Allowed

Shri Kalmeshwar Co. Op Credit Society v. Shri Jayant Appasaheb Chorage

Karnataka HC2 Sept 2013CRL.A/2555/2008

Case brief

AI extract

What is this about?

In this criminal appeal under Section 378 CrPC, the High Court of Karnataka revised the acquittal in a cheque bounce case. The court set aside the lower court's reliance on an overruled precedent, applied the presumption under Section 139 NI Act, and convicted the accused, awarding a fine of Rs. 5,10,000 as compensation.

What did the court decide?

The accused is convicted and ordered to pay a fine of Rs. 5,10,000, of which Rs. 5,00,000 is compensation to the appellant. Failure to pay results in six months simple imprisonment.

Shri Kalmeshwar Co. Op Credit Society Vs Shri Jayant… — Cheque Dishonour | Karnataka HC (2013)

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IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH

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DATED THIS THE 2^ND DAY OF SEPTEMBER, 2013

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BEFORE

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THE HON’BLE MR. JUSTICE ANAND BYRAREDDY

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CRIMINAL APPEAL No.2555 OF 2008

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BETWEEN:

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Shri Kalmeshwar Co-operative Credit Society Ltd., B.K. Kangrali, Belgaum, Represented by its Secretary Shri Anil Kallappa Kadolkar, Belgaum-590 016.

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…APPELLANT

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(By Shri L.K. Gurav, Advocate)

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AND:

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Shri Jayant Appasaheb Chorage, Aged major, Occupation: Business, Resident of CCB No.912, Gokul Building, Shahapur, Belgaum-590 001. …RESPONDENT

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(By Shri M.M. Shetty and V.V. Badiger, Advocate)

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This appeal is filed under Section 378 of the Code of Criminal Procedure, 1973 praying that the order dated 29.7.2008 passed by the IV JMFC, Belgaum in Criminal Case

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No.92/2007 be set aside and the accused be convicted for the offence under Section 138 of the Negotiable Instruments Act, 1881, by allowing the appeal.

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This appeal coming on for final hearing this day, the Court delivered the following:

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JUDGMENT

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Heard the learned counsel for the appellant. The learned

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counsel for the respondent remains absent.

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The appellant was the complainant before the Trial

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Court for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the NI Act’, for brevity). The appellant is a Co-operative Society engaged in banking and had furnished a loan of Rs.2,97,600/- for the purchase of tractor, to the respondent as on 10.10.2001. The respondent had agreed to repay the loan in installments, but defaulted in such repayment and when demand was made for payment, had issued a cheque for a sum of Rs.3,40,000/- dated 9.1.2005 bearing No.100058 drawn on Union Bank of India, APMC, Belgaum. The complainant

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presented the same for collection and the same was dishonoured with an endorsement that the funds were insufficient. Thereafter, the complainant complied with the issuance of notice as contemplated under Section 138 of the NI Act and had followed up with the complaint. Since there was noncompliance with the demand, the court having taken cognizance and having issued process, the respondent had entered appearance and denied the allegation and pleaded not guilty and claimed to be tried. It is thereafter that the appellant tendered evidence through its Secretary as PW-1. The respondent did not choose to lead any evidence. However, the witness of the complainant was cross-examined and the court below framed the following points for consideration:

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“1. Whether the complainant proves beyond all reasonable doubt that the accused availed loan and issued cheque towards the repayment of the outstanding loan amount, and such cheque was dishonoured on its presentation and further the

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accused failed to repay the cheque amount, despite issue of notice?

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What order?”

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The court below answered the same in the negative. It is

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that which is under challenge in the present appeal.

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The learned counsel for the appellant would point out

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that the cheque having been issued by the respondent, is not denied. The allegation that the details of the outstanding amount are not made clear and that the burden of proof to establish the liability in respect of which the cheque was issued was on the appellant and the court below has accepted this contention raised by the respondent, while placing reliance on a decision of the Apex Court rendered in the case of Krishna Janardhan Bhat vs. Dattatraya G Hegde, AIR 2008 SC 1325 and has proceeded to hold that the presumption regarding the existence of a legally recoverable debt lies on the complainant to be established and that the appellant had failed to do so, as

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the details of the liability were not forthcoming and the claim of the respondent having repaid certain amounts towards the loan transaction, were not accounted for and therefore, held that the cheque was not issued in discharge of a legally recoverable debt and has proceeded to acquit the accused.

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The learned counsel would submit that on the face of it, the court below could not have relied on Krishna Janardhana Bhat’s case, as the same has been overruled. The legal principle that is applied in Krishna Janardhana Bhat’s case is no longer good law, as the Apex Court in the case of Rangappa vs. Mohan, 2010 (4) SC 169, has held that in terms of Section 139 of the NI Act, the presumption that a cheque has been issued in discharge of a legal liability is in favour of the holder of the cheque and any contention to the contrary, would necessarily place the burden on the accused to establish that there was no such legal liability. This the accused would do either by tendering independent evidence in support of the contention or

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by reference to the evidence of the complainant himself to disclose that there was no such legal liability.

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In the case on hand, the mere assertions that there were

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payments made or that the accounts were not properly rendered in establishing the outstanding liability for which the cheque was issued, is unfairly held against the appellant, whereas the ledger extract in respect of the loan account was furnished and produced in Court, which clearly corresponded to the cheque amount and therefore, there was no lapse on the part of the appellant in establishing even the liability. Hence, the reasoning of the court below as reference to alleged inconsistencies in the evidence of PW-1 is entirely misleading and is illegal. The above contentions of the learned counsel for the appellant would have to be accepted on the face of it. As rightly stated by the learned counsel, the law laid down in Krishna Janardhana Bhat is no longer good law and it was incorrect on the court below to have proceeded on that basis. The initial burden as to the cheque being issued in discharge of

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a legal lia bility, was on the appellant. On the other hand, in terms of Section 139 of the NI Act, the burden was clearly on the accused. Hence, it cannot be said that the appellant had failed to establish its case for an offence punishable under Section 138 of the NI Act. Consequently, the charge insofar as the offence punishable under Section 138 of the NI Act stands established and consequently, the respondent is convicted to pay fine of Rs.5,10,000/-, out of which Rs.5,00,000/- shall be paid as compensation to the appellant in terms of Section 357 of the Code of Criminal Procedure, 1973. In default of payment of fine, the respondent shall undergo simple imprisonment for six months. The fine amount shall be payable within four weeks from the date of this judgment.

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Sd/JUDGE

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Shri Kalmeshwar Co. Op Credit Society v. Shri Jayant Appasaheb Chorage

Case brief

What is this about?

What did the court decide?

Shri Kalmeshwar Co. Op Credit Society v. Shri Jayant Appasaheb Chorage

Case brief

What is this about?

What did the court decide?

What the court decided

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