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2024 Supreme(Online)(KAR) 21016
HIGH COURT OF KARNATAKA
J.M. Khazi, J
M N Ramachandra – Appellant
Versus
Kempegowda J G – Respondent
Criminal Appeal No.1944 of 2018
For the Appellants/Petitioners: Smt. Sowbhagya V
For the Respondents: Sri. Vijayakumar Prakash
The presumption under Negotiable Instruments Act does not negate the need for the complainant to prove financial capacity, especially when challenged, reaffirming the burden of proof principles.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Criminal Procedure Code, 1973 - Section 200 - Appeal against acquittal - Complainant alleged loan of Rs.20,00,000/-; cheque dishonored - Trial Court acquitted accused - High Court assessed evidence but found complainant failed to prove financial capacity and necessity for loan - Court noted presumption in favor of complainant under Sections 118 and 139, but burden shifted to complainant when financial capacity was disputed - No compelling evidence of loan existence established - Appeal dismissed. (Paras 1, 20, 27)
(B) Presumption and Burden of Proof - Under N.I. Act - Two-fold: Complainant must initially show financial capacity; if challenged, burden shifts back to accused - Complainant's evidence inadequate to establish loan or financial necessity. (Paras 15, 28)
Facts of the case:
Complainant lent Rs.20,00,000/- to the accused on various dates as a hand loan for personal commitments, evidenced by a dishonored cheque and legal notice.
Findings of Court:
Complainant failed to prove financial capacity to lend, and necessity of borrowing a substantial sum was not justified, leading to upholding of the acquittal.
Issues: The main issue revolved around whether the complainant had proved his financial capacity to lend the alleged amount and the necessity of the accused borrowing such a loan.
Ratio Decidendi: The court ruled that under N.I. Act, the presumption in favor of the complainant is negated when the accused disputes the existence of legally enforceable debt; hence, the lack of sufficient evidence led to the dismissal of the complainant's appeal.
Result: Appeal filed by the complainant under Section 378(4) is dismissed.
| Table of Content |
|---|
| 1. appeal for acquittal and the facts behind the loan. (Para 1 , 4 , 10) |
| 2. burden of proof and evidence surrounding financial capacity. (Para 15 , 19 , 20) |
| 3. court's decision to uphold the trial court ruling. (Para 27 , 28) |
JUDGMENT
This appeal is by the complainant challenging the acquittal of respondent/accused for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as "N.I.Act" for short) 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 under Section 200 of Cr.P.C against accused, alleging that accused is his friend having known for the past 10 years. Because of this acquaintance, accused borrowed hand loan of Rs.20,00,000/- in cash on various dates as detailed below to meet his domestic and personal commitments.
| Sl. No. | Date | Amount in Rs. |
| 1. | 03.01.2015 | 30,000-00 |
| 2. | 31.01.2015 | 30,000-00 |
| 3. | 02.03.2015 | 10,000-00 |
| 4. | 27.04.2015 | 15,000-00 |
| 5. | 21.05.2015 | 6,00,000-00 |
| 6. | 05.06.2015 | 1,15,000-00 |
| 7. | 15.06.2015 | 2,00,000-00 |
| 8. | 24.06.2015 | 5,00,000-00 |
| 9. | 02.07.2015 | 5,00,000-00 |
| TOTAL Amount | 20,00,000-00 |
4. Accused had agreed to repay the same with interest at 12% p.a. On 02.07.2015, i.e., at the time of borrowing Rs.5,00,000/-, accused has issued a post dated 05.07.2015 cheque for Rs.20,00,000/- towards principle. He promised to pay interest amount later i.e., on or before 10.07.2015. Accordingly, on 08.07.2015, when complainant presented the cheque for realization, to his utter shock and surprise, it was dishonoured on the ground "Funds insufficient". Though, complainant brought this fact to the notice of accused he did not take any steps to pay the amount due. Complainant got issued legal notice dated 25.07.2015 through RPAD. It is returned with endorsement "Door locked intimation delivered". Accused has intentionally failed to receive the legal notice and also pay the amount due and hence, the complaint.
5. After due service of summons, accused appeared and contested the case by pleading not guilty.
6. In order to prove the allegations against the accused, complainant examined himself as PW-1 and got marked Ex.P1 to 6.
7. During the course of his statement under Section 313 of Cr.P.C, accused has denied the incriminating evidence lead by the complainant.
8. Accused has stepped into the witness box and examined himself as DW-1 and got marked Ex.D1 to 3.
9. Vide the impugned judgment and order, the trial Court has acquitted the accused.
10. Aggrieved by the same, complainant is before this Court, contending that the trial Court has grossly and glaringly erred in not properly appreciating the oral and documentary evidence placed on record. Complainant has produced reliable oral and documentary evidence to show that he has lent Rs.20,00,000/- to the accused and towards repayment of the same he has issued the subject cheque. The evidence led by the complainant prove the fact that since 10 years he is running bakery and milk business and having financial capacity to lend Rs.20,00,000/- to the accused. The trial Court has also failed to appreciate the fact that the concerned police have filed 'B' report in respect of the complaint filed by the accused against complainant herein as well as one M.K.Krishna. Despite claiming that the cheque was issued to M.K.Krishna during 2013 and he has not returned the same, accused has not instructed his banker to stop payment. Viewed from any angle, the impugned judgment and order are not tenable and pray to allow the appeal, convict the accused and sentence him in accordance with law.
11. In support of his arguments, learned counsel for complainant has relied upon the following decisions: (i) P.Rasiya Vs. Abdul Nazer and Anr (P.Rasiya)1 (ii) Rajesh Jain Vs. Ajay Singh (Rajesh Jain)2
12. On the other learned counsel for respondent/accused supported the impugned judgment AIR Online 2022 SC 1373 AIR Online 2023 SC 807 and order and submitted that complainant is not at all known to him an
