Mr. Arun. N. Shastry v. Miss. Rekha Kumari. B

Karnataka HC21 Apr 2025CRL.RP/1713/2023

Case brief

AI extract

What is this about?

NC: 2025:KHC:16259 — Karnataka HC (Khazi J, 21-04-2025), CRL.RP No. 1713 of 2023: revision by accused against S.138 NI Act conviction dismissed; S.139 presumption not rebutted where drawer's own evidence showed the Rs. 4 lakh cheque covered hand loan, salary arrears and interest; fine of Rs. 4,10,000/- with default sentence confirmed.

What did the court decide?

None; the conviction and sentence imposed by the trial Court and confirmed by the Sessions Court stand confirmed. ¶ORDER (i)

Mr. Arun. N. Shastry Vs Miss. Rekha Kumari. B — Cheque Dishonour | Karnataka HC (2025)

What the court decided

AI extract

Outcome

None; the conviction and sentence imposed by the trial Court and confirmed by the Sessions Court stand confirmed.

¶ORDER (i)

Issue for consideration

Whether the presumption under Section 139 of the N.I. Act was attracted and, if so, whether the accused discharged the initial burden of establishing that the cheque was not issued towards payment of any legally recoverable debt or liability. +1 more

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Court's answer

It being undisputed that the cheque was drawn on the accused's account and bore his signature, was dishonoured for want of sufficient funds, and that legal notice went uncomplied with, the presumption under Section 139 of the N.I. Act was attracted, placing the initial burden on the accused to rebut it and establish that the cheque was not issued towards payment of any legally recoverable debt or liability; only upon such rebuttal would the burden shift to the complainant.

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Ratio / Principle

The accused failed to rebut the presumption and consequently failed to discharge the initial burden; the burden therefore never shifted to the complainant, who nonetheless established through the oral and documentary evidence on record that the cheque was issued towards repayment of a legally recoverable debt or liability.

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Key takeaways

Since the accused himself deposed that the cheque for Rs. 4 lakhs was issued not only as collateral security for the hand loan of Rs. 1,90,000/- but also towards balance of salary and interest at 2% per month, the cheque reflected the total amount due; payments under Exs.D1 and D2 were therefore not the entire payment due and the accused could not claim due discharge.ratio¶16
The accused did not send a reply to the complainant's legal notice putting forth his defence at the earliest available opportunity; his defence (that only Rs. 1,90,000/- was borrowed and the cheque was security) surfaced only through his notice Ex.P13 after the complaint was filed.ratio¶15

Detailed headnote1 paragraphs

Criminal revision under Ss.397/401 Cr.P.C by the accused against his concurrent conviction under S.138 of the Negotiable Instrument Act (cheque dated 31.03.2016 for Rs. 4 lakhs, dishonoured for want of sufficient funds) dismissed by the High Court of Karnataka (J.M.Khazi J., 21.04.2025). Dishonour, service of notice and non-compliance being undisputed, the presumption under S.139 N.I. Act stood attracted with the initial burden on the accused. His defence (loan of only Rs. 1,90,000/-, cheque issued as security and later repaid under Exs.D1-D2) failed: his own deposition showed the cheque covered the hand loan, arrears of salary (Rs. 1,50,000/- for March-December 2015) and interest at 2% per month, so the payments were not a full discharge; he neither replied to the legal notice at the earliest opportunity nor produced his accounts or appeared before the labour commissioner despite notice. The presumption was thus unrebutted and the complainant established a legally recoverable debt or liability. Concurrent findings held consistent with the evidence, with no perversity; the trial Court's fine of Rs. 4,10,000/- with default sentence and the Sessions Court's confirming judgment were confirmed and the records ordered returned.

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NC: 2025:KHC:16259 CRL.RP No. 1713 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21^ST DAY OF APRIL, 2025

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BEFORE

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THE HON'BLE MS JUSTICE J.M.KHAZI

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CRIMINAL REVISION PETITION NO. 1713 OF 2023

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(397(Cr.PC) / 438(BNSS))

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BETWEEN:

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MR. ARUN. N. SHASTRY S/O. LATE NARAYANA, AGED ABOUT 47 YEARS, MANAGING DIRECTOR OF BINARYS DATE SOURCE (1) PVT. LTD., NO.4/35, DR. RAJKUMAR ROAD, 4^TH 'N' BLOCK, RAJAJINAGAR, BENGALURU-560 010.

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Digitally signed by REKHA R Location: High Court of Karnataka

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ALSO RESIDING AT NO. 42, 4^TH CROSS, SIR M.V.LAYOUT, NEAR GAS GODOWN, KODIGENAHALLI, THINDLU MAIN ROAD, BENGALURU-560 097. …PETITIONER

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(BY SRI. GOPALA H M, ADVOCATE)

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AND:

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MISS. REKHA KUMARI. B D/O. SRI. BABUTAL.P, AGED ABOUT 38 YEARS, R/AT NO. 711, 4^TH CROSS, 3^RD BLOCK, RAJAJINAGAR, BENGALURU-560 010.

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…RESPONDENT

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(BY SRI.H.J.SANGHVI, ADVOCATE)

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NC: 2025:KHC:16259 CRL.RP No. 1713 of 2023

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THIS CRL.RP IS FILED U/S.397 R/W 401 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING TO SET ASIDE THE JUDGMENT DATED 11.09.2023 PASSED BY THE LVIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE (CCH-59) BENGALURU CITY IN CRL.A.NO.658/2021 AND ALSO SET ASIDE THE ORDER DATED 04.09.2021, PASSED BY THE LEARNED XIII ADDL.CMM, BENGALURU IN C.C.NO.18746/2016, CONSEQUENTLY DISMISS THE SAID BY ALLOWING THE REVISION PETITION.

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THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MS JUSTICE J.M.KHAZI

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ORAL ORDER

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This petition filed under Section 397 r/w 401 Cr.P.C is by the accused, challenging his conviction and sentence for the offence punishable under Section 138 of the Negotiable Instrument Act, imposed by the trial Court, which came to be confirmed by the Sessions Court by dismissing the appeal filed by him.

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For the sake of convenience, parties are referred to by their ranks before the trial Court.

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Complainant filed the complaint contending that she was an employee of accused, working as sales co-ordinator since August 2014. During the said period, the company was suffering loss. To overcome the same accused requested the complainant to arrange for hand loan of ₹4 lakhs. Since complainant's father is a businessman, she took ₹4 lakhs from her father and lent the same to the accused. In fact, complainant has executed a demand promote in favour of her father. Accused had promised to repay the same within a short time. However, accused failed to fulfill his promise. He also stopped paying her salary and she had to approach the labour Court for recovery of her salary. On her repeated request and demand accused issued cheque dated 31.03.2016 for ₹4 lakhs with an assurance that it would be honoured on presentation. However, when she presented it for encashment, it was returned dishonour for want of sufficient funds. In this regard, she got issued a legal notice to the accused. Accused has neither paid the amount due or sent reply and hence the complaint.

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Accused appeared through counsel and

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contested the case by pleading not guilty.

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In order to prove the allegations against the

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accused, complainant has examined herself as PW-1 and relied upon Exs.P1 to17.

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During the course of his statement under Section 313 Cr.P.C accused has denied the incriminating evidence led by the complainant.

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Accused has also stepped into the witness box and examined himself as DW-1. He has relied upon Exs.D1 to 6.

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The trial Court convicted the accused and sentenced him to pay fine of ₹4,10,000/- with default sentence of imprisonment.

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Aggrieved by the same accused approached the

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Sessions Court in Crl.A.No.658/2021. It came to be dismissed by confirming the judgment and order of trial Court.

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Aggrieved by the same, the accused is before this Court contending that the judgment and order are not sustainable either in law or on the facts and are liable to be set aside . The complainant has not stated the date on which loan was advanced. Except the oral testimony of the complainant, there is no evidence to show that huge some of ₹4 lakhs was advanced to the accused. The accused has borrowed hand loan of ₹1,90,000/- from the complainant and had issued a blank cheque by way of security. Even though he repaid the said amount, the cheque was not returned and it is utilised to file the complaint. Both Courts have not appreciated this fact. Complainant has not examined her father to prove her case. Her income tax returns also does not reflect the fact of lending ₹4 lakhs to the accused. The findings of the trial Court and Sessions

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Court are contrary to the evidence on record and as such perverse and pray to allow the petition and set aside the same.

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On the other hand, learning counsel for complainant argued that when the complainant joined the company of accused, it's financial condition was not sound and infact it went on deteriorating. Not only accused failed to pay the salary of complainant, but also requested for financial assistance through her father. Accordingly complainant paid ₹4 lakhs to the accused by way of hand loan. However, accused failed to repay the same and on persistent request and demand he issued cheque for ₹4 lakhs, which came to be dishonoured for want of sufficient funds. Instead of complying with the legal notice, accused has sent a notice making false allegations of theft of records and other documents from his office when complainant left the job.

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11.1 He would further submit that complainant had to approach the labour department for recovery of salary and secured order for payment of ₹1,50,000/- towards her salary from March 2015 to December 2015. He has also taken an untenable defence that he had taken hand loan of only ₹1,90,000/- and at that time, he had issued the subject cheque for ₹4 lakhs, which also includes arrears of salary, by way of security; even after he repaid the hand loan of ₹1,90,000/- complainant failed to return the security cheque; on other hand presented it and on its dishonour filed false complaint. The trial Court and Sessions Court on proper appreciation of the evidence on record have rightly convicted the accused and pray to dismiss the revision petition.

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Heard arguments and perused the record.

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It is not in dispute that the cheque in question

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is drawn on the account of the accused and it bears his

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signature. On presentation, it is dishonoured for want of sufficient funds and after issuing legal notice and on the failure of accused to comply with the same, complaint is filed. Therefore, presumption under Section 139 of the N.I Act is attracted, placing the initial burden on the accused to rebut the presumption and establish that the cheque in question was not issued towards payment of any legally recoverable debt or liability. Only after the accused rebut the presumption, the burden would shift on the complainant to prove her case.

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It is also not in dispute that complainant was an employee of accused. The evidence of complainant reveal that from the beginning of her joining the service, she realised that company’s financial condition was not sound and in fact, accused requested her to provide financial assistance through her father. During the crossexamination, accused has admitted that the financial condition of the company was very bad and ultimately it was closed. According to the complainant, she fulfilled the

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request of the accused. While the complainant claimed that the hand loan given to accused was ₹4 lakhs, accused has claimed that it was only ₹1,90,000/-.

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It is pertinent to note that immediately after receipt of the legal notice, the accused has not chosen to send reply putting forth his defence at the earliest available opportunity. On the other hand, after the complainant filed the present complaint, she has chosen to send a legal notice to the accused as per Ex.P13 alleging that while leaving the job, she has taken several documents and 3HDDS containing software source codes, etc, and called upon her to return the same. He has also stated that the loan taken by him is only ₹1,90,000/- and cheque for ₹4 lakhs was issued by way of security and even after ₹1,90,000/- was repaid, she did not return the subject cheque. Of course, the complainant has sent reply to the said notice as per Ex.P14 denying the allegations made therein.

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At the same time, during the course of his evidence, the accused has deposed that the cheque for ₹4 lakhs was issued not only towards collateral security of the hand loan of ₹1,90,000/-, but also balance of salary and interest at the rate of 2% per month on the said amount. If that is so then the subject cheque for ₹4 lakhs reflects not only the alleged hand loan of ₹1,90,000/taken from the complainant, but also the arrears of salary due, as on the said date and also the interest. Therefore, the cheque at Ex.P1 reflects the amount due. Consequently, the payment as per Exs.D1 and 2 is not the entire payment due and therefore the accused cannot claim due discharge. If at all ₹1,90,000/- was the only amount due as on the date of Ex.D1, then there was no impediment for the accused to demand return of Ex.P1 cheque and on the failure of complainant to return it, accused could have instructed his banker not to honour it, stating the reasons there on.

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Accused could have produced his accounts maintained in the office to demonstrate that he had borrowed ₹1,90,000/- from the complainant and repaid the same through Ex.D1. The accounts maintained by him could have also thrown light on the dispute as to what exactly was the salary due to the complainant. As per Ex.P1, accused was due to pay the salary from March 2015 to December 2015 in a total sum of ₹1,50,000/-. Despite due service of notice, the accused has not chosen to appear before the labour commissioner and produce his books of account as to what exactly was the amount if any, due to the complainant towards the salary.

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The accused has failed to rebut the presumption and consequently failed to discharge the initial burden. Hence, the burden has not shifted on the complainant to prove his case. However, through the oral and documentary evidence on record, the complainant has established that the cheque in question was issued towards repayment of legally recoverable debt or liability.

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The trial Court as well as the Sessions Court on appreciation of oral and documentary evidence placed on record have rightly held that the allegations against accused are proved. The conclusions arrived at by them is consistent with the evidence on record. This court finds no perversity calling for interference. In the result, the petition fails and accordingly the following:

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ORDER

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(i) Petition filed by the petitioner under Section 397 r/w 401 of Cr.P.C is

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dismissed.

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(ii) The impugned judgment and order dated 04.09.2021 in C.C.No.18746/2016 on the file of XIII ACMM, Bengaluru and judgment and order dated 11.09.2023 in Crl.A.No.658/2021 on the file of LVIII Addl.City Civil and Sessions Judge (CCH59), Bengaluru are confirmed.

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