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High Court Of Karnataka
K.N.Keshavanarayana J.
Sridhar Narayan - Appellant
Versus
Karnataka Bank Limited – Respondent
Decided On : Nov 21,2008
NEGOTIABLE INSTRUMENTS ACT, 1881 - Sections 9 &10: [K.N.Keshavanarayana, J] "Holder in due course" - Held, He must be transferee in good faith and must have no sufficient cause to believe that any defect existed in the title of transferor over cheques. Fact that two cheques for substantial amounts were issued by two members of family in favour of two members of same family in favour of two members of same family is sufficient to create suspicion about entitlement of payee to receive amounts mentioned therein. Why in hurry substantial amount was paid to payees by discounting cheques even without making any enquiry about credibility of drawer and payee, is not explained by complainant Bank. Evidence on record established that, Bank initiated disciplinary action against Manager for causing loss to Bank by his negligent act in discounting cheques without proper enquiry, and he was found guilty and was demoted. It can be said that complainant Bank has not acted in good faith, and there were several circumstances and reasons to raise suspicion as to whether payees under cheques were entitled to receive money under cheques. Complainant bank cannot be said to have become holder in due course of those cheques. Complainant bank cannot maintain criminal action against accused drawer of cheques. Accused is not guilty of offence under Section 138.
NEGOTIABLE INSTRUMENTS ACT, 1881 - Sections 138 &142: [K.N.Keshavanarayana,J] Dishonour of cheque - Complaint filed by holder in due course - Maintainability - Held, It is maintainable and the Court can take cognizance of offence under Section 138.
NEGOTIABLE INSTRUMENTS ACT, 1881 - Section 139 :[K.N.Keshavanarayana,J] Presumption under - Held, It is only to extent that cheque was drawn for discharge in full or in part of any debt or other liability. Said presumption do not relate to existence of legally enforceable debt or liability. Before drawing presumption it is the duty of Court to see whether or not complainant has discharged his initial burden as to existence of legally enforceable debt.
NEGOTIABLE INSTRUMENTS ACT, 1881 - Section 139: [K.N.Keshavanarayana,J] Presumption under - Rebuttal of, by accused - Accused as drawer of cheques issued cheques in favour of payee who in turn got cheques discounted with complainant Bank for consideration - Held, There was no privity of contract between drawer of cheques and complainant bank. Moment complainant Bank paid consideration to payee of cheques, complainant Bank stepped into shoes of payee and presumptions available under Section 118(a) and 139 of Act would come into play. It is not necessary for accused in all such cases to enter witness box to rebut statutory presumptions and he may discharge burden of rebutting such presumption on basis of materials brought on record.
( 1. ) IN all these petitions filed under Section 397 read with Section 482 Cr. P. C., the legality and correctness of the common judgment dated 14. 2. 2006 passed by the Presiding Officer, Fast track Court-Ill and Additional Sessions Judge, Belgaum in Criminal appeal Nos. 95, 96, 102 and 103 of 2005 dismissing those appeals filed by the petitioners herein and affirming the identical but separate judgment dated 1. 6. 2005 passed by the Judicial Magistrate First Class-IV Court, belgaum in CC Nos. 754/02, 755/02, 98/03 and 284/03 convicting the petitioners herein who were arrayed as accused, for the offences punishable under Section 138 of the N. I. Act (for short the "act") and sentencing them to pay compensation to the common respondent - complainant and to pay fine, is questioned. As common questions of fact and law arises for consideration, these petitions were heard and are being disposed of by this common order.
( 2. ) THE common petitioner in Crl. R. P. Nos. 659/06 and 661/06 viz., saraswathi Narayan Hegde was arrayed as accused No. 1 in C.C. Nos. 284/2003 and 755/02, respectively. The common petitioner in Crl. R. P. Nos. 658/06 and 660/06 viz., Sridhar Narayan Hegde was arrayed as accused No. l in C.C. Nos. 98/03 and in C.C. No. 754/02 respectively: In C.C. No. 98/2003 one Aishwarya Services represented by its Proprietor ramachandra Narayan Hegde and in C.C. No. 754/02, one Annopoorna agencies represented by its Proprietor Manjunath Narayan Hegde had been arrayed as accused No. 2. In C.C. No. 755/02 Manjunath Narayan hegde and in C.C. No. 284/2003 Annapoorna Agencies by its proprietor manjunath Narayan Hegde had been arrayed as accused No. 2. The tabular details as to the corresponding criminal appeals and C.C. numbers with reference to the criminal revision petitions filed before this Court are as under:
Sl .
No.
Crl . RP. No.
Criminal Appeal No.
Corresponding C.C. No.
Complainant
Accused Persons
Cheques Nos. & amount
Drawn on
1.
658/2006
96/2005
98/2003
The Karnataka Bank Limited, Belgaum .
A-1 - Sridhar Narayan Hegde A-2 Ramachandra Narayan Hegde
No. 0801091 Dt. 30. 1. 2002 Rs. 5,90,000/-
Canara District Central
co-operative Bank Limited, Itagi
2.
659/2006
103/2005
284/2003
The Karnataka Bank Limited, Belgaum .
A-1 Saraswathi Narayan Hegde A-2 Manjunath Narayan Hegde
No. 906363 Dt. 18. 1. 2002 Rs. 4,80,000/-
Varada Grameena Bank, Siddapur Branch, U. K.
3.
660/2006
95/2005
754/2002
The Karnataka Bank Limited, Belgaum .
A-1 - Sridhar Narayan Hegde Ramachandra Narayan Hegde
No. 741377 Dt. 24. 1. 2002 Rs. 3,74,000/-
Varada Grameena Bank, Siddapur Branch, U. K.
4.
661/2006
102/2005
755/2002
The Karnataka Bank Limited, Belgaum .
A-1 Saraswathi Narayan Hegde A-2 Manjunath Narayan Hegde
No. 906361 Dt. 12. 1. 2002 Rs. 5,00,000/-
Varada Grameena Bank, Siddapur Branch, U. K.
Common complainant viz., Karnataka Bank Limited filed the above noted complaints against the respective accused persons under Section 200 of Cr. P.C. alleging offences punishable under Section 138 of the N. I. Act. The common averments made in all the complaints are as under: accused No. l in each of these cases issued cheques in favour of accused no. 2 who in turn got those cheques discounted with the complainant Bank. Accordingly, the Bank after deducting the commission paid the balance amount covered under those cheques to accused 2 and thus the Bank became holder in due course of these cheques. When the complainant Bank presented theses cheques, they were returned unpaid with Bankers endorsement "insufficient funds in the account of the drawer of the cheque" viz., accused No. l. Subsequently, once again the cheques were represented for encashment. But even then all the cheques were dishonoured as there was no sufficient funds to honour the cheques in the accounts of accused no. l. The fact of dishonour of the cheques were brought to the notice of accused No. l and 2 through legal notices and they were called upon to pay the amounts paid under the
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