- 1 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR CRIMINAL APPEAL No. 781 OF 2014 BETWEEN: M/S SHRIRAM TRANSPORT FINANCE CO., LTD. CENTRAL OFFICE No.123 ANGAPPA NAICKEN STREET CHENNAI. WITH ITS DIVISIONAL AND BRANCH OFFICE MANGALORE -575 007. REPRESENTED BY ITS SR.EXECUTIVE (LEGAL) M.C.NAGABHUSHAN S/O CHIKKARANGAIAH AGED ABOUT 38 YEARS …APPELLANT (BY SRI M J ALVA, ADVOCATE) AND: SMT. RADHA DAYANANDA W/O LATE B.DAYANANDA RAO AGED ABOUT 72 YEARS GANESH PRASAD, SUBHASH NAGAR, ULLALA MANGALORE – 574 159. …RESPONDENT (BY SRI VEERESH M UPPIN, ADVOCATE FOR SRI K CHANDRANATH ARIGA, ADVOCATE) THIS CRL.A. IS FILED UNDER SECTION 378(4) Cr.P.C PRAYING TO SET ASIDE THE IMPUGNED JUDGEMENT OF ACQUITTAL DATED 8.7.2014 PASSED BY THE LEARNED JMFC Digitally signed by HEMAVATHY GANGABYRAPPA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 (V COURT) MANGALORE IN C.C.No.524/2008 - ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT AND ETC., THIS APPEAL COMING ON FOR FURTHER HEARING THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR ORAL JUDGMENT This appeal is filed by the complainant challenging the judgment of acquittal dated 08.07.2014 passed in C.C.No.524/2008 by the JMFC Vth Court, Mangaluru, whereunder the respondent -accused has been acquitted for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as “N.I. Act” for brevity). 2. The brief facts of the appellant -complainant’s case is that The appellant –complainant is Public Limited Company doing money lending business. The respondent –accused has availed loan and executed hypothecation agreement with respect to his vehicle KA-19-AC-4047. In order to repay the said amount, the respondent –accused has - 3 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 issued cheque bearing No.978384 dated 27.09.2007 for Rs.3,70,000/-. The appellant –complainant presented the said cheque for encashment and same came to be dishonoured for ‘want of funds’. The appellant has issued legal notice. Inspite of service of notice the respondent – accused did not pay the cheque amount. Therefore, the appellant -complainant has filed private complaint against the respondent –accused for offence punishable under Section 138 of Negotiable Instruments Act, 1881. 3. Learned Magistrate took cognizance and registered case against the respondent –accused for offence punishable under Section 138 of N.I.Act in C.C.No.524/2008. The plea of the respondent –accused has been recorded. The complainant in order to prove its case has examined its representative as P.W.1 and got marked documents as Ex.P1 to P11. The statement of accused came to be recorded under Section 313 of Cr.P.C. The respondent –accused’ s son who is her GPA holder has examined as D.W.1 and got marked documents as Ex.D1 to D33. Learned Magistrate after hearing on both sides - 4 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 has formulated points for consideration and passed impugned judgment of acquittal. The said judgment of acquittal has been challenged by the complainant in this appeal. 4. Heard learned counsel for the appellant and learned counsel for the respondent. 5. Learned counsel for the appellant would contend that the respondent –accused has admitted availing loan in her reply notice –Ex.P7 wherein it is contended that cheque has been issued at the time of availing loan. As the cheque has been admitted by the respondent –accused the presumption under Section 139 of the N.I Act requires to be drawn that the cheque has been issued for making payment of legally enforceable debt. He further submits that Ex.P10 is the loan cum hypothecation agreement between the appellant and respondent. Ex.P11 is statement of account which indicates that balance amount is Rs.3,73,238.19/-. The cheque has been issued for Rs.3,70,000/- and it is the balance amount. He further submits that learned - 5 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 Magistrate has swayed away by the documents i.e. Ex.D9 to 33 which pertains to the year prior to loan agreement – Ex.P10. He submits that Ex.D3 –Arbitration award produced by the respondent –accused itself indicate the balance amount the same which is mentioned in the Ex.P11 –statement of account. He places reliance on following decisions 1) Dashrathbhai Trikambhai Patel Vs Hitesh Mahendrabhai Patel and Another1 2) T. Vasanthakumar Vs Vijayakumari2 3) K.S. Ranganatha Vs Vittal Shetty3 4) Rangappa Vs Mohan4 5) VGP Marine Kingdom Private Limited and Another Vs Kay Ellen Arnold5 Placing reliance on said decisions learned counsel for the appellant submits that burden is on the respondent – accused to rebut the presumption drawn under Section 1 Reported in (2023) 1 SCC 578 2 Reported in 2015 (7) SCJ 130 3 Reported in 2022 (1) KCCR 1 (SC) 4 Reported in AIR 2010 SC 1898 5 Reported in (2023) 1 SCC 597 - 6 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 139 of N.I Act. The said presumption is not rebutted by the respondent –accused by appropriate evidence. Without considering all these aspects, learned Magistrate erred in passing impugned judgment of acquittal. With this, he prays to allow the appeal and convict the respondent – accused for offence punishable under Section 138 of N.I Act. 6. Learned counsel for the respondent –accused would contend that it is specific contention of the respondent –accused that the loan amount has been repaid. The cheque is given at the time loan has been misused by the appellant. The respondent –accused has filed an application under Section 91 of Cr.P.C seeking production of five documents. Learned Magistrate by order dated 06.07.2010 has allowed the said application and directed to the appellant –complainant to produce the said documents. Only two documents are produced which are marked as Ex.P10 and 11 and other documents are directed to produce are not produced. For non production of other documents, adverse inference requires to be - 7 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 drawn. Documents directed to be produced contains statement with regard to payment made by the respondent –accused and sale proceeds of vehicle bearing No. KA-19-AC-4047. As the complainant has suppressed those documents, adverse inference requires to be drawn that amount due as mentioned in Ex.P11 is not amount due for which Ex.P1 –cheque said to have been issued. He further submits that P.W.1 in his cross examination has admitted that nobody has raised any loan on vehicle bearing No. KA-19-AC-4047 but documents produced by the respondent –accused indicate that the respondent – accused himself has availed loan on the said vehicle. He further submits that Ex.D4 to D33 are receipts having paid loan instalments indicate that the loan amount has been repaid. There is discrepancy in the sale proceedings as mentioned in Ex.P11 and in Arbitration award -Ex.D3. Even there is discrepancy in instalments paid in Ex.P11 and Ex.D3. Therefore, the said evidence will rebut the presumption drawn under Section 139 of the N.I Act. As the presumption is rebutted, the onus is on the appellant – - 8 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 complainant to prove that Ex.P1 -cheque has been issued towards making payment of legally enforceable debt. The said onus has not been discharged. Considering all these aspects, learned Magistrate has rightly acquitted the respondent –accused for offence punishable under Section 138 of the N.I Act. On these grounds he prayed for dismissal of the appeal. 7. Having heard learned counsels, the Court has perused the impugned judgment and trial Court records. Considering the grounds urged, the point arises for my consideration is “Whether learned Magistrate has erred in passing the judgment of acquittal of respondent –accused for offence punishable under Section 138 of N.I. Act.”? My answer to the above point is in the negative for the following reasons. It is specific case of the appellant –complainant that the respondent –accused has availed loan by hypothecating vehicle bearing No. KA-19-AC-1047 and - 9 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 executed loan cum hypothecation agreement –Ex.P10 and for making payment of balance Ex.P1 –cheque has been issued. The respondent –accused has not disputed her signature on Ex.P1 -cheque . Therefore, the presumption has to be drawn under Section 139 of the N.I Act that cheque has been issued for making payment of legally enforceable debt. The said presumption is rebutable presumption. The judgments relied by learned counsel for the appellant all deal with the presumption and rebuttal of the said presumption. It is for the respondent –accused to rebutt the said presumption drawn under Section 139 of the N.I Act. 8. The appellant – complainant along with the complaint has not produced any document with regard to the respondent – accused availing loan from the appellant – company. The respondent – accused has filed an application under Section 91 of Cr.P.C seeking production of the following documents; (i) Hypothecation agreement – original - 10 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 (ii) Sanction letter (iii) Instalment chart (iv) Statement regarding payment made by the respondent – accused (v) Sale proceeds of the vehicle bearing No.KA-19-AC-4047 9. The said application filed by the respondent – accused has been allowed by the learned Magistrate by order dated 06.07.2010. Under the said order, the appellant – complainant was directed to produce the above documents. In compliance of the said direction, the appellant – complainant has not produced all the documents, but only produced Ex.P10 – loan cum hypothecation agreement, Ex.P11 – statement of accounts. The other documents are not produced by the appellant – complainant. It is the specific case of the respondent – accused that he has repaid the entire loan amount. Considering the said aspect, the appellant – complainant ought to have produced what are all the payments made by the respondent – accused and the - 11 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 statement containing the payments made by the respondent – accused. The said statement produced at Ex.P11 does not contain full details of the total instalments and the amount paid in each instalment. The appellant – complainant has also not produced the documents pertaining to the sale of the hypothecated vehicle bearing No.KA-19-AC-4047 as directed by the learned Magistrate by order dated 06.07.2010. Ex.D3 is the arbitration award passed by the Arbitrator pertaining to the hypothecation loan dated 01.11.2005. The amount of balance as stated in Ex.P11 is Rs.3,73,238.19. The same is the balance claimed in arbitration proceedings and the award has been passed with regard to the said amount along with interest. In Ex.P11, the amount of instalments paid is Rs.71,902/- and in Ex.D3 – award, the amount of instalment paid is Rs.1,49,532/-. There is a discrepancy with regard to the amount of instalments paid by the respondent – accused as mentioned in Ex.P11 and Ex.D3. In Ex.D3 – arbitration award, the sale proceeds of the vehicle are stated as Rs.3,50,000/- and in Ex.P11, the sale proceeds are - 12 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 mentioned as Rs.3,75,000/-. There is also discrepancy with regard to the sale proceeds in Ex.P11 and Ex.D3. The appellant – complainant has not produced the sale proceeds of the vehicle bearing No.KA-19-AC-4047 as directed by the learned Magistrate, by order dated 06.07.2010. Even though there is a discrepancy with regard to the loan instalments paid and the amount of sale proceeds, the balance amount stated in Ex.P11 and the amount of balance claimed in the arbitration proceeds is the same. When there is a discrepancy in the amount of instalments paid and the sale proceeds, it is for the appellant – complainant to explain by producing the relevant documents. The documents directed to be produced are not produced which goes to the root of the matter regarding payments made by the respondent – accused and the sale proceeds of the vehicle bearing No.KA-19-AC-4047. PW1, in his cross examination has admitted that, earlier no loan was sanctioned pertaining to the hypothecated vehicle bearing No.KA-19-AC-4047. The documents produced by the respondent – accused which - 13 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 are at Ex.D9 to D33 would indicate that, earlier loan was availed by the respondent – accused on the hypothecation of the same vehicle ie., KA-19-AC-4047. As the statement of instalments paid and the sale proceeds of the vehicle are not produced, an adverse inference has to be drawn under Section 114 of the Indian Evidence Act, 1872. Considering the said aspect, the respondent – accused has rebutted the presumption drawn under Section 139 of the N.I. Act that the cheque issued is towards making payment of the legally enforceable debt. As the presumption is rebutted, the onus shifts on the appellant – complainant to prove that there is balance amount and the cheque has been issued towards making the payment of that balance loan amount. Considering the evidence on record, the appellant – complainant has not discharged the said onus. Considering all these aspects, the learned Magistrate has rightly acquitted the respondent – accused for the offence under Section 138 of the N.I. Act by a reasoned judgment. There are no grounds made out for - 14 - NC: 2025:KHC:4221 CRL.A No. 781 of 2014 setting aside the well reasoned judgment of acquittal. In the result, the following; ORDER The appeal is dismissed. Sd/- (SHIVASHANKAR AMARANNAVAR) JUDGE DSP,GH List No.: 1 Sl No.: 19