IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF OCTOBER, 2019 BEFORE THE HON’BLE MR.JUSTICE B.A. PATIL CRIMINAL APPEAL NO.1 OF 2019 Between:
Sri Devaraj.M Aged about 42 years S/o Sri Muniyappa R/at No.549, “Maruthi Nilaya” Rachenahalli Main Road Thanisandra, Nagawara Post Bengaluru-560095. ...Appellant (By Sri C.Shankar Reddy, Advocate for Sri S.V.Kantharaju, Advocate) And:
Sri M.Venkatarama Reddy Aged about 57 years S/o late Sri Mestrappa Doing Business at 36/1 “Mestrappa Building”, 2nd Cross Hennur Main Road, 80 Feet Road Bengaluru-560043.
Residential Address:
No.812, 5th Cross Block I, Kalyan Nagar Bengaluru-560043.
Also at “Srinivasa”, No.431/A 7th ‘A’ Main Road, 5th Cross HRBR 1st Block, Kalyana Nagar Bengaluru-560043. ... Respondent (By Sri P.N.Nanja Reddy, Advocate) This Criminal Appeal is filed under Section 378(1) & (4) of Cr.P.C., praying to set aside the impugned judgment dated 03.11.2018 passed by the LVIII A.C.M.M., Mayo Hall Unit, Bengaluru (ACMM-58) in C.C.No.52503/2016, acquitting the respondents/accused for the offence punishable under Section 138 of the N.I.Act and etc., This Criminal Appeal coming on for Admission this day, the Court delivered the following:
J U D G M E N T The present appeal has been preferred by the appellant/complainant challenging the legality and correctness of the judgment passed by the LVIII Additional Chief Metropolitan Magistrate, Mayo Hall Unit, Bengaluru in C.C.No.52503/2016 dated 03.11.2018.
2. I have heard the learned counsel for the appellant/complainant and the learned counsel for the respondent/accused.
3. Though this case is listed for admission, with the consent of learned counsel appearing for the parties, the same is taken up for final disposal.
4. The factual matrix of the case of the complainant before the Court below are that the complainant was doing the business in the name of “Maruthi Enterprises” and used to supply building materials and accused was known to him since last ten years and he was a Class I Contractor and he has taken up several contract works of BBMP and other private individuals. Because of this acquaintance, the accused approached the complainant for hand loan to invest the same in the contract works by assuring to repay the same in due course and considering the request of the accused, the complainant lent a loan for a sum of Rs.5,00,000/- on 07.07.2014 and for a sum of Rs.7,00,000/- on 06.08.2014.
5. It is further submitted that on repeated request made by the complainant, accused issued two post dated cheques bearing No.218136 dated 17.04.2015 for a sum of Rs.2,00,000/- and another cheque bearing No.140430 dated 17.04.2014 for a sum of Rs.6,00,000/-. Both were drawn on Union Bank of India and he promised to pay the remaining amount of Rs.4,00,000/- in favour of the complainant. At the request of accused, the complainant presented the said cheque through his Banker. The said cheques were returned with the shara “exceeds arrangement”. Thereafter, the complainant personally met the accused and informed regarding dishonour of the cheque. The accused did not respond to the request of the complainant. The complainant got issued notice to the three addresses of the accused on 03.06.2015 calling upon him to pay the cheque amount. But the said covers were returned with the postal shara “not claimed”. Thereafter, the complaint was registered.
6. The trail Court took the cognizance and recorded the sworn statement of the complainant and secured the presence of the accused and after supplying the copies, charge was framed. The accused pleaded not guilty. He claimed to be tried and as such, the case was posted for trail.
7. In order to prove the case of the complainant, complainant got examined himself as PW.1 and documents were marked as Exs.P1 to P11. Thereafter, the statement of the accused was recorded under Section 313 of Cr.P.C. and accused got examined himself as DW.1 and documents were marked as Exs.D1 to D10. After hearing the learned counsel appearing for the parties, the trial Court acquitted the accused. Challenging the legality and correctness, the complainant/appellant is before this Court.
8. The main grounds urged by the learned counsel for the appellant/complainant are that the judgment of the trial Court is contrary to law and facts of the case. The trial Court without properly appreciating the records has come to a wrong conclusion and has wrongly acquitted the accused.
9. It is his further contention that though the cheques given is admitted by accused, stating that the said cheque has been given to one Nagaraj and the said Nagaraj has given the said cheques to the complainant. He further submitted that the accused is a contractor and he admitted the signature on the said cheque. Then under such circumstances, the trial Court ought to have drawn the presumption as contemplated under Section 139 of the Negotiable Instruments Act. Without looking into the said aspect, the trial Court erroneously went on the other side and came to the conclusion that the complainant was not having any financial capacity to pay the loan amount and the said facts have not been shown either in the Income Tax records or any other records. It is his further submission that though the said contention has been taken up by the respondent/accused, the said cheque has been given by one Nagaraj. But the said Nagaraj has not been examined though he was in good terms with the accused. He further submitted that the said Firm is a Proprietary Firm and the complainant is the Proprietor and he has complied the requirements as contemplated under the Negotiable Instruments Act.
10. In order to substantiate his contention he has relied upon the decision of Hon’ble Apex Court in the case of Shankar Finance and Investments V/s State of Andhra Pradesh and others reported in (2008)8 SCC 536.
11. He further contended that the respondent/accused has taken inconsistent contentions and without rebuttal evidence, the trial Court has come to a wrong conclusion and has wrongly dismissed the complaint and acquitted the accused. He further submitted that there is ample material to show that the accused has committed an offence under Section 138 of the Negotiable Instruments Act. On these grounds, he prays to set aside the impugned order and the accused be convicted to the alleged offence.
12. Per contra, the learned counsel for the respondent/accused vehemently argued and contended that the complainant and the accused were not known to each other and the evidence of PW.1 clearly goes to show that the complainant was not knowing the address of the accused and when the amount was paid nobody was present and no documents/receipts have been obtained from the accused. He further submitted that Ex.P10 regarding payment of the amount has not been shown in the Income Tax returns and the said facts has also been admitted by the complainant. He further submitted that no documents have been produced to show about the business transactions and the transport of building materials. He further submitted that records indicate as on the date, the accused was having sufficient fund i.e., to an extent of Rs.8.00 crores in his account. Under such circumstances, there is no question of he taking the loan from the complainant. He further submitted that the complainant had no capacity to lend the amount and no balance was there in the account. He further submitted that in the absence of any such material, the case of the complainant is not going to fulfill the ingredients of Section 138 of the Act. It is his further submission that the complainant has to establish that there was legally recoverable debt. If the complainant fails to prove the fact of the existence of legally recoverable debt, then under such circumstances the complaint has to be dismissed.
13. In order to substantiate his contention he has relied upon the decision of the Hon’ble Supreme Court in the case of K.Subramani V/s K.Damodara Naidu reported in (2015)1 SCC 99.
14. He further submitted that the complainant has failed to prove his financial capacity and if the financial capacity has not been proved, then under such circumstances the complaint is not sustainable in law.
15. In order to substantiate the said contention he has relied upon the decision of the Hon’ble Supreme Court in the case of Basalingappa V/s Mudibasappa reported in AIR 2019 SC 1983.
16. He further submitted that he has not issued any cheque to the complainant and under such circumstances the presumption under Section 118 and 139 of the Negotiable Instruments Act will not be drawn. Without looking into the admission elicited from the complainant accepting the case of the complainant and convicting the accused is not justifiable.
17. In order to substantiate his contention, he has relied upon the decision in the case of Smt. Threja V/s Smt. Jayalaxmi reported in 2016(5) KCCR 1341.
18. It is the defence of the accused that he had transaction with one Nagaraj in the year 2008-09 and at that time, he issued the cheque and the said cheques have been misused by the complainant. The said fact has been rebutted by cogent and acceptable evidence.
19. Keeping in view the said facts and circumstances, the trial Court has rightly acquitted the accused by dismissing the complaint. He has also further submitted that the Firm is not made a party and the complainant is not apprised to file the complaint. On these grounds, he prays to dismiss the appeal.
20. I have carefully and cautiously gone through the submissions made by the learned counsel for the appellant and perused the records including lower Court records.
21. The first and foremost contention which has been taken up by the learned counsel for the respondent is that the M/s Maruthi Enterprises is a firm and the complainant is not having any authority to represent and has not been made a party, as contemplated under Section 142 of the Negotiable Instruments Act. It is the contention of the complainant that the said M/s Maruthi Enterprises is the Proprietary concern and that he is representing the said Firm and he can do the acts of the Firm in his individual capacity.
22. In order to substantiate the said fact, he has relied upon the decision in the case of Shankar Finance and Investments V/s Sate of Andhra Pradesh and others reported in (2008)8 SCC 536.
23. On going through the submissions made by the learned counsels appearing for the parties, the question which comes before this Court is that whether the M/s Maruthi Enterprises is a necessary party and whether the complainant represents the said concern, where this Proprietary concern is carrying on the business through an attorney holder or any other Proprietary concern by himself when Firm is Proprietary concern and complainant is the Proprietor. Under such circumstances, the authority will be there to initiate legal proceedings and he can represent the said Proprietary concern and even the said firm can be represented by the Proprietor in his personal capacity. When the payee is the Proprietary concern the complaint can be filed by the Proprietor of the Firm/Proprietary concern describing itself as a sole Proprietary concern represented by its sole Proprietor or by the attorney holder under power of attorney executed by the sole proprietor. This proposition of law has been laid down at para No.11 of the above said decision.
24. For the purpose of gravity I quote para No.11 which reads as under;
11. The next question is where a proprietary concern carries on business through an attorney holder, whether the attorney holder can lodge the complaint? The Attorney holder is the agent of the grantor. When the grantor authorizes the attorney holder to initiate legal proceedings and the attorney holder accordingly initiates legal proceedings, he does so as the agent of the grantor and the initiation is by the grantor represented by his attorney holder, and not by the attorney holder in his personal capacity. Therefore where the payee is a proprietary concern, the complaint can be filed.
25. On going through the ratio laid down in the above decision and as discussed above and the complaint of the complainant also clearly goes to show that the complainant has specifically averred that the complainant runs the business in the name of Maruthi Enterprises and that also substantiate the case of the complainant. The said fact is also not disputed during the course of the cross-examination.
26. In that light, the contentions raised by the learned counsel for the respondent is not having any force and the same is liable to be rejected.
27. The second contention which has been taken up by the learned counsel for the respondent is that the complainant was not having any capacity to give the loan and therefore there was no relationship whatsoever existing between the complainant and the accused. It is his further contention that the complainant has not proved the sources of income from which the alleged loan was paid to the respondent/ accused.
28. In order to substantiate his arguments, he has also relied upon the decision in K.Subramani’s case (supra) and also Basalingappa’s case (supra) and another decision in Smt. Threja’s case (supra).
29. I have carefully and cautiously gone through the said decisions and the ratio laid down therein.
30. As could be seen from the evidence of PW.1, it has been specifically suggested during the course of cross-examination of PW.1 that the accused had a transaction with one Nagaraj in the year 2008-09. At that time he issued cheques. It is the further contention of the accused that the complainant has misused his cheque and filed the false case. When the said fact has been suggested, in his evidence, he has deposed that the complainant has produced the cheque in the name of M/s Maruthi Enterprises. But he has filed the case in his individual capacity and it has also been reiterated by contending that during the year 2008-09, there was some transaction with one Nagaraj and he has issued the said cheques and even inspite of repeated request, the said cheques were not given back to him. By analyzing the said evidence, it clearly goes to show that the accused admits the signatures on the cheques at Exs.P1 and P2. When once he admits the signature on the cheques, then under such circumstances, the presumption mandated under Section 139 of the Negotiable Instruments Act i.e., includes, the existence of a legally enforceable debt or liability has to be drawn. This preposition of law has been laid down by the Hon’ble Apex Court in the case of Rangappa Vs. Sri Mohan reported in (2010)11 SCC 441, wherein at paragraph 16 it has been observed as under:-
16. All of these circumstances led the High Court to conclude that the accused had not raised a probable defence to rebut the statutory presumption. It was held that:
“6. Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant. The presumption referred to in Section 139 of the N.I. Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption.
What is required to be established by the accused in order to rebut the presumption is different from each case under given circumstances. But the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the Court.
The defence raised by the accused was that a blank cheque was lost by him, which was made use of by the complainant. Unless this barrier is crossed by the accused, the other defence raised by him whether the cheque was issued towards the hand loan or towards the amount spent by the complainant need not be considered. ”
Hence, the High Court concluded that the alleged discrepancies on part of the complainant which had been noted by the trial court were not material since the accused had failed to raise a probable defence to rebut the presumption placed on him by Section 139 of the Act. Accordingly, the High Court recorded a finding of conviction.
31. On going through above said facts and circumstances, it has been observed that the presumption mandated under Section 139 includes a presumption that there exists a legally enforceable debt or liability. It has been further observed that this is in the nature of a rebuttable presumption and it is open to the accused to raise a defence to show that there exists no legally enforceable debt.
32. Keeping in view the above said ratio, and the evidence and material placed on record, it is the specific case of the accused that he has no business transaction with the complainant and he is not having any capacity to lend loan and in this behalf he has relied upon Ex.P10, the Income Tax returns and the said amount has not shown in the Income Tax returns. But, as could be seen from the evidence of DW.1, he has contended that there was some business transaction with one Nagaraj and several times, he had asked him to return the cheques but he has not issued any notice to him and the said Nagaraj told that he is going to return the said cheques, but he should not file any complaint to the police. He has further deposed that he is in good terms with him. When he has taken up a specific contention that the said cheques which have been given to Nagaraj have been misused by the complainant. Then under such circumstances, it is the duty of the accused to establish the fact by producing cogent and acceptable evidence that the said cheques which have been issued to Nagaraj have been misused by the complainant. But for the reasons best known to the respondent/accused, he has not examined the said Nagaraj. Though during the course of cross-examination, he has admitted that there was a cordial relationship between Nagaraj and himself. When the said fact has remained as a contention, without there being any proof. Then under such circumstances, the said contention is not acceptable.
33. Section 139 of the Negotiable Instruments Act mandates that unless the contrary is proved, it is to be presumed that the holder of the cheques received the cheuqes in the nature as referred under Section 138 of the Negotiable Instruments Act, for the discharge in whole or in part of any debt or liability. Then under such circumstances, the case of the complainant has to be accepted. No doubt the presumption is rebuttable by proving the contrary under Section 139 of the Negotiable Instruments Act. Section 139 of the Negotiable Instruments Act is introduced as an exception to the general rule as to the burden of proof and shifts onus on the accused to prove the same by producing cogent evidence that there was no debt or liability, but mere denial or rebuttal by the accused is not enough.
34. This proposition of law has been laid down by the Hon’ble Apex Court in the case of Bir Singh (supra). At paragraphs 18, 20, and 24, it has been observed as under:
18. In passing the impugned judgment and order dated 21-11-2017 [Mukesh Kumar v. Bir Singh, 2017 SCC OnLine P&H 5352] , the High Court misconstrued Section 139 of the Negotiable Instruments Act, which mandates that unless the contrary is proved, it is to be presumed that the holder of a cheque received the cheque of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability. Needless to mention that the presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque.
19. xxxxxxx 20. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact as held in Hiten P. Dalal [Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 :
2001 SCC (Cri) 960] .
21. xxxxxx xxxxxx xxxxxx 22. xxxxxx xxxxxx xxxxxx 23. xxxxxx xxxxxx xxxxxx 24. In K.N. Beena v. Muniyappan [K.N. Beena v. Muniyappan, (2001) 8 SCC 458 : 2002 SCC (Cri) 14] , this Court held that in view of the provisions of Section 139 of the Negotiable Instruments Act read with Section 118 thereof, the Court had to presume that the cheque had been issued for discharging a debt or liability. The said presumption was rebuttable and could be rebutted by the accused by proving the contrary. But mere denial or rebuttal by the accused was not enough. The accused had to prove by cogent evidence that there was no debt or liability. This Court clearly held that the High Court had erroneously set aside the conviction, by proceeding on the basis that denials/averments in the reply of the accused were sufficient to shift the burden of proof on the complainant to prove that the cheque had been issued for discharge of a debt or a liability. This was an entirely erroneous approach. The accused had to prove in the trial by leading cogent evidence that there was no debt or liability.
35. Keeping in view the ratio laid down in the above decision, the records and material placed on record and the contention taken up by the accused, that the said transaction was with one Nagaraj and he has issued the cheques to him and he has misused the cheques by handing over to the complainant, has not been proved and established in this behalf. As observed in the above said decision, a mere denial is not sufficient, but the accused has to produce the cogent and acceptable evidence. In the absence of such material, the contention taken up by the accused is not acceptable. In the light of the above discussions the complainant has made out a case to allow the appeal.
36. I have carefully and cautiously gone through the judgment of the trial Court. The trial Court instead of looking into the provision of law and without drawing any presumption as to how the said presumption has been rebutted by the accused, without clear discussion on the point as discussed above, has come to a wrong conclusion that the complainant was not having any capacity to lend the loan amount. When the law mandates that the presumption has to be drawn, then the preliminary ingredients of Section 138 of the Negotiable Instruments Act has to be proved. Then under such circumstances, the burden lies on the accused and when once the burden lies on the accused and if he fails to prove the same, then the case of the complainant stands proved. In that light the trial Court has not kept in mind the right facts and law and has come to a wrong conclusion and as such, the same is liable to be set aside. Accordingly, I pass the following:
ORDER The criminal appeal is allowed.
The judgment and order of acquittal passed by the LVIII Additional Chief Metropolitan Magistrate, Mayohall Unit, Bengaluru in C.C.No.52503/2016 dated 03.11.2018 is set-aside and the respondent/accused is convicted for the offence punishable under Section 138 of the N.I.Act and sentenced to pay fine amount of Rs.8,50,000/- (Rupees Eight Lakhs Fifty Thousand Only) within a period of four weeks from today. Out of the fine amount, a sum of Rs.8,00,000/- is ordered to be paid to the complainant on proper identification and acknowledgment. Remaining amount of Rs.50,000/- shall be forfeited to the State as a fine.
Accordingly, the criminal appeal is disposed of.
Registry is directed to send back the LCR.
Sd/-
JUDGE ssb