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Karnataka High Court

Sri Nandeesh G vs Sri Giridhar G on 15 February, 2024

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                                         CRL.A.No.264 of 2015


IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 15TH DAY OF FEBRUARY, 2024

                           BEFORE
        THE HON'BLE MR JUSTICE ANIL B KATTI
          CRIMINAL APPEAL No.264 OF 2015(A)

BETWEEN:

SRI. NANDEESH .G,
S/O GANAPATHY,
AGED ABOUT 45 YEARS,
RESIDING AT NO.645, 10TH 'A' CROSS,
WEST OF CHORD ROAD, 2ND STAGE,
MAHALAKSHMIPURAM,
BENGALURU-560 086.
                                                  ...APPELLANT
(BY SMT. TAMILARASI .K, ADVOCATE FOR
    SRI. VIJAY KUMAR .K, ADVOCATE)

AND:

1.     SRI. GIRIDHAR .G,
       S/O GANGADHARAIAH,
       AGED ABOUT 42 YEARS,
       NO.740, 2ND FLOOR, 4TH E-MAIN,
       10TH CROSS, 2ND STAGE,
       WEST OF CHORD ROAD,
       MAHALAKSHMIPURAM,
       BENGALURU-560 086.

2.     SRI. K.H. MADHUSUDHAN,
       S/O K.M. HANUMAIAH,
       AGED ABOUT 43 YEARS,
       RESIDING AT NO.4329, 2ND CROSS,
       13TH MAIN, 'A' BLOCK,
       SUBRAMANYANAGAR,
       BENGALURU-560 021.
                                              ...RESPONDENTS
(BY SRI. B.S. NAGESH, ADVOCATE FOR R1 & R2)

    THIS APPEAL IS FILED UNDER SECTION 378(4) OF THE
CODE OF CRIMINAL PROCEDURE, PRAYING TO SET ASIDE THE
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                                               CRL.A.No.264 of 2015


ORDER DATED:2.2.2015, PASSED BY THE XIX ACMM,
BENGALURU,    IN    C.C.NO.17035/12-ACQUITING   THE
RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I.
ACT.

     THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
07.02.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:

                            JUDGMENT

Appellant/complainant feeling aggrieved by judgment of Trial Court on the file of XIX Additional Chief Metropolitan Magistrate, Bengaluru in C.C.No.17035/2012, dated 02.02.2015 preferred this appeal.

2. Parties to the appeal are referred with their ranks as assigned in the Trial Court for the sake of convenience.

3. Heard the arguments of both sides.

4. After hearing arguments of both sides and on perusal of Trial Court records, so also the impugned judgment under appeal, the following arise for consideration:

CRL.A.No.264 of 2015

1) Whether the impugned judgment of Trial Court in acquitting the accused for the offence punishable under Section 138 of N.I.Act is perverse, capricious and legally not sustainable?

2) Whether interference of this Court is required?

5. On careful perusal of oral and documentary evidence placed on record, it would go to show that complainant and accused are friends for several years. Both the accused were running business under name and style "M/s. Sunshine Distributors". Accused have availed loan of Rs.3,30,000/- from complainant in the month of May 2011 to meet their urgent business requirements agreeing to pay the same within the period of ten months on or before 28.03.2012. Accused Nos.1 and 2 have issued post dated cheque bearing No.036875 dated 28.03.2012 drawn on State Bank of Mysore West of Chord Road, Bengaluru Ex.P.1. Complainant presented the said cheque through his banker and same was dishonoured vide bank endorsement dated 02.04.2012 Ex.P.2 as "Funds Insufficient". Complainant issued demand notice dated -4- CRL.A.No.264 of 2015 18.04.2012 Ex.P.3 through RPAD and postal receipt are produced at Exs.P.4 and 5. The notice issued to accused No.1 returned on 20.04.2012 with endorsement "Unclaimed" and returned to sender. The notice sent to accused No.2 was duly served on 19.04.2012 vide acknowledgement card Ex.P.6. The undelivered postal cover is produced at ExP.7 and Ex.P.7(a) is the notice containing therein. Accused No.2 has denied his liability to pay the amount covered under cheque Ex.P.1 and the partnership firm "M/s. Sunshine Distributors" was dissolved and he is separated from the said business. The said partnership business was continued with induction of new partner and reconstitution deed came to be executed on 30.12.2006. The cheque in question Ex.P.1 was issued in 2006 in respect of some other transaction and the same has been misused to file this complaint.

6. If the above referred documents are perused and appreciated with the oral testimony of PW.1, then it would go to show that complainant has discharged initial burden of proving the cheque Ex.P.1 was issued by -5- CRL.A.No.264 of 2015 accused Nos.1 and 2 for lawful discharge of debt. 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') and the complainant has filed complaint within a period of one month in terms of Section 142(1)(b) of N.I.Act from the date of accrual of cause of action. Therefore, statutory presumption will have to be drawn in favour of complainant.

7. 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 by accused that cheque was given by view of security and same has been misused by complainant is not tenable. -6- CRL.A.No.264 of 2015

8. 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 that the cheque was not for 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. -7- CRL.A.No.264 of 2015

9. Now it is up to the accused to rebut statutory presumption available in favour of complainant. Accused apart from relying on the evidence produced by complainant, also relied on the evidence of DW.1 and 2, further got marked documents Exs.D.1 and 2. Whether, the said material evidence placed on record by accused would be sufficient rebuttal evidence to displace statutory presumption available in favour of complainant or not has to be decided.

10. It is the specific defence of accused in the reply dated 02.05.2012 to the demand notice issued by complainant Ex.P.3 (reply notice is not marked in the evidence). However, complainant has admitted accused No.2 having given reply to the demand notice. Otherwise also the cross-examination of PW.1 reveals that accused No.2 has made specific defence that due to differences between him and another partner Giridhar, the partnership firm M/s. Sunshine Distributors was dissolved and he has separated from the said business. The said Partnership firm was continued by executing reconstitution deed dated -8- CRL.A.No.264 of 2015 30.12.2006 by introducing the w/o Giridhar i.e., R Leelavathi and she was inducted as new partner. The blank signed cheque was issued with respect to some other transaction in the year 2006 and no any loan was availed from complainant in the month of May 2012. Further, he denied the issuance of cheque dated 28.05.2012 for lawful discharge of any debt. In support of such contention, DW.1 Giridhar has deposed to the effect that himself and accused No.2 were doing business under the name and style M/s. Sunshine Distributors and partnership firm came into existence under the partnership deed dated 01.04.1996, further they were carrying business of pharmaceuticals. During the year 2006 accused No.2 expressed his intention to retire from the partnership firm, accordingly on 30.12.2006 reconstitution deed was executed with the induction of new partner R Leelavathi. Accused No.2, Madhusudhan retired from the firm after settling all the accounts. The reconstitution of partnership was intimated to the banks and trade license was also changed by deleting the name of accused No.2 with the induction of new partner. The partnership -9- CRL.A.No.264 of 2015 between accused Nos.1 and 2 ended in the year 2006 and all the cheques and bank documents were surrendered back to the bank. He further deposed to the effect that complainant is a known person, he must have somehow got his hands over the signed cheques of himself and accused No.2 prior to 2006 and the same has been misused to file this false complaint.

11. Accused No.2 got himself examined as DW.2 and has deposed to the effect that, he has retired from the partnership firm in the year 2006 and accordingly reconstitution deed is executed Ex.D.1. The said partnership firm is being continued with accused No.1 and his wife R Leelavathi. On receipt of demand notice from complainant he has given reply. Learned counsel for complainant though has subjected both these witnesses to cross-examination nothing worth material has been elicited in their cross-examination to discredit their evidence regarding reconstitution of partnership deed dated 30.12.2006 Ex.D.2. The wholesale license Ex.D.1 would go to show that in pursuance of reconstitution of

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partnership was changed with the induction of new partner Smt.R Leelavathi with accused No.1. Therefore, from the said evidence on record, it is evident that accused No.2 was no more a partner of M/s. Sunshine Distributors with effect from 30.12.2006. Therefore, it is now up to the complainant to offer valid explanation as to how accused Nos.1 and 2 could issue cheque in question Ex.P.1 dated 28.03.2012 for the alleged lawful discharge of debt of Rs.3,30,000/- said to have been taken as hand loan on 25.05.2011 even after reconstitution of partnership deed Ex.D.2.

12. There is long time gap between reconstitution deed of partnership Ex.D.2 dated 30.12.2006 and the date of issuance of cheque on 28.03.2012 of more than five years. On perusal of the cheque, it would go to show that the figure "19" or "10" is scored and behind it, the date 28.03.2012 is written. It means that old cheque leave is being used for alleged loan transaction in the year of 2011 for issuing alleged post dated cheque dated 28.03.2012. Complainant in para 3 of the complaint and

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also in his evidence has contended that himself and accused Nos.1 and 2 are the friends for several years and they were doing business under the name and style M/s. Sunshine Distributors. Therefore, naturally complainant even according to him being best friend of accused was supposed to know that accused No.2 is not associated with M/s. Sunshine Distributors in view of the reconstitution deed of partnership dated 30.12.2006 Ex.D.2. However, during cross-examination of PW.1 denies that he was aware of reconstitution of partnership deed dated 30.12.2006 and accused No.2 is disassociated himself from partnership firm M/s. Sunshine Distributors. PW.1 during cross-examination admits about reply given by accused No.2 and stated that the partnership firm was dissolved and the partnership firm is being continued with the induction of new partner R Leelavathi w/o accused No.1. However, in spite of such knowledge of complainant after receipt of the reply did not made any enquiry regarding issuance of cheque Ex.P.1 for lawful discharge of debt on 28.03.2012 Ex.P.1. Complainant in spite of the said knowledge also did not plead anything to that effect

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in his complaint averments to establish the nexus between accused Nos.1 and 2 taking loan on 25.05.2011 and issuance of post dated cheque dated 28.03.2012 Ex.P.1. The silence of complainant in this regard and offering no any explanation to the reply given by accused No.2 would create serious doubt that cheque in question dated 28.05.2012 Ex.P.1 was issued for lawful discharge of debt.

13. Learned counsel for appellant in support of his contention that vicarious liability arises in issuing cheque Ex.P.1 only when the firm commits the offence as primary offender relied on the judgment of Hon'ble Apex Court in Dilip Hariramani Vs. Bank of Baroda reported in 2022 LiveLaw (SC) 457, wherein it has been observed and held in para 7 as under:

"Sub-section (1) to Section 141 of the NI Act states that where a company commits an offence, every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business, as well as the company itself, shall be deemed to be guilty of the offence. The expression 'every person' is wide and comprehensive enough to include a

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director, partner or other officers or persons. At the same time, it follows that a person who does not bear out the requirements of 'in charge of and responsible to the company for the conduct of its business' is not vicariously liable under Section 141 of the NI Act. The burden is on the prosecution to show that the person prosecuted was in charge of and responsible to the company for conduct of its business. The proviso, which is in the nature of an exception, states that a person liable under subsection (1) shall not be punished if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. The onus to satisfy the requirements and take benefit of the proviso is on the accused. Still, it does not displace or extricate the initial onus and burden on the prosecution to first establish the requirements of sub-section (1) to Section 141 of the NI Act. The proviso gives immunity to a person who is otherwise vicariously liable under sub- section (1) to Section 141 of the NI Act."

In view of the principles enunciated in this judgment of Hon'ble Apex Court, the onus is on complainant to prove that accused Nos.1 and 2 were partners as on the date of issuance of cheque dated 28.03.2012 Ex.P.1.

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14. In the present case accused by virtue of oral evidence of DWs.1 and 2 and the documents at Exs.D.1 and 2 have probabilised their defence that cheque in question Ex.P.1 dated 28.03.2012 was not issued for the lawful discharge of debt related to the partnership firm. The partnership firm M/s. Sunshine Distributors was dissolved, since the accused No.2 has retired from the partnership firm and reconstitution deed of partnership came to be executed on 30.12.2006 Ex.D.2. The wife of accused No.1 R Leelavathi was inducted as a new partner in place of accused No.2. The above referred evidence on record, would go to show that the intimation of reconstitution of partnership is intimated to the bank and the partners of reconstitution partnership firm continued the partnership firm M/s. Sunshine Distributors. Therefore, the accused were not vicariously liable to pay the amount covered under cheque Ex.P.1, representing the partnership firm M/s. Sunshine Distributors, since the same has been dissolved on 30.12.2006 much prior to for more than five years as on the date of issuance of cheque Ex.P.1 on 28.03.2012.

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15. Learned counsel for complainant has vehemently argued that the very same account on which cheque Ex.P.1 was drawn is still being operated by reconstituted partners and accused No.1 continued to be the partner of M/s. Sunshine Distributors, as such both the accused are vicariously liable to pay the amount covered under the cheque Ex.P.1.

16. In the present case even according to complaint allegations and the evidence of PW.1, accused Nos.1 and 2 were alleged to have availed loan of Rs.3,30,000/- from complainant to meet their urgent business requirements. Accused being partners of M/s. Sunshine Distributors issued the cheque dated 28.03.2012 Ex.P.1. In view of the evidence of DWs.1 and 2, the document at Ex.D.2 reconstitution of partnership with effect from 31.12.2006 and the change in the license of the firm is also effected Ex.D.1 wholesale license. Therefore, the partnership firm cannot avail loan from complainant to meet the urgent business requirement in the month of May 2011 which they agreed to have repay within ten months and in

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discharge of debt cheque Ex.P.1 was issued on 28.03.2012. The said inference has to be drawn in view of the dissolution of the partnership firm as on 30.12.2006 Ex.D.2. Therefore, the partnership firm was having any legally enforceable debt as on the date of issuance of cheque dated 28.03.2012 Ex.P.1 has not been proved by complainant out of the evidence placed on record. On the other hand, the accused have probabilised their defence that the cheque issued for earlier transaction has been used after more than five years on the false claim made by complainant. The standard of proof that is required to be proved by accused is not beyond reasonable doubt, but on the contrary it is on the basis of preponderance of probability. In this context of the matter, it is profitable to refer the latest judgment of the Hon'ble Supreme Court in Rajaram S/o Sriramulu Naidu (Since Deceased) through L.Rs. Vs. Maruthachalam (Since deceased) through LRs. reported in 2023 LiveLaw (SC) 46 wherein it has been observed and held that :

"The standard of proof for rebutting the presumption is that of preponderance of

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probabilities- once the execution of cheque is admitted, Section 139 of the N.I Act mandates a presumption that the cheque was for the discharge of any debt or other liability - The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities- To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence- inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely."

In view of the principles enunciated in this judgment and the above referred evidence placed on record by accused, it would go to show that accused have probabilised their defence that cheque in question Ex.P.1 was not issued for lawful discharge of debt.

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17. The Trial Court has rightly appreciated the oral and documentary evidence placed before it and has arrived to a just and proper conclusion in holding that the statutory presumption available in favour of complainant stood rebutted out of the evidence of DWs.1 and 2 and the material elicited in the cross-examination of PW.1. The said finding recorded by Trial Court is based on legal evidence on record and the same does not call for interference of this Court. Consequently, proceed to pass the following:

ORDER Appeal filed by appellant/complainant is hereby dismissed as devoid of merits.

Registry to send back the records to Trial Court with a copy of this order.

SD/-

JUDGE GSR