Uday Kumar vs Shreesha Bhat

Anand Byrareddy, J.—Heard the learned Counsel for the petitioner and the learned Counsel for the respondent. The petitioner was the accused before the court below in respect of an allegation of commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (Hereinafter referred to as the ''NI Act'', for brevity).

The petitioner and the respondent were said to be friends and it is alleged that the complainant had lent a sum of Rs. 2,92,000/- as a hand loan at the request of the accused - petitioner and when there was demand made for repayment he had issued a cheque for Rs. 3,41,935/- and the same when presented for encashment, had been dishonored for want of sufficient funds. It is thereafter that formal proceedings had been initiated by the issuance of a notice under Section 138 of the NI Act. Thereafter, when the demand was not met, a complaint was filed. The petitioner had contested the matter before the trial court. However, he had admitted that there was a loan transaction of only a sum of Rs. 50,000/- and sought to negate the cheque on the ground that there was no legal liability in respect of the amount reflected in the cheque. However, in the course of his cross-examination he had admitted a loan of Rs. 2,92,000/-. But he sought to deny that the cheque could have been issued for the amount shown even if the loan was agreed to be repayable with interest at the rate of 15%. Since the amount was borrowed in the month of October 2001, and the cheque was issued as on May 2002, the interest on the loan amount then at the have been at the rate of 15% would not be the cheque amount as shown and therefore there was a falsity in the claim of the respondent. That contention having been negated by the court below, the trial court had convicted the accused and sentenced him to pay a fine of Rs. 3,45,000/- out of which Rs. 342,000/- was paid as compensation to the respondent.

That was challenged by way of an appeal before the appellate court and the appellate court in turn had dismissed the appeal and confirmed the sentence imposed. It is that which is under challenge in the present revision petition.

The learned Counsel for the petitioner would reiterate the defence set up before the trial court and would seek to demonstrate that both the courts below have completely overlooked the defence set up in the proper perspective and the respondent has succeeded in misleading both the courts below as to the actual loan borrowed and the falsity of the cheque when it was obtained by him as purported security and has been filled in at his whim and fancy, to the detriment of the petitioner and the same has been upheld notwithstanding the injustice that is caused and the respondent having failed to establish that the cheque indeed was issued in discharge of a crystallized liability. This not having been demonstrated, the court was not justified in holding that the presumption under Section 139 of the NI Act was in favour of the holder of the cheque and that there was no rebuttal evidence to dislodge that presumption, when on the face of it, it was evident that the cheque could not have been issued for the amount reflected on the cheque if it was lent at the rate of 15% per annum, which is a glaring circumstance. However, the clear admission on the part of the petitioner that there was a loan transaction, which was nebulously claimed to be at Rs. 50,000/- and thereafter, having been admitted to be at Rs. 2,92,000/- would certainly place the petitioner at a disadvantage and the court below having held against him, cannot be faulted. On this aspect of the matter, there can be little doubt that the burden was on the petitioner herein to establish that the cheque was not issued in discharge of a legal liability, especially, in view of his nebulous stand that though there was a loan transaction, it was at Rs. 50,000/- and also to candidly admit that it may have been at Rs. 2,92,000/-. Hence, there is no fault committed by the courts below.

However, insofar as the sentence is concerned, though there is power conferred on the courts below to impose a sentence of punishment, by way of imprisonment, which could extent to a period of 2 years or fine which may extend to twice the amount of the cheque, the same is not to be mechanically invoked to award exorbitant amounts of money, as if the proceeding were in the nature of suit for recovery of money.

Consequently, interests of justice would be met if the fine amount imposed on the petitioner is suitable modified. Accordingly, the fine amount is reduced to Rs. 3,05,000/- of which Rs. 3,00,000/- shall be paid as compensation to the respondent in terms of Section 357(2) of the Code of Criminal Procedure, 1973.

The petitioner shall deposit a further sum of Rs. 2,14,516/-, in addition to Rs. 85,484/-, which is already paid, on or before 7.1.2015. In the event of default, the petitioner shall undergo simple imprisonment of two months. The respondent is permitted to withdraw the amount already in deposit and the further amount to be deposited, upon such deposit.

The petition is allowed in part.