1. This appeal by the complainant is against the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 (‘N.I Act’ for short).

2. As per the complaint, the husband of the accused subscribed two chitties conducted by the Thodupuzha Branch of the complainant company and the accused was the guarantor in both the chitties. The subscriber committed default in payment of the instalments and after issuance of notice to the subscriber and the guarantor, the accused issued cheque dated 21.07.2005 for Rs.2,10,279/- to the complainant company in discharge of the liability.

3. When the complainant company presented the cheque for collection, the same was dishonoured due to insufficiency of funds in the account of the accused and in spite of issuance of statutory notice, the accused failed to pay the cheque amount to the complainant.

4. Before the trial court, PWs 1 and 2 were examined and Exhibits P1 to P11 were marked from the side of the complainant and from the side of the accused, DWs 1 and 2 were examined and Exhibits D1 to D4 were marked.

5. After analyzing the evidence, the trial court found the accused guilty of the offence under Section 138 of the N.I. Act and sentenced to undergo simple imprisonment for one year and to pay compensation of Rs.2,10,279/- to the complainant under Section 357(3) of Cr.P.C. and in default of payment of compensation, to undergo simple imprisonment for three months.

6. The accused challenged the judgment of the trial court in Crl. Appeal No. 71 of 2007 and as per the judgment dated 21.5.2007 of the learned Additional District and Sessions Judge, (Adhoc-II), Thodupuzha, the accused was found not guilty and she was acquitted. The present appeal is filed challenging the above judgment in Crl. Appeal No. 71 of 2007 setting aside the trial court judgment and acquitting the accused.

7. Heard Sri. K. Aravind Menon, the learned counsel representing the learned counsel for the appellant on record, Sri. T.J. Michael, the learned counsel for the accused/first respondent and Sri. Alex M. Thombra, the learned Senior Public Prosecutor for the second respondent.

8. The learned counsel for the appellant argued that the finding of the Sessions Court setting aside the trial court judgment and acquitting the accused is without appreciating the evidence in a proper manner. It is argued that the accused has not disputed the signature in the cheque and that the Sessions Court ought to have found that the complainant is entitled for the benefit of the statutory presumptions.

9. The learned counsel for the accused/first respondent argued that the complainant has not disclosed the date of execution and issuance of the cheque in the complaint or in the chief affidavit of PW1 and that the complainant has also not produced the alleged guarantee agreement executed by the accused and there is no satisfactory evidence regarding the actual liability of the husband of the accused in the chitty transaction as on the date of the cheque. It is also argued that the specific case of the accused is that the complainant company obtained blank cheques of the accused and her husband at the time of giving the prize amount of the chitties to the husband of the accused and the complainant misused the cheque for filing the complaint and no amount was due from the accused to the complainant.

10. PW1 is the Assistant Business Manager of the complainant company, who filed the complaint on the basis of Exhibit P1, power of attorney executed by the Managing Director of the company in favour of PW1 on 06.09.2004. The original chief affidavit of PW1 is dated 20.06.2006 and additional chief affidavit is seen filed on 10.08.2006 and in the additional chief affidavit, it is stated that a resolution was passed by the Board of Directors of the company on 27.08.2004 authorising and empowering PW1 to represent the company and a true copy of the resolution is marked as Exhibit P9.

11. In cross examination, PW1 categorically stated that the accused has not executed any guarantee agreement undertaking to pay the chitty instalments on the default of her husband. The debt acknowledgment of chitty bearing No. J2F/93/03 dated 24.3.2004 is marked as Exhibit P10 and the debt acknowledgment of chitty bearing No.G2F/0280/KDM/08 dated 24.3.2004 is marked as Exhibit P11. According to PW1, as per Exhibit P10, Rs.1,36,050/- is due as on 24.03.2004. But, the same is not reflected in Exhibits P2 and P3 ledger extract of the chitty account produced.

12. PW1 further admitted in cross examination that he cannot identify the handwriting in Exhibits P10 and P11. PW1 has no case that he witnessed the execution or issuance of the cheque by the accused. He also admitted 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. The evidence of PW1 in cross examination also shows that he never had any occasion to see the original of Exhibit P9, resolution of the Board of Directors.

13. PW2 is the Branch Manager of the complainant company at Thodupuzha. According to PW2, the husband of the accused subscribed for two chitties and the accused was the guarantor for both the chitties. PW2 deposed that a sum of Rs.2,10,279/- was due and hence, notice was issued to subscriber and guarantor and subsequently, the accused reached  the  branch  office  and  issued  Exhibit  P4  cheque  for Rs.2,10,279/-. PW2 also deposed that the accused signed the cheque in his presence. In cross examination, PW2 deposed as follows:

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14. In cross examination, PW2 admitted that apart from Exhibits P2 and P3, there is no other document relating to Exhibit P4 cheque and he further admitted that the husband of the accused has paid the amounts mentioned in Exhibits P2 and P3. According to PW2, Exhibits D1 and D2 are the passbooks issued to the husband of the accused in connection with the chitty transaction and as per Exhibits D1 and D2, collection of instalments started from 28.07.2003. But, the evidence of PW2 shows that the husband of the accused subscribed for one chitty on 22.9.2003 and the other on 25.09.2003. However, PW2 would say that the amounts collected before the starting of the chitty is entered in the accounts. PW2 denied the suggestion that the amounts collected by the daily collection agent are not entered in the account. He also denied the suggestion that the husband of the accused has paid the entire amounts due in the chitty transaction to the complainant company.

15. In cross examination, PW2 deposed that the last payment as per Exhibit P2 was during February, 2005 and last payment as per Exhibit P3 was during December, 2005. In this connection, it is pertinent to note that Exhibit P4 cheque for Rs.2,10,279 is dated 21.07.2005.

16. It is well settled that the cheque must represent the legally enforceable debt as on the date of its presentation, as held by the Honourable Supreme Court in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel [(2023) 1 SCC 578]

17. DW1 is the Branch Manager of South Indian Bank, Muthalakodam. The evidence of DW1 and Exhibits D3 and D4 shows that the accused opened SB account No. 4269 in the said Branch on 24.03.2003 and there was no transaction in the said account. In cross examination, DW1 stated that Exhibit P4 cheque was issued to the accused and subsequently, the same was dishonoured for insufficiency of funds in the account of the accused as per Exhibit P5 memo.

18. The husband of the accused is examined as DW2. According to DW2, he subscribed for two chitties and at the time of receiving the bid amount on 24.03.2004, the complainant company obtained two cheque leaves each of himself and his wife. DW2 deposed that his wife was the nominee in the chitty and since she was not having a bank account, an account was opened in South Indian Bank, Muthalakodam Branch on 24.03.2004. He would say that he paid the entire instalments in the chitty directly and also through collection agents and no amount is due to the complainant company in the chitty transaction.

19. The learned counsel for the accused argued that the evidence elicited from PWs 1 and 2 during cross examination creates serious doubt about the existence of debt and about the transaction and therefore, the presumption under Section 139 of N.I. Act is rebutted and the defence case stands probabilised, as held in ANSS Rajashekar v. Augustus Jeba Ananth [2019 (2) KHC 155= 2019 (1) KLD 492]

20. In Basalingappa v. Mudibasappa ((2019) 5 SCC 418), the Hon'ble Supreme Court summarised the principles of law governing the presumptions under Sections 118 and 139 of the N.I Act in the following manner:

                  “(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

                  (ii)      The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

                  (iii)     To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

                  (iv)     That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. ”

21.    In Shree Daneshwari Traders (M/s.) v. Sanjay Jain and Another [2019 (4) KHC 495], the Hon'ble Supreme Court followed the principles formulated in Kumar Exports v. Sharma Carpets [2009 KHC 219], wherein it is held as follows :

                  "20. The accused in a trial under S.138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non - existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non - existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non - existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in S.114 of the Evidence Act to rebut the presumptions arising under S.118 and S.139 of the Act."

22. 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. The standard of proof, in order to rebut the statutory presumption, can be inferred from the materials on record and circumstantial evidence.

23. In M.S.Narayana Menon v. State of Kerala [(2006) 6 SCC 39], the Hon'ble Supreme Court considered the nature of the standard of proof for rebutting the presumption under Section 139 of the N.I Act and it was held that if some material is brought on record consistent with the innocence of the accused, which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal.

24. The Honourable Supreme Court in Sanjabij Tari v. Kishore S.Borcar [2025(6) KHC 250(SC)], held that ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether, in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.

25. In this case, the evidence of PW1, the power of attorney holder of the Managing Director of the company, would show that he has no direct knowledge regarding the transaction and the execution and issuance of the cheque. Even though, PW2, Branch Manager of the complainant, deposed that the accused signed the cheque in his presence, he also admitted in cross examination that he has no direct knowledge regarding the transaction and that he is deposing after perusing the records in the office relating to the chitty transaction.

26. PW2 categorically admitted that the husband of the accused has paid the amounts mentioned in Exhibits P2 and P3 and that the amount collected by the daily collection agent will be entered in the passbook marked as Exhibits D1 and D2. The evidence of PW2 in cross examination shows that the complainant company started collection of the instalments prior to the subscription of the chitties on 22.09.2003 and 25.09.2003 respectively. Admittedly, the company started collection of the instalments from 28.07.2003 onwards and the last payment as per Exhibit P3 was during December, 2005. There is no satisfactory evidence as to what exactly was the amount due from the husband of the accused as on 21.07.2005.

27. As noticed earlier, PW1 has no direct knowledge regarding the execution and issuance of the cheque or the chitty transaction. The complainant has not disclosed the date of execution and issuance of the cheque in the complaint or in the evidence of PWs 1 and 2. Even though, PW2 deposed that the accused signed the cheque in his presence, I find that his evidence in this regard is vague to the core. 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.

28. 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 and therefore, the appeal is liable to be dismissed.

                  In the result, this appeal is dismissed.