Karnataka High Court
Vijaya Credit Co Operative Society ... vs Divakara K on 27 February, 2020
Author: Mohammad Nawaz
Bench: Mohammad Nawaz
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF FEBRUARY, 2020
BEFORE:
THE HON'BLE MR. JUSTICE MOHAMMAD NAWAZ
CRIMINAL APPEAL No.420 OF 2019
BETWEEN
VIJAYA CREDIT CO-OPERATIVE
SOCIETY (REGD),
GURUVAYANAKERE,
BELTHANGADY TALUK,
D.K.-574 214.
REPRESENTED BY ITS PRESENT
CHIEF EXECUTIVE OFFICER,
MR. AJITHKUMAR,
S/O. GOPAL SHETTY. ... APPELLANT
[BY SRI. KARUNAKAR P., ADVOCATE]
AND
DIVAKARA K.,
S/O. LATE DOMMANNA SHETTY,
AGED ABOUT 51 YEARS,
KORANJA HOUSE,
GERUKATTE POST,
KALIYA VILLAGE,
BELTHANGADY TALUK-574 214. ... RESPONDENT
[BY SRI. G.L.MOHAN MAIYA, ADVOCATE FOR
SRI. A.KESHAVA BHAT, ADVOCATE]
***
THIS CRIMINAL APPEAL IS FILED U/S 378(4) OF CR.P.C.,
PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED
17.12.2018 PASSED BY THE PRINCIPAL SENIOR CIVIL JUDGE AND
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J.M.F.C., BELTHANGADY IN C.C. NO.253/2016 ACQUITTING THE
RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I. ACT.
THIS CRIMINAL APPEAL COMING ON FOR FURTHER HEARING
THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
In this appeal, the complainant has called in question the Judgment and Order passed by the trial Court thereby acquitting the accused/respondent of an offence punishable under Section 138 of the Negotiable Instruments Act [hereinafter referred to as 'N.I. Act' for short].
2. I have heard the learned counsel for the appellant/complainant and the learned counsel for the respondent/accused.
3. It is the case of the complainant that the accused was owing a sum of Rs.5,92,414/- towards a loan obtained by him. When the said amount was demanded, accused issued a cheque bearing No.577147 dated 30.07.2016 drawn on Syndicate Bank, Kaliya Branch, for the said sum and promised that the cheque will be honoured by his banker on its presentation. After the due date, when the said cheque 3 was presented by the complainant through his banker, the same was returned unpaid with an endorsement 'funds insufficient' on 02.08.2016. Thereafter, the complainant issued a legal notice dated 10.08.2016 calling upon the accused to make the payment. The said legal notice was received by the accused on 12.08.2016, however, he failed to either reply to the notice or to repay the amount mentioned in the cheque within the stipulated time and therefore, accused committed an offence punishable under Section 138 of the N.I. Act.
Before the Tribunal, on behalf of the complainant P.W.1 was examined. Exs.P1 to 7 were marked through his evidence. The trial Court after considering the oral and documentary evidence on record, acquitted the accused. Aggrieved by which, the present appeal is preferred.
4. It is the contention of the learned counsel for the appellant that the accused has neither denied issuance of the cheque nor the signature therein. He has also not replied to the legal notice issued by the complainant, denying the contents of the legal notice. Therefore, there is a legal 4 presumption available in favour of the complainant under Sections 118 and 139 of the N.I. Act. When the complainant has established the initial burden, then the burden shifts on the accused to rebut the presumption. In the present case, the accused has neither entered into the witness box nor has he produced any document to rebut the presumption. Hence, the trial Court has grossly erred in acquitting the accused holding that the complainant has failed to prove that as on the date of cheque, the accused was due in a sum of Rs.5,92,414/-. He submits that the complainant has got marked loan application as Ex.P6 and receipt as Ex.P7, which clearly show that a sum of Rs.5,00,000/- was advanced as loan to the accused. The accused having committed default in paying the instalments, has issued the cheque-Ex.P2, when he was called upon to pay the amount due. He submits that the reasons assigned by the trial court for acquitting the accused are not in accordance with law. Hence, seeks to allow the appeal.
In support of his contention, learned counsel has relied upon the following decisions:
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1) [2019 SCC OnLine SC 389]; ROHITBHAI JIVANLAL PATEL VS. STATE Of GUJARAT AND ANOTHER [LAWS(SC) 2019 3 113]
2) (2010)11 SCC 441; RANGAPPA VS. SRI MOHAN.
3) (2018)8 SCC 469; T.P.MURUGAN (DEAD) THROUGH LEGAL REPRESENTATIVES VS. BOJAN.
4) ILR 2019 KAR 493; SRI YOGESH POOJARY VS. SRI K.SHANKARA BHAT.
Per contra, the learned counsel for the respondent has contended that the accused has not at all issued any cheque to the complainant for a sum of Rs.5,92,414/-. He submits that the complainant has failed to prove that the cheque in question was issued by the accused for the said amount towards legally dischargeable debt. The complainant has not produced any document such as ledger book etc. of the complainant society to show that the said amount was due from the accused. The cheque in question was received by the complainant as security, at the time of advancing the loan. Subsequently, accused has repaid the loan amount. However, to make unlawful gain, the complainant has filled the amount mentioned in the cheque and filed a false case against the accused. He contends that when the complainant has not been able to establish as to what was the exact 6 amount payable by the accused, then it cannot be said that the amount mentioned in the cheque is a legally recoverable debt. He submits that the trial Court having appreciated the entire material on record, has acquitted the accused and there are no justifiable grounds to interfere with the said findings recorded by the trial Court. Accordingly, he seeks to dismiss the appeal.
5. The complainant is one Vijaya Credit Co-operative Society [regd.]. It is the specific case of the complainant that the accused was owing a sum of Rs.5,92,414/- towards loan obtained by him from the said Credit Co-operative Society. In this regard, he issued a cheque dated 30.07.2016 for a sum of Rs.5,92,414/- which was dishonoured when presented to the bank, with an endorsement 'funds insufficient' and that the accused failed to repay the loan amount in spite of receiving the legal notice, within the stipulated time and therefore, the accused committed an offence punishable under Section 138 of the N.I. Act.
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6. Before the Trial Court, the manager of he complainant society was examined as P.W1. Ex.P1 to Ex.P7 were got marked, on behalf of the complainant.
7. According to the complainant, the accused borrowed a loan of Rs.5,00,000/- on 02.05.2015, which was supposed to be paid in 60 equal instalments. The accused committed default in paying the loan installments and in this connection, when the complainant demanded for repayment of the loan amount, the accused issued the cheque in question. It is seen that nowhere in the complaint it is stated that a sum of Rs.5,00,000/- was advanced to the complainant. However, the complainant has got marked Ex.P.6 and Ex.P7 to show that a loan of Rs.5 lakhs was advanced to the accused. Ex.P6 is the loan application dated 27.04.2015 and Ex.P7 is the receipt dated 08.05.2015, issued for Rs.5,00,000/- in the name of borrower Divakara K., i.e., accused. According to the complainant, loan was advanced to the accused in a sum of Rs.5,00,000/- which was supposed to be repaid in 5 years in 60 equal installments. If that is so, then it is required to be established by the complainant as to what was the amount repaid by the accused and what was 8 the exact amount due from him, by producing the relevant ledger book maintained by the complainant society.
8. P.W.1 in his cross-examination has stated that Rs.5,00,000/- loan was advanced to the accused for a period of 5 years with a simple interest of 16% p.a. According to him, till 30.07.2016, the accused has not repaid any amount. He has admitted that the complainant has maintained loans ledger account book. However, he has pleaded his inability to say as to what was the amount due from the accused as on 30.07.2016, as per the Loan Agreement. He has also admitted that at the time of advancing loan, pronote, Loan hypothecation Agreement and surety will be taken as security. The said documents are not produced and marked by the complainant.
9. The defence of the accused is that at the time of advancing the loan, complainant received a signed blank cheque as security and later it was misused by the complainant and a false case was filed by filling the amount, though he is not liable to pay the amount mentioned in the cheque.
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10. The complainant has stated that the accused issued the cheque for a sum of Rs.5,92,414/-. It is not the case of the complainant that the accused issued a signed cheque and its contents are filled by the complainant. Perusal of the cheque goes to show that signature and contents of the cheque are in different handwriting and in different ink colour. Therefore, the defence taken by the accused that a signed blank cheque was received by the complainant and later it was filled by him seems probable. According to the complainant, loan was sanctioned on 02.05.2015. The cheque is dated 30.07.2016. If the loan amount was to be repaid in 5 years, then it is not explained as to what was the actual amount due as on 30.07.2016 and why the accused paid the entire amount with interest by way of cheque before the expiry of the loan period.
11. In ROHITBHAI JIVANLAL PATEL VS. STATE Of GUJARAT AND ANOTHER [supra] relied upon by the learned counsel for the appellant with regard to principles relating to presumption under Sections 118 and 139 of the 10 N.I. Act, at para 19, the Hon'ble Apex Court has observed as under:
"19. In Rangappa v. Sri Mohan : (2010) 11 SCC 441, this Court has reiterated and summarised the principles relating to presumptions under Sections 118 and 139 of the NI Act and rebuttal thereof in the following:-
"26. In the light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it is based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttal presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.11
27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions.
In such a scenario, the test of proportionality should guide the
construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused 12 has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities".
Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
12. In the case of RANGAPPA VS. SRI MOHAN [supra], the learned counsel has relied on para 27 and 28 which are already extracted in Para 19 of the judgment in 'Rohitbhai's' case referred herein above.
13. In the case of T.P.MURUGAN (DEAD) THROUGH LEGAL REPRESENTATIVES VS. BOJAN [supra], it is held that under Section 139 of the N.I. Act, once a cheque has been signed and issued in favour of holder of cheque, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability. This presumption is rebuttable one, if the issuer of the cheque is 13 able to discharge the burden that it was issued for some other purpose like security for loan.
14. In the case of SRI YOGESH POOJARY VS. SRI K.SHANKARA BHAT [supra], this Court has observed that the position with regard to the presumption mandated by Section 139 of the N.I. Act includes the presumption that there existed a legally enforceable debt or liability. However, such presumption is rebuttable in nature.
15. In the instant case, from the oral and documentary evidence adduced, it is not shown by the complainant that how an amount of Rs.5,92,414/- was due as on 30.07.2016, payable by the accused. The loan was sanctioned on 02.05.2015. The cheque is dated 30.07.2016. Hence, the complainant ought to have established by producing the relevant loan ledger book, that the amount mentioned in the cheque was actually due as on the date of issuance of the cheque i.e., on 30.07.2016 and towards the said legally dischargeable debt, the accused issued the cheque- Ex.P2. When P.W.1 has admitted that the complainant has maintained the loan ledger extract with 14 regard to payment, an adverse inference has to be taken for not producing the said document though it was available with the complainant. The complainant has also admitted that at the time of lending loan, pronote, loan Agreement, hypothecation Agreement etc., will be taken as security. It is not forthcoming as to what was the other action taken by the complainant in respect of those documents which were submitted as security by the accused at the time of borrowing the loan.
16. From the evidence led, the complainant has failed to prove that as on the date of cheque i.e., 30.07.2016, accused was due in a sum of Rs.5,92,414/- and therefore, it cannot be said that the amount mentioned in the cheque was legally recoverable from the accused. It is well settled that the accused need not step into the witness box to rebut the presumption. On the other hand, from the evidence led by the complainant, the presumption can be rebutted. As held by the Hon'ble Apex Court, when the accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. In the instant case, the accused is able to raise a probable defence 15 which creates doubts about the existence of a legally enforceable debt or liability. The accused has been able to rebut the presumption available to the complainant. The trial Court having considered the entire evidence and material on record and after giving reasons, has acquitted the accused by taking a plausible view, which does not warrant interference. Hence, the following order:
ORDER The appeal is dismissed.
Sd/-
JUDGE Ksm*