Karnataka High Court
Havyaka Finance Limited vs Sandeep Kumar Shetty V on 13 November, 2025
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CRL.A No. 1195 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF NOVEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE G BASAVARAJA
CRIMINAL APPEAL NO.1195 OF 2013
BETWEEN:
HAVYAKA FINANCE LIMITED,
COMPANY REGISTERED UNDER
COMPANIES ACT,
HAVING ITS HEAD OFFICE AT
NO.438, 1ST FLOOR,
BETWEEN 7TH AND 8TH CROSS, SAMPIGE ROAD,
MALLESHWARAM, BANGALORE
WHICH IS REPRESENTED BY ITS
AUTHORIZED OFFICER
MR. C. SUBRAMANYA SHASTHRY
S/O ISHWARA SHASTRY,
AGED ABOUT 54 YEARS,
R/AT MOODAMBAIL HOUSE,
PUNACHA VILLAGE,
BANTWAL TALUK, D.K DISTRICT
WHO IS ALSO BRANCH MANAGER OF ITS
VITTAL BRANCH - 574219
...APPELLANT
(BY SRI. RAVISHANKAR SHASTRY, ADV.)
AND:
SANDEEP KUMAR SHETTY V.
S/O RAMANANDA SHETTY V.
AGED ABOUT 37 YEARS,
R/AT CAR STREET, VITTAL,
POST: VITTAL KASABA,
BANTWAL TALUK, DK-574243.
...RESPONDENT
(RESPONDENT - SANDEEP KUMAR SHETTY V. - ABSENT.)
THIS CRIMINAL APPEAL IS FILED U/S.378(4) CR.P.C
PRAYING TO SET ASIDE THE JUDGMENT DATED 10.10.2013
PASSED BY THE PRL. SR. C.J. AND J.M.F.C., BANTWAL, D.K. IN
C.C.NO.24/2010 - ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE P/U/S 138 OF N.I.ACT.
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CRL.A No. 1195 of 2013
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 29.10.2025 AND COMING ON FOR
"PRONOUNCEMENT OF ORDERS" THIS DAY, THE COURT,
DELIVERED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE G BASAVARAJA
CAV JUDGMENT
The appellant has preferred this appeal against judgment of acquittal passed by the Principal Senior Civil Judge and JMFC, Bantwal, D.K., Mangaluru, in CC No.24 of 2010 dated 10th October, 2013 (for short "the trial Court").
2. For the sake of convenience, the parties herein are referred to as per their status before the trial Court.
3. The brief facts leading to this appeal are that the complainant has filed a complaint under Section 200 of Code of Criminal Procedure, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. It is alleged by the complainant that one Padmanabha S/o Rama Poojary borrowed loan of Rs.48,000/- from the complainant in the month of October, 2002 for his domestic necessities. The complainant sanctioned the loan to Padmanabha on 30th October, 2002 at the rate of interest 16% per annum. The loan transaction is numbered as PL/63/2002. The accused and one Ishwara S. stood as co-obligants to the loan borrowed by -3- CRL.A No. 1195 of 2013 Padmanabha. The accused is jointly and severally liable for the said loan along with principal borrower and another co-obligant. The loan so borrowed was not repaid. When Sri Subrahmanya Shastry, Manager of the complainant-Finance Company of Vitla Branch, approached the accused in his residence on 14th September, 2005, the accused has issued a cheque for Rs.71,040/- inclusive of interest in favour of SCDCC Bank Ltd., Vitla Branch bearing Cheque No.0414121. When the cheque was presented for encashment, the cheque was dishonored with an endorsement "Funds insufficient".
4. On 15.12.2005, the complainant has issued legal notice to the accused through his Advocate, the same was served on the accused on 16.12.2005. Accused has issued frivolous reply. Hence, the complainant filed the complaint.
5. After taking cognizance, the trial Court issued summons to the accused. In response to the summons, the accused appeared through his counsel and was enlarged on bail. Plea was recorded. Accused pleaded not guilty and therefore, trial was held.
6. To prove the guilt of the complainant, the Manager of the complainant's Company was examined as PW1 and -4- CRL.A No. 1195 of 2013 twelve documents were got marked as Exhibits P1 to P12. On closure of the evidence of the complainant, the statement of the accused under Section 313 of Code of Criminal Procedure was recorded. The accused has denied the prosecution evidence and he has not chosen to adduce defence evidence, but got one document marked as Exhibit D1.
7. The complainant has submitted written arguments and having heard the arguments of the learned counsel for the accused, the trial Court had acquitted the accused. Being aggrieved by the acquittal judgment, the appellant has preferred this appeal.
8. Learned counsel for the appellant would submit that the judgment of acquittal passed by the trial Court is opposed to law and facts. The trial Court has not properly appreciated the evidence placed before the Court. The reasoning given by the learned Magistrate that the accused has stood as surety to the loan taken under PL/60/2000 and the said loan was not cleared. Therefore, granting another loan of Rs.48,000/- cannot be believed and the same is opposed to the documents on record. PW.1 in his evidence has clearly stated that merely because one loan is not cleared, there is no practice of not granting another loan. In addition to this, the issuance of loan -5- CRL.A No. 1195 of 2013 in PL.No.63/2002 for Rs.48,000/- is not disputed. Ex.P8-loan register and Ex.P7-loan application conclusively proved that the loan was sanctioned on 30th October, 2002. Ex.P7-loan application contains the signature of the respondent, which is not disputed. The only suggestion made to PW.1 was that the ink of signature of respondent was different from other writings in the loan application. Thus, standing as surety to loan A/c No.PL/63/2002 is proved beyond reasonable doubt. Further, it is submitted that Ex.P8-Loan Register clearly shows that as on 11th April, 2003, the borrower was due a sum of Rs.48,046/-. The cheque was issued on 14.09.2005. The borrower or the accused had not made any payment. Under the circumstance, entering and updating loan account does not arise at all. Once the loan account was treated as NPA, the financial Institutions will not make any entry in loan ledger. The agreed rate of interest was 16% per annum. Therefore, mere calculation will prove the actual amount payable by the respondent and borrower. Thus, the reasoning of the learned Magistrate that the appellant has not produced any document to prove the actual amount due, is erroneous. Further, it is submitted that the respondent has not disputed the amount due. The only defence taken by the respondent was that the cheque was issued to the loan A/c PL.60/2000 and not to PL.63/2002. But -6- CRL.A No. 1195 of 2013 respondent failed to prove this aspect. The respondent has not examined the borrower viz. Padmanabha or other surety to prove this aspect. After the order of remand, the respondent has not led any evidence. In addition to this, the respondent has taken a defence that he has not stood as surety to loan A/c PL.63/2002. But the loan application which was produced at Ex.P7, has falsified such defence. Therefore, the defence pleaded by the respondent is not at all proved. Therefore, by drawing presumption under Section 138 of the NI Act, learned Magistrate ought to have passed an order of conviction. On all these grounds sought for allowing this appeal.
9. Despite service of notice, the respondent remained absent and unrepresented. Hence, arguments on behalf of the respondent is taken as nil.
10. Having heard the arguments and perusal of materials placed before me, the point that would arise for consideration is:
"Whether the appellant has made out a ground to interfere with the judgment of acquittal?-7- CRL.A No. 1195 of 2013
11. I have examined the materials placed before me. It is the case of the complainant that one Padmanabha has borrowed loan of Rs.48,000/- from the complainant in the month of October 2002 for his domestic necessities. The accused and one Eshwara S stood as applicants to the loan borrowed by Padmanabha. The loan transaction is numbered as PL/63/2002. As the loan was not repaid in spite of several requests, on 14th September 2005 PW1 approached the accused at residence and stated that Rs.71,040/- was due to the complainant in respect of the aforesaid loan and requested him to repay the same. The accused, towards discharge of his liability, issued check pertaining to SCDCC Bank, Vitla Branch for Rs.71,040/- with an assurance that the cheque will be honoured upon presentation. When the cheque was presented for encashment, the same was returned with endorsement "insufficient funds". Thereafter, complaint got issued demand notice through advocate demanding payment of the check amount. Notice was duly served on 16th December 2005. Accused, instead of complying, has issued reply notice dated 22nd December 2005. Hence, complainant has lodged the complaint. To substantiate the case of complainant one Sri Subrahmanya Shastry is examined as PW1 and twelve documents were marked as Exhibits P1 to P12. Perusal of -8- CRL.A No. 1195 of 2013 Exhibit P1 reveals that the disputed cheque dated 14th September 2005 for Rs.71,040/- is issued by the accused in favour of the complainant Bank. The cheque was presented on the same day and was returned with endorsement "insufficient funds". On 15th December 2005, the complainant issued demand notice demanding to pay the cheque amount with interest at rate of 15% per annum. The same was served to the accused and the accused has issued frivolous reply notice. Hence complainant lodged complaint under section 138 of Negotiable Instruments Act. The trial court has dismissed the complaint on the ground that the cheque issued by the accused is not for discharge of legally recoverable debt. In paragraph 11 of the judgment, the trial court has observed that Exhibit D1 is the passbook issued by the complainant finance company to Padmanabha. In this, the account number is shown as PL/60/2000 and the loan borrowed is shown as Rs.30,000/- and date of borrowing the loan is 27th May, 2000. PW1 in his cross-examination has admitted that Exhibit D1 is the passbook which relates to the loan account of Padmanabha. On going through the passbook Exhibit D1, it can be said that it does not relate to the loan borrowed by Padmanabha as per Exhibit P7. That date of borrowing the loan by Padmanabha as per Exhibit P7 is 30th October, 2012 and as per passbook marked as -9- CRL.A No. 1195 of 2013 Exhibit P1 on 27th July, 2001, the balance payable by Padmanabha is Rs.20,625/- and the entry in Exhibit P1 discloses that Padmanabha was not paying the instalments regularly. In spite of it, loan of Rs.48,000/- is sanctioned on 30th October 2002. PW1 in his cross-examination has stated that unless he goes through the ledger, he cannot say as to whether the loan amount shown in Exhibit D1 has been completely discharged by Padmanabha or not. As per the evidence of PW1, the loan extract marked as Exhibit P8, since the date of borrowing of loan till filing of complaint in the year 2006, Padmanabha has not paid any amount towards loan instalments. The trial court, at paragraphs 12 and 13 of the judgment, has observed as under:
"12. Now coming to the liability of the accused, admittedly no loan was lent to the accused by the complainant and the accused was not due any amount to the complainant company. In spite of it in the notice marked as Ex.P.4, it is referred that the accused is due to the complainant finance. P.W.1 in his cross examination has stated that since Padmanabha has not repaid the loan they have taken action and they have issued notice, but no materials placed by P.W.1 for having taken any action against Padmanabha for having not repaid the loan. Admittedly, no case filed against Padmanabha and P.W.1 has stated that there is no any reason for having not filed any case against Padmanabha for having not repaid the
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CRL.A No. 1195 of 2013loan. Admittedly, accused has not given in writing agreeing to discharge the loan borrowed by Padmanabha. As per the evidence of P.W.1, there is document to show as to what was the amount due, but has failed to produce any document to show the actual amount due as on the date of issue of cheque by the accused. The evidence of P.W.1 discloses that he is aware as to where Padmanabha resides. It is not that the where about of principal borrower is not known. When such is the case as to why they have collected cheque from the accused who is one of the surety instead of collecting cheque from the principal borrower is not explained by P.W.1.
13. The complainant being a finance company has to maintain the regular statement of accounts and has to issue periodical notice to the borrower and also the sureties along with the copy of the statement of loan. No materials placed by P.W.1 for having issued notice and not produced the statement of loan except producing the copy of the loan register marked as Ex.P.8. In this it is just shown Debit and balance as Rs.48,000/ as on 30- 10- 2002 and Rs.46/- shown as RAD and debit and the balance as on 11-4-2003 is shown as Rs. 48,046/-. So, on what basis the accused has issued cheque for Rs.71,040/- on 14.9.2005 is not known. Admittedly there was no decree for recovery of the amount, when such is the case why P.W.1 had been to the house of the accused for recovery of loan is not known. When the accused has not borrowed loan and there is no decree against the accused it is difficult to believe that as soon as P.W.1 had been to the house of the accused he has issued cheque for Rs. 71,040/ with out any document and with out enquiring the principal borrower Padmanabha. As per the evidence
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CRL.A No. 1195 of 2013of P.W.1, on his say the accused has written the amount in the cheque, but on going through the recital of the cheque marked as Ex.P.1, it is clear that there is variance in the ink in the signature of the accused than that of the recital of the cheque. The date, amount and name is written in one ink and the signature of the accused is in the different ink. From which it is clear that the accused has not filled the cheque."
12. On re-appreciation of the evidence on record, I do not find any error or illegality in the impugned judgment, passed by the trial court.
13. The learned Counsel appearing on behalf of the appellant would submit that once loan amount was treated as NPA, the financial institutions will not make any entry in loan ledger. But in this regard, the complainant has not stated anything in his evidence that once loan account was treated as NPA, the financial institutions will not make any entry in the loan ledger. For the first time, before this court, the learned Counsel for the complainant has submitted and the same cannot be accepted.
14. Apart from the opinion expressed by the learned Judge, one of the material points is that the complainant is a financial company. When the financial company has received the cheque from the respondent, it is the duty of the
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CRL.A No. 1195 of 2013complainant finance company to issue challan as to the receipt of the cheque and thereafter, the complainant company has to mention the same in relevant ledger extract. In the case on hand, though the complainant-financial company has received the cheque, has not issued challan in favour of the accused as to the receipt of the cheque. PW1 has not stated anything in his complaint or in his evidence in this regard. In the absence of this material piece of evidence, the evidence of PW1 itself creates doubt as to issuance of cheque as alleged by the complainant. Moreover, the complainant has also failed to prove that the accused has issued the cheque in question for discharge of legally recoverable debt as explained under explanation to section 138 of Negotiable Instruments Act. Hence, I answer the point that arose for consideration in the negative. In the result, I proceed to pass the following:
ORDER Appeal is dismissed.
Sd/-
(G BASAVARAJA) JUDGE lnn`