Allowed

Smt. M. Vijayalakshmi v. Sri. M. Sanjay

Karnataka HC9 Jan 2025CRL.A/517/2016

Case brief

AI extract

What is this about?

Complainant's appeal against acquittal in a cheque dishonour case. The court found PW1 and PW2 proved a Rs.1,00,000 hand loan, and the accused failed to establish his defence that the cheque was given as security for a chit transaction. Acquittal set aside; accused convicted under Section 138 N.I.Act.

What did the court decide?

Acquittal set aside; accused convicted under Section 138 NI Act, sentenced to fine of Rs.1,40,000 (Rs.1,30,000 as compensation to complainant), default simple imprisonment six months.

Smt. M. Vijayalakshmi Vs Sri. M. Sanjay — Cheque Dishonour | Karnataka HC (2025)

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1 - NC: 2025:KHC:746 CRL.A No. 517 of 2016

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 9^TH DAY OF JANUARY, 2025

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BEFORE

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THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR

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CRIMINAL APPEAL No. 517 OF 2016

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BETWEEN:

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SMT. M. VIJAYALAKSHMI WIFE OF B. MOHANKUMAR AGED 37 YEARS RESIDING AT No.7 S.K. MUNIYAPPA BUILDING 6^TH CROSS, VINAYAKANAGAR KAMAKSHIPALYA BANGALORE - 560 079.

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Digitally signed by LAKSHMINARAYANA MURTHY RAJASHRI Location: HIGH COURT OF KARNATAKA

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(BY SRI JAGADISH BALIGA N, ADVOCATE)

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…APPELLANT

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AND:

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SRI M. SANJAY C/O SIDDALINGAPPA AGED ABOUT 45 YEARS GANGADHARESHWARA NILAYA SIDDALINGAPPA BUILDING BESIDE ASHQINI BENGAL STORE PETROL BUNK ROAD, 3^RD CROSS, VINAYAKANAGAR KAMAKSHIPALYA BANGALORE - 560 079.

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…RESPONDENT

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(BY SRI YASHODHAR HEGDE, ADVOCATE)

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NC: 2025:KHC:746 CRL.A No. 517 of 2016

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THIS CRL.A IS FILED UNDER SECTION 378(4) Cr.P.C PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED 05.01.2015 PASSED BY THE XXII A.C.M.M., BANGALORE IN C.C.No.9623/2012 - ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT AND ETC.,

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

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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 appellant – complainant praying to set-aside the judgment of acquittal dated 05.01.2015 passed in C.C.No.9623/2012 by the XXII Additional Chief Metropolitan Magistrate, Bengaluru, whereunder, the respondent – accused has been acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short hereinafter referred to as ‘N.I.Act’).

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The brief facts of the complainant’s case is that;

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The respondent – accused is known to her for the past several years. The respondent – accused approached the complainant during the first week of February, 2011

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and requested to lend a sum of Rs.1,25,000/- as hand loan and agreed to return the same within the period of three to four months and he has sought the said hand loan to meet the domestic and legal necessities. The complainant paid Rs.1,00,000/- by way of cash on 05.02.2011 to the respondent – accused. During the last week of April, 2011, the complainant approached the respondent – accused for repayment of the said hand loan amount. The respondent – accused had issued a cheque bearing No.579938 dated 18.05.2011 drawn on Vijaya Bank, Vijaynagar Branch, Bengaluru towards the repayment of the loan to the complainant. The complainant presented the said cheque on 26.06.2011 for encashment and the same has been returned with endorsement “Opening Balance Insufficient”. Thereafter, the complainant got issued the legal notice on 29.08.2011 and it has been served on the respondent – accused on 02.09.2011. The respondent – accused did not pay the cheque amount, therefore, the complainant filed the complaint against the respondent – accused for the

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offence under Section 138 of the N.I.Act. Cognizance was taken and sworn statement was recorded and the case came to registered against the respondent – accused for the offence under Section 138 of the N.I.Act in C.C.No.9623/2012. The respondent – accused appeared and a plea came to be recorded. The complainant examined herself as PW1 and got marked Exs.P1 to P10 and also examined one witness as PW2. The respondent – accused got marked Ex.D1 in the cross examination of PW1. The statement of the respondent – accused came to be recorded under Section 313 of Cr.P.C. The respondent – accused did not lead any defence evidence. The learned Magistrate, after hearing the arguments on both sides has formulated the points for consideration and thereafter, passed the impugned judgment of acquittal. The said judgment of acquittal has been challenged by the complainant in the present appeal.

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Heard learned counsel for the appellant and learned

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counsel for the respondent – accused

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Learned counsel for the appellant – complainant would contend that all the ingredients of the offence under Section 138 of the N.I.Act have been fulfilled. The respondent – accused inspite of receipt of notice has not given any reply putting forth his defence. The evidence of PW2 coupled with evidence of PW1 would establish that the complainant had lent Rs.1,00,000/- to the respondent – accused as hand loan. The cheque – Ex.P1 has been issued for making payment of legally enforceable debt. As the amount lent has been established and as the signature on the cheque has been established by the respondent – accused, a presumption has to be drawn under Section 139 of the N.I.Act. He contends that even though a document which is confronted to PW1 is not admitted by her, but it came to be marked as Ex.D1. The defence of the respondent – accused that he had given the cheque – Ex.P1 as a security to the chit transaction run by the complainant has not been established. Merely producing a note book containing the chit details which is at Ex.D1 does not establish the defence of the respondent –

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accused that cheque – Ex.P1 has been issued as a security for the said chit transaction. The respondent – accused has not given any explanation at the time of recording his statement under Section 313 of Cr.P.C. The respondent – accused at the time of recording his statement under Section 313 of Cr.P.C has stated that he will lead evidence

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but he has not led evidence. As Ex.D1 has not been admitted by PW1, it cannot be relied on to establish the defence of the respondent – accused. As the appellant – complainant has established that she had lent Rs.1,00,000/- to the respondent – accused as a hand loan

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and the cheque – Ex.P1 has been issued for repayment of the said hand loan amount and the cheque came to be dishonoured for “Opening Balance insufficient” itself would establish the offence under Section 138 of the N.I.Act. He further submits that payment of Rs.1,00,000/- by cash given by the complainant to the respondent – accused which has been stated by PWs.1 and 2 has not been denied in their cross examination. On these grounds, he prayed for allowing the appeal and convicting the

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respondent – accused for the offence under Section 138 of N.I.Act.

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Learned counsel for the respondent – accused would contend that the objection was not raised at the time of marking Ex.D1. On reading the first sentence in the cross examination itself would indicate that PW1 has admitted that she is running the chit transaction. The complainant has not produced the documents regarding she pledging her ornaments and availing loan of Rs.60,000/- even though she has admitted that she is in possession of the said documents. The financial capacity of the complainant has been disputed by the respondent – accused. The payment of Rs.1,00,000/- by the complainant to the respondent – accused has not been established. The complainant was running the saree business and she is earning only Rs.9,000/- per month and therefore, she has no capacity to lend Rs.1,00,000/-. PW2 is an interested witness and therefore, his evidence cannot be relied on.

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(i) Learned counsel for the respondent – accused placed reliance on the decision of the Hon’ble Apex Court in the case of Dattatraya Vs. Sharanappa reported in (2024) 8 SCC 573 . He contends that the judgment of acquittal cannot be interfered unless it is shown that there is no appreciation of evidence and it is passed based on the irrelevant and inadmissible evidence. He also placed reliance on the decision of the Hon’ble Apex Court in the case of R.V.E.Venkatachala Gounder Vs. Arulmigu Viswesaraswami & V.P.Temple and Another reported in (2003)8 SCC 752 , on the point that as the objection to the marking of Ex.D1 has not been raised at the trial, now the said objection cannot be raised at the later stage or even in appeal or revision. He also placed reliance on the decision of the Hon’ble Apex Court in the case of Basalingappa Vs. Mudibasappa reported in (2019) 5 SCC 418, on the point that the standard of proof for rebutting the presumption is preponderance of probabilities and presumption can be rebutted either by leading evidence of the respondent – accused or by the

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cross examination of the complainant witnesses. He

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submits that there are no grounds for interfering with the well reasoned judgment of acquittal passed by the Trial Court. With this, he prayed to dismiss the appeal.

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Having heard the learned counsels, the Court has perused the impugned judgment and the Trial Court records.

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Considering the grounds raised and urged, the following point arises for consideration;

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“whether the Trial Court has erred in acquitting the respondent – accused of the offence punishable under Section 138 of the N.I.Act”

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My answer to the above point is in the affirmative, for the following reasons;

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It is the case of the complainant – appellant that the respondent – accused requested for hand loan and she had paid Rs.1,00,000/- by way of cash as hand loan to the respondent – accused on 05.02.2011. In order to

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establish the said aspect, the complainant has been examined as PW1 and one witness has been examined on her behalf as PW2. PW1, in her chief examination has stated regarding the request of the respondent – accused for hand loan and she paying the respondent – accused cash of Rs.1,00,000/- as hand loan on 05.02.2011. Even though PW1 has been cross examined at length, there is no denial of the aspect of PW1 lending Rs.1,00,000/- by way of cash to the respondent – accused on 05.02.2011. PW2 is an independent witness who has stated in his chief examination that when he visited the shop of the complainant on 05.02.2011 for purchase of saree for his wife, he witnessed the complainant giving cash of Rs.1,00,000/- to the respondent – accused and he came to know that the respondent – accused had borrowed the said amount as hand loan from the complainant for his domestic and legal necessities. PW2 has also been cross examined by the respondent – accused, but there is no denial of the said aspect of the complainant giving cash of Rs.1,00,000/- in his presence to the respondent –

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accused. The said evidence of PWs.1 and 2 itself establishes the complainant lending Rs.1,00,000/- by way of cash to the respondent – accused. The learned Magistrate has ignored the above said aspects and not considered the evidence of PW2. PW2 cannot be said to be an interested witness only because he was acquainted with the complainant. PW2 in his cross examination has stated that he also knew the respondent – accused since three to four years.

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It is the defence of the respondent – accused that Ex.P1 – cheque has been given to the complainant as a security for chit transaction run by her. In order to establish his defence, he placed reliance only on the cross examination of PW1 and Ex.D1 – note book. PW1, in her cross examination had denied that Ex.P1 – cheque has been given by the respondent – accused as a security to the chit transaction run by her. Ex.D1 – note book has been confronted to PW1 in her cross examination stating that she is running the chit transaction and there are

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entries of 24 chit transactions in the note book for the period from 10.04.2009 to 10.07.2010 and in that aspect PW1 has stated that she is not aware of the same. The said note book confronted to PW1 has been marked as Ex.D1. When PW1 has not admitted Ex.D1 and its contents, it is for the respondent – accused to establish the same. In Ex.D1, there is no mention of giving any cheque as security for the chit transaction. There is also no mention of the aspect of the complainant running the said chit transaction. The possession of the said Ex.D1 - note book itself would indicate that the respondent – accused might be running the said chit transaction. As per the entries in Ex.D1, there are 24 members in the said chit transaction. The respondent – accused has not chosen to examine any of the said members of the chit transaction to establish that the cheque has to be issued as a security for the chit transaction and the complainant was running the said chit transaction. The respondent – accused at the time of recording his statement under Section 313 of Cr.P.C has stated that he will lead evidence, but, he has

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not led any evidence on his behalf. On perusal of the cross examination of PW1 and Ex.D1, will not probabalize

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the defence of the respondent – accused that Ex.P1 – cheque has been issued as a security to the complainant to the chit transaction run by her.

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Learned counsel for the respondent – accused has argued that the complainant has not produced the documents regarding she pledging her ornaments and availing the loan from the Society. In the sense, he disputes the financial capacity of the complainant to lend money. In the case of Tedhi Singh Vs. Narayan Dass Mahant reported in (2022) 6 SCC 735 , the Hon’ble Apex Court has held as under;

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“8. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the N.I. Act provides that Court shall presume that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of ‘probable defence’ has grown. In an earlier judgment, in fact, which has

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also been adverted to in Basalingappa’s case (supra), this Court notes that Section 139 of the N.I. Act is an example of reverse onus. It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist.”

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Section 139 of the N.I.Act provides that the Court shall presume that the holder of the cheque received the cheque of the nature referred to in Section 138 of the N.I.Act, for the discharge, in whole or in part, of any debt or other liability. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the respondent – accused to establish that there is no consideration received. Whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and the circumstances that exists.

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The evidence of PWs.1 and 2 will prove the fact of lending cash of Rs.1,00,000/- by the complainant to the

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respondent – accused as hand loan. Merely because the chit transaction has been run by a person, it cannot be presumed that the cheque has been issued as a security for the said chit transaction. The cross examination of PW1 and the contents of Ex.D1 does not establish that a blank cheque has been issued as a security for the chit transaction. The respondent – accused has failed to establish his probable defence that the cheque has been issued as a security for the chit transaction. Without considering all these aspects, the learned Magistrate has erred in passing the impugned judgment of acquittal. Considering the documents produced, all the ingredients of the offence under Section 138 of the N.I Act are established. Considering the said aspects, the complainant has proved that the respondent – accused has committed the offence under Section 138 of the N.I.Act. In view of the above, the impugned judgment of acquittal requires to be set-aside and the respondent – accused requires to be convicted for the offence under Section 138 of the N.I.Act. In the result, the following;

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ORDER

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The appeal is allowed . The impugned judgment of acquittal dated 05.01.2015 passed in C.C.No.9623/2012 by the XXII Additional Chief Metropolitan Magistrate, Benglauru is set-aside. The respondent – accused is convicted for the offence under Section 138 of the N.I.Act

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and he is sentenced to pay fine of Rs.1,40,000/- and in default, to undergo simple imprisonment for a period of six months. Out of the fine amount, a sum of Rs.1,30,000/- is ordered to be paid as compensation to the appellant – complainant. The respondent – accused shall deposit the said fine amount within a period of three months from today.

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Sd/-

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(SHIVASHANKAR AMARANNAVAR) JUDGE

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List No.: 1 Sl No.: 8

Smt. M. Vijayalakshmi v. Sri. M. Sanjay

Case brief

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Smt. M. Vijayalakshmi v. Sri. M. Sanjay

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