Allowed

D Chandraiah v. K Gaddigeppa

Karnataka HC27 Jun 2022CRL.RP/906/2013

Case brief

AI extract

What is this about?

The High Court of Karnataka allowed a revision petition and acquitted the petitioner. Relying on Section 87 of the Negotiable Instruments Act, the Court held that a materially altered cheque (date changed without signature) is void ab initio against the drawer, negating liability for dishonour despite subsequent legal notice.

What did the court decide?

Petitioner acquitted of offence under Section 138 of the Negotiable Instruments Act; impugned judgments of conviction and appeal dismissed set aside.

D Chandraiah Vs K Gaddigeppa — Cheque Dishonour | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 27^TH DAY OF JUNE, 2022

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BEFORE

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THE HON’BLE Dr. JUSTICE H.B. PRABHAKARA SASTRY

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CRIMINAL REVISION PETITION No.906 OF 2013

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BETWEEN:

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D. Chandraiah, S/o. Revanasiddaiah, Aged about 44 years, R/o. # 855/856, 2nd floor, 1st Stage, Shivakumarswamy Layout, Davanagere.

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..Petitioner

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(By Sri. Rajashekhar K., Advocate)

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AND:

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K. Gaddigeppa S/o. Late Yellappa, Aged about 48 years, R/o. KEB Colony, H.No.MUCEB 26, Behind Community Hall, Near Stadium, Davanagere 577 004.

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.. Respondent

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(By Sri. K.G. Shantharaj, Advocate)

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This Criminal Revision Petition is filed under Section 397 read with Section 401 of the Code of Criminal Procedure, 1973, praying to call for the records in C.C.No.2550/2009 on the file of the II Additional Senior Civil Judge and JMFC, Davanagere; set aside the judgment of conviction dated 05-10-2013 passed in

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Crl.R.P.No.906/2013 2

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Criminal Appeal No.6/2013 by the Court of II Additional District and Sessions Judge, Davanagere and also set aside the judgment of conviction dated 09-01-2013 passed in C.C.No.2550/2009 by the Court of III Additional Senior Civil Judge and JMFC, Davanagere by allowing this appeal and thereby acquit the petitioner/accused; and grant such other relief/s as this Court deems to be fit grant under the facts and circumstances of the case, in the interest of justice and equity.

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This Criminal Revision Petition coming on for Final Hearing, through physical hearing/video conferencing hearing, this day, the Court made the following:

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O R D E R

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The present petitioner as the accused was tried by the Court of the learned III Additional Senior Civil Judge and Judicial Magistrate First Class, Davanagere, at: Davanagere, (hereinafter for brevity referred to as “the Trial Court”), in Criminal Case No.2550/2009 (Old C.C.No.2214/2008), for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter for brevity referred to as “the N.I. Act”) and was convicted for the said offence by its judgment of conviction and order on sentence dated 09-01-2013.

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Aggrieved by the same, the accused preferred a Criminal Appeal, in the Court of the learned II Additional District and Sessions Judge at Davanagere, (hereinafter for

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brevity referred to as “the Sessions Judge’s Court”) in Criminal Appeal No.6/2013.

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The appeal was contested by the respondent who was the complainant in the Trial Court. The Sessions Judge’s Court in its judgment dated 05-10-2013 dismissed the appeal, confirming the judgment of conviction and order on sentence passed by the Trial Court dated 09-01-2013 in C.C.No.2550/2009 (Old C.C.No.2214/2008).

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Aggrieved by the said order, the accused has preferred this revision petition.

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The summary of the case of the complainant (respondent) in the Trial Court is that, the accused was known to him since twenty years, as such, at the request of the accused, on 12-04-2008, he lent him a sum of `15,000/- in cash. The accused had promised to repay the said loan amount within two months. However, at the demand made by the complainant for the repayment of money after the said two months, the accused gave him the cheque bearing No.096528 dated 13-07-2008, for a sum of

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`15,000/-, drawn on the Corporation Bank, Mandipet,

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Davangere, in favour of the complainant and the said cheque when presented for realisation returned with the banker’s endorsement “exceeds arrangements”. Thereafter, the complainant got issued a legal notice to the accused, demanding the payment of the cheque amount. The accused neither replied to the legal notice nor paid the cheque amount, which constrained the complainant to institute a criminal case against the accused for the offence punishable under Section 138 and 142 of the N.I. Act.

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The accused appeared in the Trial Court and contested the matter through his counsel. He pleaded not guilty and claimed to be tried, as such, the Trial Court proceeded to record the evidence. To prove his case, the complainant got himself examined as PW-1 and got marked documents from Exs.P-1 to P-6(d) and closed his side. The accused got himself examined as DW-1 and got marked documents from Exs.D-1 to D-4, in his support.

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The Trial Court after recording the evidence led

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before it and hearing both side, by its impugned judgment of conviction and order on sentence dated 09-01-2013 convicted the accused for the offence punishable under Section 138 of the N.I. Act and sentenced him to pay a fine of `1,000/-, in default to undergo simple imprisonment for

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a period of one month and also directed to pay a fine of `20,000/- to the complainant towards compensation, in default to undergo simple imprisonment for a period of three months. Challenging the said judgment of conviction and order on sentence passed by the Trial Court, the accused preferred an appeal in Criminal Appeal No.6/2013, before the learned Sessions Judge’s Court, which after

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hearing both side, by its impugned judgment dated 05-10-2013 dismissed the appeal filed by the accused, while confirming the impugned judgment of conviction and order on sentence passed by the Trial Court. Being aggrieved by the judgments of conviction and order on sentence passed by both the Courts below, the accused has preferred this revision petition.

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Learned counsel for the revision petitioner (accused) and learned counsel for the respondent/ complainant are appearing physically in the Court.

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The Trial Court and Sessions Judge’s Court’s records were called for and the same are placed before this Court.

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Heard the learned counsels from both side. Perused the materials placed before this Court including impugned judgments and the Trial Court and Sessions Judge’s Court’s records.

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For the sake of convenience, the parties would be henceforth referred to as per their rankings before the Trial Court.

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After hearing the learned counsels for the parties, the only point that arise for my consideration in this revision petition is:

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Whether the judgments under revision are perverse, illegal and erroneous, warranting interference at the hands of this Court?

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Learned counsel for the revision petitioner

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(accused) in his argument submitted that, he would not deny or dispute that the cheque at Ex.P-2 is issued by the accused in favour of the complainant and that the same has been returned with the banker’s memo/endorsement “exceeds arrangements” as per Ex.P-5. He submitted that he also would not dispute that the complainant has issued a legal notice as per Ex.P-6, demanding the payment of the cheque amount. However, his contention is that, the said cheque was issued in the year 2005, but not in the year 2008, and that the complainant has materially altered the year of the cheque and presented it, as such, the accused/drawer is not liable to pay the amount. He further contended that the evidence of DW-1 supported by the documents produced by him would go to show that it was the complainant who had borrowed a sum of 60,000/- from the accused, by executing an On-Demand Promisory Note as per Exs.D-2 and D-3. However, by demanding additional loan of 15,000/-, he collected the cheque in question and

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Crl.R.P.No.906/2013

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altering its year, has presented subsequently when repayment of `60,000/- was demanded from him.

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Learned counsel for the respondent/complainant in his argument submitted that, the complainant as PW-1 in his evidence though has admitted that the year of the cheque is altered, however, he has stated that the same was done by the accused himself. He also submitted that had that been the defence of the accused, he should have mentioned the said defence by sending a reply to the legal notice. Therefore, the said defence taken up by the accused in the Court, at a later stage, would go to show that it is purely an after-thought.

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The evidence of PW-1 is nothing but reiteration of the contents of his complaint. The returned cheque at Ex.P-2, counter foil of the challan depositing the cheque and the debit advice slip at Exs.P-3 and P-4 respectively, the cheque return memo issued by the drawee Bank which is at Ex.P-5, a copy of the legal notice at Ex.P-6, postal receipts at Exs.P-6(a) and 6(b), certificate of posting at P-6(c) and

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postal acknowledgement card at Ex.P-6(d), supports the evidence of PW-1 that the accused had issued the cheque in question which was returned for the reason 'exceeds arrangements'. Thereafter the legal notice sent by the complainant demanding the payment of the cheque amount though served upon the accused, he neither replied to it nor repaid the cheque amount. Thus a presumption about the existence of a legally enforceable debt forms in favour of the complainant, however, the said presumption is rebuttable.

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In the process of rebuttal of the presumption, the

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accused, apart from making several suggestions to PW-1 in his cross-examination has also examined himself as DW-1, wherein he has taken a contention that the complainant in order to pay the maintenance to his wife in a matrimonial case had availed from him a sum of 60,000/- by executing a letter and an On-demand Promisory Note. Thereafter, for the very same purpose, he requested for an additional loan of a sum of 15,000/- in the year 2005, in which regard, the

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Crl.R.P.No.906/2013 10

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cheque in question which is at Ex.P-2, was given to him, on 13-07-2005. It is further suggestion made to PW-1 in his cross-examination and also the evidence of DW-1 that, the complainant, without even repaying the said loan of 60,000/-, at a later date, presented the cheque given by the accused as an additional loan of 15,000/-, by altering its year, as such, a false case has been filed against him.

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The suggestion made to PW-1 in that regard was

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not admitted as true by the witness. So also the evidence given by DW-1 on the similar lines also has been denied in his cross-examination by making denial suggestions, as such, the alleged loan transaction of `60,000/- between the complainant and the accused though was put in the mouth of the complainant in the form of suggestion, the witness has not admitted the same and hence, the accused could not successfully rebut the presumption formed in favour of the complainant under Section 139 of the N.I. Act.

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The complainant as PW-1 in his cross-examination

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has specifically admitted a suggestion as true that the

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Crl.R.P.No.906/2013 11

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cheque at Ex.P-2 bears an alteration with respect to the year of the cheque from the year ‘2005’ to ‘2008’. However, he contends that the said alteration was made by the drawer (accused himself). Still, the fact remains that the admitted alteration of the cheque does not bear the signature of the drawer regarding the alleged alteration.

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In addition, contending that the year mentioned in the cheque at Ex.P-2 has been altered, the accused also has confronted with the counter foil of the said cheque to PW-1 suggesting that the same is the counter foil of Ex.P-2 and it also shows the date as 13-07-2005. The witness has admitted the same and the said counter foil of the cheque was marked as Ex.D-1(a). Thus, it has stood as an admitted fact that the complainant himself has admitted that there is alteration in the year of the cheque, however, the said alleged alteration has not been authenticated by its drawer.

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Crl.R.P.No.906/2013

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In M.L. Tannan’s "Banking Law and Practice in

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India" Twenty-eighth Edition – 2021, he has defined “Material alterations” at page 950, as below:

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“An alteration is material, which in any way alters materially or substantially the operation of the instrument and the liabilities of the parties thereto, irrespective of the fact whether or not the change is prejudicial to the payee.”

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Apart from stating that a banker must be very careful when there is a material alteration in the cheque presented for payment and that it should see that such alteration has been made with the drawer’s consent or authority and is confirmed by his signature, Tannan has also given few examples of material alterations in which the alteration of the date of the instrument with the purpose of accelerating or postponing the time of the payment comes on the top.

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Under Section 87 of the N.I. Act, a Negotiable Instrument, which is materially altered becomes void as against any one who is a party thereto at the time of

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making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties. Thus, when admittedly, the cheque at Ex.P-2 has been materially altered, by virtue of its alteration in the year of the date column, and since the same does not bear any authentication signature by its drawer, the said cheque becomes invalid from its enforcement. The statements made by PW-1 in his crossexamination admitting the counter foil of the said cheque and the correctness of the date mentioned thereafter as '13-07-2005' further supports the contention of the accused that the cheque has been materially altered.

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In that view of the matter, without going much into the other aspects of the alleged defence of the accused, about the alleged loan of `60,000/-, suffice it to say that admittedly, the cheque at Ex.P-2 is shown to be materially altered, as such, has lost its validity in the eye of law.

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Thus, even though the materially altered cheque is shown to have been returned with the reason 'exceeding

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arrangements', since the instrument itself has lost its validity due to the material alteration, no liability can be fastened upon the accused on the alleged dishonor of the cheque. However, both the Trial Court and Sessions Judge’s Court since have not considered this aspect but have hastily come to a conclusion that merely because the cheque, its memo for dishonor, copy of the legal notice and the postal receipts and postal acknowledgement card were produced, the complainant has proved the alleged guilt against the accused. Since the said finding is now proved to be an erroneous one, interference at the hands of this Court is warranted.

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Accordingly, I proceed to pass the following:

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O R D E R

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[i] The Criminal Revision Petition stands allowed;

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[ii] The impugned judgment of conviction and order on sentence passed by the III Additional Senior Civil Judge and Judicial Magistrate First Class,

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Davanagere, at: Davanagere, dated 09-01-2013, in Criminal Case No.2550/2009 (Old C.C.No.2214/2008),

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holding the petitioner herein (accused No.1) guilty of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881, and the impugned judgment passed by the II Additional District and Sessions Judge at Davanagere, dated 05-10-2013, in Criminal Appeal No.6/2013, confirming the judgment of the Trial Court, are hereby set aside;

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[iii] The petitioner (accused) – Sri. D.

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Chandraiah, S/o. Revanasiddaiah, Aged about 44 years, R/o.# 855/56, 2nd Floor, 1st Stage, Shivakumarswamy Layout, Davanagere, is acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.

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Registry to transmit a copy of this order to both the Trial Court and also to the Sessions Judge’s Court along with their respective records, immediately.

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Sd/JUDGE

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BMV*

D Chandraiah v. K Gaddigeppa

Case brief

What is this about?

What did the court decide?

D Chandraiah v. K Gaddigeppa

Case brief

What is this about?

What did the court decide?

What the court decided

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