Karnataka High Court
Shrikant S/O Arjunasa Bakale vs Mahammadasab on 14 February, 2020
Author: Pradeep Singh Yerur
Bench: Pradeep Singh Yerur
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IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
ON THE 14 T H DAY OF FEBRUARY 2020
BEFORE
THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR
CRIMINAL APPEAL NO.100100 OF 2016
BETWEEN
SRI SHRIKANT,
S/O ARJUNASA BAKALE,
AGED 34 YEARS, OCC: BUSINESS,
R/O NEAR JODA MARUTI TEMPLE,
GADAG, TAL. & DIST. GADAG
... APPELLANT
(BY SRI AYUSH G.BHAT, ADVOCATE FOR SRI G.A.BHAT,
ADVOCATE)
AND
SRI MAHAMMADASAB,
S/O BADESAB UMACHAGI,
AGE MAJOR,
R/O BEHIND SAI BABA TAMPLE,
MASARI AREA, BETAGERI,DIST. GADAG.
... RESPONDENT
(BY SRI.K.L.PATIL, ADVOCATE FOR RESPONDENT)
THIS CRIMINAL APPEAL IS FILED U/S 378 (4) OF
CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT AND
ORDER OF ACQUITTAL DATED 03/10/2015 IN CC
NO.1652/2013 PASSED BY THE I ADDL. CIVIL JUDGE &
JMFC I, GADAG.
THIS CRIMINAL APPEAL COMING ON FOR
HEARING THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
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JUDGMENT
Heard the learned counsel for the appellant and respondent.
2. This appeal is filed by the complainant against the order of acquittal dated 03.10.2015 in CC No.1652 of 2013 passed by the I Addl. Civil Judge & JMFC I, Gadag.
3. The parties herein shall be referred to with reference to their status before the trial Court.
4. The facts of the case are as under:
The complainant and the accused were well known to each other since more than four to five years and the complainant wanted to purchase a property. Accordingly, the accused executed an agreement of sale in favour of the complainant on 14.06.2011 in respect of the property bearing RS No.26/2A+2B/2+3+4/C measuring 2 Acres 39 guntas of land situated at Sambhapur Village, Gadag Taluk and District. It is the case of the complainant that the sale -3- consideration amount was agreed at Rs.3,50,000/- and out of the total sale consideration the accused has paid a sum of Rs.3,40,000/- as advance for sale of the said property and the sale agreement came to be signed by both the complainant and the accused.
5. The complainant states that he requested the accused to register the sale deed in pursuance to the sale agreement and since the accused was not ready to perform his obligations, the complainant requested the accused to return the advance sale amount along with damages caused to him amounting to Rs.3,50,000/-. Though the accused wanted to postpone the payment of the said amount, the accused has finally issued a cheque for a sum of Rs.3,50,000/- on 29.04.2013, drawn on ING Vysya Bank Limited, Gadag Branch in favour of the complainant. When the complainant presented the said cheque to the bank the same came to be dishonoured for the reason 'funds insufficient'. Thereafter, the complainant got issued a legal notice on 31.07.2013 notifying the accused to repay the -4- dishonoured cheque amount. The legal notice came to be served on the accused, but no reply was sent by the accused. Accordingly, the complainant has presented a private complaint against the accused under the provisions of Section 200 Cr.P.C. requesting to take action under Section 138 & 142 of the Negotiable Instruments Act (in short 'the NI Act').
6. On receipt of the complaint, the cognizance was taken by the trial Court and summons was issued to the accused. It is the case of the complainant that summons that was sent to the accused in the same address in which legal notice was sent, was received by the accused and he appeared before the trial Court. Sworn statement was recorded and after recording the plea of the accused, the accused pleaded not guilty and claimed to be tried.
7. In order to establish the case of the complainant, he got himself examined as PW1 and got marked Ex.P1 to P14. After closure of the evidence, statement of accused was recorded under Section 313 -5- Cr.P.C. The accused has not chosen to lead any evidence nor has he produced any document in his favour.
8. Based on the pleadings and evidence recorded, the trial Court came to a conclusion that the complainant has not satisfied the requirement of Section 138 of the NI Act. The trial Court has come to the conclusion that there is no legally enforceable debt as the said transaction is civil in nature and the cheque issued is in respect of the agreement of sale at Ex.P1 and was not issued for discharge of legally enforceable debt and therefore, the accused does not have any obligation to pay the remaining amount till register of sale deed before the Sub-Registrar. Hence, on the ground that the transaction is civil in nature, the trial Court has dismissed the complaint and acquitted the accused.
9. I have heard the learned counsel for appellant and respondent.
10. The learned counsel for appellant contends that he has contacted the accused for purchase of a landed property and entered into an agreement by virtue of Ex.P8 -6- and paid a sum of Rs.3,40,000/- out of the total sale consideration of Rs.3,50,000/- and since the accused has not executed the sale deed with regard to the property he asked for refund and return of the advance sale amount, which has been returned by virtue of Ex.P1 dishonoured cheque. Therefore, the transaction is for the purpose of procuring the land, which is legally enforceable debt. The advance amount has been paid for purchase of the property, which was not fulfilled by the accused. In pursuance of the same, to fulfill and return of legally enforceable debt, which he was holding, the accused has issued a cheque at Ex.P1 in favour of the complainant.
11. The learned counsel for complainant further contends that he has got issued a legal notice to the accused and the same has been served as per Ex.P3 and the postal receipts are produced at Ex.P4 and P5 and the postal acknowledgments are produced at Ex.P6 and P7. The complainant contends that another notice was issued as per Ex.P9 and the postal receipts of the same are produced at -7- Ex.P10 and P11 and the postal acknowledgments are produced at Ex.P12 and P13. The complainant contends that since the accused did not fulfill his obligations with regard to the sale of land transaction, issued Ex.P1 in fulfillment of his legal obligations for payment of advance sale consideration amount and therefore, he contends that the accused has admitted the facts of issuance of cheque and account maintained by him, he has not denied the transaction and further accused has not been able to put forth any proper probable defence to rebut the presumption of Section 139 of the NI Act. Accordingly, he prays for reversal of the order of acquittal of the trial Court.
12. Per contra, the learned counsel for respondent contends that the cheque Ex.P1 has been executed for the purpose of security and it is not given for any legally enforceable debt. He further contends that there is no debt which is subsisting and which accused is liable to pay to the complainant and the advance taken with regard to the agreement of sale for purchase of property is civil in nature -8- and therefore, any civil transaction cannot be applicable in the present set of facts for the complainant to initiate the action under Section 138 of the NI Act and accordingly, he contends that the order of acquittal passed by the trial Court is perfectly in order and the same is sustainable.
13. Having heard the submissions of the learned counsel across the Bar and having gone through the materials produced before the Court, it is seen that there is no dispute with regard to the agreement of sale and its execution between the complainant and the accused. The transaction is admitted by the parties. The amount of consideration is not seriously disputed between the parties. The cheque has been issued and admitted by the accused in favour of the complainant. There is no serious denial of agreement of sale at Ex.P8, except for validity of the document with regard to not being registered and witness not attesting the said document, but the signature of the accused has been admitted on Ex.P8, which is marked at Ex.P8(a). Under these circumstances what is to be -9- analyzed by this Court is whether the cheque that is issued by the accused in favour of the complainant is towards legally enforceable debt and whether there is any liability to the accused to pay the same to the complainant.
14. The law has been very clearly laid down in the case of RANGAPPA vs SRI MOHAN reported in 2010 (11) SCC 441, wherein it is clearly held that 'the presumption mandated by Section 139 of the NI Act includes presumption that there exists a legally enforceable debt or liability'. This is, of course, of the nature of rebuttable presumption and it is open to the accused to raise a defense where the legally enforceable debt or liability could be contested. However, there is no doubt that there is an initial presumption which favours the complainant. Therefore, there is no ambiguity with regard to Section 138 of the NI Act, whereas once the cheque has been signed, admitted and executed in favour of the complainant the presumption come into play.
15. Section 139 of the NI Act, reads thus:
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"139. Presumption in favour of holder: It shall be presumed, unless the contrary is proved, 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."
16. Further, it is important to note that Section 118 of the NI Act, which reads as hereunder:
"118. Presumption as to negotiable instruments.- Until the contrary is proved, the following presumptions shall be made:
(a) of consideration: that every
negotiable instrument was made or
drawn for consideration, and that every such instrument when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date: that every negotiable instrument bearing a date was made or drawn on such date;-11-
(c) as to time of acceptance: that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer: that every transfer of negotiable instrument was made before its maturity;
(e) as to order of indorsement: that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamp: that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course:
that the holder of a negotiable instrument is a holder in due course:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud or for unlawful -12- consideration, the burden of proving that the holder is a holder in due course lies upon him."
17. Therefore, it is also important to note Section 20 of the NI Act, which reads as follows:
"Inchoate stamped instruments.- Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India] and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount:
Provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."-13-
18. Therefore, looking at this provision, it is clear that once the negotiable instrument is executed, handedover, signed and given to the person, the complainant herein, there is a presumption that arises, that it is executed for issuance of consideration, legally enforceable debt or liability and the person to whom is given is a holder-in- person in due course. Therefore, the complainant has established and proved the fact that the cheque that was issued at Ex.P1 in favour of the complainant is issuance towards discharge of legally enforceable debt or liability for consideration, which is due towards the complainant. The accused apart from giving vague statement with regard to issuance of the cheque for security purpose and not for legal debt, it is by way of cross examination of PW1, no other material or evidence has been adduced except by way of cross examination of the complainant - PW1. The accused admits issuance of cheque at Ex.P1 and accused also admits transaction as per Ex.P8. Merely by giving the statement that cheque is issued -14- for security and not towards legally enforceable debt or liability will not enure to the benefit of the accused.
19. The learned counsel for respondent - accused relied on the following judgment in support of his case. The Hon'ble Supreme Court in the case of SUDHIR KUMAR BHALLA vs JAGDISH CHAND AND OTHERS reported in 2008 (7) SCC 137. The learned counsel for the respondent stressed on the fact that on the point of law the Hon'ble Apex Court with regard to the cheque being issued to the security purpose and there being no discharge of liability or debt. On perusal of the said judgment, the same is not beneficial and helpful to the accused for the reason that the facts of the case are different as in that case interpolation and fabrication of cheques were questioned and the same was disputed.
20. The learned counsel for the respondent - accused relied on another judgment in the case of SUDHIR KUMAR BHALLA vs JAGDISH CHAND AND OTHERS reported in 2008 (7) SCC 137. I have gone through the judgments of -15- the Hon'ble Apex Court. With great respect the said rulings or authorities are not applicable to the facts of the case as it pertains to Section 420 of IPC.
21. The learned counsel for complainant relied on judgment of the Hon'ble Supreme Court in the case of BIR SINGH vs MUKESH KUMAR in Crl. A. No.230-231 of 2019, wherein the Hon'ble Apex Court has held in paras-37 & 38 as hereunder:
"37. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.-16-
38. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."
(underlines supplied)
22. It would be worth to note at this stage, the learned counsel for respondent - accused vehemently contends that cheque is not issued for legally enforceable debt and that it is only issued as a security; whereas he admits the transaction in Ex.P-8 and issuance of the cheque Ex.P-1 for the said transaction. Thus, it does not instill confidence and satisfy this Court, considering the material evidence and documents produced and the cross examination of PW1, in view of the fact that Ex.P8 the accused has admitted issuance of cheque is proper, it cannot be said at this stage the cheque has been issued for security purpose. Therefore, the trial Court is not justified -17- in holding that complainant has not proved the ingredients of Section 138 of the NI Act. It is also worth to mention here that at this stage that even for the sake of arguments if the cheque has been issued as a security by the accused to the complainant, Section 20 of the NI Act come into play as the cheque herein has been given in pursuance to the agreement executed by the accused and the complainant as per Ex.P8, which has not been.
23. In view of the fact that issuance of the cheque admittedly by the accused is pursuance to the execution of the agreement of sale, where amount has been advanced by the complainant for purchase of property which has been returned by the accused in favour of the complainant, the same would amount towards a liability which is legally subsisting. Therefore, the judgment of the trial Court acquitting the respondent - accused is illegal and the same cannot be sustained.
24. From the evidence on record, it is clear that the accused has failed to rebut the presumption and the tenor -18- of cross examination of PW1, clearly indicates that there is existence of legally recoverable debt / liability and the accused has admitted issuance of cheque and not disputed the same.
25. Admittedly, the complainant has complied with requirement of Section 138 of the NI Act by issuance of statutory notice the same is not disputed seriously by the accused.
26. In view of the fact that accused has failed to rebut the presumption under Section 139 of the NI Act and since he has admitted the existence of the issuance of cheque, signature on the cheque and since he has failed to pay the amount covered under cheque within 30 days from the issuance of the cheque on demand made by the complainant, the accused is liable to be convicted for the offence punishable under Section 138 of the NI Act. Therefore, the appeal deserves to be allowed.
27. Having regard to the fact that the issuance of the cheque in question is on 27.07.2013 and the transaction -19- being done in the year 2011, it is just and proper to sentence the accused to pay substantial amount, in view of the vague and untenable stand taken by the accused.
28. In the result, I pass the following order:
(1) The appeal is allowed;
(2) The Judgment and order dated 03.10.2015 in C.C. No.1652 of 2013 passed by the I Addl. Civil Judge & JMFC, Gadag, is hereby set aside;
(3) The respondent - accused is convicted for the offence punishable under Section 138 of the NI Act;
(4) The respondent - accused is directed to pay a fine in a sum of Rs.4,10,000/- (Rupees four lakh ten thousand only) within a period of four weeks from the date of this order;
(5) In case of failure on the part of the respondent -
accused to pay the fine amount as aforesaid, he -20- shall undergo simple imprisonment for a period of six months;
(6) It is further directed that out of the said sum of Rs.4,10,000/- (Rupees four lakh ten thousand only), a sum of Rs.3,90,000/- (Rupees three lakh ninety thousand only) shall be paid to the appellant
- complain7ant as compensation;
(7) Remaining sum of Rs.20,000/- shall be deposited to the State.
Sd/-
JUDGE VK