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2023 Supreme(Online)(KER) 36329
HIGH COURT OF KERALA
A.BADHARUDEEN, J
prana educational and charitable trust – Appellant
Versus
state of kerala – Respondent
Revision Petition | S.T. No.2278/2016 | Crl.A. No.176/2019
For the Appellants/Petitioners: None
For the Respondents: Public Prosecutor
A Trust can be prosecuted for dishonoring a cheque under Section 138 of the Negotiable Instruments Act, recognizing it as a juristic person liable for penalties.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Criminal Procedure Code - Section 401 - Cheque dishonour - Prosecution against Trust not maintainable - It was held that a Trust, being an artificial person, can be prosecuted under Section 138, according to the definition of 'drawer' - Legal principles established from multiple High Court rulings discussed. (Paras 10, 21, 22)
(B) Presumptions under Negotiable Instruments Act - The court highlighted the rebuttable presumption in favour of the complainant under Sections 118 and 139 when a cheque is produced - The accused's inability to rebut these presumptions was acknowledged. (Paras 23, 24)
Facts of the case:
The complainant alleged dishonour of a cheque issued by a charitable Trust in discharge of a loan. The accused contested the legal validity of prosecuting the Trust.
Findings of Court:
The court reaffirmed precedents allowing prosecution of a Trust under Section 138 and confirmed the guilt of the accused based on evidence presented.
Issues: Can a Trust be prosecuted under Section 138 of the N.I. Act?
Ratio Decidendi: The court ruled that a Trust can face criminal prosecution under Section 138; the burden lies on the accused to prove a rebuttable defense against the cheque's issuance as related to a debt.
Result: The revision petition was dismissed; the conviction was upheld.
| Table of Content |
|---|
| 1. complaint of cheque dishonor leads to prosecution under n.i. act. (Para 4 , 5) |
| 2. prosecution of a trust for cheque offence is validated. (Para 10 , 17) |
| 3. initial presumptions regarding cheque issuance favour complainant. (Para 23 , 24) |
| 4. revision dismissed confirming previous findings. (Para 35) |
ORDER
Dated this the 18th day of September, 2023
This revision petition has been filed under Sections 397 and 401 of Code of Criminal Procedure (hereinafter referred as Cr.P.C. for convenience). The revision petitioners are the accused in S.T. No.2278/2016 on the files of the Court of Special Judicial First Class Magistrate (N.I.Act Cases), Kozhikode and the appellants in Crl.A. No.176/2019 on the files of the Sessions Court, Kozhikode Division. The respondents herein are the original complainant as well as the State of Kerala.
2. I would like to refer the parties in this revision petition as 'complainant' and 'accused' hereinafter, for convenience.
3. Heard the learned counsel for the accused and the learned Public Prosecutor, representing State as well as the learned counsel appearing for the 2nd respondent/ complainant.
4. The case put up by the complainant before the trial court was that in order to discharge liability to the complainant and her husband to the tune of Rs.9,50,000/-, the 2nd accused issued cheque for Rs.9,50,000/- dated 03.04.2013 drawn on the account maintained by the 1st accused (Prana Educational and Charitable Trust) and the said cheque was dishonored for the reason “funds insufficient”. Accordingly, the complainant launched prosecution against the accused alleging commission of offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred as N.I.Act for convenience), since the accused failed to make the payment of the cheque amount on demand, within the statutory period.
5. Initially, the complaint was filed before the Judicial First Class Magistrate Court No.III, Kozhikode and the learned Magistrate took cognizance of the offence and numbered the case as C.C. No.499/2014. While so, in view of the decision of the Apex Court reported in[2014 (3) KLT 605] Dasharath Roopsingh Rathod v. State of Maharashtra and another, the complaint was represented before the Judicial First Class Magistrate Court-II, Mananthavadi and numbered as S.T. No.2205/2014. Then the case was returned to be presented before the Judicial First Class Magistrate Court-V, Kozhikode as per order dated 31.07.2015 on the ground of change of territorial jurisdiction in view of the amendment to Section 142 of Negotiable Instruments Act. Thereafter, the Judicial First Class Magistrate Court-V, Kozhikode returned the case records to Judicial First Class Magistrate Court-II, Mananthavadi and the case got renumbered as S.T. No.731/2016.
6. Learned Judicial First Class Magistrate Court-II, Mananthavadi secured the presence of accused for trial and finally tried the matter. During trial, PWs 1 and 2 were examined and Exts.P1 to P13 were marked on the side of the complainant. After questioning the accused under Section 313(1)(b) of the Cr.P.C., when opportunity was given, no witness examined on the side of the accused, but Ext.D1 marked on the side of the accused.
7. On appreciation of evidence, the trial court convicted and sentenced the accused as under:
“In the result, the first accused is convicted and sentenced u/s 255(2) of the Code of Criminal Procedure to pay fine of Rs.1000/- (Rupees One Thousand Only) and the second accused is convicted and sentenced to pay a fine of Rs.9,50,000/- for offence under section 138 of the Negotiable Instruments Act. In default of payment of fine, the second accused shall undergo simple imprisonment for a period of 5 (Five) months. The fine amount realised from the accused shall be paid to the complainant as compensation u/s. 357 (1) (b) of .”
8. Although, the accused challenged the conviction and sentence imposed by the trial court, before the Sessions Court, Kozhikode,
