Mitra Finance (R) vs Vasanth Naik
2023 Latest Caselaw 6459 Kant

                           1           CRL. A NO.913 OF 2010




    IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 12TH DAY OF SEPTEMBER, 2023

                        BEFORE

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

           CRIMINAL APPEAL NO.913 OF 2010

BETWEEN:

MITRA FINANCE (R)
MITRA PRIYA,
OLD POST OFFICE ROAD,
UDUPI - 576 101,
REPRESENTED BY
MANAGING PARTNER,
N.ACHUTHA HOLLA.
                                            ...APPELLANT
(BY SRI. S K ACHARYA, ADVOCATE)

AND:

1 . VASANTH NAIK,
    AGED 58 YEARS,
    S/O CHANDU NAIK,
    R/A SHANKAR BUILDING,
    UDUPI TALUK AND DISTRICT.

2 . V S C HOLLA,
    AGED ABOUT 50 YEARS,
    S/O LATE V S HOLLA,
    "JALAJA NIVAS", GUNDIBAIL,
    UDUPI TALUK.
                                      .....RESPONDENTS

(BY KUM. THANIMA BEKAL, ADVOCATE FOR
    SRI. T.HAREESH BHANDARY, ADVOCATE)

    THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4)
OF CODE OF CRIMINAL PROCEDURE PRAYING TO ALLOW THE
CRIMINAL APPEAL BY SETTING ASIDE THE JUDGMENT DATED
11.01.2010 PASSED IN CRIMINAL APPEAL NO.11 AND 13 OF
                                 2              CRL. A NO.913 OF 2010




2007, ON THE FILE OF THE COURT OF THE FAST TRACK
JUDGE, UDUPI DISTRICT, UDUPI AND TO CONFIRM THE
JUDGMENT      DATED     30.12.2006,   PASSED     IN
C.C.NO.2148/1999, ON THE FILE OF THE COURT OF THE I
ADDL. CIVIL JUDGE (JR. DN.) AND JMFC, UDUPI, IN THE
INTEREST OF JUSTICE.

     THIS CRIMINAL APPEAL HAVING BEEN HEARD AND
RESERVED    ON    20.06.2023, COMING   ON   FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT
DELIVERED THE FOLLOWING:

                       JUDGEMENT

1. This appeal is by the complainant, a

partnership firm engaged in money lending business,

challenging the impugned judgment and order passed by

the Sessions Court, allowing the appeals filed by accused

challenging their conviction and sentence by the Trial

Court for the offence punishable under Section 138 of

Negotiable Instrument Act.

2. For the sake of convenience, the parties are

referred to by their rank before the Trial Court.

3. It is the case of the complainant that it is a

registered partnership firm carrying on business of

money lending. It is represented by Shri Sudhakar

Andrews being the General Power of Attorney holder of 3 CRL. A NO.913 OF 2010

Managing Partner Shri N .Achutha Holla. The accused are

in charge and control of the affairs of M/s.Sri Krishna

Combines, a partnership firm represented by its partners

i.e., accused No.2-Vasanth Naik and accused No.3-

V.S.C.Holla .They are the persons responsible for day-

today business transaction of accused No.1-Firm.

3.1. On 25.6.1993, accused Nos.2 and 3 have

borrowed loan of Rs.50,000/- agreeing to repay the same

with interest at 23% per annum within a period of one

month. They have executed an on demand promissory

note as principal borrower and guarantor respectively.

But they failed to keep up with their promise and on

30.3.1996, have executed acknowledgement of debt

letter. In this regard, on 17.11.1998, accused Nos.2 and

3 have issued cheque of accused No.1-Firm for a sum of

Rs.1,12,131/- towards repayment of the amount due.

However, when presented for repayment, it was

dishonoured on the ground that the "account is closed".

The complainant got issued a legal notice, calling upon

them to pay the amount due. Though it is duly served, 4 CRL. A NO.913 OF 2010

the accused have failed to comply with the same, and on

the other hand have sent an evasive reply. Without any

alternative, the complaint is filed.

4. After due service of summons, accused

appeared before the Trial Court and contested the case.

They pleaded not guilty and claimed trial.

5. In order to prove the allegations against the

accused, one witness is examined as PW1 and Exs.P1 to

21 are marked. During the course of the statement under

Section 313 Cr.P.C., the accused have denied the

incriminating evidence.

6. Accused have not lead any defence evidence.

7. Vide Judgment and order dated 30.12.2006,

the Trial Court convicted the accused and sentenced

accused Nos.2 and 3 to undergo simple imprisonment for

one month and pay fine of Rs.1,25,000/- in default to

undergo simple imprisonment for three months.

8. Being aggrieved by the same, accused Nos.2

and 3 filed appeals before the Sessions Court. Vide the 5 CRL. A NO.913 OF 2010

impugned judgment and order, the Sessions Court has

allowed the appeals filed by accused Nos.2 and 3 and

acquitted them.

9. Being aggrieved by the same, complainant is

before this Court contending that the impugned

judgment and order of the Sessions Court is wholly

improper and illegal. The accused have not lead any

evidence to discharge the burden placed on them and

this fact is not appreciated by the Sessions Court. It has

erred in holding that PW1-Achutha Holla was not

competent person to represent the complainant-Firm,

especially when the accused have not disputed his

competence to file the complaint. Being aware of the

transaction, he was competent to speak about the same.

There are no justifiable grounds for the Sessions Court to

interfere with the same and reverse a well reasoned

judgment of the Trial Court and prays to allow appeal

and confirm the judgment and order of Trial Court.

6 CRL. A NO.913 OF 2010

10. In support of his arguments, learned counsel

representing the complainant has relied upon the

following decisions:

i. M/s.TRL Krosaki Refractorise Ltd.

                          Vs.M/s.SMS        Asia    Private      Limited     and
                          Another1 (M/s.TRL Krosaki)

               ii.        S.C.Narayanan Vs.State of Maharashtra
                          and Anr2 (S.C.Narayanan)

               iii.       Mita    India    Pvt.Ltd.       Vs.Mahendra       Jain3
                          (Mita India)

               iv.        Amaresh Vs.Shivakumar4 (Amaresh)

11. On the other hand, the learned counsel for

accused supported the impugned judgment and order

and prays to dismiss the appeal.

12. In support of the defence of the accused, the

learned counsel representing them has relied upon the

following decisions.

  2022 (1) Kar.L.R.543 (SC)

  AIR 2014 SC 630

  II (2023) BC 227 (SC)

    II (2023) BC 114 (Kar.)
                                    7           CRL. A NO.913 OF 2010




            i.        Om Shakthi SC/ST and Minority Credit Co-

operative Society Ltd. Vs.M.Venkatesh5 (Om Shakthi)

ii. S.C.Narayanan Vs.State of Maharashtra and Anr6 (S.C.Narayanan)

iii. M.K.Basheer Vs.State of Kerala & another7 (M.K.Basheer)

13. Heard arguments and perused the record.

14. Thus accused are being prosecuted on the

allegations that having borrowed loan of Rs.50,000/-,

they have agreed to repay the same with interest and in

this regard, in their capacity as the principal borrower

and guarantor, accused Nos.2 and 3 have executed

acknowledgement of debt letter and ultimately chosen to

issue cheque in question towards payment of principal

and interest. However, when presented for encashment,

it was dishonoured on the ground that account is closed.

Therefore, after issuing notice and complying with all the

formalities, complaint is filed.

  2008(1) AIR Kar R 311

  AIR 2014 SC 630

  2016 ACD 856 (KER)
                              8           CRL. A NO.913 OF 2010

15. In the reply notice, both accused Nos.2 and 3

have disputed that they have borrowed Rs.50,000/- and

have agreed to repay the same with interest and they

have executed acknowledgement of debt and finally

issued the subject checque towards repayment of the

said loan. On the other hand, they have taken up a

specific defence that the accused No.1-Firm was closed

even before 24.02.1995 and misusing the cheque issued

in respect of earlier loan transaction, accused have

chosen to file a false complaint.

16. The accused Nos.2 and 3 have not disputed

the fact that they are the partners of accused No.1-Firm,

by name Sri Krishna Combines and the subject cheque at

Ex.P5 belongs to the said Firm. Though during the course

of his cross-examination, PW1-Achutha Holla has stated

that the loan in question was borrowed by accused Nos.2

and 3 in their individual capacity, the demand promissory

note indicate that the loan was borrowed in their capacity

as the partners of accused No.1-Firm. The cheque in

question is also of accused No.1-Firm. Therefore, it could 9 CRL. A NO.913 OF 2010

be safely held that the alleged loan was borrowed for and

on behalf of accused No.1-Firm.

17. When the cheque in question belongs to

accused No.1-Firm and it bears the signature of accused

Nos.2 and 3 and it is drawn on the account of the Firm

maintained with the Banker, presumption under Section

139 of Negotiable Instruments Act is attracted and it is

obligatory to draw a presumption that the cheque in

question is issued towards legally recoverable debt or

liability. Therefore the burden is on the accused to rebut

the presumption and to establish the circumstances in

which the cheque in question reached the hands of the

complainant-Firm. Only when the accused rebut the

presumption, the burden would shift on the complainant

to prove its case. Of course it is sufficient for the accused

to discharge the burden by preponderance of

probabilities, whereas it is for the complainant to prove

its case beyond reasonable doubt.

18. Ex.P1 is the loan application. It contains space

for noting previous loan particulars. The complainant has 10 CRL. A NO.913 OF 2010

not chosen to fill this portion to indicate whether accused

have previously borrowed any loan and whether any

amount was due. In fact, the accused have cross-

examined PW1 on this aspect, wherein he has stated that

it is left to the will of the complainant to fill the same.

This fact assumes importance as the accused have taken

up a specific defence that the cheque in question was

issued while borrowing earlier loan and it is being

misused and presented by the complainant.

19. In order to prove that earlier accused had

borrowed loan from the complainant, PW1 has been

cross-examined. He has admitted that on 26.12.1991,

accused have paid Rs.50,000/- to the complainant

through cheque number 110417. This payment is earlier

to the present loan transaction which is disputed by the

accused. PW1 has also admitted that on 11.02.1994,

04.03.1994 and 04.03.1994, the accused have paid

Rs.25,000/- each to complainant-Firm. However, PW1

has not explained and accounted these payments in a

sum of Rs.1,25,000/-. The complainant has also not 11 CRL. A NO.913 OF 2010

produced the account extract to show towards which

liability, these payments have been adjusted.

20. In the absence of any explanation from the

complainant, it goes without saying that these payments

especially Rs.50,000/- on 26.12.1991 were made in

respect of earlier transaction between the complainant

and accused persons. It is not the case of complainant

that Rs.25,000/- each paid twice on 04.03.1994 is in

respect of present transaction.

21. In the absence of the complainant producing

documents with regard to the earlier transaction, the

contention of accused that the cheque in question was

issued in respect of earlier transaction and misusing the

same the present complaint is filed, is to be accepted. By

this evidence, the accused have rebutted the

presumption under Section 139 of N.I.Act by

preponderance of probabilities, throwing the burden on

the complainant to prove the alleged transaction between

the complainant and accused.

12 CRL. A NO.913 OF 2010

22. In addition to denying the transaction, the

accused have also disputed the competency of one

Sudhakar Andrew to file the complaint. In this regard,

the complainant has contended that the said Sudhakar

Andrew was an employee of complainant-Firm and he

was the General Power of Attorney holder of the

Managing Partner PW1-Achutha Holla and in that

capacity, he has filed the complaint. In fact, the

complainant has produced the General Power of Attorney

at Ex.P18, whereby PW1-Achutha Holla has given him the

Power of Attorney to file complaint etc.,

23. Ex.P16 is the partnership deed, which

revealed that PW1-Achutha Holla is the Managing

Partner. Though the complaint is filed through the GPA

holder-Sudhakar Andrew, during evidence the Managing

Partner-Achutha Holla has chosen to step into the

witness box on the ground that Sudhakar Andrew has left

the job. During his cross-examination PW1-Achutha Holla

has deposed that there is resolution passed by the

partners authorizing him to issue General Power of 13 CRL. A NO.913 OF 2010

Attorney in favour of others for the date today work of

the Firm. However the said resolution is not produced. As

held in Om Shakthi and M.K.Basheer, the absence of

such authorization, the complainant has failed to prove

that Sudhakar Andrew was authorized by the

complainant-Firm to file the complaint. Though in the

complaint, it is averred that the power of attorney holder

in his capacity as the accountant of the complainant-Firm

has knowledge of the transaction, in the absence of

resolution by the partners authorizing the Managing

Partner, the complaint filed through Sudhakar Andrew is

not maintainable. Therefore the decision in

S.C.Narayanan is not applicable to the case on hand.

24. Admittedly, complainant-Firm is engaged in

money-lending business. Consequently, it is expected to

maintain proper records. In fact, the complainant has

taken acknowledgement of debt letters from accused

Nos.2 and 3. However, when the accused have allegedly

issued the subject cheque towards repayment of the loan

due from them, the complainant has not chosen to note 14 CRL. A NO.913 OF 2010

the said fact in the record. This also creates doubt as to

whether the cheque in question was issued towards

repayment of the present debt or it was issued by way of

security for the earlier loan and it is being misused. This

fact assumes importance, since the cheque is not in the

handwriting of the person who issued it. On the other

hand, its contents are typed. PW1 is specifically cross-

examined suggesting that the contents of the cheque in

question are typed in the complaint-Firm. Of course he

has denied the said suggestion.

25. At least complainant should have produced

the accounts maintained with the complainant-Firm to

show that as on 25.6.1993, a sum of Rs.1,12,131/- was

due from the accused and accordingly the cheque at

Ex.P5 was issued by accused Nos.2 and 3 towards

repayment of the said sum. It would have corroborated

the case of the complainant. On the other hand, with the

help of admissions given by PW1 with regard to payment

of Rs.1,25,000/- made by the accused and failure of

complainant to establish that out of these payments, 15 CRL. A NO.913 OF 2010

Rs.75,000/-, which is paid subsequent to 25.06.1993 was

in respect of the present loan transaction, the accused by

preponderance of probabilities established that the

cheque in question was not issued towards the payment

of alleged loan transaction and on the other hand, it was

issued in respect of earlier loan transaction and it is

being misused.

26. Moreover, the cheque in question was

dishonoured on the ground that account is closed.

However, the complainant has not lead any evidence to

show that either after issuing the cheque, accused have

got the account closed or after coming to know that the

account is closed, they have issued the cheque with a

malafide intention that it should be dishonoured. If the

account is closed by the Bank due to operation of law,

then the liability of accused would not arise. Therefore,

the reasons for the closure of the account and weather it

was in the knowledge of the accused was required to be

established by the complainant, which it has failed to.

16 CRL. A NO.913 OF 2010

27. In the light of the above discussions, though

the Sessions Court failed to decide the appeal on merits,

on re-appreciation of the evidence placed on record, this

Court is of the considered opinion that it was justified in

allowing the appeal and setting aside the conviction of

accused. In the result, this appeal also fails and

accordingly the following:

ORDER

The appeal filed by the complainant is dismissed.

The impugned order dated

of 2007 passed by the Court of the Fast Track Judge, Udupi district setting aside the conviction and sentence imposed by the Court of I Addl.Civil Judge (Jr.Dn.) and JMFC, Udupi in C.C.No.2148/1999 dated 30.12.2006 is hereby confirmed.

Sd/-

JUDGE RR/KGK