Dismissed

N. R. Gurudath v. N. S. Ravi

Karnataka HC14 Mar 2024CRL.A/921/2018

Case brief

AI extract

What is this about?

Complainant appealed against dismissal of his Section 138 NI Act complaint for dishonour of a Rs.2 lakh cheque. The High Court held he failed to prove financial capacity despite the Section 139 presumption, rejected his application to adduce additional evidence, and confirmed the acquittal.

What the court decided

AI extract

N. R. Gurudath Vs N. S. Ravi — Cheque Dishonour | Karnataka HC (2024)

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CRL.A NO.921 OF 2018 1

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 14^TH DAY OF MARCH, 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.921 OF 2018

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BETWEEN:

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N.R.GURUDATH S/O RAJASHEKARAPPA, AGED ABOUT 61 YEARS, R/O TURCHAGHATTA VILLAGE, BELAVANURU POST, DAVANAGERE TALUK AND DISTRICT, PIN - 577 002.

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……APPELLANT

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(BY SRI. SIDDESWARA N K, ADVOCATE)

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AND:

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N.S.RAVI S/O SIDDAPPA, CONTRACTOR, MEMBER OF HADADI, GRAMAPANCHAYATH, AGED ABOUT 46 YEARS, PRESENTLY AT T.B.NAGARA, BELAVANURU POST, DAVANAGERE TALUK & DISTRICT, PIN - 577 002.

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…….RESPONDENT (BY SRI. PRABHUGOUD B TUMBIGI, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT PASSED BY THE LEARNED JMFC, III COURT, DAVANAGERE IN C.C.NO.982/2017 DATED 21.04.2018 AND CONVICT THE RESPONDENT IN ACCORDANCE WITH LAW AND GRANT SUCH OTHER RELIEF/S AS THIS HON'BLE COURT DEEMS FIT UNDER THE CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE.

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CRL.A NO.921 OF 2018 2

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THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 08.02.2024, 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 & ORDER ON IA.1 OF 2022

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Being aggrieved by dismissal of complaint filed by

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him for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short 'N.I. Act'), complainant has filed this appeal under Section 378(4) Cr.P.C.

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

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3. Complainant filed a private complaint under

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Section 200 Cr.P.C against the accused alleging offence punishable under Section 138 of N.I Act, contending that he and accused are known to each other as they are residents of the same village. Accused is a contractor whereas complainant is an agriculturist and also running a wine shop. During March 2017, accused approached

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the complainant with a request for hand loan in a sum of

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CRL.A NO.921 OF 2018 3

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Rs.2 lakhs to meet his family necessities, with an assurance that it would be repaid in April 2017. As a good friend, complainant advance the said amount. However, accused failed to repay the same till June 2017. When complainant demanded for the money, accused issued cheque dated 10.07.2017 for Rs.2 lakhs. The complainant presented it for realization, it was dishonoured for want of sufficient funds in the account. Complainant got issued legal notice. Accused refused to receive the notice sent through RPAD. The one sent through ordinary post is served. However, accused has neither paid the amount nor sent any reply and hence, the complaint.

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After service of summons, accused has

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appeared through counsel and contested the case, by pleading not guilty.

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In order to prove the allegations against the

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accused, complainant has examined himself as PW-1 and got marked Ex.P1 to 7.

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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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Accused has not led any defence evidence.

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Vide the impugned judgment and order the trial Court dismissed the complaint by holding that the complainant has not proved his financial capacity to lend Rs.2 lakhs.

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Aggrieved by the same, complainant has filed this appeal contending that the judgment and order are contrary to law, facts and probabilities of the case and as such liable to be set aside. The trial Court has erred in holding that the complainant and accused are resident of different villages and as such they were not knowing each other. However the distance between Thurchagatta and Bevanuru is only around 1 – 1 1/2 km. So on the basis of defence taken by the accused, the trial Court has come to a wrong conclusion. The trial Court has come to a conclusion that the complainant is not having financial

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capacity to lend Rs.2 lakhs solely on the ground that he has not produced documents to prove his income. During the course of evidence, the complainant has clearly deposed that he is doing agriculture and running a wine shop and has also submitted IT returns.

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Even though the accused has not led any defence evidence, the trial Court has erred in holding that he has rebutted the presumption under Section 139 of N.I Act and placing the burden on the complainant. In the absence of defence evidence, the case of complainant ought to have been accepted. Looking from any angle the impugned judgment and order of the trial Court is not sustainable and pray to allow appeal, convict the accused and sentence him in accordance with law.

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In support of his arguments, the learned counsel for complainant has relied upon the following decisions:

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(i) APS Forex vs Shakti International Fashion Linkers Pvt. Ltd ( APS Forex )¹

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1 (2020) 12 SCC 724

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CRL.A NO.921 OF 2018 6

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(ii) Uttam Ram Vs. Devinder Singh Hudan and Anr. ( Uttam Ram )²

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(iii) Bir Singh Vs. Mukesh Kumar ( Bir Singh )³

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(iv) Sri Daneshwari Traders Vs. Sanjay Jain and Anr. ( Sri Daneshwari Traders )⁴

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(v) Rohitbhai Jivanlal Patel Vs. State of Gujarat and Anr. ( Rohitbhai )⁵

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On the other hand, learned counsel for

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accused has supported the impugned judgment and order of the trial Court and sought for dismissal of the appeal also.

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Learned counsel for accused has relied upon the following decisions:

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(i) Basalingappa Vs. Mudibasappa( Basalingappa )⁶

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(ii) Rajaram (Since Deceased) Through LRs Vs. Maruthachalam (Since deceased) Though LRs. ( Rajaram )⁷

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Complainant has also filed application under

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Section 391 (1) r/w Section 482 Cr.P.C, with the prayer

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to permit him to produce the following documents:

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2 (2019) 10 SCC 287

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3 (2019) 4 SCC 197

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4 (2019) 16 SCC 83

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5 (2019) 18 SCC 106

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6 (2019) 5 SCC 418

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7 2023 Livelaw (SC) 46

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(1) True copy of CL-2 issued by D.C of Excise, Davanagere District.

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(2) True copy of Blue Print of Wine Shop of Arjuna Wines, Shiramagondanahalli, New Extension, Davanagere.

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(3) 5 RTC Extracts for the years 2017-18 in respect of Sy.Nos.3/12 & 3/13 of Belavanur (2 RTC) and Sy.Nos.155/2, 155/3 & 155/4 of Thurchagatta Village, Kasaba Hobli, Davanagere Taluk & District.

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(4) 6 years Income Tax Return Acknowledgement commencing from 2012-13, 2013-14, 201415, 2015-16, 2016-17 & 2017-18 filed by the appellant.

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In the affidavit appended to the application, the complainant has stated that the trial Court has dismissed the complaint only on the ground that he has not proved his financial capacity. In order to establish the same, the documents in question are necessary. No prejudice would be caused to the accused, if the application is allowed. On the other hand, complainant would be at great hardship, if the application is rejected.

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In support of the application, the learned counsel for complainant has relied upon the following decision:

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(i) Brigadier Sukhjeet Singh (Rtd) Vs. State of Uttar Pradesh and Ors. ( Brigadier Sukhjeet Singh )⁸

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Accused has filed objections to this application

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stating that long before he had taken loan of Rs.20,000/and at that time a blank cheque was taken from him. Though he has repaid the loan, complainant failed to return the cheque saying that it is misplaced. Now utilising the same he has filed the complaint. Rightly the trial Court has dismissed the complaint. The complainant has not come up with any explanation as to why the documents were not produced before the trial Court and pray to reject the application and also dismiss the complaint.

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Heard arguments of both sides and perused the record.

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Though the accused has disputed that he has borrowed hand loan of Rs.2 lakhs from the accused and issued the cheque in question, he admits that the same is drawn on his account maintained with his banker and it

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8 (2019) 16 SCC 712

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bears his signature. According to the accused earlier he had taken hand loan of Rs.20,000/- and at that time he had issued the subject cheque blank and though he has repaid the said amount, the complainant failed to return the cheque and utilising the same he has filed this complaint. The legal notice sent to accused is returned with endorsement "Refused". The accused has not sent any reply to the legal notice. However, during the trial he has challenged the financial capacity of accused.

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Having regard to the fact that the cheque in question belongs to accused No.1, drawn on the account maintained with its banker and it bears his 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 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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In Sri Daneshwari Traders Vs Sanjay Jain and Anr. ( Sri.Daneshwari Traders⁹ ), the Hon'ble Supreme Court held that burden is on the complainant to establish foundational facts to raise presumption under Section 139 of N.I. Act. Thereafter burden would shift on the accused to rebut the same.

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In John K.Abraham Vs. Simon C. Abraham & Anr ( John K.Abraham )¹⁰ , 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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(iii) The accused was bound to make payment as had been agreed while issuing cheque in favour of the complainant.

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9 (2019) 16 SCC 83

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10 (2014) 2 SCC 236

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CRL.A NO.921 OF 2018 1111

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CRL.A NO.921 OF 2018 1111

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Therefore, as held by the Hon'ble Supreme

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Court in Tedhi Singh Vs Narayan Das Mahant ( Tedhi Singh )¹¹ , 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.

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In APS Forex vs Shakti International Fashion Linkers Pvt. Ltd ( APS Forex )¹² , 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 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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11 2022 SCC OnLine SC 302

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12 (2020) 12 SCC 724

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In Vijay Vs. Laxman and Anr ( Vijay )¹³ , K.Subramani Vs. K.Damadara Naidu ( K.Surbamani )¹⁴ and K.Prakashan Vs. P.K.Surenderan ( K.Prakashan )¹⁵ 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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In Bir Singh , on facts it was held that there was no evidence led by the accused to prove that a blank signed cheque was given to the complainant. There was no change in the amount date or name of the payee and therefore it was not a case of material alteration.

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In Rohitbhai , it was held by the Hon'ble Supreme Court that the rule of presumption of innocence of accused cannot be applied with same rigor to offence under Section 138 of N.I. Act, particularly where

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13 (2013) 3 SCC 86

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14 (2015) 1 SCC 99

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15 (2008) 1 SCC 258

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presumption is drawn that holder received the cheque for discharge of the debt or liability. On facts, it was further held that accused failed to prove that he had transaction with his friend and the subject cheque was issued in his favour and it was misused by the complainant.

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In Sri.Daneshwari Traders , on facts it was held by the Hon'ble Supreme Court that accused has failed to prove that the cheques were issued for purchase of rice bags on credit and subsequently, payment has been made but complainant failed to return the cheques.

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In Uttam Ram , the Hon'ble Supreme Court held that in proceedings under Section 138 of N.I Act, the complainant is not expected to prove the allegations as in a civil suit and it is sufficient for the complainant to prove basic factors to rise the presumption.

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In APS Forex , on facts the Hon'ble Supreme Court held that accused has failed to rebut the presumption by leading evidence and his contention that

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cheque was given by way of security and it was misused by the complainant cannot be accepted.

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In Basalingappa and Rajaram, on facts the

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Hon'ble Supreme Court held that in order to rebut the presumption under Section 139 of N.I. Act, the accused may lead independent evidence or may also rely upon the evidence led by the complainant.

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Keeping in mind the ratio in the above decisions in mind, it is necessary to examine whether the complainant has proved the foundational facts and also his financial capacity to lend Rs.2 lakhs to the accused. Though during the course of his evidence, the complainant has claimed that he is owning agricultural land and also running a wine shop, he has not produced any documents to evidence the said fact. He could have produced his account statement. It would have supported his claim that he had sufficient financial capacity to lend the hand loan to the accused. It is the definite case of the complainant that he extended the hand loan to the accused in the month of April 2017 and

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he paid the said amount in cash and it consist of 2 bundles of Rs.500/- denomination and 50 notes of Rs.2,000/- denomination. After the demonetisation, necessarily the cash on hand was required to be exchanged through the Bank. In all probabilities, the complainant might have got the cash exchanged through the Bank. If he had withdrawn the amount from his account, then also there will be proof for having received the new currency. He could have certainly produced documents to evidence the said fact. However, for the reasons best known to him, the complainant has not chosen to produce the said documents.

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Now, through I.A.No.1/2022, the complainant is seeking permission for production of additional documents viz., copy of license for running the wine shop, RTC and copies of the tax returns from 2012–13 to 2017-18. In Brigadier Sukhjeet Singh , while discussing the power of Appellate Court to allow additional evidence, the Hon'ble Supreme Court held that the necessity of additional evidence arises where without

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it there would be failure of justice and it depends on facts of each case. Though the license prove the fact that accused is running a wine shop, he has not produced any document to show the exact income earned by him during 2016–17. Certainly the account statement of his account maintained with the Bank would have thrown some light on the income of the complainant.

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In the income tax returns for the relevant period i.e., Assessment year 2017-18 and for that matter in any of the income tax returns, the complainant has not reflected the fact of having advanced hand loan to the accused or others. He has also not shown cash on hand in his income tax returns for the relevant period. In the light of demonetization, everything again boils down to the fact whether how much cash he had on hand and in his account and when he got exchanged the old notes for new currency. In the RTC extract for the relevant period, there is no entry for any crops grown in the land. The complainant has also not produced any documents to show that he had sold the crops and received income

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and if so, what was the said income. Such being the case, even if the application for production of additional documents is allowed, it is not of any help to improve the case of the complainant.

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Taking into consideration the oral and documentary evidence placed on record, the trial Court has come to a correct conclusion that complainant has failed to prove the allegations against accused beyond reasonable doubt. On re-appreciation of the evidence placed on record, this Court is of considered opinion that there are no justifiable grounds to interfere with the conclusions arrived at by the trial Court. At the same time no justifiable grounds are made out to permit the appellant for production of addition documents. In the result, both appeal as well as I.A.No.1/2024 fails and accordingly the following:

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ORDER

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