Dismissed

M/S Sadvijai Chits and Financial Service Pvt. Ltd. v. Sri K R Srinivasa Murthy

Karnataka HC15 Feb 2022CRL.A/470/2017

Case brief

AI extract

What is this about?

Criminal appeal by a chit firm against a lower court's acquittal of an accused for cheque bounce under Section 138 NI Act. The High Court rejected the appeal, confirming acquittal because the complainant failed to prove a legally enforceable debt, citing documentation lapses and time-barred transactions.

What did the court decide?

The criminal appeal was dismissed; the judgment of acquittal passed by the trial court was confirmed.

M/S Sadvijai Chits and Financial Service Pvt. Ltd. Vs Sri… — Cheque Dishonour | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 15^TH DAY OF FEBRUARY, 2022

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BEFORE

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THE HON’BLE MR. JUSTICE RAJENDRA BADAMIKAR

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CRIMINAL APPEAL No.470/2017

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BETWEEN:

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M/S SADVIJAI CHITS AND FINANCIAL SERVICE PVT. LTD. REP. BY ITS MANAGING DIRECTOR SRI.C.SADASHIVA REDDY NO.13, 2^ND MAIN ROAD SOMESHWARNAGAR JAYANAGAR 1^ST BLOCK BENGALURU-560 011

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….APPELLANT

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(BY SRI. H. RAMACHANDRA, ADVOCATE)

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AND:

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SRI. K.R. SRINIVASA MURTHY S/O RAMA REDDY NO.406, 1^ST D MAIN ROAD DOMLUR LAYOUT BENGALURU-560 071

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…RESPONDENT

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(BY SRI. M.D. RAGHUNATH, ADVOCATE)

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THIS APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT OF QCQUITTAL DATED 07.01.2017 PASSED BY THE XLI ADDL.C.M.M., BANGALORE IN C.C.NO.12087/2014 – ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I. ACT.

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

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J U D G M E N T

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Though this appeal is listed for admission, with the consent of the learned counsels appearing for the parties on both sides, the same is taken-up for final disposal.

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This appeal is filed by the complainant against the judgment of acquittal passed by XLI Additional Chief Metropolitan Magistrate in CC No.12087/2014, whereby the learned Magistrate by judgment dated 07.01.2017 acquitted the accused of the charge punishable under Section 138 of Negotiable Instruments Act, 1881 (‘N.I. Act’ for short).

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For the sake of convenience, the parties herein

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shall be referred with the ranks occupied by them before the trial Court.

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The brief facts of the case are that, the complainant is a registered Company dealing with activities

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of Chits and Financial Services. On 25.02.2099, the accused has approached said Firm seeking financial serves

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and accordingly, loan of Rs.1,40,000/- was lent with interest at 2% per annum. After availing loan, the accused was not regular in making payments and has become defaulter. It is contended that, after several demands, the accused issued a cheque bearing No.144587 dated 24.08.2013 towards payment of debt. On presentation of the cheque on 27.08.2013, the same was returned unpaid with an endorsement ‘No such account was existing”. Then a legal notice came to be issued to the accused, which was answered by issuing an untenable and vague reply and hence, the complaint came to be filed.

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After recording the sworn statement of the complainant and after verifying the records, the learned Magistrate has taken cognizance of the alleged offence and issued process against the accused. The accused has appeared through his counsel and was enlarged on bail. He denied accusation made against him.

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The alleged Managing Director of the

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complainant –Company was examined as PW.1 and Exs. P1

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to P7 were marked. The statement of accused under Section 313 of Cr.P.C. was recorded to enable him to explain the incriminating evidence appearing against him in the case of prosecution. The case of accused is of total denial. He has also got examined one witness by name Beena Thomos as DW.1 and placed reliance on four documents marked at Exs.D1 to D4.

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After hearing arguments and on perusing the records, the learned Magistrate found that the complainant has failed to establish the fact that the cheque was issued towards legally enforceable debt or liability and the presumption in favour of complainant stands rebutted and as such dismissed the complaint by acquitting the accused. Being aggrieved by the judgment of acquittal, the complainant has filed this appeal.

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Heard the arguments advanced by the learned counsels appearing for the appellant and the respondent. Perused the records.

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Learned counsel for the appellant would contend

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that the judgment of acquittal is perverse and erroneous and the learned Magistrate has not applied proper principles of law. He would contend that, when the cheque is admitted, drawing presumption is mandatory and the learned Magistrate has not appreciated the oral and documentary evidence in proper perspective, which has resulted in miscarriage of justice. Hence, he would seek for allowing the appeal by setting aside the impugned judgment

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of acquittal and sought for conviction of the

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accused/respondent herein.

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Per contra, learned counsel for

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respondent/accused would contend that the debt itself is barred by Law of Limitation and as such, question of drawing presumption in favour of complainant under Section 139 of N.I. Act does not arise at all. He would contend that, the learned Magistrate has appreciated the oral and documentary evidence in proper perspective and arrived at a just decision. Hence, he would submit that the

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judgment of acquittal does not call for any interference and as such, prayed for dismissal of the appeal.

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It is the specific case of the complainant that, it

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is a registered Company dealing with activities of chits and finance services and on 25.02.2099, accused approached it and availed loan facility of Rs.1,40,000/- agreeing to pay interest at 2% per annum. It is the further contention of the complainant that, since accused failed to repay the loan amount, he has issued a cheque under Ex.P1, which was bounced on the ground that, ‘No such account exists’ and as such this complaint came to be lodged by the Managing Director of the complainant-Company.

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At the out-set, it is important to note here that the complainant has not produced any material document to show that it is a registered firm authorized to carry-out chit fund services. This material evidence in this regard is missing. Apart from that, the complaint is being prosecuted by the so-called Managing Director, but no material document is produced to show that the so-called one Sri.C

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Sadashiva Reddy is the Managing Director of the complainant-Company. These material documents have been with-held and it is argued that there is no challenge to these aspects on behalf of the accused. But, since it is the complainant, who has approached the Court on the ground of financial transactions, the initial burden is on the complainant to establish that it is a registered Finance Company and PW.1 is an authorized person. But, no such material evidence is forthcoming.

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The complainant has placed reliance on alleged

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Ex.P7, which is the Ledger Extract. But on perusal of Ex.P7, it is evident that, it is typed on the Letter Head of the complainant-Company and no Registration Number is also forthcoming. Further, there is no certification as per the Banking Regulation to certify that the contents therein are true and correct. Further, on perusal of Ex.P7, it is evident that, regarding certain payments, the dates were not given and only month and year were referred and if it is payment, then specific dates should have been mentioned. As such,

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the trial Court did not believe Ex.P7 to be a genuine document and considering these lacunas, it is evident that Ex.P7 is not a genuine document and it is not a copy of loan account pertaining to the accused. Apart from that, on perusal of Ex.P7, it is evident that, it is dated 15.06.2013. In view of that, the transaction should be upto 15.06.2013. But, Ex.P7 discloses that, even the transaction dated 24.08.2013 is incorporated therein. Hence, it is evident that, it is not true extract and it is simply typed as per their convenience to suit the claim of complainant.

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As stated above, the accused has got marked

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Exs.D1 to D3. They are the payment details pertaining to Rs.7,500/-, Rs.3750/- and Rs.3,750/- dated 25.03.1999, 30.01.1999 and 01.03.1999 respectively. It is also evident from these documents that the said payments are through cheques bearing Nos. 144589, 144582 and 144583. In the present case, Ex.P1 is a cheque bearing No.144587 in the same series only. Hence, from Ex.D1 to D3 it is evident that the cheque (Ex.P1) was not issued on 24.08.2013, but

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it was obtained at the time of disbursement of alleged loan only and three cheques have been encashed, but the present cheque under Ex.P1 was not presented and subsequently, the date was written as per convenience. Further, it is important to note here that, as per Ex.P2-Bank Memo, in the month of August 2013 itself the cheque was returned with an endorsement that ‘ No such Account here’ ’. Hence, the contention that, ‘the cheque under Ex.P1 was issued on relevant date’, holds no water at all.

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Apart from that, to draw presumption under

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Section 139 of NI Act, the cheque and signature on it are to be admitted. Though accused has not disputed his signature on cheque (Ex.P1), his contention is that, it was handed-over in 1996 when he availed loan and hence, looking to the evidence and documents produced by the accused, his defence becomes more probable. Further, the accused is required to prove his defence only on preponderance of probabilities, but in the instant case, he has proved his case beyond all reasonable doubt by

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producing documents. On considering Ex.P7 itself, it is evident that the presumption available in favor of the complainant stands rebutted.

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Further, the complainant-Company has not produced any document to show that it is a Registered and Licenced Company and the person so-called Managing Director is authorized to lodge complaint and no such material evidence is also not forthcoming. Even accepting Ex.P7 as genuine, then also the transaction becomes time barred, as Ex.P7 discloses that, on 22.11.2001 Rs.10,000/was paid by way of cheque. At the out-set no material evidence is produced to show that, this payment was made by way of cheque of the accused. Even accepting that payment is accepted, then within three years, there should have been next payment. But, Ex.P7 discloses that the next alleged payment is in December, 2004 for Rs.2,000/-. At the out-set, when this Rs.2,000/- is paid by way of cash is not at all forthcoming and in the statement of accounts, it is simply indicated that, “Dec 2004”. If this payment is by

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cash, there should be a specific date of payment. Even if the date is taken as 01.12.2004, from 22.11.2001 the payment was not within three years and as such, the debt is clearly barred by law of limitation and the time barred debt cannot be termed as a ‘legally enforceable debt’. Apart from this, the transaction is of the year 1999 and the notice came to be issued first time in the year 2013 ie., after 14 years. No steps were taken for recovery of amount for 14 years and it appears that Blank Cheques were taken at the time of adavancement of loan itself and even this is again consolidated from Ex.P3, which is the Demand Promissory Note dated 25.05.1999. From this date, the transaction is barred by law of limitation. The legally enforceable debt does not include barred debt and hence the prosecution under Section 138 of N.I. Act is not sustainable in this regard. When it is a time barred debt, then it cannot be presumed that Ex.P1 (Cheque) issued towards discharge of legally enforceable debt. Under these circumstances, the trial Court has analysed the oral and documentary evidence in detail and arrived at a just

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decision holding that there is no legally enforceable debt existed and it is barred by law of limitation.

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In the facts and circumstances of the case,

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considering the oral and documentary evidence available on record, the judgment of acquittal passed by the trial Court cannot be said to be perverse, erroneous or illegal so as to call for any interference by this Court. Under such circumstances, the appeal is devoid of any merits and needs to be rejected. Accordingly, I proceed to pass the following:-

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ORDER

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The appeal is dismissed. The judgment of acquittal dated 07.01.2017 passed by the trial Court viz., XLI Additional Chief Metropolitan Magistrate, Bengaluru, in CC No.12087/2014, stands confirmed.

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Sd/-

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JUDGE

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KGR*

M/S Sadvijai Chits and Financial Service Pvt. Ltd. v. Sri K R Srinivasa Murthy

Case brief

What is this about?

What did the court decide?

M/S Sadvijai Chits and Financial Service Pvt. Ltd. v. Sri K R Srinivasa Murthy

Case brief

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What did the court decide?

What the court decided

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