Karnataka High Court
Sri Basavaraju vs Sri Sunilkumar R on 16 April, 2024
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CRL.A No. 436 of 2018
NC: 2024:KHC:15140
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF APRIL, 2024
BEFORE
THE HON'BLE MS JUSTICE J.M.KHAZI
CRIMINAL APPEAL NO.436 OF 2018
BETWEEN:
SRI BASAVARAJU
S/O LINGEGOWDA
AGED ABOUT 56 YEARS,
R/AT DASEGOWDANADODDI
KASABA HOBLI
CHANNAPATNA TALUK - 571 501
...APPELLANT
(BY SRI. PRAKASH M H, ADVOCATE)
AND:
SRI SUNILKUMAR R
S/O RAJANNA
AGED ABOUT 41 YEARS,
R/AT NO.1713, MANGALAWARPET
14TH CROSS, CHANNAPATNA TOWN - 571 501
...RESPONDENT
Digitally
signed by (BY SRI. S G RAJENDRA REDDY, ADVOCATE)
REKHA R
Location: THIS CRL.A IS FILED UNDER SECTION 378(4) OF CR.P.C
High Court PRAYING TO SET ASIDE THE JUDGMENT DATED 23.01.2018 IN
of Karnataka
C.C.NO.1069/2008 PASSED BY THE ADDITIONAL CIVIL JUDGE
AND JMFC, CHANNAPATNA AND TO ALLOW THE COMPLAINT
FILED BY HIM IN THE INTEREST OF JUSTICE AND EQUITY.
THIS APPEAL, COMING ON FOR HEARING, THIS DAY, THE
COURT DELIVERED THE FOLLOWING:
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JUDGMENT
In this appeal filed under Section 378 (4) of Cr.P.C,
appellant who is complainant has challenged the impugned
judgment and order passed by the trial Court, acquitting
the accused for the offence punishable under Section 138
of Negotiable Instruments Act, 1881 (for short 'N.I.Act').
2. For the sake of convenience, parties are
referred to by their rank before the trial Court.
3. It is the case of complainant that he and
accused are well acquainted with each other. Accused
borrowed a sum of Rs.1,14,000/- from the complainant for
establishing a TV showroom at Channapatna agreeing to
repay the same within three months. On the date of loan
he issued a post dated 20.12.2007 cheque for
Rs.1,14,000/- by way of security. He instructed the
complainant to re-present the cheque on 20.12.2007.
However, when complainant presented it for encashment
on 24.12.2007, it was returned with endorsement "Funds
insufficient". When complainant personally approached the
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accused and informed him about the dishonour of cheque,
he did not care to pay the amount due from him.
Therefore, complainant got issued legal notice. It is
returned with endorsement "Absent during delivery time".
Accused has deliberately avoided service of notice, and
hence, the complaint.
4. Before the trial Court, accused appeared
through counsel and contested the case by pleading not
guilty.
5. In order to bring home guilt to the accused,
complainant examined himself as PW-1 and got marked
Ex.P1 to 13.
6. During the course of his statement under
Section 313 Cr.P.C, the accused has denied incriminating
evidence led by the complainant.
7. In fact, he has also led the defence evidence by
examining himself as DW-1 and relied upon Ex.D1
to 3.
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8. Vide the impugned judgment and order the trial
Court acquitted the accused.
9. Being aggrieved by the same, complainant has
filed this appeal, contending that the trial Court has totally
misread the entire case and passed the impugned
erroneous judgment. It has not appreciated the case of
complainant in proper perspective so far as legally
enforceable debt is concerned. Having regard to the fact
that accused has not disputed the issue of cheque,
presumption is operating in favour of the complainant
placing the initial burden on the accused. This fact is not
appreciated by the trial court. Merely because the subject
cheque was termed as issued by way of security would not
take away its character as an negotiable instrument issued
towards legally recoverable debt or liability. Viewed from
any angle the impugned judgment and order is not tenable
and pray to allow the appeal, convict the accused and
sentence him in accordance with law.
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10. In support of his arguments, the learned
counsel for complainant has relied upon the following
decisions:
(i) K.Narayana Nayak Vs. M.Shivarama Shetty
(K.Narayana Nayak)1
(ii) Lale Patel Vs. Sharanbasappa (Lale Patel)2
(i) Dashrathbhai Trikambhai Patel V. Hitesh
Mahendrabhai Patel and Anr.
(Dashrathbhai Trikambhai Patel)3
11. On the other hand, learned counsel for accused
has submitted that complainant is an LIC agent, and when
he pressed the accused to take a policy, he got a policy in
the name of his sister. When she failed to pay the
premium, on the insistence of complainant, accused issued
a blank cheque as the amount due towards premium was
uncertain. Utilizing the same, the complainant has filed a
false complaint. He would further submit that accused
never borrowed any loan from the complainant and in fact,
complainant has no financial capacity to pay the alleged
2008 Crl.L.J 3411
2012 Supreme (Kar) 1192: 2015 1 KCCR 235
AIR 2022 SC 4961
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hand loan and at the trial, he has failed to prove his
financial capacity. He would further submit that
intentionally the complainant has sent the legal notice to a
wrong address in order to see that it should not reach the
accused and that he should not send any reply. In the
cheque, except the signature, the rest of the writing is not
in the hand of accused. Considering all these aspects the
trial Court has rightly acquitted the accused and sought
for dismissal of the appeal.
12. Heard elaborate arguments of both sides and
perused the record.
13. At the out set the accused has taken up a
specific defence that the legal notice is not sent to his
correct address and therefore it is not served on him. In
this regard during his cross-examination, the accused has
confronted complainant with his election ID card and
suggested that the address mentioned therein is the
correct address of accused. Complainant has admitted the
same. It is marked as Ex.D1. The election ID of the
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accused also bear the same address as in the legal notice.
It is also the address mentioned in the complaint. The
summons sent to him to the said address is returned with
endorsement "refused". Therefore, the trial Court has
issued Non-billable warrant to the accused, after which he
has appeared through counsel and secured bail. Therefore,
the defence of the accused that the legal notice was not
sent to his correct address is not acceptable. It is also
relevant to note that the legal notice is returned with
endorsement that the address was not available during
service and therefore it is returned to the sender. It is not
returned with an endorsement that the addressee is not
staying in the said address.
14. In C.C. Alavi Haji vs Palapetty Muhammed &
Anr (Alavi Haji)4, it is held that the object and purpose of
issue of legal notice is to enable a prompt drawer of the
cheque to make payment within the specified time and
thereby avoid prosecution. It is not the case of the
accused that had he come to know the dishonour of
(2007) 6 SCC 555
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cheques, he would have paid the amount due under them
and the non-service of notice has prejudiced him. Of
course, in the present case the complainant has proved
that the notice is duly served on the accused.
15. Accused has not taken up a defence that had
the notice was served on him, he would have paid the
amount due. In Alavi Haji, the Hon'ble Supreme Court
further held that the object of issuing legal notice is to
avoid unnecessary prosecution of an honest drawer and
give him an opportunity to make amends and thus avoid
unnecessary hardship to him. Where the accused claim
that the legal notice is not served on him, but he has
received the summons along with copy of the complaint, if
his contention that had he received the notice he would
have paid the amount due, he can within 15 days of
receipt of the summons make payment of the cheque
amount and on that basis submit to the Court that
complaint to be rejected - he then cannot content that
there was no proper service of notice. It is not the case of
the accused. The legal notice is sent to his correct
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address. As evident from the endorsement on the
envelope, the postman has went to the address on five
dates and finding him absent on all the five dates, he has
returned the same after delivering information. Therefore,
it is not open to the accused to content that one of the
essential requirements of Section 138 of N.I Act is not
complied with and therefore complaint is not maintainable.
16. Having regard to the fact that the cheque in
question belongs to accused, drawn on his account
maintained with his banker and it bears his signature,
presumption under Section 139 of the N.I Act is operating in
favour of the complainant, placing the initial burden on the
accused to prove that the cheque was not issued towards
repayment of any debt or liability and on the other hand to
establish the circumstances in which the cheque has reached
the hands of the complainant.
17. In John K.Abraham Vs. Simon C. Abraham &
Anr (John K.Abraham)5, the Hon'ble Supreme Court held
that in order to draw presumption under Sections 118 and
(2014) 2 SCC 236
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139 of N.I Act, the burden lies on the complainant to show
that:
(i) She had the requisite funds for advancing the
sum of money/loan in question to accused.
(ii) The issuance of cheque by accused in support
of repayment of money advanced was true
and
(iii) The accused was bound to make payment as
had been agreed while issuing cheque in
favour of the complainant.
18. As held by the Hon'ble Supreme Court in Tedhi
Singh Vs Narayan Das Mahant (Tedhi Singh)6, where the
accused has failed to send reply to the legal notice,
challenging the financial capacity of the complainant, at the
first instance, complainant need not prove his financial
capacity. However, at the trial if the financial capacity of
complainant is challenged, then it is for the complainant to
prove the same.
2022 SCC OnLine SC 302
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19. In APS Forex vs Shakti International Fashion
Linkers Pvt. Ltd (APS Forex)7, the Hon'ble Supreme Court
held that when accused raises issue of financial capacity of
complainant, in support of his probable defence, despite
presumption operating in favour of complainant regarding
legally enforceable debt under Section 139 of N.I. Act, onus
shifts again on the complainant to prove his financial
capacity by leading evidence, more particularly when it is a
case of giving loan by cash and thereafter issue of cheque.
20. In Vijay Vs. Laxman and Anr (Vijay)8,
K.Subramani Vs. K.Damadara Naidu (K.Subramani)9 and
K.Prakashan Vs. P.K.Surenderan (K.Prakashan)10, also
the Hon'ble Supreme Court held that the presumption
under Section 139 of N.I. Act, is a rebuttable presumption
and when accused rebut the same by preponderance of
probabilities, it is for the complainant to prove his case
beyond reasonable doubt including the financial capacity.
(2020) 12 SCC 724
(2013) 3 SCC 86
(2015) 1 SCC 99
(2008) 1 SCC 258
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21. In the light of the ratio in the above decisions,
it is necessary to examine whether the complainant has
proved his financial capacity, only after which the burden
would shift on the accused to prove his defence. The
accused has extensively cross-examined complainant
regarding his financial capacity to lend him hand loan of
Rs.1,14,000/-. So far as his financial capacity is
concerned, the complainant has stated that he is an
agriculturist and also an LIC agent and so far he has made
1100 policies and out of the 75% are in force and for
every policy gets 35% commission. He has specifically
deposed that every month he gets Rs.30,000/- income
from the policies. He is also having 4 acres of land and
grows tomato, vegetables and other crops. He has also
stated that he is having account in Federal Bank, Canara
Bank and at present he is having account in State Bank of
Mysuru (SBI) also. Normally, he keeps around 2 to 3 lakhs
in his account and there is no impediment to produce
documents to evidence the above facts. He is also an
income tax assessee.
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22. However, despite the accused challenging his
financial capacity, the complainant has not chosen to
produce any of the above documents, to show that at the
relevant point of time, he was having capacity to lend
Rs.1,14,000/- to the accused. Except his self-serving
statement, the complainant has not produced any
document or evidence on record to prove his financial
capacity and consequently, the burden has not shifted on
the accused to rebut the presumption.
23. In case the accused had sent reply to the legal
notice, incidentally, he may come up with a specific
defence as to how the cheque reached the hands of
accused. However, not sending reply would not prevent
the accused from taking any defence at the trial. As
submitted by the learned counsel for the accused, at the
trial, he has taken a defence that the cheque in question
was issued by him blank towards payment of premium due
from his sister in respect of LIC policy taken by her from
the accused and misusing the same he has filed this
complaint. During his examination-in-chief, the
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complainant has admitted that he has given a policy to the
sister of accused and she was due to pay few instalments
of premium. However, he has denied that the cheque in
question was issued towards payment of the premium and
he has misused it to file the present complaint.
24. However, as admitted by the complainant there
is difference in the ink used for signing the cheque and the
remaining details in the cheque. However, he has come up
with an explanation that accused has got the cheque
written by someone else and therefore there is difference
in the ink. As deposed by him, accused is a B.Com
Graduate. Consequently, there was no need for him to get
the document written by someone else. The fact that his
signature and remaining writing are in different ink,
suppose the defence of the accused that it was blank when
he issued it.
25. The accused has also disputed that he ever run
a TV business. Complainant has denied the suggestion
made to that effect and claimed that accused was running
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TV show room at Channapatna. However, he has not
chosen to produce any documents to evidence this fact.
Such document would have corroborated his case that the
loan in question was taken by the accused to run TV
business. Thus, the complainant has failed to prove his
financial capacity. On the other hand, the accused has
proved by preponderance of probabilities that the cheque
in question was issued blank towards payment of premium
due from his sister and misusing the same complainant
has filed the complaint.
26. It is pertinent to note that in the complaint, the
complainant has pleaded that accused borrowed hand loan
of Rs.1,14,000/- and by way of security issued the subject
cheque. Mainly concentrating on this aspect, the trial
Court has held that the provisions of Section 138 is not
attracted to a cheque which is issued by way of security
and on that basis acquitted the accused. In K.Narayana
Nayak and Lale Patel, Co-ordinate Bench of this Court
held that for a cheque issued by way of security, Section
138 of N.I. Act is not attracted. However, this aspect is
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made clear by the Hon'ble Supreme Court in Sunil Todi
Vs. State of Gujarath and Anr. (Sunil Todi)11, where it is
held that merely labeling a cheque as a security would not
obviate its character as instrument designed to meet
legally enforceable debt or liability. Once agreement
between parties provided for which money is due and
payable, cheque furnished as a security is covered under
the provisions of Section 138 of N.I Act. Therefore, the
decisions in K.Narayana Nayak and Lale Patel are not
good law. Consequently, the findings of the trial Court that
cheque issued by way of security does not attract the
provisions of Section 138 of N.I. Act is incorrect.
27. The decision in Dashrathbhai Trikambhai
Patel, deals with effect of part payment and in case of
part payment how the cheque is to be presented. It is not
applicable to the case on hand.
28. Though the trial Court has wrongly dismissed
the complaint on the ground that the cheque was issued
by way of security, however, for the reasons that the
AIR 2022 SC 147
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complainant has failed to prove his financial capacity, the
ultimate conclusions arrived at by the trial Court is correct.
Consequently, the appeal filed by the complainant,
challenging the dismissal of complaint filed by him fails
and accordingly the following:
ORDER
(i) Appeal filed by the complainant under
Section 378(4) of Cr.P.C. is dismissed.
(ii) The impugned judgment and order dated
23.01.2018 in C.C.No.1069/2008 on the
file of Addl.Civil Judge and JMFC,
Channapatna is hereby confirmed.
(iii) The Registry is directed to send back the
trial Court records along with copy of this
order forthwith.
Sd/-
JUDGE
RR
