Karnataka High Court
Jagadeesh Hiremath vs R. Venkatesh on 13 February, 2020
Author: John Michael Cunha
Bench: John Michael Cunha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF FEBRUARY 2020
BEFORE
THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA
CRIMINAL APPEAL No.907 OF 2017
A/W
CRIMINAL APPEAL No.908 OF 2017
BETWEEN:
JAGADEESH HIREMATH
AGED ABOUT 62 YEARS,
S/O. LATE SOMASHEKAR,
R/O. NO.428, 9TH CROSS,
1ST HAND, 3RD EAST BLOCK,
JAYANAGAR,
BENGALURU-560 011. ... APPELLANT
(COMMON)
(BY SRI: CHIDAMBARA G.S., ADVOCATE)
AND:
R. VENKATESH
AGED ABOUT 69 YEARS,
S/O. LATE K.P. RATNAM SETTY,
TEXTILE BUSINESS,
R/O. NO.105, 1ST FLOOR,
SANGEETHA APARTMENT,
5TH CROSS, MALLESHWARAM,
BENGALURU-560 003.
AND ALSO AT:
M/S. SANDEEP TEXTILES,
NO.6, 5TH CROSS,
OPP: GEETHANJALI THEATRE,
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MALLESHWARAM,
BENGALURU-560 003. ...RESPONDENT
(COMMON)
(BY SRI: M.R. BALAKRISHNA, ADVOCATE)
---
IN CRIMINAL APPEAL No.907 OF 2017
THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4)
CR.P.C., PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED
27.3.2017 PASSED BY THE XXII A.C.M.M., BENGALURU IN
C.C.NO.14421/2016-ACQUITTING THE RESPONDENT/ACCUSED FOR
THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.ACT.
IN CRIMINAL APPEAL No.908 OF 2017
THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4)
CR.P.C. PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED
27.3.2017 PASSED BY THE XXII A.C.M.M., BENGALURU IN
C.C.NO.16674/2016-ACQUITTING THE RESPONDENT/ACCUSED FOR
THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.ACT.
THESE CRIMINAL APPEALS COMING ON FOR HEARING THIS
DAY, THE COURT DELIVERED THE FOLLOWING:-
JUDGMENT
Complainant before the Trial Court has preferred these appeals challenging the common judgment and order dated 27.03.2017 rendered by the XXII Addl. Chief Metropolitan Magistrate, Bengaluru in C.C.No.14421/2016 and C.C.No.16674/2016 acquitting the respondent/accused under section 138 of Negotiable Instruments Act, 1881 ("N.I. Act" for short).
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Heard learned counsel for appellant/complainant and learned counsel for respondent/accused (hereinafter referred to as "complainant" and "accused" respectively).
2. The case of the complainant is that the accused was known to him since several years. He was running a textile business. He approached the complainant for a hand loan of Rs.1,58,000/- during the month of September 2014 in order to meet his immediate financial and business commitments and promised to repay the said amount within 1½ year from the date of borrowal in five installments along with interest at 1.5% per month. Accordingly, complainant lent a sum of Rs.1,58,000/- to the accused in September 2014. In this regard, accused executed on-demand promissory notes and issued five cheques in favour of the complainant. These cheques, when presented for encashment, were dishonoured. Complainant issued a legal notice in terms of section 138 of N.I. Act. The accused replied to the said notice, but failed to comply with the demand and hence, the complainant instituted prosecution of the accused under section 138 N.I. Act.
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3. Here itself, it is relevant to note that a reading of the complaint indicates that the amount of Rs.1,58,000/- was advanced by the complainant in the month of September 2014, but the complainant did not specify the actual date of lending the amount. However, the subsequent averments made in the complaint indicate that on the date of lending the amount, accused issued on-demand promissory notes as well as five cheques to the complainant.
4. In this background, if we analyse the evidence adduced by the complainant, it is seen that the complainant has produced the original cheques as per Ex.P1 to Ex.P3 in C.C.No.14421/2016 and Ex.P1 and Ex.P2 in C.C.No.16674/2016. In addition, the complainant has produced five undated on-demand promissory notes as per Ex.P18 to Ex.P20 in C.C.No.14421/2016 and Ex.P9 to Ex.P11 in C.C.No.16674/2016 stated to have been executed by accused during the transaction together with undated consideration receipts attached thereto.
5. Here itself it is relevant to note that if in fact the complainant had advanced loan of Rs.1,58,000/- to the accused 5 at one go as stated in the complaint, in all probability, the complainant would have taken a single demand promissory note and single consideration receipt with specific date written on them; but for reasons best known to the complainant, the complainant has produced in all six on-demand promissory notes and six consideration receipts and none of these on-demand promissory notes and consideration receipts are dated. This probabalises the defence of the accused that these documents were not issued in 2014 as contended by the complainant. If the transaction had taken place in the year 2014, as stated by the complainant, there was no impediment for the complainant or the accused to subscribe the date in these instruments. These documents, in my view, go against the very case set up by the complainant.
6. Another aspect which requires to be noted is that, the complainant was a public servant working in the High Court of Karnataka and was on the verge of retirement. The service of the complainant was governed by the provisions of the Karnataka Civil Service (Conduct) Rules, 1966. As per Rule 21 6 of the said Rules, a Government servant was forbidden to lend money to any person for interest or in a manner whereby return in money or in kind is charged or paid. The proviso to the said rule permitted the Government servant to give or accept a purely temporary loan from a relative or personal friend, provided the amount did not exceed his three months emoluments and that too free of interest. These limitations, considered in the light of section 23 of the Indian Contract Act, would lead to the inevitable conclusion that the alleged transaction entered into between the complainant and the accused was illegal and without consideration.
7. Section 23 of the Indian Contract Act deals with a situation as to when consideration or object of an agreement is unlawful. The section reads as under:-
23. What consideration and objects are lawful, and what not.-- The consideration or object of an agreement is lawful, unless--
it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law;
or is fraudulent; or 7 involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful.
Every agreement of which the object or consideration is unlawful is void.
8. In view of the service rules governing the service of the complainant, the transaction put forward by the complainant was prohibited under law. The complainant could not have lent money to the accused on interest. This agreement or transaction is not enforceable in law. No doubt the proceedings initiated against the respondent are not for enforcement of the alleged contract or agreement between the parties, yet, in view of the failure of the object, no debt had arisen in discharge whereof the accused could have issued the subject cheques. The complainant having failed to establish a lawful transaction, the said transaction even if it is proved in evidence, the same is hit by section 23 of the Indian Contract Act and Rule 21 of the Karnataka Civil Service (Conduct) Rules, 1966. As no debt was 8 in existence as on the date of presentation of the cheques for encashment, the accused cannot be held liable for consequences of dishonour thereof.
9. In addition to the above legal defects, a bare perusal of the instruments produced before the Court creates doubt about the genuineness of the transaction propounded by the complainant. As already stated above, specific case of the complainant was that, the amount in question i.e., Rs.1,58,000/- was advanced by him to the accused in the month of September, 2014. But no material has been produced to substantiate the transaction. As already stated above, on-demand promissory notes and the consideration receipts produced by the complainant are undated and do not support the case of the prosecution that the amount in question was advanced in the month of September, 2014. On the other hand, these documents support the defence of the accused that these documents were obtained by the complainant in respect of some other transaction and the same have been made use of by the complainant to lay a claim against the accused. Otherwise, 9 there is no reason as to why these instruments did not bear the date, if in fact the consideration receipts and the on-demand promissory notes were executed at the time of receiving the amount by the accused.
10. Even a perusal of the cheques give rise to an impression that all the above cheques were not issued by the accused simultaneously as contended by the complainant. The Trial Court has also noted this fact. On considering these documents meticulously, I find that Ex.P2 in C.C.No.16674/2016 is seen to have been printed in 1900 but it is dated 16.05.2016. Further Ex.P2 was not issued in respect of a running account maintained by the accused and apparently for this reason, the said cheque has been returned to the complainant with endorsement "present with document". This cheque does not give rise to a cause of action to the complainant to proceed against the accused under section 138 of N.I. Act. This endorsement falsifies the case of the prosecution that the cheque in question was issued by the accused in respect of the transaction alleged in the complaint.
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11. As rightly pointed out by the learned counsel for accused, difference in the writing on the said cheques is also indicative of the fact that the aforesaid cheques were not issued during a single transaction as contended by the complainant. On perusal of the aforesaid cheques marked at Ex.P1 to Ex.P3 in C.C.No.14421/2016 and Ex.P1 and Ex.P2 in C.C.No.16674/2016, I am in full agreement with the learned counsel that the difference in the writing itself would show that all these cheques were not issued simultaneously as sought to be made out by the complainant. If in fact the cheques were issued during a single transaction, all the cheques would have been in consecutive numbers and would have been written in the same handwriting whereas the cheques relied on by the complainant belie the case of the complainant. In the light of the above discussions, I do not find any justifiable reason to interfere with the impugned judgment.
12. Eventhough the appellant/complainant has produced Ex.P17 in C.C.No.14421/2016 to show that he possessed sufficient funds at his credit at the relevant time, the entries in 11 the passbook do not help the complainant to show that the amount withdrawn by the complainant was paid to the accused. There is an entry in Ex.P17 dated 13.09.2014 showing withdrawal of Rs.12,50,000/-. By no stretch of imagination it could be construed that the same amount has been paid to the accused. Even assuming that the said amount was paid to the accused, as already stated above, consideration receipts would have reflected this date. In the absence of any such evidence, the entries in Ex.P17 cannot be co-related to the transaction put forward by the complainant. Thus the complainant having failed to prove the transaction as well as the legal debt due by the accused furnishing him a cause of action to proceed against accused, the Trial Court was justified in dismissing the complaint. As already discussed above, the transaction put forward by the complainant was hit by Rule 21 of KCSRs and there was no legal consideration for the cheques. Even if it is assumed that all the cheques were issued by accused, yet, the consideration was not lawful. As a result, it cannot be held that there was legally enforceable debt so as to entitle the 12 complainant to proceed against accused under section 138 of N.I. Act for dishonour of the above cheques.
13. The contention of the learned counsel for the complainant that the Trial Court has failed to formulate points for consideration and therefore the impugned judgment being violative of section 354 of Cr.P.C., is liable to be set aside does not merit consideration. The proceedings under section 138 of N.I. Act being summary in nature, provisions of section 354 of Cr.P.C. are not applicable to the facts of the case. Even otherwise, on going through the impugned judgment, I find that though the Trial Court has not given convincing reasons for dismissal of the petitions, yet a reading of the impugned judgment discloses that the Trial Court has taken into consideration all the materials produced by the complainant as well as by the accused. The facts and circumstances brought out in the evidence of the complainant probabalises the defence of the accused that the cheques in question were taken by the complainant in respect of some other transaction and not in the year 2014 as contended by the complainant.
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14. Learned counsel for respondent has placed reliance on the decision of the Hon'ble Supreme Court in the case of C.ANTONY vs. K.G.RAGHAVAN NAIR in Appeal (Crl.) No.1748/ 1996 dated 01.11.2002, wherein the Hon'ble Supreme Court has reminded the powers of this Court in dealing with the appeal arising out of an order of acquittal and it is observed as under:-
"This Court in a number of cases has held that though the appellate court has full power to review the evidence upon which the order of acquittal is founded, still while exercising such an appellate power in a case of acquittal, the appellate court, should not only consider every matter on record having a bearing on the question of fact and the reasons given by the courts below in support of its order of acquittal, it must express its reasons in the judgment which led it to hold that the acquittal is not justified. In those line of cases this Court has also held that the appellate court must also bear in mind the fact that the trial court had the benefit of seeing the witnesses in the witness box and the presumption of innocence is not weakened by the order of acquittal, and in such cases if two reasonable conclusions can be reached on the basis of the evidence on record, the appellate court should not disturb the finding of the trial court.14
15. Learned counsel for complainant has placed reliance on the decision of the Hon'ble Supreme Court in BIR SINGH vs. MUKESH KUMAR, LAWS (SC) 2019 2 45 in Criminal Appeal No.230/2019 decided on 06.02.2019 in para 36 whereof it is held that in a proceeding under section 138 of N.I. Act, the burden to rebut the presumption is on the accused. But in the instant case, as the complainant having failed to establish basic facts constituting ingredients of section 138 of N.I. Act, the question of adducing rebuttal evidence does not arise at all.
16. As already discussed above, the complainant has miserably failed to prove the transaction as well as legal debt which are the basic premise on which the complainant could seek prosecution of the accused. As the complainant has failed to prove the basic facts, principles laid down in the above decisions are not applicable to the case.
17. Learned counsel for complainant has also assailed the impugned judgment on the ground that the evidence of the accused has been recorded by way of affidavit in violation of section 145 of the Evidence Act which empowers the court to 15 record evidence only of complainant by way of affidavit. This contention is no more res integra in view of the orders of this Court in Criminal Petition No.9331/2017 c/w. Criminal Petition No.9332/2017 dated 02.07.2019 wherein following the law laid down by the Hon'ble Supreme Court in INDO INTERNATIONAL LTD., & Another vs. STATE OF MAHARASHTRA & Another, 2005 Crl.L.J. 208, it is held that "The court dealing with a complaint under Section 138 of the said Act of 1881 has an option to take evidence of the witnesses on the side of the prosecution as well as evidence of the accused and the defence witnesses, if any, on affidavit".
18. In the light of the above discussions, I do not find any good ground to interfere in the impugned judgment. I do not find any merit in the appeals. Appeals are liable to be dismissed. Accordingly, they are dismissed.
Sd/-
JUDGE Bss.