Karnataka High Court
Sri Santhosh Rai vs Sri Arun Kumar on 12 February, 2024
1 CRL.A NO.607 OF 2018
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MS.JUSTICE J.M.KHAZI
CRIMINAL APPEAL NO.607 OF 2018
BETWEEN:
SRI SANTHOSH RAI
S/O SANJEEVA RAI
AGED ABOUT 32 YEARS
R/AT SAMPYADAMOOLE HOUSE
KURIYA VILLAGE, PUTTUR TALUK,
D.K, PIN CODE - 574 201
......APPELLANT
(BY SRI. SUDEEP BANGERA, ADVOCATE)
AND:
SRI ARUN KUMAR
S/O LATE RAMACHANDRA KUNJATHAYA
AGED ABOUT 46 YEARS
R/O MADLA HOUSE, MADNOOR VILLAGE
AND POST, KAVU PUTTUR TALUK
D.K., PIN CODE - 574 201
RESPONDENT
(BY SRI. MADHUKESHWARA, ADVOCATE FOR
SRI. SACHIN B.S, ADVOCATE)
THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) OF CR.P.C PRAYING TO a) SET ASIDE THE ORDER BY
ALLOWING THE APPEAL AND SETTING ASIDE THE IMPUGNED
ORDER AND JUDGMENT IN CRL.APPEAL NO.5022/2017
DATED 20.01.2018 ON THE FILE OF THE V ADDITIONAL
DISTRICT AND SESSIONS JUDGE, PUTTUR D.K., AND
RESTORING THE IMPUGNED ORDER AND JUDGMENT DATED
01.09.2017 PASSED IN C.C.NO.149/2014 BY THE PRINCIPAL
SENIOR CIVIL JUDGE AND ACJM, PUTTUR, FOR THE OFFENCE
UNDER SECTION 138 OF THE N.I ACT; b) AND CONVICT AND
SENTENCE THE ACCUSED / RESPONDENT FOR THE OFFENCE
UNDER SECTION 138 OF N.I.ACT CHARGED AGAINST HIM IN
ACCORDANCE WITH LAW IN THE INTEREST OF JUSTICE AND
EQUITY.
2 CRL.A NO.607 OF 2018
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
29.01.2024, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
JUDGMENT
Being aggrieved by acquittal of respondent/accused
for the offence punishable under Section 138 of
Negotiable Instrument Act, 1881 (for short 'N.I. Act'), the
complainant has filed this appeal under Section 378(4) of
Cr.P.C.
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 for a
sum of Rs.4 lakhs due to the complainant, accused has
issued cheque dated 14.08.2012 drawn on State Bank of
Mysuru, Puttur Branch with an assurance of prompt
payment. When complainant presented the cheque for
collection through his account in Corporation Bank, Darbe
Branch, Puttur, it was dishonoured for want of sufficient
funds as per memo dated 17.08.2012 of State Bank of
Mysuru and dated 21.08.2012 of Corporation Bank. In
this regard complainant got issued legal notice dated
25.08.2012. Though duly served with notice, accused has
neither paid the amount due nor sent any reply and
hence, the complaint.
4. After due service of summons, accused
appeared through counsel and contested the matter.
5. He pleaded not guilty and claimed trial.
6. In order to prove the allegations against
accused, complainant has examined himself as PW-1 and
one witness as PW-2. He has relied upon Ex.P1 to 5 and
Ex.C1.
7. During the course of statement under Section
313 Cr.P.C, accused has denied the incriminating
evidence led by the complainant.
8. In fact accused has stepped into the witness
box and given evidence as DW-1 and examined one
witness as DW-2. He has relied upon Ex.D1.
9. The trial Court convicted the accused and
sentenced him to undergo imprisonment for one year and
pay fine of Rs.8 lakhs which is double the amount of
cheque with default sentence.
10. Aggrieved by the same, accused filed appeal
before the Sessions Court in Crl.A.No.5022/2017. Vide
impugned judgment and order, it came to be allowed and
the judgment and order of the trial Court was set aside
and thereby accused was acquitted.
11. Aggrieved by the same, complainant is before
this Court contending that impugned judgment and order
of the Sessions Court is illegal and improper. It ought not
to have interfered with the well reasoned judgment and
order of the trial Court. The observation of the Sessions
Court that complainant has suppressed true facts by not
whispering the date of loan transaction, is contrary to the
legal presumption under Section 139 of N.I.Act. During
the cross-examination of PW-1 the counsel for accused
has elicited the source of income of the complainant. The
Sessions Court has given undue importance to certain
statements of complainant. It is required to be
appreciated in the light of entire evidence.
11.1 The Sessions Court has failed to appreciate
the fact that the repayment of Rs.8 lakhs is altogether a
different transaction. The complainant was not cross-
examined with regard to Ex.D1. It has erred in doubting
the hand loan transaction pertaining to Ex.P1, when
accused was still due of Rs.5 lakhs as per Ex.D1. The
accused has not rebutted the presumption under Section
139 of N.I. Act. There were no justifiable grounds for the
Sessions Court to interfere with well reasoned judgment
of the trial Court and pray to allow the appeal, set aside
the impugned judgment and order of the Sessions Court
and restore that of the trial Court.
12. In support of his arguments the learned
counsel for complainant has relied upon the following
decisions:
(i) Anil Hada Vs. India Acrylic Ltd. (Anil Hada)1
(ii) K.N.Beena Vs. Muniyappa (K.N.Beena)2
AIR 2000 145 SC
AIR 2001 SC 2895
(iii) L.Mohan Vs. Mohan Naidu (L.Mohan)3
(iv) M/s MMTC and Anr. Vs. Medchl Chemicals and
Pharma (P) Ltd and Anr. (M/s MMTC Ltd)4
(v) H.Maregowda and etc Vs. Thippamma and Ors.
(H.Maregowda)5
(vi) Rohitbhai Jivanlal Patel Vs. State of Gujarat
and Anr. (Rohitbhai)6
13. On the other hand learned counsel for accused
has supported the impugned judgment and order by
contending that it is not in dispute that accused offered
to sell certain land to complainant and entered into sale
agreement dated 20.06.2011 and paid a sum of Rs.8
lakhs to the accused as advance. However, for some
reason, the transaction did not went through and
therefore a cancellation agreement dated 20.12.2011
was executed between the parties and as per the same,
accused was required to return Rs.8 lakhs on or before
10.03.2012. However, he could pay only Rs.1 lakh on
10.03.2012. He has paid the balance in instalments as
detailed in the end of Ex.D1. As there was delay in
Laws(Kar) 2004(1) 52
AIR 2002 SC 182 SC
AIR 2000 Kar 169
AIR 2001 SC 2895
paying the balance, complainant took two cheques i.e.,
one for Rs.4 lakhs and the other for Rs.1 lakh from the
accused.
14. Learned counsel for accused would submit
that though accused made delayed payment of balance
amount, in the meanwhile complainant presented the
subject cheque and after issuing the legal notice filed the
complaint. After repayment of the entire amount due
under the agreement, complainant failed to return the
cheques. Accused has not borrowed Rs.4 lakhs from the
complainant and Ex.P1 was not issued towards
repayment of the alleged loan. However, the trial Court
failed to appreciate the oral and documentary evidence
placed on record in right perspective and convicted the
accused. The Sessions Court rightly set aside the same
and sought for dismissal of this appeal also.
15. Heard arguments and perused the record.
16. Having regard to the fact that accused admit
that the cheque in question is drawn on his account
maintained with his banker and bears his signature, the
presumption under Section 139 of N.I. Act is attracted in
favour of the complainant. It would place the initial
burden on the accused to prove that it was not issued for
repayment of any legally recoverable debt or liability, but
on the other hand to establish the circumstances in which
the cheque has reached the hands of complainant, after
which the burden would shift on the complainant to prove
his case. Of course, it is sufficient for the accused to
probabalise his defence, whereas the complainant is
required to prove his case beyond reasonable doubt.
17. However, in John K.Abraham Vs. Simon C.
Abraham & Anr (John K.Abraham)7, 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:
(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
(2014) 2 SCC 236
(iii) The accused was bound to make payment
as had been agreed while issuing cheque in
favour of the complainant.
18. In Tedhi Singh Vs Narayan Das Mahant
(Tedhi Singh)8, the Hon'ble Supreme Court held that
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, if during the
course of trial accused has taken up such defence, then it
is necessary for the complainant to prove his financial
capacity, when he allegedly advanced the amount and
towards repayment of it, the accused has issued the
cheque.
19. In fact, in APS Forex vs Shakti International
Fashion Linkers Pvt. Ltd (APS Forex)9, the Hon'ble
Supreme Court held that when accused rises issue of
financial capacity of complainant in support of his
probable defence, despite presumption in favour of
2022 SCC OnLine SC 302
(2020) 12 SCC 724
complainant regarding legally enforceable debt under
Section 139, 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. Though accused admit the issue of cheque, he
has disputed that it was issued towards repayment of
hand loan of Rs.4 lakhs. On the other hand he has
contended Ex.P1 and one more cheque for Rs.1 lakh was
issued by way of security for repayment of amount due
under Ex.D1 cancellation agreement and in fact before
receipt of legal notice, he has paid Rs.3 lakhs and after
receipt of legal notice he has paid balance of Rs.5 lakhs,
but complainant failed to return the cheques and utilizing
Ex.P1 has filed this complaint.
21. Having regard to the peculiar facts in the
present case and keeping the ratio in the above decisions
in mind, it is necessary to examine whether the
complainant has proved that apart from Rs.8 lakhs due
from the accused under Ex.D1, he has availed hand loan
of Rs.4 lakhs and complainant had financial capacity to
lend the said amount to the accused and has proved the
same by producing relevant documents.
22. Perusal of cross-examination of PW-1 and
DW-1 prove the fact that though accused and
complainant entered into a sale agreement dated
20.06.2011, whereby accused agreed to sell immovable
property to the complainant for a sum of Rs.15,15,000/-
and received Rs.8 lakhs by way of advance. However, the
said transaction did not went through and they entered
into a cancellation agreement dated 20.12.2011 at
Ex.D1, whereby accused agreed to refund Rs.8 lakhs on
or before 10.03.2012. However, as per the endorsement
at the end of the document, he has repaid the said
amount in instalments. Perusal of Ex.D1 indicate that the
accused had agreed to repay the amount within
10.03.2012. However, on that day he has paid only Rs.1
lakh. The second instalment is paid on 03.04.2012. Thus,
except the first payment, the remaining four payments
are subsequent to 10.03.2012.
23. It is relevant to note that in the complaint,
absolutely there are no averments as to when accused
approached complainant and for what purpose he availed
hand loan. All that is pleaded is towards repayment of
Rs.4 lakhs due accused has issued the subject cheque.
However, during his cross-examination the complainant
has deposed that accused availed loan of Rs.4 lakhs from
him on 28.07.2012, which means that as on that date
accused was still due in a sum of Rs.5 lakhs as per
Ex.D1. When the accused was still due to him such a
huge sum of money and he has failed to comply with the
promise made in Ex.D1, it creates doubt why would
complainant still extend him hand loan of Rs.4 lakhs.
24. On this aspect the complainant has stated that
as he and accused were in the habit of lending to and
borrowing from each other, he obliged accused and
extended financial assistance in a sum of Rs.4 lakhs to
him. However, complainant has not stated what was the
urgency for the accused to borrow Rs.4 lakhs from him
when he was still due in a sum of Rs.5 lakhs to the
complainant. On the other hand the explanation of the
accused is that since he failed to repay Rs.8 lakhs within
10.03.2012 and on that day he was able to pay only Rs.1
lakh and on 03.04.2012 paid Rs.2 lakhs and was still due
in a sum of Rs.5 lakhs, complainant took two cheques for
Rs.4 lakhs and Rs.1 lakh from him which includes the
cheque at Ex.P1.
25. However, it is still open to the complainant to
prove that despite accused was due in a sum of Rs.5
lakhs, having regard to the special relationship between
them, he extended hand loan of Rs.4 lakhs. In order to
prove the same, it is necessary for the complainant to
establish his financial capacity and show that as on
28.07.2012, he was in possession of cash of Rs.4 lakhs
and paid the same to the accused.
26. With regard to his financial capacity, the
complainant has deposed that he is running a business in
the name and style of Auto Links and also having
agriculture property. He has stated that he is not having
a separate account for Auto Links, but maintaining an
account in his individual capacity. He has deposed that if
he gets Rs.50,000 - 1,00,000/- from his Auto Links
business, he credit the same to his account and if his
receipts are less than Rs.50,000/-, he invest the same in
the business. At page No.2 of his cross-examination, he
has specifically stated that out of the business proceeds
of Auto Links, he paid Rs.3.25 lakhs and from agricultural
income he paid Rs.75,000/-. However, the complainant
has not produced his account extract or any other
document to prove his income through the Auto Links
business and agriculture.
27. Now coming to the decisions relied upon by
the learned counsel for appellant/complainant, in
Rohitbhai, the Hon'ble Supreme Court summarized the
principles and modalities regarding drawing of
presumption under Section 118 and 139 of N.I. Act.
27.1 In L.Mohan, on facts the Co-ordinate Bench
of this Court held that accused failed to rebut the
presumption.
27.2 The matter in M/s MMTC Ltd, arose out of
quashing of complaint filed for dishonour of cheque. On
facts, the Hon'ble Supreme Court held that for the reason
that there were no specific averments in the complaint
with regard to subsisting liability the High Court was not
justified in quashing the complaint.
27.3 In K.N.Beena, on facts the Hon'ble
Supreme Court held that mere denial of the transaction
in the reply notice was not sufficient and accused was
required to lead evidence. However, in Rangappa Vs.
Sri Mohan10, the Hon'ble Supreme Court held that to
rebut the presumption the accused may rely on material
placed on record by the complainant or may also lead
independent evidence. In fact in the present case
accused has given evidence as DW-1 and also examined
DW-2.
27.4 The matter in H.Maregowda, arose out of
a decree based on promissory note and on facts Co-
ordinate Bench of this Court held that the defendant
(2010) 11 SCC 441
cannot escape from his liability on the ground that he
had issued a blank pronote. This decision is not
applicable to the case on hand.
27.5 So far as Anil Hada is concerned, it was a
matter arising out of cheque issued on behalf of the
company and on facts the Hon'ble Supreme Court held
that since the company was wound up, non arraigning
the company was not fatal. In fact in Aneeta Hada Vs.
Godfather Travels and Tours Pvt. Ltd. (Aneeta Hada)11,
the Hon'ble Supreme Court held that Anil Hada is not a
ratio, but confined to its fact. Anil Hada is not applicable
to the case on hand.
28. Thus, as held in John Abraham, Tedhi
Singh and APS Forex, the complainant has failed to
prove his financial capacity and as such the burden is not
shifted on the accused to prove his defence. However,
through the cross-examination of complainant and also
his evidence, the accused has probabalised his defence
that the subject cheque and another cheque for Rs.1 lakh
(2012) 5 SCC 661
was given by him regarding the transaction at Ex.D1 and
despite he repaying the entire amount of Rs.8 lakhs, the
complainant has chosen to prosecute him.
29. Appreciating the oral and documentary
evidence placed on record, the trial Court has rightly held
that complainant has failed to prove his financial capacity
and dismissed the complaint. The findings of the trial
Court are not perverse, calling for interference by this
Court. After re-appreciation of oral and documentary
evidence placed on record, this Court does not find any
justifiable grounds to interfere with the well reasoned
judgment and order of the trial Court. In the result,
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
20.01.2018 in Crl.A.No.5022/2017 on the
file of V Addl.District and Sessions Judge,
D.K.Mangaluru, Sitting at Puttur D.K, is
confirmed.
(iii) The Registry is directed to send back trial
Court records along with copy of this
judgment forthwith.
Sd/-
JUDGE
RR
