Karnataka High Court

Krishna Automatioin And vs Balaachandra S. Mule on 7 March, 2024

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                                                                 CRL.RP No. 100079 of 2016




                                  IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

                                       DATED THIS THE 7TH DAY OF MARCH, 2024

                                                        BEFORE

                                        THE HON'BLE MR JUSTICE ANIL B KATTI

                              CRIMINAL REVISION PETITION NO. 100079 OF 2016 (397)

                             BETWEEN:

                             1.   KRISHNA AUTOMATIOIN & SOFRWARE
                                  SOLUTION PRIVATE LIMITED, NO.32/12,
                                  2ND FLOOR, 3RD CROSS, 4TH MAIN ROAD,
                                  CHAMARAJPETE, BENGALURU-560018.

                             2.   KRISHNAMURTHY UDUPA, DIRECTOR,
                                  AGE: MAJOR, KRISHNA AUTOMATIOIN
                                  & SOFTWARE SOLUTION PRIVATE LIMITED,
                                  NO.32/12, 2ND FLOOR, 3RD CROSS, 4TH MAIN ROAD,
                                  CHAMARAJPETE, BENGALURU-560018.

                             3.   RAKSHA, DIRECTOR, AGE: MAJOR,
                                  KRISHNA AUTOMATIOIN & SOFTWARE
                                  SOLUTION PRIVATE LIMITED, NO.32/12,
                                  2ND FLOOR, 3RD CROSS, 4TH MAIN ROAD,
                                  CHAMARAJPETE, BENGALURU-560018.
                                                                        -   PETITIONERS
                             (BY SRI. K. SURESH KUMAR AND PRANAV RAVI, ADVOCATES)
SAROJA
HANGARAKI
                             AND:
Digitally signed by SAROJA
HANGARAKI
Location: HIGH COURT OF
KARNATAKA,DHARWAD
                             BALAACHANDRA S. MULE,
BENCH
Date: 2024.03.07 15:01:35
+0530
                             AGE: 60 YEARS, OCC: CLASS-I CIVIL CONTRACTOR,
                             R/O: CHATRA, TQ: BYADAGI, DIST: HAVERI.
                                                                        -      RESPONDENT
                             (BY SRI VIJAYENDRA BHIMAKKANAVAR, ADVOCATE)

                                   THIS CRIMINAL REVISION PETITION IS FILED U/SEC.397 R/W
                             SEC.401 OF CR.P.C., PRAYING TO SET ASIDE THE ORDER DATED
                             27.02.2016 PASSED IN CRIMINAL APPEAL NO.95/2015, PASSED BY
                             THE COURT OF THE 1ST ADDL. DIST. & SESSIONS JUDGE, HAVERI
                             AND IMPUGNED JUDGMENT AND ORDER OF CONVICTION DATED
                             03.10.2015 IN C.C. NO. 642/2005 PASSED BY THE ADDITIONAL
                             CIVIL JUDGE AND JMFC, HAVERI & ETC.
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                                                    NC: 2024:KHC-D:4979
                                                   CRL.RP No. 100079 of 2016




     THIS CRIMINAL REVISION PETITION, HAVING HEARD AND
RESERVED FOR PRONOUNCEMENT OF ORDERS ON 27.02.2024
COMING ON 'FOR PRONOUNCEMENT OF ORDER', THIS DAY, THE
COURT MADE THE FOLLOWING:

                                     ORDER

Revision petitioners/ accused Nos.1 to 3 feeling aggrieved

by judgment of first appellate Court on the file of I Addl.

District & Sessions Judge, Haveri, in Criminal Appeal

No.95/2015 dated 27.02.2016 in confirming the judgment of

the trial Court on the file of Addl. Civil Judge & JMFC, Haveri in

C.C. No. 642/2005 dated 03.10.2015, preferred this revision

petition.

2. Parties to the revision petition are referred with their

ranks as assigned in the trial court, for the sake of

convenience.

3. Heard 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 points arise for consideration.

i) Whether the impugned judgment of the first appellate Court under revision in confirming the judgment of conviction and order of sentence

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passed by the trial court for the offence punishable U/s 138 of Negotiable Instruments Act, is perverse, capracious and legally not sustainable?

ii) Whether interference of this Court is required?

5. On careful perusal of the material evidence placed on

record, it would go to show that complainant is a Class-1 Civil

Contractor and permanent resident of Byadagi. Accused No.1

is the Private Limited Company, accused Nos.2 and 3 are

husband and wife and are the Directors of accused No.1

Company. Accused Nos.2 and 3 are doing software business

through accused No.1 Company. On 13.05.2002, accused

Nos.2 and 3 visited the complainant at his place and sought

financial assistance of Rs. 5 lakhs for the purpose of improving

the business of accused No.1 Company. Complainant has paid

the said amount of Rs.5 lakhs and accused have agreed to

repay the same within six months. On 12.08.2005 complainant

demanded repayment of his money. Accused Nos.2 and 3

issued cheque bearing No. 430659 dated 16.08.2005 for Rs.5

lakhs drawn on Canara Bank, V.V. Puram Branch, Bengaluru-

Ex.P.1. Complainant presented the said cheque through his

banker, State Bank of India, Haveri branch, on 19.08.2005.

The counterfoil challan of State Bank of India is produced at

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Ex.P.9. The said cheque issued by accused Nos.1 and 2 came

to be dishonoured with bank endorsement as "payment stopped

by drawer" dated 28.08.2005-Ex.P2. The banker of complainant

given intimation of Ex.P.2 vide letter dated 19.09.2005-

Ex.P.10. Complainant issued demand notice dated 01.10.2005

through registered post and under certificate of posting-Ex.P.3.

The demand notice is duly served to accused vide postal

acknowledgement Exs.P.4 to P.6 on 04.10.2005. Accused have

replied to the demand notice dated 20.10.2005-Ex.P.12

denying their liability to pay the amount under cheque-Ex.P.1.

Complainant has filed the complainant on 24.10.2005-Ex.P.7.

6. If the aforementioned documents are perused and

appreciated with the oral testimony of PW1, then it would go to

show that complainant has complied all the necessary legal

requirements in terms of Section 138 (a) to (c) of the

Negotiable Instruments Act, 1881 (hereinafter referred as

'N.I.Act' for the sake of brevity). Complainant has filed the

complaint within a period of one month in terms of Section

141(1)(b) of the N.I. Act. Therefore statutory presumption in

terms of Sec.118 and 139 of N.I. Act will have to be drawn in

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favour of complainant holding that the cheque was issued by

accused for lawful discharge of debt.

7. In this context of the matter, it is useful to refer the

judgment of Hon'blel 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 and 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 in 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.

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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. It is now upto the accused to place rebuttal evidence to

displace the statutory presumption available in favour of

complainant. In the present case, accused apart from relying

on the materials produced by the complainant, also relied on

the evidence of DW1 and documents at Exs.D.1 to D.12.

Whether the said rebuttal evidence placed on record by the

accused would be sufficient to displace the statutory

presumption available in favour of complainant or not is to be

decided by appreciating the evidence on record.

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10. In the present case, in view of the reply of accused-

Ex.P.12 to the demand notice issued by the complainant-

Ex.P.3, the material evidence brought on record, the accused

have made following specific defences.

i) There is non compliance of Section 138(b) of N.I. Act;

ii) Cheques were stolen from the office premises of accused and one of such cheque has been misused in this case;

iii) There is no consistent evidence regarding date and place of lending money;

iv) There is material alteration of cheque which renders the instrument-Ex.P.1 as void in terms of Section 87 of N.I. Act;

v) The claim of complainant is barred by limitation.

The aforementioned defences of accused will have to be

appreciated on the strength of the material evidence placed on

record.

11. Accused No.2-Krishnamurthy Udupa got himself

examined as DW1 and has deposed for himself and on behalf of

his wife to the effect that complainant is not known to them

and they have not obtained any loan from the complainant.

There was no transaction between the accused and complainant

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as there is no any document evidencing the said transaction.

On 18.10.2003, a relative of the complainant-Vigneshwara Aital

had come for their house warming ceremony and he has stolen

the cheques kept in the locker of the house. On coming to

know of the said fact, he filed complaint before Chamarajpet

Police Station on 08.01.2004, Ex.D.1. Accordingly, he has

given instructions to the bank to stop payment of the cheques

stolen from the house. He came to know about misuse of one

such stolen cheque after receipt of demand notice from

complainant being misused to file this false case. Copy of

complaint is produced at Ex.D.2 and the Police endorsement is

at Ex.D.3. He has also filed complaint-Ex.D.4, the same was

questioned before the High Court. On the complaint of accused,

Chamarajpet Police submitted 'B' report. Other four cheque

bounce cases filed by Vigneshwara Aital came to be dismissed.

The said Vigneshwara Aital is the relative of complainant.

Exs.D.5 and D.6 are the certified copy of deposition and the

complaint. Complainant and Vigneshwara Aital colluded with

each other and by misusing the cheque, has filed this false

case.

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12. Accused Nos.2 and 3 have not denied their signature and

seal of the Company of accused no.1 appearing on Ex.P.1,

further the said cheque came to be dishonoured on their

instruction to the bank to stop payment. The first defence of

the accused is that there is non compliance of Section 1389(b)

of the N.I. Act. In terms of Section 138(b) of the N.I. Act, "the

payee or the holder in due course of the cheque, as the case

may be, makes a demand for the payment of the said amount

of money by giving a notice in writing, to the drawer of the

cheque, (within thirty days) of the receipt of information by him

from the bank regarding the return of the cheque as unpaid."

13. Learned counsel for the accused has argued that

dishonour of cheque as payment stopped by the drawer was

issued by Canara Bank on 28.08.2005-Ex.P.2. It is from the

said date, period of 30 days, demand notice will have to be

issued in terms of Section 138(b) of N.I. Act. The period of 30

days will come to an end on 28.09.2005. The demand notice

issued by the complainant on 01.10.2005-Ex.P.3 is beyond the

period of 30 days envisaged in terms of Section 138(b) of the

Act. Therefore, complainant cannot maintain the complaint for

penal action in terms of Section 138 of N.I. Act. The courts

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below have committed serious error in calculating the period of

30 days from the date of bank intimation on 19.09.2005-

Ex.P.10.

14. On perusal of counterfoil of the challan-Ex.P.9, it would

go to show that complainant has presented cheque-Ex.P.1

through his Banker-State Bank of India, on 19.08.2005. The

banker of accused given intimation dated 28.08.2005-Ex.P.2 by

dishonouring cheque as "payment stopped by drawer". In

terms of Sec. 138(b) of the N.I. Act, the period of 30 days will

have to be calculated from the date of receipt of information

from the bank regarding return of the cheque as unpaid. The

banker of complainant-State Bank of India, given intimation to

the complainant regarding return of cheque as unpaid dated

19.09.2005-Ex.P.10. In terms of Sec. 138(b) of N.I. Act, the

period of 30 days has to be calculated from the said date. If

the same is calculated, then the demand notice issued by the

complainant on 01.10.2005-Ex.P.3 is well within the period of

30 days from the date of receipt of information from the bank

regarding return of the cheque as unpaid. Therefore, the

contention of accused that there is non compliance of

Sec.138(b) cannot be legally sustained.

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15. The second contention of accused is that cheques were

stolen from the office premises of accused which was addressed

during the course of arguments by counsel for accused and also

the same is reiterated in the written arguments. However,

evidence of DW1 is quite contrary, since he has deposed to the

effect that one Vigneshwar Aital, a relative of the complainant

had attended to their house warming ceremony and it is at that

time the said Vigneshwar Aital has stolen the signed cheques

kept in the locker of the house. Accused has produced

documents-Ex.D.3 dated 08.01.2004 before Chamarajpet Police

Station stating that they have lost bundle of papers containing

official documents and some cheques.

16. On 04.10.2005 another complaint was filed to the very

same Chamarajpet Police Station in continuation of earlier

complaint dated 08.01.2004-Ex.D.3 against Balachandra S.

Mule, who is the complainant in this cause for misusing one of

the stolen cheque-Ex.P.1. The said complaint is filed by the

accused the day on which the demand notice was served to

accused on 04.10.2005. Accused also gave particulars of lost

cheque on 12.04.2005. However, in the aforementioned

documents, it has never been stated that either Vigneshwar

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Aital stolen cheque from the locker in the house when he

attended house warming ceremony nor stating that cheques

were stolen from the office premises of accused.

17. Indisputably, Police have filed 'B' report on the complaint

filed by the accused regarding loss of cheques and misusing of

one such cheque by the complainant. Accused also produced

documents at Exs.D.4 to D.6 regarding the proceedings against

Vigneshwar Aital. There is no any evidence placed on record by

accused as to how the said Vigneshwar Aital is connected to the

transaction between the complainant and the accused and the

issuance of cheque-Ex.P.1. The inconsistent evidence of

accused regarding the manner in which cheques were stolen

either from the house of accused when they were kept in the

house locker or from the office premises of accused. The said

places are secured places under the control of accused and

nobody can enter the said place without the consent and

knowledge of accused. However, no any action was taken

immediately after the alleged stolen cheque. The filing of

cheque bounce cases against Vigneshwar Aital and dismissal of

the same has nothing to do with the transaction claimed by the

complainant between himself and accused. The claim of

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accused that complainant came in possession of stolen cheque

either from his house or from the office premises through

Vigneshwar Aital has not been established by the accused.

Therefore, the second contention of accused that one of stolen

cheque in collusion with Vigneshwar Aital, was misused to file

this false case, cannot be legally sustained.

18. The third contention is that the date of lending and place

not consistent. It is the contention of accused that PW1 during

the cross examination has stated that he has paid the money in

January, 2003 which is against the complaint averments that

he has paid money on 13.05.2002. Complainant has produced

his bank account extract-Ex.P.11. Complainant has used

money of Rs.5,01,000/- to draw demand drafts and the said

money has been paid by the complainant. The extract of bank

account-Ex.P.11 would go to show that complainant has

sufficient balance in his account to pay money to accused.

Therefore, mere inconsistency in the cross examination of PW1

cannot be a ground to hold that cheque-Ex.P.1 was not issued

for lawful discharge of debt. Therefore, the said contention

also cannot be legally sustained.

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19. The 4th contention of accused is that there is material

alteration of cheque. In terms of Section 87 of the N.I. Act any

material alteration of a negotiable instrument render the same

void as against anyone who is a party thereto at the time of

making such alteration and does not consent thereto, unless it

was made in order to carry out the common intention of the

original parties.

20. On careful perusal of the cheque Ex.P.1 it would go to

show that there is no any material alteration in the cheque.

The space is left blank for writing the date and month and the

first two figures of the year are printed as "19--". The said

year "19--" printed in Ex.P.1 has not been scored out nor it is

altered to make an action within the ambit of Sec.138 of N.I.

Act. The date, month and year of the issuance of cheque is

written before the printed year "19--". Therefore, when the

accused has failed to demonstrate that the material alteration

was made in the cheque Ex.P.1 only to bring penal action

within the ambit of Sec. 138 of N.I. Act, the contention of the

accused that there is material alteration, cannot be legally

sustained and in fact there is no any material alteration in the

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cheque-Ex.P.1. Therefore, the said contention also cannot be

legally sustained.

21. The last contention of the accused is that the claim of

complainant covered under the cheque-Ex.P.1 is barred by

limitation. According to the complainant, he has paid the

money to the accused on 13.05.2002. The cheque in question-

Ex.P.1 is dated 16.08.2005 which is after lapse of more than

three years, i.e., three years 2 months and 30 days.

Therefore, it cannot be said that accused have issued cheque-

Ex.P.1 for lawful discharge of debt.

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

judgment of the Hon'ble Apex Court in A.V. Murthy Vs.

B.S.Nagabasavanna reported in (2002) 2 SCC 642 wherein

it has been observed and held as under:

"In view of Sections 118 and 139 of the Negotiable Instruments Act, Section 25(3) of the Contract Act, 1872 and in the presence of a documentary evidence which might amount to acknowledgement reviving the period of limitation, the present case was not one where the cheque was drawn in respect of a debt or liability, which was completely barred from being enforced under law. However, these are matters to be agitated before the

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Magistrate by way of defence of the respondent. But at this stage of the proceedings, to say that the cheque drawn by the respondent was in respect of a debt or liability which was not legally enforceable, was clearly illegal and erroneous."

The Division Bench of the Hon'ble Bombay High Court had an

occasion to deal with the issue of time barred debt in Dinesh

B. Chokshi Vs. Rahul Vasudeo Bhatt reported in 2013 (2)

Mh.L.J. wherein the matter was referred to Division for

deciding two questions formulated by the learned Single Judge

under his judgment and order dated 23.12.2008, which reads

as under:

"(i) Does the issuance of a cheque in repayment of a time barred debt amount to a written promise to pay the said debt within the meaning of section 25(3) of the Indian Contract Act, 1872?

(ii) If it amounts to such a promise, does such a promise, by itself, create and legally enforceable debt or other liability as contemplated by section 138 of the Negotiable Instruments Act, 1881?"

The Division Bench of Hon'ble Bombay High Court after having

considered the provisions of N.I. Act, has answered the

reference in paragraph Nos.20 and 21, which read as follows:

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"20. While recording our answer to the first question, we have already held that a cheque issued for discharge of a debt which is barred by law of limitation is itself a promise within the meaning of sub-section (3) of section 25 of the Contract Act. A promise is an agreement and such promise which is covered by section 25(3) of the Contract Act becomes enforceable contract provided that the same is not otherwise void under the Contract Act.

21. Therefore, while answering second question, we are specifically dealing with a case of promise created by a cheque issued for discharge of a time barred debt or liability. Once it is held that a cheque drawn for discharge of a time barred debt creates a promise which becomes enforceable contract, it cannot be said that the cheque is drawn in discharge of debt or a liability which is not legally enforceable. The promise in the form of a cheque drawn in discharge of a time barred debt or liability becomes enforceable by virtue of sub-section (3) of section 25 of the Contract Act. Thus, such cheque becomes a cheque drawn in discharge of a legally enforceable debt as contemplated by the explanation to Section 138 of the said Act of 1881. Therefore, even the second question will have to be answered in the affirmative."

23. In the subsequent judgment of Hon'ble Bombay High

Court in M.Shantilal & Co. Vs. Abbaji Maruti Jadhav and

Another reported in 2019 SCC OnLine Bom 4356, wherein

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by referring a judgment of Division Bench of Bombay High

Court in Dinesh B. Chokshi (supra), held in paragraph No. 11

as under:

"In the circumstances, once a cheque is drawn for discharge of a time barred debt, it creates a promise which becomes an enforceable contract and therefore, it cannot be said that the cheque is drawn in discharge of debt or liability which is not legally enforceable. Therefore, I am satisfied that the impugned judgment dated 16.9.1998 has to be set aside and is hereby set aside. The matter is remanded to the trial court to decide, based on the evidence already recorded, whether the complainant has proved the ingredients of offence punishable under Section 138 of the Negotiable Instruments Act, 1881."

24. Therefore, in view of the principles enunciated in the

aforementioned judgments, it is evident that issuance of a

cheque on time barred debt is enforceable in terms of Section

25(3) of the Indian Contract Act and such debt is legally

enforceable debt within the meaning of Sec.138 of the N.I. Act.

Thus, the last contention of learned counsel for accused that

claim of complainant is barred by limitation and as such the

cheque in question-Ex.P.1 was not issued for legally

enforceable debt, cannot be legally sustained.

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25. The Courts below have rightly appreciated the oral and