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NC: 2024:KHC-D:12465 CRL.A No. 100118 of 2016
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 30TH DAY OF AUGUST, 2024 BEFORE THE HON'BLE MR. JUSTICE S.RACHAIAH CRIMINAL APPEAL NO. 100118 OF 2016 (A) BETWEEN:
B. VEERESH S/O HANUMANTHAPPA AGE: 53 YEARS OCC: AGRICULTURE/BUSINESS R/O: JULYNAGAR-GANGAVATHI DIST: KOPPAL.
…APPELLANT (BY SRI. NEELENDRA D GUNDE, ADVOCATE)
AND:
BASAVARAJ SANGAPPA NAVALALLI AGE: MAJOR, OCC: AGRICULTURE, R/O: C/O: M.NAGESJWARARAO (LIC) SARASWATHI NILAYA, 1ST FLOOR NEAR SATYANARAYANA TEMPLE(SOUTHERN SIDE) SATYANARAYAN PETE-JAYNAGARA-GANGAVATHI, DIST: KOPPAL.
…RESPONDENT (BY SRI. VYAS DESAI, AMICUS CURIAE)
THIS CRIMINAL APPEAL IS FILED U/SEC.378(4) OF CR.P.C., PRAYING SETTING ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED 29/01/2016 PASSED IN CC.NO. 384/2013 PASSED BY THE PRL. CIVIL JUDGE & JMFC- GANGAVATHI AND CONVICT THE RESPONDENT.
THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED ON 14.06.2024 COMING ON FOR PRONOUNCEMENT
Digitally signed by NARAYANA UMA Location: HIGH COURT OF KARNATAKA
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OF JUDGMENT THIS DAY, THIS COURT DELIVERED THE FOLLOWING:
CORAM: THE HON'BLE MR. JUSTICE S.RACHAIAH
CAV JUDGMENT (PER: THE HON'BLE MR. JUSTICE S.RACHAIAH)
This Criminal Appeal is filed by the appellant / complainant, being aggrieved by the judgment and order of acquittal dated 29.01.2016 in CC No.384/2013 passed by the learned Principal Civil Judge and JMFC at Gangavathi, wherein the Trial Court acquitted the accused / respondent for the offence under Section 138 of the Negotiable Instruments Act (for short ‘N.I Act’). 2. The rank of the parties in the Trial Court henceforth will be considered accordingly for convenience. Brief facts of the case are as under: 3. The complainant filed a private complaint against the accused for the offence punishable under Section 138 of N.I. Act, contending that both were known to each other and the accused requested the complainant for hand loan of Rs.3,00,000/- and agreed to pay the interest along with the principal amount. The complainant paid the said sum. In lieu of the same, the accused executed a
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promissory note at the time of receiving the said amount. In addition to that, on 26.03.2013, the accused issued a cheque for a sum of Rs.4,25,000/- towards discharge of the said loan. When the cheque was presented for collection, the same has been returned as payment stopped. Thereafter, a notice was issued to the accused calling upon him to pay the entire amount. However, the accused did not pay the amount as agreed upon. Therefore, a case came to be registered against the accused before the Jurisdictional Magistrate. 4. In order to prove the case of the complainant, the complainant examined himself as PW.1 and also got examined one more witness as PW.2 and got marked eight documents as Exs.P1 to P8. On the other hand, the defence has examined two witnesses as DWs.1 and 2 and got marked Ex.D1. 5. The Trial Court after appreciating both oral and documentary evidence on record, opined that the complainant failed to establish the financial capacity to advance such huge amount and recorded the acquittal. Being aggrieved by the same, the appellant has preferred
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this appeal seeking to set aside the order of the Trial Court. 6. Heard Sri. Neelendra D.Gunde, learned counsel for the appellant and Sri Vyas Desai, learned Amicus Curiae for the respondent. 7. It is the contention of the learned counsel for the appellant that, the Trial Court failed to consider the facts and law properly, consequently, the impugned judgment is passed which is required to be set aside. 8. It is submitted that the accused has admitted the signature on Exs.P1 and P8. However, the Trial Court failed to raise the presumption as contemplated under Section 139 of the N.I. Act, consequently, the impugned judgment is passed. It is further submitted that it is the duty of the Trial Court to raise the presumption once the accused admitted the signature and also issuance of the cheque. 9. It is further submitted that the Trial Court erroneously arrived at a conclusion that the onus instead of being fixed on the accused, has been fixed on the complainant which appears to be lack of proper understanding of the
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nature of the presumption under Section 139 of N.I. Act. Mere making bald denial regarding the transaction is not sufficient to rebut the presumption. However, the Trial Court passed a judgment of acquittal which is contrary to the law laid down by the Hon'ble Supreme Court and also contrary to the law of N.I. Act. Therefore, the judgment of acquittal is required to be set aside. Making such submissions, learned counsel for the appellant prays to allow the appeal. 10. Per contra, learned Amicus Curiae for the respondent vehemently justified the judgment of acquittal passed by the Trial Court and submitted that, the Trial Court rightly recorded the acquittal on the ground that the complainant has failed to prove the financial capacity to lend such huge amount after considering the oral and documentary evidence on record, therefore, the judgment of acquittal is required to maintained. 11. It is further submitted that the accused has led his evidence as DW.1 and also got examined another witness as DW.2. Both the witnesses are consistent in their evidence that the cheque which is marked as Ex.P1 and
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on demand promissory note which is marked as Ex.P8 were given as security for having borrowed a sum of Rs.20,000/- from Manjunath who is none other than the brother of the complainant. The Trial Court after having considered the defence of the accused opined that the accused has rebutted the presumption. Therefore, the order of acquittal has been passed. The findings of the Trial Court in recording the acquittal is appropriate and proper and therefore, interference with the said findings may not proper and hence, the appeal filed by the complainant has to be dismissed.
Making such submissions, learned Amicus Curiae for the respondent prays to dismiss the appeal. 12. Having heard the learned counsel for the respective parties and also perused the findings of the Trial Court, it is necessary to re-appreciate the facts and law for arriving at a conclusion as to whether the Trial Court appreciated the facts and law properly or not. 13. Before adverting to the facts of the case, it is necessary to refer the dicta of the Hon'ble Supreme Court for the purpose of considering the position of law in respect of
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the Negotiable Instruments Act. The Hon'ble Supreme Court in the case of RAJARAM S/O SRIRAMULU NAIDU (SINCE DECEASED) THROUGH L.RS. V/S MARUTHACHALAM NAIDU (SINCE DECEASED) THROUGH L.RS.1 paragraph Nos.10, 11 and 12 read thus: “10. The learned counsel submitted that there arose no occasion for the Appellant-Raja Ram to issue a blank cheque in the year 1992 for a chit to be subscribed much later in the year 1995. It is further submitted that even if certain amounts are not accounted for in the Income Tax Returns, this is a matter concerning only the defaulter and Revenue Authority. Thus, a borrower cannot be allowed to take advantage of the same solely on the ground that such an amount does not reflect in the Income Tax Returns. The learned counsel relied on the judgments of this Court in the cases of Bir Singh v. Mukesh Kumar (2019) 4 SCC 197, Rohitbhai Jivanlal Patel v. State of Gujarat and Anr (2019) 18 SCC 106, Kalamani Tex and Anr v. P. Balasubramanian (2021) 5 SCC 283 to buttress his submissions.
1 2023 LIVELAW (SC) 46
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We shall first consider the Criminal Appeals. 12. This Court in the case of Baslingappa v. Mudibasappa (supra) has summarized the principles on Sections 118(a) and 139 of the N.I. Act. It will be relevant to reproduce the same. “25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner: 25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of
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probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. 25.5. It is not necessary for the accused to come in the witness box to support his defence.”
In another case, the Hon'ble Supreme Court in the case of Rajesh Jain v. Ajay Singh2 held in Paragraph Nos.55 and 56 as under: “55. At the stage when the courts concluded that the signature had been admitted, the court ought to have inquired into either of the two questions (depending on the method in which the accused has chosen to rebut the presumption) : Has the accused led any defence evidence to prove and conclusively establish that there existed no debt/liability at
2 (2023) 10 SCC 148
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the time of issuance of cheque? In the absence of rebuttal evidence being led the inquiry would entail : Has the accused proved the non- existence of debt/liability by a preponderance of probabilities by referring to the “particular circumstances of the case”?
The perversity in the approach of the trial court is noticeable from the way it proceeded to frame a question at trial. According to the trial court, the question to be decided was “whether a legally valid and enforceable debt existed qua the complainant and the cheque in question (Ext. CW I/A) was issued in discharge of said liability/debt”. When the initial framing of the question itself being erroneous, one cannot expect the outcome to be right. The onus instead of being fixed on the accused has been fixed on the complainant. Lack of proper understanding of the nature of the presumption in Section 139 and its effect has resulted in an erroneous order being passed.”
On careful reading of the dicta of the Hon'ble Supreme Court, it makes it clear that once the execution of the cheque is admitted, Section 139 of the N.I. Act mandates a presumption that the cheque was issued for the
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purpose of discharge of any debt or other liability. The said presumption is rebuttable in nature and the accused has to rebut the said presumption in the form of preponderance of probabilities. It further clarifies that, in order to rebut the presumption, initially the onus would be on the accused, thereafter, it would be shifted on the complainant once the presumption is rebutted. 15. In the present case, now, it is relevant to refer the brief facts of the case which emerge in this case are that the complainant and the accused were known to each other and the accused requested the complainant to lend a sum of Rs.3,00,000/- as loan. The complainant being acquainted with the accused, agreed to lend the amount of Rs.3,00,000/- and paid the amount to the accused. The accused, in turn, has executed a promissory note as per Ex.P8 and later he issued a cheque as per Ex.P1 to clear the debt. During trial, the accused raised two grounds namely, (a) Cheque and on-demand promissory note were issued to one Manjunath who is the brother of the complainant and the said Manjunath has misused the
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documents and filed the complaint through the complainant. (b) The complainant has not proved his financial capacity to lend such huge amount. 16. As regards the issuance of the cheque and on-demand promissory note to Manjunath is concerned, the accused examined himself as DW.1 and also got examined DW.2 to substantiate his case. According to them, Manjunath was running a grocery shop and he was writing matka chits wherein the accused was his customer and he had to pay Rs.20,000/- to the said Manjunath. The said Manjunath had gone to the house of the accused wherein DW.2 was also present. Ex.P1 and Ex.P8 were given to the said Manjunath in presence of DW.2. The said contention of DWs.1 and 2 has been denied in the cross- examination by the complainant. When the complainant denied that those two documents were issued to Manjunath, mere denial of transaction with the complainant may not be sufficient to rebut the presumption. However, the Trial Court erroneously appreciated the law on the Negotiable Instruments Act
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and opined that the presumption has been rebutted and the complainant has to establish his financial capacity appears to be erroneous and not proper. Therefore, the said aspect is required to be interfered with.
As regards the financial capacity of the complainant is concerned, the Trial Court after considering the evidence on record, opined that the complainant has to prove the financial capacity before the accused rebutted the presumption which is contrary to the dictum of the Hon'ble Supreme Court in the case of RAJESH JAIN stated supra. Therefore, I am of the considered opinion that the judgment of acquittal is required to be set aside. 18. Hence, I proceed to pass the following; ORDER i) The Criminal Appeal is allowed. ii) The Judgment and Order of acquittal dated 29.01.2016 in C.C. No.384/2013 on the file of learned Principal Civil Judge and JMFC at Gangavathi is set aside. iii) The respondent / accused is convicted for the offence under Section 138 of N.I. Act and he is sentenced to
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pay a fine of Rs.5,00,000/- (Rupees Five Lakhs only), in default of payment of fine, he shall undergo simple imprisonment for 1½ year. iv) On deposit being made, the Trial Court is directed to release a sum of Rs.4,95,000/- (Rupees Four Lakhs Ninety Five Thousand only) in favour of the complainant as compensation in terms of Section 357-A of the Code of Criminal Procedure, on proper identification and the remaining balance amount of Rs.5,000/- (Rupees Five Thousand only) shall be credited to the State Exchequer. v) The Trial Court is directed to take all necessary measures to execute the order of this Court after the appeal period is over. vi) The Assistance rendered by the learned Amicus Curiae is appreciated. The appreciation is taken on record.
Sd/- (S.RACHAIAH) JUDGE
Bss List No.: 19 Sl No.: 1