Allowed

M/S Kirloskar Ferrous Industries Ltd., v. M/S Madavi Sales Corporation

Karnataka HC11 Oct 2023CRL.A/2564/2012

Case brief

AI extract

What is this about?

In a cheque bouncing case, the High Court set aside the acquittal by the Sessions Court and upheld the conviction by the trial court. It held that evidence proved a direct business transaction and legally enforceable debt, making the presumption under the N.I. Act unrebutted despite the notice not being served.

What did the court decide?

The judgment of acquittal is set aside; the judgment of conviction and sentence is upheld and confirmed.

M/S Kirloskar Ferrous Industries Ltd., Vs M/S Madavi… — Cheque Dishonour | Karnataka HC (2023)

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NC: 2023:KHC-D:12459 CRL.A No. 2564 of 2012

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IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH

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DATED THIS THE 11^TH DAY OF OCTOBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE HANCHATE SANJEEVKUMAR

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CRIMINAL APPEAL NO.2564/2012 (A)

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BETWEEN:

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M/S. KIRLOSKAR FERROUS INDUSTRIES LIMITED, BY ITS MANAGING DIRECTOR, R.V.GUMASTE, BEVINAHALLI, TQ AND DIST: KOPPAL BY POWER OF ATTORNEY HOLDER K.G.VIJAPUR.

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…APPELLANT

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(BY SRI G.M.BHAT, ADVOCATE)

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AND:

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Digitally signed by SUJATA SUBHASH PAMMAR

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M/S. MADAVI SALES CORPORATION, 27, SAGAR COMPLEX, B/H SAVAN HOTEL, SARKHEJ, SANDAD CHOKDI, SARK BEJ, AHMEDABAD.

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BHARAT TRIVEDI, PARTENER, M/S. MADAVI SALES CORPORATION, 27, SAGAR COMPLEX, B/H SAVAN HOTEL, SARKHEJ, SANDAD CHOKDI, SARK BEJ, AHMEDABAD.

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…RESPONDENTS (BY SRI MRUTYUNJAY S. HALLIKERI, AMICUS CURIAE, ADVOCATE FOR R1 AND R2)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF THE CRIMINAL PROCEDURE CODE, PRAYING TO SET ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED 10.11.2011, PASSED BY THE FAST TRACK COURT–III, HOSAPETE, IN CRL.A.NO.22/2011

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NC: 2023:KHC-D:12459 CRL.A No. 2564 of 2012

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AND CONFIRM THE JUDGMENT AND ORDER OF CONVICTION DATED 22.03.2011, PASSED BY THE COURT OF ADDITIONAL CIVIL JUDGE (JR.DN.) AND JMFC, HOSAPETE, IN C.C.NO.1608/2006 AND CONVICT THE RESPONDENTS FOR THE OFFENCE UNDER SECTION 138 OF N.I.ACT, IN THE INTEREST OF JUSTICE.

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

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JUDGMENT

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The complainant has filed the present criminal appeal under Section 378(4) of the Code of Criminal Procedure, 1973, for setting aside the judgment and order of acquittal

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dated 10.11.2011, passed by the Fast Track Court-III, Hosapete, in Crl.A.No.22/2011 and confirm the judgment and order of conviction dated 22.03.2011 passed by the learned Additional Civil Judge and JMFC, Hosapet, in C.C.No.1608/2006 for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, hereinafter referred to as ‘the N.I. Act’).

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For the purpose of convenience, ranking of the

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parties is referred as per their status before the trial Court.

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3 - NC: 2023:KHC-D:12459 CRL.A No. 2564 of 2012

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3. The complainant is a company dealing with

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manufacturing and sale of big iron materials, castings, etc.,. Accused No.1 is the company and accused No.2 is the partner of the said company. The accused No.1 is the regular customer of the complainant/company used to purchase big iron materials from the complainant on credit basis. Due to this transaction, there was stipulation about payment of interest at the rate of 24% per annum as per custom and usage of the business and the accused failed to keep the promise and hence, the complainant approached the accused for several times for payment of dues, for which the accused has issued Ex.P.2-cheque for sum of Rs.3,85,107/- and Ex.P.3-cheque for a sum of Rs.4,74,345/- and when the said cheques were presented, they were returned with bank endorsement as ‘funds insufficient’.

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After complying legal requirements, the

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complainant has filed complaint before the learned Magistrate as per Section 200 of Cr.P.C. The learned

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4 - NC: 2023:KHC-D:12459 CRL.A No. 2564 of 2012

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Magistrate has convicted the accused for the offence under

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Section 138 of the N.I.Act. But the Sessions Court in Criminal Appeal No.22/2011 has allowed the appeal filed by the accused and thereby acquitted the accused. Being aggrieved by this, the complainant has preferred the instant criminal appeal before this Court.

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Heard the arguments on both sides and perused the records.

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appellant/complainant submitted that the accused issued cheques i.e. Ex.P.2 and Ex.P.3 to discharge legal enforceable debt as the accused were purchasing big iron materials from the complainant company and as per Exs.P.12 and 13-invoices, the accused owed a sum as mentioned in the cheques. Further submitted that it is not disputed that accused No.2 has issued cheques-Exs.P.2 and Ex.P.3 on behalf of accused No.1 as a managing partner of the company. Therefore, issuance of cheques towards discharge of legally enforceable debt is proved.

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5 - NC: 2023:KHC-D:12459 CRL.A No. 2564 of 2012

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Therefore, the trial Court is correct in convicting the accused but the Appellate Court/Sessions Court has erroneously reversed the judgment of conviction. Hence, prays to allow the appeal and confirm the judgment of the trial court.

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On the other hand, learned Amicus Curie appointed for respondent to assist the Court submitted that the Sessions Court has rightly reversed the judgment of conviction passed by the trial court which needs no interference. Therefore, prays to dismiss the appeal.

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Upon divergent findings on the issue involved in the present case, it is admitted fact that accused No.2 has issued cheques as per Exs.P.2 and Ex.P.3 on behalf of accused No.1 being managing partner of

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accused/company.

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It is the case of complainant that the accused were receiving iron material from the complainant company and there was a regular business transaction between them. Upon bouncing of cheque, the complainant

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has got issued legal notice to the accused but they were not served. Upon considering the address mentioned on the envelops of issuance of legal notice by the complainant, with the same address the accused have preferred appeal before the Sessions Court. Therefore it is proved that the accused were residing or carrying out their activity, business transaction with the address mentioned on the envelopes of the legal notice and the address mentioned in the criminal appeal.

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It is the defence of the accused that they were not purchasing the materials from the complainant company but through third party agency and hence there are no direct transactions between the accused company and the complainant company. But Exs.P.12 and P.13 are the invoices of the complainant company having supplied materials to the accused and in these invoices the total amount of invoice is the same as that of cheques Exs.P.2 and P.3. In Exs.P.12 and P.13 invoices the name of consignee is accused No.1 company. Therefore, from these

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7 - NC: 2023:KHC-D:12459 CRL.A No. 2564 of 2012

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evidence it is proved that there is a regular business transaction between the complainant company and accused company. It is not disputed by accused No.2 that he has given evidence as DW.1 that he has issued cheques Exs.P.2 and P.3. The First Appellate Court has reversed the order of the trial Court on the reason that notice is not served on the accused and also there is no legally enforceable debt accrued by opining that Exs.P.2 and P.3 were not amounting to have been issued towards discharge of legally enforceable debt. This observation of the Sessions Court is not correct and is perverse one.

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DW.1 who is accused No.2 being managing partner of accused No.1 company has stated in his evidence that the complainant company is operating its business operations from Gujarath for the purpose of selling their material in Gujarath State and the complainant company has misutilized the blank cheques and filed false complaint. It is evidence of DW.1 that the accused company was purchasing material from one

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M/s.Kadilkar Sales and Services Limited and there is no direct contract or agreement between the complainant company and accused firm. If the accused were making transaction with M/s.Kadilkar Sales and Services Limited, then why accused No.2 has issued cheque in favour of complainant company is not forthcoming.

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If really the accused did not have direct transactions with the complainant company, then there is no occasion for the accused firm to issue cheques Exs.P.2 and P.3. But Exs.P.12 and P.13 invoices prove that the invoices are raised in the name of accused No.1 firm, for the same value as mentioned in the cheques. Therefore, upon considering the evidence on all its preponderance of probabilities, as it is required to be done in these type of cases, it is proved that the accused were having direct business transactions with the complainant company and the accused has debt towards complainant company and towards discharge of legally enforceable debt Exs.P.2 and P.3 cheques were issued. Therefore, the presumption

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accrued in favour of complainant about issuance of cheques as per section 118 of the N.I.Act and receipt of cheques as per section 139 of the N.I.Act are not rebutted by the accused.

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Moreover, the complainant is successful in proving that there is a regular business transaction between them and cheques were issued towards discharge of legally enforceable debt. Hence the reversal of order of conviction of the Magistrate by the Sessions Court on technical ground that notice is not issued in favour of accused firm, is not correct. Therefore, the Sessions Court has committed error in reversing the judgment of conviction passed by the trial Court. Therefore, the appeal is liable to be allowed by setting aside the order of First Appellate Court which is reversal of the conviction recorded by the trial Court.

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Therefore the judgment of conviction and order of sentence recorded by the trial Court is hereby liable to be upheld. Hence, I proceed to pass the following:

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ORDER

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i) The appeal is allowed.

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ii) The judgment of acquittal dated 10.11.2011, passed by the Fast Track Court-III, Hosapete, in Crl.A.No.22/2011, is hereby set aside.

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iii) The judgment of conviction and order of sentence dated 22.03.2011, passed by the Addl. Civil Judge and JMFC, Hosapete, in C.C.No.1608/2006, is hereby upheld and confirmed.

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iv) Send back the records along with a copy of this judgment with a direction to the trial Court to proceed further.

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SSP: para 1 to 7 MRK: para 7 to end List No.: 3 Sl No.: 2 CT-ASC

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SD/JUDGE

M/S Kirloskar Ferrous Industries Ltd., v. M/S Madavi Sales Corporation

Case brief

What is this about?

What did the court decide?

M/S Kirloskar Ferrous Industries Ltd., v. M/S Madavi Sales Corporation

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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