Ananda K Karkera vs Yadav S Amin

S Rachaiah, J

This appeal is filed by the appellant being aggrieved by the judgment and order of acquittal dated 15.11.2012 passed in C.C.No.4372/2008 on the file of III Addl. Civil Judge and JMFC, Udupi, wherein, the Trial Court acquitted the respondent for the offence punishable under Section 138 of the Negotiable Instruments Act (for short ‘N.I. Act’).

The rank of the parties in the Trial Court henceforth will be considered accordingly for convenience.

Brief facts of the case:

It is the case of the complainant that accused had availed a hand loan of Rs.3.00 lakhs in cash to purchase the tempo and assured that he would repay the said loan along with 15% interest per annum. When the accused failed to repay the amount as agreed upon by him, the complainant demanded for repayment of the said amount and the accused issued a cheque bearing No.023260 dated 06.12.2007 for a sum of Rs.3.00 lakhs. When the same was presented for encashment, it was dishonoured with a shara as ‘insufficient funds'. The same was brought to the notice of the accused and inspite of service of notice, the accused did not repay the amount. Hence, the complainant was constrained to file a complaint before the jurisdictional Magistrate.

To prove the case of the complainant, the complainant examined himself as PW.1 and got marked five documents as Ex.P1 to Ex.P5. On the other hand, the accused examined himself as DW.1 and got marked eight documents as Ex.D1 to Ex.D8. The Trial Court after appreciating the oral and documentary evidence on record opined that the complainant failed to prove the transaction and acquitted the accused.

Heard Sri.H.Jayakara Shetty, learned counsel for the appellant and Sri.Nagaraja Hegde, learned counsel for the respondent.

It is the submission of learned counsel for the appellant that the findings recorded by the Trial Court in acquitting the accused is erroneous, perverse and illegal and the same requires to be set-aside.

It is further submitted that the cheque and signature are admitted by the accused, however, the transaction has been denied by him. The Trial Court failed to take note of the presumption which is required to be raised under Section 139 of N.I. Act. In addition to raising the presumption, the Trial Court failed to appreciate the evidence of PW.1 and DW.1 properly, as a result, the impugned judgment is passed which is required to be set aside.

It is further submitted that once the presumption is raised in favour of the complainant, the burden lies on the accused to rebut the presumption by leading the cogent evidence. Unless the accused adduces the cogent evidence, it cannot be said that the presumption would be rebutted. However, the Trial Court failed to take note of this aspect and recorded the acquittal which is perverse and illegal and the said order of acquittal has to be set aside. Making such submission, learned counsel for the appellant prays to allow the appeal.

Per contra, learned counsel for the respondent justified the order of acquittal passed by the Trial Court and submitted that the Trial Court while appreciating the oral and documentary evidence opined that, Ex.P1 cheque was of the year 1995 and the transaction is of the year 2007, hence, the loan transaction between the accused and the complainant has not been proved. In addition to the said findings, the Trial Court further considered the contradiction and inconsistency in respect of the transaction between the complainant and the accused and also further considered that the said contradiction became material contradiction. Hence, recorded the acquittal which is appropriate and relevant and interference with the said findings may not be warranted. Making such submission, learned counsel for the respondent prays to dismiss the appeal.

Having heard the learned counsel for the respective parties and also having perusing the averments made in the said findings, the points which arise for my consideration are:-

(i) Whether the judgment and order of acquittal passed by the Trial Court for the offence punishable under Section 138 of Negotiable Instruments Act is justified?

(ii) Whether the appellant has made out grounds to interfere with the findings recorded for acquittal by the Trial Court?

This Court being an Appellate Court, necessarily appreciate both oral and documentary evidence. However, in the case of appeal against acquittal, interference by the Appellate Court would be where the perversity is noticed in the findings of the acquittal passed by the Trial Court.

In order to avoid repetition of the facts, only the relevant points are to be considered to re-appreciate the findings of the Trial Court. The complainant is stated to have lent an amount of Rs.3.00 lakhs to the accused to purchase the tempo. When the amount was not repaid to the complainant as agreed upon by the accused, the complainant has insisted the accused to repay the amount. The accused in lieu of repayment of cash, issued a cheque. On presentation of the said cheque for encashment, it got dishonoured as 'insufficient funds'. In spite of notice having been served to the accused, the accused neither repaid the amount nor issued reply to defend his case.

Before adverting to the facts of the case, it is relevant to refer to the provisions of Sections 118 and 139 of N.I. Act which reads as follows:-

“118. Presumptions as to negotiable instruments.—Until the contrary is proved, the following presumptions shall be made:—

(a) of consideration:—that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date:—that every negotiable instrument bearing a date was made or drawn on such date;

(c) as to time of acceptance:—that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

(d) as to time of transfer:—that every transfer of a negotiable instrument was made before its maturity;

(e) as to order of indorsements:—that the indorsements appearing upon a negotiable instrument were made in the order in which they appear then on;

(f) as to stamp:— that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that holder is a holder in due course:—that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.

Presumption in favour of holder.—It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section138 for the discharge, in whole or in part, of any debt or other liability.”

On careful reading of the above said provisions, it states that once the cheque and the signature are admitted by the drawer of the cheque, it is presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 of N.I. Act for the discharge, in whole, or in part of any debt or liability. However, the presumption is rebuttable by proving to the contrary. Mere denial of the transaction is not sufficient to rebut the presumption. In the absence of any cogent evidence to show that the cheque was not issued in discharge of debt it cannot be said that the presumption is rebutted.

It is no doubt that initially the burden lies on the accused to rebut the presumption by leading cogent evidence. Therefore, it is appropriate to refer to the evidence of accused. He states in his evidence that no monetary transaction has taken place between himself and the complainant. In fact, cheque in dispute was issued to Pooja Finance at the time of borrowing loan from the said Pooja Finance. In order to substantiate his evidence, the accused got marked eight documents as Exs.D1 to D8.

It is further stated in his evidence that he knew the complainant since 13 years and both were doing boat business as a partners. During the said period, the accused stated to have borrowed loan of Rs.1.00 lakh from Pooja Finance and the complainant stood as guarantor. The said Pooja Finance received the cheque in dispute as a security to the said loan. After some days, the accused and the complainant have dissolved the partnership since they sustained loss in the said business. It is also stated in his evidence that the said Pooja Finance has registered a case against the accused in the same Court and the said dispute was settled between the accused and Pooja Finance for a sum of Rs.75,000/-. It is further stated in his evidence that, despite the settlement, the cheque in question had not returned from the Pooja Finance to the accused. It is the contention of the accused that instead of returning the cheque, it was issued to the complainant and case has been registered through the complainant. In order to substantiate his contention, the accused has produced Ex.D1-on demand promissory note.

On careful reading of the evidence of the accused, it may be true that the accused had borrowed loan of Rs.1.00 lakh from the Pooja Finance and also true that he has executed promissory note. However, he has not produced any documents to show that the present cheque was issued as a security for the said loan. The accused further admitted that both himself and the complainant were doing boat business as a partners and the said partnership has been dissolved due to loss sustained in the said business. It is not the case of the accused that the cheque in dispute has been taken by the accused when they were doing business together as a partners. However, he contended that the cheque in dispute was issued to Pooja Finance as a security and the said Pooja Finance given the said cheque and got the complaint filed through the complainant. In the absence of evidence on record to show the nexus between the complainant with the Pooja Finance, it cannot be accepted that the complainant took the cheque from Pooja Finance and filled it and presented it for encashment and claimed the amount through the said cheque and the Trial Court failed to take note that the presumption has not been rebutted. Even though the presumption has not been rebutted, the Trial Court asked the complainant to prove the case beyond all reasonable doubt and recorded the acquittal for not having proved the case of the complainant which appears to be erroneous and the judgment of acquittal cannot be sustainable.

In the light of the observations made above, the points which arose for my consideration are answered as:

Point No.(i)

: in the “Negative”

Point No.(ii)

: in the “Affirmative”

Hence, I proceed to pass the following;

ORDER

i) The criminal appeal is allowed.

ii) The judgment and order dated 15.11.2012 passed in C.C.No.4372/2008 by III Additional Civil Judge and JMFC, Udupi is set aside.

iii) The respondent / accused is convicted for the offence punishable under Section 138 of the N.I. Act and he is sentenced to pay a sum of Rs.4,10,000/- (Rupees Four Lakhs Ten thousand only), in default of payment of fine, he shall undergo simple imprisonment for one year.

iv) It is ordered that out of Rs.4,10,000/- (Rupees Four lakhs ten thousand only), Rs.4,00,000/-(Rupees Four lakhs only) shall be paid to the complainant as compensation in terms of Section 357-A of the Code of Criminal Procedure and the balance of Rs.10,000/- (Rupees Ten thousand only) would be adjusted to the exchequer of the State.

v) The Trial Court is directed to secure his presence for execution of sentence after appeal period got over.