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Kerala High Court
Abdulla.P vs Manappuram General Finance And Leasing … on 8 August, 2025
Crl.R.P.No.1530 of 2018 1 2025:KER:60802
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE M.B. SNEHALATHA
FRIDAY, THE 8TH DAY OF AUGUST 2025 / 17TH SRAVANA, 1947
CRL.REV.PET NO. 1530 OF 2018
AGAINST THE JUDGMENT DATED 04.09.2018 IN Crl.A NO.2 OF
2015 OF ADDITIONAL SESSIONS COURT - II, MANJERI ARISING OUT OF
THE JUDGMENT DATED 11.12.2014 IN ST NO.466 OF 2011 JUDICIAL
MAGISTRATE OF FIRST CLASS, NILAMBUR
REVISION PETITIONER/APPELLANT/ACCUSED:
ABDULLA.P, AGED 48 YEARS
S/O ALAVI, POTHANKODAN HOUSE, VANIYAMBALAM,
WANDOOR AMSOM, NILAMBUR, MALAPPURAM DISTRICT
BY ADVS.
SRI.P.SAMSUDIN
SHRI.K.C.ANTONY MATHEW
SHRI.JITHIN LUKOSE
RESPONDENTS/RESPONDENTS/COMPLAINANT:
1 MANAPPURAM GENERAL FINANCE AND LEASING LTD
MANAPPURAM HOUSE, VALAPPAD P.O. 680 567, THRISSUR
DISTRICT, REPRESENTED BY MR. JAYAN T. MANAGER AND
CLUSTER HEAD LEGAL
2 STATE OF KERALA
REPRESENTED BY THE PUBLIC PROSECUTOR,
HIGH OF KERALA,ERNAKULAM-682031.
FOR R1 BY ADV SRI.B.S.SURESH KUMAR
R2 K M FAISAL -PUBLIC PROSECUTOR
THIS CRIMINAL REVISION PETITION HAVING COME UP FOR HEARING
ON 31.7.2025, THE COURT ON 08.08.2025 DELIVERED THE FOLLOWING:
Crl.R.P.No.1530 of 2018 2 2025:KER:60802
"C.R"
M.B.SNEHALATHA, J
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Crl.R.P.No.1530 of 2018
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Dated this the 8th day of August, 2025
ORDER
This revision petition is directed against the concurrent
verdict of conviction and order of sentence against the revision
petitioner for the offence punishable under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I
Act).
2. The case of the complainant company is that on 28.06.2007,
the accused entered into a vehicle loan-cum-hypothecation
agreement with it for purchasing a vehicle and availed a loan of
₹1,19,000/-, agreeing to repay the loan amount in 36 monthly
instalments with interest at the rate of 17.7% per annum. But the
accused defaulted in repaying the amount. When demanded back the
amount, he surrendered the vehicle to the complainant, which was
sold in public auction and sale proceeds were accounted towards the
loan amount. The balance amount due was ₹1,11,644/- and in
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discharge of the said liability, accused issued Ext.P4 cheque for
₹1,11,644/- in favour of the complainant company. Upon
presentation of Ext.P4 cheque, it was returned dishonoured due to
insufficient funds in the account of the accused. Upon receipt of
dishonour memo from the bank, complainant caused to sent Ext.P7
lawyer notice. Notice sent to the accused was returned ‘unclaimed’.
Accused deliberately evaded the notice. Accused has not paid the
amount covered by Ext.P4 cheque and thereby committed the
offence under Section 138 of N.I.Act.
3. Accused pleaded not guilty to the accusation and denied his
liability to pay any amount. It was contended that the complainant
misused the signed blank cheque issued by way of security.
4. After trial, the learned Magistrate found the accused guilty
under Section 138 of N.I Act and he was convicted and sentenced to
undergo imprisonment till rising of the court and to pay a fine of
₹1,11,644/-. In default of payment of fine, to undergo simple
imprisonment for three months. It was further directed that if the
fine amount is realized, the same shall be paid to the complainant as
compensation under Section 357(1) Cr.P.C.
5. Challenging the conviction and sentence, though the accused
preferred appeal as Crl.A No.2/2015 before the Sessions Court,
Crl.R.P.No.1530 of 2018 4 2025:KER:60802
Manjeri, the same was dismissed by the learned Sessions Court,
confirming the conviction and sentence.
6. Revision petitioner/accused assails the conviction and
sentence on the ground that the trial court and the appellate court
have not appreciated the evidence in its correct perspective. It is
contended by the accused that when he committed default in
repayment of the instalment amount, the vehicle which was
purchased under the hire purchase agreement was repossessed by
the complainant company and therefore, the complainant company
has no further right to demand any amount from him and Ext.P4
cheque was not issued for any legally enforceable debt. It was
further contended that the rate of interest claimed by the
complainant as per the terms of the hire purchase agreement was
excessive and violative of the provisions of Kerala Money-Lenders
Act, 1958; that the complainant misused the blank cheque delivered
by the accused by filling it up and has claimed exorbitant rate of
interest exceeding 12% per annum and therefore the offence under
Section 138 of N.I.Act will not attract.
7. PW1, who was examined on the side of the complainant
company, has testified that accused availed a vehicle loan of
₹1,19,000/- from the Nilambur branch of complainant company after
Crl.R.P.No.1530 of 2018 5 2025:KER:60802
executing Ext.P2 loan-cum-hypothecation agreement. According to
him, accused defaulted in payment of the loan amount; that an
amount of ₹1,11,644/- was due from the accused; that the accused
issued Ext.P4 cheque in discharge of the said liability.
8. Admittedly Ext.P4 is a cheque issued from the account
maintained by the accused and it bears his signature. The accused
would admit that he had availed a vehicle loan from the complainant
company after executing a vehicle loan-cum-hypothecation
agreement. The defence canvassed by the accused is that the blank
signed cheque given by him as security at the time of availing the
vehicle loan was misused by the complainant company. Accused has
no case that he has repaid the loan amount availed by him.
9. There is absolutely no evidence to show that accused had
delivered any blank cheque to the complainant company and the
complainant misused any cheque issued by the accused. Rather, the
evidence on record would show that accused issued Ext.P4 cheque
for the amount due to the complainant.
10. It was contended by the learned counsel for the revision
petitioner that the rate of interest charged by the complainant
company was in violation of Section 7(1) of the Kerala Money-
Lenders Act, 1958 and therefore Ext.P4 cheque cannot be treated as
Crl.R.P.No.1530 of 2018 6 2025:KER:60802
one issued for a legally enforceable debt. The learned counsel for the
revision petitioner/accused contended that in view of Section 7(1) of
the Kerala Money-Lenders Act, 1958 no money lender shall charge
interest on any loan at a rate exceeding two per cent above the
maximum rate of interest charged by the commercial banks on loans
granted by them. The learned counsel further pointed out that Sub
Section (3) of Section 7 of the said Act provides that a money-lender
shall not demand or take from the debtor any interest, in excess of
that payable under sub-section (1). In support of his contention, the
learned counsel for the revision petitioner placed reliance on the
decision of this Court in Basheer M.H v. Wheels Auto Finance, Kaloor
and another (2017(3) KHC 3) wherein it was held that the cheque
issued to the money lender was not enforceable in law as it included
interest exceeding the interest stipulated in Section 7(1) of the
Kerala Money-Lenders Act.
11. Now we can have a look at Section 7 of the Kerala Money-
Lenders Act, 1958 (as it stood prior to amendment dated
19.07.2019)
“7. Interest and charges allowed to money-lenders.
[(1) No money-lender shall charge interest on any loan at a
rate exceeding two per cent above the maximum rate of
interest charged by commercial banks on loans granted by
them:
Crl.R.P.No.1530 of 2018 7 2025:KER:60802
Provided that money-lender shall be entitled to charge a
minimum of one rupee as interest on any transaction:)
(Provided further that the Government may specify, by
notification, the rate of interest under sub-section (1) from
time to time.)
(2) A money-lender may demand and take from the debtor
such charges and in such cases, as may be prescribed.
(3) A money-lender shall not demand or take from the debtor
any interest, in excess of that payable under sub-section (1).
(4)No money-lender shall give any presents, gifts,
commission or any amount other than the interest provided in
sub-section (2) of section 4 to any depositor in connection
with the deposits received by such money-lender or receive
any presents, gifts, commission or any amount other than the
interest and other charges specified in this section from any
person to whom money is advanced.”
12. Undisputably the complainant company is a non
banking financial company regulated by the Reserve Bank of India in
terms of the provisions of Chapter III B of RBI Act, 1934.
13. In Nedumpilli Finance Company Limited v. State of
Kerala and Others. [(2022) 7 SCC 394] the Hon’ble Apex Court held
that Kerala Money-Lenders act will have no application to the non
banking financial companies (in short ‘NBFC’) regulated by the
Reserve Bank of India in terms of the provisions of Chapter III B of
the Reserve Bank of India Act. In paragraph 6.19 of Nedumpilli
Finance Company Limited (cited supra) the Apex Court held as
follows:
“6.19. Once it is found that Chapter III-B of the RBI Act
provides a supervisory role for the RBI to oversee the functioning
of NBFCs, from the time of their birth (by way of registration) till
the time of their commercial death (by way of winding up), all
activities of NBFCs automatically come under the scanner of RBI.
Crl.R.P.No.1530 of 2018 8 2025:KER:60802
As a consequence, the single aspect of taking care of the interest
of the borrowers which is sought to be achieved by the State
enactments gets subsumed in the provisions of Chapter III-B.”
14. The Hon’ble Apex Court held that the entire life of a
NBFC from the womb to the tomb is regulated and monitored by the
Reserve Bank of India. The non banking financial companies
regulated by the Reserve Bank of India in terms of the provisions of
Chapter IIIB of the RBI Act, 1934 cannot be regulated by the Kerala
Money-Lenders Act, 1958. Therefore, the argument advanced by the
learned counsel for the accused that the interest claimed by the
complainant was excessive and in violation of Kerala Money-Lenders
Act 1958 and therefore it was an illegal transaction and for that
reason, Ext.P4 cheque cannot be treated as a cheque issued in
discharge of a legally enforceable debt etc. are untenable.
15. The presumption under Section 139 N.I Act entails an
obligation on the court to presume that the cheque in question was
issued by the drawer or accused in discharge of a debt or liability.
Of course, it is a rebuttable presumption. It is a settled position of
law that the standard of proof for doing so is that of preponderance
of probabilities. Accused has not succeeded in rebutting the said
presumption. For rebutting the presumptions under Section 118(a)
and 139 of N.I.Act accused has to lead credible evidence. Mere
Crl.R.P.No.1530 of 2018 9 2025:KER:60802
denial of the case of the complainant is not sufficient to shift this
burden on the complainant.
16. In Kalamani Tex and another v. P.Balasubramanian
reported in [(2021) 5 SCC 283], the Hon’ble Apex Court held as
follows:
“Adverting to the case in hand, we find on a plain reading of its
judgment that the Trial Court completely overlooked the provisions
and failed to appreciate the statutory presumption drawn Under
Section 118 and Section 139 of NIA. The Statute mandates that
once the signature(s) of an accused on the cheque/negotiable
instrument are established, then these ‘reverse onus’ clauses
become operative. In such a situation, the obligation shifts upon
the accused to discharge the presumption imposed upon him.”
17. In Rangappa v. Mohan reported in AIR 2010 SC
1898, the Hon’ble Apex Court held that the presumption mandated
by Section 139 of N.I.Act includes a presumption that there exists a
legally enforceable debt or liability. This is of course a rebuttable
presumption and it is open to the accused to raise a defence wherein
the existence of a legally enforceable debt or liability can be
contested. It was also held that in view of Section 139 of N.I Act
there is an initial presumption, which favours the complainant.
18. Accused failed to rebut the presumption under Section
139 of the NI Act. Per contra, the complainant has succeeded in
establishing that Ext.P4 cheque was issued by the accused in
discharge of a legally enforceable debt. Ext.P9 would show that the
Crl.R.P.No.1530 of 2018 10 2025:KER:60802
registered notice sent to the accused was returned as ‘unclaimed’.
The endorsement in Ext.P9 would show that in spite of the
intimation, accused failed to accept the notice. Therefore, the same
is presumed to have been served upon the accused. In spite of
service of notice, accused failed to repay the amount covered by
Ext.P4 cheque.
19. Hence, I find no reason to interfere with the finding
rendered by the learned Magistrate and the learned Sessions Judge
that the accused has committed the offence punishable under
Section 138 of the N.I Act.
The revision petition is devoid of any merit and accordingly,
it is dismissed.
The trial court shall take steps to execute the sentence.
Registry shall transmit the records to the trial court
forthwith.
Sd/-
M.B.SNEHALATHA
ab JUDGE
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