Allowed

Sri Ker Singh Dewal v. Sri P Srikantha

Karnataka HC15 Nov 2024CRL.A/605/2013

Case brief

AI extract

What is this about?

Complainant's appeal under Section 378(4) CrPC against acquittal in a Section 138 NI Act cheque dishonour case. The High Court found the appellate court's acceptance of inconsistent defence documents perverse, restored the original conviction and sentence.

What did the court decide?

Acquittal set aside; Trial Court judgment of conviction and sentence under Section 138 NI Act restored.

Sri Ker Singh Dewal Vs Sri P Srikantha — Cheque Dishonour | Karnataka HC (2024)

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NC: 2024:KHC:46583 CRL.A No. 605 of 2013

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15^TH DAY OF NOVEMBER, 2024

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BEFORE

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THE HON'BLE MRS JUSTICE M G UMA

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CRIMINAL APPEAL NO. 605 OF 2013 (A)

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BETWEEN:

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SRI KER SINGH DEWAL S/O LAKH SINGH AGED 40 YEARS R/AT NO.148, MANASARA ROAD ITTIGEGUD MYSORE - 570 010.

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Digitally signed by NANDINI B G Location: high court of karnataka

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(BY SRI. GOPAL SINGH, ADVOCATE)

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AND:

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… APPELLANT

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SRI P. SRIKANTHA S/O SUBBANNA BHAT AGED 56 YEARS R/AT NO.1194, 3^RD MAIN 6^TH CROSS, VIVEKANANDANAGAR MYSORE - 570 023.

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... RESPONDENT

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(BY SRI. GIRIDHAR H. ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) CR.P.C PRAYING TO SET ASIDE THE ORDER DATED 28.03.2012 PASSED IN CRL.A.NO.86/11 ON THE FILE OF THE I ADDITIONAL SESSIONS JUDGE, MYSORE - ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT. AND TO CONFIRM THE JUDGMENT AND ORDER DATED 07.06.2011 PASSED BY THE PRINCIPAL-I CIVIL JUDGE AND JMFC, MYSORE IN C.C.NO.948/2007.

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THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 25/10/2024 COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT DELIVERED THE FOLLOWING:-

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CORAM: HON'BLE MRS JUSTICE M G UMA

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CAV JUDGMENT

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The complainant in CC No.948 of 2007 on the file of the learned Principal-I Civil Judge and JMFC at Mysuru (hereinafter referred to as 'the Trial Court' for short), is impugning the judgment dated 28.03.2012 passed in Criminal Appeal No. 86 of 2011 on the file of the learned I Additional Sessions Judge, Mysuru, acquitting the respondent-accused for the offence punishable under Section 138 of the Negotiable Instruments Act (for short 'the NI Act'), by allowing the appeal and setting aside the impugned judgment of conviction and order of sentence dated 07.06.2011 passed by the Trial Court, convicting him for the offence punishable under Section 138 of NI Act and sentenced him to undergo simple imprisonment for 30 days and also to pay fine of Rs.1,30,000/- and in default to pay fine, to undergo simple imprisonment for one month.

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For the sake of convenience, the parties shall be referred to as per their rank and status before the Trial Court.

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Brief facts of the case are that, the complainant filed the private complaint against the accused in PCR No.1100 of 2006 alleging commission of offence punishable under Section 138 of NI Act. It is contended by the complainant that

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both the accused and the complainant were known to each other since few years and the accused had approached the complainant during May, 2006 requesting for hand loan of Rs.1,00,000/- to meet his business and legal necessities. Accordingly, the complainant had lent an amount of Rs.1,00,000/-. The accused had issued the post dated cheque bearing No.003147 for Rs.1,00,000/- dated 12.08.2006 in favor of the complainant. When the cheque was presented for encashment, the same was dishonored as account closed. Legal notice was issued by the complainant and the same was served on the accused. The accused has neither paid the cheque amount nor replied to the legal notice and thereby, committed the offence punishable under Section 138 of NI Act. Accordingly, he requested the Trial Court to take cognizance of the offence and to initiate legal action.

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The Trial Court took cognizance of the offence and registered CC No.948 of 2007. The accused appeared before the Trial Court, pleaded not guilty and claimed to be tried. The complainant examined himself as PW1 and got marked Exs.P1 to P6 in support of his contention. The accused has denied all the incriminating materials available on record in his statement

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recorded under Section 313 of Cr.P.C., examined himself as DW1 and got marked Exs.D1 to D20 in support of his defence. The Trial Court after taking into consideration all these materials on record, convicted the accused for the offence punishable under Section 138 of NI Act and sentenced him as stated above. Being aggrieved by the same, the accused has preferred Criminal Appeal No. 86 of 2011. The First Appellate Court on re-appreciation of the materials on record, allowed the appeal by setting aside the impugned judgment of conviction and order of sentence passed by the Trial Court and acquitted the accused. Being aggrieved by the same, the complainant is before this Court.

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Heard Sri Gopal Singh, learned counsel for the appellant and Sri H Giridhar, learned counsel for the respondent. Perused the materials including the Trial Court records.

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Learned counsel for the complainant contended that the complainant has taken a specific contention that the accused had borrowed a sum of Rs.1,00,000/- during May 2006 and towards discharge of the same, post dated cheque for Rs.1,00,000/- dated 12.08.2006 was issued. When the cheque

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was presented for encashment, the same was dishonored as account closed. In spite of service of notice, the accused had not repaid the cheque amount and thereby committed the offence punishable under Section 138 of NI Act.

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Learned counsel contended that the accused is not

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denying issuance of cheque as per Ex.P1, with his signature. When the accused admits issuance of cheque with his signature, the presumption under Section 139 of NI Act would arise and the initial burden on the complainant gets discharged. The burden shifts on the accused to rebut the presumption. He further contended that the accused has taken inconsistent defence initially contending that since he was a share broker, the complainant had handed over 18 share certificates marked as Exs.D1 to 18 and as security, he insisted the accused to issue the cheque and accordingly he issued the cheque as per Ex.P1 as security. Further, he denies availing of loan and contended that there is no legally enforceable debt to invoke Section 138 of NI Act. But later he produced Exs.D19 and 20 said to be the acknowledgement for having cleared the dues by the accused in favor of the complainant. The complainant is not a party to Exs.D19 and 20. Exs.D1 to 18 were not the share

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certificates standing in the name of the complainant. Moreover, Exs.D7 and D8 - share certificates were issued only on 23.09.2002. But strangely, in Exs.D19 and D20, there is reference to both these share certificates, even though the acknowledgments are dated 29.05.2002, much earlier to issuance of share certificates on 23.09.2002. There is absolutely no explanation by the accused as to how there could be an acknowledgement referring to the share certificates Exs.D7 and D8, which came to be issued much later during September 2002. These inconsistent defence taken by the accused falsifies the defence and it cannot be said that the accused is successful in rebutting the presumption. When the accused has not rebutted the presumption, he is liable for conviction.

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Learned counsel submitted that the Trial Court rightly considered the materials on record and convicted the accused. When the matter was pending before the First Appellate Court, neither the counsel for the appellant nor the counsel for the respondent addressed their arguments and the Court proceeded to dispose off the appeal by referring to the documents and it has committed an error in accepting Exs.D19

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and D20 and formed an opinion that the accused has rebutted the presumption under Section 139 of NI Act. The First Appellate Court has not taken into consideration the inconsistency and falsity in the defence taken by the accused and therefore, the impudent judgment of acquittal passed by the First Appellate Court is liable to be dismissed. Accordingly, he prays for allowing the appeal and to restore the impugned judgment of conviction and order of sentence passed by the Trial Court.

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Per contra, learned counsel for the respondent opposing the appeal submitted that the complainant has not stated the date on which he had lent the amount of Rs.1,00,000/-. The complainant admits that the accused is a share broker and he was dealing with the share certificates pertaining to the complainant. Under such circumstances, the defence taken by the accused that the share certificates were given by the complainant to the accused and as security the accused was asked to issue the cheque as per Ex.P1. The cheque which was issued as security was misused by the complainant even though there was no debt that was due to be paid by the accused.

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Learned counsel contended that the complainant

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has also not proved his capacity to lend the amount. Admittedly, there are no documents to prove lending of the amount, which is highly improbable. Moreover, during 2005, the Banks used to accept only MICR cheques and not the cheque as per Ex.P1. Therefore, it is clear that the cheque - Ex.P1 was issued by the accused much prior to the date, which was referred to by the complainant i.e., before the policy to introduce MICR cheques and thus, the contention of the complainant is falsified.

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Learned counsel further submitted that the account of the accused was closed much prior to presentation of the cheque, which also falsifies the contention taken by the complainant. He further contended that Ex.P6 was produced after recalling PW1 to produce the income tax acknowledgement for the assessment year 2007-08 to contend that the complainant has shown lending of the amount of Rs.1,00,000/- in favor of the accused in his income tax returns. But Ex.P6 - the income tax acknowledgement do not disclose lending of the amount in favor of the accused. The enclosure which is signed by the auditor discloses such lending, but the

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same bears the date 06.08.2007, whereas the income tax acknowledgment is dated 30.07.2007. Therefore, it is clear that Ex.P6 and the enclosures were concocted by the complainant to prove his contention against the accused. The First Appellate Court has believed the defence taken by the accused as the accused is successful in proving his defence. Therefore, the accused was rightly acquitted.

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Learned counsel further submitted that Exs.D19 and D20 are the acknowledgments in respect of clearing dues by the accused. The complainant is signatory to both these documents. There is a reference to the share certificates produced as per Exs.D1 to D18. When the complainant has not specifically denied the signature found in Exs.D19 and D20, the defence taken by the accused will have to be accepted. Under such circumstances, there is no illegality or perversity in the judgment passed by the First Appellate Court. There are no reasons to interfere with the same. Hence, he prays for dismissal of the appeal.

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Learned counsel for the respondent places reliance on the decision of the Hon'ble Apex Court in M S Narayana

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Menon Alias Mani Vs. State of Kerala and another¹ , in

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support of his contention that when the defence taken by the accused is probable, the burden on him to rebut the presumption gets discharged and the burden shifts on the complainant to prove lending of the amount and also existence of legally enforceable debt. He also placed reliance on the decision of the Hon'ble Apex Court in John K Abraham Vs Simon C. Abraham² , in support of his contention that the burden to prove the guilt of the accused heavily lies on the complainant and when the complainant is not sure as to when he lent the amount, as to who had written the cheque and when there are several inconsistencies in the contention taken by the complainant, it cannot be held that the guilt of the accused is proved. These are all the grounds for acquitting the accused and the First Appellate Court has rightly acquitted the accused. Placing reliance on these two decisions, learned counsel for the respondent prays for dismissal of the appeal as devoid of merits.

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1 AIR 2006 SC 3366

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2 AIR 2014 SC (Supp) 761

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In view of the rival contentions urged by learned

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counsel for both the parties, the point that would arise for my consideration is:

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"Whether the impugned judgment of acquittal passed by the First Appellate Court reversing the impugned judgment of conviction and order of sentence passed by the Trial Court suffers from perversity or illegality, which calls for interference by this Court?"

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My answer to the above point is in the 'Affirmative' for the following:

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REASONS

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It is the contention of the complainant that the accused has borrowed an amount of Rs.1,00,000/- during May 2006 and towards discharge of the same, issued post-dated cheque bearing No.003147 for Rs.1,00,000/dated 12.08.2006. When the cheque was presented for encashment, the same was dishonored as account closed. In spite of service of legal notice, the accused has not repaid the cheque amount nor issued any reply. Thereby, he has committed the offence punishable under Section 138 of NI Act.

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In order to prove his contention, the complainant

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examined himself as PW1 and reiterated his contention against the accused. The witness was cross-examined by the learned counsel for the accused. During cross-examination, witness stated that he knew the accused since about 15 years, who is a share broker. He states that lending of Rs.1,00,000/- during 2006 was declared in his income tax returns. He pleaded his ignorance that during 2005, the Bank has introduced MICR cheques and that the cheque - Ex.P1 is not a MICR cheque. Witness denied the suggestion that he had given 18 share certificates to the accused and also denied his signature on the endorsement. However, there is reference to the document which is the endorsement that was tendered to the witness during cross-examination. But later the accused produced the endorsement as per Exs.P19 and 20 and therefore, denial of the signature found on the endorsement by the complainant may be referred to Exs.D19 and D20. Witness denied the suggestion that the accused had issued the cheque in question as security and he had misused the same.

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When the accused admits issuance of cheque with

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his signature which is as per Ex.P1, the presumption under

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Section 139 of NI Act would arise and the initial burden on the complainant gets discharged. The burden shifts on the accused to rebut the legal presumption. Even though the accused has contended that he had issued the cheque as a security, the presumption under Section 139 of NI Act would arise.

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In this regard, I may place reliance on the decision

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of the Hon'ble Apex Court in Bir Singh Vs. Mukesh Kumar³ wherein, the Hon'ble Apex Court held in paragraphs 34 and 36 as under:

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" 34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

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35.xxxx

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36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent

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3 (2019) 4 SCC 197

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evidence to show that the cheque was not issued in discharge of a debt."

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When the burden shifts on the accused, degree of proof required to rebut the presumption is only the preponderance of probabilities. In other words, the burden of proof on the accused is not so high as that of the complainant who is required to prove the guilt of the accused beyond reasonable doubt.

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The accused during cross-examination of PW1 has taken the defence that since he was a share broker, the complainant had given 18 shares certificates produced as per Exs.D1 to D18 for the purpose of selling it in the market. Since 18 share certificates were handed over by the complainant to the accused, the complainant insisted for issuance of cheque as security and therefore he had issued the cheque - Ex.P1. Exs.D1 to D18 are the share certificates of various Companies. But none of these certificates stand in the name of the complainant. There is no explanation by the accused as to who was the owner of the share certificates and why none of these certificates stand in the name of the complainant.

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The accused has produced Exs.D19 and D20.

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According to the accused, both himself and the complainant have signed the document as cash was paid by the accused to the complainant and the account was settled. In Ex.D19, it is written that undated cheque bearing No.003147 to be collected back.

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It is the contention of the complainant that the document was concocted by the accused and he was never a party to the same. Witness also denied his signature found in Exs.D19 and D20. When the accused categorically contended that there was no amount that was due to be paid by him to the complainant, it is not explained as to why this acknowledgement for having settled the account came into existence. The defence taken by the accused while crossexamining PW1 was inconsistent with his defence by producing Exs.D19 and D20 during his examination.

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Learned counsel for the complainant has drawn my attention to Exs.D7 and D8, the share certificates issued by Gujarat Poly - AVX Electronics Limited. Exs.D7 and D8 are having Certificate Nos.00618574 and 00618396 dated 23.09.2002. Exs.D19 and D20 are dated 29.05.2002 i.e. much

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prior to the date of Exs.D7 and D8. But strangely, Ex.D19 refers to the Certificate No.00618396. Similarly, Ex.D20 refers to the Certificate No.00618574 dated 29.05.2002, which is much prior to the date of Exs.D7 and D8 i.e., 23.09.2002. Learned counsel for the respondent has no explanation as to how these two certificates which were issued much later could be referred to by the accused in the acknowledgment - Exs.D19 and D20.

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It is pertinent to note that, the complainant has never admitted these documents nor his signature said to be found in Ex.D19. No efforts whatsoever is made by the accused to prove the signature of the complainant said to have been found in the document, nor the said signature was got marked either during cross-examination of PW1 or during the examination of the accused. Under such circumstances, Exs.D19 and D20 cannot be believed. Even Exs.D1 to D18 also cannot be believed for the reasons discussed above.

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The accused has taken inconsistent defence to contend that as security he had issued the cheque for having received Exs.D1 to D18 and that there was no amount that was due to be paid to the complainant. However, subsequently

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produced Exs.D19 and D20 contending that the amount that was due to the complainant was already paid and the account was settled. The defence which is inconsistent with one another cannot be reconciled. When the accused fails to raise probable defence, or in other words, when the accused even though raises a defence, fails to probabalise the same, he will be liable for conviction.

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In this regard, I may refer to the decision of the Hon'ble Apex Court in Rohitbhai Jivanlal Patel Vs. State of Gujrat⁴ . The Hon'ble Apex Court reiterated the legal position that once the complainant is successful in discharging his initial burden to prove issuance of cheque by the accused with his signature, the presumption under Section 139 of NI Act would arise and the burden shifts on the accused to rebut the legal presumption. The Hon’ble Apex Court reiterated the degree of proof to rebut the presumption on the part of the accused and held in paragraph 18 as under:

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"18. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the

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4 (2019) 18 SCC 106

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part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant’s case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused…..”

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(Emphasis supplied)

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It is also relevant to refer to the decision of the

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Hon'ble Apex Court in M/s Kalamani Tex and another Vs P Balasubramanian⁵ , wherein, the Hon'ble Apex Court recorded its various decisions and held in paragraphs 15 and 17 as under:

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"15.No doubt, and as correctly argued by Senior Counsel for the appellants, the

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5 (2021) 5 SCC 283

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raised under Sections

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presumptions raised under Sections 118 and Section 139 are rebuttable in nature. As held in M.S. Narayana Menon v. State of Kerala, which was relied upon in Basalingappa, a probable defence needs to be raised, which must meet the standard of “preponderance of probability”, and not mere possibility. These principles were also affirmed in Kumar Exports, wherein it was further held that a bare denial of passing of consideration would not aid the case of accused.

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17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where this court held that:

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“36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”

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(emphasis supplied)

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In view of the settled position of law on the subject, I am of the opinion that the accused who has failed to rebut the presumption, is liable for conviction.

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Learned counsel for the respondent has placed reliance on the decisions of the Hon'ble Apex Court in M S Narayana Menon Alias Mani (supra) and John K Abraham (supra) in support of his contention. The position of law highlighted in both the decisions cannot be disputed, but the same needs to be applied to the facts of the case. When the accused has not rebutted the presumption and when it is discussed above the defence taken by the accused is not probable, the accused cannot succeed by placing reliance on the decisions referred to above. Unless the accused rebuts the presumption, the burden will not be shifted on the complainant to prove his capacity to lend, actual lending of the amount, existence of legally enforceable debt or liability or issuance of cheque in discharge of such debt or liability. Non rebuttal of legal presumption by the accused leads to proof of the guilt of the accused beyond reasonable doubt. Therefore, the accused is liable for conviction.

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I have gone through the impugned judgment of

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acquittal passed by the First Appellate Court. As rightly contended by the learned counsel for the complainant, none of the learned counsel representing the complainant and the accused have addressed their arguments before the First Appellate Court. On perusing the materials on record, the First Appellate Court proceeded to allow the appeal by accepting the defence taken by the accused, ignoring the inconsistencies and the perversities in the defence taken by the accused. Therefore, the impugned judgment of acquittal passed by the First Appellate Court is illegal and perverse, which calls for interference by this Court. Hence, I answer the above point in the Affirmative and proceed to pass the following:

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ORDER

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(i) The Criminal Appeal is allowed.

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(ii) The judgment dated 28.03.2012 passed in Criminal

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Appeal No. 86 of 2011 on the file of the learned I Additional Sessions Judge, Mysuru, is hereby set aside.

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(iii) Consequently, the accused is convicted for the offence punishable under Section 138 of NI Act and the

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