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  Judgement - 10KLC-3623
 
   
   
 

Before R. Basant & M.C. Hari Rani, JJ
Friday, the 9th day of April 2010/19th Chaitra 1932

Party Array / Case No.


 IN THE HIGH COURT OF KERALA AT ERNAKULAM

Crl.Rev.Pet.No. 1186 of 2005()


1. S.DEVAN, CINE ARTIST, NO.IV,
                      ...  Petitioner

                        Vs



1. C.KRISHNA MENON, "SOWPARNIKA",
                       ...       Respondent

2. STATE OF KERALA, REP. BY

                For Petitioner  :SRI.G.JANARDHANA KURUP (SR.)

                For Respondent  :SRI.K.RAMAKUMAR (SR.)

The Hon'ble MR. Justice R.BASANT
The Hon'ble MRS. Justice M.C.HARI RANI

 Dated :09/04/2010

Judgement





     O R D E R
                  R.BASANT & M.C. HARI RANI,JJ

           ==============================

           CRL.R.P.NOS.1186, 1187,1188 & 1197 OF 2005

             ============================

             DATED THIS THE 9TH DAY OF APRIL 2010

                              ORDER

    Basant,J.

        i)Does a cheque cease to be a cheque merely because

        the drawer raises a dispute about the execution of

        the cheque and the genuineness of the signature in

        the cheque?

        ii)  Does it cease to be a cheque when a banker

        constrained to dishonour the cheque of a valued

        customer    instead  of   returning   it   with the

        endorsement that there is no sufficient funds

        includes the reason that the signature differs?

        iii) Is an obliging banker making           such an

    Crrp 1186/2005 & \connected cases     2

           endorsement to be reckoned as the final arbiter of

           culpability in a prosecution for the offence under

           Section 138 of the Negotiable Instruments Act.

          iv)    Does        not     the court have jurisdictional

          competence in a prosecution under Section 138 of

          the Negotiable Instruments Act to ascertain the real

          reason       for    the     dishonour of the    cheque

          notwithstanding the purported reasons stated by the

          Banker ?

          v)    Does the decision in Thomas Varghese v.

          P.Jerome [1992 CRI.L.J.380] require or warrant

          reconsideration?

          vi)   Is there a conflict between the decision in

          Rejikumar v. Sukumaran [2002 KHC 409] and

          the decision in M.I. Kumaran v. Abdul Karim

          and another, [2006(1)K.L.D.(Cri)811].

          2.     These interesting questions arise for consideration in

    this revision petition which has come up before us            on a

    reference by a learned single Judge, who appears to have

    doubted the correctness of the decision in Thomas Varghese

    (Supra).

    Crrp 1186/2005 & \connected cases   3

          3.     We have heard the senior Counsel Sri. G Janardhana

    Kurup for the revision petitioner/accused and Ms.Saritha David

    Chungath for the respondent/complainant.       The parties shall be

    referred to in this order            as accused and complainant

    respectively for the sake of easy reference.

          4.     The facts scenario which is not in dispute can be

    summarised as follows:

          5.     Four cheques each for Rs.5.5 lakhs marked as Ext.P1

    respectively in the four cases which have been disposed of by a

    common judgment are the subject matter of these prosecutions.

    A monetary transaction between the parties is admitted and is

    not disputed. That there is an undischarged liability for the

    accused to pay amounts to the complainant is admitted. That

    the cheques in question are drawn on cheque leaves issued by

    the Banker of the accused to the accused to operate his Bank

    account is again admitted. That the complainant is an affluent

    businessman and the accused is an educated cine artist is also

    accepted and conceded.            That there was correspondence

    between them about the discharge of the liability and time

    required for discharge of the liability is also admitted. That the

    cheques were successively presented for encashment and were

    Crrp 1186/2005 & \connected cases   4

    dishonoured is admitted.          That the cheques were finally

    presented for encashment and were dishonoured on 08/03/1999

    is also admitted. That all the four cheques were dishonoured on

    08/03/1999 on the twin grounds - "signature differs and funds

    insufficient" is again admitted. That the statutory time table has

    been scrupulously followed after that last dishonour is also

    conceded.      That there was no funds available in the account to

    honour the cheque on the date of dishonour (8/3/1999) is also

    not disputed. That the accused had come to know of the earlier

    attempts for presentation of the cheque and dishonour of the

    same prior to its final presentation is also conceded. That the

    accused had not taken any steps after coming to know of such

    earlier instances of presentation and dishonour is also not

    disputed.     Till now, no action has been     taken against the

    complainant by the accused for alleged misuse of the cheques

    and that is also not disputed.

          6.     To the controversy now. The complainant alleged

    that the cheques were issued to him for the due discharge of a

    legally enforceable debt/liability. According to the complainant,

    the accused owed an amount of Rs.20 lakhs. It was not repaid in

    time. For return of the said amount of Rs.20 lakhs along with

    Crrp 1186/2005 & \connected cases      5

    interest which was fixed at Rs.2 lakhs, four cheques each for

    Rs.5.5 lakhs (total Rs. 22 lakhs) were allegedly issued by the

    accused to the complainant.            Those cheques are marked as

    Ext.P1 (four cheques) in this prosecution.                 When the

    complainant presented the same and it was returned on the

    twin grounds referred above, the complainant suspected that the

    accused     had fraudulently affixed        a different signature with

    malicious intent to defraud him. The complainant contended

    that notwithstanding the obliging additional reason shown by

    the    banker that "the signature differs" the real reason for

    dishonour was insufficiency of funds.           The accused, on the

    contrary, took up a stand towards the fag end of the trial that

    the cheques were not issued by him to the complainant for the

    due discharge of any legally enforceable debt/liability. He took

    a stand during cross examination of PW1 and during 313

    examination that the cheque leaves were fraudulently              and

    clandestinely obtained,          his signatures were   forged in those

    cheques and those cheques were misused and presented for

    encashment before the Banker by the complainant.

          7. Separate trials commenced. The complainant was

    examined in all the four cases and documents were marked

    Crrp 1186/2005 & \connected cases   6

    separately. At that juncture, it appears, joint trial was ordered.

    The trial continued. The complainant was cross examined in

    one case after the cases were consolidated. Exts.P1 to P4 were

    marked in all the four cases. They are the cheques, memo of

    dishonour, copy of notice and reply notice respectively. Exts.P5,

    P5(a) and P6 were marked in common after the cases were

    consolidated and the consolidated trial proceeded. Exts.D1 to

    D18 were marked by the accused.             No oral evidence was

    adduced by the defence.

          8.     The courts below - the trial court and the appellate

    court, concurrently held that the complainant has succeeded in

    establishing that the cheques in question were issued by the

    accused to the complainant for the due discharge of a legally

    enforceable debt/liability. The courts came to the positive

    conclusion that the cheques were signed executed and handed

    over by the accused to the complainant. The courts further

    found that notwithstanding the further reason shown that the

    signature in the cheques differ, the real reason was insufficiency

    of funds. The courts further held that the statutory time table has

    been scrupulously followed by the complainant. In these

    circumstances,       the     courts proceeded to  hold   that   the

    Crrp 1186/2005 & \connected cases    7

    complainant has succeeded in establishing all ingredients of the

    offence under Section 138 of the Negotiable Instruments Act in

    all the four cases. Accordingly, the courts below proceeded to

    pass the impugned judgments.

          9.     Before us, the concurrent verdict of guilty, conviction

    and sentence are assailed on various grounds. We may, at the

    outset, attempt to specify the grounds of challenge. They are:



           1.The finding of fact that the cheques were written,

              signed and handed over by the accused to the

              complainant         warrants interference   invoking

              revisional jurisdiction of superintendence and

              correction.

              2.The courts below erred in invoking the power

              under Section 73 of the Evidence Act to compare

              the signatures in Ext.P1 cheques with other

              admitted signatures.

              3. The courts below erred in coming to the conclusion

              that the cheques were issued for the due discharge of a

              legally enforceable debt/liability.

              4. The courts below ought to have held that when

    Crrp 1186/2005 & \connected cases   8

              dishonour by the banker was not on one of the two

              grounds referred to in Section 138 of the

              Negotiable        Instruments Act,  no  prosecution

              whatsoever can lie against the drawer of the

              cheque.

              5. The complainant          having chosen to make

              allegations of the offence punishable under Section

              420 I.P.C. in the complaint against the accused,

              this    prosecution     under Section  138   of  the

              Negotiable        Instruments Act   is  legally  not

              maintainable.

              6. The courts below should have held that the

              prosecution is barred by limitation inasmuch as notice of

              demand had not been issued within the period

              stipulated from the date of      first dishonour on the

              ground, inter alia that the signature in the cheques

              differed.

              7.The sentence imposed is excessive.

          10. We        have     been  taken  through  the   oral  and

    documentary evidence available in the case in detail.     We have

    been taken through the complaint, answers given by the accused

    Crrp 1186/2005 & \connected cases     9

    in 313 examination and all other relevant matters. We have

    been taken through the order of reference by the learned single

    Judge also meticulously and in detail.

          11. At the very outset, we must remind ourselves of the

    nature, quality and contours of the jurisdiction of a revisional

    court. The jurisdiction of revision is essentially the power and

    the duty of superintendence and correction.        In an appropriate

    case where the concurrent findings of fact are grossly incorrect

    and perverse, nothing can stop this court from invoking the

    revisional jurisdiction         of superintendence and correction to

    interfere with such grossly erroneous or perverse findings of

    fact. It is unnecessary to refer to precedents which have been

    copiously     cited at the bar and in the order of reference to

    support the above proposition. The crucial question is whether

    the findings of fact rendered           are so grossly erroneous or

    perverse as to warrant revisional interference. While considering

    this question, no court of revision can afford to ignore the fact

    that normally respect and regard must be given to the findings of

    fact concurrently affirmed by two courts.         The trial court has

    the advantage of seeing the witnesses perform in the witness

    stand before it and that evident advantage which a trial Judge

    Crrp 1186/2005 & \connected cases   10

    has, in the matter of appreciation of evidence, cannot be lost

    sight of.



          12. Having thus reminded ourselves of the nature, quality

    and contours of the revisional jurisdiction and of the power

    which undoubtedly is available with the revisional court to

    interfere with the finding of fact which are grossly erroneous or

    perverse, we shall now consider the challenge raised on grounds

    1 to 3.

          13. It is again unnecessary to advert to precedents, it is

    by now trite and well established that the burden is on the

    complainant in a prosecution under Section 138 of the N.I.Act to

    prove his case beyond doubt as is expected             in  every

    prosecution for a criminal indictment. In the instant case, we

    have the oral evidence of PWs.1 and 2 about the execution of

    the cheques. The learned counsel for the accused contends that

    the oral evidence of PWs.1 and 2 do not deserve to be accepted

    at all. The counsel argues that PW2 was just a casual witness

    who allegedly happened to be present with the complainant

    when the cheques were allegedly handed over by the accused.

    Primarily, we have the oral evidence of PW1. His oral evidence

    Crrp 1186/2005 & \connected cases   11

    is eminently supported by his ability to produce Ext.P1 cheques

    (four in number) which are admittedly drawn on cheque leaves

    issued to the accused by his banker to operate his account. The

    oral evidence of PW1 gets further support and assurance from

    the     admitted       circumstance that there was a     financial

    transaction between the accused and the complainant.       Ext.P5

    as well as Exts.D1 to D17 eloquently declare that the oral

    evidence of PW1 that there was monetary transaction between

    the parties and that some amount remained to be paid by the

    accused to the complainant is correct.        To crown all other

    circumstances is the crucial circumstance that the accused,

    even after admittedly coming to know that cheques were

    presented before his Banker and attempt was made to collect

    amounts by presentation of such cheques remained silent, mute

    and inactive.        Admittedly, even after coming to know that

    Ext.P1 cheques had been presented         once or twice and were

    returned, dishonoured the accused did not take any steps to

    instruct his Banker to stop payment. He did not choose to call

    upon the complainant not to present the cheques. Even after

    coming to know that the cheques had been presented, accused

    had not raised a little finger against the complainant. According

    Crrp 1186/2005 & \connected cases   12

    to the accused now, the cheques were stolen from his premises.

    His inaction, even after coming to know that the stolen cheques

    were being used to withdraw the amounts from his account, is

    eloquent. All these are circumstances which must weigh with a

    prudent mind while attempting to decide whether the oral

    evidence of PW1 can be accepted or not.

          14. Of course, there is the evidence of PW2 also. The courts

    below did not find any reason to reject and discard the evidence

    of PW2. The question certainly is not whether, we, sitting as an

    original court for appreciation of facts would have chosen to

    place reliance on the oral evidence of PW2 or not. The question

    is whether        the revisional powers of superintendence and

    correction deserve to be invoked to interfere with the findings of

    fact concurrently recorded by the two courts. The courts below

    have chosen to accept and act upon the oral evidence of PW1

    which is entirely supported by the oral evidence of PW2 and we

    find that the courts below have not committed any error

    warranting revisional interference in accepting the testimony

    and recording such findings of fact. Even if the oral evidence of

    PW2 were eschewed the court below cannot be said to have

    committed any         error warranting  revisional interference in

    Crrp 1186/2005 & \connected cases   13

    choosing to accept and act upon the testimony of PW1, the

    complainant.

          15. The unsubstantiated version of the accused also does

    go a long way to assure the court about the acceptability of the

    oral evidence of PW1. According to the accused, there was a

    business transaction . He does not dispute that he had a liability

    to discharge to the complainant.       This is evident from the fact

    that Ext.P5 is not disputed. Exts.D1 to D17 also confirm that

    fact.

          16. The accused surprisingly has not chosen to specify

    what, if not Rs. 22 lakhs, is the amount, which he is legally

    liable to pay to the complainant. The accused takes a vague and

    evasive stand that there is unspecified liability to be discharged

    but the cheques were not issued by the accused to the

    complainant. The cheque leaves were stolen by the complainant

    and misused in an attempt to siphon out funds of the accused.

    That is the plea.

          17. A careful reading of Ext.P3 notice of demand and Ext.P4

    reply notice is in this context essential. Ext.P3 is a notice of

    demand issued by the counsel for the complainant on behalf of

    the complainant. Ext.P4 is reply issued by the accused himself to

    Crrp 1186/2005 & \connected cases   14

    the counsel. A total and careful reading of Ext.P4 is essential

    and when so read, no prudent mind can be left with any

    semblance of doubt that the accused did not choose to dispute

    the genuineness of the signatures in Ext.P1 cheques or the fact

    that they were handed over by the accused to the complainant.

    Of course, vague and non specific denials are also raised in

    Ext.P4. The document must and has to be read as a whole and

    when so read crucial indications are available. The accused it is

    crucial did not choose to deny the genuineness of the signatures

    in Ext.P1 cheques. The purpose for which they were handed

    over,    was of course disputed, though the existence of some

    liability was not disputed as such.        The accused took up a

    contention that he has an alias name also. Mohan and Devan are

    two names in which he holds himself out to the world. He sign

    in both names. In fact, Ext. P4 clearly shows that he receives

    cheques and drafts in both names. He maintains this stand in

    Ext.P4 and asserts that he has issued written instruction to his

    bank that he signs as Devan also.      In the four cheques (Ext.P1),

    he has signed as Devan. The complainant in Ext.P3 in the wake

    of dishonour on the ground of "signature differs" also had raised

    an allegation that he had signed differently in the cheques

    Crrp 1186/2005 & \connected cases   15

    maliciously to defraud the complainant. It is in reply to that,

    that the complainant had asserted in Ext.P4 that he used to sign

    in both manner and bank has been informed of such course of

    conduct adopted by him.

          18. In Ext.P4, it is significant that the accused did not raise

    a contention that the cheques were fraudulently, clandestinely

    and in a malafide manner removed by the complainant from the

    possession of the accused. But surprisingly in the course of the

    trial, we find such a case being advanced. Less said about this

    weired contention raised by the accused belatedly towards the

    fag end of the trial, the better. A prudent person cannot for a

    moment accept this bizarre contention advanced by the accused

    towards the later stage of the trial.         Ext.P4, to our mind,

    eloquently conveys that this defence sought to be urged in the

    course of the trial cannot stand scrutiny of a reasonable and

    prudent mind.

          19. The courts below, in an attempt to appreciate the

    evidence of Pws.1 and 2 that the accused had signed the cheques

    in their personal presence, did look into the admitted signatures

    of the accused otherwise available and the signatures in Ext.P1

    cheques.      It is argued that the courts below totally erred in

    Crrp 1186/2005 & \connected cases   16

    resorting to this course. Precedents are relied on.

          20. We find it unnecessary to refer specifically to Section

    73 of the Evidence Act which undoubtedly clothes a court with

    the requisite powers and the court below cannot be found fault

    with at all for referring to and comparing the admitted

    signatures and the signatures in Ext.P1 in an attempt to

    ascertain whether the oral evidence of PWs.1 and 2 about the

    execution of the cheques can be accepted. It is of course true

    that when there is a serious dispute, courts should not arrogate

    to themselves the power to decide and determine the

    genuineness of signatures, handwritings and thump impressions

    without expert opinion by its own naked eye comparison. The

    court may be referred to as the expert of experts, but no finding

    of a court should ordinarily rest solely on the comparison made

    by the court under Section 73 of the Evidence Act in the absence

    of evidence of any expert.

          21. That is not the situation     in the facts of the instant

    case. The court did not choose to peruse the documents and

    venture an opinion under Section 73 of the Evidence Act at all.

    Forced to choose between the version of the complainant and

    the stand taken by the accused, the court was obliged to decide

    Crrp 1186/2005 & \connected cases   17

    whether the oral evidence of PW1 and of course PW2 can be

    accepted or not. It is for this purpose that the courts below

    referred to the admitted and disputed signatures and came to

    the conclusion that the oral evidence of PWs.1 and 2 can be

    preferred to the belated stand/version taken by the accused in

    the course of trial and which was not taken in Ext.P4 notice.

          22. It is then contended that an application filed by the

    accused to send the cheques to the expert before the appellate

    court was not allowed. The appellate court should have invoked

    its power under Section 391 Cr.P.C. to forward the cheques to

    the expert and secure expert opinion, it is contended.        One of

    the    easiest ways to secure protraction of trial is to make a

    request to send the cheques to the expert. Every such request

    will not be automatically and        ritualistically be accepted and

    allowed by a Judge. Sufficient and satisfactory reasons must be

    shown to exist to justify such reference to an expert. In the

    instant case the accused had not made any such request before

    the trial judge. The totality of the circumstances to which we

    have already referred, particularly the fact that there is no

    specific denial of the genuineness of the signatures in Ext.P1 in

    Ext.P4 - nay there is a veiled admission also, does            show

    Crrp 1186/2005 & \connected cases    18

    convincingly that the request to forward the cheques to the

    expert at the appellate stage was not bona fide or acceptable.

    We are unable to agree that the lower (appellate) court has

    committed any error in not forwarding the cheques to the expert.

    That would have been an unnecessary and                  meaningless

    exercise, according to us. The mere fact that the Banker had

    included the reason that the signatures differed (not even that

    the signatures do not appear to be genuine) is, according to us,

    too feeble and unacceptable a reason to persuade us to find

    fault with the appellate court for not invoking such powers under

    Section 391 Cr.P.C.

                 23. It is next contended that at any rate it has not

    been established that the cheques had been issued for the due

    discharge of a legally enforceable debt/liability.         We have

    already concurred with the conclusions of the courts below that

    the cheques were signed, executed and handed over by the

    accused to the complainant. It is not the law at all that in a

    prosecution under Section 138 of the Negotiable Instruments

    Act, the complainant must establish the original cause of action

    in meticulous details.         That is precisely why the presumption

    under Section 139 of the Negotiable Instruments Act has been

    Crrp 1186/2005 & \connected cases    19

    incorporated in addition to the presumption under Section 118 of

    the Evidence Act which was already there. It is unnecessary

    to refer to the various precedents that have been cited at the

    Bar. We need only reiterate that once the signature, execution

    and handing over of the cheque is satisfactorily proved by the

    evidence by the complainant, presumption under Section 139 of

    the N.I. Act comes into play and the same holds the field until

    the accused discharges the burden on him at least            by the

    inferior    standard      of    preponderance of possibilities and

    probabilities as applicable in a civil case.

          24. Exts.D1 to D17 produced by the complainant

    themselves show that there has been a monetary transaction

    between the parties and there was liability for the accused to the

    complainant. Last trace of doubt, if any on this aspect is sought

    to be set at rest by the complainant by the proof of Ext.P5

    which is not disputed at all. This, therefore, is an eminently fit

    case where the presumption under Section 139 of the N.I. Act

    must come into play . The onus must switch to the accused to

    discharge his burden.

          25. The learned counsel for the accused laboriously

    contends that there has been an inconsistency/incongruity

    Crrp 1186/2005 & \connected cases   20

    between the precise nature of the liability averred in the

    complaint and the nature of liability which was sought to be

    proved by evidence in the course of trial. In the notice and in

    the complaint, it was averred that an amount of Rs.20 lakhs had

    been borrowed by the accused from the complainant as a loan.

    But Exts.D1 to D17 as also the evidence tendered in the case

    show that it was not a pure and simple transaction of borrowal of

    money.

          26. This must persuade this Court to throw overboard the

    entire case of the complainant, it is contended.

          27. It is true that the averments in the notice and the

    complaint did not advert to the details. But the case of the

    complainant is clear. There was a proposal to make a film by

    name Bhadram. This project was sought to be undertaken by the

    parties.    The project did not come through.    There was an

    agreement that for a total amount of Rs.20 lakhs, the project

    shall be taken over by the accused. It is for discharge of this

    liability that this amount of Rs.20 lakhs was agreed to be paid.

    This included the amounts which the complainant had already

    paid to    various persons. The nature of the transaction is now

    clear from the evidence of the complainant (PW1) and

    Crrp 1186/2005 & \connected cases   21

    Exts.D1 to D17. In any view of the matter, notwithstanding the

    innocuous inconsistency between the real nature of the

    transactions and the pleadings in the complaint and the notice,

    we are unable to agree that the burden on the accused under

    Section 139 of the N.I. Act has been discharged.

          28. We are in ready agreement that the accused is not

    bound to adduce any defence           evidence. Under Section 315

    Cr.P.C, the non-examination of the accused cannot even be

    commented by the adjudicator. But the burden rests squarely on

    the shoulders of the accused. Once the presumption under

    Section 139 comes into play, that burden, we must hold, has to

    be discharged by the accused.              The alleged innocuous

    incongruity pointed out between the pleadings and the precise

    nature of the transaction proved is not sufficient to discharge the

    burden. We do, in these circumstances, come to the conclusion

    that the finding of the court below that the cheques were signed,

    executed and handed over by the accused to the complainant,

    that they were issued for the due discharge of a legally

    enforceable debt/liability and that the presumption under

    Section 139 of the Negotiable Instruments Act has not been

    rebutted by the accused are eminently correct and the same do

    Crrp 1186/2005 & \connected cases     22

    not warrant interference. The challenge on grounds 1 to 3 is

    thus rejected.

          29. We now come to the question of law raised. That is

    the 4th ground of challenge. The learned counsel contends that

    the banker having chosen to dishonour the cheques on the twin

    grounds, i.e. "signatures differ and funds insufficient", section

    138 of the Negotiable Instruments Act can have no application

    at all.      According to the learned counsel, the Banker's

    endorsement is of crucial relevance. The cheques having been

    returned for the reason that the signatures differ, the cheques

    cannot be reckoned as cheques at all. In order to be a cheque,

    the instrument must be a Bill of Exchange. In order to be a Bill

    of Exchange, it must bear the signature of the drawer. Inasmuch

    as the Bank has returned the cheques with the endorsement

    that the signature of the drawer differs, the cheques cannot be

    reckoned as cheques and the              consequent dishonour is not

    dishonour of a cheque.           At any rate it is not the dishonour for

    the reasons contemplated under Section 138 of the Negotiable

    Instruments Act.       Counsel contends that in these circumstances

    the dishonour of the cheques for the reason that the signatures

    differ also cannot attract culpability under Section 138 of the

    Crrp 1186/2005 & \connected cases   23

    Negotiable Instruments Act.

          30. We think that the question has already been concluded

    by binding decisions of courts. The Supreme Court in the

    decisions in Goaplast Pvt.Ltd. v. Chico Ursula D'Souza,

    [2003(2)K.L.T.16(SC) and N.E.P.C.Micon Ltd. v. Magma

    Leasing Ltd.,A.I.R.1999 S.C.1952. has taken the view that

    notwithstanding the fact that where cheques were dishonoured

    for the reasons "stop payment" and "account closed", it is open

    to the court to come to a finding that the real reason was

    insufficiency of funds and consequently conviction can be

    entered under Section 138 of the Negotiable Instruments Act.

    A Division Bench of this Court in Thomas Varghese (supra)

    has proceeded to observe as follows in paragraph 6:

                      " 6 From the argument advanced by

                      the learned counsel representing the

                      petitioner, it would appear that an

                      offence under S.138 of the Act should

                      depend on the endorsement made by

                      the banker while returning the cheque

                      unpaid, i.e.only when the banker

                      makes      an   endorsement that  the

    Crrp 1186/2005 & \connected cases    24

                      amount of money        standing to the

                      credit of the account of the drawer is

                      insufficient to honour the cheque or

                      that it exceeds the amount arranged to

                      be paid from that account by an

                      agreement made with that bank can an

                      offence under S.138 of the Act be

                      made out. According to us, such an

                      approach will defeat the very purpose

                      of the enactment. The offence under

                      the Section      cannot depend on the

                      endorsement made by the banker

                      while       returning   the     cheque.

                      Irrespective of the endorsement made

                      by the banker, if it is established that

                      in fact the cheque was returned unpaid

                      either     because the amount of the

                      money standing to the credit of the

                      account of the drawer is insufficient to

                      honour the cheque or that it exceeds

                      the amount arranged to be paid from

    Crrp 1186/2005 & \connected cases   25

                      that account by an agreement made

                      with that bank, the offence will be

                      established. The endorsement made by

                      the banker while returning the cheque

                      cannot be the decisive factor."

                            (emphasis supplied)

          31. Though the law has been so stated         clearly in this

    decision, the learned counsel for the petitioner contends that

    this does not represent the correct law. According to          the

    learned counsel, when the Banker returns the cheques for the

    reason that the signatures differ, these principles cannot apply

    and the cheques must be held to be not cheques and culpability

    under Section 138 of the Negotiable Instruments Act cannot be

    attracted. It is contended that in Thomas Varghese (supra),

    the Division Bench had not considered the question as to what

    would happen when the cheques are not cheques at all for the

    reason that the signatures appearing on the cheques are not that

    of the accused.

          32. We have no hesitation to agree straight away that if it is

    proved that the signatures are not genuine and there has been

    no valid execution, the cheques will be no cheques at all and

    Crrp 1186/2005 & \connected cases   26

    consequently culpability under Section 138 of the Negotiable

    Instruments Act will not be attracted. But the crucial question is

    whether that contention can be accepted.         The very important

    question is whether that question can be decided by the court or

    the court must reckon itself as a prisoner of the endorsement

    made by the Banker.

          33. In this context we feel that reference to paragraph 3 of

    M/s.Dalmia Cement(Bharat) Ltd. v. M/s.Galaxy Traders and

    Agencies Ltd., [A.I.R.2001 S.C.676]

                "3. The act was enacted and section 138

          hereof incorporated with a specified object of making

          a special provision by incorporating a strict liability

          so far as the cheque, a negotiable instrument, is

          concerned.          The    law relating to    negotiable

          instrument is the law of commercial world legislated

          to facilitate the activities in trade and commerce

          making      provision      of giving  sanctity  to  the

          instruments of credit which could be deemed to be

          convertible into money and easily passable from one

          person to another.           In the absence of such

          instruments, including a cheque, the trade and

    Crrp 1186/2005 & \connected cases    27

          commerce activities, in the present day would, are

          likely to be adversely affected as it is impracticable

          for the trading community to carry on with it the bulk

          of the currency in force. The negotiable instruments

          are in fact the instruments of credit being convertible

          on account of legality of being negotiated and are

          easily passable from one hand to another. To achieve

          the objectives of the act, the legislature has, in its

          wisdom, thought it proper to make such provisions in

          the act for conferring such privileges to the

          mercantile instruments contemplated under it and

          provide special penalties and procedure in case the

          obligations      under     the   instruments   are   not

          discharged.       The laws relating to the Act are,

          therefore, required to be interpreted in the light of

          the objects intended to be achieved by it despite

          there being deviations from the general law and the

          procedure provided          for  the  redressal  of the

          grievances to the litigants.       Efforts to defeat the

          objectives of law by resorting to innovative measures

          and methods are to be discouraged, lest it may affect

    Crrp 1186/2005 & \connected cases    28

          the commercial and mercantile activities in a smooth

          and    healthy     manner,     ultimately affecting the

          economy of the country."




          34. It is common knowledge that a Banker will be

    interested in protecting a valued customer of his. The Banker

    may not readily make an endorsement that the funds are

    insufficient.     Expressions "refer to drawer" etc. are skilfully

    employed by the Banker to avoid inconvenience to a valued

    customer even when funds are insufficient. Culpability under

    Section 138 of the Negotiable Instruments Act cannot obviously

    be left entirely to the Banker who makes the endorsement while

    dishonouring the cheques.           The court in order to effectively

    implement the scheme             under Section 138 of the Negotiable

    Instruments Act must reserve for itself, the power to decide the

    real reason that prompted the banker to dishonour the cheques.

    The reason given by the banker may be relevant. But it is for

    the court on the basis of the materials available before it come to

    a definite conclusion as to what was the actual and the real

    cause for dishonour. It is in this context that the courts will be

    Crrp 1186/2005 & \connected cases   29

    obliged, notwithstanding the nature of the endorsements made

    by the banker, to go into the question and decide what the real

    cause of dishonour is. We have already come to the conclusion

    while discussing grounds 1 to 3 that in this case the cheques

    bear the genuine signatures of the accused.              In these

    circumstances, the mere fact that the obliging banker had added

    one more convenient reason cannot be permitted to frustrate

    and stultify      the    working of the legislative scheme  under

    Section 138 of the Negotiable Instruments Act. This contention

    that the endorsement by the banker has to be treated as

    sacrosanct and the court is bound to accept the same cannot be

    accepted at all.

          35. In the order of Reference, we find that the decision of a

    learned single Judge in Rejikumar v. Sukumaran [2002 KHC

    409] has been referred to. That was a case where the cheque

    was dishonoured on the ground of insufficiency of funds.

    Notwithstanding such dishonour and notwithstanding the fact

    that notice of demand did not evoke any reply, the learned Judge

    accepted the contention of the accused that the signature in the

    cheque was not genuine or true. There was evidence in that

    case to show that the signature was not genuine or true. It is in

    Crrp 1186/2005 & \connected cases   30

    that context the court observed that where       the cheque was

    dishonoured on the ground that the signature differ (which

    contention was found to be correct by the court) culpability

    under Section 138 of the Negotiable Instruments Act will not be

    attracted.     That decision cannot and does not lay down any

    proposition contrary to what has been laid down by the Division

    Bench in Thomas Varghese (supra).              We have already

    extracted the relevant passage in Thomas Varghese (supra)

    which shows that irrespective of the reasons assigned by the

    banker, the real reason for the dishonour can be and has to be

    ascertained by the court. That is what happened in Rejikumar

    (supra).       Notwithstanding the fact that the cheque was

    dishonoured on the ground of insufficiency of funds, the court in

    that case held that the real reason for the dishonour must be

    held to be the non genuine signature.         Rejikumar(supra)

    cannot hence help the revision petitioner.

          36. Our attention has also been drawn to the two decisions

    of    learned single Judges of this Court,        Hon'ble Justice

    K.R.Udayabhanu in M.I.Kumaran v. Abdul Karim and

    another, 2006 (1)KLD 811 and                  Hon'ble Mr.Justice

    M.Sasidharan        Nambiar      in the unreported judgment    in

    Crrp 1186/2005 & \connected cases   31

    Crl.A.No.483/1999 have held that the dishonour by the banker

    with the      endorsement "signature differs" cannot clinch the

    issue.    Both the learned Judges have chosen to follow the

    decision of the Division Bench in Thomas Varghese (supra).

    In Rejikumar(supra), no reference is seen made to the decision

    in Thomas Varghese (supra) . In any view of the matter, we

    are satisfied that the dictum in       Thomas Varghese (supra)

    covers the issue squarely. We are in complete agreement with

    the said dictum and we find no reason to refer to the question

    to a larger Bench.

          37. We do in these circumstances reiterate the law thus. If

    the signature in the cheque is proved to be not genuine, the

    instrument      cannot be reckoned as a cheque and the same

    cannot attract culpability under Section 138 of the Negotiable

    Instruments Act.        But the decision as to whether the signature

    is genuine and whether the execution is proved will have to be

    taken by a court, the mere fact that the banker returns the

    cheque for the reason that the signature differs is no reason for

    the court to mechanically swallow that reason. The courts are

    obliged to consider whether the real reason for dishonour is

    insufficiency of funds or not.      We may at the risk of repetition

    Crrp 1186/2005 & \connected cases   32

    proceed to reiterate that if as a matter of fact the signatures are

    not genuine and the court finds so, needless to say    Section 138

    of the N.I. Act would not apply.       But the endorsement by the

    banker is not conclusive. The court will have to ascertain the

    real reason.        The challenge on this ground is in these

    circumstances, rejected.

    Ground No.5.

          38. It is contended that the complainant having already

    alleged in the complaint that the accused had cheated him and

    has committed an offence under Section 420 I.P.C. by signing

    differently in Ext.P1 cheques, this prosecution under Section

    138 of the Negotiable Instruments Act would not lie. We are

    unable to accept this contention at all. In fact a careful reading

    of the notice of demand and pleadings of the complainant clearly

    show that the signatures were affixed by the accused in the

    presence of the complainant.         When the Banker returned the

    same with such endorsement that the signatures differ also, the

    complainant apprehended that the accused must have signed

    differently to defraud him. This in its crux is the allegation. It

    will be totally incorrect to say that the complainant had admitted

    that the signatures were not genuine. Such a specific pleading

    Crrp 1186/2005 & \connected cases   33

    is not available at all. In the facts and circumstance of this case,

    the mere fact that in the notice and in the complaint,           the

    complainant alleged mala fides, fraud and an intention on the

    part of the accused to cheat the complainant, cannot in any way

    militate against the        maintainability of the prosecution under

    Section 138 of the Negotiable Instruments Act.         The challenge

    on the 5th ground also therefore fails.

    Ground No.6.

          39. It is contended with the help of the decision of the

    Karnataka         High        Court        in    Nanjundappa      v.

    Hanumantharayappa [2008(2)K.L.T.851] that when the

    dishonour is on the ground          of   "account closed" and   "the

    signature differs", the period of limitation must start running

    from the date of initial presentation. Subsequent presentation

    cannot give a renewed lease of life for the cause of action,

    contends the learned counsel.

          40. We have gone through the decision in Sadanandan

    Bhadran v. Madhavan Sunil Kumar (1998(2) K.L.T. 765

    (S.C) which has clearly held that successive presentation within

    the permissible period of time is justified and can be resorted to.

    The cause of action for prosecution can arise only when a notice

    Crrp 1186/2005 & \connected cases   34

    of demand is issued. Till then within the period permitted by

    Section 138 of the Negotiable Instruments Act, any number of

    re-presentations can be done.         We are unable to accept the

    general statement made in Nanjundappa (supra) that in such

    a case the prosecution must be held to be barred by limitation, if

    notice of demand is not given within the stipulated period from

    the date of the original dishonour of the cheque. In the instant

    case, we find that it is the specific case of the complainant that

    initial dishonour on the twin grounds was conveyed to the

    accused and the accused wanted the complainant to represent

    such cheques for encashment. In any view of the matter, we are

    unable to agree that the mere fact that "signature differs" was

    one of the reasons for dishonour of the cheque is sufficient to

    conclude that the period of limitation will start even before the

    cause of action has arisen as per the decision in Sadanandan

    (supra).          We respectfully disagree with the dictum in

    Nanjundappa (supra). The challenge on the sixth ground also

    therefore fails.

          Ground No.7

          41. The learned counsel for the petitioner contends that the

    sentence imposed is excessive.         Simple imprisonment for a

    Crrp 1186/2005 & \connected cases   35

    period of one month and fine of Rs.6 lakhs is the sentence

    imposed in each case. The learned counsel prays that leniency

    may be shown on the question of sentence and the substantive

    sentence of imprisonment may be avoided.

          42. The cheques in the instant case         bear the date

    10/9/1998. A period of about 12 years has elapsed from the date

    of the cheques. The complainant has been compelled to fight

    three rounds of legal battle by now.    The cheques were for an

    amount of Rs.5.5 lakhs each. The complainant has been waiting

    in the queue for justice for the past about 12 years. In the

    decision in Anil Kumar v. Shammy [2002(3)K.L.T.852] one

    of us had adverted to the principles governing the imposition of

    sentence in a prosecution under Section 138 of the Negotiable

    Instruments Act. Section 138 of the Negotiable Instruments Act

    was brought into the statute book in 1988. During the initial

    period of enforcement of this new law, we agree with the learned

    counsel for the petitioner that a deterrent, substantive sentence

    of imprisonment can be avoided. It must be zealously insisted

    that the complainant is adequately compensated. It is submitted

    that the civil court is already seized of the matter and a decree

    as prayed for has been granted in favour of the complainant.

    Crrp 1186/2005 & \connected cases   36

    The amount has not been paid so far, it is submitted. The matter

    is pending in appeal, it is reported.        Taking all the relevant

    circumstances, we are satisfied that leniency can be shown on

    the question of sentence zealously insisting at the same time that

    the complainant is fairly and justly compensated. The judgment

    has been rendered by the Additional Chief Judicial Magistrate

    who has unlimited pecuniary jurisdiction for imposition of fine.

    We are satisfied that the fine amount can be enhanced.

    Direction under Section 357(1) Cr.P.C. can also be modified and

    justice can thus be achieved in the facts and circumstances of

    the case.



          43. In the result:

          a)     these revision petitions are allowed in part.

           b)    The impugned verdicts of guilt and convictions

           of the petitioner in all the four cases under Section

           138 of the Negotiable Instruments Act are upheld.

           c)    But the sentence imposed is indulgently

           modified and reduced. The substantive sentences of

           imprisonment imposed on the petitioner/accused in

           all the cases are set aside. The sentences of fine

    Crrp 1186/2005 & \connected cases   37

           imposed are modified.

           d)    The revision petitioner is sentenced in all the

           four cases to pay a fine of Rs.7,50,000/- (Rupees

           seven lakhs and fifty thousand only) each and in

           default     to undergo simple imprisonment for a

           period of three months each. If the fine amount is

           realised, an amount of Rs.7.4 lakhs in each case

           shall   be        released  to  the   complainant    as

           compensation under Section 357(1) Cr.P.C. Of this,

           the amount of Rs.5.5 lakhs each shall be credited to

           the principal amount due under the cheques. Out of

           the balance amount, an amount of Rs.1.5 lakhs each

           shall be credited towards the interest payable. The

           balance shall be credited as costs and expenses

           incurred      for the prosecution of these three tier

           criminal proceedings.      The revision petitioner shall

           have time till 1/6/2010 to make payment and avoid

           execution of the default sentence. If the fine amount

           is not paid on or before that date, the courts below

           shall immediately proceed to execute the default

           sentence.      Needless to say, the amounts so paid

    Crrp 1186/2005 & \connected cases   38

           under Section 357(1) Cr.P.C shall be given due

           credit if the civil Court's decree is confirmed and

           attempt is made to execute that decree.



          44. It is submitted that an amount of Rs.10 lakhs is lying in

    deposit before the court below which was deposited by the

    revision petitioner as per interim orders passed by this Court.

    The said amount shall forthwith be released to the complainant.

                                                Sd/-

                                          R. BASANT, JUDGE



                                                Sd/-

    ks.                                 M.C. HARI RANI, JUDGE



                        TRUE COPY



                              P.S. TO JUDGE

    Crrp 1186/2005 & \connected cases   39




     
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