Nedumangad Housing Co-Operative Society Ltd vs State Of Kerala And Ors

This is an appeal preferred under Section 378(4) of the Code of Criminal Procedure, hereinafter referred to as the Cr.P.C., canvassing the correctness of the judgment of the Sessions Judge, Thiruvananthapuram in Crl.A.No.164/2011. By the judgment the finding of conviction and sentence imposed on the 2nd respondent who is the accused in S.T.No.75/2010 of the Judicial First Class Magistrate Court-III, Nedumangad was reversed and he was acquitted.

The proceeding was initiated by the appellant, the Nedumangad Housing Co-operative Society Ltd. T-384, represented by its Secretary, by preferring a complaint before the trial court. The allegation in the complaint is that, the accused, 2nd respondent had issued a cheque in favour of the appellant for Rs.22,890/-, in discharge of a legally enforcible liability, drawn on Nedumangad branch of the State Bank of Travancore. When the cheque was presented for encashment through the Nedumangad branch of the District Co-operative Bank, it was returned on 22.01.2008 due to insufficiency of funds. Thereafter, the appellant caused to issue a lawyer notice on 14.02.2008 demanding the amount; though the notice was duly served on the 2nd respondent, it was neither replied nor the amount was paid and that gave a cause of action for initiating the compliant alleging offence punishable under Section 138 of the Negotiable Instruments Act, hereinafter referred to as the Act. Thus the complaint was instituted on 26.03.2008 before the trial court.

Pursuant to the summons, the 2nd respondent appeared and pleaded not guilty. Thereafter two witnesses were examined on the side of the appellant. Exts.P1 to P7 were also marked. When examined under Section 313(1)(b) Cr.P.C., the 2nd respondent reiterated the earlier plea of innocence and denied all the incriminating materials. No evidence was adduced in defence by the 2nd respondent. After hearing counsel on both sides, by judgment dated 13.01.2011, repelling the plea of innocence, the learned Magistrate found the appellant guilty of offence punishable under Section 138 of the Act and sentenced to undergo simple imprisonment for three months and to pay a fine of Rs.22,890/-which was directed to be paid as compensation under Section 357(3) of the Cr.P.C; a default sentence was also imposed on the 2nd respondent.

The 2nd respondent challenged the said finding in appeal before the Sessions Court, Thiruvananthapuram, which was taken on file as Crl.A.No.164/2011. After hearing counsel on both sides, by the impugned judgment, the learned Sessions Judge allowed the appeal by reversing the finding of guilt, and the 2nd respondent was acquitted. That finding has been called in question by the complainant after taking leave of this Court under Section 378(4) of the Cr.P.C.

I heard counsel on both sides. The trial court records were summoned and perused.

The learned counsel for the appellant/complainant has disputed the findings of the learned Sessions Judge. According to him, the 2nd respondent has not disputed the document in question, namely the Ext.P3 cheque, which was issued in discharge of a legally enforcible liability. The 2nd respondent is a member of the housing society; he had subscribed a scheme for the renovation of his house and drew Rs.18,500/- agreeing to repay the same in monthly instalments. After making certain initial instalments, he failed to repay the amount. When persuaded, he came to the society and gave the Ext.P3 cheque, after making them believe that he has sufficient amount in credit in the account. But the cheque was bounced on presentation. The lawyer notice was not replied, nor the amount was paid and that made the appellant to move the trial court. The learned counsel strongly supported the finding of the trial court. According to him, the learned Sessions Judge did not appreciate the evidence and circumstances in proper perspective. The appellant could discharge the initial burden; as provided under the statute he is entitled to draw the presumptions under Sections 118(a) and 139 of the Act. But the 2nd respondent has failed to rebut the presumptions and therefore the appellant is entitled to get a finding in his favour. According to the learned counsel, the contentions of the 2nd respondent that the Ext.P3 was given as security for the money drawn by him and that he has already discharged the liability, are not available to him. There is also no inconsistency in the version of PWs 1 and 2. The learned counsel also placed reliance on the decisions reported in Bir Singh v. Mukesh Kumar [AIR 2019 SC 2446], Uttam Ram v. Devinder Singh Hudan and another [2019 (5) KHC 179], APS Forex Services Pvt.Ltd. v. Shakti International Fashion Linkers and others [AIR 2020 SC 945] and also Kalamani Tex and another v. Balasubramanian.P. [I.L.R.2021 (1) kerala 855].

On the other hand, the learned counsel for the 2nd respondent strongly supported the finding of the learned Sessions Judge. According to him, there are inconsistencies in the versions of PWs 1 and 2. Though the scheme had ended in 2005, it is not known as to how a cheque could be issued in 2008 as alleged by the appellant. The appellant could not prove that he is entitled to draw the presumptions under Sections 118 and 139 of the Act. In order to rebut the presumptions, the accused need not enter the box or adduce evidence. The entire circumstances brought out in evidence are sufficient to disbelieve the version of the appellant/complainant. Similarly, the failure of the appellant to produce the statement of accounts also is relevant. If the documents were produced, the burden would have shifted to the 2nd respondent; on the failure of the appellant to produce such documents, he has no burden to discharge. According to the learned counsel, the appeal is only to be dismissed. He also filed an argument note mainly harping on the point that the degree of proof of the accused in a prosecution under Section 138 of the Act is only by way of preponderance of probabilities. Various authorities are also noted in the argument note.

I have gone through the entire records and also the judgment of the trial court as well as the appellate judgment of the Sessions Judge. Appellant is a Housing Co-operative Society, a society registered under the provisions of the Kerala Co-operative Societies Act. The learned counsel for the appellant has pointed out that the 2nd respondent is a member of the society and in that capacity he had enrolled himself as a subscriber to a scheme for renovation of his house. Ext.P2 document suggests that he had obtained an amount of Rs.18,500/- on 05.03.2005. From the evidence it seems that the amount had to be repaid in monthly instalments. The 2nd respondent had remitted some amount towards repayment. But when he defaulted, he was approached by the officials of the bank, then he reached the bank. PWs 1 and 2 have stated that at that time, an amount of Rs.22,890/- was due and in consideration of the amount Ext.P3 cheque was issued. The materials on record indicate that when the cheque was presented for encashment, it bounced due to insufficiency of fund. Then the 2nd respondent was notified by sending a lawyer notice, which was not replied. Thus a cause of action for prosecution arose and that was how the appellant moved the trial court with a complaint alleging offence punishable under Section 138 of the Act.

After considering the rival contentions and evidence, the learned Magistrate upheld the arguments of the appellant. It was noticed that, the execution of the cheque was admitted; similarly, he had failed to prove the plea of discharge and since it was contended that the cheque was issued as security; both the arguments were not acceptable to the court and the learned Magistrate proceeded to convict the 2nd respondent as stated supra. Against that conviction, when appeal was preferred, the learned Sessions Judge reversed the finding on various reasons. According to him, it was a house deposit scheme, which had completed in the year 2005, and therefore, there is no possibility of issuing a cheque as claimed by the appellant on 22.01.2008. Similarly, the learned Judge also took serious note of the fact that the appellant had not produced the statement of accounts, though PW1 had agreed for the same. The Sessions Judge also noticed inconsistency with regard to the date of issuance of the cheque between the testimony of PWs 1 and 2 and that on consideration of these aspects, the version of the 2nd respondent was accepted and thus the finding of conviction was reversed.

After giving my thoughtful considerations, I do not find my way to approve the finding of the learned Sessions Judge. As noted earlier, the appellant is a co-operative society, which is guided by the provisions of the Co-operative Societies Act. In no stretch of imagination it could be thought, nor it was suggested that a document was fabricated by the officials of the society for the purpose of deceiving one of its own members for getting enrichment of the society. In fact, that itself is the strength of the prosecution case.

Secondly, as noticed by the trial court, there is no serious dispute with regard to the execution of the Ext.P3 cheque. Both PWs 1 and 2 have stated that the instrument was issued after the 2nd respondent had defaulted monthly repayments and amounts had fallen in lump towards repayment of monthly instalments due to the society. Then the 2nd respondent reached the society and handed over the Ext.P3 cheque, which version cannot be ignored. The Ext.P2 document reveals that he had received an amount of Rs.18,500/- in the scheme on 05.03.2005. The consideration shown in Ext.P3 is the amount outstanding, together with interest accrued. This fact cannot be eschewed for the mere reason that the statement of accounts was not produced by the appellant.

As noticed by the trial court, the appellant, after not denying the execution of the document, has taken up a plea of discharge. It is trite law that when a plea of discharge is raised, it is for the person to prove the same. Here, no attempt has been made by the 2nd respondent to say that the entire amount received by him under Ext.P2 has been repaid.

Similarly, when PWs 1 and 2 were cross examined, it has been put to him that Ext.P3 was issued as a security for the transaction. No contention was raised to say that Ext.P3 is not supported by consideration. It is here that the decision of the Hon'ble Supreme Court in Bir Singh's case, quoted supra, assumes importance. The initial burden of the complainant in such a case is to prove the transaction. Once issuance of the cheque is admitted or proved, necessarily he is entitled to draw the presumptions under Sections 118(a) and 139 of the Act. The Hon'ble Supreme Court in Bir Singh's case, cited supra, has gone to the extent of saying that even if a blank cheque leaf is given, voluntarily signed by the accused towards some payment, presumption under Section 139 of the Act will be attracted. It is true that the 2nd respondent has not disputed his signature on the Ext.P3 cheque. He does not know who had incorporated other writings. According to PWs 1 and 2 it were done by the person who had accompanied the 2nd respondent while handing over the cheque. Even assuming that the 2nd respondent had handed over a signed blank cheque, still the appellant is entitle to draw the presumptions.

Paragraphs 37 and 38 of Bir Singh's case, quoted supra, are relevant and is extracted here below:-

"37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, S.20, S.87 and S.139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of S.138 would be attracted.

If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."

The above decision has been followed by a three Judge Bench of the+ Supreme Court in Kalamani Tex, quoted supra.

It was contended that the learned Sessions Judge has approved the version that the scheme had ended in 2005 and in such a case a cheque might not have been issued in 2008. It may be true that the scheme might have been ended in 2005; but that does not mean that, by the time all the remittances due to the bank were completed. The case of the 2nd respondent is the best illustration to say that he had not paid back the entire monthly dues, which made the authorities to follow him up for getting back the amount.

The other contention that there is difference in the date spoken by the witnesses etc., has no relevance. The Ext.P3 bears a clear date, which itself is the case of the appellant. On evaluation of the entire facts and circumstances, I find that the appellant has proved the case beyond doubt, which entitles him to draw the presumptions under Sections 118 and 139 of the Act. The 2nd respondent did not even respond to the lawyer notice. It is true that no adverse inference can be drawn against the 2nd respondent for not sending the reply or not having mounted the box. The presumptions can be rebutted by him through other means also. But here, he has not rebutted the presumptions, nor taken any legally tenable contention to displace the presumptions available in favour of the appellant and that enables the appellant to get an order in his favour.

Thus, in reversal of the finding of the Sessions Judge, the conviction entered by the trial court is restored. Resultantly, the 2nd respondent is sentenced to pay a fine of Rs.30,000/- (Thirty Thousand only), failing which he shall undergo simple imprisonment for three months.

Appeal allowed as above.