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NC: 2023:KHC-D:10940 CRL.A No. 100037 of 2016
IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH
DATED THIS THE 20TH DAY OF SEPTEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE HANCHATE SANJEEVKUMAR
CRIMINAL APPEAL NO.100037/2016 (A)
BETWEEN:
CHIDAMBER S. NANAVATE S/O LATE S.V. NANAVATE, AGE: 36 YEARS, OCC: SHAILESHWAR VIDYA KENDRA, R/O: 14TH WARD, 2ND STAGE, KUMARASWAMY COLONY, SANDUR-583119, BALLARI DIST. …APPELLANT (BY SRI A. A. PATHAN AND CHIDAMBER S. NANAVATE, ADVS.)
AND:
SURESH K. S/O ANNAPPA K., AGE: 37 YEARS, OCC: BUSINESS MAN, R/O: 2ND WARD, ADAVISWAMY MUSZID, NEAR RATHNAKAR SHETTY HOSPITAL, SANDUR-583119, BALLARI DIST. …RESPONDENT (BY SRI B. C. JNANAYYASWAMY AND ANWAR BASHA B., ADVOCATES.)
THE CRIMINAL APPEAL IS FILED UNDER SECTION 378(1)& (4) OF CR.P.C. SEEKING TO GRANT THE SPECIAL LEAVE THE APPELLANT TO FILE THE APPEAL AGAINST ACQUITTAL IN C.C. NO 68/2013 PASSED BY THE CIVIL JUDGE & JMFC SANDUR DATED:14.12.2015 AND TO SET ASIDE JUDGMENT AND ORDER OF THE ACQUITTAL OF THE RESPONDENT / ACCUSED FOR THE OFFENCE PUNISHABLE U/SEC. 138 OF THE N.I ACT, PASSED BY THE CIVIL JUDGE & JMFC SANDUR DATED 14.12.2015 AND FURTHER BE PLEASED TO PUNISH THE RESPONDENT / ACCUSED FOR THE OFFENCE PUNISHABLE UNDER 138 OF N.I ACT.
R Digitally signed by SUJATA SUBHASH PAMMAR
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NC: 2023:KHC-D:10940 CRL.A No. 100037 of 2016
THIS APPEAL COMING ON FOR DICTATING JUDGMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:
ORDER
This appeal is filed by the complainant calling in question the judgment of acquittal passed in Criminal Case No.68/2013 dated 14.12.2015 by the Civil Judge and JMFC., Sandur, there by acquitting the accused for the offence punishable under Section 138 of Negotiable Instruments Act (hereinafter for short ‘NI Act’). 2. Factual matrix in the case are that the complainant and accused are close friends and accused is business man and borrowed hand loan of Rs.17,00,000/- from the complainant for the purpose of his mining and digging business and to clear house construction loan. It is stated that accused has assured to repay the same within six months. But, accused did not repay the same and hence, issued the cheque. But, said cheque was bounced due to insufficient funds. Hence, after issuing statutory notice, filed private complaint before the learned Magistrate.
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NC: 2023:KHC-D:10940 CRL.A No. 100037 of 2016
The learned Magistrate after conducting the trial has acquitted the accused on the reason that there is no proof on the part of the complainant that he has financial capacity to lend the amount of Rs.17,00,000/- to the accused and for other reason that the accused has not received statutory notice by the complainant. Therefore, on these two reasons, acquitted the accused. 4. Heard the arguments from both sides and perused the records. 5. For the purpose of convenience and easy reference, the ranking of the parties is referred as per their status before the trial Court. 6. The learned counsel for the appellant-complainant submitted that at first instance while filing the complaint before the learned Magistrate, it is not necessary for the complainant to plead his financial capacity. Therefore, just because complainant has not pleaded his financial capacity in complaint is not a ground to suspect the case of the
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complainant. Further, submitted that even though the accused has issued cheque-Ex.P1, but it is proved that accused has received statutory notice issued to him through his father. Therefore, when both father and son are residing in the same address under the same roof and father has received notice is amounting that the accused has knowledge regarding issue of legal notice to the accused and is deemed service of notice. He placed reliance on some decisions. 7. On the other hand, learned counsel for the complainant submitted that there is no evidence on the part of the complainant that he has financial capacity to give hand loan of Rs.17,00,000/-. Further more, when it is the case of the complainant that he has borrowed the said amount of Rs.17,00,000/- from 7 to 8 persons to lend to accused but the complainant has not stated their names and not examined at least one of those 7 to 8 persons. Further raised the ground that the complainant has no certainty about what was the amount lent by him whether
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it was 16 lakhs or 17 lakhs. Further, submitted that the complainant has not issued legal notice to the accused. 8. Further, submitted that the complainant is an income tax assessee but has not declared this sum of Rs.17,00,000/- to the income tax Department which proves that the complainant did not have such capacity of lending of Rs.17,00,000/-. The accused is not doing any mining or digging business and has not constructed house. Therefore, for that purpose, the accused has received hand loan is far from truth. 9. Further, submitted that in the year 2012, on which date, month and year, the alleged cheque was issued, there was no mining business. Further, submitted that the signature on Ex.P1-cheque is not tallied with other signature of the accused. Therefore, submitted that the trial Court has considered all these aspects and delivered the judgment of acquittal which needs no interference. Therefore, prays to dismiss the appeal.
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Upon considering the rival submissions, the following point arises for my consideration: “Whether, under the facts and circumstances involved in the case, the complainant has proved that the accused has issued cheque-Ex.P1 for discharge of legally enforceable debt, thus, cheque bounce attracting offence under Section 138 of NI Act, against the accused?” 11. The present case is a simple case of the complainant that he is the Secretary of Sri. Shaileshwar Vidya Kendra at Sandur. The accused is a business man of doing business activities of mining and digging and also to clear his bank debts for construction of his house has received hand loan of Rs.17,00,000/- from the complainant. 12. It is the case of the complainant that he has lent the said amount of Rs.17,00,000/- to the accused as hand loan and in this regard there was no execution of documents entered between them. Though, the accused
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has taken stand that he has not issued cheque Ex.P1 and signature on it is not of the accused, but, upon considering the Ex.P8-bank statement of the accused, the account number mentioned in the bank statements Ex.P8 and Ex.P1 are one and the same. Admittedly, Ex.P8 is a bank statement of the accused. The learned Magistrate has come to the conclusion that upon admitting the signature of accused and making comparison of it, he has found that the signature on the cheque is that of the accused. Therefore, in the cases like this, even though, cheque bounce case is for the offence punishable under Section 138 of NI Act, but enquiry is summary in nature and appreciation of evidence is by following the theory of preponderance of probability, but, not by adopting the theory beyond reasonable doubts. 13. Filing of complaint under Section 200 of Code of Criminal Procedure before the learned Magistrate for giving information to the Court/Magistrate of offence is committed. Either the complainant or the accused prove
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NC: 2023:KHC-D:10940 CRL.A No. 100037 of 2016
their case on all its preponderance of probabilities. Proving of defence by the accused is by way of probable evidence. What is preponderance of probability is meant to that upon considering the case based on the complaint, defence taken by the accused, the statement given by the accused under Section 313 of Cr.P.C. and evidence of both the parties, then, what would get impression on the mind of court that what is wrong and what is right, upon considering the case on its entirety and what is gist of impression created in the mind of the Court that is preponderance of probability. Evidence is to be weighted and sifted and what would be more probable compared to other and gets impression what is correct that can be accepted. 14. Preponderance of probabilities means that degree of certainty of belief in the mind of the tribunal of fact of the Court by which it is convinced that the existence of a fact is more probable than its non-existence.
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The Hon’ble Supreme Court in the case of Baslingappa Vs. Mudibasappa, reported in 2019(5) SCC 418 were pleased to lay down principle of law that the cheque bounce cases are to be considered on all it’s probability. Even though the accused can prove his case and destroy case of the complainant by not entering witness box but by probabalising his defence in the cross examination of the complainant. 16. Filing of complaint under Section 200 of Cr.P.C. is not a civil suit as if to be done in civil cases. Strict rules of pleadings so as to contain all pleadings in minute details are not necessary for the complaint. Gist of making of offence is necessary so as to make complaint before the learned Magistrate that to take cognizance of offence that what is the offence alleged to have committed by the accused. It is incumbent on the complainant whatever best evidence can be given on his behalf. It is also not obligatory but it is discretion on part of the accused to enter into the witness box to prove his defence and the
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NC: 2023:KHC-D:10940 CRL.A No. 100037 of 2016
accused can probabalise his defence in the course of cross examination of complainant. When this being the case, considering on appreciation of evidence, the accused has not taken his defence that the complainant is not Secretary of Sri. Shaileshwar Vidya Kendra. 17. From the evidence of DW-2 who is a postman proved the fact that the statutory notice has got issued by the complainant is served on the father of the accused. When father and son are residing under the same roof and if notice is served on the father then it is amounting to deemed service of notice on the accused. Section 27 of the General Clauses Act, 1897, enumerates regarding presumption of issuance of notice also that presumption raises a presumable fact that the accused has received the notice. 18. When this being the fact, upon analysis of the evidence on record, there is no evidence by the accused that what is his defence set up through reply to the said legal notice issued by the complainant. The accused kept
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silent in not answering by reply to the legal notice issued by the complainant. Also the accused in his evidence has not raised a cogent defence that the complainant did not have financial capacity. It is incumbent on the part of the accused to prove regarding financial incapacity on the part of the complainant by replying to the legal notice or while contesting the complaint before the learned Magistrate. The defence available to accused at very first instance while giving reply to the legal notice is not availed by the accused in the present case for taking benefit of putting forward his defence in order to rebut the case of the complainant. Therefore, when the complainant filed complaint under Section 200 of Cr.P.C., then the complainant need not prove his financial capacity or what are his financial resources. At the first instance, it is onus on the accused to raise financial incapacity of the complainant then the onus shifts on the complainant to prove his financial capacity. Therefore, proving financial capacity on the part of the complainant at first instance can not be expected from the complainant. Just because
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the complainant even though an income tax assessee has not disclosed the said lending of amount to the Income Tax Department cannot negate the case of the complainant that the accused has committed the offence under Section 138 of NI Act. Non-disclosure of amount to the income tax Department is an offence punishable which is at the domain on the Income Tax Department as per law. Just because, the said amount is not disclosed to the Income Tax Department is not the ground to say that the complainant does not have financial capacity to lend the amount. If at all, Income Tax Department wants to prosecute that upon non-disclosure of amount that the said amount transacted between the complainant and the accused is not disclosed then the Department is at liberty to initiate action as per law on the complainant. But, this non-disclosure of the amount to the Income Tax Department cannot throw out the case of the complainant so as to say that the complainant has not proved his financial capacity.
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NC: 2023:KHC-D:10940 CRL.A No. 100037 of 2016
The Hon’ble Supreme Court in the case of Tedhi Singh Vs. Narayan Dass Mahant reported in (2022) 6 SCC 735 were pleased to observe and held at para 10 as follows: “10. We have gone through the nature of the evidence in this case. We also bear in mind the fact that three Courts have held in favour of the respondent. In this regard we bear in mind that though it is true that reply notice was sent by the appellant, therein he admits the case of the respondent that the parties were having a cordial relationship. In the reply notice the appellant has not set up any case that the respondent did not have the financial capacity to advance the loan. In fact even we notice that there is no reference to the loss of the cheque book or signed cheque leaf. No complaint was given of the loss of the cheque book or the signed cheque leaf either to the police or to the bank. In the evidence of DW5, the son of the appellant, the version given is that on 5.10.2011, PW5 had left home with the cheque book of the appellant which had a cheque signed by the appellant for withdrawing money, if needed in the absence of the appellant. He set up the version that he drove away an unowned cow. in the field. Thereafter, while sitting in the bus he saw the cheque book was not with him. He further deposed that since his father was not at home he could not tell him about the incident and got engrossed in his study and forgot the incident. In his statement under Section 313 Cr.PC given on 10.01.2013, appellant has taken the stand that he informed the Bank. It
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is relevant to notice that DW5 has further deposed that when the appellant received the notice he asked him about the cheque book and then he told him about the incident of the loss of cheque book. Still, at the time when the reply notice was sent, the case is not set up about the loss of cheque book and about the cheque relied upon by the respondent being one which is brought into existence using the lost signed cheque leaf. We have already noticed that there is no evidence to establish that the appellant had informed the Bank about the loss of the cheque book containing blank cheque. In fact, In the statement under Section 313 Cr.PC. appellant had stated that this cheque book containing a blank cheque was lost. Appellant has no case that the signature on the cheque in question was not put by him.” 20. Therefore, the complainant while filing complaint before the learned Magistrate, he need not plead his financial capacity to lend the amount to the accused. What is incumbent upon the complainant is to give summary of the offence alleged to have been committed by the accused. The averments of pleadings in detail and minutely as it is to be made in civil suit is not applicable in the private complaint filed under Section 200 of Cr.P.C. It is incumbent on the accused to establish his defence by giving reply to the legal notice issued by the complainant.
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If really the accused has genuine case that his cheque is misused, then the accused shall state in his reply to the statutory notice what is his defence. From this stage, the defence of accused starts. But in the present case, even though the father of the accused has received the legal notice issued by the complainant as proved by the DW.2- post man and father is residing along with the accused in the same home. Therefore, it is amounting to deemed service on the accused. But the accused has failed to reply to the said legal notice issued by the complainant. Therefore, the accused has lost one opportunity to narrate what is his defence to put forth in the case. The accused has also not stated regarding financial incapacity of the complainant to lend such amount to the accused. Regarding financial capacity, for the first time the defence can be taken up by the accused is to controvert the case of the complainant by way of reply to notice. Just because the complainant did not disclose lending of such amount to the accused to Income Tax Department is not a ground to say that the complainant did not have financial capacity. It
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is duty of the Income Tax Department to proceed against the complainant for taking action against the complainant as to why such amount transaction is not disclosed. But such non disclosure to the Income Tax department is not the ground to take benefit by the accused regarding financial capacity. But also it is not the definite defence of the accused that the complainant has no financial capacity. The complainant in his affidavit evidence has stated that he is secretary of Saileshwar Vidya Kendra an education institution. Therefore, the accused has not taken defence regarding financial incapacity of the complainant. 21. As discussed above the evidence in the cheque bounce cases are to be appreciated and considered on theory of preponderance of probabilities and on presumption of fact as enumerated under Sections 118 and 139 of the Negotiable Instruments Act, 1881. The Hon’ble Supreme Court in the case of Tedhi Singh (supra) has laid down the law as follows:
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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 also been adverted to in Basalingappa v. Mudibasappa [(2019) 5 SCC 418], this Court notes that Section 139 of the N.I. Act is an example of reverse onus [see Rangappa v. Sri Mohan [(2010) 11 SCC 441)]. 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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NC: 2023:KHC-D:10940 CRL.A No. 100037 of 2016
Therefore presumption arises under section 118 of the N.I.Act that presumption could be made regarding consideration as to date, as to time of acceptance, as to time of transfer, as to order of indorsements, as to stamps and as to holder is a ‘holder in due course’, unless contrary is proved. For proving contra, rebuttal evidence by the accused is necessary and such rebuttal is not mere putting suggestions, but by probable defence to demonstrate under what circumstances the cheque was issued and not for discharge of legally enforceable debt. Likewise, section 139 of the N.I. Act enumerates presumption in favour of holder of cheque received for the discharge, in whole or in part of any debt or other liability. Presumption is not absolute one; presumption is rebuttable one. Where a cogent rebuttable evidence is placed before the Court, either in the course of cross- examination of the complainant or by leading defence evidence so that it demonstrates the cheque issued is not towards discharge of legally enforceable debt and the presumption is shakeable, then the presumption as per
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section 118 and 139 of the N.I. Act would not enure to the benefit of the complainant. Fundamentally the cheque is a negotiable instrument near to assuming as a promissory note. When such negotiable instrument is executed by the drawer, unless contrary is proved, presumption is always in favour of the complainant enuring to his benefit that the cheque is issued towards discharge of legally enforceable debt. 23. The complainant has specifically stated in the legal notice and in the complaint that he has lent a sum of Rs.17,00,000/- to the accused. Therefore, the complainant is certain in this case. The legal notice issued to the accused by the complainant is served on the father of the accused. Hence it is amounting to deemed service as per section 27 of the General Clauses Act as above stated. Then presumption is occurred in favour of the complainant as per Section 118 and Section 139 of N.I. Act. But, as discussed above, the accused has not rebutted the presumption.
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NC: 2023:KHC-D:10940 CRL.A No. 100037 of 2016
It is another contention of the accused that from the year 2012 there were no mining activities, therefore, there could not be occasion for the accused to receive hand loan from the complainant. Whether there were mining activities in the year 2012 or not, is not the ground to say that the accused has not received the amount from the complainant. The signature found on Ex.P.1 cheque is proved to be that of the accused and it is correctly held by the trial Court. Just because the complainant has stated that he did not know the names of 7-8 persons from whom he has received the amount and lent to the accused, is not a ground to say that the complainant has not given hand loan to the accused. Therefore, upon appreciating the evidence on record on all its preponderance of probabilities as discussed above, the complainant has proved his case that he has advanced hand loan of Rs.17,00,000/- to the accused and the accused has issued Ex.P.1 cheque to discharge the legally enforceable debt.
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The Hon’ble Apex Court in APS Forex Services Pvt. Ltd. vs. Shakti International Fashion Linkers and others, reported in AIR 2020 SC 945 has held that the signature found on the cheque is that of accused and cheque is issued out of the amount maintained in the bank by the accused, then presumption arises under section 139 of the N.I.Act that the cheque was issued towards discharge of legally enforceable debt and to rebut the presumption, the accused is required to lead evidence. Then only onus shifts on the complainant to prove that the cheque is issued towards legally enforceable debt. 26. Non disclosure of the amount by the complainant to the Income Tax Department, does not enure to the benefit of accused to absolve from the offence committed by him, but rather it is the Income Tax Department authorities, who may initiate proceedings against the complainant for such non disclosure of income while filing returns to the department. Therefore, liberty is reserved to the Income Tax Department to proceed against the complainant as per
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law for such non disclosure of amount transaction by the complainant. 27. Upon considering the entire case on its entirety, the complainant has proved that accused has committed offence under section 138 of the N.I. Act. Therefore the judgment of acquittal passed by the trial Court is liable to be set aside. Hence, I proceed to pass the following: ORDER i) The criminal appeal is allowed. ii) The judgment of acquittal dated 14.12.2015, passed by the Civil Judge and JMFC, Sandur, in C.C.No.68/2013, is hereby set aside. iii) It is held that respondent/accused is guilty of offence punishable under section 138 of the N.I.Act. Accordingly accused is convicted and sentenced to pay a fine of Rs.20,00,000/- (twenty lakh rupees) for the offence punishable under section 138 of the N.I.Act. In default to
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pay the fine amount, the accused shall undergo simple imprisonment for a period of six months. iv) Out of the said fine amount, a sum of Rs.1,00,000/- (one lakh rupees) shall be remitted to the State and the remaining Rs.19,00,000/- (nineteen lakh rupees) shall be paid to the complainant as compensation. v) Send back the trial Court records along with a copy of this judgment so as to secure the presence of accused. vi) The Registry is directed to forward copy of this order to the Chief Commissioner of Income Tax, Queens road, Bengaluru to take necessary action as observed in the paragraph No.26.
SD/- JUDGE
HMB: para 1 to 17 SSP: para 18 and 19 MRK: para 20 to end
List No.: 3 Sl No.: 17