Sri D Vigneshwara Aithal vs Krishna Automation And Software ...
2021 Latest Caselaw 5 Kant

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       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

          DATED THIS THE 4TH DAY OF JANUARY, 2021

                          BEFORE

           THE HON'BLE MR. JUSTICE H.P. SANDESH

               CRIMINAL APPEAL No.1050/2011
                           C/W
               CRIMINAL APPEAL No.1049/2011


IN CRIMINAL APPEAL No.1050/2011

BETWEEN:

SRI. D. VIGNESHWARA AITHAL
S/O. LATE D. VENKATACHALA AITHAL,
AGED ABOUT 50 YEARS
PROPRIETOR, GANAPATHI ENTERPRISES,
NO.76/3, DR. RAJKUMAR ROAD,
PRAKASHNAGAR,
BENGALURU.                                ... APPELLANT

           (BY SRI. MADHUKAR NADIG, ADVOCATE)

AND:

1.     KRISHNA AUTOMATION AND
       SOFTWARE SOLUTIONS PVT. LTD.
       NO.33/12, 2ND FLOOR,
       3RD CROSS, 4TH MAIN,
       CHAMARAJAPET,
       BENGALURU - 560 018.

2.     SRI. KRISHNAMURTHY UDUPA
       DIRECTOR,
       KRISHNA AUTOMATION AND
       SOFTWARE SOLUTIONS PVT. LTD.,
       NO.33/12, 2ND FLOOR,
                               2



       3RD CROSS, 4TH MAIN,
       CHAMARAJPET,
       BENGALURU - 560 018.

3.     RAKSHA
       DIRECTOR,
       KRISHNA AUTOMATION AND
       SOFTWARE SOLUTIONS PVT. LTD.,
       NO.33/12, 2ND FLOOR, 3RD CROSS,
       4TH MAIN, CHAMARAJPET,
       BENGALURU - 560 018.              ... RESPONDENTS

              (BY SRI. M.J. ALVA, ADVOCATE FOR
       SRI. NAGARAJA HEGDE, ADVOCATE FOR R1 TO R3)

     THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4)
OF CR.P.C PRAYING TO SET ASIDE THE ORDER DATED
13.06.2011 PASSED BY THE XIII A.C.M.M., BENGALURU IN
C.C.NO.26155/2005 - ACQUITTING THE RESPONDENTS/
ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138
OF N.I. ACT.

IN CRIMINAL APPEAL No.1049/2011

BETWEEN:

SRI. D. VIGNESHWARA AITHAL
S/O. LATE D. VENKATACHALA AITHAL,
AGED ABOUT 50 YEARS
PROPRIETOR, GANAPATHI ENTERPRISES,
NO.76/3, DR. RAJKUMAR ROAD,
PRAKASHNAGAR,
BENGALURU.                                  ... APPELLANT

            (BY SRI. MADHUKAR NADIG, ADVOCATE)

AND:

1.     KRISHNA AUTOMATION AND
       SOFTWARE SOLUTIONS PVT. LTD.
       NO.33/12, 2ND FLOOR,
       3RD CROSS, 4TH MAIN,
                              3



     CHAMARAJAPET,
     BENGALURU - 560 018.

2.   SRI. KRISHNAMURTHY UDUPA
     DIRECTOR,
     KRISHNA AUTOMATION AND
     SOFTWARE SOLUTIONS PVT. LTD.,
     NO.33/12, 2ND FLOOR,
     3RD CROSS, 4TH MAIN,
     CHAMARAJPET,
     BENGALURU - 560 018.

3.   RAKSHA
     DIRECTOR,
     KRISHNA AUTOMATION AND
     SOFTWARE SOLUTIONS PVT. LTD.,
     NO.33/12, 2ND FLOOR, 3RD CROSS,
     4TH MAIN, CHAMARAJPET,
     BENGALURU - 560 018.                   ... RESPONDENTS

             (BY SRI. M.J. ALVA, ADVOCATE FOR
      SRI. NAGARAJA HEGDE, ADVOCATE FOR R1 TO R3)

     THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4)
OF CR.P.C PRAYING TO SET ASIDE THE ORDER DATED
13.06.2011 PASSED BY THE XIII A.C.M.M., BENGALURU IN
C.C.NO.5491/2006 - ACQUITTING THE RESPONDENTS/ACCUSED
FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.
ACT.

     THESE CRIMINAL APPEALS HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 22.12.2020, THIS DAY, THE
COURT PRONOUNCED THE FOLLOWING:

                      JUDGMENT

These two appeals are filed against the common judgment

of acquittal passed in C.C.Nos.26155/2005 and 5491/2006 dated

13.06.2011, on the file of XIII Additional Chief Metropolitan

Magistrate, Bengaluru.

2. The parties are referred to as per their original

rankings before the Trial Court as complainant and accused in

order to avoid the confusion and for the convenience of the

Court.

3. Heard the learned counsel appearing for the

appellant and learned counsel appearing for the respondents.

4. The factual matrix of the case is that accused No.1 is

a Company and accused Nos.2 and 3 are the Directors of

accused No.1 Company. During the month of January 2003, the

accused approached the complainant and requested to lend an

amount of Rs.12,00,000/-. The complainant has lent an amount

of Rs.5,00,000/- and also an amount of Rs.3,00,000/- in total a

sum of Rs.8,00,000/- to the accused and the accused agreed to

repay the said amount within six months from the date of

borrowing the said amount. But the accused failed to repay the

said amount as agreed. On demand being made by the

complainant, the accused issued the subject matter of the

cheque dated 20.06.2005 for an amount of Rs.5,00,000/- and

another cheque dated 20.10.2005 for an amount of

Rs.3,00,000/- and when the same were presented for

encashment, those cheques returned with an endorsement

"payment stopped by the drawer". Thereafter, legal notices were

issued against the accused on 11.07.2005 and 10.11.2005

respectively and those notices were served on the accused, for

which the accused gave untenable replies. Hence, without any

other alternative, the complainant has filed a separate

complaints against the accused. The Trial Judge, after taking

cognizance, issued summons against accused Nos.2 and 3, who

represented through their counsel, but did not plead guilty and

claimed trial. Hence, the complainant in order to substantiate the

averments of the complaint in respect of both the complaints,

examined himself as P.W.1 and got marked the documents

Exs.P1 to P18. The accused also examined himself as D.W.1 and

got marked documents Exs.D1 and D2.

5. The common evidence has been recorded in respect

of both the cases. The statement of the accused was recorded

under Section 313 of Cr.P.C. The Trial Judge, after hearing the

respective counsel, acquitted the accused persons and hence,

the present appeals are filed before this Court by the

complainant.

6. In both the appeals, common grounds are urged

contending that the Trial Judge has committed an error in

coming to the conclusion that the burden is on the complainant

to establish the case against the accused beyond doubt. The

Trial Judge failed to draw presumption under Section 139 of

Negotiable Instruments Act (for short 'the N.I. Act'). Admittedly,

the cheques bear the signature of the accused. It is the defence

of the accused that cheques were lost and in order to

substantiate the said defence, the accused has not led any

rebuttal evidence. But the Trial Judge has committed an error in

coming to the conclusion that there is no resolution passed by

the Directors in order to avail the loan in favour of the Company.

Mere holding of the cheque is not a ground to convict the

accused under Section 138 of the N.I. Act. It is also contended

that except cheques, no other documents are produced and also

there is no specific averments as contemplated under Section

141 of the N.I. Act.

7. Learned counsel appearing for the appellant

reiterating the grounds urged in the appeal would submit that

accused Nos.2 and 3 approached the complainant seeking hand

loan for an amount of Rs.12,00,000/-. But the complainant was

not having sufficient amount of Rs.12,00,000/- and hence, paid

only an amount of Rs.8,00,000/- to the accused as loan. The

complainant is the financier and that accused Nos.2 and 3 have

signed the loan applications in terms of Ex.P15. Notices were

served on the accused, for which untenable replies were given.

The very contention of the accused is that the cheques were

stolen. In support of the said contention, he relied upon Ex.D1

dated 08.01.2004 to substantiate the case of the accused and

also filed another private complaint on 23.01.2006 after two

years of Ex.D1.

8. In pursuance of the said private complaint, the police

have filed 'B' report, which has not been challenged. The cheque

has been admitted by the accused and the defence taken by the

accused that the same was stolen has not been proved. The

cheques also bear the seal of the Company. Even though P.W.1

has produced cogent evidence before the Court, Trial Judge has

committed an error in appreciating the same.

9. Learned counsel would further submit that only in

case of a Public Limited Company, the resolution is required to

be passed and in case of a Private Limited Company, no such

resolution is necessary. The accused failed to adduce any

probable evidence and hence, the Trial Judge ought to have

drawn presumption under Section 139 of N.I. Act in favour of the

complainant. Accused No.3 is arraigned as accused on the

ground that she is a guarantor and accused No.2 for having

signed the cheques.

10. Per contra, learned counsel appearing for the

respondents would submit that the according to the complainant,

the loan was availed in the year 2003 and the accused had

agreed to repay the same within six months. But the claim of the

complainant is that the cheques were issued in the year 2005.

There is no explanation as to why there was a delay in making

repayment, when he had agreed to repay the same within six

months and also that no action has been taken.

11. Learned counsel would further submit that under

Section 269 (ss) of the Income Tax Act, more than an amount of

Rs.20,000/- can be paid only through cheque. The accused has

set up his defence in the reply notice in terms of Ex.P12. The

complaint was given on 08.01.2004. According to the

complainant, the cheques were issued in the year 2005. When

the complaint was given in the year 2004 itself, the question of

issuing the subject matter of the cheques in the year 2005 does

not arise.

12. Learned counsel would also submit that it is elicited

from the mouth of P.W.1 that he has not shown any payment of

loan in favour of the accused in his Income Tax Returns. The

accused rebutted the evidence of the complainant. There is no

consistency in the evidence of the complainant and Ex.P4 as it

does not say the year of availing loan. The oral evidence is

contrary to the averments of the complaint and Ex.P4. When the

accused has rebutted the presumption, the question of drawing

the presumption in favour of the complainant does not arise.

13. Learned counsel for the accused relying upon the

judgment of the Apex Court in the case of Shree Daneshwari

Traders v. Sanjay Jain reported in LAWS (SC) 2019 8 82

brought to the notice of this Court para Nos.19 and 20. Referring

to these two paragraphs, learned counsel would submit that

when a presumption is rebuttable, it only points out that the

party on whom lies the duty of going forward with evidence, on

the fact presumed and when that party has produced evidence

fairly and reasonably tending to show that the real fact is not as

presumed, the purpose of the presumption is over and that to

rebut the statutory presumptions, an accused is not expected to

prove his defence beyond reasonable doubt as is expected of the

Complainant in a criminal trial. The accused may adduce direct

evidence to prove that the cheque in question was not supported

by consideration and that there was no debt or liability to be

discharged by him. However, the Court need not insist in every

case that the accused should disprove the non-existence of

consideration and debt by leading direct evidence because the

existence of negative evidence is neither possible nor

contemplated.

14. Learned counsel also relying upon the judgment of

this Court dated 07.10.2020 passed in Crl.A.No.1271/2010,

would submit that this Court referring to the judgment of Shree

Daneshwari Traders (supra) dismissed the appeal under the

similar circumstances, which had been filed against the very

same accused.

15. In reply to the arguments of the learned counsel for

the accused, learned counsel appearing for the complainant

would submit that Section 269 (ss) of the Income Tax Act is not

applicable to the case on hand, as it has been held by the Apex

Court in the case of Rangappa vs. Sri. Mohan reported in

(2010) 11 SCC 441 that though the cheque amount is for a

sum of Rs.40,000/-, the presumption can be drawn.

16. Learned counsel in support of his contention relying

upon the judgment of this Court passed in Crl.A.No.869/2008

dated 18.08.2010 would submit that similar defence has been

taken in the said appeal, which came to be allowed and

sentenced the accused for the offence punishable under Section

138 of N.I. Act. Learned counsel would also submit that being

aggrieved by the judgment of this Court, a special leave petition

in S.L.P. No.10660/2010 was filed and the said S.L.P. was

dismissed vide order dated 10.01.2011.

17. Having heard the arguments of both the learned

counsel for the complainant and learned counsel for the accused,

the points that would arise for the consideration of this Court

are:

1. Whether the Trial Judge has committed an

error in acquitting the accused for the offence

punishable under Section 138 of the N.I. Act?

2. What Order?

Points No.1 and 2:-

18. Before appreciating the oral and documentary

evidence of the complainant and the accused, this Court would

like to refer to the contents of the complaint. The complainant in

para No.2 of the complaint contended that accused No.1 is a

Company and accused Nos.2 and 3 are the Directors of accused

No.1 and they are known persons to the complainant. During the

month of January 2003, accused had approached the

complainant and requested to lend an amount of Rs.12,00,000/-.

The complaint lent an amount of Rs.5,00,000/- and

Rs.3,00,000/- to meet the financial requirement for the purpose

of business. As the complainant was having good relationship

with accused, he paid the amount to the accused on a condition

that the same should be repaid within a period of six months

from the date of borrowing such amount, for which the accused

agreed to repay the same and subsequently, failed to do so. On

demand, the accused issued cheques towards repayment of the

said amount. When the cheques were presented, they returned

with an endorsement "payment stopped by drawer".

19. The complainant in the oral evidence in the form of

affidavit reiterated the averments of complaint and got marked

documents Exs.P1 to 14 at the first instance. He was subjected

to cross-examination and in the cross-examination, he admits

that he is doing finance business in the name and style of

Ganapathi Investment at Dr. Rajkumar Road, Rajajinagar,

Bengaluru, since 20 years and the said finance is registered

under the Karnataka Money Lenders Act. He admits that he has

maintained the accounts pertaining to all his transactions and

those books of accounts are in his custody and he could produce

the same, if required. It is also elicited that the accused have

filed complaint before Chamrajpet Police Station against him

with regard to cheque in question and the police have

summoned and enquired him. He also admits that, he obtained

the stay order from the High Court. The other accused persons

in the said PCR are also known to him. The accused persons

have executed loan application for having borrowed the loan

amount and he could produce the same. It is also elicited that

accused No.1 is the Registered Company under the Companies

Act, 1956. He does not know as to whether accused No.1

Company passed the resolution to borrow loan from him or not.

He paid the loan to accused Nos.2 and 3 and not to the

Company.

20. P.W.1 in the further cross-examination admits that

he has not obtained any receipt from the accused persons for

having paid the loan amount. Witness volunteers that he paid

Rs.8,00,000/- as against Rs.12,00,000/- to them by way of cash

as requested. He says that he has not maintained any accounts

for having paid the loan amount to the accused persons. He

further admits that in support of his returns, he has maintained

the account and he has not shown the present transaction in his

Income Tax Returns. He says that he does not remember date of

payment of loan amount made to the accused persons. He paid

the loan amount to the accused persons in cash by drawing the

same from his wife's SB account without interest. He could

produce the documents to that effect. It is also elicited that

there was no personal transaction between the accused persons

and him about 8 years back. It is elicited that he got filled up the

payees name and date in the cheque in question. The accused

persons are his distant relative. It is elicited that number of

cases are filed against the accused by his relatives and the police

have submitted 'B' report on the ground that the alleged stolen

cheques which are the subject matter before the Court and the

Court has to give findings on those cheques. In the month of

January 2003, he received the cheque involved in this case. He

says that he is not aware that the loan of Rs.20,000/- or more is

to be paid by way of cheque only.

21. P.W.1 is also further examined after remanding the

matter and filed the additional affidavit, wherein he has stated

that the loan of Rs.12,00,000/- was sanctioned in favour of his

wife on 11.04.2002 and after sanction of the loan, his wife

withdrew the amount and gave the amount to him for using the

same in his business during the year 2002. During the month of

December 2002 and January 2003, he himself and his wife

received the amount and at that time, accused Nos.2 and 3 have

approached and requested to pay the amount. He paid the

amount belong to him and his wife. He is the proprietor of

Ganapathi Investment and he has produced licence - Ex.P17 in

support of the same. He also produced the documents Exs.P15

and P16 and also got marked the documents Exs.P18 and P19.

He was subjected to cross-examination.

22. In the cross-examination of P.W.1, it is elicited that

Ex.P16 is in respect of making the payment to the accused and

he cannot tell as to on what date, the amount has been

withdrawn. He does not know why the same was withdrawn and

his wife used to draw the money through cheque. He also does

not remember how much amount he has received from his wife

to pay the money to the accused. He has not kept the entire

amount of Rs.12,00,000/- in his house. He says that on

11.04.2002 an amount of Rs.3,00,000/- was paid by way of

cheque to the accused. He has given only an amount of

Rs.8,00,000/- to the accused and not Rs.12,00,000/- as sought

in the loan application. The loan application does not bear the

date. In Ex.P15, there is no any mention as to whether the

application was considered or rejected.

23. Accused No.2 has been examined as D.W.1 and in

his affidavit in the form of chief-evidence, he says that he had no

transactions with the complainant. Ex.P1 is one of the several

cheques, which was lost by the accused No.1 Company and he

had lodged the complaint on 08.01.2004 and given "stop

payment" instruction. It is also his evidence that he has given

the reply notice in terms of Ex.P12 and P.W.1 has admitted in

the cross-examination that he had filled up the cheque-Ex.P1.

D.W.1 in his chief stated that several cheque cases have been

filed against him and got marked the documents at Exs.D1 and

D2. He was subjected to cross-examination.

24. In the cross-examination of D.W.1, he admits that

he purchased the house in Hanumanthanagar and for house

warming ceremony, he had invited number of relatives. He also

admits that in the said house warming ceremony, he had invited

the complainant and he had attended. But he claims that he

purchased the house from his own funds. It is suggested that he

has not started the software company on his own funds and the

same is denied. It is elicited that Ex.P1 in this case as well as

Ex.P1 in C.C.No.5491/2006 has been issued by him and the

signatures appearing in the said cheques belong to him. He also

admits that the contents of the said cheques have been written

by him. It is suggested that he has borrowed the loan from the

complainant and to discharge the said loan, he has issued the

said cheques and the same has been denied. It is elicited that he

has filed criminal petition before this Court seeking to quash

cases filed at Bengaluru, Haveri and Kundapura. The said

criminal case came to be dismissed.

25. In the further cross-examination of D.W.1, he admits

that he had stopped the business 6 years ago. In order to start

the first accused Company, he had invested the amount of

Rs.5,00,000/- and the same is shown in the balance sheet. It is

suggested that in order to develop the company, he had availed

the loan of Rs.5,00,000/- and Rs.3,00,000/- and given the

cheques and the same is denied. It is suggested that he has

given false complaint that cheques were stolen and the said

suggestion is denied. However, he admits that police have filed

'B' report. He also admits that an ordinary prudent man would

not sign and keep the cheque. But he says that he kept the said

cheque ready to give the same to the suppliers.

26. Having perused the oral evidence and also the

documentary evidence, the case of the complainant is that he

had lent an amount of Rs.5,00,000/- and Rs.3,00,000/- to the

accused and the accused in discharge of the said loan amount

had issued the subject matter of the cheques, which are marked

as Ex.P1 in both the cases. The other documents are legal

notices, postal receipts and postal acknowledgements and also

the reply notices. The complainant also relied upon Ex.P15 - the

loan application signed by accused No.2 and accused No.3 has

signed as a guarantor. On perusal of Ex.P15, it is mentioned that

he was in need of an amount of Rs.12,00,000/-. The

complainant also produced the document - Ex.P16 for having

withdrawn the amount of Rs.3,00,000/- from the account of his

wife on 11.04.2002. This account extract also discloses that the

loan amount of Rs.12,00,000/- was sanctioned in favour of the

wife of accused on the very same day. It is important to note

that the complainant also produced Ex.P17 - money lenders

licence.

27. It is also pertinent to note that in the cross-

examination of P.W.1, he categorically admits that he has

maintained the account pertaining to his transactions and those

books of accounts are in his custody and he could produce the

same, if required. It is also emerged in the evidence of both

P.W.1 and D.W.1 that complaint is given in terms of Ex.D1.

P.W.1 also admits that in pursuance of the said complaint, he

was called upon and enquired by the police. This complaint is

dated 08.01.2004 and in the complaint, it is mentioned that he

lost some bundle of papers containing personal and official

documents and some cheques and to inform him on the said

address, if they find any of those documents. The accused also

filed PCR on 23.01.2006 against the complainant. Accused No.2

and other relatives of the accused are arraigned as accused

persons and in the said complaint, it is mentioned that certain

signed cheques are missing and that immediately, he had given

stop payment instruction to the bank and also the same was

informed to the jurisdictional police. The police have not taken

any action. In the result, accused issued notice to the

complainant and started blackmailing the complainant. Accused

Nos.1 and 2 in the said complaint are brothers and the other

accused persons are totally strangers to the complainant. The

total claim made by the accused is to the tune of

Rs.38,00,000/-. The Company has not received any amount

from the accused and they are making the false claim. It has to

be noted that though this complaint is dated 09.11.2005, the

same was presented on 23.01.2006 almost after lapse of 2 years

of giving the letter to the police station vide Ex.D1, which is

dated 08.01.2004.

28. It is also important to note that notices were

exchanged between the complainant and the accused in terms of

Ex.P4 on 11.07.2005 and in terms of Ex.P8 on 10.11.2005 in

other case and reply was given in terms of Ex.P12 in both the

cases. Hence, it is clear that the complaint was given after

receipt of notice. There is no any explanation on the part of the

accused as to why he kept quite for a period of more than 2

years even after coming to know that the cheques are lost. Since

the complaint was given on 08.01.2004. It is also pertinent to

note that D.W.1 in the cross-examination categorically admits

the signature available in Ex.P1 in both the cases. It is further

elicited that the same has been issued by him and the signatures

appearing in the said cheques belong to him. He further admits

that the contents of the said cheques have been written by him.

It is also important to note that he categorically admits that an

ordinary prudent man would not keep the cheques signed with

him. No doubt, he denies the suggestion that he borrowed the

loan and issued the subject matter of the cheques. It is also

admitted by him that after filing the private complaint against

the complainant and the other accused persons, the police have

filed the 'B' report. No doubt, P.W.1 also admits in the cross-

examination that he has maintained the accounts pertaining to

his transactions, but he has not produced the same before the

Court.

29. It is also important to note that D.W.1 also in the

evidence has categorically admitted that he started his business

by investing an amount of Rs.5,00,000/- and he has maintained

the balance sheet and he could produced the same. But he has

not produced the same before the Court. It is the suggested in

the cross-examination that he spent an amount of more than a

crore for the said business. It is also important to note that

Ex.P15 discloses that he gave the loan application to the

complainant Ganapathi Investment and he also signed the said

loan application. Though the learned counsel appearing for the

accused disputes that the said loan application is not given but

has not denied the signature on the said loan application.

Nothing has been suggested to P.W.1 that no such loan

application was given to the complainant. There is no

explanation on the part of the accused with regard to the

document Ex.P15. No doubt, the said loan application does not

bear his signature and it has been admitted by P.W.1. The

accused has to explain as to when he was not in need of loan

amount, why the said loan application has been submitted by

him.

30. It is also the case of the accused that he lost the

cheques and on perusal of Ex.D1, no where it is mentioned as to

where he lost those cheques. Ex.D1 clearly depicts that he lost

bundles of papers and some cheques and asked them to inform

him if those papers and cheques are found. It has not been

specifically stated by the accused as to when he lost the cheques

and how it had gone to the custody of the complainant. He also

not denied the fact that he started the business in the year

2001-2002. He further admits that he purchased the house at

Hanumanthnagar and also invited the complainant to the house

warming ceremony of his house. In the letter dated 08.01.2004,

which the accused claims that the same is complaint, nothing is

forthcoming against this complainant and there is also no

explanation as to why private complaint was filed on 23.01.2006

that too almost after two years of Ex.D1.

31. I have already pointed out that notices were

exchanged between the complainant and the accused before

filing private complaint. It is also important to note that it is the

claim of the complainant that his wife had availed loan of

Rs.12,00,000/- and out of Rs.12,00,000/-, he had taken an

amount of Rs.3,00,000/- from the account of his wife and given

the same to the accused. In order to substantiate the same, the

complainant also produced the document Ex.P16 - bank extract

and the same discloses that an amount of Rs.3,00,000/- was

drawn on 11.04.2002. It is the claim of the complainant that

loan amount was advanced in the month of January 2003 and

the accused issued the subject matter of the cheques in

discharge of the liability.

32. Having perused the unreported judgment of this

Court in Crl.A.No.869/2008, this Court considered the principles

laid down in the judgments in Rangappa v. Mohan reported in

AIR 2010 SC 1898; Kumar Exports v. Sharama Carpets

reported in (1) 2009 BC 392 and so also Krishna Janardhan

Bhat v. Dattatraya G. Hegde reported in II (2008) BC

44(SC) wherein an observation has been made with regard to

drawing of presumption. Learned counsel also relied upon the

order passed in S.L.P. filed by the accused against the said

order, which came to be dismissed.

33. Per contra, learned counsel appearing for the

respondent/accused relied upon the judgment of Shree

Daneshwari Traders (supra) and vehemently brought to the

notice of this Court para Nos.19 and 20 with regard to the

presumptions, wherein it is observed that the accused may also

rely upon the presumptions of fact, for instance, those

mentioned in Section 114 of the Indian Evidence Act to rebut the

presumptions arising under Sections 118 and 139 of the N.I. Act.

34. There is no dispute with regard to the presumption is

concerned and the same is also a rebuttable presumption. This

Court also in Crl.A.No.1271/2010 taken note of the principles

laid down in the judgment of the Apex Court in Shree

Daneshwari Traders (supra) and acquitted the accused.

35. Having relied upon the principles laid down in the

judgments referred supra, it is settled law that once the cheque

is admitted and there is no dispute with regard to the signature

and so also notice was issued, the Court has to draw mandatory

presumption under Section 139 of the N.I. Act. No doubt, in the

case on hand, the accused has given reply denying the issuance

of the cheque. But in the cross-examination of D.W.1, he

categorically admits that he issued the cheques and the contents

of Ex.P1 cheques in both the cases are also written by him. It

has to be noted that P.W.1 in the cross-examination admits that

he filled up the contents of Ex.P1. It is also important to note

that D.W.1 categorically admits that no ordinary prudent man

would sign the cheque and keep it with him. It is the case of the

accused that he lost bunch of papers and cheques and there is

no any explanation as to why he singed the bunch of cheques

and kept with him. It is also important to note that he relied

upon Ex.D1, which does not specify the cheques that he lost. It

appears that after the issuance of the cheques, he gave the

letter to the police, which is not the complaint. He had only

requested the police to inform him, if they find the documents

and the cheques, which he had lost and to hand over .

36. The very contention of the accused is that they lost

the cheque and there is no explanation as to where he lost the

cheque. D.W.1 admitted that several cases are filed against him.

Merely because he gave the letter to the police in terms of

Ex.D1, the Court cannot come to the conclusion that he lost the

cheques and the onus is on the accused to rebut the case of the

complainant by adducing the evidence on preponderance of

probabilities, which has not been done. The Trial Judge has

committed an error in coming to the conclusion that no

resolution is passed by the Directors. I have already pointed out

that Ex.P15 is the letter signed by accused Nos.2 and 3 and that

the same is not in the name of the Company and the fact that

they are the Directors of the said Company is not in dispute. The

Trial Judge has also committed an error in coming to the

conclusion that no resolution has been passed. It is the specific

case of the complainant that he advanced the loan amount in

favour of accused Nos.2 and 3, who are the Directors of the

Company and the same has not been appreciated by the Trial

Judge properly. The further contention is that the Trial Judge has

erred in assigning the reason that the holding of the cheque

itself is not a ground to draw the presumption. The accused has

to rebut the evidence of the complainant as to how the cheque

had gone into the hands of the complainant, but the same has

not been done except relying upon Ex.D1 and Ex.D2.

37. This Court already pointed out that Ex.D2 came into

existence after the issuance of the legal notice. The other

observation made by the Trial Judge that except the cheques, no

other documents are produced. P.W.1 has categorically stated

that while advancing the loan, he has not collected any

documents and also says they are distant relatives. When such

being the case, the Court cannot also expect any other

documents at the instance of the complainant. The other

reasoning given by the Trial Court is that there is no specific

averment in the complaint with regard to accused Nos.1 and 2

discharging the duties as Directors and on perusal of the

Complaint, the complainant in para No.2 specifically mentioned

that accused No.1 is a Company, accused Nos.2 and 3 are the

Directors of accused No.1 and they are the known persons to the

complainant. When such pleadings has been made in the

complaint and that the accused persons have approached the

complainant to borrow the loan amount, it cannot be contended

that Section 141 has not been pleaded. On perusal of para Nos.6

and 8 of the complaint, it is specifically mentioned that as on the

date of borrowing the loan amount and issuing of the cheques,

accused Nos.2 and 3 were in charge and responsible for the

conduct of the business of the Company and they are

responsible for all financial transactions of the Company. Hence,

they are liable to be prosecuted under Section 138 of the N.I.

Act. When a specific pleading has been made in para Nos.6 and

8 of the complaint that these accused persons were looking after

the affairs of the company, the Trial Court ought not to have

come to the conclusion that Section 141 of the N.I. Act has not

been complied. The cheque is also issued on behalf of the

company.

38. It is also important to note that the Trial Judge failed

to take note of the 'B' report filed by the police against the

complaint-Ex.D2 and the very theory of the cheques having been

stolen has not been proved by leading any probable evidence

before the Trial Court. The cheque - Ex.P1 also bears the

common seal of the Company. When such being the case, the

Trial Judge ought not to have come to the conclusion that

accused has rebutted the case of the complainant relying upon

the documents Ex.D1 and Ex.D2. This Court has pointed out that

under what circumstances Exs.D1 and D2 came into existence

and the theory of cheques having been stolen has not been

proved. Hence, the Trial Court has committed an error in

acquitting the accused instead of considering the material

available on record. The very conclusion of the Trial Court that

the accused has rebutted the case of the complainant is perverse

as the Trial Judge has not considered the admission elicited from

the mouth of D.W.1 with regard to the issuance of the cheques

and the signature on the said cheques and so also that an

ordinary prudent man would not sign and keep the cheque with

him. He claims that not only the complaint on the cheques Ex.P1

and Ex.P2 has been filed, but also several other complaints have

been filed. But there is no explanation to the effect that if he has

not issued the said cheques, why he had signed and kept the

bunch of cheques. Under the circumstances, it requires

interference of this Court.

39. In view of the discussion made above, I pass the

following:-

ORDER

(i) The appeals are allowed.

      (ii)    The impugned judgment of acquittal passed in
              C.C.Nos.26155/2005           and    5491/2006   dated

13.06.2011, on the file of XIII Additional Chief Metropolitan Magistrate, Bengaluru, is hereby set aside.

(iii) The accused Nos.1 to 3 are convicted for the offence punishable under Section 138 of the NI Act.

      (iv)    In Crl.A.No.1049/2011, accused Nos.2 and 3
              are    directed   to   pay    the    fine   amount   of

Rs.3,50,000/- to the complainant within eight

weeks from today and in default of the payment of the fine amount, the accused Nos. 2 and 3 shall undergo simple imprisonment for a period of one year.

(v) In Crl.A.No.1050/2011, accused Nos.2 and 3 are directed to pay the fine amount of Rs.5,50,000/- to the complainant within eight weeks from today and in default of the payment of the fine amount, the accused Nos. 2 and 3 shall undergo simple imprisonment for a period of one year

(vi) The Trial Court is directed to secure the accused persons in both the cases, if they fail to pay the fine amount and subject them to serve the sentence.

(vii) The Registry is directed to transmit the Trial Court records to the Trial Court, forthwith.

Sd/-

JUDGE

PYR