Research › Search › Judgment

Karnataka High Court · body

2022 DIGILAW 579 (KAR)

Shivakumar S K v. Magesh Shankar C. P. @ Magesh

2022-04-22

K.NATARAJAN

body2022
JUDGMENT K. Natarajan, J. - This appeal is filed by the complainant under Section 378 (4) of Cr.P.C for setting aside the judgment of acquittal passed by the additional City Civil and Sessions Judge in Criminal appeal No.136/2015 dated 30.01.2016 and to confirm the judgment of the Trial Court for having convicted the respondent in CC.No.3753/2013 dated 05.01.2014. 2. Heard the arguments of learned counsel for the appellant as well as learned counsel for respondent. 3. The ranks of the parties are retained for the purpose of convenience. 4. The case of the complainant is that the accused said to be running traveling business and for improvement of his business and also for construction of his house he had borrowed a sum of Rs.7,00,000/-from the complainant on 4.5.2012 and promised to repay within 5 months and also had issued a post dated cheque drawn on Central Bank of India Ramamurthy Nagar, Bangalore and on the same day the wife of the accused executed a loan agreement. accordingly, when the cheque was presented for encashment it had become dis-honoured for "funds insufficient", hence after issuing notice complaint came to be filed. after taking cognizance the accused appeared before court and he was recorded, then evidence of the accused denied the charges. The complainant examined as PW1 and got marked 9 documents and accused himself examined as DW1, but no documents were marked. after arguments the trial court found him guilty and convicted and sentenced to pay Rs.7,25,000/- and in default he shall undergo imprisonment for one year which was challenged by the accused by filing appeal before the Sessions court in Crl.a.No.136/2015 and the same was allowed by the Sessions Judge and acquitted the accused which is under challenge before this court. 5. The learned counsel for the appellant contended that the judgment of the appellate court is not sustainable under the law where the contention of the respondent accused was believed as the appellant had no capacity and the cheque was issued for security purpose which is not correct. 5. The learned counsel for the appellant contended that the judgment of the appellate court is not sustainable under the law where the contention of the respondent accused was believed as the appellant had no capacity and the cheque was issued for security purpose which is not correct. The wife of the accused also executed agreement where it is clearly revealed that the cheque issued by the accused, the said document has been marked by the appellant as per Ex.P9 and the complainant is running traveling agency having 9 cars including 4 Innova cars and disbelieving the evidence of the complainant and presumption available in favour of the complainant has not been rebutted by the accused, therefore, prayed for setting aside the judgment of the first appellate court and to confirm the order of conviction of the order of trial court. In support of his argument the learned Counsel for the appellant relied upon judgment of the Madras High Court and judgment of this Court reported in ILR 2005 Karnataka 3167 and judgment as below: 1. Hiten P.Dalal vs. Bratindranath Banerjee 2001 SCC (2001) 6 SCC 16 , 2. ICDS Ltds., V/s Beena Shabeer and anr reported in (2002) 6 SCC 426 . 3. Sail Vs Jaggu reported in (2019) 7 SCC 658 6. Per contra the learned counsel for the respondent has supported the judgment of the first appellate court and contended that as per the agreement of the appellant in Ex.P9 the wife of the accused agreed to repay amount as she had borrowed the loan where the accused is not a signatory and it is clearly admitted by the complainant, in his evidence that cheque was given for security. The admission was not acceptable by the trial court, whereas the first appellate court has considered and when the complainant himself accepted and admitted the cheque was issued for the purpose of security he has no legally liable to pay any debt to the complainant. The complaint has no capacity to pay Rs.7,00,000/-and he has no record to show he is having so much amount. Therefore, the appeal required to be dismissed. Hence, prayed for dismissal of the appeal. 7. The complaint has no capacity to pay Rs.7,00,000/-and he has no record to show he is having so much amount. Therefore, the appeal required to be dismissed. Hence, prayed for dismissal of the appeal. 7. In support of his contention the respondent counsel relied upon the judgments of Hon'ble Supreme Court as under: a) M.S. Naryana Menon Vs State of Kerala aIR 2006 SC 3366 b) K. Narayana Nyak Vs Shivarama Shetty 2009 (2) aLT (Cri) 199, c) H.R. Nagarathna Vs Jayashree Prasad 2009 (2) aLD (Cri) 27. d) ahmed Saheb (dead by LRs and others) Vs Syed Ismail and connected matters reported in 2012 (8) SCC 516 , e) Basalingappa Vs Mudibasappa in Crl.a.No.636/2019 reported in (2019) 5 SCC 418 8. Having heard the learned counsel for the parties and perused the judgment as well as the trial court records, the point that arises for consideration is: (a) Whether the cheque issued by the accused is for discharge of legally recoverable debt and thereby he has committed offence punishable under Section 138 of NI act? (b) Whether judgment of first appellate court calls for interference? 8. Having heard the arguments and perused the records, the case of the complainant is that the accused borrowed loan from the complainant for improving the business as well as construction of building and for repayment he has issued cheque which become dis-honoured. The cheque in question has been marked as Ex.P1 in the Trial Court. The further case of the complaint is that for the purpose of repayment of the loan they executed loan agreement as per Ex.P9. The PW1 admitted in the cross examination that the cheque was given as a security of the loan under Ex.P9 and his wife signed the agreement. In view of the admission the trial court has stated that the said admission is the stay admission, therefore it cannot be considered, hence the trial court convicted the accused, whereas the first appellate court has stated that the admission is best evidence. The cheque was given as security of the loan, therefore cheque is not given for discharge of loan, hence acquitted the accused. The parties are relied upon various judgment in this regard. The cheque was given as security of the loan, therefore cheque is not given for discharge of loan, hence acquitted the accused. The parties are relied upon various judgment in this regard. However, the latest judgment of the Hon'ble Supreme court reported in 2021 SCC online SC 1002 in the case of Sripati Singh (since deceased) through his son Gaurav Singh Vs State of Jharkhand and another has categorically held at para 17, 18 and 19 as under: "17. a cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. 18. The prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defenses that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. 19. Therefore, prima facie the cheque which was taken as security had matured for payment and the appellant was entitled to present the same. On dishonour of such cheque the consequences contemplated under the Negotiable Instruments act had befallen on respondent No.2. as indicated above, the respondent No.2 may have the defense in the proceedings which will be a matter for trial. In any event, the respondent No.2 in the fact situation cannot make a grievance with regard to the cognizance being taken by the learned Magistrate or the rejection of the petition seeking discharge at this stage. 20. The appellant cannot be non-suited for proceeding with the complaint filed under Section 138 of N.I. act merely due to the fact that the cheques presented and dis-honoured are shown to have been issued as security, as indicated in the loan agreement. 20. The appellant cannot be non-suited for proceeding with the complaint filed under Section 138 of N.I. act merely due to the fact that the cheques presented and dis-honoured are shown to have been issued as security, as indicated in the loan agreement. In our opinion, such contention would arise only in a circumstance where the debt has not become recoverable and the cheque issued as security has not matured to be presented for recovery of the amount, if the due date agreed for payment of debt has not arrived. " Herein in this case the accused taken the contention that it was a security cheque which was given to the accused for some other transaction for getting rented car from the complainant but he has not produced any document to prove his contention and in view of the judgment of Hon'ble Supreme Court once the cheque is issued as security for the loan and if the loan is not paid back then if the cheque is dishonoured which attract 138 of NI act. Therefore, the contention of the accused counsel cannot be acceptable that the cheque was given only for security purpose but without producing any document to show he has repaid the loan to the complainant, then he has to pay the cheque amount when it is presented for encashment which is legally recoverable debt. 9. another contention taken by the accused is that the complainant is not having capacity to lend so much amount as loan but in the cross examination of PW1 he himself elicited complainant is having 7 cars and he is running the travel agency and accused also running travel agency and appellant also had purchased 4 Innova cars for let out in his travel agency. The accused contended that the complainant himself borrowed loan for purchasing the car and he was paying installment, he has no capacity to pay Rs.7,00,000/- to the complainant. The contention of the respondent accused is not acceptable as the complainant is having 7 cars of his own and other 4 Innova cars purchased for letting out for rent. Therefore merely he purchased car by loan, that itself is not ground to say he has no money in his hand when he is having 11 cars and travel business. The capacity of the complainant clearly reveals he has capacity to pay such amount to the accused. 10. Therefore merely he purchased car by loan, that itself is not ground to say he has no money in his hand when he is having 11 cars and travel business. The capacity of the complainant clearly reveals he has capacity to pay such amount to the accused. 10. In this regard Hon'ble Supreme Court also held in a recent judgment Basalingappa Vs Munibasappa relied by the accused counsel where the Hon'ble apex Court has held the financial capacity are based upon the evidence lead by the defense. The accused required to raise the probable defense in his evidence but here in this case he has strengthen the evidence of the complaint that he is having 11 cars. Such being the case, the contention of the respondent counsel cannot be acceptable. Therefore, I hold the cheque was issued for discharge of the loan and the same was dis-honoured for want of funds, thereby the accused committed the offence under 138 of NI act. In view of my finding above the judgment of first appellate court in the Crl.a.No.136/2015 dated 30.01.2016 is required to be set aside and the judgment of trial court in CC.No.3753/2013 dated 05.01.2014, requires to be restored. accordingly, the appeal is allowed. The judgment of the first appellant court in Crl.a.No.136/2015 dated 30.01.2016 is hereby set aside and the judgment of the trial court in CC.No.3753/2013 dated 05.01.2014 is confirmed.