Karnataka High Court

Sri Prakash Chand B vs Sri Manohar Singh on 1 March, 2024

                                           -1-
                                                    CRL.A No. 814 of 2018
                                                        NC: 2024:KHC:8706




                IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                       DATED THIS THE 1ST DAY OF MARCH, 2024

                                        BEFORE
                         THE HON'BLE MS JUSTICE J.M.KHAZI
                         CRIMINAL APPEAL NO.814 OF 2018
                BETWEEN:

                    SRI. PRAKASH CHAND B
                    S/O LATE BUDHMAL,
                    AGED ABOUT 61 YEARS
                    RESIDING AT NO.711/35,
                    1ST C MAIN, 8TH BLOCK, JAYANAGAR,
                    BENGLAURU - 560 082
                                                             ...APPELLANT
                (BY SMT. ARCHANA K M, AMICUS CURIAE)

                AND:

                    SRI. MANOHAR SINGH
                    S/O LATE RANJIT SINGH,
                    AGED ABOUT 52 YEARS
                    PROPRIETOR,
                    M/S BANGALORE COMPUTER INC,
Digitally           NO.63, P.R.LANE, S.P.ROAD CROSS,
signed by           BENGALURU - 560 002.
REKHA R             RESIDING AT TALKIA NIVAS,
Location:           NO.488, 3RD CROSS, 2ND BLOCK,
High Court of       I STAGE BSK, BENGALURU - 560 050
Karnataka                                                  ...RESPONDENT
                (BY SRI. C.P.PUTTARAJA, ADVOCATE)

                      THIS CRL.A IS FILED UNDER SECTION 378(4) OF CR.P.C
                PRAYING TO SET ASIDE THE ORDER OF ACQUITTAL DATED
                28.03.2018 PASSED IN C.C.NO.5842/2017 BY THE LEARNED XXI
                ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, BENGALURU AND
                CONVICT THE RESPONDENT FOR THE OFFENCE PUNISHABLE UNDER
                SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT IN THE INTEREST
                OF JUSTICE.
                                   -2-
                                             CRL.A No. 814 of 2018
                                                  NC: 2024:KHC:8706




     THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY,
THE COURT DELIVERED THE FOLLOWING:

                             JUDGMENT

Being aggrieved by the acquittal of

respondent/accused for the offence punishable under

Section 138 of Negotiable Instruments Act, 1881 (for short

'N.I. Act'), the complainant has challenged the order of

trial Court in this appeal filed under Section 378 (4) of

Cr.P.C.

2. For the sake of convenience, parties are

referred to by their rank before the trial Court.

3. It is the case of complainant that he and

accused are family friends and known to each other for the

past few years. Accused was visiting the house of

complainant regularly. During June 2016, accused was

under the severe financial constraint and caught in debt

trap due to losses in the business. Therefore, he

approached the complainant and requested for hand loan

of Rs.6 lakhs. Taking pity and considering the long

standing relationship, complainant gave hand loan of Rs.6

NC: 2024:KHC:8706

lakhs. Accused promised to repay the same within three

months. On the same day he issued cheque dated

01.12.2016 for a sum of Rs.6 lakhs with the promise of

due payment on presentation. On 03.12.2016,

complainant presented the cheque through his account.

On 14.12.2016, it was returned dishonoured for "Funds

insufficient". Only then complainant realised that accused

has issued a Non-CST cheque. He got issued legal notice

dated 29.12.2016. Despite due service of notice, the

accused has neither paid the amount due nor sent any

reply and hence the complaint.

4. After due service of summons, accused

appeared before the trial Court and contested the case by

pleading not guilty.

5. In order to prove the allegations against

accused, complainant has examined himself as PW-1 and

relied upon Ex.P1 to 5.

NC: 2024:KHC:8706

6. During the course of his statement under

Section 313 Cr.P.C, accused has denied the incriminating

evidence led by the complainant.

7. In fact, he has stepped into the witness box and

examined himself as DW-1. Accused has relied upon Ex.D1

to 7.

8. Vide the impugned judgment and order, the

trial Court dismissed the complaint, amongst other on the

ground that the legal notice is not duly served on the

accused and that complainant has failed to prove his

financial capacity.

9. Complainant has challenged the impugned

judgment and order, contending that the trial Court has

gravely erred in not considering the fundamental principle

of law while passing the impugned judgment and order. It

has not given due consideration to Ex.P1 to 5. It failed to

consider the admissions given by the accused during his

cross-examination. Viewed from any angle, the impugned

judgment and order are not sustainable and pray to allow

NC: 2024:KHC:8706

the appeal, convict the accused and sentence him in

accordance with law.

10. In support of her arguments, learned Amicus

Curiae for appellant has relied upon the following

decisions:

(i) Bir Singh Vs. Mukesh Kumar (Bir Singh)1

(ii) Rangappa Vs. Sri Mohan (Rangappa)2

(iii) C.C.Alavi Haji Vs. Palapetty Muhammed and Anr (C.C.Alavi Haji)3

(iv) Rajesh Jain Vs. Ajay Singh (Rajesh Jain)4

(v) P.Rasiya Vs. Abdul Nazer and Anr.

(P.Rasiya)5

11. On the other hand, learned counsel for accused

has supported the impugned judgment and order and

sought for dismissal of the appeal.

12. Heard elaborate arguments of learned Amicus

Curiae and learned counsel for respondent and perused

the record.

(2019) 4 SCC 197

(2010) 11 SCC 441

(2007) 6 SCC 555

(2023) 10 SCC 148

2022 SCC Online SC 1131

NC: 2024:KHC:8706

13. Before going to the merits of the case, it is

necessary to examine whether the legal notice is duly

served on the accused or not. During the trial, the accused

has taken up a specific defence that the notice is not duly

served on him. However, he does not dispute his address

to which the legal notice is sent. In fact, during his cross-

examination, the accused has stated that the

acknowledgement at Ex.P5 bears signature of his sister-

in-law i.e, brother's wife. It is not his case that his

brother's wife is not residing in the same premises and

that she has not brought the fact of service of notice

through Ex.P5 to his notice. Thus, through Ex.P5, the

legal notice sent by complainant is duly served on the

accused. However, he has not chosen to send reply to the

same.

14. As held by the Hon'ble Supreme Court in

C.C.Alvi Haji, the object and purpose of issue of legal

notice to the accused is to enable honest drawer of cheque

to make payment within the specified time and thereby

NC: 2024:KHC:8706

avoid prosecution. However, in the present case, the

accused is disputing that he borrowed any loan from the

complainant and issued the subject cheque and

consequently, he has not chosen to pay the amount due

under the cheque. However, the trial Court has erred in

holding that the legal notice is not served on the accused

and therefore one of the mandatory requirement of

maintaining the complaint is not fulfilled.

15. Now coming to the merits of the case, it is the

definite case of the complainant that at the relevant point

of time, the accused had suffered heavy loss in the

business and in order to come out of the same, he secured

hand loan of Rs.6 lakhs from the complainant and issued

the subject cheque to him. The accused admitted that the

subject cheque is drawn on his account, maintained with

his banker and it bears his signature. He has disputed the

loan transaction and alleged that the son of complainant

was visiting the shop of accused and during the said time

he has taken a blank signed cheque belonging to the

NC: 2024:KHC:8706

accused and the present complaint is filed. He came to

know about this only after the complaint is filed. At the

trial the accused has also challenged the financial capacity

of complainant to lend him Rs.6 lakhs.

16. Having regard to the fact that the cheque in

question belongs to accused, drawn on his account

maintained with his banker and it bears his signature,

presumption under Section 139 of the N.I Act is operating in

favour of the complainant, placing the initial burden on the

accused to prove that the cheque was not issued towards

repayment of any debt or liability and on the other hand to

establish the circumstances in which the cheque has reached

the hands of the complainant. Though accused has not

sent reply to the legal notice challenging the financial

capacity of complainant to lend him hand loan of Rs.6 lakhs,

during the trial he has challenged his financial capacity.

NC: 2024:KHC:8706

17. In John K.Abraham Vs. Simon C. Abraham &

Anr (John K.Abraham)6, the Hon'ble Supreme Court held

that in order to draw presumption under Sections 118 and

139 of N.I Act, the burden lies on the complainant to show

that:

(i) She had the requisite funds for advancing the sum of money/loan in question to accused.

(ii) The issuance of cheque by accused in support of repayment of money advanced was true and

(iii) The accused was bound to make payment as had been agreed while issuing cheque in favour of the complainant.

18. Therefore, as held by the Hon'ble Supreme Court

in Tedhi Singh Vs Narayan Das Mahant (Tedhi Singh)7,

where the accused has failed to send reply to the legal

notice, challenging the financial capacity of the complainant,

at the first instance, complainant need not prove his financial

capacity. However, at the trial if the financial capacity of

(2014) 2 SCC 236

2022 SCC OnLine SC 302

- 10 -

NC: 2024:KHC:8706

complainant is challenged, then it is for the complainant to

prove the same.

19. In APS Forex vs Shakti International Fashion

Linkers Pvt. Ltd (APS Forex)8, the Hon'ble Supreme Court

held that when accused raises issue of financial capacity of

complainant, in support of his probable defence, despite

presumption operating in favour of complainant regarding

legally enforceable debt under Section 139 of N.I. Act, onus

shifts again on the complainant to prove his financial

capacity by leading evidence, more particularly when it is a

case of giving loan by cash and thereafter issue of cheque.

20. In Vijay Vs. Laxman and Anr (Vijay)9,

K.Subramani Vs. K.Damadara Naidu (K.Surbamani)10 and

K.Prakashan Vs. P.K.Surenderan (K.Prakashan)11, also the

Hon'ble Supreme Court held that the presumption under

Section 139 of N.I. Act, is a rebuttable presumption and

(2020) 12 SCC 724

(2013) 3 SCC 86

(2015) 1 SCC 99

(2008) 1 SCC 258

- 11 -

NC: 2024:KHC:8706

when accused rebut the same by preponderance of

probabilities, it is for the complainant to prove his case

beyond reasonable doubt including the financial capacity.

21. In the light of ratio in the above decisions, it is

necessary to examine whether the complainant has proved

his financial capacity to lend Rs.6 lakhs to the accused,

only after which the burden would shift on the accused to

prove his defence.

22. In the complaint, complainant has not stated

whether the amount in question was paid by cash or

otherwise. However, during his cross-examination,

complainant has specifically stated that he paid the loan

amount in the form of cash and at that time his i.e.,

complainant's son was present. He has stated that always

he keeps cash in his house, but he is not having any

documents to prove the same. It is elicited during his

cross-examination that complainant normally carry out his

transactions through Bank account and when suggested

that there was no impediment to pay the amount to

- 12 -

NC: 2024:KHC:8706

accused through Bank, complainant has answered in the

Affirmative.

23. When questioned whether the fact of having

given hand loan of Rs. 6 lakhs to the accused is reflected

in his Income Tax Returns, complainant has replied that it

would be done in the next year. His cross-examination is

dated 30.05.2017. Even where it is held that he still had

time to file Income Tax Returns, subsequently also

complainant has not chosen to produce Income Tax

Returns to show that the fact of having lent Rs.6 lakhs to

accused is reflected therein. Though complainant has

stated that in the accounts maintained by him, the fact of

loan given to accused is reflected but the same is not

produced. Admittedly, complainant has not produced his

Income Tax Returns to show the cash available at his

hands. Thus, the complainant has failed to prove that at

the relevant point of time, he had financial capacity to

lend Rs.6 lakhs to the accused.

- 13 -

NC: 2024:KHC:8706

24. It has come in the evidence that the shop of

complainant and accused were situated side by side. The

accused has taken up a specific defence that he is hailing

from Rajasthan and every year thrice or four times he

used to visit Rajasthan and at that time he was keeping

signed blank cheques with the Manager. The accused has

alleged that the son of complainant managed to lift one

such cheque and utilizing the same the present complaint

is filed. During the course of his evidence complainant has

deposed to that effect. One of the circumstance he has

relied upon to prove this fact is that earlier he was running

business in the name and style of M/s Bangalore

Computer Inc and was having account

No.039211011010898 in the name of the said business.

According to the complainant he has closed the said

business and accordingly also closed account

No.039211011010898 on 07.01.2014.

25. Accused has claimed that after closure of the

said business he started the same business in the name

- 14 -

NC: 2024:KHC:8706

and style of Bangalore Compu Mobiles and opened account

No.039211100003873 and at the relevant point of time,

he was having sufficient balance in his account. Utilizing

the old cheque the complainant has filed this complaint.

Admittedly, the subject cheque belongs to the account of

Bangalore Computer Inc and as per Ex.D1 it was closed as

long back as 07.01.2014. Though the said account was

closed, for reasons best known to him, the Manager of the

Bank has given endorsement that the cheque is not

honoured for "Funds insufficient" instead of "Account

closed". Though the complainant has stated that he is

ready to examine the Manager of the Bank, he has not

done so. The accused has alleged that in collusion with the

Bank Manager, complainant has got a wrong endorsement

to prosecute the accused.

26. In the complaint, it is pleaded that accused

approached complainant for hand loan during June 2016

and pursuant to the same, he paid the amount and on the

same day, accused issued the subject cheque dated

- 15 -

NC: 2024:KHC:8706

01.12.2016. It is not the case of the complainant that

accused has given a signed blank cheque. However, during

his cross-examination, he has admitted that the name,

amount in Ex.P1 are in different ink and handwriting,

which supports the allegations made by the accused that

complainant managed to get the signed blank cheque and

filled it according to his convenience.

27. The complainant has admitted that normally

within Bengaluru City, it takes about 3 days for

encashment. It is relevant to note that according to the

complainant, he presented the subject cheque on

03.12.2016. Bank has issued the endorsement at Ex.P2 on

14.12.2016. Accused has alleged that colluding with the

Bank Manager he has secured a false endorsement and

therefore, it took such a long time for the Bank to issue

the said endorsement. Of course complainant has denied

the said suggestion. Ex.D2 to 7 produced by the accused

prove that at the relevant point of time he was having

sufficient balance in his account. The complainant has

- 16 -

NC: 2024:KHC:8706

cross-examined accused as to whether he has given any

complaint regarding theft of subject cheque. It is pertinent

to note that according to accused, he came to know about

the missing of subject cheque only after he received Court

notice and therefore, he could not file any complaint.

28. Accused has also stated that the Manager with

whom signed cheques used to be kept has left the job and

gone to Pune. In fact a suggestion is made to the accused

that while recording his plea, he has stated that the

subject cheque was misplaced in 2009. The overall

examination of the evidence placed on record makes it

evident that complainant has failed to prove his financial

capacity. On the other hand through the oral and

documentary evidence placed on record, coupled with the

cross-examination of complainant, accused has proved his

defence by preponderance of probabilities.

29. Though the findings of the trial Court that there

was no due service of notice is erroneous, taking into

consideration the oral and documentary evidence placed

- 17 -

NC: 2024:KHC:8706

on record, the trial Court has come to a correct conclusion

that the charge leveled against accused is not proved and

acquitted him. After re-appreciation of the same, this

Court finds no justifiable grounds to interfere with the said

conclusions arrived at by the trial Court. In the result, the

appeal fails and accordingly, the following:

ORDER

i) Appeal filed by the complainant under

Section 378(4) is dismissed.

ii) The impugned judgment and order dated

09.08.2018 in C.C.No.20922/2015 on the

file of XII Additional Chief Metropolitan

Magistrate, Bengaluru City is confirmed.

iii) The Registry is directed to send back the

trial Court records along with copy of this

judgment forthwith.

(iv) Appreciation is placed on record for the

valuable assistance rendered by the

learned Amicus Curiae representing

- 18 -

NC: 2024:KHC:8706

petitioner/accused. The fees of learned

Amicus Curiae is fixed at Rs.5,000/-. The

High Court Legal Services Committee is

directed to pay the same.