Dismissed

Mrs Lakshmi R v. Mrs Vinutha K R

Karnataka HC28 May 2024CRL.A/344/2019

Case brief

AI extract

What is this about?

Complainant appealed acquittal of accused in a Section 138 NI Act cheque dishonour case. The court found complainant failed to prove financial capacity to lend Rs.5 lakhs, so the Section 139 presumption did not operate and burden never shifted to the accused. Appeal dismissed and acquittal confirmed.

What did the court decide?

None; acquittal by Sessions Court confirmed, appeal dismissed.

Mrs Lakshmi R Vs Mrs Vinutha K R — Cheque Dishonour | Karnataka HC (2024)

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CRL.A NO.344 OF 2019 1

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 28^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.344 OF 2019

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BETWEEN:

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MRS. LAKSHMI R W/O CHANDRAPPA WORKING AS HOUSE WIFE AGED ABOUT 37 YEARS, R/O NO.69, 2^ND FLOOR, 3^RD CROSS, 2^ND STAGE, KURUBARAHALLI BENGALURU - 560 079

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……APPELLANT

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(BY SMT. BHAGYA K, ADVOCATE)

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AND:

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MRS. VINUTHA K R W/O MANJUNATH WORKING AS FILM PRODUCER AGED ABOUT 31 YEARS, R/O NO.69 2^ND FLOOR, 3^RD CROSS, 2^ND STAGE, KURUBARAHALLI BENGALURU - 560 079

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…..RESPONDENT

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(BY SRI. SRINIVASA T GOWDA, 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 19.09.2018 PASSED IN CRL.APPEAL NO.171/2018 BY THE LIX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU (CCH-60) AND PASS SUCH OTHER ORDERS AS DEEM FIT IN THE CIRCUMSTANCE OF THE CASE, IN THE INTEREST OF JUSTICE AND EQUITY.

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THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 21.03.2024, COMING ON FOR PRONOUNCEMENT OF

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CRL.A NO.344 OF 2019 2

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JUDGMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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J U D G M E N T

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In this appeal filed under Section 378(4) of Cr.P.C, complainant has challenged the judgment and order passed by the Sessions Court, reversing the conviction imposed by the trial Court and thereby acquitting the 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, parties are referred to by their rank before the trial Court.

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It is the case of the complainant that she and

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accused are close friends known to each other since five years. She believed that accused is a film producer. On 12.04.2016, accused approached her with a request for financial accommodation of Rs.5 lakhs. She promised to repay the same within three months. Complainant arranged for the said sum by pledging her ornaments and paid Rs.5 lakhs to the accused on 22.04.2016. After

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CRL.A NO.344 OF 2019 3

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three months when complainant demanded the repayment, accused asked another two months time. After further period of two months when complainant demanded the repayment, accused requested for further accommodation of three months. However, even after expiry of further period of three months, she failed to repay the amount, but issued cheque dated 28.03.2017, with an assurance of prompt payment.

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Accordingly, on 28.03.2017, complainant presented the cheque for encashment through her account. To her shock and surprise, it was dishonoured with endorsement "Funds insufficient". Even though complainant brought this fact to the notice of the accused, she did not choose to respond positively. Therefore, complainant got to issued legal notice dated 06.04.2017. It is served on the accused on 08.04.2017. After receipt of legal notice, accused has neither repaid the amount due nor sent any reply and hence the complaint.

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CRL.A NO.344 OF 2019 4

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After due service of summons, accused

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appeared before the trial Court and contested the matter by pleading not guilty to the plea recorded by the trial Court.

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In order to prove the allegations against the

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accused, the complainant has examined herself as PW-1 and relied upon Ex.P1 to 8.

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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, accused has not chosen to lead any defence evidence.

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Vide judgment and order dated 09.01.2018,

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the trial Court convicted the accused and sentenced her to pay fine Rs.5 lakhs with default sentence.

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Aggrieved by the same accused approached

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the Sessions Court in Crl.A.No.171/2018. Vide the impugned judgment and order dated 19.09.2018, the

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Sessions Court allowed the appeal filed by the accused and acquitted her.

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Complainant has challenged the judgment and

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order passed by the Sessions Court, contending that it is contrary to the evidence placed on record and as such liable to be set aside. There is no proper application of mind by the Sessions Court and the judgment and order under challenge are highly arbitrary. There is no appreciation of the pleadings and evidence and as such findings of the Sessions Court are perverse. In the light of the fact that accused does not dispute that the subject cheque is drawn on her account, maintained with her banker and it bears her signature, presumption under Section 139 of the N.I Act is operating in favour of the complainant and therefore initial burden is on the accused to prove that the cheque was not issued towards repayment of any legally recoverable debt or liability. Having failed to enter the witness box, accused has failed to rebut the presumption and therefore burden never shifted on the complainant to prove her case. Even

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CRL.A NO.344 OF 2019 6

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otherwise the complainant has proved the allegations against the accused beyond reasonable doubt. The Sessions Court is not justified in setting aside a well reasoned judgment of the trial Court and it calls for interference by this Court.

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In support of arguments, learned counsel for complainant has relied upon the decision in M.Abbas Haji Vs. T.N.Channakeshava ( M.Abbas Haji )¹ .

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On the other hand, learned counsel for

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accused has supported the impugned judgment and order. He would submit that in the light of several judgments of the Hon'ble Supreme Court, when the complainant has failed to prove her financial capacity, the burden has never shifted on the accused and therefore the Sessions Court is justified in acquitting the accused and pray to dismiss this appeal also.

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In support of his arguments, learned counsel

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for accused has relied upon the following decisions:

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1 AIR 2019 SC 4617

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(i) Basalingappa Vs. Mudibasappa ( Basalingappa )²

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(ii) Leelamma Vs. B.Puttanna ( Leelamma )³

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Heard elaborate arguments of both sides and perused the record.

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At the outset, it is relevant to note that the accused is not disputing that the subject cheque belongs to her, drawn on her account and it bears her signature. Therefore presumption under Section 139 of N.I. Act is operating in favour of the complainant, placing the initial burden on the accused to prove that the cheque was not issued towards repayment of any debt or liability and on the other hand to establish the circumstances in which the cheque has reached the hands of the complainant.

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It is also relevant to note that the accused has also not disputed the fact of service of notice. She has also not sent any reply disputing the allegations made in the complaint and putting forth any definite defence. As held by the Hon'ble Supreme Court in C.C.Alavi Haji Vs.

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2 (2019) 5 SCC 418

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3 Crl.A.No.1246/2012 Dt: 21.06.2023

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CRL.A NO.344 OF 2019 8

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Palapetty Muhammed and Anr ( Alavi Haji )⁴ , the object of issue of legal notice is to enable a honest and prompt drawer of a cheque to make payment within stipulated time and thereby escape the ignominy of facing criminal trial. However, in the reply notice, incidentally, the accused may disclose his defence and also come up with the circumstances in which the cheque came to be issued or reached the hands of the complainant.

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However, as held by the Hon'ble Supreme Court in Tedhi Singh Vs Narayan Das Mahant ( Tedhi Singh )⁵ , 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. But, 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 not sent reply to the legal notice, at the trial, she has challenged the financial capacity of

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4 (2007) 6 SCC 555

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5 2022 SCC OnLine SC 302

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the complainant and consequently the burden is on the complainant to prove her financial capacity.

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In John K.Abraham Vs. Simon C. Abraham &

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Anr ( John K.Abraham )⁶ , the Hon'ble Supreme Court held that in order to draw presumption under Sections

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

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In APS Forex vs Shakti International Fashion

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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

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6 (2014) 2 SCC 236

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7 (2020) 12 SCC 724

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defence, despite presumption operating in favour of 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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Keeping the ratio in the above decisions in mind, it is necessary to examine whether the complainant was having financial capacity to advance Rs.5 lakhs to the accused and proved the same.

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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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It is the definite case of complainant that she

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has paid the hand loan of Rs.5 lakhs by pledging her gold ornaments. However, though in the legal notice and complaint, the complainant has stated that she pledged her gold ornaments to get the money in question, she has not disclosed with whom they were pledged. However, at the trial complainant has produced Ex.P4 to 8 stated to be the receipts issued by Manappuram Asset finance Ltd. Except Ex.P7 dated 19.04.2016 which is for a sum of Rs.79,700/-, the remaining receipts are subsequent to 22.04.2016. Therefore, the complainant has failed to prove that through Ex.P 4 to 8 she has pledged her gold ornaments and paid Rs.5 lakhs to the accused to overcome her financial requirement.

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During the course of arguments, learned counsel for complainant has produced five receipts dated 19.04.2016 regarding pledge of gold ornaments on 19.04.2016, for a total sum of Rs.5,05,799/- and submitted that these are the documents through which she pledged her gold ornaments and paid the amount to

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CRL.A NO.344 OF 2019 12

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the accused. If these are the documents relevant to the case on hand, the complainant is not having any explanation as to why they were not produced and marked at the trial. Moreover, on the face of it, these documents reveal that already loan taken by pledging the gold ornaments have been repaid within June 2016 and there is nothing due. The complainant is not having an explanation as to how she was able to repay the said amount and whether it was repaid by the accused herself.

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Moreover the complainant has not filed any application seeking production of additional documents and therefore these documents cannot be taken into consideration. Even otherwise as noted earlier, as per these documents, the loan in question is already repaid and therefore intentionally, the complainant has not chosen to produce these documents. From the perusal of Ex.P4 to 8 and the documents produced along with the memo, it is quite clear that complainant is in the habit of regularly pledging ornaments and taking loan and getting the ornaments released after paying the amount due.

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It has come in the evidence that complainant is

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a homemaker, not having any income of her own, even though she has deposed that earlier she was working as Tailor in a garment factory and was promoted as Supervisor. According to her evidence itself, she left her job about five years back. Therefore, complainant is not having any income of her own. According to the complainant, accused is a film producer. If that is the case, as an out of work tailor, if the complainant could possess so many gold ornaments, certainly as a film producer, the accused may also be owning gold ornaments. If at all complainant could get requisite money by pledging her gold ornaments, she could have very well directed the accused to pledge her gold ornaments and take loan from the Manappuram Asset Finance Limited. The contention of the complainant that she advanced hand loan of Rs.5 lakhs to the accused without any interest also does not appeal to reason why she was required to pay interest to the Manappuram Asset finance Limited.

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When the complainant has failed to prove her

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financial capacity to lend Rs.5 lakhs to the accused, the presumption under Section 139 of N.I Act has not come to play and consequently the burden has not shifted on the accused to rebut the same. Therefore, despite the accused not coming up with any explanation as to how the cheque in question came into the hands of complainant, the complaint is liable to be dismissed. The trial Court without examining Ex.P4 to 8 in proper perspective came to a wrong conclusion that the allegations against accused are proved beyond reasonable doubt. However, the Session Court after re-appreciation of the oral and documentary evidence placed on record has rightly dismissed the complaint. This Court finds no justifiable reasons to interfere with the conclusions arrived by the Session 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 judgment and order dated 19.09.2018 in Crl.A.No.171/2018 on the file of LIX Addl.City Civil and Sessions Judge, Bengaluru, acquitting the accused by reversing the judgment and order dated 09.01.2018 in C.C.No.12865/2017 on the file of XXII ACMM, Bengaluru, is hereby confirmed.

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

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Sd/JUDGE

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Mrs Lakshmi R v. Mrs Vinutha K R

Case brief

What is this about?

What did the court decide?

Mrs Lakshmi R v. Mrs Vinutha K R

Case brief

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What did the court decide?

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