Citation : 2024 Latest Caselaw 11571 Kant
Judgement Date : 27 May, 2024
1 CRL.A NO.1977 OF 2021
C/W CRL.A.NO.52 OF 2022
CRL.A.NO.55 OF 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF MAY, 2024
BEFORE
THE HON'BLE MS.JUSTICE J.M.KHAZI
CRIMINAL APPEAL NO.1977 OF 2021
C/W
CRIMINAL APPEAL NO.52 OF 2022
CRIMINAL APPEAL NO.55 OF 2022
IN CRL.A NO.1977 OF 2021
BETWEEN:
M/S C P RAJAPPA SON AND CO.,
REP BY SRI ANANDA
SALES EXECUTIVE
S/O LATE A S KRISHNAMURTHY
AGED ABOUT 58 YEARS
NO.5, GOWRI MANSION, M.R.R.LANE,
S.J.P. ROAD, BENGALURU - 560 002
......APPELLANT
(BY SRI. SANDESH C.R, ADVOCATE FOR
SRI. JAYARAJ D S, ADVOCATE)
AND:
M/S CHANDRODAYA BOREWELLS
REP. BY SRI ANIL KUMAR A C
HARENAHALLI VILLAGE
A R POST K R PETE TALUK
MANDYA DISTRICT - 571 426
ALSO AT:
SRI ANIL KUMAR A C
NO.661 OLD MYSORE ROAD
K R PETE TALUK
MANDYA DISTRICT - 571 436
.....RESPONDENT
(BY SRI. K.E.JAGADEESHA, ADVOCATE FOR
SRI. S.RAJASHEKAR, ADVOCATE)
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THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) OF CR.P.C PRAYING TO a) SET ASIDE THE IMPUGNED
JUDGMENT AND ORDER DATED 15.09.2021 PASSED BY THE
XXVII ACMM, BENGALURU IN C.C.NO.23857/2019 IN
ACQUITTING THE ACCUSED/RESPONDENT AND
CONSEQUENTLY, CONVICT THE ACCUSED-RESPONDENT BY
ALLOWING THE COMPLAINT ALONG WITH COSTS; b) GRANT
SUCH OTHER RELIEF/S AS THIS HON'BLE COURT MAY DEEMS
FIT ON THE FACTS AND CIRCUMSTANCES OF THE CASE
INCLUDING THE COST OF THIS APPEAL IN THE INTEREST OF
JUSTICE AND EQUITY.
IN CRL.A NO.52 OF 2022
BETWEEN:
M/S C P RAJAPPA SON AND CO.,
REP BY SRI ANANDA
SALES EXECUTIVE
S/O LATE A S KRISHNAMURTHY
AGED ABOUT 58 YEARS
NO.5, GOWRI MANSION, M.R.R.LANE,
S.J.P. ROAD, BENGALURU - 560 002
......APPELLANT
(BY SRI. SANDESH C.R, ADVOCATE FOR
SRI. JAYARAJ D S, ADVOCATE)
AND:
M/S CHANDRODAYA BOREWELLS
REP. BY SRI ANIL KUMAR A C
HARENAHALLI VILLAGE
A R POST K R PETE TALUK
MANDYA DISTRICT - 571 426
ALSO AT:
SRI ANIL KUMAR A C
NO.661 OLD MYSORE ROAD
K R PETE TALUK
MANDYA DISTRICT - 571 436
.....RESPONDENT
(BY SRI. K.E.JAGADEESHA, ADVOCATE FOR
SRI. S.RAJASHEKAR, ADVOCATE)
3 CRL.A NO.1977 OF 2021
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CRL.A.NO.55 OF 2022
THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) OF CR.P.C PRAYING TO a) SET ASIDE THE IMPUGNED
JUDGMENT AND ORDER DATED 15.09.2021 PASSED BY THE
XXVII ACMM, BENGALURU IN C.C.NO.23855/2019 IN
ACQUITTING THE ACCUSED/RESPONDENT AND
CONSEQUENTLY, CONVICT THE ACCUSED-RESPONDENT BY
ALLOWING THE COMPLAINT ALONG WITH COSTS; b) GRANT
SUCH OTHER RELIEF/S AS THIS HON'BLE COURT MAY DEEMS
FIT ON THE FACTS AND CIRCUMSTANCES OF THE CASE
INCLUDING THE COST OF THIS APPEAL IN THE INTEREST OF
JUSTICE AND EQUITY.
IN CRL.A NO.55 OF 2022
BETWEEN:
M/S C P RAJAPPA SON AND CO.,
REP BY SRI ANANDA
SALES EXECUTIVE
S/O LATE A S KRISHNAMURTHY
AGED ABOUT 58 YEARS
NO.5, GOWRI MANSION, M.R.R.LANE,
S.J.P. ROAD, BENGALURU - 560 002
......APPELLANT
(BY SRI. SANDESH C.R, ADVOCATE FOR
SRI. JAYARAJ D S, ADVOCATE)
AND:
M/S CHANDRODAYA BOREWELLS
REP. BY SRI ANIL KUMAR A C
HARENAHALLI VILLAGE
A R POST K R PETE TALUK
MANDYA DISTRICT - 571 426
ALSO AT:
SRI ANIL KUMAR A C
NO.661 OLD MYSORE ROAD
K R PETE TALUK
MANDYA DISTRICT - 571 436
.....RESPONDENT
(BY SRI. K.E.JAGADEESHA, ADVOCATE FOR
SRI. S.RAJASHEKAR, ADVOCATE)
4 CRL.A NO.1977 OF 2021
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CRL.A.NO.55 OF 2022
THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) OF CR.P.C PRAYING TO a) SET ASIDE THE IMPUGNED
JUDGMENT AND ORDER DATED 15.09.2021 PASSED BY THE
XXVII ACMM, BENGALURU IN C.C.NO.23860/2019 IN
ACQUITTING THE ACCUSED/RESPONDENT AND
CONSEQUENTLY, CONVICT THE ACCUSED-RESPONDENT BY
ALLOWING THE COMPLAINT ALONG WITH COSTS; b) GRANT
SUCH OTHER RELIEF/S AS THIS HON'BLE COURT MAY DEEMS
FIT ON THE FACTS AND CIRCUMSTANCES OF THE CASE
INCLUDING THE COST OF THIS APPEAL IN THE INTEREST OF
JUSTICE AND EQUITY.
THESE APPEALS HAVING BEEN HEARD AND RESERVED
ON 31.01.2024, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
COMMON JUDGMENT
In these three separate appeals filed under Section
378 (4) of Cr.P.C, complainant has challenged the
acquittal of respondent/accused for the offence
punishable under Section 138 of Negotiable Instruments
Act, 1881 (for short 'N.I. Act').
2. Parties to these appeals are common. The
transaction in respect of which these appeals are filed are
also one and the same. In fact the amount due under the
transaction between the parties was sought to be
realized through three separate cheques and on their
dishonour, three separate complaints came to be filed.
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Hence, these appeals are clubbed together and decided
by a common order.
3. For the sake of convenience, parties are
referred to as complainant and accused.
4. It is the case of complainant that it is a
registered firm carrying on the business in the name and
style of C.P Rajappa Sons and Company. It is a
distributor of Finolex Rigid PVC - CPVC pipes and fittings
and other allied products. Accused is one of the
customers of complainant carrying on business of paints
and hardware. During the course of business, accused
approached the complainant for supply of CPVC, GPI
pipes and other materials. Accused agreed to pay the
amount within two months from the date of supply. In
the event of failure to making the payment within the
agreed period, accused also agreed to pay interest at
24% p.a.
5. Accordingly, accused placed orders for supply
of GI pipes amounting to Rs.55,63,298/- and
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complainant has supplied the material. Towards
repayment of the outstanding amount, accused has
issued cheques for a sum of Rs.12,72,227/- dated
10.06.2019, Rs.5,38,720/- dated 11.06.2019 and
Rs.9,70,702/- dated 18.06.2019. However, when
presented for realization, the cheques have been
returned dishonoured for want of sufficient funds.
Complainant got issued legal notice to the accused.
Though duly served, the accused has neither paid the
amount due nor sent any reply. Hence the complaint.
6. Before the trial Court, accused has appeared
through counsel and contested the matter.
7. In order to prove the allegations against
accused, in all three cases, complainant has examined
one Anand working as Sales Manager as PW-1. In
C.C.No.23857/2019 Ex.P1 to 40, in C.C.No.23855/2019
Ex.P1 to 39 and in C.C.No.23860/2019, Ex.P1to 39 are
marked.
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8. During the course of his statement under
Section 313 Cr.P.C, the accused has denied the
incriminating evidence led by the complainant.
9. In fact, in all the three cases, the accused has
examined himself as DW-1 and relied upon Ex.D1 to 3.
10. Vide the impugned judgment and order, the
trial Court has dismissed the complaints.
11. Aggrieved by the same, the complainant has
filed these three separate appeals, contending that the
reasoning given by the trial Court in drawing its
conclusion that accused has paid the entire dues to the
complainant is not proper and correct while at the same
time, the complainant having substantiated his case
along with necessary documents. It is not in dispute that
complainant is a registered firm and accused is the
customer of the complainant firm, carrying on the
business of paints and hardware and regularly making
purchases on credit basis and used to pay the amount.
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11.1 The material placed on record establish the
fact that with regard to the purchases made by the
accused, a sum of Rs.27,81,649/- was due and the
cheques in question were issued towards payment of the
same, which ultimately came to be dishonoured for want
of sufficient funds. Without appreciating these facts and
without proper application of mind, the trial Court has
dismissed the complaint. The findings of the trial Court
are contrary to the evidence placed on record and as
such perverse. In the light of the presumption available
under Section 118 and 139 of the N.I. Act, the trial Court
has failed to appreciate the oral and documentary
evidence placed on record and fell into error in acquitting
the accused.
11.2 Though the accused claimed that he has
maintained accounts he has not chosen to produce the
same and prove that the entire amount due from him is
repaid. He has also not produced his income tax returns
regarding discharge of the amount due from him. In fact,
accused has claimed that all the payments have been
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made through Bank, but has failed to prove the same.
Having regard to the fact that the cheques belongs to the
accused and bear his signature, the presumption under
Section 139 of the N.I Act is operating in favour of the
complainant, placing the initial burden on the accused to
rebut the same, only after which the burden would shift
on the complainant to prove his case. However, the
accused has failed to rebut the presumption and
therefore the burden has not shifted back to the
complainant.
11.3 The accused has not produced the accounts
maintained by him and also income tax returns to prove
that the amount due to the complainant is paid. The trial
Court has also not appreciated the fact that despite
receipt of legal notice, accused has not sent reply putting
forth his defence at the earliest available opportunity.
The trial Court has erred in coming to the conclusion that
accused has paid the amount due simply on the ground
that during his cross-examination. PW-1 has admitted
that accused had issued blank cheques. The findings of
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the trial Court are contrary to the contents of Ex.P37,
which is acknowledged by the accused. Viewed from any
angle, the impugned judgments and orders are not
sustainable and calls for interference by this Court and
pray to allow the appeal, convict the accused and
sentence him in accordance with law.
12. In support of his arguments, learned counsel
for complainant has relied upon the following decisions:
(i) K.N.Beena Vs.Muniyappan (K.N.Beena)1
(ii) Rangappa Vs. Sri Mohan (Rangappa)2
(iii) R.Vijayan Vs. Baby and Anr. (R.Vijayan)3
(iv) Mainuddin Abdul Sattar Shaikh Vs. Vijay D.
Salvi (Mainuddin)4
(v) Rohitbhai Jivanlal Patel Vs. State of Gujarat
and Anr. (Rohitbhai)5
(vi) Bir Singh Vs. Mukesh Kumar (Bir Singh)6
(vii) Uttam Ram Vs. Devindra Singh Hudam and
Anr. (Uttam Ram)7
1
(2001) 8 SCC 458
2
2010 (11) SCC 441
3
2012 (1) SCC 260
4
2015 (9) SCC 622
5
2019 (18) SCC 106
6
(2019) 4 SCC 197
7
2019 (10) SCC 287
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(viii) Kalamani Tex and Anr. Vs. P.Balasubramanian
(Kalamani Tex)8
(ix) Oriental Bank of Commerce Vs. Prabodh
Kumar Tewari (OBC)9
(x) Sh. Badri Prasad Vs. Sh. Padam Singh
(Badri Prasad)10
(xi) Ramesh Chand Vs. Deep Ram (Ramesh
Chand)11
13. On the other hand, learned counsel for
accused has supported the impugned judgments and
orders and sought for dismissal of the appeals.
14. Heard elaborate arguments of both sides and
perused the record.
15. The undisputed facts are that complainant is a
Distributor of Finolex Rigid PVC - CPVC pipes and fittings,
and other allied products and accused is one of the
customer of complainant carrying on the business of
paints and hardware. It is also not in dispute that
accused used to purchase GI pipes and other products on
8
2021 (5) SCC 283
9
2022 SCC Online SC 1089
10
Cr.Revision No.19/2021
11
Cr.M.NO.1059/2022
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credit basis and make payment subsequently. Accused
also not disputed the fact that the subject cheques
belongs to him, drawn on his account, maintained with
his banker and they bear his signature.
16. Though in the complaint, the complainant has
pleaded that the cheques were issued towards
repayment of the amount reflected therein, during the
course of the examination-in-chief of PW-1 and also
during his cross-examination, he has stated that the
cheques were issued blank by way of security and they
have been presented for the amount due from the
accused. The accused has also claimed that the entire
amount due is paid and there is no balance due from him
and despite the same, utilising the blank cheques,
complainant has filed these complaints. The accused has
also taken a defence of due discharge of the liability
under the cheques.
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17. In Sunil Todi Vs the State of Gujarat and Anr
(Sunil Todi)12, 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 money is due and payable.
Cheque furnished as security is covered under the
provisions of Section 138 of N.I Act. In Bir Singh,
referred to supra the Hon'ble Supreme Court held that
the object of Section 138 of N.I Act is to infuse credibility
to negotiable instrument, including cheques in finance
transaction and presumption that the cheque is duly
signed and voluntarily made over to the payee is also
available to post dated and blank cheques.
18. In Kalmani Tex, referred to supra the
Company and Managing Director challenged their
conviction imposed by the High Court by reversing
acquittal given by the trial Court. In that case, the
accused issued cheque for Rs.11.20 lakhs which came to
12
AIR 2022 SC 147
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be dishonoured for insufficient funds. Accused claimed
that blank cheques and stamp papers were issued to help
the complainant in debt recovery proceedings.
Appreciating the facts, the Hon'ble Supreme Court held
that Section 139 of N.I Act draws presumption placing
the initial burden on the accused. Looking to the business
relationship between the parties, it held that the trial
Court erred in calling the complainant to prove the
circumstances in which cheque was issued and that the
accused has failed to rebut the presumption and
therefore, upheld the conviction imposed by the High
Court.
19. In K.N.Beena, the Hon'ble Suprme Court held
that in the light of provisions of Section 118 and 139 of
N.I. Act, Court has to presume that the cheque had been
issued for discharging a debt or liability. However, it is a
rebuttable presumption and burden is on the accused to
rebut the same by leading evidence and sending reply is
not sufficient to rebut the presumption.
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20. In Rangappa, the Hon'ble Supreme Court
held that the presumption mandated under Section 139
of N.I. Act includes a presumption that there exist a
legally enforceable debt or liability. However, it is
rebuttable in nature.
21. In Uttam Ram, the Hon'ble Supreme Court
noted the matters to be established by the complainant
to raise presumption, after which the burden of rebutting
the presumption under Section 118 and 139 of N.I. Act
would be on the accused.
22. In OBC, the Hon'ble Supreme Court held that
the provisions of Section 138 of N.I. Act are applicable
and presumption under Section 139 of N.I Act is
attracted even to a blank cheque.
23. In the light of the ratio in the above decisions
and having regard to the fact that the cheques belong to
the accused, drawn on his account and it bears his
signature, presumption under Section 139 of the N.I Act
is operating in favour of the complainant, placing the
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initial burden on the accused to rebut the same, after
which the burden would shift on the complainant to
prove his case.
24. At the outset it is relevant to note that
complainant has sent legal notice to the accused to his
residential address as well as business address. The one
sent to his residential address is duly served as per
acknowledgement at Ex.P7. However, the one sent to his
business address is returned with an endorsement
"Insufficient address". Accused is not disputing his
residential address as well as the business address to
which the legal notice is sent. In fact in the complaint
also both residential address as well as the business
address of accused is given. The summons sent by the
trial Court is duly served on him on the said address and
he has appeared through counsel before the trial Court
and secured bail. In fact, in the present appeal also both
addresses are given and he is duly served on the same.
Perusal of the acknowledgement at Ex.P7 indicate that he
has personally received the same.
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25. Under Section 27 of the General Clauses Act
where any central Act or Regulation authorise or requires
any document be served by post, the service shall be
deemed to be effected by properly addressing, prepaying
and posting by registered post a letter containing the
document and unless the contrary is proved, to have
been effected at the time at which the letter would be
delivered in the ordinary course of post. In the light of
this provision, there is a presumption of due service of
legal notice. Despite service of legal notice, the accused
has not chosen to send any reply. Of course, he has also
not paid the amount due under the cheques.
26. In C.C. Alavi Haji Vs. Palapetty Muhammed
and Anr. (Alavi Haji)13, the Hon'ble Supreme Court held
that the object and purpose of issue of legal notice to the
accused is to enable a honest drawer of cheque to make
payment within the specified time and thereby avoid
prosecution. In case the accused dispute the transaction
or the liability under the cheque, in the reply notice the
13
(2207) 6 SCC 555
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accused may take such a stand and disclose his defence
at the earliest available opportunity. Of course, there is
no prohibition for the accused to take any defence at the
trial and establish the same. In the present case the
accused has lost the opportunity of coming up with the
specific defence at the earliest available opportunity by
sending reply to the legal notice.
27. During cross-examination of PW-1, it is
suggested that in the subject cheques there is difference
in the ink between the signature and other writing. As
admitted by PW-1, the cheques in question were issued
blank while purchasing goods on credit basis. In fact
during his examination-in-chief PW-1 has fairly deposed
that the cheques were blank and they have been filled up
according to the amount due from the accused.
Therefore, the fact that there is difference in the ink does
not assume any importance.
28. It is also suggested to PW-1 that the entire
amount due has been paid, but the complainant has
failed to return the blank cheques. Admittedly, after the
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alleged repayment of entire dues the accused has not
taken any action to intimate the Bank to stop payment or
call upon the complainant to return the blank cheques. At
least he could have sent reply to the complainant to that
effect. During his cross-examination, PW-1 has clarified
that accused used to place order telephonically and after
receipt of material confirm the same. This explains the
fact that in all the invoices, there is no signature of the
accused regarding receipt of material. There is no dispute
regarding the supply and receipt of material, and
therefore this fact does not assume any importance to
doubt the case of complainant.
29. During the course of his evidence accused who
is examined as DW-1 has reiterated that he has paid the
entire amount due regarding the supply of material by
the complainant. He has stated that in all he has paid a
sum of Rs.1,48,91,064/- through 12 payments and there
is no amount due from him. During his cross-
examination he has stated that he is the owner of
accused. Though the accused is referred to as M/s
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Chandrodaya borewells represented by Anil Kumar, it is a
Proprietorship concern. At least accused has not placed
any material on record to show that it is a private or
public company.
30. Ex.P9 to 36 are the invoices produced by the
complainant regarding the purchase made by accused.
On this aspect, the accused has not denied the
suggestion that through these invoices he has purchased
the material, but expressed ignorance. He has also
claimed that sometime he used to pay advance amount,
but conceded that in the examination-in-chief, he has not
deposed to that effect. Accused has claimed that he has
maintained accounts regarding the purchases made from
complainant and payments made in that regard. Though
accused has claimed that he regularly submitted income
tax returns, he has expressed ignorance as to whether in
the said returns, details of payment made to the
complainant is forthcoming or not. He has admitted that
all the payments made by him to the complainant are
through Bank. DW-1 has denied that out of supply for a
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sum of Rs.1,76,72,678/- he has only paid
Rs.1,48,91,029/- and for the remaining sum, he has
issued the subject cheques.
31. Now coming to the suggestions made to the
complainant regarding the payments made. During his
cross-examination, PW-1 has admitted the receipt of
payments as detailed below:
Exihibits Date of cheque Amount in Rs.
Ex.D2 07.02.2019 12,00,000-00
Ex.D3 27.03.2017 4,38,378-00
- 08.06.2017 12,00,000-00
Ex.D1 15.04.2017 11,13,813-00
17.05.2017 4,38,873-00
16.06.2017 18,00,000-00
Ex.D1 25.07.2017 10,00,000-00
09.10.2017 20,00,000-00
14.12.2018 12,00,000-00
Ex.D2 17.04.2018 35,00,000-00
06.01.2018 5,00,000-00
22.12.2017 5,00,000-00
07.02.2019 12,00,000-00
TOTAL 1,48,91,064-00
32. From the above it is evident that the first and
the last payment are one and the same. With regard to
payment of Rs.12 lakhs through Ex.D2, suggestion is
made twice. With this clarification, as per the suggestions
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made on behalf of accused himself, still Rs.12 lakhs is
due. A suggestion is also made to PW-1 that the
calculations showed in Ex.P37 is correct. This document
is the extract of account maintained by complainant
regarding the transaction between complainant and
accused from 01.04.2019 to 31.03.2020. As per this, a
sum of Rs.27,81,649/- was still due from the accused
which accounts for the amount due in the subject
cheques. Despite claiming due discharge of the amount
due and also claiming to have maintained accounts, the
accused has failed to produce the account maintained by
it and thereby failed to rebut the presumption under
Section 139 of N.I Act.
33. Consequently, the burden is not shifted back
to the complainant. Despite the same through the
complaint averments, oral and documentary evidence
placed on record, the complainant has proved that the
amount reflected in the subject cheques were due from
the accused and the cheques were dishonoured for want
of sufficient funds. Despite issue of legal notice, the
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accused has failed to pay the amount due. At the same
time, at the trial, the accused has failed to prove due
discharge of the amount due under the cheques.
However, without examining the evidence placed on
record in right perspective, the trial Court has dismissed
the complaint. Therefore, the findings of the trial Court
are perverse calling for interference by this Court.
34. When the Court comes to the conclusion that
the charge levelled against the accused is proved 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 accused is liable.
35. 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.
The amount involved through three cheques is
Rs.27,81,649, i.e., Rs.12,72,227, Rs.5,38,720 and
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Rs.9,70,702. The matter is of the year 2019. Already,
five years have lapsed.
36. Taking into consideration all these aspects,
this Court is of the considered opinion that sentencing
accused to pay fine of Rs.16,00,000/-, Rs.7,00,000/- and
Rs.12,00,000/- respectively would be sufficient to meet
the ends of justice. In default of paying the fine
sentencing accused to undergo imprisonment for a period
of one year each would be proportionate to the gravity of
the offence and accordingly, I proceed to pass the
following:
ORDER
(i) Appeals filed by the complainant under Section 378(4) of Cr.P.C. are allowed.
(ii) The impugned judgment and order dated 15.09.2021 in C.C.Nos.23855/2019, 23857/2019 and 23860/2019, on the file of XXVII ACMM, Bengaluru are set aside.
(iii) Accused is convicted for the offence punishable under Section 138 of the N.I.Act.
C/W CRL.A.NO.52 OF 2022 CRL.A.NO.55 OF 2022
(iv) In C.C.No.23855/2019, accused is sentenced to pay fine in a sum of Rs. 7,00,000/-.
(v) In C.C.No.23857/2019, accused is sentenced to pay fine in a sum of Rs.16,00,000/-.
(vi) In C.C.No.23860/2019, accused is sentenced to pay fine in a sum of Rs.12,00,000/-.
(vii) In default of payment of fine, accused is sentenced to undergo imprisonment for a period of one year each.
(v) The entire fine amount recovered is ordered to be paid to the complainant by way of compensation.
(vi) The Registry is directed to return the trial Court records along with copy of this judgment to the trial Court.
Sd/-
JUDGE
RR
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