The Karnataka High Court partly allowed an appeal filed u/s 378(4) of Cr.P.C praying to set aside the judgment and order dated 14-08-2012 passed by the Additional Judicial Magistrate First Class, and allow the complaint filed by the appellant/complainant and convict the accused for an offence punishable under sec. 138 of the N.I. act.
The Court observed that the evidence of PWs.1 and 2 read conjointly indicates that there is a slight dislocation of the tooth noticed by the dentist at the time of conducting the examination.
Brief Facts:
The complainant – Firm is a Partnership Firm engaged in carrying the business of agricultural products. The first respondent is also a Partnership Firm and respondent Nos.2 to 4 are its Partners. The respondents used to purchase Arecanut on a credit basis from the appellant. In this regard, the first respondent - Firm had opened a Khata in the appellant - Firm. Whenever the respondents purchased Arecanut on a credit basis, it was agreed between the parties that 21% p.a. interest to be paid. As of 08.07.2004, the respondents were due an amount of Rs.1,59,380/-, by adding 16% p.a. interest for the period of 09.07.2004 to 25.09.2007.
The accused had issued a cheque which got dishonoured when presented for encashment. The said cheque was signed by accused No.4 / respondent No.4. A notice was served to the respondents on 02.11.2007. In spite of the notice having been served to the respondents, the respondents neither repaid the amount nor replied to the notice. Hence, appellant had to lodge a complaint before the jurisdictional Magistrate. The Trial Court recorded the acquittal on the ground that the complainant/appellant had not proved a legally enforceable debt or liability. Hence, the present appeal.
Contentions of the Appellants:
The Learned Counsel for the Appellants submitted that the Trial Court committed error in arriving at a conclusion that the complainant has to prove the legally enforceable debt or liability even though the statutory presumption has not been rebutted. The method adopted by the Trial Court in appreciating the law of the presumption is erroneous and perverse and therefore, the judgment of acquittal is liable to be set aside.
Contentions of the Respondents:
The Learned Counsel for the Respondent submitted that as per Ex .P10, the partnership firm was not in existence and Exs.P1, P10, and P11 are the documents produced by the appellant have not been registered in terms of Section 69(2) of the Indian Partnership Act. Therefore, the said documents are to be vitiated. Since the documents are to be vitiated, the contents thereof should not be considered. The Trial Court has rightly considered the said aspect and recorded the appropriate acquittal.
Observations of the Court:
The Court noted that the burden lies on the accused to rebut the presumption. Once the ingredients of Section 138 of the NI Act are established, the Court has to raise a presumption under Section 139 of the NI Act that the cheque was indeed, issued in discharge of debt or liability.
The Court observed that the accused has not issued the reply notice even after receipt of the legal notice issued by the complainant. The signature and the issuance of the cheque are admitted by the accused. The Court said that since the cheque was issued in the year 2005, the accused being a partnership firm had to issue notice to the firm of PW.1 asking the firm to return the cheque as there was no existence of liability. Even after receipt of legal notice, the firm of the accused has not issued a reply to the said notice. The non-reply to the notice, no efforts to take back the cheque that was issued as a security, and not leading any evidence to show that no balance existed between PW.1 and the accused clearly discloses that the accused has not rebutted the presumption.
The decision of the Court:
The Karnataka High Court, allowing the appeal, held that the findings of the Trial Court in concluding that the complainant has to prove the legally recoverable debt or liability appears to be erroneous and illegal.
Case Title: Sri Siddivinayaka Adike Stores v. M/S. Sri Uduchanada Basappa & Sons
Coram: Hon’ble Justice S Rachaiah
Case no.: CRIMINAL APPEAL NO. 6 OF 2013 (A)
Advocate for the Appellant: Mr. R V Jayaprakash
Advocate for the Respondent: Mr. N Jagadish
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