The High Court
Case Details
- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 04TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MS JUSTICE J.M.KHAZI CRIMINAL REVISION PETITION NO.486 OF 2021 BETWEEN: 1 . M/S JANYA CONSTRUCTIONS PVT LTD NO.134, 2ND FLOOR, K N COMPLEX 11TH CROSS, MALLESWARAM BANGALORE-560 003 2 . SRI NAGACHAND S/O LATE B.S.JAYARAM AGED ABOUT 59 YEARS MANAGING DIRECTOR AND AUTHORIZED SIGNATORY OF M/S JANYA CONSTRUCTIONS PVT LTD NO.8, SAPATHASHREE, 7TH CROSS 2ND MAIN, MANINANJAPPA LAYOUT DINNUR, BANGALORE-560 032 (BY SRI.H.S.CHANDRAMOULI, SR.COUNSEL FOR SRI.RAVI KUMAR M B, ADVOCATE) ...PETITIONERS AND: M/S RAJESH EXPORTS LTD COMPANY INCORPORATED UNDER COMPANY'S ACT, HAVING ITS OFFICE AT NO.4, BATAVIA CHAMBERS, KUMARA KRUPA ROAD, KUMARA PARK EAST BANGALORE-560 001 REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE R M NANJUNDASWAMY (BY SRI.KIRAN.S.JAVALI, SR.COUNSEL FOR SRI.P.RAJU, ADVOCATE) …RESPONDENT - 2 - THIS CRL.RP IS FILED U/S.397 R/W 401 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING TO SET ASIDE THE ORDER OF CONVICTION AND SENTENCE PASSED BY THE LEARNED XXV ADDL. CMM BANGALORE BY ITS JUDGMENT DATED 15TH JULY, 2019 IN C.C. NO.32290/2010 AND JUDGMENT IN CRIMINAL APPEAL NO. 1738/2019 PASSED BY THE LXIV ADDL CITY CIVIL AND SESSION JUDGE, BANGALORE DATED 26.02.2021 THEREBY CONFIRMING THE TRIAL COURT JUDGMENT AND ACQUIT THE ACCUSED/PETITIONERS. THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 02.04.2025, THIS DAY ORDER WAS PRONOUNCED THEREIN AS UNDER: CORAM: HON'BLE MS JUSTICE J.M.KHAZI CAV ORDER In this petition filed under Section 397 r/w Section
Legal Reasoning
401 of Cr.P.C, accused have challenged their conviction and sentence for the offence punishable under Section 138 of the Negotiable Instrument Act (for short "N.I.Act") by the trial Court which came to be confirmed by the Sessions Court by dismissing the appeal filed by them. 2. For the sake of convenience, parties are referred to by their ranks before the trial Court. 3. Complainant filed a complaint under Section 200 Cr.P.C against accused Nos.1 and 2, contending that accused No.1 is a company and accused No.2 is it's - 3 - authorized signatory and responsible for its day-to-day activities. Accused No.1 availed inter corporate deposit (for short "ICD") amount of ₹2,50,00,000/- promising to repay the same with interest at 24% per annum. Towards security of the same, immovable property was also mortgaged. Since accused failed to pay the installments with interest, a sum of ₹2,75,00,000/- was due. Towards repayment of the same, accused No.2 issued cheque No.056402 dated 27.03.2010 for a sum of ₹2,75,00,000/- with an assurance that it would be honoured on presentation. However, when complainant presented it for encashment, it was dishonoured for want of sufficient funds. Complainant got issued legal notice dated 09.04.2010. Notice sent through RPAD is returned with endorsement "addressee not found and returned to sender". Accused have neither paid the amount nor sent any reply and hence the complaint. 4. It is also contended by the complainant that accused No.2 being the Director of accused No.1 has undertaken personal responsibility to discharge the amount - 4 - due and executed a Memorandum of Declaration and issued cheque No.968256 dated 27.03.2010 towards repayment of ₹2,75,00,000/-. However, when it was presented for encashment, it was also dishonoured for want of sufficient funds. In this regard, complainant has also issued a legal notice to the accused No.2. Despite due service, he has neither paid the amount due nor sent any reply and therefore as against accused No.2 C.C.No.32295/2010 was filed. 5. In both cases, accused appeared and pleaded not guilty. 6. Vide order dated 15.06.2017, the trial Court clubbed these two cases with a direction to lead common evidence. 7. On behalf of the complainant, one witness is examined as PW-1 and Exs.P1 to 11 are marked. 8. During the course of his statement under Section 313 of Cr.P.C accused No.2 has denied the incriminating evidence lead by the complainant. - 5 - 9. Accused No.2 has given evidence as DW-1 and Exs.D1 to 4 are marked. 10. The trial Court convicted accused Nos.1 and 2 in C.C.No.32290/2010 and sentenced accused No.2 to pay fine Rs.2,75,00,000/- with the default sentence. However, the trial Court acquitted accused in C.C.No.32295/2010 on the ground that the complainant is not at liberty to present two cheques in respect of the same liability. 11. It appears the complainant has not challenged the acquittal of accused in C.C.No.32295/2010 and it has attained finality. 12. Accused Nos.1 and 2 challenged their conviction and sentence in Crl.A.No.1738/2019 before the Sessions Court. However, Sessions Court dismissed the said appeal and thereby confirmed judgment and order of the trial Court. 13. Aggrieved by the concurrent findings of the trial Court and Sessions Court, accused have come up with this petition, contending that the impugned judgment and order - 6 - are not tenable either in law or on facts and liable to be set aside. The Courts below have failed to appreciate the oral and documentary evidence in right perspective and thereby fell into error. They ought to have acquitted the accused as the cheques were not issued towards legally recoverable debt or liability. On the other hand, the complainant has misused the blank cheques issued by way of security. Instead of filing a suit for recovery of money the complainant has filed criminal complaint. The complainant has also not utilized the option of arbitration as per the terms of mortgage deed. Against complainant charging higher interest, accused No.2 has filed a private complaint and it is referred to investigation under Section 156 (3) of Cr.P.C. The trial Court and Sessions Court have not appreciated the evidence led by the accused on this aspect. The punishment imposed is too harsh and prayed to set aside the judgment and order passed by the trial Court as well as the Sessions Court. 14. On the other hand, learned counsel for complainant supported the judgment and order of the trial - 7 - Court and Sessions Court. He would submit that accused have availed loan of Rs.2,50,00,000/- under ICD, agreeing to repay the same with interest at 24% per annum. Though certain sums have been paid towards interest, the accused have failed to pay the principal amount. Therefore, the cheque was issued and when it was presented for encashment, the same is dishonoured for want of sufficient funds. When the accused failed to pay the amount due after service of notice, without any alternative complaint is filed. 14.1 In the light of presumption under Section 139 of N.I.Act, the trial Court rightly held that accused failed to rebut the presumption and prove discharge of the amount due. Therefore, the trial Court as well as the Sessions Court have rightly held accused guilty. The punishment imposed is also on the lower side and pray to the petition also. 15. Heard arguments and perused the record. 16. The fact that accused availed loan of ₹2,50,00,000/- by way of ICD from the complainant is not - 8 - in dispute. Ex.P3 is the declaration given by accused regarding the said loan, wherein they have agreed to pay interest at 24% per annum. Ex.P3 also disclose that ₹2,50,00,000/- were paid by way of cheque dated 27.11.2008. The said document also indicate issue of a post dated cheque No.056402 for ₹2,75,00,000/-, which is the subject matter of the complaint and marked as Ex.P4. It is also not in dispute that by way of security to the said loan, the accused have also executed a mortgage deed, creating charge over immovable property. 17. In fact, during his cross-examination, accused No.2 who is examined as DW-1 has admitted that he was the authorized signatory of accused No.1 company and the subject cheque is drawn on the company account and it bears his signature. The contents of Ex.P4 clearly indicate that the cheque is in the handwriting of accused No.2, except the date. It appears an undated cheque was issued and later on the date of presentation the date has been mentioned since the date portion is in the different handwriting. In other words, the cheque at Ex.P4 was - 9 - issued by way of security for the ICD facility availed by the accused persons. As held by the Hon'ble Supreme Court in Sunil Todi and others vs State of Gujarat and Anr. (Sunil Todi)1, a cheque issued by way of security also attract the liability under Section 138 of the N.I.Act. 18. Having regard to the fact that the cheque in question is drawn on the account of accused No.1 company and it bears the signature of accused No.2, who is the authorized signatory, presumption under Section 139 of N.I.Act is attracted, placing the initial burden on the accused to establish that it was not issued towards any legally recoverable debt or liability or as claimed in the present case, as on the date of presentation there were no dues to be recovered from the accused. 19. It is pertinent to note that despite issue of legal notice, the accused have failed to pay the amount due under the cheque and also send any reply putting forth their defence at the earliest available opportunity. At the trial, they have come up with case that the entire loan 1 AIR 2022 SC 147 - 10 - amount together with interest is paid and therefore the complainant was not supposed to present the cheque and it ought to have been returned to the accused. Though the accused have relied upon Ex.P1 which is a statement of interest received from the accused persons on the ICD of Rs.2,50,00,000/- taken from the complainant, this statement clearly indicate that what is paid is only the interest. The accused have also not produced their statement of account to indicate that not only the interest but also the principal amount is repaid. Admittedly, the mortgage is also still subsisting. Of course the complainant has not chosen to enforce the said mortgage. The arbitration clause is in the mortgage and therefore the contention of the accused that complainant ought to have approached the arbitration is not correct. 20. Anyhow, the accused have failed to prove that in addition to amount paid towards interest, the principal sum of ₹2,50,00,000/- is also repaid. Thus, the accused have failed to prove discharge and consequently they have failed to rebut the presumption. On the other hand, the - 11 - evidence led by the complainant establish that Ex.P4 cheque was issued by way of security for the ICD availed by the accused. On their failure to repay the same, the complainant has exercised the option of presenting the cheque for encashment and on its dishonour filed the complaint. 21. The trial Court as well as the Sessions Court on appreciation of the entire evidence placed on record has rightly held the accused guilty. In fact, looking to the interest paid by the accused, the trial Court has imposed flea bite sentence and it cannot be said to be on the higher side. There is no perversity in the conclusions arrived at and the findings given by the trial Court as well as the Sessions Court. There are no grounds to interfere in exercise of revisional jurisdiction by this Court. In the result the petition fails and accordingly the following:
Decision
ORDER i) Petition filed by the accused under Section 397 r/w 401 of Cr.P.C is dismissed. - 12 - ii) The impugned judgment and order dated 15.07.2019 in C.C.Nos.32295 and 32290/2010 on the file of XXV ACMM, Bengaluru and judgment and order dated 26.02.2021 in Crl.A.No.1738/2019 on the file of LXIV Addl.City Civil and Sessions Judge, (CCH-65) Bengaluru, are confirmed. iii) The Registry is directed to send back the trial Court as well as Sessions Court records along with copy of this order forthwith. Sd/- (J.M.KHAZI) JUDGE RR