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2023 Supreme(Kar) 1027
IN THE HIGH COURT OF KARNATAKA
J.M.Khazi, J.
Mitra Finance (R) Mitra Priya – Appellant
Versus
Vasanth Naik & Ors. – Respondents
Criminal Appeal No. 913 of 2010
Decided On : 12-09-2023
Sri. S K Acharya, Advocate, for the Appellant; Kum. Thanima Bekal, Advocate for Sri. T.Hareesh Bhandary, Advocate, for the Respondent.
The presumption of liability under Section 139 of the Negotiable Instruments Act can be rebutted by the accused, and the burden of proof lies on the complainant to establish the legitimacy of the debt.
Headnote:
NEGOTIABLE INSTRUMENTS ACT - Dishonour of Cheque - Section 138, Section 139 - The court discussed the provisions of Section 138 regarding the offence of dishonour of cheque for insufficiency of funds and Section 139 which creates a presumption in favour of the holder of the cheque that it was issued for a legally recoverable debt. The court interpreted these sections to emphasize the burden of proof on the accused to rebut the presumption of liability, which they failed to do adequately, leading to the conclusion that the cheque was misused and not issued for the current debt.
Fact of the Case:
The complainant, a partnership firm engaged in money lending, filed a complaint against the accused for dishonouring a cheque issued towards repayment of a loan. The accused borrowed Rs.50,000 and issued a cheque for Rs.1,12,131, which was dishonoured due to a closed account. The Trial Court convicted the accused, but the Sessions Court acquitted them, leading to this appeal by the complainant.
Finding of the Court:
The court found that the accused successfully rebutted the presumption under Section 139 of the Negotiable Instruments Act by demonstrating that the cheque was issued in relation to an earlier loan and was misused. The court also noted the lack of evidence from the complainant to substantiate their claims regarding the loan and the cheque.
Issues: Whether the cheque was issued for a legally recoverable debt and whether the complainant had the authority to file the complaint.
Ratio Decidendi: The court held that the presumption under Section 139 could be rebutted by the accused through preponderance of probabilities. The absence of proper documentation and the failure to establish the legitimacy of the debt led to the conclusion that the cheque was misused.
Final Decision: The appeal by the complainant was dismissed, and the acquittal of the accused by the Sessions Court was upheld.
JUDGEMENT
1. This appeal is by the complainant, a partnership firm engaged in money lending business, challenging the impugned judgment and order passed by the Sessions Court, allowing the appeals filed by accused challenging their conviction and sentence by the Trial Court for the offence punishable under Section 138 of Negotiable Instrument Act.
2. For the sake of convenience, the parties are referred to by their rank before the Trial Court.
3. It is the case of the complainant that it is a registered partnership firm carrying on business of money lending. It is represented by Shri Sudhakar Andrews being the General Power of Attorney holder of Managing Partner Shri N. Achutha Holla. The accused are in charge and control of the affairs of M/s.Sri Krishna Combines, a partnership firm represented by its partners i.e., accused No.2-Vasanth Naik and accused No.3-V.S.C.Holla .They are the persons responsible for day today business transaction of accused No.1-Firm.
3.1. On 25.6.1993, accused Nos.2 and 3 have borrowed loan of Rs.50,000/- agreeing to repay the same with interest at 23% per annum within a period of one month. They have executed an on demand promissory note as principal borrower and guarantor respectively. But they failed to keep up with their promise and on 30.3.1996, have executed acknowledgement of debt letter. In this regard, on 17.11.1998, accused Nos.2 and 3 have issued cheque of accused No.1-Firm for a sum of Rs.1,12,131/- towards repayment of the amount due. However, when presented for repayment, it was dishonoured on the ground that the 'account is closed'. The complainant got issued a legal notice, calling upon them to pay the amount due. Though it is duly served, the accused have failed to comply with the same, and on the other hand have sent an evasive reply. Without any alternative, the complaint is filed.
4. After due service of summons, accused appeared before the Trial Court and contested the case. They pleaded not guilty and claimed trial.
5. In order to prove the allegations against the accused, one witness is examined as PW1 and Exs.P1 to 21 are marked. During the course of the statement under Section 313 Cr.P.C., the accused have denied the incriminating evidence.
6. Accused have not lead any defence evidence.
7. Vide Judgment and order dated 30.12.2006, the Trial Court convicted the accused and sentenced accused Nos.2 and 3 to undergo simple imprisonment for one month and pay fine of Rs.1,25,000/- in default to undergo simple imprisonment for three months.
8. Being aggrieved by the same, accused Nos.2 and 3 filed appeals before the Sessions Court. Vide the impugned judgment and order, the Sessions Court has allowed the appeals filed by accused Nos.2 and 3 and acquitted them.
9. Being aggrieved by the same, complainant is before this Court contending that the impugned judgment and order of the Sessions Court is wholly improper and illegal. The accused have not lead any evidence to discharge the burden placed on them and this fact is not appreciated by the Sessions Court. It has erred in holding that PW1-Achutha Holla was not competent person to represent the complainant-Firm, especially when the accused have not disputed his competence to file the complaint. Being aware of the transaction, he was competent to speak about the same. There are no justifiable grounds for the Sessions Court to interfere with the same and reverse a well reasoned judgment of the Trial Court and prays to allow appeal and confirm the judgment and order of Trial Court.
10. In support of his arguments, learned counsel representing the complainant has relied upon the following decisions:
i. M/s. TRL Krosaki Refractorise Ltd. Vs. M/s. SMS Asia Private Limited and Another, 2022 (1) Kar.L.R.543 (SC) (M/s. TRL Krosaki)
ii. S.C.Narayanan Vs. State of Maharashtra and Anr., AIR 2014 SC 630 (S.C.Narayanan)
iii. Mita India Pvt.Ltd. Vs. Mahendra Jain, II (2023) BC 227 (SC) (Mita India)
iv. Amaresh Vs. Shivakumar, II (2023) BC 114 (Kar.) (Amaresh)
11. On
