K. P. Philip vs Umaibhai and State of Kerala

M.L. Joseph Francis, J.—The appellant is the complaint and the first respondent is the accused in C.C. No. 1727 of 1998 on the file of the Judicial First Class Magistrate Court -II, Changanacherry (Mobile Court, Kottayam). The above case arose out of a private complaint filed by the appellant against the respondent/accused for the offence punishable u/s 138 of the N.I. Act.

According to the complainant, the accused has issued a cheque for Rs. 50,000/- dt. 26.3.1998 drawn on the Federal Bank, Nedumkunnam in favour of the complainant for discharging the liability due to him. When the above cheque was sent for collection through the account of the complainant in South Indian Bank, Karukachal branch, it has been returned with an endorsement that funds are insufficient in the account of the accused to honour it. On getting intimation regarding dishonour of the cheque, the complainant has caused to issue a notice on 25.5.1998 demanding the amount covered by the cheque. The notice was received by the accused on 3.6.98. Inspite of the receipt of the notice, the accused has not cared to discharge the liability.

In the Magistrate Court, on the side of the complainant PW1 was examined and Exts.P1 to P8 were marked. No evidence was adduced from the defennce side. The learned Magistrate, on considering the evidence, acquitted the accused on the ground that the complainant failed to prove that Ext.P1 cheque was executed by the accused in discharge of a liability due from her. Against that judgment the complainant filed this appeal.

During the pendency of this appeal, the original appellant/complainant expired and his legal heirs are impleaded as additional appellants 2 to 5 as per order in Crl.M.A. No. 2593 of 2006.

Heard learned Counsel for the appellants and the learned Counsel for the first respondent.

Learned Counsel for the appellants submitted that the court below went wrong in holding that the first respondent herein has no connection with the complainant inspite of the specific and categoric deposition made by the complainant to the effect that the first respondent and her husband are jointly doing business and that the first respondent/accused had also borrowed amounts from the complainant.The learned Counsel for the appellants further submitted that the court below misunderstood the case in wrong perspective and took a wrong inference without any evidence except the mere denial of the first respondent in Section 313 statement. The learned Counsel for the appellants submitted that the court below thoroughly failed to appreciate the evidence adduced in the case as a whole which h will go to show that the accused is guilty of the offence u/s 138 of the N.I. Act.

The learned Counsel for the appellants submitted that the court below ought to have found that the defence totally failed to rebut the presumption under Sections 118 and 139 of the N.I. Act. The learned Counsel for the first respondent/accused supported the judgment of the court below.

In the court below the complainant examined himself as PW1.PW1 deposed that the accused borrowed a sum of Rs. 50,000/- in August, 1997 on the undertaking that it will be repaid within a period of six months. PW1 deposed that inspite of repeated demands by the complainant the accused has failed to repay the amount and ultimately she issued a cheque dt. 26.6.98 for Rs. 50,000/- The above cheque drawn on the Federal Bank, Nedumkunnam branch is Ext.P1. PW1 deposed that Ext.P1 cheque has been issued by the accused at his residence on 26.3.1998. The above cheque was sent for collection through the account of the complainant in the South Indian Bank, Karukachal branch. The cheque was returned due to insufficiency of funds in the account of the accused. The dishonour memo dt. 20.5.1998 issued by the payee bank is Ext.P2. The reason shown for dishonour of Ext.P1 is insufficiency of funds in the account of the accused. The intimation received by the complainant from the collecting bank on 20.5.1998 is Ext.P3. On getting Ext.P3 intimation, the complainant had caused to issue a lawyer notice on 25.5.98. The above notice issued by the complainant was received by the accused on 3.6.98. Copy of the said lawyer notice is Ext.P4 and its postal receipt is Ext.P5. The postal acknowledgment is Ext.P6. From Ext.P5 it is clear that Ext.P4 notice has been issued on 25.5.98 and Ext.P6 will show that it has been received by the accused on 3.6.1998. To establish the case of the complainant that there was no sufficient funds in the account of the accused, the relevant bank documents were obtained and marked on the side of the complainant. The certified extract of the bank account ledger of the accused is Ext.P7 and the certified extract of the cheque returned register maintained in that bank is Ext.P8. Exts.P7 and P8 would show that there was no sufficient funds in the account of the accused to honour Ext.P1 cheque.

When the accused was questioned u/s 313 Cr.P.C. the version of the accused is that she is not having any knowledge with regard to the alleged transaction and that it was her husband who was having dealings with the complainant. The accused has not adduced any positive evidence to substantiate the defence case except her statement u/s 313 Code of Criminal Procedure The accused has no case that when Ext.P1 cheque was issued by her it was a blank signed cheque. The cheque whether issued for the repayment of a loan or as a security makes little difference u/s 138 of the N.I. Act and in the event of dishonour legal consequences are same without any distinction. Since execution of Ext.P1 for Rs. 50,000/- is not disputed by the accused and proved by the complainant, the presumption would arise u/s 139 of the N.I. Act in favour of the complainant. Even if there was transaction between the husband of the accused and the complainant and that the complainant obtained a decree for Rs. 1 lakh against the husband of the accused, it cannot be said to be improbable that the complainant had also transaction with the accused. It is also relevant to note the statement of the complainant that the accused and her husband are jointly doing business.

As the evidence on record shows that the cheque in question was drawn by the accused in favour of the complainant, that when the cheque was presented for encashment, it was dishonoured due to insufficiency of funds in the account of the accused, that the complainant validly complied with Clauses (a) and (b) of the proviso to Section 138 of the N.I. Act and that the accused failed to make payment within 15 days of receipt of statutory notice, I find that the complainant has succeeded in proving that the accused has committed the offence punishable u/s 138 of the N.I. Act and the accused is convicted for that offence. Therefore the learned Magistrate is not justified in acquitting the accused.

In the decision reported in Damodar S. Prabhu v. Sayed Babalal H 2010 (2) KHC 428 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. 50,000/- would meet the ends of justice. The said fine shall be paid as compensation u/s 357(1) of Cr.P.C.

Accordingly this appeal is allowed and the acquittal aof the accused in C.C. No. 1727 of 1998 on the file of the J.F.M.C.-II, Changanacherry (Mobile), Kottayam u/s 138 of the N.I. Act is set aside and the accused is found guilty u/s 138 of the N.I. Act and she is convicted and sentenced to pay a fine of Rs. 50,000/- The said fine shall be paid to the appellants as compensation u/s 357(1) Code of Criminal Procedure The accused is permitted either to deposit the fine amount before the court below or directly pay the compensation to the appellants 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, she shall suffer S.I. for a period of three months by way of default sentence.