Karnataka High Court
Sri. Karthik vs Sri. P. Ramaswamy on 31 January, 2025
Author: Shivashankar Amarannavar
Bench: Shivashankar Amarannavar
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NC: 2025:KHC:4481
CRL.A No. 1043 of 2014
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 31ST DAY OF JANUARY, 2025
BEFORE
THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR
CRIMINAL APPEAL No. 1043 OF 2014
BETWEEN:
SRI. KARTHIK
S/O SHRAYAM KUMAR
AGED ABOUT 25 YEARS
RESIDING AT No.3
4TH MAIN, VENKATESWARA LAYOUT
KOTHNUR DINNE MAIN ORAD
BANNERGATTA ROAD
BANGALORE - 560 078.
...APPELLANT
(BY SRI RAMESH ADITHYA, ADVOCATE)
Digitally signed AND:
by HEMAVATHY
GANGABYRAPPA
Location: HIGH SRI. P. RAMASWAMY
COURT OF S/O LATE PILLAPPA
KARNATAKA AGED ABOUT 55 YEARS
ACTIVE FILM MAKER (PRODUCER)
RESIDING AT No.117
5TH CROSS, ROYAL HERITAGE
BANNERGHATTA MAIN ROAD
BANGALORE - 560 083.
...RESPONDENT
(BY SRI U J HARIPRASAD, ADVOCATE)
THIS CRL.A. IS FILED UNDER SECTION 378(4) Cr.P.C
PRAYING TO SET ASIDE THE JUDGMENT AND ORDER
DATED:18.10.14 PASSED BY THE XIII ACMM, BANGALORE IN
C.C.No.146/11 - ACQUITTING THE RESPONDENT/ACCUSED
FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.
ACT AND ETC.,
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NC: 2025:KHC:4481
CRL.A No. 1043 of 2014
THIS APPEAL COMING ON FOR DICTATING JUDGMENT
THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR
ORAL JUDGMENT
This appeal is filed by the complainant challenging the judgment of acquittal dated 18.10.2014 passed in C.C.No.146/2011 by the XIII A.C.M.M., Bengaluru, whereunder the respondent -accused has been acquitted for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as "N.I. Act" for brevity).
2. The brief facts of the appellant -complainant's case is that The respondent -accused came in contact of the appellant -complainant in connection with shooting and production of kannada film "Varshadhare". During the production of the said film, the respondent -accused requested to the appellant -complainant to invest Rs.12,50,000/- for release of the said film and investment -3- NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 made by the complainant will be returned on or before 22.02.2010. The accused has under taken to execute an agreement towards repayment of the said loan amount. The complainant has paid Rs.12,50,000/- to the respondent -accused. The respondent -accused in order to repay the said amount has issued cheque bearing No.464249 dated 28.02.2010 for Rs.12,50,000/- drawn in ING Vysya Bank Ltd., Bengaluru. The complainant presented the said cheque and it came to be dishonoured with endorsement as "funds insufficient". The complainant got issued legal notice to the respondent -accused on 22.07.2010 through RPAD and UCP. Inspite of service of notice the respondent -accused neither replied nor repaid the cheque amount within stipulated time. Therefore, the appellant -complainant has filed private complaint against the respondent -accused for offence punishable under Section 138 of Negotiable Instruments Act, 1881.
3. Learned Magistrate took cognizance and registered case against the respondent -accused for offence punishable under Section 138 of N.I. Act in -4- NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 C.C.No.146/2011. The plea of the respondent -accused has been recorded. The complainant in order to prove his case has examined himself as P.W.1, got examined other two witnesses as P.W.2 and P.W.3 and got marked documents as Ex.P1 to P10. The statement of respondent
-accused came to be recorded under Section 313 of Cr.P.C. The respondent -accused did not choose to lead defence evidence. Learned Magistrate after hearing on both sides has formulated points for consideration and passed impugned judgment of acquittal. The said judgment of acquittal has been challenged by the complainant in this appeal.
4. Heard learned counsel for the appellant and learned counsel for the respondent.
5. Learned counsel for the appellant would contend that the appellant -complainant has lent money of Rs.12,50,000/- to the respondent -accused for release of the film and for that accused has executed memorandum of understanding (hereinafter referred to as "MOU" for brevity) as per Ex.P5 on 22.02.2010 and issued cheque as -5- NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 per Ex.P1 dated 22.02.2010 for Rs.12,50,000/-. The respondent -accused did not repay the said amount barrowed and therefore, the appellant -complainant presented the cheque and it came to be dishonoured. He further submits the signature of the respondent -accused on Ex.P1 -cheque has been admitted by him therefore, the presumption under Section 139 of the N.I Act has to be drawn. He further submits that the respondent -accused has also admitted his signature on Ex.P5 -MOU and contended that Ex.P1 and Ex.P5 blank signed cheque and bond has been taken from his office. As the signature on cheque has been admitted by the respondent -accused, the presumption has to be drawn under Section 139 of the N.I Act. The execution of MOU as per Ex.P5 has been proved by evidence of witness who has been examined as P.W.2. The respondent -accused has not sent any reply to the legal notice and has not lead defence evidence to rebut the said presumption. Without considering all these aspects, learned Magistrate erred in passing impugned judgment of acquittal. With this, he prays to allow the -6- NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 appeal and convict the respondent -accused for offence punishable under Section 138 of N.I Act.
6. Learned counsel for the appellant -complainant in support of his contention has placed reliance on the following decisions.
2. Shaju V.P Vs Shelby Joy2
3. Bharathi Dinesh Poojary V. Anil A.V3
4. K.P. Sharangadharan V State of Kerala4
5. Yogesh Garg Vs Mukut Singh5
6. M. Muhammadali Vs Mannooran Parambil Abraham Thomas6
7. Pavithra S. Alias Roopashree S.V. Vs Mahadevappa M.7
7. Learned counsel for the respondent -accused would contend that the appellant -complainant has no 1 Reported in 2023 (3) Kar. L.R. 560 (SC) 2 Reported in 2023 ACD 156 (KER) 3 Reported in 2023 ACD 36 (KAR) 4 Reported in 2023 ACD 82 (KER) 5 Reported in 2023 ACD 262 (MP) 6 Reported in 2023 ACD 15 (KER) 7 Reported in 2023 ACS 259 (KAR) -7- NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 capacity to lend money of Rs.12,50,000/-. The appellant has not produced any documents to show that he had money at the time of lending. Release of the film is prior to the MOU and therefore, there is no question of any barrowing for release of the film. The signed cheque and bond papers have been misused by P.W.2 -brother in law of the appellant -complainant. P.W.3 who is one of the witnesses to Ex.P5 -MOU has admitted in his cross examination that he do not know the contents of the MOU. The appellant -complainant has not proved his capacity to lend money and execution of Ex.P5 -MOU. He further submits that the cheque has been returned with endorsement "Account Dormant" and that does not amounts to dishonour of cheque for want of funds. The evidence of the complainant is contrary to the averments of the complaint. He further submits that standard of proof for rebutting presumption is standard of preponderance of probability. On that point he placed reliance on the -8- NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 decision in the case of Basalingappa Vs Mudibasappa8. He further submits that the presumption can be rebutted by cross examination of complainant's witnesses and there is no need for accused to lead his defence evidence. He further submits that considering all these aspects, learned Magistrate has rightly acquitted the respondent -accused. With these, he prayed for dismissed of the appeal.
8. Having heard learned counsels, the Court has perused the impugned judgment and trial Court records. Considering the grounds urged, the point arises for my consideration is "Whether learned Magistrate has erred in passing the judgment of acquittal of respondent -accused for offence punishable under Section 138 of N.I. Act."?
My answer to the above point is in the affirmative for the following reasons.
It is specific case of the appellant -complainant that for the purpose of release of the movie the respondent - 8 Reported in (2019) 5 SCC 418 -9- NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 accused has barrowed Rs.12,50,000/- and executed MOU as per Ex.P5 and has also issued EX.P1 -cheque for making payment of amount borrowed. The respondent - accused has admitted his signature on Ex.P1 -cheque and EX.P5 -MOU. The contention of the respondent -accused is that he had kept signed cheque and stamp paper in his office and it has been taken by P.W.2, with the help of his brother in law he has misused. The respondent -accused has admitted signature on Ex.P1 -cheque and therefore, the presumption arises under Section 139 of the N.I Act that cheque has been issued for making payment of legally enforceable debt. The said presumption is rebuttable presumption. The standard of proof for rebutting the said presumption is preponderance of probability as held by Hon'ble Apex Court in the case of Basalingappa (supra). In the said case, the Hon'ble Apex Court has also held that to rebut the presumption, it is not necessary that the respondent -accused has to lead his defence evidence and the presumption can be rebutted even by cross examination of the complainant's witnesses.
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9. Ex.P5 is MOU dated 22.02.2010 said to have been entered into between the appellant and respondent. P.W.2 and P.W.3 are witnesses to the said MOU. P.W.1 in his evidence has stated regarding the respondent - accused executing the said MOU and affixing signature on it in the presence of two witnesses. P.W.2 is one of the witnesses to MOU -Ex.P5 and he has also deposed regarding execution of MOU by the respondent -accused when the respondent -accused barrowed money of Rs.12,50,000/- from the appellant -complainant. P.W.3 is another witnesses to MOU -Ex.P5 even though he has stated that accused has executed MOU -Ex.P5 in his presence but in his cross examination he has stated that he do not know the contents of Ex.P5 -MOU. The complainant has established the execution of the said MOU
-Ex.P5 by the evidence of P.W.1 and one of the witnesses i.e. P.W.2. The respondent -accused who has taken his defence that his signed stamp paper has been misused by P.W.2. In order to establish the said aspect, nothing has been elicited in the examination of either P.W.1 or P.W.2.
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NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 The respondent -accused has also not entered into witness box in order to prove his contention. The contention of the respondent -accused remained bare contention. Even, the respondent -accused on service of legal notice sent by the appellant -complainant through certificate of posting has not choosen to send any reply taking of his defence at initial stage. Considering all these aspects, the respondent
-accused has failed to rebut the presumption drawn under Section 139 of the N.I Act. The appellant -complainant has established that the respondent -accused has barrowed Rs.12,50,000/- from the appellant -complainant and executed MOU as per EX.P5 and issued cheque as per Ex.P1 for making payment of amount barrowed from the appellant -complainant.
10. The respondent -accused has taken up contention that the appellant -complainant has no capacity to lend money to the respondent -accused. In the cross examination, P.W.1 has stated from whom all he has brought money in detail. The said aspect has not been
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NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 denied by the respondent -accused. The said evidence of P.W.1 regarding he taking money from different persons has remained unchallenged. Therefore, the respondent - accused has failed to establish that the appellant - complainant had no capacity to lend money of Rs.12,50,000/- to him.
11. Learned counsel for the respondent -accused has taken up contention that cheque -Ex.P1 has been dishonoured for the reason "Account Dormant". He submits the said endorsement does not amount to dishonoured of cheque for want of funds. The word 'dormant' literally means 'inactive' or 'torpid'. Therefore, when cheque returned unpaid with endorsement "Account Dormant", it means 'account in active' for want of funds. It is difficult to lay down a proposition that, when the account is inactive, there is sufficient amount outstanding in the said account. It is not the case of the respondent - accused that there was sufficient balance outstanding in his account to honour the cheque -Ex.P1. Therefore, the
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NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 return of the cheque with endorsement "Account Dormant"
also is the species of the genus, 'amount of money in account is insufficient'. In the case of Premajithlal V.P Vs Peter John Aswez and Another9, the Hon'ble High Court of Kerala has held as under:
"12. While appraising the first contention, it is relevant to refer the decision of the Apex Court reported in [(2012) 13 SCC 375], Laxmi Dyechem (M/s.) v. State of Gujarat & Ors., where it has been held that if the cheque is dishonoured with endorsement `signatures do not match', the said endorsement is the species of the genus, `amount of money in account is insufficient'. Thus it has to be held when cheque returned unpaid, on presentation for collection, noting any reasons other than `funds insufficient' in the account of the drawer/payer of the cheque, the said reasons are the species of the genus, `amount of money in account is insufficient'. If the above legal proposition is applied to the facts of the case, can it be said that, when a cheque was dishonoured for the reason `account dormant', the same is not akin to dishonour of cheque for want of funds? In this connection, it is relevant to refer the 9 Reported in 2022 SCC OnLine Ker 6771
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NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 definition of the word `dormant'. `Dormant' literally means `inactive' or `torpid'. Therefore, when cheque returned unpaid with endorsement `account dormant', it means `account inactive' for want of funds. It is difficult to lay down a proposition that, when the account is inactive, there is sufficient amount outstanding in the said account. Therefore, it has to be held that even dishonour of cheque with endorsement `account dormant' also is the species of the genus, `amount of money in account is insufficient' and in such scenario, it could not be held that when the cheque was dishonoured with endorsement `account dormant' the same would not attract an offence under Section 138 of the N.I Act."
12. Considering the above aspects, the return of cheque with endorsement "Account Dormant" has to be held that it is returned as the amount in the account is insufficient. The cheque has been dishonoured as per memo -Ex.P2 dated 13.07.2010 and it is returned to the complainant. The complainant got issued legal notice as per Ex.P3 dated 22.07.2010 i.e., within the statutory period to the respondent -accused by registered post and
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NC: 2025:KHC:4481 CRL.A No. 1043 of 2014 also under certificate of posting. The certificate of posting is at Ex.P9, return postal cover is at Ex.P10 and content of that cover has been marked as Ex.P10(a) and legal notice dated 22.07.2010 got issued by the appellant to the respondent and it is the original of Ex.P3 -notice dated 22.07.2010. As per Ex.P10 -the postal article has been retuned as accused was absent and it was retuned on 30.07.2010. Though the complaint has been filed on 13.09.2010 i.e., within the statutory period. The respondent -accused even inspite of service of notice has not repaid the cheque amount and therefore, he has committed offence punishable under Section 138 of the N.I Act. Without considering all these aspects the learned Magistrate has erred in acquitting the respondent - accused for offence punishable under Section 138 of the N.I Act by passing impugned judgment. The respondent - accused has to be convicted for offence punishable under Section 138 of the N.I Act as all ingredients of Section 138 of N.I Act are established.
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13. In the result the following ORDER
i) The appeal is allowed.
ii) The impugned judgment of acquittal dated 18.10.2014 passed in C.C.No.146/2011 by XIII A.C.M.M., Bengaluru acquitting the respondent
-accused for offence punishable under Section 138 of the N.I Act is set aside.
iii) The respondent -accused is convicted for offence punishable under Section 138 of the N.I Act and he has been sentenced to pay fine of Rs.12,60,000/- and in default of payment of said fine amount he shall undergo simple imprisonment for a period of 06 months.
iv) Out of the fine amount Rs.12,50,000/- is ordered to be paid as compensation to the appellant -complainant.
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v) The respondent -accused shall deposit the said fine amount within 02 months from this day.
Sd/-
(SHIVASHANKAR AMARANNAVAR) JUDGE DSP List No.: 1 Sl No.: 18