G C V Shastry @ vs M/S Guru Finance Corporation
2021 Latest Caselaw 479 Kant

  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 8TH DAY OF JANUARY 2021

                             BEFORE

  THE HON'BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY

    CRIMINAL REVISION PETITION No.1265 OF 2011

BETWEEN:

G.C.V. Shastry @
G.C. Veerabhadrappa
S/o. Chandrashekharaiah,
Cloth Merchant,
Aged about 42 years,
Srinidhi Fashions
Near Banni Mahakali Temple,
Rampura, Molakalmuru Taluk,
Chitradurga District.
                                         .. Petitioner

(By Sri. Nandish Patil, Advocate)

AND:

M/s. Guru Finance Corporation (Reg)
By its Managing Partner,
Sri.M.V. Prabhu,
S/o. M. Veerabhadraiah,
Age: 19 years, R/o. Kailash Complex,
Behind BDO Office, Chitradurga Road,
Challakere Town.
                                       .. Respondent
(By Sri. B.M. Siddappa, Advocate)
                                              Crl.R.P.No.1265/2011
                                 2


                                  ****
      This Criminal Revision Petition is filed under Sections 397
read with 401 of Cr.P.C. praying to call for the records and allow
and set aside the judgment of the learned Additional Sessions
Judge (Fast Tract Court), Chitradurga in Cr.A.No.59/2010 dated
20-10-2011 and also the judgment of conviction and sentence
passed by the learned Civil Judge and JMFC, Challakere in
C.C.No.341/2007 dated 03-07-2010 as illegal and consequently
acquit the accused/petitioner of the offence punishable under
Section 138 of the Negotiable Instruments Act, 1881 and to grant
such other relief as this Court deems fit to pass in the facts and
circumstances of the case.

      This Criminal Revision Petition coming on for Hearing,
through Physical Hearing/Video Conferencing Hearing this
day, the Court made the following:

                            ORDER

The present petitioner as the accused was tried by the Court

of the learned Civil Judge & J.M.F.C, Challakere (hereinafter for

brevity referred to as the "Trial Court") in C.C.No.341/2007 for the

offence punishable under Section 138 of the Negotiable Instruments

Act, 1881 (hereinafter for brevity referred to as the "N.I. Act") and

was convicted for the said offence by its judgment of conviction

and order on sentence dated 03-07-2010.

Aggrieved by the same, the accused preferred a Criminal

Appeal in the Court of the learned Additional Sessions Judge, (Fast Crl.R.P.No.1265/2011

Track Court), Chitradurga (hereinafter for brevity referred to as the

"Sessions Judge's Court") in Criminal Appeal No.59/2010.

The appeal was contested by the respondent who was the

complainant in the Trial Court. The Sessions Judge's Court in its

order dated 20-10-2011 dismissed the appeal, confirming the

judgment of conviction and order on sentence passed by the Trial

Court dated 03-07-2010 in C.C.No.341/2007. Aggrieved by the

said order, the accused has preferred this revision petition.

2. The summary of the case of the complainant in the Trial

Court is that, the complainant is a registered Finance Corporation

doing money lending business under a valid licence issued as per

the Karnataka Co-operative Societies Act, 1959 and the Karnataka

Money Lenders Act, 1961. On 16-08-2006, the accused borrowed

loan of a sum of `4,75,000/- from it for his business necessities by

agreeing to repay the said amount on 30-11-2006. In that

connection, the accused had given a cheque bearing No.868912 for

a sum of `4,75,000/- on 30-11-2006 drawn on Indian Overseas

Bank Limited, Rampura Branch, Molakalmuru Taluk. When the said

cheque was presented by the complainant, the same came to be Crl.R.P.No.1265/2011

dis-honoured with the Banker's endorsement 'funds insufficient'.

Thereafter, the complainant issued a legal notice through his

Advocate upon the accused on 19-02-2007, calling upon him to pay

the cheque amount. The accused refused to receive the said notice

and also did not pay the cheque amount, which constrained the

complainant to institute the complaint for the offence punishable

under Section 138 of the Negotiable Instruments Act, 1881

(hereinafter for brevity referred to as the "N.I. Act").

3. The respondent appeared in the Trial Court and contested

the matter.

4. After recording the evidence led from both side, the Trial

Court by its judgment of conviction and order on sentence dated

03-07-2010 convicted the accused for the offence punishable under

Section 138 of the N.I. Act and sentenced him to undergo Simple

Imprisonment for six months and also to pay a fine of `4,75,000/-,

in default, to undergo Simple Imprisonment for a period of six

months.

Challenging the said judgment of conviction, the accused

preferred a criminal appeal in Criminal Appeal No.59/2010 in the Crl.R.P.No.1265/2011

Court of the learned Sessions Judge's Court, which also by its

judgment dated 20-10-2011, dismissed the appeal filed by the

appellant, however, it modified the sentence of fine holding the

accused as liable to pay a fine of `5,000/- and to pay cheque

amount of `4,75,000/- to the complainant. Aggrieved by the

judgments of conviction and order on sentence, the accused has

preferred this revision petition.

5. The respondent herein is being represented by his

counsel.

6. The Trial Court and Sessions Judge's Court's records were

called for and the same are placed before this Court.

7. Heard the arguments from both side. Perused the materials

placed before this Court including the Trial Court and Sessions

Judge's Court's records.

8. For the sake of convenience, the parties would be

henceforth referred to as per their rankings before the Trial Court.

9. After hearing the learned counsels for the parties, the only

point that arise for my consideration in this revision petition is:

Crl.R.P.No.1265/2011

Whether the judgments under revision are perverse, illegal and erroneous warranting interference at the hands of this Court?

10. Learned counsel for the petitioner in his argument

submitted that the complainant has not proved its financial capacity

to lend money to the accused. The fact that the complainant has

not claimed any interest on the alleged loan would go to show that

the loan transaction was a sham transaction. He further submitted

that the alleged business loan which was for a short period of

fifteen days is unbelievable because of its short duration. Learned

counsel for petitioner submitted that no property was secured by

the complainant as security for the alleged loan, as such, the

genuinity of the loan is highly suspectable. Lastly, he submitted

that both the Trial Court and the Sessions Judge's Court have not

considered the defence taken up by the accused that ten blank

signed cheques were earlier given by the accused to the

complainant about seven years back when he had availed another

loan and that the complainant has misused one among those

cheques, which is the subject matter of the present case.

Crl.R.P.No.1265/2011

11. Per contra, learned counsel for the complainant

appearing through video conference in his very brief argument

submitted that the alleged financial incapacity has not at all been

raised either in the Trial Court or in the first appellate Court and it

is for the first time, that too, only in the arguments, the said point

is being canvassed, as such, the same does not require any

attention by this revisional Court. He also submits that the

complainant is a registered Financial Institution doing money

lending business and had filed returns with the competent

authorities which also goes to show that it has financial capacity to

lend money to the accused. He states that the presumption under

Section 139 of the N.I. Act operates in favour of the complainant

which has not been convincingly rebutted by the accused.

12. The acquaintance between the parties is not in dispute.

The complainant, as PW-1, in his evidence has stated that, the

accused had acquaintance with him since about twenty years prior

to the last transaction which has not been denied by the accused.

Similarly, the accused who examined himself as DW-1, in his cross-

examination also has admitted that the complainant was known to Crl.R.P.No.1265/2011

him since about fifteen years prior to the alleged loan transaction.

Furthermore, the details of the previous avocation said to have

been pursued by the accused has also been brought out in the

cross-examination of DW-1 and these aspects clearly go to show

that the complainant and the accused were known to each other

since a long time of not less than about fifteen years prior to the

date of the alleged loan transaction. Further it is also not in dispute

that the complainant is a registered Partnership Firm doing money

lending business which it claims, is doing after obtaining necessary

licence by the competent authorities. Though the accused in his

Examination-in-chief as DW-1 has generally denied the entire loan

transaction including the alleged issuance of cheque said to be

belonging to him at Ex.P-1, the alleged loan transaction and the

alleged non-repayment of the loan and the alleged dis-honour of

the cheque and subsequent issuance of legal notice by the

complainant to the accused, however, learned counsel for the

petitioner in the opening submission of his argument fairly concedes

that he would not dispute that the cheque at Ex.P1 pertains to the

accused and it bears his signature also. He also fairly submitted Crl.R.P.No.1265/2011

that he would admit that the said cheque was presented by the

complainant for its payment and the same came to be dishonored

for the reason of insufficiency of funds in the drawer's bank

account, in which regard, the Banker has issued an endorsement as

per Ex.P-3. He also submits that a legal notice as per Ex.P-4 was

issued to the accused, however, he fairly concedes that the accused

has not sent any reply to the said notice. However, learned counsel

for the accused/petitioner submits that his main and only

contention is that there existed no legally enforceable debt, as

such, the question of the accused issuing the cheque at Ex.P-1 to

the complainant does not arise. He reiterates that the accused

has taken a specific defence in the Trial Court that the said cheque

was given by the accused to the complainant some where in the

year 1999-2000 along with another undated blank signed cheque

which has been mis-used by the complainant.

13. When the cheque at Ex.P-1 is admittedly issued by the

accused with his signature therein and when that signed cheque

has been presented by the complainant for its payment and the

same came to be dis-honoured for the reason of insufficiency of Crl.R.P.No.1265/2011

funds and also when the complainant has admittedly issued a legal

notice as per Ex.P-4, calling upon the accused to pay the said

cheque amount, and when the accused has failed to meet the

demand made in the legal notice, a presumption under Section 139

of the N.I. Act forms in favour of the complainant. However, the

said presumption is rebuttable. Therefore, the aspect to be

considered is, whether the accused could able to rebut the said

legal presumption thus shifting the onus back upon the accused to

prove the alleged loan transaction. It is in that regard

he had taken a defence that ten blank duly signed cheques

were issued to the complainant as long back as in 1999-2000 and

the present cheque is one of those ten cheques that has

been misused by the complainant. Interestingly, no such specific

contention has been taken by the accused at the earliest

point of time. Had it been the case of the accused that he had

issued ten blank signed cheques in the year 1999-2000 to the

complainant duly putting his signature therein, then, nothing

had prevented the accused to take appropriate action in recovering Crl.R.P.No.1265/2011

those cheques from the alleged possession of the complainant.

Admittedly, the accused has not taken any steps in that regard.

In that connection, in the cross-examination of DW-1, a

specific question was asked as to whether the accused has taken

any steps to recover the alleged blank cheques from the alleged

custody of the complainant, for which DW-1 (accused) has

answered in the negative. That means, the accused who claims to

know the worldly affairs and claims to be doing business in flowers

earlier and also a cloth merchant has not bothered to make any

effort in recovering the alleged cheques from the alleged custody of

the complainant for not less than about six to seven years.

14. Secondly, admittedly, the accused has not given any stop

payment instruction to his banker till the said cheque was

presented by the complainant for its realisation and even in that

connection also, an answer has been elicited in the cross-

examination of DW-1 that, the accused has not intimated his

Banker about those unused cheques by him and requested it to

stop the payment of the said cheques. In such a situation, the

burden would be solely upon the accused to show that he had Crl.R.P.No.1265/2011

issued those cheques only as a security towards the alleged

previous loan transactions and that the complainant has misused

those cheques.

In that connection, the very evidence of DW-1 himself gives

an answer to the same. The said accused as DW-1 in his first leg of

his evidence in Examination-in-chief has stated that he has not

availed the loan of `4,75,000/- from the complainant and has not

issued the cheque, however, the complainant has misused the

cheques given to it about six to seven years back as a security.

The said defence was taken by the accused for the first time in his

Examination-in-chief recorded on 12-02-2009.

On the other hand, the very same witness in his further

Examination-in-chief recorded on 18-04-2009 on his own in the

form of an affidavit evidence has categorically and specifically

stated that when he requested the Managing Partner of the

complainant - Sri. M.V. Prabhu for a loan on 07-07-2006, the said

Sri. Prabhu put a condition that, they would give loan provided the

accused gives him the advance cheques. Therefore, he (accused)

gave him cheques bearing Sl.Nos.868911 to 868920, which is the Crl.R.P.No.1265/2011

entire cheque book duly signed on 08-07-2006. That means, the

very accused himself voluntarily in his further Examination-in-chief

has stated that he approached the complainant for a loan on

07-07-2006 and had delivered ten blank signed cheques on the

very next day, i.e. on 08-07-2006. This evidence of DW-1 is

contrary to his own earlier evidence which is mentioned above.

Therefore, the accused himself was not clear in his defence as to

when the alleged signed blank cheques were given, on the other

hand, he has admitted that he had approached the complainant for

a loan on 07-07-2006. Even according to the complainant, the loan

was given to the accused on 16-08-2006, few days after the

accused (DW-1) approached him for a loan.

15. Thirdly, the accused, as DW-1, both in his Examination-

in-chief dated 12-02-2009 and his further Examination-in-chief

dated 18-04-2009, on his own, has stated that with respect to he

giving ten blank cheques duly signed to the complainant, he has

mentioned in a document and has obtained the signature of the

complainant by its Managing Partner on the said document.

Though DW-1(accused) has stated the same at more than one Crl.R.P.No.1265/2011

place in his Examination-in-chief, but he has not produced any

piece of paper to show that he has obtained the signature on any

such document from the complainant in that regard.

16. Fourthly, even though the accused as DW-1 in his

Examination-in-chief has taken a contention that he had issued

those cheques as a security, but, nowhere he has given any details

as to when and as against which particular loan transaction and for

how much amount of loan alleged to have been availed by him, he

had issued those cheques as security. He has not even stated that

those cheques were issued as a security towards a loan. He has

only stated that the cheques were issued as a security. He has not

mentioned as to security is provided for what purpose. Therefore,

the very defence taken by the accused though at a belated stage in

the Trial Court, still remains with lot of lacunas in it and he could

not even able to give a clear shape to his alleged defence.

On the other hand, the complainant, represented by its

Managing Partner, apart from stating that the accused had

approached him for a loan of `4,75,000/-, in his detailed cross-

examination has given several details of how his finance business Crl.R.P.No.1265/2011

was being run by the firm and which are the documents they used

to maintain and how and under which hope, the loan was given to

the accused. He has also produced certain documents including a

document shown to be accounts of the accused' ledger extract in

Form No.5 at Ex.P-8, P-9 and P-13 respectively.

17. Learned counsel for the petitioner/accused also

contended in his argument that there was no financial capacity for

the complainant to lend money. The said contention had not

specifically been taken by the accused at the earliest point of time.

No where in the cross-examination of PW-1, any suggestion was

made to the witness specifically and clearly suggesting to the

witness that the complainant firm had no financial capacity to lend

money. On the other hand, several details were elicited from PW-1

to the effect that, even though they did not have sufficient Bank

balance or funds with them, some how the firm makes adjustments

in pooling out the fund and lend the money.

Further, the learned counsel for the petitioner/accused also

contended that the document produced by him at Exs.D-4 and D-5

which are the account extracts of the complainant firm would go to Crl.R.P.No.1265/2011

show that it had no financial capacity to lend money. A perusal of

those two documents would go to show that those two documents

are the Bank Account statements of the complainant firm for a

particular period. No doubt the said Bank balance reflected in

those two statements does not cross three digits, however, the

evidence of PW-1 particularly his cross-examination reveals that,

PW-1 has specifically and clearly stated that for lending

`4,75,000/- to the accused, the firm did not drew any amount from

the Bank, but it collected the money available in cash register as a

balance in cash on hand and it has made some adjustments from

other sources and the loan was paid in cash to the accused. The

said statement in the form of explanation regarding the source of

the loan given by PW-1 is not further been specifically denied or

disputed from the accused' side. Therefore, the first and the main

argument of the learned counsel for the petitioner/accused that the

complainant had no financial capacity to lend money is not

acceptable.

18. The argument of the learned counsel for the petitioner

that, the non-claiming of interest and the very short duration of the Crl.R.P.No.1265/2011

loan amount also raises a doubt about the genuinity of the loan

transaction, is also not acceptable for the reason that, the

complaint is filed under Section 138 of the N.I. Act which can be

confined only to the cheque amount. Even according to the

complainant firm, the loan amount of `4,75,000/- was repaid to it

through a cheque in question at Ex.P-1. Therefore, it is not the

case of the complainant also that the cheque amount is the entire

amount of liability towards it by the accused. Moreover, it is not

mandatory that a loan must necessarily be repaid with interest. No

suggestions were made in that regard by PW-1 in his cross-

examination and no answers are elicited from the other witnesses.

Therefore, the Court cannot presume that in the absence of

demand for any interest upon the alleged loan, the alleged loan

itself is suspicious or doubtful, that too, particularly, in the absence of

any other circumstances compelling the Court to draw such an

inference.

Similarly, the duration of the loan is also not necessarily an

important aspect. When the business can run within a shortest

period like in the number of days, it is not expected that a business

loan must run into a long duration or must be for a longer period.

Crl.R.P.No.1265/2011

Even on this aspect also, neither any answers or reaction were

elicited from the complainant in his cross-examination as PW-1 nor

DW-1 has anywhere whispered in his evidence. Therefore, the said

argument of the learned counsel for the petitioner/accused is also

not acceptable.

19. All these facts clearly go to prove that the complainant

has proved the alleged guilt punishable under Section 138 of the

N.I. Act against the accused.

20. Even though the Trial Court and the Sessions Judge's

Court have not discussed these aspects in detail, but they have

given a finding that the complainant has proved that the accused

has committed an offence punishable under Section 138 of the N.I.

Act. No doubt, the learned Sessions Judge's Court, at some places

in its impugned judgment has observed that the loan availed by the

accused is an admitted fact, when in fact there is no such

admission from the accused' side, however, such a passing

observation made by the learned Sessions Judge's Court has not led

it to give a wrong finding in its conclusion. Therefore, I do not find

any reasons to interfere in the finding of both the Trial Court as well Crl.R.P.No.1265/2011

as the Sessions Judge's Court's judgment of convicting the accused

for the alleged offence punishable under Section 138 of the N.I. Act.

21. However, so far as the order on sentence passed by both

Courts are concerned, it has to be seen that a sentence must be

proportionate to the gravity of the proven guilt. In the instant

case, the Courts have sentenced the accused to undergo Simple

Imprisonment for a period of six months and also to pay a total

sum of `4,75,000/- as fine.

Considering the nature of the proven guilt against the

accused and the facts and circumstances of the present case, I am

of the considered view that the sentence of imprisonment imposed

by the Trial Court to an extent of six months is on the higher side

and the same requires to be reduced, maintaining the sentence to

pay fine intact. It is only to that limited extent, the intervention of

this Court is warranted.

Accordingly, I proceed to pass the following:-

ORDER

[i] The Criminal Revision Petition is allowed-in-part;

Crl.R.P.No.1265/2011

[ii] While confirming the judgment of conviction of the

present petitioner for the offence punishable under

Section 138 of the Negotiable Instruments Act, 1881,

and imposing total fine of `4,75,000/- as an amount

payable to the complainant and another sum of `5,000/-

towards the State as it is, the order on the sentence of

imprisonment alone is modified, reducing the sentence

of imprisonment from six months to two months Simple

Imprisonment.

[iii] Rest of the terms of the order of sentence remains

without any modification.

In view of disposal of the main petition, I.A.No.1/2015 does

not survive for consideration and is accordingly, disposed of.

Registry to transmit a copy of this order to both the Trial

Court as also the Sessions Judge's Court along with their respective

records forthwith.

Sd/-

JUDGE BMV*