M/S Shriram Transport Finance Co. Ltd. Vs H… — Company and Corporate | Karnataka HC (2025)

M/S Shriram Transport Finance Co. Ltd. Vs H… — Company and Corporate | Karnataka HC (2025)

What the court decided

AI extract

Outcome

None to the appellant-complainant; the acquittal of the respondent/accused under Section 138 NI Act stands undisturbed.

Issue for consideration

Whether the trial Court is justified in acquitting the accused for the offence punishable under Section 138 of NI Act?

Court's answer

PW1, the authorised officer of the complainant company, produced no ledger extract of the accused's loan account and categorically admitted in cross-examination that he had no knowledge whatsoever of the loan transaction or the issuance of the cheque; in consequence, the complainant failed to prove the legally recoverable debt pending against the accused.

Ratio / Principle

Although the initial presumptions under Sections 118 and 139 of NI Act favoured the complainant, the accused rebutted the initial presumption by raising a probable defence (cheque alleged to have been issued as blank security and vehicle seized/sold); the acquittal was therefore justified and the impugned judgment called for no interference.

Key takeaways

The sole point was answered in the affirmative: the trial Court rightly acquitted the accused for the offence punishable under Section 138 of NI Act, and this Court declined to interfere with the impugned judgment.ratio¶57

Detailed headnote1 paragraphs

High Court of Karnataka, Dharwad Bench (Rajesh Rai K, J.), 26.06.2025 — Complainant's criminal appeal under Section 378(4) Cr.P.C. against acquittal under Section 138 NI Act (CC No.1741/2012, Addl. Civil Judge & JMFC, Hospet) dismissed. Signature on the cheque (Ex.P4) was not seriously disputed, but PW1, the company's authorised officer, produced no ledger extract of the loan account and admitted in cross-examination that he had no knowledge of the loan transaction or the issuance of the cheque; the complainant therefore failed to prove the legally recoverable debt of Rs.1,78,000/-. Though initial presumptions arose under Sections 118 and 139 NI Act, the accused rebutted them by a probable defence (cheque allegedly issued as blank security at loan stage; last instalment equated by seizure and sale of the hypothecated vehicle). The trial Court's acquittal was held correct and the point answered in the affirmative; the appeal was dismissed and the acquittal stands.

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 26^TH DAY OF JUNE, 2025 BEFORE

THE HON'BLE MR. JUSTICE RAJESH RAI K CRIMINAL APPEAL NO.100182 OF 2016 (A)

BETWEEN:

M/S. SHRIRAM TRANSPORT FINANCE CO. LTD. HAVING ITS REGISTERED OFFICE AT CHENNAI AND BRANCH OFFICE AT III FLOOR, RAJAPUR COMPLEX, OPP. JAYARAM HOSPITAL, COLLEGE ROAD, HOSPET, BELLARY DISTRICT. THROUGH ITS FIELD EXECUTIVE AND POWER OF ATTORNEY HOLDER, G. KRISHNA MURTHY S/O. DEVAREDDY GOUDA, AGED ABOUT 35 YEARS, HINDU, R/O. HOSPET, BELLARY DISTRICT.

…APPELLANT

(BY SRI. SHREEVATSA HEGDE, ADVOCATE)

AND:

YASHAVANT NARAYANKAR Digitally signed byYASHAVANT NARAYANKAR Date: 2025.06.27 15:02:08 +0530

H. PRASHANTHKUMAR S/O. SHIVALINGAPPA, AGE: MAJOR, OCCUPATION: BUSINESS, R/O. NEAR URAMMA TEMPLE, BEHIND PANCHYATH HIGHER PRIMARY SCHOOL, DANANAYAKANKERE, TQ. HOSAPETE, DIST. BELLARY.

…RESPONDENT

(BY KUM. GALAGI KAVYA SHIVAPPA, ADVOCATE FOR SRI. H.N. GULARADDI, ADVOCATE)

THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C., PRAYING TO SET ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED 3.11.2015 PASSED BY THE ADDITIONAL CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS COURT, HOSPET IN CRIMINAL CASE NO.1741 OF 2012 AND CONVICT THE RESPONDENT FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT.

THIS APPEAL, COMING ON FOR FURTHER HEARING THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE RAJESH RAI K

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ORAL JUDGMENT

(PER: THE HON'BLE MR. JUSTICE RAJESH RAI K)

The appellant has assailed the judgment passed in CC No.1741/2012, dated 03.11.2015 on the file of the learned Addl. Civil Judge and JMFC, Hospete¹ , whereby the trial Court acquitted the accused/respondent for the offence punishable under Section 138 of Negotiable Instruments Act, 1881² .

2. For the sake of convenience and easy reference, the

parties are referred to as per their rankings before the trial Court.

3. The abridged facts of the prosecution case are that, the appellant/complainant-M/s. Shriram Transport Finance Company Limited³ is a private company registered under the Indian Companies Act, 1956. It is stated that the respondent/accused has borrowed a vehicle loan from the company to purchase Tata Tipper vehicle bearing registration No.KA-35/7388 for a sum of Rs.7,41,841/-. Accordingly, he entered into loan-cum-hypothecation agreement with the

1 Hereinafter referred to as ‘Trial Court’ for short

2 Hereinafter referred to as ‘NI Act’ for short

3 Hereinafter referred to as ‘Company’ for short

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company. Thereafter, though the accused agreed to repay the said loan amount in 35 Equated Monthly Installments (EMI), he defaulted to make payment as per terms of the agreement and there was due of Rs.1,78,000/-. In spite of repeated requests, he issued a cheque bearing No.024702 dated 08.02.2012 drawn on Axis Bank Ltd., Hospet Branch for a sum of Rs.1,78,000/-. As per the advice of the respondent/accused, the complainant/company presented the cheque through its banker for encashment, however, the same was returned with an endorsement “Insufficient Funds” dated 03.04.2012. Subsequent thereto, the complainant/company issued a legal notice dated 23.04.2012 to the accused to repay the said cheque amount. Though notice was served on the accused, he failed to repay the said loan amount. Hence, the company filed a private complaint under Section 200 of Cr.P.C. for the offence punishable under Section 138 of NI Act before the trial Court.

4. To prove the case, the complainant examined its Authorized Officer as PW1 and marked 9 documents as Ex.P1 to P9. The accused neither examined any witness on his behalf, nor marked any documents.

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5. After assessment of oral and documentary evidence, the trial Court acquitted the accused for the offence punishable under Section 138 of NI Act vide judgment dated 03.11.2015, as stated supra. The said judgment is under challenge in this appeal by the complainant.

6. Heard the learned counsel Sri.Shreevatsa Hegde for the appellant/complainant, so also learned counsel Ms. Galagi Kavya Shivappa for Sri. H.N. Gularaddi, learned counsel for the respondent/accused.

7. The primary contention of the learned counsel for the appellant/complainant is that the trial Court grossly erred while acquitting the accused for the offence punishable under Section 138 of NI Act, despite the complainant placing sufficient evidence on record to prove the case. According to the learned counsel, the accused entered into hypothecation-cum-loan agreement with the complainant’s company, he failed to repay the loan amount and issued the cheque in question. Admittedly, the accused has not disputed his signature on Ex.P4-Cheque in question. In such circumstance, the complainant has proved the initial presumption available under Sections 118 and 139 of

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NI Act. He further submitted that the trial Court misread the evidence and came to the conclusion, PW1 is not an authorized

person to prosecute the case on behalf of the complainant/company and the cheque in question was issued for the security purpose. Further, according to him, the trial Court committed an error in holding that once the hypothecated vehicle seized and sold, then the hire purchase agreement automatically gets cancelled and the company cannot recover the remaining balance amount. Hence, according to him, the judgment passed by the trial Court is liable to be set-aside and accordingly, he prays to allow the appeal and convict the accused for the charged offence.

8. Per contra , learned counsel for the

respondent/accused contended that the trial Court after meticulously examining the entire evidence on record passed a well-reasoned judgment, which does not warrant interference at the hands of this Court. She contended that the complainant/company has miserably failed to prove the legally recoverable debt against the accused/respondent by placing the ledger extract to prove that the accused is owing to a sum of Rs.1,78,000/-. She also contended that the trial Court has

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rightly held that the accused has repaid all installments except last installment of Rs.1,78,000/-, hence immediately the complainant/company seized the vehicle in question and by selling the same, equated the installment. In such circumstance, the hypothecation agreement automatically stands cancelled and the same cannot be acted upon. In that view of the matter, the trial Court has rightly acquitted the accused. Accordingly, she prays to dismiss the appeal.

9. Having heard the learned counsel for the respective parties and on perusal of the material evidence available on record, the sole point that arise for my consideration is:

“ Whether the trial Court is justified in

acquitting the accused for the offence punishable under Section 138 of NI Act? ”

10. As could be gathered from records, issuance of

cheque in question at Ex.P4 by the accused to the company and the signature on it is not seriously disputed by the accused. The specific defence of the accused is that the cheque in question was issued at the time of obtaining loan for purchase of Tata Tipper vehicle. According to him, the accused has issued several blank signed cheques as security purpose.

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Subsequently, the accused repaid all the installments and failed to pay the last installment i.e., a sum of Rs.1,78,000/-. As such, the company immediately seized the vehicle and by selling the same, equated the said installment amount. Despite, the complainant presented the cheque in question for a sum of Rs.1,78,000/- for unlawful gain. On careful perusal of the evidence of PW1-authorised officer of the company, he has failed to produce the ledger extract pertaining to the loan transaction of the accused in the company. He categorically admitted in his cross-examination that he had no knowledge whatsoever in respect of transaction of the loan amount and also issuance of cheque in question. In such circumstance, the complainant/company failed to prove the legally recoverable debt pending against the accused to the complainant/company. No doubt, initial presumption arises under Sections 118 and 139 of NI Act to favour the complainant. However, it is well settled position of law by this Court as well as by the Hon’ble Apex Court in catena of decisions that initial presumption can be rebutted by placing probable defence. In the instant case, on a careful perusal of the evidence available on record, the accused rebutted initial presumption. In that view of the

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matter, I am of the considered view that the trial Court has rightly acquitted the accused for the offence punishable under Section 138 of NI Act. Therefore, interference does not call for in the impugned judgment. Accordingly, I answer the point raised above in the “affirmative” and proceed to pass the following:

ORDER

The Criminal Appeal No.100182/2016 stands dismissed .

SD/(RAJESH RAI K) JUDGE

JTR CT:PA

List No.: 1 Sl No.: 2