C.R. Harish vs C.K. Keerthi

Anand Byrareddy, J.—There is a delay of 7 days in filing the appeal. The notice of the application having been served on the respondent, the respondent is represented by counsel, who is heard. The delay in filing the appeal is condoned. Special leave is granted and the appeal is considered for final disposal even at this stage, having regard to the facts and circumstances for final disposal.

It is the case of the present appellant, who was the complainant before the Trial Court that the respondent had borrowed a sum of Rs. 5,00,000/- as loan and had agreed to repay the same on or before 24.11.2006 and in discharge of the loan, had issued a post dated cheque bearing No. 0354459, dated 24.11.2006, drawn on Canara Bank, Gudugalale Branch. When the same was presented for the encashment, it was returned with the banker''s endorsement that the funds were insufficient. Therefore, the appellant had issued a notice under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as "the NI Act" for brevity), making a demand in terms there of. When the respondent did not meet the demand, a complaint was lodged. The respondent having entered appearance, on summons being served, had contested the matter denying the transactions and stood trial and the Trial Court had framed the following point for consideration:

"Whether the complainant proves that the accused has issued a cheque bearing No. 0354459 dt. 24.11.2006 in discharge of his liability and the said cheque came to be dishonoured and even after issuance of statutory legal notice, the accused has not paid the cheque amount and thereby the accused has committed an offence punishable u/s. 138 of the N.I. Act?"

and held the same in the negative and acquitted the accused. It is that, which under challenge in the present appeal.

The learned counsel for the appellant would point out that the cheque issued by the respondent is not denied, nor is the signature on the cheque denied. The contention that the same was not issued in discharge of legal liability, has been upheld by the court below by reference to the decision in the case of Krishna Janardhan Bhat Vs. Dattatraya G. Hegde, . The learned counsel would point out that the said decision is no longer good law, has been over ruled by a Larger Bench of the Supreme Court in the case of Rangappa Vs. Sri Mohan, and therefore, the opinion that there is an initial burden on the complainant to demonstrate that the cheque was issued in discharge of a legal liability, has been reversed with reference to the expressed provisions of Section 139 of the NI Act, which rests on that, there is a presumption in favour of the holder of the cheque that the same was issued in discharge of legal liability and the said presumption however is a rebuttal presumption, which can be discharged by tendering expressed record in that regard or even with reference to the evidence of the complainant.

In the present case on hand, the court below has proceeded on the footing that there was an initial burden on the complainant in demonstrating that the cheque was issued for discharge of legal liability only on the bald claim of the respondent - accused, which is not in accordance with law. This contention would have to be accepted on the face of it. Therefore, from reading of the judgment, it is evident that the court below has only proceeded on this erroneous footing in addressing whether the appellant had discharged initial burden of establishing that the cheque was issued in discharge of legal liability and has extensively referred to case law, all of which is crystallised in Krishna Janardhana Bhat''s case, which is no longer a good law. Therefore, the appeal is summarily allowed. The judgment of the court below is set aside. The issuance of the cheque not being denied, or the signature on the same was not being denied and the banker having endorsed that the cheque was being dishonoured for want of sufficient funds, would adequately establish the ingredients of the offence punishable under Section 138 of the NI Act. Therefore, the complainant has succeeded in his case against the accused and the judgment of the court below is set aside. Hence, the respondent is convicted for the offence punishable under Section 138 of the NI Act and is sentenced to pay a fine of Rs. 5,05,000/-, of which Rs. 5,00,000/- shall be paid as compensation to the appellant in terms of Section 357(2) of the Code of Criminal Procedure 1973 and in default, of payment of the fine by the respondent, he shall suffer simple imprisonment for a period of three months.