M/S Sadvijai Chits And Financial ... vs Sri K R Srinivasa Murthy
2022 Latest Caselaw 2415 Kant

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   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 15TH DAY OF FEBRUARY, 2022

                        BEFORE

    THE HON'BLE MR. JUSTICE RAJENDRA BADAMIKAR

             CRIMINAL APPEAL No.470/2017

BETWEEN:

M/S SADVIJAI CHITS AND
FINANCIAL SERVICE PVT. LTD.
REP. BY ITS MANAGING DIRECTOR
SRI.C.SADASHIVA REDDY
NO.13, 2ND MAIN ROAD
SOMESHWARNAGAR
JAYANAGAR 1ST BLOCK
BENGALURU-560 011
                                             ....APPELLANT
(BY SRI. H. RAMACHANDRA, ADVOCATE)

AND:

SRI. K.R. SRINIVASA MURTHY
S/O RAMA REDDY
NO.406, 1ST D MAIN ROAD
DOMLUR LAYOUT
BENGALURU-560 071
                                           ...RESPONDENT
(BY SRI. M.D. RAGHUNATH, ADVOCATE)

     THIS APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C.
PRAYING TO SET ASIDE THE JUDGMENT OF QCQUITTAL DATED
07.01.2017 PASSED BY THE XLI ADDL.C.M.M., BANGALORE IN
C.C.NO.12087/2014 - ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE P/U/S 138 OF N.I. ACT.
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    THIS APPEAL COMING ON FOR ADMISSION THIS DAY, THE
COURT DELIVERED THE FOLLOWING:

                           JUDGMENT

Though this appeal is listed for admission, with the

consent of the learned counsels appearing for the parties on

both sides, the same is taken-up for final disposal.

2. This appeal is filed by the complainant against

the judgment of acquittal passed by XLI Additional Chief

Metropolitan Magistrate in CC No.12087/2014, whereby the

learned Magistrate by judgment dated 07.01.2017 acquitted

the accused of the charge punishable under Section 138 of

Negotiable Instruments Act, 1881 ('N.I. Act' for short).

3. For the sake of convenience, the parties herein

shall be referred with the ranks occupied by them before

the trial Court.

4. The brief facts of the case are that, the

complainant is a registered Company dealing with activities

of Chits and Financial Services. On 25.02.2099, the

accused has approached said Firm seeking financial serves

and accordingly, loan of Rs.1,40,000/- was lent with

interest at 2% per annum. After availing loan, the accused

was not regular in making payments and has become

defaulter. It is contended that, after several demands, the

accused issued a cheque bearing No.144587 dated

24.08.2013 towards payment of debt. On presentation of

the cheque on 27.08.2013, the same was returned unpaid

with an endorsement 'No such account was existing". Then

a legal notice came to be issued to the accused, which was

answered by issuing an untenable and vague reply and

hence, the complaint came to be filed.

5. After recording the sworn statement of the

complainant and after verifying the records, the learned

Magistrate has taken cognizance of the alleged offence and

issued process against the accused. The accused has

appeared through his counsel and was enlarged on bail. He

denied accusation made against him.

6. The alleged Managing Director of the

complainant -Company was examined as PW.1 and Exs. P1

to P7 were marked. The statement of accused under

Section 313 of Cr.P.C. was recorded to enable him to

explain the incriminating evidence appearing against him in

the case of prosecution. The case of accused is of total

denial. He has also got examined one witness by name

Beena Thomos as DW.1 and placed reliance on four

documents marked at Exs.D1 to D4.

7. After hearing arguments and on perusing the

records, the learned Magistrate found that the complainant

has failed to establish the fact that the cheque was issued

towards legally enforceable debt or liability and the

presumption in favour of complainant stands rebutted and

as such dismissed the complaint by acquitting the accused.

Being aggrieved by the judgment of acquittal, the

complainant has filed this appeal.

8. Heard the arguments advanced by the learned

counsels appearing for the appellant and the respondent.

Perused the records.

9. Learned counsel for the appellant would contend

that the judgment of acquittal is perverse and erroneous

and the learned Magistrate has not applied proper principles

of law. He would contend that, when the cheque is

admitted, drawing presumption is mandatory and the

learned Magistrate has not appreciated the oral and

documentary evidence in proper perspective, which has

resulted in miscarriage of justice. Hence, he would seek for

allowing the appeal by setting aside the impugned judgment

of acquittal and sought for conviction of the

accused/respondent herein.

10. Per contra, learned counsel for

respondent/accused would contend that the debt itself is

barred by Law of Limitation and as such, question of

drawing presumption in favour of complainant under

Section 139 of N.I. Act does not arise at all. He would

contend that, the learned Magistrate has appreciated the

oral and documentary evidence in proper perspective and

arrived at a just decision. Hence, he would submit that the

judgment of acquittal does not call for any interference and

as such, prayed for dismissal of the appeal.

11. It is the specific case of the complainant that, it

is a registered Company dealing with activities of chits and

finance services and on 25.02.2099, accused approached it

and availed loan facility of Rs.1,40,000/- agreeing to pay

interest at 2% per annum. It is the further contention of

the complainant that, since accused failed to repay the loan

amount, he has issued a cheque under Ex.P1, which was

bounced on the ground that, 'No such account exists' and

as such this complaint came to be lodged by the Managing

Director of the complainant-Company.

12. At the out-set, it is important to note here that

the complainant has not produced any material document to

show that it is a registered firm authorized to carry-out chit

fund services. This material evidence in this regard is

missing. Apart from that, the complaint is being prosecuted

by the so-called Managing Director, but no material

document is produced to show that the so-called one Sri.C

Sadashiva Reddy is the Managing Director of the

complainant-Company. These material documents have

been with-held and it is argued that there is no challenge to

these aspects on behalf of the accused. But, since it is the

complainant, who has approached the Court on the ground

of financial transactions, the initial burden is on the

complainant to establish that it is a registered Finance

Company and PW.1 is an authorized person. But, no such

material evidence is forthcoming.

13. The complainant has placed reliance on alleged

Ex.P7, which is the Ledger Extract. But on perusal of Ex.P7,

it is evident that, it is typed on the Letter Head of the

complainant-Company and no Registration Number is also

forthcoming. Further, there is no certification as per the

Banking Regulation to certify that the contents therein are

true and correct. Further, on perusal of Ex.P7, it is evident

that, regarding certain payments, the dates were not given

and only month and year were referred and if it is payment,

then specific dates should have been mentioned. As such,

the trial Court did not believe Ex.P7 to be a genuine

document and considering these lacunas, it is evident that

Ex.P7 is not a genuine document and it is not a copy of loan

account pertaining to the accused. Apart from that, on

perusal of Ex.P7, it is evident that, it is dated 15.06.2013.

In view of that, the transaction should be upto 15.06.2013.

But, Ex.P7 discloses that, even the transaction dated

24.08.2013 is incorporated therein. Hence, it is evident

that, it is not true extract and it is simply typed as per their

convenience to suit the claim of complainant.

14. As stated above, the accused has got marked

Exs.D1 to D3. They are the payment details pertaining to

Rs.7,500/-, Rs.3750/- and Rs.3,750/- dated 25.03.1999,

30.01.1999 and 01.03.1999 respectively. It is also evident

from these documents that the said payments are through

cheques bearing Nos. 144589, 144582 and 144583. In the

present case, Ex.P1 is a cheque bearing No.144587 in the

same series only. Hence, from Ex.D1 to D3 it is evident

that the cheque (Ex.P1) was not issued on 24.08.2013, but

it was obtained at the time of disbursement of alleged loan

only and three cheques have been encashed, but the

present cheque under Ex.P1 was not presented and

subsequently, the date was written as per convenience.

Further, it is important to note here that, as per Ex.P2-Bank

Memo, in the month of August 2013 itself the cheque was

returned with an endorsement that 'No such Account here''.

Hence, the contention that, 'the cheque under Ex.P1 was

issued on relevant date', holds no water at all.

15. Apart from that, to draw presumption under

Section 139 of NI Act, the cheque and signature on it are to

be admitted. Though accused has not disputed his

signature on cheque (Ex.P1), his contention is that, it was

handed-over in 1996 when he availed loan and hence,

looking to the evidence and documents produced by the

accused, his defence becomes more probable. Further, the

accused is required to prove his defence only on

preponderance of probabilities, but in the instant case, he

has proved his case beyond all reasonable doubt by

producing documents. On considering Ex.P7 itself, it is

evident that the presumption available in favor of the

complainant stands rebutted.

16. Further, the complainant-Company has not

produced any document to show that it is a Registered and

Licenced Company and the person so-called Managing

Director is authorized to lodge complaint and no such

material evidence is also not forthcoming. Even accepting

Ex.P7 as genuine, then also the transaction becomes time

barred, as Ex.P7 discloses that, on 22.11.2001 Rs.10,000/-

was paid by way of cheque. At the out-set no material

evidence is produced to show that, this payment was made

by way of cheque of the accused. Even accepting that

payment is accepted, then within three years, there should

have been next payment. But, Ex.P7 discloses that the

next alleged payment is in December, 2004 for Rs.2,000/-.

At the out-set, when this Rs.2,000/- is paid by way of cash

is not at all forthcoming and in the statement of accounts, it

is simply indicated that, "Dec 2004". If this payment is by

cash, there should be a specific date of payment. Even if

the date is taken as 01.12.2004, from 22.11.2001 the

payment was not within three years and as such, the debt

is clearly barred by law of limitation and the time barred

debt cannot be termed as a 'legally enforceable debt'.

Apart from this, the transaction is of the year 1999 and the

notice came to be issued first time in the year 2013 ie.,

after 14 years. No steps were taken for recovery of amount

for 14 years and it appears that Blank Cheques were taken

at the time of adavancement of loan itself and even this is

again consolidated from Ex.P3, which is the Demand

Promissory Note dated 25.05.1999. From this date, the

transaction is barred by law of limitation. The legally

enforceable debt does not include barred debt and hence

the prosecution under Section 138 of N.I. Act is not

sustainable in this regard. When it is a time barred debt,

then it cannot be presumed that Ex.P1 (Cheque) issued

towards discharge of legally enforceable debt. Under these

circumstances, the trial Court has analysed the oral and

documentary evidence in detail and arrived at a just

decision holding that there is no legally enforceable debt

existed and it is barred by law of limitation.

17. In the facts and circumstances of the case,

considering the oral and documentary evidence available on

record, the judgment of acquittal passed by the trial Court

cannot be said to be perverse, erroneous or illegal so as to

call for any interference by this Court. Under such

circumstances, 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 dated 07.01.2017 passed by the trial Court viz., XLI Additional Chief Metropolitan Magistrate, Bengaluru, in CC No.12087/2014, stands confirmed.

Sd/-

JUDGE

KGR*