Karnataka High Court
B Sudhakar S/O B Pullaiah vs P Mrithyunjaya S/O Late P Vishwamurthy on 19 September, 2013
Author: Anand Byrareddy
Bench: Anand Byrareddy
1
IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 19TH DAY OF SEPTEMBER 2013
BEFORE
THE HON'BLE MR. JUSTICE ANAND BYRAREDDY
CRIMINAL APPEAL No.2553/2009
BETWEEN:
B.Sudhakar,
Son of B.Pullaiah,
Aged 35 years
Occ: Advocate and Agriculturist,
Resident of Siruguppa Taluk,
Bellary District. ..APPELLANT
(By Shri J.Basavaraj, Advocate)
AND:
P.Mrithyunjaya
Son of late P.Vishwamurthy,
Aged 39 years,
Resident of Shanthinikethana School,
Bellary Road,
Siruguppa Taluk,
Bellary District. ...RESPONDENT
(By Shri.Gode Nagaraj, Advocate)
---
2
This appeal is filed under Section 378(1) and (3) of the Code of
Criminal Procedure, 1973 praying to call for the records in CC
No.185/2003 on the file of the Civil Judge (Junior Division) and
JMFC, Siruguppa, peruse the same, allow this appeal and set aside
the judgment of acquittal dated 17.12.2008 and etc.
This appeal coming on for final hearing this day, the Court
delivered the following:
JUDGMENT
Heard the learned Counsel for the appellant and the learned Counsel for the respondents.
2. The appellant was the complainant before the trial court. It was the case of the complainant that the respondent herein had received a loan of Rs.1,27,000/- and had agreed to pay the same within a month, but had repaid only Rs.20,000/- and in respect of the balance amount, there was default. When repeated demands were made, a cheque bearing No.0469888 dated 24.12.2002 drawn on State Bank of Mysore, Siruguppa was issued to the appellant. When the same was presented for collection, it was returned with an endorsement that the funds were insufficient in the account of the respondent and therefore, after issuance of a statutory notice of 3 demand and when there was default on the part of the respondent to comply, a complaint came to be lodged.
The court having taken cognizance of the offence, had issued summons and on the respondent having entered appearance, had contested the matter. The plea of the respondent having been recorded, he had pleaded not guilty and claimed to be tried. The complainant had then examined himself as PW.1 and marked Exhibits P.1 to P.7. The accused - respondent on the other hand, examined himself as DW.1 and produced and marked Exhibits D.1 and D.2. The court below framed the following point for consideration:
"Whether the complainant proves that on 24.12.2002, the accused issued cheque bearing No.0469888 for Rs.1,07,000/- to be drawn on State Bank of Mysore, Siruguppa in token of the loan of Rs.1,27,000/- received from him, which was dishonoured on 26.12.2002 due to insufficient funds in the account of the accused when presented, and thereby, with dishonest intention cheated the complainant and committed an offence punishable 4 under section 138 of the Negotiable Instruments Act, 1881?"
The court below answered the above point in the negative and acquitted the accused - respondent. It is this which is under challenge in the present appeal.
3. The learned Counsel for the appellant while taking this court through the record, would point out that the finding of the court below that even though it is admitted that the cheque in question has been issued by the respondent, that it was issued not in discharge of any legally recoverable debt, but was issued as security in respect of certain transaction, which was not the subject matter of claim and therefore, the conclusion drawn by the trial court, it is contended, was without any basis as the burden was on the respondent to establish the alleged transaction in respect of which the cheque was issued as security as claimed by the respondent. The learned Counsel would submit that in terms of Section139 of the NI Act, the presumption is in favour of the holder of the cheque that the same was issued in discharge of legal liability, unless the contrary is proved. Therefore, 5 the burden is on the person, claiming that the cheque was not issued in discharge of a legal liability, to establish the same. Mere denial that the cheque was issued in discharge a legal liability and the claim that it was issued as a security in some other transaction, would not shift the burden on the holder of the cheque and therefore, it is contended that the trial court has proceeded on a wrong assumption that the burden was on the appellant to establish that the cheque was not issued as security, but in discharge of a legal liability. The ingredients of Section 138 having been satisfied, any contention raised in defence by the respondent places the burden of establishing the same on the respondent and therefore in the absence of any cogent evidence in this regard, the court below was not justified in holding that the appellant had failed to establish the commission of an offence punishable under Section 138 of the NI Act.
It is pointed out that the respondent had not entered the witness box and therefore in order to contend that the presumption under section 139 stood rebutted by the evidence tendered on behalf of the respondent, in support of his defence, cannot be sustained only on the 6 evidence of DW.1 whose evidence was not sufficient nor was the witness competent to establish any such defence as claimed by the respondent and therefore the learned counsel would seek intervention of this court, as the court below has misinterpreted the legal position and in casting the burden on the appellant to establish the transaction and the fact that the cheque was issued in discharge of a legal liability.
4. The learned Counsel for the respondent, on the other hand, would point out that the respondent had denied having borrowed a sum of Rs.1,27,000/- and in the face of the admitted circumstance that the complainant had admitted that there were no other witnesses to the transaction, it cannot be said that in the absence of any other material document to indicate that the respondent borrowed a loan of Rs.1,27,000/-, it cannot be said that the cheque was in discharge of a liability or repayment of the said loan. The fact that the appellant claims that he had received a sum of Rs.20,000/- and that Rs.1,07,000/- was still notwithstanding was not established by any material document and when there is a denial of the transaction and 7 there is no cogent evidence to establish the transaction, the burden would naturally shift to the complainant to prove that there was a liability and it was in discharge of that liability that the cheque in question had been issued. The rebuttal of the presumption under Section 118 and Section 139 of the NI Act is complete when there is a probable defence raised, which would require the holder of the cheque to discharge the burden of establishing that the cheque was issued in discharge of a legal liability.
The learned counsel would point out that from the cross- examination of PW.1, it is evident that he had not placed any material to establish the loan and therefore the contention that the cheque was issued as security in some other transaction and was not in discharge of the loan transaction ought to be held probable and therefore, the burden was on the complainant to establish it otherwise. It is further pointed out that exhibits D.1 and D.2 are admitted by the appellant as being in his handwriting and the same were written on the date of receipt of Exhibit P.2 and further that Exhibit P.2, Cheque also having been said to have been issued on the same day, the 8 presumption is that it was issued not on the date indicated on the cheque namely,24.12.2002, but on 15.10.1999 and the interpolation on the cheque Exhibit P.2 in the column provided for the date, is clearly mischievous and it is incorporated by the appellant to misuse the cheque which has been issued as security. The clear admission by the appellant in the course of his cross-examination on this aspect of the matter clearly did not require the respondent to tender any further evidence to rebut the presumption that the cheque was issued in discharge of a legal liability and that it was to be presumed on the preponderance of probability that it was issued as security in certain other transaction, which again is not established by the appellant. This is the reasoning that is accepted by the trial court and rightly so and therefore there is no warrant for interference by this court with the finding that the burden was clearly on the appellant to establish the loan transaction in order to demonstrate that the cheque was indeed issued in discharge of that liability. Further, the trial court having categorically found that the complaint did not mention as to when the accused had received the loan of Rs.1,27,000/- nor is any 9 such date mentioned in the notice under section 138 of the NI Act and there is also no indication as to when a part of the amount of Rs.20,000/- was paid in discharge of the loan transaction and it could not be said that there was substance in the complaint of an offence punishable under Section 138 insofar as the cheque in question was concerned and accordingly the learned counsel would seek to justify the judgment of the court below.
Reliance is placed on a decision of the apex court in M.S.Narayana Menon vs. State of Kerala, AIR 2006 SC 3366, in support of the proposition that when a cheque is issued as security in certain other transaction, which cannot be construed as having been issued in discharge of a legal liability and therefore cannot be the subject matter of the proceedings under section 138 of the NI Act and the learned Counsel would submit that the said decision would apply on all fours to the present case on hand.
Reliance is also placed on a decision of this court in M.Senguttuvan vs. Mahadevaswamy, ILR 2007 Kar.2709, wherein in identical circumstances, the money lending transaction not having 10 been established by the production of the relevant documents, this court having concluded that the burden of establishing a legally enforceable debt had shifted on the complainant in view of the denial of the transaction and since no material was produced to establish the money lending transaction, the accused having been acquitted was sustained.
5. In the light of these rival contentions, and the material on record, the point for consideration is whether the court below was justified in holding that the cheque in question was issued as security in the year 1999 in respect of some other transaction, which is sought to be misused by the appellant in respect of the purported loan transaction which was not established by the appellant.
From a reading of Section 138 of the NI Act, the ingredients of Section 138 of the NI Act, are that when a cheque is drawn by a person on an account maintained by him for discharge of any debt or liability issued in favour of another and is returned by the bank unpaid, as there was no amount of money standing to the credit of that account, as insufficient to honour the cheque, such person is 11 deemed to have committed an offence and in order to establish that offence, the complainant should demonstrate that the cheque has been presented in the bank within a period of six months from the date on which it was drawn and that a demand has been made by notice in writing to the drawer of the cheque within 30 days from the date of receipt of dishonor and that the drawer has failed to make payment on such demand within fifteen days from the date of receipt of notice. These ingredients on the face of it are complied with by the appellant. Therefore, when a defence is raised denying the entire transaction or that the cheque was issued by the respondent in discharge of a legal liability, the burden was clearly on the respondent. The premise that there was a denial of the loan transaction, in respect of which a cheque had been issued and therefore it was incumbent on the appellant to establish the transaction, is incorrect. It is for the respondent to establish that there was an earlier transaction said to be of the year 1999 and Exhibits D.1 and D.2 are documents which are in the hand of the appellant himself, at which point of time, the cheque is also said to have been issued namely, in the year 1999, has 12 been accepted by the court below. Firstly, to establish that the transaction was of the year 1999, in respect of which, a blank cheque had been issued was on the respondent by the production of Exhibits D.1 and D.2. It could not be said that there was a transaction of the year 1999, which stood established. On the other hand, from the entries made in Exhibits D.1 and D.2, it is evident that there is reference to payments made in the year 2000, 2001 and 2002. Therefore, the document having been executed in the year 1999 and the cheque also having been coincidentally issued ,cannot be accepted. Even if there is an admission by the complainant, it is not tenable as the documents speak for themselves. There is no presumption that Exhibits D.1 and D.2 had been executed by the complainant in the year 1999 and that a cheque had been furnished as security in respect of any such transaction in the year 1999. Therefore, the defence claimed by the respondent to that extent was not at all tenable and the answers elicited from the complainant in admission thereof, would not advance the case of the respondent in support of his defence. The allegation as regards there being a 13 tampering with the cheque in regard to the date on which it is executed, is not a ground on which the cheque has been dishonoured by the banker. On the other hand, the correction, if any, in the date is endorsed by the respondent and that signature has been disputed by the banker. Therefore, the cheque amount for which it is issued and the date on which it is issued, which are doubted by the court below, is without any basis. It is a mechanical acceptance of the contentions put-forth by the respondent. Insofar as further findings of the trial court that it was necessary for the appellant to establish the loan transaction of Rs.1,27,000/- and to further establish that there was a part payment of Rs.20,000/- and that outstanding was Rs.1,07,000/-, for which the cheque had been issued, is again a requirement which is not forthcoming from the provisions of Chapter XVII of the NI Act. It is only if the respondent had adduced evidence and if on a preponderance of probabilities, it could be demonstrated that there was an earlier transaction, in respect of which a cheque had been issued as security, that the burden would shift to the complainant. Apart from mere denial and reliance placed on Exhibits D.1 and D.2, 14 there is no other material to establish any earlier transaction. Therefore, it could not be said that the respondent had discharged the burden of establishing that there was no legal liability in respect of which the cheque could have been issued for the court below to have held that the burden had shifted on the complainant and therefore, he was liable to establish not only that the cheque had been issued for a legal liability, but that he had lent a sum of Rs.1,27,000/- and that a part it had been paid and it was for the balance that the cheque had been issued. This is not the purport and Scheme of law in the present case on hand.
Insofar as the decision in Narayana Menon, supra is concerned, it was on the facts and circumstances of that case and on the material that was available on record, it was found that the cheque in question therein had indeed been issued as security as security which had not become enforceable. Therefore, the apex court having held that the cheque issued as security could not be the subject matter of a complaint as if the same was issued in discharge of a legally recoverable debt, may not be out of place. But to draw 15 declaration of law therein as general principle applicable only on the mere claim that the cheque has been issued as a security without further establishing the transaction in question and demonstrate on preponderance of probabilities that the same was issued as security, it cannot be accepted on that basis and the complainant's case denied.
Insofar as the decision in Senguttavan, Supra, the facts of that case warranting a finding as rendered, cannot be a precedent for the present case on hand given the facts and circumstances and therefore, the view expressed therein is an authority for the facts of that case and cannot be pressed into service in the present case on hand.
Consequently, the appeal succeeds. The judgement of the court below is set aside. The offence punishable under Section 138 of the NI Act stands established and the respondent is convicted for the same and shall pay a fine of Rs.1,60,000/-, of which Rs.1,50,000/- shall be paid as compensation to the appellant and in default of payment of fine, the appellant shall suffer simple imprisonment of six months.
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The Counsel for the respondent makes an oral prayer for stay of this judgment for a period of four weeks. The prayer is rejected.
SD/-
JUDGE nv