Karnataka High Court
Srinivas vs A V Krishnamurthy on 8 December, 2023
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NC: 2023:KHC:44711
CRL.RP No. 37 of 2016
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE ANIL B KATTI
CRIMINAL REVISION PETITION NO.37 OF 2016
BETWEEN:
SRINIVAS,
S/O. LATE H.V. SUBBAIAH,
AGED ABOUT 52 YEARS,
NO.116/1, GUNDAPPA NIVAS,
OPP: GAS GOLDEN,
KAMBATHANAHALLI ROAD,
GOTTIGERE, BANNERGATTA MAIN ROAD,
BANGALORE - 560 083.
...PETITIONER
(BY SRI. SHIVAKUMAR D.K, ADVOCATE)
AND:
A.V. KRISHNAMURTHY,
Digitally S/O. VENKATARAYAPPA,
signed by AGED ABOUT 45 YEARS,
SUMITHRA R RESIDING AT NO.43,
Location: 5TH CROSS, 1ST BLOCK,
HIGH AYYAPPA NAGAR, K.R.PURAM,
COURT OF BANGALORE - 560 036.
KARNATAKA
...RESPONDENT
(BY SRI. NACHE GOWDA B.H, ADVOCATE)
THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 R/W 401 OF CR.P.C PRAYING TO SET ASIDE THE
JUDGMENT AND ORDER DATED 07.12.2015 PASSED BY THE
LVII ADDL. CITY CIVIL AND SESSIONS JUDGE, BANGALORE IN
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NC: 2023:KHC:44711
CRL.RP No. 37 of 2016
CRL.A.NO.25082/2014 AND ALSO THE JDUGMENT AND ORDER
OF CONVICTION AND SENTENCE DATED 21.04.2014 PASSED
BY TEH XIV A.C.M.M., BANGALORE IN C.C.NO.26757/2012 AND
ACQUIT THE PETITIONER FORM THE ALLEGED OFFENCE.
THIS PETITION, COMING ON FOR ARGUMENTS, THIS
DAY, THE COURT MADE THE FOLLOWING:
ORDER
Revision petitioner/accused feeling aggrieved by the judgment of First Appellate Court on the file of LVII Addl. City Civil and Sessions Judge,[CCH-58], Bengaluru in Crl.A.No.25082/2014, dated 07.12.2015 confirming the judgment of Trial Court on the file of XIV Addl. Chief Metropolitan Magistrate, Bengaluru in C.C.No.26757/2012, dated 21.04.2014, preferred this Revision Petition.
2. Parties to the Revision Petition are referred with their ranks as assigned in the Trial Court for the sake of convenience.
3. Heard the arguments.
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016
4. After hearing the arguments of both sides and on perusal of Trial Court Records with judgment of both the Courts below, the following points arise for consideration:
1) Whether the impugned judgment under Revision passed by the First Appellate Court in confirming the judgment of Trial Court for the offence under Section 138 of N.I. Act is perverse capricious and legally not sustainable?
2) Whether any interference by this Court is required?
5. On careful perusal of oral and documentary evidence placed on record, it would go to show that accused is friend of complainant and for meeting his financial necessities borrowed an amount of Rs.2,50,000/- as a hand loan with an assurance that he will repay the same within few months. Accused in order to discharge legally enforceable debt issued the cheque bearing No.011480 drawn on Axis Bank Ltd., J.P. Nagar Branch, -4- NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 Bengaluru for Rs.2,50,000/-, dated 04.11.2011 Ex.P.1. Complainant presented the said cheque through his banker, Canara Bank, K.R. Puram Branch, Bengaluru. The said cheque was dishonored as "Account closed" vide bank endorsement Ex.P.2. Complainant issued demand notice dated 30.11.2011 Ex.P.3 and the same is duly served to the accused vide acknowledgment card Ex.P.4. Accused in spite of due service of notice, has neither replied to the demand notice nor paid the amount. Therefore, complainant has filed the complaint on 05.01.2012. If the above referred dates with regard to issuance of cheque are perused and appreciated with the evidence of PW-1, then it would go to show that complainant has complied necessary legal requirements in terms of Section 138(a) to
(c) of Negotiable Instruments Act, 1881 (hereinafter for brevity referred to as "N.I. Act"). Therefore, the statutory presumption in terms of Section 118 and 139 of N.I. Act will have to be drawn.
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016
6. In this context of the matter, it is useful to refer the judgment of Hon'ble Apex Court in APS Forex Services Pvt. Ltd. Vs. Shakti International Fashion Linkers and others reported in AIR 2020 SC 945, wherein it has been observed and held that once the issuance of cheque with signature on cheque is admitted, there is always a presumption in favour of complainant that there exist legally enforceable debt or liability. Plea of accused that cheque was given in view of security and the same has been misused by complainant is not tenable.
7. It is also profitable to refer another judgment of Hon'ble Apex Court in P. Rasiya vs. Abdul Nazer and another reported in 2022 SCC OnLine SC 1131, wherein it has been observed and held that:-
" Once the initial burden is discharged by the complainant that the cheque was issued by the accused and signature of accused on the cheque is not disputed, then in that case, the onus will shift upon the accused to prove the contrary and that the cheque was not for -6- NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 discharge of any debt or other liability. The presumption under Section 139 of N.I. Act is statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the complainant/holder of the cheque, in that case it is for the accused to prove the contrary."
In view of the principles enunciated in the aforementioned two judgments of Hon'ble Apex Court, it is evident that when once issuance of cheque with signature of accused on the account maintained by him is admitted or proved, then statutory presumption in terms of Section 118 and 139 of N.I. Act will have to be drawn and it is now up to the accused to place rebuttal evidence to displace the statutory presumption available in favour of the complainant in terms of Section 118 and 139 of N.I. Act, the burden of placing rebuttal evidence to displace the statutory presumption is on the accused.
[ 8. In this context of the matter, it is useful to refer the judgment of Hon'ble Apex Court in Basalingappa Vs. -7- NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 Mudibasappa reported in 2019 Cr.R. page No. 639 (SC), wherein it has been observed and held that:
"Presumption under Section 139 is rebuttable presumption and onus is on accused to raise probable defence and standard of proof for rebutting presumption is that of preponderance of probabilities. To rebut presumption, it is open for accused to rely on evidence laid by him or accused can also rely on materials submitted by complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from materials brought on record by parties, but also by reference to circumstances upon which they rely. It is not necessary for accused to come in witness box in support of his defence. Section 139 imposed an evidentiary burden and not a presumptive burden".
9. The Hon'ble Apex Court in the latest decision in Rajesh Jain Vs. Ajay Singh reported in 2023 SCC online 1275, wherein it has been held that burden of placing rebuttal evidence to displace the statutory -8- NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 presumption available in favour of complainant is on accused.
In view of the principles enunciated in both the aforementioned judgment of Hon'ble Apex Court, it is evident that the accused to probabilise his defence can rely on his own evidence or also can rely on the materials submitted by complainant. It is not necessary for the accused to step into witness box to probabilise his defence.
10. In the present case the following are the defences of accused:
1) Complainant is running a chit fund and accused has issued the two blank signed cheques as a security for the chit fund amount.
2) Complainant has not produced any documents to show that he was having money to pay the same to accused.-9-
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3) No income tax returns are filed.
4) Contents of Ex.P.1 are not written by accused.
Accused apart from relying on material produced by the complainant also relied on the evidence of DW.1 and DW.2 as rebuttal evidence to displace the statutory presumptions available in favour of complainant.
11. Accused during the course of his evidence as DW.1 has deposed to the effect that complainant was introduced to him through his friend Ramesh, who was the member of chit fund run by complainant and he is working in Rakshita Medicals as Manager. The owner of Rakshita Medicals is one Smt. Nagarathna, who is also the member of chit fund run by the complainant. In the year 2008, chit fund for Rs.4,00,000/- was commenced and each member has to deposit an amount of 16,000/- per month consisting of 25 members. Accused has taken the chit fund of Rs.2,05,000/- and he is regularly paying the chit fund amount. Complainant at the time of commencing the chit
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 fund of Rs.4,00,000/- has taken two blank signed cheques from accused and one of the said cheque has been misused, though the period of chit is completed in the year 2010.
12. Accused has also examined his friend Ramesh as DW.2 through whom he claimed that complainant was introduced to accused. DW.2 has deposed to the effect that he knows the complainant since around 2007, who is running chit business and he is also member of the chit business of the complainant and he introduced the accused to complainant. The chit fund of Rs.4,00,000/- was commenced with 25 members and the first chit amount was taken by him and he is regularly paying Rs.16,000/-. DW.2 has further deposed to the effect that the complainant has taken two blank signed cheques at the commencement of chit fund of Rs.4,00,000/-. Similarly, the complainant has collected blank signed cheques from accused and other members and the blank signed cheque has not been returned to him and
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 complainant is demanding Rs.2,00,000/- for return of the cheque.
13. The documents at Exs.D.1 and D.2 are Form No.21 and 20 regarding retail license of Rakshita Medicals stands in the name of Smt. P Nagarathna proprietor of Rakshita Medicals. What is pleaded by complainant in the complaint is that accused is running medical shop and was having financial necessity to purchase medical items. Complainant has not pleaded that accused is proprietor of Rakshita Medicals. Therefore, the documents at Exs.D.1 and D.2 cannot be of any much assistance to the case made out by the accused. Complainant has only pleaded that accused is his friend and even according to the evidence of DW.1, he is the manager of Rakshita Medicals. It means that accused is working in Rakshita Medicals. The complainant is not expected to ascertain the truthfulness of the financial need of the accused or the cause assigned by him. When once issuance of cheque with signature of accused is admitted by accused then in terms of Section
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 118(a) of N.I. Act passing of considering has to be presumed. Accused has also not produced any documents showing that the complainant is running chit fund business. The mere evidence of DW.2 that he has also issued blank signed cheque at the time of commencement of chit fund of Rs.4,00,000/- cannot be accepted without there being any corroborative documents to that effect. Therefore, the first contention of the accused that the complainant is running chit fund business and as a security he has given two blank signed cheques and one of such cheque has been misused by the complainant, cannot be legally sustained.
14. The second contention of accused is that complainant has not produced any documents to show that he was having money covered under the cheque Ex.P.1 to pay the same to accused. DW.1 in his entire evidence has not challenged the financial capacity of the complainant to mobilize the fund of Rs.2,50,000/- to pay the same to the accused. On the other hand, the evidence
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 of DW.1 and DW.2 revolves around blank signed cheque having been issued to the complainant for the chit commenced for the amount of Rs.4,00,000/-. Indisputably the demand notice Ex.P.3 is duly served to the accused Ex.P.4. Accused has not given reply to the said demand notice, inspite of due service of the same Ex.P.4, accused has not availed the first available opportunity to put forth his defence in denying the cheque issued by him to the complainant not for any legally enforceable debt. The accused even after his appearance in the case, before seeking permission of the Court to cross examine PW.1 on the defences available to him, has not made any written communication disclosing the defence on which he wished to cross examine PW.1. The accused has also not brought any worth material evidence in the cross examination of PW.1 questioning the financial capacity of the accused to pay the amount. On the other hand, the entire cross examination of PW.1 revolves around the issuance of blank signed cheque as a security for the chit amount of Rs.4,00,000/-, to which he was a member. Therefore, the
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 second contention of the accused that the complainant has not produced any documents to show that he was possessing money covered under the cheque, also cannot be legally sustained.
15. The third contention of the accused is that the complainant has not produced income tax returns for having shown the loan transaction with the accused and having paid an amount of Rs.2,50,000/- covered under the cheque Ex.P.1. Therefore, the claim of complainant that accused has borrowed money of Rs.2,50,000/- from the complainant, cannot be legally sustained.
16. The non disclosure of the transaction in the Income Tax Returns creates doubt regarding the legally enforceable debt or not is to be decided. The Constitutional validity of Section 269-SS of Income Tax Act was called in question before the Hon'ble Apex Court in the case reported in (2002) 6 SCC Page No.259, Assistant Director of Inspection
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 Investigation Vs A.B.Shanti, wherein it has been observed and held that:-
"The object of introducing Section 269- SS was to ensure that a taxpayer should not be allowed to give false explanation for his unaccounted money, or if he has given some false entries in his accounts, he should not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records later to suit the plea of taxpayer. The main object of Section 269-SS was to curb this menace. As regards the tax legislations, it is a policy matter, it is for Parliament to decide in which manner the legislation should be made. Of course, it should stand the test of constitutional validity."
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 The Hon'ble Supreme Court having so observed negated the contention of appellants that taking a loan or receiving a deposit is a single transaction wherein a lender and barrower are involved and by the impugned section the barrower alone is sought to be penalized and the lender is allowed to go scot-free.
17. The proviso 269-SS only prescribes the mode of taking or accepting certain loans, deposits and specified sum. The said proviso would speak to the effect that no person shall take or accept from any other person (herein referred to as the depositor). Mode of taking any loan or deposit or any specified sum, otherwise than by an account-payee Cheque or account or accepting payees and draft or use of electronic clearing system through a bank account. The proviso was inserted in the Income Tax Act debarring person from taking or accepting from any other person any loan or deposit otherwise than by account payee cheque or account payee bank draft, if the amount of such loan or deposit or the aggregate amount of such
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 loan or deposit is Rs.10,000/- or more. The amount of Rs.10,000/- was later revised as `20,000/- with effect from 01.04.1989. The said proviso does not prohibit for giving or lending loan, it is only taking and acceptance is prohibited. The acceptance of loan by way of cash in excess of Rs.20,000/- may attract panel provision in terms of Section 271- D. Whether the provisions of Section 269- SS of the Income Tax Act 1961, disentitles the plaintiff from filing recovery suits was directly under consideration by the coordinate bench of this Court in the decision reported in ILR 2007 Kar 3614 - Mr. Mohammed Iqbal vs Mr. Mohammed Zahoor, wherein it has been held that:
"The main object of introducing the provisions of Section 269-SS of the Income Tax Act is to curb and unearth black money. But the Section does not declare the present transaction which is brought before the court illegal, wide and unenforceable."
(Emphasis supplied)
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 This Court while recording the said finding has taken note of the decision of the Hon'ble Apex Court in Assistant Director of Inspection Investigation referred above. In para 7 of the said judgment concluded that in the light of the observations of Apex Court, it cannot be said that Section 269- SS only provided for the mode of acceptance payment or repayment in certain cases so as to counteract evasion of Tax. Section 269-SS does not declare all transactions of loan, by cash in excess of Rs.20,000/- as invalid, illegal or null and void, while as observed by the Apex Court, the main objection of introducing the provisions was to curb and unearth black money. To construe Section 269-SS as a competent enactment declaring as illegal and enforceable all transactions of loan, by cash, beyond Rs.20,000/- in my opinion cannot be countenanced. It is true that the said decision has been rendered in a Civil suit for recovery of money, but the principle of law with regard to the effect of Section 269- SS of Income Tax Act holds good. Therefore, in view of the principles enunciated in the above referred
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 decisions, the finding of the Trial Court that the transaction involved leading to issuance of cheque in question as per Ex.P1 which is contravention of Section 269-SS of Income Tax Act has become unenforceable debt and by virtue of the same, the presumption in favour of complainant stood rebutted cannot be legally sustained.
In view of the principles enunciated in the aforementioned judgements, the contention of learned counsel for the revision petitioner regarding non-filing of income tax returns cannot be accepted as rebuttal evidence to displace the statutory presumption available in favour of the complainant.
18. The last contention of the accused is that the contents of Ex.P.1 are not in the hand writing of accused. The accused has not disputed his signature on cheque Ex.P.1 and it was delivered to the complainant. The contention of the accused is that he has issued two blank signed cheques to complainant as a security for chit
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 amount of Rs.4,00,000/-, to which he was a member. For the reasons recorded above, it is held that the same has not been proved by the accused. In terms of Section 20 of N.I. Act, where one person signs and delivers to another 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. Therefore, in view of the said proviso, when accused has chosen to give blank signed cheque, he gives an authority to the holder of the cheque
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 to fill the contents of Ex.P.1 and he is answerable for the claim made by the complainant covered under Ex.P.1. Therefore, the contention of the accused that he has issued blank signed cheques and the same has been misused by the complainant, also cannot be legally sustained.
19. When once issuance of cheque is admitted or proved by complainant out of evidence of PW.1 and documents of Ex.P.1 to P.4, then statutory presumptions in terms of Section 118 and 139 of N.I. Act will have to be drawn in the absence of rebuttal evidence of accused or the rebuttal evidence placed by the accused cannot be legally sustained, then the statutory presumption will continue to operate in favour of complainant. The Courts below have rightly appreciated the oral and documentary evidence placed on record and justified in recording that the complainant has proved that accused has committed an offence punishable under Section 138 of N.I. Act. The
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 said finding recorded by both the Courts below is based on the legal evidence on record.
20. Now coming to the question of imposition of sentence is concerned. The Trial Court imposed sentence of fine of Rs.3,85,000/- and out of which Rs.2,000/- was ordered to be paid as prosecution expenses and the remaining amount was ordered to be given to the complainant. The First Appellate Court has confirmed the imposition of sentence passed by the trial Court, looking to the period from 25.10.2011 the date from which the accused is liable to pay the amount due to the complainant and the date of judgment of the trial Court, this Court finds no reason to interfere even on the question of imposition of sentence. Consequently, proceeds to pass the following;
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NC: 2023:KHC:44711 CRL.RP No. 37 of 2016 ORDER Revision petition filed by the Revision Petitioner/accused is hereby dismissed as devoid of merits.
Registry is directed to send back the records to Trial Court with a copy of this order.
SD/-
JUDGE ABK