- 1 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF APRIL, 2025 BEFORE THE HON'BLE MS JUSTICE J.M.KHAZI CRIMINAL REVISION PETITION NO. 557 OF 2017 BETWEEN: SRI GANESH SHETTI S/O LATE H.D.SHETTI AGED ABOUT 47 YEARS R/AT NO.7/43, 2ND FLOOR 2ND CROSS, VENKATESHWARA LAYOUT J P NAGAR 8TH PHASE BANGALORE-560076 …PETITIONER (BY SMT.CHANNAMMA S, ADVOCATE A/W SMT.NANDINI.C.G, ADVOCATE) AND: SRI RAJAN CHAUDHARY S/O LATE D.R CHAUDHARY AGED ABOUT 47 YEARS R/AT FLAT NO.G5, KALPATHARU PARAMOUNT 23RD 'A' CROSS, 4TH MAIN HSR LAYOUT 7TH SECTOR BANGALORE-560068 …RESPONDENT (BY SRI. KESHAV KUMAR B, ADVOCATE) THIS CRL.RP IS FILED U/S.397 R/W 401 CR.P.C BY THE ADVOCATE FOR THE PETITIONER PRAYING TO SET ASIDE AN ORDER OF CONVICTION DATED 12.04.2017 IN Digitally signed by REKHA R Location: High Court of Karnataka - 2 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 CRL.A.NO.648/2016 ON THE FILE OF LX ADDL. CITY CIVIL AND SESSIONS JUDGE, BANGALORE CITY (CCH-61) AND SET ASIDE ORDER PASSED BY THE XIX ADDL.C.M.M., BANGALORE IN C.C.NO.21662/2012 AND PASS AN ORDER OF ACQUITTAL BY ALLOWING THIS RP. THIS PETITION, COMING ON FOR HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MS JUSTICE J.M.KHAZI ORAL ORDER In this petition filed under Section 397 r/w 401 Cr.P.C accused has challenged his conviction and sentence for the offence punishable under Section 138 of the N.I Act imposed by the trial Court, which came to be confirmed by the Sessions Court, by dismissing the appeal filed by him. 2. For the sake of convenience, parties are referred to by their ranks before the trial Court. 3. Complainant is filed by the complaint alleging that accused is the owner of Flat No.G5, Kalpataru, Paramount Apartments, Bengaluru-560068. Complainant and accused entered into lease agreement dated 25.02.2010, by which the said apartment was leased in - 3 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 favour of the complainant for a sum of ₹5 lakhs towards security deposit. Complainant paid the said amount through cheques. Accordingly, complainant was putting possession of the said apartment. However, to the utter shock and dismay, during the month of May the complainant came to know that accused has taken home loan from Canfin home loans and became defaulter. Therefore, the bank has initiated proceedings under Secutarisation Act and issued notice over possession of the property. 3.1 After coming to know about it, complainant issued termination notice to the accused and after much persuasion and on follow-up accused issued cheque dated 22.05.2012 for ₹5 lakhs with an assurance that on presentation, it would be realised. However, when the complainant presented the cheque through his bank, it was returned dishonoured as payment was stopped by the drawer. After the dishonour of the cheque, accused started evading the complainant. Without any alternative, - 4 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 complainant got issued legal notice dated 20.07.2012 through RPAD to the three (3) addresses of the accused i.e, to his residential address, office address and permanent address. The notice is duly served. However, the accused failed to either comply with the notice or send any reply and hence, the complaint. 4. After due service of summons, the accused appeared through counsel and contested the case. He pleaded not guilty and claimed trial. 5. In order to prove the allegations against the accused, complainant examined himself as PW-1 and got marked Exs.P1 to 8. 6. During the course of his statement under Section 313 Cr.P.C, the accused has denied the incriminating evidence led by the complainant. 7. He has also given evidence as DW-1 and relied upon Exs.D1 to 3. - 5 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 8. The trial court convicted the accused and sentenced him to pay fine of ₹6 lakhs with default sentence of imprisonment. 9. Accused challenged the same before the Sessions Court, it came to be dismissed by confirming the judgment and order passed by the trial Court. 10. Aggrieved by the same, the accused is before this Court contending that offence under Section 138 of N.I Act is a technical offence, but the complainant has failed to prove the allegation against accused beyond reasonable doubt by complying all the mandatory requirements. In the present case, the legal notice is not served on the accused. The complainant has not examined the postman to prove the service of notice. There was an agreement of sale between the complainant and accused. However, the complainant was not ready and willing to perform his part of the contract and as such the advance is forfeited. Therefore, the complainant is not having any claim over the cheque. The evidence disclose that - 6 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 complainant had delivered possession of the flat on 28.12.2012 and as such as on the date of the cheque, there was no legally enforceable debt payable by the accused to the complainant. The trial Court has not considered the decisions relied upon by the accused in support of his defence. Viewed from any angle, the impugned judgment and order of the trial Court and Sessions Court are not sustainable and hence the petition. 11. In support of the petition accused has relied upon the following decisions: 1) M/s Swastik Coaters Pvt. Ltd Vs. M/s Deepak Brothers and Anr.(Swastik Coaters)1 2) Shanku Concretes Private Ltd & Ors. Vs. State of Gujarat & Anr. (Shanku Concretes)2 3) Supply House Vs. Ullas (Ullas)3 4) Indus Airways Private Ltd. & Ors Vs. Magnum Aviation Private Ltd and Anr. (Indus Airways)4 5) Sampelly Satyanarayana Rao Vs. Indian Renewable Energy Development Agency Ltd.(Sampelly Satyanarayana Rao)5 1 1996 SCC Online AP 1003 : 1997 Crl.LJ 1942 2 1999 SCC Online Guj 366: 2000 Crl.LJ 1988 3 2006 SCC Online Ker 533 : 2006 Crl.LJ 4330 4 (2014) 12 SCC 539 - 7 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 12. It is pertinent to note that on 17.10.2019, there was no representation for the accused. After hearing the learned counsel for complainant, the petition came to be dismissed on merits. Accused challenged the same before the Hon'ble Supreme Court in SLP (Crl) No.13366/2021. The Hon'ble Supreme Court was pleased to set aside the order dated 17.10.2019 and remanded the case for fresh disposal after providing opportunity to both parties. 13. After the remand, heard learned counsel for complainant, who argued in terms of the grounds urged in the petition. 14. On the other hand, learned counsel appearing for complainant submitted that when the complainant took the flat on lease, he paid ₹5 lakhs, which was returnable On the termination of the lease Period of three years. However, the Canara Bank with which he had borrowed home loan, initiated proceedings under the Securitisation Act and attached the property and recovered possession 5 AIR 2016 SC 4363: (2016) 10 SCC 458 - 8 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 from the complainant. The accused terminated the tenancy and issued the subject cheque towards repayment of the lease amount. When the accused failed to pay the lease amount, the complainant presented the cheque for realisation. However, it was dishonoured as accused had stopped the payment. Therefore after issuing legal notice and on the failure of accused to comply with the same, complainant has filed the complaint. The sale agreement was a tripartite agreement and it never materialise and it is cancelled. The accused has failed to rebut the presumption. On the other hand, complainant has proved his case. Rightly, both courts on proper appreciation of the evidence on record have convicted the accused. There are no grounds to interfere with the concurrent findings by the Court in exercise of its revisionary jurisdiction and prayed to reject the petition. 15. Heard arguments of both sides and perused the record. - 9 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 16. Thus, the accused has taken multiple defences viz., the legal notices are not served on him; in view of the sale agreement the lease has merged with the sale agreement and as such complainant cannot enforce the terms of the lease agreement; and that the amount due under the cheque is already paid and as such the complainant is not justified in presenting the cheque which was given by way of security for reaslization. In the light of the multiple defences taken by the accused, it is necessary to examine whether the accused has proved them and whether the trial Court as well as Sessions Court are justified in convicting the accused. 17. Having regard to the fact that the cheque in question is drawn on the account of the accused maintained with his banker and it bears his signature and it is dishonoured on stop payment instructions by the accused, presumption under Section 139 of N.I. Act comes into operation to the effect that it was issued towards repayment of any recoverable debt or liability, placing the - 10 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 initial burden on the accused to rebut the same. Only after he is able to rebut the presumption, the burden would shift on the complainant to prove his case. 18. The fact that accused in his capacity as the owner of the flat leased the same to the complainant on payment of Rs.5 lakhs for a period of 3 years and put him in possession is not in dispute. It is also not in dispute that he had availed home loan and on becoming defaulter, proceedings were initiated under Securitization Act and for this reason complainant was required to vacate the said premises is also not in dispute. 19. However, the accused has disputed that the legal notice is duly served on him and therefore contend that there is no compliance of mandatory requirement of Section 138 of N.I. Act. At the outset, it is relevant to note that the complainant has sent legal notice to the accused to his residential addressed, office address and permanent address. Accused is not disputing his addresses to which - 11 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 the legal notices were sent. As per Ex.P5 the letter issued by the postmaster the legal notice sent through Docket No.RK016774547IN which is addressed to the residential address of the accused is served on him on 24.07.2012. The other two envelopes addressed to his permanent address and office address are returned unserved as 'Not claimed'. When the accused has failed to receive the notices sent to the other two addresses, it presupposes that intentionally he has not received it. 20. Of course the notice sent to accused to his residential address is duly served. Therefore, it is not open to the accused to claim that there is no compliance of mandatory requirement of Section 138 of N.I. Act. Admittedly, the accused has not complied with the legal notice. He has also not sent reply to the notice. Of course there is no compulsion for the accused to send reply, but it provides opportunity to the accused to come up with his defence at the earliest available opportunity. - 12 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 21. It is submitted by the learned counsel for accused that in the light of the sale agreement, the lease merged with it and as such the complainant could not enforce the terms of the lease and seek refund of the amount by presenting the cheque for encashment. At the outset, it is relevant to note that PW-1 is not cross- examined with regard to this aspect. Apart from suggesting that notice is not served on him, the cross- examination of PW-1 is only to the effect that complainant was vacated from the possession of the premises by the Bank on 28.12.2012 and not in the month of May 2012 as deposed by him. In the cross-examination it is suggested that accused has paid the amount due under the cheque and he was supposed to return the cheque to the accused. Only during the course of his evidence, accused has deposed that since there was sale agreement, he instructed Bank not to honour the cheque for refund of lease amount. - 13 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 22. However during his evidence, the accused has deposed that he had issued Ex.P1 cheque which was blank except his signature when the lease agreement was entered into, which is contrary to Ex.P8. It is a letter dated 22.05.2012 issued by accused, terminating the lease agreement and enclosing the subject cheque with a request to vacate the premises as soon as possible and that he would repay lease amount of ₹5 lakhs and wait for his instructions to present the cheque. Thus, as per Ex.P8 the accused has terminated the lease agreement, giving rise to a right to the complainant to claim back the amount. 23. During the course of his evidence, the accused has deposed and also suggestions were made to the complainant during his cross-examination that accused has withdrawn in all ₹3,10,000/- from his account and paid to him and also paid a sum of ₹1,90,000/- on 28.12.2012 and thereby entire sum of ₹5 lakhs is paid to him. However, accused has not produced any evidence to - 14 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 this effect. Of course, complainant has denied the said suggestion. There was no impediment for the accused to transfer ₹3,10,000/- to the account of complainant, instead of withdrawing and paying the same in cash. Of course there is also no evidence to establish that he had paid ₹1,90,000/- in cash to the complainant. Thus, the accused has failed to prove discharge of the amount due under the cheque. 24. When the accused has failed to establish that he had taken hand loan of Rs.1,90,000/- only and at that time had given the subject cheque i.e., blank signed cheque by way of security, the decisions relied upon by him are not applicable to the case on hand. 25. Now, coming to the defence of the accused that the lease has merged with the sale agreement. As noted earlier there is no cross-examination of PW-1 on this aspect. On the other hand, during the course of his evidence, the accused has in unequivocal terms deposed - 15 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 that during October 2012, the complainant refused to purchase the house and withdrew ₹4,00,000/- deposited by him to the Bank and therefore, he and complainant got the agreement cancelled. As per Ex.P8, lease agreement was already cancelled. The sale agreement was also cancelled and came to an end. Such being the case, question of lease merging into the sale agreement would not arise. 26. As per Ex.P8, when the accused failed to pay the amount due under the subject cheque, complainant got a right to present the cheque for realization within its period of validity and rightly he has done so. Instead of repaying the lease amount, the accused has wrongly instructed the Bank to stop payment giving rise to a cause of action to the complainant to file the complaint for the offence punishable under Section 138 of N.I. Act. 27. The trial Court as well as the Sessions put on proper appreciation of oral and documentary evidence on record have rightly held that the allegations against - 16 - NC: 2025:KHC:14744 CRL.RP No. 557 of 2017 accused are proved and convicted and sentenced him. There is no perversity in the conclusions arrived at by them calling for interference by this Court. In the result, the petition fails and accordingly the following: ORDER 1. Petition filed by the accused under Section 397 r/w 401 Cr.P.C is hereby dismissed. 2. The impugned judgment and order dated 05.05.2016 in CC.No.21662/2012 on the file of XIX ACMM, Bengaluru and judgment and order dated 12.04.2017 in Crl.A.No.648/2016 on the file of LX Addl.City Civil and Sessions Judge, Bengaluru are confirmed. 3. The Registry is directed to return the trial Court as well as Sessions Court records along with a copy of this order forthwith. Sd/- (J.M.KHAZI) JUDGE RR List No.: 1 Sl No.: 56