Dismissed

Sri Kishore v. Mr Vasanth Shetty

Karnataka HC20 Aug 2025CRL.RP/1394/2022

Case brief

AI extract

What is this about?

The High Court dismissed a criminal revision petition challenging a conviction under Section 138 of the Negotiable Instruments Act. The Court held that the presumption of legally enforceable debt was not rebutted and ruled that a cash transaction exceeding Rs. 20,000 does not invalidate the debt under Section 269SS of the Income Tax Act.

What did the court decide?

Petition dismissed upholding the conviction and sentence under Section 138 of the Negotiable Instruments Act.

Sri Kishore Vs Mr Vasanth Shetty — Cheque Dishonour | Karnataka HC (2025)

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NC: 2025:KHC:32457 CRL.RP No. 1394 of 2022

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HC-KAR

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20^TH DAY OF AUGUST, 2025

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BEFORE

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THE HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE CRIMINAL REVISION PETITION NO. 1394 OF 2022

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BETWEEN:

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SRI. KISHORE S/O LATE PADMANABHA AGED ABOUT 48 YEARS R/AT D NO.20-157,OPP. SEBESTIAN SCHOOL T.C.ROAD, THOKKOTTU POST ULLAL MANGALORE TALUK-575 017

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…PETITIONER

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(BY SRI. STEEPHEN MATHEW, ADVOCATE FOR SRI. KARUNAKARA P, ADVOCATE)

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AND:

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Digitally signed by C HONNUR SAB Location: HIGH COURT OF KARNATAKA

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MR. VASANTH SHETTY S/O NARAYANA ALIAS KAALAPPA SHETTY,AGED ABOUT 41 YEARS R/AT KEREBAIL HOUSE, KALLAPPA PERMANNURU POST AND VILLAGE MANGALORE TALUK-575 017

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…RESPONDENT (BY SMT. NANDINI B, ADVOCATE FOR SRI. BHARGAV G, ADVOCATE)

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THIS CRL.RP IS FILED U/S.397 R/W 401 CR.P.C PRAYING TO SET ASIDE JUDGMENT AND CONVICTION ORDER OF SENTENCE PASSED IN C.C.NO.2947/2016 DATED 09.08.2019 ON THE FILE OF THE JMFC IV COURT, MANGALURU D.K, AND ORDER DATED 04.08.2022 IN CRL.A.NO.141/2019 PASSED BY THE II ADDITIONAL DISTRICT AND SESSIONS JUDGE, D.K.,

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2 - NC: 2025:KHC:32457 CRL.RP No. 1394 of 2022

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HC-KAR

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MANGALURU PETITIONER PREFERS THIS REVISION PETITION AND ACQUIT THE PETITIONER.

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THIS PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE ANANT RAMANATH HEGDE

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ORAL ORDER

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This petition by the accused is arising from the concurrent finding in a proceeding initiated under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'Act, 1881').

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The cheque said to have been issued by the petitioner/accused for Rs.1,00,000/is dishonoured. Accused is convicted for an offence under Section 138 of the Act, 1881.

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Accused contested the complainant's claim that the cheque was issued towards repayment of hand loan of Rs.1,00,000/-.

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Both parties led evidence. Trial Court concluded that complainant has established the transaction and accused has committed the offence. Accused is sentenced to

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NC: 2025:KHC:32457 CRL.RP No. 1394 of 2022

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HC-KAR

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pay fine of Rs.1,37,000/- and out of the said amount, Rs.1,35,000/- is ordered to be paid as compensation and Rs.2,000/- is ordered to be defrayed towards expenses in favour of the State. In default of payment of fine amount, the Trial Court also imposed simple imprisonment of six months.

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Accused filed an appeal before the Sessions

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Court. Appeal is dismissed confirming the judgment passed by the Trial Court. Hence the present petition.

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Learned counsel for the petitioner would submit that the cheque was issued by the petitioner to one Smt Chitrakala as security for a transaction between the petitioner and Smt Chitrakala and same is misused and the said cheque is handed over to the complainant and complainant has presented the said cheque without there being any legally enforceable debt in favour of the complainant.

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It is his further submission that the complainant claims to have paid Rs.1,00,000/- in cash, and the said

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NC: 2025:KHC:32457 CRL.RP No. 1394 of 2022

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HC-KAR

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transaction even if accepted to be correct, is not a valid transaction in the eye of law as there is a prohibition under Section 269SS of the Income Tax Act, 1961 to transact in cash in excess of Rs.20,000.00

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In support of his contention, the learned counsel for the petitioner would refer to the judgment of the Kerala High Court in P C Hari vs Shine Varghese¹ .

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It is also urged that, the complainant in the cross examination has admitted that he was aware of the fact that there is a prohibition to transact in cash in excess of Rs.20,000/- and that being the position, it cannot be accepted that the complainant has lent money in cash in excess of Rs.20,000/-. Thus, it is urged that the petitioner is to be acquitted.

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Learned counsel for the respondent/complainant would submit that the signature on the cheque is not in dispute. The presumption in favour of the complainant under

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1 2025 KER 54510

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NC: 2025:KHC:32457 CRL.RP No. 1394 of 2022

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HC-KAR

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Section 139 of the Act, 1881 is not rebutted by leading acceptable evidence.

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Accused having received Rs.1,00,000/- as hand loan in cash from the complainant cannot raise a defense under Section 269SS of the Income Tax Act, 1961 as the said provision prohibits receipt of amount in cash but does not prohibit lending the amount in cash in excess of Rs.20,000/-.

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It is also urged that even if the amount is paid in excess of Rs.20,000/-, same is recoverable and the debt would be a legally enforceable debt and in support of the contention placed reliance on the judgment of the Division Bench of the Bombay High Court in Prakash Madhukarrao Desai vs Dattatraya Sheshrao Desai²

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This Court has considered the contentions raised at the bar and perused the records.

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Under Section 139 of Act, 1881 initial

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presumption relating to legally enforceable debt is in favour 2 (2023) 458 ITR 174

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HC-KAR

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of the complainant and the holder of the cheque. The presumption is that the cheque is issued towards discharge of the debt. Of course the presumption is rebuttable. The question is, "Whether the accused has rebutted the presumption?"

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It is the contention of the accused that the

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cheque was handed over to one Smt Chitrakala and she in turn has handed over the cheque to the complainant without there being any transaction between the complainant and the accused. This defense is not established. No action is taken by the accused against Smt Chitrakala for unauthorisedly handing over the cheque to the complainant. Except making the statement that the cheque issued by the accused to Smt Chitrakala is misused, no other evidence is led to accept the said contention. This being the position, this Court is of the view that the presumption under Section 139 of Act, 1881 read with Section 118 of the said Act is not rebutted.

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NC: 2025:KHC:32457 CRL.RP No. 1394 of 2022

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HC-KAR

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The next question is, "Whether the transaction is legal in the light of the contentions raised with reference to Section 269SS of the Income Tax Act, 1961?"

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After perusal of the said aforementioned provision, it is noticed that the said provision imposes an embargo on the person who receives money in cash in excess of Rs.20,000/-. The said provision also provides for the consequence of violating the said provision. The Division Bench of the Bombay High Court in Prakash Madhukarrao

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Desai supra has concluded that merely because the transaction is in excess of Rs.20,000/- in cash, that does not make the transaction unenforceable under Section 138 of Act, 1881.

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The judgment rendered in P C Hari supra by the Kerala High Court is rendered in a different factual background where the contention is raised relating to the prohibited transaction under Section 269SS of the Income Tax Act, 1961 before the Trial Court when the complainant stated that he is an income tax assessee has maintained

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HC-KAR

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books of account relating to the transaction. Having said so, he has not produced any records relating to the transaction involved in the said case. The contention that the transaction is hit by Section 269SS of the Income Tax Act, 1961 can be considered as one of the grounds to disbelieve the transaction in appropriate cases where the other materials on record casts serious doubt about the transaction.

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In the instant case, no such circumstances are brought on record to disbelieve the transaction of hand loan of Rs.1,00,000/-. For the aforementioned reasons this Court is not inclined to follow the aforementioned judgment in P C Hari supra.

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Insofar as the fine amount is concerned, it is noticed that the cheque is of the year 2014 and fine amount imposed is Rs.1,37,000/-. This Court does not find that the fine imposed is disproportionate.

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Under the circumstances, no case is made out to interfere with the concurrent finding in exercise of jurisdiction under Section 397 of Criminal Procedure Code.

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NC: 2025:KHC:32457 CRL.RP No. 1394 of 2022

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HC-KAR

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22. Accordingly, petition is dismissed .

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Sd/(ANANT RAMANATH HEGDE) JUDGE

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BRN List No.: 2 Sl No.: 29