Allowed

Sumanth Finance v. Ganapati H Hedge

Karnataka HC1 Aug 2025CRL.A/100357/2017

Case brief

AI extract

What is this about?

In this appeal under Section 378 Cr.P.C., the Karnataka High Court allowed the appeal, setting aside the Sessions Court's acquittal and restoring the conviction. The Court held that the legal notice was validly served within the statutory period based on the date of receipt of the acknowledgement (28.03.2000) rather than the date of endorsement (16.03.2000).

What did the court decide?

The Criminal Appeal was allowed. The judgment of acquittal dated 18.07.2017 passed by the Sessions Court was set aside. The judgment of conviction dated 26.09.2011 was affirmed.

Sumanth Finance Vs Ganapati H Hedge — Cheque Dishonour | Karnataka HC (2025)

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NC: 2025:KHC-D:9595 CRL.A No. 100357 of 2017

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 1^ST DAY OF AUGUST 2025 BEFORE

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THE HON'BLE MR. JUSTICE C.M. POONACHA CRIMINAL APPEAL NO. 100357 OF 2017 (A-)

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BETWEEN:

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SUMANTH FINANCE, NEAR GOVINDRA HALL, R/BY ITS MANAGING PARTNER/MANAGER, BHARATI S. MADIVALA, AGE: 45 YEARS, VIKASA ASHRAM CIRCLE, SIRSI, (U.K.)-581401.

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…APPELLANT

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(BY SRI. SURAJ M. KATAGI FOR SRI. V.G. BHAT, ADVOCATES)

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AND:

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GANAPATI S. HEDGE, AGE: 47 YEARS, OCC: AGRICULTURE, R/O: ELEGUNDI HITTALLI, TQ: YELLAPUR, (U.K.)-581331.

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…RESPONDENT

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(BY SRI. VISHWANATH HEGDE, ADVOCATE)

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YASHAVANT NARAYANKAR

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Digitally signed by YASHAVANT NARAYANKAR Location: HIGHCOURT OF KARNATAKA DHARWAD BENCH DHARWAD

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C., SEEKING TO CALL FOR THE RECORDS IN CRIMINAL APPEAL NO.122/2011 ON THE FILE OF 1^ST ADDITIONAL SESSIONS JUDGE, KARWAR, SITTING AT SIRSI AND C.C. NO.1808/2000 ON THE FILE OF IIND ADDITIONAL J.M.F.C. SIRSI; TO SET-ASIDE THE JUDGMENT AND ORDER DATED 18.07.2017 PASSED BY THE IST ADDITIONAL SESSIONS JUDGE U.K. KARWAR, SITTING AT SIRSI IN CRIMINAL APPEAL NO.122 OF 2011 BY RESTORING THE JUDGMENT OF CONVICTION AND ORDER DATED 26.09.2011 IN C.C.NO.1808 OF 2000 PASSED BY THE II ADDITIONAL J.M.F.C. SIRSI. CONVICTING RESPONDENT ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENT ACT AND PASS SUCH OTHER ORDER FOR ENHANCEMENT OF PUNISHMENT AND COMPENSATION WITH INTEREST ETC. AS THIS HONORABLE COURT THINKS PROPER UNDER THE CIRCUMSTANCE OF THE CASE, IN THE INTEREST OF JUSTICE AND EQUITY AND ETC.

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NC: 2025:KHC-D:9595 CRL.A No. 100357 of 2017

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HC-KAR

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

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CORAM: THE HON'BLE MR. JUSTICE C.M. POONACHA

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ORAL JUDGMENT

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The present appeal is filed under Section 378(4) of the Code of Criminal Procedure, 1973¹ , seeking to set aside the judgment and order dated 18.07.2017 passed in Crl.Appeal No.122/2011 by the I Additional District and Sessions Judge, U.K.Karwar, Sitting at Sirsi² and seeking to restore the judgment of conviction and order dated 26.09.2011 passed in C.C.No.1808/2000 by the II Additional JMFC, Sirsi³ .

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The relevant facts in a nutshell leading to the present appeal are that the appellant/complainant, a financial institution, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881⁴ , against the respondent/accused contending, inter alia , that the respondent had borrowed a sum of ₹25,000/- on 14.09.1999 agreeing to repay the same in eight Equated Monthly Installment⁵ with interest at 21% per annum. That the respondent failed to repay

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1 Hereinafter referred to as the ‘Cr.P.C’

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2 Hereinafter referred to as the ‘Sessions Court’

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3 Hereinafter referred to as the ‘Magistrate Court’

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4 Hereinafter referred to as the ‘N.I. Act’

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5 Hereinafter referred to as the ‘EMI’

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3 - NC: 2025:KHC-D:9595 CRL.A No. 100357 of 2017

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HC-KAR

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the loan amount and when the complainant demanded for payment of the same, the accused issued a cheque dated 16.03.2000 for ₹26,000/-. That the complainant presented the said cheque through his bank on 16.03.2000, which was dishonoured with the endorsement “account closed”. The complainant got issued a legal notice on 03.04.2000, which notice was served on the accused on 04.04.2000. However, there was no reply to the said notice. Subsequently, the complainant filed a complaint in C.C.No.1808/2000, which was contested by the accused.

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The Magistrate Court, vide judgement dated 16.01.2008, dismissed the complaint and acquitted the accused. Being aggrieved, the complainant preferred the Crl.Appeal No.272/2008 before this Court, which appeal was allowed on 02.03.2009 and the matter was remitted back to the Magistrate Court. Thereafter, the complainant having adduced further evidence, the Magistrate Court, vide judgment dated 26.09.2011, allowed the complaint and convicted the accused of the offence punishable under Section 138 of the N.I. Act and imposed a fine. Being aggrieved, the accused has preferred the Crl.Appeal No.122/2011. The complainant

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HC-KAR

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entered appearance in the said proceedings and contested the same. The Sessions Court, vide judgement dated 18.07.2017, allowed the appeal, set aside the judgment dated 26.09.2011 passed by the Magistrate Court and acquitted the accused of the offence punishable under Section 138 of the N.I. Act. Being aggrieved, the complainant has preferred the present appeal.

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Heard submissions of the learned counsel Sri.Suraj M. Katagi appearing for the learned counsel Sri.V.G. Bhat for the appellant/complainant and the learned counsel Sri. Vishwanath Hegde for the respondent/accused.

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At the outset, it is pertinent to note that the issuance of cheque dated 16.03.2000 (Ex.P1) by the accused, the dishounour of cheque with the endorsement “account closed”, the issuance of legal notice dated 03.04.2000 (Ex.P4) as also the postal acknowledgment (Ex.P5) are undisputed.

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The sole ground on which the proceedings instituted

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by the complainant have been contested by the accused is that the intimation of dishonour of cheque was received by the complainant on 16.03.2000, consequent to which, the notice was issued on 03.04.2000, beyond the period of 15 days as

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HC-KAR

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contemplated under the Proviso (b) to Section 138 of the N.I. Act (prior to amendment). In this context, it is pertinent to notice that an attested copy of the endorsement (Ex.P2) was initially marked in evidence. Subsequently, after remand, the complainant examined the manager of bank as CW.1 and marked the carbon copy of the endorsement dated 16.03.2000 (Ex.C1). It is forthcoming from a perusal of the said endorsements (Ex.P2 and Ex.C1) that the same was issued by the banker of complainant on 16.03.2000, whereas an acknowledgement for having received the said endorsement is made on 28.03.2000.

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The Magistrate Court, vide judgement dated 26.09.2011, recorded a finding that the complainant received the intimation of dishonour of cheque on 28.03.2000 and hence the notice (Ex.P4) having been issued on 03.04.2000, the same has been issued within 15 days as contemplated under Proviso (b) of Section 138 of the N.I. Act. However, the Sessions Court has recorded a finding that the complainant was very much aware about the dishonour of cheque dated 16.03.2000 and hence, the issuance of notice (Ex.P4) is after the statutory period of 15 days from the date of knowledge.

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HC-KAR

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At this juncture, the learned counsel for the respondent/accused also places reliance on the averment made in the notice (Ex.P4), wherein, it is stated that the complainant received the intimation from its banker on 16.03.2000. In this context, it is pertinent to note that, in the complaint, it is specifically averred that the cheque was dishonoured on 16.03.2000 as “account closed” and the complainant was informed about the dishonour of cheque on 28.03.2000. Further, PW.1 in the affidavit, by way of examination in chief, has specifically deposed that the cheque was dishonoured on 16.03.2000 as “account closed” and the complainant was informed about the dishonour of cheque on 28.03.2000. It is also forthcoming from the endorsement (Ex.P2/Ex.C1) that the said endorsement was issued by the banker of complainant on 16.03.2000, whereas, in the acknowledgment that is forthcoming in the said endorsement (Ex.P2/Ex.C1), it is mentioned that the same was received on 28.03.2000.

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The learned counsel for the respondent/accused placing reliance on the Proviso (b) to Section 138 of the N.I. Act vehemently contends that the said Proviso clearly indicates that the period of 15 days for issuance of notice would

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HC-KAR

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commence on “the receipt of information from the bank regarding return of cheque”. In support of the same, reliance is placed on the notice (Ex.P4), wherein, it is stated that the complainant had received the intimation from its banker on 16.03.2000. In this context, it is forthcoming from the material on record that it has been stated that the complainant was informed telephonically by its banker that the cheque was dishonoured. However, having regard to the admitted position that it is mentioned in the endorsement (Ex.P2/Ex.C1) that the acknowledgement has received on 28.03.2000 and in view of the specific case of the complainant as averred in the complaint as also as deposed in the evidence, the finding of the Magistrate Court regarding the same is just and proper.

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The learned counsel for the respondent/accused placing reliance on the findings of the Sessions Court vehemently contends that there is an interpolation in the date mentioned in Ex.C1, wherein, the carbon copy marking of the date is mentioned as “16.03.2000” and the month has thereafter been corrected by an original ink from “4 to 3” and that the said aspect of the matter has also been noticed by the Sessions Court. In this context, it is pertinent to notice that in

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HC-KAR

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the endorsement (Ex.P2), which is a photocopy of Ex.C1, which photocopy has also been attested by the banker of the complainant, it appears that there is a correction of the month from “4 to 3”. In any event, the said correction having been made at the earliest point of time and no other imputation is forthcoming by virtue of the said alleged correction, the contention put forth on behalf of the respondent/accused is not liable to be accepted.

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In view of the discussion made above, this Court is of the considered opinion that the judgment dated 18.07.2017 passed in Crl.Appeal No.122/2011 is liable to be set aside and the judgment dated 18.08.2000 passed in C.C.No.1808/2000 is required to be affirmed.

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Hence, the following:

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ORDER

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i) The above appeal is allowed .

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ii) The judgment dated 18.07.2017 passed in Criminal Appeal No.122/2011 by the I

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NC: 2025:KHC-D:9595 CRL.A No. 100357 of 2017

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HC-KAR

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Additional District and Sessions Judge,

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U.K.Karwar, Sitting at Sirsi, is set aside.

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iii) The judgment of conviction and sentence dated 18.08.2000 passed in C.C.No.1808/2000 by the II Additional JMFC, Sirsi, is affirmed.

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iv) No costs.

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Sd/(C.M. POONACHA) JUDGE

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PMP CT-MCK List No.: 1 Sl No.: 8

Sumanth Finance v. Ganapati H Hedge

Case brief

What is this about?

What did the court decide?

Sumanth Finance v. Ganapati H Hedge

Case brief

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What did the court decide?

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