Complainants appealed against acquittal in two Section 138 NI Act complaints. The High Court held the accused rebutted the presumption by proving blank cheques were issued for an earlier loan and stop payment was instructed; complainants failed to prove financial capacity. Both appeals dismissed, acquittals confirmed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF MARCH, 2024
BEFORE
THE HON'BLE MS. JUSTICE J.M.KHAZI CRIMINAL APPEAL NO.1716 OF 2016 C/W CRIMINAL APPEAL NO.1715 OF 2016
IN CRL. A NO.1716 OF 2016
BETWEEN:
Digitally signed by REKHA R Location: High Court of Karnataka
SMT. NIRMALA S. RAMADURGA W/O SHANKARAPPA AGED ABOUT 33 YEARS R/AT 34/A, C/O AZAD PASHA NEAR ROBIN THEATRE SACHIDANANDA NAGARA 2ND CROSS, 6TH MAIN ROAD KENGERI SATELLITE TOWN BENGALURU - 560 060.
…APPELLANT
(BY SRI. K.N.SRINIVASA, ADVOCATE)
AND:
SRI. GURUPADAYYA G. HIREMATH S/O GOLLALAYYA AGED ABOUT 43 YEARS R/AT 6321, OLD TOWNSHIP HAL QUARTERS, VIMANAPURA BENGALURU - 560 037. ASLO RESIDING AT NO.336, OLD TOWN SHIP HAL QUARTERS, VIMANAPURA BENGALURU - 560 017.
…RESPONDENT
(BY SMT. H.R.ANITHA, ADVOCATE)
THIS CRL.A IS FILED UNDER SECTION 378(4) OF CR.P.C. PRAYING TO a) CALL FOR THE RECORDS IN COMPLAINT C.C.NO.741/2013 ON THE FILE OF XXIII ADDITIONAL CHIEF METROPOLITAN MAGISTRATE BENGALURU CITY AND SET ASIDE THE ORDER DATED 17.03.2016 IN C.C.NO.741/2013 PASSED BY XXIII ADDL. CMM, BENGALURU CITY; b) CONVICT THE RESPONDENT/ACCUSED AND PUNISH HIM UNDER SECTION 138 OF N.I. ACT; AND c) AWARD THE FINE TWICE OF THE CHEQUE AMOUNT PAYABLE TO THE APPELLANT, IN THE INTEREST OF JUSTICE AND EQUITY.
IN CRL. A NO.1715 OF 2016
BETWEEN:
SRI. SHANKARAPPA B.ANNIGERE S/O BASAPPA AGED ABOUT 36 YEARS R/AT C/O THIMMAYYA NO.1534, 7TH MAIN, 7TH CROSS K S TOWN, BENGALURU - 560 072.
…APPELLANT
(BY SRI. SRINIVASA K.N, ADVOCATE)
AND:
SRI. GURUPADAYYA G. HIREMATH S/O GOLLALAYYA AGED ABOUT 43 YEARS R/AT NO.6326, OLD TOWNSHIP HAL QUARTERS, VIMANAPURA BENGALURU - 560 037.
ALSO RESIDING AT NO.336, OLD TOWN SHIP, HAL QUARTERS VIMANAPURA, BENGALURU - 560 017.
…RESPONDENT
(BY SMT. H.R. ANITHA, ADVOCATE)
THIS CRL.A IS FILED UNDER SECTION 378(4) OF CR.P.C. PRAYING TO a) SET ASIDE THE ORDER DATED 17.03.2016 PASSED IN C.C.NO.19439/2013 ON THE FILE OF XXIII ACMM,
BENGALURU; b) CONVICT THE RESPONDENT/ACCUSED AND PUNISH HIM UNDER SECTION 138 OF N.I.ACT; c) AWARD THE FINE TWICE OF THE CHEQUE AMOUNT PAYABLE TO THE APPELLANT, IN THE INTEREST OF JUSTICE AND EQUITY.
THESE APPEALS COMING ON FOR FURTHER HEARING, THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGEMENT
In these appeals, appellants, who are husband and wife, have challenged acquittal of respondent/accused by the trial Court for the offence punishable under Section 138 of N.I. Act, by dismissing their separate complaints filed under Section 200 Cr.P.C.
referred to as accused and appellants are referred to as complainant followed by their name.
enumerated in both cases and evidence led by both parties are similar, these two appeals are clubbed together and disposed of by a common judgment and order.
complainant Shankarappa is working in Toyota company,
Bidadi, whereas accused is an employee of HAL working as Apprentice trainer. In fact complainant Shankarappa has taken training under the accused for some time and later he joined Toyota company. In this way both complainants came to be acquainted with accused.
accused has sent an evasive reply and hence, the complaint.
that in the second week of January 2013 accused approached him for a hand loan of Rs.3,00,000/- to meet his urgent financial and family necessities. Accordingly, in the last week of January 2013 he advanced hand loan of Rs.2,50,000/- to the accused. Accused promised to repay the same within one month. After the stipulated period when accused failed to repay the amount, in the first week of March 2013, complainant Shankarappa demanded accused for repayment. Expressing his inability to repay the amount, accused promised the repayment on or before 14.03.2013 and issued cheque dated 14.03.2013. However, when it was presented for encashment on 14.03.2013, it was returned dishonoured with endorsement "Funds insufficient". When complainant Shankarappa got issued a legal notice, accused sent an evasive reply and hence, the complaint.
accused appeared and contested the matter by pleading not guilty and claimed trial.
examined herself as PW-1 and got marked Ex.P1 to 8.
Shankarappa examined himself as PW-1 and got marked Ex.P1 to 8.
payment, the offence under Section 138 is attracted.
1 (2023) 10 SCC 148: AIR 2023 SC 5018
perused the record.
Abraham & Anr ( John K.Abraham )2 , 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:
2 (2014) 2 SCC 236
3 2022 SCC OnLine SC 302
complainant is challenged, then it is for the complainant to prove the same. As noted earlier in the present case though the accused has sent reply, therein he has not challenged the financial capacity of complainants, but at trial he has challenged their financial capacity.
( Basalingappa )4 , the Hon'ble Supreme Court held that when accused dispute the financial capacity of complainant to pay the amount and leading evidence to prove it and thereby probabilise his defence, then burden would be on the complainant to establish his financial capacity.
4 (2019) 5 SCC 418
5 (2020) 12 SCC 724
financial capacity by leading evidence, more particularly when it is a case of giving loan by cash and thereafter issue of cheque.
of the Hon'ble Supreme Court and having regard to the fact that accused has challenged the financial capacity of complainants, at the outset it is necessary to examine whether the complainants have proved their financial
6 (2013) 3 SCC 86
7 (2015) 1 SCC 99
8 (2008) 1 SCC 258
capacity after which it would be necessary for the accused to prove his defence.
capacity to lend Rs.2,50,000/- to the accused, but also
Rs.3,00,000/- which was lent through his wife.
evidence, she has deposed that the said amount was paid to her by her mother. With regard to the financial capacity of her mother, complainant Nirmala has deposed that her mother is also a home maker, but she is getting income through rent from residential premises as well as pension. To evidence this fact also, she has not produced any documents. Consequently, she has also failed to prove that at the relevant point of time, she was in possession of Rs.3,00,000/- either received from her husband or through her mother.
balance, he is not ready to return the blank cheques and therefore he has issued stop payment instructions to his banker and requested to return the blank cheques and receive Rs.25,000/-.
533548 and 533549. He has already discharged Rs.75,000/- together with interest and due to pay only Rs.25,000/- and though he is ready to pay the balance and requested complainant Shankarappa to return the blank cheques, he refused to return the blank cheques and misusing one of them he has filed the complaint.
reply notice the accused has expressed that no such transaction has taken place. When such being the case, it is hard to believe that complainant Shankarappa would
lend him another loan of Rs.2,50,000/-. This itself falsifies
the case put forth by the complainants.
Shankarappa not to misuse the said cheques, intentionally he has not received the said notice. The returned postal envelope is marked as Ex.D6. The postal endorsement state that the same is refused by the addressee. Accused has also produced Ex.D3 letter dated 22.06.2015 addressed to the Manager, SBI Branch, Helicopter Division, Bengaluru to give him endorsement regarding the stop payment request made by him on 21.05.2012. The Manager has made an endorsement on the letter as "Stop Payment series on 21.05.2012". Even though the accused has instructed the Bank to stop payment and in fact in respect of the cheque presented by complainant Nirmala the cheque is dishonoured on stop payment instructions, so far as complainant Shankarappa is
concerned, the Bank has issued endorsement as "Funds insufficient" as the reason for dishonour of the cheque.
reply to the legal notice. He had also failed to lead any
evidence to prove his defence. Therefore, on facts the Hon'ble Supreme Court held that the charges leveled against the accused are proved, convicted and sentenced him. However, in the present case at the earliest available opportunity, the accused has taken a definite stand and proved his defence. As required by the decisions of the Hon'ble Supreme Court in Basalingappa and APS Forex, the complainants have also failed to prove their financial capacity. Therefore, the decision in Rajesh Jain is not applicable to the case on hand.
ORDER
(i) Both appeals filed by the complainants under Section 378(4) of Cr.P.C. are dismissed.
(ii) The impugned judgments and orders dated 17.03.2016 in C.C.No.741/2013 and C.C.No.19439/2013 on the file of XXIII ACMM, Bengaluru are confirmed.
Sd/JUDGE
RR
List No.: 1 Sl No.: 71
3 issues framed by the court
Whether complainants proved financial capacity to lend Rs.3,00,000/- and Rs.2,50,000/- after accused rebutted the Section 139 presumption.
Whether the accused's defence that blank cheques were misused was proved on preponderance of probabilities.
Whether the trial court's acquittal under Section 138 NI Act warranted interference.
Colour shows how this judgement treated each authority
Rajesh Jain Vs. Ajay SinghDistinguished¶35
(2023) 10 SCC 148: AIR 2023 SC 5018 · Who else cites this
John K.Abraham Vs. Simon C. Abraham & AnrRelied on¶18
(2014) 2 SCC 236 · Who else cites this
Tedhi Singh Vs Narayan Das MahantRelied on¶19
2022 SCC OnLine SC 302 · Who else cites this
Basalingappa Vs. MudibasappaApplied¶23
(2019) 5 SCC 418 · Who else cites this
APS Forex vs Shakti International Fashion Linkers Pvt. LtdApplied¶23
(2020) 12 SCC 724 · Who else cites this
Vijay Vs. Laxman and AnrRelied on¶22
(2013) 3 SCC 86 · Who else cites this
K.Subramani Vs. K.Damadara NaiduRelied on¶22
(2015) 1 SCC 99 · Who else cites this
K.Prakashan Vs. P.K.SurenderanRelied on¶22
(2008) 1 SCC 258 · Who else cites this
6 provisions across 2 enactments
SMT. NIRMALA S. RAMADURGA
SHANKARAPPA B.ANNIGERE
GURUPADAYYA G. HIREMATH
J.M.KHAZI
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
