Karnataka High Court
Mr Shyam Sundar vs Apple Nutra Pharmaceuticals on 7 February, 2024
1 CRL.A NO.445 OF 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MS.JUSTICE J.M.KHAZI
CRIMINAL APPEAL NO.445 OF 2021
BETWEEN:
MR. SHYAM SUNDAR
S/O. LATE KRISHNA MURTHY,
AGED ABOUT 50 YEARS
MARKETING EXECUTIVE,
C/O MYLARLINGESHWARA, 8TH CROSS,
3RD STATE, VINOBHA NAGAR,
SHIVAMOGGA - 577 201
......APPELLANT
(BY SMT. ANITHA H R, ADVOCATE)
AND:
1. APPLE NUTRA PHARMACEUTICALS
JAYA APARTMENT,
FLAT NO.A-2, 2ND FLOOR,
6TH CROSS, MALLESHWARAM,
BENGALURU - 560 003
2. MR. SRIDHAR MURTHY
MANAGING PARTNER,
AGED ABOUT 61 YEARS
JAYA APARTMENT,
FLAT NO.A-2, 2ND FLOOR,
6TH CROSS, MALLESHWARAM,
BENGALURU - 560 003
3. SMT. SUMATHI SRIDHAR
PARTNER,
AGED ABOUT 48 YEARS
JAYA APARTMENT,
FLAT NO.A-2, 2ND FLOOR,
6TH CROSS, MALLESHWARAM,
BENGALURU - 560 003
2 CRL.A NO.445 OF 2021
NOW RESPONDENT NOS.2 AND 3
ARE RESIDING AT:
NO.4, 1ST 'A' MAIN ROAD,
NEAR BALAJI TRADERS,
OPP. D.S. MAX SELDON APARTMENT,
VIGNESHWARA BADAVANE, SHETTYHALLI,
JALAHALLY WEST, WARD NO.12
RESPONDENTS
(BY SRI. AKASH V T, ADVOCATE)
THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) OF CR.P.C PRAYING TO a) SET ASIDE THE ORDER
PASSED BY THE III ADDITIONAL CIVIL JUDGE AND JMFC AT
SHIVAMOGGA IN C.C.NO.3069/2009 DATED 15.02.2020; b)
CONVICT THE RESPONDENT / ACCUSED AND PUNISH THEM
UNDER SECTION 138 OF N.I.ACT; c) AWARD THE FINE TWICE
OF THE CHEQUE AMOUNT PAYABLE TO THE APPELLANT.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
18.01.2024, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
JUDGMENT
Being aggrieved by dismissal of complaint filed by
him against respondent/accused for the offence
punishable under Section 138 of N.I Act, complainant has
filed this appeal under Section 378 (4) Cr.P.C.
2. For the sake of convenience, parties are referred
to by the rank before the trial Court.
3. As reflected in the complaint, it is the case of
the complainant that accused No.1 is a Partnership Firm
engaged in manufacture of drugs and accused No.2 is its
Managing Partner and accused No.3 is active partner and
they are engaged in day-to-day affairs of accused
No.1/Firm.
4. Earlier complainant, his brother Satish, one
Satyanarayana, Prasad Gowda and accused No.2 are
known to each other as all of them were working in Micro
Lab company. In this background, accused No.2 and 3 put
forth the plan to start a pharmaceutical company by name
Apple Nutra and Pharmaceuticals for manufacture and
distribution of pharmaceutical products. Accordingly, all the
above four persons agreed and they and accused No.2
resigned from Micro company.
4.1 Accused Nos.1 and 2 started accused No.1
Company and the complainant and other three became
commission agents. Due to their hard work there was
considerable growth of business in the company and there
was all round demand for its products. Therefore, there was
need for additional financial. At the request of accused,
complainant and three others extended financial help in a
sum of Rs.3 lakhs each by way of hand loan during the first
week of January 2004. Accused promised to repay the
same on or before May 2004.
4.2 At the request of accused, the time for
repayment was extended by one more year. However,
accused failed to repay the said amount and on the other
hand gave a proposal to induct the complainant and other
three as partners and the loan extended by them as
investment. It was rejected by them. In this regard a
meeting was held at Shivamogga and the remaining three
persons authorised the complainant to receive the principle
and interest and agreeing for the same, accused No.2
issued subject cheque for a sum of Rs.12 lakhs in favour of
the complainant and agreed to pay interest at the rate of
9% within next six months. However, when the subject
cheque was presented for realization, it was returned with
endorsement "Account closed". When complainant got
issued legal notice to the accused, instead of paying the
amount due, they have sent untenable reply and hence the
complaint.
5. Accused appeared and contested the matter.
6. To prove the allegations against the accused,
complainant got himself examined as a PW-1 and relied
upon Ex.P1 to 13.
7. During the course of statement under Section
313 Cr.P.C, accused Nos.2 and 3 have denied the
incriminating evidence led by the complainant.
8. Accused No.2 has examined himself as a DW-1
and got marked Ex.D1 and 2.
9. Vide the impugned judgment and order, the trial
Court acquitted the accused.
10. Aggrieved by the same, complainant has filed
this appeal, contending that accused No.2 has intentionally
evaded repayment of the hand loan and all the accused are
jointly and severally liable to pay the amount due to the
complainant and three others. The accused have cheated
the complainant and three others by issuing the cheque of
the account which is closed long back. The trial Court has
acquitted the accused without appreciating the oral and
documentary evidence placed on record and it calls for
interference by this Court.
11. On the other hand, learned counsel for accused
supported the impugned judgment and order and
submitted that misusing signed blank cheque available with
him the complainant has filed this complaint with the false
averments. The complainant has failed to prove financial
capacity of himself and the other three and rightly the trial
Court has dismissed the complaint and pray to dismiss the
appeal also.
12. In support of his arguments, learned counsel for
accused has relied upon the following decisions:
(i) John K.Abraham Vs. Simon C. Abraham
& Anr (John K.Abraham)1
(ii) Vijay Vs. Laxman and Anr (Vijay)2
(iii) K.Subramani Vs. K.Damadara Naidu
(K.Surbamani)3
(2014) 2 SCC 236
(2013) 3 SCC 86
(2015) 1 SCC 99
(iv) K.Prakashan Vs. P.K.Surenderan
(K.Prakashan)4
(v) Yeshwanth Kumar Vs. Shanth KUmar N
(Yeshwanth Kumar)5
(vi) K.N.Raju Vs. Manjunath T.V (K.N.Raju)6
(vii) Joseph Vs. Devassia (Joseph)7
13. Heard arguments of both sides and perused the
record.
14. It is an undisputed fact that at a certain point of
time, complainant, his brother Satish, one Satyanarayana,
Prasad Gowda and accused No.2 were working in Micro Lab
Company. Later when accused Nos.2 and 3 started accused
No.1 Company, complainant, his brother Satish,
Satyanarayana and Prasad Gowda joined accused No.1
Company and they were allotted different territories as
stated in the complaint and they were paid on commission
basis. Complainant has alleged that in order to expand the
business, accused borrowed a sum of Rs.3 lakhs each from
complainant, his brother Satish, Satyanarayana and
(2008) 1 SCC 258
(2019) 6 Kant LT 553
2018 SCC Online Kar 3988
2000 SCC Online Ker 460
Prasad Gowda with a promise to repay the same within one
year. When they failed to repay the same even after one
year and extended period of six months, on the insistence
of complainant and three others, accused No.2 issued the
subject cheque in the name of complainant, as the other
three authorized him to receive the total outstanding debt
with interest. However, on presentation, the cheque came
to be dishonoured on the ground "Account closed". After
issuing legal notice, and on failure of accused to pay the
amount due, the complaint is filed.
15. Accused have denied that they borrowed a sum
of Rs.3 lakhs each from complainant, his brother Satish,
Satyanarayana and Prasad Gowda. They have set up a
defence that earlier the head office of accused No.1
Company was in Mysuru. Accused No.2 used to visit Mysuru
once in 15 days. He used to keep signed cheques. Later,
the head office was shifted to Bengaluru. Misusing one such
cheque, complainant has filed this complaint. In fact, in the
reply notice accused have taken up such contention.
16. Having regard to the fact that the cheque in
question belongs to accused No.1, drawn on the account
maintained with its banker and it bears the signature of
accused No.2 in his capacity as the Managing Partner,
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. Though in the
reply notice, accused have not disputed the financial
capacity of complainant and three others to lend them hand
loan of Rs.12 lakhs, during the trial they have challenged
their financial capacity.
17. In John K.Abraham Vs. Simon C. Abraham &
Anr (John K.Abraham)8, the Hon'ble Supreme Court
held that in order to draw presumption under Sections
118 and 139 of N.I Act, the burden lies on the
complainant to show that:
(2014) 2 SCC 236
(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. Therefore, as held by the Hon'ble Supreme
Court in Tedhi Singh Vs Narayan Das Mahant (Tedhi
Singh)9, 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.
19. In APS Forex vs Shakti International Fashion
Linkers Pvt. Ltd (APS Forex)10, the Hon'ble Supreme Court
held that when accused raises issue of financial capacity of
2022 SCC OnLine SC 302
(2020) 12 SCC 724
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, K.Subramani and K.Prakashan, 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.
21. Keeping the ratio in the above decisions in mind,
it is necessary to examine whether the complainant has
proved that in the first week of January 2004 complainant,
his brother Satish, Satyanarayana and Prasad Gowda had
financial capacity to lend Rs.3 lakhs each to the accused.
22. During his cross-examination, complainant who
is examined as PW-1 has stated that he is having
documents to prove his financial capacity and in fact he is
having Income Tax returns, but in the said returns, he and
other three persons have not shown the fact of lending
Rs.3 lakhs each to accused. Though the complainant has
stated that he is an Income Tax assessee, his father is a
doctor and they are also having a cinema theatre, fact
remains that neither the complainant nor the other three
persons have produced any documents to prove their
financial capacity. Moreover, complainant has not examined
the other three persons. They have also not executed any
Power of Attorney in favour of complainant to show that he
was authorized to receive the amount on their behalf and
accordingly, the cheque for the entire sum of Rs.12 lakhs
was issued in the name of complainant and also to show
that they have authorized him to issue the legal notice and
file complaint.
23. The accused have taken up specific defence
that earlier the headquarter of accused No.1 Company was
Mysuru and subsequently it was shifted to Bengaluru during
2005 and at that time the account in question was closed.
In fact, during his cross-examination, the complainant has
admitted that during 2004-05, the office of accused No.1
Company at Mysuru was closed. However, he has
expressed ignorance that the account in question was
closed at that time itself. Consequently, the complainant
has failed to prove that after issuing the cheque in
question, accused have chosen to close the account. At
least complainant could have produced documents from the
Bank to show when exactly the account came to be closed.
During the cross-examination of complainant, it is elicited
that he has filed similar complaints of cheque bounce case
against one Lata K.Y, Chandralekha and Guru. It creates
doubt that compliant is habitually indulged in filing cheque
bounce cases and there is likelihood of he doing money
lending business.
24. During the course of his evidence, accused No.2
has reiterated the defence taken by the accused and stated
that misusing one of the signed blank cheque belonging to
him which was kept in the Mysuru office, the present case
is filed. He has specifically deposed that the account at
Mysuru was closed during 2005. Ex.D1 is the audit report
of accused No.1 Company dated 16.08.2004 and Ex.D2 is
the acquittal judgment and order in C.C.No.2392/2010
which was a complaint filed by the present complainant
against one Lata K.Y, for the offence punishable under
Section 138 of N.I Act. Though the complainant has cross-
examined accused No.2 in detail, he has failed to prove
that he and other three have lent Rs.3 lakhs each to
accused and that towards repayment of it, he has issued
the subject cheque.
25. On the other hand, the accused have
probabalised their defence that the cheque was misused by
complainant for filing this complaint. After appreciating the
oral and documentary evidence placed on record, the trial
Court has rightly acquitted the accused. After re-
appreciation of oral and documentary evidence this Court
does not find any justifiable grounds to interfere with the
same. In the result, the appeal 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
15.02.2020 in C.C.No.3069/2009 on the
file of III Addl.Civil Judge and JMFC.,
Shivamogga is confirmed.
(iii) The Registry is directed to send back the
trial Court records along with copy of
this judgment forthwith.
Sd/-
JUDGE
RR
