Karnataka High Court
M.Laxminarayan Setty vs B.Murali S/O. B. Gurappa on 1 March, 2014
Author: K.N.Phaneendra
Bench: K.N. Phaneendra
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IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 1ST DAY OF MARCH, 2014
BEFORE
THE HONOURABLE MR. JUSTICE K.N. PHANEENDRA
CRIMINAL APPEAL NO.2716/2013 (A)
BETWEEN:
M.LAXMINARAYAN SETTY,
S/O LATE GOVINDARAJULU SETTY,
AGE ABOUT 60 YEARS,
OCC: MONEY LENDER AND PAWN BROKERS,
RESIDING AT BANKER'S 87/23, MAIN ROAD,
COWL BAZAR, BELLARY.
...APPELLANT
(BY SRI.V.K.KULKARNI, ADV.)
AND:
B.MURALI S/O B.GURAPPA,
AGE ABOUT 50 YEARS, OCC: BUSINESS,
RESIDING AT DOOR NO.7,
MIG-II, NETAJI NAGAR,
CANTONMENT, BELLARY.
...RESPONDENT
(BY SRI.M.AMAREGOUDA, ADV.)
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THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378 OF CR.P.C. SEEKING TO SET ASIDE THE JUDGMENT
DATED 27.03.2013 PASSED BY THE II-ADDL. CIVIL JUDGE
& JMFC COURT, BELLARY, IN C.C.NO.897/2008 AND
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CONVICT THE RESPONDENT FOR THE OFFENCES P/U/S
138 OF NI ACT.
THIS CRIMINAL APPEAL COMING ON FOR
ADMISSION THIS DAY, THE COURT DELIVERED THE
FOLLOWING:
JUDGMENT
In this criminal appeal, the judgment of acquittal of the respondent is called in question, passed by the II Additional Civil Judge and JMFC, Bellary in C.C.No.897/2008 dated 27.03.2013, wherein, the learned Magistrate acquitted the accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act' for brevity). The appellant has challenged the said order on several grounds, particularly, the learned counsel for the appellant argued in support of the grounds urged before this Court that the judgment of the trial Court is contrary to the provisions of Section 139 of the Act. The accused has categorically admitted the existence of debt or liability, issuance of the cheque and taken up the defence that he has repaid the amount due under the said cheque. 3 It is the burden on the accused to prove that he has repaid the said amount, in spite of that, the cheque was not returned by the appellant and thereafter by misusing the said cheque, the appellant has claimed the amount under the cheque in order to have wrongful gain. The learned counsel contended that there is no dispute by the accused with regard to the formalities of presentation of the cheque, dishonour of cheque by the concerned bank of the appellant, issuance of notice and thereafter filing of the complaint in time. The learned Magistrate has also not dismissed the complaint on any of the technical grounds, but acquitted the accused on the ground that the complainant has not proved the existence of any legally recoverable debt or liability against the accused. When sufficient materials are there, the learned Magistrate has not applied his judicious mind in proper perspective and has directed himself in a wrong direction in acquitting the accused.
2. Per contra, the learned counsel for the accused strenuously contended that, though the accused has 4 admitted issuance of the cheque as well as the transaction between himself and the appellant, nevertheless it is the burden on the complainant to establish by producing convincing and cogent evidence in order to establish existence of debt or liability on the part of the accused and for discharge of the said debt only the disputed cheque has been issued by him. The evidence placed before the Court if it is properly appreciated, it reveals that the complainant has utterly failed to prove his case. Therefore, the learned Magistrate has rightly acquitted the accused and there is no room for interference with the said judgment by this Court.
3. Before adverting to the factual aspects of this case, it is just and necessary to look into certain rulings of the Hon'ble Supreme Court, wherein the Hon'ble Supreme Court has said that, in the case of acquittal, the Court should be very careful in reversing the judgment of the trial Court. It is worth to note the rulings of the Supreme Court in the case of State of Uttar Pradesh Vs Gobardhan & Others reported 5 in 2013 AIR SCW 4507, wherein the Hon'ble Supreme Court has held that "the appellate Court can interfere with the order of acquittal only in exceptional cases, where there are compelling circumstances to interfere and the judgment under appeal is found to be perverse. The appellate Court should bear in mind the presumption of innocence of the accused interference in a routine manner, where other view is possible should be avoided, unless there are good reasons for interference.
4. In view of the same, this Court has to consider whether the order of the trial Court is perverse or capricious and the view taken up by the trial Court is wrong and the proper view has to be taken in the particular case." In this background, let me to consider materials on record.
5. The appellant (hereinafter called as complainant) has categorically stated in the complaint that the accused has availed the loan of Rs.1,00,000/- from the complainant on 03.03.2008 for his business and domestic purpose. He has not repaid the said amount, nor any interest and he 6 issued the cheque bearing No.937493 on 30.03.2008 drawn on State Bank of Mysore, Cowl Bazar Branch, Bellary with the assurance that the cheque will be honoured. The said cheque was presented through its banker i.e., State Bank of Mysore, Cowl Bazar by the appellant on 18.03.2008, the same was bounced with an endorsement 'insufficient funds'. On receiving the banker's memo, a legal notice was issued on 31.03.2008 to the accused calling upon him to make payment of the said cheque amount of Rs.1,00,000/- and interest at the rate of 24% p.a. giving 15 days time. The registered post cover sent to the accused was returned with an endorsement by the postal authority, accused refused to receive the cover, which was returned on 05.04.2008. After lapse of 15 days, a complaint came to be lodged on 13.05.2008. After taking cognizance, the learned trial Court issued summons to the accused and the accused appeared before the trial Court and his plea was recorded, who denied the allegations made against him and claimed to be tried. On the side of the complainant, complainant examined 7 himself as P.W.1 and got marked Exs.P1 to P6. The accused also not only cross examined the complainant but also examined himself as D.W.1 and got marked Ex.D1. The complainant has reiterated the averments made in the complaint and in fact he has stated about liability of Rs.1,00,000/- on the part of the accused and issuance of the cheque and the said cheque was returned for want of insufficient funds in the bank. Ex.P1 is the cheque marked before the Court. It contains the admitted signature of the accused. Ex.P2 is the bank endorsement. Ex.P3 is the legal notice and Ex.P4 is the registered cover sent to the accused returned with a shara that the accused refused. Ex.P5 is the certificate of posting, under which, a copy of the notice was sent to the accused.
6. On looking to the cross examination of the complainant, he has categorically stated that he has been doing money lending business and he knew the accused and the accused was due in a sum of Rs.4,00,000/- and no other 8 business dealing was there with the accused. He further stated that he has studied up to 3rd standard and he does not know reading and writing English language. It is suggested that the accused was not due to him any money, he has returned the entire amount, he has left the cheque with complainant believing him that he will not misuse the same. As such, a false case has been registered against him, but all these suggestions are denied.
7. By looking to the evidence of P.W.1, it is very clear from the tenor of cross examination that the accused has taken up the plea that he has discharged the entire debt and even after discharging the debt, the said cheque was retained by the complainant and not returned the same.
8. In this background, the evidence of the accused also play an important role. In the examination in chief itself, by way of an affidavit, the accused has categorically stated that, since 15 to 20 years, the complainant has got money lending license and he has been doing the business and accused 9 often approach the complainant seeking financial help to take hand loan by executing pro-notes and also issuing cheques etc. In the second paragraph, he has taken up the defense that soon after the dealings, he used to repay the loan amounts, but the complainant used to keep some of the security documents, such as pro-notes and cheques with him. The complainant used to return the documents very lately and sometimes he used to say that some documents are misplaced. Believing the words of the complainant, he did not press for return of the cheques and pro-notes on some occasions. It is also stated that the complainant is in the habit of increasing the interest and started misusing pro-notes even after payment of the entire amount. This is the exact defence taken up by the accused. Even in the examination in chief itself there is absolutely no denial that he never taken any loan from the complainant in order to issue any cheque. Particularly insofar as the present cheque which is involved in the case is concerned, there is 10 absolutely no denial that such cheque was not issued by him for repayment of any debt or liability.
9. It is further clarified in the cross-examination of this person that, he has categorically admitted that he has transacted with the complainant on several occasions and specifically he has stated that Ex.P1, cheque was issued for repayment of some loan amount. He further admitted that he has transacted with the complainant since 20 years to the extent of Rupees 80 to 90 lakhs and he has given cheques and pro-notes for the repayment of the said amount and on some occasions he used to keep the cheques and pro-notes as security for taking further loan from the complainant. These admissions of the accused abundantly clears out the doubt that even without assistance of the presumption under Section 139 of the Act, on facts, the complainant has established the existence of debt and liability on the part of the accused in view of categorical admissions on the part of the accused.
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10. Now the question arises whether the amount which is due under the particular cheque has been repaid by the accused and any material has been placed before the Court to establish this particular aspect. It is to be borne in mind that, the accused need not prove his case beyond all reasonable doubt, as it is incumbent upon the complainant to prove his case beyond all reasonable doubt. The accused is supposed to prove his case by means of preponderance of probabilities. The probability that placed before the Court by the accused shall be in such a manner they should create some doubt in the case of the complainant. The accused can rebut the said presumption raised in favour of the complainant, by establishing his defence either during the course of cross-examination of the complainant or by means of leading evidence by himself or by means of producing any documentary evidence before the Court.
11. Bearing in mind the above said principles now let me see what he has placed before the Court in the course of 12 his cross-examination of the complainant. He has categorically stated that he has given Ex.P1-cheque for repayment of the loan, but he has repaid the entire amount under Ex.P1-cheque. But in the next sentence, he admits that he has not produced any document to show that he has repaid the said amount. He has also not stated either in the examination in chief or in the cross-examination as admitted by him that on what date he has repaid the said amount. But he lay a claim on the ground that he has made so many payments to the complainant, therefore, he do not remember on which date he has repaid the amount. When the accused has taken up the defence that he has repaid this amount, some material should be placed before the Court. In the absence of such materials before the Court, it cannot be said that even by means of preponderance of probabilities, the accused has discharged his burden to show that he has discharged the loan amount to the complainant. 13
12. Another contention of the learned counsel is that even after repayment of the said amount, the complainant has not returned the cheque and misused the said cheque. This contingency is also very well covered under the N.I.Act. The Legislators knew about this type of bald defenses may be taken by some unscrupulous debtors, therefore, they have legislated a perfect peace of provision of law in order to avoid this type of defence being taken up by the persons, who claim that even after repayment of the loan, the cheque has not been returned.
13. It is worth to note Section 81 of the N.I.Act, which reads thus:
Delivery of instrument on payment or indemnity in case of loss: -
(1) Any person liable to pay, and called upon by the holder thereof to pay, the amount due on a promissory note, bill of exchange or cheque is before payment entitled to have it shown, and is on payment entitled to have it delivered up, to him, or if 14 the instrument is lost or cannot be produced, to be indemnified against any further claim thereon against him.
(Section 81(2) and (3) are not relevant for the present case)
14. On plain reading of the above said provision Section 81(1), it abundantly make it clear that, if any person who is liable to pay any debt or liability under any promissory note, bill of exchange or cheque, he is duty bound and has a right before payment entitled to have it shown to him and on payment he is entitled to have it delivered or if instrument is lost or cannot be produced, then there should be an indemnification by the holder of the said cheque that he has no further claim thereon against the said person. Applying the said provision to the present case, the accused has not stated that before making payment of loan under the disputed cheque he has demanded the said cheque to be shown to him by the complainant or he believed that the complainant has not lost the cheque and 15 kept this document in a safe locker or for any reason the complainant could not have returned the said document in favour of the accused, then the accused should have taken an indemnification from the complainant that the complainant has no further claim against the accused. In the absence of compliance to the said statutory provision, the oral evidence let by the accused will not come to help him. When a statue mandates a particular act to be done in a particular manner, if it is not done in such a manner, any amount of oral evidence cannot substitute the statutory requirement. Under the above said circumstances, I am of the considered opinion, the view taken by the trial Court that the complainant has to establish the existence of previous debt or liability, therefore he has not established the same is not correct. The learned Magistrate has not even looked into the evidence of the complainant and the accused meticulously.
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15. The learned Magistrate has acquitted the accused on the other grounds that the complainant is a money lendor and he has not produced form No.8 stating that he has lent the money to the accused and no entry is made in the records sent to the office of the Registrar of Co-operative Society in order to prove that the money has been lent to the accused and he has not produced any Income Tax returns as such. If the reasons of learned Magistrate is accepted, then what would be the consequence of non-production of the Income Tax returns and the document pertaining to money lending. It is to be noted that, if the accused had denied the transaction of having taken loan from the complainant and if it is the defence that, the cheque was issued to the complainant on some other context. If there is a dispute regarding the liability of the accused, then for the purpose of proving the same, the complainant has to produce all such necessary documents. But in this particular case, when the accused has categorically admitted that he has repaid the entire loan amount taken from 17 complainant, then there is no necessity for the complainant to prove the same by producing any such document. Even admitting that the complainant has not paid any Income Tax nor sent any copy of form No.8 to the concerned Department, it only leads to the conclusion that under the said enactments the complainant has to be dealt with and if there is any penalty that can be imposed that has to be imposed under the Income Tax Act and if the money lending licence has to be cancelled for violation of any of the rules thereunder, the licence can be cancelled. These are all penal action the concerned department can take against the complainant. But in any manner that will not absolve the liability of the accused from proving his case before the Court.
16. The trial Court has in fact relied upon the decision of the Apex Court reported in (2008) 4 Supreme Court Cases 54 between Krishna Janardhan Bhat Vs. Dattatray G. Hegde and held that the complainant has to 18 prove its own case and he should not rely on the falsity against the case of the accused. The complainant has to prove by producing cogent and convincing materials with regard to the existence of debt or liability. But this particular case has been considered in detail by the Hon'ble Apex Court in a subsequent decision reported in (2010) 11 Supreme Court Cases 441 between Rangappa Vs. Sri.Mohan, wherein, the Hon'ble Supreme Court has held that "the presumption mandated by Section 139 includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of rebuttal presumption and it is open to the accused to raise a defence wherein the existence of legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the respondent / complainant. It was also held that Section 139 is an 19 example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof. The reverse clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled 20 position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence, which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the material submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
17. Looking to the above said judgement, virtually, the earlier decision of the Apex Court in Krishna Janardhan Bhat Vs Dattatraya G.Hegde's case, has been distinguished and dissented by the above said later ruling. In the above said ruling, the principle laid down is that, the initial presumption has to be raised only when the denial on the part of the accused with regard to the existence of debt or liability. Then in order to rebut the said presumption, the 21 accused has to place some materials to create some doubt with regard to the existence of debt or liability. Then only the onus shifts on to the complainant once again to prove the existence of the debt or liability. But in this particular case, the existence of debt or liability on the part of the accused has been categorically admitted by the accused. The defence taken by him is that even after repayment of said debt, the cheque was retained by the complainant, for that, no materials have been placed. On the other hand, he himself has admitted that he has no other materials except his oral statement before the Court. In view of the provisions under Section 81 of N.I. Act, even after the payment of debt by the accused if he has not taken back the disputed cheque nor having taken any indemnification from the complainant, he has to blame himself.
18. Under the above said circumstances, though acquittal judgment should not normally be interfered by this Court, but the trial Court has not applied its judicious mind 22 and not properly appreciated the evidence in proper perspective in accordance with law. Under such circumstances, this Court has got ample power to interfere with such perverse judgment. Hence, I am of the opinion, in this particular case, the complainant has proved the case against the accused beyond all reasonable doubts. Therefore, the accused is liable to be convicted for the offence punishable under Section 138 of the N.I.Act. In view of the same, the judgment of the trial Court requires to be reversed. In view of my above said observations, I proceed to pass the following:
ORDER The order passed by the II Additional Civil Judge & JMFC, Bellary in C.C.No.897/2008 dated 27.03.2013 is hereby set aside. Consequently, the accused is convicted for the offence punishable under Section 138 of N.I.Act. He is sentenced to pay a sum of Rs.1,25,000/- and in default, to undergo simple imprisonment for a period of six months. 23 Out of the fine amount, a sum of Rs.1,20,000/- shall be paid to the complainant as compensation. The accused is directed to pay this amount or deposit the said amount before the trial Court within two months from the date of this order.
SD/-
JUDGE MBS/-