Karnataka High Court
Srinivas vs A V Krishnamurthy on 8 December, 2023
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CRL.RP No. 37 of 2016
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE ANIL B KATTI
CRIMINAL REVISION PETITION NO.37 OF 2016
BETWEEN:
SRINIVAS,
S/O. LATE H.V. SUBBAIAH,
AGED ABOUT 52 YEARS,
NO.116/1, GUNDAPPA NIVAS,
OPP: GAS GOLDEN,
KAMBATHANAHALLI ROAD,
GOTTIGERE, BANNERGATTA MAIN ROAD,
BANGALORE - 560 083.
...PETITIONER
(BY SRI. SHIVAKUMAR D.K, ADVOCATE)
AND:
A.V. KRISHNAMURTHY,
Digitally S/O. VENKATARAYAPPA,
signed by AGED ABOUT 45 YEARS,
SUMITHRA R RESIDING AT NO.43,
Location: 5TH CROSS, 1ST BLOCK,
HIGH AYYAPPA NAGAR, K.R.PURAM,
COURT OF BANGALORE - 560 036.
KARNATAKA
...RESPONDENT
(BY SRI. NACHE GOWDA B.H, ADVOCATE)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 R/W 401 OF CR.P.C PRAYING TO SET ASIDE THE
JUDGMENT AND ORDER DATED 07.12.2015 PASSED BY THE
LVII ADDL. CITY CIVIL AND SESSIONS JUDGE, BANGALORE IN
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CRL.RP No. 37 of 2016
CRL.A.NO.25082/2014 AND ALSO THE JDUGMENT AND ORDER
OF CONVICTION AND SENTENCE DATED 21.04.2014 PASSED
BY TEH XIV A.C.M.M., BANGALORE IN C.C.NO.26757/2012 AND
ACQUIT THE PETITIONER FORM THE ALLEGED OFFENCE.
THIS PETITION, COMING ON FOR ARGUMENTS, THIS
DAY, THE COURT MADE THE FOLLOWING:
ORDER
Revision petitioner/accused feeling aggrieved by the
judgment of First Appellate Court on the file of
LVII Addl. City Civil and Sessions Judge,[CCH-58],
Bengaluru in Crl.A.No.25082/2014, dated 07.12.2015
confirming the judgment of Trial Court on the file of XIV
Addl. Chief Metropolitan Magistrate, Bengaluru in
C.C.No.26757/2012, dated 21.04.2014, preferred this
Revision Petition.
2. Parties to the Revision Petition are referred with
their ranks as assigned in the Trial Court for the sake of
convenience.
3. Heard the arguments.
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4. After hearing the arguments of both sides and
on perusal of Trial Court Records with judgment of both
the Courts below, the following points arise for
consideration:
1) Whether the impugned judgment under
Revision passed by the First Appellate
Court in confirming the judgment of Trial
Court for the offence under Section 138 of
N.I. Act is perverse capricious and legally
not sustainable?
2) Whether any interference by this Court is
required?
5. On careful perusal of oral and documentary
evidence placed on record, it would go to show that
accused is friend of complainant and for meeting his
financial necessities borrowed an amount of Rs.2,50,000/-
as a hand loan with an assurance that he will repay the
same within few months. Accused in order to discharge
legally enforceable debt issued the cheque bearing
No.011480 drawn on Axis Bank Ltd., J.P. Nagar Branch,
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Bengaluru for Rs.2,50,000/-, dated 04.11.2011 Ex.P.1.
Complainant presented the said cheque through his
banker, Canara Bank, K.R. Puram Branch, Bengaluru. The
said cheque was dishonored as "Account closed" vide bank
endorsement Ex.P.2. Complainant issued demand notice
dated 30.11.2011 Ex.P.3 and the same is duly served to
the accused vide acknowledgment card Ex.P.4. Accused in
spite of due service of notice, has neither replied to the
demand notice nor paid the amount. Therefore,
complainant has filed the complaint on 05.01.2012. If the
above referred dates with regard to issuance of cheque are
perused and appreciated with the evidence of PW-1, then
it would go to show that complainant has complied
necessary legal requirements in terms of Section 138(a) to
(c) of Negotiable Instruments Act, 1881 (hereinafter for
brevity referred to as "N.I. Act"). Therefore, the statutory
presumption in terms of Section 118 and 139 of N.I. Act
will have to be drawn.
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6. In this context of the matter, it is useful to refer
the judgment of Hon'ble Apex Court in APS Forex
Services Pvt. Ltd. Vs. Shakti International Fashion
Linkers and others reported in AIR 2020 SC 945,
wherein it has been observed and held that once the
issuance of cheque with signature on cheque is admitted,
there is always a presumption in favour of complainant
that there exist legally enforceable debt or liability. Plea of
accused that cheque was given in view of security and the
same has been misused by complainant is not tenable.
7. It is also profitable to refer another judgment of
Hon'ble Apex Court in P. Rasiya vs. Abdul Nazer and
another reported in 2022 SCC OnLine SC 1131,
wherein it has been observed and held that:-
" Once the initial burden is discharged by the
complainant that the cheque was issued by the
accused and signature of accused on the
cheque is not disputed, then in that case, the
onus will shift upon the accused to prove the
contrary and that the cheque was not for
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discharge of any debt or other liability. The
presumption under Section 139 of N.I. Act is
statutory presumption and thereafter, once it is
presumed that the cheque is issued in whole or
in part of any debt or other liability which is in
favour of the complainant/holder of the cheque,
in that case it is for the accused to prove the
contrary."
In view of the principles enunciated in the
aforementioned two judgments of Hon'ble Apex Court, it is
evident that when once issuance of cheque with signature
of accused on the account maintained by him is admitted
or proved, then statutory presumption in terms of Section
118 and 139 of N.I. Act will have to be drawn and it is now
up to the accused to place rebuttal evidence to displace
the statutory presumption available in favour of the
complainant in terms of Section 118 and 139 of N.I. Act,
the burden of placing rebuttal evidence to displace the
statutory presumption is on the accused.
[ 8. In this context of the matter, it is useful to refer
the judgment of Hon'ble Apex Court in Basalingappa Vs.
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Mudibasappa reported in 2019 Cr.R. page No. 639
(SC), wherein it has been observed and held that:
"Presumption under Section 139 is
rebuttable presumption and onus is on accused
to raise probable defence and standard of proof
for rebutting presumption is that of
preponderance of probabilities. To rebut
presumption, it is open for accused to rely on
evidence laid by him or accused can also rely
on materials submitted by complainant in order
to raise a probable defence. Inference of
preponderance of probabilities can be drawn
not only from materials brought on record by
parties, but also by reference to circumstances
upon which they rely. It is not necessary for
accused to come in witness box in support of
his defence. Section 139 imposed an
evidentiary burden and not a presumptive
burden".
9. The Hon'ble Apex Court in the latest decision in
Rajesh Jain Vs. Ajay Singh reported in 2023 SCC
online 1275, wherein it has been held that burden of
placing rebuttal evidence to displace the statutory
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presumption available in favour of complainant is on
accused.
In view of the principles enunciated in both the
aforementioned judgment of Hon'ble Apex Court, it is
evident that the accused to probabilise his defence can
rely on his own evidence or also can rely on the materials
submitted by complainant. It is not necessary for the
accused to step into witness box to probabilise his
defence.
10. In the present case the following are the
defences of accused:
1) Complainant is running a chit fund
and accused has issued the two
blank signed cheques as a security
for the chit fund amount.
2) Complainant has not produced any
documents to show that he was
having money to pay the same to
accused.
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3) No income tax returns are filed.
4) Contents of Ex.P.1 are not written by
accused.
Accused apart from relying on material produced by
the complainant also relied on the evidence of DW.1 and
DW.2 as rebuttal evidence to displace the statutory
presumptions available in favour of complainant.
11. Accused during the course of his evidence as
DW.1 has deposed to the effect that complainant was
introduced to him through his friend Ramesh, who was the
member of chit fund run by complainant and he is working
in Rakshita Medicals as Manager. The owner of Rakshita
Medicals is one Smt. Nagarathna, who is also the member
of chit fund run by the complainant. In the year 2008, chit
fund for Rs.4,00,000/- was commenced and each member
has to deposit an amount of 16,000/- per month
consisting of 25 members. Accused has taken the chit fund
of Rs.2,05,000/- and he is regularly paying the chit fund
amount. Complainant at the time of commencing the chit
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fund of Rs.4,00,000/- has taken two blank signed cheques
from accused and one of the said cheque has been
misused, though the period of chit is completed in the year
2010.
12. Accused has also examined his friend Ramesh
as DW.2 through whom he claimed that complainant was
introduced to accused. DW.2 has deposed to the effect
that he knows the complainant since around 2007, who is
running chit business and he is also member of the chit
business of the complainant and he introduced the
accused to complainant. The chit fund of Rs.4,00,000/-
was commenced with 25 members and the first chit
amount was taken by him and he is regularly paying
Rs.16,000/-. DW.2 has further deposed to the effect that
the complainant has taken two blank signed cheques at
the commencement of chit fund of Rs.4,00,000/-.
Similarly, the complainant has collected blank signed
cheques from accused and other members and the blank
signed cheque has not been returned to him and
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complainant is demanding Rs.2,00,000/- for return of the
cheque.
13. The documents at Exs.D.1 and D.2 are Form
No.21 and 20 regarding retail license of Rakshita Medicals
stands in the name of Smt. P Nagarathna proprietor of
Rakshita Medicals. What is pleaded by complainant in the
complaint is that accused is running medical shop and was
having financial necessity to purchase medical items.
Complainant has not pleaded that accused is proprietor of
Rakshita Medicals. Therefore, the documents at Exs.D.1
and D.2 cannot be of any much assistance to the case
made out by the accused. Complainant has only pleaded
that accused is his friend and even according to the
evidence of DW.1, he is the manager of Rakshita Medicals.
It means that accused is working in Rakshita Medicals. The
complainant is not expected to ascertain the truthfulness
of the financial need of the accused or the cause assigned
by him. When once issuance of cheque with signature of
accused is admitted by accused then in terms of Section
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118(a) of N.I. Act passing of considering has to be
presumed. Accused has also not produced any documents
showing that the complainant is running chit fund
business. The mere evidence of DW.2 that he has also
issued blank signed cheque at the time of commencement
of chit fund of Rs.4,00,000/- cannot be accepted without
there being any corroborative documents to that effect.
Therefore, the first contention of the accused that the
complainant is running chit fund business and as a security
he has given two blank signed cheques and one of such
cheque has been misused by the complainant, cannot be
legally sustained.
14. The second contention of accused is that
complainant has not produced any documents to show
that he was having money covered under the cheque
Ex.P.1 to pay the same to accused. DW.1 in his entire
evidence has not challenged the financial capacity of the
complainant to mobilize the fund of Rs.2,50,000/- to pay
the same to the accused. On the other hand, the evidence
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of DW.1 and DW.2 revolves around blank signed cheque
having been issued to the complainant for the chit
commenced for the amount of Rs.4,00,000/-. Indisputably
the demand notice Ex.P.3 is duly served to the accused
Ex.P.4. Accused has not given reply to the said demand
notice, inspite of due service of the same Ex.P.4, accused
has not availed the first available opportunity to put forth
his defence in denying the cheque issued by him to the
complainant not for any legally enforceable debt. The
accused even after his appearance in the case, before
seeking permission of the Court to cross examine PW.1 on
the defences available to him, has not made any written
communication disclosing the defence on which he wished
to cross examine PW.1. The accused has also not brought
any worth material evidence in the cross examination of
PW.1 questioning the financial capacity of the accused to
pay the amount. On the other hand, the entire cross
examination of PW.1 revolves around the issuance of blank
signed cheque as a security for the chit amount of
Rs.4,00,000/-, to which he was a member. Therefore, the
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second contention of the accused that the complainant has
not produced any documents to show that he was
possessing money covered under the cheque, also cannot
be legally sustained.
15. The third contention of the accused is that the
complainant has not produced income tax returns for
having shown the loan transaction with the accused and
having paid an amount of Rs.2,50,000/- covered under the
cheque Ex.P.1. Therefore, the claim of complainant that
accused has borrowed money of Rs.2,50,000/- from the
complainant, cannot be legally sustained.
16. The non disclosure of the transaction in the
Income Tax Returns creates doubt regarding the legally
enforceable debt or not is to be decided. The
Constitutional validity of Section 269-SS of Income Tax
Act was called in question before the Hon'ble Apex
Court in the case reported in (2002) 6 SCC Page
No.259, Assistant Director of Inspection
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Investigation Vs A.B.Shanti, wherein it has been
observed and held that:-
"The object of introducing Section 269- SS
was to ensure that a taxpayer should not
be allowed to give false explanation for his
unaccounted money, or if he has given
some false entries in his accounts, he
should not escape by giving false
explanation for the same. During search
and seizures, unaccounted money is
unearthed and the taxpayer would usually
give the explanation that he had borrowed
or received deposits from his relatives or
friends and it is easy for the so-called
lender also to manipulate his records later
to suit the plea of taxpayer. The main
object of Section 269-SS was to curb this
menace. As regards the tax legislations, it
is a policy matter, it is for Parliament to
decide in which manner the legislation
should be made. Of course, it should stand
the test of constitutional validity."
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The Hon'ble Supreme Court having so observed
negated the contention of appellants that taking a loan or
receiving a deposit is a single transaction wherein a lender
and barrower are involved and by the impugned section
the barrower alone is sought to be penalized and the
lender is allowed to go scot-free.
17. The proviso 269-SS only prescribes the mode of
taking or accepting certain loans, deposits and specified
sum. The said proviso would speak to the effect that no
person shall take or accept from any other person (herein
referred to as the depositor). Mode of taking any loan or
deposit or any specified sum, otherwise than by an
account-payee Cheque or account or accepting payees and
draft or use of electronic clearing system through a bank
account. The proviso was inserted in the Income Tax Act
debarring person from taking or accepting from any other
person any loan or deposit otherwise than by account
payee cheque or account payee bank draft, if the amount
of such loan or deposit or the aggregate amount of such
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loan or deposit is Rs.10,000/- or more. The amount of
Rs.10,000/- was later revised as `20,000/- with effect
from 01.04.1989. The said proviso does not prohibit for
giving or lending loan, it is only taking and acceptance is
prohibited. The acceptance of loan by way of cash in
excess of Rs.20,000/- may attract panel provision in terms
of Section 271- D. Whether the provisions of Section 269-
SS of the Income Tax Act 1961, disentitles the plaintiff
from filing recovery suits was directly under consideration
by the coordinate bench of this Court in the decision
reported in ILR 2007 Kar 3614 - Mr. Mohammed Iqbal
vs Mr. Mohammed Zahoor, wherein it has been held
that:
"The main object of introducing the
provisions of Section 269-SS of the Income
Tax Act is to curb and unearth black
money. But the Section does not declare
the present transaction which is brought
before the court illegal, wide and
unenforceable."
(Emphasis supplied)
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This Court while recording the said finding has taken
note of the decision of the Hon'ble Apex Court in
Assistant Director of Inspection Investigation
referred above. In para 7 of the said judgment concluded
that in the light of the observations of Apex Court, it
cannot be said that Section 269- SS only provided for the
mode of acceptance payment or repayment in certain
cases so as to counteract evasion of Tax. Section 269-SS
does not declare all transactions of loan, by cash in excess
of Rs.20,000/- as invalid, illegal or null and void, while as
observed by the Apex Court, the main objection of
introducing the provisions was to curb and unearth black
money. To construe Section 269-SS as a competent
enactment declaring as illegal and enforceable all
transactions of loan, by cash, beyond Rs.20,000/- in my
opinion cannot be countenanced. It is true that the said
decision has been rendered in a Civil suit for recovery of
money, but the principle of law with regard to the effect of
Section 269- SS of Income Tax Act holds good. Therefore,
in view of the principles enunciated in the above referred
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decisions, the finding of the Trial Court that the transaction
involved leading to issuance of cheque in question as per
Ex.P1 which is contravention of Section 269-SS of Income
Tax Act has become unenforceable debt and by virtue of
the same, the presumption in favour of complainant stood
rebutted cannot be legally sustained.
In view of the principles enunciated in the
aforementioned judgements, the contention of learned
counsel for the revision petitioner regarding non-filing of
income tax returns cannot be accepted as rebuttal
evidence to displace the statutory presumption available in
favour of the complainant.
18. The last contention of the accused is that the
contents of Ex.P.1 are not in the hand writing of accused.
The accused has not disputed his signature on cheque
Ex.P.1 and it was delivered to the complainant. The
contention of the accused is that he has issued two blank
signed cheques to complainant as a security for chit
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amount of Rs.4,00,000/-, to which he was a member. For
the reasons recorded above, it is held that the same has
not been proved by the accused. In terms of Section 20 of
N.I. Act, where one person signs and delivers to another
paper stamped in accordance with the law relating to
negotiable instruments then in force in India, and either
wholly blank or having written thereon an incomplete
negotiable instrument, he thereby gives prima facie
authority to the holder thereof to make or complete, as
the case may be, upon it a negotiable instrument, for any
amount specified therein and not exceeding the amount
covered by the stamp. The person so signing shall be
liable upon such instrument, in the capacity in which he
signed the same, to any holder in due course for such
amount; provided that no person other than a holder in
due course shall recover from the person delivering the
instrument anything in excess of the amount intended by
him to be paid thereunder. Therefore, in view of the said
proviso, when accused has chosen to give blank signed
cheque, he gives an authority to the holder of the cheque
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to fill the contents of Ex.P.1 and he is answerable for the
claim made by the complainant covered under Ex.P.1.
Therefore, the contention of the accused that he has
issued blank signed cheques and the same has been
misused by the complainant, also cannot be legally
sustained.
19. When once issuance of cheque is admitted or
proved by complainant out of evidence of PW.1 and
documents of Ex.P.1 to P.4, then statutory presumptions
in terms of Section 118 and 139 of N.I. Act will have to be
drawn in the absence of rebuttal evidence of accused or
the rebuttal evidence placed by the accused cannot be
legally sustained, then the statutory presumption will
continue to operate in favour of complainant. The Courts
below have rightly appreciated the oral and documentary
evidence placed on record and justified in recording that
the complainant has proved that accused has committed
an offence punishable under Section 138 of N.I. Act. The
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said finding recorded by both the Courts below is based on
the legal evidence on record.
20. Now coming to the question of imposition of
sentence is concerned. The Trial Court imposed sentence
of fine of Rs.3,85,000/- and out of which Rs.2,000/- was
ordered to be paid as prosecution expenses and the
remaining amount was ordered to be given to the
complainant. The First Appellate Court has confirmed the
imposition of sentence passed by the trial Court, looking to
the period from 25.10.2011 the date from which the
accused is liable to pay the amount due to the complainant
and the date of judgment of the trial Court, this Court
finds no reason to interfere even on the question of
imposition of sentence. Consequently, proceeds to pass
the following;
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ORDER
Revision petition filed by the Revision
Petitioner/accused is hereby dismissed as devoid of merits.
Registry is directed to send back the records to Trial
Court with a copy of this order.
SD/-
JUDGE
ABK
