Wednesday, 12 October 2016

When suppression of material facts in notice and complaint for dishonour of cheque is fatal?

  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, 

   V
          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.

       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.

       21.   A similar case came up for consideration before the

Supreme Court in Vijay v. Laxman and another (2013 (3) SC 86). The

allegation of the complainant in that case was the liability of the accused

which arose from a loan transaction. But the former did not produce

many materials to prove the transaction; he did not even mention in the



complaint the date on which the loan was advanced. The Supreme

Court observed:

                     "The High Court has rightly accepted the

              version given by the respondent-accused herein.

              We say so for reasons more than one. In the first

              place the story of the complainant that he

              advanced a loan to the respondent-accused is

              unsupported by any material leave alone any

              documentary        evidence that any such loan

              transaction had ever taken place. So much so, the

              complaint does not even indicate the date on which

              the loan was demanded and advanced.            It is

              blissfully silent about these aspects thereby making

              the entire story suspect. We are not unmindful of

              the fact that there is a presumption that the issue

              of a cheque is for consideration. Sections 118 and

              139 of the Negotiable Instruments Act make that

              abundantly clear.     That presumption is, however,

              rebuttable in nature. What is most important is that

              the standard of proof required for rebutting any

              such presumption is not as high as that required of

              the prosecution. So long as the accused can make

              his version reasonably probable, the burden of

              rebutting the presumption would stand discharged.

              Whether or not it is so in a given case depends

              upon the facts and circumstances of that case. It

              is trite that the courts can take into consideration


              the circumstances appearing in the evidence to

              determine whether the presumptions should be

              held to be sufficiently rebutted. The legal position

              regarding the standard of proof required for

              rebutting a presumption is fairly well settled by a

              long line of decisions of this Court."

The court further observed: "..........................the absence of any details

of the date on which the loan was advanced as also the absence of any

documentary or other evidence to show that any such loan transaction

had indeed taken place between the parties is a significant

circumstance." It held that the High Court was perfectly justified in its

conclusion that the prosecution failed to make out the case against the

accused and in acquitting him of the charge.

       22.   Suppression of the material facts in Ext P4 statutory notice

and in the subsequent complaint filed by the 2nd respondent is fatal to

her.

       23.   It was brought out in the evidence of the 2nd respondent

(PW1) that Ext P1 cheque was signed by the revision petitioner at her

residence at Pampadi on 14.9.1998. On the very same date Ext P8

undertaking also was allegedly executed by the revision petitioner. I

shall first consider the evidence regarding execution of Ext P8

undertaking.     It is on a 50 rupee (Rs.40+10) stamp paper.               PW1



deposed that when she wanted the revision petitioner to execute a

document in her favour apart from a cheque, he went out to purchase

stamp paper and came back with the stamp paper on which Ext P8 is

written. She claimed to have seen the revision petitioner signing the

document. She denied the suggestion that the signature of the revision

petitioner was obtained on blank stamp paper. Her evidence that the

revision petitioner went out to buy stamp paper and he came back with

it is false. It is seen from the endorsement on the stamp papers (40+10)

that they were purchased from a vendor at Pampadi on 9.9.1998, five

days prior to 14.9.1998 on which date the revision petitioner is shown to

have executed it. Much space has been left blank at the top of the

second sheet of Ext P8, which was necessary to accommodate the

contents on it just above the signature of the revision petitioner. It is a

sure indication that it was written up on a signed blank paper.

       24.   Ext P8 had not been produced along with the complaint. It

was produced only on the date on which the first respondent was

examined as a witness. The revision petitioner had no prior notice of its

production. A party to a proceedings has every right to know in advance

about the documents which would be tendered in evidence unless they

are sought to be used under Section 145 of the Evidence Act.

Principles of natural justice demands giving him sufficient time before



the document is tendered in evidence. The learned Magistrate should

not have allowed the first respondent to tender Ext P8 in evidence.

Admitting it is evidence without giving sufficient notice to the revision

petition caused much prejudice to him.

       25.   PW2 was examined to prove that it was he wrote Ext P8

before it was signed by the revision petition at the residence of the first

respondent. His name did not appear in the witness list appended to

the complaint. He was shown as a witness only in the witness list filed

11 days after the examination of the first respondent. He was examined

one month later.      In the evidence of the first respondent there is not

even a whisper that he is the scribe.            Moreover in the cross-

examination she made a categorical statement that the revision

petitioner wrote the document: ("gx6 &UVcfMGgM^Z dID_ DfK gI^O_

NadgMdD" U^B_f5^Im UKm .]aD_ 2M_Gm Dx_5O^O_xaKa." i.e When I

demanded execution of a document, the accused went out to purchase

stamp paper, came back with it, wrote the document and signed it). The

evidence of PW2 is false.

       26.   Coming to the execution of Ext P1 cheque, the definite case

of the 2nd respondent is that the cheque and Ext.P8 document were

executed simultaneously. But PW2 who claims to have written Ext P8

did not see execution of the cheque, for which there is no explanation.



The testimony of the second respondent (PW1) and her husband (DW1)

that they do not know who made the entires in the cheque is very

significant. Both of them would say that the revision petitioner issued a

written up cheque.

       27.   A dishonest complainant who takes a signed blank cheque

leaf from the accused or who misuses a signed blank cheque taken

from the accused by someone else would naturally disown the liability to

prove the identity of the person who entered the particulars in it stating

that the accused brought to him a written up cheque and signed it in his

presence. A judicial officer unless he has taken holidays of his common

sense can easily see through this game.

       28.   The signature in Ext P1 cheque is in one ink and all other

particulars in another ink, which suggests that the signature was put and

the entries were made not simultaneously.

       29.   If it is proved that the 1st respondent or her husband did not

have the capacity to pay Rs.1,95,000/- at the relevant time, it will make

improbable her case that she and her husband advanced that amount

as loan to the revision petitioner. Neither the first respondent, nor her

husband had a single rupee with them so that they could lend

Rs.1,95,000/- to the revision petitioner.      She (PW1) gave conflicting

statements with regard to her source in her examination-in-chief and


cross-examination.     The situation was made worse by the answers

given by PW1 in response to the leading questions put to her in the re-

examination. It is crystal clear that her evidence as to the source of

money is unbelievable. Her version that her husband borrowed Rs.1

lakh from someone for interest at 60% per annum and he took a loan of

Rs.50,000/- from her provident fund account and borrowed Rs.45,000/-

pledging her ornaments could have been easily proved by producing

documents. But that was not done. The inference is that the evidence

of the 1st respondent (PW1) and her husband (DW1) is false.

       30.   Though    the amount    covered  by   ExtP1   cheque    is

Rs.2,55,000/-, the amount allegedly paid to the revision petitioner was

only Rs.1,95,000/-, out of which Rs. 1 = lakh was paid on 9.4.1998 and

Rs.45,000/- on 8.5.1998. The excess amount of Rs.60,000/- is said to

be the interest. PW1 has no consistent case as to how the interest was

calculated. One of her versions is that Rs.60,000/- is the interest on

Rs.1 lakh for 10 months calculated at the rate of 60% per annum. The

first payment of Rs.1,50,000/- was made on 9.4.1998. The cheque is

dated 11.1.1999. The period between these two dates is only 9 months.

Her evidence that Rs.60,000/- is interest for 10 months is false. The

testimony of her husband (DW1) that Rs.60,000/- was interest on Rs.1

lakh for one year calculated at 60% per annum also is equally false for


the same reason. There is no explanation for showing the amount of

Rs.2,55,000/- in Ext P1 cheque.

       31.   Each of the facts discussed above indicates that in all

probability Ext P1 was a signed blank cheque leaf at the time of its

delivery. Even if it is taken for granted that Ext.P1 is a cheque executed

by the revision petitioner, any one of the facts and circumstances

revealed in the evidence is sufficient to rebut the presumptions under

Sections 118 and 139 NI Act. The courts below fell in error in convicting

the revision petitioner. He is entitled to acquittal.

       In the result, this Criminal Revision Petition is allowed. The order

of conviction of the revision petitioner under Section 138 NI Act and the

sentence imposed on him are set aside. He is acquitted of the said

offence.


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