Karnataka High Court
Sri. Karthik vs Sri. P. Ramaswamy on 31 January, 2025
Author: Shivashankar Amarannavar
Bench: Shivashankar Amarannavar
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CRL.A No. 1043 of 2014
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 31ST DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR
CRIMINAL APPEAL No. 1043 OF 2014
BETWEEN:
SRI. KARTHIK
S/O SHRAYAM KUMAR
AGED ABOUT 25 YEARS
RESIDING AT No.3
4TH MAIN, VENKATESWARA LAYOUT
KOTHNUR DINNE MAIN ORAD
BANNERGATTA ROAD
BANGALORE - 560 078.
...APPELLANT
(BY SRI RAMESH ADITHYA, ADVOCATE)
Digitally signed AND:
by HEMAVATHY
GANGABYRAPPA
Location: HIGH SRI. P. RAMASWAMY
COURT OF S/O LATE PILLAPPA
KARNATAKA AGED ABOUT 55 YEARS
ACTIVE FILM MAKER (PRODUCER)
RESIDING AT No.117
5TH CROSS, ROYAL HERITAGE
BANNERGHATTA MAIN ROAD
BANGALORE - 560 083.
...RESPONDENT
(BY SRI U J HARIPRASAD, ADVOCATE)
THIS CRL.A. IS FILED UNDER SECTION 378(4) Cr.P.C
PRAYING TO SET ASIDE THE JUDGMENT AND ORDER
DATED:18.10.14 PASSED BY THE XIII ACMM, BANGALORE IN
C.C.No.146/11 - ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.
ACT AND ETC.,
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CRL.A No. 1043 of 2014
THIS APPEAL COMING ON FOR DICTATING JUDGMENT
THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR
ORAL JUDGMENT
This appeal is filed by the complainant challenging the
judgment of acquittal dated 18.10.2014 passed in
C.C.No.146/2011 by the XIII A.C.M.M., Bengaluru,
whereunder the respondent -accused has been acquitted
for the offence punishable under Section 138 of Negotiable
Instruments Act, 1881 (hereinafter referred to as "N.I.
Act" for brevity).
2. The brief facts of the appellant -complainant's
case is that
The respondent -accused came in contact of the
appellant -complainant in connection with shooting and
production of kannada film "Varshadhare". During the
production of the said film, the respondent -accused
requested to the appellant -complainant to invest
Rs.12,50,000/- for release of the said film and investment
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made by the complainant will be returned on or before
22.02.2010. The accused has under taken to execute an
agreement towards repayment of the said loan amount.
The complainant has paid Rs.12,50,000/- to the
respondent -accused. The respondent -accused in order
to repay the said amount has issued cheque bearing
No.464249 dated 28.02.2010 for Rs.12,50,000/- drawn in
ING Vysya Bank Ltd., Bengaluru. The complainant
presented the said cheque and it came to be dishonoured
with endorsement as "funds insufficient". The complainant
got issued legal notice to the respondent -accused on
22.07.2010 through RPAD and UCP. Inspite of service of
notice the respondent -accused neither replied nor repaid
the cheque amount within stipulated time. Therefore, the
appellant -complainant has filed private complaint against
the respondent -accused for offence punishable under
Section 138 of Negotiable Instruments Act, 1881.
3. Learned Magistrate took cognizance and
registered case against the respondent -accused for
offence punishable under Section 138 of N.I. Act in
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C.C.No.146/2011. The plea of the respondent -accused
has been recorded. The complainant in order to prove his
case has examined himself as P.W.1, got examined other
two witnesses as P.W.2 and P.W.3 and got marked
documents as Ex.P1 to P10. The statement of respondent
-accused came to be recorded under Section 313 of
Cr.P.C. The respondent -accused did not choose to lead
defence evidence. Learned Magistrate after hearing on
both sides has formulated points for consideration and
passed impugned judgment of acquittal. The said
judgment of acquittal has been challenged by the
complainant in this appeal.
4. Heard learned counsel for the appellant and
learned counsel for the respondent.
5. Learned counsel for the appellant would
contend that the appellant -complainant has lent money of
Rs.12,50,000/- to the respondent -accused for release of
the film and for that accused has executed memorandum
of understanding (hereinafter referred to as "MOU" for
brevity) as per Ex.P5 on 22.02.2010 and issued cheque as
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per Ex.P1 dated 22.02.2010 for Rs.12,50,000/-. The
respondent -accused did not repay the said amount
barrowed and therefore, the appellant -complainant
presented the cheque and it came to be dishonoured. He
further submits the signature of the respondent -accused
on Ex.P1 -cheque has been admitted by him therefore, the
presumption under Section 139 of the N.I Act has to be
drawn. He further submits that the respondent -accused
has also admitted his signature on Ex.P5 -MOU and
contended that Ex.P1 and Ex.P5 blank signed cheque and
bond has been taken from his office. As the signature on
cheque has been admitted by the respondent -accused,
the presumption has to be drawn under Section 139 of the
N.I Act. The execution of MOU as per Ex.P5 has been
proved by evidence of witness who has been examined as
P.W.2. The respondent -accused has not sent any reply to
the legal notice and has not lead defence evidence to
rebut the said presumption. Without considering all these
aspects, learned Magistrate erred in passing impugned
judgment of acquittal. With this, he prays to allow the
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appeal and convict the respondent -accused for offence
punishable under Section 138 of N.I Act.
6. Learned counsel for the appellant -complainant
in support of his contention has placed reliance on the
following decisions.
1. Rajesh Jain Vs Ajay Singh1
2. Shaju V.P Vs Shelby Joy2
3. Bharathi Dinesh Poojary V. Anil A.V3
4. K.P. Sharangadharan V State of Kerala4
5. Yogesh Garg Vs Mukut Singh5
6. M. Muhammadali Vs Mannooran Parambil
Abraham Thomas6
7. Pavithra S. Alias Roopashree S.V. Vs
Mahadevappa M.7
7. Learned counsel for the respondent -accused
would contend that the appellant -complainant has no
Reported in 2023 (3) Kar. L.R. 560 (SC)
Reported in 2023 ACD 156 (KER)
Reported in 2023 ACD 36 (KAR)
Reported in 2023 ACD 82 (KER)
Reported in 2023 ACD 262 (MP)
Reported in 2023 ACD 15 (KER)
Reported in 2023 ACS 259 (KAR)
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capacity to lend money of Rs.12,50,000/-. The appellant
has not produced any documents to show that he had
money at the time of lending. Release of the film is prior
to the MOU and therefore, there is no question of any
barrowing for release of the film. The signed cheque and
bond papers have been misused by P.W.2 -brother in law
of the appellant -complainant. P.W.3 who is one of the
witnesses to Ex.P5 -MOU has admitted in his cross
examination that he do not know the contents of the MOU.
The appellant -complainant has not proved his capacity to
lend money and execution of Ex.P5 -MOU. He further
submits that the cheque has been returned with
endorsement "Account Dormant" and that does not
amounts to dishonour of cheque for want of funds. The
evidence of the complainant is contrary to the averments
of the complaint. He further submits that standard of proof
for rebutting presumption is standard of preponderance
of probability. On that point he placed reliance on the
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decision in the case of Basalingappa Vs Mudibasappa8.
He further submits that the presumption can be rebutted
by cross examination of complainant's witnesses and there
is no need for accused to lead his defence evidence. He
further submits that considering all these aspects, learned
Magistrate has rightly acquitted the respondent -accused.
With these, he prayed for dismissed of the appeal.
8. Having heard learned counsels, the Court has
perused the impugned judgment and trial Court records.
Considering the grounds urged, the point arises for my
consideration is
"Whether learned Magistrate has erred in
passing the judgment of acquittal of
respondent -accused for offence punishable
under Section 138 of N.I. Act."?
My answer to the above point is in the affirmative
for the following reasons.
It is specific case of the appellant -complainant that
for the purpose of release of the movie the respondent -
Reported in (2019) 5 SCC 418
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accused has barrowed Rs.12,50,000/- and executed MOU
as per Ex.P5 and has also issued EX.P1 -cheque for
making payment of amount borrowed. The respondent -
accused has admitted his signature on Ex.P1 -cheque and
EX.P5 -MOU. The contention of the respondent -accused
is that he had kept signed cheque and stamp paper in his
office and it has been taken by P.W.2, with the help of his
brother in law he has misused. The respondent -accused
has admitted signature on Ex.P1 -cheque and therefore,
the presumption arises under Section 139 of the N.I Act
that cheque has been issued for making payment of legally
enforceable debt. The said presumption is rebuttable
presumption. The standard of proof for rebutting the said
presumption is preponderance of probability as held by
Hon'ble Apex Court in the case of Basalingappa (supra).
In the said case, the Hon'ble Apex Court has also held that
to rebut the presumption, it is not necessary that the
respondent -accused has to lead his defence evidence and
the presumption can be rebutted even by cross
examination of the complainant's witnesses.
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9. Ex.P5 is MOU dated 22.02.2010 said to have
been entered into between the appellant and respondent.
P.W.2 and P.W.3 are witnesses to the said MOU. P.W.1 in
his evidence has stated regarding the respondent -
accused executing the said MOU and affixing signature on
it in the presence of two witnesses. P.W.2 is one of the
witnesses to MOU -Ex.P5 and he has also deposed
regarding execution of MOU by the respondent -accused
when the respondent -accused barrowed money of
Rs.12,50,000/- from the appellant -complainant. P.W.3 is
another witnesses to MOU -Ex.P5 even though he has
stated that accused has executed MOU -Ex.P5 in his
presence but in his cross examination he has stated that
he do not know the contents of Ex.P5 -MOU. The
complainant has established the execution of the said MOU
-Ex.P5 by the evidence of P.W.1 and one of the witnesses
i.e. P.W.2. The respondent -accused who has taken his
defence that his signed stamp paper has been misused by
P.W.2. In order to establish the said aspect, nothing has
been elicited in the examination of either P.W.1 or P.W.2.
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The respondent -accused has also not entered into witness
box in order to prove his contention. The contention of
the respondent -accused remained bare contention. Even,
the respondent -accused on service of legal notice sent by
the appellant -complainant through certificate of posting
has not choosen to send any reply taking of his defence at
initial stage. Considering all these aspects, the respondent
-accused has failed to rebut the presumption drawn under
Section 139 of the N.I Act. The appellant -complainant
has established that the respondent -accused has
barrowed Rs.12,50,000/- from the appellant -complainant
and executed MOU as per EX.P5 and issued cheque as per
Ex.P1 for making payment of amount barrowed from the
appellant -complainant.
10. The respondent -accused has taken up
contention that the appellant -complainant has no
capacity to lend money to the respondent -accused. In
the cross examination, P.W.1 has stated from whom all he
has brought money in detail. The said aspect has not been
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denied by the respondent -accused. The said evidence of
P.W.1 regarding he taking money from different persons
has remained unchallenged. Therefore, the respondent -
accused has failed to establish that the appellant -
complainant had no capacity to lend money of
Rs.12,50,000/- to him.
11. Learned counsel for the respondent -accused
has taken up contention that cheque -Ex.P1 has been
dishonoured for the reason "Account Dormant". He
submits the said endorsement does not amount to
dishonoured of cheque for want of funds. The word
'dormant' literally means 'inactive' or 'torpid'. Therefore,
when cheque returned unpaid with endorsement "Account
Dormant", it means 'account in active' for want of funds.
It is difficult to lay down a proposition that, when the
account is inactive, there is sufficient amount outstanding
in the said account. It is not the case of the respondent -
accused that there was sufficient balance outstanding in
his account to honour the cheque -Ex.P1. Therefore, the
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return of the cheque with endorsement "Account Dormant"
also is the species of the genus, 'amount of money in
account is insufficient'. In the case of Premajithlal V.P
Vs Peter John Aswez and Another9, the Hon'ble High
Court of Kerala has held as under:
"12. While appraising the first contention, it
is relevant to refer the decision of the Apex Court
reported in [(2012) 13 SCC 375], Laxmi Dyechem
(M/s.) v. State of Gujarat & Ors., where it has
been held that if the cheque is dishonoured with
endorsement `signatures do not match', the said
endorsement is the species of the genus,
`amount of money in account is insufficient'. Thus
it has to be held when cheque returned unpaid,
on presentation for collection, noting any reasons
other than `funds insufficient' in the account of
the drawer/payer of the cheque, the said reasons
are the species of the genus, `amount of money
in account is insufficient'. If the above legal
proposition is applied to the facts of the case, can
it be said that, when a cheque was dishonoured
for the reason `account dormant', the same is not
akin to dishonour of cheque for want of funds? In
this connection, it is relevant to refer the
Reported in 2022 SCC OnLine Ker 6771
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definition of the word `dormant'. `Dormant'
literally means `inactive' or `torpid'. Therefore,
when cheque returned unpaid with endorsement
`account dormant', it means `account inactive'
for want of funds. It is difficult to lay down a
proposition that, when the account is inactive,
there is sufficient amount outstanding in the said
account. Therefore, it has to be held that even
dishonour of cheque with endorsement `account
dormant' also is the species of the genus,
`amount of money in account is insufficient' and
in such scenario, it could not be held that when
the cheque was dishonoured with endorsement
`account dormant' the same would not attract an
offence under Section 138 of the N.I Act."
12. Considering the above aspects, the return of
cheque with endorsement "Account Dormant" has to be
held that it is returned as the amount in the account is
insufficient. The cheque has been dishonoured as per
memo -Ex.P2 dated 13.07.2010 and it is returned to the
complainant. The complainant got issued legal notice as
per Ex.P3 dated 22.07.2010 i.e., within the statutory
period to the respondent -accused by registered post and
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also under certificate of posting. The certificate of posting
is at Ex.P9, return postal cover is at Ex.P10 and content of
that cover has been marked as Ex.P10(a) and legal notice
dated 22.07.2010 got issued by the appellant to the
respondent and it is the original of Ex.P3 -notice dated
22.07.2010. As per Ex.P10 -the postal article has been
retuned as accused was absent and it was retuned on
30.07.2010. Though the complaint has been filed on
13.09.2010 i.e., within the statutory period. The
respondent -accused even inspite of service of notice has
not repaid the cheque amount and therefore, he has
committed offence punishable under Section 138 of the
N.I Act. Without considering all these aspects the learned
Magistrate has erred in acquitting the respondent -
accused for offence punishable under Section 138 of the
N.I Act by passing impugned judgment. The respondent -
accused has to be convicted for offence punishable under
Section 138 of the N.I Act as all ingredients of Section 138
of N.I Act are established.
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13. In the result the following
ORDER
i) The appeal is allowed.
ii) The impugned judgment of acquittal dated
18.10.2014 passed in C.C.No.146/2011 by XIII
A.C.M.M., Bengaluru acquitting the respondent
-accused for offence punishable under Section
138 of the N.I Act is set aside.
iii) The respondent -accused is convicted for
offence punishable under Section 138 of the N.I
Act and he has been sentenced to pay fine of
Rs.12,60,000/- and in default of payment of
said fine amount he shall undergo simple
imprisonment for a period of 06 months.
iv) Out of the fine amount Rs.12,50,000/- is
ordered to be paid as compensation to the
appellant -complainant.
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v) The respondent -accused shall deposit the said
fine amount within 02 months from this day.
Sd/-
(SHIVASHANKAR AMARANNAVAR)
JUDGE
DSP
