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2025 Supreme(Online)(Kar) 31954
KARNATAKA HIGH COURT
MR. RAVI V.HOSMANI, J
SRI VIJAYAKUMAR R.B. – Appellant
Versus
SRI VEERAYYA S/O FAKKIRAPPA LAKSHMESHWARNATH – Respondent
CRIMINAL REVISION PETITION NO. 100436 OF 2024
For the Appellants/Petitioners: SRI SHIVAKUMAR S.BADAWADAGI
For the Respondents: SHASHWATH S.HIREMATH
The absence of a valid contract negates liability under Section 138 of the Negotiable Instruments Act, affirming that a cheque issued merely as security does not constitute an enforceable debt.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Dishonor of cheque - Petitioner issued a cheque for an advance towards a contract, which was later dishonored - Courts below failed to appreciate lack of privity of contract and misuse of cheque as security rather than an enforceable debt - Presumption of liability rebutted by evidence - Petitioner acquitted of offense. (Paras 16-34, 34-35)
(B) Burden of Proof - The complainant must establish the case beyond reasonable doubt - It is not sufficient to merely assert existence of debt; evidential burden rests with the complainant to provide credible evidence. (Paras 2-13)
Facts of the case:
The petitioner issued a cheque for₹4,00,000/- to the complainant as part of a painting project assignment but claimed it was misused. The cheque was dishonored due to insufficient funds leading to a complaint under Section 138 of N.I. Act.
Findings of Court:
Both lower courts did not properly evaluate the lack of any enforceable debt relationship, leading to the conviction being overturned.
Issues: Determining if there was an existing liability owed by the petitioner to the complainant enforceable under Section 138 of N.I. Act.
Ratio Decidendi: The courts found that without a valid contractual relationship and considering the evidence of the cheque being issued solely for security, the presumption of liability under N.I. Act was effectively rebutted, resulting in the acquittal.
Result: Criminal Revision Petition allowed; conviction and sentence set aside.
| Table of Content |
|---|
| 1. petitioner issued a cheque which was claimed to be misused. (Para 2 , 3 , 4 , 5) |
| 2. the defense argues no privity of contract exists. (Para 6 , 10 , 24) |
| 3. judgment based on the impossibility of proving debt. (Para 13 , 14 , 30) |
| 4. court rules on the need for enforceable debt for conviction. (Para 33 , 34) |
CAV ORDER
(PER: THE HON'BLE MR. JUSTICE RAVI V.HOSMANI)
Challenging judgment/order dated 23.10.2024 passed by V Addl. District and Sessions Judge, Dharwad, sitting at Hubballi (‘Appellate Court’, for short) in Crl.A.no.5013/2024 and judgment/order dated 06.01.2024 passed by I Addl. Civil Judge and J.M.F.C., Hubballi, (‘Trial Court’, for short) in C.C.no.1335/2018, this revision petition is filed.
2. Sri Shivakumar S. Badawadagi, learned counsel for petitioner submitted, respondent (complainant) had filed private complaint against petitioner, stating that complainant was doing painting work since 15 to 20 years, while petitioner was Civil Contractor and about a year and half earlier, they came in contact with each other through common acquaintance Suresh Paste. Due to same, complainant was entrusted with painting work of Income Tax Building at Mangalore from GC and Company, Mangalore ('GC’, for short), for sum of Rs.18,00,000/-. In course of said work, when complainant sought advance payment, petitioner issued cheque bearing no.31851 dated 16.02.2018, for Rs.4,00,000/-, drawn at Bank of India, Chikmagaluru Branch.
3. When same was presented for collection on 17.02.2018, it returned dishonored with endorsement ‘funds insufficient’ and same was intimated on 18.02.2018. Thereafter, when legal notice was got issued on 05.03.2018, even after receipt of same on 14.03.2018, petitioner failed to pay cheque amount within 15 days and replied with untenable reasons and denied for payment. Therefore, complaint was filed on 13.04.2018 alleging commission of offence under Section 138 of Negotiable Instruments Act, 1881 (‘NI Act’, for short).
4. It was further submitted, after appearance, when substance of accusation was read over and explained, petitioner pleaded not guilty and claimed to be tried. It was submitted, complainant examined himself as PW.1 and got marked Exs.P1 to P5. On being apprised of incriminating circumstances, statement of petitioner denying same was recorded under Section 313 of CrPC. Thereafter, petitioner availed opportunity, examined herself as DW.1 and another as DW.2 and no documents were marked.
5. It was submitted, though petitioner had set up substantial defence denying not only acquaintance and having any financial transaction with complainant, but also alleged misuse of cheque given by respondent, trial Court convicted petitioner by sentencing to pay fine of Rs.4,10,000/- in default of payment to undergo simple imprisonment for a period of six months and payment of Rs.10,000/- as fine amount to State. Aggrieved thereby, petitioner preferred Crl.A.no.5313/2024 on various grounds.
6. Upon consideration of said grounds, first appellate Court dismissed appeal and confirmed judgment passed by trial Court. Aggrieved thereby, this revision petition was filed.
7. At outset, it was submitted, there was no transaction between complainant and petitioner. Therefore, there was no legally enforceable debt, as alleged in complaint. Further, painting work was assigned by GC. Bare reference to same would be insufficient to cast liability on petitioner. It was submitted, complainant has not produced any document or material to establish contract between them. It was contended, cheque was issued only for security purpose, but misused by complainant.
8. It was submitted, during cross-examination complainant specifically admitted that transaction was entered into between himself and GC. Admittedly, petitioner was not contracting party nor part of any transaction. Even complainant admitted, entrustment of painting work from GC was through Suresh Paste. Though, complainant stated that at time of entrustment of work, Suresh
