The accused can rebut the presumption under S.139 of the Negotiable Instruments Act, shifting the burden to the complainant to prove the consideration for the cheque.

JUDGMENT

1. This Appeal is filed against the order of acquittal in Criminal Appeal No.17/2002 on the file of Additional Sessions Court, Kozhikode. The first appellate court reversed the conviction and sentence passed under S.138 of the Negotiable Instruments Act, 1881 (hereinafter ‘the Act’) and acquitted the respondent (hereinafter ‘the accused’).

A learned Single Judge having come across conflicting opinions in Divakaran v. State of Kerala (2016 (4) KLT 233) and Surendra Das B. v. State of Kerala (2019 (2) KLT 895), the case was referred for resolution of conflict to the Division Bench.

2. The case of the appellant (hereinafter ‘the complainant’) is that accused owed an amount of Rs. 30,00,000/- to the complainant and in discharge of the liability, issued Ext.P1 cheque. On presentation of the cheque for collection, it was returned due to ‘insufficiency of funds’ in the account of the accused. Statutory notices were issued in the residential as well as office address of the accused. In spite of receipt of notices, accused neither responded nor paid up the money. The complainant was examined as Pw1 and Exts.P1 to P6 marked and the accused examined himself as Dw1 and the Branch Manager as Dw2, marking Ext.D1 to D7 in defence.

3. In Divakaran a learned Single Judge held that the nature and date of transaction and the date of issuance of cheque are material facts; which if not disclosed in the statutory notice, the doors of the Court would be closed for such ‘fortune seekers’. It was held that an accused, in a complaint filed under S.142 of the Act, is entitled to know before trial the material particulars of the accusation levelled; suppression of which would entail acquittal, without anything more.

4. Whereas in Surendra Das another learned Single Judge of this Court held that omission or error in the notice to state the nature of debt or liability does not render it invalid. It was noticed that no form is prescribed under clause (b) of proviso to S.138 of the Act and it was found, there is no requirement under S.138 of the Act that the complainant must specifically allege the nature of the debt or liability and a demand as specified in clause (b) of Section 138 would suffice.

5. Noticing the conflict of opinion in the decisions and doubting Divakaran, the issue referred was as to whether without full disclosure of the details of the transaction in the notice of demand; i.e., of what constitutes valid consideration, the statutory notice would be rendered invalid or not. At the outset we notice a Division Bench decision of this Court in Kallara Sukumaran v. Union of India (1987 (1) KLT 226) which held that a single Judge is not empowered to refer a question of law alone and the entire case has to be referred. We would hence attempt to resolve the conflict first and then look at the merits of the appeal.

6. According to the complainant, the dictum laid down in Divakaran is against the settled position of law laid down by the Apex Court in various decisions and also of this Court and hence ought to be reversed. The respondent argues for reversing Surendra Das, so as to sustain the order of acquittal.

7. Chapter XVII was inserted in the Act, as per Act 66 of 1988 introducing S.138 to S.147. The very object of introduction of Chapter XVII was to encourage the use of cheques and enhance the credibility of the instrument, with adequate safeguards to prevent harassment of honest drawers. The amendment foresaw the development of businesses, in the wake of opening up of the economy and ensured an effective and quick remedy quite distinct from the existing cumbersome procedure and deterrent penalties.

8. Section 138, takes in every cheque drawn by a person, maintaining an account with a banker, to another person in discharge of a liability, either in whole or part. It contemplates the contingency of dishonour of the cheque issued, due to insufficiency of funds or exceeding the arrangement with the banker when an offence is deemed to have been comm