Partly allowed

Sri T Kumar v. Sri K Chennakeshavulu

Karnataka HC23 Nov 2020CRL.RP/426/2017

Case brief

AI extract

What is this about?

The High Court of Karnataka held that the petitioner failed to rebut the statutory presumption that the dishonoured cheque was issued for legal liability. It affirmed conviction but modified the sentence from one year imprisonment to a 30-day default term, remitting the original fine to a bank deposit.

What did the court decide?

Conviction confirmed. Sentence reduced from one year simple imprisonment to 30 days default imprisonment in event of non-payment of fine.

Sri T Kumar Vs Sri K Chennakeshavulu — Cheque Dishonour | Karnataka HC (2020)

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Crl.R.P.No.426/2017

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 23^RD DAY OF NOVEMBER 2020

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BEFORE

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THE HON’BLE MRS. JUSTICE K.S.MUDAGAL

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CRIMINAL REVISION PETITION No.426/2017

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BETWEEN :

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SRI T.KUMAR S/O TANGAVELU AGED ABOUT 48 YEARS R/AT NO.5^TH B STREET SWATANTRANAGAR VIRGONAGAR POST BENGALURU – 560 049 …PETITIONER (BY SRI K.NAGENDRA KUMAR, FOR SRI GANAPATHI BHAT VAJRALLI, ADVOCATE)

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AND :

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SRI K.CHENNAKESHAVULU S/O KRISHNAPPA AGED ABOUT 40 YEARS R/AT MAHILA SAMAJA SOCIETY ROAD DEVASANDRA, K.R.PURAM BENGALURU – 560 036 …RESPONDENT (BY SRI S.CHETAN NAG, ADVOCATE)

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THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 R/W SECTION 401 OF CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED 23.04.2016 PASSED BY THE LVII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, MAYOHALL UNIT, BANGALORE IN CRIMINAL APPEAL NO.25138/2013 AND TO SET ASIDE THE JUDGMENT AND ORDER DATED 24.09.2013 PASSED BY THE XVII ADDITIONAL JUDGE AND XXV ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, COURT OF SMALL CAUSES, MAYOHALL UNIT, BANGALORE IN C.C.NO.35723/2009.

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Crl.R.P.No.426/2017

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THIS CRIMINAL REVISION PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT THROUGH PHYSICAL HEARING MADE THE FOLLOWING:

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O R D E R

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“Whether the impugned orders of conviction and sentence passed against the petitioner for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 suffer infirmity, incorrectness or illegality”? is the question involved in this case.

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The respondent prosecuted the petitioner in C.C.No.35723/2009 on the file of XVII Additional Small Causes and XXV Additional Chief Metropolitan Magistrate, Mayohall unit, Bengluru for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (‘the Act’ for short).

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The respondent presented the cheque Ex.P1 dated 12.07.2008 for a sum of Rs.9,50,000/purportedly drawn by the petitioner on Punjab National Bank, Indiranagar Branch, Bengaluru in his favour for collection through is account in Federal Bank Ltd., K.R.Puram Branch. The same was dishonoured as per the Banker’s memo Ex.P2 dated 13.08.2008 with an

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Crl.R.P.No.426/2017

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endorsement “funds insufficient”. Thereafter, the respondent got issued the statutory notice dated 25.08.2008 as per Ex.P3 to the petitioner alleging that by issuing the cheque without making arrangements for realization of the same, he has committed cheating and called upon him to pay the cheque amount within fifteen days or else to face the prosecution.

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The notice was sent as per the certificate of posting Ex.P4. As per Ex.P6 postal acknowledgement, the notice was received by one Shakuntala.K. Before the expiry of the statutory limitation, the respondent filed the complaint in P.C.R.No.12206/2008 against the petitioner alleging that by issuing cheque without making arrangements for payment and not paying the same, even after service of statutory notice, the petitioner has committed the offence punishable under Section 138 of the Act.

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The trial Court on taking cognizance, registered the case in C.C.No.35723/2009. The trial Court summoned the petitioner and tried him. After

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such trial, on hearing the parties, the trial Court by the judgment and order dated 24.09.2013 convicted the petitioner for the offence punishable under Section 138 of the Act and sentenced him to simple imprisonment for one year and fine of Rs.19,00,000/-. Out of the fine amount, the trial Court awarded Rs.18,50,000/- as compensation to the respondent.

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The petitioner challenged the said judgment

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and order before LVII Additional City Civil & Sessions Judge, Mayohall Unit, Bengaluru (CCH-58) in Crl.A.No.25138/2013. The First Appellate Court on hearing the parties, by the judgment and order dated 23.04.2016 dismissed the appeal and confirmed the judgment and order of sentence of the trial Court.

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Before the trial Court, the prime defence of the petitioner was as follows:

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(i) The petitioner was not due to pay any amount to the respondent;

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(ii) There was enimity between the petitioner

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and one Balakrishna, Counsellor and the petitioner’s

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Crl.R.P.No.426/2017

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brother Mohan. Due to such ill-will, those persons committed theft of the signed cheque and handed over the same to the respondent herein to falsely implicate him in the case; &

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(iii) The statutory notice was not served on him.

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The trial Court and the First Appellate Court

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held that once the petitioner admits his signature on the cheque and that the cheque pertains to his account, Section 139 of the Act confers presumption that the cheque was issued to discharge the debt or liability and the petitioner has failed to rebut the said presumption.

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Sri K.Nagendra Kumar, learned Counsel for the petitioner reiterating the defence raised before the trial Court seeks to assail the impugned orders of conviction and sentence on the following grounds:

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(i) DW.1 in his deposition states that he does

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not know on whom the notice was served and that the postal acknowledgement does not bear his signature. Therefore, the Courts below were in error in holding that the notice was served on the petitioner and there was

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compliance of statutory requirement of Section 138 of the Act;

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(ii) Lending capacity of the respondent was not

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proved;

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(iii) The Courts below were not justified in holding that there was legally enforceable debt or liability.

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In support of his contentions, he relies upon the following judgments:

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(i) M.D.Thomas vs. P.S.Jaleel & Ors.¹

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(ii) Basalingappa vs. Mudibasappa²

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(iii) Shree Daneshwari Traders vs. Sanjay Jain & Ors.³

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Per contra, Sri S.Chetan Nag, learned

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Counsel for the respondent seeks to justify the impugned orders of the Courts below on the following grounds:

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(i) The notice was addressed to the permanent

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address of the petitioner and nowhere during the trial,

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1 (2009) 14 SCC 398

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2 (2019) 5 SCC 418

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3 AIR 2019 SC 4003

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Crl.R.P.No.426/2017

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the petitioner claimed that the address found on Exs.P4 to P6 was incorrect;

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(ii) Petitioner did not claim that Sujatha K. the recipient of Ex.P6 was in no way related to him. Therefore, the presumption under Section 114 of the Indian Evidence Act, 1872 (‘the Evidence Act’ for short) and Section 27 of the General Clauses Act, 1897 arises and that was not rebutted;

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(iii) Petitioner raised two inconsistent defence regarding the cheque Ex.P1 reaching the hands of the respondent and he even did not substantiate those defence. Neither in the cross-examination of PW.1 nor in his evidence, the petitioner specifically asserted that the respondent had no lending capacity. Therefore, the burden had not reversed to the respondent to prove his lending capacity;

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(iv) Since the petitioner admitted his signature on Ex.P1 and that pertains to his account, the Courts below have rightly raised the presumption available under Sections 118 and 139 of the Act and that was not rebutted by the petitioner; &

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(iv) The Courts below on appreciation of the evidence concurrently held that the offence under Section 138 of the Act is made out and that cannot be interfered by this Court in this revision petition.

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In support of his contentions, he relies upon

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the following judgments:

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(i) APS Forex Services Pvt. Ltd. vs. Shakti International Fashion Linkers & Ors.⁴

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(ii) D.K.Chandel vs. M/s. Wockhardt Ltd.⁵

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Petitioner does not dispute the issuance of notice as per Ex.P3. He also does not dispute that the same was sent under certificate of posting Ex.P4. Exs.P5 and P6 are the RPAD receipt and postal acknowledgement respectively. But his contention was that the said notice was not served on him. Neither the petitioner suggested in the cross-examination of PW.1 nor asserted in his chief examination that the address mentioned in those documents were not his address.

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4 AIR 2020 SC 945

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5 2020 SCC Online SC 265

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Crl.R.P.No.426/2017

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The postal acknowledgement bears the signature of one Shakuntala K. Once, the notice is dispatched to the correct address, the presumption under Section 114 of the Evidence Act and Section 27 of the General Clauses Act is that the notice was served. So it was for the petitioner to rebut the said presumption. The petitioner neither in his evidence nor in the cross-examination of PW.1 suggest that the signatory Shakuntala on Ex.P6 was stranger to him. Apparently, the initial K. in Shakuntala is referable to the petitioner Kumar.

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No doubt, in M.D.Thomas’s case referred to

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supra , in para 5 of the judgment held that service of notice on wife was not sufficient service. But in K.Bhaskaran vs. Sankaran Vaidhyan Balan & Anr.⁶ referring to Section 27 of the General Clauses Act, the Hon’ble Supreme Court held that a conjoint reading of Section 139 of the Act and Section 27 of the General Clauses Act makes it clear that if once the sender dispatches the notice by post with correct address

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6 (1999) Cri.L.J 4606

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written, the notice is deemed to have been served by the sender. Further the Hon’ble Supreme Court in D.Vinod Shivappa vs. Nanda Belliappa⁷ referring to Section 27 of the General Clauses Act in the context of Section 138 of the Act took the similar view.

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When the matter was referred to the Larger Bench of the Hon’ble Supreme Court in C.C.Alavi Haji vs. Palapetty Muhammed & Anr.⁸ answering the reference in para 17 of the judgment it was held as follows:

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“17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any

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7 (2006) Cri.L.J 2897

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8 (2007) Cri.L.J.3214

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other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran’s case (supra), if the ‘giving of notice’ in the context of Clause (b) of the proviso was the same as the ‘receipt of notice’ a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.”

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(Emphasis supplied)

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17. All the aforesaid judgments and the Larger

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Bench judgment of the Supreme Court were not referred to in M.D.Thomas’s case referred to supra.

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In State of U.P. & Another vs. Synthetics &

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Chemicals Ltd. & Another⁹ while dealing with the law of ratio and sub-silentio , the Hon’ble Supreme Court in para 5 of the judgment held as follows:

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“5. Does this principle extend and apply to a conclusion of law, which was neither raised nor preceded by any consideration. In other words can such conclusions be considered as declaration of law? Here again the English Courts and jurists have carved out an exception to the rule of precedents. It has been explained as rule of sub-silentio. A decision passed sub-silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind' (Salmond 12th Edition). In Lancaster Motor Company (London) Ltd. v. Bremith Ltd., [1941] 1KB 675 the Court did not feel bound by earlier decision as it was rendered 'without any argument, without reference to the crucial words

9 (1991) 4 SCC 139

Crl.R.P.No.426/2017

of the rule and without any citation of the authority'. It was approved by this Court in Municipal Corporation of Delhi Vs. Gumam Kaur. The Bench held that, 'precedents sub-silentio and without argument are of no moment'. The Courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents. A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141 . Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without any occasion is not ratio decedendi. In Shama Rao v. State of Pondicherry, AIR 1967 SC 1680 it was observed, 'it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down there-in'. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidity beyond reasonable limits is inimical to the growth of law.”

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(Emphasis supplied)

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Since in M.D.Thomas’s case referred to supra , the effect of Section 114 of the Evidence Act and Section 27 of the General Clauses Act and the Larger Bench judgment of the Supreme Court in C.C.Alavi Haji’s case were not raised and considered, this Court has to follow the Larger Bench judgment rendered in C.C.Alavi Haji’s case referred to supra .

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Since the petitioner did not dispute the address mentioned in the notice or the correctness of the address in Exs.P3 to P6 and did not claim that the recipient of Ex.P6 was stranger to him, the Courts below were justified in holding that there was deemed service of notice. Therefore, the contention of the learned counsel for the petitioner in that regard cannot be accepted.

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Reg: Lending capacity:

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It was contended that the respondent did not produce any material to show that he was possessing cash of Rs.9,50,000/- on the date of the alleged lending and he did not produce his bank account statement, income tax returns etc. therefore, lending capacity was not proved. This Court has already held that there was deemed service of notice on the petitioner. But the petitioner did not choose to reply the notice.

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PW1 deposed that in the year 2000 he completed his diploma at the age of 21 years, thereafter he was in real estate business and he had income from

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the said business. The fact of he completing diploma and thereafter carrying on real estate business was not at all disputed. In the cross-examination of PW.1 only questions like whether he can produce the statement of accounts, whether he is an income assessee were asked. There was no direct suggestion to PW.1 that he had no lending capacity. Such statement was not made even in the evidence of DW.1

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Considering the materials on record and the presumption attached under Section 139 of the Act, the Courts below accepted the claim of the respondent that he lent loan with the funds available to him. This Court does not find any perversity in such findings of the Courts below.

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Reg. liability under Ex.P1 and presumption under Section 139 of the Act:

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The petitioner admitted that the cheque Ex.P1 pertains to his account and it bears his signature. He had two fold defences regarding the cheque reaching the custody of the respondent. First one was that he worked during the election against one Balakrishna

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Counsellor and due to enimity, Balakrishna set up the respondent to file the complaint. Second defence was that there was property dispute between himself and his brother Mohan, therefore, Mohan stole the signed cheque and delivered that to the respondent to harass the petitioner and got filed the false complaint.

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Thus it is clear that there was no clear and consistent defence to explain the cheque reaching the hands of the respondent. Admittedly the petitioner did not prosecute neither Mohan nor Balakrishna for committing theft of the cheque or misusing that etc. He had not filed any complaint to the Bank alleging fraud. He admitted in the cross-examination that no property cases were pending before the Court between him and his brother Mohan. Therefore, his defence in that regard was unsubstantiated.

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Once the signature on the cheque and the cheque pertaining to the petitioner’s account was admitted, the respondent was entitled to the presumption under Sections 118 and 139 of the Act to

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the effect that the cheque was issued for discharge of debt or liability. As rightly pointed out, the petitioner failed to rebut the said presumption by substantiating his defence.

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In Basalingappa’s case referred to supra relied upon by learned Counsel for the petitioner lending capacity was disputed. It was held that unless the complainant discharges the initial burden of lending the loan and issuance of the cheque, the presumption under Section 139 of the Act does not arise.

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28. In Sree Daneshwari Traders’s case referred

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to supra , relied upon by the learned Counsel for the petitioner in para 16 it was held that Section 139 of the

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Act creates statutory presumption that the cheque received in the nature referred to under Section 138 of the Act is for the discharge in whole or in part of any debt or any other liability. It was held that initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour.

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In this case, the initial burden that the cheque was issued to discharge the debt to the extent of Rs.9,50,000/- was discharged by the complainant by examining himself and by producing Exs.P1 to P6. It is already held that the respondent had lending capacity and loan transaction was not disputed by issuing reply to the notice.

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In APS Forex Services Private Limited’s

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case referred to supra distinguishing the judgment in Basalingappa’s case referred to supra, the Hon’ble Supreme Court held that once the signature on the cheque and that the cheque pertains to the account of the accused is admitted, the presumption under Section 139 of the Act that the cheque was issued towards discharge of debt or liability arises and to rebut the presumption, the accused was required to lead evidence and then only the burden reverses to the complainant to prove that the cheque was issued towards legally recoverable debt. In D.K.Chandel’s case referred to supra, similar view was taken. In this case also the

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petitioner failed to rebut the presumption available under Section 139 of the Act. This Court does not find any illegality or impropriety in the orders of the Courts below convicting the petitioner for the offences punishable under Section 138 of the Act.

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Learned Counsel for the petitioner submits that the sentence of imprisonment is disproportionate. The trial Court has convicted the petitioner for simple imprisonment for one year and fine to the extent of double the cheque amount. The petitioner has faced the proceedings nearly for about 12 years. The dispute arose out of monetary transactions between the parties. Under such circumstances, the imposition of sentence of simple imprisonment for one year is harsher.

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Having regard to the period spent in these proceedings, this Court does not find it just to reduce the sentence of fine. The trial Court has not imposed any sentence in default to pay the fine amount. The default sentence needs to be included to ensure the

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recovery of the fine amount. For the aforesaid reasons, the petition is partly allowed.

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The impugned order of conviction is confirmed. The impugned order of sentence is modified as follows:

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Petitioner/accused is sentenced to fine of Rs.19,00,000/- for the offence punishable under Section 138 of the Act. In default to pay fine amount petitioner shall undergo simple imprisonment for 30 days.

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Out of the said fine amount, Rs.50,000/- shall be remitted to the State and Rs.18,50,000/- shall be paid to the complainant as compensation.

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Fine amount deposited, if any, before this Court or

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the trial Court shall be disbursed to the complainant according to the above order.

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Sd/JUDGE

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KSR

Sri T Kumar v. Sri K Chennakeshavulu

Case brief

What is this about?

What did the court decide?

Sri T Kumar v. Sri K Chennakeshavulu

Case brief

What is this about?

What did the court decide?

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