M.S. NARAYANAN MENON @ MANI versus STATE OF KERALA AND ANR.

Citation: [2006] SUPP. 3 S.C.R. 124 · Decided: 04-07-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
M.S. NARAYANAN MENON @ MANI 
v. 
STATE OF KERALA AND ANR. 
JULY 4, 2006 
[S.B. SINHA AND P.P. NAOLEKAR, JJ.] 
Negotiable Instruments Act; Ss. l/8(a), 138 and 139: 
Dishonour of a Cheque-Complaint-Notice-Trial Court found accused-
C share-broker guilty of committing offence under Section 138 of the Act-
Reversed by the first Appellate Court-Appeal against allowed by High Court-
on appeal, Held: A member of Stock Exchange is required to maintain books 
of accounts in a particular manner-The accused did not maintain statutOly 
books of account in terms of bye-laws of the Stock Exchange and also did not 
D produce the same before the Court-The Cheque in question was allegedly 
issued by the accused in discharge of his debt-Thus, liability arose in terms 
of that transaction-Under the circumstances, accused required only to 
discharge initial onus of proof, he need not require to disprove the case of the 
prosecution-Onus on the accused is not as heavy as that on the prosecution-
Evidence adduced by the parties before the trial Court concludes that the 
E accused had discharged his initial burden but the complainant had not been 
able to prove his case-The accused clearly stated that the Cheque was issued 
by him by way of security and not in discharge of debt-The statement accepted 
as probable-Thus the Cheque in question cannot be held to have been issued 
in discharge of the debt-Hence, provisions of Section 138 of the Act not 
F attracted-Evidence Act, 1872--Ss. 3 and 4 . 
G 
H 
.Jurisdiction of High Court: 
Revisional!Appellate jurisdiction of the High Court-Exercise a/-
Discussed 
The Appellant used to carrY, on transactions in shares through the 
Second Respondent, a membt~r of Stock Exchange. They have been on 
business terms for some time. Allegedly, a sum of Rs. 3,00,033/-was due 
to the second respondent from the Appellant in relation to the said -
transactions. The Appellant allegedly paid a sum of Rs. 5000/- in cash and 
124 
M.S. NARAYANAN MENON@ MANI v. ST A TE OF KERALA 
125 
issued another Cheque drawn on Vijaya Bank for the balance amount. A 
When the Cheque was presented for encashment through the same banker, 
it was dishonoured as the funds in the account of the Appellant were found 
to be insufficient. A complaint petition was filed by the Second Respondent 
against the Appellant purported to be for commission of an offence under 
Section 138 of the Negotiable Instruments Act. A notice was issued to him. B 
His defence was that the first Cheque was a blank Cheque given by him 
to Respondent No. 2 by way of security. The second Cheque was issued 
later and the same had been given for the purpose of discounting. 
The Trial Court held that the Appellant had failed to discharge the 
onus placed on him in terms of Section 139 of the Act. A verdict of guilt C 
was recorded against the Appellant. He was sentenced to undergo rigorous 
imprisonment for one year. On an appeal preferred thereagainst by the 
Appellant, the judgment of conviction and sentence was set aside by the 
appellate Court. However, appeal against the order of the appellate Court 
was allowed by the High Court. Hence the present appeal. 
D 
Appellant contended that the Trial Court and the High Court 
misconstrued and misinterpreted Section 139 of the Act and furthermore 
failed to take into consideration the principle of law that once the accused 
discharges the initial burden placed on him, the burden of proof would 
revert back to the prosecution; and that the High Court acted illegally 
and without jurisdiction in arriving at the finding that it was for the E 
accused to prove his innocence by adducing positive evidence for rebutting 
the statutory presumption that he had not received the Cheque of the r 
na~ure referred to under Section 138 of the Act for the discharge, in whole 
or in part, of any debt or other liability. 
F 
Respondent submitted that the Appellant did not dispute the 
statement of accounts in relation to the transactions and he had also 
acknowledged his liability in relation to some of the transactions and the 
dispute being only in relation to the quantum of debt; and that statutory 
presumption in terms of Section 139 of the Act although is a rebuttable 
one, the question will have to be determined upon taking into consideration G 
another presumption drawn in terms ofSection 118(a) thereof. 
Allowing the appeal, the Court 
HELD: I. I. The High Court, in view of the findings of fact arrived 
at by the appell

Excerpt shown. Read the full judgment & AI analysis in Lexace.