Karnataka High Court

Khaleel Khan P vs Shankarappa on 3 November, 2023

Bench: J.M.Khazi

                           1         CRL.R.P.No.1456 of 2022



   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 3RD DAY OF NOVEMBER, 2023

                         BEFORE

           THE HON'BLE MS.JUSTICE J.M.KHAZI

  CRIMINAL REVISION PETITION NO.1456 OF 2022

BETWEEN:

KHALEEL KHAN P
S/O PEERKHAN
AGED ABOUT 59 YEARS
RESIDING AT PHARMACIST
2ND CROSS, TIPPU NAGARA
ARASIKERE TOWN
HASSAN - 573 103
                                            ...PETITIONER

(BY SRI. PRANAV RAVI, ADVOCATE FOR
    SMT. CHANDINI S, ADVOCATE)

AND:

SHANKARAPPA
S/O SIDDARAMAPPA
AGED ABOUT 55 YEARS
R/O HARNAHALLY VILLAGE
ARASIKERE TALUK
HASSAN - 573 122
                                        .......RESPONDENT
(BY SRI. SHANMUKHA G C, ADVOCATE)

     THIS CRL.R.P IS FILED UNDER SECTION 397 R/W 401
OF CR.P.C PRAYING TO a) SET ASIDE THE JUDGMENT DATED
07.11.2022 IN CRIMINAL APPEAL NO.51/2021 ON THE FILE
OF III ADDITIONAL DISTRICT AND SESSIONS JUDGE AT
HASSAN AS PRAYED FOR, IN THE INTEREST OF JUSTICE; b)
AND ALSO SET ASIDE THE JUDGMENT DATED 11.02.2021 IN
C.C.NO.601/2017 ON THE FILE OF SENIOR CIVIL JUDGE AND
JMFC, ARASIKERE AND c) PASS ANY ORDER/S AS DEEMS FIT
TO THIS HON'BLE COURT IN THE INTEREST OF JUSTICE.
                              2          CRL.R.P.No.1456 of 2022



    THIS CRIMINAL REVISION PETITION HAVING BEEN
HEARD AND RESERVED ON 26.10.2023, COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT
MADE THE FOLLOWING:


                          ORDER

This Criminal Revision Petition filed under Section

397 and 401 of the Cr.P.C, is by the accused challenging

his conviction and sentence imposed by the trial Court in

CC.No.601/2017 for the offence punishable under Section

138 of N.I.Act, which came to be confirmed by the

Sessions Court in Crl.A.No.51/2021. The trial Court

sentenced the accused to pay fine of Rs.6 lakhs in default

to undergo simple imprisonment for six months. Out of

the fine amount realized, the trial Court has directed that

Rs.5,95,000/- to be paid to the complainant by way of

compensation.

2. For the sake of convenience, the parties are

referred to by their rank before the trial Court.

3. Complainant filed a private complaint under

Section 200 Cr.P.C against the accused, alleging offence

punishable under Section 138 of N.I. Act, contending that

he and accused are well known to each other. On

11.07.2017, accused for the purpose of repaying loan

taken for construction of his house requested for loan of

Rs.5 lakhs. Complainant agreed for the same and on the

same day advanced loan of Rs.5 lakhs. In this regard

accused executed a demand Promissory Note-cum-

Consideration Receipt, agreeing to repay the same with

interest at 2% p.a.

3.1 On the next day that is on 12.07.2017,

accused issued a cheque for Rs.5 lakhs with a direction

to present it on 18.09.2017. Accordingly on 18.09.2017,

complainant presented it through Corporation Bank,

Arasikere branch. However, it was dishonoured on the

ground "Funds insufficient". The complainant brought this

fact to the notice of the accused. He did not make any

arrangement for paying the amount due. Therefore, on

22.09.2017, complainant got issued a legal notice to the

accused calling upon him to pay the amount due. Despite

due service of the notice, the accused has neither chosen

to pay the amount nor sent any reply. Without any

alternative complaint is filed.

4. Accused appeared before the trial Court and

contested the matter. Though he admits that the cheque

in question belongs to him drawn on his account

maintained with his banker and it bears his signatures,

he has disputed that he borrowed hand loan of Rs.5

lakhs and executed demand Promissory Note-cum-

Consideration Receipt on 11.07.2017 and on the next

date he had issued the cheque in question towards

repayment of the said loan. Accused has taken up a

specific defence that the son of complainant was running

chit fund business and he had participated in the said

chit fund transaction and issued the cheque/Demand

Promissory Note and misusing the same, the complainant

has filed the complaint. The accused has also contended

that complainant is not having financial capacity to

advance him Rs.5 lakhs.

5. Accused pleaded not guilty and claimed trial.

6. In order to prove the allegations against the

accused, complainant has examined himself as PW-1. He

has examined one witness to the demand Promissory

Note as PW-2 and got marked Ex.P1 to 7.

7. During the course of his statement under

Section 313 Cr.P.C accused has denied the incriminating

evidence.

8. He has examined himself as DW-1 and relied

upon Ex.D1.

9. Vide the judgment and order dated

11.02.2021, the trial Court convicted the accused and

sentenced him to pay fine of Rs.6 lakhs in default to

undergo simple imprisonment for six months.

10. Accused took the matter in appeal before the

Sessions Court in Crl.A.No.51/2021. Vide the impugned

judgment and order dated 07.11.2022, the Sessions

Court dismissed the appeal and thereby confirmed the

order of the trial Court.

11. Being aggrieved by the orders of the trial

Court as well as the Sessions Court, the accused is

before this Court contending that the findings of both

orders are contrary to the well settled principles of law

and is liable to be set aside. Both courts have failed to

appreciate the fact that there was no legally enforceable

debt to attract the provisions of Section 138 of N.I. Act.

The Courts below have failed to consider the

discrepancies and contradictions in the evidence of

complainant. They have not appreciated the defence of

accused and the fact that the complainant has failed to

prove his financial capacity to lend Rs.5 lakhs to the

accused, despite accused having rebutted the

presumption and complainant having failed to prove

advancing of loan as well as his capacity to lend Rs.5

lakhs.

11.1 Despite the trial Court coming to the

conclusion that the complainant has failed to prove

passing of consideration, still it has proceeded to convict

the accused. The Sessions Court has also failed to

appreciate the evidence placed on record in the right

perspective and simply proceeded to confirm the trial

Court order and prays to allow the petition, set aside the

impugned judgments and orders and acquit the accused.

12. On the other hand, learned counsel for

complainant has supported the impugned judgments and

orders and sought for dismissal of the revision petition.

13. Heard arguments of both sides and perused

on record.

14. Thus, it is the definite case of the complainant

that having known the accused since long, at his request

on 11.07.2017, he has advanced loan of Rs.5 lakhs and

on the same day accused executed a demand Promissory

Note-cum-Consideration receipt in the presence of

witnesses and on the next day i.e., on 12.07.2017,

accused issued the subject cheque towards the payment

of the said loan with the direction to present it on

18.09.2017. Accordingly on 18.09.2017, when

complainant presented the cheque for encashment, it

was dishonoured for "Funds insufficient" and after issuing

legal notice he has filed the complaint.

15. Having regard to the fact that accused admit

that the cheque in question is drawn on his account

maintained with his banker and it bears his signature,

presumption under Sections 118 and 139 of N.I. Act is

attracted to the effect that the cheque was issued

towards legally recoverable debt or liability. Therefore,

the initial burden is on the accused to prove that no

consideration has passed i.e, the cheque was not issued

towards repayment of any legally recoverable debt or

liability and the circumstances in which the cheque has

reached the hands of the complainant. Only after the

accused rebut the presumption, the burden shifts on the

complainant to prove his case, including passing of

consideration and his financial capacity to lend such huge

sum of money at the relevant point of time. Of course it

is sufficient for the accused to rebut the presumption by

preponderance of probabilities. However, the

complainant is required to discharge the burden shifted

on him beyond reasonable doubt.

16. It is pertinent to note that before filing the

complaint, the complainant has sent legal notice as per

Ex.P4 and it is served on accused as per Ex.P5. Though

the accused has denied that notice is served on him,

during his cross-examination he has admitted that the

address to which the legal notice is sent to him is

correct. Therefore, under Section 27 of the General

Clauses Act, it is presumed that the notice sent to his

address through Registered Post is duly served on him.

The signature on the acknowledgement also prima facie

indicates that it is his signature. After receipt of notice,

accused has not paid the amount in the cheque. Of

course he has also not sent any reply disputing the

allegations made in the notice.

17. As held by the Hon'ble Supreme Court in

C.C.Alavi Haji Vs. Palapetty Muhammed and Anr (Alavi

Haji)1, the object and purpose of issuing legal notice to

the accused is to enable honest drawer of cheque to

make payment within the specified time and thereby

avoid prosecution. However, this is not the case with the

accused. He has taken up a specific defence that the

cheque in question was not issued to the complainant for

repayment of any legally recoverable debt or liability. Of

course by not sending reply he lost an opportunity to

explain the circumstances under which the cheque has

reached the hands of complainant. However, during the

course of trial, he has taken up such defence, contending

that he has not borrowed any loan from the complainant

and in fact complainant he had no financial capacity to

lend him such a huge sum of Rs.5 lakhs. In the light of

specific case of the complainant and the defence of

accused, it is necessary to examine whether the accused

has rebutted the presumption and in that event whether

the complainant has discharged the burden shifted on

him.

(2007) 6 SCC 555

18. As held by the Hon'ble Supreme Court in

Tedhi Singh Vs. Narayan Dass Mahant (Tedhi Singh)2,

when the accused has failed to send reply to the legal

notice, challenging the financial capacity of the

complainant, at first instance, complainant need not

prove his financial capacity. However, if during the

course of trial accused takes up such defence, then it is

necessary for the complainant to prove his financial

capacity when he allegedly advanced the amount and

towards repayment of it, the accused has issued a

cheque. Keeping in mind ratio in the above said decision,

it is necessary to examine whether the accused has

made out justifiable grounds to interfere with the

impugned judgments and orders.

19. As pleaded in the complaint, it is the definite

case of the complainant that on 11.07.2017 accused

requested for loan of Rs.5 lakhs and on the same day he

paid the said amount in the presence of witnesses and

obtained a demand Promissory Note-cum-Consideration

(2022) 6 SCC 753

receipt. On the next day i.e., on 12.07.2017, accused

issued the subject cheque with a direction to present it

on 18.09.2017. In his examination-in-chief also, the

complainant has reiterated his case. However, during the

course of his cross-examination, he has come up with a

case that accused requested for loan one month prior to

11.07.2017. He had Rs.4 lakhs in his account and he

withdrew the same and adding cash of Rs.1,00,000/-

which he had in his house, he paid Rs.5 lakhs. This

statement made by the complainant during his cross-

examination is required to be appreciated in the light of

certain entries in his account statement at Ex.P7. As per

these entries, on 19.06.2017, Rs.88,000/- on

20.06.2017, Rs.2,12,000/- and on 21.06.2017,

Rs.1,00,000/- is credited to his account which comes to

Rs.4 lakhs.

20. With regard to complainant getting these

amount, he has stated that he got the sums by selling

coconut. Though the complainant has claimed that he is

having agriculture land and grows vegetables and

coconut, admittedly, he has not produced either the RTC

or any document to show that at the relevant point of

time he sold coconut and vegetables and from the same

he got Rs.4 lakhs as detailed in the account statement.

There is also no evidence to show that during this

relevant point of time he was having cash in a sum of

Rs.1,00,000/- in his house. This is clearly an

improvement made by the complainant during his cross-

examination. Absolutely, there was no impediment for

the complainant to plead that one month prior to

11.07.2017 accused requested for loan of Rs.5 lakhs and

during the period of one month, he was in receipt of Rs.4

lakhs and was able to pay the same to the accused by

including cash of Rs.1,00,000/- available in his house.

21. On the other hand, according to the complaint

averments, on 11.07.2017 accused requested for the

loan and he paid the said amount on the same day. As

held in Tedhi Singh, referred to supra accused has not

sent any reply to the legal notice and therefore the

complainant is not expected to prove his financial

capacity at the first instance. However, having regard to

the fact that during the trial, accused has challenged the

financial capacity of the complainant, he is expected to

prove the same and the evidence to that effect should be

acceptable and reliable. Since the accused has taken up

a specific contention that the cheque was issued long

back to the son of complainant, it appears only to create

evidence, the complainant has made certain credits to his

account in order to use them to prove his financial

capacity.

22. Had he produced some evidence to show that

he is having agricultural land, raises vegetables and

coconut and was in receipt of Rs.4 lakhs as detailed in

Ex.P7 immediately prior to 11.07.2017 and including

certain cash available with him, he lent it to the accused

things would be different. When the complainant has

chosen to get a demand Promissory Note-cum-

Consideration Receipt and has also chosen to receive a

cheque from the accused towards repayment of the loan,

nothing prevented him from paying the said loan by way

of cheque or demand draft which would have secured his

interest, especially when he is operating an account and

is in the habit of promptly crediting his receipts into his

account.

23. It is pertinent to note that in the complaint as

well as during the course of his evidence, the

complainant has pleaded and deposed that he presented

the subject cheque only once i.e., on 18.09.2017 and it

was dishonoured as per the endorsement at Ex.P3.

However, the account extract at Ex.P7 indicate that

thrice i.e on 13.07.2017, 16.08.2017 and 20.09.2017,

the complainant has presented the cheque for

encashment and on all the three times, it is returned

dishonoured for "Funds Insufficient". The complainant is

not having any explanation as to why he presented the

cheque thrice. It is not his case that he brought the fact

of dishonour of cheque on the first and second occasion

to the notice of the accused and on his instructions

presented it on the second as well as on the third time.

This also creates doubt as to the bonafides of the case of

the accused.

24. Though the complainant has examined PW-2

Y.B.Nagaraju, as a witness to the demand Promissory

Note-cum-Consideration Receipt at Ex.P6, his evidence is

not of any help to improve the case of the complainant.

As rightly observed by the trial Court, instead of helping

the complainant, his evidence creates doubt as to the

veracity of complainant's case. Despite making such

observation, the trial Court has proceeded to accept the

case of complainant by making an observation that

demand Promissory Note-cum-Consideration receipt is

not compulsorily a attestable document and there was no

need for the complainant to examine him. However, it

has failed to examine the veracity of the complainant's

case in the light of his attempts made to create evidence.

25. The accused has stepped into the witness box

and deposed that the cheque in question as well as the

demand Promissory note were given to the son of

complainant in connection with the chit fund business run

by him and misusing the same, the complainant has filed

this complaint. Of course the cross-examination of

accused establish the fact that during 2013, he had

taken loan of Rs.16 lakhs from Vijaya Bank and he is

repaying the same. He has also admitted that one

Marulasiddappa relative of complainant; R Ashok and S

Yogesh, have also filed cheque bounce cases against

him. He has admitted that in the complaint filed by

Yogesh he was convicted and in the appeal he

compromised with him by paying the amount due.

26. Though the cross-examination of accused

indicate that for purchasing house, he took loan from the

Bank and a number of complaints were filed against him

for dishonour of cheques issued by him, the same would

not improve the case of the complainant. It appears

taking advantage of the necessity of accused, blank

cheques having been taken from him and utilising one

such cheque, the present complaint is filed. In the light

of the cross-examination of the complainant and also

through his testimony, the accused has rebutted the

presumption shifting the burden on the complainant.

However the complainant has failed to prove that at the

relevant point of time he had the financial capacity to

lend Rs.5 lakhs to the accused and the cheque in

question was issued by the accused towards repayment

of the said loan.

27. Though the demand Promissory Note state

and also it is pleaded by the complainant that accused

had agreed to repay the said sum along with interest at

2% p.m., there is no explanation for not making any

attempts to recover the interest. Both trial Court as well

as the Sessions Court has failed to appreciate the oral

and documentary evidence placed on record by the

complainant in the light of specific defence taken by the

accused. Simply on the basis that presumption under

Sections 118 and 139 of N.I. Act, they proceeded to

convict the accused. The findings of the trial Court as

well as the Sessions Court are contrary to the evidence

placed on record and as such perverse. It is erroneous

and calls for interference by this Court and accordingly, I

pass the following:

ORDER

(i) The Criminal Revision Petition filed

under Section 397 r/w 401 Cr.P.C is

allowed.

(ii) The impugned judgment and order

dated 07.11.2022 in Crl.A.No.51/2021

on the file of III Addl.District and

Sessions Judge, Hassan and Judgment

and order dated 11.02.2021 in

C.C.No.601/2017 on the file of Senior

Civil Judge and JMFC., Arasikere, are

hereby set aside.