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2025 DIGILAW 1997 (KER)

A. C. Ninan S/o Chandy v. State of Kerala

2025-07-16

GOPINATH P.

body2025
JUDGMENT : GOPINATH P., J. 1. This appeal has been filed challenging the judgment dated 26.09.2014 in S.T.No.115/2013 on the file of the Judicial First Class Magistrate Court-III, Kanjirapally. S.T.No.115/2013 was a complaint filed alleging commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘1881 Act’) by the 2 nd respondent/accused. According to the complainant, he lent Rs. 4,00,000/- (Rupees Four lakhs Only) to the 2 nd respondent/accused on 04.01.2013. It is the case of the complainant that the amount was to be repaid within one month. When he demanded the repayment of the amount, the accused had issued a cheque dated 04.02.2013 drawn on the account maintained by the accused with the Ponkunnam Service Co-operative Bank Limited. It is stated that when the complainant presented the cheque for collection through his account maintained with the Central Bank of India, Vazhoor Branch, the same was returned unpaid for the reason - ‘full cover not received’. It is stated that after complying with all statutory formalities, the complaint was filed before the Judicial First Class Magistrate-III, Kanjirappally. 2. The complainant was examined as PW1. Exts. P1 to P6 documents were marked for the complainant. Ext.P1 is the cheque, Ext.P2 is the dishonour memo, Ext.P3 is the intimation slip issued by the complainant’s bank, Ext.P4 is the copy of the statutory notice, Ext.P5 is the postal receipt for issuance of the notice, and Ext.P6 is the postal acknowledgement card. No evidence was tendered for the2 nd respondent/accused. 3. The learned Magistrate on a consideration of the matter held that since it was admitted by PW1 that the amount mentioned in Ext.P1 cheque in words and figures and the name of the payee etc. were not filled in by the 2 nd respondent/accused and in the absence of any attempt on the part of the complainant to examine the person who filled in such details on the cheque, the execution of the cheque by the 2 nd respondent/accused cannot be admitted on account of the law laid down by this Court in Santhi v. Marly Sherly, 2011 (3) KLT 273 . The learned Magistrate also took the view that the complainant had failed to prove the source of income for having lent a sum of Rs.4,00,000/- (Rupees Four lakhs only) to the 2 nd respondent/accused. The 2 nd respondent/accused was thus acquitted. 4. The learned Magistrate also took the view that the complainant had failed to prove the source of income for having lent a sum of Rs.4,00,000/- (Rupees Four lakhs only) to the 2 nd respondent/accused. The 2 nd respondent/accused was thus acquitted. 4. The learned counsel appearing for the appellant submits that the findings of the learned Magistrate are perverse and cannot be sustained in law. He submits that when the signature on the cheque has been admitted in the absence of any coercion or fraud, the fact that the other details of the cheque were filled up by some other person is no ground to acquit the accused. The learned counsel placed reliance on the judgment of the Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197 , in support of this contention. The learned counsel also took me through the evidence of PW1 to contend that in cross-examination, the complainant had clearly stated that he had obtained the amount lent to the 2 nd respondent/accused from the sale of certain trees standing on his property. It is submitted that the complainant had also stated in the box that he was an income tax assessee at the time of examination and that his wife was an income tax assessee even in the year 2013. It is submitted that taking into account the statutory presumptions under Sections 118 and 139 of the 1881 Act, the complainant had discharged his burden, and in the absence of any cogent evidence on the side of the 2 nd respondent/accused, the bene presumption should have been given to the complainant. It is submitted that the judgment of the learned Magistrate is therefore liable to be set aside and the 2 nd respondent/accused is liable to be convicted for committing the offence punishable under Section 138 of the 1881 Act. 5. The learned counsel appearing for the2 nd respondent/accused would submit that the 2 nd respondent/accused had denied issuing any cheque to the complainant for a sum of Rs.4,00,000/- (Rupees Four Lakhs only). It is submitted that, according to the 2 nd respondent/accused, he had borrowed a sum of Rs.50,000/- (Rupees Fifty Thousand only) earlier from the appellant/complainant, and even after repaying the said amount along with interest, the cheque obtained from the 2 nd respondent/accused (as security) was not returned by the appellant/complainant. It is submitted that, according to the 2 nd respondent/accused, he had borrowed a sum of Rs.50,000/- (Rupees Fifty Thousand only) earlier from the appellant/complainant, and even after repaying the said amount along with interest, the cheque obtained from the 2 nd respondent/accused (as security) was not returned by the appellant/complainant. It is submitted that the appellant/complainant had made it appear that the 2 nd respondent/accused had issued a cheque for a sum of Rs.4,00,000/- (Rupees Four Lakhs only) by filling in that amount on the cheque. It is submitted that the complainant had failed to discharge his initial burden by leading evidence regarding the issuance of the cheque by the 2 nd respondent/accused and was therefore not entitled to the benefit of the statutory presumptions in the1881 Act. The learned counsel relied on the judgment of the Supreme Court in John K. Abraham v. Simon C. Abraham, 2014 (1) KLT 90 (SC), to contend that to draw the benefit of the presumptions, the burden is heavy on the complainant to show that he had the necessary means for advancing money to the accused. It is submitted that since the appellant/complainant had failed to discharge the burden, and when it had come out in cross- examination that he was not able to give the name and other details of the person from whom he had received the amount of Rs.4,00,000/- (Rupees Four lakhs only) out of sale of the logs/trees, and when the details of the property on which the said trees were standing had not been produced before the Court, it must be held that the appellant/complainant had failed to prove his case. It is submitted that the judgment of the learned Magistrate is sustainable in law and does not warrant interference at the hands of this Court. 6. Having heard the learned counsel appearing for the appellant/complainant and the learned counsel appearing for the 2 nd respondent/accused, I am of the view that the appeal has to be allowed. A reading of the judgment of the learned Magistrate indicates that one of the grounds upon which the learned Magistrate held in favour of the 2 nd respondent/accused was that the person who had written the details of the amount etc. in the cheque had not been examined, and mere admission of signature does not amount to admission of execution of the cheque for the amount mentioned therein. in the cheque had not been examined, and mere admission of signature does not amount to admission of execution of the cheque for the amount mentioned therein. This finding was based on the law laid down by this Court in Santhi (supra). However, a reading of the judgment of the Supreme Court in Bir Singh (supra) indicates that even if the details in the cheque had been filled up by a third party, a prosecution under Section 138 of the 1881 Act will lie and the presumptions under the 1881 Act will operate in favour of the complainant. The relevant portion of the judgment in Bir Singh (supra) reads thus: “32. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post-dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act. 33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87, 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 Section 138 would be attracted. 34. 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. 35. It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. 35. It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative. 36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt. 37……. 38. In the absence of any finding that the cheque in question was not signed by the respondent-accused or not voluntarily made over to the payee and in the absence of any evidence with regard to the circumstances in which a blank signed cheque had been given to the appellant-complainant, it may reasonably be presumed that the cheque was filled in by the appellant-complainant being the payee in the presence of the respondent-accused being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alteration. There was no change in the amount of the cheque, its date or the name of the payee. The High Court ought not to have acquitted the respondent- accused of the charge under Section 138 of the Negotiable Instruments Act.” Therefore, the finding of the learned Magistrate that since the appellant/complainant had failed to examine the person who had written the details in the cheque, the execution of the cheque cannot be admitted, is not sustainable in law. 7. Coming to the question as to whether the appellant/complainant had discharged the initial burden by proving the source of funds, it appears from the cross-examination of the appellant/complainant as PW1 that he had clearly stated that his wife was an income tax assessee even at the time when the amount of Rs.4,00,000/- (Rupees Four lakhs Only) was lent to the 2 nd respondent/accused. Further, it is also stated that he had sold certain timber to a merchant in Erattupetta. Further, it is also stated that he had sold certain timber to a merchant in Erattupetta. The fact that he did not remember the name of the merchant who purchased the timber does not, in my opinion, lead to the conclusion that the complainant had not proved the means to lend an amount of Rs.4,00,000/- (Rupees Four lakhs Only) to the 2 nd respondent/accused. 8. In Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106 , the Supreme Court has considered the presumptions available under Sections 118 and 139 of the 1881 Act. It was held:- “16. In Rangappa v. Sri Mohan, this Court has reiterated and summarised the principles relating to presumptions under Sections 118 and 139 of the NI Act and rebuttal thereof in the following : (SCC pp. 453-454, paras 26-28) “26. In the light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna JanardhanBhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it is 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. 27. Section 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 Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 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. However, it must be remembered that the offence made punishable by Section 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 defendant-accused cannot be expected to discharge an unduly high standard of proof. 28. 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 Section 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.” 17. On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasised that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged under Sections 118 and 139 of the NI Act. This Court stated the principles in Kumar Exports as follows : (SCC pp. 520-521, paras 20-21) “20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act. 21. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act. 21. The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, therefore, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue.” 18. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused. The aspect relevant for consideration had been as to whether the appellant-accused has brought on record such facts/material/circumstances which could be of a reasonably probable defence. In Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283 , the Supreme Court upheld the observations made in Bir Singh (supra) and Rohitbhai Jivanlal Patel (supra) and held:- “13. 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. 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 crystallised by this Court in Rohitbhai Jivanlal Patel v. State of Gujarat in the following words : (SCC pp. 120-21, para 18) “18. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused.” 14. Once the 2nd appellant had admitted his signatures on the cheque and the deed, the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial court fell in error when it called upon the respondent complainant to explain the circumstances under which the appellants were liable to pay. Such approach of the trial court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law. 15. No doubt, and as correctly argued by the Senior Counsel for the appellants, the presumptions raised under Section 118 and Section 139 are rebuttable in nature. Such approach of the trial court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law. 15. No doubt, and as correctly argued by the Senior Counsel for the appellants, the presumptions raised under Section 118 and Section 139 are rebuttable in nature. As held in M.S. Narayana Menon v. State of Kerala , which was relied upon in Basalingappa, a probable defence needs to be raised, which must meet the standard of “preponderance of probability”, and not mere possibility. These principles were also affirmed in Kumar Exports , wherein it was further held that a bare denial of passing of consideration would not aid the case of the accused. 16. …….. 17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where this Court held that : (SCC p. 209, para 36) “36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.” Therefore, the onus to rebut the presumption vested with the 2 nd respondent/accused was never shifted to the appellant/complainant. Consequently, the accused’s failure to present any defence meeting the standard of preponderance of probability rendered the 2 nd respondent/accused liable for the Section 138 of the 1881 Act. Thus, I am of the view that the appellant/complainant has discharged his burden and therefore the presumptions under Sections 118 and 139 of the 1881 Act operate in his favour. For the reasons stated above, the appeal is allowed. The judgment and order dated 26.09.2014 passed by the Judicial First Class Magistrate Court - III, Kanjirapally, is set aside and the 2 nd respondent/accused is hereby convicted for the offence punishable under section 138 of the 1881 Act. Respondent No.2/accused is sentenced to undergo simple imprisonment for one day till the rising of the Court and to pay a fine of Rs. 4,00,000/- (Rupees four Lakhs Only). Respondent No.2/accused is sentenced to undergo simple imprisonment for one day till the rising of the Court and to pay a fine of Rs. 4,00,000/- (Rupees four Lakhs Only). The fine (if realised) shall be paid to the complainant as compensation under Section 357(1)(b) of the Code of Criminal Procedure, 1973. In default of payment of the fine, the accused shall undergo simple imprisonment for three months. The accused is directed to surrender before the trial court to undergo the sentence on 30.09.2025 at 11.00 a.m. and on failure to do so, the trial court is directed to execute the sentence imposed by this Court, without fail. The Registry shall forward a copy of this judgment to the trial court for information and compliance, forthwith.