Dismissed

Sri. Ananda Shetty v. Smt. Nalini Ganesh

Karnataka HC16 Nov 2023CRL.RP/823/2016

Case brief

AI extract

What is this about?

In a criminal revision petition under Section 397/401 Cr.P.C., the High Court of Karnataka rejected the accused's challenge to his conviction for cheque dishonour. The Court held that the accused failed to rebut the presumption under Section 139 of the N.I. Act as he produced no evidence and did not examine the payee he alleged in place of the complainant.

What did the court decide?

Revision Petition dismissed; Judgment of conviction and sentence confirmed.

Sri. Ananda Shetty Vs Smt. Nalini Ganesh — Cheque Dishonour | Karnataka HC (2023)

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1 - NC: 2023:KHC:41146 CRL.RP No. 823 of 2016

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 16^TH DAY OF NOVEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE VENKATESH NAIK T CRIMINAL REVISION PETITION NO. 823 OF 2016

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BETWEEN:

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SRI. ANANDA SHETTY S/O SUBBANNA SHETTY, AGED ABOUT 61 YEARS, R/AT HEBBAGILU MANE, VAKWADI VAKWADI POST, KUNDAPURA TALUK, UDUPI DISTRICT - 576 201.

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…PETITIONER

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(BY SRI. SUYOG HERELE E., ADVOCATE)

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AND:

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Digitally signed by MADHUSHREE H Location: High Court of Karnataka

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SMT. NALINI GANESH, W/O GANESH, AGED ABOUT 36 YEARS, R/AT 7^TH CROSS, LAXMINAGARA, KADAVOOR POST, UDUPI TALUK AND DISTRICT - 576 201.

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…RESPONDENT (BY SRI. GURUPRASAD B.R., ADVOCATE)

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THIS CRL.RP IS FILED U/S.397 R/W 401 OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED 02.04.2016 IN CRL.A.NO.10/2015 PASSED BY THE LEARNED PRL. S.J., UDUPI DISTRICT, UDUPI THEREBY CONFIRMING THE JUDGMENT AND ORDER DATED 28.02.2015 IN C.C.NO.1022/2012 ON THE FILE OF THE COURT OF THE PRL. CIVIL JUDGE AND JMFC, UDUPI BY ALLOWING THE ABOVE CRL.R.P.

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

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NC: 2023:KHC:41146 CRL.RP No. 823 of 2016

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ORDER

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Heard the learned counsel Sri. Suyog Herele, for the petitioner and Sri. Guruprasad B.R., learned counsel for the respondent.

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The accused-Petitioner has filed this petition

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under Section 401 read with Section 397 of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.'), praying to

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set aside the judgment of conviction and order on sentence passed by the learned Principal Civil Judge and J.M.F.C, Udupi in C.C.No.1022/2012 and judgment passed by the learned Principal Sessions Judge, Udupi in Crl.A.No.10/2015 and prayed to acquit the petitioner for the offence punishable under Section 138 of Negotiable Instruments Act.

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For the sake of convenience, the parties are referred to as per their ranking before the trial Court. The petitioner is the 'accused' and the respondent is 'complainant' before the trial Court.

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The brief facts of the complainant's case are as

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under:

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The complainant filed the private complaint under Section 200 of Cr.P.C., for the offence punishable under Section 138 of Negotiable Instruments Act (for short "N.I. Act"), contending that the accused borrowed a sum of Rs.90,000/- (Rupees Ninety thousand only) as a hand loan from the complainant and had promised to repay the same within three months. Accordingly, the accused issued a cheque bearing No.781604 dated 22.06.2010 for Rs.90,000/- (Rupees Ninety thousand only) drawn on Canara Bank, Bijadi branch, Udupi and on being presentation of the said cheque, it was dishonoured for the reason "Funds insufficient" vide memo dated 22.07.2010. Hence, the complainant issued legal notice dated 22.07.2010 and called upon the accused to pay the cheque amount within 15 days, inspite of service of legal notice, the accused neither paid any amount nor replied

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the legal notice. Hence, the complainant filed the private complaint.

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After institution of the complaint, the trial Court recorded the sworn statement of complainant, took cognizance under Section 190(1)(a) of Cr.P.C., secured the presence of accused, recorded plea of accused, accused pleaded not guilty and claimed to be tried.

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The complainant in order to prove her case got

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examined one Satish i.e., her GPA holder as PW-1 and got marked in all 8 documents as Exs-P1 to P8.

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In order to rebut the claim of the complainant,

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accused did not enter the witness box.

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On the basis of the oral and documentary evidence, the trial Court convicted the accused for the offence punishable under Section 138 of N.I. Act and directed the accused to pay a sum of Rs.99,000/- (Rupees Ninety nine thousand) and in default of payment of fine

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amount, he shall undergo simple imprisonment for one month.

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[9. Aggrieved by the judgment of conviction and

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order of sentence passed by the trial Court, the accused had filed an appeal in Crl.A.No.10/2015 before the First Appellate Court, in turn, the First Appellate Court confirmed the judgment of conviction and sentence passed by the trial Court, thus, dismissed the appeal. Now, aggrieved by the order of both the Courts, the accused filed this Revision Petition contending that the judgment of conviction and order of sentence passed by the trial Court as well as the First Appellate Court is not in accordance with law, the complainant failed to prove the requirement of Section 138 of N.I. Act, as accused disputed the cheque in question. It is contended that the complainant had no capacity to lend the loan amount and there was no legally recoverable debt and Ex.P3 cheque was issued in favour of one Raju Shettigar, but the complainant misused the cheque and presented for encashment. This factual aspect

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has not been considered by the trial Court and the First Appellate Court.

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It is further contended that there was no amount

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due to the complainant and hence, there was no legally enforceable debt or liability due. On all these grounds, learned counsel appearing for the petitioner prays to allow the petition.

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Learned counsel appearing for the respondent contended that both the Courts have given concurrent findings and the petitioner was convicted for the offence punishable under Section 138 of NI Act. The complainant proved her case beyond doubt and hence, the trial Court as well as the first appellate Court drawn presumption under Section 138 of NI Act.

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It is contended that, the cheque was issued in favour of one Raju Shettigar, the accused ought to have issued legal notice to the complainant or one Raju Shettigar and insisted for return of cheque, but the accused fail to do so. Further, if accused had discharged

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the loan in question, he would have instructed his bank authorities for stop payment, as amount was completely discharged, but the accused failed to instruct his bankers. Therefore, the complainant has proved her case. Thus, the trial Court as well as the first appellate Court passed the impugned judgment. Hence, the learned counsel justified the judgment of conviction and sentence passed by the trial Court as well as the first appellate Court and thus prayed for dismissal of the revision petition.

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On the basis of the above submissions made by

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the parties to the lis, the points that would arise for Court's consideration are as under:

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i. Whether the revision petitioner proved that there is apparent error on the face of record in the judgment of the trial Court as well as the first appellate Court in convicting the accused for the offence punishable under Section 138 of N.I. Act?

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ii. Whether the judgment of conviction and sentence passed by the trial Court as well as the first appellate Court is perverse and called for interference?

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Admittedly, the complainant filed a private complaint under Section 200 of Cr.PC against the accused for the offence punishable under Section 138 of the Negotiable Instruments Act. In order to substantiate the contention of the complainant, she got examined her General Power of Attorney as PW1 and got marked in all 9 documents as per Exs.P1 to P9.

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Ex.P1 is the General Power of Attorney, Ex.P2 is the complaint, Ex.P2(a) is the signature of complainant, Ex.P3 is the cheque in question, Ex.P3(a) is the signature of accused, Exs.P4 and P5 are the bank memos, Ex.P6 is the legal notice issued to the accused, Ex.P6(a) is the postal receipt, Ex.P7 is the certificate of posting, Ex.P8 is

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the postal acknowledgment and Ex.P8(a) is the signature of accused.

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To rebut the claim of the complainant, accused did not enter the witness box.

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On perusal of the oral testimony of PW-1 and Exs.P1 to P8, it appears that the accused had borrowed a sum of Rs.90,000/- from the complainant and in consideration thereof, he had issued Ex.P3 cheque for a sum of Rs.90,000/-, hence, the complainant presented the cheque for encashment to the banker and the cheque was dishonoured for the reason "funds insufficient" in the account of the accused. Inspite of issuance of legal notice as per Ex.P6, accused failed to repay the said amount due under Ex.P3 cheque.

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In the instant case, the complainant has produced cheque in question and it was marked as Ex.P3. The signature of the accused was also marked as Ex.P3(a). The bank endorsement also marked as Exs.P4 and P5. On perusal of all these documents, it clearly

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establishes that the accused has not disputed the issuance of cheque and service of legal notice upon him. As per the presumption available under Section 139 of Negotiable Instrument Act, the complainant has complied the legal requirements under Section 138 of NI Act. Now, the burden shifts on the accused to disprove the case of the complainant.

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On perusal of the evidence on record, the accused has taken contention that the cheque was issued in favour of one Raju Shettigar for different transaction and for security of the said transaction, he had issued cheque in the year 2010 and thereby, the complainant has misused the cheque. To substantiate this contention, accused did not enter the witness box and produced documents. Accused never tried to examine Raju Shettigar to substantiate that cheque was issued to him and not to the complainant. Hence, the fact remains that the accused never discharged the alleged loan borrowed from the complainant in the year 2010.

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If the execution of Negotiable Instrument-Ex.P3

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cheque is admitted, then, the Court may draw presumption under Section 118 of N.I. Act and the Court shall draw presumption under Section 139 of N.I. Act in favour of holder of Negotiable Instrument.

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In the present case, the complainant proved that the cheque was issued towards legally enforceable debt. In the case of DON AYENGIA v. STATE OF ASSAM AND ANOTHER reported in ( 2016) 3 SCC 1, the Hon'ble Apex Court clearly held that 'if cheque issued towards discharge of any debt or other liability, it is to be called as legally enforceable debt within the meaning of Section 138 of N.I.Act.' In the instant case, as a matter of fact, the existence of debt or liability was never in dispute. On the contrary, it was acknowledged by the accused and he has simply taken a contention that the cheque was issued to one Raju Shettigar and the loan was discharged.

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If the cheque was issued in relation to other transaction, it should be construed as the same was issued towards present debt or present transaction and it was issued towards legally enforceable debt or liability. There is a presumption that negotiable instrument is supported by consideration, then, there was no dispute that such consideration, inasmuch as this cheque Ex.P3 in question was issued in connection with discharge of present liability.

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In the instant case, the complainant proved that on the relevant date, she lent loan to the accused and in consideration thereof, accused issued Ex.P3 cheque in favour of the complainant. However, the accused has not placed any material before the Court to prove under what circumstances he issued Ex.P3 cheque either in favour of the complainant or in favour of one Raju shettigar. However, the accused has not taken the contention that he has discharged his loan due to one Raju shettigar and

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moreover, the accused never called upon Raju shettigar and examined him in support of his contentions.

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Learned counsel for the petitioner contended that the complainant has misused the cheque and presented for encashment. Where one person signs and delivers to another, negotiable instrument, either it is wholly blank or nothing written thereon an incomplete negotiable instrument, it thereby give prima facie authority to the holder thereof to make or complete, as the case may be, an negotiable instrument, for any amount satisfied there under and not exceeding the amount covered by stamp.

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The person so signing on the negotiable instrument shall rely upon such instrument under Section 20 of the N.I. Act. Therefore, the complainant by invoking Section 20 of the N.I. Act, filled up the cheque in question and presented for encashment. Hence, the trial Court as well as the first appellate Court drawn presumption under Section 118 of N.I. Act as to consideration, as to date, as

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to time of acceptance, as to time of transfer, as to order of indorsements, as to stamps and that holder in due course.

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The burden lies on the accused to prove nonexistence of consideration which would lead to the Court to disbelieve the non-existence of consideration either by direct evidence or by probable evidence to show the existence of consideration was improbable, doubtful or illegal, but the accused has not produced any kind of evidence to show that existence of consideration was improbable, doubtful or illegal. Therefore, the trial Court as well as the first appellate Court have drawn presumption that the cheque was issued for legally enforceable debt, until contrary is established.

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Whether the accused has issued the cheque for repayment of the loan or as security or it was discharged prior to the current transaction, make no difference under Section 138 of the N.I. Act. The legal consequence was same without any distinction.

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In the instant case, the trial Court as well as the first appellate Court considering the oral or documentary evidence on record and the peculiar facts and circumstances of the case has convicted the petitioner for the offence punishable under Section 138 of the N.I. Act. In the case of VIJAY MOHAN SINGH v. STATE OF KARNATAKA reported in (2019) 5 SCC 436 , the Hon'ble Apex Court held that if the complainant proved the material, on clinching aspect, on the peculiar circumstances of the case, then the conviction under Section 138 of N.I. Act can be sustained.

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The Hon'ble Apex Court in the case of BASALINGAPPA v. MUDIBASAPPA reported in (2019) 5 SCC 418 , has held at paragraph Nos.22 and 23 as under:

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"22. Elaborating further, this Court in Rangappa v. Sri Mohan, (2010) 11 SCC 441 held that Section 139 of the Act is an example of a reverse onus and the test of proportionality should guide the construction and interpretation of reverse onus clauses on the defendant-accused and the defendant- accused cannot be expected to

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discharge an unduly high standard of proof. In paras 27 and 28, the following was laid down: (Rangappa case, Rangappa v. Sri Mohan, (2010) 11 SCC 441 SCC pp.453-54):-

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“27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof.

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28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of “preponderance of probabilities”. Therefore, if the accused is able to raise a probable defence which

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creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.”

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23. We may now notice the judgment relied on by the learned counsel for the complainant i.e. judgment of this Court in Kishan Rao v. Shankargouda, (2018) 8 SCC 165. This Court in the above case has examined Section 139 of the Act. In the above case, the only defence which was taken by the accused was that cheque was stolen by the appellant. The said defence was rejected by the trial court. In paras 21 to 23, the following was laid down: (SCC pp.173-74)

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“21. In the present case, the trial court as well as the appellate court having found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank, the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. The accused even did not come in the witness box to support his case. In the reply to the notice which was given by the appellant, the accused took the defence that the cheque was stolen by the appellant. The said defence was rejected by the trial court after considering the evidence on record with regard to which no contrary view has also been expressed by the High Court.

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22. Another judgment which needs to be looked into is Rangappa v. Sri Mohan, (2010) 11 SCC 441. A three-Judge Bench of

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this Court had occasion to examine the presumption under Section 139 of the 1881 Act. This Court in the aforesaid case has held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. The following was laid down in paras 26 and 27: (SCC pp. 45354)

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“26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54, may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.

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27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable

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instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof.”

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23. No evidence was led by the accused. The defence taken in the reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High Court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. How the presumption under Section 139 can be rebutted on the evidence of PW 1, himself has not been explained by the High Court."

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(emphasis supplied)

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The Hon'ble Apex Court in the case of

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RANGAPPA v. SRI MOHAN reported in (2010) 11 SCC

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441 , has held at paragraph No.29 as under:

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"29. Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the stop payment' instructions to his bank. Furthermore, the instructions to stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability."

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(emphasis supplied)

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Looking into any angle, the judgment of the trial

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Court as well as the first appellate Court is in accordance with law. The trial Court as well as the first appellate Court has passed well reasoned orders. Hence, no interference is

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called for and there is no error on the face of the record.

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Hence, I proceed to pass the following:

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ORDER

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i. The Revision Petition filed by the petitioner is dismissed.

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ii. The judgment of conviction and sentence passed in C.C.No.1022/2012 by the learned Principal Civil Judge and J.M.F.C, Udupi and in Crl.A.NO.10/2015 passed by learned Principal Sessions Judge, Udupi is confirmed.

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iii. Registry is directed to send TCR to trial Court with a copy of this order, forthwith.

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Sd/JUDGE

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ABK/CH

Sri. Ananda Shetty v. Smt. Nalini Ganesh

Case brief

What is this about?

What did the court decide?

Sri. Ananda Shetty v. Smt. Nalini Ganesh

Case brief

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What did the court decide?

What the court decided

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