Karnataka High Court
M/S Shriram Transport Finance Co. Ltd vs Simon Correa on 13 November, 2025
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CRL.A No. 1241 of 2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF NOVEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE G BASAVARAJA
CRIMINAL APPEAL NO.1241 OF 2015
BETWEEN:
M/S SHRIRAM TRANSPORT FINANCE CO. LTD.
HAVING ITS REGISTERED OFFICE AT
NO.123, ANGAPPA NAICKEN STREET,
MYLAPORE, CHENNAI-600004
WITH ITS DIVISIONAL OFFICE AT
MANGALORE AND
BRANCH OFFICE AT SURATKAL,
MANGALORE-575011
REP. BY ITS MANAGER (LEGAL)
MR. NAGABHUSHAN M.C.
S/O CHIKKARANGAIAH
AGED ABOUT 39 YEARS.
...APPELLANT
(BY SRI. M. J. ALVA, ADV.)
AND:
SIMON CORREA
S/O MR. FELIX CORREA
AGED ABOUT 57 YEARS
NO.3, 48/5 (1)
YESU KRIPA, GANDHI NAGAR,
KUNJATBAIL, KAVOOR,
MANGALORE-575105
...RESPONDENT
(BY SRI. H. PAVANA CHANDRA SHETTY, ADV.)
THIS CRIMINAL APPEAL IS FILED U/S.378(4) CR.P.C
PRAYING TO SET ASIDE THE JUDGMENT OF ACQUITTAL DATED
15.09.2015 PASSED BY THE JMFC-V, MANGALORE, D.K. IN
C.C.NO.1426/2014 - ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE P/U/S 138 OF N.I. ACT.
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CRL.A No. 1241 of 2015
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 14.10.2025 AND COMING ON FOR
"PRONOUNCEMENT OF ORDERS" THIS DAY, THE COURT,
DELIVERED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE G BASAVARAJA
CAV JUDGMENT
This Criminal Appeal by the Appellant-Finance Company is
against the Judgment of Acquittal dated 15th September, 2015
passed in CC No.1426 of 2014 by the JMFC-V, Mangalore,
Dakshina Kannada (for short "the trial Court") acquitting the
respondent/accused for the offence punishable under Section
138 of Negotiable Instruments Act, 1881 (for short "NI Act").
2. Sri M. J. Alva, learned Counsel appearing for the
appellant submits that the complainant has proved the essential
ingredients to attract evidence under Section 138 of NI Act.
The account extract is also produced. As per the account
extract, there was due of Rs.9,10,000/- from the accused for
which the accused has issued the cheque. The defendant has
not placed any material to rebut the presumption under Section
138 of NI Act. However, the trial Court has not considered the
same and acquitted the accused which is not sustainable. To
substantiate his submissions, he has relied on the following
decisions:
1. T. VASANTHAKUMAR v. VIJAYAKUMAR -
2015(7) SCJ 130;
2. RAJESH JAIN v. AJAY SINGH - (2023)10 SCC
148;
3. R. VIJAYAN v. BABY AND ANOTHER - 2012(4)
SCJ 500;
4. BIR SINGH v. MUKESH KUMAR - AIR 2019 SC
3. As against this, Sri H. Pavanachandra Shetty, learned
counsel appearing for the respondent, would submit that the
trial Court has properly appreciated the evidence on record in
accordance with law and facts. He would submit that the
complainant has initiated arbitration proceedings against the
respondent. The learned Arbitrator has passed the award and
the same was challenged by the respondent under Section 34 of
Arbitration and Conciliation Act in Arbitration Suit No.18 of
2016. The same was allowed and the award passed by the
Arbitrator was set aside. The appellant has not challenged the
same and hence it reached finality. The subject matter of the
Arbitration Suit No.18 of 2016 and the subject matter of the
present appeal, are one and the same. Memo is filed by the
learned Counsel for the respondent to show that even after
setting aside of the arbitral award, again, another arbitration
notice has been issued. The Notice is also produced. Learned
Counsel submits that absolutely, there are no materials to
interfere with the impugned Judgment of acquittal. To
substantiate his argument, he has relied on the following
decisions:
1. M.S. NARAYANA MENON ALIAS MANI v. STATE
OF KERALA AND ANOTHER (2006)6 SCC 39;
2. CRIMINAL APPEAL NO.868 OF 2008 DECIDED
ON 15TH DECEMBER, 2011 RENDERED IN THE
CASE OF P.B. JAYAPRAKASH RAI v. SAMSON
TEVENCE AND ANOTHER
4. In reply, learned counsel for the appellant would
submit that initiation of arbitration proceedings will not bar to
initiate proceedings under Section 138 of NI Act.
5. I have examined the materials placed before this
Court. It is the case of the complainant that the complainant is
a Limited Company incorporated under the Companies Act,
1956 and the complainant company is a Non-baking Finance
Company engaged in the business of financing on commercial
vehicles, machineries, equipments under the schemes of
hypothecation, hire-purchase as well as leasing of vehicles. It
is stated that the accused has entered into loan-cum-
hypothecation agreement with the complainant company as per
Agreement MNGL40211060005 dated 07th November, 2021 in
respect of Telcon Ex.200 Hitachi Machine bearing No.MECH-
2525 and towards full and final settlement of the loan
outstanding in connection with the same loan the respondent
had issued cheque No.493710 dated 14th July, 2014 for
Rs.9,10,000/- drawn on Mangalore Catholic Co-operative Bank
Ltd., Hampanakatta Branch, Mangalore. When the cheque was
presented for encashment, the same was dishonoured with
bank endorsement "funds insufficient". Thereafter, the
complainant Company got issued legal notice on 1st August,
2014 through Advocate to pay the cheque amount within fifteen
days of receipt of the said notice. Despite service of notice, the
accused deliberately and intentionally failed to pay the cheque
amount. Hence, the company-complainant lodged complaint
under Section 138 of Negotiable Instruments Act.
6. It is the specific case of the complainant that the
accused has issued cheque bearing No.493710 dated 14th July,
2014 for Rs.9,10,000/-. When the accused has issued Cheque
for Rs.9,10,000/-, it is the duty of the Complainant Company
being a Company registered under Companies Act, to issue
challan as to receipt of the cheque for Rs.9,10,000/- and also to
enter the same in the concerned Register as to receipt of
cheque. In the instant case, the complainant has not produced
any challan issued to the accused for having received the
cheque. The complainant has not explained anything as to non-
production of the challan. Therefore the same will create
reasonable doubt as to issuance of cheque by the accused, as
alleged by the complainant. The complainant-company has
produced Exhibit P9-Account Statement, in which also, the
complainant company has not disclosed as to the receipt of
disputed cheque. If really, the accused had issued the disputed
cheque to the complainant as alleged by the complainant, the
Complainant Company ought to have mentioned the same in
the account statement Exhibit P9 that the Company has
received the disputed cheque and thereafter, the Company
should have shown that the cheque was dishonoured by the
bank for insufficient funds. But the complainant had not done
so. In the absence of such entry, it is difficult to accept the
case of the complainant. Further, DW1-Simon Correa, has
clearly deposed in his evidence that he has borrowed loan of
Rs.11,00,000/- from the Complainant Company and he was
repaying the same. The agents of the Complainant Company
were recovering the loan amount. At the time of lending loan,
the Complainant Company has obtained five cheques. The
accused has not issued the cheque in dispute and he was in
arrears of only two instalments. During the course of cross-
examination of PW1, he has clearly admitted that the
complainant-Company has maintained the account as to the
remittance and disbursement of the loan amount.
7. The learned Counsel for the respondent has produced
the copy of the judgment passed in Arbitration Suit No.18 of
2016 which is between the complainant and the accused, in
which the learned District Judge, has observed as under:
"12. Coming to the merits of the case, the plaintiffs
have produced the certified copy of the order in
C.C.1426/2014. The perusal of the entire judgment of the
Criminal Court shows that the legally enforceable debt
was not proved by defendant No.1 and there was no
account extract which was produced by defendant No.1
which would have been a conclusive evidence. Para-19 of
the judgment shows that only the gist of the accounts
was produced but not the entire details of the account. It
was also noticed that some agents of the defendant No.1
had approached the plaintiff for recovery of the
instalments and those instalments were paid but they
were not reflected in the accounts of the defendant No.1.
This contention of the plaintiffs was sufficiently
probabilised before the criminal court which resulted in
acquittal of the plaintiff No1. Thus the criminal court had
come to the conclusion that there was no such dues worth
Rs. 9,10,533/- and therefore the plaintiff was absolved
from the criminal liability."
8. In view of the above observations, the learned District
Judge has set aside the award dated 04th April, 2016 passed by
the Arbitrator in Arbitration Case No.1644 of 2014. The learned
Counsel for the respondent has also filed memo along with the
copy of the notice issued by the Complainant Company to the
accused on 19th May, 2025, which reveals that the Sole
Arbitrator Mr. V. Paul Das, has issued notice to the accused
stating that the accused shall not send any letter directly to the
Arbitrator. The counsel for the respondent along with Memo
has also produced copy of the notice dated 19th May, 2025
issued by Sri V.Paul Das, Advocate and Arbitrator. The
subsequent proceedings initiated by the complainant Company
reveals that the Complainant Company has suppressed the
material facts and filed complaint against the accused. The
complainant-Finance Company has not approached the Court
with clean hands. The trial Court has properly appreciated the
evidence on record in accordance with law and facts. The trail
Court, relying upon the judgment of Hon'ble Supreme Court in
the case of GOPAL KRISHNAJI KETKAR v. MOHAMED HAJI LATIF
reported in AIR 1968 SC 1413, has held that adverse inference
can be drawn against the complainant Company for non-
production of documents under Section 114(g) of Indian
Evidence Act, 1872.
9. On re-appreciation of the entire evidence on record, I
do not find any error/illegality in the judgment of acquittal.
Hence, I proceed to pass the following:
ORDER
Appeal dismissed.
Sd/-
(G BASAVARAJA)
JUDGE
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