Karnataka High Court

Bhimappa Padasalagi vs Mohammed Talha on 21 February, 2024

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                                        CRL.A.No.484/2015


  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 .484 OF 2015 (A)


BETWEEN:

BHIMAPPA PADASALAGI
S/O SAGAREPPA PADASALAGI,
AGED ABOUT 54 YEARS,
RESIDING AT NO.592,
2ND FLOOR, 9TH 'A' MAIN,
YELAHANKA NEW TOWN,
BANGALORE-560 106.
                                               ...APPELLANT
(BY SRI. RAVI H.K., ADVOCATE)

AND

MOHAMMED TALHA
S/O MOHAMMED ISHAQ,
AGED ABOUT 27 YEARS,
RESIDING AT FLAT NO.206,
N-HIG-B, 1ST FLOOR, BLOCK NO.5,
5TH PHASE, YELAHANKA NEW TOWN,
BANGALORE-560 106.
                                              ...RESPONDENT
(BY SRI.MOHAMMED TAHIR, ADVOCATE)

     THIS CRL.A. IS FILED U/S.378(4) CR.P.C., PRAYING TO SET
ASIDE THE ORDER DATED:27.09.2014, PASSED BY THE COURT
OF THE FAST TRACK-XII, BANGALORE CITY ALLOWING THE
APPEAL    FILED    BY    THE    RESPONDENT      HEREIN    IN
CRL.A.NO.452/2014 AND CONFIRM THE JUDGMENT AND ORDER
DATED 23.4.2014 PASSED IN CC.NO.16563/2011 BY 18TH ACMM,
BANGALORE BY ALLOWING THIS APPEAL - ACQUITTING THE
RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I.
ACT.
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                                       CRL.A.No.484/2015



     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 - XII,

Bengaluru City in Crl.A.No.452/2014 dated 27.09.2014 in

reversing the judgment of Trial Court on the file of XVIII

Additional Chief Metropolitan Magistrate, Bengaluru, in

C.C.No.16563/2011, dated 23.04.2014, 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 and accused are well known to each other.

Accused has taken advance amount of Rs.2,50,000/-

towards part sale consideration under the agreement of

sale dated 18.07.2010 and also taken additional amount of

Rs.10,000/-. The sale transaction covered under

agreement of sale dated 18.07.2010 was not materialized.

Accused at the first instance paid cash of Rs.80,000/- out

of Rs.2,60,000/- which he has received as earnest money

and for remaining amount of Rs.1,80,000/- issued the

cheque bearing No.144380 dated 28.01.2011 drawn on

ICICI Bank Limited, Kammanahalli Branch, Bengaluru -

Ex.P1. Complainant presented the said cheque through his

banker State Bank of India for collection and the same

was dishonoured as "Funds Insufficient" vide Bank

Endorsement dated 29.01.2011 - Ex.P2. Complainant

issued demand notice dated 07.02.2011 - Ex.P3 through

RPAD. The postal receipt is produced at Ex.P4 and postal

acknowledgment for having served the demand notice is

produced at Ex.P5. The agreement of sale between

complainant and accused is at Ex.P6. 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 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 within a period of

one month from the date of accrual of cause of action, has

filed the complaint on 15.03.2011 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 the 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. Now it is upto the accused to place rebuttal

evidence to displace the statutory presumption available in

favour of complainant. Accused apart from relying on the

material evidence produced by the complainant also relied

on the evidence of DWs.1 and 2 and no documents are

relied on behalf of accused. It is the defense of accused

that he do not know the complainant. According to the

complainant, the transaction took place between

complainant and his father. The father of accused had

given sufficient time to complainant to get the Sale Deed

registered, but the complainant himself failed to get the

Sale Deed registered. Accused kept 4 - 5 blank signed

cheques with his father and the complainant himself has

committed breach of contract and his father told him that

agreement is cancelled, complainant to pay the amount by

deducting certain amount and the complainant has filed

this false case. Whether the rebuttal evidence placed on

record by accused is sufficient to displace the statutory

presumption available in favour of complainant or not is to

be decided.

9. The cheque at Ex.P1 was drawn on the account

maintained by the accused and his signature is appearing

on the cheque - Ex.P1 is admitted by accused. Accused to

probabalise the defense has given his own evidence and

deposed to the effect that he do not know the

complainant. The talks for sale of flat was held between

his father and the complainant. He do not know the sale

consideration amount fixed by the parties and his father

has signed Ex.P6 - agreement of sale, so also Murthy and

Venkatesh have signed as witnesses to the agreement of

sale - Ex.P6. The contents of cheque are not filled by

himself or his father. He had kept 4 - 5 signed cheques

with his father in the house and Ex.P1 is one of such

cheques. He has further deposed to the effect that his

father told him that agreement of sale is cancelled and

complainant asked to pay the amount by deducting certain

amount and therefore he is not liable to pay the cheque

amount and complainant has filed this false case.

10. DW.2 - father of accused has deposed to the

effect that complainant has agreed to purchase Schedule

'A' property covered under agreement of sale - Ex.P6

dated 18.07.2010 and he has received Rs.2,50,000/- as

earnest money. Complainant did not purchase within the

period prescribed under agreement of sale - Ex.P6.

Thereafter, there was a compromise talks between him

and complainant and given back Rs.70,000/- to the

complainant. It was further agreed that he is not liable to

pay the amount of Rs.1,80,000/- since complainant has

committed breach of contract. He has further deposed to

the effect that he has given blank signed cheque of his son

to the complainant as a security for the transaction

covered under agreement of sale - Ex.P6. After the

compromise, the complainant did not return the blank

signed cheque of accused and filed this false case.

11. If the above referred evidence of DWs.1 and 2

are perused and appreciated with the evidence of PW.1

and complaint allegations, then, it would go to show that

the agreement of sale dated 18.07.2010 - Ex.P6 and

receipt of earnest money by accused is not in dispute.

Complainant and accused both alleges against each other

being the person responsible for breach of contract

covered under agreement of sale - Ex.P6. On perusal of

the agreement of sale - Ex.P6 dated 18.07.2010, it would

go to show that residential Flat bearing No.206, N-HIG-B

in Khatha No.2303 of Bruhat Bengaluru Mahanagara Palike

(BBMP.) situated in the first floor of Block No.5, 5th phase,

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Yelahanka New Town, Bengaluru-560 106, was offered for

sale by the accused.

12. Accused during the course of his evidence

claims that his father has negotiated and he is unaware of

the contents of agreement of sale dated 18.07.2010 -

Ex.P6. It has been elicited in the cross-examination of

DW.1 that accused is highly educated and was studying in

M.Sc., Final Year and has got sufficient worldly knowledge

about the transaction that he has entered under

agreement of sale under Ex.P6 and he cannot plead

ignorance. Accused further claimed that his father has

signed Ex.P6, but on perusal of agreement of sale - Ex.P6,

it is accused alone has signed and not the father of

accused. It may be true that father of accused being the

elderly person must have negotiated or talked with the

complainant regarding the sale of schedule 'A' property

covered under Ex.P6. However, at any rate, the evidence

of accused - DW.1 cannot be accepted that he has not

entered the agreement of sale and his father entered the

agreement of sale and signed the agreement of sale -

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Ex.P6. The document at Ex.P6 and the evidence of

complainant - PW.1 would go to show that the agreement

of sale was executed by accused for sale of Schedule 'A'

property covered under Ex.P6 and received earnest money

out of the total sale consideration of Rs.17 Lakhs. The Sale

was agreed to be completed within a period of 2½ months.

However, admittedly, within that period Sale Deed process

could not be completed. DW.2 in his cross-examination

admits that it was agreed under Ex.P6 that he has to clear

the Canara Bank loan and to produce 'No Due Certificate'

before registering the Sale Deed. Accused has not

produced any documents to show that the said loan has

been discharged by repaying the loan amount and 'No Due

Certificate' was not produced. Therefore, it will have to be

held that it is only because of non production of 'No Due

Certificate' by the vendor, the Sale Deed could not be

proceeded within the stipulated 2½ months time under

agreement of sale - Ex.P6. DW.2 has denied that due to

non-production of 'No Due Certificate', the process of Sale

Deed could not be completed. When it was suggested that

if 'No Due Certificate' is produced, complainant is prepared

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to get the Sale Deed executed, but DW.2 states that if the

present market value is given, he is ready to execute the

Sale Deed. It means that it is father of accused who is not

willing to execute the Sale Deed and demanding the

market price as on the date of giving his evidence before

the Court on 27.03.2014. There was no any breach on the

part of complainant in getting the Sale Deed executed.

However, the fact remains that the transaction of

agreement of sale covered under Ex.P6 was not

materialized and to refund the earnest money of

complainant, accused has issued the cheque - Ex.P1.

13. It is the contention of the father of accused in

his evidence that due to breach of contract in honoring the

agreement of sale - Ex.P6, he is not willing to pay back

the amount of Rs.1,80,000/- to the complainant. Accused

has not placed any evidence on record regarding the

alleged breach of contract in terms of agreement of sale -

Ex.P6. The terms of agreement of sale - Ex.P6, does not

provide forfeiture of earnest money in the event of breach

of either party in enforcing the agreement of sale covered

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under Ex.P6. On the contrary, it only gives right to the

complainant to seek for specific performance of contract in

case of breach.

14. The First Appellate Court by referring to the Co-

ordinate Bench Judgment of this Court in Venkatesh

Bhat A Vs. Rohidas Shenoy reported in LAWS(KAR)-

2009-8-27, has held that violation of terms of Ex.P6, the

remedy is open to enforce the agreement of Sale before

the competent Civil Court. Therefore, criminal action under

Section 138 of the NI Act is not maintainable. On going

through the aforementioned Co-ordinate Bench Judgment

of this Court, it has been held at paragraph No.5 as

under:-

"5. ON a plain reading of the allegations in the said notice Ex.P2 made by the accused against the complainant, it is clear that he rescinded the said agreement (Ex.P1) on the ground that his signatures on it were obtained by the complainant by threatening him with dire consequences and under coercion. It is further alleged in the said notice Ex.P2 that the cheque in question was obtained by the complainant from the accused by exercising coercion on him. Therefore, it is clear that the very legality of

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Ex.P1, the agreement, and the factum of issuing of the cheque in question by the accused in favour of the complainant towards payment of balance consideration amount in terms of the said agreement (Ex.P1), had been seriously disputed by the accused. Having regard to these facts, as asserted by the complainant himself, the fact remains that in case he proves the said agreement, he would be entitled to receive the balance consideration amount from the accused only on execution and registration of the sale deed in favour of the accused, and not otherwise. Therefore, I am of the considered opinion that even if the payment of balance consideration amount under the said agreement by the accused to the complainant could be held as 'other liability' within the meaning of Section 138 of the NI Act, it could not be further held that the said liability was legally enforceable against the accused by the complainant as on 1-7-2007, the date of the cheque in question which is said to have been issued by the accused in favour of the complainant. Therefore, I do not find any illegality committed by the Trial Court in observing in its impugned judgment that no 'legally enforceable liability' existed as on the date of the said cheque."

15. The said factual aspects of the matter covered

in the aforementioned Judgment are not the one involved

in the present case. In the present case, the agreement

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of Sale - Ex.P6 is admitted. Accused has also admitted his

signature on Ex.P1. The claim of father of accused that

complainant has committed breach of agreement of sale -

Ex.P6 and on account of compromise, he has paid the

amount of Rs.70,000/- and remaining amount is forfeited

has not been proved by the evidence placed on record. It

is the further contention of DW.2 in his evidence that he

has given blank signed cheque of his son to the

complainant as a security for the transaction covered

under Ex.P6 and the same has been misused by the

complainant is not proved by the accused out of the

material evidence placed on record.

16. Learned counsel for complainant in support of

his contentions that the cheque issued for the alleged

security also attract penal action relies on the judgment of

the Hon'ble Apex Court in Sampelly Satyanarayana Rao

Vs. Indian Renewable Energy Development Agency

Limited reported in (2016) 10 Supreme Court Cases

458, wherein, it has been observed and held as under:-

"_Held, crucial point is whether cheque represents discharge of existing enforceable debt or

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liability or whether it represents advance payment without there being any subsisting liability. Once loan amount was disbursed and as per agreement, installments had fallen due on date of issuance of cheque, dishonour of such cheque would fall under Section 138 of the NI Act. Such issuance of cheque undoubtedly represents outstanding liability."

17. In the present case, complainant has claimed

that the agreement of sale covered under Ex.P6 was not

materialized and accused in order to refund the earnest

money issued the cheque - Ex.P1. The claim of accused

and his father - DW.2 that an amount of Rs.1,80,000/-

was forfeited cannot be legally sustained since there was

no any clause under agreement of sale - Ex.P6 to forfeit

any portion of earnest money in the event of breach of the

party to the agreement of sale - Ex.P6.

18. In view of the principles enunciated in the

aforementioned judgment of the Hon'ble Apex Court, the

issuance of cheque - Ex.P1 for refunding the earnest

money received by the accused, undoubtedly, represents

outstanding liability of accused. Another contention of the

accused is that demand notice is not duly served to the

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accused. The Trial Court as well as First Appellate Court

for the reasons recorded in the judgment have rightly

rejected the contention of accused regarding non-service

of demand notice. The said finding recorded by both the

Courts below are based on the material evidence on

record. There are no any justifiable grounds to deviate

from the findings recorded by both the Courts below

regarding service of demand notice to the accused.

19. The Trial Court has rightly appreciated the oral

and documentary evidence placed on record before it and

was justified in holding that accused has issued the

cheque in question - Ex.P1 for lawful discharge of debt,

accused has not paid the amount covered under cheque -

Ex.P1 within the stipulated time. Therefore, complainant

out of the material evidence on record has established that

the accused has committed an offence punishable under

Section 138 of the NI Act. The findings of the First

Appellate Court that breach of terms of agreement of sale

- Ex.P6 only prevents civil remedy and criminal action

under Section 138 of the NI Act cannot be maintained is a

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perverse finding and the same has no any legal sanctity.

The First Appellate Court has committed an error in

reversing the finding of the Trial Court in holding that the

accused is guilty for the offence punishable under Section

138 of the NI Act without there being any valid reasons.

Therefore, the same needs interference by this Court to

restore the Judgment of Conviction and Order of Sentence

passed by the Trial Court. Consequently, proceed to pass

the following:

ORDER

Appeal filed by the appellant-complainant is hereby

allowed.

The judgment of First Appellate Court on the file of

Fast Track - XII, Bengaluru City in Crl.A.No.452/2014

dated 27.09.2014, is hereby set aside.

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The judgment of the Trial Court on the file of XVIII

Additional Chief Metropolitan Magistrate, Bengaluru, in

C.C.No.16563/2011, dated 23.04.2014, is ordered to be

restored.