Karnataka High Court
Prakash Leasing Ltd vs M/S Shri Patravali Borewells on 3 April, 2012
Author: Jawad Rahim
Bench: Jawad Rahim
1 Crl.A.1O11/2008
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 03 DAY OF APRIL 2012
BEFORE
THE HON'BLE MR.JUSTICE JAWAD RAHIM
CRIMINAL APPEAL No.1011/2008
BETWEEN:
Prakash Leasing Limited,
No.7(49), 2
nd
Floor,
Kodava Samaja Building,
St
1
Main, Vasantha Nagara,
Bangalore 560 052.
--
Represented by its Authorized Officer,
Mr.B.Ravi Shankar.
APPELLANT
(By Sri.M.V.Kini & Co., Adv.)
AND:
1. M/s.Shri Patravali Borewells,
A Partnership Firm, Having Office
at Station Road,
Dharwar 580 007,
--
Represented by its Partner
Mr.Sunil Manohar Patravali.
2. Mr.Shital M.Patravali,
Partner,
M/s.Shri Patravali Borewells,
Station Road,
Dharwar 580 007.
-
RESPONDENTS
(By Sri.K.L.Patil, Adv. for
Sri.A.R.Desai, Adv.)
2 CrLA.1O11/2008
THIS CRL.A. IS FILED U/S.374(2) CR.P.C BY
THE
ADVOCATE FOR THE APPELLANT AGAINST THE
JUDGMENT
DATED 23.08.2005 PASSED BY THE Si. FAST TRACK COURT, CHITRADURGA, IN S.C.NO.4/2005 CON VICTING THE APPELLANTS/ ACCUSED No.1 & 2 FOR THE OFFENCES PUNISHABLE UNDER SECTIONS 324 & 326 OF IPC, ETC.
THIS APPEAL COMING ON FOR FINAL HEARING, THIS DAY, THE COURT DELIVERED THE FOLLOWING :
JUDGMENT The complainant is in appeal against the acquittal of the respondents for offence punishable under Sect ion 138 of the Negotiable Instruments Act.
2. Heard Sri.M.V.Kini Rao, learned counsel for the appellant and Sri.K.L.Patil and Sri.A.R.Desai, learned counsel for the respondents.
3. The material facts on basis of which the respondents were arraigned, tried and ultimately acquitted are:
The appellant a Company incorporated under the Companies Act initiated prosecution against the respo ndents
-- partnership firms for offence under Sectionl38 of Negotiable Instruments Act, on assertive cont ention that the respondent No.1 firm through its partner, the second respondent had availed bill discounting facility to the tune of 3 Crl.A.1O11/2008 Rs.12,50,000/-. It availed the said benefit for the purpose of purchase of machineries for use of business on hire purchase basis. The accused having utilised the benefit failed to repay the amount which was qualified at Rs.1O,49,655/- as on 21.09.1999. On demand, the accu sed No.2 issued cheque impugned on behalf of the first respondent -- accused, firm but the cheque on presentation was dishonored for insufficient funds, necessitating issua nce of statutory notice which was also not complied.
4. Cognizance was taken on the complainant by jurisdictional Magistrate and Respondents 1 & 2 were summoned. Respondent No.1 was represented by 2 n d respondent its partner about which there is no disp ute.
However, they denied the liability. The accused were put to trial. In the trial so conducted, complainant examined PWs 1 & 2, its authorized officers and relied on 18 documen ts.
The second accused Sri.Shetal tendered evidence as DW-1 and examined a witness as DW-2. He relied on 26 documents.
5. From the evidence brought on record, the appellant assertively contended that the accused had availed bfll discounting facility to the tune of Rs.12,50 ,000/-
..v -
4 Crl.A.101 1/2008 and on accounting, it was found to be due Rs.1O,49 ,655/-.
In discharge of that liability, the impugned cheque was issued. Since the cheque was dishonored, the liability was enforceable under Section 138 of N.I.Act.
6. In negation of these contentions, the accused brought out through Exs.D11 to D20 that the action initiated by the complainant was on baseless alleg ations alleged liability in a sum of Rs.1O,49,655/-. In this regard, the accused through their evidence brought out that vide Ex.D11 Rs.5,45,000/- was paid towards hundi, vide Ex.D 12 Rs.5,40,000/- was also paid. Besides vide Ex.D13 Rs.4,40,615.75/- was paid and likewise, it produced proo f of payment of Rs.20,000/- vide Ex.D17.
7. Relying on these documents it was urged the transaction of hire purchase was finally settled.
The accused had repaid the amount of loan advanced by the complainant towards purchase of two lorries and nothing was outstanding. The accused also contended if proper accounting is done, it could be noticed the accused have paid not only towards the said loan but other finan cial benefit granted by the Complainant.
5 Crl.A.1O11/2008
8. However, the complainant re-iterated that the liability of the accused was not only in respe ct of hire purchase of the vehicle but towards discounting of the bill.
In this regard, they relied on a letter written by the accused vide Ex.D12 requesting discounting facility towards Patravli Borewells amount to Rs.12,50,000/-. Basing on that letter, it was contended that there are two transactions, thus the documents exhibit Dli, D13 are of no avail.
9. The learned Trial Judge gave due credence to the evidence tendered by the accused establishing payment on various dates. In the result, it held complainant had failed to establish impugned cheque was issue d towards "existing debt or legal liability" and acquitted the respondents. Learned counsel for the appellant took me through the records. He would contend that the accused adopted a strategy of confusing the court mixing various transactions. He would submit the discounting facility granted by the complainant was in respect of two transactions of two different firms. One Patra vii Borewelis and another Parvathi Boreweils. The payments made as proved by evidence Exs.Dll, Di4 and D17 are in respect of different transactions and not the one 6 Cr1A.10H/2OO8 covered under the complaint. He would submit that towards the transactions referred to in the complaint, no amount has been received and therefo re, the Trial Court erred seriously in holding the complai nt has failed to prove debt or legal liability.
10. Per contra, counsel for the respondent! accused has referred once again to the averme nts in the complaint, testimony of the complainant's witnesses and other evidence, to show that payment made by the accused has not been disputed by the complainan t and therefore, they are liable to account for it. On accounting, it is found that the accused has paid entire amount due . He supports the impugned judgment.
11. Keeping in mind, what is urged by both sides, I have re-apprised the evidence. At the outset, it is material to note that the genesis of the cnminal action against the respondents for offence under Section 138 of Negotiable Instruments Act is traced by the complainant to the discounting facility given to the acc used for purchase of machineries for business on hire purchase. The averments in Paragraph Nos. -- 3 and 4 of the complaint are the only material particulars. It reads as follows:
7 Crl.A.1O11/2008 "3. The complainant submits that in the course of its financial services, it has introduced bill discounting facility for the benefit of its customer. The accused, facility for the benefit of its customers. The accused, being one of such customers, had availed the said bill discount facility to a sum of Rs.12,50,000/- (Rupees Twelve Lakhs only) for the purpose of advance towards purchase of machineries for use in his business, on hire purchase basis. The accused having received the benefit of the said facility is liable to repay the said amount of Rs.12,50,000/-
together with interest and other incidental charges.
4. The complainant submits that both the accused being the partners of the firm are equally liable for the day to day affairs of the said firm and towards the liability, the accused, had issued a cheque and assured the complainant that the cheque would be honored when presented for encashment on its due date. But to the contrary, the below mentioned cheque when presented, was dishonored. The details of the cheque and reason for the dishonor are as follows:
Cheque No.046532; Date 16.09.1999; Amount (Rs,)- 10,49,655/-;
Date and Reasons for dishonor "Account closed"
The above mentioned cheque was drawn on Vijaya Bank, Vijaya Road, Dharwad, and presented through the complainant bankers, State Bank of India, Bangalore City Branch, Bangalore on the specific request of the accused.' 8 Crl.A.1011/2008
12. The averments in paragraphs 3 and 4 of the complaint spell out complainant is seeking to enforce the impugned cheque in respect of quantified liability at Rs.1O,49,655/- relating to the money advanced by it to the respondent-accused for purchase of machinery on hire. In answer to such allegation, accused have produced Ex.D5 evidencing payment of Rs.4,05,000/- and Ex.D6 proving payment of Rs.4,00,000/- towards the loan transaction for purchase of vehicle on hire purchase basis. Therefore, to this extent, accused have discharged the burden cast on it that towards the alleged liability, they have made payment as evidenced by these documents. Besides, 2 n d accused as DW1 has furnished further material particulars about repayments made. He has also established that the two lorries purchased by the accused availing loan from the complainant bearing registration nos.MEI 5487 and MEZ 5749 which were hypothecated to the complainant and for which endorsement was made by the concerned RT.O., Dharwad, were seized by the complainant itself.
13. The audited balance sheet for the years 1994-95 and 1995-96 show as on 31.3.1995, the loan outstanding to the complainant was Rs.9,75,000/-. As on 31.3.1996, the 9 Crl.A. 1011/2008 outstanding was reduced to Rs2,54,O5O/-. Referring to it, DW1 has further deposed tha t such liability of Rs.2,54,050/
-
was cleared paying Rs.4,00,0 00/-. Thus, the liability was cleared.
14. It is further established that the complainant had issued no objection for can cellation of endorsement of hypothecation made in the Registration Certificate by the R.T.O. They had also pro duced receipt of Rs.4,00,000/
-
from Sri Gurusiddeshwara Co
-operative Bank Limtied, Hubli , dated 157.1998 and also Fo rm No.35 HP terminating the hypothecation agreement cre ated in favour of the appellant. By this evidence, accuse d has substantiated tha t hypothecation of the vehicles was to secure loan granted by the complainant and as the loan was repaid, complainant had cancelled the hypothecatio n.
15. Accused is right in conten ding had there been subsistence of such liability, complainant would not have given no objection for cancellation of hypothecatio n endorsement. Thus, the eviden ce in its entirety establishes genesis of prosecution is the transaction of loan relating to purchase of vehicles by the respondent-accused and hypothecation made in favour of the complainant The fact 10 Crl.AJ011/2008 that the complainant has terminated hypothecation agreement establishes termination of transaction between it and the accused. There should be no hesitation in accepting that the liability of the accused was either discharged by payment of the entire amount or by adjustment of the amount paid by it.
16. For the reasons discussed abo ve, I am satisfied mere dishonour of cheque is not sufficient to convict the accused, unless it is shown that the cheque impugned which is dishonoured was in respect of an existing debt or legal liability. The complainant had failed to prove there was any existing debt or legal liability and hen ce, mere dishonour of the cheque did not justify convict ion. Rightly the learned trial judge has acquitted the respond ent.
17. I find no merit in this appeal aga inst such finding.
Accord ingly, the appeal is dismissed.
SdI JUDGE dh*