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  Reportable

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL     APPEAL     NO.1594     OF     2012   

Rev. Mother Marykutty    …Appellant

VERSUS

Reni C. Kottaram & another                           …Respondents

J     U     D     G     M     E     N     T   

Fakkir Mohamed Ibrahim Kalifulla, J.

The appellant/accused is aggrieved by the judgment dated  

17.03.2010 passed in Criminal Appeal No.1707/2007 of the High  

Court of Kerala at Ernakulam. The respondent herein preferred a  

complaint against the appellant under Section 142 of the Negotiable  

Instruments Act (hereinafter called ‘the Act’) for an offence  

punishable under Section 138 of the Act. According to the  

complainant, the appellant/accused entrusted the work of  

construction of an Old Age Home and a Chapel at Punnaveli,  

Pathanamthitta District based on an agreement between the  

appellant and the respondent. According to the respondent, the  

appellant issued a post dated cheque for Rs.25 lakhs in favour of the

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respondent towards the outstanding amount due to him for the work  

done by him. The cheque was dated 21.03.2005. It was claimed that  

when the cheque was presented by the respondent with his bankers,  

the same was dishonoured due to insufficiency of funds in the  

account of the appellant. It was further claimed that though the  

respondent intimated about the dishonour of the cheque by a  

lawyer’s notice dated 30.03.2005 served on the appellant on  

31.03.2005, she came forward with a reply taking the stand that no  

amount was due and that the respondent stealthily removed two  

cheques from the custody of the appellant of which the present one  

was forged and presented for clearance. Before the trial Court the  

appellant pleaded not guilty. On behalf of the respondent Exhibits P-

1 to P-20 were marked and the respondent examined himself as  

P.W.1. On behalf of the appellant Exhibits D-1 to D-4 series were  

marked, in the course of cross-examination of P.W.1. No oral  

evidence was adduced on behalf of the appellant. When the  

incriminating circumstances were put against the appellant under  

Section 313 of Cr.P.C. she denied the same and filed a written  

statement.

The trial Court on a detailed analysis of the evidence, placed before it,  

ultimately held that the appellant was able to rebut the presumption

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and that there was no circumstance warranting the execution of  

Exhibit P-1 cheque in favour of the respondent. So holding, the trial  

Court found the appellant not guilty of the offence under Section 138  

of the Act and acquitted her under Section 255(1) of Cr.P.C.  

Aggrieved by the acquittal of the appellant, the respondent preferred  

an appeal before the High Court of Kerala at Ernakulam wherein the  

impugned judgment came to be rendered.

The High Court while reversing the judgment of the trial Court found  

the appellant guilty of the offence and sentenced her to pay a fine of  

Rs.30 lakhs and in default to pay the fine amount directed her to  

undergo simple imprisonment for 1 ½ years. It was further directed  

that on realization of the fine amount, the same should be paid to the  

complainant under Section 357(1) of Cr.P.C. Appellant was also  

directed to appear before the trial Court on 17.07.2010 to make the  

payment of the fine amount. It was further directed that in default of  

appearance before the trial Court, the trial Court would be free to  

proceed against the appellant for taking coercive steps for executing  

the sentence.

At the time when special leave petition was moved, based on the

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undertaking of the appellant, she was directed to deposit a sum of  

Rs.25 lakhs in the trial Court within two weeks. Subject to the said  

condition notice was issued and interim stay was also granted subject  

to fulfillment of the said condition. Subsequently, it was reported on  

10.11.2010 that the amount directed to be deposited was also  

deposited.

We have heard Mr. Basava Prabhu Patil, Senior Counsel for the  

appellant and Shri V. Giri, Senior Counsel for the respondent. We  

have also perused the material papers placed before us, the judgment  

of the trial Court as well as that of the High Court.  

Mr. Basava Prabhu Patil, Senior Counsel for the appellant in his  

submissions primarily contended that the appellant discharged her  

burden by rebutting the initial presumption contemplated under  

Section 118 read along with Section 139 of the Act and that having  

regard to the overwhelming preponderance of probabilities existing in  

favour of the appellant, the trial Court rightly concluded that the  

appellant was entitled for the acquittal. The learned Senior Counsel  

further contended that the overwhelming evidence available on record  

which was considered by the trial Court, though was referred to by  

the High Court in the impugned judgment has been completely  

omitted to be considered while reversing the order of acquittal of the

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trial Court. The learned Senior Counsel, therefore, contended that the  

impugned judgment of the High Court was liable to be set aside.  

Apart from the above submission, the learned Senior Counsel by  

referring to Sections 8, 9, 138, 139 and 142 of the Act sought to raise  

a contention based on the specific expression “Holder” and “Holder in  

due course” used in those provisions to contend that the respondent  

cannot be said to have fulfilled the requirement of the said provisions  

in order to avail the benefits under the provisions of the Act. Learned  

Senior Counsel relied upon the decision of this Court, M.S. Narayana  

Menon alias Mani Vs. State of Kerala and another reported in  

(2006) 6 SCC 39, in support of his submissions.  

As against the above submissions Mr. V. Giri, Learned Senior  

Counsel for the respondent contended that the appellant was  

prevaricating in her stand as regards the issuance of the cheque,  

namely, the one in her reply to the lawyer’s notice and the other  

before the Court, in her written statement. The learned Senior  

Counsel by referring to Annexure R-3 and R-4 contended that the  

contents of the said documents proved appellant’s liability to the  

respondent and that the appellant miserably failed to rebut the initial  

presumption relating to the issuance of the cheque in favour of the  

respondent. As regards the submission based on Sections 8, 9, 138,  

139 and 142 of the Act, made by the learned counsel for the

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appellant it was contended that the said contention has been raised  

for the first time in this Court and that in any event the status of the  

respondent as payee/holder of the cheque was duly proved.  

Having heard learned counsel for the respective parties and having  

bestowed our serious consideration to the contentions raised, at the  

very outset, we wish to state that while the trial Court made every  

effort to examine the claim of the respondent as regards the issuance  

of the cheque by the appellant in his favour and the stand of the  

appellant by referring to the respective documentary evidence as well  

as the version of P.W.1 before reaching the conclusion about the guilt  

of the appellant, we find that the High Court completely failed to  

consider and appreciate the documents marked on the side of the  

appellant. We find that though the High Court made a reference to  

those specific Exhibits, the attention to which was drawn by the  

learned counsel, namely, Exhibit D-3, Exhibits P-6 to P-8, Exhibits D-

4(A) to D-4(F) series vouchers as well as Exhibit D-4(J) voucher  

unhesitatingly stated that he did not propose to enter into any finding  

on merit as the same was unwarranted in the case on hand  

considering the nature of allegations and claim contained in the case.  

It also went on to state that in spite of those materials, in its  

conclusion, the appellant failed to produce whatever records available  

in her possession to show that no amount was due from her to the

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respondent. When we made a comparative consideration of the  

analysis made by the trial Court while holding that no offence was  

made out as against the appellant, as against the above reasoning of  

the learned Judge, in the order impugned in this appeal, we are  

convinced that the High Court has failed to discharge its onerous  

responsibility of considering the material evidence available on record  

which were brought to its notice and for the reasons best known, the  

High Court blatantly declined to examine those materials by simply  

stating that the same was not warranted.

In order to appreciate the correctness of the impugned judgment of  

the High Court, as well as, that of the trial Court, it will be  

worthwhile to refer to certain conclusions drawn by the learned trial  

Judge by making specific reference to the various documentary  

evidence placed before it vis-à-vis the oral version of the complainant  

himself. The significant admission of the respondent as P.W.1 was  

noted by the trial Court as under:

The construction work entrusted with the respondent had to be  

completed for a total sum of Rs.78,70,678/- as stated in Exhibit  

D-3.

Respondent admitted that he had not completed the work and that  

he would have got payment only after the measurement of the

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quantity of the work done.

All the amounts received from the accused were noted in Exhibit P-

9.

It was admitted that a sum of Rs.12,60,100/- mentioned in  

Exhibit D-4 series voucher was not noted in Exhibit P-9.

The amount received by him from the accused for conducting  

earth work was also not included in Exhibit P-9.

The respondent received various amounts by cheques and cash.  

He, however, denied the suggestion that the accused gave two  

cheques to one Joychen Manthurthy by way of security on  

23.10.2001 while borrowing Rs.5 lakhs from the said person.  

It was admitted by the respondent that flooring of the building was  

done by the appellant herself and the expenses were not included  

in the bill.  

The respondent admitted that he had received Rs.77,31,500/- as  

per Exhibit P-9 statement while the total amount of work as per  

Exhibit D-3 agreement was Rs.78,70,678/-.  

The respondent, however, denied the suggestion that excess  

payments were made by the appellant to him.  

Respondent also admitted that he did not complete the work and  

the flooring was ultimately done by the appellant herself.  

It was not in dispute that the final payment was to be settled only  

after completion of the work and that the respondent did not

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complete the work.  

There was no evidence to conclude that any measurement of the  

work was done and the accounts were settled.  

As regards the variation in the stand of the appellant, namely, the  

one in the reply notice and the other in the written statement the  

same did not materially affect the stand of the appellant in the  

light of the overwhelming evidence in support of her stand.

The fact that the cheque was not in the handwriting of the  

appellant strengthens the defence version that it was not executed  

in favour of the respondent.

There was no reliable documentary evidence adduced by the  

complainant to hold that a sum of Rs.25 lakhs was due to him  

warranting execution of Exhibit P-1 cheque.  

There was no amount legally due to the respondent to hold that  

Exhibit P-1 cheque was as a matter of fact issued by the appellant  

in favour of the respondent in order to hold that he was a holder of  

the cheque.

It was based on the above reasoning, the trial Court ultimately  

concluded that no offence was made out as against the appellant  

under Section 138 of the Act in order to convict her under Section  

142 of the Act. While such an elaborate consideration was made by  

the trial Court for acquitting the appellant, it will be appropriate to

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refer to the nature of consideration made by the High Court which  

has been stated in paragraph 13 of the impugned judgment, which is  

to the following effect:

“13. Another point vehemently raised by the counsel for  the respondent/accused is that no amount is due from the  accused to the complainant so as to issue Ext.P1 cheque. In  order to substantiate the above submission, the learned  counsel has taken me through the documents namely,  Ext.D3, Exts.P6 to P8 final bills and Ext.D4(A) to D4(F) series  vouchers and also Ext.D4(J) voucher. Regarding     this    submission,     I     am     not     proposed     to     enter     into     any     finding     on    merit     as     the     same     is     unwarranted     in     the     present     case    considering     the     nature     of     allegations     and     claim     contained     in    this     case.     But     from     the     materials     and     evidence     on     record,     it     is    crystal     clear     that     the     accused     miserably     failed     to     produce    whatever     records     which     she     was     in     possession     to     show     that    no     amount     is     due     from     the     accused     to     the     complainant  . On  the other hand, the attempt was to interpret and explain the  documents produced by the complainant. Admittedly, no  payment was made to the complainant otherwise than  through the vouchers and cheques. If that be so, by  producing those documents, the defence plea can be  established. But there was no attempt in this regard. When  the accused has admitted the transaction claimed by the  complainant and the complainant has established his claim  that there was outstanding amounts due from the accused to  the complainant out of the contract work undertaken by him  under Ext.D3 agreement, it is for the accused to establish  that no amount is due to the complainant by producing  cogent and concrete evidence if they are sticking on their  stand.

(underlining is ours)   

We can understand if the High Court had considered those Exhibits,  

the attention of which was drawn to it and stated as to how it was not  

in a position to agree with the conclusions drawn by the learned trial  

Judge. The above statement contained in paragraph 13 of the

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impugned judgment discloses that the attention of the High Court  

was drawn to the specific Exhibits which were relied upon by the  

appellant and referred to by the learned trial Judge to reach a  

conclusion about the guilt or otherwise of the appellant. After  

referring to those Exhibits, unfortunately, we find that in the very  

next sentence the High Court proceeded to state that the appellant  

failed to produce any material which was in her possession to show  

that no amount was due from the appellant to the respondent. Such  

an approach of the High Court, in our considered opinion, has  

displayed the total perversity in its approach while reversing the  

order of the trial Judge. Even, Mr. V. Giri, learned Senior Counsel for  

the respondent in spite of his best efforts was unable to convince us  

to support the above conclusion found in the judgment of the High  

Court.  

That apart having considered the conclusions of the learned trial  

Judge, we find that those conclusions were drawn by adducing  

cogent and convincing reasoning and we do not find any fault in the  

said conclusions drawn by the learned trial Judge. In the  

circumstance, the principles set out in the decision relied upon by the  

learned counsel for the appellant in M.S. Narayana Menon alias  

Mani (supra) as regards the presumption to be drawn and the  

preponderance of probabilities to be inferred, as set out in

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paragraphs 31 to 33, are fully satisfied. Those principles, set out in  

paragraphs 31 to 33, can be usefully referred to which are as under:

“31. A Division Bench of this Court in Bharat Barrel & Drum  Mfg. Co. v. Amin Chand Payrelal albeit in a civil case laid down  the law in the following terms: (SCC pp. 50-51, para 12)

“12. Upon consideration of various judgments as  noted hereinabove, the position of law which emerges  is that once execution of the promissory note is  admitted, the presumption under Section 118(a)  would arise that it is supported by a consideration.  Such a presumption is rebuttable. The defendant can  prove the non-existence of a consideration by raising  a probable defence. If the defendant is proved to have  discharged the initial onus of proof showing that the  existence of consideration was improbable or doubtful  or the same was illegal, the onus would shift to the  plaintiff who will be obliged to prove it as a matter of  fact and upon its failure to prove would disentitle him  to the grant of relief on the basis of the negotiable  instrument. The burden upon the defendant of  proving the non-existence of the consideration can be  either direct or by bringing on record the  preponderance of probabilities by reference to the  circumstances upon which he relies. In such an  event, the plaintiff is entitled under law to rely upon  all the evidence led in the case including that of the  plaintiff as well. In case, where the defendant fails to  discharge the initial onus of proof by showing the  non-existence of the consideration, the plaintiff would  invariably be held entitled to the benefit of  presumption arising under Section 118(a) in his  favour. The court may not insist upon the defendant  to disprove the existence of consideration by leading  direct evidence as the existence of negative evidence  is neither possible nor contemplated and even if led,  is to be seen with a doubt.”

This Court, therefore, clearly opined that it is not necessary for  the defendant to disprove the existence of consideration by way  of direct evidence.

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32. The standard of proof evidently is preponderance of  probabilities. Inference of preponderance of probabilities can be  drawn not only from the materials on record but also by  reference to the circumstances upon which he relies.

33. Presumption drawn under a statute has only an evidentiary  value. Presumptions are raised in terms of the Evidence Act.  Presumption drawn in respect of one fact may be an evidence  even for the purpose of drawing presumption under another.”

Applying the abovesaid principles to the case on hand, we find that  

the judgment of the trial Court in having drawn the conclusions to  

the effect that the appellant sufficiently rebutted the initial  

presumption as regards the issuance of the cheque under Sections  

138 and 139 of the Act, was perfectly justified. We also find that the  

preponderance of probabilities also fully support the stand of the  

appellant as held by the learned trial Judge. The judgment of the  

High Court in having interfered with the order of acquittal by the  

learned trial Judge without proper reasoning is, therefore, liable to be  

set aside and is accordingly set aside. Consequently, the conviction  

and sentence imposed in the judgment impugned is also set aside.  

Having regard to our above conclusions, the amount deposited by the  

appellant with the trial Court in a sum of Rs.25 lakhs with accrued  

interest, if any, shall be refunded to her forthwith on production of a  

copy of this judgment. The appeal stands allowed with the above  

directions.

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          …..……….…………………………...J.                         [Dr. B.S. Chauhan]

   …………….………………………………J.                      [Fakkir Mohamed Ibrahim Kalifulla]

New Delhi; October 12, 2012