A complaint under Section 138 of the Negotiable Instruments Act had been filed against three accused – a company and two of its directors. Since one director was in a coma, the case was split up and pursued against the other director, who was convicted by the Trial Court, and the Appellate Court upheld the conviction.
The complainant had averred that both the directors were responsible for the management of the accused company. Opposing this averment, the convicted director filed a revision petition before the Kerala High Court, contending that she was not responsible for the day-to-day affairs of the accused company and that there was no material on record which would prove that she was in charge and responsible for the daily affairs of the company.
Regarding this contention, the High Court observed, “The law propounded above only casts the primary responsibility on the complainant to aver in the complaint that the accused were in charge and responsible for the conduct of the business of the firm when the offence was committed. Nevertheless, the complainant is not obliged to establish that the accused were aware of every transaction.”
The High Court further observed that under Section 139, when an accused has to rebut the presumption, the standard of proof required is ‘preponderance of probabilities’. Therefore, if the accused is able to raise a probable defence, which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused may need not even produce evidence of their own if they rely on the materials submitted by the complainant.
However, in the present case, the convicted director failed to raise a probable defence. She had not produced any cogent evidence to rebut the fact that she was not in charge of the day-to-day business.
Moreover, the court noted that the defence of the loss of a blank cheque was taken up belatedly. Furthermore, the accused had mentioned a different date in the ‘stop payment’ instructions to the bank. Also, the instruction did not mention that the reason for stopping the payment was that the cheque had been lost.
The High Court noted that the accused had failed to reply to the legal notice under Section 138, which was reflective of merit in the complainant’s version.
Hence, the High Court found that the complainant did disclose prima facie existence of a debt, stating that his money was used for construction expenses. Since the accused admitted that the signature was hers, statutory presumption came into play.
Thus, the High Court confirmed the director's conviction, as it did not find any error in the findings of courts below.
Case Name: Shiby Poly v. Mary Devachan & Another
Coram: Justice C.S. Dias
Case No.: Crl. Rev. Pet No. 3051 of 2019
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