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C. Antony v. K.G Raghavan Nair .
Factual and Procedural Background
The respondent (complainant) alleged that on 1-11-1990 he advanced Rs 26,500 to the appellant for the expansion of the appellant’s hospital. A cheque for the same amount, allegedly issued by the appellant, was dishonoured with the bank endorsement “Payment stopped by the drawer.” After issuing the statutory notice required by Section 138 of the Negotiable Instruments Act, 1881, the respondent filed a criminal complaint.
The Judicial First Class Magistrate, Cherthala, tried the case, disbelieved the respondent’s version, and dismissed the complaint, thereby acquitting the appellant. On appeal, the High Court of Kerala reversed the acquittal, convicted the appellant under Section 138, and sentenced him to a fine of Rs 37,500 (three months’ rigorous imprisonment in default), directing that Rs 34,500 be paid to the respondent as compensation.
The appellant obtained special-leave to appeal to the Supreme Court, challenging the High Court’s reversal of the acquittal.
Legal Issues Presented
- Whether the High Court, sitting in appeal against an acquittal, applied the correct legal standard in reversing the trial court’s findings and convicting the appellant under Section 138 of the Negotiable Instruments Act.
- Whether, on the evidence recorded, the offence under Section 138 was proved beyond reasonable doubt against the appellant.
Arguments of the Parties
Appellant’s Arguments
- No money was borrowed from the respondent; consequently, no cheque was issued to him.
- The cheque in question had been signed blank and handed over in 1985 to one Chandrappa Panicker as security in a chit transaction; it was subsequently misused by the respondent in collusion with Panicker.
- The High Court erred in drawing an adverse inference from the appellant’s non-examination without first finding the trial court’s view to be perverse.
Respondent’s (Complainant’s) Arguments
- The respondent advanced Rs 26,500 in cash to the appellant on 1-11-1990 and received the cheque towards repayment.
- Dishonour of the cheque, followed by statutory notice and non-payment, constitutes an offence under Section 138.
- The appellant failed to produce counterfoils of his cheque book to substantiate his defence that the cheque belonged to 1985, warranting the High Court’s adverse inference.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bhim Singh Rup Singh v. State of Maharashtra, (1974) 3 SCC 762 | An appellate court reversing an acquittal must show that the trial court’s findings are perverse or contrary to evidence; mere possibility of another view is insufficient. | The Supreme Court used this principle to hold that the High Court erred in substituting its own view without demonstrating that the trial court’s conclusions were unreasonable or unsupported by the record. |
| Dharamdeo Singh v. State of Bihar, (1976) 1 SCC 610 | Reiterates the need for appellate courts to give cogent reasons when overturning an acquittal and to respect the presumption of innocence reinforced by the trial court’s verdict. | Cited to emphasise that the High Court failed to address the specific findings of the trial court and, therefore, its reversal of acquittal was legally unsustainable. |
Court's Reasoning and Analysis
The Supreme Court scrutinised the judgments of both courts below and highlighted three critical deficiencies in the prosecution case that the trial court had relied upon:
- Non-examination of Advocate Vijay Kumar: The complainant claimed the loan was advanced in the advocate’s office, making his testimony essential. The High Court ignored this omission.
- Possible misuse of a blank cheque: The trial court found the defence—that the signed blank cheque had been issued to Chandrappa Panicker during a chit transaction—plausible, noting the complainant’s failure to examine Panicker despite his presence in court.
- Difference in ink on the cheque: Variation between the ink used for the body of the cheque and for the signature supported the appellant’s claim that the cheque text was written later by someone else.
The Supreme Court held that the High Court, while exercising appellate jurisdiction over an acquittal, was obliged first to demonstrate that the trial court’s findings were perverse or against the weight of evidence. Instead, the High Court re-appreciated the evidence on new grounds, drew adverse inferences against the appellant, and failed to address the trial court’s core reasons for doubt. This approach violated the standards articulated in Bhim Singh Rup Singh and Dharamdeo Singh. Consequently, the conviction could not stand.
Holding and Implications
APPEAL ALLOWED; HIGH COURT JUDGMENT SET ASIDE.
The appellant’s conviction and sentence under Section 138 of the Negotiable Instruments Act are overturned, restoring the trial court’s acquittal. The ruling reinforces the well-settled principle that an appellate court must not disturb an acquittal unless the trial court’s findings are demonstrably perverse or contrary to the record; no broader precedent beyond this reaffirmation was set.
Santosh Hegde, J.— This appeal by special leave is preferred against the judgment of the High Court of Kerala at Ernakulam dated 17-11-1995 made in Criminal Appeal No. 438 of 1993 whereby the appellant herein was found guilty of an offence punishable under Section 138 of the Negotiable Instruments Act (the Act), and was convicted and sentenced to pay a fine of Rs 37,500 and in default to undergo RI for a period of 3 months. The High Court had further directed that out of the fine, if realised, a sum of Rs 34,500 should be paid to the respondent herein by way of compensation.
2. Briefly stated, the prosecution case is that the respondent herein on 1-11-1990 had advanced a cash sum of Rs 26,500 for expansion of the appellant's hospital and towards the repayment of the said amount, the appellant had issued a cheque for the said sum which when presented to the bank, was dishonoured with an endorsement “Payment stopped by the drawer”. The respondent after issuing the required statutory notice, filed a complaint against the appellant for offence under Section 138 of the Act, as stated above. The plea of the appellant was that no cheque was issued to the respondent nor was any amount borrowed from him. He stated that the cheque in question was a blank cheque issued to one Chandrappa Panicker in October 1985 as security for future instalments of amount if due from the appellant in a chit transaction but the said Panicker did not return the cheque even after the chit transaction was over and the said cheque was misused by the respondent in collusion with the said Panicker.
3. Learned Ist Class Magistrate, Cherthala, after trial, came to the conclusion that the respondent had failed to establish the payment of money as alleged by him. For this, he primarily relied on the fact that according to the complainant, the respondent did not know the appellant herein personally and he advanced the said sum of money at the instance of an advocate Vijay Kumar in the office of the said advocate. But the respondent had not examined the said Vijay Kumar to prove this fact. The trial court also held that the respondent had not given any reason whatsoever for not examining this witness. The trial court also held that the respondent's case that the cheque in question Ext. P-1 was filled up by the appellant and brought to the office of Vijay Kumar could not be accepted because of the difference in the ink used in writing of the name and amount in the cheque and the ink used in the signature portion of the cheque. This, according to the trial court, showed that the case of the appellant that he had given a blank cheque signed was more probable. The trial court also took into consideration the fact that though the respondent had filed a civil suit for the recovery of the amount allegedly paid to the appellant under the cheque in question did not pursue the same, hence, from this fact also the trial court came to the conclusion that the appellant's version that the cheque in question was given in a blank condition to Chandrappa Panicker and the said Panicker being very close to the respondent had colluded with the respondent to make a false complaint against the appellant. The trial court also took note of the fact that the said Chandrappa Panicker was seen in the court hall during the trial but was not examined as a witness in support of the respondent's case. In this view of the matter, it came to the conclusion that the respondent complainant has not proved his case and accordingly dismissed the complaint.
4. In appeal, however, the High Court took a contra-view of the matter. The High Court held that the appellant had failed to produce the other counterfoils of his cheque-book to show whether other cheques had been issued between 1985 and 1990 to establish the fact that the cheque in question was in fact issued in the year 1985. The High Court also drew an adverse inference against the appellant for not examining himself. On the above basis, it found the appellant guilty of an offence punishable under Section 138 of the Act and, accordingly, convicted and sentenced him, as stated above.
5. We have heard learned counsel for the parties as also perused the evidence as well as the judgments of the two courts below. From the judgment of the trial court, we notice that the learned Magistrate has given cogent reasons for not accepting the evidence led on behalf of the respondent and on that basis he came to the conclusion that the respondent complainant has not established his case. While the High Court on reappreciation of the evidence, has come to a different conclusion on entirely new grounds without considering the material considered by the trial court and as held above, convicted the appellant. While doing so, the High Court had lost sight of the fact that it was sitting as an appellate court against a judgment of acquittal passed by the trial court, therefore, there was an obligation on the part of the High Court to come to a definite conclusion that the findings of the trial court are either perverse or the same are contrary to the material on record because the High Court could not have substituted its finding merely because another contrary opinion was possible based on the material on record. It was the duty of the High Court to have first come to the conclusion that the conclusions arrived at by the trial court for good reasons are either unreasonable or as stated above, contrary to the material on record. In the absence of any such finding in our opinion, the High Court was in error in taking a contra-view merely because another view was possible on the material on record.
6. This Court in a number of cases has held that though the appellate court has full power to review the evidence upon which the order of acquittal is founded, still while exercising such an appellate power in a case of acquittal, the appellate court, should not only consider every matter on record having a bearing on the question of fact and the reasons given by the courts below in support of its order of acquittal, it must express its reasons in the judgment which led it to hold that the acquittal is not justified. In those line of cases this Court has also held that the appellate court must also bear in mind the fact that the trial court had the benefit of seeing the witnesses in the witness box and the presumption of innocence is not weakened by the order of acquittal, and in such cases if two reasonable conclusions can be reached on the basis of the evidence on record, the appellate court should not disturb the finding of the trial court. (See Bhim Singh Rup Singh v. State of Maharashtra (1974) 3 SCC 762 and Dharamdeo Singh v. State of Bihar (1976) 1 SCC 610.)
7. If we examine the judgment of the two courts below in this appeal in the light of the law laid down by this Court in the above-cited cases, it is to be seen that the trial court came to the conclusion that non-examination of Advocate Vijay Kumar was fatal to the case of the respondent complainant because it is the case of the respondent that he came to know the appellant through the said Vijay Kumar and the amount in question was paid in the office of the said Vijay Kumar. In such a situation, the trial court came to the conclusion that when the appellant has set up a possible defence of having given a blank cheque to Chandrappa Panicker in regard to a chit transaction, therefore, it was necessary for the respondent complainant to have examined the said Vijay Kumar to establish the fact that Vijay Kumar indeed, persuaded the respondent to advance the cash. We also think this was a very necessary piece of evidence to establish the fact that the respondent had in fact advanced a sum of Rs 26,500 to the appellant. From a perusal of the judgment of the High Court, in this regard, we find that there is absolutely no discussion on this point at all. The non-consideration of this aspect of the case by the High Court, in our opinion, runs counter to the principles laid down in the above-referred judgments of this Court.
8. Then again, it is to be noticed that the trial court also took into consideration the plea of the appellant that the cheque in question was given in a blank state to Chandrappa Panicker and he being a close friend of the respondent in collusion with each other misused the said cheque to defraud the appellant. The trial court also observed that non-examination of Chandrappa Panicker has also weakened the case of the respondent, especially in view of the fact that the court had noticed that the said Chandrappa Panicker was seen in the premises of the courthouse at the time of trial. This is also a relevant factor on which the trial court relied upon but the High Court did not consider the effect of the said default on the part of the respondent. The third circumstance relied upon by the trial court is in regard to the difference in the ink found in the body of the cheque as well as in the signature of the appellant. It is the case of the respondent that the appellant had filled up the cheque in its entirety including its signature and had brought the cheque to the office of Vijay Kumar to be handed over to the respondent but the learned Magistrate on a perusal of the cheque, found that the ink used in the body of the cheque was different from the ink used in the signature on the cheque, therefore, he drew an inference that the case put forth by the respondent was doubtful, hence, could not be accepted. Even in this regard the High Court has failed to apply its mind. Having considered the findings delivered by the trial court in regard to the above three points, we are of the opinion that the trial court was justified in coming to the said conclusion because of the above three deficiencies pointed out by the trial court, and that the respondent's complaint ought to fail. In such a situation, we are of the opinion that the High Court fell in error in reappreciating the case of the respondent on a totally different perspective without coming to the conclusion that the findings given by the trial court on the above three points are either irrelevant or contrary to the material on record. Therefore, following the law laid down by this Court in the abovesaid cases of Bhim Singh Rup Singh (1974) 3 SCC 762 and Dharamdeo Singh (1976) 1 SCC 610 we are of the opinion that the High Court was in error in reversing the finding of acquittal recorded by the trial court.
9. For the above reasons, this appeal succeeds and the same is allowed, setting aside the impugned judgment of the High Court.
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