Karnataka High Court
K Narayana Nayak S/O Late K Ramakrishna ... vs M Shivarama Shetty S/O P D Shetty on 11 April, 2008
Equivalent citations: AIR 2009 (NOC) 1607 (JHA), 2008 CRI. L. J. 3411, 2009 (1) AIR JHAR R 830, 2008 (4) AIR KANT HCR 398, 2008 (4) AIR KAR R 398, (2009) 4 CURCRIR 151, (2009) 1 CIVLJ 863, 2009 ALL MR(CRI) 54 JS, (2008) 69 ALLINDCAS 773 (KAR), (2008) ILR (KANT) 3635, (2009) 1 JCR 125 (JHA), (2009) 73 ALLINDCAS 513 (JHA), 2008 (62) ALLCRIC 73 SOC, (2008) 6 KANT LJ 756, (2008) 4 ALLCRILR 532, (2009) 2 BANKCAS 85, (2009) 1 CURCC 375, (2009) 2 CIVLJ 863, (2009) 1 BANKCLR 170
Author: K.Ramanna
Bench: K.Ramanna
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 11™ DAY OF APRIL 2008
BEFORE ~ oe
THE HON'BLE MR.JUSTICE K. RAMANKS
CRIMINAL APPEAL N 2
B 1H
: 4
K NARAYANA NAYAK
S/O LATE K RAMAKRISHNA NAYAK.
AGED ABOUT 67 YEARS, NO.11/6,°.
"RAMA PRASAD", 26TH CROSS ROAD,
7TH BLCOK, JAYAMAGAR, ~~ 0.
BANGALORE-560) 070 Mo 7 ~ ".., APPELLANTS
(By Sri D ASWATHAPPA, ADV) ie
AND :
M SHIVARAMA, SHETTY ©
S/O P D SHETTY
AGED ABOUT 52 YEARS, NO. 67,
Tl CROSS, NAGAPPA STREET,
PALACE GUTTAHALLI
BANGALORE-560 003. -- RESPONDENT{§)
| (by Sci § SHEKAR SHETTY, ADV. & SRI K.S.CHANDRAHASA, ADV. }
hbddddd
_ . EHIS CRLA. IS FILED U/S. 3784) CR.P.C. BY THE ADVOCATE
FOR THE APPELLANT PRAYING THAT THIS HON'BLE COURT MAY BE
_ PLEASED TO SET ASIDE THE JUDGEMENT DT. 7.2.2002 PASSED BY
". 'THE XIN ADDL. C.M.M., BANGALORE IN CC NO.16051/99 ACQUITTING
ACT,
THE RESPONDENT /ACCUSED FOR THE OFFENCE U/S. 138 OF NI
= THIS APPEAL COMING ON FOR PRONOUNCEMENT OF
~ JUDGEMENT THIS DAY, COURT DELIVERED THE FOLLOWING:
JUDGMENT
The appellant/complainant has come up with 'tile | sppeal challenging the onder of acquitial paneed by the tral | Court in C.C.No.16051/99 | dated 7/2/2002 "thereby:
diomisoing the complaint fled by hia against ie respondent for the offence punishable: under Section 2 198 of Negotiable
2. The trie] court dismissed the complaint filed by the appellant/complainant mainly on the ground that: there was no legally recoverable debt under the cheque and that there is no proper service of statutory notice on the respondent.
3. _ Heard the arguments of learned counsel for both the . partie and peruned the records.
| 4 _ Tt is argued by the learned counsel for the appellant that non-denial of the issuance of the cheque by the _ respondent conclusively establishes existence of debt and gy that the cheque has been issued in discharge of the same. He Sn 7 pointed out that when the notice was sent by RPAD\UCP by has rightly acquitted the respondent. |
6. in support oftheir respective contentions beth aes | have placed reliance on a number of decisions. gs
7. The complainant-appeiiant staind to have lent a sum of Rs. 1,00,000\- to the accused on 166-1996 by way of two self cheques, one for Re.78,000\- end another for Rs. 12,000\- and & sm, of Re. 10,000\- by cosh, in all Rs. 1,00,000\-. - On desand, 'the lent issued a post dated cheque date 23--1998 for Rs. 1,00,000\-. In addition the respondent also gave 20,000 equity shares of M\s Grant Lease Fiurex Ltd, 'Bangalore, of the face value of Re.10\-
"each. 'The cheque when presented to the bank bounced for the : TeAson of insuificient funds. The complainant-appellant | issued a legal notice to the respondent through RPAD and vcr, which was served on one of the inmates of the house of 'the accused. Since the respondent did not pay the cheque Bo 'amount, the complainant filed CC No. 16051\99.
rely on the sole testimony of PW.1. The trial court alse found that the notice was not served on the respondent. --
10. The contention of the learned counsel 'for the :
appellant is that when issuance of cheaue is s accepted, 'the presumption under S.139 of Ni. het is existence of ability | and the cheque issued. | is towards iccharge of a legally recoverable the debt.
11. Sec. 138 of the NE "Act Says, "Where any cheque drawn by person on « account meintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, > of f any ) Gebt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of. that account is insufficient to honour the cheque | "oF that it exceeds the amount arranged to be paid from that
-- account by an agreement made with that bank, such person "shall be deemed to have committed an offence, provided:
(@) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period | of i - validity, whichever is earlier, --s
(b) the payee or the holder in due course at tne cheque, as the case may be, makes a demand for the payment of the said amount of money by. _ giving a notice in writing, to the drawer of the | cheque, within 15 days . of the receipt of information by hm from the bank resarding the return of the cheque as unpeid; and ae
(c) the drawer of such cheaw: faile to make the payment of the said amount of womsy to the payee or as the case may be, to the halder in due cures of the cheque within 15 days of the receipt of the said sotice.
"Debt or other Habiity" meane & : legally enforceable debt of other liability. In (2006}6 SCC 39 it is held that it is obligatory on the part of the Court to presume the liability of the drawer for the amount of the cheque in every case where the factual basis for such presumption is establish.
1. In so far as the dishonoured cheque is concerned the stand talren by the respondent is that the cheque was not a iss ued towards discharge of any legally enforceable debt, but oS the blank signed cheque was issued as security. Relying on _ the decision reported in ILR 2003 KAR 4373 ~ICDS Ltd. Vs. 4 \ .
Beena Shabeer and another the learned counse! fr the appellant submitted that when a cheque is. isstp } i as. a security, complaint will lie under 8. "188 af the Na. At. But, | in the decision reported in AIR 1992 Madras 946 it haw bean held: "Delivery of signed blank stamp paper to party ~ Pasty receiving it, authorised to. complet= it - | But party is not entitled to recover said amount ty filing quit, as by completing inchcatz cocument he dess not become holder in due course of that document." 'Therefore, the amount reflected in the cheque is not en enforceable legal liability. In ILR 2006 Ker.2597 it #8 held that a cheque issued in respect of uncertain future liabiities would not attract prosecution under Section 138 of the N. 1.Act.
NS. 13. With regard to the service of notice, the respondent ~ contended that he was not served with the notice. The notice was issued both by registered post and also by certificate of _ 7 posting. "The appellant contended that the notice was served on the inmates of the house. The appellant relied upon the ~ decision reported in ILR 2005 KAR 4486. In that case the Ge . \ lower appellate court had held that there was no pleading in the complaint to the effect that the netics was served end but the High Court upheld the conviction onder « of the trial | court holding that the accused had not t placed any material | on record to establish that the auarese to which the legal notice was sent was not correct. 'The position is different in the present case. -- | .
14. In the decision reported in 'AIR 2008 SC 109 what is stated. is that notice dispatched by sender by post with correct address on it con be decmed to be served on sendee/ addressee unless he proves that it was not really
15. The learned counsel] for the respondent relied upon | >the decision zeported in AIR 1988 Gujarat 5 wherein it is held
- S 'that the 'notice sent under certificate of posting cannot be 'deemed to have been served, observing that it is not unknown : or unusual where these kinds of endorsements have been got "made by the postman without proper care and some times ] ab deliberately false. in that case the notice sent by registered post was returned as refused. In another decision relied upon -- by the respondent reported in ILR 2005 Kar 409, ee notice | sent to the correct address of the drawer was returned with the endorsement that door of the house was locked. in 2006(1) Supreme 47 the Supreme Court held that certificate of posting obtained by a sender is not comparable to a receipt for sending a communicetion by registered post - The case with which such certificates can be procured by affixing ante dated seal with iis: comnivance of any employee af the post office is a matier of concern. 'Here in the case on hand the position is different. In thie case the contention of the "appellant iz 'that the notice was served on one of the inmates of the respondent's house, whereas the respondent contended that he hed not authorised anyone to receive the notice and _ he hes not 'been served with summons. As opined by the a 7 apex, court it is easy to procure certificate of posting by affixing ante-dated seal with the connivance of postal * "employees. The idea behind sending a communication by ~ registered post is that the communication should reach te the hands of the addressee himself. If the addressee was not - present when the postman went to the correct address, he : should have left a memo with the inmates of | the iouse asking | the addressee to receive the registered post from the post office or to visit the address again on the next day. But, in the instant case the postmen is stated to have handed over the notice to one of the inmates. of f the house. However, the respondent contends that he had net mceived the notice. The receipt of registered post, is acknowledged by one Sujaya Setty. The respondent ini. his evidence deposed that the name of his wife is. Kumari Hegde. Respondent is not cross- 7 examined on this evidezice. The appellant has not confronted the signature of Sujaya Setty affixed in the acknowledgment to the respondent to admit or deny the signature as that of : hia 'wife. Rt is not clear the signature found on the ~ 'endorsement as "Sujaya Setty" was really affixed by the wife . : of the respondent herself. The suggestion put to DW.1 in the _ -gress-examination is that one of the inmates of his house N Te ----
a ' 12 received the notice. In the crose-examination it isnot suggested that his wife's name is Sujatha Shetty. pw. 2 ies . deposed that there is no one in hie house by name Sujatha : Shetty. Before the signature or name in question found tn the endorsement there is a prefix For'. 'That means the signature is put for and on behalf af Sujaya Shetty. 'It appears to have been written as Sujatha' and not Sujays'. 'Therefore, I hold that service of notice is nct satisfactorily proved.
16. The main question to be considered is, whether the cheque issued by the respundent was for the discharge , im whole or in part, of any debt or other ability. The learned counsel ur the eppellant relied on the decision in case of . K.N.BEENA Vs. _MUNIYAPPAN AND ANOTHER reported in (200138 sec 458 wherein it is held:
in: view of the provisions contained in Ss 118 and 139, », the court has to presume that the cheque had been ' dssued for discharging a debt or liability --However, the
-. sald presumption could be rebutted by the accused by _ proving the contrary -Mere denial or rebuttal by accused to the reply to the legal notice sent by the complainant not enough -- Accused had to prove by cogent evidence that there was no debt or Hability."
= eo
17. The complaint discloses that ne "accused-
respondent stated to had facing acute financial prohiems s end os he was badly in need of funds to discharge the taans he hed | made with private parties and hence the appelant paid Rs. 1,00,000/- by issuing two cheques. "The appellant has stated that both the cheques are in the custody of Canara Bank, Yediyur Branch, and he reserved his right to summon the cheques at the time of trial "Thus, there was no impediment to 'the appellant to summon the cheques or produce his statement of beni account. PW.1 in his evidence does not say anything about 'the shares except deposing about coiateral security. . - Therefore, the court below has . rightly < sonchded that it is not safe to conclude that the | appellant had 'advanced loan to the accused-respondent, _ relying on the evidence of PW. 1 alone.
18. According to the complaint, the appellant advanced the Joan on the condition that he should give collateral 'security and post dated cheque putting the probable date on 'the cheque. The decisions reported in 1993 CrL.L.J. 2359, II AQ 14 1995 B.C. 506 Bombay and II (1992) B.C. 218 on which reliance is placed by the court below says that isone of post dated cheque has to be treated as drwn on dete it is delivered and not on the date it bears. 'Further, acct ci Ss. 198 of the NI Act, the cheque has to be presented to the bank within a period of six months fom the date on which it is drawn. If there was any agreement to 'repay the amount after two years with interest at 10%, and if the cheque was issued after two years, the cheque amount would have been more than one iokh, More over, 'the complaint reveals that the loan wes : advanced on | condition that the respondent- accused should give a post dated cheque. That means, the : accused had issued the cheque on 16-6-1996. In that view of the anatter, it is Clear that the cheque issued by the ~ respondent to appellant is only as a security and not for a diochore of any existing debt, as on the date of issuance of
19. So far as the presumption as to issuance of the " Cheque for consideration and in discharge of debt, the Th 16 in relation to the amount lent by him to the respondent through cheques, is fatal to the case ; of che | complainant/appellant. As such, the appeliant has faiied to discharge his burden by producing documentary evidence | before the Court below. Hence, viewed from axiy angle, I do not find any good reasons to interfere with the order of acquittal passed by the Court below.
20. Accordingly, the appeal is dismissed.
ae Judge