M/S Gayatri Minerals vs Praveen S. Mensinkai
2021 Latest Caselaw 3156 Kant

               IN THE HIGH COURT OF KARNATAKA
                       DHARWAD BENCH

           DATED THIS THE 17TH DAY OF AUGUST, 2021

                              BEFORE

        THE HON'BLE MR. JUSTICE RAJENDRA BADAMIKAR

                CRIMINAL APPEAL NO.2813/2012

Between:

M/s.Gayatri Minerals
Main road, Bhimasamudra,
Dist:Chitradurga,
Represented by its Partner Sri.R.P.Phadatre.
                                                       ...Appellant
(By Sri.V.G.Bhat, Advocate)

And:

Sri.Praveen.S.Mensinkai
Sri.Vaishnavi Minerals,
No.38/1, Nava Ayodhya Nagar,
Hubli-580024, Dist:Dharwad.
                                                    ...Respondent
(By Sri.R.G.Dhongadi, Advocate - absent)

      This appeal is filed under section 378 of Cr.P.C. seeking to
set aside the order of acquittal passed by the Prl.JMFC Court,
Dharwad in C.C.No.427/2008 dated 12.06.2012 and convict the
respondent as per law.

       This appeal having been heard and reserved for judgment
on 05.08.2021, coming on for 'Pronouncement of Judgment' this
day, the court delivered the following:
                                 2


                          JUDGMENT

This appellant has filed this appeal against the

judgment of acquittal passed by Prl. Civil Judge and Prl.JMFC,

Dharwad in CC No.427/2008 dated 12.06.2012 and sought

for convicting the respondent-accused.

2. For the sake of convenience parties herein are

referred with the ranks occupied by them before the trial

Court.

3. The brief facts leading to the case are that the

complainant and accused are well acquainted knowing each

other since many years. Both of them are also acquainted

with the business of Iron Ore Pebbles. That on 01.11.2007

both of them have entered in to contract and as per the said

terms and conditions the complainant as a buyer and

accused as a seller have entered into an agreement whereby

the accused agreed to supply iron pebbles and the

complainant agreed to pay Rs.2,00,000/- by way of cheque

as advance to the accused.

4. It is alleged that as per the said agreement the

accused was required to deliver minimum 400 MT each day

until the completion of the contracted quantity of 5000 MT

and delivery is required to start from 12.11.2007 with a

grace period of 8 days on receipt of the advance amount

from the buyer. It is also a condition that if the accused fail

to fulfill the agreement he has to return Rs.2,00,000/- paid

by the buyer by way of cheque. Further it is alleged that both

have exchanged a cheque in this regard and accused failed to

fulfill his account and when the complainant demanded

repayment of the amount the accused asked him to present

the cheque given as a security as per the agreement and

when the said cheque was presented, it was bounced for

insufficient of funds. Hence, the complainant has issued a

legal notice and as accused failed to comply the notice also,

the complainant has filed a private complaint. Thereafter the

learned magistrate has recorded sworn statement and found

that there is sufficient material against the accused and

issued process. The accused has appeared and was enlarged

on bail and plea was recorded and accused pleaded not

guilty. The complainant has lead the evidence of the partner

as PW.1 and one witness was examined as PW.2 and Ex.P1

to 12 were marked.

5. After hearing the arguments the learned

magistrate found that the cheque was not issued in respect

of legally enforceable debt but it was only a civil contract and

for breach of the contract the complainant is at liberty to

take necessary steps and hence, he dismissed the complaint

by acquitting the accused - respondent.

6. Being aggrieved by this judgment of acquittal the

complainant has filed this appeal. The learned counsel for the

appellant would contend that the cheque is issued out of

business transaction which is undisputed. It is also contended

that issuance of cheque and signature are undisputed and

hence, the mandatory presumption under Section 139 of NI

Act is required to be drawn. He would also contend that the

learned magistrate has dismissed the complaint on the

ground that transaction was not established and admittedly it

is a business transaction in respect of Iron ore business. The

evidence also disclose that the accused-complainant has

encashed Rs.2,00,000/- paid under the agreement and there

is no response to the legal notice. The accused has not lead

any rebuttal evidence and the transaction referred by the

trial Court is irrelevant and the trial Court has wrongly casted

the burden on the complainant rather than the accused.

Hence, he would contend that the judgment of acquittal is

erroneous and the findings required to be interfered by this

Appellate Court. Hence, he has sought for allowing the

appeal.

7. Learned counsel for the respondent inspite of

granting sufficient opportunity did not appear before the

Court so as to advance any arguments. Perused the records.

8. It is an undisputed fact that there was an

agreement between the complainant and the accused and it

is as per Ex.P7. As per the agreement Clause-5, the accused

is required to deliver 5000 MT of iron ore and he was

required to deliver minimum 400 MT each day. The clause

further disclose that as an advance payment of Rs.2,00,000/-

is given by way of cheque and said amount was to be

adjusted towards last consignment. Further a cheque of

Rs.2,00,000/- was given by accused to the complainant with

assurance that is required to encashed incase the agreement

is not fulfilled. There is no serious dispute between the

parties regarding this agreement. It is admittedly a

partnership firm and the deed of partnership is produced at

Ex.P.12 but there is no evidence placed to show that the

partnership firm is registered and Ex.P11 simply discloses

that it is registered under Value added tax but the firm by

itself is not registered. Hence, Section 69 of the Indian

Partnership Act also plays a vital role in this regard.

9. Pw.1 is one of the partner. In his examination in

chief he has reiterated a complaint allegations and the

agreement is relied at Ex.P7. Admittedly as per the

agreement minimum 400 MT of Iron is required to be

transported every day. However, Rs.2,00,000/- cheque was

given as an advance payment to be settled by the end of

conclusion of the contract. It is important to note here that

there is no penal clause in the agreement. The only clause is

that in case the accused fails to fulfill contractual obligtion,

he has to return the advance payment of Rs.2,00,000/- and

for that purpose cheque is given as a security by accused. As

regards these aspects are concerned there is no dispute.

10. The accused has got examined himself as DW.1

and in his cross examination he admitted that the cheque

issued by the complainant was encashed by the accused.

However, the accused has taken a defence that he did

supplied the iron ore as agreed in terms of the agreement

and in fact he supplied excess ore and he required to get

payment from complainant. At the same time, it is also

important to note here that it is not the case of the

complainant that no single consignment is attended by the

accused. No such defence is set up by the accused. The

burden is on the complainant that accused has not supplied

any quantity of ore.

11. In the cross examination PW.1 admitted that the

complainant - Company has maintained a register pertaining

to Weights and Measurements regarding supply of iron ore. It

is also admitted that the material which is brought by the

complainant would be weighed in a weighing bridge and it is

in the control of complainant and a account is being

maintained in respect of every unloading ore to the

complainant. In this context it was for complainant to

produce the register in question regarding weights and

measurement pertaining to unloading of ore. But this

material document is withheld by the complainant.

12. DW.1 in his cross examination has specifically

denied non supply of ore and it is to be noted here that it is

not the case made out by the complainant that no single load

was supplied. The entire complaint is silent in this

regard.Dw.1 claims that he is getting the ore from

Shantalingeshwar Mining Company and used to supply it and

much cross examination is made regarding he getting the

bills from Shantalingeshwar Mining Company but when

complainant himself was maintaining the relevant account of

unloading the ore, what prevented him from producing the

relevant register is not at all forthcoming. This is not a

money transaction but admittedly it is a business transaction.

Hence, the provisions of Section 139 directly cannot be made

applicable and burden is on the complainant to establish that

there was no supply of ore. Apart from that if there is a

breach of condition nothing prevented the complainant from

taking a legal action in accordance with law. But Section 69

of the Indian Partnership Act comes in the way due to non

registration of the firm and therefore he would choose this

remedy under Section 138 of NI Act. If the evidence and

clauses of the agreement are taken into consideration, it is

evident that cheque issued by accused was required to be

returned to accused as it was given as a security after

complete delivery of 5000MT ore.

13. It is also evident that if there is any violation of

Clause by accused, then accused has to return the amount of

Rs.2,00,000/- to buyer immediately which he received by

way of cheque in advance. Hence, these circumstances

clearly establish that transaction is purely a contractual and

neither of the parties are permitted to use the cheques given

by them against each other as a security so as to bring the

transaction within the purview of Section 138 of NI Act.

14. Further admittedly it is a contractual liability and

the complainant has not issued any notice regarding violation

of the conditions of the agreement Ex.P7. The nature of the

transaction is totally a civil contract and in pursuance of the

said civil contract there was exchange of cheques by both

parties as security against each other. The disputed cheque

is issued by accused as a security for civil contract and

hence, the presumption under Section 139 cannot be

attracted in this regard. It is also important to note here that

it is not a question of debt or liability but it is a condition for

violation of the agreement. Further the complainant himself

is in possession of relevant records as he is maintaining

register in respect of supply of ore and he is not prepared to

produce the said register. Why the complainant is

withholding the material documents available with him and

that itself establish that adverse inference is required to be

drawn against him in this regard. The complainant has not

discharged his burden of calculating the account of receipt of

ore from the accused by producing any relevant documents.

As observed above, it is not the case of the complainant that

accused has 'not at all supplied any ore'. If at all accused

supplied ore for limited extent, nothing prevented

complainant from producing relevant documents maintained

in his office as admittedly the unloading is being done in the

office of the complainant and there is a weighing bridge

wherein the weight is also being recorded. The allegations is

only regarding violation of the terms of the contract and it is

for the complainant to establish the violation and if there is

violation of the terms of contract the remedy for parties is

elsewhere and the provisions of Section 138 of NI Act cannot

be incorporated. The evidence also disclose that one of the

partner of the complainant filled up the date of Ex.P1 and

admittedly the Ex.P1 cheque is issued as a security as per

the clause-5 of Ex.P7. Hence, the complainant ought to have

produced relevant records available in his office to show that

the ore supplied by accused is insufficient and he still owe

certain amount to the complainant but no such documents

are forthcoming. Admittedly the accused is securing the ore

from Shanthalingeshwar Mining Company and he is acting

only in the form of agent. Hence, considering these aspects

and considering the nature of transaction as referred in Ex.P7

it is evident that the defence of the accused appears to be

more probable rather than the complainant as complainant

has failed to produce the documents in his position for the

best reasons known to him. The accused need not prove his

case beyond all reasonable doubt but he can create a dent in

the case of the complainant based on the principles of

preponderance of probability which he has done in the

instant case. Admittedly the records disclose that the nature

of the act pertaining to the accused is in the form of agent

and the complainant is a statutory body and ought to have

maintained certain account regarding supply of ore but the

complainant has withheld material documents. Mere issuance

of cheque is not an offence as admittedly cheque is issued

under Ex.P7 agreement and liability begins only after

encashment of the cheque issued by the complainant but the

defence of the accused is regarding supply of ore and the

complainant having material documents in the form of

register has not produced the register before the Court.

Hence, the adverse inference is required to be drawn against

the complainant. The complainant has failed to show the

exact account by producing the proper documents pertaining

to the transportation and admittedly the dispute is of civil

contract wherein the cheque was issued as a security. Hence,

the complainant is at liberty to initiate civil action against the

accused for violation of the clause but the complainant is

prosecuting the complaint under Section 138 of NI Act.

15. Under these circumstances, the offence under

Section 138 of NI Act is not attracted in the facts and

circumstances of the case in hand.

16. The learned magistrate has analysed the oral and

documentary evidence in detail and meticulously discussed

the issue. The learned magistrate has also considered the

rival contentions raised by the respective parties and after

appreciating the rival contentions he has arrived at a just

decision. At no stretch of imagination judgment of the

learned magistrate is said to be erroneous or illegal so as to

call for an inference. Hence this Court interfering in the

judgment of acquittal does not arise at all. As such the

appeal is devoid of any merits and needs to be rejected.

Accordingly, I proceed to pass the following:-

ORDER

The appeal is dismissed.

The judgment of acquittal passed by Prl. Civil Judge and Prl.JMFC, Dharwad in CC No.427/2008 dated 12.06.2012 for the offence punishable under Section 138 of N.I. Act, is confirmed.

Sd/-

JUDGE

NS