M/S K S Hindalagekar Brothers vs C S Hunnargikar on 14 January, 2011

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Karnataka High Court

M/S K S Hindalagekar Brothers vs C S Hunnargikar on 14 January, 2011

Bench: Anand Byrareddy

IN THE HIGH COURT' OF' I<ARI\IA"IAI%T§_ A .j*T/i   = '

CIRCUIT BENCH AT Dif£AR\?v',A'I'f;v* I. A  I

DATED THIS THE I M my icy?  

BEF©I:§E  . Vk  
THE HONBLE MR. JUSTICE BYIP_}XR'E§4DiV)Y
CRIMINAL APPEA-L.'§a'I)'."1.2.47!2€)0§.. 

BETWEEN:

M/s. K.S.HinIdaiage§<_ar B?6Iheé§, " 
8}' its Dartnei',  é       
Shri Annasa:ha5"  5H.i.IédaE3ge;rkar,=."  '
Major, {)cc:VE3u€i;_II§.:ss,' ' '  I 
R113. # I 697:',.R£;!T1dé%.{.gaH'i,V   
Belgaum.  L'  u 

.I.AppeiIaI1t

{ By Shri Q 'R.€1'i}}"I'3Ch3f1d:'53* Ag." -«'I._':A'eIE"I;', Adv<>cat:e)
AND}  V' ' A'  "

 =  Shri  s
 "I\:«'£.e«1jL<':;", %3':iI:?_ClI_aI*:erec§ Accountant,
 VREQ'. '#33v8 1'I, .Shi\§z:Isagar., Coliege Roaci,
1'B_€i'égguIﬁ,.' I 

0:37:66 at 3% 'BIASSZE, Mahalaxmi Compiex,

V Vv . CCB" IIGEIA, Cdiiegs R,0a:i., Bdgaums I..R€3S§3O{'}C§€I'}f

 .ﬁ{B§'I__Shi'§ ." R;I\:'I.KuEkarIIi, Advocate
A  "'-'_f0If»S'hI'i. Ci.B.SEIas:rjy; Advocate)

"§'h§:<I Criminal Agépeai is fiieé i§I§§€§£' Sectiim 3?8{4-3 tithe

 ""CTCié$ {If Ci"§§"*:"i§§3§ PI*0<:$du:*eI by aha Aéa="0ca*I:s 59:' {E26 agpeiiazzi
' §}?3}~'§1"Eg 'I235: Ihés f"§0f:'E3§€:E C{}ili"E Ina}: bs ﬁeased :8 3:3: :s:<;i§§:r I333

Qéésr Iéfacggaééiai éaireaﬁ §2,Q§IZGG§ in C,C.F%E<>.s%%$3f2€}S3 (II: {he

I3



fx)

me of the 3.M.F.C.~li£ Court, Beﬁgaum. and conx«*%é:*-,jthe
regpondent fer an 0f1%nce punishzzbie under Secii0:';'~.1:I'%«8'~Qf'
Negotiable Enszmmems Act. ' ' "

Thig appeaé coming, 0:1 for ﬁnai hé:az'%_::gg__fE2EsV*§éij;, {he  '

Ceurt deiiw-.:*ed the foilovszing:   -

JUDGEMENT  X 

Heard the learned c0unSal""§'()r tf1e:.. .appejiv§au1Aé"€ 'V£iiidV the 'V

learned counsel for the rfisppndehf.' " .:  
2. The bzfieff3;:t3a1fe§=asfQi:.IVQwSj  
The p1#é:;.en€; ?1ppeIEani__is.._«--af&'c01ng§Iai11ant and it is a

partnersh_i_p_1"§rz:i"e}i:g;age;d 'ir:; t}itA-.b;;§i»ﬁess of Sanitaryware and

>

Tiles, iriihe 'nameé:1:§§ 3t§?Es__6:? Mfg. Z.S.Hinda%a

It is statecu§ *:.h az. ofls S.aﬁmus'h Chandrakant Hindalagekar and

 ,__S:r1i§ 5§:§haiVEaj.;1 Sarffosh.-Hindaiagekar were aiso pariners Céf the

 _ﬁ*1*r:i "3.n'ii'v,_é>;.§§i':?:_:V3Sff.?d their desire £9 retire from the firm and

 0:' Rstirementg dated 05;07.I'?)'~}'?). The

V'-»2*esp0néic3::4: who is a CharI;e:'ed Accouniazit by <:3ccupati0a was 3

":&'E'm..e$'s 'E3 the same' E': was cantended that the retiring partrzars

 = .E::{d ﬁzzring, {he <.:0u:*:s;s:,  §3ar§:;€r:: had wézhdmwn an agg:*€gaie

2§1'E"£€)i$§1E <2?' EZXQ5 amt? éﬁhéif depoaiis R39? 3:: E2/Ezmazhzz ifs»

é



'».oJ

operative Bank and Malaprabha Gvrame-en 'tetteii:;r§g;'«.tév.t Vt

?°I,70,000f«. The said w§thd1*awa1s   

withérawat of the eapitat that  AhrQug,htJ'hin."':TjI"}'re.ret'ore, * L'

the retiring partners agreed te eompertsegte the sameA_bv§/Wpaying 3

sum of ?"1t§€)§O00/- irﬁeijgrht, e§§t,:at""«vr;i't;1_$t::,1rlmehts, payabie
quarterly. The :'espQ:1der:t' Vwa"sr,_;§reseritt.v"a§t that time had
assured to pay the     eiéeht efdefault by the

retiring partne.rs'r--  _ . . «. _ 
 """  'It_V:i:Vw'as"ff'ﬁtrt'her alleged that, at the time of

1'etireme"nt,"the':'etir'rh§;pertr:.e<r§_.had to pay ﬁve installments till

1" Jan_L1ary--Z'00'r and ha._ei"£:--32}ed to de so. It is at that point of

  'the c0Arh'p1e..ir.nant had approached the resportdentg on

 'th.e"fQ0ti_;jg t=héi't..in View of the guarantee to make good the

a'metzrtt ;V3a;§%ehtAeVhy' the retiring partners and about his promise

 to meézeietreh payment; It is the etaim of the <:0mpiainar1t's that

hhtﬁthe*:ies;irer1derrt ~ accused had admitted his Eiabiiity and had

  3 eheqee bearing Nc>t55§5?& stated 2-4.€)?.2Q§{},§ fer 3

hﬂserrz er" ?i,§€}7€3€:€}f»~r drew: an heetk at Bareéar Betgaerrz

Branch. Tile 3323318 was eeeepteri in geeé faith emit wee

§



presented by the eemptainent for en:e'eéh1§:eht"..te_:thje"b;1ztkei%' (if

Syndicate Barth? Niaruti Galli, Beigeugmi.-. H0wev.er;,the"

was returned by the banker -v§ith% art" e:1Cietjsezf:ie--:.fit''''"tends ''

insuffieient'? It is in this;..b.aekg1j0«uhe§';-thatthe eem,pI,ah1ant had
initiated the preeeedingé'h'-ehixwfof;t'eh.Vf;<t::ptmishahle under
Section 138 ef_A'-?$_tegetEéih'ie::'¥ before the
competent  contested and
  the complaint on the
follewihg  h I

FirSt.1y', it was there were eight postdated

.  '3bVseneeE»*{)'t'af:§;' staterhehts by the complainant as to whether the

 e--.sé£m.e  for the encashment er otherwise and in the

absehee {>t"a§jz;;fV material ctecuments, that the same were duty

'V..,presentedA'1.e1' dishoneured, the Court has expressed? it is

"«i"expf"e":sed that the eemplatnant has net hreught; home the

' aléegatiehs againgt the accused

4' §:tsefa:'..,  the eheqee ésseeé E3}; the eeeusged -

%"€S§€§IE§€i'i}§, heirtg in eésehaege {>5 any iiéejzgett Eéehititjyg the the



Ur

Cam"? below has found that the  

mereiy signed the Re£iremen*i_.E_)eed,7as"--a wit::e.ssi:'azid 'if£"'isi'

nowhere stateiti that he had ié;f7fiiXed i1is'..si'gné:tL:i*e  the
document as a guarantoriepiisci1éiges.iii:e:i'iiiabi1ityiefthe retiring
partners. ii _i '   ii   
5. It is 1iiI'th,€£' noi,iCed,'th;1t i'iri'vthe..:iep1y, to the iegal
netiee issued  the" ie€).1i:1s1é1ir:"éin'ci;'the--ii:*e-s.pi:)r1den'i had taken :3
specific <:0ni'i;emii_(_ii;:_ thétithieifje  mg iegai Iiabiiity for which
the saiciiieheciigiuewfiyas iissueéei;~j'h0ughWit was signed in furthuranee
of certain finarsciéiii.ijV'a_fir2i3:;:;gerri'ents which the respondent --

aeeuseczi hadi"w_iii2v.£i'iei'e0ihi>lainant and it is not for a iegai is en."'ti:i*s"'i*eas0ning that the Court below has _iCi()'-'mpiélini which Qrder is chaiienge before this The ieameci eeimsei fer the eeihpiainant weuici {ffiirs§ij.; contend that insefar as {he legal position is eoneerneci iiiseiiar as Seeiiien ii'/:9 ei' {he Negeiiiahie iE1S'§§'LlE"}f'i~ii'§'1'E$ 2-'set, is ::eeeemeé {he seine hes iQi€§"'§'§Fe'3§$d is}? :he Agiex iifeiizz is § 6 the judgement, reperted in the case of "R(:11g(1pp;i"e::$.'5>I0Izc::é"'« _ ' AIR EON) Supreme Court E898? 'E: has-I presumpiien mandated by Section E349V..e§f'--the V' include the existence of Eegally 'e'1«2fc3?eeab1e" .r_iebt.€:)r 1'£:;1b§V1%:§:. it is in the namre efa 1*ebuii:a.bIe p:"VesLi1s;§ii§5iz._ and ifis eben to the accused to raise a defence ef :21 legaily enforceabie deb:'::r_ liability cm}: be ceifszesteci. However, there is no doubt th2:it"Vt'r§»e1fe"'i"s3':;=_.n i'r1ji':iai.pfesizinmien, which favours the co:np1ai:1ar1vi.,,_ 'he se3e3t%en"--.is'--an eXae<:p'Ie ofa reverse onus clause that has~-been iec'I1;:dfe.re;<iV i;xv1°u:f_tVh*e19ai1ce of the legislative objective of iinpreviizgz he 0? negetiabie insirumenés. Vhiie Sectiezév 'I38 of'theA Actvspeciﬁes a strong criminal remedy in 1*e!a};"ier2 Ste' thedishoneur ofcheques, the rebuttable presumption L"'::ncI'er'1Seeﬁer:K3'? is 3 device to prevent undue delay in the couétse Qf Eiﬁvigetion and it is also observed that Section E38 can "be jcfescriiied as a reguiatery provisien. Since the ciishenoer efa " eisecgee is Iaegeiy in the nature efa civii wreng whose impac: is seﬂesueléy eenféeeé rie esizfsée parties Em/eﬁs/ed is C{§§}1:1§s'3%'€:§E}E 'i:*2:z*:s2:ci'.éi:>r:s.. {he ﬁes: inf' p:'e;>er':%eee§1:y sizeéuid geiiie 'ahe § construction and ihterpreiaiion of a re_\ze::rs_e c3:e1;':e"'c'i:a:,i_:~;:~=: hémvciihev accused cannot be expeeied to di's4eha_;g,e*e' an ur§:i::iy[i"%.;i:gh_* siahdarci of proof. Furtherﬁ whehthe aei:-ushedvhaS:'iejjeb;1§13 the gwesumption under Seeiien 139, .€:éf- doing so is that of 'prep0ndev1'3;;ee.'e--f. 'Therefore? the accused is ehie te. gfaihseiehxsvhich creates a doubt ab0u§_ a_.\:.4V}<,%,jgel".h_~V/1"'mefiforceahle debt or liability. V .. . .e « """ Thigrefcifgie; the "Couné'e'i"would submit that in the instant ease the -.f:1r3:4'Vé:q:3_;V§0:ji1ini§y that the accused had was in his repij/re.._'t0 the .ie'g"aE'Vr:1:etiee, $0 state the cheque was not issueﬁi 1uoh'disehefge eailegai liability. It was for him to deny that Ewes hVot.p:1§'s*eant to an undertaking given by him at the time hhhe-fV"Te;:«ee'ui'i'h.g Retirement Deed aieng with retirement paxih---e1*sv--.§e$ 2: 'éignatory. This being teiehjq abseni in the repiy to ¥:heeeEegaI"'n0iiee and such a eeeieniien not having been raised in ":he'*s-ieéemeht ef ebjeeziehs :0 the eempieéni 0: ie 32:}; further ' 'V -~::;--:3:e:e:':en%: 39: the {haze of ex/é;*Ee:2ee, it wag <>n§g 34: the Siege ef % 8 arguments that such a theory was prtajeeted, which 1'€3£?tCiit*i}?.V' accepted by the Ceurt below. _

8. Therefore, the eot1nseiww._§>§zes:iid su'bej1itv'that§ the first requirement of discha§*gi'iig_A€gI€ required uncier Section 139 is absent arid. beiew was not justified in itjeh -~ respendent. He wouid below has not found that the retiring partners were indeed Therefore there was he iegai iiabiiity to s'cibstantE.ate=_that by virtue of which the cheque " '~ 'issu'eLi~ b;:)zT_iii€f respehcieet'e0u1d be taken as an instrument issued tea €iiisehai'ig;eV"iie'ga.i iiabiiity. On the other hand, it is on mere siisgjieionitiiat eempiaint has faiied to establish the fact at' the postbateai cheques issued by the retiring partners. Heneei issue ,.ﬂ.ai'ises¢ as te very iegai iiabiiity for the aceused--resp<:>ndei1t as i' issued a cheque.

9; the teamed eeuhsei weaié submit that there was :20 %;*¥'i(i€§i€;'€ by way ei' zebettabie ama eeaiti be a<;ie>;i3ted by § the {rial Court in holding against th'e'AAee1hp_l2;.§na;n:.:V'"lieweelcii further pain: out thai the fact of the :i*e_s§j-:_>hdeni.'lflavingg such a cheque is not denied. Th'e._f'espenelent 'heihg la,3ig:x.:§1te:~y V E0 the retirement cleetl,» is nee-""d.e::-ielzl-»_ Hene'e:,--.. there is a presumptien in faveur <>fl"':l1e--.el:ee'iguk{:; h;m{ing'»heen issued for a legal liability. hu1~cleri"'w9lSg efe:.§hel :;esp..e":ieient to establish his defence, l'l1C"l{_V3;l8,$';l.COf1_lS}'1:d€;3d -olhlerwise by leading, pesitive evidence._i_n_ :esp'eeE--:;:}f_i:h.e"CaVse; was putferth. Therefore, the Cehrt ._l:=el<;»WVVlw::;ls"l:j:>:__j'ustiﬁ~ed in finding a case for the respendeiﬁ: 4' _ _ « ll): *-Whil lleafned counsel for the respondent wegilél. peinl eut"":ha:___«i:1sefa1* as the judgment Cited by the 'le,3"mecl«.5:0u1:.se'i for the complainant at the bar is concerned wQi1'l-ti' itselfjihlflieaie that the accused can rely en the material sehhl*ii{te'd' by {he complainant in order 10 raise such a clefenee " .l_a::ele..i4_t lSH'CO¥lCEflV.%1l3l€ that in 801116 eases the aeeuseel may not fzeeltil-3 adéeee ea/iéehee es? his own, as cited in the last per': 9*? l V' "e"::rag:"::pl2 14 e§the jéielggemeet. As zilreagly gehzteé eel in eegaly ie ihe legal E3{}'{§C<3 iseeeai éhe reegendeeé: hag <:§eaz*l§s sighed Ehe': 10

there was no Eegal liability for which the cheque vikag isjeéueei aha? V' T a../ that the respendent had not give1:"'ah§;«.un1.;Eertai{i%ig Vih=7'the':

retirement deed, whereby he steed g'§,u4ée7a:*i~.t--_ee for 'thee but mereiy signed as a witness;»__T'h._is eohxpletelyﬁahhsehz/ea the '' Iiahihty of the accused ungier the"RVet:i':*eh'1e11t Deedg which does not disclose that the ree'p:hj1é.ei2tvwas affixing his signature as a gua'1'a1i}to1;:ih usatatement that he was eyvhieeiifh'fatovuhlahhheleariy support the ease net withstanding the reasonihg by the Court below on an independent;ghassesssheht htateriai on reeerd it is seen that the a_f3'pe1_1ant-}esper1elent' never stood as guarantor and therefore "V'theV.Vthe($'r"§}' that the cheque issued was in eenaideration of the A,,.;*esp0:ideiit.vhhafe'-Eng stood as guarantor. Further, the teamed take this Court through the er0ss»--examihatioh of couztsei fa/euhii V'-the eeriazgﬁainant and seek to demonstrate that as on the date of cf the saia cheque theye was no Retirement Deed in V £33itS'£€f§lC:'3., {he ehecgue whi::h was éssaed mueh préey ta the éate hf §%et%:*emet':t. $1; is peirtteti eat the: the <:{}iE1§§3§§'13E'E5£ hag eéeariy fa ll aclmitted the cheque was dated 34.O"Z..:2£lG€l.A ll of Retirement, was dated 05.07. W9 1 to of the complainant the re5p0hdez}t"--:yas attipreachecl tipeh v him to discharge the liability {3:;1....ll:'fl'vtlanaar};l?§§C{l.1, HTlheref0re, there is no lI"1CllC3.'£lOH made by the complainant, the _e'heque:.;:a'1he:'t«:3l the cheque was issued._ " ef loan transaction ar1"angerheht llwho was a Chartered Aeceuntant l_e>lA1'"t'_t1'1_'n as stated by him. Namely, towards fehewal' ~-a'-?<§an_l'"w'hicli the complainant ﬁrm had availeclvwith lta,ba'n§i:er.ll"l'herelbre, the learned counsel would . -point.' lCut"tha"t..the basiellex/*idence of the transaction having faile<:l rightly concluded that there was no material ta thellelgal liability an the accused.

' El"-..A "€331 the ether hand, by way of reply the learned he-zazhsel lfbr the complainant weuld submit that the contention that' the reapehéeht had not iasued the cheque in discharge at' " "the levaé liahiht I is /ahle ofheéna dis iaeeé ha' :*et'e:*eaee tea a 3:» Q:_/ .J/ daeumeat whieh ar':§<3rtanat:etjg was mt pteéeeea he§<>:*e the trial *2 i':_..a«*' Court and therefore, an appiicatien heﬁ:j:'ei'i;i1_is:C--erui;£'g under Seetien 386 of the Cede of CfiiiiiiiiaiiiP1'Oé'€.§i{}~f.i;} ieave efihis Ceuri: to place the en i*ec§):"%.:'.,_i%;.:ié'~Sfé{ie<fithai i' there is a ietier written by--- the 1*esp0n€ien£"iQ the feii-ring' paﬁners eompiaining that the unéiet§t;>,:i{'ingf;* iigixiee him under the Retirement Deed is seught {G er:f(;--reeti efgéinst him and this would Cii1'1Ch'EH6?.§§i:5§€.';ViI1"f2{x¥QiLi-if 0f_'theeompIainant.

12. In abé've4ha§:kg1'--eund», this Court is to consider Wh€'£i1€;;a Chaise has bee}; _rha§ie out fer reverse} ef the judgement impugnefi. Insefar 'a..§f:hev«E.eg:1lpositien is concerned, it is ciear from a i*evieW ofthev-.eri'£.ire"~aiV21se law by the Apex Court that the :iei*:ns;._i:0f.__Seetiiijn-...§.?E?, the burden was on the accused to 'e.;s'Ea§:>i.ish__V'€h::::£iii"th_ere was no Iegai liability for which {he ccsneemeci e'ijiee;ee was issued. Whiie it is also possibie fer the 'V aeeeuéed ﬁe feiy oh ;':":a£e;*iai prociueed by the complainant which iifitie' Via-Ego vvdiseharge such a burden as observed by ihe iﬁorﬁhle iS.ei§jrei:ne Ceuri, Whiie net expfeiseing wheiher the maieriei Vi 'e*vaii3hie am :*e<:0:§ eaifiéeieni fer the eeeizeeé is ciiseiiarge {he h:,:§§e:2., sieee fer the reaeeee siazed hereixéeféeiz ii; weeié be if:

necessary fer the trial Court: to re~e><amir1e the matter; in the opinion er" this Court, E': is appropriate that the m_a.tt_e::"'t'ae remanded for further enquiry to ertabie the certtpiairrtxht . on reeerd the document which is 3aid.:e»Vh_aye hheerih V the accused to admit that he is 1iableA'ih transaction while it is to be furthe.r:"e.hser\3'ed_ thatj - '' regpcmdent not having tiieught itt'fi't'te"teﬁder evhideherev to place on record, the factum Qf the chveettie_.~hTé;<}_it1§been issued in respect cf ar1}f;'d'eI";te:t:':>r Eegai §'i':ahi'}it'y;."thejesportdent accused shalt} be at ii'Qert:}_ﬁt_o a'Vda'u_ee.':Vs:tehrrevidehce in this regard. This below to re_eexa1nihe'the_rr:att4er in order to do eomplete justice to thehpéwties, A'Le_§reiir1g:Ey, the appeal is aiieswed the judgement »<>f't.h_e iETi.Et3 Cr¢'{1-3,'¥Z' is Set aside the matter is remanded fer a fresh CO{iS'§.<3€1*3t§?§'n. its terms as afereeaid.

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