Karnataka High Court
S Goutamchand Saklecha Huf vs S.G.R.Technology And Education on 23 February, 2024
1 CRL.A NO.828 OF 2018
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF FEBRUARY, 2024
BEFORE
THE HON'BLE MS.JUSTICE J.M.KHAZI
CRIMINAL APPEAL NO.828 OF 2018
BETWEEN:
S GOUTAMCHAND SAKLECHA HUF
BY ITS KARTHA
MR GOUTHAMCHAND SAKLECHA
AGED ABOUT 60 YEARS
S/O LATE SRI SAKLECHA
R/AT NO.1108,13TH CROSS,
INDIRANAGAR II STAGE,
BENGALURU - 560 038
......APPELLANT
(BY SMT. SHOBHA BHAVIKATTI, ADVOCATE)
AND:
1. S.G.R.TECHNOLOGY AND EDUCATION
SOCIETY, NO.111/1, MUNNEKOLALA
MARATHAHALLI
BENGALURU - 560 037
BY ITS CHAIRPERSON,
DR S SHYAMLA REDDY
2. DR. S SYAMALA REDDY
CHAIRPERSON
S.G.R.TECHNOLOGY & EDUCATION
SOCIETY, NO.111/1, MUNNEKOLALA
MARATHAHALLI, BENGALURU - 560 037
3. DR. S CHAITANYA REDDY
SECRETARY,
S.G.R.TECHNOLOGY & EDUCATION
SOCIETY, NO.111/1, MUNNEKOLALA
MARATHAHALLI,
BENGALURU - 560 037
.......RESPONDENTS
2 CRL.A NO.828 OF 2018
(BY SRI. K.VIJAYAKUMAR, ADVOCATE FOR
SRI. LOKESH K, ADVOCATE FOR R1 & R2;
VIDE ORDER DATED 04.09.2019, APPEAL AGAINST R3 IS
ABATED)
THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) OF CR.P.C PRAYING TO a) SET ASIDE THE JUDGMENT
DATED 02.04.2018 IN C.C.NO.50636/2017 PASSED BY THE
LVIII A.C.M.M, BENGALURU AND CONVICT THE
RESPONDENTS; b) SUCH OTHER RELIEF'S AS THIS HON'BLE
COURT DEEMS FIT UNDER THE FACTS AND CIRCUMSTANCES
OF THE CASE.
THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
05.02.2024, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
JUDGMENT
This appeal filed under Section 378 (4) of Cr.P.C, is
by the complainant challenging the judgment and order
of the trial Court acquitting respondents/accused Nos.1
to 3 for the offence punishable under Section 138 of
Negotiable Instrument Act (for short 'N.I. Act').
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 accused
No.1 is involved in the business of imparting education.
Accused No.2 is the Chairperson and accused No.3 is the
Secretary of accused No.1. Accused Nos.2 and 3 are
involved in day to day affairs of accused No.1 Society.
approached the complainant for financial assistance for
expansion of business of the accused No.1. Complainant
has lent a sum of Rs.30 lakhs on 01.01.2013. Accused
agreed to repay the same with interest at 2% p.m.
Though accused have repaid certain sums, as on
30.09.2013, a sum of Rs.10 lakhs was due. In this
regard on 30.09.2013, accused No.3 issued cheque
dated 30.09.2013 and 15.10.2013 for Rs.5 lakhs each.
However, on 27.12.2013, when complainant presented
the cheques for realization, they were dishonoured on
the ground "Payment stopped by drawer". In this regard
complainant got issued legal notice dated 23.01.2014.
Though duly served accused have failed to either pay the
amount due or send reply and hence the complaint.
4. In response to the summons accused
appeared through counsel and contested the matter.
They pleaded not guilty and claimed trial.
5. In order to prove the allegations against the
accused, complainant is examined as PW-1 and got
marked Ex.P1 to 12.
6. During the course of their statement under
Section 313 Cr.P.C, the accusedNos.2 and 3 have denied
the incriminating evidence led by the complainant.
7. Accused have not led any defence evidence.
8. Vide the impugned judgment and order dated
02.04.2018, the trial Court acquitted the accused.
9. Aggrieved by the same, complainant has filed
this appeal, contending that the impugned judgment and
order passed are erroneous and unsustainable both in
law or on facts and as such liable to be set aside. Though
the learned Magistrate has rightly come to the conclusion
that there was financial relationship between complainant
and accused, but erroneously held that the subject
cheques were issued by respondent No.3 in his personal
capacity. The trial Court has failed to appreciate the fact
that accused Nos.2 and 3 have executed Memorandum of
Understanding at Ex.P11 and the subject cheques were
issued towards repayment of loan borrowed on behalf of
accused No.1. The learned Magistrate has failed to
appreciate the fact that Ex.P1 and 2 are the demand
promissory notes dated 01.01.2013 executed by accused
Nos.1 to 3. Similarly, the trial Court has failed to
appreciate the contents of Ex.P11 and erroneously held it
as a demand promissory note. The trial Court has also
not appreciated the fact that the accused have failed to
send reply to the legal notice putting forth their defence
and also failed to lead evidence in support of their
defence. Viewed from any angle the impugned judgment
and order are not sustainable and pray to allow the
appeal, convict the accused and sentence them in
accordance with law.
10. On the other hand learned counsel for accused
supported the impugned judgment and order of the trial
Court and sought for dismissal of the appeal.
11. Heard arguments of both sides and perused
the record.
12. Thus, it is the definite case of complainant
that accused No.1 is a society engaged in imparting
education and accused Nos.2 and 3 are it's Chairperson
and Secretary involved in its day-today affairs. They
have borrowed hand loan of Rs.30 lakhs for expansion of
its business. Out of the said amount, accused have
already paid Rs.20 lakhs and for the repayment of
balance of Rs.10 lakhs, the subject cheques are issued.
13. At the outset, it is relevant to note that
despite due service of notice the accused have not
chosen to send the reply and thereby failed to come up
with any definite defence. At the trial, accused have not
disputed the fact that accused No.2 is the Chairperson
and accused No.3 is the Secretary of accused No.1 -
Society and they are involved in it's day-today affairs.
The accused have also not disputed the financial capacity
of complainant to lend hand loan of Rs.30 lakhs. In fact,
during the cross- examination of PW-1, a suggestion is
made that they have borrowed only Rs.12 lakhs and the
subject cheques were issued by way of security and that
the said 12 lakhs is repaid.
14. Having regard to the fact that the subject
cheques belong to accused No.3 and it bears his
signature is not in dispute, presumption under Sections
118 and 139 of the N.I Act is operating in favour of the
complainant and initial burden is on the accused to prove
that they were not issued towards the repayment of any
legally recoverable debt or liability and on the other hand
they have taken hand loan of Rs.12 lakhs only and the
same is repaid and that the subject cheques were issued
by way of security and complainant has failed to return
the same. Only after the accused rebut the presumption,
the burden shifts on the complainant to prove their case.
Of course, it is sufficient for the accused to establish their
defence by preponderance of probabilities, whereas
complainant is required to prove his case beyond
reasonable doubt.
15. As noted earlier, accused have not led any
oral or documentary evidence to rebut the burden placed
on them. Of course as held in Rangappa Vs. Sri Mohan
(Rangappa)1, accused need not lead evidence to prove
his defence. On the other hand, he may rely upon the
evidence led by the complainant and prove his defence
through it. Therefore, it is necessary to examine whether
through the evidence led by the complainant and his
cross-examination, the accused have discharged the
burden placed on them in the light of presumption under
Section 139 of N.I Act.
16. During the course of evidence, complainant
has reiterated the complaint averments. Ex.P1 and 2 are
the pronote-cum-consideration receipts executed by
accused Nos.2 and 3. Ex.P3 and 4 are the subject
cheques. Ex.P11 is the memorandum of understanding
executed by accused Nos.2 and 3. During the course of
his cross-examination, when questioned whether in
addition to the documents already produced, there are
(2010 11 SCC 441
any other documents to support his claim that accused
have borrowed hand loan of Rs.30 lakhs, the complainant
has deposed that there is also a Memorandum of
Understanding executed by accused Nos.2 and 3 and
produced the same at Ex.P11.
17. Accused have questioned him whether in the
complaint as well as in the legal notice the fact of
execution of Ex.P1 is forthcoming. Of course there is no
such averment. This fact is required to be appreciated in
the light of the fact that, by not sending reply the
accused have failed to dispute the case of the
complainant. Since the complainant has prosecuted the
accused for the offence punishable under Section 138 of
N.I Act based on the cheques in question, he was not
expected to come with the pleadings as in case of a civil
suit. Therefore, the fact that there was no pleadings
would not come in the way of considering Ex.P11.
18. Ex.P11 is dated 03.01.2013. It is executed by
accused Nos.2 and 3 on behalf of accused No.1. As per
this document, accused acknowledge the receipt of hand
loan of Rs.30 lakhs and undertake to repay the same
with interest at 24% p.a, either in lump sum or in
instalments on or before 31.03.2013. They have agreed
to pay interest in a sum of Rs.60,000/- p.m. It is also
stated that as a guarantee to the outstanding amount,
they have executed a demand promissory note and
issued 10 cheques for Rs.3 lakhs each, which the second
part shall return on the settlement of the above amount.
19. On 29.06.2013, accused No.2 has made an
endorsement at Ex.P11 that she has received back
cheque Nos.352899, 352900, 352901, 352902, 352903
and 352904, which gives an indication that out of Rs.30
lakhs, Rs.18 lakhs is paid. Again on 03.07.2013, accused
No.2 has made an endorsement in Ex.P11 that she has
received back cheque Nos.352905, 352906, 352907and
352908, as they are barred and replacing them by
cheque numbers 546779, 546780, 546781 and 546782
for Rs.11 lakhs. This endorsement goes to show that as
on 03.07.2013, still Rs.11 lakhs was due and since the
validity period of earlier cheques was over, the accused
have replaced the said cheques by new cheques.
20. There is one more endorsement in Ex.P11
made by accused No.2 that she has received back
cheque numbers 546779, 546780, 546781 and 546782
for Rs.11 lakhs and replacing them by cheque Nos.
331714 and 331715 for Rs.10 lakhs. She is giving the
personal cheques, including the interest till date and if
she fails to pay the amount due, complainant is at liberty
to take action. The third endorsement is not signed.
However, the writing in all the three endorsement are
that of accused No.2 and first two endorsements are
signed by her. Ex.P11 establish the fact that after
securing hand loan of Rs.30 lakhs, initially accused Nos.2
and 3 gave 10 cheques for Rs.3 lakhs each. After paying
Rs.18 lakhs, they have taken back six cheques. Later
they have replaced remaining four cheques by another
set of four cheques for Rs.11 lakhs on the ground that
their validity period is over. Once again, the accused
have taken back the latest four cheques and replaced
them by the subject cheques at Ex.P3 and 4 for a sum of
Rs.5 lakhs each.
21. After the accused have failed to pay the
amount due, the complainant has presented them for
encashment and when they were dishonoured and on
failure of accused Nos.2 and 3 to pay the amount due,
chosen to file the complaint based on them. In Sunil Todi
Vs State of Gujarat and Anr (Sunil Todi)2, the Hon'ble
Supreme Court held that merely labelling a cheque as
security would not obviate its character as instrument
designed to meet legally enforceable debt or liability,
once agreement between parties provided for which
monies due and payable. Cheque furnished as security is
covered under the provisions of Section 138 of N.I Act.
Thus, whenever the accused have paid the amount, the
complainant has returned the respective cheques. In
fact, the accused have also taken back those cheques
whose validity period was over and replaced them by
other cheques.
AIR 2022 SC 147
22. Whenever the amount is paid and the due
amount is less than the cheques available with the
complainant, then also accused have taken them back
and given cheque for lesser amount. Thus, through the
evidence placed on record the accused have proved that
out of Rs.30 lakhs, 20 lakhs with proportionate interest is
repaid. However, as on the date of the subject cheques,
Rs.10 lakhs was still due. The contention of the accused
that they have taken hand loan of only Rs.12 lakhs is
incorrect. On the other hand, the evidence placed by the
complainant prove that at the relevant point of time, the
accused were due in a sum of Rs.10 lakhs and
accordingly the complainant has presented the cheques
for encashment which unfortunately were dishonoured on
the ground that there is stop payment instructions by the
accused.
23. Accused have not come up with any
explanation as to why stop payment instructions were
given to the Bank. At least they could have stepped into
the witness box and given evidence providing
justification for instructing the Bank not to pay the
amount due under the cheques. In the absence of any
explanation, the Court is left with no other alternative,
but to hold that with an oblique motive, such instructions
were given. Even after receipt of legal notice, the
accused have not come up with any explanation as to
why the amount was not paid. At least they could have
led evidence to show that if not Rs.10 lakhs what was the
amount due. Thus, the evidence placed on record prove
that accused Nos.2 and 3 borrowed hand loan of Rs.30
lakhs from the complainant for and on behalf of accused
No.1 and issued the subject cheques for the balance due.
24. Though accused have claimed that they have
availed hand loan of Rs.12 lakhs only and subject
cheques were issued by way of security, at the trial it is
contended by the accused that the subject cheques are
personal cheques belonging to accused No.3, whereas it
is the specific case of complainant that the loan was
taken by accused Nos.2 and 3 for and on behalf of
accused No.1. This issue is dealt with by the Hon'ble
Supreme Court in ICDS Ltd. Vs. Beena Shabeer and Anr
(ICDS Ltd)3, which was a case wherein the husband of
accused availed loan based on hire purchase agreement
to purchase a car with complainant and the cheque was
issued by accused as a guarantor.
25. At the instance of accused, the High Court
quashed the proceedings holding that being a cheque
issued by the guarantor, it cannot be said to have issued
towards discharging any debt or liability. Negating the
same, the Hon'ble Supreme Court held that a complaint
against guarantor on dishonour of cheque issued by her
is maintainable. It held that the words "any cheque" and
"other liability" occurring in Section 138 are two key
expressions which stand as clarifying the legislative
intent so as to bring the factual context within the ambit
of the provisions of the statute. These expressions leave
no manner of doubt that for whatever reason it may be,
the liability under Section 138 cannot be avoided in the
event the cheque stands returned by the banker unpaid.
(2002) 6 SCC 426
Any contra - interpretation would defeat the intent of the
legislature. The High Court got carried away by the issue
of guarantee and guarantor's liability and thus has
overlooked the true intent and purport of Section 138 of
the N.I. Act.
26. Thus, even where it is held that the subject
cheques are coming from the personal account of
accused No.3, fact remains that both accused Nos.2 and
3 have acted on behalf of accused No.1 and issued the
subject cheques and by issuing stop payment
instructions have facilitated dishonour of the subject
cheques. Therefore, they are liable for the offence
punishable under Section 138 of N.I. Act.
27. Without appreciating the oral and
documentary evidence placed on record in the right
perspective, the trial Court has disbelieved the case of
complainant and acquitted the accused. The findings of
the trial Court are contrary to the evidence placed on
record and as such perverse, calling for interference by
this Court.
28. When once the Court comes to the conclusion
that the charge levelled against the accused is proved
beyond reasonable doubt for the offence punishable
under Section 138 of N.I.Act and the appeal is allowed by
setting aside the impugned judgment and order of
acquittal, the next question would be to what punishment
the accused are liable.
29. The punishment prescribed for the offence
under Section 138 of the N.I.Act is imprisonment for a
term which may extend to two years or with fine which
may extend to twice the amount of cheque or with both.
Though the accused borrowed hand loan of Rs.30 lakhs,
the material placed on record establish the fact that they
have repaid Rs.20 lakhs with interest. For the balance
the subject cheques were issued for a total sum of Rs.10
lakhs. Having regard to these aspects, I am of the
considered opinion that sentencing accused Nos.2 and 3
to pay fine in a sum of Rs.10,00,000/- each in default of
paying the fine sentencing accused Nos.2 and 3 to
undergo imprisonment for a period of six months each
would meet the ends of justice and accordingly, I
proceed to pass the following:
ORDER
(i) Appeal filed by the complainant under
Section 378(4) of Cr.P.C is allowed.
(ii) The impugned judgment and order dated
02.04.2018 in C.C.No.50636/2017 on the
file of LVIII ACMM, Bengaluru is set aside.
(iii) Accused Nos.1 to 3 are convicted for the
offence punishable under Section 138 of
the N.I.Act.
(iii) Accused Nos.2 and 3 are sentenced to pay
fine in a sum of Rs.10,00,000/- each in
default of payment of fine, accused Nos.2
and 3 are sentenced to undergo
imprisonment for a period of six months
each.
(iv) The entire fine amount is ordered to be
paid to the complainant by way of
compensation.
(v) The Registry is directed to send back the
trial Court records along with copy of this
judgment to the trial Court.
Sd/-
JUDGE
RR
