Criminal Appeal No. 1045 of 2002 · Kerala High Court · 2007

J.M.JAMES, J. - - - - - - - - - - - - - - - - - - - -Crl.A.No.1045 of 2002 (D) - - - - - - - - - - - - - - - - - - - -Dated this the 27th day of March, 2007J U D G M E N TThe appellant who is aggrieved, because of thedismissal of the complaint and acquittal of the accused, the firstrespondent, by the Chief Judicial Magistrate, Palakkad, inS.T.Case No.529/1998, is before this Court, through this appeal,after obtaining leave, challenging the acquittal. 2.The facts reveal that the first respondent was asubscriber to three chits conducted by the appellant. One wasfor an amount of Rs.50,000/-. It was bid by the respondent-accused on 20/12/1996. There were two chits for Rs.15,000/-each. The first respondent bid both these chits on 02/01/1997.However, the first respondent defaulted the payment of thesubscriptions to all the above three chits, which were due, hebeing a successful bidder of those chits. Exhibit D1 series arethe notices issued by the appellant to the first respondent,intimating him of the default and demanding the amount.Exhibit D2 series are the reply given by the first respondent- Crl.A.No.1045/2002-: 2 :-accused to Exhibit D1 series communication. Exhibits D1 andD2 series show and establish, the transactions between theappellant and the first respondent, the bidding of the three chitsby the first respondent and default of the instalments, due to theappellant in those three chits. Exhibit P1 is a cheque dated02/04/1998 for an amount of Rs.53,005/-. Exhibit P2 is a cheque,dated 13/04/1998, for an amount of Rs.4,665/-. Both thesecheques, when presented, were dishonoured. Therefore, ExhibitP5 lawyer notice was sent. Exhibit P7 is the reply notice. In it,the first respondent had conceded some amount is due to theappellant, but did not specifically say what exactly was theamount. However, the first respondent took a contention in thereply notice, Exhibit P7, that Exhibits P1 and P2 cheques wereissued as a security, without entering any amount in them, and,therefore, Exhibits P1 and P2, may not be entertained. Hence,the appellant filed the complaint before the court below. On thestrength of Exhibit P10 resolution passed by the Board ofDirectors of M/s Sree Lakshmi Kuries and Loans Private Limited,PW.1, the Manager of that firm had entered the box. He also gotmarked 10 documents. There was no evidence except the Crl.A.No.1045/2002-: 3 :-marking of Exhibits D1 and D2 series from the side of the firstrespondent-accused. The learned Magistrate found that ExhibitsP1 and P2 were issued as security and, therefore, holding thatSection 138 of the Negotiable Instruments Act, in short 'the Act',was not attracted, dismissed the complaint and acquitted theaccused. 3.I have heard the arguments advanced by bothsides. The evidence available on record clearly show that thefirst respondent-accused had defaulted the premium, to be paidto the appellant, after bidding the three chits, as stated above.In Exhibit P7 also he concedes the same. Exhibit D2 seriesreplies, further reveal the above said fact. The question now,therefore, arises is, whether, Exhibits P1 and P2 which isadmittedly issued by the respondent as securities, could createany legal liability on the respondent-accused, and whether thecomplainant can fill up the signed blank cheque leaf, issued bythe respondent and present it for encashment of the amount. 4.In I.C.D.S vs.Beena Shabeer [2002(3) KLT 218(SC)], the Apex Court had an occasion to consider whether thecheque issued by a guarantor could be made use of by the Crl.A.No.1045/2002-: 4 :-drawee under Section 138 of the Act. The court held that acheque issued by a guarantor, as a security, also comes within'any debt or other liability', as contemplated under Section 138of the Act. Applying the same principle in this case, Exhibits P1and P2, having been issued by the first respondent himself, Ihold that though they were signed and given by the firstrespondent as security, and in case of default of payment, theappellant is entitled to fill up the cheques for the due amountand present it for encashment. This view had been reiterated inLillykutty v. Lawrance [2003(3) KLT 721], wherein it was heldthat the payee is entitled to fill up the cheque signed anddelivered to the holder, and unless the contrary is proved, apresumption can be made that every negotiable instrument wasmade for consideration. In the case at hand, in the light ofExhibits D2 series and Exhibit P7, the first respondent havingdefaulted the payment towards three chits of the appellant,amounts are due to the appellant. Therefore, Exhibits P1 andP2, though they were issued as security, are liable to beproceeded against the drawer, the first respondent-accusedunder Section 138 of the Act. However, it is for the accused to Crl.A.No.1045/2002-: 5 :-prove whether the amount stated in the cheques are due to theappellant or not and thus rebut the presumption as per the lawof preponderance of probabilities. No evidence is adduced orcircumstances are available in favour of the accused.5.In view of the above position of law, the learnedMagistrate was not legally right in dismissing the complaint andacquitting the accused. In the result, I set aside the impugnedjudgment dated 27/03/2002 in S.T.Case No.529/1998. I holdthat the appellant had established a case under Section 138 ofthe Act, against the first respondent-accused and, therefore, Ifind him guilty. Hence, I convict him under Section 138 of theAct. The first respondent-accused has to be heard before asentence is imposed on him. Instead of summoning him beforethis Court and questioning him, I am of the view that it isexpedient to send back the case to the court below. Therefore, Irestore S.T.Case No.529/1998 to the file of Chief JudicialMagistrate, Palakkad. The parties shall appear before the courtbelow on 15/05/2007.6.On the appearance of the first respondent-accused, the learned Magistrate shall hear the respondent on Crl.A.No.1045/2002-: 6 :-the question of sentence, and impose the sentence on him, asper the law.7.I make it clear that in the event of the appellantcompounding the matter with the first respondent-accused,under Section 147 of the Act, the learned Magistrate shall passappropriate orders, according to the law. In case of any failureof the first respondent-accused to appear, as directed hereinabove, the learned Magistrate shall take coercive steps to get hispresence. The learned Magistrate shall dispose of the case,within two months from the date of appearance/production ofthe respondent-accused, before the court below.The appeal is allowed as above.(J.M.JAMES)Judgems Crl.A.No.1045/2002-: 7 :-J.M.JAMES, J. - - - - - - - - - - - - - - - - - - - -Crl.A.No.1045 of 2002 (D) - - - - - - - - - - - - - - - - - - - -J U D G M E N T 27th March, 2007