Dismissed

Mrs Chethana Shetty v. Rohan Monteiro

Karnataka HC8 Sept 2023CRL.RP/849/2014

Case brief

AI extract

What is this about?

High Court of Karnataka dismissed the criminal revision petition under Section 397 Cr.P.C. against the conviction under Section 138 NI Act. The court held that although the cheque was issued as security, the accused failed to rebut the statutory presumption of debt under Section 139.

What did the court decide?

Revision petition dismissed; judgment of conviction and sentence affirmed.

Mrs Chethana Shetty Vs Rohan Monteiro — Cheque Dishonour | Karnataka HC (2023)

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Crl.R.P.No.849/2014

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8^TH DAY OF SEPTEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR CRIMINAL REVISION PETITION No.849/2014 BETWEEN:

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MRS. CHETHANA SHETTY W/O.SATHISH SHETTY AGED ABOUT 42 YEARS R/A.ISHA KRIPA NEAR SOMANATHA TEMPLE GOODSHED ROAD, HOIGEBAZAR BUNDER MANGALORE.

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PETITIONER

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(BY SRI.P.DALWAI VENKATESH, AMICUS CURIAE,)

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AND:

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ROHAN MONTEIRO S/O.AUSTIN MONTEIRO AGED ABOUT 39 YEARS R/A.FLAT NO.203 EDEN APARTMENTS URWA STORE MANGALORE

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…RESPONDENT

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(BY SRI G.RAVISHANKAR SHASTRY, PRASAD, ADVOCATE)

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THIS CRIMINAL REVISION PETITION FILED UNDER SECTION 397 CR.P.C. R/W.401 Cr.P.C. THE ADVOCATE FOR THE PETITIONER TO SET ASIDE THE IMPUGNED JUDGMENT AND ORDER OF CONVICTION DATED 28.10.2013 MADE IN CC NO.4544/12 BY THE COURT OF JMFC-IV COURT, MANGALORE AND THE JUDGMENT AND ORDER DATED 17.9.2014 MADE IN

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Crl.R.P.No.849/2014

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CRL.A.NO.374/13 BY THE IV ADDL.DIST.AND S.J., MANGALORE AND ACQUIT THE PETITIONER.

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THIS CRIMINAL REVISION PETITION IS COMING ON FOR ADMISSION ON 17.07.2023 AND THE SAME HAVING BEEN HEARD AND RESERVED FOR PRONOUNCEMENT OF ORDER, THIS DAY, THE COURT PASSED THE FOLLOWING:

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ORDER

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Appellant/accused has preferred this revision petition under Section 397 of Cr.P.C., challenging the judgment of conviction and sentence passed against her by JMFC-IV Court, Mangalore in CC No.4544/12 dated 28.10.2013 and also Judgment 17.09.2014 passed by the IV Addl.Dist. and S.J., Mangalore and acquit the petitioner/accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘N.I. Act’, for brevity).

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The parties to T are referred to as per their rank before the Trial Court.

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Brief facts of the case

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Respondent-complainant filed a private

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complaint against the accused person alleging that, accused had obtained a hand loan of Rs.2,00,000/- from the complainant on 12.10.2011 to meet her urgent

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financial requirement. On persistent requests, the accused

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issued a cheque bearing No.215555 for Rs.2,00,000/drawn on Corporation Bank, Poonja Arcade Branch, Mangalore. When complainant presented the cheque for encashment, the same was dishonoured for want of sufficient funds in the account of the accused.

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Thereafter, complainant issued the legal notice

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calling upon the accused to pay the cheque amount. Despite service of notice, the cheque amount was not paid. Therefore, the complainant was constrained to file a complaint against the accused before the trial Court for the offence punishable under Section 138 of the Act.

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To prove the case of the complainant, he

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himself entered the witness box and was examined as PW.1. On his behalf Ex.P.1 to Ex.P.5 are marked. To rebut the evidence of the complainant, on the side of accused herself was examined as DW.3 and got examined her husband as DW.1 and examined one Mr.Gopala Krishna Saralayya as DW.2 and on behalf of defence, Ex.D.1 and D.2 are marked.

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6. Learned Magistrate on hearing the arguments

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of both the side and on perusal of the records found the accused guilty of offence under Section 138 of N.I. Act and sentenced her as under:

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“Acting under Section 255(2) of Cr.P.C, accused is convicted for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 and she is sentenced to pay a fine of Rs.2,15,0000/- (Rupees two lakhs and fifteen thousand only). In default to pay fine the accused shall undergo simple imprisonment for a period of two years.

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Further, acting under Section 357(1) (a) of Cr.P.C., out of the fine amount the complainant is entitled for Rs.2,15,000/(Rupees Two Lakhs fifteen thousand only) a sum of Rs.2,000/- (Rupees two thousand) only shall be defrayed as prosecution expenses to the State.

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Acting under Section 357(1)(b) of Cr.P.C. the balance amount of Rs.2,13,000/- (Rupees Two lakhs thirteen thousand only) out of the fine amount on recovery shall be paid as compensation to the complainant.

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This judgment of conviction and sentence

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passed by the learned Magistrate was challenged by the accused before the learned IV Additional District and

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Sessions Judge, D.K., Mangalore in Criminal Appeal Nos.374/2013. The learned Sessions Judge by judgment dated 17.09.2013 dismissed the said appeal confirming the judgment of conviction and sentence passed by the learned trial Judge. This is how appellant is before this Court by way of this revision petition.

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It is argued by the learned counsel for the appellant-accused Sri. P.Dalwai that, accused had no occasion to have any transaction with the complainant. It is submitted that, as her husband had raised loan from the complainant, at that time, towards security, the complainant took two cheques from the accused and from her sister. When the said loan amount raised by her husband was repaid and her husband requested to return the said cheques, but, complainant did not return the said cheques on the ground that till encashment of the cheque

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given by her husband, he would retain the same. Even after encashment of the cheque issued by her husband, complainant had not returned the said cheques and now based upon the said cheques received by way of security

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has filed false complaints i.e. one against the accused and another against her sister with false claim. He would further submit that, in view of all these factual features, the present complaint is not at all tenable in the eyes of law and has to be dismissed.

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As against this submission, it is submitted by the counsel for the complainant Sri G.Ravishankar Shastry that, the defence set up by the accused is without any basis. There was no receipt of the cheque drawn by the accused by way of security. He would further submit that, because of loan being raised by the accused, in discharge of the said legally enforceable debt, the said cheque was issued. As the said cheque was dishonoured for want of sufficient funds, the complainant has filed the complaint. He relied upon the evidence spoken to by the witnesses in support of his case.

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I have given my anxious consideration to the arguments of both sides. Meticulously perused the records.

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Before adverting to the other facts of the case,

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it is just and proper to incorporate the provisions of Section 138 of NI Act.

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Section 138 of N.I. Act reads as under:

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“Dishonour of cheque for insufficiency, etc., of funds in the accounts:

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

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For the purpose of this section, “Debt or Other Liability” means a legally enforceable debt or other liability”.

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This Section 138 of the Act provides that a drawer of a cheque is deemed to have committed the

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offence if the following ingredients are fulfilled:

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i) A cheque drawn from the payment of any amount of money to another person;

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ii) The cheque is drawn for the discharge of the “whole or part” of any debt or other liability.

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“Debt or other liability” means legally enforceable debt or other liability: and

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iii) The cheque is returned by the Bank unpaid because of insufficient funds.

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However, unless the stipulations in the proviso are fulfilled, the offence is not committed. The conditions in the proviso are as under:

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i) the cheque must be presented in the Bank within six months from the date on which it was drawn or within the period of its validity;

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ii) The holder of the cheque must make a demand for the payment of the “said amount of money” by giving a notice in writing to the drawer of the cheque within 30 days from the receipt of the notice from the Bank that the cheque was dishonoured; and

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iii) The holder of the cheque fails to make the payment of the “said amount of money within fifteen days from the receipt of the notice.

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The primary contention of the accused is that, the offence under Section 138 was not committed since the amount mentioned in the cheque was not at all payable to the complainant. The said cheque was given to the complainant by way of security towards the loan taken by her husband from the complainant. Therefore, the question before this Court is, whether Section 138 of the Act is attracted when the said cheque was issued or given to the complainant by way of security?

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In Sripathi Singh vs. State of Jharkhand

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(2022) 18 SCC 614, the Hon’ble Apex Court has observed that if a cheque is issued as security and if the debt is not repaid in any other form before the due date or if there is no understanding or agreement within the parties to defer the repayment, the cheque would mature for representation. It is true that a cheque issued as a security pursuant to financial transaction cannot be considered as worthless piece of paper under every circumstance. `Security’ in its true sense is the state of being safe and the security given for a loan is something

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given as a pledge of payment. It is given deposited or

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pledged to make certain the fulfillment of an obligation to which the parties to the transaction are bound. Thus the burden is on the accused to prove that the said cheque was given to the complainant by way of security.

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PW.1 being the complainant has reiterated the complaint averments and relied upon Ex.P1 to P5. Amongst them Ex.P1 and P2 are the cheque and endorsement issued by the Banker. So far as issuance of the cheque is concerned, it is admitted. So also dishonour of the cheque. After dishonour of the cheque, a notice came to be issued as per Ex.P3 on 1.12.2011. This fact is also not disputed. Though the accused deny her signature on Ex.P5, the postal acknowledge, but there is bald denial of this receipt of the notice.

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A lengthy and searching cross-examination is directed to PW.1 by the counsel for the accused. On perusal of the cross-examination, except denial, nothing is elicited. It is the defence set up in the cross-examination that, complainant had no financial capacity to advance the

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loan and therefore, the accused had no occasion to take

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the loan from the complainant. It is also a defence of the

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accused that her husband raised a laon of RS.1,00,000/from the complainant and it has been repaid by him. The complainant is a businessman as per his evidence. So when complainant had financial capacity to advance loan to her husband, why not to the accused? This defence appears to be a formal defence set by the accused. Even this PW.1 admits that the financial transaction with the husband of the accused has been closed. He has received a cheque for Rs.1,00,0000/- from the husband of the accused. Though PW.1 is cross-examined at length but, nothing worth is elicited from his mouth so as to disbelieve his version given in the examination-in-chief.

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DW1. is none else than the husband of the accused. He is an insurance agent by profession. He stated that he had financial transaction with the complainant. He has repaid the amount by way of cheque and also by way

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of cash of Rs.20000/- to the complainant. It is his evidence that when he raised loan from the complainant,

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complainant received two blank cheques by way of security. Even the complainant has done galata when amount was not paid by the accused. In the crossexamination, he has stated that there were other similar complainants against him and he was called to the police station to have the settlement. So also deposed ignorance about the personal business transactions of his wife. When he is not having any personal knowledge about the business transaction of his wife, the question arises that, is he competent to prove the defence of the accused i.e., his wife. It has come in his evidence that, he is speaking for the first time before the Court stating that the complainant had not returned the cheques of his wife and her sister. He denied all the suggestions.

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DW.2 Gopalakrishna Saralaya independent witness spoke about no transaction has been taken place between the accused and complainant. In his crossexamination he states, he goes to the shop of the accused

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to bring the milk. Even he deposed ignorance that the said Ex.P.1 cheque belongs to whom. That means he is not

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aware of the transaction and as he is in visiting terms to the shop of the accused, he would have come before the trial Court to support the accused. This possibility cannot be ruled out and he is completely ignorant about the transaction between complainant and accused.

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DW.3 is accused. Consistently she deposes that because of her husband raising loan from the complainant, herself and her sister gave two cheques towards security. The suggestion so directed to PW.1 to that effect have been denied by him. She admits about the address so stated in the notice. Whatever she has stated in her examination-in-Chief is not at all found as a concrete defence set up in the cross-examination directed to PW.1. She deposes that the complainant and his henchmen came to the shop did galata and demanded to given the money etc.. If such a galata is made by the complainant, what legal steps have been taken by the accused is not stated by her. She has been thoroughly cross-examined by the counsel for the complainant. She denied all the suggestions.

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There is presumption under the provisions of

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Section 118 and 139 of the NI Act. The presumptions are rebuttable presumptions but, the accused has not rebutted the presumption available under Section 118 of NI Act with regard to the consideration, date, time of acceptance, time of transfer etc.. Section 139 of the NI Act also provides a presumption. The word used is `Shall be presumed’ unless the contrary is proved. Thus, the presumption is a rebuttable presumption and accused issuing the cheque is at liberty to prove to the contrary. Thus, the presumption shall be the cheque was issued by the drawer of the cheque i.e. accused in discharge of debt or liability owned by her to its holder i.e. complainant. This presumption is in favour of the holder of the cheque. It is not mentioned in the section. The said presumption would operate only against the drawer. After all, a presumption is only for casting the burden of proof as to who should advance evidence in a case. It is open to the accused to adduce the evidence to rebut the said presumption. Though DW1 to 3 have been examined in this case to prove the rebuttable presumption, but, complainant has

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been able to prove the presumption in his favour. Therefore, the defence of issuing cheque by way of security cannot be accepted. When a cheque is issued and is treated as `Security’ towards payment of the amount with the time period being stipulated for repayment, it is for the accused to prove the said fact. These are all the defences that would be available to the drawer of the cheque in a proceeding initiated under Section 138 of NI Act. Therefore, there cannot be a hard and fast rule that a

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cheque which is issued as security can never be presented by the drawer of the cheque. The cardinal rule with regard to such offence is that, presumption which is available under the provisions of Section 118 and Section 139 of the NI Act is rebutted or not. The object of the NI Act is to enhance the acceptability of the cheques and inculcate faith in the efficiency of Negotiable Instrument for transaction of business. In this case, except the bald defence of the accused with regard to taking of cheques by way of security by the complaint, no other concrete defence has been set up. Even the post-dated cheques issued as security would also fall within the purview of

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Section 138 of the Act. That means Section 138 of the Cheque criminalises dishonour of cheque. This is in additional to the civil remedy i.e. available. The testimony of DWs. 1 to 3 cannot be accepted in view of strict provisions of the NI Act as aforesaid.

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The trial Court as well as the first appellate Court after evaluating the evidence have come to the conclusion that accused has committed the offence under Section 138 of the NI Act and accordingly, she is found guilty. In the revision petition, this Court cannot sit as an appellate Court and re-appreciate the evidence. Even on re-appreciation of the evidence, it is proved by the complainant, accused has committed the offence under Section 138 of the NI Act. Both the Courts have concurrently held about the guilt of the accused which do not warrant any interference by this Court. Therefore, there is no merit in the revision petition and is liable to be dismissed.

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24. Resultantly, following:

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ORDER

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i) Revision petition filed by the appellant/accused under Section 397 of Cr.P.C. is dismissed.

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(ii) The judgment of conviction and sentence passed by the JMFC-IV Court, Mangalore affirmed vide Judgment and Order dated 17.09.2014 in Crl.A.No.374/13 by the IV Addl.Dist. and Sessions Judge, Mangalore are hereby confirmed.

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(iii) Send back the Trial Court and appellate Court records forthwith along with copy of this judgment.

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The efforts put in by the learned Amicus Curiae is

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highly appreciated. His fees is fixed at Rs.10,000/- to be payable by the High Court Legal Services Committee.

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Sd/JUDGE

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Sk/-

Mrs Chethana Shetty v. Rohan Monteiro

Case brief

What is this about?

What did the court decide?

Mrs Chethana Shetty v. Rohan Monteiro

Case brief

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