Dismissed

M Shivamallegowda v. C Kemparaju

Karnataka HC27 May 2024CRL.A/1541/2021

Case brief

AI extract

What is this about?

Complainant appealed against acquittal under Section 138 NI Act, arguing Sessions Court erred in considering cheque memo re-dating and ignoring NI Act provisions. Court held complainant failed to prove financial capacity despite accused having sufficient funds, opining acquittal was correct.

What did the court decide?

Appeal filed under Section 378(4) of Cr.P.C is dismissed; impugned judgment acquitting accused is confirmed.

M Shivamallegowda Vs C Kemparaju — Money Laundering | Karnataka HC (2024)

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CRL.A NO.1541 OF 2021 1

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 27^TH DAY OF MAY, 2024

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BEFORE

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THE HON'BLE MS.JUSTICE J.M.KHAZI

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CRIMINAL APPEAL NO.1541 OF 2021

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BETWEEN:

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M. SHIVAMALLEGOWDA S/O LATE B MALLEGOWDA AGED ABOUT 57 YEARS R/O B G DODDI VILLAGE THELLANURU POST KOLLEGAL TALUK - 84

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……APPELLANT (BY SRI. RAGHAVENDRA GOWDA K, ADVOCATE FOR SRI. MOHANKUMARA D, ADVOCATE)

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AND:

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C KEMPARAJU S/O CHIKKAMARIGOWDA AGED ABOUT 50 YEARS, PROPRIETOR MARUTHI TRADERS NAMASTHE GARMENTS OPPOSITE NEXUS GARMENTS BANNERUGHATTA ROAD, BENGALURU - 76

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……RESPONDENT

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(BY SRI. G.K.VENKATA REDDY, ADVOCATE FOR SRI. PARAMESHWAR N HEGDE, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C PRAYING TO SET ASIDE THE ORDER OF ACQUITTAL DATED 14.02.2022 PASSED BY THE LEARNED ADDITIONAL DISTRICT AND SESSIONS JUDGE, CHAMARAJANAGARA (SITTING AT KOLLEGALA) IN CRL.A.NO.5002/2018 FOR THE OFFENCES PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT, IN THE INTEREST OF JUSTICE AND EQUITY.

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CRL.A NO.1541 OF 2021 2

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THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 12.03.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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J U D G M E N T

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This is complainant’s appeal filed under Section 378(4) of Cr.P.C, challenging the acquittal of respondent/accused for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short ‘N.I Act’).

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For the sake of convenience, the parties are referred to by their rank before the trial Court.

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It is the case of the complainant that he and accused are known to each other very well. On 10.09.2012, accused availed hand loan of Rs.1,15,000/to meet his business requirement. On the same day, he issued post dated 10.10.2012 cheque for Rs.1,15,000/-. He promised that the amount would be paid on or before the said date. However, complainant failed to keep up the promise and directed the complainant to present the cheque and realise the amount. Accordingly, complainant

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CRL.A NO.1541 OF 2021 3

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presented the cheque for encashment on 10.10.2012. It was returned dishonoured on 11.10.2012 with endorsement “Account closed”. In this regard complainant got issued legal notice. It is served on the accused. Instead of paying the amount due, the accused has sent an invasive reply and hence the complaint.

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The accused has appeared before the trial Court and contested the matter by pleading not guilty.

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In order to prove the allegation against

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accused, the complainant has examined himself as PW-1 and one witness as PW-2. He has relied upon Ex.P1 to 6.

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During the course of his statement under Section 313 Cr.P.C, the accused has denied the incriminating evidence led by the complainant.

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In fact, the accused has also stepped into the

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witness box and examined himself as DW-1. He has also examined Manager of the drawer bank as DW-2. He has relied upon Ex.D1 and 2.

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CRL.A NO.1541 OF 2021 4

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8. Vide the impugned judgment and order the

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trial Court convicted the accused.

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9. Accused challenged his conviction before the

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Sessions Court.

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Vide the impugned judgment and order the Sessions Court allowed the appeal and set aside the conviction.

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Aggrieved by the same, the complainant has filed appeal, contending that the Sessions Court has completely ignored the provisions of N.I Act by wrongly holding that the bank memo is re-dated as 30.10.2012 in the place of 11.10.2012 to suit the convenience of the complainant. The Sessions Court has lost sight of the fact that the cheque in question is dated 10.10.2012 and on presentation for the second time which in the period of its validity, it was dishonoured as per memo dated 30.10.2012. Therefore, the observation of the Sessions Court that to suit the convenience of complainant, the endorsement dated 30.10.2012 is secured. For this

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CRL.A NO.1541 OF 2021 5

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reason also, the observation of the Session Court that the legal notice was issued beyond the period of 30 days from the date of dishonour is also erroneous. The impugned judgment and order is also contrary to law, facts and probabilities of the case and calls for interference by this Court.

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In support of his arguments, learned counsel

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for complainant has relied upon the following decisions:

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(i) Rajesh Jain Vs. Ajay Singh ( Rajesh Jain )¹

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(ii) Shylaja K.N Vs. Thippeswamy ( Shylaja )²

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(iii) H.B.Bhagyalakshmi Vs. Cheluvamma ( H.B.Bhagyalakshmi )³

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On the other hand, the learned counsel for

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accused has supported the impugned judgment and order and submitted that during the second week of September 2009, accused borrowed a sum of Rs.15,000/from the complainant and on the instructions of complainant issued a cheque for

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Rs.15,000/- specifying the amount only in figure. Though

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1 AIR 2023 SC 5018: 2023 LiveLaw (SC) 866

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2 Crl.A.No.712/2012

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3 Crl.A.No.2104/2018

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he repaid the said amount, accused failed to return the cheque and using the same, he has filed the present complaint. He would further submit that the accused has challenged the financial capacity of complainant, which he has failed to establish and taking into consideration the entire evidence on record, the Session Court has rightly reversed the judgment and order of the trial Court and acquitted the accused and sought for dismissal of the appeal.

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In support of his arguments, he has relied upon the decision in Prem Chand Vijay Kumar Vs. Yashpal Singh and Anr. ( Prem Chand Vijay Kumar i)⁴

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Heard elaborate arguments of both sides and perused the record.

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The fact that complainant and accused are known to each other and they are also distant relatives is not in dispute. The accused admit the fact that the subject cheque belongs to him, drawn on his account

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4 (2005) 4 SC 417

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maintained with his banker and it bears his signature. Therefore, presumption under Section 118 and 139 of the N.I Act comes into operation in favour of the complainant that the subject cheque was issued towards repayment of any legally recoverable debt or liability, placing the initial burden on the accused to rebut the same by proving that the cheque was not issued towards repayment of any legally recoverable debt or liability, but on the other hand, establish the circumstances in which it has reached the hands of the complainant.

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In John K.Abraham Vs. Simon C. Abraham & Anr ( John K.Abraham )⁵ , the Hon'ble Supreme Court held that in order to draw presumption under Sections 118 and 139 of N.I Act, the burden lies on the complainant to show that:

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(i) She had the requisite funds for advancing the sum of money/loan in question to accused.

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(ii) The issuance of cheque by accused in support of repayment of money advanced was true and

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5 (2014) 2 SCC 236

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(iii) The accused was bound to make payment as had been agreed while issuing cheque in favour of the complainant.

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As held by the Hon'ble Supreme Court in Tedhi Singh Vs Narayan Das Mahant ( Tedhi Singh )⁶ , where the accused has failed to send reply to the legal notice, challenging the financial capacity of the complainant, at the first instance, complainant need not prove his financial capacity. However, at the trial if the financial capacity of complainant is challenged, then it is for the complainant to prove the same. In the present case though the accused has sent reply to the legal notice, he has not challenged the financial capacity of complainant. But, at the trial he has done so.

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In APS Forex vs Shakti International Fashion Linkers Pvt. Ltd ( APS Forex )⁷ , the Hon'ble Supreme Court held that when accused raises issue of financial capacity of complainant, in support of his probable defence, despite presumption operating in favour of

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6 2022 SCC OnLine SC 302

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7 (2020) 12 SCC 724

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CRL.A NO.1541 OF 2021 9

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complainant regarding legally enforceable debt under Section 139 of N.I. Act, onus shifts again on the complainant to prove his financial capacity by leading evidence, more particularly when it is a case of giving loan by cash and thereafter issue of cheque.

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In Vijay Vs. Laxman and Anr ( Vijay )⁸ , K.Subramani Vs. K.Damadara Naidu ( K.Subramani )⁹ and K.Prakashan Vs. P.K.Surenderan ( K.Prakashan )¹⁰ , also the Hon'ble Supreme Court held that the presumption under Section 139 of N.I. Act, is a rebuttable presumption and when accused rebut the same by preponderance of probabilities, it is for the complainant to prove his case beyond reasonable doubt including the financial capacity.

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The subject cheque at Ex.P1 which is drawn

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on Vijaya Bank is dated 10.10.2012. According to the complainant, it was presented to the Bank through his account in Syndicate Bank on the same day i.e., 10.10.2012. As per Ex.P2, it was returned dishonoured

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8 (2013) 3 SCC 86

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9 (2015) 1 SCC 99

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10 (2008) 1 SCC 258

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by the Vijaya Bank as per Ex.P2 dated 11.10.2012. In turn the Syndicate Bank has forwarded the said memo with the endorsement of the Manager on 30.10.2012. As per Ex.P3, the complainant has sent legal notice on 20.11.2012. The accused has alleged that as per provisions (b) of Section 138 of N.I Act, complainant is required to send the legal notice within 30 days from the date of receipt of information from the Bank and the information regarding dishonour of cheque was received on 11.10.2012 itself. In order to overcome the limitation of 30 days, complainant has got the endorsement dated 30.10.2012 and therefore the complaint is not maintainable.

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21.1 Though during the arguments such a submission was made, in the cross- examination of PW2, who is the Manager of Syndicate Bank, no suggestions are made. Except making a suggestion that without verifying the records, endorsement is given, the accused has not chosen to draw the attention of PW-2 to Ex.P2 and the endorsement therein. Therefore, in the absence

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of evidence to the contrary, this Court is left with no other alternative, but to accept that Syndicate Bank has forwarded to the complainant the endorsement received from Vijaya bank on 30.10.2012 and from the said date the legal notice dated 20.11.2012 is within the period of limitation of 30 days.

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Having regard to the fact that in the reply notice itself, the accused has denied the transaction between him and the complainant and at the trial he has also disputed the financial capacity of the complainant, in the light of the ratio in the above decisions, despite the presumption under Section 139 of the N.I Act, the initial burden is on the complainant to prove that he had the financial capacity to lend Rs.1,15,000/- to the accused. This fact is to be appreciated in the light of evidence produced by the accused on record that, at the relevant point of time when he allegedly borrowed Rs.1,15,000/from the complainant, he had sufficient amount in his account. As held in APS Forex only after the

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complainant prove his financial capacity, the burden would shift on the accused to prove his defence.

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Challenging his financial capacity, the accused has questioned the complainant as to whether he is having any documents to show that as on 10.09.2012, he was in possession of Rs.1,15,000/-. Complainant has replied that he has not produced any such documents, but volunteered and stated that he is a contractor and normally he keeps cash in his house for his business purpose. He has stated that he is an income tax assessee, but in his income tax returns, he has not reflected the fact of advancing hand loan of Rs.1,15,000/- to the accused. He has also conceded that neither in the legal notice nor in the complaint, he has disclosed the source of income for advancing the said amount to the accused.

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However, during the cross- examination of

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accused, a suggestion is made that complainant is having 10 and odd acres of land. Though accused has admitted the said suggestion, he has expressed

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ignorance that complainant is having income from the said lands. Except the oral assertion, the complainant has not produced any documents to show that at the relevant point of time, he had the financial capacity to lend Rs.1,15,000/- to the accused. The complainant has failed to prove that as on 10.09.2012, he had the financial capacity to lend a sum of Rs.1,15,000/- to the accused. Consequently, the burden has not shifted on the accused to rebut the presumption under Section 139 of the N.I Act.

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The accused has taken up a specific defence that Account No.130406011000013 on which the cheque at Ex.P1 is drawn was not closed, but it was changed into Account No.1304062111000014. To prove this aspect, accused has examined DW-2 H.S.Nagesh Manager of the Vijaya Bank. He has deposed that earlier from 01.04.2008 to 02.12.2010 accused was having CCM Account No.130406011000013. Later on the CCM accounts were closed and they were converted into CCH account and accordingly at present accused is having

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Account No.1304062111000014. It is a transfer from one scheme to the other and as such technically, it cannot be said that the earlier account was closed. He has also deposed that as on 10.10.2012, the accused was having withdrawable balance of Rs.5 lakhs.

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Ex.D1 is the statement of account of the accused with respect to Account No.1304062111000014 for the period from 01.04.2012 to 31.03.2013, which covers the date 10.09.2012 when the complainant has allegedly lent Rs.1,15,000/-. As per Ex.D1 throughout the said period, the accused has maintained an average of Rs.9 lakhs in his account. Such being the case, it is doubtful, whether when he himself is having sufficient amount in his account, accused would need financial assistance from the complainant. It is also a circumstance which creates doubt as to the veracity of the case of the complainant.

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Thus, not only the complainant has failed to prove his financial capacity, but also accused has

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rebutted the presumption by proving that at the relevant point of time, he was in possession of sufficient amount in his account and thereby created a doubt whether Ex.P1 was issued for repayment of Rs.1,15,000/- or it was issued at an earlier point of time. The fact that the subject cheque pertains to his earlier account, which came to be converted into CCH account subsequent to 02.12.2010 also probabilises the defence of the accused that it was issued during 2009 for a sum of Rs.15,000/-.

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The trial Court without examining the evidence led by both parties in right perspective has erroneously come to the conclusion that the allegations against accused are proved and convicted him. On reappreciation of the evidence, the Session Court has rightly reversed the same. This Court finds no justifiable grounds to interfere with the conclusions arrived at by the Sessions Court. In the result, the appeal fails and accordingly the following:

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ORDER

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(i) Appeal filed by the complainant under Section 378(4) of Cr.P.C is dismissed.

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(ii) The impugned judgment and order dated 14.02.2020 in Crl.A.No.5002/2018 on the file of Addl.District and Sessions Judge, Chamarajanagar (Sitting at Kollegal), reversing the judgment and order of conviction dated 04.04.2018 in C.C.No.432/2013 on the file of Prl.Civil Judge and JMFC, Kollegal, is hereby confirmed.

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(iii) The Registry is directed to send back the trial Court records as well as Sessions Court records along with copy of this judgment forthwith.

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Sd/JUDGE

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M Shivamallegowda v. C Kemparaju

Case brief

What is this about?

What did the court decide?

M Shivamallegowda v. C Kemparaju

Case brief

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