THE COMMISSIONER vs. M/S SOBHA DEVELOPERS LTD

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CRL.A. No. 206 of 2014 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF FEBRUARY, 2024 BEFORE THE HON'BLE MR JUSTICE ANIL B KATTI CRIMINAL APPEAL No.206 OF 2014 (A) BETWEEN: A.P.RAJAGOPAL S/O.PUTTASWAMY, AGED ABOUT 65 YEARS, BEKKESOLDUR VILLAGE, VIRAJPET TALUK, KODAGU DISTRICT-571 218 …APPELLANT (BY SRI. NIHAL, ADVOCATE FOR SRI. B.S.SACHIN, ADVOCATE) AND: K.M.SHUBHA W/O. DR.CHANDRU, AGED ABOUT 49 YEARS, COORG DENTAL CLINIC, VIRAJPET ROAD, SIDDAPURA, KODAGU DISTRICT-571 218 …RESPONDENT (BY SRI. MANU PRABHAKAR KULKARNI, ADVOCATE)

THIS APPEAL IS FILED UNDER SECTION 378(4) CR.P.C, PRAYING TO SET ASIDE THE JUDGMENT DATED 21.11.2013 PASSED BY THE II ADDL. DIST. AND S.J., KODAGU, MADIKERI (SITTING AT VIRAJPET) IN CRL.A.NO.34/11 AND RESTORE THE JUDGMENT DATED: 30.08.2011 PASSED BY THE C.J., AND JMFC, PONNAMPET IN C.C.NO.819/2010.

THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 05.01.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:

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CRL.A. No. 206 of 2014 JUDGMENT

Appellant/complainant feeling aggrieved by judgment of First Appellate Court on the file of II Addl.District and Sessions Judge, Kodagu Madikeri (sitting at Virajpet) in Crl.A.No.34/2011, dated 21.11.2013 in reversing the judgment of Trial Court on the file of Civil Judge and JMFC, Ponnampet in C.C.No.819/2010, dated 30.08.2011 preferred this appeal.

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CRL.A. No. 206 of 2014 2) Whether interference of this Court is required? 5. On careful perusal of oral and documentary evidence placed on record, it would go to show that the father of accused Madahaiah is neighbour of complainant and as such he know the accused and her family for long time. Accused is Dentist by profession and married to Dr.Chandru resident of Siddapura. Accused during third week of July 2008 approached complainant for hand loan of Rs.1,00,000/-. Complainant gave hand loan of Rs.1,00,000/- to accused. Accused in order to discharge said legally enforceable debt issued post dated cheque bearing No.414523 dated 05.03.2009 drawn on SBI Virajpet branch Ex.P.1. Accused promised complainant that she will arrange for funds by first week of March 2009. In the meantime accused issued false notice against complainant dated 19.01.2009 alleging that accused has given blank signed cheque as security for her father’s case and the complainant has suitably replied to the said notice. Complainant presented the said cheque through his banker Canara Bank Ex.P.3 and the same was dishonoured

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CRL.A. No. 206 of 2014 vide bank endorsement dated 16.03.2009 Ex.P.2 as “Insufficient funds”. However on the said day accused approached complainant and pleaded some time. Hence, believing on the words of accused, complainant re-presented the cheque on 16.04.2009 and the same was dishonoured vide Bank intimation Ex.P.4 dated 16.04.2009 and the same was intimated by banker of complainant Canara Bank dated 22.04.2009 Ex.P.5. Complainant issued demand notice dated 24.04.2009 Ex.P.8 through RPAD and under certificate of posting as per the postal receipt and UCP certificate Ex.P.10 and Ex.P.11. The demand notice is duly served to the accused Ex.P.12, accused has replied to the demand notice Ex.P.9 dated 02.05.2009 by reiterating the same contentions stated in Ex.P.6. The said documents were marked by Trial Court at the time of recording sworn statement of complainant. 6. After the appearance of accused while recording the evidence, it is only the cheque Ex.P.1, endorsement of bank Ex.P.2, demand notice Ex.P.3 AD card Ex.P.4, receipt of UCP Ex.P.5 and notice issued by accused is marked as Ex.P.6. Complainant admittedly has replied to the notice of

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CRL.A. No. 206 of 2014 accused dated 11.02.2009 Ex.P.7. Hence, documents marked on behalf of complainant while recording the sworn statement are referred, since the same are not disputed by accused. 7. If the evidence of PW.1 and the aforementioned documents are perused and appreciated, then it would go to show that, complainant has complied necessary legal requirement in terms of Section 138(a) to (c) of Negotiable Instruments Act, 1881 (herein after for brevity referred to as “N.I.Act”). The complaint is filed on 15.05.2009 within a period of one month from the date of accrual of cause of action in terms of Section 142(1)(b) of N.I.Act. Therefore, statutory presumption in terms of Section 118 and 139 of N.I.Act will have to be drawn in favour of complainant. 8. In this context of the matter, it is useful to refer the judgment of Hon'ble Apex Court in APS Forex Services Pvt. Ltd. Vs. Shakti International Fashion Linkers and others reported in AIR 2020 SC 945, wherein it has been observed and held that once the

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CRL.A. No. 206 of 2014 issuance of cheque with signature on cheque is admitted, there is always a presumption in favour of complainant that there exist legally enforceable debt or liability. Plea by accused that cheque was given by view of security and same has been misused by complainant is not tenable. 9. It is also profitable to refer another judgment of Hon'ble Apex Court in P. Rasiya vs. Abdul Nazer and another reported in 2022 SCC OnLine SC 1131, wherein it has been observed and held that:- " Once the initial burden is discharged by the complainant that the cheque was issued by the accused and signature of accused on the cheque is not disputed, then in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for discharge of any debt or other liability. The presumption under Section 139 of N.I. Act is statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the complainant/holder of the cheque, in that case it is for the accused to prove the contrary." In view of the principles enunciated in the aforementioned two judgments of Hon'ble Apex Court, it is evident that

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CRL.A. No. 206 of 2014 when once issuance of cheque with signature of accused on the account maintained by him is admitted or proved then statutory presumption in terms of Section 118 and 139 of N.I. Act will have to be drawn. Now, it is up to the accused to place rebuttal evidence to displace the statutory presumption available in favour of the complainant. 10. It is the specific defence of accused in the notice issued to complainant dated 19.01.2009 Ex.P.6 that she has issued blank signed cheque as security for settlement of dispute between complainant and her father who was convicted in cheque bounce case in C.C.No.1060/2002. However, the negotiation for settlement was failed and therefore accused has issued notice dated 19.01.2010 Ex.P.6 for return of blank signed cheque bearing No.414523 given to the complainant. However, the said notice is duly replied by complainant dated 11.02.2009 Ex.P.7. The complainant though admits about pendency of appeal before Sessions Court, Madikeri against the judgment of conviction in C.C.No.1060/2002

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CRL.A. No. 206 of 2014 against father of accused, but specifically denies that accused has issued cheque Ex.P.1 as a security for settlement of case in C.C.No.1060/2002 between complainant and her father. Complainant has contended that the transaction between complainant and her father is different and the transaction covered under Ex.P.1 is different. Accused to probabilise her defence has not entered into witness box, but chose to rely on the material evidence produced by complainant. 11. In this context of the matter, it is useful to refer the judgment of Hon'ble Apex Court in Basalingappa Vs. Mudibasappa reported in 2019 Cr.R. page No. 639 (SC), wherein it has been observed and held that: "Presumption under Section 139 is rebuttable presumption and onus is on accused to raise probable defence. Standard of proof for rebutting presumption is that of preponderance of probabilities. To rebut presumption, it is open for accused to rely on evidence laid by him or accused can also rely on materials submitted by complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from materials brought on record by

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CRL.A. No. 206 of 2014 parties, but also by reference to circumstances upon which they rely. It is not necessary for accused to come in witness box in support of his defence. Section 139 imposed an evidentiary burden and not a presumptive burden". 12. The Hon'ble Apex Court in it’s latest judgment in Rajesh Jain v/s Ajay Singh reported in 2023 SCC OnLine SC 1275, wherein it has been observed and held that, once issuance of cheque with signature of accused is either admitted or proved then, statutory presumption will have to be drawn in favour of the complainant. In view of the principles enunciated in both the aforementioned judgment, it is evident that the accused to probabilise his defence can rely on his own evidence or also can rely on material submitted by complainant. It is not necessary for the accused to step into witness box to probabilise his defence. 13. Learned counsel for complainant argued that accused kept quite for more than two years without mentioning the cheque Ex.P.1 was given as security for

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CRL.A. No. 206 of 2014 settlement of dispute between her father and complainant. Secondly, the case is still pending before Sessions Court, thirdly accused has not disputed the signature on the cheque Ex.P.1 and lastly accused has not given any stop payment instruction to the banker. Therefore, the contrary defence setup by accused in the notice issued by her Ex.P.6 dated 19.01.2009 cannot be legally sustained. 14. Per contra, learned counsel for accused has argued that complainant has not mentioned date and time of giving hand loan to the accused, secondly financial position of complainant has not been proved, thirdly, Income Tax returns has not been filed to prove the loan transaction claimed by complainant, fourthly, accused and her husband both are Dentist by profession and had no occasion to avail loan of Rs.1,00,000/- and lastly accused has issued notice dated 19.01.2009 Ex.P.6 for return of the cheque bearing No.414523 given by accused to the complainant as security for settlement of dispute between complainant and her father which was subject matter in C.C.No.1060/2002.

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CRL.A. No. 206 of 2014

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CRL.A. No. 206 of 2014 Instruments Act. The issues which weighed with the Appellate Court in acquitting the accused that the complainant has not been able to prove that the cheque was issued by the convict/appellants in discharge of his liability or any legal enforceable debt; the reasons for coming to such a conclusion is because of the complainant in cross-examination has neither given the date, month or the year when the loan was given nor had be obtained any receipt from the accused; the amount of loan has neither been reflected in the income tax return of the complainant nor has it been in the books of account; on the contrary the cheque in question was signed by the accused with the different ink and the particulars regarding the date, name and money it has been filled up in the cheque which has been indifferent ink, no chit of paper has been produced by the complaint in support of the transaction of a huge sum of Rs.9,70,000/-. Such infirmities according to the appellate Court are sufficient to draw inference regarding the probability of defence of the accused that he has not issued the cheque for discharging the liability and the Magistrate Court erroneously banking upon Sec.139 of the N.I.Act to arrive at its finding of guile.

The aforesaid observations of the appellate Court are beyond the scope of appreciating evidence in respect of provisions relating to adjudication of offence under Sec.138 of the

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CRL.A. No. 206 of 2014 N.I.Act. Sec. 139 of the N.I.Act is a statutory presumption which carries with it an expression “unless the contrary is proved”. The test of proportionality in such cases must guide the determination of the issue of rebuttal. As such what is required for the accused to do in such case is to raise a probable defence. It cannot be a probable defence that the complainant has no capacity to pay the money until and unless an initial defence is set up by a reply notice or the accused examines his witness and relies upon documentary evidence. In this case the signature in the cheque also has not been challenged, no evidence to that effect is reflected in the cross-examination of PW.1 (the sole witness in this case). Further, no materials have been produced to show as to how the cheque was in possession of the complainant as there are no allegations of lost cheque or the signature in the cheque being forged. Although it is permitted in a case of such nature to raise a probable defence from the available materials in the cross- examination of the prosecution witness only, but the nature of the cross-examination and the probable defence raised by the accused do not qualify as a rebuttal to the provisions under Sec.139 of the N.I.Act and the learned Appellate Court unnecessarily resorted to the issue of difference in ink as no case has been made out by the accused for the cheque having been lost or the same was obtained by coercion”.

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CRL.A. No. 206 of 2014

Hon’ble Calcutta High Court having so observed set aside the concurrent finding of both the Courts below in acquitting the accused. This decision is complete answer for the above referred contention raised by counsel for accused. 16. Learned counsel for complainant has placed reliance on the Co-ordinate Bench Judgment of this Court in Gajanan s/o Kallappa Kadolkar Vs. Appasaheb Siddamallappa Kaveri in Crl.R.P.No.2011/2013 dated 18.11.2022. This Court after referring the judgment of Hon'ble Apex Court and also Co-ordinate Bench Judgment of this Court has recorded finding in para 21.2 as under: “21.2 Hence, the said contravention of Section 269 SS of the Income Tax Act does not make the alleged transaction void. The concerned authorities can take necessary action against the complainant for non compliance of Section 269 of the Income Tax Act. Only on that ground, this Court cannot interfere with the impugned judgment passed by the Courts below”.

Therefore, the contention of learned counsel for accused that non declaration of the loan given to accused

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CRL.A. No. 206 of 2014 in the Income Tax returns cannot be valid ground to disown the liability covered under the cheque Ex.P.1. 17. Learned counsel for respondent relied on the judgment of Hon'ble Apex Court in Rajesh Jain Vs. Ajay Singh reported in (2023) 10 SCC 148, wherein it has been observed and held in para 41 and 42 as under: “41. In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that the cheque was not issued in discharge of a debt/liability. The second option is to prove the non-existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused’s case may be even fifty one to forty nine and arising out of the entire circumstances of the case, which includes: the complainant’s version in the original complaint, the case in the legal/demand notice, complainant’s case at the trial, as also the plea of the accused in the reply notice, his 313 statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a preponderance of probabilities justifying a finding that there was ‘no debt/liability’.

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CRL.A. No. 206 of 2014 42. The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e. oral and documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact.” 18. Learned counsel for accused relied on the Co- ordinate Bench Judgment of this Court in Narasimhegowda C.M. (Since deceased Legal Heir) Vs. Smt.Deepthi R w/o Nagabhushana in Crl.A.No.910/2011 dated 11.01.2023. This Court after appreciating the evidence on record in the said case has confirmed the judgment of acquittal passed by the Trial Court. Learned counsel for accused also placed reliance on another Co-ordinate Bench Judgment of this Court in Shri Satappa s/o Venkatarao Vardhaman s/o Mahaveer s/o Kulabhushan Vardhaman in Crl.A.No.200061/2021 dated 16.12.2022. Wherein the judgment of acquittal passed by the Trial Court came to be set aside, since the rebuttal evidence placed on record by the accused was unsustainable.

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CRL.A. No. 206 of 2014 19. In the present case main contention of accused is that she has issued blank signed cheque bearing No.414523 Ex.P.1 as a security for the settlement of dispute between complainant and her father Madaiah which was subject matter in C.C.No.1060/2009 against the judgment of conviction and the appeal is pending before the Sessions Court. However, the settlement of talks have been failed and therefore she issued notice Ex.P.6 dated 19.01.2009 calling upon the complainant to return the cheque Ex.P.1 which she claims to have given to complainant as security. It has been elicited in the cross- examination of PW.1 regarding issuance of notice of accused dated 19.01.2009 and complainant having replied to the said notice. Therefore, the issuance of notice by accused dated 19.01.2009 and reply of complainant dated 11.02.2009 has not been disputed by accused. Therefore, the contents of reply given by complainant dated 11.02.2009 can be looked into. Wherein complainant has denied that accused has given cheque Ex.P.1 as a security for settlement of dispute between complainant and her father. Therefore, it is the duty of accused to place

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CRL.A. No. 206 of 2014 requisite evidence on record that she has issued blank signed cheque Ex.P.1 as a security for settlement of dispute between complainant and her father which was subject matter in C.C.No.1060/2002. 20. Accused other than the self serving statement in the notice dated 19.01.2009 Ex.P.6 has not produced any document to show that there was any negotiation between complainant and accused or with her father for settlement of dispute in C.C.No.1060/2002. On going through the contents of the notice issued by accused Ex.P.6, it would go to show that father of accused was convicted for the offence under Section 138 of N.I.Act in C.C.No.1060/2002 and the appeal is pending before Sessions Court. If at all any negotiation is to be done for settlement in a pending appeal before the Sessions Court, then the same should have been informed to the Sessions Court either by making oral submission or by written communication that negotiation talks are going on for settling the dispute between complainant and her father. According to accused in the notice issued by her Ex.P.6,

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CRL.A. No. 206 of 2014 she issued the cheque in the month of February 2007 for settling the matter between complainant and her father before October 2008. Accused offered no any explanation as to why she kept silent for not taking any action against complainant withholding her cheque. The cheque in question Ex.P.1 is issued on 05.03.2009. Above all neither accused stepped into witness box nor examined her father to prove the fact that there was negotiation between complainant and father of accused regarding the settlement of dispute between complainant and her father which was subject matter in C.C.No.1060/2002 against which appeal is pending before the Sessions Court. Other than the contention of accused as referred above, there is virtually no any evidence on record to show that there was negotiation between complainant and father of accused regarding the settlement of cheque bounce case in C.C.No.1060/2002. Accused could have at least ask her father and complainant to make submission before the Sessions Court where the appeal is pending, the parties are negotiating the matter for settlement, so as to draw inference that in fact and in reality there was negotiation

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CRL.A. No. 206 of 2014 between complainant and father of accused relating settlement of cheque bounce case in C.C.No.1060/2002. In the absence of any material evidence on record the bare contention of accused that she issued the blank signed cheque to the accused as a security for the settlement of dispute between complainant and her father which is subject matter in C.C.No.1060/2002 cannot be accepted. 21. Learned counsel for respondent has also argued that accused is a Dentist by profession and her husband is also a doctor, both of them are sufficiently earning and accused had no any occasion to avail the loan of Rs.1,00,000/- from complainant. Accused has taken no any such contention in the notice issued by her dated 19.01.2009 Ex.P.6 nor in the reply dated 02.05.2009 Ex.P.9 issued to the demand notice of complainant. It is for the accused to prove the said fact, however accused has not placed any evidence on record to that effect. There is no any hard and fast rule that simply because accused and her husband are doctors by profession cannot

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CRL.A. No. 206 of 2014 have any financial difficulty at all. Therefore, only on assumption and presumption based on there profession no any legal inference can be drawn. 22. Trial Court has rightly appreciated the oral and documentary evidence placed on record and was justified in holding that Ex.P.1 cheque was issued for lawful discharge of debt and the accused has failed to probabilise her defence that cheque Ex.P.1 was issued as a security for settlement of dispute between her father and complainant which was subject matter in C.C.No.1060/2002. However, the First Appellate Court without assigning any valid reason for deviating from the findings recorded by Trial Court only on the basis of notice issued by accused Ex.P.6 and the fact that accused and her husband are doctors by profession proceeded to draw inference that they have sufficient source of income and there was no occasion for the accused to avail loan of Rs.1,00,000/- from complainant. The observations and findings recorded by First Appellate Court are contrary to the evidence on record. When the rebuttal evidence placed

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CRL.A. No. 206 of 2014 on record by accused is held to be unsustainable in law, then statutory presumption in terms of Section 118 and 139 of N.I.Act will continue to operate. Therefore, the contrary finding recorded by First Appellate Court cannot be legally sustained and the same is required to be interfered by this Court. 23. On question of imposition of sentence also the Trial Court has rightly exercised it’s judicial discretion in imposing of fine amount with default sentence. Looking to the facts and circumstances of the case there are no any justifiable reason to interfere in the discretion exercised by the Trial Court while imposing sentence. Consequently proceed to pass the following. ORDER Appeal filed by appellant/complainant is hereby allowed.

The judgment of First Appellate Court on the file of II Addl.District and Sessions Judge, Kodagu Madikeri (sitting at Virajpet) in Crl.A.No.34/2011, dated 21.11.2013 is hereby set aside.

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CRL.A. No. 206 of 2014

The judgment of Trial Court on the file of Civil Judge and JMFC, Ponnampet in C.C.No.819/2010, dated 30.08.2011 is ordered to be restored.

Registry to send back the records to Trial Court with a copy of this order. Sd/- JUDGE GSR List No.: 1 Sl No.: 5