Kerala High Court

M/S.Vaishnav Securities vs Sasi T. And Another on 23 May, 2024

Crl. Appeal No. 1092/2007         :1:




                  IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                  PRESENT
                  THE HONOURABLE MR. JUSTICE JOHNSON JOHN
           THURSDAY, THE 23RD DAY OF MAY 2024 / 2ND JYAISHTA, 1946
                           CRL.A NO. 1092 OF 2007

JUDGMENT DATED 26.05.2005 IN STC NO. 6079 OF 2003 OF THE JUDICIAL FIRST
CLASS MAGISTRATE-II, PALAKKAD
JUDGMENT DATED 20.09.2006 IN CRA NO.294 OF 2005 OF II ADDITIONAL SESSIONS
JUDGE, PALAKKAD

APPELLANT/RESPONDENT/COMPLAINANT:

             M/S.VAISHNAV SECURITIES
             REGD. OFFICE AT DOOR NO.3/570, MADATHIL POTTAYIL, COMPOUND,
             KERALASSERI VILLAGE, PALAKKAD,, REPRESENTED BY POWER OF
             ATTORNEY AGENT V.JAYAKUMAR, S/O.VELAYUDHAN EZHUTHASSAN,
             PADINJARE VEEDU, MARIKULAMMBU, KUDALLUR P.O.
             BY ADVS.
             SRI.K.P.BALAGOPAL


RESPONDENT/APPELLANT/ACCUSED:

      1      SASI T., S/O. KRISHNAN,
             THENOLI HOUSE (THAIKANDI HOUSE), KANNANAM P.O.,, MOKERI,
             CHITARIPARAMBA, PANOOR (VIA), KANNUR.
      2      STATE OF KERALA
             REPRESENTED BY THE PUBLIC PROSECUTOR,, HIGH COURT OF KERALA,
             ERNAKULAM.
             BY ADVS.
             SMT. N.SHOBHA
             R1 BY SRI.K.SHRIHARI RAO
             R2 BY SRI. SANAL P. RAJ, PUBLIC PROSECUTOR



       THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 21.05.2024, THE

      COURT ON 23.05.2024 DELIVERED THE FOLLOWING:
 Crl. Appeal No. 1092/2007         :2:



                             JOHNSON JOHN, J.
           ---------------------------------------------------------
                       Crl. Appeal No. 1092 of 2007
            --------------------------------------------------------
               Dated this the 23rd day of May, 2024.

                                 JUDGMENT

This appeal is filed against the judgment dated 20.09.2006 in Crl.

Appeal No. 294 of 2005 of the II Additional Sessions Judge, Palakkad,

whereby the judgment dated 26.05.2005 of the Judicial First Class

Magistrate-II, Palakkad in S.T. No. 6079 of 2003 is set aside and the

first respondent/accused was found not guilty of the offence under

Section 138 of the Negotiable Instruments Act, 1881 (for short 'NI

Act') and acquitted.

2. The appellant is the complainant. The case of the complainant

firm is that a loan of Rs.70,000/- was advanced by the complainant to

the accused in furtherance of a hire purchase agreement on 07.03.2001

and towards part payment of the liability, the accused issued cheque

dated 25.09.2003 for Rs. 35960/- and when the complainant presented

the cheque for collection, the same was dishonoured as per memo dated

13.10.2003 with the endorsement 'refer to drawer' and in spite of

issuance of statutory notice, the accused failed to pay the cheque

amount.

3. In the trial court, from the side of the complainant, PW1 was

examined and Exhibits P1 to P7 were marked and no evidence adduced

from the side of the accused. After considering the oral and documentary

evidence on record and after hearing both sides, the trial court found the

accused guilty of the offence under Section 138 of the NI Act and

sentenced him to undergo simple imprisonment for 3 months and to pay

a compensation of Rs.26,000/- and in default of payment of

compensation, to undergo simple imprisonment for one month.

4. Against the trial court judgment, the accused filed Crl. Appeal

No. 294 of 2005 and as per the impugned judgment dated 20.9.2006, it

was found that the complainant failed to prove the existence of a legally

recoverable debt from the side of the accused and that PW1, the power

of attorney holder of the complainant, was not able to depose regarding

the entire transactions between the complainant and the accused in

connection with the issuance of the cheque and that the complainant

also failed to produce the accounts in connection with the transaction

and that the accused has succeeded in rebutting the statutory

presumptions in favour of the complainant and hence, the accused was

acquitted of the offence under Section 138 of the NI Act.

5. Heard Sri. K.P. Balagopal, the learned counsel for the

appellant, Sri. K. Srihari Rao, the learned counsel for the first respondent

and Sri. Sanal P. Raj, the learned Public Prosecutor and perused the

records.

6. The learned counsel for the appellant argued that the issuance

of the cheque and the signature are not disputed and the finding in the

impugned judgment that the complainant has failed to prove the

existence of a legally recoverable debt from the side of the accused to

the complainant, is erroneous and against the evidence on record.

7. But, the learned counsel for the first respondent/accused argued

that PW1, the power of attorney holder of the complainant has clearly

admitted in cross examination that Exhibit D1 is a statutory notice

issued from the side of the complainant to the accused in connection

with the dishonour of another cheque relating to the same transaction

and PW1 also admitted that he is not in a position to say under what

circumstance the complainant issued Exhibit D1 notice to the accused

and also regarding the entire transaction between the accused and the

complainant and therefore, there is no valid ground to interfere with the

impugned judgment.

8. A perusal of the complaint shows that the specific case of the

complainant is that the complainant has advanced a loan of Rs.70,000/-

to the accused in furtherance of a hire purchase agreement dated

07.03.2001 and that Exhibit P2 cheque was issued by the accused

towards part payment. But, there is nothing in Exhibit P7 hire purchase

agreement to show that the complainant advanced a loan of Rs.70,000/-

to the accused. A perusal of Exhibit P7 shows that as per the terms and

conditions in Exhibit P7, hire purchase agreement, the vehicle shown in

A schedule of the agreement was taken on hire by the accused from the

complainant, who is the owner of the vehicle agreeing to pay the rent

specified in the B schedule of the agreement for a term of 15 months

from 07.03.2001 onwards. There is nothing in the complaint or the chief

affidavit of PW1 as to the date from which the accused committed

default in the payment of the rent and what exactly is the amount due

from the accused to the complainant as per Exhibit P7, hire purchase

agreement.

9. A perusal of Exhibit D1 notice dated 08.10.2002 admittedly

issued for and on behalf of the complainant to the accused, shows that

the said notice is also with reference to a cheque said to be issued by

the accused to the complainant in connection with Exhibit P7, hire

purchase agreement, dated 07.03.2001. Even though PW1 has initially

stated in cross examination that the accused has not issued any cheque

to the complainant prior to Exhibit P2 cheque and that the complainant

has not initiated any legal action against the accused before this case,

he subsequently admitted that Exhibit D1 notice is issued for and on

behalf of the complainant to the accused. However, PW1 would say that

he is not in a position to say under what circumstance, the complainant

issued Exhibit D1 notice to the accused and he is also not in a position to

depose regarding the entire matters connected with the transaction

between the accused and the complainant. The evidence of PW1 in

cross examination shows that the complainant is maintaining accounts in

connection with Exhibit P7, hire purchase agreement.

10. It cannot be disputed that the power of attorney holder

cannot depose regarding the matters which are known only to the

complainant and that he can depose only regarding the matters in which

he has personal knowledge. Since PW1 has categorically admitted in

cross examination that he is not in a position to depose regarding the

entire matters relating to the transaction between the accused and the

complainant in connection with the issuance of Exhibit P2 cheque and

that he is not in a position to depose under what circumstance the

complainant has issued Exhibit D1 notice to the accused demanding

payment of another cheque relating to the same transaction and as to

what action was initiated against the accused on the basis of Exhibit D1

notice, I find no reason to disagree with the finding in the impugned

judgment that the complainant has not succeeded in adducing

satisfactory evidence regarding the actual transaction between the

accused and the complainant in connection with the issuance of Exhibit

P2 cheque.

11. It is pertinent to note that in spite of the order in Crl. M.P. No..

5017 of 2004 under Section 91 Cr.P.C., the complainant has not

produced the statement of accounts relating to Exhibit P7, hire purchase

agreement, between the accused and the complainant. It is well settled

that the standard of proof which is required from the accused to rebut

the statutory presumption under Sections 118 and 139 of NI Act is

preponderance of probabilities and that the accused is not required to

prove his case beyond reasonable doubt. The standard of proof, in

order to rebut the statutory presumption, can be inferred from the

materials on record and circumstantial evidence.

12. In Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal

[(1999) 3 SCC 35], the Honourable Supreme Court held that the non

existence of consideration for the cheque can be proved by raising a

probable defence and if it is shown that the existence of consideration

was improbable or doubtful or the same was illegal, the onus would shift

to the complainant.

13. In Harbhajan Singh v. State of Punjab (AIR 1966 SC

97), the Honourable Supreme Court held that the onus on an accused

person might well be compared to the onus on a party in civil

proceedings, and just as in civil proceedings the court trying an issue

makes its decision by adopting the test of probabilities

14. The Honourable Supreme Court considered the nature of the

standard of proof required for rebutting the presumption under Section

139 of the Negotiable Instruments Act in M.S.Narayana Menon v.

State of Kerala (2006 (6) SCC 39), and it was held that if some

material is brought on record consistent with the innocence of the

accused, which may reasonably be true, even though it is not positively

proved to be true, the accused would be entitled to acquittal.

15. The Honourable Supreme Court in Basalingappa v.

Mudibasappa [(2019) 5 SCC 418] summarised the principles of law

governing presumptions under Sections 118(a) and 139 of the NI Act in

the following manner:

(i) Once the execution of cheque is admitted S.139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

(ii) The presumption under S.139 is a rebuttable presumption and the onus is on the accused to raise the probable defence.

The standard of proof for rebutting the presumption is that of preponderance of probabilities.

(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the

parties but also by reference to the circumstances upon which they rely.

(iv) That it is not necessary for the accused to come in the witness box in support of his defence, S.139 imposed an evidentiary burden and not a persuasive burden.

16. A perusal of the complaint and the evidence of PW1 in chief

examination clearly shows that the nature of the transaction alleged in

the complaint and the chief affidavit of PW1 does not tally with the

nature of the transaction mentioned in Exhibit P7, hire purchase

agreement. PW1 has categorically admitted in cross examination that

he is not in a position to depose regarding the entire matters in

connection with the transactions between the accused and the

complainant and he is also not in a position to say under what

circumstance, the complainant issued Exhibit D1 notice to the accused

and as to whether any legal proceedings was initiated against the

accused by the complainant on the basis of Exhibit D1 notice.

17. The complainant has also not produced the statement of