Partly allowed

Parbhakar S/O. Basappa Katagi v. G.Krishnareddy S/O. Nagareddi

Karnataka HC8 Dec 2020CRL.A/100034/2014

Case brief

AI extract

What is this about?

This Criminal Appeal by the prosecution complainedant against a trial Court judgment acquitting the accused under Section 138 NI Act. The High Court held that the accused successfully rebutted the presumption of debt by casting serious doubt on the complainant's financial capacity to lend twenty lakhs, dismissing the appeal.

What did the court decide?

Criminal Appeal dismissed. Previous acquittal upheld as the complainant failed to prove financial capacity for the alleged loan.

Parbhakar S/O. Basappa Katagi Vs G.Krishnareddy S/O… — Cheque Dishonour | Karnataka HC (2020)

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IN THE HIGH COURT OF KARNATAKA

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DHARWAD BENCH

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DATED THIS THE 8^TH DAY OF DECEMBER 2020

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BEFORE

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THE HON’BLE MR.JUSTICE RAVI V.HOSMANI

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CRIMINAL APPEAL No.100034 OF 2014

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BETWEEN

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PARBHAKAR S/O BASAPPA KATAGI, AGE: 38 YEARS, OCC: AGRICULTURE AND CONTRACTOR, R/O. HAVARGI, TQ: HUNAGUND, DIST: BAGALKOT.

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...APPELLANT

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(BY SRI SHRIHARSH A.NEELOPANT, ADVOCATE)

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AND

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G.KRISHNAREDDY S/O NAGAREDDI, AGE: MAJOR, R/O. NO. 105, 4^{T H} CROSS, ADARSHNAGAR, HUBLI, DIST: DHARWAD.

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…RESPONDENT

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(BY SRI RAJENDRA R.PATIL, ADVOCATE FOR SRI SRINAND A.PACHHAPURE, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C. SEEKING TO ALLOW THE APPEAL AND SET ASIDE THE JUDGMENT PASSED IN C.C. NO.616/2005 DATED 09.10.2013 BY THE PRINCIPAL

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JMFC COURT, HUNAGUND AND CONVICT THE ACCUSED/RESPONDENT FOR THE OFFENCES WITH WHICH THEY HAVE BEEN CHARGED.

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THIS APPEAL BEING RESERVED FOR JUDGMENT ON 12.11.2020 THIS DAY, THE COURT, DELIVERED THE FOLLOWING:

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JUDGMENT

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Challenging judgment dated 09.10.2013 passed by the J.M.F.C., Hungund in C.C.No.616/2005 acquitting the accused for offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I.Act’ for short), this appeal is filed by the complainant.

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Brief facts giving rise to this appeal are that a private complaint under Section 200 of the Code of Criminal Procedure, 1973 (Cr.P.C. for short) came to be filed on 16.03.2005 stating that the complainant and accused were contractors and friends of each other. They were doing contract work in Hungund and accused used to take hand loan from the complainant usually one to two lakhs and return

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them. As such, on 10.08.2004 accused borrowed a hand loan of twenty lakhs from complainant. For repayment of same, complainant issued a cheque bearing No.954499 dated 22.01.2005 drawn on Syndicate Bank, Ilkal. When the cheque was presented for payment, it returned with endorsement dated 24.01.2005 as “account closed”. Immediately thereafter a statutory notice was issued by RPAD to the accused on 09.02.2005. The same was received by accused and accused replied to the notice on 23.02.2005 making a false claim that his cheque book was missing and stating that he had not issued any cheque to the complainant and denied borrowing hand loan.

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After recording sworn statement and taking cognizance, trial Court issued summons to the accused. Upon entering appearance, accused denied the charges and sought trial. In support of his case,

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complainant got himself examined as PW1 and got marked Exhibits P1 to P6. Thereafter incriminating material was explained to accused, which he denied and sought permission to lead evidence. His statement under Section 313 Cr.P.C. was recorded. Thereafter, accused examined himself as DW1 and marked Exhibits D1 to D3.

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On consideration, trial Court framed

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following points for its consideration:

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¢£ÁAPÀ: 10.08.2004 gÀAzÀÄ DgÉÆÃ¦vÀ£ÀÄ vÀ¤ßAzÀ 20 ®PÀë gÀÆ¥Á¬Ä ¸Á® ¥ÀqÉzÀÄPÉÆAqÀÄ ºÀtzÀ ¨sÀzÀævÉUÁV ¢£ÁAPÀ: 22.04.2005 gÀ ªÉÊ±Áå ¨ÁåAPï, E®PÀ®è ±ÁSÉAiÀÄ ZÉPÀÌ £ÀA:594499 £ÀÄß ¤ÃrgÀÄvÁÛ£É J£ÀÄßªÀÅzÀ£ÀÄß ¦AiÀiÁð¢zÁgÀ£ÀÄ ¸Á©ÃvÀÄ¥Àr¸ÀÄvÁÛ£ÉAiÉÄÃ?

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DgÉÆÃ¦vÀ£ÀÄ ªÀUÁðªÀuÉÃAiÀÄ °TvÀ PÁAiÉÄÝ PÀ®A-138 gÀ CrAiÀÄ°è ²PÁëºÀðªÁzÀ C¥ÀgÁzsÀªÀ£ÀÄß J¸ÀVgÀÄvÁÛ£É J£ÀÄßªÀÅzÀ£ÀÄß ¦AiÀiÁð¢zÁgÀ£ÀÄ ¸Á©ÃvÀÄ¥Àr¸ÀÄvÁÛ£ÉAiÉÄÃ?

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AiÀiÁªÀ DzÉÃ±À?

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After answering point Nos.1 and 2 in the negative, trial court passed the impugned order of

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acquittal. Challenging acquittal, complainant is in appeal.

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Learned counsel Sri Shriharsh A.Neelopant submitted that complainant had made clear averments regarding all the ingredients of offence under Section 138 and had also produced necessary supporting documents such as the cheque, bank endorsement, statutory notice, postal acknowledgment and reply given by accused. Such being the case, trial Court on perverse reasoning acquitted the accused. Assailing reasons assigned by trial Court, learned counsel submitted that trial Court held that the complainant’s claim that he paid entire amount of twenty lakhs on one day, at his residence upon a request by accused, is doubted by the trial Court, on the ground that no particulars about source of twenty lakh rupees cash is disclosed by complainant either in legal notice, or in

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complaint. It further held that absence of any witnesses for transaction and failure to give

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clarification regarding source of income for said sum cast a doubt about transaction. The trial Court has also made much of change in ink and alleged overwriting on the cheque for passing impugned judgment, without subjecting cheque to any expert’s opinion. It has also interpreted the presence of accused’s signature on the backside of cheque as one more circumstance that raises doubt about complainant’s case. The trial Court has further relied upon Ex.D3 stop payment instruction given by accused to his banker. The fact that accused had closed account also appears to have weighed in favour of accused before trial Court. The trial Court relied upon decision of Hon’ble Supreme Court in

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Krishna Janardhan Bhat V/s Dattatreya G.Hegde,

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reported in (2008) 4 SCC 54 for placing burden of proving financial capacity of complainant to lend

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money, upon the complainant. It was submitted by learned counsel that the said reasons were not only perverse but were contrary to evidence and therefore the impugned judgment of acquittal led to miscarriage of justice calling for interference in the appeal.

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It was submitted that defence set up by accused regarding lost cheque book is inconsistent with contents of reply notice Ex.P6 in which accused on one hand states that signed cheque was missing, while on the other hand claims his signature on cheque is forged and did not lead evidence in support of such contention. The trial Court however ignored these glaring inconsistencies in the defence set up by accused while acquitting the accused, thereby committing grave error. It was further submitted that though accused claims to have issued intimation to his banker about missing cheque, but accused has

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not given any police complaint about the same. Further, even the intimation to bank-Ex.D3, does not contain date of receipt, which cast serious doubt about it. This is lost sight of by trial Court. The trial Court has further ignored the fact that accused ultimately admitted his signature on cheque and therefore, presumption in law was available to complainant and therefore complainant was not required to prove loan transaction and existence of debt beyond reasonable doubt. The trial Court committed grave error in relying upon decision in Krishna Bhat’s even though it was overruled in Rangappa V/s Sri Mohan, reported in (2010)11 SCC 441. Learned counsel also relied upon latest Supreme Court decision in APS Forex Services Pvt.Ltd. V/s Shakti International Fassion Linkers and others reported in AIR 2020 SC 945.

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On the other hand, learned counsel Sri Srinand Pachchapure supported the impugned judgment and submitted that accused in this case had not only denied entire case of complainant, but also placed cogent evidence in support of his contention namely Ex.D3-intimation to the banker about missing cheque and instructing stop payment, both of which were much prior to date of alleged ‘hand-loan transaction.’ Learned counsel submitted that accused had thus rebutted the presumption available to complainant and as the complainant failed to substantiate his claim beyond reasonable doubt, acquittal by the trial Court was fully justified. Learned counsel further submitted that there were several inconsistencies and omissions in the complainant’s case which were elicited by accused during cross-examination.

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I have heard learned counsel, perused the

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impugned judgment and record. From the above, the following facts emerge.

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The accused was doing contract work in Hungund during 2004. The accused admits his signature on cheque Ex.P1. However, entire remaining facts are disputed namely complainant and accused knowing each other, existence of earlier transactions between them, borrowing loan of rupees twenty lakhs and issuance of cheque towards repayment of such hand loan.

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On perusal of complaint, it reveals that complainant had stated that he was a contractor. And that on 10.08.2004, accused requested for a hand loan of rupees twenty lakhs as he was in urgent need of money for his contract work. Considering that in the past, accused had borrowed one to two lakhs as hand loan and was returning the same

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timely, complainant gave money to accused. For security of loan, complainant issued him a post dated cheque of 22.01.2005, at the time of borrowing loan. But during cross-examination, PW1 admits that he is not having a licence for doing contract work. He admits he was lending money to his friends but is not having any licence to do money lending. He thereafter admits that he has not produced records to show that he owns agricultural lands. He admits that he is not an income tax assessee and admits he does not have documents to show from where he had got the money and to show that he had kept rupees twenty lakhs cash at his house.

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From the above, it is noticed that

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complainant altered his stand regarding his avocation and source of income repeatedly. He ultimately adopted a stand that he was an

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agriculturist and his source of income was by selling

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agricultural produce at APMC. But, even this assertion is exposed doubtful as he admits that was granting lease of his lands. On the other hand, accused has produced his income tax returns as Ex.D1 and D2 to support his contention that he was having sufficient turn over and income and was not in need of money. Therefore the complainant’s claim that he had financial capacity to lend such huge sum of rupees twenty lakhs would be doubtful.

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On taking a close look at Ex.P1-cheque, it reveals that there is some overwriting in respect of payee’s name. Looking at the amount mentioned in figures, a couple of zeros appear to have been added, which does not appear to be normal. When the entire case of complainant is considered in background of a clear stand taken by accused in Ex.P6 and followed in Ex.D3, it emerges that accused has not only rebutted the presumption available to complainant

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but also successfully exposed serious doubts about complainant’s claims. Such as the alleged loan transaction of rupees twenty lakhs, about his occupation, source of income and financial capacity to lend the loan.

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However, the trial Court has committed an error in relying upon decision in Krishna Bhat’s case as it was overruled in Rangappa’s case. But trial Court has held that accused successfully rebutted presumption in favour of complainant regarding debt by cogent evidence casting serious doubt about financial capacity of complainant to lend such huge sum. Such effort on the part of accused satisfies the parameters for rebuttal of presumption as held by Hon’ble Supreme Court in Kumar Exports V/s Sharma Carpets, reported in (2009) 2 SCC 513, wherein it is held that:

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“The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was

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no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist .”

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emphasis supplied

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The decision in Kumar Exports is reiterated by Hon’ble Supreme Court in Krishna Rao V/s Shankargouda reported in 2018(8) SCC 165.

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Further, in APS Forex (supra), the Hon’ble

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Supreme Court was considering a case where accused

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had admitted his signature on cheque and such cheque was issued for the second time after dishonour of earlier cheque. Taking note of same, Hon’ble Supreme Court held that such admission gave rise to presumption in favour of complainant about existing debt. As it is held in this case that accused successfully rebutted presumption; having due regard to law laid down in APS Forex also it is held that the complainant failed to prove his financial capacity to lend loan of rupees twenty lakhs to accused and failed to prove that accused had issued cheque in question towards discharge of such debt. Though some of the reasons assigned by trial Court may be erroneous as stated above, the ultimate result is found justified. No case for interference with the same is made out.

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Consequently, I do not find any merit in the

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appeal and is accordingly dismissed.

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Sd/JUDGE

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CLK

Parbhakar S/O. Basappa Katagi v. G.Krishnareddy S/O. Nagareddi

Case brief

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Parbhakar S/O. Basappa Katagi v. G.Krishnareddy S/O. Nagareddi

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