Karnataka High Court

Sri A Ravindra vs Sri Ajith on 23 February, 2022

Bench: Rajendra Badamikar

   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 23RD DAY OF FEBRUARY, 2022

                        BEFORE

    THE HON'BLE MR. JUSTICE RAJENDRA BADAMIKAR

             CRIMINAL APPEAL No.413/2019
BETWEEN:

SRI. A. RAVINDRA
S/O LATE B. ANILKUMAR
AGED ABOUT 64 YEARS
RESIDING AT:NO.748
1ST FLOOR, 15TH MAIN
22ND CROSS, JUDICIAL LAYOUT
GKVK POST, YELAHANKA
BENGALURU-560 064
                                            ....APPELLANT
(BY SRI. MUKUNDA P., ADVOCATE)

AND:

SRI. AJITH S/O CHANNAPPA
AGED ABOUT 35 YEARS
RESIDING AT RAJAGHATTA VILLAGE AND POST
DODDABALLAPURA TALUK
BENGALURU RURAL DISTRICT
BENGALURU-561 203
                                          .... RESPONDENT
(BY SRI. AJITH KUMAR A.S., ADVOCATE)

     THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4)
OF CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT DATED
18.01.2019 PASSED BY THE XVIII A.C.M.M., BANGALORE IN
C.C.NO.15354/2017, ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE P/U/S 138 ON N.I.ACT.
                                2



     THIS CRIMINAL APPEAL HAVING BEEN HEARD    AND
RESERVED FOR JUDGMENT ON 16.02.2022, COMING ON FOR
'PRONOUNCEMENT JUDGMENT' THIS DAY, THE COURT
DELIVERED THE FOLLOWING:

                          JUDGMENT

Though this appeal is listed for admission, with the

consent of the learned counsel appearing for the parties on

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

2. This is an appeal filed by the

complainant/appellant under Section 378(4) of Criminal

Procedure Code, 1973 ('Cr.P.C.' for short) challenging the

judgment of acquittal dated 18.01.2019 passed by the

XVIII Additional Chief Metropolitan Magistrate, Bengaluru

('trial Court' for short), whereby the learned Magistrate has

acquitted the accused/respondent herein for the offence

punishable under Section 138 of the Negotiable Instruments

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

3. For the sake of convenience, the parties herein

are referred with the original ranks occupied by them

before the trial Court.

4. The brief factual matrix of the case is that, the

complainant and accused are acquainted with each other

and accused is running the hotel business and he has

availed hand-loan of Rs.1,75,000/- from the complainant in

the month of October, 2016 for expansion of his hotel

business with a promise to return the same within six

months. Conceding his request, the complainant has

advanced the hand-loan of Rs.1,75,000/- by way of cash

and when the complainant repeatedly requested for

repayment of the said amount, the accused has issued a

cheque dated 15.04.2017 for a sum of Rs.1,75,000/-

towards repayment of the said hand-loan. But, when the

complainant presented the said cheque for encashment, it

was dishonoured on 17.04.2017 with an endorsement

'Funds Insufficient". Thereafter, the complainant has issued

a legal notice on 24.04.2017 calling upon the accused to

make payment of the cheque amount and though the notice

is served on the accused, he has neither replied nor paid

the amount. Hence, the complainant has filed a complaint.

5. The learned Magistrate, after recording the

sworn statement of the complainant, taken cognizance of

the said offence and has issued process against the

accused. The accused has appeared through his counsel

and was enlarged on bail. The plea was recorded and the

accused has denied the same.

6. The complainant-Sri. A. Ravindra was got

examined as PW.1 and he placed reliance on five

documents as Exs.P1 to P5. After conclusion of the

evidence of the prosecution witnesses, the statement of

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

enable accused to explain the incriminating evidence

appearing against him, in the case of prosecution. His case

is of total denial and he got examined himself as DW.1.

7. After hearing arguments of the learned counsels

appearing for the parties on both sides and perusing the

material records, the learned Magistrate has come to a

conclusion that the complainant has failed to establish that

the cheque under Ex.P1 was issued towards legally

enforceable debt and as such, acquitted the accused in

respect of the offence punishable under Section 138 of the

N.I. Act. Being aggrieved by this judgment of acquittal, the

appellant/complainant has preferred this appeal.

8. Heard the learned counsel for the appellant/

complainant and learned counsel for the

respondent/accused. Perused the records.

9. Learned counsel for the appellant would contend

that the judgment and order of acquittal is illegal and

contrary to law and evidence. He would further contend

that, admittedly, the cheque in question belongs to accused

and the accused admits his signature on the cheque.

Hence, the trial Court has failed to draw a presumption

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

complainant. Further, he would contend that, though the

trial Court comes to a conclusion that the presumption is

not rebutted, but erroneously observed that ingredients of

Section 138 of N.I. Act have not been established by the

complainant and the financial status of the complainant to

advance loan of Rs.1,75,000/- is not established. He would

further contend that the financial status of the complainant

was never challenged during cross-examination of PW.1

and the trial Court ought to have drawn a presumption and

when the accused has failed to rebut the presumption, the

trial Court ought to have convicted the accused. Hence, he

would seek for setting aside the impunged judgment of

acquittal and sought for convicting the accused/respondent

by allowing this appeal.

10. Per contra, the learned counsel for the

respondent/accused would support the judgment of

acquittal passed by the trial Court. He would further

contend that the complainant has not established his

financial status to advance loan of Rs.1,75,000/-. He would

also contend that the cheque under Ex.P1 was issued to one

Balu as security in respect of purchase of chicken for

Rs.30,000/- and the same has been misused by the

complainant in collusion with the said Balu and there is no

financial transaction between the complainant and accused

at any point of time. Hence, he would contend that the trial

Court considered these aspects and has rightly acquitted

the accused. Hence, he would contend that the impugned

judgment of acquittal does not call for any interference and

as such, sought for dismissal of the appeal.

11. Having heard the arguments advanced by the

learned counsels appearing for the parties on both sides

and perusing the records, the following point would arise for

consideration:

"Whether the judgment of acquittal passed by the trial Court is perverse, capricious and arbitrary so as to call for interference by this Court ?"

12. It is the specific contention of the appellant that

the accused has availed loan of Rs.1,75,000/- in the month

of October, 2016 for expansion of his hotel business with a

promise to return the same within six months, but failed to

repay the same in time and when the complainant

demanded for repayment of the said amount, the accused

issued a cheque under Ex.P1 dated 15.04.2017 for

Rs.1,75,000/- It is also contended by the complainant

that, when the said cheque was presented to the Bank, it

was dishonoured with an endorsement 'Insufficient Funds"

and in spite of issuance of legal notice, the amount was not

paid and hence, the presumption is in favour of the

complainant under Section 139 of the N.I. Act.

13. It is to be noted here that the cheque under

Ex.P1 belongs to the account of accused and it bears the

signature of the accused are undisputed. The accused has

nowhere denied his signature on the cheque and further

admits that the cheque belongs to him. He has also

admitted that, he is running a Military Hotel. When the

cheque and signature have been admitted by accused, it is

mandatory on the part of the court to draw a presumption

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

regarding issuance of cheque towards discharge of legally

enforceable debt. Further, the said presumption is a

rebuttable presumption and it is for the accused to rebut

the presumption. But, for rebutting the presumption, mere

explanation or denial is not sufficient and the accused is

required to place some material evidence before the Court.

14. It is the contention of the accused that, he has

issued the cheque under Ex.P1 for Rs.30,000/- as security

to one Mr. Balu in respect of purchase of chicken, for his

hotel business. Further, it is contended that the said

cheque has been misused by the complainant, by colluding

with the said Balu. However, it is to be noted here that,

admittedly the accused has not issued any cheque for

Rs.30,000/-. If at all, he had issued the cheque as security

to one Balu, he could have endorsed the figure of

Rs.30,000/- on it. But, Ex.P1 discloses that, it is for

Rs.1,75,000/-. Further, it is in the name of the

complainant. Admittedly, the complainant is the holder of

the cheque in due course and presumption is in his favour

under Section 118 of the N.I. Act. Except a formal

statement that the cheque was issued to one Balu as

security for Rs.30,000/-, no other materials evidence is

placed by the accused.

15. It is also important to note here that the

complainant has issued notice to the accused after bouncing

of the cheque. Ex.P4 is the postal receipt for having sent

the notice by Registered Post Acknowledgement Due

('RPAD' for short) and Ex.P5 is the postal

acknowledgement. The accused has not denied receipt of

notice by him. In his cross-examination, he claims that, he

got information of misuse of the cheque when he received

notice. If that is so, nothing prevented him for issuing a

reply immediately. But, he has not issued any reply. Even

he admitted that he has not lodged any complaint regarding

misuse of the cheque. However, the accused asserts that

there were settlement negotiations. But, no material is

placed in this regard. Even after receipt of notice, the

accused has not replied the legal notice to deny the

transaction by putting forward his case. Only for the first

time during cross-examination of PW.1, he had put-up the

defence of issuance of cheque as security for Rs.30,000/- to

one Balu. He has not even produced any material evidence

to show that, he had any transaction with one Balu or the

said Balu was carrying on any business of dealing in

chicken. The material evidence in this regard is also

missing.

16. The learned Magistrate has made observation

that the complainant has not proved his financial status.

But, the entire cross-examination of PW.1 disclose that the

financial status of the complainant was not at all

challenged. When the financial status of the complainant

was not challenged by the accused, it was mandatory for

the trial Court to draw a presumption under Section 139 of

the N.I. Act in favour of the complainant. But, the

judgment of the trial Court discloses that the trial Court has

given unnecessary importance to irrelevant factors and

gone to the extent of observing that the accused has

denied the source of income and capacity of the

complainant. But, on perusal of cross-examination of PW.1,

the source of income and capacity of the complainant was

not at all challenged by the accused. Hence, the trial Court

was misconceived the evidence and observed that the

source of income and existence of debt is not proved by the

complainant, without considering the presumption under

Section 139 of the N.I. Act. No doubt, PW.1 was cross-

examined regarding non-production of document to show

that, he was possessing Rs.1,75,000/- in October, 2016 and

non-execution of any document, but, the financial status

was not denied. Under such circumstances, the trial Court

has erred in making observation that, accused has

challenged the financial status of the complainant. In this

context, the learned counsel for the appellant has placed

reliance on a decision of the Co-ordinate Bench of this Court

in Criminal Appeal No.2109/2017 [V.R. Shresti Vs.

Bhaskar P.] dated 15.10.2019 and the facts and

circumstances of the said case are directly applicable to the

case on hand. In the instant case also, the accused has

not given any reply to the notice and in cross-examination,

he admits that the cheque belongs to him and also the

receipt of notice, but did not take any steps. As such, in

the absence of any rebuttal evidence, the presumption

under Section 139 of N.I. Act would be in favour of the

complainant.

17. Learned counsel for the appellant has further

placed reliance on a decision reported in AIR 2019 SC

2446 [Bir Singh Vs. Mukesh Kumar], wherein the

Hon'ble Apex Court has observed as under (Head Note: C &

E):

"(C) Negotiable Instruments Act ( 26 of 1881), S.

138, S. 139- Evidence Act (1 of 1872), S.4- Presumption u/S.139- Is presumption of law, distinguished from presumption of facts - Presumptions are rules of evidence and do not conflict with presumption of innocence, which requires prosecution to prove case against accused - Obligation on prosecution may be discharged with help of presumptions of law and presumptions of fact unless accused adduces evidence showing reasonable possibility of non-existence of presumed fact.

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      (E)    Negotiable Instruments Act (26 of 1881),
             S.138,   S.139    -    Dishonour   of    cheque    -
             Presumption    as to legally enforceable debt -

Rebuttal - Onus to rebut presumption that cheque issued in discharge of debt or liability is on accused."

Hence, it is evident that, it is mandatory for drawing

presumption under Section 139 of N.I. Act regarding

existence of legally enforceable debt and onus to rebut the

same is on the accused. But, admittedly, in the instant

case, except giving some explanation, no attempt has been

made by accused to rebut the said presumption. Further,

admittedly accused has admitted his signature on the

cheque and that the cheque belongs to him. His defence

regarding cheque issued towards security to one Balu is not

established. Under these circumstances, the ingredients of

Section 138 of N.I. Act have been established by the

complainant. The learned Magistrate was carried-away by

making unnecessary observation without there being any

specific defence and hence approach of the learned

Magistrate is perverse, erroneous and arbitrary, and it has

led to miscarriage of justice. The learned Magistrate has

not considered the materials placed before the Court

properly, while acquitting the accused and has also not

considered the statutory presumption in favour of the

complainant under Sections 118 and 139 of N.I. Act. As

such, the trial Court has erred in acquitting the accused and

the same requires to be interfered by this Court. Hence,

this is a fit case to reverse the finding of the trial Court and

set aside the judgment of the trial Court. Accordingly, the

point under consideration is answered in the affirmative.

18. In view of the discussion made above, I proceed

to pass the following:-

     i)    The appeal is allowed.

     ii)   The judgment of acquittal        dated 18.01.2019
           passed by the          trial Court viz., the XVIII
           Additional     Chief     Metropolitan    Magistrate,

Bengaluru, in CC No.15354/2017 for the offence

punishable under Section 138 of the N.I. Act is set aside.

iii) The accused is convicted for the offence under Section 138 of the N.I. Act and he is sentenced to pay fine of Rs.3,00,000/- and in default, to undergo Simple Imprisonment for a period of one year.

iv) Out of fine amount so recovered, Rs.2,50,000/-