Dismissed

Shivageeta W/O. Dakshinamurthy Hiremath v. Savita Chandrashekhar

Karnataka HC22 Dec 2020CRL.A/2840/2013

Case brief

AI extract

What is this about?

An appeal against acquittal in a cheque bounce case. The High Court upheld the trial court's acquittal, holding that the appellant failed to establish a legally enforceable debt due to material alterations on the cheque and probable collusion between parties.

What did the court decide?

Appeal dismissed. Judgment of acquittal by the trial court confirmed.

Shivageeta W/O. Dakshinamurthy Hiremath Vs Savita… — Cheque Dishonour | Karnataka HC (2020)

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MOHANKUMARB SHELARDigitally signedbyMOHANKUMARB SHELARDate:2020.12.2317:44:11 +0530 IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH

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DATED THIS THE 22^ND DAY OF DECEMBER, 2020

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BEFORE

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THE HON’BLE MR. JUSTICE PRADEEP SINGH YERUR

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CRIMINAL APPEAL NO.2840 OF 2013

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BETWEEN: SMT.SHIVAGEETA W/O.DAKSHINAMURTHY HIREMATH AGED ABOUT 45 YEARS OCC: AGRICULTURE & HOUSE KEEPING R/AT PLOT NO.51, 11^TH CROSS VIDYAGIRI BAGALKOT BAGALKOT TQ. & DIST. ... APPELLANT (BY SRI N.L.BATAKURKI, ADVOCATE)

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AND:

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SMT.SAVITA CHANDRASHEKHAR PRESIDENT SASYA SHYAMALA SOUHARDA CREDIT CO-OPERATIVE SOCIETY LTD., HOSPET ... RESPONDENT (BY SRI SABEEL AHMAD FOR SRI A.S.PATIL, ADVOCATES)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT PASSED BY THE ADDITIONAL CIVIL JUDGE AND JMFC, BAGALKOT IN C.C.NO.141/2008 DATED 20.09.2013 FOR THE OFFENCE UNDER

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SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT AND CONVICT ACCUSED NO.1/RESPONDENT HEREIN FOR THE SAID OFFENCE, IN THE INTEREST OF JUSTICE.

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

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JUDGMENT

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This appeal is preferred by the complainant against the judgment of acquittal passed by the Additional Civil Judge and JMFC, Bagalkot in Criminal Case No.141/2008 on 20.09.2013 acquitting the accused for the offence under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘the N.I. Act’).

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Parties shall be referred to as per their status before the trial Court.

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Brief facts leading to filing of this appeal are as under:

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It is the case of the complainant that accused No.1 is the President of Sasya Shamala Souhardha Credit Co-operative Ltd., Hospet and accused No.2 is

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the Chief Executive Officer of the said society. Both the accused were required to pay an amount of Rs.4,00,000/- to the complainant and to discharge their liability, they issued a cheque bearing No.006062000015000 jointly for a sum of Rs.4,00,000/dated 23.02.2007 in favour of complainant. The complainant presented the aforesaid cheque on several occasions i.e. on 24.02.2007, 07.03.2007 and 08.03.2007. The cheque came to be dishonoured for the reason ‘insufficient funds’. Thereafter, the complainant got issued a legal notice dated 10.08.2007 to both the accused calling upon them to make the payment of dishonoured cheque. Despite receipt of legal notice, neither the accused repaid the amount demanded nor replied to the legal notice. Thereafter, the complainant registered a complaint under Section 138 of the N.I.Act. On cognizance being taken, the accused were summoned by the Court. They pleaded

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not guilty and claimed to be tried. Accordingly, they were tried.

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In order to prove the guilt of the accused, the complainant got examined herself as PW.1 and got marked documents as per Exs.P1 to P9. Thereafter, the statement of accused No.1 was recorded under Section 313 of Cr.P.C. It is relevant to note here that the case was dismissed as against accused No.2 and the same has attained finality and there is no action taken by complainant to that effect. Accused No.1 adduced evidence as DW.1 and got marked documents as per Exs.D1 and D2.

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After considering the entire material evidence i.e. both oral and documentary, the trial Court came to the conclusion that the complainant failed to establish the ingredients of Section 138 of the N.I.Act and the trial Court held that in view of material alterations of cheque-Ex.P1, Section 87 of the N.I.Act renders the same instrument as void and

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Ex.P1-cheque is materially altered. Therefore, the complainant has failed to establish the guilt of the accused for the offence under Section 138 of the N.I.Act and accordingly, acquitted the accused for the above said offence.

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Heard Sri N.L.Batakurki, learned counsel for the appellant and Sri Sabeel Ahmad appearing on behalf of Sri A.S.Patil, learned counsel for the respondent.

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It is contended by the learned counsel for the appellant that the judgment of acquittal passed by the trial Court is one sided, arbitrary and contrary to the material evidence on record. Hence, the same is liable to be set aside and reversed. He further contends that the impugned judgment of acquittal suffers from material illegalities and irregularities and hence, the same is required to be reversed. He further contends that accused No.2 has admitted the transaction amount of Rs.4,00,000/- in

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his reply to the legal notice as per Ex.P9 and therefore, the admission of accused No.2 with regard to the transaction proves the fact that the amount was deposited by the complainant with accused No.2, society. Therefore, non consideration of this admission of accused No.2 by the trial Court is illegal and arbitrary. The learned counsel further contends that despite issuance of legal notice by the complainant, deliberately accused Nos.1 and 2 did not reply to the legal notice and Exs.D1 and D2 produced by accused No.2 clearly establish the fact that the accused were aware of the transaction and hence, they have taken a frivolous and inconsistent plea only to defraud the complainant. This fact is ignored by the trial Court, which is erroneous in law.

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He further contends that though there is certain difference in the ink used in filling up of Ex.P1 and there is alteration in the cheque-Ex.P1, the same would not be fatal to the case. In view of

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the fact that Section 20 of the N.I.Act permits the holder in due course and the payee to fill up the contents of the cheque, the material alternation plea which is taken up by accused No.1 would not be fatal to the case of the complainant. Hence, by such defence itself, the trial Court ought not to have acquitted the accused. The learned counsel further contends that in Ex.P9-reply to the legal notice, it is clearly stated by accused No.2 that if the complainant had come to the office personally, he would have paid the amount of Rs.4,00,000/-.

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In view of admission made by accused No.2

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in Ex.P.9, it is a clear case of acceptance of legal debt and liability and therefore trial Court ought to have convicted accused for the offence punishable under section 138 of Negotiable Instruments Act. Viewed from any angle, judgment of acquittal passed by trial Court is perverse and arbitrary and the same requires to be set aside and reversed. On these

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submissions, learned counsel for appellant seeks to allow the appeal and reverse the impugned judgment passed by trial Court.

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Per contra, learned counsel for respondent who represents only accused No.1 contends that judgment of acquittal passed by trial Court is based on material evidence and documents produced by both parties and same is in accordance with law and does not call for any interference by this Court. He further contends that complaint filed by complainant ex-facie is not tenable in view of the fact that complainant is seeking to enforce the liability of co-operative society. Ex.P.1 cheque is issued on behalf of Sasya Shyamala Souharda Credit Co-operative Limited, which is a society. Learned counsel contends that society has not been made as party to the proceedings before trial Court. Admittedly accused No.1 is the president of society. Accused No.2 is CEO of the society who are made

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liable in their individual capacity. However the society perse has not been made as accused in the complaint filed by complainant.

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Learned counsel further contends that

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even the legal notice has been issued to the individuals and not to the society demanding the amount as sought for in Ex.P.4. It is further contended by learned counsel for accused No.1 that after the complaint was filed, accused No.2 did not appear before the Court and the complaint as against accused No.2 is dismissed at initial stage itself which has attained finality. No action is taken to set aside or challenge the order of dismissal against accused No.2. Therefore on this count also complaint itself is not maintainable and the impugned order of acquittal passed by trial Court is to be sustained.

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Learned counsel for accused No.1,

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respondent herein has further contended that Ex.P.1

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cheque has not been signed by respondent accused No.1 and she does not admit issuance of Ex.P.1 to complainant. Learned counsel further contends that there is material alteration on Ex.P.1 at two different places. Though there is a small correction by way of signature just below the date on Ex.P.1, the same is alleged to have been indorsed by accused No.2 and there is no indorsement by respondent accused No.1. Therefore when there is no indorsement to the material alterations on Ex.P.1, there is no consent or agreement to the said corrections made in Ex.P.1, thereby making the instrument void as contemplated under section 87 of the Act. On this ground also impugned order of acquittal passed by trial Court is well reasoned and the same is to be sustained.

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It is further contended by learned counsel for respondent that without proceeding further as against accused No.2, complainant having proceeded

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only as against respondent/accused No.1 is fatal to the case of complainant and on this ground also the acquittal order passed by trial Court is correct and the same is sustainable in law. Learned counsel further contends that it is the case of complainant that Ex.P.1 cheque has been issued on behalf of society i.e., Sasya Shyamala Souharda Credit Co-operative Limited. But non impleading and making the society as party to the proceedings is fatal to the case of complainant in view of section 142 of the Act which contemplates that if cheque is issued by either company, firm or association of persons, then it is necessary that the company has to be made as a party to the proceedings. Hence on this ground also acquittal order passed by trial Court is well reasoned and sustainable.

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Learned counsel further contends that reply notice produced by complainant PW.1 alleged to have been issued by accused No.2 to the legal notice

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as produced in Ex.D.1 and D.2 does not bear any date. Therefore, veracity and contents of Ex.P.9 is doubtful in nature and hence the same cannot be believed. Even in the evidence adduced by PW.1, she has admitted in cross-examination that she does not know who has given the cheque. Therefore there is no clarity to complainant herself and existence of transaction itself is questionable and rightfully trial Court has passed an order of acquittal for the aforesaid offence. On these grounds learned counsel for respondent/accused No.1 seeks to dismiss the appeal filed by appellant and confirm the order of acquittal passed by trial Court.

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Having heard learned counsel for appellant and learned counsel for respondent, the points that arise for consideration before this Court are as under:

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“(i) Whether respondent/accused No.1 has rebutted the presumption as

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contemplated under section 139 of Negotiable Instruments Act?

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(ii) Whether judgment of acquittal passed by trial Court deserves to be set aside and reversed?”

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In order to answer the above points, it is necessary to have a cursory look at the facts of the case and materials placed before the Court. It is the case of complainant that she has paid an amount of Rs.4,00,000/- to society namely Sasya Shyamala Souharda Credit Co-operative Limited as an investment towards which respondent/accused No.1 along with accused No.2, who is not a party before this Court issued a cheque for Rs.4,00,000/- which on presentation came to be dishonoured. In pursuance to the cognizance being taken by trial Court, complaint as against accused No.2 came to be dismissed for the reason that complainant has not taken steps to execute non bailable warrant and to secure presence of accused No.2. Therefore trial

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Court passed an order on 10.3.2011 dismissing the proceedings against accused No.2. The accused came to be discharged from the case. This order of dismissal of proceedings as against accused No.2 and dismissal for non prosecution discharging accused by trial Court has attained finality and there is no challenge to the said order by complainant.

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No doubt PW.1 has stepped into witness box and adduced evidence reiterating the averments made in the legal notice as well as in the complaint. She has got produced Exs.P.1 to P.9. She relies more on Ex.P.9 which is a reply sent by accused No.2, wherein accused No.2 has admitted liability of Rs.4,00,000/- to be paid to complainant. Apart from this, there is no other document placed on record by complainant other than Ex.P.1 to prove her case. All other exhibits i.e., Exs.P.1 to P.8 are cheque, bank indorsement, legal notice and postal receipts/ acknowledgements.

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In cross-examination, PW.1 has admitted with regard to material alterations on the cheque and admitted the fact that there are two account numbers mentioned on the cheque Ex.P.1. Further she has admitted that she does not know who gave the cheque. Further PW.1 in her evidence has admitted that she has kept a deposit with society which was belonging to her and thereafter again she has stated that deposit was kept by her husband and it is her husband who knows details of other transactions. She has also admitted that it is only her husband who pays tax and she does not know whether her husband has mentioned about present transaction of Rs.4,00,000/- in income tax returns. These are some of the admissions of PW.1 in her cross-examination.

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Accused No.1 has examined herself as DW.1 and relied on two documents Exs.D.1 and D.2 which are legal notice issued by complainant on

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24.8.2007. DW.1 in her evidence has deposed that

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she has not signed Ex.P.1 and the signature alleged to be shows as that of respondent/accused No.1 is a forged signature not belonging to that of respondent herein. She has further deposed that she has not received any notice and no summons were also received by her. She has deposed that it is only after warrant was issued, she appeared before Court and only then she came to know about this entire case registered by complainant.

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DW.1 has further deposed that accused No.2 has colluded with complainant with mala fide intention. She further contends that accused No.2 has colluded with complainant and has got issued Ex.P.9 which is alleged to be a reply given by accused No.2 to the complainant. In this view of the matter, it is essential and relevant to extract the provisions of section 138 of Negotiable Instruments Act, which reads as under:

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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 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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It is seen that on fulfillment of the ingredients of proviso (a) to (c) of section 138 of Negotiable Instruments Act, the offence is technically made out. On cognizance being taken by the Court, presumption under section 139 of the Act comes into play in favour of complainant, which reads as under:

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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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No doubt there is a presumption in law in

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favour of complainant but the said presumption is a

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rebuttable presumption. It is for accused to rebut the presumption and prove to the contrary that there never existed or does not exist any legally recoverable debt or liability and if such rebuttal is proved, then the onus would shift on complainant to satisfy such rebuttal made by accused. Now in the present case it is to be seen whether accused has rebutted the said presumption cast under section 139 of the Act.

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On a careful examination of facts of the case, it is not in dispute that complainant is seeking to recover an amount of Rs.4,00,000/- from society namely Sasya Shyamala Souharda Credit Co-operative Limited. Complainant has not made society as party, accused in the complaint. Though trial Court has dismissed the case and discharged accused No.2, no challenge is made to such dismissal of case against accused No.2. Nevertheless, accused No.1/respondent herein has

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deposed that she has not signed the cheque Ex.P.1 and she disputes the signature on Ex.P.1. She has also disputed issuance of cheque itself and also existence of any debt or liability.

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Respondent/accused No.1 has seriously contended that there is serious material alteration on Ex.P.1 cheque at two places. It is apparent on the face of Ex.P.1 that there is a material alteration just below the date on the cheque and also the account number being changed. There is no counter signature of respondent/accused No.1 at either of the places. There is also no counter signature just below the correction of account number on Ex.P.1.

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On a careful examination of evidence on

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record, it is seen that it is the stand taken by respondent/accused No.1 that accused No.2 has colluded with complainant who lodged the present case and it is the matter of record that accused No.2 has been discharged from the case and the same has

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attained finality and no action has been initiated by complainant to challenge the same. Section 87 of the Act reads as under:

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“87. Effect of material alteration

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Any material alteration of a negotiable instrument renders the same void as against anyone who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties;

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Alternation by endorsee:

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and any such alteration, if made by any endorsee, discharges his endorser from all liability to him in respect of the consideration thereof.

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The provisions of this section are subject to those of sections 20, 49, 86 and 125.”

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When there is any alteration made by an indorsee, the same is void if the indorsee does not

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consent thereto with regard to making of such alteration. Therefore the word consent used in the said provision would be an express consent on such material alterations. In the present case on hand Ex.P.1 clearly exhibits the indorsement by accused No.2 just below the alterations made on date of cheque. But admittedly there is no such indorsement by respondent/accused No.2 who is also supposed to be the signatory of the cheque. It is also apparent on face of Ex.P.1 that there is no indorsement made below the alteration of the account number on Ex.P.1. When this fact was confronted to DW.1 complainant, she has no doubt admitted alterations on the cheque, but has denied suggestion that she altered the cheque. However PW.1 has further admitted in cross-examination that she does not know on what date cheque was given to her. She has further admitted that there is no signature of accused No.1, respondent herein on Ex.P.9 which was sent by accused No.2.

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On a perusal of evidence of PW.1, it is clearly seen that PW.1 does not know about alleged transaction mentioned in the complaint as she has clearly deposed by stating that she does not know as to when and on what date she has deposited a sum of Rs.68,75,148/- with the society. As stated earlier, at one breath she says that amount is deposited by her and at another breath she says amount is deposited by her husband. It is also apparent that after cross-examination of PW.1 and evidence of DW.1, no other material has been placed before the Court other than Ex.P.1 by complainant to substantiate the fact that there is existence of subsisting legally recoverable debt.

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Therefore, on the basis of the evidence

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adduced by the respondent – accused No.1, it can be safely concluded that the respondent – accused No.1 has rebutted the presumption under Section 139 of

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NI Act in favour of the Complainant. Hence, I answer Point No.1 in the negative.

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When the cogent material by way of evidence is produced by respondent – accused No.1, the onus shifts on the Complainant to satisfy the rebuttal made by the respondent – accused No.1. In the present case on hand, no material has been placed by the Complainant to satisfactorily explain the rebuttal made by the respondent – accused No.1. On the contrary, it is seen that Complainant has conveniently kept quite and silent despite accused No.2 having been discharged from the case for non-prosecution on 10.03.2011, which order has attained finality and no action has been taken by the Complainant to that effect.

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It is also relevant to see that Ex.P9, which is produced and marked by the Complainant alleging that the same has been due by accused No.2 admitting transaction and the liability of Rs.4 lakhs

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is very doubtful and marked by the Complainant alleged that the same has been issued by accused No.2 demanding the transaction and the liability of Rs.4 lakhs is very doubtful and the same is unbelievable as the said document – Ex.P9 does not bear any date and no cogent material is placed to show that this document was got issued by accused No.2 in favour of the Complainant.

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Hence, no evidence is forthcoming to

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prove the contents of the said Ex.P9. In fact, the undated Ex.P9 produced by the Complainant and the material alteration on Ex.P1 which is indorsed by accused No.2 and dismissal of the Complainant for non-prosecution as against accused No.2, the same having reached finality and no action has been taken by the Complainant against accused No.2, all goes to prove that there is collusion between the Complainant and accused No.2. All these aspects have been considered by the trial Court in detail and

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an order of acquittal is rightfully passed by the trial Court. It is apparent on the face of Ex.P1 that there is material alteration and there is no endorsement by respondent – accused No.1 to consent to the said material alteration on Ex.P1. Therefore, as per Section 87 of NI Act any negotiable instrument with material alteration renders the same void as there is no consent thereto for the said material alteration. In the present case, admittedly there is only one signature under the date on Ex.P1 and admittedly, the respondent – accused No.1 has not indorsed the material alteration. Therefore, without any doubt it can be safely concluded at Ex.P1 is hit by Section 87 of NI Act.

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For the aforesaid reason, I am of the opinion that the trial Court has considered all these material aspects both oral or documentary and has arrived at a well reasoned order of acquittal, which does not call for interference. Hence, I answer point

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No.2 in the negative. Accordingly, I pass the

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following:

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ORDER

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Appeal is dismissed. Judgment of acquittal

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passed by the trial Court is confirmed.

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Sd/JUDGE

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LB/MRK/VK

Shivageeta W/O. Dakshinamurthy Hiremath v. Savita Chandrashekhar

Case brief

What is this about?

What did the court decide?

Shivageeta W/O. Dakshinamurthy Hiremath v. Savita Chandrashekhar

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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