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2023 Supreme(Kar) 1029

IN THE HIGH COURT OF KARNATAKA
G.Basavaraja, J.
Puttaraju – Appellant
Versus
Y. Rajgopala Naidu – Respondent
Criminal Appeal No. 958 of 2013
Decided On : 07-11-2023

Advocates appeared:
Sachin K.Naik, Advocate, S.Rajashekar, Advocate, C.S.Vinod, Advocate

The presumption under Section 139 of the Negotiable Instruments Act places the burden on the accused to prove that a cheque was not issued for a legally recoverable debt, which was not met in this case.

Headnote:

NEGOTIABLE INSTRUMENTS - CHEQUE DISHONOR - Negotiable Instruments Act, 1881 - Section 138, 139 - The court discussed the provisions of Section 138, which penalizes the dishonor of a cheque for insufficient funds or account closure, and Section 139, which creates a presumption in favor of the holder of the cheque regarding the existence of a legally enforceable debt. The court interpreted these sections to emphasize that the burden of proof lies with the accused to demonstrate that the cheque was not issued for a legally recoverable debt. The trial court's acquittal was based on inconsistencies in the complainant's evidence and the defense's demonstration that the cheque was issued as security rather than for a debt, influencing the court's decision to uphold the acquittal.

Fact of the Case:

The appellant/complainant filed an appeal against the trial court's acquittal of the accused for issuing a dishonored cheque of Rs. 1,50,000. The cheque was issued during the closure of a partnership business between the parties. The cheque was returned due to the account being closed, leading to a legal complaint under Section 138 of the Negotiable Instruments Act.

Finding of the Court:

The court found that the trial court had properly assessed the evidence and concluded that the complainant failed to prove the existence of a legally recoverable debt at the time the cheque was issued. The inconsistencies in the complainant's testimony and the evidence presented by the accused supported the trial court's decision.

Issues: 1. Whether the appellant/complainant has made out a ground to interfere with the impugned judgment of acquittal? 2. What order should be passed?

Ratio Decidendi: The court upheld the trial court's findings, emphasizing that the complainant did not establish that the cheque was issued in discharge of a legally recoverable debt, and the accused successfully demonstrated that the cheque was issued as security related to a partnership agreement.

Final Decision: The appeal was dismissed, and the trial court's order of acquittal was confirmed.

JUDGMENT

1. The appellant/complainant has preferred this appeal against the judgment of acquittal dtd. 14/8/2013 passed in CC No.127 of 2012 by the Senior Civil Judge and JMFC, Nagamangala (for brevity, hereinafter referred to as the "trial Court").

2. For the sake of convenience, the parties in this appeal are referred to as per their status and rank before the trial Court.

3. Brief facts of the case of the complainant/appellant are that in the years 2010 and 2011, the complainant and accused were doing business under partnership. In the year 2011, misunderstanding arose between them. Therefore, they decided to close the partnership business and at the time of closing the partnership business, the accused by accepting liability of Rs.1, 50, 000.00, issued a cheque dtd. 10/10/2011 to the complainant to be drawn on Axis Bank, Ramanagar (Andhra Pradesh). The complainant presented the same for encashment to Canara Bank, Bellur Branch, Nagamangala. The Canara Bank has sent the cheque to Axis Bank, Ramanagar (Andhra Pradesh) for clearance, but the same came to be returned on 14/10/2011 with endorsement "Account closed". The complainant sent legal notice dtd. 4/11/2011 to the accused through registered post. After receipt of the same, the accused sent reply, but he has not paid any cheque amount. Therefore, the complainant lodged a complaint under Sec. 200 of the Code of Criminal Procedure for commission of offence punishable under Sec. 138 of Negotiable Instruments Act, 1881.

4. After recording sworn statement, trial Court has taken cognizance against the accused for commission of offence punishable under Sec. 138 of the Negotiable Instruments Act, 1881 and registered a case in CC No.127 of 2012. In pursuance of the summons, accused appeared before the Court. Plea of the accused was recorded. Accused pleaded not guilty and claim to be tried.

5. In order to prove the case of the complainant, one witness was examined as PW1 and ten documents were marked as Exhibits P1 to P10. After completion of the complainant's side evidence, statement of the accused under Sec. 313 of Code of Criminal Procedure was recorded. The accused denied all the incriminating evidence found against him. Accused examined himself as DW1 and produced six documents as Exhibits D1 to D6. Upon hearing the arguments on both sides, the trial Court has acquitted the accused for commission of offence under Sec. 138 of the Negotiable Instruments Act, 1881. Being aggrieved by this judgment of acquittal, the appellant/complainant has preferred this appeal.

6. Learned counsel for the appellant/complainant submits that the impugned judgment passed by the trial Court is contrary to law and also contrary to the evidence on record. The trial Court is not justified in acquitting the accused after holding that the cheque in question came to be issued by the accused to the complainant. Learned counsel further submits that the finding of the trial Court that the complainant has not produced any document to show that he is authorised to represent Kruti Agencies and as such, the presumption envisaged under Sec. 139 of the Negotiable Instruments Act, 1881 will not come to the aid of the complainant is wrong and contrary to the provisions. He submits that the statutory presumption under law is, once the cheque is issued and the accused admits the issuance of cheque, then it is the bounden duty of the accused to prove that cheque is not issued towards discharge of legally recoverable debt. The trial Court has not properly appreciated the evidence on record in accordance with law and facts and on all these grounds sought to allow the appeal.

7. Learned counsel for the respondent is absent and hence arguments on the side of respondent is taken as nil.

8. Having heard the arguments of the learned counsel for the appellant/complainant, the following points would arise for my consideration in this appeal:

    1. Whether the appellant/complainant has made out a ground to interfere with the impugn

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