAKKAD DISTRICT. BY MR.K.RAMAKUMAR, SENIOR ADVOCATE, MR.RAMAPRASAD UNNI.T. RESPONDENT(S): RESPONDENT:COMPLAINANT: ------------------------------------------------------------------------- 1. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, KOCHI – 31. 2. SREEDHARAN, S/O.GOVINDAPANICKER, MANIYATTU VEEDU, PERUVEMBU, PALAKKAD. R1 BY PUBLIC PROSECUTOR SMT. M.K.PUSHAPALATHA R2 BY ADV. MR.P.VIJAYA BHANU THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 31/03/2009, THE COURT ON 10/07/2009 PASSED THE FOLLOWING: Kss ORDER ON CRL.M.P.NO.3881/2001 IN CRRP.NO.840/2001 DISMISSED 10/07/2009 SD/- S.S.SATHEESACHANDRAN, JUDGE /TRUE COPY/ P.A.TO JUDGE Kss S.S.SATHEESACHANDRAN, J. ------------------------------- CRL.R.P.NO.840 OF 2001 () ----------------------------------- Dated this the 10th day of July, 2009 O R D E R Concurrent verdict of guilty rendered against the petitioner for the offence under Section 138 of the Negotiable Instruments Act, for short 'the N.I.Act' is challenged in the revision. The learned Magistrate, after trial finding him guilty of the offence, convicted him thereunder, sentencing him to undergo simple imprisonment for a period of three months and to pay fine of Rs.5,000/- with default term of simple imprisonment for one month more. In appeal, the Additional Sessions Judge, Palakkad confirmed the conviction and sentence without any modification. Propriety, legality and correctness of the conviction and sentence as aforesaid, is challenged by the accused in the revision. 2. The short facts necessary for disposal of the revision may be summed up thus: Towards purchasing of a motor CRRP.840/01 2 vehicle from the complainant, the accused issued two cheques, one for Rs.75,000/- and the other for Rs.49,000/- and the cheque for Rs.75,000/- on presentation was honoured and the other instrument for Rs.49,000/- on presentation, was dishonoured for the reason “payment stopped by the drawer” was the case of the complainant. Statutory notice intimating the dishonour of the cheque and demanding the sum thereunder was responded with a reply raising false and untenable contentions. Complainant, therefore filed a complaint to prosecute the accused for the offence under Section 138 of the N.I.Act. The accused on appearance, pleaded not guilty when the particulars of the offence were made known. Complainant examined three witnesses including himself as PWs.1 to 3 and got marked Exts.P1 to P12 to prove his case. The accused questioned under Section 313 of Cr.P.C., denied the prosecution case, contending that the cheque was issued only as a security for a sale transaction over immovable property, which was not completed and instruction was given to the bank to stop payment on the instrument. The accused also got examined one witness as DW1 to prove that the transaction relating to the cheque was CRRP.840/01 3 different from that canvassed by the complainant. The learned Magistrate, after appreciating the materials produced, found the case of the complainant relating to the issue of Ext.P1 cheque as credible and trustworthy and that of the accused unworthy of any merit. On the materials produced the accused was found guilty and thereupon he was convicted and sentenced, which was confirmed without modification in appeal by the learned Additional Sessions Judge. 3. I heard the learned counsel on both sides. The learned counsel for the accused assailed the conviction and sentence raising a twofold challenge that the necessary ingredients to constitute an offence under Section 138 of the N.I.Act have not even been pleaded in the complaint nor established by the materials tendered in evidence, and that the dishonour of the cheque on the instruction of stop payment by the drawer to his banker at the time of presentation of the instrument when his account had sufficient funds to honour the instrument would not constitute the above offence. The learned counsel, relying on a number of judicial pronouncements rendered by this Court as well as the apex CRRP.840/01 4 court forcefully urged that this was not a case where the dishonour of the cheque was on account of insufficiency of funds or where the amount exceeded the arrangement, which according to the counsel, is necessary to prove an offence under Section 138 of the N.I.Act. The learned counsel relied on Bhageerathy v. Beena (1992 (2) KLT 31), Sidharthan v. Praveena Chandran (1997 (1) KLT 6 (SC)), Ashok v. Vasudevan Moosad (1993 (1) KLT 671), Modi Cements Ltd. v. Kuchil Kumar Nandi ((1998) 3 SCC 249), M.M.T.C.Ltd. and another v. Medchl Chemicals and Pharma (P) Ltd. ((2002) 1 SCC 234) and Goa Plast (P) Ltd. v. Chico Ursula D'souza ((2004) SCC 235) to contend that the dishonour of a cheque for the reason of stop payment by the drawer, when his account had sufficient funds to honour the instrument, would not constitute an offence under Section 138 of the N.I.Act. Reliance was also placed by the counsel in George v. Muhammed (1999 (2) KLT 401) and Chackochan T.K. v. P.P.Paul and another (2008 (4) KHC 922) to contend that essential ingredients constituting the offence should be pleaded and proved by the complainant that the stop payment order was given by the maker to circumvent CRRP.840/01 5 the penal liability and to defeat the very purpose of the Section. Taking serious exceptions to the observations made by the learned Magistrate that the earlier decision of the apex court namely Sidharthan v. Praveena Chandran (1997 (1) KLT 6 (SC)) has become irrelevant in the light of the later decision Modi Cements Ltd. v. Kuchil Kumar Nandi ((1998) 3 SCC 249) (paragraph 8 of the judgment by the trial Magistrate) the learned counsel contended that the apex court in the later decision referred to above, has not overruled the conclusion formed in the previous decision that a stop payment order issued by the maker and dishonour of the cheque pursuant thereto when sufficient funds are available in his account would not make out an offence under Section 138 of the N.I.Act. “Insufficiency of funds or exceeding arrangement” according to the counsel, is the crux of the offence under Section 138 of the N.I.Act, and when that is not so, on the facts presented, no prosecution for such offence would lie leave alone conviction and sentence for such offence. The evidence of PW2, bank official and Ext.P10, extract of the account of the accused are relied by the counsel to contend that the accused had sufficient funds in his account CRRP.840/01 6 when Ext.P1 cheque was presented for encashment. PW2 was treated as hostile by the complainant, who summoned and examined him, it is submitted, is not sufficient to discard his evidence and as such, the portion of his evidence which is advantageous to a party can be taken advantage and the only safeguard thereto, according to the counsel, is that his evidence should be subjected to careful scrutiny by the court. The complainant having failed to establish that Ext.P1 cheque was dishonoured due to insufficiency of funds or exceeds the arrangement, his case must fail and both the courts below went wrong in convicting and sentencing the accused for the offence under Section 138 of the N.I.Act and it is liable to be reversed to advance the ends of justice, submits the counsel. On the other hand, the learned counsel for the complainant submitted that there is no merit in the revision and the conviction and sentence imposed against the accused is fully supported by unimpeachable legal evidence. Inviting my attention to Modi Cements Ltd. v. Kuchil Kumar Nandi ((1998) 3 SCC 249), the learned counsel for the complainant contended that the burden is on the accused to establish that the stop payment instruction given to the CRRP.840/01 7 banker leading to the dishonour of the cheque would not constitute an offence and, further, that he had sufficient funds in his account when the cheque was presented. The accused has not let in any evidence in the case to discharge that burden, and further, Ext.P10 certified extract of his account showing the interleniations made thereunder clearly demonstrate that the entries in his account had been manipulated to make out that he had funds to honour the cheque, but, actually, at the time when the cheque was presented, it was dishonoured due to insufficiency of funds in his account. Both the courts below have concurrently found that the accused is guilty of the offence under Section 138 of the N.I.Act after minute and close scrutiny of the materials tendered, and there is no infirmity, factual or legal, to interfere with the concurrent findings of the inferior courts in exercise of the revisional jurisdiction, submits the counsel urging for dismissal of the revision as devoid of any merit. 4. Revisional jurisdiction, needless to point out, is very much circumscribed and unless it is shown that the finding arrived by the inferior courts is legally unsustainable or so CRRP.840/01 8 perverse, it is not correct and legal to interfere with such finding. Revision is a paternal jurisdiction conferred on a superior court, intended to correct serious infirmities in the findings or orders of the inferior courts to avoid miscarriage of justice. The challenges raised by the learned counsel for the accused to impeach his conviction for the offence under Section 138 of the N.I.Act, necessarily has to be appreciated within the parameters governing the exercise of revisional jurisdiction. The challenge raised by the counsel relying on a number of authorities that an offence under Section 138 of the N.I.Act would lie only if it is established that the instrument issued was dishonoured due to insufficiency of funds or exceeds arrangement in the account of the maker and that has to be pleaded and proved by the complainant is to be appreciated not in the literal sense of those words used under Section 138 of the N.I.Act, but with a broader view that a cheque could be dishonoured for various reasons. The reason for such dishonour, if it is established, was on account of insufficiency of funds or exceeds arrangement, whatever be the reason, it would definitely constitute an offence under Section 138 of the N.I.Act. The very same argument raised by CRRP.840/01 9 the counsel had prompted the decision rendered by the Calcutta High Court, the correctness of which came up for consideration in Modi Cements Ltd. v. Kuchil Kumar Nandi ((1998) 3 SCC 249), before the apex court. The High Court in that case had allowed the petitions moved by the accused for quashing the complaints under Section 482 of the Cr.P.C on the ground that the complainant had not pleaded in his complaint that the cheques were returned by the bank unpaid “either because the amount or 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.” or in other words, the case advanced by the accused was that necessary ingredients of Section 138 of the N.I.Act having not been pleaded in the complaint, the court should not have taken cognizance of the offence. In the similar way, the accused in that case also contended that mere endorsement of the bank “payment stopped” was not sufficient to entertain the complaint as that was not the ingredient of the offence under Section 138 of the Act. Repelling both these contentions as unworthy of any merit, the apex court held that any CRRP.840/01 10 interpretation of Section 138 of the N.I.Act as canvassed by the accused would render it a dead letter. The observations made in the decisions, Electronics Trade & Technology Development Corporation Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. ((1996) 2 SCC 739) and K.K. Sidharthan v. T.P.Praveena Chandran ((1996) 6 SCC 369), which lend support to the proposition canvassed by the learned counsel have been found to be not laying down the law correctly by the apex court. In the decisions, Modi Cements Ltd. v. Kuchil Kumar Nandi ((1998) 3 SCC 249) and, later, in M.M.T.C. Ltd. and another v. Medchl Chemicals and Pharma (P) Ltd. and another ((2002) 1 SCC 234) , after examining the question whether a stop payment instruction by the drawer leading to dishonour of the cheque would constitute an offence under Section 138 of the N.I.Act, the apex court has held that the burden was on the accused to prove that dishonour of the cheque issued by him was not due to insufficiency of funds, and there was valid cause including absence of any debt or liability for the stop payment. In Geoplast Pvt. Ltd. v. Chico Ursula D'Souza (2003 (2) KLT 16 (SC)), the apex court has held in CRRP.840/01 11 unmistakable terms that Section 138 of the N.I.Act is attracted to cases where the drawee bank is directed to stop payment. The apex court has held thus: “Once such a cheque is issued by the drawer, the presumption under Section 139 of the N.I.Act must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment, it will not preclude an action under Section 138 of the N.I.Act by the drawee or the holder of the cheque in due course” In the light of the judicial pronouncements as above, it is too late in the day to canvass the proposition that a stop payment instruction by the drawer to the bank leading to dishonour of a cheque would not constitute an offence since that Section contemplates only of dishonour of the instrument due to insufficiency of funds or exceeds arrangement. The decision Bhageerathy v. Beena (1992 (2) KLT 31) and Ashok v. Vasudevan Moosad (1993 (1) KLT 671) cannot be considered as having laid down the correct principles in view of the later judicial pronouncements by the apex court as indicated above. Similarly, the view taken by the apex court in K.K. Sidharthan v. T.P.Praveena Chandran ((1996) 6 SCC 369), that issue of the cheque at the time when there CRRP.840/01 12 was sufficient balance in the accounts would not constitute an offence has been held to be not laying the good law by the apex court in the later pronouncements already indicated above. The judicial pronouncements by the apex court in Modi Cements Ltd. v. Kuchil Kumar Nandi ((1998) 3 SCC 249), M.M.T.C. Ltd. and another v. Medchl Chemicals and Pharma (P) Ltd. and another ((2002) 1 SCC 234) and Geoplast Pvt. Ltd. v. Chico Ursula D'Souza (2003 (2) KLT 16 (SC)), it is noticed, have not been brought to the notice of the learned Judge who rendered the decision in Chackochan T.K. v. P.P.Paul and another (2008 (4) KHC 922), expressing the view that the complainant has to plead and prove that the stop payment instruction was issued to circumvent penal liability under Section 138 of the N.I.Act. That view, with respect, run counter to the decisions of the apex court, referred to above, which have laid down the principle that the burden was on the accused when a cheque issued by him got dishonoured on his stop payment instruction that he had sufficient funds to clear the amount under the instrument and the stop payment instruction was given for other valid reasons. The principle laid down by the apex court CRRP.840/01 13 casting the burden on the accused under the circumstances referred to is succinctly stated thus in M.M.T.C. Ltd. and another v. Medchl Chemicals and Pharma (P) Ltd. and another ((2002) 1 SCC 234): “If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused.” (underline supplied) 5. Both the courts have concurrently found, after appreciating the materials tendered, that the accused is guilty of the offence under Section 138 of the N.I.Act. He has not let in any evidence to show that the stop memo issued to his banker leading to the dishonour of the cheque, would not constitute the offence under Section 138 of the N.I.Act. The issue of the cheque having been admitted by the accused the presumption under Section 139 of the N.I.Act applied with full force that it had been issued towards discharge of a debt or CRRP.840/01 14 liability until the contrary was established by the maker. In his account, there was not sufficient funds to honour the cheque when it was presented, has been proved by Ext.P10 extract of his account, in which several interleniations had been made to make out otherwise. The view taken by the Magistrate after appreciating the evidence of PW2, a bank Manager, who was treated as hostile with that of Ext.P10 that the account of the accused had no sufficient funds at the time of presentation appears to be proper and correct after perusing the materials, though it was differed by the learned Sessions Judge. The learned Magistrate had the opportunity to watch the demeanour and deportment of the witnesses and the view taken by him after appreciating the materials deserve to be given due consideration and in the absence of sufficient and convincing reason to show that his finding is erroneous it is not correct to interfere with it on the premise that another view is possible. 6. I am satisfied after perusal of the materials that the finding of guilt entered against the accused for the offence under Section 138 of the N.I.Act by the learned Magistrate, CRRP.840/01 15 which was concurred by the appellate Sessions Judge after reappreciating the evidence, is perfectly correct and it is fully established by the legal evidence tendered in the case. Conviction of the accused for the said offence is umimpeachable. 7. Now, coming to the sentence, the accused on his conviction has been sentenced by the trial Magistrate to undergo Simple imprisonment for three months and to pay fine of Rs.5,000/- with default term of imprisonment of one month more. Sessions Judge in appeal has confirmed that sentence without any modification. Having regard to the nature of the offence and the pendency of case from 1998 onwards, I am of the view that the ends of justice would be met by modifying the sentence directing the accused to undergo imprisonment till the rising of the court and to pay a sum of Rs.60,000/-, considering the lapse of time after the issue of Ext.P1 cheque for Rs.49,000/-, to the complainant as compensation under Section 357 (3) of Cr.P.C. Sum fixed as compensation shall be paid to the complainant within two months from the date of this order, failing which, the accused CRRP.840/01 16 shall undergo simple imprisonment for three months. The accused shall appear and his sureties shall produce him before the Judicial First Class Magistrate, Chittoor, on 15.9.2009, and the learned Magistrate shall execute the sentence as directed. Revision is dismissed except to the extent of modification of the sentence as indicated. S.S.SATHEESACHANDRAN JUDGE prp S.S.SATHEESACHANDRAN, J. -------------------------------------------------------- CRL.R.P.NO.840 OF 2001 () --------------------------------------------------------- O R D E R --------------------------------------------------------- 10th July, 2009