Karnataka High Court

Sri Bhaskar Ravishankar vs M/S Sri Srinivasa Stores on 28 May, 2024

                           1            CRL.A NO.77 OF 2015




   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 28TH DAY OF MAY, 2024

                       BEFORE

           THE HON'BLE MS.JUSTICE J.M.KHAZI

           CRIMINAL APPEAL NO.77 OF 2015

BETWEEN:

SRI. BHASKAR RAVISHANKAR
S/O B CHANDRASHEKAR
AGED ABOUT 57 YEARS
R/AT NO.4266, 1ST FLOOR
19TH MAIN A BLOCK
2ND MAIN, RAJAJINAGAR
BENGALURU - 560 010
                                         ......APPELLANT
(BY SRI. H A MANJUNATHA, ADVOCATE)

AND:

M/S SRI SRINIVASA STORES
PROP: K NAGARAJA RAO
S/O A V KRISHNA RAO
AGED ABOUT 50 YEARS
R/AT NO.173, 12TH CROSS
3RD MAIN, MAHALAKSHMIPURAM
BENGALURU - 560 086
                                     .......RESPONDENT
(BY SRI. SHRINIVAS M KULKARNI, ADVOCATE)

     THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378
OF CR.P.C PRAYING TO a) SET ASIDE THE ORDER OF
ACQUITTAL DATED 7.11.2014, PASSED BY THE XX ADDL.
CHIEF METROPOLITAN MAGISTRATE, BENGALURU CITY IN
C.C.NO.24787/2010 BY CONVICTING THE RESPONDENT FOR
THE OFFENCE PUNISHABLE UNDER SECTION 138 OF
NEGOTIABLE INSTRUMENTS ACT; AND b) PASS SUCH OTHER
ORDER OR ORDERS AS THIS HON'BLE COURT DEEMS FIT TO
GRANT IN THE CIRCUMSTANCES OF THE CASE IN THE
INTEREST OF JUSTICE.
                               2                CRL.A NO.77 OF 2015




     THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
18.03.2024, COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
                       JUDGMENT

In this appeal 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. 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

issued cheque dated 10.03.2010 for a sum of Rs.15 lakhs

towards discharge of his liability towards the complainant

as per the sale agreement dated 09.11.2006 and the

receipt dated 27.06.2008. However, when complainant

presented the said cheque for realisation through his

account, it was returned with endorsement dated

11.03.2010 as "Funds insufficient". In this regard,

complainant got issued legal notice dated 15.03.2010. It

is duly served on the accused on 17.03.2010. Instead of

paying the amount due, the accused has sent an evasive

reply and hence the complaint.

4. Accused appeared through the counsel and

contested the case by pleading not guilty.

5. In order to prove the allegation against the

accused, the complainant has examined himself as PW-1

and got marked Ex.P1 to 7.

6. During the course of his statement under

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

incriminating evidence led by the complainant.

7. In fact, he has also stepped into the witness

box and examined himself as DW-1. He has relied upon

Ex.D1.

8. Vide the impugned judgment and order, the

trial Court acquitted the accused and dismissed the

complaint.

9. Aggrieved by the same, the complainant has

filed this appeal, contending that the impugned judgment

and order are illegal, arbitrary and not in accordance with

law. The trial Court has failed to appreciate the oral and

documentary evidence placed on record in right

perspective. The trial Court has committed grave error in

holding that the accused was liable to pay only Rs.11

lakhs, but the complainant is claiming Rs.15 lakhs and

thereby trying to make unlawful gain. It has also erred in

holding that except the signature, the rest of the writing

in the subject cheque is not in the handwriting of

accused and it supports the defence taken by him.

Viewed from any angle, the impugned judgment and

order are not sustainable and pray to allow the appeal,

convict the accused and punish him in accordance with

law.

10. On the other hand, learned counsel for

accused has supported the judgment and order and

sought for dismissal of the appeal.

11. Thus, it is the definite case of the

complainant that accused agreed to sell immovable

property to him for a sum of Rs.18 lakhs and received

advance of Rs.15 lakhs. However, for some reason the

deal did not went through and therefore towards

repayment of the amount due to the complainant,

accused issued the subject cheque. It came to be

dishonoured for want of sufficient funds and after issuing

legal notice and on non-compliance of the same, he has

filed the complaint.

12. Accused admitted that the cheque in question

belongs to him, drawn on his account maintained with his

banker and it bears his signature. He also admit the sale

agreement entered into between the complainant and

himself and the receipt of Rs.15 lakhs from the

complainant and that for some reason the deal could not

be completed. He has taken a definite stand that in

respect of advance amount, he has already paid Rs.9

lakhs and only the balance is due. The complainant who

had taken blank cheques from him has chosen to file this

complaint utilising one such cheque.

13. Having regard to the fact that accused admit

receipt of Rs.15 lakhs and execution of the sale

agreement and also the fact that the subject cheque

belongs to him, drawn on his account maintained with his

banker and it bears his signature, the presumption under

Section 139 of the N.I Act comes into play in favour of

the complainant to the effect that the cheque was issued

towards repayment of any legal recoverable debt or

liability, placing the initial burden on the accused to rebut

the same and establish that the cheque was not issued

towards repayment of any legally recoverable debt or

liability and the circumstances in which the cheque has

gone to the hands of complainant.

14. During the course of his evidence, the

complainant has reiterated the complaint averments. In

addition to the regular documents and sale agreement,

the complainant has also produced photo copy of receipt

for having received Rs.9 lakhs from the accused and

agreed to receive balance of Rs.6 lakhs within

31.07.2008. He has also agreed to pay a sum of Rs.5

lakhs by way of penalty and get a cancellation deed

executed through the complainant.

15. During his cross-examination, the

complainant has admitted that the transaction between

him and accused could not be proceeded with and

therefore as per Ex.P6, he has received a sum of Rs.9

lakhs out of Rs.15 lakhs due from the accused and issued

receipt as per Ex.P6. Thus the fact of complainant having

received Rs.9 lakhs out of Rs.15 lakhs due from the

accused is not disclosed by the complainant and as

though the entire sum of Rs.15 lakhs is due, he has

presented the cheque for the entire amount. Accused has

alleged that at the time of executing the consideration

receipt, complainant had taken two blank signed

cheques, including Ex.P1 from him and misusing the

same he has filed the complaint.

16. In the consideration receipt at Ex.P6 there is

also a clause that for having failed to execute the sale

deed, he is liable to pay Rs.5 lakhs by way of penalty.

Even if this penalty amount of Rs.5 lakhs is added to the

balance of Rs.6 lakhs due, the total sum liable to be paid

by the accused comes to Rs.11 lakhs. Therefore, as on

the date of presentation of the cheque, Rs.15 lakhs was

not due from the accused. Therefore, Ex.P1 does not

reflect the actual amount due from the accused.

17. At this stage, it is relevant to refer to Section

56 of N.I. Act which deals with endorsement for part of

sum due. It provides that no writing on a negotiable

instrument is valid for the purpose of negotiation if such

writing purports to transfer only a part of the amount

appearing to be due on the instrument; but where such

amount has been partly paid a note to that effect may be

endorsed on the instrument, which may then be

negotiated for the balance.

18. In Dashrathbhai Trikambhai Patel Vs. Hitesh

Mahendrabhai Patel and Anr. (Dashrathbhai)1, the

Hon'ble Supreme Court has dealt with the effect of part

2022 SCC Online SC 1376: (2023) 1 SCC 578

payment made after the cheque is drawn, but before it is

encashed and it is dishonoured for the entire sum. It held

that:

For attracting Section 138, as per proviso(b) a demand notice needs to be made by the drawee and an Omni bus demand notice (For the entire sum) without specifying as to what was the amount due under the dishonoured cheque would not subserve the requirement of law. Further, when a part payment of the debt is made after the cheque was drawn, but before the cheque is encashed, such payment, held, must be endorsed on the cheque under Section 56 of N.I Act, and the cheque cannot be presented for encashment without recording part payment. Therefore, if the unendorsed cheque is dishonoured on presentation, the offence under Section 138 of N.I act would not attract, since the cheque does not represent illegally recoverable debt at the time of encashment.

19. At para No.34 of the judgment, the Hon'ble

Supreme Court summarized the conclusions as under:

"34.1 For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation. 34.2 If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon

maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque.

34.3 When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted. 34.4 The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the "legally enforceable debt"

on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds.

34.5 The notice demanding the payment of the "said amount of money" has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offence under Section 138, the validity of the form of the notice need not be decided."

20. Thus, as per Section 56 of N.I. Act, an

indorsement for part of the amount appearing to be due

on the instrument is prohibited. However, as per the

second part of the Section, there is no impediment for

the complainant to make a note on the cheques

regarding the part payment and present it for balance.

When the accused has made part payments, the

complainant was not supposed to claim the entire

amount due under the cheque. He was required to give

deductions to the payments made and present the

cheque only for balance amount.

21. Thus as held in Dashrathbhai Trikambhai