The High Court of Kerala has dismissed a criminal appeal filed by Sree Gokulam Chit and Finance Co. (P) Ltd., upholding the acquittal of an accused in a cheque dishonour case. The Court ruled that the complainant failed to prove that the cheque was issued in discharge of a legally enforceable debt, noting significant gaps in evidence, including the failure to produce the alleged guarantee agreement.
Justice Johnson John, presiding over the matter, affirmed the judgment of the Additional District & Sessions Court (Adhoc)-II, Thodupuzha, which had overturned the trial court’s conviction of the accused, Anu Thomas. The High Court observed that the evidence provided by the complainant’s witnesses was vague and lacked direct knowledge regarding the transaction and the execution of the cheque.
Background of the Case
The appeal arose from a complaint filed by Sree Gokulam Chit and Finance Co. (P) Ltd. under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The company alleged that the husband of the accused had subscribed to two chitties conducted by their Thodupuzha Branch, for which the accused stood as a guarantor.
According to the complainant, the subscriber defaulted on instalments. To discharge the liability, the accused allegedly issued a cheque dated July 21, 2005, for Rs. 2,10,279/-. The cheque was dishonoured upon presentation due to “insufficiency of funds.” Despite a statutory notice, the amount remained unpaid.
The Judicial Magistrate of First Class-I, Thodupuzha, initially convicted the accused, sentencing her to one year of simple imprisonment and ordering compensation of Rs. 2,10,279/-. However, on appeal, the Sessions Court set aside this conviction and acquitted her, prompting the finance company to approach the High Court.
Arguments of the Parties
The counsel for the appellant (complainant) argued that the Sessions Court erred in setting aside the trial court’s judgment. It was contended that since the accused did not dispute her signature on the cheque, the complainant was entitled to the benefit of statutory presumptions under the NI Act.
Conversely, the counsel for the accused argued that the complainant failed to disclose the specific date of execution and issuance of the cheque. The defence maintained that the company had obtained blank cheques from the accused and her husband at the time of disbursing the prize amount and subsequently misused them. Crucially, the defence pointed out that the complainant did not produce the alleged guarantee agreement executed by the accused.
Court’s Analysis and Observations
The High Court meticulously analysed the evidence of the complainant’s witnesses, PW1 (Assistant Business Manager) and PW2 (Branch Manager).
The Court noted that PW1, a Power of Attorney holder, admitted in cross-examination that “he has no direct knowledge regarding the liability or remittance in the chitty account and he is deposing on the basis of the available documents.” PW1 also confirmed that the accused had not executed any guarantee agreement undertaking to pay the instalments upon her husband’s default.
Regarding the testimony of PW2, the Branch Manager, the Court observed that while he claimed the accused signed the cheque in his presence, his evidence was “vague to the core.” The Court stated:
“It is pertinent to note that PW2 has not deposed anything regarding the date on which the accused signed and handed over the cheque. The complainant company has also not produced the guarantee agreement said to be executed by the accused in favour of the company.”
The Court highlighted contradictions regarding the payments. PW2 admitted that the husband of the accused had made payments in February 2005 and December 2005, while the cheque in question was dated July 21, 2005. The Court referenced the Supreme Court’s decision in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel [(2023) 1 SCC 578], reiterating that “the cheque must represent the legally enforceable debt as on the date of its presentation.”
Furthermore, the Court discussed the standard of proof required for an accused to rebut the presumption under Section 139 of the NI Act. Citing Basalingappa v. Mudibasappa and M.S. Narayana Menon v. State of Kerala, Justice Johnson John observed:
“It is well settled that the standard of proof which is required from the accused to rebut the statutory presumption under Sections 118 and 139 of the N.I Act is preponderance of probabilities and that the accused is not required to prove his case beyond reasonable doubt.”
Decision
The High Court concluded that the accused successfully raised a probable defence, casting serious doubt on the existence of a legally enforceable debt. The Court held:
“On a careful re-appreciation of the entire evidence, I find that the complainant has not succeeded in proving that the accused issued Exhibit P4 cheque in discharge of a legally enforceable debt and having regard to the material contradictions brought out in the cross examination of PWs 1 and 2, I find that the view taken in the impugned judgment is a possible view.”
Consequently, the appeal was dismissed.
Case Details:
- Case Title: Sree Gokulam Chit And Finance Co. (P) Ltd. vs. Anu Thomas And Another
- Case No: Crl. Appeal No. 787 of 2008
- Court: High Court of Kerala at Ernakulam
- Bench: Justice Johnson John
- Citation: 2025:KER:96683
