Law Web: Whether suppression of material facts in notice and complaint for dishonour of cheque is fatal to case?

Before she filed the complaint the second respondent sent

Ext P4 statutory notice to the revision petitioner informing him about the

dishonour of the cheque and demanding payment of the amount

covered by it. Neither the nature, nor the date of the transaction

between the parties nor the date of issuance of the cheque was

disclosed in it. There was only a bald statement that the revision

petitioner issued a cheque bearing the date 11.1.1999 for Rs.2,55,000/-

in discharge of a debt. There is no explanation why these material facts

were not disclosed in the statutory notice. Suppression of material facts

relating to the alleged transaction in the notice issued before filing the

suit or the complaint is an artifice used by certain litigants, the intention

of which is very clear. They want to develop a story after knowing the

defence that may be set up by the opposite party. The doors of the

court should be closed to such fortune seekers.

19. In the complaint also neither the nature, nor the date of the

transaction between the parties is mentioned. The only addition made

in the complaint is that the date of issuance of cheque is 14.9.1998. For

the first time it was in her evidence the 2nd respondent (PW1) disclosed

that the transaction between the parties was a loan of Rs.1,95,000/-. In

answer to a leading question put in the examination in chief she stated

that the transaction was after the marriage between her daughter

Sulatha and the revision petitioner's son Pradeep, which was

solemnised on 23.1.1998. She testified that the revision petitioner

requested for a loan of Rs. 3 lakh one week after the marriage of

Sulatha and Pradeep and she paid him Rs.1 = lakh on 9.4.1998 and

Rs.45,000/- on 8.5.1998. The amount mentioned in the cheque is

Rs.2,55,000/- though the loan amount was only Rs.1,95,000/-

Rs.60,000/- is said to be interest. How the interest was calculated will

be considered later. Her story is that in August 1998 she made a

demand for repayment of the amount and then the revision petitioner

undertook to pay the amount in January 1999; the 2nd respondent

insisted on getting a cheque and a document from the revision

petitioner; on 14.9.1998 at her residence at Pampadi the revision

petitioner executed Ext P1 cheque and Ext P8 undertaking.

20. In a criminal case the accused should be informed before

the trial not only of the nature of the offence but also the particulars of

the transaction which are necessary for him to effectively meet the case

against him. But unscrupulous complainants refuse to do so with the

object of denying the accused a fair trial, which is a right guaranteed

under Article 21 of the Constitution. An accused in a complaint case

filed under Section 142 of the Act also is entitled to know before the trial

the particulars of the accusation against him. Suppression of these

particulars in the complaint alone is sufficient to order his acquittal.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT:

MR. JUSTICE K.ABRAHAM MATHEW

9TH DAY OF SEPTEMBER 2016

Crl.Rev.Pet.No. 1689 of 2009 ( )

K.K.DIVAKARAN,

STATE OF KERALA

At the trial that took place on a complaint filed by the mother in-law

of his son under Section 142 of the Negotiable Instruments Act

(hereinafter called the Act) the revision petitioner was convicted of the

offence under Section 138 of the Act and sentenced to undergo simple

imprisonment for six months. He was also directed to pay the second

respondent/complainant Rs.2,55,000/- as compensation and in default of

payment of the amount to undergo simple imprisonment for a further

period of two months. In the appeal filed by him the order of conviction

was upheld, but the sentence was modified; he was ordered to undergo

imprisonment till the rising of the court. The direction to pay the

compensation and to undergo imprisonment in case the amount was not

paid was not modified. The order of conviction and the sentence are

assailed on the ground that both courts failed to analyse the evidence,

and to apply the law laid down by the Supreme Court as to how the

presumptions under Sections 118(a) and 139 of the Act may be rebutted.

It is submitted that both courts failed to examine whether the evidence

available in the case was sufficient to prove the contention of the

revision petitioner that the cheque in question was a signed blank

cheque leaf given to the husband of the second respondent as a

security for the loan of Rs.50,000/- taken by Pradeep, son of the former

and son in law of the second respondent.

2. A perusal of the judgments of the courts below reveals that

there is much substance in the submission of the learned counsel for

the revision petitioner. The trial court in its judgment gave a summary

of the evidence of each witness, which is not expected to be given in a

judgment. The court should consider each relevant fact and discuss

and analyse only the evidence given by the witnesses who have

deposed to it. If the summary of the testimony of the witnesses is

discarded, nothing much remains in the judgment of the trial court. The

second respondent relied on Ext P8 which is said to be a document

executed by the revision petitioner acknowledging his liability, admitting

issuance of the cheque and undertaking to pay the amount. The

contention of the latter is that Ext P8 was a signed blank paper he gave

the husband of the second respondent along with the signed blank

cheque. The trial court in its judgment has observed: "Moreover as per

Ext P8 agreement the accused admitted his liability to the complainant."

The learned Magistrate did not examine the contention of the revision

petitioner. He further observed: "There is no evidence adduced by the

accused to rebut the presumption under Section 139 of the NI Act.

There is no reason to reject the testimony of PWs 1 to 3". It has

become a practice of some courts not to even consider whether the

accused has been able to rebut the presumptions under Sections 118

and 139 of the NI Act. This case is a classic example of it. The

judgment of the appellate court is not better than that of the trial court.

There is no discussion or analysis of the evidence. It held: "Therefore, it

is the duty of the appellant to prove that he has issued Ext P1 cheque

not in discharge of a debt or liability. A close scrutiny of the evidence of

the first respondent shows that the defence story put forward by the

appellant is only to be discarded." The learned Sessions Judge reached

this conclusion without examining whether the materials available in the

case are sufficient to rebut the presumption. I have no doubt that the

failure of the courts below to discharge their duties properly have

resulted in miscarriage of justice. This makes it necessary for this

court to discuss and analyse the evidence adduced by either side with

regard to the execution of Ext P1 cheque as well as the evidence

regarding the contention of the revision petitioner that is not supported

by consideration and that it was a signed blank cheque leaf given to the

husband of the second respondent.

3. The allegation in the complaint is that to discharge a debt the

revision petitioner on 14.9.1998 issued at Pampadi Ext P1 cheque

bearing the date 11.1.1999 and when it was presented the bank

returned it as there was no sufficient funds in his account and in spite of

demand by notice, he failed to pay the amount and thus he committed

the offence under Section 138 of the Act.

4. The effect of admission of signing a blank paper by a party

to a proceedings came up for consideration in A.Pathu and others v

Katheesa Umma (1990(2) KLJ 115) the learned judge held:

" Normally, when execution of a document is

either admitted or proved and when no disabling

factor or vitiating circumstance is alleged or proved,

admission of proof of signature with the necessary

formalities, if any, will be proof of execution with

knowledge of the contents atleast, prima facie, for

the purpose of shifting the burden. If a person

denies the execution of a document which contains

his signature, he must first explain how the

signature happened to be there without actual

execution. That may be by getting the signature in

a blank paper or under other circumstances which

disclose that there was no conscious of voluntary

execution. When a person's signature appears at

the place where the executant would normally

sign, the signature may be accepted prima facie

as having been put in token of execution. There is

the presumption under Section 114 of the

Evidence Act that a person only puts signature in a

document in token of execution."

5. A division bench of this court in Velayudhan v. Valayudhan

(2001(1) KLT 392) also had occasion to consider it. The division bench

held:

"The plaintiff may give evidence regarding the

execution of the document. If the fact of thumb

impression or signature is admitted, that will give

more reliability to the plaintiff's evidence. If such

evidence adduced by the plaintiff is reliable and if

the plaintiff is able to discharge his burden

sufficiently, then onus will shift on the defendant to

show that he had not executed the document. We

only say that the plaintiff cannot succeed in the case

without giving evidence."

6. In Joseph v. Gladis Sasi (2010 (3) KLT 379), Santhi C v.

Mary Sherly and another (2011 (3) KHC 22) and Purushothaman

Nair P v. Sreekandan Nair (2013 (4) KLJ 256) this court held that

admission of a person that he signed a blank cheque leaf does not

amount to execution of the cheque.

7. Though the revision petitioner admits to have put his

signature in the cheque leaf, the first respondent has to prove execution

of the cheque as the admission of the former does not amount to

execution of the cheque. If the evidence adduced by the first

respondent to discharge his initial burden is not satisfactory, the revision

petitioner has no duty to prove that what he signed was only a blank

cheque leaf.

8. Sections 118 and 139 NI Act which create presumptions are

relevant in the context of this case.

Section 118

Until the contrary is proved, the following

presumptions shall be made:

(a) of consideration: that every negotiable

instrument was made or drawn for consideration,

and that every such instrument when it has been

accepted, endorsed, negotiated or transferred, was

accepted, endorsed, negotiated or transferred for

consideration;.....

(b to g omitted)

Section 139

It shall be presumed, unless the contrary is

proved, that the holder of a cheque received the

cheque, of the nature referred to in Section 138 for

the discharge, in whole or in part, of any debt, or

other liability.

9. The expression used in Section 118 is 'until the contrary is

proved' while the expression used in Section 138 is 'unless the contrary

proved' which do not make any difference. Both are rebuttable

presumptions.

10. In Kundanlal Rallaram v. Custodian Evacuee Property,

Bombay (AIR 1961 SC 1316) a three judge bench of the Supreme

Court considered how the burden under Section 118 of the Act may be

rebutted. It has held:

"The defendant may adduce direct evidence

to prove that the promissory note was not

supported by consideration, and, if he adduced

acceptable evidence, the burden again shifts to the

plaintiff, and so on. The defendant may also rely

upon circumstantial evidence and, if the

circumstances so relied upon are compelling, the

burden may likewise shift again to the plaintiff. He

may also rely upon presumptions of fact, for

instance those mentioned in S.114 and other

sections of the Evidence Act."

11. Section 118(a) of the Act came up for consideration before

the Supreme Court in Bharat Barrel and Drum Manufacturing

Company v. Amin Chand Pyarelal (AIR 1999 SC 1008) the court held:

"The burden upon the defendant of proving

the non-existence of the consideration can be

either direct or by bringing on record the

preponderance of probabilities by reference to the

circumstances upon which he relies. In such an

event, the plaintiff is entitled under law to rely upon

all the evidence led in the case including that of the

plaintiff as well. In case, where the defendant fails

to discharge the initial onus of proof by showing the

non-existence of the consideration, the plaintiff

would invariably be held entitled to the benefit of

presumption arising under Section 118(a) in his

favour. The court may not insist upon the defendant

to disprove the existence of consideration by

leading direct evidence as the existence of negative

evidence is neither possible nor contemplated and

even if led, is to be seen with a doubt. The bare

denial of the passing of the consideration apparently

does not appear to be any defence. Something

which is probable has to be brought on record for

getting the benefit of shifting the onus of proving to

the plaintiff. To disprove the presumption, the

defendant has to bring on record such facts and

circumstances upon consideration of which the

court may either believe that the consideration did

not exist or its non-existence was so probable that a

prudent man would, under the circumstances of the

case, act upon the plea that it did not exist."

12. The last two judgments of the Supreme Court were rendered

in civil cases. But the rule of evidence contained in Section 118(a) is

equally applicable to criminal cases also. The following observation of

the Supreme Court in M.S.Narayana Menon @ Mani v. State of

Kerala and another (AIR 2006 SC 3366) is relevant.

"If for the purpose of a civil litigation, the

defendant may not adduce any evidence to

discharge the initial burden placed on him, a 'fortiori'

even an accused need not enter into the witness

box and examine other witnesses in support of his

defence."

13. In Hiten P Dala v. Bratindranath Banerji (AIR 2001 SC

3897) the apex court held: " Therefore, the rebuttal does not have to be

conclusively established but such must be adduced before the court in

support of the defence that the court must either believe the defence to

exists or consider its existence to be reasonably probable, the standard

reasonability being that of the prudent man."

14. In M.S.Narayana Menon @ Mani v. State of Kerala and

another (AIR 2006 SC 3366) which was a case arising from a complaint

filed under Section 142 NI Act the Supreme Court observed: "For

rebutting such presumption what is needed is to raise a probable

defence. Even for the said purpose the evidence adduced on behalf of

the complainant could be relied upon." " The standard of proof evidently

is of preponderance of probabilities. Inference of preponderance can be

drawn not only from the materials on records but also by reference to

the circumstances upon which he relies."

15. The manner in which the presumption under Section 118(a)

may be rebutted was considered by the Supreme Court in Mallavarapu

Kasivisweswara Rao v. Thadikonda Ramulu Firm (AIR 2008 SC

2898), wherein it is observed : "It is also settled position that the initial

burden in this regard lies on the defendant to prove the non existence of

consideration by bringing on record such facts and circumstances which

would lead the court to believe the non existence of the consideration

either by direct evidence or by preponderance of probabilities showing

that the existence of consideration was improbable, doubtful or

illegal.....................".

16. After considering its earlier decisions including those

referred to above a three judge bench of the Supreme Court in

Rangappa v. Mohan (AIR 2010 SC 1898) held:

"In such a scenario, the test of proportionality

should guide the construction and interpretation of

reverse onus clauses and the accused/defendant

cannot be expected to discharge an unduly high

standards or proof. In the absence of compelling

justifications, reverse onus clauses usually impose

an evidentiary burden and not a persuasive burden.

Keeping this 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' ''.

17. Neither the trial court nor the appellate court took notice of

the above decisions of the apex court, which is the reason why they

failed even to examine whether the materials available on record are

sufficient to rebut the presumptions under Sections 118(a) and 139 of

the Act.

18. Before she filed the complaint the second respondent sent

Ext P4 statutory notice to the revision petitioner informing him about the

dishonour of the cheque and demanding payment of the amount

covered by it. Neither the nature, nor the date of the transaction

between the parties nor the date of issuance of the cheque was

disclosed in it. There was only a bald statement that the revision

petitioner issued a cheque bearing the date 11.1.1999 for Rs.2,55,000/-

in discharge of a debt. There is no explanation why these material facts

were not disclosed in the statutory notice. Suppression of material facts

relating to the alleged transaction in the notice issued before filing the

suit or the complaint is an artifice used by certain litigants, the intention

of which is very clear. They want to develop a story after knowing the

defence that may be set up by the opposite party. The doors of the

court should be closed to such fortune seekers.