Karnataka High Court
Havyaka Finance Limited vs Sandeep Kumar Shetty V on 13 November, 2025
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CRL.A No. 1195 of 2013
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.1195 OF 2013
BETWEEN:
HAVYAKA FINANCE LIMITED,
COMPANY REGISTERED UNDER
COMPANIES ACT,
HAVING ITS HEAD OFFICE AT
NO.438, 1ST FLOOR,
BETWEEN 7TH AND 8TH CROSS, SAMPIGE ROAD,
MALLESHWARAM, BANGALORE
WHICH IS REPRESENTED BY ITS
AUTHORIZED OFFICER
MR. C. SUBRAMANYA SHASTHRY
S/O ISHWARA SHASTRY,
AGED ABOUT 54 YEARS,
R/AT MOODAMBAIL HOUSE,
PUNACHA VILLAGE,
BANTWAL TALUK, D.K DISTRICT
WHO IS ALSO BRANCH MANAGER OF ITS
VITTAL BRANCH - 574219
...APPELLANT
(BY SRI. RAVISHANKAR SHASTRY, ADV.)
AND:
SANDEEP KUMAR SHETTY V.
S/O RAMANANDA SHETTY V.
AGED ABOUT 37 YEARS,
R/AT CAR STREET, VITTAL,
POST: VITTAL KASABA,
BANTWAL TALUK, DK-574243.
...RESPONDENT
(RESPONDENT - SANDEEP KUMAR SHETTY V. - ABSENT.)
THIS CRIMINAL APPEAL IS FILED U/S.378(4) CR.P.C
PRAYING TO SET ASIDE THE JUDGMENT DATED 10.10.2013
PASSED BY THE PRL. SR. C.J. AND J.M.F.C., BANTWAL, D.K. IN
C.C.NO.24/2010 - ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE P/U/S 138 OF N.I.ACT.
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CRL.A No. 1195 of 2013
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 29.10.2025 AND COMING ON FOR
"PRONOUNCEMENT OF ORDERS" THIS DAY, THE COURT,
DELIVERED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE G BASAVARAJA
CAV JUDGMENT
The appellant has preferred this appeal against judgment
of acquittal passed by the Principal Senior Civil Judge and
JMFC, Bantwal, D.K., Mangaluru, in CC No.24 of 2010 dated
10th October, 2013 (for short "the trial Court").
2. For the sake of convenience, the parties herein are
referred to as per their status before the trial Court.
3. The brief facts leading to this appeal are that the
complainant has filed a complaint under Section 200 of Code of
Criminal Procedure, for the offence punishable under Section
138 of the Negotiable Instruments Act, 1881. It is alleged by
the complainant that one Padmanabha S/o Rama Poojary
borrowed loan of Rs.48,000/- from the complainant in the
month of October, 2002 for his domestic necessities. The
complainant sanctioned the loan to Padmanabha on 30th
October, 2002 at the rate of interest 16% per annum. The loan
transaction is numbered as PL/63/2002. The accused and one
Ishwara S. stood as co-obligants to the loan borrowed by
Padmanabha. The accused is jointly and severally liable for the
said loan along with principal borrower and another co-obligant.
The loan so borrowed was not repaid. When Sri Subrahmanya
Shastry, Manager of the complainant-Finance Company of Vitla
Branch, approached the accused in his residence on 14th
September, 2005, the accused has issued a cheque for
Rs.71,040/- inclusive of interest in favour of SCDCC Bank Ltd.,
Vitla Branch bearing Cheque No.0414121. When the cheque
was presented for encashment, the cheque was dishonored
with an endorsement "Funds insufficient".
4. On 15.12.2005, the complainant has issued legal
notice to the accused through his Advocate, the same was
served on the accused on 16.12.2005. Accused has issued
frivolous reply. Hence, the complainant filed the complaint.
5. After taking cognizance, the trial Court issued
summons to the accused. In response to the summons, the
accused appeared through his counsel and was enlarged on
bail. Plea was recorded. Accused pleaded not guilty and
therefore, trial was held.
6. To prove the guilt of the complainant, the Manager
of the complainant's Company was examined as PW1 and
twelve documents were got marked as Exhibits P1 to P12. On
closure of the evidence of the complainant, the statement of
the accused under Section 313 of Code of Criminal Procedure
was recorded. The accused has denied the prosecution
evidence and he has not chosen to adduce defence evidence,
but got one document marked as Exhibit D1.
7. The complainant has submitted written arguments
and having heard the arguments of the learned counsel for the
accused, the trial Court had acquitted the accused. Being
aggrieved by the acquittal judgment, the appellant has
preferred this appeal.
8. Learned counsel for the appellant would submit that
the judgment of acquittal passed by the trial Court is opposed
to law and facts. The trial Court has not properly appreciated
the evidence placed before the Court. The reasoning given by
the learned Magistrate that the accused has stood as surety to
the loan taken under PL/60/2000 and the said loan was not
cleared. Therefore, granting another loan of Rs.48,000/- cannot
be believed and the same is opposed to the documents on
record. PW.1 in his evidence has clearly stated that merely
because one loan is not cleared, there is no practice of not
granting another loan. In addition to this, the issuance of loan
in PL.No.63/2002 for Rs.48,000/- is not disputed. Ex.P8-loan
register and Ex.P7-loan application conclusively proved that the
loan was sanctioned on 30th October, 2002. Ex.P7-loan
application contains the signature of the respondent, which is
not disputed. The only suggestion made to PW.1 was that the
ink of signature of respondent was different from other writings
in the loan application. Thus, standing as surety to loan A/c
No.PL/63/2002 is proved beyond reasonable doubt. Further, it
is submitted that Ex.P8-Loan Register clearly shows that as on
11th April, 2003, the borrower was due a sum of Rs.48,046/-.
The cheque was issued on 14.09.2005. The borrower or the
accused had not made any payment. Under the circumstance,
entering and updating loan account does not arise at all. Once
the loan account was treated as NPA, the financial Institutions
will not make any entry in loan ledger. The agreed rate of
interest was 16% per annum. Therefore, mere calculation will
prove the actual amount payable by the respondent and
borrower. Thus, the reasoning of the learned Magistrate that
the appellant has not produced any document to prove the
actual amount due, is erroneous. Further, it is submitted that
the respondent has not disputed the amount due. The only
defence taken by the respondent was that the cheque was
issued to the loan A/c PL.60/2000 and not to PL.63/2002. But
respondent failed to prove this aspect. The respondent has not
examined the borrower viz. Padmanabha or other surety to
prove this aspect. After the order of remand, the respondent
has not led any evidence. In addition to this, the respondent
has taken a defence that he has not stood as surety to loan A/c
PL.63/2002. But the loan application which was produced at
Ex.P7, has falsified such defence. Therefore, the defence
pleaded by the respondent is not at all proved. Therefore, by
drawing presumption under Section 138 of the NI Act, learned
Magistrate ought to have passed an order of conviction. On all
these grounds sought for allowing this appeal.
9. Despite service of notice, the respondent remained
absent and unrepresented. Hence, arguments on behalf of the
respondent is taken as nil.
10. Having heard the arguments and perusal of
materials placed before me, the point that would arise for
consideration is:
"Whether the appellant has made out a
ground to interfere with the judgment of
acquittal?
11. I have examined the materials placed before me. It
is the case of the complainant that one Padmanabha has
borrowed loan of Rs.48,000/- from the complainant in the
month of October 2002 for his domestic necessities. The
accused and one Eshwara S stood as applicants to the loan
borrowed by Padmanabha. The loan transaction is numbered
as PL/63/2002. As the loan was not repaid in spite of several
requests, on 14th September 2005 PW1 approached the
accused at residence and stated that Rs.71,040/- was due to
the complainant in respect of the aforesaid loan and requested
him to repay the same. The accused, towards discharge of his
liability, issued check pertaining to SCDCC Bank, Vitla Branch
for Rs.71,040/- with an assurance that the cheque will be
honoured upon presentation. When the cheque was presented
for encashment, the same was returned with endorsement
"insufficient funds". Thereafter, complaint got issued demand
notice through advocate demanding payment of the check
amount. Notice was duly served on 16th December 2005.
Accused, instead of complying, has issued reply notice dated
22nd December 2005. Hence, complainant has lodged the
complaint. To substantiate the case of complainant one Sri
Subrahmanya Shastry is examined as PW1 and twelve
documents were marked as Exhibits P1 to P12. Perusal of
Exhibit P1 reveals that the disputed cheque dated 14th
September 2005 for Rs.71,040/- is issued by the accused in
favour of the complainant Bank. The cheque was presented on
the same day and was returned with endorsement "insufficient
funds". On 15th December 2005, the complainant issued
demand notice demanding to pay the cheque amount with
interest at rate of 15% per annum. The same was served to
the accused and the accused has issued frivolous reply notice.
Hence complainant lodged complaint under section 138 of
Negotiable Instruments Act. The trial court has dismissed the
complaint on the ground that the cheque issued by the accused
is not for discharge of legally recoverable debt. In paragraph
11 of the judgment, the trial court has observed that Exhibit D1
is the passbook issued by the complainant finance company to
Padmanabha. In this, the account number is shown as
PL/60/2000 and the loan borrowed is shown as Rs.30,000/-
and date of borrowing the loan is 27th May, 2000. PW1 in his
cross-examination has admitted that Exhibit D1 is the passbook
which relates to the loan account of Padmanabha. On going
through the passbook Exhibit D1, it can be said that it does not
relate to the loan borrowed by Padmanabha as per Exhibit P7.
That date of borrowing the loan by Padmanabha as per Exhibit
P7 is 30th October, 2012 and as per passbook marked as
Exhibit P1 on 27th July, 2001, the balance payable by
Padmanabha is Rs.20,625/- and the entry in Exhibit P1
discloses that Padmanabha was not paying the instalments
regularly. In spite of it, loan of Rs.48,000/- is sanctioned on
30th October 2002. PW1 in his cross-examination has stated
that unless he goes through the ledger, he cannot say as to
whether the loan amount shown in Exhibit D1 has been
completely discharged by Padmanabha or not. As per the
evidence of PW1, the loan extract marked as Exhibit P8, since
the date of borrowing of loan till filing of complaint in the year
2006, Padmanabha has not paid any amount towards loan
instalments. The trial court, at paragraphs 12 and 13 of the
judgment, has observed as under:
"12. Now coming to the liability of the accused,
admittedly no loan was lent to the accused by the
complainant and the accused was not due any amount to
the complainant company. In spite of it in the notice
marked as Ex.P.4, it is referred that the accused is due to
the complainant finance. P.W.1 in his cross examination
has stated that since Padmanabha has not repaid the loan
they have taken action and they have issued notice, but
no materials placed by P.W.1 for having taken any action
against Padmanabha for having not repaid the loan.
Admittedly, no case filed against Padmanabha and P.W.1
has stated that there is no any reason for having not filed
any case against Padmanabha for having not repaid the
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loan. Admittedly, accused has not given in writing
agreeing to discharge the loan borrowed by Padmanabha.
As per the evidence of P.W.1, there is document to show
as to what was the amount due, but has failed to produce
any document to show the actual amount due as on the
date of issue of cheque by the accused. The evidence of
P.W.1 discloses that he is aware as to where Padmanabha
resides. It is not that the where about of principal
borrower is not known. When such is the case as to why
they have collected cheque from the accused who is one
of the surety instead of collecting cheque from the
principal borrower is not explained by P.W.1.
13. The complainant being a finance company has
to maintain the regular statement of accounts and has to
issue periodical notice to the borrower and also the
sureties along with the copy of the statement of loan. No
materials placed by P.W.1 for having issued notice and
not produced the statement of loan except producing the
copy of the loan register marked as Ex.P.8. In this it is
just shown Debit and balance as Rs.48,000/ as on 30- 10-
2002 and Rs.46/- shown as RAD and debit and the
balance as on 11-4-2003 is shown as Rs. 48,046/-. So, on
what basis the accused has issued cheque for Rs.71,040/-
on 14.9.2005 is not known. Admittedly there was no
decree for recovery of the amount, when such is the case
why P.W.1 had been to the house of the accused for
recovery of loan is not known. When the accused has not
borrowed loan and there is no decree against the accused
it is difficult to believe that as soon as P.W.1 had been to
the house of the accused he has issued cheque for Rs.
71,040/ with out any document and with out enquiring
the principal borrower Padmanabha. As per the evidence
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of P.W.1, on his say the accused has written the amount
in the cheque, but on going through the recital of the
cheque marked as Ex.P.1, it is clear that there is variance
in the ink in the signature of the accused than that of the
recital of the cheque. The date, amount and name is
written in one ink and the signature of the accused is in
the different ink. From which it is clear that the accused
has not filled the cheque."
12. On re-appreciation of the evidence on record, I do
not find any error or illegality in the impugned judgment,
passed by the trial court.
13. The learned Counsel appearing on behalf of the
appellant would submit that once loan amount was treated as
NPA, the financial institutions will not make any entry in loan
ledger. But in this regard, the complainant has not stated
anything in his evidence that once loan account was treated as
NPA, the financial institutions will not make any entry in the
loan ledger. For the first time, before this court, the learned
Counsel for the complainant has submitted and the same
cannot be accepted.
14. Apart from the opinion expressed by the learned
Judge, one of the material points is that the complainant is a
financial company. When the financial company has received
the cheque from the respondent, it is the duty of the
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complainant finance company to issue challan as to the receipt
of the cheque and thereafter, the complainant company has to
mention the same in relevant ledger extract. In the case on
hand, though the complainant-financial company has received
the cheque, has not issued challan in favour of the accused as
to the receipt of the cheque. PW1 has not stated anything in
his complaint or in his evidence in this regard. In the absence
of this material piece of evidence, the evidence of PW1 itself
creates doubt as to issuance of cheque as alleged by the
complainant. Moreover, the complainant has also failed to
prove that the accused has issued the cheque in question for
discharge of legally recoverable debt as explained under
explanation to section 138 of Negotiable Instruments Act.
Hence, I answer the point that arose for consideration in the
negative. In the result, I proceed to pass the following:
ORDER
Appeal is dismissed.
Sd/-
(G BASAVARAJA)
JUDGE
lnn`
