Karnataka High Court

J J Vageesh Kumar vs S D Chandrashekar @ Adike Shettru on 7 February, 2024

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                                      CRL.A.No.544 of 2013


IN THE HIGH COURT OF KARNATAKA AT BENGALURU

   DATED THIS THE 7TH DAY OF FEBRUARY, 2024

                        BEFORE
       THE HON'BLE MR JUSTICE ANIL B KATTI
        CRIMINAL APPEAL No.544 OF 2013 (A)
BETWEEN:

J.J.VAGEESH KUMAR
S/O. J.M.JAYAKUMAR
35 YEARS, AGRICULTURIST AND
ALSO MANAGING
BRINDAVAN LODGE AND COMPLEX,
R/AT BALAKRISHNA NILAYA,
MAHAVEER NAGAR MAIN ROAD,
BESIDE AZAD FLOUR MILL,
CHITRADURGA TOWN.
                                               ...APPELLANT
(BY SRI. N.VAGEESH, ADVOCATE)

AND:

S.D.CHANDRASHEKAR @ ADIKE SHETTRU
S/O LATE S.K.DHANANJAYA NAIDU,
50 YEARS, COFFEE PLANTER AND
DHARSHAN LORRY OWNER,
R/O. BESIDE KHETAN SERVICE STATION,
(BELEGADDE) RAGHAVENDRA NAGAR,
B.M.ROAD, NH-48,
SAKLESHPURA POST-573 134,
HASSAN DISTRICT.
                                            ...RESPONDENT
(BY SRI. PRAKASH M.PATIL, ADVOCATE)

     THIS APPEAL IS FILED UNDER SECTION 378(4) CR.P.C,
PRAYING TO SET ASIDE THE JUDGMENT DATED 25.03.2013
PASSED BY THE I ADDL. J.M.F.C., CHITRADURGA IN
C.C.NO.1695/2006- ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.ACT.

     THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
17.01.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
                                -2-
                                            CRL.A.No.544 of 2013


                          JUDGMENT

Appellant/complainant feeling aggrieved by judgment

of Trial Court on the file of I Addl.Civil Judge and JMFC,

Chitradurga in C.C.No.1695/2006, dated 25.03.2013

preferred this appeal.

2. Parties to the appeal are referred with their

ranks as assigned in the Trial Court for the sake of

convenience.

3. Heard the arguments of both sides.

4. After hearing arguments of both sides and on

perusal of Trial Court records with the impugned judgment

under appeal, the following points arise for consideration:

1) Whether the impugned judgment under

appeal passed by Trial Court is perverse,

capricious and legally not sustainable?

2) Whether interference of this Court is

required?

5. On careful perusal of oral and documentary

evidence placed on record, it would go to show that

complainant and accused were well acquainted with each

other as family friends. On 09.04.2006 accused

approached complainant for financial assistance of

Rs.15,00,000/- in order to improve and develop his coffee

estate and has assured to repay the same within one

month. Complainant has paid the money of Rs.15,00,000/-

on 09.04.2006 and accused issued post dated cheque

bearing No.0980862, dated 09.05.2006 for Rs.15,00,000/-

drawn on Corporation Bank, Sakleshpura branch.

Complainant presented the said cheque for collection

through his banker Veerashaiva Urban Co-operative

Society Ltd., Chitradurga. The said bank sent the cheque

for collection through Karnataka Bank Ltd., Chitradurga

and the same was dishonoured for want of sufficient fund

in the account of accused vide bank endorsement Ex.P.2

dated 15.05.2006. The banker of complainant intimated

the same to complainant on 17.05.2006 Ex.P.3 and the

letter of the banker of complainant is produced at Ex.P.4

dated 22.05.2006. Complainant issued demand notice

dated 03.06.2006 Ex.P.5 through RPAD and under

certificate of posting. UCP is produced at Ex.P.6 and the

undelivered demand notice through RPAD envelop is

produced on 15.06.2006 Ex.P.7(a) as not claimed.

Complainant has filed complaint on 24.07.2006 within a

period of one month from the date of accrual of cause of

action. PW.2 Bheemarao is the Manager of Veerashaiva

Urban Co-operative Society Ltd. and has spoken about

Ex.P.1 cheque was presented by complainant for collection

and the same was sent for collection which came to be

dishonoured for want of sufficient funds in the account of

accused. He further deposes that the intimation of

dishonour of cheque was given to complainant by letter

Ex.P.4 and the intimation of Karnataka Bank Ex.P.3, so

also the bank endorsement Ex.P.2. If the above referred

documents are perused and appreciated with the evidence

of PWs.1 and 2, then it would go to show that complainant

has complied necessary legal requirement in terms of

Section 138 (a) to (c) of Negotiable Instruments Act, 1881

(hereinafter for brevity referred as "N.I.Act"). Thereafter,

complainant has filed the complaint on 24.07.2006 within

one month from the date of accrual of cause of action in

terms of Section 142(1)(b) of N.I.Act. When once issuance

of cheque and signature of accused on Ex.P.1 cheque is

proved by the complainant, then statutory presumption in

terms of Section 118 and 139 of N.I.Act will have to be

drawn.

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

by accused that cheque was given by view of security and

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 that the cheque was not for 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. Now, it is up to the

accused to place rebuttal evidence to displace the

statutory presumption available in favour of the

complainant.

8. The defence of accused is that complainant has

no financial capacity to lend huge loan of Rs.15,00,000/-

and there are no documents for giving money to accused.

Accused to probabilise his defence apart from relying on

the material produced by complainant also relied on the

evidence of DWs.1 to 4 and the documents Ex.D.1 to

Ex.D.8. Whether the said rebuttal evidence placed on

record by accused would be sufficient to displace the

statutory presumption available in favour of complainant

or not is to be decided.

9. Learned counsel for accused has also argued

that demand notice Ex.P.5 dated 03.06.2006 is not duly

served to accused. Therefore, there is non compliance of

Section 138(b) of N.I.Act. The Trial Court has elaborately

discussed regarding the service of notice on the correct

address of accused from para Nos.12 to 18 of it's

judgment and recorded finding that demand notice was

duly served to accused. Accused has not denied the

correctness of the address shown in the cause title of the

complaint. The Trial Court has also referred Exs.D.1 and 2

certified copy of the ledger extract of the Corporation

Bank, Sakleshpura Bank and statement of accounts.

Where under the very same address is appearing as

shown in the cause title of the complaint. In this context,

it is useful to refer the judgment of Hon'ble Apex Court in

C C Alavi Haji vs. Palapatti Muhammed and Another

reported in (2007) 6 SCC 555 wherein it has been

observed and held in para 13 and 14 as under :

"13. According to Section 114 of the Act, read with Illustration (f) thereunder, when it appears to the court that the common course of business renders it probable that a thing would happen, the court may draw presumption that the thing would have happened, unless there are circumstances in a particular case to show that the common course of business was not followed. Thus, Section 114 enables the court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to the facts of the particular case. Consequently, the court can presume that the common course of business has been followed in particular cases. When applied to communications sent by post, Section 114 enables the court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. But the presumption that is raised under Section 27 of the GC Act is a far stronger presumption. Further, while

Section 114 of the Evidence Act refers to a general presumption, Section 27 refers to a specific presumption. For the sake of ready reference, Section 27 of the GC Act is extracted below:

"27. Meaning of service by post.-

Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression 'serve' or either of the expression 'give' or 'send' or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post."

14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the

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contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed. (Vide Jagadish Singh v. Natthu Singh; State of M.P. v. Hiralal and V.Raja Kumari v. P.Subbarama Naidu). It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved."

In view of the principles enunciated in this judgment

of Hon'ble Apex Court, the contention of accused that

demand notice is not duly served to him cannot be legally

sustained. Therefore, there are no valid grounds to deviate

from the finding recorded by the Trial Court regarding

deemed service of demand notice Ex.P.5 to the accused.

10. Learned counsel for accused has also

vehemently argued that there is a material alteration in

the cheque Ex.P.1 and the said material alteration of the

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year renders Ex.P.1 as void in terms of Section 87 of

N.I.Act. On careful perusal of cheque in question Ex.P.1, it

would go to show that the date, month and year as

9.5.2006 is correctly written in the cheque. It is true that

there is printed numerical number "19" thereafter some

blank space is left to complete the year. There is no any

alteration in the numerical year "19". It is behind to that

the date 9.5.2006 is written as the cheque was drawn on

the said date. The numerical beginning of the year i.e.,

"19" has not been altered and it remains as it is.

Therefore, there is no question of accused signing on the

alleged alteration said to have been appearing in cheque

Ex.P.1. Accused has examined DW.2 Senior Manager of

Corporation bank, Sakleshpura Branch who has deposed to

the effect that, on 18.06.1999 cheque book containing 10

cheque leaves from No.987721 to 987730 have been

issued to the accused. Thereafter, on 07.03.2000 bank has

issued cheque book containing 10 cheque leaves from

No.595871 to 595880. DW.2 has admitted in his cross-

examination that after requisition form in the cheque

book, there will be three cheques which can made use of

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by complainant. DW.2 has further admitted that there is

no any rule that all the cheques of the year has to be used

in the same year. At the most it can be said that cheque

book issued to the complainant containing 10 cheque

leaves issued on 18.06.1999, one of the cheque after the

requisition out of the remaining 3 cheque leaves must

have been used by the accused to deliver the same to the

complainant. The issuance of cheque and his signature is

not disputed by the accused. Therefore, it will have to be

held that accused has issued cheque Ex.P.1 to the

complainant on the account maintained by him in the

Corporation bank, Sakleshpura branch. The defence of

accused that he has issued the said cheque for the loan of

Rs.50,000/- availed from complainant and he has repaid

the entire amount, but by misusing the said cheque has

filed the complaint. This defence will be appreciated with

the evidence on record at later stage. The Trial Court has

rightly appreciated the evidence of DW.2 and the cheque

Ex.P.1 with that of the evidence of PW.1 and recorded

proper finding in rejecting the contention of accused that

there is material alteration in the cheque Ex.P.1.

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11. It is the defence of accused that complainant

has no financial capacity to lend huge money of

Rs.15,00,000/- on 09.04.2006 and there are no any

documents for giving the said money to accused. Accused

got himself examined as DW.1 and he has deposed to the

effect that, complainant known to him for the last 15 years

and the house of mother of complainant is by the side of

his house in Sakleshpura. He has availed loan of

Rs.50,000/- in the year 1999 and as a security for the said

loan given blank signed cheque drawn on Corporation

bank, Sakleshpura branch and he has repaid the entire

loan amount of Rs.50,000/- in the year 2000. When he

asked for return of the cheque given as security,

complainant stated that it is in the house at Chitradurga

and he will trace the same and return it. He has further

deposed to the effect that he has taken loan from bank

whenever there was need for improvement of garden land

and for education of his daughter.

12. DW.3 N Raghavendra is the Income Tax

Inspector and has deposed to the effect that complainant

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has filed Income Tax returns from 2000 to 2007. The loan

transaction has to be shown in the Income Tax returns. On

31.03.2006 Income Tax returns for the year 2005-06 has

been filed by the complainant and shown that he has

advanced money to three persons and out of them

Chandrashekar name is not there. Income Tax returns for

the year 2006-07 has been filed, balance sheet was not

produced. DW.3 has categorically admitted in his cross-

examination that in the Income Tax returns for the

assessment year 2006-07 the transactions from

01.04.2005 to 31.03.2006 will be shown. The present

transaction as per the complaint averments took place on

09.04.2006, which will be after the financial year of

01.04.2005 to 31.03.2006. Therefore, the loan transaction

will have to be shown only for the financial year dated

01.04.2006 to 31.03.2007 for the assessment year 2007-

08.

13. Complainant has produced Income Tax returns

Exs.P.8 to 12. The relevant year Income Tax returns for

the assessment year 2007-08 is at Ex.P.8. Learned

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counsel for accused has vehemently argued that the

annexures to Exs.P.8 to 12 does not bear the seal and

signature of Income Tax department and the same cannot

be looked into as part and partial of Income Tax returns.

The Income Tax returns Exs.P.8 to 12 would go to show

that the columns are meant to only to show the income,

net liability to pay the tax and TDS. The Income Tax

returns will be accompanied by statement of income which

will depict the income, liability and other particulars and

ultimate determination of tax liability payable by filing

Income Tax returns. The advancement of loan to the

accused amounting to Rs.15,00,000/- is shown in all the

Income Tax returns appended with the annexures showing

the loans and advances. It is not the only form i.e.,

Income Tax return verification form is being submitted

without disclosing the statement of income and liability. If

at all the accused doubts about the genuineness of

statement of income appended to Exs.P.8 to 12, then

nothing would have been prevented him from eliciting

those facts in examination-in-chief of DW.3

N.Raghavendra, Income Tax Inspector who has been

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examined by the accused. The contention of learned

counsel for accused is that the transaction on 09.04.2006

giving loan of Rs.15,00,000 to the accused is not shown in

the Income Tax returns for the year 2006-07. This

contention of learned counsel for accused cannot be legally

sustained in view of the clear admission of DW.3 in his

cross-examination that in the Income Tax returns for the

year 2006-07 the transaction from 01.04.2005 to

31.03.2006 only will be shown. Indisputably, the

transaction in question took place after the said financial

year of 09.04.2006. Therefore, complainant has shown

advancing of loan in the Income Tax returns Ex.P.8 for the

assessment year 2007-08. The same is followed in the

subsequent years of assessment Ex.P.9 to Ex.P.12. The

seal and signature of receiving authority in the Income Tax

department is appearing on Exs.P.8 to 12. If the

statement of income is not filed along with the Income Tax

returns Exs.P.8 to 12, then the tax liability to which the

complainant is required to pay the tax could not even be

determined. If at all the accused is sure that no statement

of income was filed along with Income Tax returns Exs.P.8

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to 12, then nothing would have been prevented to

summon DW.3 who has been examined by accused to

produce the statement of income. The contention of

learned counsel for accused that the loan transaction is

not shown in the Income Tax statement 2006-07 cannot

be legally sustained, since the transaction from

01.04.2005 to 31.03.2006 will be only shown for the

assessment year 2006-07. The transaction in question

took place on 09.04.2006 which is after the financial year

of 2006-07. Therefore, the same will have to be shown

only in the assessment year 2007-08. The Trial Court has

not properly appreciated the Income Tax returns and the

evidence of DW.3 in recording finding that Income Tax

returns for the year 2006-07 is not produced and as such

the transaction as claimed by the complainant is not

proved. The question of filing income tax return for the

year 2006-07 would arise only if the transaction falling

within the period from 01.04.2005 to 31.03.2006.

Therefore, the non production of Income Tax returns for

the year 2006-07 will be a suspicious circumstance in

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proving the loan transaction claimed by complainant

cannot be legally sustained.

14. Learned counsel for accused has also argued

that complainant has not produced document evidencing

the loan transaction and therefore accused was under no

obligation to pay the money of Rs.15,00,000/- covered

under Ex.P.1 as claimed by complainant. In this regard if

the evidence of PW.1 and his defence is appreciated, then

even according to him accused he has taken loan of

Rs.50,000/- and at that time complainant has obtained no

any documents from the accused. It means that

complainant has given money to the accused without

obtaining any document as it was done earlier also. The

issuance of cheque Ex.P.1 with his signature on the

account maintained by him in Corporation bank,

Sakleshpura branch is not disputed by the accused.

15. It is true that accused has availed loan from

Canara bank vide documents Exs.D.1 to 4 and the

education loan of his daughter Ex.P.7. Just because

accused has availed loan from Canara bank, it does not

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mean that accused cannot avail any private loan.

Therefore, the said documents relied by accused cannot be

of much assistance to substantiate his defence.

16. Lastly, learned counsel for accused also

challenged the financial capacity of complainant to lend

huge money of Rs.15,00,000/-. It is also further argued

that there is inconsistent statement of complainant

regarding payment of loan of Rs.15,00,000/-. Complainant

has also filed O.S.No.1/2008 for recovery of the cheque

amount with interest. The Trial Court decreed the suit and

the defendant assailed the said judgment of Trial Court

before this Court in R.F.A.No.1094/2010 which came to be

allowed by judgment dated 23.02.2012 and the matter

was remanded to the Trial Court. There is no legal bar to

maintain civil proceedings and criminal proceedings on the

cheque issued by the accused. In this context it is

profitable to refer the judgment of Hon'ble Apex Court in

D.Purushothama Reddy and another Vs. K.Sateesh

reported in (2008)8 SCC 505, wherein it has been

observed and held that:

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" Although, it is beyond any doubt or dispute that for the same cause of action both a civil suit and a complaint petition under Section 138 of N.I.Act would be maintainable, in terms of Section 357 of Cr.P.C., a duty is cost upon Civil Courts to take into account the sum paid or recovered as compensation in the criminal proceedings. The judgment of conviction and sentence was passed by the criminal Court on 15.12.2005. The suit was decreed by civil Court on 23.01.2006. Deposit of a sum of Rs.2,00,000/- by the appellants in favour of respondent was directed by the Criminal Court. Such an order should have been taken into consideration by the Civil Court".

In view of the principles enunciated in this judgment

of Hon'ble Apex Court, it is evident that simultaneous civil

suit and complaint case under Section 138 of N.I.Act for

the same cause of action is maintainable.

17. It has been elicited in the cross-examination of

PW.1 that all the family members of complainant are

together residing and family possesses Brundavana lodge

with complex, so also runs Bharath gas and possesses

agricultural income and he is looking after the affairs of

Brundavana lodge and collecting the rent of complex in

Lakshmi bazaar. Complainant has given Rs.50,00,000/- to

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his brother and he gets Rs.3,00,000/- income per year.

PW.1 has shown the advancing of said loan to his brother-

in-law in the Income Tax returns filed Exs.P.8 to 12. It has

been elicited in the cross-examination of DW.3 that as per

the records complainant has advanced loan of

Rs.25,00,000/- to S Suresh Kumar and he has also got

fixed deposit of Rs.15,00,000/- in Veerashaiva Bank,

further complainant has lend the loan of Rs.10,00,000/- to

one P S Nanjappa and the said transactions are evidenced

in the Income Tax returns for the year 2007-08. When the

complainant is capable of mobilizing the funds to advance

loan to accused, then it cannot be said that complainant

has no financial capacity to lend money to accused

covered under cheque Ex.P.1. The Trial Court for the

reasons recorded in para 37 and 38 of it's judgment has

held that when the complainant is lending money to others

on interest, but accused was not charged with any interest

on the loan availed by him. The fact that the mother of

complainant is from Sakleshpura and her parental house is

next to the house of accused and complainant is known to

the accused for the last fifteen years and they were having

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earlier transaction also, further even according to the

evidence of DW.1 when he has taken alleged loan of

Rs.50,000/- for repaying the installment of his vehicle no

any interest was charged for him. Therefore, non charging

of interest from the loan availed by the accused under

these circumstances cannot be a ground to hold that it is

the suspicious circumstances to discredit the loan

transaction claimed by complainant. Therefore, the

findings of Trial Court regarding the financial capacity and

no documents for giving money are the circumstances to

suspect the genuineness of the transaction cannot be

legally sustained.

18. Thus, the accused has failed to probabilise his

defence that he has issued the cheque Ex.P.1 to the

complainant for availing loan of Rs.50,000/- and he has

repaid the said loan amount in the year 2000. However,

complainant has misused the said cheque to file this false

complaint.

19. The Trial Court has not properly appreciated the

evidence on record in holding that complainant has no

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financial capacity to lend the money to complainant

covered under cheque Ex.P.1. The Income Tax returns

filed Exs.P.8 to 12 and the non production of Income Tax

returns for the year 2006-07 and there being no any

document of giving money to the accused are the

suspicious circumstances which would be sufficient

rebuttal evidence to displace the statutory presumption

available in favour of complainant. The transaction in

question took place on 09.04.2006 i.e., after the financial

year of 01.04.2005 to 31.05.2006. Therefore, there is no

question of showing the said transaction for the

assessment year 2006-07. Complainant has shown the

said loan transaction of accused and his brother-in-law in

the Income Tax returns submitted Exs.P.8 to 12. The

contrary findings recorded by Trial Court cannot be legally

sustained.

20. When once issuance of cheque with signature of

accused is admitted or proved, then statutory presumption

will have to be drawn. On appreciating the evidence on

record, if the rebuttal evidence placed on record by

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accused is found to be unsustainable then in that event of

the matter statutory presumption available in favour of

complainant in terms of Section 118 and 138 of N.I.Act

continues to operate in his favour. The complainant by

evidence on record has proved that accused has

committed an offence under Section 138 of N.I.Act.

21. The question now remains is imposition of

sentence. The imposition of sentence has to be

proportionate to the proved guilt of accused. The Court

has to take into consideration the material evidence placed

on record, nature of transaction and other attending

circumstances. Looking to the facts and circumstances of

the present case, if the accused is sentenced to pay a fine

of Rs.15,10,000/- and in default of payment of fine shall

undergo simple imprisonment for 6 months is imposed

would meet the ends of justice. Consequently proceed to

pass the following:

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ORDER

Appeal filed by appellant/complainant is here by

allowed.

The impugned judgment of Trial Court on the file of

I Addl.Civil Judge and JMFC, Chitradurga in

C.C.No.1695/2006, dated 25.03.2013 is hereby set aside.

Accused is convicted for the offence punishable under

Section 138 of N.I.Act. and sentenced to pay a fine of

Rs.15,10,000/- and in default of payment of fine shall

undergo simple imprisonment for 6 months.

In exercise of power under Section 357 of Cr.P.C.,

out of the fine amount Rs.15,00,000/- is ordered to be

given to the complainant as compensation and remaining

Rs.10,000/- is ordered to be defrayed as prosecution

expenses.