IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN MONDAY, THE 18TH FEBRUARY 2008 / 29TH MAGHA 1929 CRL.A.No.60 of 2008 (B) ----------------------------- AGAINST THE ORDER IN CRL.L.P.860/2007 Dated 27/09/2007 CRL.A.885/2006 of SESSIONS COURT, ERNAKULAM .................... APPELLANT: COMPLAINANT -------------------------------- M/S.I.C.D.S. LTD., KALANGOTT TOWERS, M.G.ROAD NORTH END ERNAKULAM, REP. BY ITS MANAGER SHRI.VITTAPPA RAO. BY ADV. SRI.S.R.DAYANANDA PRABHU RESPONDENTS: ACCUSED & STATE ----------------------------------------- 1. MR.ABDUL HAQUE, S/O.KUTTY MOOSA, AGED 47 YEARS, KOZHESSERIL HOUSE, VADUTHALA JETTY P.O., AROOKUTTY, ALAPPUZHA. 2. STATE OF KERALA, REPRESENTED BY PUBLIC PROSECUTOR, KERALA HIGH COURT BUILDINGS, ERNAKULAM. BY ADV. SRI.SHAJI P.CHALY PUBLIC PROSECUTOR SRI.P.RAVINDRA BABU THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 18/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.P.BALACHANDRAN, J. ------------------------------------------------ Crl. Appeal No.60 of 2008 ------------------------------------------------ Dated this the 18th day of February, 2008 JUDGMENT The appellant was the complainant in C.C.399/02 on the file of the Judicial First Class Magistrate's Court, Ernakulam. This appeal is filed challenging the acquittal of the first respondent by the Sessions Judge, Ernakulam in Crl. Appeal No.885/06 preferred against the judgment in C.C.399/02 aforesaid. 2. The appellant filed complaint before the Magistrate alleging inter alia that the appellant is a registered company under the Indian Companies Act having its registered office at Ernakulam represented by its power of attorney holder; that the first respondent entered into a hire purchase agreement with the appellant on 06/06/97 in respect of a diesel car; that the first respondent defaulted hire purchase instalments and the matter was referred to arbitration as per provisions of the hire purchase agreement; Crl. Appeal No.60 of 2008 -2- that the arbitrator passed an award for Rs.4,57,567/- with future interest at 21% per annum; that towards discharge of the said liability the first respondent issued Ext.P3 cheque for Rs.4,80,000/- on 16/11/01 drawn on his account at the Ernakulam, M.G.Road branch of State Bank of Travancore; that on forwarding the cheque for collection through the Ernakulam, M.G. Road branch of the Lord Krishna Bank, it was dishonoured by the drawee bank under Ext.P4 memorandum assigning the reason “funds insufficient”; that thereupon, the original of Ext.P5 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 Ext.P6 is the said notice which is returned unclaimed; that the first respondent has not paid up the amounts covered by the cheque either within the statutory period or ever thereafter and has thereby committed an offence punishable under Section 138 of the Crl. Appeal No.60 of 2008 -3- N.I. Act. 3. On appearance of the first respondent before the Magistrate, he was served with copies of all relevant records in the case and 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 Magistrate. 4. On the side of the complainant, PW1 was examined and Exts.P1 to P6 were got marked. On the complainant closing his evidence, the accused 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. He also filed a written statement of defence wherein he has contended that Ext.P3 is one made up on a blank signed cheque leaf entrusted by him to the complainant on 06/06/97 at the time of entering into the hypothecation agreement by Crl. Appeal No.60 of 2008 -4- way of security; that he has deposited an amount of Rs.2,92,000/- under the hypothecation agreement; that however in 1998, the complainant seized the vehicle and without notice to him they disposed of the vehicle; and that to his knowledge all balance amounts due from him has been realised by the complainant by sale of the said vehicle; that arbitration award has been passed without notice to him and he assailed it before the District Court, Ernakulam and that was ordered to be returned for presentation before the proper court; that the said order was assailed before this Court and this Court directed the application being filed before the Udupi District Court; that against the guarantor under the hypothecation agreement execution is being proceeded with before the District Court, Alappuzha; that he has taken steps to file appeal before the Karnataka High Court; that it is false to say that Ext.P3 cheque is issued in discharge of amounts due under the Crl. Appeal No.60 of 2008 -5- award, but that the blank cheque furnished by way of security was being misused to bring into existence the cheque on the basis of which the complaint is filed and that the complaint is ill-conceived and deserves to be dismissed. On the defence side the respondent got himself examined as DW1 and got marked in evidence Exts.D1 and D2. 5. The learned Magistrate considered the case in the light of the evidence adduced as aforesaid held that the appellant is guilty of offence punishable under Section 138 of the N.I. Act; convicted him thereunder and sentenced him to undergo simple imprisonment for six months and to pay a fine of Rs.4,85,000/- and in default to undergo simple imprisonment for a further term of six months. The first respondent aggrieved by the said conviction preferred Crl. Appeal 885/06 before the Sessions Court, Ernakulam and the Sessions Judge set aside the conviction and sentence so passed against the first respondent and Crl. Appeal No.60 of 2008 -6- acquitted him vide judgment impugned. Hence, this appeal by the aggrieved complainant. 6. It is contended before me by the learned counsel for the appellant that it is true that award was passed based on the hire purchase agreement; that application has been filed before the District Court, Ernakulam to have the award set aside and that was dismissed; that against that, an appeal has been preferred before this Court and this Court allowing the appeal directed the petition to set aside the award being filed before the proper court and accordingly, the appeal was disposed of by this Court directing the first respondent to move the court in Dakshina Kannada as stipulated in the Hire Purchase Agreement within one month's time; that accordingly, petition was filed to set aside the award before the Dakshina Kannada Court and that court passed a revised award reducing the amount awarded by the arbitrator to Rs.2,06,240/-. Crl. Appeal No.60 of 2008 -7- 7. All the same, it is vehemently contended by the counsel for the appellant that after seizure and sale of the hired vehicle, the parties had come to an understanding and for an amount settled by agreement so arrived at, an amount of Rs.4,80,000/- was agreed to be paid and it is for that amount that Ext.P3 cheque is issued; and that therefore, Ext.P3 cheque is supported by consideration and that the appellant having satisfied all statutory requirements which are prerequisites for the maintainability of a complaint under Section 138 of the N.I. Act and the dishonour of Ext.P3 cheque being for reason of “insufficient funds” in the account of the first respondent to honour the said cheque; the first respondent should have been found guilty and convicted for offence under Section 138 of the N.I. Act. 8. On the other hand, it is contended by the learned counsel for the first respondent that Ext.P3 is cheque made up on a blank Crl. Appeal No.60 of 2008 -8- signed cheque leaf entrusted by the first respondent with the appellant for the due performance of the obligations under the hire purchase agreement; and that consequent on the seizure and sale of the hired vehicle there is no obligation on the part of the first respondent to perform the conditions in the hire purchase agreement; that no agreement had been arrived at with the first respondent as contended whereby the first respondent agreed to pay an amount of Rs.4,80,000/-; and that the cheque is not one executed by the first respondent as alleged by the appellant, agreeing to pay so much amount after seizure and sale of the hired vehicle. 9. The accused himself has tendered evidence as DW1 to the effect that in 1997 when the hire purchase agreement was entered into, the appellant has received three blank signed cheques one of which is used to manipulate therein Ext.P3 and that after seizure and sale of the vehicle Ext.P3 cheque Crl. Appeal No.60 of 2008 -9- so made up on one of the blank signed cheque leaves entrusted with the appellant was being used to file the present complaint. In this context, it is worthy to note that PW1 has deposed in cross examination that he is not aware as to whether Rs.2,50,000/- is deposited by the first respondent. The suggestion put to him was that including the amounts so paid up and the amount realised by sale of the vehicle that was seized, the appellant has obtained sufficient amount to have the debt discharged though however, that is denied by PW1. In the proof affidavit sworn by PW1, he has only sworn to the amount for which the arbitrator passed award. There is no whisper as to what was the amount advanced under the hire purchase agreement for purchase of vehicle. The hire purchase agreement is not produced before court. It is not in evidence as to whether the monthly instalment of hire amount payable was being paid in cash each month or whether blank cheques were being entrusted Crl. Appeal No.60 of 2008 -10- with the appellant to be filled up and presented in bank to encash it from the account of the hirer. It is without producing any of those records that the appellant has filed the complaint alleging that it is in settlement of all further amounts due after the sale of the vehicle that the first respondent has issued cheque for Rs.4,80,000/- while at the same time, alleging that award passed by the arbitrator was for Rs.4,57,567/-. It is worthy to note that if at all the award was for Rs.4,57,567/- and the first respondent was prepared to pay an amount of Rs.4,80,000/- vide Ext.P3 cheque, there was no necessity for the first respondent to have challenged the award before the District Court, Ernakulam and thereafter, before this Court and to file a petition before the appropriate court to have the award set aside and to have got the award modified and reduced to one for an amount of Rs.2,06,240/-. Thus, the contention of the first respondent that Crl. Appeal No.60 of 2008 -11- Ext.P3 cheque was not being issued arriving at any agreement to pay up the amount as found by the award passed at Udupi but is cheque made up by the appellant himself for a very high amount misusing the blank signed cheque which had been received by way of security at the time of execution of the hire purchase agreement stands highly probabilised. The presumption under Section 139 of the N.I. Act is not as regards existence of debt as alleged or that there exists a legally recoverable debt but only a presumption in favour of the holder of the cheque that the same is issued for discharge of any debt or other liability. Hence, it is up to the appellant to establish the claim made by him and he cannot bank on the presumption under Section 139 of the N.I. Act and contend that consequent on dishonour of Ext.P3 cheque, a complaint filed by him after complying with all legal formalities has to end in conviction of the first respondent. In the circumstances, the Sessions Court was Crl. Appeal No.60 of 2008 -12- rightly coming to the conclusion that the defence set up by the first respondent stands proved by preponderance of probabilities; that Ext.P3 cheque is not supported by consideration and that therefore, the first respondent is not liable to be convicted and sentenced for offence under Section 138 of the N.I. Act but that the appellant is entitled only to execute the award obtained by him against the first respondent. I do not find any circumstance to disagree with the approach made by the Sessions Judge. This appeal, in the circumstances, deserves only to be dismissed concurring with the judgment of acquittal passed by the Sessions Judge. 10. In the result, concurring with the acquittal of the first respondent by the court below, I dismiss this Criminal Appeal. K.P.BALACHANDRAN, JUDGE kns/-