Dismissed¶89

Sri. H. S. Khantharaju v. M/S. Sachin Tyres

Karnataka HC15 Apr 2025CRL.RP/657/2022

Case brief

AI extract

What is this about?

CRL.RP No. 657 of 2022; High Court of Karnataka; J.M.Khazi J.; 15 April 2025; S.138 NI Act; S.139 presumption; rebuttal of presumption; stop payment dishonour; cheque Rs.40 lakhs; loan Rs.1 crore; lost cheque books defence; reply notice Ex.P4; no police complaint; accused not stepping into witness box; burden shifting; financial capacity of complainant; Basalingappa (2019) 5 SCC 418; Rangappa (2010) 11 SCC 441; T.Vasanthkumar (2015) 8 SCC 378; Goaplast (2003) 3 SCC 232; conviction under S.138 confirmed; fine Rs.40 lakhs; revision dismissed.

What did the court decide?

Since the cheque was drawn on the accused's account, bore his signature, was dishonoured on his stop-payment instructions and legal notice was duly served, the presumption under Section 139 NI Act came into play, placing the initial burden on the accused to prove otherwise.

Sri. H. S. Khantharaju Vs M/S. Sachin Tyres — Cheque Dishonour | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Dismissed

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Issue for consideration

Whether the accused rebutted the presumption under Section 139 of the N.I Act that the subject cheque was issued towards repayment of a legally recoverable debt or liability. +2 more

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Court's answer

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Ratio / Principle

The accused failed to rebut the presumption: apart from the reply notice (Ex.P4) alleging loss of cheque books while travelling, he produced no evidence; he did not file a police complaint nor produce the letter to the bank explaining the stop payment.

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Key takeaways

Following T.Vasanthakumar, when the accused fails to rebut the presumption under Section 139 of the N.I Act, the burden does not shift on the complainant.ratio¶83
Per Goaplast (P) Ltd, even dishonour of a cheque on stop payment instructions attracts the provisions of Section 138 of the N.I Act.ratio¶83
Though per Basalingappa and Rangappa the accused need not step into the witness box and may rely on the evidence led by the complainant, in the present case, except the allegations contained in the reply notice, there was no evidence on record to prove the defence of the accused.

Detailed headnote1 paragraphs

Criminal Revision Petition (S.397 r/w 401 Cr.P.C.) by the accused against conviction under S.138 NI Act, confirmed in appeal, dismissed. Complainant alleged a loan of Rs.1,00,00,000/- released through his business firm; the accused issued a cheque for Rs.40 lakhs in favour of M/s Sri Sachin Tyres, which on presentation was dishonoured on the accused's 'stop payment' instructions; legal notice was duly served and unanswered by payment. The presumption under S.139 NI Act arose, placing the initial burden on the accused. In reply (Ex.P4) the accused alleged loss of cheque books while travelling and fraudulent acquisition by the complainant, but produced no evidence, filed no police complaint, did not produce the stop-payment letter to the bank, and did not depose. Relying on Basalingappa and Rangappa, the Court held the accused need not enter the witness box but must adduce some evidence; following T.Vasanthakumar, on failure to rebut the S.139 presumption the burden does not shift to the complainant, including on financial capacity; applying Goaplast (P) Ltd, dishonour on stop payment instructions attracts S.138 NI Act. Concurrent findings of the trial Court and Sessions Court confirmed; fine of Rs.40 lakhs (default six months imprisonment) upheld, the Court observing the punishment was not commensurate with the gravity of the offence though the complainant did not challenge it.

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NC: 2025:KHC:15517 CRL.RP No. 657 of 2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 15^TH 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. 657 OF 2022

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

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BETWEEN:

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SRI. H. S. KHANTHARAJU S/O SOMASHEKAR GOWDA AGED ABOUT 49 YEARS R/AT HANIYUR VILLAGE VIRUPAKSHIPURA HOBLI CHANNAPATNA TALUK RAMANAGARA DISTRICT-562159

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…PETITIONER

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(BY SRI.HARISHA.A.S, ADVOCATE)

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AND:

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Digitally signed by REKHA R Location: High Court of Karnataka

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M/S. SACHIN TYRES REP BY ITS AUTHORIZED SIGNATORY M B RAMESH S/O LATE BOREGOWDA AGED ABOUT 50 YEARS O/AT POPULAR BUILDING NO.38, 17/1, A M ROAD KALASIPALYAM, BANGALORE-560052

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…RESPONDENT

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(BY SRI.K.AKRAM PASHA, ADVOCATE)

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THIS CRL.RP IS FILED U/S.397 R/W 401 BY THE ADVOCATE FOR THE PETITIONER PRAYING TO SET ASIDE THE JUDGMENT PASSED BY THE HONBLE LXIX ADDL.CITY CIVIL

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NC: 2025:KHC:15517 CRL.RP No. 657 of 2022

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AND SESSIONS JUDGE (CCH-70), BENGALURU CITY IN CRL.A.NO.1149/2016 DATED 10.11.2021 AND JUDGMENT OF CONVICTION OF SENTENCE PASSED BY THE HONBLE XXI A.C.M.M AND XXIII A.S.C.J, BENGALURU IN C.C.NO.19450/2011 DATED 02.09.2016 AND ACQUIT THE PETITIONER FOR THE OFFENCE P/U/S 138 OF THE N.I ACT WHICH HE HAS BEEN CHARGED WITH.

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THIS PETITION, COMING ON FOR FURTHER HEARING, 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 the judgment and order passed by the trial Court, convicting him for the offence punishable under Section 138 of the N.I Act, 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 in question alleging that he and accused are distant relatives. Accused offered him to join in the business of sand mining with handsome returns. When he did not show interest, he

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requested complainant at least lend him loan to run his business. Complainant released a sum of Rs.1,00,00,000/through his business firm to the accused. Accused agreed to repay the same with interest at 18% per annum. However, accused failed to fulfill his promise, except paying interest of Rs.15 lakhs. When complainant insisted upon returning the said amount, accused issued cheque for Rs.45 lakhs in favour of Sri Rakshith Tyres and cheque for Rs.40 lakhs in favour of M/s Sri Sachin Tyres. When complainant presented the cheque for Rs.40 lakhs in question, it was dishonoured as “Payment stopped”. Complainant got issued legal notice. In respect of the same accused has neither paid the amount due nor sent any reply and hence the complaint.

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After service of summons, accused appeared through counsel and resisted the complaint by pleading not guilty.

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NC: 2025:KHC:15517 CRL.RP No. 657 of 2022

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On behalf of complainant, it’s authorised

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signatory is examined as PW-1 and Ex.P1 to 6 are marked.

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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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However, accused has not led any evidence either oral or documentary in support of his defence.

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Vide the impugned judgment and order trial Court convicted the accused and sentenced him to pay fine of Rs.40 lakhs, in default to undergo imprisonment for six months.

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Aggrieved by the same accused approached the Session Court in appeal. However, it came to be dismissed, confirming the judgment and order of the trial Court.

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Challenging the concurrent findings of the trial Court and the Session Court, accused is before this Court

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contending that he has not committed the alleged offence and that he has been wrongly convicted by both Courts. They have failed to appreciate the vital admissions given by the complainant. There are no material to show that complainant has financial capacity to lend Rs.40 lakhs to the accused. It is not believable that such a huge sum was lent without any security. Merely because the accused has

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failed to prove his defence, the Courts below are not justified in holding that allegations against him are proved. When accused has taken a specific defence that his cheques are misused, complainant cannot have the benefit of presumption under Section 139 of N.I Act. Accused is entitled for benefit of doubt and pray to allow the petition.

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In support of his arguments, learned counsel for

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accused has relied upon the following decisions:

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(i) Sathish Kumar Vs. State NCT of Delhi ( Sathish Kumar )¹

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(ii) Basalingappa Vs Mudibasappa ( Basalingappa )²

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(iii) Sri.Dattatraya Vs. Sharanappa ( Dattatraya )³

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1 LAWS(DLH)-2013-8-315: Crl.LP.95/2006 Dt.01.08.2013

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2 (2019) 5 SCC 418

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3 (2024) 8 SCR 121: 2024 INSC 586

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NC: 2025:KHC:15517 CRL.RP No. 657 of 2022

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On the other hand learned counsel for

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complainant supporting the impugned judgment and order

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passed by the trial Court and Sessions Court, would submit that in the light of the fact that there is no dispute that the cheque is drawn on the account of the accused and it bears his signature and on presentation dishonoured for “Stop payment” instructions and despite issue of legal notice, accused has failed to pay the amount due, presumption under Section 139 of N.I Act is pressed into service placing the initial burden on the accused to rebut the presumption and prove that the cheque was not issued towards repayment of any legally recoverable debt or liability and on the other hand, the circumstances in which the cheque has reached the hands of complainant. Only after accused is able to rebut the presumption, burden would shift on the complainant to prove his case.

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He would further submit that in the instance

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case, the accused has failed to prove that the cheques were stolen and consequently, failed to rebut the

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7 - NC: 2025:KHC:15517 CRL.RP No. 657 of 2022

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presumption and therefore rightly the trial Court has convicted and sentenced. There is no perversity calling for interference by this Court and pray to dismiss the petition also.

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In support of his arguments, learned counsel for

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complainant has relied upon the following decisions:

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(i) Goaplast (P) Ltd Vs. Chico Ursula D'Souza and Anr. ( Goaplast (P) Ltd )⁴

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(ii) T.Vasanthkumar Vs. Vijayakumari ( T.Vasanthkumar )⁵

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Heard elaborate arguments of both sides and

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perused the record.

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As rightly argued by the learned counsel for complainant, having regard to the fact that the cheque in question is drawn on the account of the accused and it bears his signature and on presentation, it’s payment was stopped on the instructions of the accused and the complainant has issued legal notice and it is duly served

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4 (2003) 3 SCC 232

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5 (2015) 8 SCC 378

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on the accused, presumption under Section 139 comes into play that the cheque was issued towards repayment of any legally recoverable debt or liability, placing the initial burden on the accused to prove otherwise. In fact in Basalingappa relied upon by the accused, the Hon’ble Supreme Court held that only after the accused able to rebut the presumption, burden would shift on the complainant to prove his financial capacity.

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It is relevant to note that in response to the legal notice, accused has sent reply as per Ex.P4. Para Nos.1 to 3 and the first half of para No.4 of the reply notice consist of denial of the allegations made in the legal notice. In the second half of para No.4 accused has stated that while travelling, he has lost two cheque books with cheque numbers, 270526 to 270550 and 850332 to 850337, 850339 to 850350, which includes the subject cheque. He has also alleged that complainant has fraudulently acquired these cheque books and that a

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criminal prosecution would be initiated against the complainant and called upon him to return the cheques.

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Except the reply notice containing the said allegations, the accused has not produced any evidence to establish that while travelling, he lost the said cheque books. The accused has instructed bank to stop payment, but he has not produced copy of the letter given to the bank to ascertain what exactly is the reason given by him for stop payment. When the complainant is very sure that while travelling, he has lost the cheque books containing

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the subject cheque, the proper course available to him was to file a complaint with the concerned police, which would have been a positive evidence to ascertain his bona fides.

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At the same time, it is also relevant to note that during the cross-examination of the complainant, it is elicited by the accused that he and complainant were visiting each other. However, he has denied that they have

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NC: 2025:KHC:15517 CRL.RP No. 657 of 2022

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travelled together. He has also denied that while going with the accused, he has stolen cheque books belonging to him. By making this suggestion, the accused is making a positive assertion that it is the complainant who has committed theft of the cheque books containing the subject cheque. However, in the reply notice there is no specific allegation that it is the complainant who has committed the theft in question. On the other hand, he has only stated that while travelling in the bus, he lost the cheque books. If the accused is very sure that it is the complainant who has committed theft of the cheques belonging to him, there was no impediment for him to file complaint and also state the said fact in the stop payment letter given to the bank.

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Accused has also not stepped into the witness box to give evidence to this effect. It is true that in Basalingappa referred to above and also Rangappa Vs Sri Mohan ( Rangappa )⁶ , the Hon’ble Supreme Court held

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6 (2010) 11 SCC 441

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NC: 2025:KHC:15517 CRL.RP No. 657 of 2022

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that in order to prove the defence accused need not step into the witness box and he may rely on the evidence lead by the complainant, but in the present case, except the allegations contained in the reply notice, there is no evidence on record to prove the defence of the accused. As held by the Hon’ble Supreme Court in T.Vasanthakumar , referred to supra, when the accused has failed to rebut the presumption under Section 139 of the N.I Act, the burden would not shift on the complainant. In fact in Goaplast (P) Ltd , referred to spura the Hon’ble Supreme Court held that even dishonour of cheque on stop payment instructions would attract provisions of Section 138 of N.I Act. On the other hand, with the evidence lead by the complainant, he has proved the preliminary facts, giving raise to the presumption.

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The trial Court as well as Sessions Court on proper appreciation of oral and documentary evidence placed on record have rightly held the accused guilty and convicted him. In fact, the punishment imposed is not in

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NC: 2025:KHC:15517 CRL.RP No. 657 of 2022

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commensurate with the gravity of the offence. Of course the complainant has not challenged the same. In the result, the petition fails and accordingly the following:

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ORDER

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Petition filed by the accused under Section 397 r/w Section 401 of Cr.P.C. is dismissed.

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The impugned judgment and order dated 02.09.2016 in C.C.No.19450/2011 on the file of XXI ACMM, Bengaluru, and judgment and order dated 10.11.2021 in Crl.A.No.1149/2016 on the file of LXIX Addl. City Civil and Sessions Judge, Bengaluru (CCH-70) are hereby confirmed.

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The Registry is directed to send back the trial Court records as well as Sessions Court records along with copy of this order forthwith.

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Sd/(J.M.KHAZI) JUDGE

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RR List No.: 1 Sl No.: 53

Sri. H. S. Khantharaju v. M/S. Sachin Tyres

Case brief

What is this about?

What did the court decide?

Sri. H. S. Khantharaju v. M/S. Sachin Tyres

Case brief

What is this about?

What did the court decide?

What the court decided

Issues for consideration

Cases cited

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