The case

Vishnu Prasad v. Gracy Yohannan (Crl.A No. 1216 of 2013) (2025 KLT OnLine 2081) Decided on 4th June, 2025 Hon’ble Mr. Justice A. Badharudeen,  High Court of Kerala.

Facts of the case

The case of the complainant is that, the accused borrowed Rs.3 Lakh from him on 19.08.2008 and promised to repay the same on 19.09.2008. Accordingly, the accused issued cheque for the said sum dated 19.09.2008 drawn on State Bank of Travancore, Kulathuppuzha Branch. When the cheque was presented for collection, the same got dishonored for want of funds.  Although, legal notice was issued to the accused intimating dishonor and demanding payment of the cheque amount, she failed to pay the amount.

On appreciation of evidence, the trial court – Judicial First Class Magistrate Court-IV, Punalur in C.C. No.103 of 2009 dated 20.03.2012- found that the accused committed the offence punishable under Section 138 of the NI Act. Accordingly, she was sentenced to undergo simple imprisonment for a period of three months and to pay compensation to the tune of Rs.3, 25,000/-. In default, the accused was sentenced to undergo simple imprisonment for three months more. But on appeal, the Appellate Court _Additional Sessions Judge-II, Kollam in Crl. Appeal No.94 of 2012 dated 17.06.2013 – reversed the said finding and acquitted the accused. Now, the finding of the Appellate Court is under challenge.

Submissions of appellant/complainant

While assailing the judgment of acquittal rendered by the first Appellate Court, it is argued by the learned counsel for the appellant/complainant that, the complainant himself got examined as PW1 and he deposed about the transaction, which led to execution of Ext.P1 cheque. According to the learned counsel for the appellant/complainant regarding the source of money to advance Rs.3 Lakh to the accused, during cross-examination, the complainant deposed that he sold properties belonged to him during the year 2007 and 2008, though he failed to remember the name of the purchaser/vendee. It is pointed out that, however, one Rahim, who is the purchaser of the properties from PW1 was summoned and examined by the accused as part of defence evidence as DW1 and he supported the purchase of properties from the complainant, having an extent of 55 cents and 88 cents, supporting the version of PW1. Therefore, the trial court rightly appreciated the evidence and entered into conviction. But, the Appellate Court wrongly re-appreciated evidence, mainly on the premise that the complainant was not aware as to who filled up the cheque; whether it was by the accused or anybody under his instructions. It is pointed out by the learned counsel for the appellant/complainant that the reasoning given by the Appellate Court to set aside the trial court judgment is insufficient and erroneous Therefore, the same may be set aside and the trial court judgment may be restored.

The learned counsel for the appellant/complainant placed decision of the Apex Court reported in [2024 5 Supreme 235 : 2024 0 Supreme (SC) 521 : 2024 0 KLT (OnLine) 1279] K. Ramesh v. K. Kothandaraman, wherein the Apex Court held as under:

“When once negotiable instrument has been marked in evidence, presumption regarding its validity would arise and it is for accused to displace the presumption – Even if a blank cheque leaf is voluntarily signed and handed over by accused towards some payment would attract presumption under Section 139 of Act and in absence of any cogent evidence to show that cheque was not issued in discharge of debt, presumption would hold good – Forensic opinion was wholly unnecessary in instant case Application filed by accused before Trial Court was wholly frivolous and Trial Court had rightly rejected application – High Court ought not to have allowed revision application – Impugned order set aside.”

In K. Ramesh’s case (supra) the Apex court referred the decision reported in [(2019) 4 SCC 197] Bir Singh v. Mukesh Kumar, with reference to paragraph Nos.32, 33, 34 and 36. The same read as under:

“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, Sections20, 87 and 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. 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.”

Submissions of accused

Repelling the contentions raised by the learned counsel for the complainant, the learned counsel for the accused argued that, on reading the evidence given by PW1 extracted during cross-examination, the entire evidence is filled with improbabilities. According to him, even though PW1 deposed that he sold properties during the year 2007 and 2008 to justify the source to advance the money to the accused, he was unable to remember the name of the purchaser/vendee. That apart, when he was asked to explain the circumstances under which the cheque amount was given to the accused, he failed to give a rational answer and he had given answer that the same was known to the accused. According to the learned counsel for the accused, as admitted by PW1 and as contended by the accused, there was gold loan dealings in between the complainant and accused and for which, Ext.P1 cheque was issued as security and the same has been misused for the purpose of lodging the complaint against the accused. Therefore, after setting aside the judgment rendered by the trial court, the Appellate Court rightly recorded acquittal and the same does not require any interference.

Court’s observations & findings

The law is well settled that, an initial burden is cast upon the complainant to prove the transaction led to execution of the cheque, so as to canvas benefit of presumptions under Sections 118 and 139 of the NI Act. In the instant case, the trial court found on evidence that the complainant proved the transaction and execution of the cheque and the presumptions in favour of the complainant was not rebutted by the accused. Therefore, the accused was convicted and sentenced by the trial court. But, the first Appellate Court, on reappreciation of evidence, found otherwise. It was observed by the first Appellate Court relying on the evidence of DW1 during cross-examination that, the complainant had no explanation as to who filled up Ext.P1 cheque, since he admitted in cross-examination that he did not know who filled up the cheque. Further, he deposed that he did not know whether Ext.P1 cheque contains the handwriting of the accused or not. Regarding the entries, the evidence of PW1 to the effect that the accused might have brought the cheque after filling it up, was also referred by the trial court. The Appellate Court is of the view that a blank cheque leaf entrusted by the accused was misused by the complainant, accepting the case advanced by the accused and the Appellate Court believed the said version. Thereby, reversed the acquittal, finding fault with the evidence of PW1 regarding transaction and execution of Ext.P1 cheque. legal notice of demand and reluctance on the part of the accused to repay the same. It was through him, Ext.P1 the original cheque along with Ext.P2 dishonor memo, Ext.P3 intimation, Ext.P4 copy of lawyer notice, Ext.P5 postal receipt, Ext.P6 returned lawyer’s notice and Ext.P7 statement of account of the complainant were marked. It is true that, during cross-examination of PW1, when a question was asked regarding his employment, he stated that he has been working as a Poojari in temples for 20 years and he would get Rs.300/- per day as wage. But as regards to the source to advance the cheque amount to the accused, his version is that, he sold 2.5 Acres of properties for a total consideration of Rs.18 Lakh (Rs.10.5 Lakh + 7.5 Lakh) and the amount given to the accused was so obtained by him. During further cross-examination, PW1 admitted that the money was not withdrawn from the bank and he also failed to name the vendor to whom he sold the properties. He also admitted during further cross-examination that, there were gold loan deals in between him and the accused earlier, though no such deals on the date of giving evidence. Even though, the name of the vendee, who purchased the properties was not disclosed by PW1 during his crossexamination, at the instance of the accused one Rahim got examined as DW1 by issuing summons. During chief examination, DW1 admitted that he purchased properties from PW1 though he did not exactly remember the year of purchase. But, he stated that the sale was four years ago and his date of examination was on 01.12.2011. DW1 also deposed during examination that, he purchased 55 cents and 88 cents of property from PW1 and sold 88 cents of property for Rs.10.5 Lakh thereafter. But, regarding the details of the agreement for sale and the date of said agreement, he did not have much memory.

The trial court given emphasis to the evidence of PW1 regarding the source as spoken by him, which is supported by the evidence of DW1. It is true that the documents pertaining to property sale were not produced by either side. But, on perusal of Ext.P7 statement of account in the name of the complainant, the same would show that, there was deposit of Rs.9,50,000/- (Rs.6,50,000/- + Rs.3,00,000/-) as on 11.07.2007 in the account of the complainant, though on 08.07.2008, the balance was only Rs.4,476/-. Thus, from Ext.P7, it could be seen that there was deposit of Rs.9,50,000/- (Rs.6,50,000/- + Rs.3,00,000/-) in the account of the complainant and the same was periodically withdrawn. Here, the case of the complainant initially is that, he had given Rs.3 Lakh to the accused and the money was obtained by him by selling his properties, later, during his further cross-examination, he admitted that the money given to the accused was not withdrawn from the bank. But, his version as to sale of properties, is supported by the evidence of DW1, who is a witness from the side of the accused. Further, availability of Rs.9,50,000/- on 11.07.2007 in the account of the complainant could be gathered from Ext.P7. 16. The Appellate Court given emphasis to the decisions of this court in Santhi v. Mary Sherly reported in [2011 (3) KLT 273 : 2013 (1) KLT 157] and Jose v. Joy reported in [2008 (3) KLT 512] to hold that the transaction and execution of the cheque as contended by the complainant were not proved and the reasoning rendered by the trial court holding contra view was wrong.

In a prosecution alleging commission of offence under Section 138 of the NI Act, the complainant has an initial burden to prove the transaction, which led to execution of the cheque alleged to be issued by the accused in his favour. As part of the same, when the source of money to advance the cheque amount is put under challenge, the complainant is expected to give a rational explanation, though no statutory duty cast upon the complainant to prove the source voluntarily, when there is no dispute regarding source. 18. In the instant case, source of money of the complainant to advance Rs.3,00,000/- to the accused, as contended by the complainant was seriously put under challenge. During cross-examination, PW1 deposed about the source on asserting that he sold properties during the year 2007 and 2008. It is true that PW1 did not produce any documents to substantiate sale of properties as stated by him. He also failed to remember the name of the purchaser/vendee. The evidence of PW1, who did not know even the name of the vendee/purchaser and who did not produce documents showing property sale, alone would not be sufficient to believe the complainant’s version that he sold properties and out of the said money Rs.3,00,000/- was given to the accused. However, in the instant case, the accused who presumably knew the property sale, summoned and examined the vendee, who pruchased the properties of the complainant, as a defence witness to negate the evidence of PW1 regarding the sale of properties, as stated by him. But, the evidence of DW1, in fact, supported purchase of property from the complainant. When the witness produced by the defence itself supported sale of properties as spoken by PW1, who had no inclination to the complainant, the evidence of PW1 that he sold properties and out of the said amount, the money was given to the accused, is proved as admitted by DW1. That apart, Ext.P7 would show that, during the month of July, 2007, the complainant had bank deposit of Rs.9,50,000/-. PW1’s evidence is that the amount was not taken immediately from the Bank. Thus, it could not be held that the complainant failed to prove the transaction led to execution of Ext.P1 cheque, merely for the reason that he did not know, who filled up the cheque and the handwriting in Ext.P1 cheque, as found by the first Appellate Court.

In this case, issuance of Ext.P1 cheque is admitted by the accused, but as security towards gold loan dealings between the complainant and the accused. In such a case, the finding of the trial court is only to be confirmed, while holding that the first Appellate Court went wrong in reversing the same .

Decision

The court  held that the verdict rendered by the first Appellate Court acquitting the accused on the finding that she did not commit the offence punishable under Section 138 of the NI Act is wrong and the same deserves interference. In the result, the appeal stands allowed and the judgment of the first Appellate Court stands set aside.