Allowed

Shrinivas Narayan Pal v. Subhadhar Narayan Shetty

Karnataka HC11 Dec 2020CRL.A/2522/2013

Case brief

AI extract

What is this about?

High Court of Karnataka allowed the criminal appeal, setting aside the acquittal of the accused. The court held that prosecution based on successive cheque defaults is maintainable and the presumption under the Negotiable Instruments Act stood unrebutted. The accused convicted was sentenced to a fine.

What did the court decide?

Impugned judgment of acquittal set aside. Appellant convicted. Sentenced to fine of Rs. 1,00,000/- and awarded compensation of Rs. 95,000/-.

Shrinivas Narayan Pal Vs Subhadhar Narayan Shetty — 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 11^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.2522/2013

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BETWEEN:

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SHRINIVAS NARAYAN PAL, AGE: 48 YEARS, OCC: BUSINESS, R/O SHRINIVAS KRUPA, PLOT NO.63, JADHAV NAGAR, BELAGAVI.

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... APPELLANT

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(BY SRI R.M.KULKARNI, ADVOCATE)

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AND

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SUBHADHAR NARAYAN SHETTY, AGE: MAJOR, OCC: BUSINESS, R/O C/O HEBBAR KIRANI STORES, NEAR YUVAK MANDAL PETRI, TQ. AND DIST: UDUPI,

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... RESPONDENT

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(BY SRI SOURABH HEGDE, ADVOCATE FOR SRI SHREEVATSA S.HEGDE, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT DATED 06.12.2012 IN C.C.NO.1606/2010 ON THE FILE OF II ADDL.CIVIL JUDGE AND J.M.F.C., BELAGAVI, AND ACCUSED BE PUNISHED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.ACT.

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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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Challenging the judgment dated 06.12.2012 passed by II Addl.Civil Judge and J.M.F.C., Belagavi in C.C.No.1606/2010, 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 this appeal are that a complaint came to be filed on 04.07.2005 under Section 200 of Code of Criminal Procedure, 1973 (hereinafter referred to as ‘Cr.P.C.’ for short) stating that accused was doing coconut business in Shop No.5 of CTS No.10856 of Belagavi, owned by one Sri S.N.Rao. Sri S.N.Rao happened to be a good friend of complainant. During May, 2004 accused approached complainant along with Sri. S.N.Rao, seeking financial assistance. Complainant gave a sum of Rs.50,000/- as hand loan which accused promised to repay within three months. Complainant

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demanded repayment, accused issued a cheque dated 08.03.2005 bearing No.292058 drawn on Corporation Bank, Branch at Kirloskar Road, Belagavi, for a sum of Rs.50,000/-. When cheque was presented for payment, it was returned with endorsement ‘funds insufficient’ on 11.03.2005. A statutory notice was issued to accused on 04.04.2005, which was not served on accused. Thereafter complainant approached accused, who requested him to re-present the cheque. Therefore, cheque was re-presented for payment on 10.05.2005. But, it was returned once again on 12.05.2005 with endorsement ‘funds insufficient’. Thereafter statutory notice dated 28.05.2005 came to be issued to accused by RPAD. However, same was returned with postal shara as ‘not claimed’. 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. On appearance, accused denied the charges and sought for trial. In support of his case, complainant got himself examined as PW1 and Exhibits P1 to P15 were

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marked. Thereafter, entire incriminating material was explained to accused, who denied the same stating that he had not issued cheque. His statement was recorded under Section 313 of Cr.P.C. Though accused stated that he would lead evidence, no evidence was led.

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Based on the above, trial Court framed following points for its consideration:

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Whether the complainant proves that he has complied with all the mandatory requirements as contemplated under Section 138(a) to (c) of Negotiable Instruments Act?

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Whether the complainant further proves that the accused has issued the cheque dated 08.03.2005 bearing No.292058 for Rs.50,000/- drawn on Corporation Bank, Branch at Kirloskar Road, Belgaum towards legally recoverable debt?

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If so, what order?

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After answering point Nos.1 and 2 in the negative, trial Court proceeded to pass impugned judgment acquitting accused.

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Learned counsel Sri R.M.Kulkarni appearing for

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appellant submitted that complainant established the foundational facts for offence under Section 138 of N.I. Act by examining himself as PW1 and reiterated entire complaint averments and also produced relevant documents, such as cheque- Ex.P1; bank memos- Exs.P2 to P5; postal receipt- Ex.P6; UCP slip-Ex.P7, returned envelope-Exs.P8 to P11; debit slip-Ex.P12; returned postal cover-Ex.P13 and copies of statutory noticeExs.P14 and P15. It was submitted that though respondent-accused failed to lead any contrary evidence, trial Court only on the ground that complaint was filed after presentation of cheque for the second time not maintainable.

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Apart from above, trial Court also held that there were doubts regarding transaction as there was non-examination of Sri S.N.Rao, who was stated to be an witness to the transaction. Trial Court further held complainant failed to discharge burden of proof to prove

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existence of debt, towards discharge of which, the cheque in question was claimed to have been issued.

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Assailing the reasons, it was submitted that Hon’ble Supreme Court in the case of MSR Leathers V/s S.Palaniappan and another reported in (2013) 1 SCC 177 had authoritatively held there was no bar for initiating prosecution based on second or successive defaults in payment of cheque amount, simply because no prosecution based on the first default had been initiated. Therefore, reason regarding maintainability of complaint assigned by trial Court was contrary to law.

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Learned counsel further submitted that accused had taken a defence that cheque in question was issued as a security to Sri S.N.Rao in whose building, he was a tenant. Said S.N.Rao had not returned cheque to accused and case filed by complainant against him was not with regard to any admitted or proved debt. It was also contended that handwriting on Ex.P1-cheque was different as name of payee was written in capitals, whereas the

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amount in words is written in small letters and there was no explanation by complainant for this discrepancy. It was submitted that by virtue of these discrepancies, accused rebutted the presumption in favour of complainant and as there is failure of complainant to prove loan transaction by examining Sri S.N.Rao or otherwise, impugned judgment of acquittal was justified.

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I have heard learned counsel, perused impugned judgment and record.

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From the complaint, it is seen that complainant had made clear averments regarding debt amount of Rs.50,000/- borrowed by accused and issuance of chequeEx.P1 towards discharge of debt. Complainant has also stated about presentation of cheque and its dishonour. It was further stated that accused failed to make payment even after receiving statutory notice. Thus, the foundational facts for constituting offence under Section 138 of N.I. Act were asserted. In the cross-examination of PW1, a stand is taken by accused that cheque in question

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was given by him to Sri. S.N.Rao for security purposes. Thus, there is admission of accused’s signature on cheque. Further possession of cheque by complainant is not stated to be unlawful or illegal. Thus, it has to be held that complainant was in lawful possession of cheque. These twin facts would in turn avail presumption under Sections 118 and 139 of N.I. Act in favour of complainant as held by Hon’ble Supreme Court in Rangappa V/s Sri Mohan reported in (2010) 11 SCC 441. But such presumption would be rebuttable. Except suggesting to PW1 that cheque in question was issued as security to Sri S.N.Rao, and denying existence of loan transaction between complainant and accused, no cogent evidence is led by accused to doubt the transaction.

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Insofar as contention that complaint on successive presentation of cheque would not maintainable, the Hon’ble Supreme Court in case of MSR Leathers (supra), has held as under:

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“33. Applying the above rule of interpretation and the provisions of Section 138, we have no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay had not been launched. If the entire purpose underlying Section 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason. There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time.”

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Hence, the reason regarding non-maintainability of complaint assigned by trial Court would be contrary to law.

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Further, even in the absence of any rebuttal evidence or substantiation of any of the contentions of accused, the presumption available to complainant would render acquittal as illegal and unsustainable. Such acquittal would be miscarriage of justice.

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In the result, impugned judgment of acquittal is set aside. It is held that complainant has established the commission of offence punishable under Section 138 of N.I. Act, by the accused. Hence, the accused is held guilty of offence punishable under Section 138 of N.I. Act.

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Accordingly, appeal is allowed.

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Insofar as sentence, learned counsel for appellant submitted that accused with full knowledge about insufficiency of funds in his account, issued cheque in question and misled complainant. Cheque was issued in

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the year 2005 and fifteen years have lapsed. Hence, sought for imposition of sentence of imprisonment and maximum penalty.

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On the other hand, learned counsel for accused submitted that accused was in dire financial difficulties and sought leniency in sentence.

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The Hon’ble Supreme Court in Damodar 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 of the N.I. Act, 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.1,00,000/- (Rupees one lakh only) and in default of payment of fine, to undergo simple imprisonment for a period of four months.

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Acting under Section 357 of Cr.P.C., it is ordered that a sum of Rs.95,000/- (Rupees ninety-five

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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

Shrinivas Narayan Pal v. Subhadhar Narayan Shetty

Case brief

What is this about?

What did the court decide?

Shrinivas Narayan Pal v. Subhadhar Narayan Shetty

Case brief

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