Dismissed

M/S Institute of Language v. Himaja Educational Institutions

Karnataka HC24 Feb 2025CRL.A/1280/2015

Case brief

AI extract

What is this about?

In this criminal appeal under Section 378 CrPC, the High Court of Karnataka upheld the acquittal of respondents accused of cheque bouncing under Section 138 NI Act. The Court held that the complainant failed to prove liability as they did not perform the agreed services during the period covered by the bounced cheque.

What did the court decide?

Appeal dismissed; acquittal of respondents for Section 138 of N.I. Act affirmed.

M/S Institute of Language Vs Himaja Educational… — Cheque Dishonour | Karnataka HC (2025)

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NC: 2025:KHC:8026 CRL.A No. 1280 of 2015

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 24^TH DAY OF FEBRUARY, 2025

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BEFORE

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THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR

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CRIMINAL APPEAL NO. 1280 OF 2015

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BETWEEN:

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M/S. INSTITUTE OF LANGUAGE MANAGEMENT PVT.LTD., HAVING ITS REGISTERED OFFICE AT NO.48/49/50, "ASHOK PLAZA" 3^RD FLOOR, GANDHI BAZAAR MAIN ROAD BASAVANAGUDI BANGALORE-560 004 REPRESENTED BY ITS

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Digitally signed by LAKSHMINARAYANA AUTHORISED REPRESENTATIVE MURTHY RAJASHRI Location: HIGH MR. A. GHOUSE PASHA COURT OF KARNATAKA

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…APPELLANT

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(BY SMT. VIDYA R. GOWDA, ADV. FOR SRI. G.B. SHARATH GOWDA, ADVOCATE)

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AND:

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HIMAJA EDUCATIONAL INSTITUTIONS

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K.N.ROAD, PUTTUR CHITTOOR DISTRICT-517 583 REPRESENTED BY ITS CHAIRMAN MR.M.SURENDRA RAJU

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MR.M.SURENDRA RAJU CHAIRMAN HIMAJA EDUCATIONAL INSTITUTIONS

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K.N.ROAD, PUTTUR-517583

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…RESPONDENTS

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(BY SRI. D.R.P. BABU, ADV.)

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THIS CRL.A. IS FILED U/S.378(4) OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT DATED 14.09.2015 PASSED BY THE XXV A.C.M.M., BANGALORE IN C.C.NO.15561/2012 - ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I. ACT.

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

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NC: 2025:KHC:8026 CRL.A No. 1280 of 2015

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CORAM: HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR

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ORAL JUDGMENT

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This appeal is filed by the complainant challenging the judgment of acquittal dated 14.09.2015 passed in C.C.No.15561/2012 by the XXV Additional Chief Metropolitan Magistrate, Bengaluru, whereunder the respondents have been acquitted for offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'N.I. Act', for short).

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The case of the complainant in brief is as under:

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The complainant is into business of conducting training

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sessions/workshops in communicative English to students of various schools throughout Southern India. The complainant had entered into a Memorandum of Understanding dated 28.03.2011 with the first accused - Institution for conducting workshop of spoken English to students of Himaja Educational Institution at Puttur, Jems English Medium School, Puttur, Himaja Bala Saraswarthi School, Nindra Himaja International Concept School, Nagari and Himaja Degree College,

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NC: 2025:KHC:8026 CRL.A No. 1280 of 2015

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Kalyanpuram, Puttur, Chittoor District. As per the agreement, the project was to cover 2900 students and the fee agreed upon for each student was Rs.300/- for the academic year i.e., duration of not more than eight months. The total amount of the project was Rs.8,70,000/- payable in three installments i.e., the first installment comprising of 50% of the agreed sum to be paid in June 2011, second installment comprising 25% to be paid in the month of September, 2011 and third installment comprising of remaining 25% to be paid in the month of December, 2011. The complainant had started the project successfully though the accused did not pay the installment amount. However, during September 2011, the accused requested the complainant for rescheduling the payments and had requested for six installments to pay the balance amount. The complainant had offered to accused three installments to clear the balance amount. But the accused did not adhere to three installments and in order to reduce cost of the project, the accused had chosen for three faculties and further reduced the faculty to two and off late demanded three faculties. Later, everything was set in place after mutual discussion between the accused and the complainant and in the mutual discussion,

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the number of students was reworked to 1574 instead of 2900 and the amount was mutually agreed to Rs.3,94,960/regarding 1574 students as against the original Rs.8,70,000/for 2900 students. In pursuance of the mutual discussion, the accused addressed a final settlement letter dated 19.12.2011 acknowledging total project cost as Rs.3,94,360/- and after deducting Rs.3,00,000/-, which was already paid, the accused issued a post dated cheque in favour of the complainant for Rs.94,360/- dated 10.02.2012 bearing No.689397 drawn on State Bank of India, Puttur agreeing to complete the rest of the project with two faculties. On presentation of the said cheque for collection, the same has returned dishonored for reason "funds insufficient" vide memo dated 13.02.2012. The complainant got issued legal notice dated 27.02.2012. Inspite of service of notice, the accused failed to make payment of the cheque amount. Therefore, the complainant has filed a private complaint against the respondent - accused for offence under Section 138 of the N.I. Act. The learned Magistrate has taken cognizance and registered C.C.No.15561/2012 against the respondent - accused Nos.1 and 2 for offence under Section 138 of the N.I. Act. The complainant in order to prove his case,

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has examined one witness as PW.1 and got marked Exs.P1 to P10. Exs.D1 and D2 are marked in the cross-examination of PW.1. The statement of the accused has been recorded under Section 313 of Cr.P.C. The evidence was not led by the accused. The learned Magistrate after hearing the arguments of both sides, has formulated points for consideration and passed the impugned judgment of acquittal. The said judgment of acquittal has been challenged by the appellant - complainant in this appeal.

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Heard the learned counsel for the appellant and the

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learned counsel for the respondents.

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The learned counsel for the appellant would contend that the respondent - accused has admitted the signature on cheque - Ex.P4 and its liability to pay sum of Rs.94,360/under letter - Ex.P3. Therefore, the presumption under Section 139 of the N.I. Act requires to be drawn. He further submits that the said presumption has not been rebutted by the respondent - accused. Without considering this aspect, the learned Magistrate has swayed away by the admissions given by PW.1 in his cross-examination and erred in acquitting the

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respondent - accused. With this, she prayed for allowing the appeal and convicting the respondent - accused for offence under Section 138 of N.I. Act.

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The learned counsel for the respondents would contend that PW.1 in his cross-examination has admitted that two faculties not worked for March and April, 2012 and cheque - Ex.P4 has been issued for making payment regarding March and April, 2012. He further submits that the cheque issued is a post dated cheque and it is issued under letter dated 19.12.2011 which is at Ex.P3, whereas the complainant did not complete the assignment inspite of issuing two letters which are at Exs.D1 and D2. There is no liability on the part of the respondent - accused to pay the cheque amount. He further submits that as the work assigned is not carried out, the post dated cheque cannot be held to have been drawn for existing debt or liability. On that point, he placed reliance upon the decision of the Hon'ble Apex Court in the case of Indus Airways Private Limited and Others vs. Magnum Aviation Private Limited and another reported in (2014) 12 SCC 539. He further submits that considering all

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these aspects, the learned Magistrate has rightly acquitted the respondent - accused. With this, he prayed for dismissal of the appeal.

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Having heard the learned counsels, this Court has

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perused the impugned judgment and Trial Court records.

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Considering the grounds urged, the following point arises for consideration:

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"Whether the learned Magistrate has erred in acquitting the respondent - accused for offence under Section 138 of N.I. Act?"

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My answer to the above point is in Negative for the following reasons:

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The parties entering into Memorandum of Understanding dated 28.03.2011 as per Ex.P2 is not in dispute. The terms of the said Memorandum of Understanding have been modified in discussion between the complainant and the accused and the settlement was arrived at on 19.12.2011 which is at Ex.P3. As per terms of Ex.P3, a total amount payable is Rs.3,94,360/and the respondent - accused had paid Rs.3,00,000/- and

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balance payable is Rs.94,360/-. The said balance amount of Rs.94,360/- is payable for two faculties till end of academic year. For making payment of the said amount of Rs.94,360/-, a post dated cheque has been issued by the respondent - accused and the same has been mentioned in Ex.P3. The said post dated cheque is at Ex.P4. It is the case of the appellant - complainant that they have completed their assignment as per settlement arrived at Ex.P3 and therefore, the respondent - accused is liable to pay the amount of cheque - Ex.P4. PW.1 in his cross-examination has admitted that the Memorandum of Understanding is for academic year and the said academic year commences on 28.03.2011 and ends, on 23.04.2012. PW.1 has admitted in his cross-examination that from 19.12.2011 they have sent two staff to the Institution of accused and the said two staff were taken back during March 2012. PW.1 has further admitted that during March and April, 2012 no staff of appellant worked in the Institution of accused. PW.1 has further admitted that the cheque amount of Ex.P4 pertains to March and April, 2012. When PW.1 himself has admitted that they have not done the work for March and April, 2012 they are not entitled for any amount for the said two months.

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Cheque - Ex.P4 has been issued as a post dated cheque under letter Ex.P3 for making payment for March and April, 2012 as admitted by PW.1, whereas the complainant has not sent staff to the accused - Institution for March and April, 2012. There is no liability on the part of the respondent -accused to make payment of amount of cheque - Ex.P4. Therefore, the learned Magistrate has rightly held that Ex.P4 - cheque has not been issued for making payment of liability. Considering the said aspect, the learned Magistrate has rightly acquitted the respondent - accused for offence under Section 138 of the N.I. Act.

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