Allowed

Lohit @ Channappa S/O Basavaraj Nelvigi v. Jayasheelrao S/O Appanna Potdar

Karnataka HC10 Dec 2020CRL.A/100211/2014

Case brief

AI extract

What is this about?

The High Court set aside the trial court 's acquittal of the accused in a cheque bounce case. Relying on Supreme Court precedents, the court held that the statutory presumption regarding the lawful debt persisted despite the accused 's claim that the cheque was for security. The appeal was allowed, the accused was convicted, and sentenced to a fine.

What did the court decide?

Impugned judgment of acquittal set aside; accused held guilty; sentenced to fine of Rs. 7,33,400/-; Rs. 7,25,000/- paid to complainant as compensation under Section 357 Cr.P.C.

Lohit @ Channappa S/O Basavaraj Nelvigi Vs Jayasheelrao… — 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 10^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.100211/2014

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BETWEEN:

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LOHIT @ CHANNAPPA, 35 YEARS, OCC: BUSINESS, R/O LAKSHMESHWAR, TQ: SHIRAHATTI, DIST: GADAG.

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... APPELLANT

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(BY SRI SADIQ N.GOODWALA, ADVOCATE)

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AND

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JAYASHEELRAO, S/O APPANNA POTDAR, AGE: 50 YEARS, OCC: BUSINESS, R/O PROP: M/S DEVI AUTOMOBILES, J.N.M.C. ROAD, BELGAUM.

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... RESPONDENT (BY SRI JAGADISH PATIL, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C. SEEKING TO SET ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED 29.09.2014 PASSED BY THE CIVIL JUDGE AND J.M.F.C., LAKSHMESHWAR IN C.C.NO.224/2004 AND CONSEQUENTLY CONVICT THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT.

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THIS APPEAL COMING ON FOR DICTATING JUDGMENT THIS DAY, THE COURT, DELIVERED THE FOLLOWING:

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JUDGMENT

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Challenging the judgment dated 29.09.2014 passed

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by Civil Judge and J.M.F.C., Lakshmeshwar in C.C.No.224/2004, acquitting accused for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I.Act’ for short), this appeal is filed.

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Brief facts leading to appeal are that a complaint was filed on 17.06.2003 under Section 200 of the Code of Criminal Procedure, 1973 (hereinafter referred to as ‘Cr.P.C.’ for short) stating that complainant is a businessman dealing in sales of tractors. Accused was also in same business and used to purchase tractors from complainant and sell them at Belagavi. There was business relation between complainant and accused. As such, on 15.02.2003, accused issued a post dated cheque bearing No.600500 drawn on Syndicate Bank, Belagavi for a sum of Rs.3,66,700/- for purchase of a tractor. The

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tractor was supplied to accused. Thereafter, when cheque was presented for payment on 05.04.2003 through Union Bank of India, Belagavi Branch, it returned unpaid on 12.04.2003 with an endorsement ‘account closed’. Thereafter, statutory notice was issued by RPAD on 05.05.2003 and served on accused on 10.05.2003. Accused replied on 16.05.2003, but did not make any payment. Hence, complaint came to be filed.

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After recording sworn statement of complainant

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and taking cognizance, trial Court issued summons to accused. Accused entered appearance and denied the charges. Matter was set for trial. In support of his case, complainant got himself examined as PW1 and another witness as PW2. Exhibits P1 to P11 were marked. Thereafter, entire incriminating material was explained to accused, who denied the same and sought permission to file written explanation. His written explanation under Section 313 was taken on record. Thereafter, trial Court proceeded to frame following points for its consideration.

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DgÉÆÃ¦AiÀÄ °TvÀ ªÀUÁðªÀuÉAiÀÄ C¢ü¤AiÀÄªÀÄ 1881 PÀ®A 138 gÀrAiÀÄ°è zÀAqÀ¤ÃAiÀÄªÁzÀ C¥ÀgÁzsÀªÀ£ÀÄß J¸ÀVgÀÄªÀ£ÉAzÀÄ ¦gÁå¢zÁgÀ£ÀÄ ¸Á©ÃvÀÄ¥Àr¸ÀÄªÀ£ÉÃ?

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AiÀiÁªÀ DzÉÃ±À?

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After answering point No.1 in the negative, trial

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Court proceeded to pass impugned judgment acquitting accused. Challenging acquittal, complainant is in appeal.

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Learned counsel Sri Sadiq N.Goodwala

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appearing for appellant submitted that complainant had clearly stated about all ingredients of offence under Section 138 of N.I. Act and also produced relevant documents. Even though accused admitted his signature on cheque, and failed to lead any contrary evidence, trial Court acquitted accused. The reason assigned by trial Court, were that statutory notice-Ex.P6 was issued by one of the partners of complainant firm whereas complaint filed by another partner; there was failure to produce books of accounts by complainant; and admission of PW1 in cross-examination that he does not have knowledge of exact outstanding amount from accused. In support of his

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contention, learned counsel relied upon decisions of Hon’ble Supreme Court in APS Forex Services Pvt.Ltd. V/s Shakti International Fashion Linkers and others reported in AIR 2020 SC 945; D.K.Chandel V/s M/s Wockhardt Ltd. and another, reported in 2020(1) CIVIL COURT CASES 582 (SC); M/s Shree Daneshwari Traders V/s Sanjay Jain and another reported in 2018(16) SCC 83 and in Bir Singh V/s Mukesh Kumar reported in (2019) 4 SCC 197. It was submitted that when there is admission of signature on cheque and there is no evidence to contradict lawful possession of cheque by complainant, the presumption under Sections 118 and 139 of N.I. Act, would lie in favour of complainant and he would not be required to prove entire transactions and beyond reasonable doubt, as if in civil suit. Hence, it was submitted that impugned judgment passed by trial Court was illegal and had led to miscarriage of justice.

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On the other hand, learned counsel Sri. Jagadish Patil appearing for accused submitted that accused had taken a clear stand in his reply to the statutory notice produced as Ex.P7, as well as, in the cross-examination of PW1 that cheque in question was given as a security to proprietorship firm, but complaint was filed on behalf of partnership firm by name Basava Agro World. Hence, complaint was not maintainable and acquittal by trial Court did not call for interference. Attention of this Court was also drawn to the fact that Ex.P7-statutory notice was issued by an individual and not by the firm. Learned counsel further submitted that when partnership firm itself was registered only on 03.04.2003, there could not have been any debt from accused in favour of complainant firm and prior to such date and cheque in question herein was dated 27.02.2003. Hence, on these grounds submitted that complaint was not tenable and impugned judgment of trial Court does not call for any interference.

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I have heard learned counsel, perused

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impugned judgment and record.

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From the complaint, it is seen that complaint is filed by Sri Lohit @ Channappa Basavaraj Nelavigi as one of the partners of M/s Basava Agro World, Laxmeshwar Town. It was stated therein that towards business transaction, accused had issued cheque on 15.02.2003 for a sum of Rs.3,66,700/- by post dating it to 27.02.2003. On presentation of cheque on 05.04.2003, it returned unpaid on 12.04.2003 and thereafter statutory notice was issued to complainant on 05.05.2003, which were received by accused on 10.05.2003. But there wass failure to make payment as per demand made in notice. Ex.P1 is cheque in question, Exs.P2 and P3 are memoranda issued by Union Bank of India, Ex.P4 issued by Syndicate Bank, Ex.P5 is RPAD acknowledgment, for statutory notice dated 05.05.2003 marked as Ex.P6, Ex.P7 is reply by accused, Exs.P8 to P10 are the letters issued by accused to complainant dated 15.12.2001, 24.12.2001 and

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11.02.2002. Ex.P11 is the registration certificate of complainant firm.

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From perusal of Ex.P11, it is seen that date of formation of partnership is 26.09.2001. Only the date of registration of firm is 03.04.2003. The payee named in cheque is M/s Basava Agro World, Laxmeshwar. In his evidence, PW1 has stated about manner of conduct of business between complainant and accused. Complainant used to purchase tractors at wholesale prices and sell them to dealers. Accused was a dealer, who purchased tractors from complainant. He used to pay advance amount for purchase of tractors and after selling them, pay balance amount. It was in the nature of a running account. It was further stated that on 15.02.2003, accused purchased a tractor from complainant. Towards purchase price of tractor, post dated cheque for Rs.3,66,700/- being the price of tractor was issued. PW1 also stated that cheque on presentation was dishonoured

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and statutory notice issued to accused was received by him, but no payment made.

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From the above, complainant duly established all the foundational facts necessary to constitute offence under Section 138 of N.I. Act namely:

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a. That cheque was issued;

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b. The same was presented;

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c. It was dishonoured, on presentation;

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d. A notice, in terms of provisions of NI Act was served on the person, to be made liable;

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e. Despite service of notice, neither any payment was made nor any other obligations, if any, were complied within 15 days from date of receipt of notice.

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[refer N.K.Wahi Vs. Shekhar Singh and Ors. reported in (2007) 9 SCC 481 ]

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During cross-examination of PW1, it was

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suggested by accused that cheque was issued for purpose of security only. This suggestion itself established that accused admitted his signature on cheque and its issuance to complainant. In view of these admissions, presumptions

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in law under Section 118 and 139 of N.I. Act would be available to complainant as per the law laid down in the cases of APS Forex Services Pvt.Ltd.; D.K.Chandel; M/s Shree Daneshwari Traders and Bir Singh (supra).

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It was for accused to rebut such presumption. But in this case, except eliciting admission from PW1 that he did not know exact amount due from accused, no other admissions were obtained, which would create a doubt about complainant’s case. The Hon’ble Supreme Court has observed in M/s Shree Daneshwari Traders (supra) that failure to explain payments made by cash and raising a contention that cheque was issued for security purposes only does not amount to rebuttal of presumption or casting doubt about transaction in case of a running account and burden would continue to be on accused to establish that cheque was not issued for discharging lawful debt.

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In view of the above, the reasons assigned by trial Court for acquittal are not only contrary to law under

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N.I. Act but also the evidence on record. Acquittal has led to miscarriage of justice. Hence, impugned judgment is liable to be set aside. It is held that ingredients of offence under Section 138 are duly established by complainant.

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For the foregoing, appeal is allowed, impugned order of acquittal is set aside. The accused is held guilty of offence punishable under Section 138 of the N.I. Act.

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Insofar as sentence, learned counsel for complainant submitted that due in question is of year 2003 i.e. more than seventeen years have lapsed. And accused knowing about insufficiency of funds in account, issued post dated cheque, there misused negotiable instrument and also subjected the complainant to hardship. Hence, sought for imposition of sentence of imprisonment and also fine.

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On the other hand, learned counsel for accused submitted that there was genuine doubt about transaction and accused was in financial difficulties and therefore sought for imposition of simple sentence of fine only.

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17. The Hon’ble Supreme Court in Damodar

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S.Prabhu V/s Sayed Babalal H., reported in (2010) 5 SCC 663, has observed that the offence under Section 138 of N.I. Act is in the nature of a civil wrong and the purpose of Section 138 is compensatory and not punitive. Hence, I feel it just and proper to impose a sentence of fine instead of imprisonment. The accused is hereby sentenced to pay a fine of Rs.7,33,400/- (Rupees seven lakhs thirty-three thousands and four hundred only) and in default of payment of fine, to undergo simple imprisonment for a period of nine months.

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Acting under Section 357 of Cr.P.C., it is ordered that a sum of Rs.7,25,000/- (Rupees seven lakhs twentyfive thousands only) shall be paid to complainant as compensation and remaining amount is ordered to be defrayed to State.

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SD/JUDGE

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CLK

Lohit @ Channappa S/O Basavaraj Nelvigi v. Jayasheelrao S/O Appanna Potdar

Case brief

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Lohit @ Channappa S/O Basavaraj Nelvigi v. Jayasheelrao S/O Appanna Potdar

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