Karnataka High Court
Sri Laxmi Finance & Investments vs B Mahalinga Shetty on 13 February, 2024
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CRL.A.No.808 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE ANIL B KATTI
CRIMINAL APPEAL No.808 OF 2013(A)
BETWEEN:
SRI. LAXMI FINANCE & INVESTMENTS,
CHITRAPADY, POST SALIGRAMA,
UDUPI TALUK,
REPRESENTED BY ITS WORKING PARTNER,
MANJUNATHA MADHYASTHA,
AGED ABOUT 70 YEARS,
S/O LATE ANANTHAYYA MADHYASTHA,
RESIDENT OF KARKADA VILLAGE,
UDUPI TALUK-576 101.
...APPELLANT
(BY SRI. MAHESH KIRAN SHETTY .S, ADVOCATE)
AND:
B. MAHALINGA SHETTY,
AGED ABOUT 67 YEARS,
S/O PADMAYYA SHETTY,
RESIDENT OF BELUR VILLAGE,
DEVASTHANABETTU POST,
KUNDAPURA TALUK-576 101.
...RESPONDENT
(BY SRI. S.N. BHAT, ADVOCATE)
THIS APPEAL IS FILED UNDER SECTION 378(4) OF CODE OF
CRIMINAL PROCEDURE, PRAYING TO SET ASIDE THE ORDER
DATED:12.04.2013 PASSED BY THE ADDL. CIVIL JUDGE AND
JMFC, KUNDAPURA IN C.C.NO.2166/2007-ACQUITING THE
RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I.
ACT.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
07.02.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
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CRL.A.No.808 of 2013
JUDGMENT
Appellant/complainant feeling aggrieved by judgment
of Trial Court on the file of Addl.Civil Judge and JMFC,
Kundapura in C.C.No.2166/2007, dated 12.04.2013
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, so also the impugned
judgment, the following points arise for consideration:
1) Whether the impugned judgment under appeal
passed by Trial Court for the offence punishable
under Section 138 of N.I.Act 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
accused approached complainant and borrowed hand loan
of Rs.12,500/-. Accused in order to discharge legally
enforceable debt issued cheque bearing No.975294 for
Rs.12,500/- dated 19.04.2007 drawn on Canara Bank,
Thekkatte Branch Ex.P.1. Complainant presented the said
cheque for collection through his banker, Kota C.A. Bank
Ltd., and the same was dishonoured vide bank
endorsement Ex.P.2 as "Payment Stopped By The Drawer"
dated 27.04.2007. The same was communicated to the
complainant through his banker on 07.05.2007 Ex.P.3.
Complainant issued demand notice dated 09.05.2007
Ex.P.6 through RPAD and the same is duly served to
accused on 14.05.2007 Ex.P.4. Accused has replied to the
said notice dated 22.05.2007 Ex.P.5 and denied the
liability covered under cheque Ex.P.1.
6. The defence of accused in the reply dated
22.05.2007 Ex.P.6 to the demand notice issued by
complainant is that, he has issued blank signed cheque as
a security for the loan borrowed from complainant about
ten years back. Accused has repaid entire loan amount to
complainant. However, complainant did not return blank
signed cheque and postponed to return the same on one
or the other pretext. On receipt of demand notice,
accused came to know that the said cheque has been
misused by complainant to file this false case. Accused in
order to probabilise his defence relied on the material
produced by complainant and document confronted
Ex.D.1. Accused has not chosen to lead his defence
evidence.
7. In this context of the matter, it is useful to refer
the judgment of Hon'ble Apex Court in Basalingappa Vs.
Mudibasappa reported in 2019 Cr.R. page No. 639 (SC),
wherein it has been observed and held that:
"Presumption under Section 139 is
rebuttable presumption and onus is on accused
to raise probable defence. Standard of proof
for rebutting presumption is that of
preponderance of probabilities. To rebut
presumption, it is open for accused to rely on
evidence laid by him or accused can also rely
on materials submitted by complainant in order
to raise a probable defence. Inference of
preponderance of probabilities can be drawn
not only from materials brought on record by
parties, but also by reference to circumstances
upon which they rely. It is not necessary for
accused to come in witness box in support of
his defence. Section 139 imposed an
evidentiary burden and not a presumptive
burden".
8. The Hon'ble Apex Court in it's latest judgment
in Rajesh Jain v/s Ajay Singh reported in 2023 SCC
OnLine SC 1275, wherein it has been observed and held
that, once issuance of cheque with signature of accused is
either admitted or proved then, statutory presumption will
have to be drawn in favour of the complainant.
In view of the principles enunciated in both the
aforementioned judgment, it is evident that the accused to
probabilise his defence can rely on his own evidence or
also can rely on material submitted by complainant. It is
not necessary for the accused to step into witness box to
probabilise his defence.
9. Complainant in the entire complaint averments
did not plead anything about the loan borrowed by
accused on executing on demand promissory note.
However, during course of his evidence produced loan
application of accused for grant of loan of Rs.5,000/-
payable within 3 months Ex.P.7. The statement showing
the details of condition of loan is at Ex.P.8, on demand
promissory note Ex.P.9. These documents Exs.P.7 to 9
would go to show that accused availed loan of Rs.5,000/-
on 31.08.1996. There is no reference of these documents
having been executed by accused either in the complaint
averments or in the demand notice issued by complainant
Ex.P.6 dated 09.05.2007. Complainant has not pleaded
any other transaction other than one stated in Exs.P.7 to 9
on 31.08.1996. PW.1 admits in his cross-examination
regarding the confronted letter of complainant and the
same is marked as Ex.D.1. On perusal of the same, it
would go to show that the loan availed by accused on
31.08.1996 is completed. However, PW.1 denies that
accused has repaid entire loan amount. The said denial is
contrary to the own letter of the complainant Ex.D.1.
Complainant has not produced any documents to show
that as on the date of issuance of cheque Ex.P.1 dated
19.04.2007 accused was in due of Rs.12,500/-. Therefore,
complainant has failed to establish nexus between loan
transaction on 31.08.1996 vide Exs.P.7 to 9 and Ex.D.1
with the issuance of cheque for lawful discharge of the
said loan Ex.P.1.
10. Accused has also contended that the claim of
complainant to recover the amount of loan dated
31.08.1996 on the basis of on demand promissory note
Ex.P.9 is time-barred. Therefore, as on the date of
issuance of cheque on 19.04.2007 there was no any
legally enforceable debt. The time fixed under on demand
promissory note Ex.P.9 for repayment of the loan is three
months. The loan application reveals about three months
time sought for repayment of the loan. Therefore, the
period of three months from 31.08.1996 will come to an
end on 01.12.1996. If there is any balance of amount
recoverable under on demand promissory note Ex.P.9 is
within three years from 01.12.1996 and the period of
three years has come to an end on 01.12.1999. Whereas
the cheque in question is issued on 19.04.2007 after
nearly about seven and half years from 01.12.1999 to
19.04.2007 (7 years 4 months 19 days). Therefore, the
claim of complainant to enforce any amount due under
promissory note Ex.P.9 was already time-barred.
Therefore, as on the date of issuance of cheque dated
19.04.2007 there was no any legally enforceable debt.
11. Learned counsel for complainant has argued
that issuance of cheque Ex.P.1 itself is acknowledgement
of debt and the period of three years commence from the
date of issuance of cheque. In support of such contention
reliance is placed on the judgment of Hon'ble Apex Court
in K.Hymavathi Vs. State of Andhra Pradesh and
another reported in AIR 2023 Supreme Court 4369,
wherein it has been observed and held that:
" In respect of promissory note payable at a
fixed time, the period of limitation being 3 years
would begin to run when fixed time expires"
In the said case before the Hon'ble Apex Court the
cheque was issued within a period of three years.
Therefore, the principles enunciated in this judgment has
no application to the facts of the present case.
12. Learned counsel for accused in support of his
contention that time-barred debt cannot be enforced as it
is not legally recoverable debt as on the date of issuance
of cheque Ex.P.1 relied on the Co-ordinate Bench
Judgment of this Court in Sri.Nandi Greens Agro Farms
and Developers(Private) Limited Vs.
Sri.K.S.Jagannathan in Crl.A.No.226/2015, wherein it
has been observed and held at para 3 as under:
" 3. It is apparent that if any money was to
be recovered under the transaction of the year
2008, time to recover the same would have expired
in the year 2011 and any acknowledgement of such
debt beyond that period would not also save the
limitation period. Therefore, the court below having
held that there was no legally enforceable liability,
may be in order. There is no merit in this appeal.
The same is rejected".
On the same principle of time-barred debt, it is profitable
to refer the judgment of Hon'ble Delhi High Court on
similar facts involved in this case in Vijay Polymers Pvt.
Ltd., and another Vs. Vinnay Aggarwal reported in
2009 SCC Online Del. 1075, wherein it has been
observed and held as under:
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"Section 138 of N.I.Act-Limitation Act 1963-
Section 18-Dishonour of cheque-Complaint-
Cheques issued in lieu of a debt which was not
legally recoverable-Acknowledgement, if any, must
be there before period of limitation is over.
Magistrate was right in coming to the conclusion,
that it has not been proved that the dishonour of
the cheque was in relation to a legally enforceable
debt or liability in law-Dishonoured cheque
admittedly issued after five years-Debt was not
legally enforceable at the time of issuance of
cheque-Proceedings not maintainable".
In view of the principles enunciated in the aforementioned
two judgments, it is evident that the time-barred debt
does not fall within the ambit of legally enforceable debt in
terms of Section 138 of N.I.Act. If at all there is any
acknowledgement of debt then such acknowledgement
must be within period of limitation. Therefore, the
contention of learned counsel for complainant that
issuance of cheque Ex.P.1 itself is an acknowledgement of
time-barred debt cannot be legally sustained.
13. In the present case the transaction covered
under on demand promissory note Ex.P.9 dated
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31.08.1996, the time fixed for repayment of the loan is
three month, the same will come to an end as on
01.12.1996. Thereafter, within a period of three years
the right to recover money due under promissory note
under Ex.P.9 should have been exercised. Complainant
has not produced any documents to show that accused
has acknowledged the debt within a period of three years.
If no any such documents are executed by accused
acknowledging the debt then the claim of complainant
based on Ex.P.1 is seeking to enforce the time-barred debt
cannot be legally sustained. The claim of complainant is
based on the time-barred debt. Therefore, the contention
of learned counsel for complainant that issuance of cheque
Ex.P.1 itself amounts to acknowledgement of time-barred
debt cannot be accepted in view of the principles
enunciated in the aforementioned judgment.
14. The Trial Court has rightly appreciated the
evidence on record and was justified in holding that time-
barred debt does not fall within the ambit of legally
enforceable debt. Therefore, the complainant has failed to
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establish that issuance of cheque Ex.P.1 by accused was
for lawful discharge of debt. The said findings recorded by
Trial Court is based on material evidence on record and
the same does not call for interference by this Court.
Consequently, proceed to pass the following:
ORDER
Appeal filed by appellant/complainant is hereby
dismissed as devoid of merits.
Registry to send back the records to Trial Court with
a copy of this order.
Sd/-
JUDGE
GSR
