Dismissed

Sri Omkarmurthy v. T H Manjunatha

Karnataka HC7 Dec 2023CRL.A/325/2014

Case brief

AI extract

What is this about?

The High Court of Karnataka dismissed an appeal challenging the acquittal of the respondent in a Section 138 NI Act case. The High Court upheld the trial court's findings, including the conclusion that the complainant failed to implead the company as an accused, rendering the complaint not maintainable, and rejected the appellant's contention regarding notice service to the wife.

What did the court decide?

The criminal appeal was dismissed and the judgment of acquittal dated 14.02.2014 passed by the Judicial Magistrate First Class, Gubbi, was confirmed.

Sri Omkarmurthy Vs T H Manjunatha — Company and Corporate | Karnataka HC (2023)

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NC: 2023:KHC:44307 CRL.A No. 325 of 2014

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE G BASAVARAJA CRIMINAL APPEAL NO. 325 OF 2014

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BETWEEN:

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SRI. OMKARMURTHY, S/O LATE GANGANNA, AGED ABOUT 50 YEARS, R/A M.M.A. KAVAL, SOMALAPURA VILLAGE, NITTUR HOBLI, GUBBI TALUK, TUMKUR DISTRICT - 572 216.

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…APPELLANT

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(BY SRI. P.H. VIRUPAKSHAIAH, ADVOCATE)

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AND:

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Digitally signed by SANDHYA S Location: High Court of Karnataka

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T.H. MANJUNATHA, S/O T.D. HULURAIAH AGED ABOUT 37 YEARS, R/A HURULITHOTA, NEAR OLD TILES FACTORY, TUMKUR - 572 101.

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…RESPONDENT

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(BY SRI. R. PREMKUMAR, ADVOCATE)

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THIS CRL.A IS FILED U/S.378(4) OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT DATED 14.2.2014 PASSED BY THE PRL. C.J. AND J.M.F.C., GUBBI IN C.C.NO.35/2008 - ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I.ACT.

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NC: 2023:KHC:44307 CRL.A No. 325 of 2014

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

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JUDGMENT

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The complainant/appellant has preferred this appeal against the judgment of acquittal passed by the Judicial Magistrate First Class, Gubbi in CC.No.35/2008 dated: 14.02.2014, (for short hereinafter referred to as 'trial Court').

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The rank of the parties in this appeal are referred to as per their status before the trial Court.

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The brief facts of the complainant is that the accused in running a Financial Institution by name Manjunatha Finance and Investments (R) office at M.M.S Building, near Kote Sri.Ananjenaya Temple, Chikkapet Main Road, Tumkur and he is the Managing partner to that Finance. He has taken deposit of Rs.2,65,000/- from the complainant with interest at 15% p.a. The said deposit was matured and when the complainant has demanded the accused to return the said deposit amount, he has issued a cheque bearing No.921635 for a sum of Rs.2,65,000/- drawn on Indian Overseas Bank, B.H.Road, Tumkur of his firm's current account No.100, dated

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05.09.2007. On presentation of the said cheque through Canara Bank, Main Branch, Tumkur for encashment through his account on 11.10.2007 was bounced as 'Insufficient Funds' and issued an endorsement on 11.10.2007. The accused has issued the above cheque even though he has no sufficient funds in his account only to deceive the complainant, after the cheque was dishonoured the complainant issued legal notice to the accused on 09.11.2007, to comply with that notice by paying the above said cheque amount within 15 days from the date of receipt of notice, the wife of accused by name Sunitha A.S has signed on the acknowledgement and received the postal cover, inspite of service of notice, accused did not repay the amount within a statutory period. Hence, the complainant had lodged a complaint under Section 138 of the Negotiable Instruments Act, 1881.

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After taking cognizance the trial Court has registered the case in CC.No.35/2008 and summons was issued to the accused. In response to summons accused appeared before the Court and enlarged on bail. The plea was recorded and the accused pleaded not guilty and claimed to be tried.

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NC: 2023:KHC:44307 CRL.A No. 325 of 2014

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To prove the case of the complainant, complainant himself examined as PW1, 08 documents were marked as Ex.P1 to Ex.P8 and another witness was examined by name K.Gururaj examined as PW2. On closure of complainant side evidence statement under Section 313 of Cr.P.C was recorded. Accused has totally denied the evidence of PW1 and also adduced his evidence as DW1.

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On hearing the arguments on both sides, the trial Court has acquitted the accused. Being aggrieved by the judgment of acquittal the appellant has preferred this appeal.

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Learned counsel for the appellant has submitted his arguments that the order of acquittal passed by the learned Magistrate is contrary to law, facts of the case and evidence on record, as such is liable to be set-aside. The learned Magistrate has failed to understand that whenever a cheque is issued the presumption is that the same is issued for discharge of lawfully enforceable debt, as such passing the impugned order dated 14.02.2014 is untenable and erroneous. The learned Magistrate has failed to understand that signature and other facts of such as issuance of cheque etc., has not disputed by the respondent.

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The remaining aspects such as the contents of the documents are presumed to be true. As such disbelieving the version of appellant/complainant and ultimately acquitting the respondent is against to law. The trial Court has not properly appreciated the evidence on record in accordance with law and facts. The trial Court has acquitted the accused on two grounds; (1) The notice issued by the complainant was not served, though it was served to the wife of the accused, DW1 has clearly admitted in his cross examination that Sunitha A.S, is his wife. (2) The Company has not arrayed as accused in this case. But in the complaint the complainant has clearly stated that accused is running a Financial Institution by name Manjunatha Finance and Investments Registered office at M.M.S Building, near Kote Sri. Anjaneya Temple, Chikkapet Main Road, Tumkur and he is the Managing partner of that Finance. Hence, that there is no need to implead the said Finance Company and on all these grounds sought for allow this appeal. To substantiate his arguments he relied on the decisions of M/S. BILAKCHAND GYANCHAND CO. VS A. CHINNASWAMI reported in 1999 (5) SCC 693; V. N. SAMANT VS K.G.N. TRADERS AND ANOTHER reported in ILR 1994 KAR 2991.

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As against this, learned counsel for the respondent

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has submitted his arguments that the trial Court has properly appreciated the evidence on record in accordance with law and facts and also the decision of Hon'ble Apex Court, that there are no grounds to interfere with the impugned judgment of acquittal. On all these grounds sought for dismissal of this appeal.

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I have examined the materials placed before this Court. The complainant has filed this complaint under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheque of Rs.2,65,000/- dated 05.09.2007. The accused has issued this cheque for Manjunatha Finance and Investments. The accused has put his signature as Managing partner, this cheque was presented for encashment on 11.10.2007. The same was dishonoured with endorsement as Ex.P3 'insufficient funds', that on 09.11.2007 a legal notice was issued to the accused to pay the cheque amount of Rs.2,65,000/-, the same was served on the wife of the accused as per Ex.P5, Ex.P6 is the account opening form of Manjunatha Finance and Investments, Ex.P7 is the specimen signature of the accusedfirm.

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The trial Court has observed in para No.16 of the judgment that the notice issued by the complainant is not served to the accused. In this regard the trial Court has relied on the decision of M.B.THOMAS Vs. T.S.JALEEL AND ANOTHER reported in 2009 (2) DCR 519 . But in the case on hand, the DW1-Manjunatha has stated in his evidence that complainant has not issued the notice to him and also to his firm. But he has not disputed the signature of his wife on Ex.P5. The address shown in Ex.P4-notice also not denied by the accused and during the course of cross-examination the accused he has clearly admitted that his wife Sunitha A.S, is residing with him. The admission made by DW1 is sufficient to come to the conclusion that the notice is duly served to the wife of the accused. Accordingly, the complainant has complied the provisions of Section 138(b) of the Negotiable Instruments Act, 1881.

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With regard to the maintainability of the complaint is concerned in para Nos.17 to 22, the trial Court has observed as hereunder:

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"17. The another point canvassed by the learned counsel for the accused is that, the

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complainant has deposited amount in the Manjunatha Finance Investment Company and the complainant has not made the company as party in the present complaint and the cheque in dispute shows it was issued on behalf of company and the evidence of p.w.2 clearly discloses the Ex.P-1 is pertaining to the account of Manjunatha Finance and Investment company and it is not issued by accused on his personal account. Therefore, the complaint is not maintainable. In support of his arguments, he relied upon a decision reported in 2013(2) DCR construction 705 AP US Nirmalakumari and another decision reported in 2008(1) DCR 38 Snehalatha vs M/s Victory leathers, another decision 2012(1) DCR 746 Anitha Hada VS M/s God fathers Travels Tours and Put. Limited. 2013(1) KCCR 191 B.L. Boolani VS Vasanthakumar Bangera, 2009 (2) DCR 296 Jugesh Sehgal VS Samsheer Singh Gogi.

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18. On the other hand learned counsel for the complainant has argued that, the accused has issued the cheque in dispute for due return of deposit amount which was deposited in the company of Manjunatha Finance and Investment company, in which the present accused is also one of the partner and he issued the cheque and he has not disputed the signature found in the cheque therefore the burden is on the accused to rebut the same and the evidence adduced by the complainant clearly establishes the accused has committed offence punishable under sec. 138 of NI Act and he prays to convict the accused.

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19. I have scrutinized the evidence adduced by the complainant and the averments of complaint. Admittedly, the complainant in his examination in chief has admitted that he has invested the amount in the Manjunatha Finance and Investment company and he has not issued any notice to the said company and he has not made the said company as party in the complaint and Ex. P-1 discloses that it was issued by Manjunatha Finance Investment Company and it was not issued on the personal account of accused. P.w.2 who is the bank manager has also deposed that, the cheque in dispute is pertaining to the account of Manjunatha Finance and Investment company, therefore it is crystal clear the cheque is not pertaining to the personal account of the accused and it belongs to Manjunatha Finance and Investment company. Admittedly, the complainant has not made the said company as party to this complaint.

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20. The decision of the Hon'ble Supreme court reported in 2012(1) DCR 746 Aneetha Hada versus M/s God father Travels has held that complaint filed without impleading company - maintainability- held section 141 of NI Act clearly stipulates that when a person which is a company commits an offence then certain categories of persons in charge as well as the company would be deemed to be liable for section 138. it bounded duty of court to ascertain for what purpose the legal fiction has been created criminal liability on account of dishonor of cheque primarily falls on the drawer of company and he is extended to the

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offers of company- for maintaining the persecution under sec. 141 of NI Act arraying of a company as an accused is imperative.

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21. In the present case also the complainant has not made the company as one of the accused. Therefore, the complaint is not maintainable without impleading the company as accused. Even the complainant in the cause title has not mentioned the designation of accused in the said company. To constitute an offence under sec. 138 of NI Act it is necessary that a person must have drawn cheque on account maintain by him in the bank. Admittedly, the evidence adduced by the complainant clearly establishes the cheque is not pertaining to the accused and he has not issued the cheque from the account maintained by him.

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22. The cheque in dispute has not drawn by the accused on his personal account maintained by him. Therefore, the complaint fails. Since the complainant has failed to prove the ingredients of 138 of NI Act, the complaint is liable to be dismissed. Hence, I answer point No.1 in the negative."

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On re-appreciation/re-examination and

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reconsideration of the evidence on record and also keeping in mind the aforesaid decisions, I do not find any illegality/legal infirmity in the impugned judgment of acquittal as to the maintainability of his complaint. Hence, I answer point No.1 in negative.

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Regarding Point No.2:

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The trial Court has acquitted the accused on technical ground considering the facts and circumstances of this case. It is just and proper to give liberty to the complainant to proceed against the accused and also the Manjunatha Finance and Investments to recover the cheque amount in accordance with law, if permissible.

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