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IN THE HIGH COURT OF KARNATAKA
J.M. Khazi, J.
Mr. Naveen A. V., S/O Mr. A. S. Vishwanath – Appellant
Versus
Mr. Srinivasa Murthy S. , S/O Mr. Yerrappa – Respondent
Criminal Appeal No.747 of 2018
Decided On : 19-03-2024
N.I. Act - Negotiable Instruments Act, 1881 - Section 138, Section 56 - The court discussed the provisions of Section 138 of the Negotiable Instruments Act, which penalizes the dishonor of cheques issued for the repayment of legally enforceable debts. It emphasized the importance of the cheque representing a legally recoverable debt at the time of presentation. The court also referred to Section 56, which prohibits endorsements for part payments on negotiable instruments but allows for a note regarding part payments. The court concluded that since the accused had made part payments, the cheque did not represent the full amount due, and thus the offence under Section 138 was not established.
Fact of the Case:
The complainant alleged that the accused borrowed Rs.4,50,000 and issued four cheques as security for repayment. Upon presentation, the cheques were dishonored due to insufficient funds. The complainant filed a complaint after the accused failed to respond to a legal notice.
Finding of the Court:
The trial court acquitted the accused, finding that the complainant had not proven the allegations. The court noted that the accused had made several payments towards the loan, which were not accounted for by the complainant.
Issues: Whether the dishonored cheques represented a legally enforceable debt at the time of presentation, and whether the complainant was entitled to claim the entire amount despite the accused's part payments.
Ratio Decidendi: The court held that for an offence under Section 138 to be established, the cheque must represent a legally enforceable debt at the time of its presentation. Since the accused had made part payments, the cheque did not represent the full amount due, and thus the offence was not attracted.
Final Decision: The appeal was dismissed, and the trial court's acquittal of the accused was confirmed.
JUDGMENT
J.M. Khazi, J.
This appeal is by the complainant challenging the acquittal of respondent/accused for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short 'N.I.Act') by the trial Court.
2. For the sake of convenience, parties are referred to by their rank before the trial Court.
3. Complainant filed the complaint against the accused alleging that in order to overcome his financial difficulties, accused approached complainant and borrowed a sum of Rs.4,50,000/-. Accused agreed to pay interest at the rate of 3% p.m. i.e, Rs.13,500/- p.m. He also issued three cheques dated 05.11.2015 for Rs.2,00,000/, Rs.1,50,000/- and Rs.1,00,000/-. He also issued one more cheque for Rs.2,50,000/- dated 05.11.2015 towards part payment of interest. Accused assured prompt payment of the amount on presentation of cheques to the bank. Complainant presented the cheque, through his banker. To his shock and surprise, they were dishonoured with endorsement "Funds insufficient''. Complainant got issued legal notice dated 17.12.2015. Though it is duly served, accused has neither paid the amount nor sent any reply and hence the complaint.
4. After due service of summons accused appeared through counsel and resisted the complaint. He pleaded not guilty and claimed trial.
5. To prove the allegations against accused, complainant has examined himself as PW-1 and got marked Ex.P1 to 16.
6. During the course of his statement under Section 313 Cr.P.C, accused has denied the incriminating evidence led by the complainant.
7. Accused has examined himself as DW-1 and got marked Ex.D1 to 5.
8. Vide the impugned judgment and order, the trial Court dismissed the complaint.
9. Aggrieved by the same, complainant has filed this appeal, contending that the trial Court has erred in dismissing the complaint and acquitting the accused. The trial Court after giving findings that complainant has proved that the accused has borrowed hand loan, it ought to have convicted him. The trial Court has not appreciated the oral and documentary evidence placed on record in right perspective. Ex.D1, which is a clinching document shows that accused was due to pay the amount to the complainant. Ex.D1 though shows that certain payments are made, but not Rs.9,39,603/- as claimed by the accused. In Ex.D3, on 16.01.2016, it is stated that after payment of Rs.1,00,000/- still there is balance of Rs.3,50,000/-. When accused has not sent reply to the legal notice, it is to be presumed that he has accepted the averments made in the legal notice. The findings of trial Court are contrary to the decision of the Hon'ble Supreme Court. Viewed from any angle the impugned judgment and order are not sustainable and it calls for interference by this Court and hence the appeal.
10. In support of his arguments, learned counsel for complainant has relied upon the order passed by this Court in Crl.A.No.1401/2012 dated 23.11.2023.
11. On the other hand, learned counsel for accused has supported the impugned judgment and order and submitted that though accused borrowed hand loan of Rs.4,50,000/- from the complainant, four cheques in question were issued by way of security and as evident from the oral and documentary evidence placed on record and the admissions given by the complainant during his cross-examination, several payments have been made by the accused towards part payment of the amount due. Without giving deduction to the said payments, the complainant in order to make wrongful gain has made claim for the entire amount and interest and rightly the trial Court has dismissed the complaint and pray for dismissal of appeal also.
12. Heard elaborate arguments of both sides and perused the record.
13. The fact that accused borrowed a sum of Rs.4,50,000/- from the complainant and issued the subject cheques is not in dispute. Accused claim that the cheques were issued blank by way of security and even though several payments have been made, without giving deduction to them, the compla
A cheque that is dishonored must represent a legally enforceable debt at the time of presentation; part payments made prior to encashment must be accounted for, or the offence under Section 138 of th....
Accused failed to rebut the presumption of debt under Section 139, leading to acquittal being upheld despite dishonoured cheques. Evidence must sufficiently support claims of payment to avoid prosecu....
The presumption under Section 139 of the N.I. Act is attracted when the accused admits the issuance of the cheque and his signature upon the same. The accused can rebut this presumption either by eff....
Dishonour of cheque – If drawer of cheque pays a part or whole of sum between period when cheque is drawn and when it is encashed upon maturity, then legally enforceable debt on date of maturity woul....
(1) Incriminating circumstances, regarding which no explanation has been called from accused, cannot be used against him.(2) Dishonour of cheque – Unless part payment is endorsed on cheque as per Sec....
The burden of proof, legal presumptions, and the accused's admission of debt in the issuance of the cheque are crucial in determining liability under the Negotiable Instrument Act.
The judgment establishes the rebuttable nature of the presumption under Section 139 of the NI Act and emphasizes the requirement to record the statement of the accused under Section 342 of J&K Cr.P.C....
The issuance of a cheque signifies a legally enforceable debt under Section 138 of the N.I. Act, and the burden to prove otherwise lies with the accused, not the complainant.
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