Kerala High Court dismisses appeal


The High Court of Kerala observed that it was highly unlikely that a check sheet from a checkbook exhausted in 1996 would be used by a drawer to discharge its liability which arose in 2000.

Judge Gopinath P added that it was highly unlikely that a money lender would initiate a second loan transaction when the first loan transaction had not yet been paid, which further weakened the appellant’s case.

As a result, it was held that the complaint failed to prove the existence of a legally enforceable debt, thus implying that the accused under section 138 of the Tradable Instruments Act had successfully refuted the legal presumption.

This appeal was filed against the order of a first class magistrate’s court acquitting the 2nd defendant of an offense under section 138 of the Tradable Instruments Act.

Factual background:

A complaint was filed alleging that the 2nd defendant had issued a check bearing number 327388 dated 12/30/2000 (check in object) drawn for a sum of Rs.1,70,000 / – in payment of a debt and that upon presentation, the said check was returned unpaid citing insufficient funds in the account.

The magistrate concluded that the check in question had been issued before June 1995, when the plaintiff advanced a loan of Rs 40,000 / – to the 2nd defendant. He also observed that a new loan would not have been granted when the old loan was in progress and that the loan amount of Rs170,000 / – would not have been granted in cash when the previous loan of Rs 40 000 Rs / – was delivered by check.

As the plaintiff failed to prove his case, the second defendant was acquitted. Damaged by this acquittal, the complainant applied to the Court.

The complainant’s case was that the loan of Rs170,000 was granted on a personal basis. According to him, the presumption under section 139 of the Act, although rebuttable, should have worked in his favor in the total absence of any acceptable evidence to rebut this presumption on the defense side.

The 2nd respondent relied on a few decisions to argue that when an accused in a prosecution under section 138 of the NI Act has fairly and reasonably established that the case presented by the complainant is highly unlikely, the complainant cannot invoke the legal presumption any longer.

He added that for the proposition that when the accused has succeeded in rebutting the presumption under the Negotiable Instruments Act, the onus is on the complainant to prove the consideration and, failing to do so, the accused has the right to be acquitted.

Remarks :

  • It is unlikely that the checkbook check sheet exhausted in 1996 was used to discharge liability in 2000

The first circumstance taken into account by the magistrate in concluding that the 2nd defendant was entitled to an acquittal is the fact that the check in question could not have been issued at around the time when it was declared to have been issued. According to the appellant / complainant, the loan of Rs. 1 70 000 / – was granted on 12/26/2000 and in payment of this debt, the check in question was issued on 12/30/2000.

However, based on the evidence produced by the 2nd defendant, the immediately preceding check was presented for collection on 23.05.1995. The one which followed the verification of the object was presented for collection on 06.10.1995.

The Magistrate took note of the fact that the entire checkbook which contained the object check was exhausted on 02/07/1996 and that a new checkbook was issued on 03/29/1996. In addition, we have seen that the 2nd respondent presented the check for the new checkbook on March 29, 1996.

The Court noted that the above-mentioned conclusions of the Magistrate on the basis of the book of the accused are not open to criticism.

However, he pointed out that the mere fact that the immediately preceding check bearing the number 327387 was not presented for collection until 23.05.1995 and the fact that the previous loan which the accused acknowledged the applicant was on 18.04.1995 does not do so in any way, suggest that the check in question was not issued as security for the loan granted on April 18, 1995. There can be many reasons why the earlier check was presented later.

However, the Chamber noted as follows:

“Considering all the evidence, I think that the argument advanced by the 2nd defendant cannot be reversed, because it is admitted that there was a transaction between the parties during the year 1995, as the clearly shows the fact that an amount of Rs.40,000 / – was credited to the account of the 2nd defendant / accused by means of checks issued by the plaintiff on 04/18/1995 and 04/29/1995 “.

The Court also took note of the fact that the loan of 1 70 000 rupees would have been granted on 12/26/2000.

“It is highly unlikely that a check sheet from a checkbook exhausted on 02/07/1996 was used on 12/30/2000 to pay off a debt for a loan taken out on 12/26/2000.”

  • Unconvincing that the second loan transaction occurred when the first loan was not repaid

As the magistrate rightly argued, there was no admission of repayment of the loan amount of Rs.40,000 / – on 12/26/2000.

The statement that another loan of Rs. 1,70,000 / – was given in cash by the appellant, who admittedly was a money lender at the time the previous loan of Rs. 40,000 / – was outstanding was clearly a circumstance that could be taken into account. note to conclude that the 2nd transaction was quite improbable.

The appellant’s case that the second settlement with the 2nd respondent was in his personal capacity was only intended to overcome the defense of the 2nd respondent that he had discharged the previous liability and that there was no further liability. subsisting to reimburse the appellant.

“Therefore, I fully agree with the view of the learned magistrate that there is evidence to show that the check in question was not issued in relief of the alleged liability of Rs. 1,70,000 / – . “

The Court also concluded that the 2nd defendant had succeeded in demonstrating that the legal presumption in Article 139 should not be applied. I

“In other words, the 2nd defendant / accused was able to rebut the legal presumption. The appellant / plaintiff was subsequently unable to provide any evidence to suggest the existence of a transaction resulting in an enforceable debt payable by the 2nd defendant / accused. “

Consequently, the Panel observed that the prosecution of the 2nd Respondent under Article 138 of the Negotiable Instruments Act must necessarily fail.

As a result, the appeal failed and was dismissed.

Lawyer Peeyus A. Kottam appeared for the appellant, Government litigator Ranjith George represented the State and the respondent appeared by Lawyer PV Elias.

Case title: VP Zacharia v. State of Kerala & Anr.

Click here to read / download the order


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