Kerala High Court
Balakrishnan vs Shaniba Snehajan on 26 September, 2017
Author: Alexander Thomas
Bench: Alexander Thomas
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS
TUESDAY, THE 26TH DAY OF SEPTEMBER 2017/4TH ASWINA, 1939
CRL. APPEAL No. 676 of 2017 ()
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Crl.L.P.256/2017 of HIGH COURT OF KERALA
C.C.23/2016 OF FIRST CLASS JUDICIAL MAGISTRATE-II,
CHAVAKKAD, THRISSUR
APPELLANT(S)/COMPLAINANT:
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BALAKRISHNAN,
S/O KOCHUNNY, KANDAMPULLY HOUSE,
KARIYANNOOR, KANDANASSERY P.O.,
TALAPPILLY-680 102.
BY ADV. SRI.P.RAMACHANDRAN
RESPONDENT(S)/ACCUSED & STATE:
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1. SHANIBA SNEHAJAN,
W/O SNEHAJAN, VALIYAKATH HOUSE,
IRINGAPURAM P.O.,
CHAVAKKAD-680 103.
2. STATE OF KERALA,
REPRESENTED BY THE PUBLIC PROSECUTOR,
HIGH COURT OF KERALA,
ERNAKULAM, KOCHI-31.
R1 BY ADVS. SRI.G.SREEKUMAR (CHELUR)
SRI.K.R.ARUN KRISHNAN
R2 BY PUBLIC PROSECUTOR SRI. SAIGI JACOB PALATTY
THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD
ON 26-09-2017, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
EL
ALEXANDER THOMAS, J.
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Crl.A.No.676 Of 2017
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Dated this the 26th day of September, 2017.
J U D G M E N T
The complainant in C.C.No.23/2016 on the file of the Judicial First Class Magistrate Court-II, Chavakkad, is the appellant herein. The 1st respondent has been indicted for the offence punishable under Sec.138 of the N.I. Act in the above said complaint. Ext.P-1 dishonoured cheque dated 30.5.2015 is for Rs.1 lakh. The trial court as per the impugned judgment dated 16.5.2017 had acquitted the accused mainly on the ground that the appellant/complainant has failed to prove the crucial factum of dishonour of the cheque inasmuch as he had not marked the dishonour memo issued by the drawee bank in evidence. Being aggrieved by the said judgment of acquittal, the appellant had preferred Criminal Leave Petition No.256/2017 seeking Special Leave of this Court under Sec.378(4) of the Cr.P.C so as to file Criminal Appeal to impugn the said judgment of acquittal. This Court as per order dated 18.7.2017 had allowed the said plea and had ::2::
Crl.A.No.676 Of 2017 granted Special Leave to the petitioner. It is thereafter that the petitioner has instituted the present appeal so as to impugn the above said judgment of acquittal.
2. Heard Sri.P.Ramachandran, learned counsel appearing for the appellant-complainant, Sri.G.Sreekumar (Chelur), learned counsel appearing for the 1st respondent-accused and Sri.Saigi Jacob Palatty, learned Prosecutor appearing for R-2 State.
3. The brief of the allegations in the complaint is to the effect that the complainant and accused were acquainted with each other and in view of the said circumstances, the accused had requested for a personal loan of Rs.1 lakh and accordingly on 20.4.2015, the complainant had advanced an amount of Rs.1 lakh to the accused on the assurance that the amount will be repaid within one month and when the amount was demanded the accused had come over to the residence of the complainant and in discharge of the said liability he had issued Ext.P-1 cheque dated 30.5.2015 for Rs.1 lakh drawn from the Federal Bank, Chowalloorpadi Branch, in favour of the complainant. The cheque was sent for collection to the complainant's bank (Syndicate Bank, Guruvayoor Branch), and the factum of dishonour by the drawee ::3::
Crl.A.No.676 Of 2017 bank was intimated to the petitioner as per Ext.P-2 cheque return memo dated 2.6.2015 issued by the complainant's collection bank (Syndicate Bank, Guruvayoor), and thereupon the complainant issued Ext.P-3 statutory demand notice dated 9.6.2015 calling upon the accused to pay the amount covered by the cheque within 15 days of receipt of the said notice and that the said notice send by registered post was duly received by the accused as evident from Ext.P-4 postal receipt dated 12.6.2015 and Ext.P-5 postal acknowledgement card dated 16.6.2015. The accused had not responded to the statutory demand notice. Since the amount was not paid, the complainant had instituted the present complaint which led to the conduct of the trial. During the trial, complainant was examined as PW-1 and marked Exts.P-1 to P-5 documents. The defence had not adduced any oral or documentary evidence. The trial court as per the impugned judgment dated 16.5.2017 had acquitted the accused solely on the ground that the complainant has failed to prove the factum of dishonour of the cheque by the drawee bank (Federal Bank, Chowalloorpadi Branch) inasmuch as the complainant had not marked in evidence the dishonour memo, which is said to have been issued by the drawee bank. In view of these ::4::
Crl.A.No.676 Of 2017 aspects, the trial court has taken the view that since the complainant has failed to mark in evidence the dishonour memo issued by the drawee bank, he has failed to prove the crucial factum regarding the dishonour of the cheque by the drawee bank and therefore the accused is entitled for the benefit of acquittal. It is common ground that the appellant-complainant had produced and marked as Ext.P-2 cheque dishonour memo, which was issued by the complainant's collection bank, viz., Syndicate Bank, Guruvayoor Branch. The main point to be decided in this appeal is as to the correctness or otherwise of the said finding made by the trial court. The first page of Ext.P-2 is the memo dated 5.6.2015 issued by the complainant's collection bank (Syndicate Bank, Guruvayoor Branch), whereby the appellant-complainant has been intimated that the cheque presented by him bearing No.10157731 dated 30.5.2015 for Rs.1 lakh has been dishonoured by the drawee bank concerned in view of the reason intimated to the Central Account Office of the collection bank through the CTS (Cheque Truncation System) inward return report received as on 2.6.2015. The 2nd page of Ext.P-2 is the above referred CTS inward report of the Central Account Office at Chennai of the Syndicate Bank. Therein it is intimated that the ::5::
Crl.A.No.676 Of 2017 above said cheque for Rs.1 lakh has been returned as per CTS system with the reason "funds insufficient". It is contended by Sri.P.Ramachandran, learned counsel appearing for the appellant/complainant that at any point of time during the trial has the accused raised any challenge as against the factum of dishonour of the cheque during cross-examination of PW-1. That PW-1 had tendered evidence and had also marked Ext.P-2 documents as referred to hereinabove and the marking and admissibility of the said evidence has never been objected to by the accused. Moreover, during the cross- examination of PW-1, not even a remote suggestion has been put forward by the learned counsel appearing for the defence so as to even indirectly challenge the factum of dishonour of the cheque as stated in the evidence given in examination in chief (by proof affidavit) of PW-1. Therefore, it is argued by the appellant's counsel that since no challenge whatsoever has been raised by the accused as against the crucial factum of dishonour of cheque, it is only to be treated that the accused has accepted the above said evidence given by PW-1 regarding the dishonour of the cheque and that in such a scenario it was not right and proper for the trial court to have unilaterally taken the above said issue for ::6::
Crl.A.No.676 Of 2017 consideration. Further, it is pointed out that during the time of arguments before the trial court, counsel for the accused has never appraised any such arguments before the trial court and that the said issue has been so unilaterally taken by the trial court, etc.
4. On a consideration of this issue, this Court is of the considered view that the matter in issue on this aspect of the matter is fully covered in favour of the appellant in view of the dictum laid down in the judgment dated 21.7.2017 in Crl.M.C.No.1240/2017.
5. It is by now well settled by virtue of the legal principles laid down by the Three-Judge Bench decision of the Apex Court in Dasarath Rupsingh Rathod v. State of Maharashtra & anr., reported in (2014) 9 SCC 129, that time and place of the commission of the offence punishable under Sec.138 of the N.I. Act is the time and place where the dishonour of the cheque occurs [see paras 18 - 21 of the aforecited D.R.Rathod's case (supra)]. Of course, such an offence becomes a prosecutable one only after the complainant follows statutory demand notice in terms of Sec.138(b) of the N.I. Act and other formalities stipulated in the provisos to that section. Proviso (a) to Sec.138 of the N.I. Act mandates that cheque should have been presented to the bank within a period of 6 months from the date on which it is drawn or within the period of its validity, whichever is earlier.
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Crl.A.No.676 Of 2017 It is now common ground that the Reserve Bank of India has issued notification dated 4.11.2011 with effect from 1.4.2012, whereby it has been held that the validity period of the cheque will henceforth be only three months and this notification has been issued by the Reserve Bank of India in exercise of the enabling powers conferred by Sec.35A r/w Sec.56 of the Banking Regulations Act, 1949. It has been held by the Apex Court in the decisions as in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd., reported in 2001 (3) SCC 609 and Rameshchandra Ambalal Joshi v. State of Gujarat and another, reported in (2014) 11 SCC 759, that the time prescribed for presenting the cheque within the validity period is to be adjudged at the point of time of the presentation of the cheque at the drawee Bank. It is also relevant to note that an amendment has been introduced to Chapter XXVII of the Negotiable Instruments Act by inserting Sec.146 thereof with effect from 6.2.2003 which reads as follows :
"146. Bank's slip prima facie evidence of certain facts : - The Court shall, in respect of every proceeding under this Chapter, on production of Bank's slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved."
6. The definition of "cheque" referred to in Sec.6 of the Negotiable Instruments Act has been amended by Amendment Act 26 of ::8::
Crl.A.No.676 Of 2017 2015 as per Section 2(i) thereof with effect from 15.6.2015 and the provisions of Section 6 of the Negotiable Instruments Act as it stands now to the said amendment reads as follows :
"6. Cheque : - A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. Explanation I:-For the purposes of this Section, the expressions -
(a) "a cheque in the electronic form" means a cheque drawn in electronic form by using any computer resource and signed in a secure system with digital signature (with or without biometrics signature) and asymmetric crypto system or with electronic signature, as the case may be ;
(b) "a truncated cheque" means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the Bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.
Explanation II.- For the purposes of this Section, the expression "clearing house" means the clearing house managed by the Reserve Bank of India or a clearing house recognised as such by the Reserve Bank of India. Explanation III.- For the purposes of this Section, the expressions "asymmetric crypto system", "computer resource", "digital signature", "electronic form" and "electronic signature" shall have the same meanings respectively assigned to them in the Information Technology Act, 2000 (21 of 2000)."
7. The statement of objects and reasons of the Negotiable Instruments (Amendment) Bill, 2015, Bill No.151 of 2015 would show that Explanation I has been introduced under Sec.6 of the N.I.Act relating to meaning of the expression "a cheque in the electronic form" as the said meaning is found to be deficient because it presumes the ::9::
Crl.A.No.676 Of 2017 drawing of a physical cheque, which is not the objective in preparing "a cheque in the electronic form" and inserting a new Explanation III in the said Section giving reference to the expressions contained in the Information Technology Act, 2000.
8. It is also brought to the notice of this Court that the current cheque clearing mechanism in banks does not involve physical movement of cheques from one location to another. The cheques, which are presented by the payee before the branch of his collection bank, remain with that branch concerned of the payee's collection bank, where it is presented and an image of the cheque is captured and the same is transmitted through an electronic/digital grid to the branch of the drawee Bank concerned. The cheques are then cleared through a straight through process and debited to the account of the drawer. The proceeds are then digitally transmitted to the collection bank concerned, which through another straight through process credits to the account of the payee. This process is carried out by "Cheque Truncation" and hence banks have now provided their customers with CTS (Cheque Truncation System) cheques. The CTS cheques carry a rectangular encryption in the bottom left side. This enables the scanner to decipher ::10::
Crl.A.No.676 Of 2017 the bank and the branch, for transmissions electronically. With the introduction of the Core Banking Solutions, banks have now done away with the concept of customer of a specific branch and instead, the customer is for the bank and customer may transact through any branch of the bank, save for certain restrictions on cash transactions and cash transactions could be done at any branch, but certain caps are stipulated for such transactions at branches other than the branch, where the account is maintained. Having regard to these sweeping technological changes brought about to banking practices and also taking into account the amended provisions of the N.I. Act, more particularly those in Sec.6 thereof, ordinarily complainant/payee might receive the cheque return memo, as intimated to them by their collection Bank and having regard to the amended provisions of the N.I. Act more particularly in Sec.6 thereof, ordinarily, the complainant/payee, might receive only the cheque return memo, i.e., intimated to them by their collection Bank and the complainant/payee may not get the intimation conveyed by the drawee Bank to the complainant's Bank, as such communication may be on the basis of the electronic media. Therefore, in order to get the presumption under ::11::
Crl.A.No.676 Of 2017 Sec.146, it cannot now be insisted that the complainant/payee should necessarily produce the cheque return memo, which is issued by the drawee Bank and they can make available only the cheque return memo as intimated to them by the complainant's Bank. Therefore, there is nothing wrong in the complainant submitting a cheque return memo that is intimated to him by his collection Bank if he has not received any intimation from the drawee Bank. The gist of the information conveyed in such cheque return memo as intimated to the complainant by the collection Bank would be sufficient to get the presumption of Sec.146. This is all the more so particularly in the light of the amendment made to Sec.6 of the N.I.Act and going by the statement of objects and reasons of the abovesaid bill which introduced the amended provisions. If the said cheque return memo made available by the complainant's Bank discloses that the cheque was dishonoured within the prescribed validity period of the cheque, on the ground of insufficiency of funds, etc., then certainly the complainant could draw the presumption envisaged in Sec.146 of the N.I.Act. But if the said cheque return memo itself shows that the dishonour is much after the validity period of the cheque or if the said document is not clear as to whether or not the ::12::
Crl.A.No.676 Of 2017 presentation of the cheque before the drawee Bank was within the validity period of the cheque, etc., then the court may have to secure additional materials either at the stage of Sec.200 Cr.P.C. preliminary enquiry at the stage of Sec.202 Cr.P.C. inquiry. However, in cases where the complainants are served with intimations by way of cheque return memos, both by the complainant's collection bank as well as by the drawee Bank, then the complainant should produce necessary cheque return memo issued by the drawee Bank concerned. If the accused has a case that the details contained in such cheque return memos produced by the complainant do not reflect the correct position, then certainly he can rebut the presumption under Sec.146 of the N.I. Act by leading contra evidence in that regard so as to disprove the case of the complainant.
9. In the instant case, Ext.P-2 memo issued by the complainant's collection bank (Syndicate Bank, Guruvayoor) clearly shows that the cheque No.10157731 dated 30.5.2015 for Rs.1 lakh, which was presented by the complainant for collection through the said collection bank has been dishonoured by the drawee bank concerned as per CTS system on the ground that funds are insufficient in the account concerned. Cheque ::13::
Crl.A.No.676 Of 2017 No.10157731 dated 30.5.2015, which was referred to in Ext.P-2 is the one covered by Ext.P-1. From the 2nd page of Ext.P-2, it is crystal clear that the cheque has been presented for collection through electronic process of Cheque Truncation System (CTS). Therefore, in such a situation after the introduction of CTS electronic clearing process, the complainant's only document that may be made available to the complainant is the one given by their collection bank as referred to in Ext.P-2 and in such electronic process, no document of the drawee bank is made available to the complainant and therefore, in view of the sweeping changes introduced mainly by new technology, it will be impracticable and unrealistic to insist that the complainant should invariably produce materials from the drawee bank concerned to prove the factum of dishonour of cheque. In such cases, they will not be having any access to such documents and more crucially since the entire process of clearing cheques are done electronically, such information will have to be then collected from the drawee bank to show the details in that regard. So if a technical approach is taken that such materials from the drawee bank should necessarily be produced and marked in evidence in order to prove the factum of dishonour, then the state of affairs which prevailed prior to introduction of CTS, with the result that the bank officials will have to be summoned ::14::
Crl.A.No.676 Of 2017 constantly for giving evidence both at the Sec.200 Cr.P.C preliminary enquiry stage of Sec.202 Cr.P.C enquiry stage and even during the trial process. If such a position is insisted even for CTS clearing process, then it would be virtually amount to undoing and unmaking the provision engrafted by the Parliament as in Sec.146, which has been made effective from 6.2.2003. Therefore, in view of this new system of CTS clearing process, the complainant need to produce only documents that are made available to him by the complainant's collection bank and if it contains the basic and necessary details then the presumption under Sec.146 of the N.I. Act could be drawn regarding the dishonour of cheque. But that is certainly not the end of the road for the accused and if the accused has a contention that the dishonour has not taken place as contemplated in Sec.138 of the N.I. Act, then certainly he can lead evidence to vindicate this position by adducing documentary and oral evidence from the drawee bank concerned in order to disprove the factum of dishonour. In the instant case, the accused has not made any challenge to the evidence adduced by PW-1 regarding the dishonour of the cheque. Not even a suggestion is put forward during cross-examination of PW-1 to the effect that there is no dishonour as understood in the above said provision. The trial court appears to have been unilaterally considered this issue.
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Crl.A.No.676 Of 2017 Therefore, in the light of the above said aspects, the above said point decided by the trial court against the complainant is liable to be overruled and it is accordingly so ordered. The complainant has not raised any serious objection regarding the aspect of dishonour of the cheque during the cross-examination of PW-1. Therefore, it is only to be held that the complainant has proved the crucial aspect regarding the dishonour of the cheque through marking of Ext.P-2 memo issued by the collection bank.
10. The learned counsel for the 1st respondent (accused) has raised various other contentions. It is stated that there is crucial suppression of material particulars regarding the transaction and that the accused is entitled for the benefit of acquittal in view of the dictum laid down by this Court in K.K.Divakaran v. State of Kerala, reported in 2016 (4) KLT 233. Further it is pointed out that the accused has mounted serious challenge during the cross-examination of PW-1 regarding the source of funds of the complainant for raising the said amount for the said borrowal transaction in question. Further that apart from making oral assertions, the complainant has not adduced any material evidence to prove the crucial fact regarding the said evidence. In view of these aspects, the complainant is not entitled to get the benefit of statutory presumption under Sec.118(a) and Sec.139 of the N.I. Act in the light of ::16::
Crl.A.No.676 Of 2017 the dictum laid down by the Apex Court in John K.Abraham v. Simon C.Abraham, reported in (2014) 2 SCC 236, K.Subramani v. K.Damodara Naidu, reported in (2015) 1 SCC 99 and K.Prakashan v. P.K.Surenderan, reported in (2008) 1 SCC 258. It is also pointed out that the very case projected by the complainant is not credible and probable and various submissions in that regard has also been made.
11. After hearing both sides on the above said aspects, this Court is of the view that those aspects require fresh consideration at the hands of the trial court and that the matter is liable to be remitted in that view of the matter. Accordingly, it is ordered that the impugned judgment dated 16.5.2015 rendered by the Judicial First Class Magistrate Court-II, Chavakkad, in C.C.No.23/2016 will stand set aside and the complaint in C.C.No.23/2016 will stand restored to the file of the trial court. The matter is remitted for fresh consideration of the matter from the stage of consideration of the final arguments of the case. The trial court will hear the learned Advocates appearing on both sides and decide all aspects of the matter other than the point regarding the dishonour of the cheque. It is made clear that the parties shall not be permitted to adduce any further evidence. The learned counsel for ::17::
Crl.A.No.676 Of 2017 the complainant and the learned counsel for the accused will appear before the trial court at 11:00 a.m. on 4.11.2017 and produce a certified copy of this judgment before the court below. The trial court will then fix up a date for final hearing which is convenient to both sides and then proceed with the hearing and consider the final arguments of both sides and will render a judgment as directed hereinabove. The process in this regard may be endeavoured to be completed within a period of 3 months from the date of production of a certified copy of this judgment. It is made clear that none of the observations made by this Court shall in any manner trammel the trial court from independently considering those aspects which deal the subject matter of the remit in this matter.
With these observations and directions, the Criminal Appeal stands finally disposed of.
ALEXANDER THOMAS, Judge.
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