Dismissed¶¶86

J. Nagaraj S/O Ayappa, v. H.K. Shantaraj

Karnataka HC20 Jun 2025CRL.A/100299/2016

Case brief

AI extract

What is this about?

Section 138 N.I. Act acquittal upheld; rebuttal of presumptions under Sections 118 and 139 N.I. Act by defence evidence (DW1–DW3, Ex.D1); blank/security cheque leaves handed to financier; hand loan of ₹1,10,000/-; cheque No.394071 Syndicate Bank, Gangavathi dishonoured 'funds insufficient'; complainant a money-lender/financier ('Yogi Finance', as contended) with multiple cheque-bounce cases; criminal appeal under Section 378(4) Cr.P.C. against judgment of acquittal; non-interference where First Appellate Court takes a plausible view; acquittal by District and Sessions Judge, Koppal in Crl.A.No.12/2013 reversing JMFC Gangavathi conviction in C.C.No.509/2008.

What did the court decide?

None; the appeal of the appellant-complainant is dismissed and the acquittal of the respondent-accused recorded by the First Appellate Court stands.

J. Nagaraj S/O Ayappa, Vs H.K. Shantaraj — Cheque Dishonour | Karnataka HC (2025)

What the court decided

AI extract

Outcome

None; the appeal of the appellant-complainant is dismissed and the acquittal of the respondent-accused recorded by the First Appellate Court stands.

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Issue for consideration

Whether the First Appellate Court is justified in acquitting the accused for the offence punishable under section 138 of the N.I. Act by setting aside the judgment of conviction and order of sentence passed by the trial court in C.C.No.509/2008?

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Court's answer

Although the initial presumption under Sections 118 and 139 N.I. Act favoured the complainant, it stood rebutted because the accused placed sufficient defence evidence (DW1 to DW3 and Ex.D1); in consequence a doubt arose in the Court's mind regarding the alleged transaction and the legally recoverable debt owed by the accused.

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Ratio / Principle

The First Appellate Court rightly appreciated the evidence on record in acquitting the accused by setting aside the trial court's judgment of conviction and order on sentence.

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Key takeaways

It is settled position of law that an appellate court shall not interfere with a judgment of acquittal unless the view taken is not plausible; here the First Appellate Court took a plausible view, and therefore no good grounds existed to interfere with the acquittal.ratio¶¶84
The sole framed point — whether the First Appellate Court was justified in acquitting the accused under section 138 N.I. Act by setting aside the conviction and sentence in C.C.No.509/2008 — is answered in the affirmative.ratio¶¶84

Detailed headnote1 paragraphs

Criminal Appeal No.100299 of 2016 under Section 378(4) Cr.P.C. — High Court of Karnataka, Dharwad Bench (Rajesh Rai K, J.), 20.06.2025: Dismissed. The appellant-complainant challenged the First Appellate Court's (District and Sessions Judge, Koppal) judgment of acquittal dated 24.08.2016 in Crl.A.No.12/2013, by which the accused was acquitted under Section 138 of the Negotiable Instruments Act, 1881 and the conviction and sentence dated 01.02.2013 in C.C.No.509/2008 (Principal Civil Judge and JMFC, Gangavathi) — fine of Rs.1,10,000/- under Section 255(2) Cr.P.C. with six months' simple imprisonment in default, and Rs.1,00,000/- compensation under Section 357 Cr.P.C. — was set aside. Cheque No.394071 (Syndicate Bank, Gangavathi Branch, dated 19.09.2012) for ₹1,10,000/- and the accused's signature were not disputed; the defence was that ten blank cheque leaves had been handed to the complainant as security for a ₹40,000/- loan availed in 2000 by DW3, the accused's sister (agreement of sale Ex.D1 dated 26.07.2000; bank account Ex.D2 dated 21.07.2000). PW1 admitted DW3's loan, admitted filing several cheque-bounce cases as financier and personally, and nowhere stated the date, month or year of the alleged loan to the accused. Held: the presumptions under Sections 118 and 139 N.I. Act stood rebutted by the defence evidence of DW1 to DW3 and Ex.D1, casting doubt on the alleged transaction and the legally recoverable debt; the First Appellate Court having taken a plausible view, interference with the acquittal was unwarranted; the framed point answered in the affirmative. Appeal dismissed.

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NC: 2025:KHC-D:7889 CRL.A No. 100299 of 2016

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 20^TH DAY OF JUNE, 2025

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BEFORE

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THE HON'BLE MR. JUSTICE RAJESH RAI K

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CRIMINAL APPEAL NO.100299 OF 2016 (A)

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BETWEEN:

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J. NAGARAJ S/O. AYAPPA, AGED ABOUT 60 YEARS, OCC. AGRICULTURE, R/O. HIRE JANTAKAL, TALUK: GANGAVATHI, DISTRICT: KOPPAL.

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…APPELLANT

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(BY SRI. MALLIKARJUNSWAMY B. HIREMATH, ADVOCATE)

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AND:

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YASHAVANT NARAYANKAR Digitally signed by YASHAVANT NARAYANKAR Date: 2025.06.24 10:12:00 +0530

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H.K. SHANTARAJ S/O. CHOTA ANJIRAO, AGED ABOUT 52 YEARS, OCC. CONTRACTOR, R/O. BASAVADURGA, NOW AT HIRE JANTAKAL, TQ. GANGAVATHI, DISTRICT: KOPPAL.

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(BY SRI. GURUBASAVARAJ S.M., ADVOCATE)

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…RESPONDENT

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C., PRAYING TO SET-ASIDE JUDGMENT IN CRIMINAL APPEAL NO.12 OF 2013 DATED 24/8/2016 PASSED BY THE DISTRICT AND SESSIONS JUDGE, KOPPAL AT KOPPAL AND CONSEQUENTLY RESTORE THE JUDGMENT DATED 01/02/2013 PASSED BY THE PRINCIPAL CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, AT GANGAVATI IN CRIMINAL CASE NO.509 OF 2008.

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NC: 2025:KHC-D:7889 CRL.A No. 100299 of 2016

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HC-KAR

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THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: THE HON'BLE MR. JUSTICE RAJESH RAI K

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ORAL JUDGMENT

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

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In this appeal, the appellant/complainant has assailed the judgment of acquittal dated 24.08.2016 in Crl.A.No.12/2013 passed by the District and Sessions Judge, Koppal (hereinafter referred to as the 'First Appellate Court'), whereby the First Appellate Court allowed the appeal filed by the accused and acquitted him for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short 'N.I. Act') by setting aside the judgment of conviction and order on sentence dated 01.02.2013 in C.C.No.509/2008 passed by the Principal Civil Judge and JMFC, Gangavathi (hereinafter referred to as the ‘learned Magistrate').

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For the sake of convenience, the parties are referred to as per their rankings before the trial Court.

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HC-KAR

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The abridged facts of the case are as under:

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The complainant and accused are known to each other and in the year 2012, the accused borrowed a hand loan of ₹1,10,000/- from the complainant and thereafter, failed to repay the same. On repeated request made by the complainant, the accused issued a cheque bearing No.394071 drawn on Syndicate Bank, Gangavathi Branch on 19.09.2012 for repayment of the loan amount of ₹1,10,000/- in favour of the complainant. Thereafter, the complainant presented the said cheque for encashment through his banker. However, the said cheque was dishonored with an endorsement ‘funds insufficient’ on 24.09.2002. The said aspect was intimated by the complainant to the accused by issuing legal notice dated 24.09.2002. Though the said notice was served on accused, neither he replied nor repaid the loan amount. Left with no other alternative, the complainant filed a private complaint under Section 200 of Cr.P.C., against the

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NC: 2025:KHC-D:7889 CRL.A No. 100299 of 2016

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HC-KAR

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accused before the learned Magistrate for the offence punishable under Section 138 of the N.I. Act.

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To prove the case before the trial Court, the

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complainant himself examined as PW1 and marked 8 documents as Exs.P1 to P8. The accused also examined himself as DW1 and also examined 2 witnesses on his behalf as DW2 and DW3 so also marked 5 documents as Ex.D1 to Ex.D5.

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On assessment of oral and documentary

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evidence, the learned Magistrate convicted the accused for the offence punishable under Section 138 of the N.I. Act and ordered as follows:

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“ORDER

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Acting U/sec.255(2) of Cr.P.C., accused is convicted for an offence punishable U/Sec.138 of Negotiable Instruments Act and ordered to pay fine of Rs.1,10,000/-. In default, he shall undergo simple imprisonment for six months.

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NC: 2025:KHC-D:7889 CRL.A No. 100299 of 2016

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HC-KAR

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Further, Acting U/sec. 357 of Cr.P.C., out of fine amount, office is ordered Rs.1,00,000/- paid to the complainant as a compensation.”

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Aggrieved by the same, the accused preferred an appeal before the First Appellate Court in

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Crl.A.No.12/2013.

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On reassessment of the evidence on record, the First Appellate Court allowed the appeal and set-aside the judgment of conviction and order on sentence passed by the learned Magistrate and acquitted the accused for the offence punishable under Section 138 of the N.I. Act. The said judgment of the First Appellate Court is under challenge in this appeal.

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Heard the learned counsel Sri.

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Mallikarjunaswamy B Hiremath for the appellantcomplainant and the learned counsel Sri.Gurubasavaraj S.M., for the respondent-accused.

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HC-KAR

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The primary contention of the learned counsel

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for the appellant-complainant is that the First Appellate Court, without appreciating the evidence on record in a right perspective, has grossly erred in allowing the appeal and setting aside the judgment of conviction and order on sentence passed by the Trial Court. He contended that, to prove the legally recoverable debt, the complainant himself examined before the trial Court as PW1 and marked 8 documents. In his evidence, he clearly stated that the accused had approached him for hand loan of ₹1,10,000/- in the year 2012 and accordingly, he advanced the loan amount of ₹1,10,000/- to the accused, however, the accused failed to refund the same. Thereafter, he issued a cheque in question in favour of the complainant and on presentation of the same, the said cheque was returned to the complainant with an endorsement ‘funds insufficient’. Thereafter, the complainant issued a legal notice to the accused. Though the legal notice was served on the accused, neither he

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HC-KAR

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replied nor repaid the loan amount to the complainant. It is contended by the learned counsel that the complainant has discharged the initial presumption arising under Sections 118 and 139 of the N.I. Act and the same was not rebutted by the accused by placing a probable defence. He contended that, the lending capacity of the complainant is also proved since it is admitted by the accused that the complainant is a money lender and owning finance in the name and style ‘Yogi Finance’. In such circumstances, the Trial Court has rightly convicted the accused; however, the First Appellate Court misread the evidence and acquitted the accused. Accordingly, he prays to allow this appeal by setting aside the judgment passed by the First Appellate Court.

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Per contra , learned counsel for the respondent-

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accused contended that the First Appellate Court, after meticulously examining the evidence on record, has rightly passed well reasoned judgment, which does not call for interference at the hands of this Court. He contended that

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HC-KAR

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the accused has rebutted the initial presumption arising

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under Sections 118 and 139 of the N.I. Act by placing a probable defence by way of leading evidence of DWs.1 to 3. All these witnesses have consistently deposed that DW3, who is the sister of the accused, had obtained a hand loan of ₹40,000/- from the complainant in the year 2000 and for repayment of the same, she executed an agreement of sale of her property as per Ex.D1. At that time, the complainant insisted DW3 for issuing cheques as security, for which DW3 approached the accused, who is none other than her brother and requested him to open a bank account in his name and obtain cheques to hand over the same to the complainant as security. Accordingly, the accused opened a bank account and obtained cheque book. From the said cheque book, 10 cheque leaves were given to the complainant by the accused as a security. Though DW3 repaid the loan amount, the complainant did not return the said cheques and subsequently, he presented the cheque in question for unlawful gain. This

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9 - NC: 2025:KHC-D:7889 CRL.A No. 100299 of 2016

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HC-KAR

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aspect of the matter is clearly appreciated by the First Appellate Court in acquitting the accused by setting aside the judgment of conviction and order on sentence passed by the Trial Court. In such circumstances, the learned counsel for the respondent-accused prays to dismiss the appeal.

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Having heard the learned counsel for the parties

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and on perusal of the entire material available on record, the sole point that would surface for my consideration is:

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“Whether the First Appellate Court is justified in acquitting the accused for the offence punishable under section 138 of the N.I. Act by setting aside the judgment of conviction and order of sentence passed by the trial court in C.C.No.509/2008?

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I have given my anxious consideration to the

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arguments advanced by both the learned counsel and perused the materials on record.

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HC-KAR

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On perusal of the records it could be gathered that, Ex.P1-cheque in question and signature of the accused on the cheque is not disputed by the accused. The specific defence of the accused is, at no point of time, he borrowed a hand loan of ₹1,10,000/from the complainant and it is DW3/his sister, had obtained a loan of ₹40,000/- from the complainant in the year 2000 by executing an agreement of sale of her property on 26.07.2000 as per Ex.D1. Despite, the complainant insisted DW3 to issue a cheque as a security and as such, DW3 approached the accused requesting him for cheque. At that time, the accused opened an account in Syndicate Bank at Gangavati Branch as per Ex.D2 on 21.07.2000 and obtained a cheque book and from the said cheque book, he gave 10 blank cheques to his sister-DW3 and in turn, DW3 handed over the same to the complainant as a security for the hand loan obtained by her. It is further case of the accused that, subsequently, DW3 repaid the loan amount to the complainant, however the complainant

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HC-KAR

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failed to return the cheques of the accused and presented the cheque in question for unlawful gain. To substantiate this defence, the accused examined himself as DW1 and his sister as DW3 and her son as DW2.

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On careful perusal of their evidence, all these witnesses have deposed that DW3 availed a hand loan of Rs.40,000/- from the complainant in the year 2000 and for repayment of the said hand loan, the cheque in question was issued by the accused as a security. It is pertinent to mention at this stage that, in the cross-examination of PW1-complainant, he admitted about DW3 availing a hand loan of ₹40,000/- from his Finance in the year 2000 and an agreement of sale was also executed by her. Further, on perusal of the complaint and the evidence of PW1complainant, nowhere the complainant has stated the date, month or the year of lending loan to the accused. Further, he also admitted in his cross-examination that there are several cheque bounce cases filed by him against different persons in the capacity of Finance and on

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HC-KAR

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his personal capacity. In such circumstances, a doubt

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arises in the mind of this Court in respect of alleged transaction between the complainant and accused and also about legally recoverable debt owned by the accused. No doubt, the initial presumption arising under Sections 118 and 139 of the N.I. Act favours the complainant, however, at the same time, as per the settled position by this Court and the Hon’ble Apex Court in catena of judgments, the initial burden can be rebutted by the accused by placing sufficient defence. In the instant case, the accused has placed sufficient evidence of DW1 to DW3 and also marked document at Ex.D1 to rebut the initial presumption. In that view of the matter, I am of the considered view that the First Appellate Court has rightly appreciated the evidence on record and acquitted the accused by setting aside the judgment of conviction and order on sentence passed by the Trial Court. Further, this appeal is against the judgment of acquittal and it is settled position of law that the Appellate Court shall not interfere with the

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HC-KAR

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acquittal judgment unless the trial Court had not taken a plausible view. In the instant case, the First Appellate Court has taken a plausible view. Under such circumstances, I find no good grounds to interfere in the acquittal judgment passed by the First Appellate Court. In that view of the matter, I answer point raised above in the affirmative and proceed to pass the following:

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ORDER

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The Criminal Appeal No.100299/2016 is hereby

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dismissed .

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SD/(RAJESH RAI K) JUDGE

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YAN CT:PA LIST NO.: 1 SL NO.: 6

J. Nagaraj S/O Ayappa, v. H.K. Shantaraj

Case brief

What is this about?

What did the court decide?

J. Nagaraj S/O Ayappa, v. H.K. Shantaraj

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Statutes considered

Procedural history

Parties & counsel

Coram

Case details

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