IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR WEDNESDAY, THE 19TH NOVEMBER 2008 / 28TH KARTHIKA 1930 Crl.Rev.Pet.No. 4349 of 2007() ------------------------------------------ CRA.316/2007 of ADDL. SESSIONS COURT,(ADHOC-II), ERNAKULAM. CC.1413/2003 of JUDL.MAGISTRATE OF FIRST CLASS-II, ALUVA .................... REVN. PETITIONER(S): APPELLANTS/ACCUSED ---------------------------------- M.ABDUL KALAM AZAD, AGED 52 YEARS, SON OF MUHAMMED GANI, 39/5288, PANAMPILLY NAGAR, ERNAKULAM, COCHIN-36. BY ADV. SRI.VARGHESE C.KURIAKOSE SRI.PRAVEEN K. JOY SRI.E.M.MURUGAN RESPONDENT(S): RESPONDENTS/COMPLAINANT & STATE --------------------------- 1. SRI. N.BABU, AGED 51 YEARS, ILLICATT HOUSE, N.H.17, EDAPPALLY, ERNAKULAM. 2. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA,ERNAKULAM. ADV. SRI.BEPIN VIJAYAN FOR R.1 PUBLIC PROSECUTOR SRI.C.M.NAZAR THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 19/11/2008, ALONG WITH CRRP NO. 4350 OF 2007 CRRP NO. 4354 OF 2007 CRRP NO. 4356 OF 2007 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.SASIDHARAN NAMBIAR,J. =========================== Crl.R.P. NO.4349,4350,4354 & 4356 OF 2007 =========================== Dated this the 19th day of November,2008 ORDER Revision petitioner is the accused and first respondent the complainant before Judicial First Class Magistrate Court-II, Aluva. Petitioner was convicted and sentenced for the offence under section 138 of Negotiable Instruments Act by learned Magistrate in C.C.1413/2003,1414/2003, 1415/2003 and 1416/2003. Petitioner challenged the conviction and sentence before Sessions Court, Ernakulam in Crl.A.307/2007, 315/2007, 316/2007 & 317/2007. Learned Sessions Judge on reappreciation of evidence confirmed the conviction but modified the sentence. Revisions are filed challenging the conviction and sentence. 2. Learned counsel appearing for petitioner and learned counsel appearing for first respondent were heard. CRRP 4349/07,4350,4354,4356 of 2007 2 3. The argument of the learned counsel appearing for revision petitioner relying on the decision of the Apex Court in M.S.Narayana Menon alias Mani v. State of Kerala and another (2006) 6 SCC 39, D.Vinod Shivappa v. Nanda Belliappa (2006) 6 SCC 456, Krishna Janardhan Bhat v. Dattatraya Hegde (2008(1) KLT 425 (SC), Prakashan v. Surenderan (2007(4) KLT 502(SC) and the decision of a learned single Judge of this Court in Gemini v. Chandran (2007(2) KLT 439) and Anil Raj v. Integrated Finance Co. Ltd (2005 (2) KLT 972) is that the presumption under section 118(a) and 139 of Negotiable Instruments Act were rebutted by the evidence of the first respondent as PW1 himself and the improbabilities brought out in evidence and it is for the first respondent to establish that the dishonoured cheques were issued by the revision petitioner towards discharge of legally recoverable debt and there is absolutely no evidence to establish that fact and hence the conviction is not sustainable. Learned counsel CRRP 4349/07,4350,4354,4356 of 2007 3 argued that courts below did not properly appreciate the evidence of PW1 and convicted petitioner based on the presumption under section 139 of N.I. Act when evidence of PW1 establishes that he would not have granted a loan of Rs.7.25 lakhs in 2002 without getting any instrument especially when it is the case of first respondent that a power of attorney was executed by first respondent to enable revision petitioner to sell 17.68 acres of his property. It was argued that as admitted by PW1, out of the said property 2 acres was sold by first respondent and its value was not paid to the revision petitioner and though it was claimed by PW1 that the matter has been settled in September, 2002 and there was a settlement, there could only be a settlement of the entire claim including the amount if any borrowed by the revision petitioner and these material aspects were omitted to be appreciated by the courts below and therefore the conviction is not sustainable. Learned counsel relying on the decision , Raja Kumari v. Subbarama Naidu (2004(3) KLT 799), in CRRP 4349/07,4350,4354,4356 of 2007 4 Alavi Haji v. Muhammed (2007(3) KLT 77) and argued that even if notices were sent under section 138 (b) of the Negotiable Instruments Act, they were not sent in the correct address of the revision petitioner and evidence of DW2 establish that the notices were not tendered to revision petitioner or refused and there is no evidence that DW2 was in collusion with the revision petitioner and as there cannot be a deemed service, there was no cause of action for commission of an offence under section 138 of Negotiable Instruments Act and on that ground also the conviction is bad. 4. Learned counsel appearing for first respondent argued that courts below appreciated the evidence in the proper perspective and even at the time of evidence revision petitioner admitted that he had issued the dishonoured cheques and what was suggested to PW1` was that those cheques were issued for developing the property of the revision petitioner and as there is no evidence to prove that any such cheque was handed over for developing the land as suggested and issuance of CRRP 4349/07,4350,4354,4356 of 2007 5 the cheques is admitted and identity of neither the payee nor the dates nor the amounts covered by the dishonoured cheques were disputed courts below rightly appreciated the evidence. It was also argued that revision petitioner did not adduce any evidence to prove that the cheques were not issued towards repayment of the amount borrowed and so courts below were perfectly justified in drawing the presumption provided under section 139 of Negotiable Instruments Act. Learned counsel also argued that evidence of PW1 which was found credible and reliable by both the courts below establish that the dishonoured cheques were issued towards repayment of the amounts borrowed in August, 2002 and those cheques were dishonoured for want of sufficient funds and therefore the conviction in all the cases is perfectly legal. Learned counsel relying on the decision of the Apex Court in Alavi Haji's case (supra) (2007(3) KLT 77) argued that burden of the first respondent is only to send a notice in the correct address of the drawer of the cheque demanding the amount covered CRRP 4349/07,4350,4354,4356 of 2007 6 by the dishonoured cheque and Ext.P6 series were sent in the correct address of the revision petitioner and though revision petitioner contended that address is not correct Exts.P10 to P15, the documents executed by the revision petitioner including his vakalath in a proceeding pending before the Munsiff Court, Kodungallur and during the period before and after the transaction establish that the address in which the notices were sent by the first respondent is the very same address. It is argued that circumstances establish that revision petitioner got the notices returned with incorrect endorsement by DW2 that address is not correct when it was the correct address and courts below rightly found that there was deemed service of notice and as revision petitioner did not pay the amount as demanded in the notices, he was rightly convicted for the offence under section 138 of Negotiable Instruments Act. 5. Though learned counsel appearing for the revision petitioner relying on the evidence of Dws. 2 to 4 and the endorsement in Ext.P6 series of CRRP 4349/07,4350,4354,4356 of 2007 7 returned envelopes, whereunder the notice under section 138(b) of Negotiable Instruments Act were sent, argued that there was no service either proper or deemed, on the proved facts, I cannot agree with the argument. Though revision petitioner raised a contention that the address seen in Ext.P6 series are not his correct address, as rightly found by the courts below Ext.P10 to P15 the documents executed by the revision petitioner himself and including the vakalath filed by him before Munsiff Court, Kodungallur where the address is given establish that address of the revision petitioner is the very same address in which Ext.P6 notices were sent. (Exts.P10 to P15 relate to the period before, during and after the transaction). Under section 138(b) of Negotiable Instruments Act the payee has to demand the amount covered by the dishonoured cheque in writing from the drawer within the period provided therein. That notice is contemplated so that drawer of the cheque could avoid prosecution by paying the amount covered by the dishonoured cheque. When revision petitioner CRRP 4349/07,4350,4354,4356 of 2007 8 is disputing the liability itself even if he had received the notices, he would not have paid that amount. Therefore on the facts non-receipt of the notice as such is not very relevant in this case. True, the cause of action would arise only on the failure to pay on receipt of the notice demanding the amount covered by the dishonoured cheque. The presumption provided under section 27 of General Clauses Act can be invoked if it is proved that notices were sent in the correct address of the revision petitioner. In such a case unless he proves that it was not really served and that he was not responsible for such non-service. Evidence establish that registered notice in the correct address of the revision petitioner was sent. When the notice was not served and was returned, if there is no evidence to establish that the revision petitioner was responsible for return of the notice, presumption under section 27 of General Clauses Act cannot be drawn. Whether it is to be drawn or not depends on the facts of each case. DW2 Postman was examined by the revision CRRP 4349/07,4350,4354,4356 of 2007 9 petitioner. Evidence of DW2 is that the address shown in Ext.P6 series of notices is not the correct address of the revision petitioner. Ext.P10 to P15 conclusively disprove that version and establish that notices were sent in the correct address. If that be the case, evidence of DW2 as to why notices were returned establish that DW2 is deposing to help revision petitioner and in fact the notices were returned only to help revision petitioner. These facts are sufficient indications to hold that Ext.P6 notices were returned at the instance of the revision petitioner himself. If that be so, when Ext.P6 notices were sent in the correct address of the revision petitioner and were returned with a wrong endorsement at the instance of revision petitioner the notices are deemed to be served on the revision petitioner. Therefore on that ground, no interference is warranted. 6. But the crucial question is whether findings of the courts below on appreciation of evidence that the dishonoured cheques were issued CRRP 4349/07,4350,4354,4356 of 2007 10 towards discharge of legally recoverable debt by the revision petitioner is sustainable. There is force in the argument of the learned counsel appearing for the revision petitioner that courts below were carried away by the presumption available under section 139 of the Negotiable Instruments Act. Question is whether it is legal. Section 139 of Negotiable Instruments Act provides that unless the contrary is proved it shall be presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge either in whole or in part of any debt or other liability. Once it is admitted or proved that first respondent is the holder of a cheque received by him of the nature referred to in Section 138, unless the contrary is proved it shall be presumed that the cheque was received in discharge of a debt or liability. Apart from the presumption provided under section 139, sub section (a) of Section 118 of Negotiable Instruments Act provides a presumption that the cheque was made or drawn for consideration. But both the presumptions CRRP 4349/07,4350,4354,4356 of 2007 11 under section 118(a) and section 139 of the Negotiable Instruments Act are rebuttable presumption and not irrebuttable. Apex Court in M.S. Narayana Menon v. State of Kerala (2006) 6 SCC 39) considering the presumption held:- 32.The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies. 33. Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another.” Analysing the extent of rebuttal needed Apex Court CRRP 4349/07,4350,4354,4356 of 2007 12 in Krishna Janardhan Bhat v. Dattatraya Hegde (2008 (1) KLT 425) held:- “25. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is 'preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies. 26. A statutory presumption has an evidentiary value. The question as to whether the presumption whether stood rebutted or not, must, therefore, be determined CRRP 4349/07,4350,4354,4356 of 2007 13 keeping in view the other evidences on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In a case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration.” The presumption under section 139 of Negotiable Instruments Act could be rebutted either by adducing evidence or by cross examining the complainant and his witnesses or any other materials or evidence available on record. As held by the Apex Court in Krishna Janardhan Bhat's case (supra) (2008(1) KLT 425 (SC) the burden on the revision petitioner could be discharged even by preponderance of probability. Once it is rebutted, CRRP 4349/07,4350,4354,4356 of 2007 14 it is for the first respondent to prove that the cheques were issued in discharge of the legally recoverable debt or liability. In view of the decisions of the Apex Court, it is not necessary to elaborate the question of law on these aspects. 7. The question then is whether revision petitioner has rebutted the burden and if so whether first respondent has discharged his burden as declared by the Apex Court. Though neither Ext.P6 notice nor the complaint discloses that Rs.7.25 lakhs was borrowed by revision petitioner on different dates when revision petitioner denied the entire case of any loan first respondent as PW1 deposed that the amounts were borrowed by the revision petitioner in August, 2002 on different dates namely August, 4, 10, 15 and 20. Evidence of PW1 is that the amount was borrowed on the promise that he will repay it within a period of six months and subsequently when these amounts were demanded the dishonoured cheques were issued and when presented they were dishonoured for want of sufficient funds. PW1 was CRRP 4349/07,4350,4354,4356 of 2007 15 cross examined with regard to the alleged loans as well as the availability of the amount with him to grant the loan. According to PW1 he is having Real Estate business and he is also a broker and is running an office at his residence for the businesses. PW1 also admitted that he did not withdraw even one rupee from the Bank account for the purpose of granting a loan of Rs.7.25 lakhs to the revision petitioner. Therefore to test the capacity of first respondent to grant such a loan PW1 was further cross examined with regard to the availability of funds. Evidence of PW1 was that in 2001 revision petitioner had purchased a property belonging to first respondent for a consideration of Rs.12 lakhs and after granting a loan to three persons namely Sahadevan, Rejikuttan and another for a total amount of Rs.4 ½ lakhs the balance was retained by him. If the evidence of PW1 that he granted a loan of Rs.7.25 lakhs in August, 2002 is to be accepted and it is to be believed that revision petitioner was having the said fund, retained with him out of the consideration CRRP 4349/07,4350,4354,4356 of 2007 16 received by sale of the property in favour of the revision petitioner, his own further evidence disproves it. Ext.P10 is the sale deed by which the revision petitioner purchased the property belonging to the first respondent. That sale deed is on 27.11.2001. The consideration shown therein is only Rs.2,23,000/-. Learned counsel appearing for first respondent submitted that there are other sale deeds also. Whatever it be, even if the evidence of PW1 is believed, he received Rs.12 lakhs in November, 2002 as consideration for the property sold to the revision petitioner. Evidence of PW1 is that out of Rs.12 lakhs, Rs.4 ½ lakhs was given as loan by him to three persons. Further evidence of PW1 is that from 2003 onwards he was retaining the balance of Rs.7.50 lakhs. If that be the case first respondent was retaining in his possession the balance of 7.50 lakhs even after 2003. In that case, version of PW1 that revision petitioner had obtained Rs.7.25 lakhs from the first respondent in November 2002 cannot be correct. Therefore that evidence of PW1 cast CRRP 4349/07,4350,4354,4356 of 2007 17 serious doubt on his case that a loan of Rs.7.25 lakhs was given on different dates in August, 2002. 8. It was admitted by first respondent that revision petitioner had executed a power of attorney in favour of first respondent to sell an extent of 17.68 acres of property belonging to the revision petitioner. It was also admitted by first respondent as PW1 that out of that property, two acres were sold by him. PW1 further admitted that that the said purchase price which should have been paid to the revision petitioner was not paid. When further cross examined PW1 stated that there was a settlement on 20.9.2002, whereunder the entire amount due to the revision petitioner was paid and the account was settled. It is also admitted by PW1 that there is no documentary evidence to prove the settlement. It was also brought out from PW1 that the amount to be settled at that time was in respect of the transactions amounting to lakhs of rupees apart from several acres of immovable property. If Rs.7.25 lakhs was borrowed by the revision petitioner in August, 2002 when 2001 the CRRP 4349/07,4350,4354,4356 of 2007 18 revision petitioner had executed a power of attorney in favour of first respondent to sell his property and on the strength of the said power of attorney, first respondent had sold two acres of land and that sale price was with PW1 to be paid to revision petitioner, in the ordinary human conduct, there cannot be a settlement of accounts on 20.9.2002 in respect of the immovable property alone or the consideration received for the sale of two acres of land under the power of attorney executed by the revision petitioner, when Rs.7.25 lakhs was outstanding to be paid by revision petitioner to first respondent. If in fact there was a settlement as claimed by first respondent on 20.9.2002 it could only be inclusive of all other outstanding liability either due to revision petitioner or to the first respondent. When these facts are appreciated in the proper perspective it cannot be held that the dishonoured cheques were issued towards repayment of the loan as claimed by the revision petitioner. Unfortunately this aspect was omitted to be taken note of by the courts CRRP 4349/07,4350,4354,4356 of 2007 19 below. If in fact Rs.7.25 lakhs was outstanding to be paid by revision petitioner to first respondent on 20.9.2002, as the amount was allegedly borrowed in August, 2002, when the amount due to revision petitioner from the first respondent out of the sale consideration of 2 acres of property sold by first respondent on the strength of the power of attorney executed by the revision petitioner was settled, definitely the outstanding loan should also be settled. When there is no acceptable evidence to prove a settlement of account on 20.9.2002, apart from the ipse dixit of PW1 it cannot be believed that there was a settlement of accounts. If that be so, it can only be found that revision petitioner did not establish that dishonoured cheques were issued towards discharge of the liability outstanding. In the ordinary human conduct, when Rs.7.25 lakhs was given by first respondent, he would have obtained instruments in writing from the revision petitioner. It is more so because first respondent admitted that he is running an office at CRRP 4349/07,4350,4354,4356 of 2007 20 his residence and is a broker. In the ordinary course he would have get something in writing from the revision petitioner while granting a loan of Rs.7.25 lakhs and that too on four dates and on an undertaking to repay the same with interest after a period of six months. 9. Petitioner has not admitted execution of the dishonoured cheques for the amounts covered therein. The suggestion made to PW1 that cheques were given towards the arrangement for filling up the property and failure of the revision petitioner cannot be taken as an admission of execution or proof of execution. Even if that plea is treated as admission or proof of execution, the presumption if any available under section 139 of Negotiable Instruments Act is successfully rebutted by cross examination of PW1 and the improbabilities of a transaction set up by the first respondent, in the nature of the other admitted transactions. If so it is for first respondent to prove that the cheques were issued in discharge of the amounts borrowed. Evidence do not establish the loan set CRRP 4349/07,4350,4354,4356 of 2007 21 up by first respondent. 10. When the entire evidence is appreciated, it is to be found that first respondent did not establish that the dishonoured cheques were issued in discharge of a legally recoverable debt. Hence conviction of the revision petitioner in all the cases is illegal and is not sustainable. Revision Petitions are allowed. The conviction and sentence passed by the Judicial First Class Magistrate Court-II, Aluva in C.C.1413/2003, C.C.1414/2003, C.C.1415/2003 and C.C.1416/2003 as confirmed by the Additional Sessions Judge (Adhoc II), Ernakulam in Crl.A.307/2007,315/2007, 316/2007 & 317/2007 are set aside. Petitioner is found not guilty of the offence. He is acquitted in all the cases. M.SASIDHARAN NAMBIAR JUDGE tpl/- M.SASIDHARAN NAMBIAR, J. --------------------- W.P.(C).NO. /06 --------------------- JUDGMENT SEPTEMBER,2006