Sindhu S. Nair vs Shyni Anoop & Anr.

This appeal is at the instance of the complainant in S.T. No.10/2017 on the files of the Judicial First Class Magistrate Court-II, Changanacherry. The 1^st respondent herein is the sole accused in the complaint and the 2^nd respondent herein is the State of Kerala represented by the learned Public Prosecutor. The appellant assails judgment dated 25.08.2017 in the above case.

2 . Heard the learned counsel for the appellant/complainant, the learned counsel appearing for the accused/1^st respondent and the learned Public Prosecutor for the 2^nd respondent, in detail. Perused the verdict impugned and the evidence available.

The complainant launched prosecution alleging commission of offence punishable under Section 138 of the Negotiable Instruments Act (for short 'N.I Act'), by the accused when cheque for Rs.7,00,000/- issued by the accused in favour of the complainant to clear her liability to the tune of Rs.7,00,000/- alleged to be borrowed by the accused from the complainant got dishonored and when the accused failed to repay the same even on demand.

The learned Magistrate took cognizance of the matter and proceeded with the trial. During trial, PW1 and PW2 were examined and Exts.P1 to P10 were marked on the side of the prosecution. On the side of the defence, DW1 and DW2 were examined.

On appreciation of evidence, the learned Magistrate relied on the ratio of the decision of this Court in Divakaran v. State of Kerala [2016 (4) KLT 233] to record acquittal of accused/1^st respondent, among other reasons.

While challenging the verdict impugned, it is pointed out by the learned counsel for the complainant/appellant that apart from the evidence of PW1, PW2, the brother of PW1 also was examined by the complainant to prove that the amount borrowed by the accused from the complainant was given by PW2 on withdrawing the same from his bank account as evident from Ext.P8 statement of accounts. Therefore, the complainant discharged her initial burden of proving the transaction and execution of Ext.P1 cheque through the evidence of PW1 and PW2 as well as Exts. P1 to P6 to avail the presumptions under Sections 118 and 139 of the N.I.Act in her favour. It is also submitted that Divakaran's Case (Supra) was over ruled by the Division Bench of this Court in Basheer K. v. C.K.Usman Koya [2021 (2) KHC 432] and held that material particulars and the nature of the transaction must be explicitly stated in the statutory notice and complaint in Section 138 cases-was “not good in law”. The Division Bench held that the mere omission to state the nature of the transaction does not render the statutory notice invalid or warrant the automatic acquittal of the accused. Therefore, the acquittal, relying on the said decision would require interference.

The learned counsel for the 1^st respondent/accused supported the verdict and argued that when the transaction and execution of Ext.P1 cheque failed to be proved by the complainant and the evidence of PW1 and PW2 are quite insufficient to prove the case of the complainant, even ignoring the ratio in Divakaran's Case (Supra), the acquittal is liable to be confirmed. According to the learned counsel for the accused/1^st respondent, insofar as handing over of Rs.7,00,000/-by PW2 in favour of PW1, no evidence adduced by the complainant. Although Ext.P8 statement of account was tendered in evidence through PW2 showing the withdrawal of Rs.9,00,000/- by him on the date of the transaction, it is argued by the learned counsel for the accused/1^st respondent that there is no evidence to establish the entrustment of Rs.7,00,000/- by PW2 to PW1. It is also submitted that in this case, a probable defence has been established by the accused and in such a case, the defence version to be considered as more probable against the case advanced by the complainant to hold that there is strong doubt regarding any legally enforceable debt or liability covered by Ext.P1. In this connection, a decision of this Court in Koranil Yusaf v. V.A.Firoz and Ors. reported in [MANU/KE/3459/2025] with reference to paragraph No.22, has been placed by the learned counsel wherein a learned Single Judge of this Court observed as under:

According to the learned counsel for the accused/1^st respondent, the case put up by the defence is that PW1 and the accused had joint in business and during this period PW1 had obtained Ext.P1 and foisted this false case against the accused. According to him, this contention is substantiated by the evidence of DW1 and DW2, who spoke about the joint business carried on by PW1 and the accused. Therefore, a probable defence, has been established and therefore, the verdict is liable to be confirmed.

Now the points arise for consideration are:

In this case the complainant herself got examined as PW1 to prove the case of the complainant in addition to the evidence of PW2, her brother. PW1 deposed that she had acquaintance with the accused and the accused had acquaintance with her in connection with computer business. According to her, on 01.06.2011, the accused borrowed Rs.7,00,000/- from her and in discharge of the said liability she had issued Ext.P1 cheque dated 21.11.2013 after repeated demands made by the complainant. PW1 deposed further that the accused ensured encashment of Ext.P1 cheque on presentation for collection. But when the cheque was presented for collection, the same got dishonored for want of funds. Apart from Ext.P1, Ext.P2 reply notice dated 14.02.2014, Ext.P3 postal receipt dated 30.01.2014, Ext.P4 acknowledgment card, Ext.P5 dishonour memo, Ext.P6 intimation memo and Ext.P7 reply of legal notice were tendered in evidence through PW1. During cross-examination PW1 testified that the accused brought the cheque after writing the same and put the signature therein before her.

The contention raised by the 1^st respondent/accused is that PW1 and the accused were engaged in partnership business and PW1 had taken away Ext.P1 cheque leaf kept by her at the office and when the business collapsed, then Ext.P1 cheque was misused for the purpose of this case. DW1 and DW2 were examined substantiate the defense said case.

In order to prove availability of the fund at the hands of the complainant to give the amount to the accused, PW2, the brother of PW1 was examined and he deposed that as per Ext.P8 statements of accounts, he had withdrawn Rs.9,00,000/-on 01.06.2011 and he had entrusted Rs.7,00,000/- out of the same to PW1 to enable her to lend the same to the accused on the date of transaction on 01.06.2011.

It is relevant to note that non disclosure of the date on which the cheque was issued in the complaint and in Ext.P7 notice is one among the reasons by which the learned Magistrate recorded acquittal relying on the decision in Divakaran's Case (Supra) and the same is now over ruled and therefore the ratio therein has no application, as of now.

It is perceptible from the case put up by the complainant and as deposed by PW1 that, the amount was borrowed on 01.06.2011 and the accused agreed to repay the same within two months. But as observed by the Magistrate, the cheque was issued after two years, i.e., on 21.11.2013. According to PW1, since the agreement to repay the same failed to be complied by the accused, PW1 made repeated demands and Ext.P1 was issued on 21.11.2013 in continuation of the said repeated demands. The learned Magistrate was not inclined to accept this version of the complainant and the learned Magistrate disbelieved the same. It is true that DW1 and DW2 deposed before the court regarding a joint business in between PW1 and the accused and the case of the accused is that her cheque in the office was taken away by PW1 and was misused for the purpose of this case.

In paragraph Nos.19 and 40 of the decision in Basheer’s case (supra), the Division Bench of this Court held as under while overruling the decision in Divakaran’s case (supra):

On tracing the evidence of DW1, it could be gathered that, DW1, who alleged to have run another concern nearby the concern alleged to be run by the accused deposed that the complainant also was a party to the business. When DW1 was cross-examined, he deposed that he did not know whether any registered partnership entered into between PW1 and the accused or where PW1 was residing. He also deposed that he did not know about the financial dealings between PW1 and the accused and that he had not even seen any document evidencing a partnership business between them. He also did not know whether the complainant had any computer expertise.

Coming to the version of DW2, the same also is not supported by any materials rather than oral version. In this context, it is very relevant to refer Ext.P2 reply notice sent by the accused on getting the demand notice issued by the complainant. In paragraph Nos.3, 4 and 5, the contentions raised by the accused/1^st respondent are as under:

Going through the contention taken in Ext.P2 and the defence case canvassed during trial the same are absolutely contrary. In Ext.P2, a transaction with PW2 for an amount of Rs.1,50,000/- was admitted along with the issuance of two cheques, viz; one belonged to the accused and other belonged to Tony Sebastian. Though plea of discharge of the said liability was the defence taken in Ext.P2, the contention in Ext.P2 was given a go-by at the time of cross-examination of PW1. During cross-examination of PW1, the defence case suggested was that the complainant used to visit the concern run by the accused and that the cheque was misused. During cross-examination of PW1, no suggestion regarding the partnership business was also put to her. Thus, the accused/1^st respondent had taken a totally different defence during trial and contrary to the defence case taken in Ext.P2. In such circumstances, this Court is forced to observe that the Magistrate in fact, is unaware of the fundamental principles governing evaluation of evidence and without even looking into Ext.P2 and the defence taken during trial the case of the complainant was disbelieved. Therefore, the learned Magistrate grossly erred in appreciating the evidence.

When the accused has a case that there was partnership business between the accused and the complainant the best evidence to prove the said contention is production of the partnership deed or some documents, if any to find a partnership business. Here, no such documents produced. Then the best person to speak of the partnership business is the accused herself. Bu the accused shown no interest to give evidence. Most importantly during the course of examination of PW1, the accused never put up a defence that PW1 and accused run joint partnership business. But later DW1 and DW2 were examined to prove a partnership business and their evidence, in fact, in no way established any partnership business between the accused and PW1.

Regarding the contentions raised b the learned counsel for the appellant that no evidence forthcoming to see payment of money by PW2 to PW1, this argument appears to be absolutely meritless as Ext.P8 compared with the evidence of PW2 would substantiate the same. In fact none of the contentions raised by the appellant found to be sustainable. In view of the above discussion and in consideration of the fact that the evidence would suggest proof of the transaction and execution of Ext.P1 cheque for the consideration shown therein, the complainant would get the benefit of presumptions under Sections 118 and 139 of the NI Act and the improbable defence should not be a substitute to rebut the presumptions. Therefore, the verdict would require interference.

Accordingly, the appeal is allowed and the verdict under challenge is interfered and set aside. Consequently, the accused/1^st respondent is convicted for the offence punishable under Section 138 of the NI Act and he is sentenced to undergo simple imprisonment for a day till rising of the court, and to pay a fine of Rs.11,00,000/- (Rupees Eleven Lakh only). Fine amount, if paid or realised, the same shall be given as compensation to the complainant under Section 357(1)(b) of the Code of Criminal Procedure, 1973. The accused/1^st respondent is directed to appear before the trial court within a period of two weeks from today, i.e. on or before 20.07.2026 to undergo the sentence imposed. On failure to do so, the trial court is directed to execute the sentence imposed by this Court without fail.

Registry is directed to forward a copy of this judgment to the trial court, for information and compliance.