2023 Supreme(Online)(KAR) 15909

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 11^TH DAY OF OCTOBER, 2023

BEFORE

THE HON’BLE MRS.JUSTICE M.G. UMA

CRIMINAL REVISION PETITION NO.1305/2019

C/W

CRIMINAL REVISION PETITION NO.113/2020

BETWEEN:

S.E. VIJAY

SON OF S.M. ESHWARAPPA

AGED 46 YEARS

RESIDING AT NO.559

SECOND 'B' CROSS

THIRD BLOCK, THIRD STAGE

BASAVESHWARNAGAR

BANGALORE - 560 079

… COMMON PETITIONER

(BY SRI: VENKATRAMANA .M.K., ADVOCATE)

AND:

H. MANJAPPA

SON OF LATE BASAPPA

AGED 75 YEARS

RESIDING AT 1010, 2(I) CROSS

THIRD BLOCK, THIRD STAGE

BASAVESHWARNAGAR

BANGALORE - 560 046

… COMMON RESPONDENT

(BY SRI: KULKARNI RAGHAVENDRA ANNARAO, ADVOCATE)

CRIMINAL REVISION PETITION NO.1305 OF 2019 IS FILED

UNDER SECTION 397 READ WITH SECTION 401 OF CR.P.C. PRAYING

TO SET ASIDE THE JUDGMENT DATED 30.08.2019 PASSED IN

CRL.A.NO.779/2017 ON THE FILE OF THE LII ADDITIONAL CITY CIVIL

AND SESSIONS JUDGE, BENGALURU CITY AND TO SET ASIDE THE

JUDGMENT/ORDER OF CONVICTION DATED 25.04.2017 PASSED IN

C.C.NO.25789/2012 ON THE FILE OF THE FILE OF THE XXV A.C.M.M.,

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BENGALURU BY ALLOWING THE ABOVE RP BY ACQUITTING THE

PETITIONER.

CRIMINAL REVISION PETITION NO.113 OF 2020 IS FILED

UNDER SECTION 397 READ WITH SECTION 401 OF CR.P.C. PRAYING

TO SET ASIDE THE JUDGMENT DATED 30.08.2019 PASSED IN

CRL.A.NO.1026/2017 ON THE FILE OF THE LII ADDITIONAL CITY

CIVIL

AND

SESSIONS

JUDGE,

BENGALURU

CITY

CCH-53

BY

ALLOWING THE ABOVE RP BY ACQUITTING THE PETITIONER.

THESE CRIMINAL REVISION PETITIONS HAVING BEEN HEARD

AND RESERVED FOR JUDGMENT ON 20.09.2023 COMING ON FOR

PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT PASSED THE

FOLLOWING:

COMMON ORDER

The accused in CC No.25789 of 2012 on the file of the

learned XXV Additional Chief Metropolitan Magistrate, Bengaluru

(hereinafter referred to as 'the Trial Court' for brevity), is

impugning the judgment of conviction and order of sentence

dated 25.04.2017 convicting him for the offence punishable

under Section 138 of the Negotiable Instruments Act (for short

'NI Act') and sentencing to pay fine of Rs.15,02,000/-, which

was enhanced vide judgment dated 30.08.2019 passed in

Criminal Appeal No.1026 of 2017 preferred by the complainant

on the file of the learned LII Additional City Civil and Sessions

Judge, Bengaluru City (CCH-53), (hereinafter referred to as 'the

First Appellate Court'), while dismissing Criminal Appeal No.779

of 2017 preferred by the accused.

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2.

The accused is challenging the dismissal of Criminal

Appeal No.779 of 2017 by preferring Criminal Revision Petition

No.1305 of 2019 and the judgment modifying the order of

sentence passed in Criminal Appeal No.1026 of 2017 by

preferring Criminal Revision Petition No.113 of 2020.

3.

Brief facts of the case are that, the complainant has

filed private complaint in PCR No.140011 of 2012 before the Trial

Court against the accused alleging commission of offence

punishable under Section 138 of NI Act. It is contended that he

is a retired Central Government employee having monthly

pension. With an intention to start small business for the benefit

of his unemployed son, the complainant wanted to invest in

some business. The accused was owning a proprietary concern

by name M/s.Toon Zone, a franchise of Ants Studio Pvt. Ltd. The

father of the accused was having acquaintance with the

complainant and it is stated that the accused is doing extremely

well in the said business and lured the complainant to invest in

the business of his son. Accordingly, the complainant agreed to

invest as he was promised of huge percentage of business profit.

It was agreed that the proprietary concern run by the accused

would be converted into partnership business. The complainant

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invested an amount of Rs.25,00,000/- by mortgaging his house

property by way of reverse mortgage. An equal amount of

contribution was said to have been made by the accused and his

father. A partnership deed was entered into on 16.01.2009. It

was registered on 02.02.2009 before the Registrar of partnership

firm.

4.

It is contended by the complainant that prior to

registration of partnership firm, the father of the accused got an

agreement dated 20.01.2009 signed by him, complainant and

the accused undertaking to transfer the proprietorship business

into a partnership firm for a total capital of Rs.50,00,000/-. The

accused has acknowledged the receipt of Rs.25,00,000/-

towards transfer of infrastructure and the franchise license and

other list of items mentioned in Annexure-A attached with the

agreement. But the accused has never transferred any of those

items as undertaken. The accused and his father started showing

hostile attitude towards the complainant. The partnership

business was never took off. No joint bank account was opened

in the name of the firm. The accused managed to get back his

money from the proprietary concern from out of the amount that

was invested by the complainant. The complainant realised that

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the accused with the help of his father managed to create a

bogus partnership firm with ulterior motive to make wrongful

gain.

5.

It is contended that when the accused and his father

have not heeded to the request made by the complainant, he

was forced to file a criminal complaint which was registered in

Crime No.42 of 2012 of Jayanagar Police Station on 22.02.2012.

The police have undertaken investigation in the matter. When

the investigation was undertaken, the accused has expressed his

willingness to settle the dispute amicably and voluntarily came

forward and issued the post dated cheque on 05.03.2012

bearing No.683976 dated 14.06.2012, for Rs.15,00,000/- drawn

on HDFC Bank, Jayanagar Branch, towards payment of portion of

the amount which was invested by the complainant. When the

cheque

was

presented

for

encashment,

the

same

was

dishonoured as account closed. The complainant issued the

legal notice to the accused informing him about dishonour of

cheque and calling upon to pay the cheque amount. Even

though, the notice was served on the accused, he has not repaid

the cheque amount, but issued a reply taking untenable

contentions. Therefore, the complainant requested the Trial

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Court to take cognizance of the offence and to initiate legal

action against the accused.

6.

The Trial Court took cognizance of the offence and

registered CC No.25789 of 2012 and summoned the accused to

appear before the Court. The accused appeared before the

Court and pleaded not guilty for the accusation made against

him. The complainant examined himself as PW1 and got marked

Exs.P1 to P8. The accused examined DWs.1 and 2 and got

marked Exs.D1 to D16 in support of his defence. The Trial Court

after taking into consideration all these materials on record

proceeded to pass the impugned judgment of conviction by

convicting the accused for the offence punishable under Section

138 of NI Act and sentencing him to pay fine of Rs.15,02,000/-.

7.

Being aggrieved by the same, the accused has

preferred Criminal Appeal No.779 of 2017 before the First

Appellate Court. The complainant has preferred Criminal Appeal

No.1026 of 2017 being aggrieved by the insufficiency of fine

amount imposed on the accused. The First Appellate Court on

re-appreciation of the materials on record disposed off both the

appeals by common judgment dated 30.08.2019, dismissing

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Criminal Appeal No.779 of 2017, allowing Criminal Appeal

No.1026 of 2017, modifying the order of sentence passed by the

Trial Court and enhancing the fine amount to Rs.20,00,000/-

with interest at 18% per annum over the cheque amount from

the date of receipt of cheque till its payment.

8.

Being aggrieved by the same, the accused has

preferred these two criminal revision petitions.

9.

Heard Sri M K Venkataramana, learned counsel for

the revision petitioner and Sri Raghavendra A Kulkarni, learned

counsel for the respondent. Perused the materials including the

Trial Court records.

10.

Learned counsel for the revision petitioner contended

that the accused had never borrowed any loan from the

complainant. The complainant has not proved the existence of

legally recoverable debt. Even though, the accused admits that

Ex.P1 - cheque belongs to his bank account and it bears his

signature, the same was not issued towards legally recoverable

debt. Since there was business transaction between the

complainant and the accused, and the complainant was running

a partnership firm with the father of the accused and since the

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accused was working as an Executive in the said partnership

business, he issued the cheque in question as security. The

complainant has misused the said blank cheque and presented

the same for encashment. The cheque was not dishonoured as

there was insufficient funds, but it was dishonoured as account

closed. Therefore, Section 138 of NI Act would not apply to the

facts of the case.

11.

Learned counsel for the revision petitioner submitted

that Ex.D2 is the agreement entered into between the

complainant and father of the accused, whereunder, the

complainant had undertaken to invest Rs.25,00,000/- in the

partnership business, but he paid only Rs.15,00,000/-. An

amount of Rs.10,00,000/- is still due to be paid by the

complainant. In the meantime, the complainant filed PCR

No.1662 of 2012 against the father of the accused, who is one

of the partners of the firm, alleging commission of offences

punishable under Sections 417, 418 and 420 of IPC. The matter

was referred for investigation in Crime No.42 of 2012 of

Jayanagar Police Station and after investigation 'B' report came

to be filed. In the meantime, the complainant filed the

complaint

before

the

Consumer

Forum

for

recovery

of

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Rs.10,00,000/- from the accused. All these developments

disclose that the relationship between the accused and the

complainant was strained. Under such circumstances, it cannot

be believed that the accused had issued the cheque as per Ex.P1

towards legally recoverable debt.

12.

Learned counsel submitted that Ex.D3 is the

partnership deed between the complainant and the father of the

accused; Ex.D1 is Form-C registering the partnership firm and

Ex.D2 dated 20.01.2009 is the agreement admittedly entered

into between the complainant and the father of the accused;

Ex.D4 is the letter evidencing the fact that the father of the

accused had availed loan of Rs.66,00,000/- by reverse mortgage

for the purpose of investing in the partnership firm. Ex.D15 is

the sale agreement dated 01.04.2009. All these documents go

to show that the complainant even though agreed to invest

Rs.25,00,000/-, had invested only Rs.15,00,000/- and when the

balance amount of Rs.10,00,000/- was demanded, he misused

the blank cheque issued by the accused and presented it for

encashment. Exs.D1 to 3 are the admitted documents as the

same were marked through PW1. He admits that the cheque -

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Ex.P1 was issued by the accused in the Police Station. Under

such circumstances, no credence could be given to Ex.P1.

13.

Learned counsel submitted that the complainant had

requested the accused to issue a blank cheque of his personal

account as security till completion of the sale transaction.

Accordingly, the accused issued the blank cheque on 06.01.2009

which was misused by the complainant. The accused and his

father are examined before the Trial Court as DWs.1 and 2.

Even though, the complainant has failed to prove his contention

of lending the amount and existence of legally recoverable debt,

the accused is successful in proving his defence that a blank

cheque as per - Ex.P1 was issued as security and the same was

misused by the complainant. The Trial Court and the First

Appellate Court have not considered any of these facts and

circumstances, and the admitted documents but proceeded to

convict the accused, without any basis.

14.

Learned counsel further submitted that the First

Appellate Court proceeded to allow the Criminal Appeal No.1026

of 2017 filed by the complainant and enhanced the fine amount

to Rs.20,00,000/- with interest at 18% p.a. from the date of

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receipt of the cheque till payment. The First Appellate Court

failed to take into consideration that the cause of action had not

arisen to initiate action under Section 138 of NI Act on the date

of cheque, but it would arise after lapse of the period fixed for

payment of the cheque amount after service of notice.

Moreover, Section 138 of NI Act would not authorise the

Appellate Court for granting interest at any rate on the fine

amount. Learned counsel for the accused placed reliance on the

decision of the Hon'ble Apex Court in Dilip Hariramani Vs

Bank of Baroda¹, in support of his contention.

15.

Learned

counsel

further

submitted

that

the

complainant could not have preferred an appeal before the First

Appellate Court seeking enhancement of the fine amount. The

First Appellate Court failed to consider any of these defence and

proceeded to pass the impugned judgment, without any basis.

Therefore, he prays for allowing the revision petitions and to set

aside the impugned judgment passed by the Trial Court and the

First Appellate Court and to acquit the accused, in the interest of

justice.

1 2022 Crl.L.J.2595

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16.

Per contra, learned counsel for the respondent

opposing the revisions submitted that the accused committed

the offence punishable under Section 138 of NI Act. The

complainant examined himself as PW1 and got marked the

relevant documents in support of his contention. The Trial Court

and the First Appellate Court on appreciation of the materials on

record, recorded concurrent findings that the complainant is

successful in proving the guilt of the accused beyond reasonable

doubt and convicted the accused. The scope of this revision is

very limited and unless it is shown that the impugned judgment

of conviction is either vitiated by perversity or there was

jurisdictional error, this Court may not interfere with the

impugned judgment of conviction. In support of his contention,

learned counsel for the respondent has placed reliance on Bir

Singh Vs Mukesh Kumar².

17.

Learned counsel also submitted that when the

accused admits issuance of cheque, the presumption under

Section 139 of NI Act would arise and unless the accused rebuts

the said presumption, he is liable for conviction. In this regard,

he placed reliance on the decision of the Hon'ble Apex Court in

2 (2019) 4 SCC 197

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APS Forex Services Pvt. Ltd., Vs Shakti International

Fashion Linkers and Others³.

18.

Learned counsel further submitted that as per the

admitted document - Ex.D2, the complainant had paid a sum of

Rs.25,00,000/- to the accused. The partnership firm even

though registered had not undertaken the business. Admittedly,

the accused has not complied with the undertaking given under

Ex.D2. Therefore, when the complainant demanded his amount

back, the accused had issued the cheque for Rs.15,00,000/-

towards part payment as per Ex.P1. Admittedly, the said cheque

was dishonored as account closed. Even according to the

accused, the account in question was closed during 2009-10.

But Ex.P1 was issued during 2012 i.e., on 14.06.2012. This

shows the conduct of the accused and it is a clear case of

cheating.

19.

Learned counsel further submitted that the cheque -

Ex.P1 for Rs.15,00,000/- is dated 14.06.2012. The impugned

judgment of conviction and order of sentence of the Trial Court

was passed on 25.04.2017, in spite of that, the Trial Court

3 AIR 2020 SC 945

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awarded fine of Rs.15,02,000/-. Therefore, the complainant has

preferred Criminal Appeal No.1026 of 2017, which came to be

allowed by awarding fine of Rs.20,00,000/- with interest at 18%

p.a. Learned counsel would submit that Section 117 of NI Act

deals with the Rules as to compensation. The compensation

payable in case of dishonour of a cheque would result in

awarding compensation and as per sub clause (c), the

complainant is entitled for the amount of cheque along with

interest at 18% per annum from the date of payment till

realization together with expenses caused by dishonour of the

cheque. Accordingly, the First Appellate Court modified the

impugned order of sentence. There is nothing wrong in

awarding the fine amount with interest at 18% per annum.

Therefore, there are no reasons to interfere with the impugned

judgment of conviction and order of sentence. Hence, both the

revision petitions are liable to be dismissed.

20.

In view of the rival contentions urged by learned

counsel for both the parties, the point that would arise for my

consideration is:

"Whether

the

impugned