N.Sudhakar vs Mrs. A.Usha
2022 Latest Caselaw 4952 Kant

                                     Crl.A.No.2000/2019

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 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 17TH DAY OF MARCH 2022

                       BEFORE

       THE HON'BLE MRS JUSTICE K.S.MUDAGAL

         CRIMINAL APPEAL No.2000/2019

BETWEEN:

MR.N.SUDHAKAR
S/O M.NATARAJAN
AGED ABOUT 41 YEARS
R/AT NO.1, SSS BUILDINGS
A.V.ROAD, 1ST MAIN ROAD
CHAMARAJPET
BENGALURU - 560 018                 ...APPELLANT

(BY SRI.VENKATARAMANA K S, ADV.)

AND:

MRS.A.USHA
W/O SHRI.K.MANJUNATH
AGED ABOUT 36 YEARS
C/O SMT.SHARADAMMA
R/AT NAGI REDDY PALAYAM
ANALAYA, DANKANIKOTA
HOSUR - 635 113
TAMILNADU 1.                        ...RESPONDENT

(BY SRI.CHANDRAHASA RAI, ADV. FOR
    R.PRABHAKAR, ADV.)

      THIS CRL.A. IS FILED UNDER SECTION 378(4) OF
CR.P.C., PRAYING TO SET ASIDE THE ORDER OF ACQUITTAL
DATED 09.10.2019 PASSED BY THE C/C XII ADDITIONAL
CHIEF METROPOLITAN MAGISTRATE, BENGALURU IN C.C.
NO.8518/2017- ACQUITTING THE RESPONDENT/ACCUSED FOR
THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.ACT.
                                                Crl.A.No.2000/2019

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     THIS CRIMINAL APPEAL COMING ON FOR FURTHER
HEARING THIS DAY, THE COURT THROUGH VIDEO
CONFERENCE DELIVERED THE FOLLOWING:

                          JUDGMENT

Aggrieved by the order of acquittal passed in favour

of the respondent, the complainant in C.C.No.8518/2017

on the file of XII Additional Chief Metropolitan Magistrate,

Bengaluru has preferred the above appeal.

2. The appellant was the complainant and the

respondent was the accused in C.C.No.8518/2017 before

the trial Court. For the purpose of convenience, the

parties will be referred to henceforth according to their

ranks before the trial Court.

3. The complainant presented the cheque Ex.P1

bearing No.000125 dated 24.10.2016 drawn on Karur

Vyasa Bank for realization. The said cheque was

dishonoured for "other reasons" as per bank's

endorsement Ex.P2 dated 31.12.2016. The complainant

got issued statutory notice as per Ex.P3 dated 16.01.2017

notifying the accused about dishonour of the cheque,

imputing her the act of cheating and calling upon her to Crl.A.No.2000/2019

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pay the cheque amount within 15 days. The said notice

was returned with postal endorsement 'with intimation I

served and intimation II served over seven days returned

to sender'. Ex.P4 is the said unserved postal cover along

with acknowledgement.

4. Thereafter the complainant filed the complaint

before the trial Court in P.C.R.No.3598/2017 seeking

prosecution of the accused for the offence punishable

under Section 138 of the Negotiable Instruments Act,

1881 ('the Act' for short).

5. The case of the complainant is as follows:

The lorry of the husband of the complainant was

seized by the financier due to default in payment of the

loan amount. On the request of the accused, he lent

Rs.6,00,000/- to the complainant to enable her husband

to get the seized lorry released by paying the loan

amount. The accused and her husband assured that on

releasing the vehicle, they would sell the vehicle and

repay his money, but they did not repay the amount as

agreed. When he demanded for repayment of the Crl.A.No.2000/2019

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amount, the accused issued cheque Ex.P1 for

Rs.6,00,000/- to discharge her liability. The cheque was

dishonoured, accused did not claim the notice and pay the

amount. Thus she is liable to be punished for the offence

punishable under Section 138 of the Act.

6. The trial Court on taking cognizance of the

offences, registered the case in C.C.No.8518/2017 and

summoned the accused. On her appearance, she denied

substance of accusation and claimed trial. To substantiate

his case, the complainant got examined himself as PW.1

and got marked Exs.P1 to P4. On examining under

Section 313 of Cr.P.C, the accused did not lead any

defence evidence. On hearing the parties, the trial Court

by the impugned order acquitted the accused on the

following grounds:

(i) The cheque was dishonoured on the ground of

'other reasons' and the complainant did not examine the

Bank Manager to explain 'other reason';

(ii) The complainant has not proved his lending

capacity;

Crl.A.No.2000/2019

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(iii) The complainant has not stated specifically on

which date, he lent loan to the accused and sold the

seized lorry;

(iv) The cheque has been issued by the accused

for the purpose of security;

(v) The complainant has not produced the income

tax returns to show that he had lent loan to the accused;

(vi) The complainant has not adduced cogent and

convincing evidence to prove the case beyond all

reasonable doubt.

Submissions of Sri Venkataramana.K.S., learned Counsel for the complainant assailing the impugned order are:

7. The statutory notice was issued to the

accused to her ordinary residence. As per Section 27 of

the General Clauses Act, 1897, there is presumption

regarding service of notice to the effect that the accused

is served with the notice. During the cross-examination

of PW.1, the accused did not dispute her signature on

Ex.P1 and that the cheque was drawn on her account.

Therefore presumption under Sections 118 and 139 of the Crl.A.No.2000/2019

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Act regarding passing of the consideration and the cheque

being issued for discharge of legally recoverable liability

arises. In the cross-examination of PW.1, the accused

herself suggested that the cheque was issued as security

for joint purchase of lorry by her husband and the

complainant which suggestion was denied by the

complainant. Accused did not probabalise that defence.

She did not adduce any evidence. Therefore she failed to

rebut the presumption available under Sections 118 and

139 of the Act. Nowhere the accused disputed the lending

capacity of the complainant. Therefore the findings of the

trial Court that the complainant has not proved his

lending capacity is perverse. The suggestions made to the

complainant/PW.1 themselves show that the complainant

was in transport business. PW.1 deposed that his monthly

income is Rs.50,000/- to Rs.1,00,000/- which was not

denied. The very suggestion to PW.1 in his cross-

examination that the complainant and the husband of the

accused have together purchased the lorry goes to show

that he was financially sound. The accused did not

probabalise the theory of issuing cheque Ex.P1 as security Crl.A.No.2000/2019

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for any lorry transaction. The return of cheque for any

reason constitutes an offence under section 138 of the

Act. If at all the accused wants to escape the clutches of

Section 138 of the Act, it was for him to explain what was

the 'other reason' so that the cheque is honoured.

In support of his contentions, he relies upon the

following judgments:

      (i)     Triyambak S.Hegde vs. Sripad1

      (ii)    K.S.Ranganatha vs. Vittal Setty2

      (iii)   Kishan Rao vs. Shankargouda3

(iv) M/s.Kalamani Tex Anr vs. P.Balasubramanian4

(v) Modi Cements Ltd., vs. Shri Kushil Kumar

Nandi5

vi) Laxmi Dyechem vs. State of Gujarat6

Submissions of Sri R.Prabhakar, learned counsel for the respondent:

8. The complainant claims to have lent loan of

Rs.6,00,000/- in cash. There was no proof of his lending

2021 SCC Online SC 788

Crl.A.No.1860/2011 DD 08.12.2021

AIR 2018 SC 3173

Crl.A.No.123/2021 (10.02.2021)

AIR 1998 SC 1057

(2012)13 SCC 375 Crl.A.No.2000/2019

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capacity. He did not produce his IT returns to prove the

lending of the loan. He admitted that in the IT returns

loan transaction was not reflected. Though loan was said

to be lent in hire purchase transaction, no document to

that effect was produced. There are material

contradictions in the complaint and in the cross

examination of PW.1 regarding the time of issuance of the

cheque. By such evidence of the complainant himself,

the presumption under Section 139 of the NI Act stood

rebutted. Therefore, there was no need for the accused

to enter the witness box. The cheque was returned for

other reasons and not for want of sufficient funds. The

complainant did not examine the bankers to prove the

cause of return. There was delay in presenting the

cheque. The judgments relied on by the learned counsel

for the appellant are not applicable to the facts of the

case.

9. Having regard to rival contentions and the

material on record, the question that arises for

consideration is whether the impugned order of acquittal

is sustainable in law.

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Regarding the return of cheque for 'other reasons'

10. The cheque in question was returned with the

endorsement 'other reasons'. It is contended that to

incur the liability under Section 138 of the Act, the

cheque should be returned on the ground of 'insufficient

funds' or it should exceed the amount arranged and other

reasons are not included in Section 138 of the Act.

11. In Modi Cements' case the cheque was

returned with the endorsement 'payment stopped by the

drawer'. In Laxmi Dyechem's case the cheque was

returned on the ground that signature of the drawer of

the cheque did not match with the specimen signature

available in the bank. In those cases also, the accused

had taken the contention that return of cheque on the

ground other than "want of sufficient funds" or "exceeds

arrangement" do not attract Section 138 of the Act.

12. In that context, the larger bench of the

Hon'ble Supreme Court in Modi Cements' case held that

such interpretation of Sections 138 and 139 of the Act

make the said provisions a dead letter and that is Crl.A.No.2000/2019

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contrary to the spirit and object of Sections 138 and 139

of the Act. It was further held that by issuing a cheque,

the drawer of the cheque induces the payee or holder in

due course to act upon it and Section 138 of the Act

draws presumption that one commits the offence, if he

issues the cheque dishonestly. The same principle was

reiterated in Laxmi Dyechem's case also.

13. Having regard to the said judgments, if there

was no dishonest intention on the part of the accused and

if she had no role in the dishonour of the cheque, it was

for the accused to examine the bank authorities.

Therefore, the contention that the return of the cheque

for 'other reasons' does not attract Section 138 of the

Act, has no merit.

Regarding issuance of the cheque:

14. The accused did not dispute her signature on

Ex.P1 or that the cheque pertains to her account. Her

specific defence was that her husband and the

complainant had together purchased a lorry and Ex.P1

was issued as security for such joint purchase. The Crl.A.No.2000/2019

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Hon'ble Supreme Court in Triyambak Hegde's case

referring to several other judgments held that the

moment the accused admits his signature on the cheque

and the cheque pertains to his account, presumption

under Sections 118 and 139 of the Act to the effect that

the cheque was issued for consideration and towards

discharge of debt or liability arises. Then the burden

shifts to the accused to rebut the said presumption.

15. The larger bench of the Hon'ble Supreme

Court in M/s Kalamani Tex's case referring to its earlier

judgments held that to rebut the presumption, mere

denial of passing of consideration or debt or liability is not

sufficient, there shall be probable defence which shall be

demonstrated by acceptable material.

16. The complainant in his evidence reiterated the

complaint averments that husband of accused was under

financial stress due to seizure of his lorry for default in

payment of hire purchase instalments and on their

request to riggle them out of that situation, he lent loan

of Rs.6,00,000/-. Towards discharge of the debt, Crl.A.No.2000/2019

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Ex.P1 was issued. He denied the defence of the accused

that husband of the accused purchased the lorry jointly

with him and in that transaction Ex.P1 was issued as a

security. Thereby in the cross examination of PW.1 the

defence was not probabilsed. The accused did not enter

the witness box nor submitted the defence statement to

probabilise her defence.

17. In Kumar Exports vs. Sharma Carpets7 the

Hon'ble Supreme Court held that the accused has to

probabilise his/her defence by leading evidence and only

in exceptional cases the defence can be established by

the evidence of the complainant itself. No such

exceptional case was made out in this case. The accused

did not produce any record to show that her husband and

the complainant together purchased lorry. Thereby the

accused failed to rebut the presumption under Sections

139 and 118 of the Act.

18. The trial Court without referring to the legal

principles laid down by the Hon'ble Supreme Court in the

(2009)2 SCC 513 Crl.A.No.2000/2019

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judgments referred to supra places the burden on the

complainant that the complainant should have produced

the records of hire purchase transaction of the husband of

the complainant. Such finding and opinion by the Trial

Court is contrary to Sections 138 and 139 of the Act and

the judgments of the Hon'ble Supreme Court in Kumar

Exports' case, Triyambak Hegde's case and Kalamani

Tex's case referred to supra.

Regarding lending capacity:

19. The other ground of acquittal is that the

complainant has not proved his lending capacity. It is no

doubt true that the Hon'ble Supreme Court in APS Forex

Services Pvt.Ltd vs. Shakti Internatitonal Fashion

Linkers8 held that when the transaction is in cash and

lending capacity is disputed, the complainant has to prove

his lending capacity. But what is the degree of burden in

proving that aspect is the question. According to the

accused herself, the complainant and her husband

purchased the lorry and in that transaction the cheque

was issued. Further she herself suggests to complainant

AIR 2021 SC 2814 Crl.A.No.2000/2019

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that he has submitted the income tax returns and in that

the loan transaction is not reflected. He admits the

submission of the Income Tax returns and he also admits

that the loan transaction is not reflected in those income

tax returns.

20. When the accused herself admitted that the

complainant is an income tax assessee, that shows he

was a man of some financial stability. The admitted fact

need not be proved. If at all the loan transaction is not

reflected in the income tax returns and thereby, if there is

any violation of any law, that may give rise to an action

under the provisions of Income Tax Act,1961. That itself

does not falsify his lending capacity. The complainant

denied the suggestion that he had no lending capacity.

21. The deposition of PW.1 shows that several

times PW.1 was recalled for cross examination, but the

accused had taken time on the ground that she would

compromise the matter. She herself has suggested to

the complainant that the complainant was working in Crl.A.No.2000/2019

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lorry transports. His evidence that he earns Rs.50,000/-

to Rs.1,00,000/- per year was not denied.

22. Under the aforesaid circumstances, the trial

Court was not justified in holding that the lending

capacity of the complainant was not proved merely on the

ground that he did not produce the income tax returns.

Therefore, the judgment in APS Forex's case is not

applicable.

23. The facts and circumstances of the case and

the evidence on record show that the complainant was

entitled to the presumption under Sections 118 and 139

of the Act and the accused failed to rebut the said

presumption. There was sufficient material regarding the

lending capacity of the complainant. Therefore, the

impugned order of acquittal suffers perversity and liable

to be set aside. The appeal is allowed.

The impugned order acquittal is hereby set aside.

The respondent is hereby convicted for the offence

punishable under Section 138 of the Act.

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The respondent is sentenced to fine of

Rs.10,00,000/-. The same shall be deposited before the

Trial Court within four weeks from the date of receipt of

copy of this order. In default to pay the fine amount

within the stipulated time, the respondent-accused shall

undergo simple imprisonment for one month.

Out of the fine amount, a sum of Rs.9.5 lakhs shall

be paid to the complainant and remaining amount shall

be remitted to the State.

Sd/-

JUDGE Ksr/akc