PR COMMISSIONER OF vs. M/S STCL LIMITED

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ITA/532/2015HC KarnatakaKAHC01035888201508 March 2016Bench: B.V.NAGARATHNA,JAYANT PATEL5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Rs. 44,00,000/- advanced was unaccounted cash and not a legally enforceable debt. Protection under law cannot be granted to those who have violated the law themselves by dealing with unaccounted cash.

What were the facts?

The complainant advanced Rs. 44,00,000/- in cash to the accused, which was allegedly to be repaid with interest. The accused issued two cheques for Rs. 22,00,000/- each, which bounced due to insufficient funds. The complainant initiated proceedings under Section 138 of the Negotiable Instruments Act.

What were the issues?

Whether a debt arising from an unaccounted cash transaction can form the basis of a legally enforceable claim under Section 138 of the Negotiable Instruments Act. Whether the complainant's inability to account for the cash advanced vitiates the transaction.

Which sections of the Income-tax Act were involved?

Section 138

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

ON THE 21st DAY OF FEBRUARY, 2018

BEFORE

THE HON'BLE Mr. JUSTICE RAVI MALIMATH

CRIMINAL APPEAL NO.532 OF 2015

BETWEEN:

SRI SATISH KUMAR B, S/O BALASUNDARAM, AGED ABOUT 43 YEARS, NO.152, 6TH CROSS, JAI JAWAN NAGAR, SUBBANNAPALYA, BANGALORE – 560 033. ... APPELLANT

(BY SRI VENKATESHA T S, ADVOCATE)

AND:

SRI SHIVAKUMAR R, S/O LATE RAGHAVAN, AGED ABOUT 43 YEARS, NO.248, I BLOCK, HRBR LAYOUT, KALYAN NAGAR, BANGALORE – 560 043. ... RESPONDENT

(BY SRI JOSE K SEBASTIAN, ADVOCATE FOR SRI M A SEBASTIAN, ADVOCATE)

THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT OF ACQUITTAL DATED 31.03.2015 PASSED BY THE V A.S.C.J. AND XXIV A.C.M.M. COURT OF SMALL CAUSES, MAYO HALL

2 UNIT, BANGALORE IN C.C. NO.27408/2011 ACQUITTING THE RESPNDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT.

THIS APPEAL COMING ON FOR ORDERS THIS DAY, THE COURT DELIVERED THE FOLLOWING:

JUDGMENT

The case of the complainant is that he paid a sum of Rs.44,00,000/- to the accused to be repaid along with interest at the rate of 12% p.a. An agreement was executed on the same day. The original sale deed of the property was hypothecated. A charge was created over the property. On a demand being made to return the said amount the accused issued two cheques for a sum of Rs.22,00,000/- each. When presented for payment, they were returned with an endorsement of “funds insufficient”. A legal notice was issued. Inspite of that, the accused did not make any payment. Hence the instant proceedings were initiated.

2.

By the impugned order the trial Court come to the conclusion that the amount given by the complainant cannot be considered as a leally enforceable debt. It was also of the view that the complainant has not lent

3 Rs.44,00,000/- to the accused at all. Aggrieved by the same the present appeal is filed.

3.

Learned counsel for the appellant contends that the order passed by the trial Court is erroneous. That even though the said amount has not been accounted for in his income tax returns, the same cannot be a ground to acquit the accused. On the other hand counsel for the respondent disputes the same.

4.

On hearing learned counsels, I’ am of the view that there is no merit in this appeal. Notwithstanding the various facts of the case, the admitted fact is that a sum of Rs.44,00,000/- has been paid in cash to the accused. The same is not disclosed in the income tax returns. The appellant’s counsel on questioning submits, that the complainant is not even an assessee. Therefore, the question of he holding Rs.44,00,000/- in cash is illegal.

5.

It is contended that he is in the real estate business and on sale of sites he has earned an income of

4 Rs.30,00,000/-. That Rs.8,00,000/- was already in his possession and Rs.6,00,000/- was received by pledging gold ornaments. So far as Rs.6,00,000/- is concerned, there is no material to indicate that any gold was mortgaged in order to receive the said amount. There is no material to indicate how he was in possession of Rs.8 lakhs in cash at home. Therefore, in the totality of the contentions not a single rupee which the complainant has, has been accounted for. Therefore, rightly the trial Court came to the conclusion that in the absence of proving all these material, the accused has rebutted the presumption in issuing the cheque. I do not find any perversity in the order of the trial Court that calls for interference.

6.

Here is a case where a sum of Rs.44,00,000/- has been advanced. The said amount is unaccounted. When the cheque bounced, the protection of law was sought for. I’ am of the view that protection under law could not be granted to those who have violated the law themselves. Protection of law would not arise for unaccounted cash.

5 Therefore, it is needless to state that transactions relatable to the said amount of Rs.44,00,000/- could also be declared as null and void. Consequently, in the absence of any material, the appeal is dismissed. The judgment of the trial Court in C.C.No.27408/2011 dated 31.03.2015 is confirmed.

SD/-

JUDGE

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