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. 346 of 2001() ----------------------- CC.380/1997 of JUDL.MAGISTRATE OF FIRST CLASS-I, MUVATTUPUZHA .................... APPELLANT/COMPLAINANT: ----------------------------- BAWAN C.PAUL, S/O PAULOSE, CHERAKUNNATHU VEEDU, MADAVOOR KARA, VELLOORKUNNAM VILLAGE. BY ADV. SRI.H.SIVARAMAN SRI.MATHEW CHERIAN RESPONDENTS/ACCUSED & STATE : ---------------------------------------- 1. SHIBU MATHEW, VILAVINAL VEEDU, KARAVALOOR P.O., PUNALOOR, KOLLAM. 2. THE STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA. BY SRI.ALEXANDER JOSEPH FOR R1 PUBLIC PROSECUTOR SHRI P.RAVINDRA BABU FOR R2. 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.346 OF 2001 ----------------------------- DATED THIS THE 12TH DAY OF FEBRUARY, 2008 J U D G M E N T This appeal is filed with leave by the complainant in C.C.No.380/97 on the file of the Judicial First Class Magistrate's Court-I, Muvattupuzha assailing the acquittal of the first respondent under section 255(1) Cr.P.C. of an offence punishable under section 138 of the Negotiable Instruments Act. The complaint is that in discharge of debt due to the appellant, the first respondent issued Exhibit P1 cheque for an amount of Rs.1,75,000/= drawn on the Punalur Branch of the Syndicate Bank on 28.11.1996, that on the same day it was forwarded for collection through the Muvattupuzha Branch of the South Indian Bank and thereupon it was returned dishonoured by the drawee Bank under Exhibit P2 memorandum assigning the reasons “payment stopped by the drawer” and “funds insufficient”, that the said memorandum along with the cheque was delivered over to him by his bankers the South Indian Bank, Muvattupuzha Branch vide Exhibit P3 intimation, that thereupon the original of CRL.APPEAL NO.346/01 2 Exhibit P4 notice was issued to the first respondent intimating him of the dishonour of the cheque and demanding payment of the amount covered by the cheque, that despite the notice, the first respondent has not cared to pay up the amounts either within the statutory period or ever thereafter but has issued Exhibit P6 reply setting up false contentions and he has thereby committed an offence punishable under section 138 of the Negotiable Instruments Act. 2. On receipt of summons, the first respondent entered appearance in the court below and he was served with copies of all relevant records in the case. Thereafter he was questioned by the 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. On the side of the complainant he gave evidence as PW1 and Exhibits P1 to P8 were got marked. On the complainant closing his evidence, the first respondent was questioned under Section 313 Cr.P.C. Thereupon, he generally denied all incriminating circumstances appearing in evidence against him and maintained that he is innocent. According to him, he has received Exhibit P4 notice under Exhibit P5 A/D card CRL.APPEAL NO.346/01 3 on 28.1.1997. But no amount is due from him to the appellant. According to him, he effected purchase of a stage carriage bus on 23.7.1995 from one Joy, s/o Kunju of Velamblakal at Karikode, Thodupuzha for a price of Rs.2,30,000/-, that an amount of Rs.1 lakh was paid in cash and the balance amount of Rs.1,30,000/= for which there was finance from Malaya Financiers was agreed to be paid by him and that then Bino Paul, the Managing Director of Malaya Financiers had received from him by way of security a signed blank cheque, a signed stamp paper and a promissory note, that thereafter he sold the stage carriage bus to one Ajith Kumar and intimated it to Malaya Financiers that however they did not return the documents given signed and apprehending that the documents so given will be misused by the Financiers, he issued stop payment memo to the Bank and he also instituted a civil suit for declaration that the cheque is invalid and that he is not guilty of any offence and that this case is falsely foisted against him and that no amount is due from him to the appellant. 3. On the defence side, DWs 1 and 2 were examined and Exhibits D1 to D7 were got marked. The court below considered the CRL.APPEAL NO.346/01 4 case in the light of the evidence adduced as aforesaid and found that there is no evidence in the case, that Exhibit P1 cheque was being issued in discharge of a legally enforceable debt or other liability and consequently, acquitted the first respondent of the offence punishable under section 138 of the Negotiable Instruments Act by the judgment impugned. Hence this appeal by the aggrieved appellant. 4. It is contended before me by the learned counsel for the appellant that the court below has not properly appreciated the case of the complainant and that in fact the presumption available under section 139 of the Negotiable Instruments Act should have been found to support the case of the appellant as the said presumption has not been rebutted by the first respondent on the evidence in this case and that since all statutory formalities required for the maintainability of a complaint under section 138 of the Negotiable Instruments Act stands complied with and the dishonour of Exhibit P1 cheque is for reason of insufficiency of funds in the account of the first respondent and not merely for the reason that the payment is stopped by the drawer, the first respondent should have been found guilty of the offence under section 138 of Negotiable Instruments Act and convicted and CRL.APPEAL NO.346/01 5 sentenced thereunder. 5. There is no allegation at all in the complaint as to how the first respondent became indebted to the appellant. Even in Exhibit P4 notice, there is no mention of the details of advancing of money by the appellant to the first respondent except that the cheque was issued in discharge of debt of Rs.1,75,000/=. The first respondent has issued Exhibit P6 reply to the said notice raising all the contentions that he has raised in this case at the stage of trial. In chief examination, PW1 has stated that an amount of Rs.1,75,000/= due to him is on account of sale of vehicle. In cross-examination he has deposed that the acquaintance he has with the first respondent is the acquaintance he had by sale of vehicle to him and that he is one engaged in sale of vehicle. According to him the bus bearing registration No.KEE-2688 was sold to the first respondent for Rs.3 lakhs, but that its registered owner was not himself but one P.P.Sony from whom he had purchased the vehicle which was having hire purchase agreement with Malaya Motor Financiers, Muvattupuzha. He has also stated that in the registration certificate of the vehicle, the factum of hire purchase also is recorded. He has deposed that on 24.7.1995, the first respondent CRL.APPEAL NO.346/01 6 purchased the vehicle and the first respondent was being introduced to him by broker Radhakrishnan. He had no satisfactory answer when he was asked as to why the details of the vehicle transaction had not been disclosed in Exhibit P4 notice. To the question put to PW1 as to whether the first respondent had availed of loan from Malaya Finance and he had given Exhibit P1 by way of security to Bino Paul who is conducting the said business, the appellant has answered in negative. The suggestion put to PW1 is that when the Financiers seized the vehicle, the first respondent was issuing stop payment of the said cheque to his bankers and that Exhibit P1 cheque was being utilised to file the present complaint against him through the appellant . DW2 is one Prakash and he has proved Exhibit D6 agreement executed on 23.7.1995 between the first respondent and one Joy of Thodupuzha in the matter of sale of bus to the first respondent to which he is an attestor. He has supported the defence contention stating that the sale of the bus was for a consideration of Rs.2,30,000/= of which an amount of Rs.1 lakh was paid in cash and an amount of Rs.1,30,000/= for which there was finance agreement with Malaya Financiers was being taken over by the first respondent and that for that purpose the CRL.APPEAL NO.346/01 7 first respondent had delivered a signed stamp paper, a cheque and a promissory note in favour of Malaya Financiers, the proprietor of which is DW1, Bino Paul. He has also proved Exhibit D7 which is a certified copy of agreement dated 8.12.1995 whereunder the said bus has been sold to one Ajith Kumar by the first respondent and has deposed that the original of Exhibit D7 is produced before the Sub Court, Muvattupuzha in OS.No.47/97 wherein he is the second defendant. He has further stated that the said suit is one instituted by the first respondent against the appellant Bawan C.Paul; against himself as also against DW1 for a declaration that Exhibit P1 cheque is not supported by consideration. Nothing has been brought out in cross- examination of DW2 to disbelieve his testimony. DW1 has given evidence that he is the Managing Director of Malaya Motor Finance at Muvattupuzha; that he knows the first respondent and has proved Exhibit D1 letter dated 14.9.1995 as letter issued from his office signed by him. The said letter demands the first respondent to pay an amount of Rs.5,500/= towards defaulted instalment of hire purchase dues under hypothecation agreement No.24/94 in relation to a stage carriage bus bearing registration No.KEE-2688. He has also stated CRL.APPEAL NO.346/01 8 that as per the said agreement, finance was being advanced to one Sony and that notice was issued to the first respondent as it had come to his notice that during the existence of loan, the vehicle was purchased by him. He has, however, admitted that the appellant is known to him for at least 5–6 years immediately preceding his tendering evidence before court and that such acquaintance is in connection with sale of vehicles. He has also admitted that Exhibit D2 notice was issued by the first respondent to him for return of cheque, signed stamp paper, etc. in his possession and for non-return of those papers, suit has been instituted against him before Sub Court Muvattupuzha to have the cheque declared as void. Copy of plaint in the case is proved as Exhibit D3 and Exhibit D4 as the written statement filed by him. He admits in paragraph 2 of Exhibit D4 written statement that in relation to the hire purchase agreement which he had in relation to vehicle bearing registration No.KEE-2688, the first respondent or the appellant has no connection at all. All the same, he has admitted that while giving Exhibit D4 written statement the bus bearing registration NO.KEE-2688 was in the possession of the first respondent. He has also proved Exhibit D5 letter as one issued by CRL.APPEAL NO.346/01 9 him to the first respondent intimating the first respondent that the R.C.Book in relation to bus bearing registration No.KEE-2688 is missing from him. He has no doubt, denied Exhibit P1 cheque as one given by the first respondent to him. However, he admits that the loan arrangement still subsists in relation to the said bus possessed by the first respondent. In cross-examination DW1 has admitted that vehicles in relation to which hypothecation agreements are there, are sold keeping in force the hypothecation agreement and he has admitted that the stage carriage bus bearing registration No.KEE-2688 was accordingly being purchased by the first respondent from the hirer P.P.Sony. The circumstances that has been brought to light by the totality of the evidence that has been adduced in the case shows that the first respondent and the appellant were persons engaged in purchase and sale of vehicles and that the stage carriage bus bearing registration No.KEE-2688 purchased by the first respondent by intervention of PW1 is a vehicle in relation to which finance had been advanced by DW1 under a hire purchase agreement. The definite case of the first respondent is that the cheque that has been received from him by DW1 by way of security while purchasing the stage carriage CRL.APPEAL NO.346/01 10 bus bearing registration No.KEE-2688 of which DW1 was the financier was being made use of to file a complaint setting up the appellant as the payee and that actually no amount is due to the appellant from the first respondent. The defence so set up has caused very serious cloud on the case of the appellant as regards the transaction which he has alleged on the basis of Exhibit P1 cheque, especially when circumstances which support the case of the first respondent has come out from the testimony of PW1 and DW1 as well. It is worthy to note in this context the decision of the Apex Court in Krishna Janardhan Bhat v.Dattatraya G.Hegde 2008 (1) KHC 410 (SC) that the presumption under section 139 of Negotiable Instruments Act is not regarding existence of any legally recoverable debt or that there existed a debt, but it merely raises a presumption in favour of the holder of the cheque that the same has been issued for discharge of any debt or other liability. In view of the presumption under section 139 of Negotiable Instruments Act, a contention that the cheque was issued by way of advancing a loan may not stand. However, no presumption with respect to the quantum of amount due is available by reason of the presumption under section 139 of Negotiable CRL.APPEAL NO.346/01 11 Instruments Act. The appellant in the instant case has miserably failed to establish the existence of any debt which the first respondent was bound to discharge, except producing Exhibit P1 cheque and by preponderance of probabilities on the evidence adduced in the case, the presumption available in favour of the holder of Exhibit P1 cheque has been rebutted. Hence as rightly held by the court below, the first respondent is not liable to be convicted for an offence punishable under section 138 of Negotiable Instruments Act. Hence he was rightly being acquitted by the court below. The acquittal has only to be confirmed, dismissing the appeal. In the result, confirming the correctness of acquittal of the first respondent by the court below, I dismiss this criminal appeal. K.P.BALACHANDRAN, JUDGE. dsn CRL.APPEAL NO.346/01 12 K.P.BALACHANDRAN, J. ----------------------- CRL.A.NO.346/01 J U D G M E N T 12.2.2008