IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS MONDAY, THE 22ND NOVEMBER 2010 / 1ST AGRAHAYANA 1932 CRL.A.No. 1965 of 2004() ------------------------ CC.269/2001 of JUDL.MAGISTRATE OF FIRST CLASS-II, CHERTHALA .................... APPELLANT: COMPLAINANT ------------------------- K.K.JAYARAM, KOLLATTU VEEDU, ARTHUMKAL P.O., CHERTHALA. BY ADV. SRI.J.OM PRAKASH RESPONDENT(S): STATE AND THE ACCUSED ------------------------------------ 1. THE STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. 2. BENNY SOLAMAN, PAZHAMPASSERIL, ARTHUMKAL P.O., CHERTHALA. ADV. SRI.B.RAJEEV KOYICKAL FOR R2 R1 BY PUBLIC PROSECUTOR SHRI. P.R. JAYAKRISHNAN THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 18/11/2010, THE COURT ON 22/11/2010 DELIVERED THE FOLLOWING: M.L. JOSEPH FRANCIS, J. - - - - - - - - - - - - - - - - - - - - - - - - - - Crl.A. No. 1965 of 2004 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 22nd day of November, 2010 JUDGMENT This appeal is filed by the complainant in C.C. No. 269 of 2001 on the file of Judicial First Class Magistrate Court - II, Cherthala against the judgment of acquittal dated 21.7.2004. The second respondent herein was the accused in that case, which was filed by the complainant alleging commission of the offence under Section 138 of N.I. Act. 2. The case of the complainant is briefly as follows. On 5.11.2000 the accused borrowed a sum of Rs.1,00,000/- from the complainant agreeing to repay the amount within one month and issued a cheque dated 4.10.2000 for Rs.1,00,000/- drawn on the Arthunkal Village Service Co-operative Bank Ltd. When the complainant presented that cheque for collection, it was dishonoured on 12.12.2000 for the reason “funds insufficient”. Crl.A. No. 1965 of 2004 2 On 23.12.2000 the complainant caused to issue a lawyer notice to the accused intimating the fact of dishonour of the cheque and demanding the amount. The accused accepted the said notice on 29.12.2000. But he has neither sent any reply nor paid the cheque amount. 3. In the Magistrate Court, on the side of the complainant PW1 and PW2 were examined and Exts. P1 to P7 were marked. On the defence side Ext.D1 was marked. The learned Magistrate, on considering the evidence, found that the accused has not borrowed any amount from the complainant and has not issued Ext.P1 cheque for the discharge of any debt or liability and the accused was acquitted under Section 255(1) of Cr.P.C. Against that judgment OF acquittal the complainant filed this appeal. 4. Heard the learned counsel for the appellant and the learned Public Prosecutor. 5. The learned counsel for the appellant submitted that Ext.D1 was not executed by the complainant and even if the Ext.D1 is genuine, even then the accused is liable under Section 138 of the N.I. Act. Crl.A. No. 1965 of 2004 3 6. When the accused was question under Section 313 Cr.P.C., he denied the case of the complainant. The accused has stated that he has not borrowed any amount from the complainant. One Alotious and they were friends and that Alotious had joined in a chitty conducted by the complainant. When Alotious availed loan from the chitty, the complainant demanded a cheque of another as security and as requested by Alotious the accused entrusted a blank cheque with Alotious and Alotious delivered the same to the complainant. The said fact had been endorsed in the chitty pass book of Alotious. The accused contends that by misusing the said cheque, the complainant filed this false complaint against him. 7. The complainant was examined as PW1. PW1 deposed that on 28.10.2000 the accused demanded Rs.1,00,000/- from him and he agreed to give the amount within one week. Accordingly, on 5.11.2000 the accused came to his house and borrowed Rs.1,00,000/- from him and issued Ext.P1 cheque dated 4.12.00 for Rs.1,00,000/- drawn on Arthunkal Service Co-operative Bank Ltd. He has further stated that Crl.A. No. 1965 of 2004 4 when he presented the said cheque for collection, it was dishonoured on 12.12.2000 for the reason “fund insufficient”. Ext.P2 is the dishonour memo dated 12.12.2000 issued from Arthunkal Village Service Co-operative Bank Ltd. On 23.12.2000, PW1 sent a lawyer notice to the accused and the accused accepted the notice on 29.12.2000. But he has not repaid the cheque amount. Ext.P13 is the copy of the lawyer notice, Ext.P4 is the postal receipt and Ext.P5 is the postal acknowledgment card. PW2 is the Secretary of Arthunkal Service Co-operative Bank Ltd., who proved Ext.P6 account particulars and Ext.P7 certified copy of the cheque returned register. 8. When cross-examined, PW1 admitted that he was conducting a chitty by name Dhanush Finance Chitty Funds, Arthunkal. Ext.D1 is the pass book issued from that company to one Alotious. Pages 2 to 14 of Ext.D1 pass book contain 'thalavaryola' of the chitty and the complainant has signed in page No.14 as the 'thalayal'. Just above the signature, it is written that Alotious availed Rs.19,000/- as loan from Crl.A. No. 1965 of 2004 5 that chitty on giving Ext.P1 cheque as security and that endorsement bears the date as 28.10.2000. When that endorsement was shown to PW1, he stated that the endorsement was not made by him. In Ext.D1 pass book there is an entry to the effect that Alotious remitted Rs.780/- on 15.10.2000 as 19th instalment. After that entry there is no entry regarding payment of any instalment and there is no further endorsement stating that Alotious borrowed Rs.19,000/- from the chitty. 9. The accused has not examined Alotious to prove that the endorsement made on page No.l4 of Ext.D1 is genuine. In the absence of such evidence it cannot be said that Ext.P1 cheque was received by the complainant as security for the loan amount given to Alotious. Ext.P1 cheque, even if it is issued as security for payment, it is a negotiable instrument at the hands of the payee. Therefore merely because the drawer contends that it is issued as a security is not a ground to exonerate penal liability under Section 138 of N.I. Act. 10. In the present case, even though the accused received the Crl.A. No. 1965 of 2004 6 lawyer notice sent by the complainant, the accused failed to avail the first opportunity to set forth his defence and to prevent the complainant from taking legal action if the defence is true. At the time of cross examination, an attempt was made by the defence to the effect that the signature seen in Ext.P1 is not that of the accused. PW1 specifically states that the cheque was signed by the accused. PW2 stated that the signature seen in Ext.P1 cheque is that of the accused. Even if the endorsement in Ext.D1 is taken as true, it is not stated in that endorsement that the cheque given by the accused was a blank signed cheque. 11. The evidence on record shows that the accused borrowed Rs.1 lakh from the complainant on issuing Ext.P1 cheque and when the complainant presented that cheque for collection it was dishonoured for the reason that 'funds insufficient' in the account of the accused and that the accused failed to pay the cheque amount within 15 days after receipt of the lawyer notice. The complainant has proved all the necessary ingredients of the offence punishable under Section 138 Crl.A. No. 1965 of 2004 7 of the N.I. Act. Therefore, the learned Magistrate is not justified in acquitting the accused. Since the accused has committed an offence punishable under Section 138 of the N.I. Act he is convicted for that offence. 12. In the decision reported in Damodar S. Prabhu v. Sayed Babalal H (2010(2) KHC 428 (SC)), it was held that in a case of dishonour of cheques, compensatory aspect of the remedy should be given priority over the punitive aspect. Considering the facts and circumstances of the case, I am of the view that sentencing the accused to pay a fine of Rs. 1 lakh would meet the ends of justice. The said fine shall be paid as compensation under Section 357(1) of Cr.P.C. 15. Accordingly this appeal is allowed and the acquittal of the accused in C.C.No. 269 of 2001 on the file of the Judicial First Class Magistrate Court-II, Cherthala under Section 255(1) Cr.P.C. is set aside and the accused is found guilty under Section Crl.A. No. 1965 of 2004 8 138 of the N.I. Act and he is convicted and sentenced to pay a fine of Rs. 1 lakh. The said fine shall be paid to the appellant as compensation under Section 357(1) of Cr.P.C. The accused is permitted either to deposit the fine amount before the court below or directly pay the compensation to the appellant within three months from today and produce a memo to that effect before the court below in case of direct payment. If the accused failed to deposit or pay the said amount within the aforesaid period, he shall suffer S.I. for a period of three months by way of default sentence. (M.L. JOSEPH FRANCIS) Judge tm Crl.A. No. 1965 of 2004 9