Karnataka High Court
Maheshwari Constructions Pvt. Ltd. ... vs Lords Palace And Resorts Ltd. Rep. By Its ... on 27 November, 2006
Equivalent citations: 2007(4)KARLJ96
Author: K. Ramanna
Bench: K. Ramanna
JUDGMENT K. Ramanna, J.
1. This is an appeal filed by the appellant complainant challenging the judgment and order of acquittal passed by the XX Addl. CMM and XXII Addl. Small Cause Judge, Bangalore City in CC No. 2968/2002 whereby the said court dismissed the complaint filed against the respondent accused for an offence punishable Under Section 138 and 142 of the N.I. Act consequently, acquitted the respondent. Therefore, assailing the same the appellant M/s Maheswari Construction represented by its proprietor has come up with this appeal mainly on the ground that the trial court is improperly appreciated the evidence placed on record by the appellant in the case both oral and documentary evidence. The appellant being a proprietary business establishment engaged in the business of construction activity and the 3 cheques issued by the respondent No. 2 on behalf of the first respondent for the legally recoverable debt towards the construction work carried out by the appellant, but the trial court wrongly came to the conclusion in dismissing the complaint Even though the respondent received the demand notice issued by the appellant through an Advocate it did not choose to comply with the demand made therein. But the court below had come to a wrong conclusion holding that the appellant complainant has no locus standi to file a complaint Though the respondent is the payee of the 3 dishonoured cheques for the reasons that the appellant had executed a power of attorney in favour of his bankers ie., M/s State Bank of Mysore and that it was for the hanker of the appellant complainant to have prosecuted the respondent accused but not the appellant-complainant and ordered for acquittal by forgetting that the principal is readily available , therefore, the question of initiation of a prosecution against the respondent accused by the banker does not arise. Instead of holding that the Power of Attorney Holder ie M/s State Bank of Mysore cannot initiate prosecution against the respondent when the 3 dishonoured cheques were issued in favour of M/s Maheswari Construction Pvt. Ltd. But, the court below has chosen to appreciate the evidence placed on record is unknown to law. The approach of the trial court in spite of the materials placed on record and came to an improper conclusion which is liable to be set aside and the respondent-accused deserves to be convicted for the aforesaid offences. Hence, this appeal.
2. Heard the arguments of the learned Counsel Sri C.V. Nagesh for the appellant, the learned Senior counsel Sri S.G. Bhagawan for the respondent and perused the records.
3. It is argued by the learned Counsel Sri C.V. Nagesh for the appellant that the first respondent M/s Lords Palace and Resorts Ltd. represented by the second respondent who is the Managing Director engaged in construction of resorts on the site at Kalastavadi village in Srirangapatana taluk, Bangalore Mysore Highway. He entrusted the construction of the said resort to the appellant complainant. Accordingly, an agreement was entered into between the parties. As per the agreement that the bills raised by the appellant complainant should be declared on the implementation of the construction work entrusted to it So as per the instructions of the respondent the appellant complainant entrusted them and towards the payment of the amount due the 2nd respondent being the Managing Director of the first respondent issued 3 cheques as per Exs.P.1 to P.3 in all amounting to Rs. 1,08,00,000/-, At the time of issuing cheques, the respondent assured the appellant complainant to maintain sufficient balance in the account so as to honour the cheques on their due dates. When they were presented for encashment Exs.P.1, P.3 and P5 were returned with an endorsement 'insufficient funds'. The said 3 cheques were drawn on Canara Bank, Hebbal Branch, Bangalore, and were presented through the complainant's banker S.B.M., Kavalabyrasansdra branch. Therefore, he got issued legal notice between 13.8.2002 through their advocates demanding the respondents to pay the dues within 15 days from the date of receipt of the notice. This notice was sent by RPAD to respondent No. 1 returned on 28-8-2002 with the postal shara 'not claimed and not available during delivery time'. Another notice which was went to Mysore address was returned on 7-8-2002 with postal shara as 'not available during delivery time'. Likewise, the notices were sent to the other accused persons namely, respondent No. 2, and Mr. V.G. Srihari and Mr. Mahabalakrishna Bhat who are the Directors of the first respondent to both Bangalore and to their residential addresses. The notices sent were returned with the same type of endorsement 'not available' during delivery time. But the notices issues to the respondents 1 and 2 as swell as the two Directors who have been arrayed as accused 2 and 4 in CC No. 29689/2002 sent under Certificate of Posting were received by all of them. Therefore, the respondent 1 and 2 or their Directors namely, Srihari and Mahabala Krishna Bhat have not paid the amount. Therefore, the appellant was constrained to file a private complaint under Section 200 of Cr.P.C. for offence punishable under Section 138 and 142 of N.I. Act. ft is further argued by the learned Counsel for the appellant that the respondents accused have admitted the liability as per Ex.P 18 and P. 19 . Ex.P. 18 is a letter dated 15-1-2002 addressed to respondent No. 1 by the proprietor of the appellant by making it clear that he has not cleared the bill and settled the said bill with accepted interest within 15 days. Accordingly, Ex.P.19 is the reply given by the respondent No. 1 by its authorised signatory respondent No. 2., the Managing Director. They are trying to negotiate with two parties who have shown the interest to buy the property which is getting delayed due to Ashada and other reasons and tried to get additional term loan through India Tourism Department and Tourism Finance Corporation which will take place during August and September, 2002. So also additional loan from KSFC is being processed and they have received a positive response from KSFC, therefore requested the appellant to co-operate with the respondent and sought time till September end to clear the dues. It is further argued that in spite of the admissions made by the respondents, the trial court without proper appreciation in the letter and spirit of contents of Ex. P. 19 came to a wrong conclusion in dismissing the complaint is illegal, perverse against the settled law. It is argued that the admissions made by DW.1 clearly indicates about the letter written by the respondent by it admitting its liability to pay a sum of Rs. 1,08,00,000/- covered by Ex.P.1, P3 and P.5. It is farther argued that DW. 1 who is the signature to Ex.D. 19 admits his signature and its contents, but the trial court wrongly considered this fact. It is argued that even DW.1 has admitted the contents of Ex. P.19 written to the appellant after receipt of Ex.P.18 but wrongly held that there is no legally enforceable debt payable by the respondents to the appellant which is totally incorrect. It is further argued that the trial court dismissed the complaint on the ground that the cheques are not drawn in favour of the hanker, ie M/s State Bank of Mysore who is not the payee . The 3 cheques Ex.P.1, P3 and P5 are account payee cheques. Though the power of attorney executed by the appellant in favour of its banker, it is not looses its right of prosecution. If Ex.P.1 toP.3 issued by the respondents in favour of the M/s State Bank of Mysore in whose favour the appellant had executed a Power of Attorney, then it would have been a different matter, but the chequesEx.Pl to P.3 were issued by the respondents in favour of the appellant M/s Maheswari Constructions. Two cheques for Rs. 50,00,000/-each. One cheque was for Rs. 8,00,000/-. But the trial court has not considered the contents of Ex.D.37, copy of the Power of Attorney. It is argued that the plain reading of the contents of Ex.P.37 shows that the State Bank of Mysore is nominated and appointed as their lawful attorney who shall apply for receive or any amount that may be due and owing to them from the parties, namely, M/s Lords Palace and Resorts Ltd., RT Nagar, Bangalore, and other parties/departments and bodies that may be liable to pay the expectants, ie., appellant herein. The value of the said bills and other connected with the said supply, so also authorised the bank to give valid discharge for the amount received with or without any reference to the executants and to sue and recover the said sum and to execute, present any bills or other documents which may be necessary or require to collect the said amount. But the trial court wrongly interpreted held that the appellant has executed an irrecoverable power of attorney in favour of its banker is totally incorrect . It is argued that since the first respondent issued the cheques duly signed by its Managing Director respondent No. 2 in favour of M/s Maheswari Constructions. Represented by its proprietor. Therefore, the appellant being the proprietor is entitled to present the cheques issued by the respondent for legally enforceable debt which were dishonoured. It is argued that the work done by the appellant and certified by the authorised architect of the respondent as per Ex. P. 15 to P. 17, 20 to 24 in the measurement books. Since the architects are appointed by the respondent accused as admitted by DW.1 in the cross-examination at page 7 and the respondents have not denied about the contents of Es.P.15 to 17 and 20 to 24. Therefore, in pursuance of the entries of Es.P.15 to 17 and 20 to 24 that the appellant turned out the construction work upto Rs. l,08,00,000/-. Therefore the 3 cheques Exs.P.1 to P.3 issued by the respondents. It is argued by the learned advocate for appellant that for the first time the accused respondents have opened their mouth that the said cheques were secured as security and the burden lies on the respondent to rebut the evidence. In the Cross-examination the admission made by DW.3 clearly indicates that those cheques were issued for legally enforceable debt Though Ex.D.39 marked through DW,6 has not been proved its contents, but the appellant is not a party to Ex.D.39 and no suggestions were put to PW.1 . Therefore, the conclusion arrived at by the trial court in dismissing the complaint is totally incorrect, perverse and illegal and liable to be set aside.
4. On the other hand the learned Counsel Sri Bhagawan for the respondents stated that Ex.D3 is the letter written by the appellant complainant to the accused on 16-2-2000. As per Ex.D.3 goes to show that the appellant requested to send the payment directly to the banker and the bank also agreed to collect the bills or cheques as per Ex.D.37. The admission made by PW.1 indicates that appellant complainant authorising its banker to collect the bills or cheques received on its behalf. Accordingly the cheque Ex.D2 issued in favour of M/s Maheswari Construction account No. SBM Kavalabyrasandra. Accordingly, the sum of Rs. 8,00,000/- covered under Ex.D.2 came to be credited to the payee's account. Therefore, the appellant is not the person to collect the amount covered under the cheques Exs.P1, P3 and P5 and those Ex.P1, P3 and P.5 are collected by appellant as security without completion of the work entrusted to it and misused the cheques and presented them for encashment against the contents of the power of attorney executed by the appellant in favour of its banker. Therefore those cheques collected by the appellant is not for any legally recoverable debt. Therefore the learned Counsel for the respondent drawn the attention of the court about the cross-examination made on behalf of the respondents. It is argued that the replies sent by the respondent on 9-9-2002 to the advocate for the appellant has not been marked through PW.1. Therefore, the trial court rightly drawn the presumption against the appellant in favour of the respondents. It is argued what is the total amount due to the appellant and the work turned out by them. That the measurement books marked as Ex.P. 15 to P. 17 and 20 to 24 does not contain signature of the respondents or its authorised architecture. Therefore, the respondents rebutted the evidence of the appellant complainant by examining 6 witnesses. It is further submitted that it is for the appellant to prove before the court that the cheques issued by the respondents is for legally enforceable debt or otherwise. The burden of proof on the accused is not heavy and the respondent need not disprove the case of the complainant. He can discharge its burden on the basis of the preponderance of probabilities through direct or circumstantial evidence. Therefore, the trial court rightly drawn adverse inference against the appellant complainant by not proving its case.
In support of this contention the counsel for the respondents relied on the recent decision of the Hon'ble Apex court in case of M.S. Narayana Menon @ Mani v. State of Kerala and Anr. . Under Section 101 to 103 of Evidence Act onus of proof is on the accused, Held is not as heavy as that of the prosecution. Such onus compared with that of the respondent in civil proceedings and further held that the court has to presume negotiable instrument to be for consideration unless the existence of consideration is disproved. The presumption Under Section 118 and 139 as to the issuance of the said instrument for consideration and is discharged debt and in discharge of debt.
5. In supported of his contention the learned Counsel relied a decision in AIR 2003 SC182.
6. He has also relied on another decision of this Court in case of Shreyes Afro Services Pvt. Ltd. v. Chandra Kumar S.B 2006 (4) AIR Karnataka 242 wherein this Court has held that:
For the words 'for discharge of any debt or other liability' in Section 138 should be interpreted to have been current existing or past ascertained liabilities. If the accused is able to prove that there is bona fide dispute with regard to extent of liability, the dishonour of cheques under such circumstances does not attract the prosecution Under Section 138 of N.I. Act Therefore, it is argued that the trial court is right in dismissing the complaint on the ground that without completion of work entrusted to the appellant the cheques which were collected at the time of agreement as a security cannot be encashed and the trial court is right in dismissing the complaint Therefore, the present appeal is liable to be dismissed.
7. Having heard the arguments the learned Advocates for both the parties after carefully scrutinising the material placed on record, the point that arises for my consideration and decision are:
(1) Whether the 3 cheques dated Exs.P1, P3 and P5 issued by the responded, accused are legally enforceable debt or otherwise.
2) Whether the trial court properly appreciated the evidence placed on record?
3) If so, whether the findings recorded by the trial court is perverse, illegal, contrary to material evidence?
8. The complainant herein is engaged in the business of construction of residential/commercial buildings in the name and style of M/s. Maheswari Constructions by its proprietor J. Nagachanda. When the respondent accused approached the appellant-complainant for construction of the resorts on site at Kalastawadi village, Srirangapatna taluka on Bangalore-Mysore Highway. Accordingly, the appellant complainant undertook the works entrusted to them and towards the payment of the amount due to the complainant The respondent accused No. 2 being the Managing Director of the first accused issued 3 cheques marked as Exs.P.1, R3 and P.5, ie., 2 cheques for Rs. 50 lakhs each, and another cheque for Rs. 8 lakhs and Rs. 1,08,00,000/-. It is an undisputed fact that the 3 cheques Exs.D.1, D3 and D.5 came to be dishonoured when they were presented. Therefore, legal notice was issued by R.P.A.D was returned , but notices sent to the two available addresses to accused No. 3 at Bangalore has been received by him on 21-2-2002, whereas the notice sent to accused No. 4 was returned with postal shara that "not available during delivery time" and the accused have failed to pay the amount Therefore, he filed a private complaint under Section 200 of Cr.PC. against the respondents for the offence Under Section 138 of the N.I. Act.
9. It is an undisputed fact that initially the respondent accused said to have been entrusted the construction of the resort etc. to S. Mallikarjuna Associates. Since Mallikarjuna Associates showed its inability to carry out the construction work undertaken by it for its financial constraint. Therefore, it has given No objection certificate. Accordingly, the appellant complainant as well as the respondents accused entered into an agreement dated 10-9-99. So, under the said agreement the first stage of work approximating to 3 crores comprised to compound wall, two side pool side restaurant, club house, road, fire fencing and cottages in the resort section. As per Ex.D.8 it was agreed between the parties that the complainant should construct first phase as per the plans and specifications prepared by M/s. Bharadwraj and Acharya - architects from Basavanagudi, Bangalore. It was also agreed to complete the project within a period of 15 months and also he has to submit his first R. A Bill after the execution of minimum of Rs. 30 lakhs worth progress of minimum Rs. 10 lack work. The architect was supposed to certify payment of 75% of the value of the Bill. So as per the power of attorney executed by the appellant-complainant in favour of its banker , ie., State Bank of Mysore, Kavala Byrasandra Branch and thew appellant has already received Rs. 1,10,00,000/- (rupees one rupees one crore ten lakhs) for the work turned out by him. The contention of the respondents that the 3 cheques Exs. P. 1,3 and 5 issued as a security. The cheques were given before executing the Power of Attorney to the complainant towards security. As could be seen from the material placed on record, that the Power of Attorney executed by the appellant in favour of S.B.M., Kaval Byrasandra to collect the payment made by the respondents on behalf of the complainant. Since the complainant had applied to the said bank for financial assistance to enable it to construction purpose and accordingly the bank had agreed to advance the sum as and when required by complainant and accordingly the appellant to save and protect the rights of the Bank nominated and appointed the bank as their Lawful Attorney and agent who shall apply for and receive all or any amount that may be due or owing to them from thew parties, namely, respondent No. 1, and other parties that may be liable to pay the executants value of the said bills, though contents of the Power of Attorney Ex.D.37 state that the appellant has given authority even to sue the first respondent herein for the recovery of the amount covered under the bills. But not given any authority by the appellant to its banker to file complaint against the respondents for dishonour of cheques. Therefore, it could be said that the finding recorded by the trial court that the complainant has no power to lodge the complaint against the respondents for an offence punishable under Section 138 of the N.I. Act for dishonour of the 3 cheqes marked as Exs.P.1, 3 and 5. The appellant does not looses its right to file a private complaint under Section 200 Cr.P.C. against the respondents for dishonour of cheques issued in its name only. It is clear from the evidence and as per the agreements entered into between the parties the first phase of work to be carried out within 15 months and the first phase work was valued at rupees 3 crores. The respondents who had already issued a cheque for rupees one crore, ten lakhs was already encashed towards R.A. Bills. Thereafter the appellant herein continued the construction work. One cheque issued for rupees eight lakhs issued in the name of MBM, Kavai Byrasandra account number of the complainant whereas the 3 cheques i.e., Exs.P1, P3 and P5 issued by respondent No. 1 signed by respondent No. 2 being the M.D. of the first respondent in favour of M/s Maheswari Constructions. In the said 3 cheques account number of Maheswari Constructions has not been written. Therefore, the respondents have no voice to contend before the court that those cheques issued by them as security cannot be accepted. Therefore, the complaint filed by the appellant for an offence punishable under Section 138 of the N.I. Act is in the capacity of a proprietor of M/s Maheswari Constructions is maintainable. Therefore, the finding recorded by the trial court that the appellant complainant has no power to file complaint against the respondents where in has executed irrevocable power of attorney in favour of its Banker SBM, Kaval Byrasandra cannot be accepted for the simple reason that when 3 cheques have been issued in favour of the complainant in favour of M/s Maheswari Constructions without mentioning the account number. The respondents have no locus standi to question the terms of the general power of attorney Ex.D37 entered into between the appellant-complainant and its banker. The violations of terms of general power of attorney Ex.D37 by the appellant if any it is for the Bank i.e., attorney to take any legal action. But the respondents have no right whatsoever. Therefore, complaint filed against the respondents in the capacity of proprietor of M/s Maheswari constructions is maintainable. Why such an agreement has been executed by the complainant is that the bank has agreed to advance such sums as and when required by the complainant. Therefore, the finding recorded by the trial court is perverse and untenable in law. If at all Exs.P1, 3 and 5 issued and given undated prior to the execution of the Power of Attorney for the purpose of securing to undertake the work. But the respondents have not produced any documents or receipt for having delivered 3 cheques in question prior to the execution of the Power of Attorney by the appellant complainant in favour of its banker as security. As a prudent businessman the respondents insisted the complainant to pass a receipt for having taken undated 3 cheques i.e., Exs.P1, P3 and P5 prior to the execution of the Power of Attorney, Ex.D37. Therefore, the finding recorded by the trial court that the complainant misused the cheques filed the complaint cannot be accepted and the said finding is perverse and illegal and the same is liable to be set aside. As per Ex. P. 19 dated 6-8-2002 addressed by the respondents requesting the complainant to co-operate with them and to give time until September end to clear the dues. As per Ex.P.19 the respondents requested the complainant as under:
Keeping in mind the above development we request you to kindly co-operative with us and give us time until September end to clear the dues. You have been co-operating with us until now for which we are grateful to you and request you to consider the above point, so that the problem could be solved amicably.
This letter Ex.P.19 written by the authorised signatory for Lords and Palace Ltd on the basis of agreement dated 10-9-99 at the letter of understanding dated 27-4-2002. Now the signatory to Ex.P.9 with a mala fide intention denied the signature in the letter of understanding. As per Ex.P.19 in the letter and spirit the respondents-accused have been trying to negotiate with the parties who are showing interest to buy the property which is getting delayed due to Ashada and other reasons and also they have tried to get additional loan through India Tourism Department and Tourism Finance Corporation which would take place during August and September, 2002. Apart from that the respondents are also making effort to get the additional term loan from KSFC is being processed and they have a positive response from them. Therefore the respondents requested the complainant to grant time tilt September end to clear the dues. Ex.P.18 is the letter dated 15-1-2002 addressed by the appellant to the respondent No.2. the Managing Director of the first respondent-accused submitting the certified 5th running account bill on 2nd of August 2001 informing that the respondents have not cleared the bills to the to tune of rupees 1,18,20,214.15. Therefore, it cannot be said that 3 cheques i.e., Exs.P1, P3 and P5 were issued prior to execution of the Power of Attorney by the respondents as a security cannot be accepted. Therefore, the finding recorded by the trial court that if at all Ex.P. 19 was written by respondents on 6-8-2002 to give them time till the end of September 2002 there is no question of issuing the said cheques by the respondent to the complainant on 8-8-2002. Perhaps the cheques might have been given by the respondents at the request of the complainant after submission of R.A. bills duly certified by the architects. Under Section 20 of the N.I. Act even if 3 undated cheques were issued by the respondents immediately after the execution of Power of Attorney in favour of SBM, the respondents would have mentioned in their letter dated 6-8-2002 not to present those cheques, as the respondent company is making efforts to get the additional term loan through the India Tourism Department, and Tourism Finance Corporation, KSFC. The plain reading of Point No. 1 in the letter Ex.P.19 that the respondents are making efforts to sell the properties and they are trying to negotiate with 2 parties and that they have also shown interest to purchase the property since it was delayed due to Ashada. This goes to show that even though the RA bills submitted by the complainant duly certified by M/s. Bharadwraj and Acharya, architects of Bangalore unable to pay the amount covered under three cheques. Therefore, presentation of the cheques by filling the date by the complainant cannot be said that the appellant has misused those cheques is totally incorrect The trial court recorded its perverse findings that the appellant in collusion of M/s Bharadwraj and Acharya, Architects , prepared the measurements, books even though the respondents and M/s Bharadwaj and Acharaya. The measurement book contained the signatures of the architects appointed by the respondents only. Therefore, it is not proper on the part of the respondents to make such allegations that the measurement books prepared with collusion of architects. Of course, respondents have examined in all six witnesses. Though the trial court has discussed the evidence of DWs.1 to 6, but has not discussed the evidence of the complainant PW.1 and the admissions made by E.W.1 to D.W.6 in their cross-examination, the first phase of the work entrusted by the respondents to the complainant approximately for rupees 3 crores. Since the respondents have already paid Rs. 1, 10,00,000/- and the three cheques issued for one crore eight lakhs . The admission made by complainant PW.1 in the cross-examination that he has riot completed the flooring of full site restaurant, wood work, sanitary, painting, electrical wiring appears to be reasonable. As per the R. A. work, whatever the construction done by him to the extent of Rs. 2,18,00,000/- out of Rs. 3 crores approximate value of the project. Therefore, as a honest contractor the admission made by him that there is a balance of work like flooring, wood work, sanitary, painting and electrical wiring approximately would be of Rs. 82,00,000/-. But the trial court mis-interpreted the admission made by the appellant P.W.1 in order to dismiss the complaint, which is highly illegal, perverse and against the oral and documentary evidence placed on record.
10. The trial court has not at all discussed the evidence of PW.1, on the other hand discussed the evidence of DWs.1 to 6, but the admissions made by them during the course of cross-examination have not been taken into consideration about the admissions made by DWs.1 to 6. If really the trial court had considered the admissions made by DWs. 1 to 6 the truth would have been come out, whether those cheques issued were for legally enforceable debt or otherwise.
11. When once the three cheques have been issued by the respondents towards the value of the work carried out by the appellant and when they were dishonoured will become both criminal and civil liability. There is no such clause in the agreement dated 10-9-1999 entered into between the parties. So under Section 118A and 139 of the N.I. Act it is for the respondents to rebut the evidence of the complainant. It is the quality of the evidence which required to be considered, whether those three cheques were issued as a security or a legally enforceable debt or otherwise. DW 1 has admitted in his cross-examination that they don't have any documentary evidence to show that those cheques were issued before giving any authority to the Bank and they have appointed Bhardwraj and Acharya as their architect till the completion of the work. The further admission made by DW.1 show that they have received the letter dated 15-1-2002 written by the complainant which is marked as Ex.P. 18. He has also admitted his signature in it. The signatures find in Ex.P18 and P. 19 are his signatures. Likewise, DW.2 Rajagopal , who was in-charge as executive project of the respondent accused No.1 admitted that he was not present when the agreement dated 10-9-99 was entered into. He does not know whether there is any clause in the agreement that the measurement should be taken in his presence. DW.4 Srihari, Director of accused No. 1 's company, has also made some admissions stating that if at all any cheques were given , there must be record in the office. Before giving the cheques all the Directors should discuss in the meeting, thereafter they should issue the cheques. But, he has showed his inability to say as per the second agreement it was discussed in the Board Meeting by all the Directors. So, by the consent of all the Directors those cheques have been issued. But the respondents have not produced the Minutes book of the Directors meeting and he has also shown his inability that the bills issued by the complainant to the entire completion of construction work are whatever the construction have been made by it. So also he has shown his inability to say whether the cheques were issued by the respondents before or at the time of construction, since DW.4 happens to be the younger brother of respondent No. 2, the Managing Director. It could be said that DW.4 is an interested witness. DW.S Nagaraj, is the Deputy Manager (technical) of KSFC. In the examination-in-chief itself he has stated that the inspection report Ex.D.39 was made in the presence of M/s. Maheswari Construction or not. So also he does not know what all the things considered at the time of inspection and he is not the author of Ex.D. 39. The inspection report includes only the value of the construction and not the profit of contractors. Therefore, the respondents who were examined DW.6 O.S. Nagaraj who is the Manager of KSFC and he is not the author of Ex.D.39. Therefore, the trial court is wrong in coming to the conclusion in recording its finding that as per Ex.D.39 the details of building and other civil work to the tune of Rs. 88.02 lakhs is yet to be carried out, which is more favourable to the complainant appellant than to the respondents. More over the inspection is done by K. Manjunatha of KSFC in the absence of the appellant and he came to know that the promoters have not paid the amount to the contractors towards the construction. Therefore, the finding recorded by the trial court that the appellants failed to prove that the said 3 cheques i.e., Exs.P1, P3 and P5 issued by the respondents were not legally recoverable debt is perverse, illegal and liable to be quashed.
12. Taking into consideration the facts and circumstances of the case, the trial court ought to have presumed the Negotiable Instrument to be for consideration unless the existence of the consideration is disproved. But the respondents failed to disprove that the cheques issued by them not for cost of the construction work carried out by the appellant, but they were issued as a security.
13. In an appeal filed under Section 378 of Cr.PC power of the High Court in entertaining the appeal, treating it to be an appeal against acquittal, it was in fact exercising Revisional jurisdiction. Even while exercising an appellate power against the judgment of acquittal, the High court should have borne in mind the well settled principles of law that where two views are possible, the appellate court should not interfere with the finding of the acquittal recorded by the trial court Even after re-appraisal of the entire evidence placed by both the parties, it could be said that 3 cheques were issued by the respondents after submitting the 5th R.A. Bills to them duly certified by the architects appointed by the respondent. Therefore, the trial court is wrong in believing the version of the respondents. The issuance of said three cheques were issued as a security after the execution of the Power of Attorney in favour of the Bank does not arise. The findings recorded by the trial court is totally perverse, illegal. Therefore, taking into consideration the facts and circumstances of the case this Court comes to the conclusion that the order of acquittal passed by the trial court is liable to be set aside and the respondents are to be convicted for the offence punishable under Section 138 of N.I. Act.
14. For the foregoing reasons, the judgment and order of acquittal passed by the 20th Addl. CMM and 22nd ASCJ ,Bangalore City, on 17* of January, 2005, in CC No. 29689/2002 is hereby set aside and the respondents 1 and 2 are convicted for an offence punishable under Section 138 of the N.L. Act
15. By relying of the law laid down by this Court in the case of Metalloy N. Steel Corporation v. Sri Sridhara M.A. the respondent No.2 being the Managing Director of first respondent company shall undergo sentence till the rising of the court and to pay a fine of Rs. 1,30,00,000/- (Rupees One Crore thirty lakh). In default of payment of fine amount respondent No.2 shall undergo simple imprisonment for a period of one year.
16. Respondent No.2 shall appear before the trial court on 11.12.2006 to undergo sentence till the rising of the court between 11 a.m. to S p.m. The respondent-2 shall deposit the fine amount of Rs. 1,30,00,000/- within four weeks from the date of passing of this order. On depositing of fine amount by the 2nd respondent, a sum of Rs. 1,29,75,000/- shall be paid to the complainant as compensation. The balance sum of Rs. 25,000/- shall be credited to the State exchequer.