IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.K.MOHANAN MONDAY, THE 17TH MAY, 2010 / 27TH VAISAKHA, 1932 CRL.A.No. 1914 of 2006 -------------------------- (AGAINST THE ORDER IN S.T.NO.230/2004 OF JFCM COURT-IV,KOCHI) .................... APPELLANT(S): ---------------- SHAJAHAN T.M., S/O.MOULA RAWTHER, THOPPIL PARAMBIL HOUSE, VEDIMARA STOP, MANNAM P.O., N.PARUR. BY ADV. SRI.S.SREEKUMAR RESPONDENT(S): ------------------- 1. P.J.ABRAHAM, PUTHENPURAYIL HOUSE, KAINADY P.O., KOTTAYAM DISTRICT. 2. STATE OF KERALA, REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. BY ADV. SRI.LIJU.V.STEPHEN FOR R1 BY ADV. SRI.BECHU KURIAN THOMAS FOR R1. BY PUBLIC PROSECUTOR SRI.C.M.KAMMAPPU. THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 23/03/2010, ALONG WITH CRA NO. 1917 OF 2006 AND OTHER CONNECTED CASES, THE COURT ON 17/05/2010 DELIVERED THE FOLLOWING: V.K.MOHANAN, J. -------------------------------------------------- Crl.A.Nos.1914,1917, 1918 & 1919 OF 2006 -------------------------------------------------- Dated this the 17th day of May, 2010 J U D G M E N T All these appeals are filed, under Section 378(4) of the Code of Criminal Procedure (for short 'Cr.P.C.') by the same complainant in four different prosecution cases for the offence punishable under Section 138 of the Negotiable Instruments Act,1881 (hereinafter referred for short as 'the N.I.Act' only) challenging the orders of acquittal recorded under Section 255(1) of the Cr.P.C., vide judgment dated 23.8.2006 of the Judicial First Class Magistrate Court-IV, Kochi in the above cases. 2. As the appellant in all these cases is one and the same person and the subject matter, especially the facts, circumstances and the question of law involved are identical and the first respondent/accused in each case are though different Crl.ANos.1914, 1917,1918 &1919 of 2006 :-2-: persons, but as they are close relatives and as the imputation of allegations and the liability alleged against them are identical and connected and the impugned judgments deserve same treatment as the same are issued by the same court, these appeals were heard together and being disposed of by this common judgment. Crl.A.No.1914 of 2006:- This appeal is preferred by the complainant against the judgment dated 23.8.2006 in S.T.No.230 of 2004 of the Judicial First Class Magistrate Court-IV, Kochi-5 (Additional Munsiff, Kochi) against the first respondent/accused, one P.J.Abraham, wherein the case is connected with Ext.P8 cheque bearing No.635278 dated 9.8.2004 for an amount of Rs.15 lakhs. Crl.A.No.1917 of 2006:- This appeal is preferred by the complainant Crl.ANos.1914, 1917,1918 &1919 of 2006 :-3-: against the judgment dated 23.8.2006 in S.T.No.235 of 2004 of the Judicial First Class Magistrate Court-IV, Kochi-5 (Additional Munsiff, Kochi) against the first respondent/accused, one Titto Abraham wherein the case is connected with Ext.P8 cheque bearing No.104589 dated 9.8.2004 for an amount of Rs.20 lakhs. Crl.A.No.1918 of 2006:- This appeal is preferred by the complainant against the judgment dated 23.8.2006 in S.T.No.380 of 2004 of the Judicial First Class Magistrate Court-IV, Kochi-5 (Additional Munsiff, Kochi) against the first respondent/accused, one Tojo Abraham wherein the case is connected with Ext.P8 cheque bearing No.106005 dated 9.8.2004 for an amount of Rs.20 lakhs. Crl.A.No.1919 of 2006:- This appeal is preferred by the complainant Crl.ANos.1914, 1917,1918 &1919 of 2006 :-4-: against the judgment dated 23.8.2006 in S.T.No.237 of 2004 of the Judicial First Class Magistrate Court-IV, Kochi-5 (Additional Munsiff, Kochi) against the first respondent/accused, one Lillikutty wherein the case is connected with Ext.P8 cheque bearing No.104531 dated 9.8.2004 for an amount of Rs.15 lakhs. 3. In all these cases, the allegations raised and the facts and circumstances involved are identical and liabilities attributed against all the respondents/ accused are similar in nature and connected with the same transaction which I shall refer now. 4. According to the complainant, M/s.Kainady Tanneries Pvt.Ltd. (hereinafter referred to as 'company' only) is a company incorporated under the Companies Act, 1956 of which one Tony Abraham is the Managing Director and Mr.P.J.Abraham, Mr.Tito Abraham and Mr.Tojo Abraham are the Directors and the major shares of the company were held by the said Crl.ANos.1914, 1917,1918 &1919 of 2006 :-5-: Lillykutty. 5. The father of said Tony Abraham, viz., P.J.Abraham is the first respondent/accused in Crl.A.No.1914 of 2006, who is one of the Directors of the company. The first respondent/accused in Crl.A.Nos.1917 and 1918 of 2006, respectively Titto Abraham and Tojo Abraham are the brothers of the said Managing Director- Tony Abraham and the sons of the above mentioned P.J.Abraham. The first respondent/accused in Crl.A.No.1919 of 2006 is the mother of the said Managing Director- Tony Abraham and also the first respondent/accused in Crl.A.Nos.1917 and 1918 of 2006 and the wife of Mr.P.J.Abraham, who is the first respondent/accused in Crl.A.No.1914 of 2006. According to the complainant, Lillikutty Abraham, though, she is not a member of Director Board of the company, she holds substantial number of shares of the said company. Crl.ANos.1914, 1917,1918 &1919 of 2006 :-6-: 6. According to the complainant, all the accused were actively involved in the day to day functioning of the company and its registered office was at Idayar and the company was engaged in the business of tanning of leather and manufacture of semi finished leather. According to the complainant, the company had availed loan from the Kerala Financial Corporation and thus, the company was indebted to the K.F.C. According to the complainant, he is also engaged in tanning of leather and for the said purpose, he had taken a factory on lease at Agraharam, Erode, Tamilnadu and he used to sell raw hides to the company and thus, he had got business relationship with the company and its Directors and shareholder right from 1992. Thus, it is the specific case of the complainant that the Kerala Financial Corporation initiated proceedings under Section 29 of the Kerala Financial Corporation Act for taking Crl.ANos.1914, 1917,1918 &1919 of 2006 :-7-: possession of the company as huge amount was due to the Corporation. According to the complainant, the accused approached the complainant and requested for financial assistance and as he had full faith and confidence over the accused, to tide over the situation, the company and its Directors and shareholders together availed a loan of Rs.60 lakhs from the complainant in August, 2002. 7. According to the complainant, thereafter, on 2.11.2002, the Managing Director viz., Mr.Tony Abraham, who is not an accused in any of the case and the complainant executed an agreement, viz., Ext.P1 whereby the said Tony Abraham admitted the receipt of Rs.60 lakhs and acknowledged the liability to K.F.C. which is quantified and fixed, as per the said agreement, as Rs.156 lakhs. Another clause of the said agreement is that the complainant shall purchase the assets of the company after payment of dues, Crl.ANos.1914, 1917,1918 &1919 of 2006 :-8-: which are quantified as Rs.156 lakhs, to the K.F.C. Another condition in the said agreement is to the effect that on paying the amount to the K.F.C., the title deed given as equitable mortgage by Tony Abraham would be released and would be pledged again in any other financial institutions and the amount so arranged, has been agreed to be repaid, towards the loan amount of Rs.60 lakhs, in instalments. According to the complainant, Ext.P1 agreement did not work out and no amount was paid to the complainant and hence, a fresh agreement dated 24.2.2003-Ext.P2 was executed between the company and the complainant and as per the provisions of the above mentioned fresh agreement, the company has offered to sell its assets and the company itself to the complainant and the complainant had agreed to purchase the same. Again as per the condition of the said agreement, the Crl.ANos.1914, 1917,1918 &1919 of 2006 :-9-: complainant was authorised to negotiate with Kerala Financial Corporation to have an one time settlement. According to the complainant, in Ext.P2 fresh agreement, a particular clause was also incorporated to the effect that the amount so arrived has been agreed to be treated as the total sale consideration payable by the complainant to the company. Thus, according to the complainant, on 24.2.2003, Ext.P3 Power of Attorney was executed in favour of the complainant and though negotiation had taken place with the K.F.C., the same was not materialised. Thus, according to the complainant, as the company was running in heavy loss, the Directors of the company have decided to lease out the company to the complainant. Thus, on 1.4.2003, the unit was handed over to the complainant for effecting necessary repairs and according to the complainant, he had spent a sum of Rs.10 lakhs, being the expenses for the Crl.ANos.1914, 1917,1918 &1919 of 2006 :-10-: repair works. The further allegation is to the effect that thereafter, on 10.6.2003, Ext.P4 document was executed incorporating the terms and conditions of the lease agreement, according to which, the lease was for a period of 11 months for a consolidated rent of Rs.10 lakhs which was adjusted towards the expenses met by the complainant for effecting repair works. According to the complainant, thus he was put in possession of the factory and the company. 8. According to the complainant, in the mean while, the Kerala Financial Corporation took over the possession of the company and they notified the company for sale towards the realisation of the debt amount. Thus, the complainant claimed that he had offered a sum of Rs.140 lakhs as total sale consideration as per his letter-Ext.P5 dated 25.9.2003 and in response to the said letter, the K.F.C., as per Ext.P6, informed the complainant accepting the offer Crl.ANos.1914, 1917,1918 &1919 of 2006 :-11-: made by the complainant and he was further directed to remit one-third of the total sale consideration offered by him before 29.9.2003 and the balance amount before 15.10.2003. Thus, according to the complainant, he had paid the entire amount as directed by the K.F.C. and thus, he was put in possession of the company and factory and thus, according to him, he became the absolute owner and he is in possession of the company with effect from 25.2.2004. 9. It is the further case of the complainant that thereafter, all the accused persuaded the K.F.C. to release the document entrusted with it. According to the complainant, on 29.3.2004, another agreement, i.e., Ext.P7 was entered into and executed between the complainant and the Managing Director of the company, viz., Tony Abraham. As per the said document, a sum of Rs.60 lakhs due to the Crl.ANos.1914, 1917,1918 &1919 of 2006 :-12-: complainant was acknowledged. Another clause of the said agreement is to the effect that it is agreed to repay the said amount in instalments. But, according to the complainant, the K.F.C. did not release the document. 10. It is the further case of the complainant that he was badly in need of money and hence, he persistently demanded the return of money. According to the complainant, as the company was highly indebted, the accused persons undertook to pay the amount from their personal account and accordingly, they issued the cheques in question. Therefore, according to the complainant, towards the discharge of the liability undertaken by the accused, viz., accused in S.T.No.230 of 2004 against which Crl.A.No.1914 of 2006 is preferred, issued cheque bearing No.635278 dated 9.8.2004 for an amount of Rs.15 lakhs, accused in S.T.No.235 of 2004 against Crl.ANos.1914, 1917,1918 &1919 of 2006 :-13-: which Crl.A.No.1917 of 2006 is preferred, issued cheque bearing No.104589 dated 9.8.2004 for an amount of Rs.20 lakhs, accused in S.T.No.380 of 2004 against which Crl.A.No.1918 of 2006 is preferred, issued cheque bearing No.106005 dated 9.8.2004 for an amount of Rs.20 lakhs and accused in S.T.No.237 of 2004 against which Crl.A.No.1919 of 2006 is preferred, issued cheque bearing No.104531 dated 9.8.2004 for an amount of Rs.15 lakhs. Thus, according to the complainant, the above four cheques cover an amount of Rs.70 lakhs out of which Rs.60 lakhs is the amount availed as loan by the accused and out of remaining amount of Rs.10 lakhs, Rs.4 lakhs was paid by the complainant to one Virali Remanan towards the payment of value of wet blue purchased by the company and Rs.6 lakhs was received by one Sheriff, an employee of the company on various occasions from the complainant. Thus, it is the Crl.ANos.1914, 1917,1918 &1919 of 2006 :-14-: specific case of the complainant that the cheques in question were issued by the accused towards the discharge of the liability undertaken by them connected with the company affairs. But, according to the complainant, when those cheques were presented for encashment, the same were not encashed for want of sufficient fund in the account maintained by the accused and also for the reason that the accounts were closed, consequent to which he caused to issue separate lawyer notice to each of the accused intimating the dishonour of cheque and demanding for payment of the amount covered by the dishonoured cheque. According to the complainant, in spite of the formal demand for the payment of the amount covered by the dishonoured cheque, no amount was paid by the accused and hence, he approached the court below by filing separate complaints. 11. The appellant/complainant filed four Crl.ANos.1914, 1917,1918 &1919 of 2006 :-15-: separate complaints against the above mentioned accused before the Chief Judicial Magistrate Court, Ernakulam wherein cognizance was taken under Section 138 of the N.I.Act and thereafter, those cases were made over to the Judicial First Class Magistrate Court-IV, Kochi-5 (Additional Munsiff, Kochi) wherein the above complaints were registered as S.T.Nos.230, 235,380 and 237 of 2004. On the appearance of the accused, the particulars of the allegations and the offences were read over and explained to them and they denied the same and pleaded not guilty which resulted in further trial of the cases. 12. In S.T.No.230 of 2004 against which Crl.A.No.1914 of 2006 is filed, from the side of the complainant, two witnesses including the complainant were examined as PWs.1 and 2 and Exts.P1 to P16 were produced and marked. Ext.X2, the extract of the bank account pertaining to Ext.P8 cheque was also Crl.ANos.1914, 1917,1918 &1919 of 2006 :-16-: produced and marked. From the side of the defence, the accused as well as the two other witnesses, viz., Dws.1 to 3 were examined. Exts.D1 to D8 documents were also marked from the side of the defence and Ext.X1, copy of particulars of appointment of Directors of the company was also marked. 13. Crl.A.No.1917 of 2006 is against S.T.No.235 of 2004 in which also from the side of the complainant, two witnesses were examined and Exts.P1 to P14 were marked and Ext.X1, particulars of bank statement of SBI pertaining to Ext.P8 was also marked. In this case, though no defence witness was examined, Exts.D1 to D5 were marked. 14. In S.T.No.380 of 2004 against which Crl.A.No.1918 of 2006 is filed, from the side of the complainant, PWs.1 to 3 were examined and Exts.P1 to P14 were marked. In this case also, Ext.X1, the particulars of account pertaining to Ext.P8 cheque in Crl.ANos.1914, 1917,1918 &1919 of 2006 :-17-: that case is also marked. Though Exts.D1 to D4 were marked from the side of the defence, no witness was examined for the accused. 15. During the trial of S.T.No.237 of 2004 against which Crl.A.No.1919 of 2006 is filed, PWs.1 and 2 were examined and Exts.P1 to P14 and Ext.X1 Bank Statement pertaining to Ext.P8 cheque were marked. In this case also, though no witnesses were examined from the side of the defence, Exts.D1 to D4 were produced and marked. 16. When the accused were examined under Section 313 of Cr.P.C and when the incriminating circumstances and evidences were put to them, they denied the same. In all these cases, the accused took same defence and has raised though common, but specific plea, right from the reply notice, till they were examined under Section 313 of Cr.P.C. and throughout the trial of the case. According to the accused, Crl.ANos.1914, 1917,1918 &1919 of 2006 :-18-: they did not execute and issue any cheque to the complainant and they controverted the contra claim of the complainant. According to the defence, when they were active in the company, they entrusted signed blank cheque leaves and stamp papers with Tony Abraham, who is the Managing Director of the company for the easy business transaction of the company since they were residing far away from the registered office of the company. According to them, thus the signed blank cheques which were entrusted with Tony Abraham, the Managing Director of the company and which were kept in the company, were stolen by the complainant who happened to be in possession of the company and by misusing the said cheques, he preferred those complaints. Thus, the accused specifically denied the execution and issuance of the cheques in question in favour of the complainant. The trial court, on the basis of the above Crl.ANos.1914, 1917,1918 &1919 of 2006 :-19-: materials and after considering the rival pleadings, formulated three points for its consideration in all these cases, viz., whether the accused had issued the cheque in question to the complainant in discharge of a legally recoverable debt and whether the accused had committed the offence punishable under Section 138 of the N.I.Act and finally the sentence or order. Thus, while considering the points formulated by the trial court and after considering the evidence and materials on record, the trial court has found that there is no dispute and there is no material to disbelieve the contention of the complainant that Tony Abraham, the Managing Director of the company had acknowledged the liability of Rs.60 lakhs owing to the complainant. Though the accused has tried to establish that they have no connection with the company right from 2000, the trial court found that the evidence adduced by the defence in this regard Crl.ANos.1914, 1917,1918 &1919 of 2006 :-20-: need not be looked into as the complainant has no case that the cheques in question were issued for and on behalf of the company and thus, accordingly, the trial court has held that Section 141 of the N.I.Act is not attracted. The trial court has also found that the company has not been arrayed as an accused in any of the cases. After formulating the question as to whether the cheque was issued towards the discharge of any liability, the trial court has considered the allegations and claim of the complainant, in detail. The trial court has observed that the allegation, according to the complainant, is that the loan was availed of by the Directors during the month of August 2002 and subsequently, they issued the cheque to discharge the liability undertaken by them. The trial court has categorically found that Exts.P1 to P7 are not helpful for the complainant to show that there was any liability from the accused towards the Crl.ANos.1914, 1917,1918 &1919 of 2006 :-21-: complainant. In the absence of any documentary evidence for fixing the liability as alleged by the complainant, the court has considered the evidence of PW1, the complainant. After elaborately considering the evidence of PW1, the trial court has specifically found that PW1 has no consistent case regarding the availing of loan, mode of payment and issuance of the cheque. Thus, on the basis of the findings arrived on by the court below, which are on purely factual basis, the trial court has held that the complainant is not successful in proving that the cheques in question were issued by the accused in discharge of a legally recoverable debt and further pointed out that the complainant has failed to prove that the accused has committed the offence punishable under Section 138 of the N.I.Act and accordingly, held that the accused are not guilty under Section 138 of the N.I.Act. Thus, the accused were acquitted under Section 255(1) of Crl.ANos.1914, 1917,1918 &1919 of 2006 :-22-: Cr.P.C. It is the above findings and order of acquittal challenged in these appeals by the complainant and he sought for the interference of this Court, to reverse the order of acquittal of the accused and to convict the respondents/accused for the offence under Section 138 of the N.I.Act. 17. I have heard Sri.S.Sreekumar, learned counsel appearing for the appellant in all these cases and also Sri.Bechu Kurian Thomas, learned counsel appearing for the contesting respondents and Sri.C.S.Hrithwik, learned Public Prosecutor. 18. Mr.S.Sreekumar, reiterating the pleadings in the appeal memorandum as well as the pleadings taken in the trial court, contended that Exts.P1,P2,P3 and P7 would prove the liability of Mr.Tony Abraham, the Managing Director of the company, who is none other than the son of Mr.P.J.Abraham and Lillikutty and also the brother of the other accused viz., Titto Crl.ANos.1914, 1917,1918 &1919 of 2006 :-23-: Abraham and Tojo Abraham and the consequent liability of the accused. It is also the case of the learned counsel that as execution of the cheque is admitted, the evidence of PW1 would further show that the cheques in question were issued towards the discharge of the liability acknowledged as per Exts.P1,P2,P3 and P7 and as undertaken by the accused. According to the learned counsel, the trial court committed a serious mistake in not giving the benefit namely, the presumption under Section 139 of the N.I.Act in favour of the prosecution-the complainant. It is the specific contention of the learned counsel that the accused has miserably failed to establish the defence case, on the other hand, the materials and evidence on record would show that the defence case is an utter false one. According to the learned counsel, the company was took over by the K.F.C. on 14.8.2003 and thereafter, the entire factory Crl.ANos.1914, 1917,1918 &1919 of 2006 :-24-: was under the lock and key of K.F.C. and the complainant was put in possession of the company only on 24.2.2004 and therefore, absolutely there was no access for the complainant to any of the documents kept in the company. According to the learned counsel, the factory was brought under the possession of the complainant only after preparing an inventory and there was no mention in the inventory about the cheques in question. Learned counsel also argued that the finding of the trial court that the accounts were closed is not correct and the evidence of PW2, the Bank Manager shows that the account was closed only for the reason that the account holder did not maintain sufficient balance in the account and it was not closed at the request of the accused. Learned counsel would further submit that Exts.P1 to P4 and P7 documents were issued by the Managing Director of the company, who is closely related to the accused Crl.ANos.1914, 1917,1918 &1919 of 2006 :-25-: and therefore, there is no meaning for insisting oral evidence to prove the legal liability. According to the learned counsel, the trial court ought to have accepted the evidence of PW1, the complainant and the approach made by the trial court disbelieving the evidence of PW1 is highly illegal and erroneous. It is also the contention of the learned counsel that the trial court has placed much reliance upon Ext.D1 suit to disbelieve PW1. Learned counsel pointed out that the said suit was filed after the issuance of lawyer notice and therefore, the civil and criminal proceedings initiated by the accused cannot be taken as a ground to disbelieve the case of the complainant and to acquit the accused. The learned counsel further submitted that the finding of the trial court to the effect that the materials on record and preponderance of probabilities probabilise the defence case is wrong and faulty. In support of the Crl.ANos.1914, 1917,1918 &1919 of 2006 :-26-: above submission and arguments, the learned counsel placed reliance upon the decisions reported in Krishna Bai v. Arti Press (1992(2) KLT 40), Alexander v. Joseph Chacko (1993(2) KLT 326), Gopi v. Sudarsanan (2002(1) KLJ 783), Mohanan v. Bibhukumar (2003(2) KLT 825), Salim v. Thomas (2004(1) KLT 816), Goa Plast(P) Ltd. v. Chico Ursula D'Souza [(2004)2 SCC 235), Narayana Menon v. State of Kerala [2006(3) KLT 404 (SC)], Krishna Janardhan Bhat v. Dattatraya Hegde [2008(1) KLT 425(SC)], Sree Sakthi Paper Mills Ltd. v. Anjaneya Enterprises (2007(4) KLT 215), Komalam v. Mohankumar [2009(3) KLT 263] and K.N.Beena v. Muniyappan and Another [(2001)8 SCC 458] and Bhaskaran Nair v. Mohanan