Allowed

Bandopant B Badavanache v. Basavana Mahadev Co-Operative Credit Society Ltd.

Karnataka HC29 Nov 2022CRL.RP/2033/2013

Case brief

AI extract

What is this about?

This criminal revision petition challenged a conviction under Section 138 of the Negotiable Instruments Act, 1881 against a guarantor. The High Court set aside the conviction, holding that prosecution was unsustainable without proof that the complainant had exhausted recovery remedies against the principal borrower.

What did the court decide?

The criminal revision petition was allowed; the judgment of conviction and sentence were set aside; the petitioner was acquitted; bail bonds were cancelled.

Bandopant B Badavanache Vs Basavana… — Contract and Commercial Disputes | Karnataka HC (2022)

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CRL.RP No. 2033 of 2013

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IN THE HIGH COURT OF KARNATAKA,

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DHARWAD BENCH

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DATED THIS THE 29^TH DAY OF NOVEMBER, 2022 BEFORE

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THE HON'BLE MR JUSTICE S.RACHAIAH CRIMINAL REVISION PETITION NO. 2033 OF 2013

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BETWEEN:

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BANDOPANT B BADAVANACHE AGE: 60 YEARS, OCC: BUSINESS R/O.LAXMI PRINTING PRESS, KACHERI ROAD, BELGAUM

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..…PETITIONER

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(BY SRI. SANTOSH RAWOOT, ADVOCATE)

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AND:

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BASAVANA MAHADEV CO-OPERATIVE CREDIT SOCIETY LTD., R/BY ITS SECRETARY NEHRU NAGAR, BELGAUM

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..…RESPONDENT

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(BY SRI. VISHWANATH V. BADIGER, ADVOCATE)

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THIS CRIMINAL REVISION PETITION IS FILED U/SEC. 397 R/W 401 OF CR.P.C SEEKING TO SETTING ASIDE THE JUDGMENT AND ORDER DATED 27.11.2012 PASSED BY THE I ADDL. SESSIONS JUDGE, BELGAUM IN CRIMINAL APPEALL NO.137/2012 CONFIRMING THE JUDGEMENT AND ORDER PASSED IN C.C.NO.1182/2007 DATED 10.07.2012 BY THE III ADDL. CIVIL JUDGE & JMFC, BELGAUM.

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THIS PETITION COMING ON FOR FINAL HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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CRL.RP No. 2033 of 2013

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ORDER

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This criminal revision petition is filed by the petitioner being aggrieved by the judgment of conviction and order of sentence dated 10.07.2012 passed by the III Addl. Civil Judge & JMFC, Belgaum (for short, ‘Trial Court’) and its confirmation order dated 27.11.2012 passed by the I Addl. Sessions Judge, Belgaum (for short, ‘Appellate Court’) in Criminal Appeal No.137/2012.

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2. Brief facts of the case are as under:

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The complainant is a Co-operative Society. The friend of the accused namely Ramesh Kulkarni availed a loan of Rs.15,000/-. The accused stood as a guarantor for the said loan. The loan was sanctioned on 30.05.2001.

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It is alleged that the said Ramesh Kulkarni did not repay the loan along with interest. After repeated requests, the accused being a guarantor issued a cheque bearing No.281713 dated 28.02.2007 for a sum of Rs.6,618/- and another cheque bearing its No.281714 dated 30.03.2007 for a sum of Rs.6,618/- drawn on Indian Overseas Bank, Belagavi.

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CRL.RP No. 2033 of 2013

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It is further submitted that on presentation of the said cheques for encashment, the same have been dishonoured for the reason, “funds insufficient” on 23.04.2007 and the said intimation was received by the complainant on 26.04.2007. Thereafter, the complainant lodged a complaint on 06.06.2007.

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To prove the case, the complainant has examined himself as PW1 and got marked Ex.P-1 to Ex.P-9 and the accused examined himself as DW-1 and marked Ex.D-1 to Ex.D-19.

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The Trial Court after appreciating the oral and documentary evidence, convicted the accused for the offence under Section 138 of Negotiable Instruments Act, 1881 (for short, ‘N.I. Act’) and sentenced him to pay a fine of Rs.16,000/-, in default of payment of fine, he shall undergo simple imprisonment for six months. The petitioner approached the Appellate Court by filing appeal against the judgment of conviction and order of sentence. However, the Appellate Court confirmed the said order of conviction. Hence, this revision petition.

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CRL.RP No. 2033 of 2013

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Heard Sri Santosh Rawoot, learned counsel for petitioner and Sri Vishwanath V. Badiger, learned counsel for respondent.

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Sri Santosh Rawoot, learned counsel for petitioner submits that, the judgment and order of conviction and its confirmation order passed by the Appellate Court are contrary to the facts and law. Hence, the concurrent findings of the subordinate Courts are liable to be set aside.

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It is further submitted that, the accused is the guarantor for the loan which one Ramesh Kulkarni had availed from the Co-operative Bank. The amount is of Rs.15,000/-, the accused and the loanee have furnished cheques as collateral security for the said loan.

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It is further submitted that, the complainant has not produced any documents to show that, efforts have been made to recover the amount from Ramesh Kulkarni, who is a principal borrower since the said amount has not been recovered from Ramesh Kulkarni i.e., principal borrower, the complainant has proceeded against the guarantor. In absence of such efforts having been made to recover the amount from

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CRL.RP No. 2033 of 2013

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the principal borrower, proceeding against the accused for the offence under Section 138 of N.I. Act is unsustainable and liable to be set aside.

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Per contra , Sri Vishwanath V. Badiger, learned counsel for respondent submits that the accused has stood as guarantor and issued a cheque when the demand was being made by the complainant. The principal borrower has became defaulter and did not pay the amount. Ex.P-1 to Ex.P-3 are the documents which clearly indicates the outstanding of the loan as on the date of issuance of the cheque by the accused.

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It is settled principle of law that if the amount is not recovered from the principal borrower, the guarantor is held liable for the amount which the principal borrower has borrowed. Therefore, the Trial Court and the Appellate Court rightly convicted the accused and the concurrent findings of the conviction do not require interference by this Court.

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After having heard the learned counsel for the parties, the question which arise for my consideration is

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“Whether the complainant filed a complaint under Section138 of N.I. Act against the guarantor

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CRL.RP No. 2033 of 2013

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without exhausting the remedy of the principal borrower for inflicting the punishment to the guarantor?”

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It is settled principle of law that in a recovery proceedings from the bank or any other financial institutions, the banker are entitled to recover the amount from the guarantor in the case, if the principal borrower became defaulter and loan amount cannot be recovered from the principal borrower. However, the said recovery of the amount from the guarantor restricted only in the civil case. The principle of vicarious liability is alien to the criminal jurisprudence.

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Admittedly, the complainant in this case has not produced any document to show that, efforts have been made to recover the amount from the principal borrower. The Ex.P-8 which is the personal loan account extract which indicates that as on 01.01.2005, the principal borrower Mr. Ramesh Kulkarni was due a sum of Rs.10,650/-. Except the statement, the complainant not produced any other document to show regarding recovery of the loan amount either to the principal borrower or to the guarantor.

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CRL.RP No. 2033 of 2013

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It is not in dispute that Ex.D-4 to Ex.D19 are receipts for having paid the installment by the principal borrower to the complainant. All these receipts pertaining to account No.111. Ex.D-4 indicates the date as 23.02.2007. Ex.D-6 indicates the date as 13.12.2006. These two receipts contain a sum of Rs.6,620/- and Rs.6,618/- respectively. However, the Ex.P-8 indicates the closing balance a sum of Rs.10,650/- as on 01.01.2005. However, the complainant presented the cheques for a sum of Rs.13,236/is unsustainable and the guarantor cannot be prosecuted for the default of the principal borrower. In spite of having cleared the amount from the principal borrower, the complainant presented the cheque of the accused/guarantor for encashment is unsustainable and not explained properly by the complainant. In other words, the complainant has failed to prove the existing debt or liability as on the date of presentation of cheque for encashment. These facts should have been considered by the Trial Court and the Appellate Court. Failing to consider these facts, led the subordinate Courts to conclude that, the accused has committed offence under Section 138 of N.I. Act which is illegal and perverse and the same is liable to be set aside.

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CRL.RP No. 2033 of 2013

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In light of the observations made above, the point

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which arose for my consideration is answered in the negative and the criminal revision petition is deserves to be allowed.

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Hence, I proceed to pass the following;

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ORDER

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i) The criminal revision petition is allowed. ii) The judgment of conviction and order of sentence dated 10.07.2012 in C.C. No.1182/2007 on the file of the III Additional Civil Judge and JMFC at Belagavi and it’s confirmation order dated 27.11.2012 in Crl.A. No.137/2012 on the file of the I Additional Sessions Judge, Belagavi, are set aside.

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iii) The petitioner is acquitted for the offence punishable under Section 138 of N. I. Act. iv) Bail bonds executed if any, stands cancelled.

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Sd/JUDGE

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NAA

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List No.: 1 Sl No.: 22

Bandopant B Badavanache v. Basavana Mahadev Co-Operative Credit Society Ltd.

Case brief

What is this about?

What did the court decide?

Bandopant B Badavanache v. Basavana Mahadev Co-Operative Credit Society Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

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