Dismissed

M/S Shriram Transport Finance Co. Ltd., v. Smt. H. R. Bhagyavathi W/O H. N. Renukappa

Karnataka HC11 Dec 2020CRL.A/2580/2011

Case brief

AI extract

What is this about?

In a Criminal Appeal under Section 378 Cr.P.C. regarding Section 138 NI Act, the High Court held that the accused successfully rebutted the presumption of legally recoverable debt by proving repayment of installments via blank-signed cheque misuse. The Court dismissed the appeal.

What did the court decide?

Criminal Appeal dismissed; acquittal of the respondent upheld; no conviction or sentence set aside.

M/S Shriram Transport Finance Co. Ltd., Vs Smt. H. R… — Cheque Dishonour | Karnataka HC (2020)

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IN THE HIGH COURT OF KARNATAKA 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 PRADEEP SINGH YERUR RAKESHSHARIHARDigitally signedby RAKESH SHARIHARDate:2020.12.1811:37:02 +0530

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CRIMINAL APPEAL NO.2580/2011

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BETWEEN:

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M/s. SHRIRAM INVESTMENTS LTD., A COMPANY REGISTERED UNDER THE INDIAN COMPANIES ACT HAVING ITS ADMINISTRATIVE OFFICE AT MOOKAMBIKA COMPLEX, III FLOOR, 4, LADY DESIKACHARYA ROAD, CHENNAI HAVIG ITS BRANCH OFFICE AT HUBLI REP. BY ITS AUTHORISED SIGNATORY AND POWER OF ATTORNEY HOLDER SRI RAGHAVENDRA MANVI S/O: R.K.MANVI, AGED ABOUT 32 YEARS OCCUPATION: SERVICE CHIKKAVEERAYYANAVAR COMPLEX NEELIGIN ROAD HUBLI-580029. NOW REPRESENTED BY ITS AUTHORISED SIGNATORY AND POWER OF ATTORNEY HOLDER SHRI PRAVEER SHETTY S/O.CHIDANAND SHETTY AGED ABOUT 38 YEARS OCC: SERVICE AS FIELD EXECUTIVE (LEGAL) III FLOOR, KALBURGI SQUARE, CLUB ROAD, DESAI CROSS, HUBLI. ……APPELLANT (BY SRI. SHREEVATSA HEGDE, ADVOCATE)

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AND:

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SMT. H.R.BHAGYAVATHI W/O: H.N.RENUKAPPA, AGED ABOUT: 43 YEARS, OCC: BUSINESS, R/O; PANCHAKALLAIAH BEEDHI, POST: TARIKERE, DIST: CHIKKAMAGALUR.

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…….RESPONDENT

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(BY SRI.S.G.KADADAKATTI, ADVOCATE)

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THIS APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C. SEEKING TO SET ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED 31.12.2010 PASSED BY THE PRINCIPAL CIVIL JUDGE (JR.DN) AND JMFC, HUBLI IN C.C.NO.2481/2005 AND CONVICT THE RESPONDENT FOR AN 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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This appeal is preferred by complainant against the judgment of acquittal passed by the Court of Principal Civil Judge & JMFC, at Hubli in C.C.No.2481/2015 dated 31.12.2010.

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Brief facts leading to this case are as under:

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Appellant herein is none other than complainant before the trial Court. It is a case of complainant that it is a Company engaged in vehicle finance business under the name and style of M/s. Shriram Investments Limited. Accused had availed finance from the

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complainant-Company to purchase TaTa passenger vehicle of 1997 model bearing registration No.KA18/9518 by executing a HP agreement DPN and other related documents in favour of complainant. As there were certain dues payable by accused in respect of transactions stated above, same was intimated to respondent-accused for which respondent issued a cheque bearing No.386621 for a sum of Rs.5,33,144/on 23.10.2003 towards repayment of above transaction amount and for discharge of legal debt and liability. On presentation of cheque, the same came to be dishonored for the reasons “Funds Insufficient” on 17.11.2003. Thereafter, complainant got issued a legal notice to accused on 01.12.2003. Despite receipt of legal notice, accused has not repaid the amount and neither did he reply to the said legal notice necessitating the complainant to file present complaint against accused for the offence punishable under Section 138 of Negotiable Instruments Act (for short ‘N.I.Act’).

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On cognizance being taken by the learned Magistrate, accused appeared before the Court pleaded not guilty and claimed to be tried, accordingly he was tried.

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The Power of Attorney of holder of

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complainant-Company examined himself as PW.1 and got marked Ex.P1 to P.12 to prove the guilt of accused and thereafter closed his side. The statement was recorded under Section 313 of Code of Criminal Procedure (for short ‘Cr.P.C.), wherein accused denied all the incriminating evidence against her. Accused examined herself as DW.1 and got marked Ex.D1 to D13, in support of her defence.

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Heard Sri Shreevatsa Hegde, learned counsel for appellant-complainant and Sri S.G.Kadadakatti, learned counsel for respondent-accused.

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It is contended by learned counsel for appellant-complainant that judgment of acquittal passed by trial Court is contrary to the material evidence available on record and hence the same is

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illegal and erroneous. Learned counsel further contends

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that the trial Court has committed a serious error in acquitting the accused despite complainant proving his case beyond all reasonable doubt by producing cogent evidence and reliable material documents. Learned counsel further contends that the trial Court has ignored the aspect of presumption of law under Section 139 of N.I.Act in favour of complainant and in the present case accused having admitted the issuance of cheque and signature on the cheque, the said presumption is fortified in favour of complainant and therefore despite the said presumption in favour of complainant acquittal of accused is arbitrary, illegal and perverse.

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Learned counsel further contends that the

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trial Court has not applied its mind to appreciate the provisions of 138 of NI Act and in the present case having fulfilled the necessary requirements under Section 138 of NI Act, the trial Court ought to have convicted the accused for the aforesaid offence. He further contends that there is no dispute in the present

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case with regard to existence of loan transaction, issuance of cheque, signature on the cheque and hence when all these facts are admitted it leads to fortify the presumption under Section 139 of NI Act. Learned counsel further contends that the trial Court has misdirected itself to cast the burden of proof on Complainant, whereas the burden of proof is on the accused in view of presumption under Section 139 of NI Act. Learned counsel further contends that there is no rebuttal of presumption by accused to show that there is existence of legally recoverable debt between the parties.

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Learned counsel further contends that he has produced Ex.P2 to P12 to establish legally subsisting liability and debt for which the cheque in dispute has been issued by the accused. Non consideration of these documents and acquitting the accused is illegal and erroneous in law. Learned counsel further contends that the findings of the trial Court that Complainant has misused the singed blank cheque issued by the accused, does not hold any water in view of Section 20

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of NI Act. Learned counsel further contends that when there is clear admission by the accused of issuance of cheque at Ex.P4, the entire burden shifts on the accused to disprove the case of the Complainant, which has not been done in the present case. Therefore, the order of acquittal is bad in law. Learned counsel further contends that the trial Court has given a go-bye to the presumption enshrined in the enactment under Section 118 and 139 of NI Act. It is further contended by the learned counsel that once the issuance of cheque has been admitted and signature on the cheque is also admitted the presumption under Section 139 of NI Act will come in favour of the Complainant and unless the said presumption is rebutted and proved to the contrary that there does not exists subsisting legally recoverable debt, the onus always lies on the accused to prove and produce cogent material evidence either oral or documentary to demolish/disprove the case of Complainant. Non-consideration of all these aspects by the trial Court is arbitrary and erroneous in law and on the facts and circumstance of the present case.

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Learned counsel further contends that the finding of trial Court to the effect that Complainant ought to have sent notice to the Guarantor of the loan and initiated action against him for recovery of the amount due, is perverse, illegal and erroneous. He contends that under NI Act when a complaint is filed under Section 138 of NI Act, the issuance of cheque itself makes out

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the offence and there need not be any document to corroborate the same. Learned counsel placed reliance on the case of D.K. CHANDEL vs M/s WOCKHARDT LTD AND ANOTHER reported in 2020(1) CIVIL COURT CASES 582 (SC). On these submissions the learned counsel seeks to allow the appeal and set aside the order of acquittal passed by the trial Court.

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Per contra, learned counsel for respondent -

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accused vehemently contends that the judgment of acquittal passed by the trial Court is based on the material evidence both oral or documentary and on proper appreciation of the same. The trial Court has rightfully come to a conclusion that Complainant has not made out a case to attract the provisions of Section

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138 of NI Act and accordingly, acquitted the accused, which does not call for any interference by this Court. Learned counsel further contends that receipt of loan is admitted by accused and the issuance of cheque is also admitted, the same has been signed and handed over as a blank document. Learned counsel further contends that the loan was obtained on 05.12.2001 for a sum of Rs.4 lakhs and thereafter accused has regularly paid the premium amount/installment amount to the Complainant over a period of time. Learned counsel further contends that he has produced Ex.D1 to D3 to disprove the case of the Complainant.

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Learned counsel further contends that the loan which was taken in the year 2001 was fully repaid by several installments for over a period of time and he has produced Ex.D3 to show that as on 31.03.2002 the arrears was only Rs.22,200/- and therefore, there was no legally subsisting debt or liability as against the accused over the aforementioned loan transaction. Learned counsel further contends that he has also produced Ex.D4 to D13, which are the amount of

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installments paid to the Complainant, which is not disputed by the Complainant. Learned counsel further contends that once he has produced all these documents at Ex.D1 to D13 to show before Court that he has paid full amount towards transaction and Ex.D4 is only blank signed document issued only as security. The rebuttal of presumption has been made by the accused, thereby shifting the onus on the Complainant. Learned counsel further contends that the same has been appreciated by the trial Court and trial Court has rightfully acquitted the accused as Complainant was unable to prove the existence of legally recoverable debt. Learned counsel further contends that the complaint filed itself is not maintainable in view of the fact that the Complaint is filed by M/s Sriram Investments Limited, represented by its PA Holder Sri Raghavendra K. Manvi, whereas the evidence has been adduced by one Praveen S.Shetty, acting as PA Holder. Therefore, initiation of the complaint itself is invalid. Learned counsel further contends that it is an admitted fact that PA Holder who has adduced evidence has no

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knowledge of the case prior to two to three years and he has admitted that he is employed in the Company since past two to three years. Therefore, he is not a witness to the transaction and neither does he have any knowledge about loan transaction between the Complainant and accused. Learned counsel further contends that the complaint is liable to be rejected and rightfully the trial Court has acquitted the accused. On these grounds learned counsel for respondent – accused seeks for dismissal of the appeal and to confirm the judgment of acquittal passed by the trial Court. Learned counsel for the Complainant has relied on the case of M/S SHRIRAM TRANSPORT FINANCE CO.LTD. vs SMT. AKHILABANU reported in 2015(3) KCCR 2578.

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Having heard the learned counsel for appellant

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and learned counsel for respondent, the points that arise for consideration before this Court are:

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“(1) Whether accused has been able to rebut the presumption under Section 138 of NI Act?

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(2) Whether Complainant has been able to satisfy the rebuttal of the said presumption?

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(3) Whether the judgment of acquittal deserves to be set aside?”

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To answer the above points let us have a

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cursory look on the factual matrix of the case.

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The respondent/accused had obtained a loan for purchase of a Tata passenger vehicle of 1997 model by hypothecating the said vehicle by way of hypothecation agreement she availed the loan. While availing such loan for vehicle she has got issued blank signed cheque. Thereafter, accused has paid the installments towards the said loan to complainant and after certain period of payment of installments, complainant got filed complaint against the accused by presenting the cheque towards legally recoverable debt pertaining to loan transaction. On dishonor of the said cheque, complainant has initiated the present complaint. It is not in dispute that accused had obtained loan for purchase of vehicle as mentioned

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above. It is also not in dispute that accused had issued a cheque infavour of complainant, but the same was blank signed cheque. It is the version of accused that

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though she had obtained loan for purchase of vehicle, over a period of time she has repaid certain amount towards the fulfillment of said loan. It is also not in dispute that accused had paid certain amount by way of installments towards loan transaction which has been accepted and acknowledged by complainant and the said documentary proof towards payment of installments having produced by accused in Exs.D.4 to 13. It is also seen that as per Ex.D.3, the arrears as on 31.03.2002 is only a sum of Rs.22,200/- towards loan transaction, therefore, admittedly some portion of loan has been repaid by accused/respondent which is admitted by complainant.

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It is the case of complainant that since accused has not repaid the loan amount, the present cheque has been presented for encashment and since the signature on the cheque and the cheque having been admitted, accused cannot go back and say he has

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no capacity to pay the cheque amount. It is further case of complainant that the presumption of law under Section 139 of N.I.Act will come into play infavour of complainant once there is an admission and acceptance of issuance of cheque-Ex.P.4; in view of this, it is essential to have re-look at proviso (a) to (c) to Section 138 of N.I.Act.

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138. Dishonour of cheque for insufficiency, etc., of funds in the accounts

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Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a

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term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

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PROVIDED that nothing contained in this section shall apply unless—

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(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

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(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

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(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

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Explanation: For the purposes of this section, “debt of other liability” means a legally enforceable debt or other liability.

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On careful perusal of the above provisions, there is no doubt that on fulfillment of provision (a) to (c) of Section 138 of N.I.Act, the cause of action in filing the complaint arises and on presentation of the said complaint, the offence under Section 138 of N.I.Act is made out. Pursuant to the cognizance taken by the Court under Section 139 of N.I.Act will comes into play in favour of complainant.

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139. Presumption in favour of holder

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It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.

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Section 139 of N.I.Act acts as a presumption in law in favour of complainant to the effect that the

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payee or holder of cheque has received the cheque towards discharge of legally recoverable debt in whole or in part, therefore, this presumption is infavour of complainant that the cheque is issued towards discharge of a legally recoverable debt.

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No doubt it is a presumption in law as contemplated under Section 139 of N.I.Act, but the said presumption is rebuttable presumption. If the accused is able to rebut the above presumption and prove to the contrary that there does not exist any legally recoverable debt or liability and the said cheque has been misused and on such cogent material evidence or cross-examination, the onus shifts on complainant to satisfy such rebuttable evidence produced by accused.

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In the present case on hand, no doubt accused admits the receipt of loan amount and issuance of cheque, but she categorically claims that said cheque was a blank signed cheque given only as security towards the said loan amount and once the loan amount has been repaid by way of installments the complainant ought to have returned the said cheque. Whereas, in the present case, despite receipt of amount by way of installments on various dates, which is acknowledged by complainant, deliberately with mala fide intentions complainant has failed to return the blank signed cheque and has misused it by entering the amount on

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the cheque. It is also contended by learned counsel for complainant that even though the cheque is given as a blank cheque under Section 20 of N.I.Act he is entitled to fill-up the contents of cheque and thereafter, the presumption under Sections 118 and 139 of N.I.Act will come infavour of complainant. It is no doubt true that a cheque can be filled by the recipient, payee or the holder, in due course towards a valid transaction and it is also not in dispute that presumption will act in favour of complainant, but the said presumption is a rebuttable presumption and once the said rebuttal has been established and proved to the contrary by accused, the onus will shift on the complainant to substantiate and controvert such rebuttal made by accused.

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In the present case, accused has produced sufficient material before the Court to show that towards the above said loan she had made payments of several installments which is produced as Exs.D.1 to 13 and even the letter issued by complainant as per Ex.D.3 shows that as on 31.03.2002 the arrears was only

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Rs.22,200/-. Therefore, once these documents are apparently available and produced before the Court which are not disputed, on the contrary, the same are admitted, then without hesitation, it can be said that the accused has rebutted the presumption as contemplated under Section 139 of N.I.Act. Therefore, I answer point No.1 in the affirmative to the effect that accused has rebutted the presumption under Section 139 of N.I.Act.

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On such rebuttal by accused, the onus shifts on complainant to satisfy this Court, on such rebuttal and disprove the case made out by accused. In the present case, the complainant has not led any evidence or produced any material documents before this Court or cross-examined the accused who stepped into the witness box to disprove the case and documents produced to show that despite receipt of payments by way of installments the accused was still due the amount towards loan as depicted in Ex.P.4, the cheque herein. Infact complainant has admitted the issuance of receipts Exs.D.4 to 13, the statement of extract shown

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the balance amount towards the loan as per Ex.D.3 which is dated 22.04.2002. It is also interesting to note that despite issuing the letter at Ex.D.3 on 22.04.2002 arbitration notice got issued by complainant on 15.11.2005 claiming an amount of Rs.5,33,114/- from accused towards the very same loan transaction. It is also interesting to note that as per Ex.P.11 produced by complainant the details of agreement and statement made breakup liable to be paid by accused is shown as Rs.5,33,114/as on 30.09.2003 and this is the statement of accounts of complainant. Therefore, the document produced by complainant as per Ex.P.11 which is issued on 30.09.2003 and the letter issued on 15.11.2005 as per Ex.D.2 which is after two years there is no change in the amount claimed by complainant.

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Further, as per Ex.D.3 issued on 22.04.2002, the arrears as on 31.03.2002 was only Rs.22,200/-, so these three documents do not tally with each other and so also on admission by complainant with regard to receipt of loan amount by way of installments as per Exs.D.4 to 13 have not been shown anywhere in the

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statement of account or extract produced by complainant. Therefore, when the accused has produced several documents as stated above to show that she

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has made payment towards loan amount by way of installments, it becomes the bounden duty of complainant to either show such payments made, the deduction given and a consolidated statement of account/extract to be produced to substantiate his case. In the present case, no such statement or extract is produced neither is it stated by complainant in the oral evidence adduced or any elicitation through crossexamination of D.W.1. Hence, I answer point No.2 in the negative.

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The other point that arises for consideration before this Court is the initiation of complaint by company through Power of Attorney Holder namely Raghavendra Manvi and thereafter the evidence has been adduced by one Praveer Shetti as P.W.1. In the cross-examination of P.W.1, he has clearly admitted that P.W.1 has no knowledge with regard to transaction and he has joined the company only two years three

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months prior to his evidence before the Court. So therefore, it is apparent that P.W.1 does not have knowledge and was not a party to the transaction. Hence, once P.W.1 is adducing evidence on behalf of the Company either he should have witnessed the incident or he should have the knowledge of transaction especially the cheque in question. In the present case, complainant has not made out both requirements for adducing the evidence of P.W.1. Hence, the complainant has not made out the necessary ingredients required to prove the guilt of accused under Section 138 of N.I.Act.

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It is seen from the records that trial Court

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has appreciated all these aspects by very well reasoned order and has rightfully appreciated the evidence and materials placed by respondent/accused and has come to a conclusion that on all these misgivings and non explanation by complainant leads to an inference that the cheque in dispute was a blank signed cheque given by accused to the complainant which has been misused by complainant. The trial Court has rightfully held that

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complainant has failed to discharge the element of existence of legally subsisting recoverable debt and hence the rebuttal of presumption has been established by accused pursuant to the said rebuttal by accused through cogent material evidence both oral and documentary, complainant has not satisfactorily explained and disproved such rebuttable. Hence, the trial Court has rightfully acquitted the accused for the offence punishable under Section 138 of N.I.Act. I do not find any reason to interfere with the well reasoned Judgment of acquittal. Hence, I answer point No.3 in the negative. Learned counsel for complainant in support of his contentions relied on the case of D.K.CHANDEL, referred to supra. The facts of the case therein are not applicable to the present case on hand.

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In a case of acquittal there is an innocence in favour of accused, which is doubled by way of an acquittal. In the present case, the same is fortified by the judgment of acquittal of the accused. Viewed from any angle, I do not find any illegality or perversity in

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the judgment of acquittal passed by the trial Court. Accordingly, I pass the following Order:

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ORDER

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Appeal is dismissed. Judgment of conviction and order of sentence passed by the trial Court is

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confirmed.

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Sd/JUDGE