The Manager vs Shri Sitaram Pandurang Ubare
2021 Latest Caselaw 3302 Kant

            IN THE HIGH COURT OF KARNATAKA
                    DHARWAD BENCH

        DATED THIS THE 6TH DAY OF SEPTEMBER, 2021

                         BEFORE

       THE HON'BLE MR. JUSTICE RAJENDRA BADAMIKAR

              CRIMINAL APPEAL NO.2687/2013

BETWEEN:

THE MANAGER
SHRI JAGAJYOTI BASAVESHWAR CREDIT
SOUHARD SAHAKARI NIYAMIT SANKESHWAR,
R/BY SHRI SHIVANAND APARAI CHOUGALA
AGE: MAJOR, OCC: MANAGER,
R/O. SANKESHWAR, DIST: BELGAUM
                                              ...APPELLANT
(BY SRI.ANOOP G.DESHPANDE, ADV.)

AND:

SHRI SITARAM PANDURANG UBARE
R/O. SANKESHWAR, NOW AT
LONERE GOREGAON ROAD,
TQ: MAGAON, DIST: RAYAGAD
MAHARASHTRA STATE.
                                             ...RESPONDENT
(BY SRI.BALAGOUDA A.PATIL, ADV.)

      THIS CRIMINAL APPEAL IS FILED UNDER SECTION U/S
378(1) OF CR.P.C. SEEKING TO SET ASIDE THE JUDGMENT
DATED 10.05.2013 PASSED BY THE JMFC, SANKESHWAR IN
C.C.NO.512/2005.

     THIS CRIMINAL APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 26.08.2021 COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT
DELIVERED THE FOLLOWING:
                                   2




                           JUDGMENT

This criminal appeal is filed by the

appellant/complainant under Section 378(1) of Cr.P.C. for

setting aside the judgment of acquittal dated 10.05.2013

passed by the JMFC, Sankeshwar in C.C.No.512/2005 by

allowing this criminal appeal and convicting the

respondent/accused for the offence punishable under

Section 138 of Negotiable Instruments Act.

2. For the sake of convenience, the parties herein

are referred with the original ranks occupied by them

before the trial court.

3. Brief facts leading to the case are that,

complainant is the manager and authorized person of the

complainant-society. On 20.12.2003 the accused has

applied for a loan of Rs.6,00,000/- from the complainant-

society and the same was sanctioned to an extent of

Rs.5,50,000/-. It is alleged that the accused has agreed to

repay the loan amount with interest in 10 installments

payable once in three months and he has also executed

necessary documents in favour of the complainant-society.

But he has failed to repay the loan amount. When the

complainant-society demanded repayment of the loan, on

21.04.2005, the accused issued a cheque for

Rs.7,01,447/- including interest portion towards discharge

of his legally enforceable debt. When the said cheque was

presented for encashment, the same was bounced for

insufficient of funds. As per the request of the accused, the

cheque was presented and again it was dishonoured. On

18.06.2005 it was again presented at the request of the

accused, but it was dishonoured for insufficient funds.

Hence, the legal notice came to be issued. As the accused

has not paid the amount, a complaint came to be lodged.

After taking cognizance and sworn statement of the

complainant by the learned Magistrate, the process came

to be issued. The accused has appeared and was enlarged

on bail. He denied the accusation.

4. The complainant was examined as P.W.1 and

one witness was examined as P.W.2 and 13 documents

were marked as Exs.P1 to P13. Thereafter, the statement

of the accused under Section 313 of Cr.P.C. was recorded

and accused denied the incrementing evidence appearing

against him. He did not lead any independent evidence,

but he got marked 15 documents as Exs.D1 to D15 during

the course of cross-examination of P.Ws.1 and 2. After

hearing the arguments and after perusing the oral as well

as documentary evidence in detail, the learned Magistrate

has acquitted the accused for the offence punishable under

Section 138 of N.I.Act. Being aggrieved by this judgment

of acquittal, the appellant/complainant has filed this

appeal.

5. Heard the arguments advanced by the learned

counsel for the appellant/complainant and learned counsel

for the respondent/accused. The trial court records are

secured and I have perused them in detail.

6. Learned counsel for the appellant/complainant

would submit that the trial court has failed to appreciate

the oral and documentary evidence in proper perspective

and has committed an error in acquitting the accused,

which has resulted in miscarriage of justice. He would also

contend that the accused has not denied the signature on

the cheque, loan application and other documents and

when he has not denied the issuance of cheque, the trial

court has committed an error in dismissing the complaint

on technical ground. He would also contend that cheque is

issued in the name of "Jagajyoti Sri Basaveshwar Credit

Souhard Sahakari Niyamit" and the same was later merged

with "Sri Basaveshwar Souhard Sahakari Niyamit" and it

was renamed as "Sri.Basaveshwar Urban Credit Souhard

Sahakari Niyamit". He would contend that this process is

well within the purview of law and it is evident from the

documentary evidence. He would contend that registration

number clearly disclose that entity is one and the same.

Hence, he would seek for allowing the appeal by setting

aside the impugned judgment of acquittal.

7. On the contrary, learned counsel for the

respondent/accused would contend that there is no

document to show the merger of the society. Admittedly,

the cheque is in the name of "Jagajyoti Sri Basaveshwar

Credit Souhard Sahakari Niyamit" which was merged with

"Sri Basaveshwar Souhard Sahakari Niyamit" and it was

renamed as "Sri.Basaveshwar Urban Credit Souhard

Sahakari Niyamit". The documents do not establish that

P.W.1 was authorized in this regard and there is no

document to show that merged society changed into

"Sri.Basaveshwar Urban Credit Souhard Sahakari Niyamit".

He would also contend that, as on the date of issuing

notice there was no authorization, as notice was issued on

27.06.2005, but the resolution is dated 30.06.2005 and

complaint was filed on 02.08.2005. He would also contend

that loan application is dated 20.12.2003 and sanctioned

on 22.12.2003, but promissory note was signed on

24.12.2003. Hence, he would contend that there is no

legally enforceable debt. Hence, he would contend that the

trial court has considered all these aspects in proper

perspective and the judgment of the trial court is in

accordance with law and does not suffer from any

infirmity. Hence, he would seek for rejection of the appeal.

8. Having heard the arguments and perusing the

records, now the following point would arise for my

consideration:

Whether the appellant/complainant proves that the judgment of the trial court is erroneous and illegal and the trial court has committed an error in acquitting the accused?

9. It is to be noted here that complaint is filed

against the accused in his individual capacity, but the

cheque was issued in the name of Ubhare Engineering

Works by its proprietor. Further, it is important to note

here that accused has not disputed his signature on Ex.P1

cheque. He has also admitted that he is the proprietor of

the Ubhare Engineering Works. It is contended that

proprietary firm is not included as an accused and there is

no liability of the proprietary firm. In the instant case,

there is no dispute that accused is the sole proprietor of

the firm and he was operating the account of the firm and

Ex.P1 cheque was drawn on Hireyankashi Employees Co-

Op. Bank Ltd., Sankeshwar. As such, it is evident that

accused was incharge of the business of the proprietary

firm at the relevant point of time.

10. In this context, learned counsel for the

appellant/complainant placed reliance on the decision of

the Hon'ble Apex Court in the case of M/s Shankar

Finance & Investments Vs State of Andhra Pradesh &

Others in Crl.A.No.1449/2003 and the decision of the

Allahabad High Court in the case of Dhirendra Singh

Vs State of U.P. and Another in 2231/2020 and the

judgment of this Court in the case of Shri.M.Chinnakoti

Reddy Vs. Smt.B.Bhagyalakshmi passed in

Crl.A.No.2556/2009 dated 02.09.2013. The Hon'ble

Apex Court has analyzed the difference between the

company and proprietary firm as an association of the

individuals. It is clearly observed that, a proprietary

concern is nothing but an individual trading under a trade

name and an individual carries on business in a name or

style other than his own name. This Court in

Crl.A.No.2556/2009 has elaborately discussed this aspect

and held that a proprietorship is one which is managed by

an individual and it would consist of sole proprietor. Hence,

it is held that there is no indication in Section 141 of

N.I.Act that a company would include a proprietorship and

that a complaint would not be maintainable if it is brought

in the name of the proprietor without the proprietorship

concerned also being made a party.

11. Admittedly, in the instant case, loan is not

obtained by the proprietary concern, but loan was obtained

by the accused in his individual capacity. It is evident from

Exs.D1 and D2 that he has applied for loan. Under such

circumstances, the said contention holds no water and

accused being the proprietor has issued the cheque

pertaining to the proprietorship concern operated by him.

As such, the said ground is not available to the accused.

The other ground regarding residence of the accused etc.

holds no water, as he as dealing with sugar factory and

was a contractor. Apart from that, the accused has taken

inconsistent defences and his defences are also not

established, as he is not stepped into the witness box. He

has admitted that he has issued cheque. His contention is

that he issued blank cheque to one Mangasuli in order to

look after his financial transactions as he has suffered

fracture injuries between 2002-2007, but this aspect is not

established by the accused. Apart from that, under Section

139 of N.I.Act, the burden is on the accused to rebut the

presumption available in favour of the complainant.

Admittedly, the cheque is in favour of the complainant and

as such, the presumption is in favour of the complainant.

The burden is on the accused to rebut the said

presumption. Exs.D1 and D2 disclose that he has issued

cheque in his personal capacity and though Ex.P1 pertains

to the firm, it is evident that it is operated by him only.

12. Much arguments have been advanced

regarding application for loan was given on 20.12.2003

and loan has been granted on 22.12.2003 and promissory

note being signed on 24.12.2003, but all these aspects are

irrelevant in view of the fact that the accused has admitted

the cheque and Exs.D1 and D2 establish that he has

applied for loan. It is not the case of the accused that loan

was not disbursed to him. He has taken a defence

regarding cheque being handed over to Mangasuli, but that

was not established by him.

13. The complaint came to be filed on 02.08.2005

by the Manager, Shivanand A.Chougala. The legal notice

was issued by the counsel on 27.06.2005. Hence, it is

contended that there was no authorization for prosecuting

the accused by the complainant-society. Ex.P7 disclose

that complainant was authorized by resolution dated

30.06.2005. Though there was no authorization for

issuance of notice, but that was ratified by issuing

authorization to complainant P.W.1 to prosecute the

matter, which presupposes that issuance of notice has

been ratified. The resolution was dated 30.06.2005 and

the complaint was filed on 02.08.2005. No doubt the letter

regarding authorization was issued is dated 03.09.2005,

but it is not the case of the accused that there was no such

resolution or in the absence of resolution this false letter

has been issued. No such defence has been set up.

Further, the society itself has not raised any issue and

there is no evidence to show that society is not interested

in prosecuting the accused. Under such circumstances, the

said ground urged by the accused is unsustainable.

14. The complaint was lodged by the Manager of

Jagajyoti Shree Basaveshwar Credit Souhard Sahakari

Niyamit, Sankeshwar. The cheque is in the name of

Jagajyoti Shree Basaveshwar Credit Souhard Sahakari

Niyamit, Sankeshwar itself. P.W.1 is the manager of the

said society. Subsequently, it is asserted that the said

society is merged with Sri Basaveshwar Souhard Sahakari

Niyamit, Sankeshwar. This fact is evident from Ex.P7A.

From Ex.P7A and Ex.D8, it is evident that Sri Basaveshwar

Credit Souhard Sahakari Niyamit, Sankeshwar was merged

with Sri Basaveshwar Shouhard Sahakari Niyamit,

Sankeshwar.

15. Much reliance is placed by the defence counsel

on Ex.D8 that the notice was issued under Ex.D8 dated

03.12.2011 in the name of Sri Basaveshwar Urban Credit

Souhard Sahakari Niyamit, Sankeshwar. This notice is of

the year 2011, but it is to be noted here that the complaint

was filed in the year 2005 itself. Hence, Ex.D8 which was

issued during the pendency of this criminal case has no

much relevancy and the trial court has given much

importance to Ex.D8 claiming that the same was issued

pertaining to the same transaction as admitted by P.W.1.

It is argued that there is no evidence placed on record to

show that Sri Basaveshwar Urban Credit Souhard Sahakari

Niyamit is merged.

16. The trial court has held that there is no

certainty as on whom the liability of the accused to be

declared. But it is to be noted here that whether it is

Jagajyoti Basaveshwar Credit Souhard Sahakari Niyamit or

Sri Basaveshwar Urban Credit Souhard Sahakari Niyamit is

botheration of the complainant. If it is merged into Sri

Basaveshwar Urban Credit Souhard Sahakari Niyamit then

Sri Basaveshwar Urban Credit Souhard Sahakari Niyamit

will take the benefit of the order, but that is nothing to do

with the accused, as the evidence on record does establish

that accused is liable to pay complainant-society and there

is a legally enforceable debt in favour of the complainant-

society. Any other society which takes over the

complainant-society will have the benefit of the order.

However, that was nothing to do with the accused. The

accused is liable to pay the complainant-society and

evidence does establish that he has issued cheque in

favour of the complainant-society towards discharge of

debt. Under Section 139 of the N.I.Act, there is a

presumption in favour of the complainant and the burden

is on the accused to rebut the said presumption, but the

accused has not rebutted the said presumption and he has

not stepped into the witness box. He admits signature on

the cheque Ex.P1. Even the loan transaction under Exs.D1

and D2 are not disputed by him. The other documents do

establish that there is a transaction between the accused

and the complainant-society. Due to merger of the

complainant-society accused cannot get benefit of the

same or exonerate him from his liability of paying legally

enforceable debt. The trial court has given much

importance regarding variance in the balance referred in

Ex.D8, but it is to be noted here that the complaint was

filed in the year 2005 itself and as on that date the amount

was Rs.7,01,446/-, but subsequent payment and other

things becomes relevant and no higher amount is claimed

under Ex.D8, but lesser amount has been claimed. Under

these circumstances, the accused cannot take benefit of

Ex.D8 and it is not the case that he has cleared the entire

loan amount.

17. The ground urged by him that he is not the

resident of Sankeshwar etc. holds no water, as the

documents produced itself disclose that he was having

contract work of sugar factory in Sankeshwar. He would

not have worked there without there being an

employment. Under these circumstances, the accused

failed to rebut the presumption and now he wanted to take

advantage of merger of the complainant-society, which he

is not entitle and that does not absolve his liability. Hence,

the trial court has committed an error in acquitting the

accused only on the basis of Ex.D8 and variance in the

amount referred in Ex.D8 and failed to take note of the

fact that Ex.D8 was issued in 2011 and though complaint

was filed in 2005 itself. Hence, the judgment of the trial

court is erroneous and illegal and it has lead to miscarriage

of justice. As such, it calls for interference. Hence, prima

facie evidence on record clearly establish that the accused

has committed an offence under Section 138 of N.I.Act. As

such, the appeal is required to be allowed.

18. Admittedly, the cheque amount is

Rs.7,01,447/- and the matter is pending since 2005. The

accused all along taking inconsistent defences. Though in

Ex.D8, it is mentioned as Rs.5,74,897/-, that cannot be

looked into at this juncture and looking to the conduct of

the accused/respondent, in my considered opinion, he is

required to be imposed sentence of fine to the tune of

Rs.7,50,000/-. Out of it, a sum of Rs.7,00,000/- shall be

paid to the complainant-society by way of compensation.

Hence, the point under consideration is answered in the

affirmative and I proceed to pass the following:

ORDER

The appeal is allowed. The judgment of acquittal dated 10.05.2013 passed by the JMFC, Sankeshwar in C.C.No.512/2005 is set aside. The respondent/accused is held guilty for the offence punishable under Section 138 of N.I.Act and he is convicted and sentenced to pay fine of Rs.7,50,000/- and in default of payment of fine to undergo simple imprisonment for a period of six months.

Out of the fine amount, Rs.7,00,000/- shall be paid to the complainant-society by way of compensation and remaining balance of Rs.50,000/- shall be credited to the State account.

Sd/-

JUDGE MBS/-