Karnataka High Court
Shri A Mohan Das vs Shri Himanshu Gupta on 22 November, 2024
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CRL.A No. 135 of 2023
C/W CRL.A No. 56 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF NOVEMBER, 2024
BEFORE
THE HON'BLE MRS JUSTICE M G UMA
CRIMINAL APPEAL NO. 135 OF 2023 (A)
C/W
CRIMINAL APPEAL NO. 56 OF 2021
BETWEEN:
SHRI. A. MOHAN DAS
AGED 71 YEARS
SON OF LATE H.S. ARUNACHALAM
RESIDING AT: NO.753, FERNS PARADISE
DODDANAKUNDI, MARATHAHALLI
BENGALURU - 560 037
...COMMON APPELLANT
(BY SRI. PALLAVA .R., ADVOCATE)
Digitally
signed by
NANDINI B G AND:
Location: high SHRI. HIMANSHU GUPTA
court of ADDITIONAL DIRECTOR AND
karnataka AUTHORIZED SIGNATORY
M/S. ESVEEGEE REALTY
(GUJARAT) PRIVATE LIMITED
RESIDING AT NO.65
LAUGHING WATERS
RAMAGONDANAHALLI
WHITEFIELD
BENGALURU - 560 066
...COMMON RESPONDENT
(BY SRI. GURUSWAMY K.S., ADVOCATE)
CRL.A.NO.135/2023 IS FILED UNDER SECTION 378(4) CR.P.C
PRAYING TO SET ASIDE THE IMPUGNED JUDGMENT AND ORDER OF
ACQUITTAL DATED 01.12.2022 PASSED BY THE XXXIV A.C.M.M.,
MAYO HALL BENGALURU IN C.C.NO.50026/2020; CONVICT THE
RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER
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CRL.A No. 135 of 2023
C/W CRL.A No. 56 of 2021
SECTION138 OF NI ACT AND IMPOSE MAXIMUM SENTENCE OF
IMPRISONMENT AND FINE AVAILABLE UNDER LAW.
CRL.A.NO.56/2021 IS FILED UNDER SECTION 378(4) CR.P.C
PRAYING TO SET ASIDE THE IMPUGNED JUDGMENT AND ORDER OF
ACQUITTAL DATED 01.12.2020 PASSED BY THE XXXIV ADDL.
C.M.M., MAYO HALL, BENGALURU IN C.C.NO.52483/2019 -
ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE
PUNISHABLE UNDER SECTION 138 OF N.I. ACT.
THESE CRIMINAL APPEALS, COMING ON FOR FINAL HEARING,
THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MRS JUSTICE M G UMA
COMMON ORAL JUDGMENT
The complainant in CC No.52483 of 2019 and CC
No.50026 of 2020 on the file of the learned XXXIV Additional
Chief Metropolitan Magistrate, Mayo Hall, Bengaluru, is
impugning the judgment dated 01.12.2020 and 01.12.2022
respectively, acquitting the respondent - accused for the
offence punishable under Section 138 of the Negotiable
Instruments Act (for short 'the NI Act'), holding that the
complainant is not successful in proving the guilt of the accused
beyond reasonable doubt, has preferred these appeals.
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2. For the sake of convenience, the parties shall be
referred to as per their rank and status before the Trial Court.
3. Brief facts of the case are that, the complainant has
filed the private complaint in PCR No.50217 of 2018 and PCR
No.50218 of 2019 against the accused alleging commission of
offence punishable under Section 138 of NI Act. It is
contended that one M/s ESVEEGEE Realty (Gujarat) Pvt. Ltd.,
(hereinafter referred to as the 'Company') is engaged in
business of real estate and formed residential layout comprising
of several sites of different dimensions, by name 'Highlands' in
Sy.Nos.58 and 61 of Dadahalli Village, Jayapura Hobli, Mysore
Taluk.
4. The complainant along with his wife Smt Malathi
Mohan was desirous of purchasing site No.19 measuring 2324
sq.ft. and entered into an agreement of sale with the accused
on 05.01.2011 by paying the entire sale consideration of
Rs.12,66,580/-. The accused represented the said Company
and received the consideration amount by executing the
agreement dated 05.01.2011. The accused has not executed
the sale deed in respect of site No.19, but later during 2016,
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the complainant and his wife came to know that site No.19
agreed to be sold by the accused in their favour was in fact sold
in favour of a third party by name Dr.Harsha. When they
contacted the accused, he agreed to return the consideration
amount paid by them and executed Memorandum of
Understanding (MOU) dated 01.06.2018 agreeing to repay the
amount and issued 5 post dated cheques as referred to in MOU,
towards discharge of legally enforceable debt. When the
cheques were presented for encashment, same were
dishonored as funds insufficient.
5. Two separate legal notices were issued to the
accused, one in respect of cheque bearing No.758087 dated
25.10.2018 for Rs.2,90,000/- and another in respect of other 4
cheques bearing No.758083 dated 18.06.2018 for
Rs.3,00,000/-, No.758084 dated 25.07.2018 for Rs.3,00,000/-,
No.758085 dated 25.08.2018 for Rs.2,00,000/- and No.758086
dated 25.09.2018 for Rs.2,00,000/- calling upon him to pay the
cheque amount. Both these notices was served on the
accused, but in spite of service of notice, the accused has not
repaid the cheque amounts nor replied to the notices and
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thereby, he has committed the offence punishable under
Section 138 of NI Act.
6. The Trial Court took cognizance of the offence in
both the cases and registered CC No.52483 of 2019 and CC
No.50026 of 2020 respectively and summoned the accused.
The accused appeared before the Trial Court and pleaded not
guilty. The complainant in CC No.52483 of 2019 examined
himself as PW1 and got marked Exs.P1 to P12 in support of his
contention. The accused denied all the incriminating materials
available on record and examined himself as DW1. In CC
No.50026 of 2020, the complainant examined himself as PW1
and got marked Exs.P1 to P16 in support of his contention. The
accused denied all the incriminating materials available on
record, examined himself as DW1 and got marked Exs.D1 to
D15 in support of his defence. The Trial Court after taking into
consideration all these materials on record passed the
impugned judgments as referred to above and acquitted the
accused holding that the complainant has not proved the guilt
of the accused beyond reasonable doubt. Being aggrieved by
the same, the complainant is before this Court.
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7. Heard Sri R Pallava, learned counsel for the
appellant and Sri K S Guruaswamy, learned counsel for the
respondent. Perused the materials including the Trial Court
records.
8. Learned counsel for the complainant contended that
the accused is the authorized signatory and Additional Director
of the Company, which formed residential layout in Mysuru and
offered to sell site No.19 in favour of complainant. The accused
had entered into agreement of sale with the complainant as per
Ex.P11 in CC No.52483 of 2019 and as per Ex.P15 in CC
No.50026 of 2020 and agreed to sell site No.19 of Highland
project for a total consideration of Rs.12,66,580/-. The entire
amount was received by the accused. But later, on
30.01.2012, on behalf of the company, the accused sold the
said site No.19 in favour of Dr.Harsha. When these facts came
to the knowledge of the complainant, he approached the
accused and demanded back the amount. At that time, it was
the accused who entered into MOU dated 01.06.2018 marked
as Ex.P12 in CC No.52483 of 2019 and Ex.P16 in CC No.50026
of 2020 undertaking to repay the amount that was due to be
paid to the complainant and accordingly issued 5 post dated
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cheques, which are the subject matter of these two complaints.
When the cheques were presented for encashment, all the 5
cheques were dishonored and two different legal notices were
sent to the accused informing him about dishonor of the
cheques and calling upon him to pay the cheque amounts. In
spite of that, the accused has not repaid the cheques amount,
thereby, committed the offence under Section 138 of NI Act.
9. Learned counsel contended that the accused has
admitted entering into agreement of sale agreeing to sell site
No.19 in favour of the complainant. He also admits entering
into MOU and issuing of personal cheques of the accused
towards repayment of legally enforceable debt. Either the
agreement of sale or MOU relied on by the complainant was
never disputed by the accused. The only defence taken by the
accused is that, agreement of sale was entered into with the
complainant by the accused in his capacity as authorized
signatory of the Company and therefore, he is not personally
liable to pay the cheque amounts. Learned counsel placed
reliance on the decision of the Hon'ble Apex Court in
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Mainuddin Abdul Sattar Shaikh Vs Vijay D Salvi1, in
support of his contention that when the accused has issued his
personal cheques towards discharge of legally enforceable debt,
he is liable for conviction.
10. Learned counsel contended that the Trial Court
proceeded to acquit the accused accepting the defence taken
by the accused by holding that the Company and its Directors
are not arrayed as accused and the accused is only the
authorized signatory of the Company and therefore, he is not
personally liable for conviction. The impugned judgment of
acquittal passed by the Trial Court in both the cases are illegal
and perverse and the same are liable to be set aside.
Accordingly, he prays for allowing the appeals.
11. Per contra, learned counsel for the respondent
opposing the appeals submitted that entering into agreement of
sale by the accused in his capacity as authorized signatory of
the Company is admitted. It is admitted that MOU referred to
above was entered into between the complainant and the
accused. The accused agreed to repay the amount paid by the
(2015) 9 SCC 622
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complainant only on behalf of Company and not in his personal
capacity. However as security, 5 cheques were issued on
behalf of the Company. But the accused is not personally liable
to pay the amount. The Company or its Directors are not made
as parties by the complainant. Under such circumstances, the
Trial Court has rightly dismissed the complaint.
12. Secondly, learned counsel for the respondent
contended that legal notice was never served on the accused
and therefore, the offence under Section 138 of NI Act is not
complete. On that count also, the Trial Court is right in
acquitting the accused. Accordingly, he prays for dismissal of
the appeal.
13. In view of the rival contentions urged by learned
counsel for both the parties, the point that would arise for my
consideration is:
"Whether the impugned judgment of acquittal
passed by the Trial Court suffers from perversity or
illegality, which calls for interference by this
Court?"
My answer to the above point is in the 'Affirmative' for
the following:
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REASONS
14. The contention of the complainant that he had
entered into an agreement of sale as referred to above with the
accused being the authorized signatory of the M/s ESVEEGEE
Realty (Gujarat) Pvt. Ltd., is not in dispute. The accused has
not disputed that he had received Rs.12,66,580/- from the
complainant as consideration for site No.19 formed in Highland
project. It is the contention of the accused that he had
received the amount and entered into agreement of sale for
and on behalf of the Company, but not in his individual
capacity. It is also admitted that the accused had agreed to
repay the consideration amount of Rs.12,66,580/- and MOU as
referred to above was executed. Again it is the contention of
the accused that he had indeed executed MOU, but it was in his
capacity as authorized signatory of the Company and not in his
individual capacity. A specific defence was taken by the
accused that 5 cheques referred to by the complainant in two
different complaints were issued by the accused only as
security, but not towards discharge of any debt or liability.
Under such circumstances, it is the contention of the accused
that the Company and its Directors should have been arrayed
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as accused and in their absence, offence under Section 138 of
NI Act is not made out.
15. The complainant examined himself as PW1 and got
marked relevant documents. Similarly, accused also stepped
into the witness box and put forth his defence. He got marked
Exs.D1 to D15 in CC No.50026 of 2020. Even though
voluminous documents are relied on by both the parties, the
only dispute that arise for consideration is as to whether the
accused is liable to honor the cheques, which were issued
under the MOU towards discharge of legally enforceable debt
payable to the complainant by the Company.
16. Learned counsel for the appellant places reliance on
the decision of the Hon'ble Apex Court in Mainuddin Abdul
Sattar Shaikh (supra), wherein the Court considered a similar
situation and held in paragraphs 9, 11 and 13 as under:
"9. From a bare reading of Section 138 of
the NI Act, the following essentials have to be met
for attracting a liability under the section. The first
and foremost being that the person who is to be
made liable should be the drawer of the cheque
and should have drawn the cheque on an account
maintained by him with a banker for payment of
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any amount of money to another person from out
of that account for discharge in whole or part, of
any debt or other liability. We see that from the
bare test of the section it has been stated clearly
that the person, who draw a cheque on an account
maintained by him, for paying the payee, alone
attracts liability.
11. About the liability under Section 138 of
the NI Act, where the cheque drawn by the
employee of the appellant Company on his personal
account, even if it be for discharging dues of the
appellant Company and its Directors, the appellant
Company and its Directors cannot be made liable
under Section 138. Thus, we observe that in the
abovementioned case, the personal liability was
upheld and the Company and its Directors were
absolved of the liability. The logic applied was that
the section itself makes the drawer liable and no
other person. This Court in P J Agro Tech Ltd., VS
Water Base Ltd. [SCC p.150, para 14] noted as
under:
"14. ... An action in respect of a criminal or a
quasi criminal provision has to be strictly construed
in keeping with the provisions alleged to have been
violated. The proceedings in such matters are in
personam and cannot be used to foist an offence
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on some other person, who under the statute was
not liable for the commission of such offence."
Going by the strict interpretation of the
provision, the drawer which in the present case is
the respondent, is liable under Section 138 of the
NI Act.
13. Thus, in the light of the position which
the respondent in the present case held, we are of
the view that the respondent be made liable under
Section 138 of the NI Act, even though the
Company had not been named in the notice or the
complaint. There was no necessity for the appellant
to prove that the said respondent was in charge of
the affairs of the Company, by virtue of the position
be held. Thus, we hold that the respondent Vijay
D. Salvi is liable for the offence under Section 138
of the NI Act."
(emphasis supplied)
17. In view of the above, it is clear that the drawer of
the cheques alone will be liable for the offence under Section
138 of NI Act, but not the Company or it Directors, who
admittedly not the drawer of the cheques. In other words,
even if the accused has issued the cheque as the drawer, for
discharge of debt or liability pertaining to the Company he
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being the drawer of the cheques is liable for the offence under
Section 138 of NI Act.
18. In the present case, admittedly, the Company had
not issued any cheques nor its Directors have issued any
cheques. Even though the accused has signed the documents
as authorized signatory of the Company, the cheques in
question which are the subject matter of the complaints were
the personal cheques of the accused. It was the accused who
was the drawer of the cheques and when the cheques were
presented for encashment, all the 5 cheques were dishonored
as insufficient funds. Admittedly, the accused has not repaid
the cheque amounts. Under such circumstances, the offence
under Section 138 of NI Act is complete.
19. The other defence taken by the accused is that, he
has issued 5 cheques referred to in MOU which are subject
matter of the complaints only as security, but not intended to
be presented for encashment. This contention cannot be
accepted even for a moment. It is now settled position of law
that even issuance of blank cheque with signature of the
drawer, as security attracts the penal provision under Section
138 of NI Act.
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20. In this regard, I may refer to the decision of Bir
Singh Vs. Mukesh Kumar2, where the Court has made the
position very clear in paragraphs 34 and 36 as under:
"34. If a signed blank cheque is voluntarily
presented to a payee, towards some payment, the
payee may fill up the amount and other particulars.
This in itself would not invalidate the cheque. The onus
would still be on the accused to prove that the cheque
was not in discharge of a debt or liability by adducing
evidence.
36. Even a blank cheque leaf, voluntarily signed
and handed over by the accused, which is towards
some payment, would attract presumption under
Section 139 of the Negotiable Instruments Act, in the
absence of any cogent evidence to show that the
cheque was not issued in discharge of a debt."
21. Learned counsel for the respondent places reliance
on the decision of the Hon'ble Apex Court in Krishna
Janardhan Bhat Vs Dattatraya G Hegde3, to contend that
presumption under Section 139 of NI Act merely raises a
presumption in favour of the holder of the cheque that the
same has been issued towards discharge of debt or liability, but
2 (2019) 4 SCC 197
(2008) 4 SCC 54
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the existence of legally enforceable debt is not a matter of
presumption under Section 139 of NI Act. But this finding
recorded by the Hon'ble Apex Court is already held as not good
law. In Rangappa Vs. Sri. Mohan'4, where the Hon'ble Apex
Court has made the position of law very clear and held in
paragraphs 26 which reads as under:
"26. In light of these extracts, we are in
agreement with the respondent claimant that the
presumption mandated by Section 139 of the Act
does indeed include the existence of a legally
enforceable debt or liability. To that extent, the
impugned observations in Krishna Janardhan Bhat
may not be correct. However, this does not in any
way cast doubt on the correctness of the decision in
that case since it was based on the specific facts
and circumstances therein. As noted in the
citations, this is of course in the nature of a
rebuttable presumption and it is open to the
accused to raise a defence wherein the existence of
a legally enforceable debt or liability can be
contested. However, there can be no doubt that
there is an initial presumption which favours the
complainant."
(emphasis supplied)
4 (2010) 11 SCC 441
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Therefore, the contention of the learned counsel for the
accused holds no water.
22. Learned counsel for the respondent further
submitted that legal notices sent by the complainant are not
served on the accused. The complainant in CC No.52483 of
2019 produced postal track receipt to show that article is
served on the addressee. In CC No.50026 of 2020 the
complainant has produced the postal acknowledgment for
having served notice, which is as per Ex.P14. As per these
documents, notice is duly served on the addressee. Under such
circumstances, the contention of the learned counsel for the
respondent that address was not complete or that the same
was not served on the accused, cannot be accepted. When the
address mentioned in the agreement of sale, MOU and also in
the complaints presented by the complainant are one and the
same, which are found in the legal notice, the contention taken
by the accused in that regard is liable to be rejected.
Accordingly, it is rejected.
23. From the discussions held above, it is clear that the
accused had entered into the agreement of sale and accepted
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consideration amount of Rs.12,66,580/- as authorized
signatory of the Company and also entered into MOU agreeing
to repay the said amount to the complainant, issued 5 post
dated cheques as referred to in the MOU and all 5 cheques
were issued by the accused in his personal capacity, but not on
behalf of the Company. Admittedly, cheques were drawn from
the personal bank account of the accused, and it was the
accused who is the drawer of the cheques. Under such
circumstances, when the accused has failed to discharge his
burden by rebutting the legal presumption under Section 139 of
NI Act, he is liable for conviction.
24. I have gone through the impugned judgment of
acquittal passed by the Trial Court. The Trial Court proceeded
to acquit the accused solely on the ground that the Company
and its Directors are not made as parties. It has not taken into
consideration the settled proposition of law that it is only the
drawer of cheque is liable for conviction under Section 138 of
NI Act. When admittedly Company or its Directors are not the
drawer of cheques, the findings recorded by the Trial Court is
perverse and illegal and the same is liable to be set aside.
Accordingly, I answer the above point in the affirmative.
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REGARDING SENTENCE
Heard learned counsel for the appellant and learned
counsel for the respondent on imposition of sentence.
Learned counsel for the respondent submitted that
maximum leniency may be shown while sentencing the
accused.
Learned counsel for the appellant submitted that the
amount of Rs.12,66,580/- was paid under the agreement of
sale dated 05.01.2011 and cheques were issued in the year
2018. In all, the complainant has paid Rs.12,90,0000/- to the
accused. Even if the said amount was to be invested in any of
the nationalized banks, it would have fetched interest of about
Rs.6,00,000/-. Coupled with legal expenses, the accused is
liable for sentence with double the cheque amounts.
Accordingly, he prays for imposing maximum sentence.
On consideration of the materials on record, it is clear
that the accused voluntarily issued 5 post dated cheques under
the MOU which is an admitted document. However, he has
taken an untenable defence that he is not liable for the cheques
amount and it was only the Company, which is liable. But the
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Trial Court accepted the said contention and acquitted the
accused. Under such circumstances, I am of the opinion that
accused is not liable for maximum sentence or substantive
sentence. If the accused is sentenced only to pay fine, that
would meet the ends of justice.
Accordingly, I proceed to pass the following:
ORDER
(i) The Criminal Appeal is allowed.
(ii) The judgment dated 01.12.2020 passed in CC
No.52483 of 2019, dated 01.12.2022 passed in CC No.50026 of
2020 on the file of the learned XXXIV Additional Chief
Metropolitan Magistrate, Mayo Hall Unit, Bengaluru, is hereby
set aside.
(iii) Consequently, the accused is convicted for the
offence punishable under Section 138 of NI Act and in CC
No.52483 of 2019, the accused is sentenced to pay fine of
Rs.3,50,000/- to be paid within eight weeks and in default to
pay fine amount, to undergo simple imprisonment for a period
of one year. Out of the fine amount, Rs.3,40,000/- to be paid
to the complainant as compensation.
(iv) The accused is convicted in CC No.50026 of 2020,
and is sentenced to pay fine of Rs.13,00,000/- to be paid within
eight weeks and in default to pay fine amount, to undergo
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simple imprisonment for a period of one year. Out of the fine
amount, Rs.12,90,000/- to be paid to the complainant as
compensation.
Registry is directed to send back the Trial Court records
for information and for needful action.
Sd/-
(M G UMA)
JUDGE
*bgn/-
CT:VS
