P.G. Sasi vs Sainaba and State of Kerala

S.S. Satheesachandran, J.—Complainant is the appellant. His complaint filed against the 1st respondent, hereinafter referred to as the ''accused'', for the offence u/s 138 of the Negotiable Instruments Act, for short, the ''N.I.Act'', after trial, ended in a judgment of acquittal rendered in favour of the accused. Questioning the correctness and legality of the acquittal, the complainant has preferred this appeal.

The case of the complainant is that, towards discharge of a liability under a loan availed, the accused issued Ext.P1 cheque for Rs. One lakh promising its encashment on presentation before the Bank in due course. The instrument presented, was however, dishonoured due to insufficiency of funds in the account maintained by the accused. Statutory notice intimating dishonour and demanding the sum covered by the instrument was acknowledged, but not responded with payment. Complainant thereupon launched prosecution against the accused for the offence u/s 138 of the N.I.Act.

The accused, on appearance, pleaded not guilty when the particulars of the offence were made known. Complainant examined himself as PW1 and another, a bank official as PW2. He also got marked Exts.P1 to P8 to substantiate his case. The accused questioned u/s 313 of Cr.P.C., maintaining her innocence submitted that she had no financial transaction with the complainant. Her husband had borrowed a sum of Rs. 5,000/- from the complainant undertaking to repay the sum by way of daily instalment of Rs. 50/-. Towards security for that transaction, the complainant demanded a blank cheque from her and pursuant to his instructions, an account was opened in the bank and Ext.P1 cheque in blank form with her signature had been obtained by the complainant from her husband. Though her husband discharged the liability under the above transaction, making instalment payment of Rs. 50/-, which was acknowledged by the complainant issuing a card (Ext.D1) making entries of such payments, the blank cheque given as security, accoriding to the accused, was not returned stating that it had been lost. However the complainant had executed a document acknowledging the receipt of sum of Rs. 5,000/- and also that the cheque had been lost. Subsequently, without authority, the blank cheque had been used for filing the false complaint was the defence canvassed by the accused contending that she had no financial transaction with the complainant. To prove her defence, she examined one witness as DW1.

The learned Magistrate, after appreciating the materials produced, was of the view that the complainant had failed to prove the liability of the accused under Ext.P1 cheque and the accused had successfully rebutted the presumption covered by Section 139 of the N.I. Act. In that view of the matter, the accused was found not guilty of the offence imputed and she was acquitted. The correctness and legality of that decision is impeached in the appeal.

I heard the counsel of both sides. I find that the following two points arise for consideration: (i) Is the acquittal of the accused absolving her of the offence imputed u/s 138 of the N.I. Act sustainable in the facts and circumstances involved and materials tendered in the case? and (ii) in case the acquittal warrants interference, what, if any, are the orders to be passed to meet the ends of justice?

Perusing the records of the case giving consideration to the submissions made by the counsel of both sides, I am afraid the learned Magistrate had misdirected his enquiry ignoring certain material circumstances presented in the case. It was argued before me by the learned Counsel for the complainant that the defence version canvassed was not even suggested to the complainant when he was examined as PW1, and further, the introduction of Ext.D2, a receipt purported to have been executed by him was not confronted with nor any explanation sought from him when he gave evidence as a witness before the court. I notice that the submissions made by the counsel have considerable force, and, in fact, the case of the complainant and the rival version set up by the accused disputing her liability on Ext.P1 cheque has not been properly appreciated by the learned Magistrate on the totality of the proved facts and circumstances brought out by the materials produced by both sides. One most pertinent circumstance cutting at the root of the defence case as disclosed by Ext.P8 reply notice sent by the accused in response to the notice intimating dishonour of Ext.P1 cheque was totally ignored by the learned Magistrate as evidenced from the impugned judgment, where no reference is made to Ext.P8 reply notice. Ext.P8 reply notice was produced by the complainant subsequently and got marked, recalling him again for further examination. That does not affect its evidentiary value as the accused has no case that it was not her reply to the notice of dishonour. Her version in Ext.P8 reply is entirely different from the defence version canvassed, which too, as seen from the materials, was presented only when she was examined u/s 313 of Cr.P.C and not even during the examination of the complainant as PW1. In the reply notice sent through her advocate, she would state that she had financial transaction with the complainant but the liability thereunder had been discharged by repayment. She would also state that a document had been executed by the complainant evidencing the repayment made and closing of the transaction. What is stated by her further in the reply is quite material and crucial in appreciating the defence canvassed in trial. She would state though there was an undertaking by the complainant to return the cheque and several documents collected for advancing the loan, despite demand, such documents had not been returned. There is no case nor even a whisper that the accused had issued any document or receipt evidencing the discharge of her liability under the loan transaction by repayment and that the cheque collected as security for the loan had been lost. When that be the tenor of the reply, wherein the accused has unequivocally admitted of having had financial transaction with the complainant but with a plea of discharge, what is seen from the defence version projected in trial, that too only at the time of 313 questioning, is diametrically opposite as she would contend that her husband alone had financial transaction and in respect of that transaction her blank signed cheque had been obtained as security by the complainant and that instrument was not returned despite repayment of the loan amount and discharging the entire liability of that transaction. In the context, it is interesting to note that when the complainant, examined as PW1 was subjected to cross examination, initially, that is before he was recalled again at his request to prove Ext.P8 reply notice, the accused had no case nor even a suggestion that Ext.P1 cheque had been collected as a security towards a transaction which her husband had with the complainant. Complainant was recalled and further examined to prove Ext.P8 reply notice, it is seen, long after the questioning of the accused u/s 313 of Cr.P.C. wherein she had presented the defence version referred to earlier and also after examination of her witness DW1, in support of that version. Strangely enough even when the complainant was cross examined, pursuant to his recalling for further examination, as seen from the cross examination made, the accused had no case that Ext.P1 cheque had been collected as security for a financial transaction with her husband and not with her. The defence version canvassed by the accused, which was set up belatedly and which militated against the specific admissions made by her in her reply notice sent through the Advocate and in respect of which not even any suggestion was made during the examination of the complainant, needless to point out, was totally unworthy of any merit. There is much force in the submissions of the counsel for the complainant that Ext.D2, styled as a receipt was brought into existence fraudulently long after Ext.P8 reply was sent by the accused. The evidence of DW1, who was examined to prove the defence version as to his intervention as a mediator and also his presence at the time of execution of Ext.D2 document by the accused, in the given facts of the case, is totally unworthy of any value. Most interestingly if the transaction was only between the husband of the accused and the complainant and if a blank signed cheque of the accused had been given by her husband as security for that transaction, any document evidencing discharge of that loan under normal circumstances would be executed in favour of her husband. If she had no transaction with the complainant in respect of Ext.P1 cheque, why should he execute a document like Ext.D2 in her favour, also requires an explanation. The statement made in Ext.D2 as to collection of a blank signed cheque as security and it was in respect of a transaction which her husband had with the complainant, all of which are in conflict with the statements in Ext.P8 reply notice, sufficiently indicate that the document had been forged. One other material circumstance indicating the fraudulent creation of that document is also brought out during the cross examination of DW1, the mediator, who allegedly witnessed execution of that document by the complainant. Address of the accused shown in Ext.D2 document relate to her changed address in which she started occupation long after the alleged transaction which the complainant had with the accused, which as seen from Ext.D1 card produced by her was closed on 13.11.1996, that is, the last instalment payment. It may also require to be pointed out that by mistake, probably by inadvertence, the learned Magistrate had recorded the evidence of DW1 after he was recalled and further examined on 24.12.2001 as part of the evidence of PW1, in continuation of the evidence of that witness, whose evidence had already been closed after his further examination on recalling on 24.8.2001. That mistake, it appears, has not been pointed out by the court officials nor received the attention of the learned Magistrate before disposal of the case and passing of the impugned judgment. Since that mistake has not caused any prejudice to any of the parties, no further comment thereof is called for. Falsity of the defence version projected by the accused is evident from other circumstances covered by the materials produced in the case. Presenting her defence version, she had advanced a case that pursuant to demand for a blank signed cheque from her as security and instructions given for opening an account in the bank to provide a loan of Rs. 5,000/- to her husband, she opened a bank account and a signed blank cheque of her was collected by the complainant from her husband. She had produced Ext.D1 to show that the transaction which her husband had with the complainant for Rs. 5,000/- had been discharged by instalment payments, which is admitted to by the complainant also. I have already pointed out the date of last entry of repayment in Ext.D1 was 13.11.1996. The first entry as to repayment by instalment as seen from that card is 15.7.1996. Ext.P7 is the certified copy of the extract of the account operated by the accused in State Bank of Travancore. The entries in Ext.P7 would show that the account was opened on 20.5.1996 depositing a sum of Rs. 500/- and it was closed on 30.12.1997. To receive a loan of Rs. 5,000/-, issuing a blank signed cheque as security, on the instructions of the complainant she opened an account in a bank depositing a sum of Rs. 500/- atleast one month prior to the first date of repayment of the instalment under the loan, is something difficult to digest, and it is hardly susceptible.

Complainant has examined himself as PW1 to prove his case. Other than showing that he had engaged in money lending business nothing has been brought out to doubt the worth of his case that Ext.P1 cheque had been issued by the accused towards discharge of a liability arising out of a loan transaction which she had availed from him. Ext.P8 reply notice would convincingly show that the accused had money transaction with the complainant. Her plea of discharge of that transaction remains unsubstantiated. She had produced Exts.D1 and D2 only to contend that her husband had transaction with the complainant. No material whatsoever was produced by her to show that she had discharged her liability in the financial transaction which she had with the complainant. All statutory formalities had been complied with by the complainant for prosecuting the accused for the imputed offence as borne out by the materials tendered. The learned Magistrate, without properly appreciating the defence version has taken the view that the accused had rebutted the presumption u/s 139 of the N.I. Act. The presumption u/s 139 of the N.I.Act is different from the presumption u/s 118(a) of the N.I. Act. On the dishonour of a cheque, if its execution is admitted or proved, the payee or the holder in due course, in a prosecution for the offence u/s 138 of the N.I.Act, is entitled to a presumption that the instrument had been issued towards discharge of a debt or liability. No doubt, in the present case, the handing over of the cheque to the complainant is admitted to by the accused, but with a case that it related to a transaction as between the complainant and her husband and the instrument was in blank form with her signature. Handing over a blank signed cheque, even if it is admitted of was in relation to a transaction as between the complainant and the accused, by itself, is not sufficient to hold that there was due execution of the instrument. The entire defence version of the accused has been found unworthy of any merit. It has been proved that she had set up a false version without any basis and giving a complete gobay of her specific admissions in Ext.P8 reply notice. Her case that the instrument was given only in blank form with signature alone does not merit any consideration. The totality of the facts established on the materials produced has to be appreciated in entering a finding as to whether there was due execution of the instrument and also the entitlement to the complainant as the payee or holder in due course to have the presumption u/s 139 of the N.I.Act. In the given facts of the case, the evidence of the complainant, which to some extent is supported by Ext.P8 reply notice of the accused, I find that Ext.P1 instrument duly executed was handed over and he is entitled to the benefit of the presumption u/s 139 of the N.I. Act. The learned Magistrate had found fault with the complainant for not proving the transaction and also passing of the consideration, for which according to the Magistrate, the complainant solely relied on Section 139 of the N.I. Act. As already pointed out the presumption under Sections 118(a) and 139 of the N.I. Act operate in different realms, former in relation to consideration and the latter, in relation to discharge of a debt or liability, both applicable only where execution of the instrument is admitted or proved by the materials produced in the case. The acquittal of the accused absolving her of the offence in the proved facts of the case is found to be thoroughly unsustainable. I find her guilty of the offence u/s 138 of the N.I.A and convict her thereunder in reversal of the judgment of acquittal rendered by the court below.

What should be the sentence to be imposed against the accused in the facts and circumstances of the case is the next question emerging for consideration. Incarceration of an offender convicted of the offence u/s 138 of the N.I. Act for a prison term, in the absence of exceptional circumstances justifying such punishment is not called for to advance the ends of justice as in very many cases such convicted accused at the time of issue of the cheque had no mensrea to commit the offence but the dishonour of the cheque later leading to his/her prosecution might be on account of financial difficulties owing to unforeseen circumstances. So, even if punishment is modulated, avoiding a prison term in the case of offender u/s 138 of the N.I. Act, he should be compelled to compensate the complainant for the loss and injuries suffered by him on the dishonour of the cheque, driving him to initiate prosecution proceeding. In awarding such compensation, there is no rule that the accused should be directed to pay the entire cheque amount or more to the complainant. Depending on the facts of the case, compensation to be awarded to the complainant has to be adjudged. It may be on the lesser side or higher side of the cheque amount or the sum shown in the instrument. Complainant in the case is found to be engaged in money lending business. Money lending business, in the State, is governed by Kerala Money Lenders Act, requiring registration and issue of licence. Complainant has not produced any licence to show that he was a registered money lender. Ext.D1 card produced by the accused would show that money advanced as loan was collected by way of instalment repayment. Version of the complainant that he never used to collect interest for the loan advanced can be taken only with a pinch of salt. This is a case where the court would be justified in holding that Ext.P1 cheque is supported by consideration but it is not possible to conclude on the materials produced and the facts and circumstances involved especially noting the money lending business of the complainant, for which, no licence or authority was produced, that the instrument though supported by consideration reflects the entire amount advanced as loan. That aspect also deserves to be taken into consideration in fixing the compensation to be paid by the accused.

Convicting the accused for the offence u/s 138 of the N.I. Act in reversal of the judgment of acquittal passed by the court below, I sentence the accused to undergo imprisonment till the rising of the court and to pay a sum of Rs. 15,000/- as compensation to the complainant u/s 357(3) of the Cr.P.C. within one month from the date of this judgment. In default of the payment of compensation as directed, the accused shall undergo simple imprisonment for three months. The accused shall appear and her sureties shall produce her before the Judicial First Class Magistrate Court, Perumbavoor, on 10.6.2009, and the learned Magistrate shall execute the sentence as directed.

Appeal is allowed.