L.Latha vs Manoj Kumar & Another

C. S. Dias, J

The revision petitioner calls in question the correctness and legality of the judgment of the Court of the Additional Sessions Judge (Adhoc) Fast Track Court-II, Pathanamthitta (Appellate Court) in Crl.Appeal No.8/2010, confirming the judgment of the Court of the Judicial Magistrate of First Class, Thiruvalla (Trial Court) in S.T.No.1719/2005, convicting and sentencing the revision petitioner for the offence under Section 138 of the Negotiable Instruments Act (for brevity, “N.I.Act”). The revision petitioner was the accused and the 1st respondent was the complainant before the Trial Court.

The facts in brief:

The first respondent had filed the complaint before the Trial Court alleging that the revision petitioner had borrowed an amount of Rs.58,000/- from him and in discharge of the said liability, the revision petitioner had issued Ext.P1 cheque in his favour. However, the cheque, on presentation to the bank for collection, was dishonoured by Ext.P2 memorandum due to ‘insufficient funds’ in the bank account. Although the first respondent had issued Ext P4 lawyer notice, which was received by the revision petitioner, she failed to pay the demanded amount. Hence, the revision petitioner had committed the offence under Section 138 of the N.I.Act.

Trial

The revision petitioner pleaded not guilty to the substance of accusation read over to her. In the Trial, the first respondent was examined as PW1 and Exts.P1 to P6 were marked in evidence. The revision petitioner denied the incriminating questions put to her in the questioning under Section 313 of the Code of Criminal Procedure ( in short, Cr.P.C’). The revision petitioner did not let in any defence evidence.

Trial Court Judgment

The Trial Court, after analysing the materials on record, convicted the revision petitioner for the offence under Section 138 of the N.I.Act and sentenced her to undergo simple imprisonment for a period of two months and to pay an amount of Rs.58,000/- as compensation to the first respondent under Sec.357(3) of the Cr.P.C and in default to undergo simple imprisonment for a further period of one month.

Aggrieved by the said judgment, the revision petitioner filed Criminal Appeal No.8/2010 before the Appellate Court.

Appellate Court judgment

The Appellate Court, after re-appreciating the materials on record, by the impugned judgment, confirmed the conviction and sentence imposed by the Trial Court.

It is assailing the concurrent judgments passed by the courts below, the revision petition is filed.

Heard; Sri.P.Sathisan, the learned Counsel appearing for the revision petitioner; Sri.Jacob Chacko, the learned Counsel appearing for the first respondent and Smt.Seetha.S, the learned Public Prosecutor appearing for the second respondent.

The question is whether there is any illegality, impropriety and irregularity in the judgments passed by the courts below?

It is well settled that the revisional power of this Court is to be sparingly exercised and only in cases of exceptional rarity. The power of this Court is in the nature of a supervisory jurisdiction, to correct patent errors, manifest illegality and when there is total miscarriage of justice. The revisional power of this Court cannot be equated to the powers of the Appellate/Second Appellate Court.

In Sanjaysinh Ramrao Chavan vs Dattatray Gulabrao Phalke & Anr [(2015) 3 SCC 123], the Hon’ble Supreme Court has succinctly laid down the scope and purport of the powers under Secs.397 to 401 of the Cr.P.C. It is apposite to extract the revisional declaration of law, which reads as follows:

“14. In the case before us, the learned Magistrate went through the entire records of the case, not limiting to the report filed by the police and has passed a reasoned order holding that it is not a fit case to take cognizance for the purpose of issuing process to the appellant. Unless the order passed by the Magistrate is perverse or the view taken by the court is wholly unreasonable or there is nonconsideration of any relevant material or there is palpable misreading of records, the Revisional Court is not justified in setting aside the order, merely because another view is possible. The Revisional Court is not meant to act as an appellate court. The whole purpose of the revisional jurisdiction is to preserve the power in the court to do justice in accordance with the principles of criminal jurisprudence. The revisional power of the court under Sections 397 to 401 CrPC is not to be equated with that of an appeal. Unless the finding of the court, whose decision is sought to be revised, is shown to be perverse or untenable in law or is grossly erroneous or glaringly unreasonable or where the decision is based on no material or where the material facts are wholly ignored or where the judicial discretion is exercised arbitrarily or capriciously, the courts may not interfere with decision in exercise of their revisional jurisdiction.”

Now, coming back to the facts of the case at hand.

The first respondent’s case is that the revision petitioner had borrowed an amount of Rs.58,000/- from him and issued Ext P1 cheque in discharge of a legally enforceable liability. The revision petitioner denied the prosecution case and alleged that the blank cheque leaf that was issued by her as a security to a chitty company was made use by the first respondent. Therefore, she has not committed the offence as alleged in the complaint.

A negotiable instrument, which includes a cheque, carries the presumption of consideration under Secs.118(a) and 139 of the N.I Act. It is profitable to extract the said relevant provisions:

“118. Presumptions as to negotiable instruments – Until the contrary is proved, the following presumptions shall be made;-

(a) of consideration-that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

Presumption in favour of holder. —It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in section 138, for the discharge, in whole or in part, of any debt or other liability”.

A three-Judge Bench of the Hon’ble Supreme Court in Rangappa vs. Sri.Mohan [2010 KHC 4325], while dealing with Sec.139 of the N.I Act has conceptualised the doctrine of ‘reverse onus’, by holding thus:

“ 18. In light of these extracts, we are in agreement with the respondent - claimant that the presumption mandated by S.139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. S.139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While S.138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under S.139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by S.138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused / defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under S.139, the standard of proof for doing so is that of '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. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his / her own.

Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the 'stop payment' instructions to his bank. Furthermore, the instructions to 'stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under S.138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant - accused was not able to contest the existence of a legally enforceable debt or liability. The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction – related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction - expenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant”.

Recently, a three-Judge Bench of the Hon’ble Supreme Court in Kalamani Tex and Anr vs. P. Balasubramanian [2021 (2) KHC 517] has reiterated the legal position and doctrine of the reverse onus. It is apposite to extract the relevant paragraphs, which declares the law on the point in the following terms:

“14. Adverting to the case in hand, we find on a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The Statute mandates that once the signature (s) of an accused on the cheque/negotiable instrument are established, then these ‘reverse onus’ clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystalized by this Court in Rohitbhai Jivanlal Patel v. State of Gujarat (2019 (2) KHC 243).”

Indisputably, the revision petitioner has admitted the execution of Ext P1 cheque. Her defence is that the cheque was given as a security to a chitty company, which was made use by the first respondent.

Admittedly, the revision petitioner has not issued any reply notice to Ext P4 lawyer notice sent by the first respondent.

In Rangappa (supra), the Honourable Supreme Court has held that, once a cheque is dishonoured, a reverse onus of proof is cast on the accused under Section 139 of the N.I.Act. If the accused fails to reply to the statutory lawyer notice issued by the complainant under Section 138 of the N.I.Act, then an inference has to be drawn in favour of the complainant.

Likewise, in Kalamani Tex (supra), the Honourable Supreme Court has held that even if a blank cheque leaf is voluntarily signed and handed over by the accused towards some payment, the statutory presumption under Section 139 of the N.I.Act cannot be obliterated, unless the accused raises a probable defence.

In the case at hand, the courts below, after adverting to the materials placed on record and the oral testimony of PW1, have concurrently found that Ext P1 cheque was issued towards a legally enforceable debt and that the cheque was dishonoured due to insufficient funds in the account of the revision petitioner. Despite the receipt of Ext P4 lawyer notice, the revision petitioner has failed to pay the demanded amount. Accordingly, the courts below have held that the revision petitioner is guilty for the offence under Sec.138 of the N.I Act.

On an appreciation of the materials on record and the law laid down by the Honourable Supreme Court, I do not find any error, illegality or impropriety in the concurrent findings of the courts below to take a contrary view that the revision petitioner has not committed an offence under Section 138 of the N.I.Act. Thus, I confirm the concurrent convictions of the courts below and the sentence imposed by the Appellate Court.

At the said point of time, the learned Counsel appearing for the revision petitioner prayed that the sentence of imprisonment imposed by the courts below may be confined to till the rising of the Court, taking into account the fact that the offence under Sec.138 of the N.I Act is more civil in nature. This Court and the Honourable Supreme Court have repeatedly held that no purpose would be served in incarcerating the accused to prison. The intention of the legislature is to compel the accused drawer to pay the cheque amount within a stipulated time period.

On an overall appreciation of the fact that the revision petitioner/accused is a lady, the transaction occurred in the year 2005 and that the revision petitioner is willing to pay the cheque amount, I am of the view that the substantive sentence can be modified by directing the revision petitioner to undergo simple imprisonment for a period of one day (till the rising of the Court) and pay the compensation amount of Rs.58,000/- within two months, which would do complete justice to both sides.

In the result;

(i) The revision petition is partly allowed;

(ii) The conviction imposed by the courts below is confirmed;

(iii) The substantive sentence imposed by the courts below is modified by reducing the same and sentencing the revision petitioner to undergo imprisonment for a period of one day (till the rising of the Court) and to pay compensation of Rs.58,000/- to the first respondent within a period of two months from today, and in default to undergo simple imprisonment for a further period of two months;

(iv) The revision petitioner is directed to appear before the Trial Court on 4.12.2023 to undergo the sentence and to pay the compensation amount;

(v) Needless to mention, if the revision petitioner has already deposited any amount towards the compensation amount, only the balance amount need be deposited;

(vi) In case of failure of the revision petitioner to appear before the Trial Court to undergo the sentence and to pay the compensation amount as directed above, the Trial Court shall execute the sentence and recover the compensation amount from the revision petitioner, in accordance with law.

(vii) The execution of the sentence shall stand deferred till 4.12.2023.

(viii) The Registry is directed to forthwith forward a copy of this order to the Trial Court for compliance.