Karnataka High Court

Sri Nandeesh G vs Sri Giridhar G on 15 February, 2024

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                                         CRL.A.No.264 of 2015


IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 15TH DAY OF FEBRUARY, 2024

                           BEFORE
        THE HON'BLE MR JUSTICE ANIL B KATTI
          CRIMINAL APPEAL No.264 OF 2015(A)

BETWEEN:

SRI. NANDEESH .G,
S/O GANAPATHY,
AGED ABOUT 45 YEARS,
RESIDING AT NO.645, 10TH 'A' CROSS,
WEST OF CHORD ROAD, 2ND STAGE,
MAHALAKSHMIPURAM,
BENGALURU-560 086.
                                                  ...APPELLANT
(BY SMT. TAMILARASI .K, ADVOCATE FOR
    SRI. VIJAY KUMAR .K, ADVOCATE)

AND:

1.     SRI. GIRIDHAR .G,
       S/O GANGADHARAIAH,
       AGED ABOUT 42 YEARS,
       NO.740, 2ND FLOOR, 4TH E-MAIN,
       10TH CROSS, 2ND STAGE,
       WEST OF CHORD ROAD,
       MAHALAKSHMIPURAM,
       BENGALURU-560 086.

2.     SRI. K.H. MADHUSUDHAN,
       S/O K.M. HANUMAIAH,
       AGED ABOUT 43 YEARS,
       RESIDING AT NO.4329, 2ND CROSS,
       13TH MAIN, 'A' BLOCK,
       SUBRAMANYANAGAR,
       BENGALURU-560 021.
                                              ...RESPONDENTS
(BY SRI. B.S. NAGESH, ADVOCATE FOR R1 & R2)

    THIS APPEAL IS FILED UNDER SECTION 378(4) OF THE
CODE OF CRIMINAL PROCEDURE, PRAYING TO SET ASIDE THE
                                  -2-
                                               CRL.A.No.264 of 2015


ORDER DATED:2.2.2015, PASSED BY THE XIX ACMM,
BENGALURU,    IN    C.C.NO.17035/12-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:

                            JUDGMENT

Appellant/complainant feeling aggrieved by judgment

of Trial Court on the file of XIX Additional Chief

Metropolitan Magistrate, Bengaluru in C.C.No.17035/2012,

dated 02.02.2015 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 arise for

consideration:

1) Whether the impugned judgment of Trial Court in acquitting the accused 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

complainant and accused are friends for several years.

Both the accused were running business under name and

style "M/s. Sunshine Distributors". Accused have availed

loan of Rs.3,30,000/- from complainant in the month of

May 2011 to meet their urgent business requirements

agreeing to pay the same within the period of ten months

on or before 28.03.2012. Accused Nos.1 and 2 have issued

post dated cheque bearing No.036875 dated 28.03.2012

drawn on State Bank of Mysore West of Chord Road,

Bengaluru Ex.P.1. Complainant presented the said cheque

through his banker and same was dishonoured vide bank

endorsement dated 02.04.2012 Ex.P.2 as "Funds

Insufficient". Complainant issued demand notice dated

18.04.2012 Ex.P.3 through RPAD and postal receipt are

produced at Exs.P.4 and 5. The notice issued to accused

No.1 returned on 20.04.2012 with endorsement

"Unclaimed" and returned to sender. The notice sent to

accused No.2 was duly served on 19.04.2012 vide

acknowledgement card Ex.P.6. The undelivered postal

cover is produced at ExP.7 and Ex.P.7(a) is the notice

containing therein. Accused No.2 has denied his liability to

pay the amount covered under cheque Ex.P.1 and the

partnership firm "M/s. Sunshine Distributors" was

dissolved and he is separated from the said business. The

said partnership business was continued with induction of

new partner and reconstitution deed came to be executed

on 30.12.2006. The cheque in question Ex.P.1 was issued

in 2006 in respect of some other transaction and the same

has been misused to file this complaint.

6. If the above referred documents are perused

and appreciated with the oral testimony of PW.1, then it

would go to show that complainant has discharged initial

burden of proving the cheque Ex.P.1 was issued by

accused Nos.1 and 2 for lawful discharge of debt.

Complainant has complied necessary legal requirements in

terms of Section 138(a) to (c) of Negotiable Instruments

Act, 1881(hereinafter for brevity referred to as "N.I.Act')

and the complainant has filed complaint within a period of

one month in terms of Section 142(1)(b) of N.I.Act from

the date of accrual of cause of action. Therefore, statutory

presumption will have to be drawn in favour of

complainant.

7. 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.

8. 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.

9. Now it is up to the accused to rebut statutory

presumption available in favour of complainant. Accused

apart from relying on the evidence produced by

complainant, also relied on the evidence of DW.1 and 2,

further got marked documents Exs.D.1 and 2. Whether,

the said material evidence placed on record by accused

would be sufficient rebuttal evidence to displace statutory

presumption available in favour of complainant or not has

to be decided.

10. It is the specific defence of accused in the reply

dated 02.05.2012 to the demand notice issued by

complainant Ex.P.3 (reply notice is not marked in the

evidence). However, complainant has admitted accused

No.2 having given reply to the demand notice. Otherwise

also the cross-examination of PW.1 reveals that accused

No.2 has made specific defence that due to differences

between him and another partner Giridhar, the partnership

firm M/s. Sunshine Distributors was dissolved and he has

separated from the said business. The said Partnership

firm was continued by executing reconstitution deed dated

30.12.2006 by introducing the w/o Giridhar i.e.,

R Leelavathi and she was inducted as new partner. The

blank signed cheque was issued with respect to some

other transaction in the year 2006 and no any loan was

availed from complainant in the month of May 2012.

Further, he denied the issuance of cheque dated

28.05.2012 for lawful discharge of any debt. In support of

such contention, DW.1 Giridhar has deposed to the effect

that himself and accused No.2 were doing business under

the name and style M/s. Sunshine Distributors and

partnership firm came into existence under the partnership

deed dated 01.04.1996, further they were carrying

business of pharmaceuticals. During the year 2006

accused No.2 expressed his intention to retire from the

partnership firm, accordingly on 30.12.2006 reconstitution

deed was executed with the induction of new partner R

Leelavathi. Accused No.2, Madhusudhan retired from the

firm after settling all the accounts. The reconstitution of

partnership was intimated to the banks and trade license

was also changed by deleting the name of accused No.2

with the induction of new partner. The partnership

between accused Nos.1 and 2 ended in the year 2006 and

all the cheques and bank documents were surrendered

back to the bank. He further deposed to the effect that

complainant is a known person, he must have somehow

got his hands over the signed cheques of himself and

accused No.2 prior to 2006 and the same has been

misused to file this false complaint.

11. Accused No.2 got himself examined as DW.2

and has deposed to the effect that, he has retired from the

partnership firm in the year 2006 and accordingly

reconstitution deed is executed Ex.D.1. The said

partnership firm is being continued with accused No.1 and

his wife R Leelavathi. On receipt of demand notice from

complainant he has given reply. Learned counsel for

complainant though has subjected both these witnesses to

cross-examination nothing worth material has been

elicited in their cross-examination to discredit their

evidence regarding reconstitution of partnership deed

dated 30.12.2006 Ex.D.2. The wholesale license Ex.D.1

would go to show that in pursuance of reconstitution of

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partnership was changed with the induction of new partner

Smt.R Leelavathi with accused No.1. Therefore, from the

said evidence on record, it is evident that accused No.2

was no more a partner of M/s. Sunshine Distributors with

effect from 30.12.2006. Therefore, it is now up to the

complainant to offer valid explanation as to how accused

Nos.1 and 2 could issue cheque in question Ex.P.1 dated

28.03.2012 for the alleged lawful discharge of debt of

Rs.3,30,000/- said to have been taken as hand loan on

25.05.2011 even after reconstitution of partnership deed

Ex.D.2.

12. There is long time gap between reconstitution

deed of partnership Ex.D.2 dated 30.12.2006 and the date

of issuance of cheque on 28.03.2012 of more than five

years. On perusal of the cheque, it would go to show that

the figure "19" or "10" is scored and behind it, the date

28.03.2012 is written. It means that old cheque leave is

being used for alleged loan transaction in the year of

2011 for issuing alleged post dated cheque dated

28.03.2012. Complainant in para 3 of the complaint and

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also in his evidence has contended that himself and

accused Nos.1 and 2 are the friends for several years and

they were doing business under the name and style M/s.

Sunshine Distributors. Therefore, naturally complainant

even according to him being best friend of accused was

supposed to know that accused No.2 is not associated with

M/s. Sunshine Distributors in view of the reconstitution

deed of partnership dated 30.12.2006 Ex.D.2. However,

during cross-examination of PW.1 denies that he was

aware of reconstitution of partnership deed dated

30.12.2006 and accused No.2 is disassociated himself

from partnership firm M/s. Sunshine Distributors. PW.1

during cross-examination admits about reply given by

accused No.2 and stated that the partnership firm was

dissolved and the partnership firm is being continued with

the induction of new partner R Leelavathi w/o accused

No.1. However, in spite of such knowledge of complainant

after receipt of the reply did not made any enquiry

regarding issuance of cheque Ex.P.1 for lawful discharge of

debt on 28.03.2012 Ex.P.1. Complainant in spite of the

said knowledge also did not plead anything to that effect

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in his complaint averments to establish the nexus between

accused Nos.1 and 2 taking loan on 25.05.2011 and

issuance of post dated cheque dated 28.03.2012 Ex.P.1.

The silence of complainant in this regard and offering no

any explanation to the reply given by accused No.2 would

create serious doubt that cheque in question dated

28.05.2012 Ex.P.1 was issued for lawful discharge of debt.

13. Learned counsel for appellant in support of his

contention that vicarious liability arises in issuing cheque

Ex.P.1 only when the firm commits the offence as primary

offender relied on the judgment of Hon'ble Apex Court in

Dilip Hariramani Vs. Bank of Baroda reported in

2022 LiveLaw (SC) 457, wherein it has been observed

and held in para 7 as under:

"Sub-section (1) to Section 141 of the NI Act states that where a company commits an offence, every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business, as well as the company itself, shall be deemed to be guilty of the offence. The expression 'every person' is wide and comprehensive enough to include a

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director, partner or other officers or persons. At the same time, it follows that a person who does not bear out the requirements of 'in charge of and responsible to the company for the conduct of its business' is not vicariously liable under Section 141 of the NI Act. The burden is on the prosecution to show that the person prosecuted was in charge of and responsible to the company for conduct of its business. The proviso, which is in the nature of an exception, states that a person liable under subsection (1) shall not be punished if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. The onus to satisfy the requirements and take benefit of the proviso is on the accused. Still, it does not displace or extricate the initial onus and burden on the prosecution to first establish the requirements of sub-section (1) to Section 141 of the NI Act. The proviso gives immunity to a person who is otherwise vicariously liable under sub- section (1) to Section 141 of the NI Act."

In view of the principles enunciated in this judgment

of Hon'ble Apex Court, the onus is on complainant to

prove that accused Nos.1 and 2 were partners as on the

date of issuance of cheque dated 28.03.2012 Ex.P.1.

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14. In the present case accused by virtue of oral

evidence of DWs.1 and 2 and the documents at Exs.D.1

and 2 have probabilised their defence that cheque in

question Ex.P.1 dated 28.03.2012 was not issued for the

lawful discharge of debt related to the partnership firm.

The partnership firm M/s. Sunshine Distributors was

dissolved, since the accused No.2 has retired from the

partnership firm and reconstitution deed of partnership

came to be executed on 30.12.2006 Ex.D.2. The wife of

accused No.1 R Leelavathi was inducted as a new partner

in place of accused No.2. The above referred evidence on

record, would go to show that the intimation of

reconstitution of partnership is intimated to the bank and

the partners of reconstitution partnership firm continued

the partnership firm M/s. Sunshine Distributors. Therefore,

the accused were not vicariously liable to pay the amount

covered under cheque Ex.P.1, representing the partnership

firm M/s. Sunshine Distributors, since the same has been

dissolved on 30.12.2006 much prior to for more than five

years as on the date of issuance of cheque Ex.P.1 on

28.03.2012.

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15. Learned counsel for complainant has

vehemently argued that the very same account on which

cheque Ex.P.1 was drawn is still being operated by

reconstituted partners and accused No.1 continued to be

the partner of M/s. Sunshine Distributors, as such both the

accused are vicariously liable to pay the amount covered

under the cheque Ex.P.1.

16. In the present case even according to complaint

allegations and the evidence of PW.1, accused Nos.1 and 2

were alleged to have availed loan of Rs.3,30,000/- from

complainant to meet their urgent business requirements.

Accused being partners of M/s. Sunshine Distributors

issued the cheque dated 28.03.2012 Ex.P.1. In view of the

evidence of DWs.1 and 2, the document at Ex.D.2

reconstitution of partnership with effect from 31.12.2006

and the change in the license of the firm is also effected

Ex.D.1 wholesale license. Therefore, the partnership firm

cannot avail loan from complainant to meet the urgent

business requirement in the month of May 2011 which

they agreed to have repay within ten months and in

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discharge of debt cheque Ex.P.1 was issued on

28.03.2012. The said inference has to be drawn in view of

the dissolution of the partnership firm as on 30.12.2006

Ex.D.2. Therefore, the partnership firm was having any

legally enforceable debt as on the date of issuance of

cheque dated 28.03.2012 Ex.P.1 has not been proved by

complainant out of the evidence placed on record. On the

other hand, the accused have probabilised their defence

that the cheque issued for earlier transaction has been

used after more than five years on the false claim made

by complainant. The standard of proof that is required to

be proved by accused is not beyond reasonable doubt, but

on the contrary it is on the basis of preponderance of

probability. In this context of the matter, it is profitable to

refer the latest judgment of the Hon'ble Supreme Court in

Rajaram S/o Sriramulu Naidu (Since Deceased)

through L.Rs. Vs. Maruthachalam (Since deceased)

through LRs. reported in 2023 LiveLaw (SC) 46

wherein it has been observed and held that :

"The standard of proof for rebutting the presumption is that of preponderance of

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probabilities- once the execution of cheque is admitted, Section 139 of the N.I Act mandates a presumption that the cheque was for the discharge of any debt or other liability - The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities- To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence- inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely."

In view of the principles enunciated in this judgment

and the above referred evidence placed on record by

accused, it would go to show that accused have

probabilised their defence that cheque in question Ex.P.1

was not issued for lawful discharge of debt.

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17. The Trial Court has rightly appreciated the oral

and documentary evidence placed before it and has

arrived to a just and proper conclusion in holding that the

statutory presumption available in favour of complainant

stood rebutted out of the evidence of DWs.1 and 2 and the

material elicited in the cross-examination of PW.1. The