Allowed

Shri Siddappa S/O Nigappa Kalyal v. Smt Chandbee Hyderabadi

Karnataka HC8 Apr 2014CRL.A/2677/2009

Case brief

AI extract

What is this about?

In this criminal appeal under Section 378 CrPC, the High Court allowed the appeal by the complainant, restoring the conviction of the accused for cheque dishonour under Section 138 N.I. Act. The Court held that the lower appellate court erred in acquitting the accused as she failed to provide sufficient documentary evidence to rebut the presumption of legally recoverable debt under Section 139 N.I

What did the court decide?

The judgment of the Sessions Judge setting aside the conviction is set aside. The conviction is restored. A fine of Rs.2,00,000 is awarded, with Rs.1,95,000 set aside as compensation to the complainan

Shri Siddappa S/O Nigappa Kalyal Vs Smt Chandbee Hyderabadi — Cheque Dishonour | Karnataka HC (2014)

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 8^TH DAY OF APRIL, 2014

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BEFORE:

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THE HON’BLE MR. JUSTICE K.N. PHANEENDRA

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CRIMINAL APPEAL NO.2677/2009

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BETWEEN

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SHRI SIDDAPPA S/O NINGAPPA KALYAL AGE 65 YEARS OCC: RETIRED EMPLOYEE R/O ADHYAPAK NAGAR HUBLI. … APPELLANT

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(BY SRI NITIN R. BOLABANDI, ADV. FOR SRI A S PATIL)

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AND

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SMT CHANDBEE HYDERABAD AGE: 52 YEARS OCC GOVT SERVICE C/O MEHABOOBSAB SHAIKH JAIBHIM NAGAR BHOOSAPPA CHOWK DHARWAD ... RESPONDENT

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(RESPONDENT SERVED)

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THIS CRL.A IS FILED U/S.378(1)CR.P.C PRAYING TO SET ASIDE THE JUDGEMENT AND ORDER DATED 24.06.2008 PASSED IN CRIMINAL

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APPEAL NO.84/2006 ON THE FILE OF HON'BLE FIRST ADDITIONAL SESSIONS JUDGE, DHARWAD SITTING AT HUBLI AND TO ALLOW THE PRESENT APPEAL BY CONFIRMING THE JUDGEMENT AND ORDER DATED 30/11/2006 PASSED BY THE HON'BLE JMFC II HUBLI IN C.C.NO.1660/2005.

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THIS CRIMINAL APPEAL COMING ON FOR HEARING, THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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J U D G M E N T

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The present appeal preferred is by the

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complainant against the judgment of acquittal passed by the Addl. District and Sessions Judge, Dharwad, sitting at Hubli in Crl.A.No.84/2006, dated 24.06.2008.

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The brief factual matrix of the case are:

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The appellant herein (hereinafter called as the

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‘complainant’) filed a private complaint against the respondent (hereinafter called as the ‘accused’) in CC No.1660/2005 on the file of the learned JMFC II, Hubli, for the offence punishable under Section 138 of the Negotiable Instruments Act. In fact, the accused

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appeared in the said case, contested the proceedings. After due contest, the learned JMFC, Hubli convicted the accused person, sentencing the accused to pay fine of Rs.5,000/- and to undergo Simple imprisonment for one year and in default of payment of fine to undergo Simple imprisonment for a further period of three months. Further, the learned Magistrate has also awarded compensation of Rs.1,65,000/to the complainant. The said order was challenged by the accused in Crl.A.No.84/2006 before the Sessions Judge and after due contest, the appeal was allowed and the accused was acquitted and compensation amount and the fine amount deposited by the complainant were ordered to be refunded to the accused. Hence, the complainant is before this Court in appeal.

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It is the case of the complainant that accused has availed hand loan of Rs.1,65,000/- prior to 2005 and for repayment of the said loan, accused had issued

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a cheque dated 21.3.2005, drawn on Bank of Baroda, Dharwad Branch. On presentation of the said cheque to the Syndicate Bank, Supermarket Branch, Hubli, the cheque came to be dishonoured with a shara ‘insufficient funds’. The complainant got issued a legal Notice on 3.7.2003 and the said notice was duly served on the accused and the accused after service of the said notice neither replied nor complied the notice. Therefore, the complainant presented a complaint before the II JMFC, Hubli. On perusal of the records, the tenor of the cross examination of PW1 and the defence evidence led by the accused, reveals that he has taken up the contention that one Mehaboob Sab Shaik, who is no other than the relative of the accused approached a financier by name Somshekar of Dharwad and obtained a loan of Rs.40,000/- in-turn, the said Somshekar/ financier asked for a surety from the said Mehaboob Sab Shaik. The said Mehaboob sab Shaik approached the accused for surety. Therefore, the

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accused who is no other than the sister-in-law of the said Mehaboob sab shaik issued a cheque in dispute to the said Somshekar as a security for the repayment of the debt taken by Mehaboobsab shaik. It is specifically contended that she has not issued any cheque at any time nor borrowed loan of Rs.1,65,000/- from the complainant.

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The complainant led the evidence. In the

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evidence he almost reiterated the averments made in the complaint and stated that the accused has received a sum of Rs.1,65,000/- by way of hand loan. The learned Trial Judge appreciated the evidence on record, drawn presumption u/s.139 and as well as u/s.118 of the Negotiable Instruments Act and ultimately held that the defence taken up by the accused has not been proved by means of preponderance of probabilities. Therefore, the trial Court convicted the accused and sentenced accordingly.

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The appellate court in fact while allowing the

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appeal has discussed in detail, relying upon several rulings, holding that Section 139 of the Negotiable Instruments Act merely raises a presumption with in favour of the holder of the cheque that, the same has been issued for discharge of some debt or liability but not for a legally recoverable debt or liability. The learned Sessions Judge also said that the statute does not say how the presumption drawn should rebutted and that the doctrine of reverse burden introduced by Section 139 of the Negotiable Instruments Act should be delicately balanced. The learned Sessions Judge in order to acquit the accused has taken the help of sections 269-SS of the Income Tax Act, non mentioning of the date of the hand loan given by the complainant and non production of documents in proof of the hand loan. But in my opinion, the said observation made by the learned Sessions Judge is not tenable because once

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the accused has admitted the signature on the cheque, the responsibility shifts on the accused to establish that there was no pre-existing legally recoverable debt or liability. Of course, the accused need not prove this particular defence taken up beyond reasonable doubt as it is incumbent upon the complainant. The accused can prove the defence either elucidating the facts during the course of cross examination of the complainant or by means of producing any documentary evidence before the court or by means of leading any evidence on the side of the accused. The court has to see the totality of the materials placed before the court by the accused and ascertain as to whether the presumption drawn in favour of the complainant has been discharged by the accused or not.

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In this regard, it is worth to mention some rulings cited by the learned Counsel for the appellant. In a decision reported in:

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“AIR 2001 SC 2895 between K.N. Beena Vs. Muniyappan and another, the apex court has held that –

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The 1^st respondent had to prove in the trial, by leading cogent evidence, that there was no debt or liability. The 1^st respondent not having led any evidence could not be said to have discharged the burden cast on him. The 1^st respondent not having discharged the burden of proving that the cheque was not issued for a debt or liability, the conviction as awarded by the Magistrate was correct. The High Court erroneously set aside that conviction.”

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(emphasis supplied)

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In another ruling reported in –

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“AIR (2001) SC 3897 between Hiten P Dalal Vs. Bratindranath Banerjee. At paragraph 11 of the judgment, the apex court has held that –

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In a case of a mandatory presumption – the burden resting of the accused person in such a case would not be as light as it is where a presumption raised of law u/s.114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation

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offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words ‘unless the contrary is proved’ which occur in this provision make it clear that the presumption has to be rebutted by ‘proof’ and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted.”

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(emphasis supplied)

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In a latest judgment, the Hon'ble Supreme Court in a decision reported in –

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“AIR (2010) 11 SCC 441 between Rangappa Vs. Sri Mohan with regard to presumption u/s.139 of the Negotiable Instruments Act, the apex court has held that -

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Section 139 is an example of reverse onus clause that has been included in furtherance of the legislative objective of improving the

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credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttal presumption u/s.139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 of the Negotiable Instruments Act can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant – accused cannot be expected to discharge an unduly high standard of proof.”

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The presumption mandated u/s.139 of the Negotiable Instruments Act includes a presumption that, there exists a legally enforceable debt or liability. This is of course in the nature of rebuttal and it is open for the accused to raise a defence. However, here, there can

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be no doubt that there is an initial presumption which favours the respondent – complainant.

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On meaningful reading and understanding of

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the above said rulings, it is clear that the initial presumption u/s.138 and 139 of the Negotiable Instruments Act have to be raised in favour of the complainant. Section 139 of the Negotiable Instruments Act in fact creates presumption with regard to the existence of legally recoverable debt or liability. Once, the presumption is drawn in favour of the complainant

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with regard to the existence of previous legally recoverable debt or liability, the court itself cannot by using some other means rebut the presumption, it should be by means of evidence on the part of the accused whether during the course of cross examination of the complainant or by means of any documentary evidence or the defence evidence led by the accused. If there is any denial on the issuance of the cheque or

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doubt regarding the signature on the said cheque, then the question arises whether the complainant had got no means to pay that amount or the cheque itself is bogus cheque or the cheque was not at all issued for repayment of any debt or liability. In view of the above said presumption, the payment of Rs.1,65,000/- by the complainant and the cheque issued by the accused for repayment of the said amount are to be presumed unless the said presumption is rebutted by the accused. Therefore, in my opinion, the complainant himself has not produced any proof of giving hand loan nor he has not declared his amount in the income tax returns, would not come to the aid of accused. The preponderance of probabilities shows that the

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presumption raised in favour of the complainant is rebutted.

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Now, in this background, it is just and necessary to refer the evidence of the parties, led before

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the trial Court. Of course, in the complaint there is no mention of, the date on which he had given loan to the accused. Nevertheless, it is stated that for repayment of the debt, cheque was issued on 21.3.2005. In the evidence, the complainant has stated that the amount was given to the accused about six months prior to the issuance of the said cheque. In the evidence, the complainant has categorically stated that he was working as a Teacher and accused was working as a Urdu teacher and they know each other and they were

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used to meet in the Teachers’ meetings. The complainant has said that in the year 2005, he retired and has received an amount of Rs.6,00,000/-. This particular portion of the evidence has not been subjected to cross examination. The complainant was having an amount of Rs.6,00,000/- has not been specifically denied during the course of cross examination. In the course of the cross examination, what has been concentrated by the accused is that the

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cheque was given to one Somshekar for the repayment of the debt amount of Rs.40,000/- by Mehaboobsab shaik and she stood as a guarantor and in that context, she gave cheque in favour of the said Somshekar. But the said suggestions have been denied by the complainant. Though it is denied that an amount of Rs.1,65,000/- was not given to the accused, but the court has to see whether the defence taken up by the accused, except putting suggestion to the complainant has been proved otherwise. Though the said suggestion has been made, denial is taken, in my opinion, mere suggestions will not take place of proof even by means of preponderance of probabilities, and something more is required to rebut the presumption.

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The accused has also led evidence as PW1

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and in the cross examination, some suggestions are put to the complainant and in the course of cross examination, it had been re-iterated in the examination

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in chief. In the course of cross examination, though it was very short, but it is elicited that the accused do not have any documentary evidence to show that she has issued Ex.P1 as a security for the loan to Somshekar taken by Mehaboobsab shaik. She also admitted that she do not have documents to show that there was any money transaction between Somshekar and Mehaboobsab shaik. She has also not given any reason to the notice issued by the complainant to her and she has not taken any action against Somshekar or against this complainant for mis-using of the cheque. It is suggested that the accused is deposing falsehood to that effect. Therefore, the evidence of the complainant is nothing but oath against oath. The evidence adduced by the complainant is fully supported by the presumption u/s.139 of the Negotiable Instruments Act. The evidence on oath by the accused shall be supported by some more evidence other than mere suggestions. Therefore, the court require some more materials to

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come to the conclusion that the said defence taken up by the accused is probabalised and sufficient to preponder upon the evidence led by the complainant.

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In this background if we analyse the

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evidence of the accused, it is the specific case of the accused that the said cheque was given to the Somshekar. Who is Somshekar and when the said cheque was given to him and whether the Mehaboobsab shaik is a relative of the accused, whether accused was present when Somshekar had given loan of Rs.40,000/to Mehaboob Sab Shaik, all these facts ought to have been established by the accused atleast by means of acceptable evidence before the Court. Though it is stated that Mehaboobsab shaik is the relative of the accused. There was no embargo for the accused to examine the said man before the court neither the Somshekar nor Mehaboobsab shaik have been called upon before the court in order to support the case of the

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accused and it is not explained why such step has not been taken by the accused. Further, added to that, if a cheque is mis-used long back by the said Somshekar, even after the said Mehaboobsab shaik has repaid the loan, the accused would not have kept quite for such a long time when atleast the complainant has issued notice to the accused, she would have taken appropriate legal steps against the Mehaboobsab shaik as well as the complainant and the said Somshekar if really her cheque has been mis-used by any of these three persons.

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One more important aspect to be taken note of is that the legal notice issued by the complainant explaining the lending of the hand loan of Rs.1,65,000/and issuance of cheque by the accused and the same came to be dishonoured and calling upon the accused to comply with the notice. If at all the factual aspects pleaded by the accused by way of defence were to be

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true, why the said notice has not been replied. No explanation is offered by the accused at least during the course of full dressed trial before the Court. It is not even suggested to the complainant; why such notice has not been replied nor any evidence led by the accused in her examination in chief; why such notice has not been replied. Therefore, in my opinion, after appearance before the court, it appears for the sake of taking a defence, the accused might have taken such a defence unmindful of the effect that she is not in a position prove such a defence. Therefore, in my opinion it is a very casual defence taken by the accused and no proof at least by means of preponderance of probabilities adduced or produced before the trial Court. Therefore, what has not been pleaded or urged, or argued by either of the parties has been taken into consideration by the trial Court i.e. with regard to the non furnishing of the income tax returns and also the complainant has not stated, on what date the hand loan was given. All these

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facts were not been subjected to the cross-examination of complainant by the accused during the course of the evidence. When such being the case, the court itself cannot step into the shoes of accused to prove the case of the accused by finding out some lapses or lacunas.

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In the above said circumstances, I am of the considered opinion that the appellate court has committed a serious error in totally acquitting the accused for the offence punishable under Section 138 of the Negotiable Instruments Act. On the other hand, the

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trial Court has indetail dealt with the matter, considered the evidence on record and drawn presumption in favour of the complainant considering the evidence of the accused whether she has proved the defence taken up by means of preponderance of probabilities and thereafter arrived at a proper conclusion. In my opinion, the said judgment of the trial Court requires to be restored.

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Now coming to the sentence passed by the trial Court. The trial Court has awarded compensation of Rs.1,65,000/- with Simple imprisonment for one year and in default of payment of fine of Rs.5,000/-. The amount alleged to have been given prior to 2005. If an amount of Ra.1,65,000/- is awarded, the complainant will suffer serious loss and inconvenience. Therefore, atleast he must get simple interest on his money, which was given by way of loan to the accused. In the above said circumstances when the court is of the opinion, the compensation amount has to be increased, then the sentence of Simple imprisonment passed by the trial Court in my opinion, requires to be modified. By means of imposing fine on Rs.1,65,000/- with simple interest, in my opinion it would meet the ends of justice. Accordingly, the sentence of the trial Court requires is modified. In view of the above said observations and reasons, I proceed to pass the following:

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ORDER

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The Appeal is allowed. The judgment of the learned Sessions Judge passed in Crl.Appeal No.84/2006 dated 24.6.2008 is hereby set aside. The conviction and sentence passed by the learned JMFC-II, Hubli in CC No.1660/2005 dated 30.11.2006 in so far as it relates to the fine of Rs.5,000/- and Simple imprisonment for one year and compensation awarded in a sum of Rs.1,65,000/- are hereby modified to the following effect:

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