- 1 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR CRIMINAL APPEAL No. 338 OF 2014 BETWEEN: BRIG.HARSHARAN SINGH ARORA S/O LATE HARNAM SINGH ARORA AGED ABOUT 69 YEARS RESIDENT OF No. 114 SALAPURIA CAMBRIDGE RESIDENCY 3RD MAIN, 1ST CROSS CAMBRIDGE LAYOUT BANGALORE – 560 008. …APPELLANT (BY SRI N DINESH RAO, ADVOCATE) AND: SRI. HARPAL SINGH SEHGAL S/O LATE HARBANS SINGH SEHGAL AGED ABOUT 52 YEARS RESIDENT OF No. 10, POTS & PANS C M H ROAD, INDIRANAGAR BANGALORE – 560 038. …RESPONDENT (BY SRI P B APPAIAH, ADVOCATE) THIS CRL.A. IS FILED UNDER SECTION 378(4) Cr.P.C PRAYING TO SET ASIDE THE JUDGMENT DATED 2.4.2014, PASSED IN C.C.No.27490/2012 BY THE XIV ADDL. CMM, BANGALORE AND PUNISH THE RESPONDENT FOR THE OFFENCES PUNISHABLE UNDER SECTION 138 OF N.I. ACT AND ETC., THIS APPEAL COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: Digitally signed by LAKSHMINARAYANA MURTHY RAJASHRI Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 CORAM: HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR ORAL JUDGMENT 1. This appeal is filed by the appellant – complainant praying to set-aside the judgment of acquittal dated 02.04.2014 passed in C.C.No.27490/2012 by the XIV Additional Chief Metropolitan Magistrate, Bengaluru, whereunder, the respondent – accused has been acquitted of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short hereinafter referred to as ‘N.I.Act’). 2. Case of the appellant – complainant in brief is that; The respondent – accused was known to him since several years and during the first week of October, 2006, the respondent – accused has requested and borrowed a sum of Rs.5,00,000/- for urgent financial / business commitments by executing an on demand Promissory Note with consideration receipt, agreeing to repay the same with interest at the rate of 18% per annum, within one year. It is further stated that during January 2010 – June, - 3 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 2010, the respondent – accused had made some part payments towards the interest amount and to clear the loan amount with interest, he had issued a cheque bearing No.000938 dated 01.05.2012 for Rs.5,00,000/- drawn on Centurion Bank of Punjab Limited, Indira Nagar Branch, Bengaluru. The appellant – complainant presented the said cheque for encashment through his H.D.F.C Bank, Indira Nagar Branch, Bengaluru and it came to be returned on 18.07.2012 with endorsement - “Account Closed”. The appellant – complainant got issued a legal notice on 25.07.2012 and that has been served on the respondent – accused. The respondent – accused did not pay the cheque amount, nor sent reply to the said legal notice. Therefore, the appellant – complainant initiated the proceedings against the respondent – accused for the offence under Section 138 of the N.I.Act. The plea of the respondent – accused came to be recorded. The complainant in order to prove his case, has examined himself as PW1 and got marked Exs.P1 to P9. The statement of the respondent – accused came to be - 4 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 recorded under Section 313 of Cr.P.C. The respondent – accused examined himself as DW1 and no documents were marked on his behalf. The Trial Court after hearing the arguments on both sides, has formulated the points for consideration and thereafter, passed the impugned judgment of acquittal. The said judgment of acquittal has been challenged by the appellant – complainant in the present appeal. 3. Heard learned counsel for the appellant – complainant and learned counsel for the respondent – accused. 4. Learned counsel for the appellant – complainant would contend that the respondent – accused had admitted borrowing of Rs.5,00,000/- from the appellant – complainant and execution of on demand Promissory Note with consideration receipt which are at Ex.P1 and Ex.P1(a). He further submits that the respondent – accused had also admitted the signature on Ex.P2 and therefore, a presumption arises under Section 139 of the - 5 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 N.I.Act, that a cheque has been issued for making payment of legally enforceable debt. The respondent – accused has not proved his defence that the cheque – Ex.P2 has been issued at the time of borrowing the loan as a security. On these grounds, he prayed for allowing the appeal and convicting the respondent – accused for the offence under Section 138 of the N.I.Act. 5. Learned counsel for the respondent – accused would contend that Ex.P2 – cheque has been drawn on Centurion Bank of Punjab Limited and it is dated 01.05.2012. Ex.P8 itself would indicate that the said Centurion Bank of Punjab Limited has been merged with H.D.F.C Bank on 23.05.2008. He further submits that the said aspect of merger in the year 2008 itself would indicate that the cheque –Ex.P2 has been issued prior to the said date. He further submits that as the document executed by the respondent – accused is an on demand Promissory Note dated 13.10.2006, the alleged debt is barred by limitation and therefore, it cannot be said that it is legally - 6 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 recoverable debt. The presumption raised under Section 139 of the N.I.Act, has been rebutted. Considering the said aspect, the Trial Court has rightly acquitted the respondent – accused. With this, he prayed to dismiss the appeal. 6. Having heard the learned counsels and on perusal of the Trial Court records and considering the grounds urged, the following point arises for consideration; “Whether the Trial Court has erred in acquitting the respondent – accused of the offence punishable under Section 138 of the N.I.Act?” 7. My answer to the above point is in the nagative, for the following reasons; Ex.P1 is an on demand Promissory Note dated 13.10.2006 and it is executed by the respondent – accused while he was borrowing Rs.5,00,000/- from the appellant – complainant. Ex.P1(a) is consideration receipt dated 13.10.2006. The respondent – accused has admitted - 7 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 that he had borrowed Rs.5,00,000/- from the appellant – complainant on 13.10.2006 and execution of Ex.P1 an on demand Promissory Note with consideration receipt. It is the defence of the respondent – accused that he had repaid the said loan amount within one year. It is his further defence that he had issued a blank signed cheque as a security and it has been misused by the appellant – complainant. The amount of borrowing and execution of an on demand Promissory Note is on 13.10.2006 and a cheque for payment of the said debt is said to be issued on 01.05.2012 as per Ex.P2. The initiation of legal action for recovery of the amount due under the on demand Promissory Note is three years from the date of on demand Promissory Note. After three years of date of on demand Promissory Note, the said debt under it becomes bared by limitation. The cheque – Ex.P2 is dated 01.05.2012, said to have been issued for making payment of debt. It cannot be said that the said cheque had been issued for making payment of legally enforceable debt, since the debt is barred by limitation. - 8 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 8. Ex.P8 is a letter of H.D.F.C Bank whereunder, it is stated that Centurion Bank of Punjab Limited has been merged with Punjab National Bank on 23.05.2008 and on merger, a new account has been opened in the name of the respondent – accused and the same has been closed. Subsequently, the cheque – Ex.P2 is drawn on Centurion Bank of Punjab Limited and it is dated 01.05.2012. Considering the said aspect, it is clear that the said cheque – Ex.P2 has been issued prior to merger of the Centurion Bank of Punjab Limited with H.D.F.C Bank ie., on 23.05.2008. It fortifies the defence of the respondent – accused that Ex.P2 – cheque has been issued as a security at the time of availing loan. Considering all these aspects, the learned Magistrate has rightly held that the complainant had failed to prove that the respondent – accused had committed the offence under Section 138 of the N.I.Act, as the cheque had not been issued for making payment of legally enforceable debt. There are no grounds - 9 - NC: 2025:KHC:1254 CRL.A No. 338 of 2014 to interfere with the well reasoned order passed by the learned Magistrate. In the result, the following; ORDER The appeal is dismissed. Sd/- (SHIVASHANKAR AMARANNAVAR) JUDGE GH List No.: 1 Sl No.: 48