Point of Law: It is wrong to equate defense evidence with complainant’s evidence and extend option available to complaint also to accused under Section 145 of N.I. Act.

JUDGMENT :

The appellant questions the legality and correctness of the judgment passed by the Court of the Judicial First Class Magistrate, Kolencherry, in S.T.No.70/2008, acquitting the first respondent – accused – holding him not guilty for the offence under Section 138 of the Negotiable Instruments Act, 1881 (for brevity, ‘N.I.Act’).

Relevant Factual Matrix:

2. The appellant had filed the complaint before the court below, alleging that the first respondent had borrowed an amount of Rs.2,00,000/-from him and in the discharge of the debt, the first respondent had issued Ext P1 cheque. The cheque on presentation to the bank for collection was returned with an endorsement ‘payment stopped by the drawer’.

Although the appellant had issued Ext P4 statutory notice, the first respondent failed to pay the demanded amount. Instead, the first respondent sent Ext P7 reply notice alleging that he was not liable to pay any amount. Hence, the first respondent committed the offence under Section 138 of the N.I. Act. The first respondent appeared and pleaded not guilty to the substance of the accusation against him. Consequently, the complaint was posted for trial.

Trial

3. The appellant was examined as PW1 and Exts P1 to P7 were marked in evidence. The first respondent was questioned under Section 313 of the Code of Criminal Procedure(Cr.P.C) and he denied the incriminating circumstances against him. The first respondent got himself and two other witnesses examined as DWs 1 to 3 and marked Exts.D1 to D5 through them.

Trial Court judgment

4. After analysing the materials on record, the learned Magistrate, by the impugned judgment, found the first respondent not guilty for the offence under Section 138 of the N.I. Act.

5. Heard; Kumari Annet Jerald., the learned counsel for the appellant, Smt.Litha T., the learned counsel for the first respondent and Smt.Seetha S., the learned Senior Public Prosecutor appearing for the second respondent – State.

6. The learned counsel for the appellant strenuously argued that the learned Magistrate had failed to appreciate Sections 138 and 139 of the N.I. Act and the materials on record in their proper perspective. Instead, the court below has blindly accepted the defence version of the first respondent and passed the impugned judgment. Her two cardinal contentions were (i) there was a material irregularity in the procedure adopted by the learned Magistrate, who permitted the defence witnesses to file proof affidavits in lieu of their examination in chief in flagrant violation of the mandate under Section 145 (1) of the N.I.Act and the law declared by the Honourable Supreme Court in Mandvi Cooop. Bank Ltd.(M/s.) v. Nimesh B. Thakore [2010 (1) KHC 310] and the decision of this Court in Tomy T.J. v. State of Kerala and Another [2017 (2) KHC 841] and (ii) the learned Magistrate has committed an error in holding that the offence under Section 138 of the N.I.Act is not attracted because the cheque got dishonoured for the reason of ‘payment stopped by the drawer’ and not ‘insufficient funds’, which is against the decisions of the Honourable Supreme Court in M.M.T.C. Ltd. v. Medchil Chemicals and Pharma (P) Ltd.[2002 KHC 241], Laxmi Dyechem (M/s.) v. State of Gujarat and Others [2012 (4) KHC 826] and HMT Watches Ltd. v. M.A. Abida and Another [2015(2) KHC 264]. Hence, she prayed that the appeal be allowed.

7. The learned counsel for the first respondent defended the impugned judgment and contended that the learned Magistrate had rightly found that the cheque was not issued in discharge of a legally enforceable debt. She submitted that the appellant and the first respondent are brothers. The first respondent had issued Ext P1 cheque to the appellant as per the covenants in Ext D5 Will deed executed by their late father. But, as the appellant refused to register the receipt acknowledging the receipt of the cheque; the first respondent was constrained to issue Ext D2 stop payment to his bank and Ext D4 letter to the appellant. E