Allowed

Shivaraj v. Smt H R Sowmya

Karnataka HC27 May 2024CRL.A/333/2016

Case brief

AI extract

What is this about?

Complainant appealed against acquittal in two cheque-dishonour complaints concerning cheques of Rs.8,38,000 and Rs.8 lakh issued against a Rs.9 lakh loan. Holding the accused failed to rebut the Section 139 presumption and her security defence unproved, the High Court convicted her under Section 138 and imposed fine.

What did the court decide?

Acquittal set aside; accused convicted under Section 138 NI Act and sentenced to fine of Rs.11,00,000 in each case, default one year imprisonment; fine paid to complainant as compensation.

Shivaraj Vs Smt H R Sowmya — Cheque Dishonour | Karnataka HC (2024)

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CRL.A NO.333 OF 2016 1

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c/w CRL.A NO.334 OF 2016

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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 CRIMINAL APPEAL NO.333 OF 2016 C/W CRIMINAL APPEAL NO.334 OF 2016

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IN CRL.A NO.333 OF 2016

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BETWEEN:

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SHIVARAJ S/O LATE N APPANASHETTY AGED ABOUT 47 YEARS R/O 1^ST CROSS, SUBASH NAGAR ARSIKERE TOWN HASSAN DISTRICT - 573 103

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……APPELLANT

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(BY SRI. SIDDHARTH B MUCHANDI, ADVOCATE)

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AND:

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SMT. H R SOWMYA W/O SANJAY R/A YELE REVEANNA BUILDING 5^TH CROSS, SUBASH NAGAR BEHIND MUNICIPAL GUESTHOUSE ARSIKERE, HASSAN DISTRICT-573103

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…..RESPONDENT

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(BY SRI. SADASHIVAIAH K G, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED 04.02.2016 IN C.C.NO.117/2014 PASSED BY THE SENIOR CIVIL JUDGE AND JMFC, ARASIKERE AND CONVICT THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT AND COMPENSATE THE APPELLANT/COMPLAINANT

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CRL.A NO.333 OF 2016 2

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c/w CRL.A NO.334 OF 2016

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ADEQUATELY UNDER SECTION 357 OF THE CODE OF CRIMINAL PROCEDURE, TO MEET THE ENDS OF JUSTICE.

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IN CRL.A NO.334 OF 2016

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BETWEEN:

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SHIVARAJ S/O LATE N APPANASHETTY AGED ABOUT 47 YEARS R/O 1^ST CROSS, SUBASH NAGAR ARSIKERE TOWN HASSAN DISTRICT - 573 103

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……APPELLANT

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(BY SRI. SIDDHARTH B MUCHANDI, ADVOCATE)

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AND:

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SMT. H R SOWMYA W/O SANJAY R/A YELE REVEANNA BUILDING 5^TH CROSS, SUBASH NAGAR BEHIND MUNICIPAL GUESTHOUSE ARSIKERE, HASSAN DISTRICT-573103

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…..RESPONDENT

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(BY SRI. SADASHIVAIAH K G, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED 04.02.2016 IN C.C.NO.161/2014 PASSED BY THE SENIOR CIVIL JUDGE AND JMFC, ARASIKERE AND CONVICT THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT AND COMPENSATE THE APPELLANT/COMPLAINANT ADEQUATELY UNDER SECTION 357 OF THE CODE OF CRIMINAL PROCEDURE, TO MEET THE ENDS OF JUSTICE.

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THESE APPEALS HAVING BEEN HEARD AND RESERVED ON 13.03.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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CRL.A NO.333 OF 2016 3 c/w CRL.A NO.334 OF 2016

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COMMON JUDGMENT

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Being aggrieved by the dismissal of complaints filed by him against the respondent/accused for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short ‘N.I. Act’), complainant has filed these appeals under Section 378 (4) of Cr.P.C.

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Since parties to these appeals are common and the facts based on which complaints were filed and the defence taken by the accused are common, these two appeals are clubbed together and decided by a common order.

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3. For the sake of convenience, parties are

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referred to by their rank before the trial Court.

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It is the case of the complainant that

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complainant and accused are family friends. For a legal necessity, accused has borrowed in all a sum of Rs.9 lakhs from the complainant as detailed below:

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CRL.A NO.333 OF 2016 4

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c/w CRL.A NO.334 OF 2016

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Date	Bank Name	Cheque No.	Amount
03.03.2010	Vijaya Bank, Arasikere	811015	2,00,000
03.03.2010	-do-	811014	2,00,000
03.03.2010	-do-	811013	2,00,000
03.03.2010	-do-	811016	2,00,000
03.03.2011	-do-	811028	1,00,000

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Accused agreed to pay the interest at 18% per annum. She also agreed to repay the amount as and when demanded. In fact, on 28.01.2012 and 28.03.2012, accused has paid interest in a sum of Rs.36,000/each through her husband. Except Rs.72,000/- the accused has not paid either the principal amount or the interest. She was due in a sum of Rs.16,38,000/- towards principal and interest as on 23.12.2013. Ultimately, on repeated request and demand, accused has issued cheque dated 23.12.2013 for Rs.8,38,000/- and cheque dated 24.12.2013 for a sum of Rs.8 lakhs. Accused assured that payment would be made on presentation of these cheques.

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Accordingly, complainant presented the

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cheques on 23.12.2013 and 24.12.2013, i.e., on the

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CRL.A NO.333 OF 2016 5 c/w CRL.A NO.334 OF 2016

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respective days of the cheques. However, they were returned dishonoured with endorsement “Funds insufficient”. Complainant brought this fact to the notice of accused. However, she did not choose to pay the amount due under the cheques. Without any alternative complaint got issued legal notice dated 30.12.2013. It is served on the accused on 31.12.2013. Despite due service of notice, the accused has neither paid the amount due nor sent any reply and therefore separate complaints are filed in respect of individual cheques in C.C.No.117/2014 and C.C.No.161/2014.

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After due service of summons, accused

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appeared before the trial Court and contested the matters by pleading not guilty.

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In order to prove the allegations against accused, in both cases complainant has examined himself as PW-1.

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In C.C.No.117/2014, the complainant has relied upon Ex.P1 to 6.

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CRL.A NO.333 OF 2016 6 c/w CRL.A NO.334 OF 2016

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In C.C.No.161/2014, the complainant has relied upon Ex.P1 to 12, which includes 6 RTC extract in respect of lands owned by the complainant.

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

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However, the accused has not chosen to lead any defence evidence.

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Vide separate judgments and orders impugned in these appeals, the complainant has challenged the same contending that the same are illegal, improper and suffers from serious legal infirmities. Re-appreciation of the entire evidence is essentially required to prevent miscarriage of justice. The trial Court has not appreciated the basic ingredients of Section 138 of N.I Act and the presumption under Section 139 of N.I Act. Complainant has advanced hand loan to the accused through cheques and the said act is proved through the account extract of his account at

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CRL.A NO.333 OF 2016 7 c/w CRL.A NO.334 OF 2016

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Ex.P6. Despite the same, the trial Court has committed grave error in holding that the complainant has no financial capacity to lend the same to the accused.

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Though the accused has claimed that the

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cheques in question were issued as a security to the loan borrowed by her husband from the complainant, she has not led any evidence. She has not sent reply to the legal notice received from the complainant. In the light of the fact that cheques belongs to the accused, drawn on her account maintained with the banker and bears her signature, presumption under Section 139 of the N.I Act is operating in favour of the complainant, placing the initial burden on the accused to prove otherwise. This aspect is not appreciated by the trial Court. The reasons assigned for dismissing the complaint are not sustainable, especially in the light of several judgments of the Hon’ble Supreme Court. Viewed from any angle, the impugned judgments and orders are not tenable and pray to allow the appeal, convict the accused and sentence her in accordance with law.

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CRL.A NO.333 OF 2016 8 c/w CRL.A NO.334 OF 2016

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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) Uttam Ram Vs. Devinder Singh Hudan ( Uttam Ram )¹

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(ii) Bir Singh Vs. Mukesh Kumar ( Bir Singh )²

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(iii) Rajesh Prasad Mittal Vs. Manish³ Garg ( Rajesh Prasad Mittal )

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On the other hand, learned counsel for

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accused has supported the impugned judgments and order and sought for dismissal of the appeals also.

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Heard elaborate arguments of both sides and perused the record.

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Thus, it is the definite case of the complainant that accused borrowed in all a sum of Rs.9 lakhs agreeing to repay the same with interest at 18% per annum. Except 2 payments of Rs.36,000/- each, the accused has failed to pay the balance together with interest. As on 23.12.2013, a total sum of

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1 (2019) 10 SCC 287

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2 (2019) 4 SCC 197

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3 2023 SCC Online Del 6574

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CRL.A NO.333 OF 2016 9 c/w CRL.A NO.334 OF 2016

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Rs.16,38,000/- was due towards principal and interest and payment of the same, accused issued cheque for Rs.8,38,000/- and another cheque for Rs.8 lakhs. However, when they were presented for realization, they were returned unpaid for want of sufficient funds and therefore, after issuing legal notice and on failure of the accused to comply with the same two separate complaints are filed.

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Accused admit the fact that the cheques in question belongs to her, drawn on her account maintained with her banker and they bear her signature. Therefore, as held in Uttam Ram, Bir Singh and

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Rajesh Prasad Mittal and catena of other judgments, presumption under Section 139 of the N.I Act to the effect that the cheques are issued towards repayment of any legally recoverable debt or liability comes into picture, placing the initial burden on the accused to prove that they were not issued towards repayment of any legally recoverable debt or liability and prove the

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CRL.A NO.333 OF 2016 10 c/w CRL.A NO.334 OF 2016

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circumstances in which the cheques have reached the hands of complainant.

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At the outset it is relevant to note that despite due service of notice, the accused has not sent any reply to the legal notice. As held the Hon’ble Supreme Court in C.C. Alavi Haji Vs. Palapetty Muhammed and Anr. ( Alavi Haji )⁴ , the object of issue of legal notice is to enable an honest drawer of the cheque to make payment of the amount due under the cheques and escape from the ignominy of undergoing criminal trial. However, in the reply notice, incidentally, the accused may spell out his defence and the circumstances in which according to him, the cheques came to be issued or have reached the hands of complainant. At the trial, the accused by making certain suggestions has taken up a specific defence and it is necessary to examine whether the accused has succeeded in establishing the said defence, at least by preponderance of probability.

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4 (2007) 6 SCC 555

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CRL.A NO.333 OF 2016 11 c/w CRL.A NO.334 OF 2016

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The accused has challenged financial capacity of complainant by questioning as to what is his source of income. He has deposed that he is having garden land measuring 9 acres, and getting income of Rs.10 lakhs per year. He is running Montessori at Arasikere by name Kids Zee and he is also a reporter of Uday TV. In fact in C.C.No.161/2014, the complainant has produced RTC extracts standing in his name. Undisputedly the payment of Rs.9 lakhs by the complainant to the accused is through his account vide cheque Nos.811016, 811015, 811014, 811013 and 811028. When these payments are made through bank transfer, question of doubting the financial capacity of the complainant would not arise. Only when he had the requisite funds in his account, he is able to transfer them to accused. Such being the case, the trial Court has committed a grave error in holding that complainant has not proved his financial capacity.

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A suggestion is made to PW-1 that through these entries, payments have been made by the accused to the account of complainant, which is prima facie

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CRL.A NO.333 OF 2016 12 c/w CRL.A NO.334 OF 2016

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incorrect. After payment made through these cheques, the respective amount is debited from the account of the complainant. Accused has totally denied that she has borrowed a sum of Rs.9 lakhs from the complainant. Certainly, she is not claiming discharge. Such being the case, it is preposterous to suggest that as per these entries accused has made payments to the complainant.

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A suggestion is also made to the complainant that it is the husband of the accused who has borrowed loan from the complainant and accused has issued the subject cheques by way of security. Except the suggestion made to the complainant, no evidence is led by the accused to prove that the loan in question or for that matter any loan was borrowed by her husband and she has issued the cheques by way of security. In the absence of pleading and proof, the accused has miserably failed to prove that the loan was borrowed by her husband and she has issued the cheques by way of security.

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CRL.A NO.333 OF 2016 13 c/w CRL.A NO.334 OF 2016

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Even otherwise, as held by the Hon’ble Supreme Court in Sunil Todi Vs. State of Gujarath ( Sunil Todi )⁵ , merely labelling a cheque as security would not obviate its character as an instrument designed to meet legally enforceable, debt or liability. Once agreement between parties provided for which money is due and payable, cheque furnished as a security is covered under the provisions of Section 138 of N.I Act. In ICDS Ltd Vs. Beena Shabeer and Anr ( ICDS Ltd )⁶ , which was a case wherein husband of the accused availed loan based on hire purchase agreement to purchase a car with complainant and the cheque was issued by accused as a guarantor, the Hon’ble Supreme Court held that even cheque issued by the guarantor is covered under the provisions of Section 138 of the N.I Act. A suggestion is made to PW-1 that the husband of accused has repaid the loan taken by him and inspite of it, utilising the cheques given by the accused false complaints have been filed. The accused has not led any evidence to prove that her husband has paid any amount to the

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5 AIR 2022 SC 147

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6 (2002) 6 SCC 426

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CRL.A NO.333 OF 2016 14 c/w CRL.A NO.334 OF 2016

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complainant to claim discharge. Of course, in the present case, the accused has failed to prove that the loan was taken by her husband and she has issued the subject cheques by way of security.

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It is elicited through the cross-examination of complainant that he has filed a number of similar complaints against others. He has denied the suggestion that he is indulging money lending business without obtaining necessary license. In the account statement also, there are several entries through which several sums have been paid to different persons. On that basis, the trial Court has come to the conclusion that complainant is habitually involved in lending money without possessing valid license and therefore disbelieved his case.

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First of all the defence has failed to prove that the payments made by the complainant to several persons as reflected in the account extract is towards money lending. If at all the complainant is habitually involved in money landing, then he may be liable under

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CRL.A NO.333 OF 2016 15 c/w CRL.A NO.334 OF 2016

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the Karnataka Money Lending Act or other provisions. The accused cannot claim benefit for the same and escape from the liability arising out of dishonour of the subject cheques.

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The trial Court has dismissed the complaint also on the ground that the loan sought to be paid through the subject cheques is barred by limitation. It is pertinent to note that during the course of crossexamination of PW-1, no such suggestions are made to that effect. The complainant has taken up specific plea that accused has paid a sum of Rs.36,000/- each on 28.01.2012 and 28.03.2012. No suggestion is made to the complainant that no such payments have been made by the accused. According to the complainant, in all a sum of Rs.9 lakhs was advanced to the accused in five instalments i.e Rs.2 lakhs each in four instalments and the last of the payment of Rs.1,00,000/- was made on 03.02.2011. The subject cheques are dated 23.12.2013 and 24.12.2013. The legal notice was issued on 30.12.2013. In the light of the evidence placed on

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CRL.A NO.333 OF 2016 16 c/w CRL.A NO.334 OF 2016

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record, the complaint filed is well within the period of limitation. Therefore, the trial Court has committed a grave error in holding that the complaints are barred by limitation.

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Thus, from the above discussion, this Court is of the considered opinion that the accused has failed to rebut the presumption arising under Section 139 of N.I Act. On the other hand through the oral and documentary evidence placed on record the complainant has proved the allegations against accused beyond reasonable doubt. The findings of the trial Court is contrary to the evidence placed on record and as such perverse and as such calls for interference by this Court.

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When the Court comes to the conclusion that the charge levelled against the accused is proved for the offence punishable under Section 138 of N.I.Act and the appeal is allowed by setting aside the impugned judgment and order of acquittal, the next question would be to what punishment accused is liable.

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CRL.A NO.333 OF 2016 17 c/w CRL.A NO.334 OF 2016

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The punishment prescribed for the offence under Section 138 of the N.I.Act is imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of cheque or with both. The amount involved through the cheques at Ex.P1 is respectively Rs.8,38,000/- and Rs.8,00,000/-. Taking into consideration all these aspects, this Court is of the considered opinion that it would be appropriate to sentence accused to pay fine of Rs.11,00,000/- each. In default of paying the fine sentencing accused to undergo imprisonment for a period of one year would meet the ends of justice and accordingly, I proceed to pass the following:

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ORDER

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(i) Appeals filed by the complainant under Section 378(4) of Cr.P.C. are allowed.

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(ii) The impugned judgments and orders dated 04.02.2016 in C.C.Nos.161/2014 and 117/2014, on the file of Senior Civil Judge and JMFC, Arasikere, are set aside.

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CRL.A NO.333 OF 2016 18

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c/w CRL.A NO.334 OF 2016

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(iii) In both complaints, accused is convicted for

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the offence punishable under Section 138 of the N.I.Act.

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(iv) Accused is sentenced to pay fine in a sum of Rs.11,00,000/each and in default of payment of fine, accused is sentenced to undergo imprisonment for a period of one year each.

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(v) The entire fine amount recovered is ordered to be paid to the complainant by way of compensation.

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(vi) The Registry is directed to return the trial Court records along with copy of this judgment forthwith.

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Sd/JUDGE

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Shivaraj v. Smt H R Sowmya

Case brief

What is this about?

What did the court decide?

Shivaraj v. Smt H R Sowmya

Case brief

What is this about?

What did the court decide?

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