The Karnataka High Court allowed a Criminal Revision Petition filed by an accused challenging his conviction under Section 138 of the Negotiable Instruments Act. The High Court’s meticulous evaluation of evidence brought forth discrepancies which had been overlooked by the Trial Court and the Sessions Court.
The complainant and the accused were well-known to each other. The built-up narrative was that the complainant lent ₹5 lakhs to the accused to help him repay his bank loan. The accused issued a cheque with a direction to present it two months later. Accordingly, the complainant presented it but was dishonoured due to insufficient funds. The accused did not make any arrangement for payment upon being informed. So, the complainant issued a legal notice.
The accused admitted before the courts that the cheque belonged to him, but he disputed that he borrowed ₹5 lakhs from the complainant. He put up the defence that the complainant's son was running a chit fund, in which he had issued the blank cheque, which the complainant was misusing. The accused further submitted that the complainant had no financial capacity to lend him ₹5 lakhs.
The Trial Court convicted the accused and sentenced him to pay a fine of ₹6 lakhs and simple imprisonment of six months. The Sessions Court confirmed the conviction. Aggrieved by the orders of the Trial Court and the Sessions Court, the accused filed a Revision Petition before the High Court.
The High Court found that both the courts had failed to appreciate the fact there was no legally enforceable debt under Section 138 of the NI Act and that the complainant had failed to prove his financial capacity to lend ₹5 lakhs. They had also overlooked the discrepancies and contradictions in the complainant's evidence.
The High Court explained that under Sections 118 and 139 of the NI Act, the presumption is that a cheque was issued to recover legally recoverable debt. Thus, the initial burden is on the accused to prove that the cheque was not issued to repay any recoverable debt. Only after the accused rebuts the presumption does the burden shift on the complainant to prove his case, including passing the consideration and his financial capacity to lend money at that time. The complainant is required to discharge the burden beyond a reasonable doubt.
The High Court noted the following discrepancies in the evidence:
- The complainant had pleaded in the complaint that he had paid the loan amount on the day the accused had requested it. However, in cross-examination, he stated the loan request had been made one month before the date he paid the loaned amount. The account statements reflected that in the previous month itself, specific amounts had been credited to his account, totalling up to ₹4 lakhs and the remaining ₹1 lakh were claimed to be paid in cash. The complainant claimed to have received these amounts by selling coconuts. No evidence for the sale of coconuts was produced.
- The complainant had pleaded and deposed that he had presented the cheque only once and it got dishonoured. However, the account indicated that he had presented it thrice and all three times it returned dishonoured for “funds insufficient”. Moreover, he did not bring dishonour of cheque to the notice of the accused on the first two occasions. The complainant had no explanation for this. The HC stated that “this also creates doubt as to the bonafides of the case of the accused.”
The High Court also stated that it is true that the accused had taken a loan from the Bank and a number of complaints had been filed against him for the dishonour of cheques, but this would not improve the case of the complainant, who was taking advantage of the accused by misusing blank cheques taken from him.
Hence, the bench presided by Justice JM Khazi acquitted the accused and set aside the erroneous judgements and orders passed by the Trial Court and Sessions Court.
Case Name: Khaleel Khan P v. Shankarappa
Coram: Justice J.M. Khazi
Case No.: CRL.R.P.No.1456 of 2022
Order Date: November 3, 2023
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