Karnataka High Court

M/S Om Promotions & Advertising vs Mr Mukesh M Jani on 21 February, 2024

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                                   CRL.A.No.682/2014


  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

      DATED THIS THE 21st DAY OF FEBRUARY, 2024

                       BEFORE

        THE HON'BLE MR JUSTICE ANIL B KATTI

         CRIMINAL APPEAL No.682 OF 2014(A)


BETWEEN:

M/s. OM PROMOTIONS & ADVERTISING
A PARTNERSHIP FIRM REGISTERED
UNDER THE INDIAN PARTNERSHIP ACT
HAVING ITS OFFICE AT
NO.625, 5TH MAIN ROAD
OMBR LAYOUT
BANASWADI
BANGALORE 560 043.

REPRESENTED BY ITS PARTNER
Mr. OM PRAKASH NEMANI
                                         ...APPELLANT
(BY SMT.RUPA R., ADVOCATE FOR
    SMT.SUKRUTHA R., ADVOCATE)

AND

MR.MUKESH M. JANI
PROPRIETOR, ACCURATE NETWORK,
NO.3, MALHAR HOUSE
BEHIND RATHNAM COMPLEX
NEAR NIKUMB COMPLEX
C.G. ROAD
AHMEDABAD-380 015.
                                       ...RESPONDENT

(By SRI S.B.SUMAN, ADVOCATE FOR
    SRI S.G.BHAGAVAN, ADVOCATE)
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                                        CRL.A.No.682/2014


     THIS APPEAL IS FILED UNDER SECTION 378(4) CR.P.C.,
PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED
16.03.2012 PASSED BY THE ADDL. S.J. & P.O., F.T.C.-III,
MAYO HALL UNIT, BANGALORE IN CRL.A.NO.25074/2011 -
ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE
PUNISHABLE UNDER SECTION 138 OF NI ACT AND CONFIRM
THE CONVICTION AND SENTENCE DATED 29.03.2011 PASSED
BY THE XIV A.C.M.M., BANGALORE IN C.C.NO.50754/2009.


     THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
09.02.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:


                        JUDGMENT

Appellant/complainant feeling aggrieved by judgment

of First Appellate Court on the file of Fast Track Court -

III, P.O. & Additional Sessions Judge, Mayo Hall Unit,

Bengaluru in Crl.A.No.25074/2011 dated 16.03.2012 in

reversing the judgment of the Trial Court on the file of XIV

Additional Chief Metropolitan Magistrate, Bengaluru, in

C.C.No.50754/2009, dated 29.03.2011, 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 of Trial Court under appeal, the following points

arise for consideration:

1) Whether the impugned judgment of the First Appellate Court in reversing the finding of the 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

complainant is a registered Partnership Firm carrying

business of advertising and other related activities.

Accused is a Proprietorship concern and customer of

complainant. Accused made purchase order dated

20.02.2008 to the complainant for lease of 4 nos. of

Advertising Cycles at terminal - 1A, 1B on entry/exit roads

of CSI Airport, Mumbai at the rate of Rs.4,75,000/- per

month for the period from 25.02.2008 to 24.04.2008. In

pursuance of the purchase order dated 20.02.2008,

complainant raised invoice dated 17.04.2008 for a sum of

Rs.21,34,840/-. Accused issued cheque bearing

No.832753 dated 15.04.2008 drawn on ICICI Bank,

Ahmedabad Branch for a sum of Rs.11,34,840/- for lawful

discharge of debt - Ex.P4. Complainant presented the

said cheque through his banker HSBC Bank, M.G. Road

Branch, Bengaluru on 10.10.2008, the same was

dishonoured as "Funds Insufficient" vide Bank

endorsement - Ex.P5. Complainant issued demand notice

dated 20.10.2008 - Ex.P6 through registered post and

UCP. The postal receipt for having sent the demand notice

through RPAD., is produced at Ex.P7 and the UCP

Certificate is produced at Ex.P8. Complainant has written

letter to the postal authorities for non receipt of

acknowledgement card - Ex.P9 and the postal authorities

have replied that the demand notice was delivered to the

addressee on 03.11.2008 vide Ex.P10. 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 that

accused has issued cheque for lawful discharge of debt

and the same was dishonoured for want of sufficient funds

in the account of accused. The complainant has complied

all the 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").

Complainant has filed a complaint on 04.12.2008 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,

statutory presumption in terms of Sections 118 and 139 of

the NI 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 way 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 Sections 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 Complainant

in terms of Sections 118 and 139 of N.I. Act. The burden

of placing rebuttal evidence to displace the statutory

presumption is on the accused.

8. It is now upto the accused to place rebuttal

evidence to displace the statutory presumption available in

favour of complainant. Accused apart from relying on the

material produced by the complainant also got himself

examined as DW.1 and relied on the documents - Exs.D1

to D8. Whether the said material evidence placed on

record by the accused would be sufficient rebuttal

evidence to displace the statutory presumption available in

favour of complainant or not is to be decided.

9. It is the defense of accused that complainant

entered into factoring arrangements with HSBC Factoring

Services Division. In terms of the said arrangements, the

Bank is a beneficial owners of all trade debts and the Bank

issued notice dated 30.04.2007 - Ex.D1 and the same was

acknowledged by accused and made necessary

endorsement regarding confirmation that all future

payments in respect of invoices raised by complainant will

be made to HSBC account of M/s. Om Promotions and

Advertising. Accused has made the payments due to the

complainant to the Bank as per his undertaking in the

notice - Ex.D1.

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

PW.1 that in the invoice - Ex.P3, there is special

instructions to make payments to HSBC Limited Account of

M/s. Om Promotions and Advertising. Therefore, from the

said admission of PW.1 and the invoice - Ex.P3 dated

17.04.2008, it is evident that there was special

instructions to all the customers of complainant to make

payment to HSBC Limited Account of M/s. Om Promotions

and Advertising on all the invoices drawn by the

complainant.

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

DW.1 that initially as per the Purchase Order - Ex.P11, the

period of advertising has to be carried for two months and

the bicycles for advertisement were to be supplied by the

complainant. The actual advertisement was done for a

period of one month and the invoice was raised only for

one month and not for two months, the same has been

admitted by DW.1 as true and correct.

12. In view of the letter of HSBC Bank - Ex.D1

dated 30.04.2007, the Bank has issued notice dated

04.11.2008 - Ex.D3 to accused on dishonour of the very

same cheque bearing No.832753 dated 15.04.2008 -

Ex.P4. It means that complainant on dishonour of cheque,

issued demand notice - Ex.P6 and the HSBC Bank has also

issued notice on dishonour of the very same cheque dated

04.11.2008 - Ex.D3. The said notice has been replied by

the accused on 12.11.2008 - Ex.D4. Accused has

undertaken in the reply - Ex.D4 dated 12.11.2008 to pay

immediate payment of Rs.5 Lakhs and remaining amount

of Rs.6,34,380/- in two months' time. In pursuance of

such understanding, cheque bearing No.639220 dated

04.11.2008 for a sum of Rs.5,00,000/- drawn on ICICI

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Bank, was issued in favour of Bank. Accused has written

letter to HSBC Bank dated 06.12.2010 - Ex.D5 by

disclosing the payments made by the accused as per the

invoice screen No.074 dated 17.04.2008. The said letter

of accused has been replied by the Bank dated 08.12.2010

- Ex.D6 and along with the said letter produced the copy

of payment details of accused made against the invoice -

Ex.P3. Thus, accused has made total payment of

Rs.10,25,000/- and TDS Certificate amounting to

Rs.74,177/-. HSBC Bank has written a letter addressed

to the complainant and issued 'No Due Certificate' from

M/s. Accurate Network i.e., Proprietorship concern of the

accused. In the said letter, it has been specifically stated

by the Bank that accused has repaid all their liabilities and

the factoring facilities granted to the above buyer stands

cancelled as on 28.07.2009. The details of payment

particulars of accused furnished by the Bank - Ex.D7 and

'No Due Certificate' issued by the Bank dated 06.01.2010

- Ex.D8, would go to show that accused has paid all the

amount due to the complainant on the invoice No.074

drawn on 17.04.2008 - Ex.P3. When the complainant

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admits about issuing of special instructions to make all

payments to HSBC Limited Account of M/s. Om Promotions

and Advertising vide Invoice - Ex.P3 and the Bank also

communicate the same to the accused - Ex.D1 dated

30.04.2007 and in pursuance of the same accused having

made all the payments due to the complainant to its

banker, then the complainant cannot enforce the amount

covered under cheque dated 15.04.2008 - Ex.P4. The

contention of the learned counsel for complainant is that

the agreement between complainant and accused for the

advertisement done by the complainant, as such and

accused has to make payment to the complainant in view

of the above referred evidence cannot be legally

sustained.

13. It is pertinent to note that HSBC Bank was

collecting money on behalf of the complainant in view of

factoring arrangement entered by the complainant with

the Bank. It is because of the said reason only, special

instructions has been issued in the invoice at Ex.P3 to

make payment to "HSBC LTD A/C OM PROMOTIONS &

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ADVERTISING" for the amount due to the complainant.

Therefore, the complainant cannot claim the existence of

legally enforceable debt covered under cheque - Ex.P1 in

view of the complainant entering into factoring

arrangement with HSBC Bank and the Bank under due

authority has collected the money due to the complainant

from the accused.

14. Learned counsel for complainant in support of

her contentions that part payment made by the accused to

the Bank - Ex.D7 does not amount to discharge of entire

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

Dashrathbhai Trikambhai Patel Vs. Hitesh

Mahendrabhai Patel and Another reported in (2023) 1

Supreme Court Cases 578, wherein it has been

observed and held as under :

"- Held, for attracting S.138, as per proviso

(b) a demand notice needs to be made by the drawee of the cheque and an omnibus demand notice without specifying as to what was the amount due under the dishonoured cheque would not subserve the requirement of law. Further, when a part-payment of the debt is made after the

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cheque was drawn but before the cheque is encashed, such payment, held, must be endorsed on the cheque under Section 56 and the cheque cannot be presented for encashment without recording the part-payment. Therefore, if the unendorsed cheque is dishonoured on presentation, the offence under S.138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of eacashment."

15. In the present case, the complainant has

authorized HSBC Bank to collect all the payments due to

the complainant by issuing special instructions in the

invoice itself - Ex.P3. In pursuance of such agreement

between complainant and HSBC Bank, the Bank has

collected all the money due to the complainant covered

under Invoice - Ex.P3 and also produced statement of

payment particulars made by the accused - Ex.D7.

Further, the Bank has also issued 'No Due Certificate' that

accused repaid all their liabilities and the factoring facilities

granted to the above buyer stands cancelled as on

28.07.2009. Therefore, in view of the aforementioned