Karnataka High Court
Sridhar Narayan Hegde vs The Karnataka Bank Ltd on 21 November, 2008
Equivalent citations: AIR 2009 (NOC) 954 (KAR.), 2011 ACD 1445 (KAR), 2009 (1) AIR KANT HCR 565, (2009) 1 KCCR 283, (2009) 2 ALLCRILR 401
IN THE man COURT 0;: KARNATAKA AT BANGA1,{JF? E}~«_ "'.,A
my « .. 5 ;.
DATE!) THIS THE 21-sac? NOVEMBER mas * '
BEFORE -?%"
THE HOWBLE MRJUSTICE K.N.i{ES:§§'AX}*Afi;Ai¥AY.%fQ§§,,., '
CRL.R.P.NO.659iO6 c/W c:'1Rz,.R.P."N5§S.6582'2s:05.V
660/2005 and 66'i,.!2oo€~- _
IN cRL.=m_> No.%653'1'2<5c5(_
..B.....E'"I.,..'3«..V_E3f:':.__I_V.; H
SRIDHAR NARAYz;N%';1%E;GD§3'. g
MAJOR, occ BUS.INE:$S ~ _
R/O VAJAGOUA VELLAGE
Si9DAPUR,__I§§)I€'1fH'C:§§1'§AR_A " PETITIONER
(By Sri: VQAY .r>--.1)'v.)
AND :
" A3,. "rH1:'L"KAm:ATA;<A BANK LTD
GFF'I--CE~ .A'1"~'% KDKEIALBAIL
*MANGA¥.« (3wRE
c)'1'«'Fi¢::E AT-Maiwy PLACES
V INCLUDI_1\EG_{§NE AT
; 'm.AKwA1}I,'BELGAuM
~'-REP BY MANAGER'
-Iv!' S-RANGANATH,
'AGI31;ifi.'ABoUT 49 YEARS
. occ: BANK MANAGER,
(I)I='F'ICE AT SHUKRAVAR AT
T "'l'ILAK'WADI, BELGAUM
2 STATE OF KARNATAKA
2
RE? BY PUBLIC PROSECUTOR
BELGAUM RESPONDENTS
(By SR1. A R DESAI, ADV.)
THIS CRLRP FILED U/8.397 R/w 401 CR.P.C pRA§'iNG
TO SET ASIDE THE JUDGMENT m'.:.c:=.os PASSED"-.T. in
C.C.NO.98/{)3 ON THE FILE 0F THE JMFcg_:;'v"«cQ.1}§<3','~«A
BELGAUM, AND JUDGMENT 1:)'r.14.2.2oo5 =PASSElf) 12¢
CRL.A.NO.96/{)5 ON THE ms cm THE 13.0., F.'11t::--__I::.1u &._jABD1,;' -. "
S.._L, BELGAUM. ¢ - _ "
IN CRLRP NO 6S9}'..gO06 .. 3'
BETWEEN:
1 SMT SARASWATI NARAYAN '
70 YEARS, 06;: Wméx
R/o,ix.«wAGoDA:::v1LLAGE '--
SID}J)APUR",~.'[§.ORTH ¢AN§xRA_- PETITIONER
(33: SR1; xkmgxv S.S.NAGARALE, Amt)
ADE) :
"1-. éiis i:<AR~NATAi{A""BANK ma
. '=oFi=':_cE Af1"'£{OD§ALBAIL
A VMANVGAL0RE' ..
. A-ND BRANCZH' OFFICE TILAKWADI,
'.EsELGAUz-.1 *
R'£';P§'~é.ESE'NTED BY MANAGER
' M S RANGANATH
A. A_GED"ABQUT 49 YEARS,
" _ ocic: BANK MANAGER
'max OFFICE AT SHUKRAVARA PET
JFILAKWAQI, BELGAUM
STATE OF' KARNATAKA
REP BY §"I'S PUBLIC} PROSECUTOR
BELGAUM . . . RESPQNDENTS ;
(By SR} A R DESAI, AEV.)
THES CRLRP ES FILED (US. 397 R/w<f3i0;.A-.};iIéL':2.'€;
PRAYING TO 331' ASIDE THE JUDGMENT :31'. 1.6.2{}G5 'mssmp ~ V'
IN <:.c:.No.234/03 ON THE FILE OF"'i""rIF; JM§«fcg'1v._C0U.R'I;,
BELGAUM, AND JUDGMENT DT.34...2?.C:6I_ P_ASSED__
CRL.A.NO.3()3[{)5 on THE 911.3 OF' 'THE i?'.._O., Fm-i1;a..:. A.:»'{>;;.V._
S.J., BELGAUM.
EN CRLRP Nqeeic .2'0o_§
BETWEEN: * 1' V *
1 SRIDHAR NARAYAN I~iEG~DE "
MAJOR, O(3CB.US1NES$ *
R/O VAJAG-or;-A VILLAGE ,
s1DDAPt¥R,_N-::)r<''TH C'A.:s;Ai2A.,Aw- .. i>ErmoNER
(By SRI.VE;.¥AY" F§A'3f':*L, Aijfv;)
AND :
1 ma» :<;AR;4~iA*-FAKA gm: LTD
{:»;=:F1<;:«: AT KGDEALEAIL
% é M.*\NC%P.L{)~RE,
» _ 'oFF:.CE%Afr 'MANY PLACES
.:TNcL.1j£1INGT-QNE AT
= A :£,AKw*ADz;J:= BELGAUM
REPRESENFED BY MANAGER
Ms RANGANATH,
AGED' A301}? 49 YEARS
* ace BANK MANAGER,
= _ . Qlrmca AT SHUKRAVAR AT
T':LAKwAm, BELGAUM
V 2 STATE 01+' KARNATAKA
/'7
y
REP BY PUBLIC PROSECUTQR _
BELGAUM
(By SR1. A R DESAI, ADV.)
THIS CRLRP IS FILED U/S.,139?A-f€.'/aw " 40-14"'vt:-12.3%'
PRAYING TO SET ASIDE THE JUDGMEN? i:>'r.1'.a.<>5V 2:>A;5%'s~r«:i3._V
IN C.C.NG.754/02 on THE FI,LE.__0F '1*.se_:r:': JMFc.<;v41Vcc3§;:R*:*,%V'.
BELGAUM, AND JUDGMENT 1%,M1:')*gt, 14.2.2005' 'vPA-SSED 1»: '
cRL.A..No.95/05 on THE FILE oF'<r_HE_ 9.0.;-.§fI*c«111';& ADEL.
S.J.,BELGAUM. _
IN CRL.RP'T-HQ
BETWEEN: 1..
1 SARASWATF} 13 V M
AGED ABOUT'?O'i'*--EARfS
occ _H_QU'SE'i*i("<.':[._D "WORK ~
R]Q"'VAJ2§Q€DDA'i"fWE,LA§}E %
SIDDAP__U-R,' r<'<)gmc.aNAreA.
KARWAR, - ' .. ...PE'"§"'ITIONER
(By SR1: ViJAY"--«KUMAf§ A~.;5A*;'i'L, ADV.)
.....
<1' 'f'irI.E ~I{.A~RE€A'FA}{A BANK LTD .<:m='~1v.;:E..A'rji;c:D1ALBAIL '-- AMANGALQRAE CAFFIC-E Afjr: MANY PLACES ENCLUDING cams AT TILAKWADL BELGAUM REP 32' MANAGER M s RANGANATH, V, " man ABOUT 49 YEARS ~ _ -Q05); BANK MANAGER, OFFICE AT SHUKRAVAR AT 'FILAKWADI, BELGAUM E2 STATE OF' KARNATAKA REP BY PUBLIC PROSECUTOR Sé/ and to pay fine, is questioned. As common questioI_1sV_of4 '_fl3.ct and law arises for consideration, these petitions» . and are being disposed of by this con1_}z;o3j1 or6_.er".' " =3 . '
2. The common petitioner in 661/06 Saraswafhi Hegd.e' as'-L' accused No.1 in C.C.Nos.2§34«/.355/02,._:esf)ecfiveiy. The common pefitioner and 660 / {)6 viz., Sridhar NaIay§m,__ No.1 in C.C.Nos. 98/Z933'-». respectively. in c.c.No.98':f'2UU3T; represented by its ?roprieto1"'d'.A £daeay'an Hegde and in C.C.N0.?S4/ oiaevvaxiizepeorna Agencies represented by its 'vfiopfiefor.§yAa1ymi§it1'1~----}*Earayan Hegde had been arrayed as 'accused '{3.C.No.7 55/ 02 Manfsnath Narayan Hegde C'..(E.:;?§o:l284/2003 Annaporna Agencies by its proprietor ddbiarxjmxath Narayan. Hegde had. been arrayed as No.2. The tabular details as to the corresponding appeals and QC. numbers with reference to the revision petitions filed before this Court are as under:
/ C. .x.b.£ommmm ._ % usafiufim .cmmw,m .dm......am.mHmZ .x§..m <ooo.oc..m.§ _..;fi..:,__.,_:r.§4 ...m-¢ .... .. .E§wm.,m mcuuafio ace? 5 5 ._ mmmum a£.§m.z.. "a fiéafl xmam %Em.> Smoomdz',,. w£m._.§,_wam.. ...,_-«.L_iS.n3a.§m 2,? moomxmmm moomxmofi ooomhfi _.....
3.3 fiomfim V, _.%mum .§%...m.z W... . . .. ,:a%Em . mbucm..nn_.mm..,~mm... _ __ gém .\¢oo.E.m.mm , , ,_.m.¢____.T...V EEEEG moon." ffim ._V.%mom :H@.&.z..._ .?\_,._:E.3.x§wm . mvm.a.> E2E._oz Eawtm .. T4. .m%~..w.£a.m._Ewm. .Wmoom.:.m\. moomxmm ooamxoow .m. $.wUm.nfl.mm .,.,_ . "H. .. .. .. . . . . .. .§..+%Ew uwmem fi.Em.m.m.m_?...
Jfim -\ooo.ow.¢_§ €352 ...m,.<. ....._S:mw%m acfififiw moomgfi .5 mfimam amamamz ,.,.a§.E3 x§m.. W %«..a> $$om.oz mfimamfimm T<.. 1 fifiafifim mfi. ...mo_..m.,>..,m_m. ...moom3o_ moomxmmw .m cmmvm cdmwmmz M . .. . .. . .
"mains Ewcmgomnam V. .
xmmm Eaflemo -\ooo.am.m_& mé .8§m6m .8 Museum meow; .35 «was; aifiaz fifiafi xfim Enfia waéu :.§omo.oz Qnwtm - 3.. fimewfimx one 8%'? moom._\mm... %@o§§ 4 udfiofimmw wcomfiwm .....oZ.U.O... .oz.%\umm¢ _. $2 .02 as rmsmufl $02 mvzwvsv fiuwsuoaq ufiwafimxmcaofl wamuflommvtonw. __.é[email protected]. .. 'mw_..?.H._ gm .. N..-
"ev H Magistrate convicted accused No.1 in all the comp1.ej.ut:s:'e~for the offence punishable under Section 138 of . directed him/ her to pay fine of Rs.5,O0QV/ -- in each. " = default, to undergo simple .3 for i Respective accused No.1 in all .t'he__.casee,_i;i7e.s pey ; compensation of Rs. in * ._vV:(2 .v5C.I\:§V'fe:).98/O3; Rs.6,00,{)O0/- in '§:a.}e,00.Aooo/-- in C.C.No.75S/2002 and Rs.A7,0o,JooMo/}_iiie.c.?e.ré'o.754/2002 to the complainaut amounts and in defiauit to pay they were ordered to undergo a' of one year in each case.
by the judment of convictiou and by the ieamed Magistrate, the respective V appeals before the Sessions Judge at Appeals as noted above. These appeals maeievvoeer to the Presiding Officer, Fast Track Court-Iii, who by the common judgment dated 14.2.2906 all the appeals and upheld the judgment of conviction sentence ondexed by the learned Mag;istIate. Being /@ aggrieved by the judgment of the learned Sessions Judge dismissing the appeals, the respective accusetri no.1 havefiled these revision petitions as noted above.
8. Upon service of notice of these the "
complainant Bank has appeared ' _
9. I have heard the -..fo~_--~3 the zevision petitioner] accused- 1 and efippearing for the compiainazot bank. V
10. Sri.Sa_.11r1:losh. teamed counsel appearLnga_t'or petitioner contended that both the cou 4' below; llaWe" to consider that a holder is cine co1J;:sc_ of "a weegotialblelll instruxnent cannot mafuitain a "':'Vcos;p}VaV'1"';r:at ofiefice under Section 138 of the Act of the cheque since there is no legally 'V'enforce.=tbIe_ between the parties and there is no privity of " 'coimfaet lietsieen them. In this regard, he also relied upon two 'dectsio.ns--' of Andhra Pradesh High Court in the case of Refineries Ltd. and another 173. Banaras State Bank Ltd. reported in (zoom 103 Company Cases 732 and in the case of Sh:-idi Sat Steal, Batu Complex and others Vs. State of 13.1'. and another reported in 2902 Cr1.L.J. 3193. He fzirtller contended that the courts below have utterly failed/to.' the complainant has not proved eicistericei'~-..Qf':.l_:'iega1ly"i .c enforceable debt against the drawer oi' ' contended that the presumption. iindeiv $eofior1c of Act" i only to the extent that cheque isiiissiied for disciiarfie debt or liability and this presu':111p1:iojh.:'does._ I.iiotc.exterid es to the existence of legally enforceableidetit Therefore, the complainant is under' art obligafiori -:.'to,._};irove existence of legally en_forceebl1e'..~de_litor as a matter of fact to the satisfactionli' of _t;l:1e=._ only if the complainant establishes the of legally enforceable debt or liability Secfion 139 of the Act to the felieque issued was to discharge legally El'"V"enforc%b1ev___v'del§tli could be drawn. To substantiate this i' relied upon judgment of the Supreme Court in
--eas.el=of Krishncuanardhan Bhat Vs. Dattatraya G. Hegde in AIR 2008 SC 1325. He further contended that as " -eoimpiainant in these cases has not placed any evidence _,§>/ 18 for erzcashment and in spite of issuance of statutory notices, the amounts covered unéer the eheqties have not bee1i""to the Bank, therefore, there are on grounds to i11te1ffe}ToV ' concurrent judgments of the cour.tsA»~ ' submissions, the learned counsel 'T foi'*-- yeiitions.
12. in the light of the riva1Aco£)A;'£e_11i;i,oIzs,'followirig points arise for considerafion: A '4 V A ( 1) Whether c_oz:11""ts hoiding that £116 'Cw?BlP1a:ifian€"'ba'nk -is-._t_1.oIder in due couree of _cf--heq:1_1_e'e. -.qu.jeetio I1? (2) Whefller the V"ho1defe=é1fi due course of a cheque, Cari. maintajri "complaint for the ofienee pu11J'.s'hab1e 1._1I:de1<.--" Section 138 of the Act ; 'against the Vtlvraxver of the cheque?
the meourts beiow were justified in "_ho_1('ii1;ig et11at the accused is guilty of the Aof§e13,oe..pzj1Jishab1e unéer Section 138 of the ACt?V:'j_ 41:3'. Paton':
V' V. n There is no serious dispute that the cheques involved ix:
cases bear signatiue of respective accuseé; and that ' A "'£le;e:}V?'ivere drawn in favour of persons, who had been originally @ 26 Section 10 of the Act defines "payment in due course" as under:
" 10. "Payment in due course" --- j"
in due course" means payment in accordance. _ the apparent tenor of the instrument good'*efaith and without negligence to any ' gp"erson.__ "in.,_L possession thereof under circuit: stances which do 7 A not afford a reasonable gronnd for iaelievixig "
he is not entitled to reeeitze payment v.Vof"V._:the. amount therein mentioned." "
Thus from the def1njtion's'~~..of t'Iie'_ , "boidef in due ' course" and "payment in due 8, 9 and 10, as ext1'ac{ed"Vda.bo§;'e, become a " holder in due course " a. : instrument, the foilowing requirements to safisfied:
hemuswt' holder for consideration;
V fijl' instnnnent mast have been Ctaransferred to him before it becomes . .ow*erdue;
":.he must be a transferee in good faith and he should not have any reason to believe that there was any defect in the title of the transferor.
-:'_'i'i1e"evidence placed on record in ail these cases which is not a seriously disputed by the accused persons, cleariy establishes that the payee under these cheques issued by resyective /& 24 disregard a "red flag" which has raised suspicions."
We, therefore, modify the View taken __bj«.? the Allahabad High Court in Durga Shalfs case 1952 Allahabad 590) to the exte1_1_t...th_at tlioagh'_fthe" . failure to prove bona fide or absence of negligence, « would not negafive the claim of the fholder=_to* a holder in due course, yet inthe cireuzastanees of a given case, if there is pate3:1t'*~gross'~neglige11ce._'or1.. his part which by itself indicates 1ar_.:_k"~o-f cine diligence, it can negative his___elaia:;_»_for he canrfrfot negligently disregard "red which aroeses suspicion regarding the title. f.I1;1 View of the matter we hold that the decision i1:r«.Ragl\a_\ig'i's case (1906 (8) 330311 92:1} 11Q'(._la'y'_ d.di?§'I1 correct law. We agfee1'* wi=tl1 mic "views. by the Allahabad iCQ--ffiI't. above modification. 1'i4__ 'From the »--ahove Ciiscussion it emerges that the'*I;::1dia§1 flefirlition imposes a more stringent cor;::1..ition on the holder in dae coarse gthe». Englishwiefmition and as the learned 'authors. .,have noted the definition is based on '"{3_fl1'tsveaseV{1:$'24 (:07) ER 806). Under the Indian ' ._law, a holderfto be a holder in due course, must not only iiave acquired the bill, note or cheque for valid consideration but should have aoqeired the cheqneiwithout having sufiiciem: cause to believe " he that any defect existed in the title of the person whom he derived his title. This condition requires that he should act in good faith and with Ereasorzable caution. However, mere failure to prove bone title or absence of negligence on his part would not negative his claim. But in a gkren case it is left to the Court to ¢:lecide_ Whether the negligence on the part of the holder is so gross and extraordinary as to presume that he had M 27 title. In the light of this, let me eertsider the facts and circumstances of this case to find out as to whether there is patent gross negligence on the part of the irlciieating lack of due diligence which is sufiicierit suspicion regarding the title of transferors' omjeij the
19. The evidence on recorriindieates of these cheques are close relativesof pgayees... iffisvovfeheques were issued by mother in her .so-31».I§/Ea:}junatk1 Narayan Hegde, while the other txzrIo.:._eheo_L1:es'iiiiizerei/o,'*issued by one brother Ir;-iiiieiyee iilairoayaeeiiiifiegde, in favour of his another brother Narayana Hegde. They all belong to orie The"'eheques in question were drawn ffor._substar;2:iai'vr.emoii:1ts;"'It is not the say of either P.W.1 or iiiscounting the cheques, the payees were .____._askGf.1' the cheques drawn for such substantial amounts wfeiie for discharge of any debt or liability due to "the drawers or whether the cheques were issued as V. assistance to them by the drawers for their ht"tSi1'l€SS. The very fact that the cheques are shown. to have been issued by two members of a family in favour of w E?
28 remaining two members of same family for substéintial amounts would be sufiicient in normai create suspicion in the mind of even an orémary "
less an ofificial of a scheduled Bank a.g¢.;1« e:z';£i§1e1;ien£ payees to receive the amounts 1»11entic4t1e¢ei'--tAherei.§3",'.A :'I'1"1" ' this, the Oficer of the Bank befcreV.'disccuntJ._;_n"ge V ought to have made What circumstances, the drawere As the cheques were for considerable amount, the fllexn ought to have enquired with the cheques are drawn to know as to would be hounoured if sent for there is sufiicient fund in the V' Lac-gou;:ts "cf _f;i:.e drawers. With the advancement in of enquiry was not diflicult. Why in 2 such a""hur__I'y amount was paid to the payees by H Zthe cheques even Without making any enquiry ' A credibility of the drawer and payee, is not explained complainant Bank. Theme is absolutely no evidence 3 "pieced by the complairmnt bank to show that if acted in good
21. Point No.2:
Section 138 of the Act deals with dishonour _ for insufficiency of funds ii} the accounts. deals with the offence upon dishonou£j I do {{:he- However, proviso to Section 138; lays d'os_#i1 co13.d'i'tion¢_s ujiide1' ;
which dishonour of cheque oflence punishable tinder 'Ae oroviso (b) dishonour of the cheque unless the
payee or ho1.c¥er4_viéo'_'co1%Lrse_ as the case ma?' be makes a money by giving a notice in of the cheque Within a period of thirty da3}'s'v--ofot1f1e"reE§eAip£: information from the Bank 'the disfxoooor of the cheque. Thus, Section 138 V. (3))? provides for holder in due course of the demand by issuing a notice.
22. '~Se<':ti.on 142 of the Act deals with cognizance of the As per clause (a) of Section 142, notwithstanding contained in Cr.P.C., 1973 no Court shall take _4_eog11izance of the ofience punishable under Secolon 138 except on a complaint made by the payee or, as the case may 32 etc., Vs. State of AJ'. and another referred to supr*a---sleet' held that holder in éue course of a cheque 3' i complaint for the ofience under unable to concur with the views expressed iii. Atvheise decisions as the learned havei' talgen into consideration, the provisioiziso. of };3'8.(b) (3) of the Act which clearly due course can Inaintain a to place any reliance on Having regard in the statutory ldtiiieroviso (b) and $42 (a) of the Act, I i1o' mind that a holder in due course of _a cheque resin a complaint for the offence '3Ifi'dt3I' 138 of the Act In View of the above,_.Ii No.2 in the afirmative.
As ceuld be seen from the judgments of the courts \ the courts after holding that the complainant holder in due course and that the accused issued V Ltiiose cheques to the payees who in turn discounted the same ii with the bank for consideration, have drawn the presumption &/ 36 "An accused for discharggg the burdeggmgmf K proof glgtced upon him under a statute I1C{_i'.'{}_ not.' 'V' ' examine himself. He may discharge his burden. "
on the basis of the materials already on " _ record. An accused has a con:s'tit:§1t:ioI_1al right . maintain siience. Standard of proofoon-e'the._part of :7] an accused and that of 'the p'3:ose_cution*_vA a * "
criminal case is differez'1t:."* _V (tmderljnirzg me) Again in para 44 L'ourf'1ias"'observed thus:
" xxxxx 'I'he*eo:"_11'ts §mu:.st_i3e'«.oi1.jgua1tVi' to see that merely on _ap}§1i<:at1'on_ , of 'ptesumptiorx as conten1p32itec1'----11i*1(i3er Seexio:1__ 139, of the Negotiable {nstn1mexz_ts'vAe3;, the same net lead to injustice or mistaizezijconvicfion, "-It is "for~f11e aforementioned masons t_he1'i;'v§weV i:zave._t'aJ;;e11 into consideration the deciséoxis opemfiazg iei:he" field where the difficulty of ea txegective izgasfaeen emphasised. it is not suggested that7.afeegaf:;ve can never be proved but there aie cases "Where such dificulties are faced b3;§theA'accuseti--we.V_g_.__Ahonest and reasenable mistake A of feet. .111 a recent article 'The pxesuinption of » V'i«nnoee13.ee.VAa:1t_:1 Reverse Burdens; a Balancing Duty " Vpubéiehed in_2§')O7 CLJ {March Part) 142 it has been 2 ste.te<:I:' V "---'A'In" determining whether a reverse burden is compatible with the presumption of innocence 'A Ijegaxirl shouid also be had to the pragmatics of , pfoofi How dificult would it be for the prosecution es' prove guilt without the reverse burden? How i easily could on innocent defendant discharge the T reverse burden? But courts will not allow these pragatic considerations to override the legitimate rights of the defendant. Pragmatiszn will have geater sway Where the reverse burden wouid not pose e risk of great irljusticewhether the offence 41 discharge of such debt. As noticed, the specific casefliof; complainant is that cheques issued by the accriseds*t V' discounted by the payee of the cheqt1es;*--. a", Ru cheque by the bank is a normai A' lfipggiaafion bank. Mere fact that the cheqnesfirawnvhby m 2 ' favour of its clients are d.isconn!3edV:..by'uthe banks, rlioes not lead to 31157 Drivity of tlrawer of the cheque or the bank Therefore, the aspect of civil the question of criminal " has to be covered fiom " _.'P1.'0Visions in that behalf. Admittedly, qjiesiion were not drawn in favour 'ofvtihe The eiristence of any legally enforceable debt er drawer or the payee of the cheque is not oeven' May be the complainant Bank can .''enforce 'its right against the drawer and the payee of the in a civil court. It is in the evidence 'bf P.W.1 that the ____'eomV'plair1ant bank has already instituted civil suits before the V '4 jurisdictional court for recovery of the amounts covered under these cheques. It is also in the evidence of P.W.1 that the ,/'3 @