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Case Number

Crl.R.P No. 2519 of 2006

Attorney(S)

T.K.Ajit Kumar
P.Deepthy

Judges

R. Basant, J.

Acts

S. 114 of the Evidence Act
S. 3 of the Evidence Act.

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Smart Summary

Structured Summary of the Opinion (R. Basant, J.)

Factual and Procedural Background

This revision petition challenged concurrent convictions, sentences and findings of guilt under Section 138 of the Negotiable Instruments Act. The cheque in question was for Rs. 1,00,000/-, dated 05/03/1993, and was dishonoured on the ground of insufficiency of funds. A notice of demand was sent to the accused at an address alleged to be correct; the postal endorsement on return was that the notice was "not claimed." The complainant filed prosecution proceedings within the statutory timetable, examined himself as PW 1 and produced exhibits Exts. P1 to P4. The accused examined two witnesses (DWs 1 and 2) and produced documents D1 to D4 in defence. The courts below convicted the accused under S.138 N.I. Act, prompting this revision.

Legal Issues Presented

Whether the cheque was issued for the discharge of a legally enforceable debt or liability (i.e., whether the essential ingredient of S.138 N.I. Act was established).
Whether the notice of demand was served at the correct address of the accused (i.e., whether the statutory notice requirement under the proviso to S.138 was satisfied).
Whether this Court should exercise revisional jurisdiction to interfere with the concurrent findings of the courts below (i.e., whether there was illegality, irregularity, impropriety or miscarriage of justice warranting revision).
Whether leniency on sentence should be granted and, if so, on what terms (i.e., modification of sentence and payment of compensation under S.357(3) Cr.P.C.).

Arguments of the Parties

Petitioner's (Accused's) Arguments

The cheque was not issued for discharge of any legally enforceable debt or liability. It was a blank signed cheque handed over as security in a transaction involving the petitioner's son; the underlying liability had been discharged by the son and the cheque should have been returned but was not, and was allegedly misutilised by the complainant.
The notice of demand was not sent to the petitioner's correct residence. The notice was addressed to "Mukunda Sadanam, Manimooli, Nilambur" whereas the petitioner contended he resided at Ambika Sadanam in Edavanna village. DWs 1 and 2 and documents D1–D4 were produced to show ownership/residence facts supporting this contention.

Complainant's Arguments

The cheque (Ext. P1) was drawn by the accused on his bank account and was dishonoured for insufficiency of funds; the complainant complied with statutory timing and procedural requirements and produced evidence (PW 1 and Exts. P1–P4) proving issuance, presentation and return of the cheque.
The notice of demand was sent to the correct address; the postal endorsement ("not claimed") and PW 1's evidence of personal knowledge of the accused's residence supported proper service.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Suresh Kumar v. Sasi (2003 (2) KLT 367)	Authority for the proposition that proper notice of demand must be given under S.138; emphasises the requirement of correct service.	The court relied on this line of authority when assessing whether the notice in the present case was issued to the proper address; after weighing the postal endorsement and PW 1's evidence, the court found the notice to be effectively served and that the petitioner's evidence did not displace the presumption in favour of proper service.
Anil Kumar v. Shammi (2002 (3) KLT 852)	Principles governing imposition of sentence in prosecutions under S.138 N.I. Act (sentencing considerations and scope for leniency).	The court referred to these sentencing principles when deciding that a deterrent substantive sentence of imprisonment was not required but that compensation and modified custody should be ordered; these principles informed the decision to grant conditional leniency subject to payment of compensation.

Court's Reasoning and Analysis

The court undertook a fact-based analysis of the two principal contentions and reviewed the scope of revisional powers:

On the "blank signed cheque" defence: The court accepted PW 1's oral evidence that Ext. P1 was a cheque leaf issued to the petitioner by his bank bearing the petitioner's admitted signature and that it moved from the petitioner's possession to the complainant's possession. The court characterised the defence that a signed blank cheque was given as security as inherently suspicious and cautioned that such a defence imposes a heavy burden on the account-holder who seeks absolution by asserting careless or irresponsible conduct. The court referred to the standard of proof encapsulated in S.3 of the Evidence Act and concluded that the petitioner's version was inherently improbable and unworthy of acceptance, therefore rejecting that defence.
On the notice-of-demand/address contention: The court examined the endorsement on Ext. P4 (the notice) by the Postman, which stated the notice was "not claimed" and that attempts were made to deliver it twice. The court emphasised that the notice was not returned with the endorsement "No such addressee," and observed that the petitioner thereafter described his residence in pleadings as at Mukunda Sadanam, Manimooli, Nilambur — a fact to be given due significance. The court applied the presumption under S.114 of the Evidence Act in favour of the veracity of the postal endorsement and found that the DWs' evidence (D1–D4 and DWs 1 and 2) did not satisfactorily dislodge PW 1's evidence or that presumption. Specific gaps in the defence evidence were noted (for example, an inability of a defence witness to specify building details or produce ration card/voters list).
On revisional jurisdiction and miscarriage of justice: The court reiterated that revisional powers are not to be lightly or routinely exercised; interference is justified only where there is illegality, irregularity or a miscarriage of justice. The court found no such vice in the concurrent judgments and was not persuaded that any error amounted to miscarriage of justice. The court also observed that even after the commencement of prosecution, the petitioner did not pay off the amount and thus did not avail himself of an opportunity to mitigate consequences — a circumstance that undercut the petitioner's contention that procedural notice defects caused prejudice.
On sentencing: Applying authorities on sentencing in S.138 prosecutions (viz., Anil Kumar v. Shammi), the court concluded there were no compelling reasons for imposing a deterrent substantive sentence of imprisonment. Nevertheless, the court recognised the complainant's hardship in having to litigate repeatedly and adopted a remedial approach: the sentence was modified to provide leniency conditioned on adequate compensation being paid to the complainant.

Holding and Implications

Core Holding: The court upheld the conviction for the offence under Section 138 of the Negotiable Instruments Act; the revision petition was allowed only in part.

Direct consequences and orders (as decided by the court):

The verdict of guilty and conviction under S.138 N.I. Act as recorded by the courts below was upheld.
The sentence imposed by the courts below was modified: in supersession of the earlier sentence, the petitioner was sentenced to undergo imprisonment till rising of court (i.e., a short custody at the time of the order) and was directed to pay Rs. 1,20,000/- as compensation under Section 357(3) Cr.P.C.; in default of payment, the petitioner shall undergo simple imprisonment for three months. If the compensation is realized, it is to be paid to the complainant.
The petitioner was granted time until 30/09/2006 to appear before the learned Magistrate and serve the modified sentence; the impugned sentences shall not be executed until that date. If the petitioner fails to appear by that date, the learned Magistrate shall proceed to execute the modified sentence.

Broader implications: The opinion does not set out to create new legal precedent. It applies established principles relating to the evidentiary burden where a defence of a blank signed cheque is urged, the requirement for proper notice under the proviso to S.138, and established sentencing considerations in S.138 prosecutions. The decision primarily affects the parties by confirming conviction but moderating punishment in the exercise of judicial discretion.

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Bhaskaran Nair v. Abdul Kareem

R. Basant, J.:— This Revision Petition is directed against a concurrent verdict of guilty, conviction and sentence in a prosecution under S. 138 of the N.I Act. The cheque is for an amount of Rs. 1,00,000/- The cheque bears the date 05/03/1993. The cheque was dishonoured on the ground of insufficiency of funds. Notice of demand was sent to the accused allegedly in the correct address. It was returned with the endorsement that the notice was not claimed. The complainant came to the court with this complaint scrupulously observing the statutory timetable. The complainant examined himself as PW 1 and proved Exts. P1 to P4. The accused examined DWs. 1 and 2 and proved D1 to D4.

2. Two contentions appear to have been raised before the courts below. The first contention is that the cheque was not issued for the due discharge of any legally enforceable debt or liability. There was a transaction between the complainant and the son of the accused. A blank signed cheque was handed over as security in that transaction. The liability under that transaction was already discharged but the blank signed cheque was not returned. It was misutilised by the complainant to stake the present false and untenable claim. This is the first contention.

3. Secondly, it was contended that the notice of demand was not issued in the correct address of the accused. It was sent in the address “Bhaskaran Nair, S/o. Shankaran Nair, Mukunda Sadanam, Manimooli, Nilambur”. That the name of the petitioner is Bhaskaran Nair is not disputed. There is no dispute regarding the father's name also. That Mukunda Sadanam is a house belonging to the sisters of the wife of the complainant is not disputed. But according to the petitioner, he was not residing in Mukunda Sadanam and was instead residing in Ambika Sadanam in Edavanna village. He examined DW 1 and proved D1 to D3 to show the ownership of three houses in the same compound, which bear the name Ambika Sadanam. He examined DW 2 and proved D4 in support of his contention that he resides in Edavanna village and not at Manimooli.

4. The courts below considered the above contentions anxiously and came to the conclusion that the complainant has succeeded in establishing all ingredients of the offence punishable under S. 138 of the N.I Act. Accordingly, they proceeded to pass the impugned concurrent judgment.

5. Called upon to explain the nature of challenge which the petitioner wants to mount against the impugned concurrent judgments, the learned counsel for the peti-tioner reiterates the contentions that were raised before the courts below. The first contention is found to be absolute without any merit. We primarily have the evidence of PW 1 about the circumstances under which Ext. P1 cheque written on a cheque leaf issued to the petitioner by his bank to operate his account, with the admitted signature of the petitioner affixed thereon, found its way from the possession of the petitioner to the possession of the complainant. The oral evidence of PW 1 is eminently supported his liability to produce such cheque Ext. P1. The theory advanced by the accused that Ext. P1 was handed over as a blank signed cheque as security when his son had entered into an earlier transaction cannot be readily swallowed. The defence that a signed blank cheque was handed over by an account holder is inherently a suspicious one and must be approached with great care and caution. If the laudable commercial morality which the legislature wants to usher in by introduction of S. 138 of the N.I Act in the statute book were to prevail among the polity such an irresponsible, casual and indifferent approach by account holders deserves to be discouraged. No account holder is expected to deal with the cheques in such a casual, careless, irresponsible and indifferent manner. Such a defence may still not be impossible in a prosecution under S. 138 of the N.I Act. But the burden must certainly rest heavily on the shoulders of such an indictee who wants to attribute such an irresponsible conduct to himself to claim absolution from culpable liability. In the facts and circumstances of this case, the said version advanced by the accused cannot be swallowed by a reasonable and prudent mind, whose standards the courts are expected to adopt and follow while considering the rival sets of evidence to decide whether the facts are “proved” to the satisfaction of the definition of the expression proved in S. 3 of the Evidence Act. The theory that even when the liability was entirely discharged by the son of the petitioner, the cheque continued to remain with the complainant is inherently improbable and unworthy. The same cannot be accepted. The first contention raised must hence fall to the ground.

6. The second contention raised is that the petitioner does not reside at the address shown, that is at Manimooli, Nilambur. We have the evidence of PW 1 that that is the address at which the petitioner resides. Notice of demand issued in that address was not returned with the endorsement that there is no such addressee residing at the address shown in the notice. It was returned only with the endorsement that the addressee did not claim the notice and the persons in occupation did not receive the intimation. The Postman was hence compelled to go twice to the said address, but was unable to meet the addressee. It is significant that the notice was not returned with the endorsement that there is no such addressee at the said address. It is not as though the petitioner contends that he has no connection whatsoever with the said address. Admittedly, Mukunda Sadanam is the common name for the houses in a compound which belong to the wife of the petitioner and her sisters. There is nothing to show the name of the wife of the accused. The name of the owners shown in D1 to D3 and the evidence of DW 1 does not at all show that the petitioner's wife is not one of the owners. We do also have the further circumstance that PW 1 asserted in evidence that he knows the residence of the accused, that he went to the said Mukunda Sadanam where the petitioner resides and he found the petitioner there. We have also the circumstance that in the light of all this burning controversy, in the memorandum of appeal and in this revision petition, the petitioner has chosen to describe himself as son of Sankaran Nair, residing at Mukunda Sadanam, Manimooli, Nilambur. Due significance must certainly be attached to that subsequent conduct of the petitioner/accused while considering the challenge raised on the ground that there is no proper notice.

7. Reliance is placed on the decision reported in Suresh Kumar v. Sasi (2003 (2) KLT 367). Precedents galore to indicate that proper notice of demand must be given, There can be no quarrel on that proposition. The short question is whether in the instant case notice has been issued in the correct address. I have already taken note of the circumstances against the petitioner on that aspect which the courts below have chosen to rely on. The counsel for the petitioner contends that evidence of DWs. 1 and 2 and D1 to D4 are sufficient to show that the petitioner does not reside at Mukunda Sadanam and resides in another village of Edavanna. The courts below did advert to the evidence of DWs 1 and 2 and D1 to D4. The evidence of DW 1 and D1 to D3 cannot at all lead a prudent mind to the conclusion that the petitioner does not reside in Mukunda Sadanam. The names of the owners of the house mentioned in D1 to D3 are no guarantee or assurance of the contention of the petitioner that he does not reside at that address. It is not even asserted specifically that the petitioner's wife is not one of the owners. Due presumption under S. 114 of the Evidence Act deserves to be drawn on the basis of the endorsement written on Ext.P4 notice by the Postman. If there were no such person at the address the notice would have been returned in the ordinary course with the endorsement “No such addressee”. So far as the evi-dence of DW 4 is concerned, he concedes that he cannot specify the number or details of the building in which the petitioner resides. Ration card, voters list etc. have not been seen by that witness or produced before court to show that the petitioner resides in Edavanna Village. Merely because the petitioner hails from Edavanna village, a certificate like D4 can be issued to him. Suffice to say that I am unable to find any reason justifying interference with the concurrent conclusion of the courts below at this third tier of criminal litigation. Evidence of DWs 1 and 2 and D1 to D4 are not according to me sufficient to dislodge the weight of evidence tendered by PW 1 and the presumption which must essentially arise from the endorsement on Ext.P4 notice of demand by the Postman concerned.

8. I must also alertly note that the revisional powers of superintendence and correction are not to be lightly invoked. Any and every error, assuming that an error has been committed by the courts below, is not sufficient justification for invoking the revisional powers. The conscience of the court must be satisfied that there is illegality, irregularity, impropriety or incorrectness and that such vice in turn leads to miscarriage of justice to justify such invocation of revisional powers. I am not able to discover or invent any such vice resulting in miscarriage of justice by the course adopted by the courts below in not accepting and acting upon evidence of DWs 1 and 2 and Exts. D1 to D4 and in choosing to exercise the discretion in favour of the complainant accepting the oral evidence of PW 1 on the basis of the various circumstances which I have already referred to. The challenge in revision must hence be found to be not maintainable.

9. According to me it may not be inapposite in this context to refer to the scheme of S. 138 of the N.I Act. Definition of the offence and punishment for such offence appears in the body of S. 138 which I extract below.

“138. Dishonour of cheque for insufficiency, etc., of funds in the account.—

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account 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, such person shall be deemed to have committed the offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless—

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.

Explanation:— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.” (emphasis supplied)

10. The offence is prescribed and punishment is stipulated in the body of the Section which is followed by the proviso which states that nothing contained in the section shall apply unless clauses a, b and c in the proviso are satisfied. The definition of the offence appears in the body of the Section. The proviso only insists on certain safeguards on satisfaction of which alone the main section will be applicable. The requirement of giving notice to the indictee is to help him to avoid the prosecution under S. 138 of the N.I Act It is not an empty or ritualistic formality. It is to give him time to avoid a prosecution by correcting an error and indiscretion. A fundamental question arises. What is the offence under S. 138 of the N.I Act? The plain reading of the body of S. 138 can leave behind no doubt that the offence is dishonour of the cheque issued for the discharge of liability of a specified nature on the grounds specified in the Section. That is the offence. Proviso deals only with certain formalities to be complied with before a successful prosecution can be launched. They do not make or unmake the offence. The offence is already defined in the body of the Section. Proviso only incorporates certain conditions before a valid prosecution for the offence defined is launched. The point is that the offence defined has nothing to do with the proviso. The proviso does not prescribe the ingredients of the offence. It only prescribes the procedural formalities to be satisfied before the prosecution is launched. While considering whether the mandates of the proviso have been satisfied, it cannot be lost sight of that they are not ingredients of the offence but only procedural safeguards to help an indictee to avoid prosecution. If that be so the Court of Revision has to apply its mind to the question whether the alleged infraction of the procedure has resulted in miscarriage of justice.

11. In the instant case, no court can afford to ignore the fact that even after the commencement of prosecution, the petitioner has not availed the opportunity to pay off the amount and discharge the liability. Instead, he has chosen to raise a contention that no amount is liable to be paid which I have already found against. I look into this aspect only to appreciate that the alleged failure to issue notice in the correct address (even if true) has not resulted in any miscarriage of justice in the instant case in as much as even after coming to know of the prosecution which has been launched the indictee has not chosen to pay the amount and claim mitigation of the offence. In this view of the matter also I am not persuaded to agree that the revisional powers are liable to be invoked - no failure of justice having resulted.

12. No other contentions are raised on merits. I am satisfied that the challenge against the verdict of guilty and conviction on merits must in these circumstances fail.

13. The learned counsel for the petitioner then prays that leniency may be shown on the question of sentence and some more time may be granted to pay the amount of compensation directed by the courts below. The petitioner now faces a sentence of S.I for a period of three months. There is a further direction to pay the actual cheque amount of Rs. 1,00,000/- as compensation and in default to undergo a S.I for a period of two months. I have already adverted to principles governing imposition of sentence in a prosecution under S. 138 of the N.I Act in the decision reported in Anil Kumar v. Shammi (2002 (3) KLT 852). I am unable to find any compelling reasons which can persuade this Court to insist on imposition of any deterrent substantive sentence of imprisonment. But the plight of the complainant deserves sympathy and consideration. He has been compelled to fight two rounds of unnecessary legal battle by now and to wait from May 2003 for the redressal of his grievances. Leniency can be shown to the petitioner provided he makes amends and compensates the victim adequately. Challenge against the sentence can succeed only to the above extent.

14. In the nature of relief which I propose to grant, I am satisfied that it is not necessary to wait for issue and return of notice to the respondent/complainant.

15. In the result:

a) This RP is allowed in part,

b) The verdict of guilty and conviction under S. 138 of the N.I Act is upheld.

c) Sentence imposed is modified and reduced. In supersession of the sentence imposed by the courts below, the petitioner is sentenced to undergo imprisonment till rising of court. He is further directed to pay an amount of Rs. 1,20,000/- as compensation under S. 357(3) Cr.P.C and in default to undergo S.I for a period of three months. If realised the entire amount shall be paid to the complainant as compensation.

16. The petitioner shall have time till 30/09/2006 to appear before the learned Magistrate and serve the modified sentence hereby imposed. The impugned sentences shall not be executed till that date. If the petitioner does not appear before the learned Magistrate on or before 30/09/2006, the learned Magistrate shall thereafter proceed to take necessary steps to execute the modified sentence hereby imposed.

Bhaskaran Nair v. Abdul Kareem

Structured Summary of the Opinion (R. Basant, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's (Accused's) Arguments

Complainant's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Bhaskaran Nair v. Abdul Kareem

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