Karnataka High Court
G E Ramesh vs B P Umashankar on 9 February, 2024
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CRL.A.No.1197 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 09 TH DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE ANIL B KATTI
CRIMINAL APPEAL No.1197 OF 2013 (A)
BETWEEN:
G.E.RAMESH
S/O.H.N.ESHWARAPPA
AGRICULTURIST
R/O.GONDICHATNAHALLI VILLAGE
SHIMOGA TALUK-577 201
...APPELLANT
(BY SRI.NAGESH M.V.PATIL, ADVOCATE FOR
SRI.B.S.PRASAD, ADVOCATE)
AND:
Digitally signed
by SUMITHRA R B.P.UMASHANKAR
Location: HIGH S/O.PARAMESHWARAPPA
COURT OF
KARNATAKA RICE MERCHANT, VIDYANAGAR
SHIKARIPURA
SHIMOGA DISTRICT-577 363
...RESPONDENT
(BY SRI.S.B.TOTAD, ADVOCATE)
THIS APPEAL FILED U/S.378 (4) CR.P.C, PRAYING TO SET
ASIDE THE ORDER DATED: 2.12.13 PASSED BY THE I ADDL.
SESSIONS JUDGE, SHIVAMOGGA IN CRL.A.72/13- ACQUITTING
THE RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF
N.I. ACT AND RESTORE THE CONVICTION ORDER DATED
13.03.2013 PASSED BY THE JMFC-II, SHIVAMOGGA IN
C.C.NO.952/10.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
29.01.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
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CRL.A.No.1197 of 2013
JUDGMENT
Appellant/complainant feeling aggrieved by
judgment of First Appellate Court on the file of
I Addl.Sessions Judge, Shivamogga in Crl.A.No.72/2013,
dated 02.12.2013 in reversing the judgment of Trial Court
on the file of JMFC II, Shivamogga, in C.C.No.952/2010,
dated 13.03.2013 convicting the accused for the offence
under Section 138 of N.I.Act 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, so also the impugned
judgment under appeal, the following points arise for
consideration:
1) Whether the impugned judgment under appeal
passed by First Appellate 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 are known to each other since
many years. Accused is the paddy merchant, he use to
purchase paddy from him. Accused has purchased 200
quintals of paddy by name 'savirada ondu' from
complainant on 14.11.2009. Accused in order to discharge
legally enforceable debt issued cheque bearing No.024183
dated 06.11.2009 for Rs.2,00,000/- drawn on UTI bank
Ltd. Shivamogga Ex.P.1. Complainant presented the said
cheque through his banker Indian Overseas bank,
Shivamogga and the said cheque was dishonoured vide
bank endorsement as "Payment stopped by the drawer"
dated 21.01.2010 Ex.P.2. Complainant issued demand
notice dated 01.02.2010 Ex.P.3 through RPAD and postal
receipt is produced at Ex.P.5 and the acknowledgement
card for having served the demand notice to accused vide
Ex.P.6. Accused has replied to said demand notice issued
by complainant by reply notice dated 11.02.2010 Ex.P.7.
Complainant has also produced RTC extract Exs.P.8 to 10
to show that paddy crop is being grown in the said
agricultural land. If the aforementioned documents are
perused and appreciated with the evidence of PW.1, then
it would go to show that complainant has complied all the
legal requirements in terms of Section 138 (a) to (c) of
Negotiable Instruments Act, 1881 (hereinafter for brevity
referred to as "N.I.Act"). Complainant has filed the
complaint on 19.02.2010 within a period of one month
from the date of accrual of cause of action in terms of
Section 142 (1) (b) of N.I.Act. Therefore, when issuance of
cheque with signature of accused on the account
maintained by him is proved by the evidence on record
then statutory presumption in terms of Section 118 and
139 of N.I.Act will have to be drawn in favour of
complainant.
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.
8. It is the specific defence of accused that he has
not purchased paddy from complainant and not issued the
cheque Ex.P.1 for lawful discharge of debt. It is further
defence of accused that he has lost the signed cheque on
18.01.2010 and filed the complaint. In this regard filed
complaint before the town Police Station Shikaripura
Ex.D.3 and police issued endorsement Ex.D.4 on the same
day. Complainant also given stop payment instruction to
the bank not to honour the cheque bearing No.24183.
Accused to probabilise the said defence apart from relying
on the material produced by complainant also relied on his
own evidence as DW.1 and the documents Exs.D.1 to 5.
9. Learned counsel for accused in support of his
contention that complainant has no financial capacity to
pay the amount covered under the cheque Ex.P.1 relied on
the Co-ordinate Bench Judgment of this Court in
Shivappa Shivanand s/o Mallappa Nirani Vs.
Chidanand s/o Hanamantappa Sikkeri in
Crl.A.No.100267/2019, dated 23.01.2024. In the said
case before this Court complainant has failed to prove that
he had capacity to lend the amount of Rs.20,00,000/- to
the accused, since no any material evidence was produced
to that effect. Reliance is also placed on another Co-
ordinate Bench Judgment of this Court in T.Karthik Raja
Vs. V.M.Prabhakar in Crl.P.No.578/2017 dated
08.01.2021, wherein it has been observed and held in
para 21 as under:
" Under Section 138 of the NI Act, once the
cheque is issued by the drawer, a presumption
under Section 139 of the NI Act in favour of the
holder would be attracted. Section 139 creates a
statutory presumption that a cheque received in the
nature referred to under Section 138 of the NI Act
is for the discharge in whole or in part of any debt
or other liability. The initial burden lies upon the
complainant to prove the circumstances under
which the cheque was issued in his favour and the
same was issued in discharge of a legally
enforceable debt. It is for the accused to adduce
evidence in relation to such facts and circumstances
to rebut the presumption that such debt does not
exist or that the cheque is not supposed by
consideration".
The statute itself place initial burden on the
complainant to prove that cheque in question was drawn
for lawful discharge of debt. Once if the initial burden is
discharged by the complainant then the onus shift on the
accused to prove that there was no any legally enforceable
debt covered under the cheque Ex.P.1.
10. Learned counsel for accused has vehemently
argued that accused is not a paddy merchant and there
was no occasion for him to purchase the 200 quintal of
paddy from complainant. The RTC extract Exs.P.8 to 10
would go to show that only three acres of land is standing
in the name of complainant. Therefore, there was no any
legally enforceable debt to issue cheque in question dated
16.11.2009 Ex.P.1. Complainant in the complaint
averments and during the course of his evidence has
deposed to the effect that accused has purchased 200
quintal of paddy by name 'Savirada Ondu' on 14.11.2009.
In order to discharge the said legally enforceable debt
issued the cheque in question Ex.P.1 for Rs.2,00,000/-. It
is not obligatory on the part of complainant to enquire as
to whether accused possesses any license for purchase or
sale of paddy and whether he owned any shop for the said
business. The RTC extract produced by complainant
Exs.P.8 to 10 would go to show that the family members
possesses the requisite extent of land wherein paddy crop
is being grown. The mere denial of transaction by accused
cannot be said as sufficient evidence to discredit the
evidence of PW.1 that cheque in question Ex.P.1 was
issued for lawful discharge of debt.
11. In this context of the matter it is useful to refer
the judgment of the Hon'ble Apex Court in Rangappa Vs.
Mohan reported in AIR 2010 SC 1898 wherein it has
been observed and held as under :
"xxxx The bare denial of the passing of the
consideration apparently does not appear to be
any defence. Something which is probable has to
be brought on record for getting the benefit of
shifting the onus of proving to the plaintiff. To
disprove the proving to the plaintiff. To disprove
the presumption, the defendant has to bring on
record such facts and circumstances upon
consideration of which the court may either
believe that the consideration did not exist or its
non-existence was to probable that a prudent
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man would, under the circumstances of the case,
act upon the plea that it did not exist."
(Emphasis supplied)
This judgment has been considered in subsequent
judgment of Hon'ble Supreme Court in Anss Rajshekar
Vs. Augustus Jeba Ananth reported in (2020) 15 SCC
348 and has held that "a mere denial of transaction or an
omnibus denial of the entire transaction could not be
considered as a tenable defence". In view of the principles
enunciated in both the aforementioned judgments of
Hon'ble Apex Court, it is evident that mere denial of
transaction by accused cannot be said as sufficient
rebuttal evidence to discredit the evidence of PW.1.
12. The next main contention of accused is that
accused has lost the cheque duly signed by him and
accordingly he has filed complaint before town Police
Station Shikaripura Ex.D.3 on 18.01.2010 and police
issued endorsement dated 18.01.2010 Ex.D.4. Accused on
receipt of demand notice dated 01.02.2010 Ex.P.3 has
replied Ex.P.7 dated 11.02.2010 and made foundation
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regarding the lose of cheque and filed complaint on
18.01.2010 Ex.D.3 and issuance of police endorsement on
the same day Ex.D.4.
13. Learned counsel for complainant has
vehemently argued that if the defence of accused is to be
accepted relying loss of cheque then evil consequences will
follow and allow everybody to make such claim of loss of
cheque after issuing the cheque for lawful discharge of
debt. Complainant has reasonably explained as to how he
came in possession of cheque Ex.P.1 on 16.11.2009
which was issued by accused for lawful discharge of debt.
14. Per contra, learned counsel for accused has
argued that the stop payment instruction to the bank was
given on 12.01.2010 itself. Complainant has filed the
complaint Ex.D.3 on 18.01.2010 for having loss of cheque
and accordingly town Police Station Shikaripura had issued
endorsement on the same day Ex.D.4. Accused has made
known his defence by making foundation in reply to
demand notice Ex.P.7 (the copy of reply notice is also
produced by accused Ex.D.1). Complainant has specifically
pleaded that accused has purchased 200 quintal of paddy
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worth Rs.2,00,000/- on 14.11.2009. Accused has issued
cheque Ex.P.1 on 16.11.2009 for lawful discharge of said
debt. There is time gap of more than two months from the
date of issuance of cheque Ex.P.1 dated 16.11.2009 and
the date of complaint being filed by accused on
18.01.2010 Ex.D.3. Accused has not offered any
explanation or brought on record the circumstances made
him to carry the cheque dated 16.11.2009 to the date on
which he lost the cheque on 18.01.2010. Accused in
Ex.D.3 has wisely shown only the cheque No.024183 and
claims that he has signed the cheque to the front and
back. Accused has not stated anything in the reply notice
Ex.P.7 as to whether the cheque signed by him was duly
filled or not with the different date appearing on Ex.P.1. It
is only stated by accused that he has lost the signed
cheque on 18.01.2010 and the complainant has misused
the said cheque to file this false case. If the evidence of
accused DW.1 and the contention raised in the reply notice
Ex.P.7 is to be accepted, then according to accused
complainant was unknown to him. Therefore, there is no
question of complainant misusing the cheque of accused
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which he claims to have lost on 18.01.2010 vide Ex.D.3.
Accused has also failed to bring any material evidence in
the cross-examination of PW.1 that complainant had any
ill will or motive against accused which prompted him to
misuse the said cheque Ex.P.1 which accused claims to
have lost on 18.01.2010. It is also pertinent to note that
accused has not taken any action against the complainant
even after coming to know that he has misused the
cheque and filed this false case.
15. The evidence placed on record by accused and
the material elicited in the cross-examination of PW.1
would go to show that bank has issued endorsement
Ex.P.2 as "payment stopped by the drawer". The said
endorsement is essentially after the accused having filed
the complaint for loss of cheque on 18.01.2010 Ex.D.3.
Accused has produced computer generated address Ex.D.2
which goes to show that the stop payment instruction was
received from accused on 12.01.2010 at 17:12:59. It
means that six days prior to the filing of complaint Ex.D.3
for loss of cheque, stop payment instruction was given to
the bank on 12.01.2010. If at all accused has really lost
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the cheque on 18.01.2010 then he should have issued
necessary intimation to bank to stop payment either on
18.01.2010 or to the subsequent said date. How can
accused presupposes that the cheque in his possession will
be lost on 18.01.2010, so that he can give advance
intimation to the bank on 12.01.2010 to stop payment of
the cheque bearing No.24183. This conduct of accused
would demonstrate the fact that accused only with an
intention to prevent the complainant from receiving the
legally enforceable debt covered under Ex.P.1 has planned
to file the complaint on 18.01.2010 claiming that he has
lost the cheque bearing No.21483 and filed complaint
Ex.D.3 before town Police Station Shikaripura and on the
same day obtains the endorsement of town Police Station
Shikaripura Ex.D.4. However the truth has come out from
the own document of accused Ex.D.2 that stop payment
instruction was given on 12.01.2010 much prior to six
days of complainant having lost the cheque on 18.01.2010
Ex.D.3. The balance standing in the account of accused is
shown as Rs.3,470.40/-. It means that accused was aware
that he has no sufficient funds in his account and cheque
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will be dishonoured. Therefore, in order to cover such latches
and escaping from the clutches of Section 138 of N.I.Act has
executed is plan of having lost the cheque on 18.01.2010
Ex.D.3. Therefore, in view of the reasons stated above the
evidence of DW.1 and the documents Exs.D.3 and 4
cannot be relied to prove that in fact the accused has lost
the cheque on 18.01.2010 and filed complaint Ex.D.3 and
on the same day police issued endorsement Ex.D.4. Thus,
the accused has failed to probabilise his defence to
displace the statutory presumption available in favour of
complainant.
16. The Trial Court has rightly appreciated the
evidence placed on record and has arrived to a just and
proper conclusion in holding that the cheque issued by
accused No.1 for lawful discharge of debt. The accused
only with an intention to escape from the clutches of penal
action under Section 138 of N.I.Act has planned to file
false complaint of having lost the cheque and filed
complaint Ex.D.3. The Trial Court was justified in negating
the claim of accused that the lost cheque of accused was
misused by complainant to file this case. However, the
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First Appellate Court without assigning valid reasons for
deviating from the finding recorded by the Trial Court only
on the basis of complaint filed by accused having lost the
cheque on 18.01.2010 Ex.D.3 and the endorsement issued
by police on the same day Ex.D.4 which is prior to
presentation of the cheque by complainant for collection
on 21.01.2010 through his banker has proceeded to hold
that accused has probabilised his defence. The said finding
recorded by the First Appellate Court is contrary to
evidence on record and the same cannot be legally
sustained.
17. When the rebuttal evidence placed on record by
accused is held to be unsustainable in law and accused has
failed to probabilise his defence, then the statutory
presumption in terms of Section 118 and 139 of N.I.Act
will continue to operate in favour of complainant. The Trial
Court has rightly appreciated the evidence on record and
justified in convicting the accused for the offence under
Section 138 of N.I.Act.
18. The question now remains is imposition of
sentence. The Trial Court has convicted the accused and
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sentenced to undergo rigorous imprisonment for a period
of 2 years and shall pay a fine of Rs.4,00,000/- and in
default of payment of fine shall undergo further rigorous
imprisonment for a period of 3 months, out of the total
fine amount a sum of Rs.3,90,000/- was ordered to be
paid as compensation to complainant.
19. In this context of the matter, it is useful to refer
the judgment of Hon'ble Apex Court in the case of
Somnath Sarkar vs. Utpal Basu Mallick and another
reported in (2013) 16 SCC 465 wherein, the Hon'ble
Apex Court has held that:
"14. This Court also took note of the
number of cases involving dishonour of
cheques choking the criminal justice system of
this country, especially at the level of the
Magisterial Courts, and held that dishonour of
cheque being a regulatory offence, aimed at
ensuring the reliability of negotiable
instruments, the provision for imprisonment
extending up to two years was only intended
to ensure quick recovery of the amount
payable under the instrument. The following
passages from the decision are in this regard
apposite: (Damodar S. Prabhu case, SCC
p.666 paras 4-5)
"4. ... It is quite evident that the
legislative intent was to provide a strong
criminal remedy in order to deter the
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worryingly high incidence of dishonour of
cheques. While the possibility of imprisonment
up to two years provides a remedy of a
punitive nature, the provision for imposing a
'fine which may extend to twice the amount of
the cheque' serves a compensatory purpose.
What must be remembered is that the
dishonour of a cheque can be best described
as a regulatory offence that has been created
to serve the public interest in ensuring the
reliability of these instruments. The impact of
this offence is usually confined to the private
parties involved in commercial transactions.
5. Invariably, the provision of a strong
criminal remedy has encouraged the institution
of a large number of cases that are relatable
to the offence contemplated by Section 138 of
the Act. So much so, that at present a
disproportionately large number of cases
involving the dishonour of cheques is choking
our criminal justice system, especially at the
level of Magistrates' Courts. As per the 213th
Report of the Law Commission of India, more
than 38 lakhs cheque bouncing cases were
pending before various courts in the country
as of October 2008. This is putting an
unprecedented strain on our judicial system."
The Hon'ble Apex Court having referred the said finding
has observed and held that Statute provide for imposition
of imprisonment was only intended to ensure quick
recovery of the amount payable under the instrument. It
has been further held that the legislative intent was to
provide a strong criminal remedy in order to deter the
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worryingly high incidence of dishonour of cheques. While
the possibility of imprisonment up to two years provides a
remedy of a punitive nature, the provision for imposing a
'fine which may extend to twice the amount of the cheque'
serves a compensatory purpose. What must be
remembered is that the dishonour of a cheque can be best
described as a regulatory offence that has been created to
serve the public interest in ensuring the reliability of these
instruments. The impact of this offence is usually confined
to the private parties involved in commercial transactions.
20. In view of the principles enunciated in this
decision and the object of legislature in incorporating the
provision for punishment for offence under Section 138 of
N.I. Act is to ensure the credibility of the money involved
covered under the cheque. The Court will have to take
into consideration the nature of transaction involved, the
evidence placed on record and other attending
circumstances. Imposition of maximum sentence of 2
years imprisonment and double of the cheque amount is
not mandatory in all the cases. The Court has to exercise
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it's judicial discretion in imposing the sentence and the
sentence imposed must be proportionate to the proved
guilt of accused. Looking to the facts and circumstances of
the case if the accused is sentenced to pay fine of
Rs.2,20,000/- and in default of payment of fine sentenced
to undergo simple imprisonment of 6 months is ordered
will meet the ends of justice. Consequently proceed to
pass the following:
ORDER
Appeal filed by appellant/complaint is hereby
allowed.
The judgment of First Appellate Court on the file of
I Addl. Sessions Judge, Shivamogga in Crl.A.No.72/2013,
dated 02.12.2013 is hereby set aside.
The judgment of Trial Court on the file of JMFC II,
Shivamogga, in CC.No.952/2010, dated 13.03.2013 is
hereby ordered to be modified as under:
Accused is convicted for the offence under Section
138 of N.I.Act and sentenced to pay a fine of
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Rs.2,20,000/- and in default of payment of fine shall
undergo simple imprisonment for a period of 6 months.
In view of the exercise of power under Section 357 of
Cr.P.C. out of the fine amount Rs.2,10,000/- is ordered to
be given to complainant as compensation and remaining
Rs.10,000/- is ordered to be defrayed as prosecution
expenses.
Registry to send back the records to Trial Court with
a copy of this order.
Sd/-
JUDGE
GSR
