Karnataka High Court

Sumanth Finance vs Ganapati H Hedge on 1 August, 2025

                                                   -1-
                                                               NC: 2025:KHC-D:9595
                                                         CRL.A No. 100357 of 2017


                      HC-KAR



                         IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
                               DATED THIS THE 1ST DAY OF AUGUST 2025
                                                BEFORE
                               THE HON'BLE MR. JUSTICE C.M. POONACHA
                               CRIMINAL APPEAL NO. 100357 OF 2017 (A-)

                      BETWEEN:

                      SUMANTH FINANCE,
                      NEAR GOVINDRA HALL,
                      R/BY ITS MANAGING PARTNER/MANAGER,
                      BHARATI S. MADIVALA, AGE: 45 YEARS,
                      VIKASA ASHRAM CIRCLE, SIRSI, (U.K.)-581401.
                                                                       ...APPELLANT
                      (BY SRI. SURAJ M. KATAGI FOR
                          SRI. V.G. BHAT, ADVOCATES)

                      AND:

                      GANAPATI S. HEDGE,
                      AGE: 47 YEARS, OCC: AGRICULTURE,
                      R/O: ELEGUNDI HITTALLI,
                      TQ: YELLAPUR, (U.K.)-581331.
                                                                     ...RESPONDENT
                      (BY SRI. VISHWANATH HEGDE, ADVOCATE)
YASHAVANT
NARAYANKAR                  THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF
                      CR.P.C., SEEKING TO CALL FOR THE RECORDS IN CRIMINAL APPEAL
Digitally signed by
YASHAVANT             NO.122/2011 ON THE FILE OF 1ST ADDITIONAL SESSIONS JUDGE,
NARAYANKAR
Location: HIGHCOURT
OF KARNATAKA
                      KARWAR, SITTING AT SIRSI AND C.C. NO.1808/2000 ON THE FILE
DHARWAD BENCH
DHARWAD               OF IIND ADDITIONAL J.M.F.C. SIRSI; TO SET-ASIDE THE JUDGMENT
                      AND ORDER DATED 18.07.2017 PASSED BY THE IST ADDITIONAL
                      SESSIONS JUDGE U.K. KARWAR, SITTING AT SIRSI IN CRIMINAL
                      APPEAL NO.122 OF 2011 BY RESTORING THE JUDGMENT OF
                      CONVICTION AND ORDER DATED 26.09.2011 IN C.C.NO.1808 OF
                      2000 PASSED BY THE II ADDITIONAL J.M.F.C. SIRSI. CONVICTING
                      RESPONDENT ACCUSED FOR THE OFFENCE PUNISHABLE UNDER
                      SECTION 138 OF NEGOTIABLE INSTRUMENT ACT AND PASS SUCH
                      OTHER ORDER FOR ENHANCEMENT OF PUNISHMENT AND
                      COMPENSATION WITH INTEREST ETC. AS THIS HONORABLE COURT
                      THINKS PROPER UNDER THE CIRCUMSTANCE OF THE CASE, IN THE
                      INTEREST OF JUSTICE AND EQUITY AND ETC.
                                          -2-
                                                        NC: 2025:KHC-D:9595
                                                 CRL.A No. 100357 of 2017


    HC-KAR



     THIS APPEAL, COMING ON FOR HEARING,                            THIS        DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM:        THE HON'BLE MR. JUSTICE C.M. POONACHA

                                  ORAL JUDGMENT

The present appeal is filed under Section 378(4) of the

Code of Criminal Procedure, 19731, seeking to set aside the

judgment and order dated 18.07.2017 passed in Crl.Appeal

No.122/2011 by the I Additional District and Sessions Judge,

U.K.Karwar, Sitting at Sirsi2 and seeking to restore the

judgment of conviction and order dated 26.09.2011 passed in

C.C.No.1808/2000 by the II Additional JMFC, Sirsi3.

2. The relevant facts in a nutshell leading to the present

appeal are that the appellant/complainant, a financial

institution, filed a complaint under Section 138 of the

Negotiable Instruments Act, 18814, against the

respondent/accused contending, inter alia, that the respondent

had borrowed a sum of ₹25,000/- on 14.09.1999 agreeing to

repay the same in eight Equated Monthly Installment5 with

interest at 21% per annum. That the respondent failed to repay

Hereinafter referred to as the 'Cr.P.C'

Hereinafter referred to as the 'Sessions Court'

Hereinafter referred to as the 'Magistrate Court'

Hereinafter referred to as the 'N.I. Act'

Hereinafter referred to as the 'EMI'

NC: 2025:KHC-D:9595

HC-KAR

the loan amount and when the complainant demanded for

payment of the same, the accused issued a cheque dated

16.03.2000 for ₹26,000/-. That the complainant presented the

said cheque through his bank on 16.03.2000, which was

dishonoured with the endorsement "account closed". The

complainant got issued a legal notice on 03.04.2000, which

notice was served on the accused on 04.04.2000. However,

there was no reply to the said notice. Subsequently, the

complainant filed a complaint in C.C.No.1808/2000, which was

contested by the accused.

3. The Magistrate Court, vide judgement dated

16.01.2008, dismissed the complaint and acquitted the

accused. Being aggrieved, the complainant preferred the

Crl.Appeal No.272/2008 before this Court, which appeal was

allowed on 02.03.2009 and the matter was remitted back to

the Magistrate Court. Thereafter, the complainant having

adduced further evidence, the Magistrate Court, vide judgment

dated 26.09.2011, allowed the complaint and convicted the

accused of the offence punishable under Section 138 of the N.I.

Act and imposed a fine. Being aggrieved, the accused has

preferred the Crl.Appeal No.122/2011. The complainant

NC: 2025:KHC-D:9595

HC-KAR

entered appearance in the said proceedings and contested the

same. The Sessions Court, vide judgement dated 18.07.2017,

allowed the appeal, set aside the judgment dated 26.09.2011

passed by the Magistrate Court and acquitted the accused of

the offence punishable under Section 138 of the N.I. Act. Being

aggrieved, the complainant has preferred the present appeal.

4. Heard submissions of the learned counsel

Sri.Suraj M. Katagi appearing for the learned counsel

Sri.V.G. Bhat for the appellant/complainant and the learned

counsel Sri. Vishwanath Hegde for the respondent/accused.

5. At the outset, it is pertinent to note that the issuance

of cheque dated 16.03.2000 (Ex.P1) by the accused, the

dishounour of cheque with the endorsement "account closed",

the issuance of legal notice dated 03.04.2000 (Ex.P4) as also

the postal acknowledgment (Ex.P5) are undisputed.

6. The sole ground on which the proceedings instituted

by the complainant have been contested by the accused is that

the intimation of dishonour of cheque was received by the

complainant on 16.03.2000, consequent to which, the notice

was issued on 03.04.2000, beyond the period of 15 days as

NC: 2025:KHC-D:9595

HC-KAR

contemplated under the Proviso (b) to Section 138 of the N.I.

Act (prior to amendment). In this context, it is pertinent to

notice that an attested copy of the endorsement (Ex.P2) was

initially marked in evidence. Subsequently, after remand, the

complainant examined the manager of bank as CW.1 and

marked the carbon copy of the endorsement dated 16.03.2000

(Ex.C1). It is forthcoming from a perusal of the said

endorsements (Ex.P2 and Ex.C1) that the same was issued by

the banker of complainant on 16.03.2000, whereas an

acknowledgement for having received the said endorsement is

made on 28.03.2000.

7. The Magistrate Court, vide judgement dated

26.09.2011, recorded a finding that the complainant received

the intimation of dishonour of cheque on 28.03.2000 and hence

the notice (Ex.P4) having been issued on 03.04.2000, the same

has been issued within 15 days as contemplated under Proviso

(b) of Section 138 of the N.I. Act. However, the Sessions Court

has recorded a finding that the complainant was very much

aware about the dishonour of cheque dated 16.03.2000 and

hence, the issuance of notice (Ex.P4) is after the statutory

period of 15 days from the date of knowledge.

NC: 2025:KHC-D:9595

HC-KAR

8. At this juncture, the learned counsel for the

respondent/accused also places reliance on the averment made

in the notice (Ex.P4), wherein, it is stated that the complainant

received the intimation from its banker on 16.03.2000. In this

context, it is pertinent to note that, in the complaint, it is

specifically averred that the cheque was dishonoured on

16.03.2000 as "account closed" and the complainant was

informed about the dishonour of cheque on 28.03.2000.

Further, PW.1 in the affidavit, by way of examination in chief,

has specifically deposed that the cheque was dishonoured on

16.03.2000 as "account closed" and the complainant was

informed about the dishonour of cheque on 28.03.2000. It is

also forthcoming from the endorsement (Ex.P2/Ex.C1) that the

said endorsement was issued by the banker of complainant on

16.03.2000, whereas, in the acknowledgment that is

forthcoming in the said endorsement (Ex.P2/Ex.C1), it is

mentioned that the same was received on 28.03.2000.

9. The learned counsel for the respondent/accused

placing reliance on the Proviso (b) to Section 138 of the N.I.

Act vehemently contends that the said Proviso clearly indicates

that the period of 15 days for issuance of notice would

NC: 2025:KHC-D:9595

HC-KAR

commence on "the receipt of information from the bank

regarding return of cheque". In support of the same, reliance is

placed on the notice (Ex.P4), wherein, it is stated that the

complainant had received the intimation from its banker on

16.03.2000. In this context, it is forthcoming from the material

on record that it has been stated that the complainant was

informed telephonically by its banker that the cheque was

dishonoured. However, having regard to the admitted position

that it is mentioned in the endorsement (Ex.P2/Ex.C1) that the

acknowledgement has received on 28.03.2000 and in view of

the specific case of the complainant as averred in the complaint

as also as deposed in the evidence, the finding of the

Magistrate Court regarding the same is just and proper.

10. The learned counsel for the respondent/accused

placing reliance on the findings of the Sessions Court

vehemently contends that there is an interpolation in the date

mentioned in Ex.C1, wherein, the carbon copy marking of the

date is mentioned as "16.03.2000" and the month has

thereafter been corrected by an original ink from "4 to 3" and

that the said aspect of the matter has also been noticed by the

Sessions Court. In this context, it is pertinent to notice that in

NC: 2025:KHC-D:9595

HC-KAR

the endorsement (Ex.P2), which is a photocopy of Ex.C1, which

photocopy has also been attested by the banker of the

complainant, it appears that there is a correction of the month

from "4 to 3". In any event, the said correction having been

made at the earliest point of time and no other imputation is

forthcoming by virtue of the said alleged correction, the

contention put forth on behalf of the respondent/accused is not

liable to be accepted.

11. In view of the discussion made above, this Court is of

the considered opinion that the judgment dated 18.07.2017

passed in Crl.Appeal No.122/2011 is liable to be set aside and

the judgment dated 18.08.2000 passed in C.C.No.1808/2000 is

required to be affirmed.

12. Hence, the following:

ORDER

i) The above appeal is allowed.

ii) The judgment dated 18.07.2017 passed in

Criminal Appeal No.122/2011 by the I

NC: 2025:KHC-D:9595

HC-KAR

Additional District and Sessions Judge,

U.K.Karwar, Sitting at Sirsi, is set aside.