Partly allowed

D. Ganesh Naik S/O. Kariya Naik v. Raghavendra U Shet S/O Late Umesh Shet

Karnataka HC25 Oct 2023CRL.RP/100193/2021

Case brief

AI extract

What is this about?

This court allowed the revision petition partly. It upheld the conviction under Section 138 of N.I. Act but modified the sentence, enhancing the total fine to Rs. 3,60,000/- while reducing the term of simple imprisonment to three months in case of default.

What did the court decide?

Conviction upheld. Sentence modified: fine enhanced to Rs.3,60,000/-; imprisonment reduced to three months for default; partial payment allowed.

D. Ganesh Naik S/O. Kariya Naik Vs Raghavendra U Shet S/O… — Cheque Dishonour | Karnataka HC (2023)

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NC: 2023:KHC-D:12533 CRL.RP No. 100193 of 2021

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 25^TH DAY OF OCTOBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR

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CRIMINAL REVISION PETITION NO. 100193 OF 2021 (397)

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BETWEEN:

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D. GANESH NAIK S/O. KARIYA NAIK, AGE: 40 YEARS, OCC: AGRICULTURE, R/O: MACHIHALLI THANDA, HARAPANAHALLI TALUKA, DISTRICT: VIJAYNAGAR.

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…PETITIONER

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(BY SRI. SRINIVAS B. NAIK, ADVOCATE)

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AND:

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RAGHAVENDRA U. SHET S/O. LATE UMESH SHET, AGE: 37 YEARS, OCC: BUSINESS, R/O: GOWLER PETE HARAPANAHALLI TOWN, DISTRICT VIJAYNAGAR 583131.

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…RESPONDENT

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YASHAVANT NARAYANKAR

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Digitally signed by YASHAVANT NARAYANKAR Date: 2023.11.07 10:14:27 +0530

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(BY SRI B.G. INDI, FOR SRI K.L. PATIL, ADVOCATES)

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THIS CRIMINAL REVISION PETITION IS FILED U/S 397 R/W 401 OF CR.P.C., PRAYING TO SET-ASIDE THE JUDGMENT AND ORDER DATED 23.08.2021 PASSED IN CRIMINAL APPEAL NO.5041/2019 ON THE FILE OF III ADDITIONAL DISTRICT AND SESSIONS JUDGE, BALLARI SITTING AT HOSAPETE, AND SET ASIDE THE JUDGMENT AND ORDER OF CONVICTION AND SENTENCE DATED 05.09.2019 PASSED IN CC NO.141/2016 ON THE FILE OF CIVIL JUDGE AND JMFC COURT, HARAPANAHALLI AND THEREBY ACQUIT THE PETITIONER/ACCUSED FOR THE OFFENCE PUNISHABLE U/S 138 OF THE NEGOTIABLE

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INSTRUMENTS ACT, IN THE INTEREST OF JUSTICE AND EQUITY.

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

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ORDER

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This Criminal Revision Petition arises out of a judgment of conviction and sentence passed by the Civil Judge and JMFC, Harapanahalli in C.C.No.141/2016 dated 05.09.2019 convicting the revision petitioner for the offence punishable under Section of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘N.I. Act’, for brevity) and to undergo simple imprisonment for a period of six months and he shall pay fine of Rs.3,00,000/- and out of that Rs.2,98,000/- be paid to the complainant as compensation as provided under Section 357(3) of Code of Criminal Procedure, 1973 (hereinafter referred to as the ‘Cr.P.C.’, for brevity) and Rs.2,000/- be deposited to the State as fine amount with default clause. Further, the said judgment is being confirmed by the III Additional District and Sessions Judge, Ballari (sitting at Hosapete) in Criminal Appeal No.5041/2019 dated 23.08.2021.

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Parties to this revision petition are referred to as per the ranks before the Trial Court for the purpose of convenience.

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The facts leading to this revision petition are as under:

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The complainant and accused are close to each other. Accused is a labour contractor and agriculturist by profession. Accused requested the complainant to give a hand loan of Rs.2,90,000/- in the month of June-2013. Accordingly, the complainant advanced a hand loan of Rs.2,90,000/- as requested by the accused. When the complainant requested the accused to repay the loan amount, accused issued a cheque bearing No.885146 dated 20.01.2014 drawn on ING Vysya Bank Limited, Davangere branch in the name of the complainant towards discharge of the said hand loan. When the complainant presented the said cheque for encashment on 20.01.2014 through his banker i.e., State Bank of Mysuru, Harapanahalli branch, the said cheque was dishonored as per the endorsement dated 12.02.2014 as “Account closed on 02.08.2011”.

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It is further case of the complainant that, thereafter, he issued the statutory notice on 26.02.2014 requesting the accused to repay the cheque amount. Though the said notice was duly served on the accused on 01.03.2014 sent by RPAD, the accused did not pay the cheque amount within the time stipulated, thus accused has committed the offence under Section 138 of N.I. Act. Accordingly the complainant lodged the complaint before the Trial Court.

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To prove the case of the complainant before the Trial Court, he himself was examined as PW.1. He also examined one more witness in the shape of PW.2. Got marked Ex.P.1 to P.6 and closed complainant’s evidence. The accused has not led any defence evidence on his behalf.

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Learned Trial Court on perusal of the evidence placed on record and also on perusal of the documents so produced, found the accused guilty of committing the offence under Section 138 of N.I. Act and accordingly convicted the accused as stated above.

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This judgment of conviction and order of sentence was challenged by the accused before the III Additional District

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and Sessions Judge, Ballari (sitting at Hosapete) in Criminal Appeal No.5041/2019. The learned first appellate Court on hearing the arguments of both the sides by its judgment dated 23.08.2021 confirmed the judgment of conviction passed by the Trial Court. This is how the revision petitioner is before this Court challenging both the judgments passed by the Trial Court as well as first appellate Court.

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The learned counsel for the petitioner/accused Shri. Srinivas B. Naik submits that, first of all there is no transaction between the complainant and the accused. There was no legally recoverable debt. The complainant has misused the cheque possessed by the accused. He disputes the very transaction. According to learned counsel for the accused, the learned Trial Court as well as the first appellate Court have committed illegality in finding the accused guilty of the offence so committed by the accused. According to him, accused is innocent and he has been wrongly convicted. In support of his submission, learned counsel for the accused/revision petitioner relied upon the evidence placed on record by the complainant

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both oral and documentary. So

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also he pointed certain contradictions in the evidence so placed by PW.1.

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As against this submission, learned counsel Shri. B.G. Indi for the complainant/respondent submits that, the allegations made in the complaint are with regard to the loan transaction between the complainant and the accused. It was the accused who raised a loan from the complainant to meet his legal necessities. Accordingly as complainant and accused are known to each other, he advanced the loan and to that effect when there was a demand to repay the loan amount, the accused issued the cheque dated 20.01.2014. When the said cheque was presented for encashment, but it was dishonored on account of ‘closing of account by the accused’. Therefore, there is a commission of the offence by the accused under Section 138 of N.I. Act. By following all the statutory provisions, he lodged the complaint and learned Trial Court is right in convicting the accused. There is a concurrent finding of the appellate Court also. He submits that there is no merit in the submission of the counsel for the accused. He prays to dismiss the revision petition.

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I have given my anxious consideration to the arguments of both the sides. Meticulously perused the records. In view of rival submissions of both the sides, the following points arise for my consideration:

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i) Whether the learned Trial Court and the

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first appellate Court have committed any illegality and perversity in finding the accused guilty of the commission of offence under Section 138 of N.I. Act?

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ii) If so, whether the judgment of conviction

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and order of sentence passed by the Trial Court and affirmed by first appellate Court requires interference by this Court?

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iii) What order?

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My I answers to point Nos.1 and 2 are in the negative for the following reasons. These two points requires common discussion. Therefore, I would like to discuss both the points so as to avoid the repeatation of discussion.

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On perusal of the complaint averments and evidence placed on record, it is not in dispute that the complainant and the accused are known to each other. It is also not in dispute about the profession of the accused as a labor contractor and agriculturist. According to the complainant, to meet the legal necessity of the accused, there was request by the accused to advance loan of Rs.2,90,000/- in the month of June–2013. Accordingly, he arranged and advanced the said amount to the accused. Towards repayment of the said loan amount, accused issued a cheque bearing No.885146 dated 20.01.2014 drawn on ING Vysya Bank Limited, Davanagere branch. When the complainant presented the said cheque for encashment to his bank i.e., State Bank of Mysuru, Harapanahalli branch. The said cheque was returned with an endorsement dated 12.02.2014 as “Account is closed on 02.08.2011.” Therefore, within the stipulated period complainant issued the legal notice through his counsel on 26.02.2014 by RPAD. It was duly served upon the accused on 01.03.2014. Despite receiving the said notice, accused did not pay the amount. Therefore within statutory period, the complainant has filed the private complaint.

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On perusal of calendar of events right from the date of issuing of cheque till filing of the complaint, it is proved by the complainant that, he has complied all the statutory provisions of filing a private complaint for the offence under Section 138 of N.I. Act. This following of the statutory requirement is not denied by the accused in his crossexamination. Thus the complaint so filed by the complainant is in accordance with the provisions of Section 138 of N.I. Act.

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Before the Trial Court the complainant himself has entered the witness box as PW.1 and reiterated the assertions made in the complaint. He has been thoroughly cross examined by the defence. But nothing worth is elicited from the mouth of this PW.1 so as to disbelieve his version spoken in the examination-in-chief. It is suggested to PW.1 that for the purpose of raising loan, cheque was received by the complainant as a security. This suggestion itself goes to establish that there was a raising of a loan by the accused from the complainant. The other suggestions are with regard to the profession of the complainant as a money lender. It is not the

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case of the complainant that he is a money lender by profession. As the complainant was known to the accused and

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accused was well known about the affairs of the complainant therefore, in that capacity, he demanded a loan of Rs.2,90,000/- and accordingly, the complainant by arranging the same has paid the amount to the accused. Therefore, the defence of the accused that by way of security the said cheque was given to the complainant cannot be accepted.

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Further, PW.2 was examined by the complainant to

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show that he has issued endorsement as per Ex.P.3. Thus, from the evidence of PW.2 it is very much clear that, the accused has closed his account which comes under the perview of under Section 138 of N.I. Act.

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So far as documentary evidence is concerned, Ex.P.1 is the cheque issued by the accused containing his signature. His signature on cheque is not denied. So also Ex.P.2 is the memo issued by the bank stating that the said cheque so presented was dishonored for closing of account on 02.08.2011. Ex.P.3 is the endorsement issued by the bank to show about the dishonor of the said cheque. Ex.P.4 and P.5 are postal receipt and postal acknowledgements. These documents show the service of statutory notice issued on the accused.

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Ex.P.6 is the notice issued by the complainant through his counsel.

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On perusal of the notice, it is made clear and notified by the complainant that, the said cheque was issued by the accused which was dishonored as the account of the accused was closed.

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Learned Trial Court while appreciating the evidence of the complainant has come to the conclusion that, the complainant has proved the offence under Section 138 of N.I. Act. Learned Trial Court has discussed about how the offence under Section 138 of N.I. Act is attracted. This finding of the Trial Court has been affirmed by the first appellate Court. While appreciating the evidence placed on record by the complainant, even the first appellate Court also has come to the conclusion that, complainant has proved the offence by the offence under Section 138 of N.I. Act.

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When there is legally enforceable debt, it is for the complainant to prove the said offence with legal evidence. In this case issuance of the cheque dated 20.01.20214 in favour of the complainant marked at Ex.P.1 Rs.2,90,000/- is duly

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proved in accordance with law. It was drawn on ING Vysya Bank Limited, Davangere branch. Signature of the accused on the cheque is admitted. So also, the said cheque was dishonored for “closing of the account” of the accused. Even after receipt of legal notice dated 26.02.2014, the accused has not paid the cheque amount within time stipulated. Thus, the complainant is able to establish the ingredients of offence under Section 138 N.I. Act.

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More so, as rightly observed by the Trial Court as well as first appellate Court, the presumption is very much available with regard to the issuance of cheque under Sections 118 and 138 of N.I. Act. The said provisions read as under:

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118. Presumptions as to negotiable instruments.- Until the contrary is proved, the following presumptions shall be made:-

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(a) of consideration- that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

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(b) as to date- that every negotiable instrument bearing a date was made or drawn on such date;

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(c) as to time of acceptance- that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

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(d) as to time of transfer- that every transfer of a negotiable instrument was made before its maturity;

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(e) as to order of indorsements- that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

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(f) as to stamps- that a lost promissory note, bill of exchange or cheque was duly stamped:

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(g) that holder is a holder in due course- that the holder of a negotiable instrument is a holder in due course:

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Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.

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138. Dishonour of cheque for insufficiency,

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etc., of funds in the account- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount

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arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both:

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Provided that nothing contained in this section shall apply unless-

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(a) the cheque has been presented to the bank within a period of six months* from the date on which it is drawn or within the period of its validity, whichever is earlier;

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(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

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(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

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1. The words "law of British India" were successively amended by A.O. 1948, the A.O. 1950 and Act 3 of 1951, sec. 3 and Sch. (w.e.f. 1-4-1951) to read as above.

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2. The words "in British India" were successively amended, by A.O. 1948, the A.O. 1950 and Act 3 of 1951, sec. 3 and Sch. (w.e.f. 1-4-1951) to read as above.

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3. The words "or the State of Jammu and Kashmir" omitted by Act 62 of 1956, sec. 2 and such.

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4. Subs. by Act 3 of 1951, sec. 3 and Sch., for "the States" (w.e.f. 1-4-1951)

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5. Chapter XVII (containing sections 138 to 142) ins. by Act 66 of 1988, sec. 4 (w.e.f. 1-4-1989).

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6. Subs. by Act 55 of 2002, sec. 7, for a term which may be extended to one year" (w.e.f. 6-2-2003).

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*The period has been reduced from six months to three months vide R.B.I. Notiication No. RBI/201112/251, DBOD.AML BC. No. 47/14.01.001/2011-12, dated 4th November, 2011 (w.e.f. 1-4-2012).

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7. Subs. by Act 55 of 2002, sec. 7, for "within fifteen days" (w.e.f. 6-2-2003).

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Explanation,-For the purpose of this section, “debt or other liability” means a legally enforceable debt or other liability.]

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On perusal of the provisions of Sections 118 and 138 of N.I. Act, in this case the consideration of Rs.2,90,000/-

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seen in Ex.P.1 is not denied. Date of cheque, time of acceptance, handing over the said cheque to the complainant and endorsement issued by the bank with regard to dishonored

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is duly proved in accordance with law. Therefore, when all these ingredients are proved, and when the said cheque is presented to the bank within a period of six month from the date of which it was drawn and it was dishonored, and within the stipulated time the complainant issued a notice and there is no compliance of the contents of the said notice, then the presumption is very much available under Section 138 of N.I. Act. That means it can be stated that, accused has issued the said cheque towards legally enforceable debt and for the sake of denial he must have denied the very transaction. Thus the very conduct of the accused has to be taken into consideration. So also though these presumptions are available under the provisions of N.I. Act with regard to the cheque, it is a rebutable presumption. There is no rebuttal evidence placed by the accused so as to rebut the presumption available under Sections 118 and 138 of N.I.Act. It was open to the accused to defend the said presumption. But in this case, accused has not adduced any rebuttal evidence. Therefore, if all these factual features coupled with legal position is put together and applied to the present facts of the case, I find that, the learned Trial Court as well as first appellate Court are right in finding the

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accused guilty of committing the offence under Section 138 of N.I. Act. Therefore, the judgment of conviction and order of sentence passed by the learned Trial Court as well as first appellate Court do not require any interference by this Court.

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It is submitted by learned counsel for revision petitioner/accused that, the learned Trial Court has found the accused guilty and imposed the sentence of six months simple imprisonment and also imposed fine of Rs.3,00,000/- with default clause. He submits that, the accused is also directed to pay compensation of Rs.2,98,000/-. According to him the accused is a business man and agriculturist. If now he is directed to undergo imprisonment as directed by the Trial Court, he being a business man and having a family will be put to hardship. He further submits that, the fine so imposed be enhanced and he be directed to pay the enhance fine amount to the complainant. Further he submits to take lenient view by modifying the sentence.

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As against this submissions, the learned counsel for complainant submits that, the learned Trial Court is right in imposing the fine of Rs.3,00,000/-. He submits that in view of

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fair submission of the counsel for accused, the fine amount may be enhanced so as to enable the accused to pay the said amount as compensation to the complainant as the complainant has arranged the fund with great difficulties and advanced to the accused.

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The so called transaction was of the year 2014. Already 9 years have been lapsed. Therefore, according to him, the fine amount so imposed be enhanced.

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In view of the rival submission of both the sides and also taking into consideration of the facts of this case and the age of the case, if the fine amount is further enhanced to Rs.60,000/- in addition to the fine imposed, it would meet the ends of justice. Thus, there shall be modification of judgment of conviction and order of sentence.

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It is submitted that, at the time of filing this petition accused/revision petitioner has deposited Rs.1,75,000/- on 22.10.2021 out of the fine amount before the Trial Court. The counsel for revision petitioner undertakes to deposit the entire balance fine amount within one month from today. Accordingly the points raised supra are answered partly in the affirmative.

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27. Resultantly, following order is passed:

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ORDER

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(i) The revision petition filed by the accused/revision petitioner is allowed in part.

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(ii) The judgment of conviction and order of sentence passed by the Trial Court is modified as under:

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a. The accused/revision petitioner is directed to pay the fine amount of Rs.3,60,000/- in all within one month from today. In default of payment of fine amount he shall undergo simple imprisonment for three months.

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b. Deduction of Rs.1,75,000/- which is

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deposit is allowed.

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c. The accused/revision petitioner shall deposit the fine amount so imposed within one month from today.

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e. On such deposit, Rs.2,000/- as ordered by the Trial Court is to be credited to the account of the State as fine amount.

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Remaining Rs.3,58,000/- is to be released in favour of the complainant after collecting necessary documents with due identification and acknowledgment.

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Sd/JUDGE

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SMM

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LIST NO.: 1 SL NO.: 7

D. Ganesh Naik S/O. Kariya Naik v. Raghavendra U Shet S/O Late Umesh Shet

Case brief

What is this about?

What did the court decide?

D. Ganesh Naik S/O. Kariya Naik v. Raghavendra U Shet S/O Late Umesh Shet

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

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