Karnataka High Court
Srinidhi Finance And Investment ... vs Basavanthappa S. S/O Devendrappa ... on 23 November, 2020
Author: Pradeep Singh Yerur
Bench: Pradeep Singh Yerur
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH R
DATED THIS THE 23RD DAY OF NOVEMBER, 2020
BEFORE
THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR
CRIMINAL APPEAL NO.2828/2011
BETWEEN:
SRINIDHI FINANCE &
INVESTMENT CORPORATION,
GADAG, BY ITS MANAGING PARTNER
SRI SHIDDLINGAPPA,
S/O TIPPANNA SATYAPPANAVAR,
AGE: 52 YEARS, OCC : BUSINESS,
R/O SHIVANANDANAGAR, GADAG,
DIST. GADAG
...APPELLANT
(BY SMT. PADMAJA TADAPATRI, ADVOCATE FOR SRI
K.L.PATIL, ADV.)
AND:
BASAVANTHAPPA,
S/O DEVENDRAPPA MUNDARGI,
AGE: 53 YEARS,
OCC : CLARK KVSR COLLEGE,
R/O GADAG, DIST. GADAG
... RESPONDENT
(BY SRI J.S.SHETTY AND ASSOCIATES, ADVOCATES)
***
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THIS CRIMINAL APPEAL IS FILED U/S 378(1) OF
CR.P.C., PRAYING TO SET ASIDE THE JUDGMENT AND
ORDER OF ACQUITTAL DATED 16.09.2011, PASSED BY THE I
ADDL. CIVIL JUDGE (JR. DVN.) & JMFC, GADAG IN C.C.
NO.100/2009 AND PUNISH THE ACCUSED WITH MAXIMUM
PUNISHMENT FOR THE OFFENCE PUNISHABLE UNDER
SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT.
THIS APPEAL IS COMING ON FOR FINAL HEARING THIS
DAY, THE COURT MADE THE FOLLOWING:
JUDGMENT
This criminal appeal is preferred by the complainant against the judgment of acquittal passed by the I Addl. Civil Judge (Jr. Dvn.) and JMFC, Gadag in C.C.No.100/2009 dated 16.09.2011, for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act').
2. For the sake of convenience the parties herein shall be referred to as per their status before the trial Court.
3. Brief facts leading to filing of this appeal are as under:
It is the case of complainant that one Devappa Yellappa Dambal borrowed a loan of Rs.75,000/- on 07.07.2005 from 3 Complainant - Finance Corporation, for which accused -
Basavantappa, stood as surety. When complainant requested principal borrower and surety, accused herein, to repay the loan amount towards discharge of debt, accused got issued a cheque dated 13.09.2006 for Rs.75,000/- to Complainant.
4. On presentation of the said cheque, same came to be dishonoured with an endorsement 'funds insufficient'. Thereafter, Complainant got issued a legal notice, which was served on accused on 26.09.2006. Despite receipt of notice, no payment of dishonoured cheque was made and neither was any reply sent by accused. As no payment was made towards dishonoured cheque, a complaint came to be filed against accused for the offence punishable under Section 138 of N.I.Act.
5. Thereafter, cognizance was taken and accused was summoned before Court, wherein his plea was recorded and he pleaded not guilty of the offence and claimed to be tried. Accordingly, he was tried.
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6. In order to prove the guilt of accused, complainant got examined its Partner as PW1 and another witness as PW2 and got marked Ex.P1 to P8. Thereafter, statement of accused was recorded under Section 313 of Cr.P.C., wherein accused denied all the incriminating evidence against him, but did not choose to lead evidence on his behalf nor did he produce any documents in support of his case, except confronting Ex.D-1 to complainant witness.
7. After going through the entire material evidence both oral and documentary, trial Court came to a conclusion that cheque in question was issued in the name of an individual, namely, Sri Siddalingappa Tippanna Satyappanavar and complaint has been filed in the name of Partnership Firm. Further, the trial Court came to a conclusion that complainant firm miserably failed to discharge its burden to prove the existence of legally recoverable debt and accordingly acquitted the accused for the offence punishable under Section 138 of NI Act. 5
8. Aggrieved by the said judgment of acquittal, complainant is before this Court in appeal, seeking to set aside the judgment of acquittal and to convict accused for the offence punishable under Section 138 of NI Act.
9. Heard Smt. Padmaja Tadapatri, learned counsel for appellant - Complainant and Sri K.S. Shetty, learned counsel for respondent - accused.
10. Learned counsel for complainant contends that judgment of acquittal passed by the trial Court is contrary to the material evidence and documents produced and hence the same deserves to be reversed. Learned counsel further contends that the trial Court has erred in coming to a conclusion that there is no legally recoverable debt. She further contends that when there is no dispute with regard to issuance of cheque, execution of the documents, namely, Ex.P5 and P6, hence accused is liable to pay the cheque amount. This factum of the matter has been ignored by the trial Court while passing the impugned order. 6
11. Learned counsel further contends that when the cheque is admitted, the signature on the cheque is admitted and it is also admitted by accused that he has stood as surety to the principal borrower; such being the case there is a presumption in law, which could act in favour of complainant and as the said presumption is not rebutted, the trial Court was wrong in acquitting the accused. Learned counsel further contends that neither accused has stepped into witness box to lead any evidence on his behalf, nor as he produced any document in support of his case. Under such circumstance, trial Court ought to have convicted accused rather than acquitting him of the charges. Learned counsel for complainant further contends that the trial Court has come to an erroneous conclusion that the cheque was issued in the individual name and not in the name of the firm. She further contends that complainant herein is Managing Partner of the Firm. Therefore, whether cheque issued in the name of the firm or in the name of complainant, would not make any difference to the case on hand.
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12. She further contends that once the issuance of cheque is admitted then it will not lie in the mouth of accused to say that cheque was not issued in favour of the Firm. Learned counsel further contends that the trial Court has committed an error in coming to a conclusion that complainant has not produced the account extract of the loan account to which accused has stood surety. She contends that learned Magistrate ought to have directed the complainant to produce any such document rather than drawing adverse inference against complainant and thereby acquitting accused. Learned counsel further contends that there is no bar to proceed against both principal borrower and surety to realize the amount, which is legally due. This point has been ignored and not considered by the trial Court. Viewed from any angle, the learned Magistrate has committed an illegality in acquitting accused and therefore, the same requires to be set aside. On these submissions, learned counsel for complainant seeks to allow the appeal and set aside the judgment of acquittal passed by the trial Court.
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13. Per contra, learned counsel for respondent - accused has vehemently contended that the complaint filed by the Partnership Firm itself is not maintainable in law and so also on facts and circumstance of the present case. Learned counsel contends that complainant herein, which is a Partnership Firm, is nether payee nor holder in due course of the cheque. Therefore, when complainant is not a recipient of the cheque and is not an interested person to whom the cheque is being given, complaint filed by such firm is not maintainable under Section 142 of NI Act.
14. Learned counsel further contends that Ex.P3, which is copy of legal notice, is also issued by Partnership Firm to accused, whereas according to him the cheque in question has been issued by accused in the name of Sri Siddalingappa Tippanna Satyappanavar in the individual capacity. Therefore, he contends that payee of the cheque has not initiated any action, much less, the complaint. Further learned counsel for accused contends that in the legal notice Ex.P3, it is stated that loan has been obtained by 9 one Devappa Mallappa Dambal, whereas legal notice and the complaint is lodged by Devappa Yellappa Dambal. Therefore, he contends that there is discrepancy in the name of the principal borrower of the loan and Complainant itself does not know who is the principal borrower, which has been rightly appreciated by the trial Court and has accordingly acquitted accused. Learned counsel further contends that Ex.D1, document which has been confronted to the complainant, is admitted by Complainant that a legal notice came to be issued for similar loan, wherein cheque came to be issued by accused for a sum of Rs.50,000/- and that a complaint has been filed against dishonour of the cheque for a sum of Rs.50,000/- against accused herein.
15. Learned counsel further contends that the complainant has not come before the Court with clean hands and has suppressed material facts before the Court and only with an intention to make unlawful enrichment of money has filed the present complaint. Learned counsel further contends that he has rebutted the presumption cast under 10 Section 139 to which complainant has not satisfactorily explained the details of the loan amount by production of any material with all account extract or books of accounts pertaining to the loan. Therefore, on these grounds, he seeks for dismissal of the appeal and to affirm the judgment of acquittal.
16. It is not in dispute that the complaint has been filed by Srinidhi Finance and Investment Corporation, which is a Partnership Firm, represented by Managing Partner, Sri Sri Siddalingappa Tippanna Satyappanavar, against accused, who is a surety for the principal borrower, having borrowed a loan of Rs.75,000/- from complainant - firm. It is not in dispute that the cheque bearing No. 988035 dated 13.09.2006 for a sum of Rs.75,000/- came to be issued by accused to Sri Siddalingappa Tippanna Satyappanavar. It is also not in dispute that the cheque is dishonoured and the same is admitted by accused to be belonging to him. It is also not in dispute that the signature in the cheque is that of accused. Objection that is raised by accused in the present 11 case is mainly with regard to maintainability of the complaint itself.
17. Having heard learned counsel for complainant and learned counsel for accused, the points that arise for consideration before this Court are :
"(1) Whether the complaint is in compliance with Section 138 of N.I.Act.
(2) Whether the judgment of acquittal passed by the trial Court is liable to be set aside?"
18. In order to answer the points for consideration, it is necessary to go through relevant provisions of N.I.Act.
19. Let us now find out the requirements of Section 142(1) of NI Act, which reads as follows:
"142. Cognizance of offences. -- (1) Notwithstanding anything contained in the Code of Criminal Procedure,1973 (2 of 1974)--
(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the 12 case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138: [Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.]
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section
138.]
20. On careful examination of clause(a) to Section 142(1), it is apparent that no Court shall take cognizance of any offence punishable under Section 138 of NI Act, except upon a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque.
21. In the present case, cheque-Ex.P.1 has been issued by the accused in the name of Siddalingappa Tippanna Satyappanavar, who is 'payee'. In order to find out who is 13 the holder in due course of the cheque, it is necessary to peruse Section 118(g) of NI Act, which reads as under:
"118 Presumptions as to negotiable instruments. --Until the contrary is proved, the following presumptions shall be made:--
(g) that holder is a holder in due course
--that the holder of a negotiable instrument is a holder in due course:"
22. In the present case, holder in due course of the cheque is none other than the 'payee'- Siddalingappa Tippanna Satyappanavar.
23. Section 138 of NI Act reads as follows:
"138 Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained 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 any debt 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 14 cheque or 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 and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless--
(a) 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 its validity, whichever is earlier;
(b) the payee or the holder in due course of the 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 thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.15
24. Proviso (b) to Section 138 of NI Act states that 'the payee or the holder in due course of the 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 thirty days), of the receipt of information by him from the bank regarding the return of the cheque as unpaid.'
25. Clause (c) to Section 138 of NI Act states that 'the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.'
26. It is not in dispute that Section 138 of NI Act contemplates that on fulfillment of proviso (a) to (c), Offence under Section 138 of NI Act is technically made out and also the cause of action for filing a complaint is made out.
27. In the present case, it is to be seen whether the complainant has made out a case by complying with the 16 provisions required under proviso (a) to (c) of Section 138 of NI Act. As noticed in Ex.P.1 and in Ex.P.3 and in the complaint filed by the complainant, it is not in dispute that the payee and holder in due course of the cheque is one Sri. Siddalingappa Tippanna Satyappanavar. The legal notice got issued by complainant-Ex.P.3 is not by the payee or holder in due course but by the complainant-Partnership Firm. The complaint filed before the learned Magistrate is also not by the payee or holder in due course but by the partnership firm M/s. Srinidhi Finance and Investment Corporation, Gadag, by its Managing Partner Sri. Siddalingappa Tippanna Satyappanavar. As stated earlier Section 142(1)(a) clearly states that no Court shall take cognizance of any offence punishable under Section 138 of NI Act, except on a complaint, in writing made by the 'payee' or, as the case may be, the holder in due course of the cheque. At the cost of repetition, it is seen that the payee and holder in due course of the cheque is not the complainant in the present case. Therefore, the primary mandatory requirement of Section 138 of NI Act, has not been fulfilled by the 17 complainant herein. Therefore, the initiation of the complaint itself is not in accordance with law.
28. Learned counsel for the complainant during the course of arguments vociferously raised the issue that the partnership firm which is the complainant has initiated the complaint because the payee of the cheque is none other than the Managing Partner of the firm, therefore, according to the complainant, the partnership firm and the individual partner are one and the same. There is no distinction between the partner and the partnership firm.
29. Learned counsel for the complainant relied on the following judgments, in support of her case;
(1) M/s Reshmi Constructions V/s Shri.Laxman Vithal Chunekar and another in Crl.RP.No.17 of 2014.
(2) State of Andhra Pradesh, represented by it's Public Prosecutor, High Court of Andra Pradesh, Hyderabad and another in Crl.A.No.852/2002. 18 (3) M/s Saptagiri Traders V/s D.Venkatesh reported in 2020(4) KCCR 2505.
(4) D.K.Chandel V/s M/s Wockhardt Ltd. & another reported in Crl.A.No.(s)132 of 2020. (5) APS Forex Services Pvt. Ltd. V/s Shakti International Fashion Linkers and others reported in AIR 2020 SC 94.
30. Learned counsel relied on the judgment of the Hon'ble Supreme Court of India stated supra to buttress her argument with regard to presumption in law which would act in her favour on the admission made by the accused with regard to Ex.P.1-cheque and the signature on Ex.P.1-cheque. In the present case the issuance of cheque and the signature on the cheque at Ex.P1 is no doubt admitted, but the same has not been issued to the Complainant herein. Hence, the said judgment though pertinent, would not be applicable to the facts of the present case.
31. In the case of M/s Reshmi Constructions V/s Shri.Laxman Vithal Chunekar and another stated supra, the facts of the case are different and the same is not helpful to 19 the complainant herein as the case pertains to partnership firm having filed the case through a power of attorney holder of another partner. So also, in the case pertaining to Andhra Pradesh High Court, stated supra, the facts of the case are different and the same is not applicable to the present facts and circumstances of the case. In the case of M/s Saptagiri Traders V/s D. Venkatesh, again the said case would not be helpful to the complainant in view of the fact that the change of name could not be much helpful in the present case for the reason that the main defence of accused is that complaint itself is not maintainable. Therefore, the said argument based on the above said authorities would be of no significant value for the complainant.
32. It is necessary in the facts and circumstances of the present case to appreciate that Ex.P.1-cheque has been issued by accused in the name of Sri. Siddalingappa Tippanna Satyappanavar who is the payee and holder in due course and it is clearly noticed from Ex.P.3-legal notice is issued by the partnership firm and the complaint is initiated 20 by the partnership firm viz. M/s Srinidhi Finance and Investment Corporation, represented by it's Managing partner.
33. In view of this, it is essential to see whether complaint is instituted by the payee or holder in due course. Admittedly, it is the case of complainant that complainant is a partnership firm represented by more than one partner and the present complainant is acting as Managing partner. Whereas, the cheque in dispute is issued in the name of an individual viz. Sri. Siddalingappa Tippanna Satyappanavar. The partnership firm is governed by the provisions of Partnership Act. Though, a partnership firm is not a juristic person, it would ordinarily mean body of persons which is not incorporated under Statute. Under order 30 Rule(1) of C.P.C. any two or more persons claiming or being liable as partners carrying on business in India may sue or be sued in the name of the Firm of which such persons were partners at the time of accruing of the cause of action and any party to a suit may in such case can apply to the Court for the statements, 21 names and addresses of the persons who were at the time of accruing of the cause of action partners in such firm to be furnished and verified in such manner as the Court may direct. Therefore, the partnership firm shall sue or be sued in the name of the firm.
34. Admittedly, in the present case, cheque-Ex.P.1 has not been issued in the name of partnership firm. It is also not the case of the complainant that it is a proprietary firm which stands on different footing. Therefore, it is clearly, evident from the factual aspect that the complainant firm is not the payee or the holder in due course.
35. While dealing with the present appeal, this Court under the Appellate jurisdiction has the full power to review, re-appreciate and re-consider the evidence upon which the order of acquittal is founded and it is also very well established that this Court can reach it's own conclusion both on questions of fact and questions of law. What has to be borne in mind by this Court while deciding an appeal arising out of acquittal is that of double presumption which is in 22 favour of accused. Firstly, there is presumption of innocence available to him under the fundamental principles of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty. In the present case, no doubt, there is a presumption in favour of complainant under Section 139 of NI, Act. But, the said presumption is a rebuttable presumption. Secondly, accused having been acquitted by trial Court, the above stated innocence is further re-inforced and re-affirmed and strengthened by the judgment of trial Court.
36. Primarily, it is a mandatory requirement under law for the complainant to satisfy the requirement of Section 138 proviso (a) to (c) only then the presumption will act in favour of complainant driving the accused to rebut such presumption.
37. On careful appreciation of the entire material evidence and the documents produced before the Court, it is seen that the complainant has not fulfilled the necessary mandatory requirements of proviso (a) to (c) of Section 138 23 of NI Act. Hence, I answer Point No.1 in the negative. Trial Court has considered the entire materials both oral and documentary and has rightly come to a conclusion of acquitting the accused. I do not find any ground to interfere with the judgment of acquittal passed by trial Court. Hence, I answer Point No.2 in the negative. Accordingly, I pass the following order:
ORDER (1) Appeal is dismissed.;
(2) Order of acquittal passed by the trial Court is affirmed.;
(3) No orders as to costs.
Sd/-
JUDGE VK/HMB