- 1 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 27TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR CRIMINAL APPEAL NO.100137 OF 2018 BETWEEN: 1. SAMRUDH SOUHARD CREDIT SAHAKARI NIYAMIT, HAVING ITS OFFICE AT CTS NO.5647, IIIRD FLOOR, BAMNE TOWER, OPP. FIRE BRIGADGE STATION, KHANAPUR ROAD, BELAGAVI, REPRESENTED BY IT SECRETARY, SMT. KRANTI W/O. MANGESH KANTAK, AGE:36 YEARS, OCC: SERVICE, R/O: CTS NO.5647, IIIRD FLOOR, BAMNE TOWER, OPP. FIRE BRIGADGE STATION, KHANAPUR ROAD, BELAGAVI. 2. SHRI. MANGESH S/O. TRIVIKRAM KANTAK, AGE: 41 YEARS, OCC: SERVICE, R/O: CTS NO.5647, IIIRD FLOOR, BAMNE TOWNER OPP. FIRE BRIGADGE STATION, KHANAPUR ROAD, BELAGAVI. …APPELLANTS (BY SRI. RAM P. GHORPADE, ADVOCATE) AND: SHRI. JAHEER MEHMOOD JAMADAR, AGE: 45 YEARS, OCC: BUSINESS, R/O: H.NO.2075, SARASWATI NAGAR, NEAR SIDHIVINAYAK TEMPLE BELAGAVI – 06. …RESPONDENT (BY SRI. S. B. SHAIKH, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C., SEEKING TO GRANT LEAVE TO APPEAL AND TO CALL FOR THE RELEVANT RECORDS AND ALLOW THIS CRIMINAL APPEAL, BY SETTING ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED Digitally signed by MOHANKUMAR B SHELAR Location: High Court of Karnataka, Dharwad Bench, Dharwad - 2 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 28.03.2018 PASSED IN C.C.NO.172/2017, BY THE VITH JMFC, BELAGAVI AND TO CONVICT AND SENTENCE THE ACCUSED/RESPONDENT FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT AND PASS SUCH ANY OTHER ORDER OR ORDERS AS THIS HON’BE COURT DEEMS FIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IN THE INTEREST OF JUSTICE AND EQUITY. THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR ORAL JUDGMENT This appeal is filed by the appellant -complainant praying to set-aside the judgment of acquittal dated 20.03.2018 passed in C.C.No.172/2017 by the VI JMFC, Belagavi, whereunder the respondent -accused has been acquitted for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I. Act’, for short) 2. The case of the appellant –complainant’s in brief is as under: The respondent –accused has taken a loan of Rs.3,00,000/- (rupees Three Lakhs only) on 16.11.2013 - 3 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 from the complainant. The respondent –accused become defaulter in paying the installments of the said loan. The total amount due as on 14.01.2016 is Rs.4,36,357/- (rupees Four Lakh Thirty Six Thousand Three Hundred Fifty Seven Only). The appellant –complainant requested the accused to make payment of loan amount. The respondent –accused has issued a cheque bearing No.212232 dated 14.01.2016 drawn on ICICI Bank, Khanapur Road, Tilakwadi Branch, Belagavi for Rs. 4,36,357/-(rupees Four Lakh Thirty Six Thousand Three Hundred Fifty Seven Only) infavour of the appellant – complainant. The appellant –complainant presented the said cheque for encashment and it came to be dishonoured for reason ”funds insufficient” in the account of accused under memo dated 18.01.2016. The appellant –complainant got issued legal notice to the respondent accused on 15.02.2016 and it has been served on the respondent –accused on 16.02.2016. The respondent – accused has not paid the cheque amount and therefore, - 4 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 the appellant –complainant has filed a private complaint against the respondent –accused for the offence punishable under Section 138 of the N.I Act. 3. Learned Magistrate has taken cognizance and registered C.C.No.172/2017 against the respondent - accused for the offence under Section 138 of N.I. Act. The plea of the accused has been recorded. The appellant - complainant in order to prove its case has examined witness as PW-1 and got marked documents as Exs.P-1 to P-14. The statement of accused has been recorded under Section 313 of Cr.P.C. The respondent –accused did not lead any defence evidence. The learned Magistrate after hearing the arguments on both sides, has formulated the points for consideration and passed the impugned judgment of acquittal of the respondent –accused for offence punishable under Section 138 of the N.I Act. The said judgment of acquittal has been challenged by the appellant -complainant in this appeal. - 5 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 4. Heard learned counsel for appellant and learned counsel for the respondent. 5. Learned counsel for appellant –complainant would contend that the borrowing of loan of Rs.3,00,000/- (rupees Three Lakhs only) has been established by producing loan application –Ex.P7, promissory note –Ex.P8 executed by the respondent –accused and two others and withdrawing the loan amount credited to the SB account of the respondent –accused under two withdrawal slips Ex.P12 and 13. The statement of personal loan account – Ex.P10 and 11 indicate that the loan amount was due and it is higher than the cheque amount as on the date of cheque. The respondent –accused has admitted his signature on the cheque –Ex.P1. The presumption drawn under Section 139 of the N.I Act has not been rebutted by the respondent –accused. There is legally enforceable debt and for which the respondent –accused has issued cheque –Ex.P1 and it has been dishonoured for reason “funds insufficient” in the account of the accused. Inspite of - 6 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 issuance of notice, the respondent –accused neither replied to the notice nor paid the cheque amount within 15 days. The evidence on record will establish that the respondent –accused has committed offence punishable under Section 138 of the N.I Act. Without considering all these aspects, learned trial Judge has erred in acquitting the respondent –accused for offence punishable under Section 138 of the N.I Act. On these grounds, he prays to allow the appeal and convict the respondent –accused for offence punishable under Section 138 of the N.I Act. 6. Learned counsel for the respondent –accused would contend that P.W.1 in his cross examination has admitted that proposal of loan has been rejected. He contends that loan application, demand promissory note and other documents were taken at the time of filing loan application. He contends that cheque has been also issued at the time of filing loan application. The Chairman of appellant - Society was friend of the respondent –accused and at his instance he affixed his signature on documents - 7 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 including cheque. Husband is Chairman and wife is Secretary of appellant –Society and family members cannot be hold post of elected members as per Section 29(A)(1)(f) of the Karnataka Co-Operative Societies Act, 1959. The respondent –accused has rebutted the presumption raised under Section 139 of the N.I Act. The appellant –complainant has also filed another case for dishonor of cheque by using cheque bearing No.212231 and it is pending. He submits that considering all these aspects, learned Magistrate has rightly acquitted the respondent –accused for offence punishable under Section 138 of the N.I Act. With these, he prays 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 following point arises for my consideration: “Whether the trial Court has erred in acquitting the respondent -accused - 8 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 for offence under Section 138 of N.I. Act?” My answer to the above point is in the ‘affirmative’ for the following reasons: It is the specific case of the appellant -complainant that the respondent –accused has availed loan of Rs.3,00,000/- (rupees Three Lakhs only) from the appellant –complainant and repayment of the same has issued cheque –Ex.P1. The respondent –accused has admitted his signature on cheque –Ex.P1. As respondent –accused has admitted his signature on cheque –Ex.P1, the presumption has to be drawn under Section 139 of the N.I Act that the cheque has been issued for discharge of debt. The said presumption is rebuttable presumption. The standard of proof for rebutting the said presumption is preponderance of probability. 8. Since, the appellant –complainant has produced documents to establish that the respondent –accused has - 9 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 borrowed loan of Rs.3,00,000/-(rupees Three Lakhs only) and there was balance more than cheque amount as on the date of cheque, the presumption drawn under Section 139 of the N.I Act becomes insignificant. 9. Ex.P7 is loan application filed by the respondent –accused seeking loan of Rs.5,00,000/-(rupees Five Lakhs only) and it bears his signature. The page No.2 of the said application bears signature of two guarantors namely Dattatraya Jadhav and Srikanth Patil. The page No.3 of the said application contains sanction order and loan has been sanctioned in sum of Rs.3,00,000/-(rupees Three Lakhs only) to the respondent –accused under resolution dated 05.11.2013 and it has been signed by the Chairman and Secretary with round seal. Ex.P8 –on demand promissory note executed by the respondent –accused and two sureties infavour of the appellant –complainant for sum of Rs.3,00,000/-(rupees Three Lakhs only) dated 16.11.2013. It bears signature of the respondent -accused and two sureties. Ex.P9 is account opening form of SB - 10 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 account filed by the respondent –accused and it contains account No.594 which is SB account of the respondent – accused. It is case of the appellant –complainant that loan amount of Rs.3,00,000/-(rupees Three Lakhs only) has been credited to SB account of the respondent –accused and he has withdrawn Rs.41,625/- on 16.11.2013 under withdrawal slip –Ex.P13 and Rs.2,58,375/- on 19.11.2023 under withdrawal slip –Ex.P12. Those two withdrawal slips pertains to SB account No.594 and they bears signature of the respondent –accused. Ex.P12 contains signature of the respondent –accused on the back of the withdrawal slip. There is no signature on the back of Ex.P13 withdrawal slip. The said documents itself clearly establish that the respondent –accused has availed loan of Rs.3,00,000/- (rupees Three Lakhs only) from the appellant – complainant. 10. Ex.P-11 is statement of loan account of the respondent/accused maintained with the appellant. As per Ex.P-11, a sum of Rs.4,73,343/- (rupees Four Lakhs - 11 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 Seventy Three Thousand Three Hundred Fourty Three only) was due as on 31.03.2016. The said statement of loan account Ex.P-11 indicates that the respondent - accused has not repaid any amount towards his loan account. Ex.P-1-cheque has been issued on 14.01.2016 for Rs.4,36,357/-(rupees Four Lakhs Thirty Six Thousand Three Hundred Fifty Seven only) by the accused in favour of the appellant. The said cheque has been withdrawn for repayment of loan amount. Ex.P11- statement of loan account indicate that loan due is more than the cheque amount. 11. Learned counsel for respondent/accused would contend that the name of Samruddhi Co-operative Credit Society Limited has been changed to Samrudh Souhard Credit Sahakari Niyamit in the year 2007 and it has been admitted by PW-1 in his cross-examination. Ex.P-7, Ex.P- 8, Ex.P-9, Ex.P-12 and Ex.P-13 are printed in the name of Samruddhi Co-operative Credit Society Limited. Learned counsel contends that even though the name is changed, - 12 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 the forms are used in the old name and therefore, there is no legal liability to show that loan amount is due by the accused to the appellant. On perusal of those documents, it is seen that seal of Samrudh Souhard Credit Sahakari Niyamit is affixed on top of all those documents namely, Ex.P7, Ex.P-8, Ex.P9, Ex.P-12 and Ex.P-13. 12. Placing reliance on the admission given by PW-1 in his cross-examination that the application for loan has been rejected, the learned counsel submits that when loan application is rejected, there is no any liability of the accused to pay the loan amount. On perusal of the sanction order contained in Pg.No.3 of Ex.P-7, loan of Rs.3,00,000/- has been sanctioned to the respondent - accused under resolution No.3 dated 05.11.2013 and it bears seal and signature of Chairman and Secretary and it is dated 05.11.2013. Therefore, the said admission given by PW-1 in his cross-examination does not help the accused to say that he has not been sanctioned with loan by the appellant. - 13 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 13. Learned counsel for appellant contended that the signature on Ex.P-5-Postal acknowledgement is not that of respondent -accused. The respondent -accused has not disputed his address mentioned in Ex.P-5 and Ex.P-3- legal notice. When address on a postal cover/postal acknowledgement is not disputed, there is a presumption under Section 27 of the General Clauses Act that the letter is delivered to the addressee. 14. The cheque has been issued by the appellant/accused as per Ex.P-1 for Rs.4,36,357/- towards repayment of amount borrowed. Ex.P-11 indicate the loan availed by respondent -accused is due more than the extent of the cheque amount. The said cheque has been dishonoured for want of funds in the account of the drawer as per Bank memo-Ex.P-2. The appellant has issued notice as per Ex.P-3. The said notice-Ex.P-3 has been served on accused on 16.02.2016 as per Ex.P-5-Postal acknowledgement. The accused did not pay cheque amount within 15 days from the date of service of legal - 14 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 notice. The appellant has filed complaint within one month from the date of cause of action. Considering all these aspects, the appellant has established all ingredients of offence under Section 138 of N.I. Act. Learned Magistrate without considering the above aspects, has erred in acquitting respondent -accused for offence under Section 138 of N.I. Act. Therefore, the impugned judgment requires to be set aside and respondent -accused is liable to be convicted for offence under Section 138 of N.I. Act. 15. In the result, the following: ORDER i. The appeal is allowed. ii. The impugned judgment of acquittal dated 28.03.2018 passed in C.C.No.172/2017 by VI- JMFC, Belagavi is set aside. iii. The respondent -accused is convicted for offence under Section 138 of N.I. Act and he is - 15 - NC: 2025:KHC-D:5687 CRL.A No. 100137 of 2018 sentenced to pay fine of Rs.4,46,357/- (rupees Four Lakhs Forty Six Thousand Three Hundred Fifty Seven only) and in default to undergo simple imprisonment for six months. Out of this said fine amount Rs.4,36,357/- (rupees Four Lakhs Thirty Six Thousand Three Hundred Fifty Seven only) has to be paid as compensation to the appellant. iv. The appellant -accused shall deposit the said fine amount within two months from this day. Sd/- (SHIVASHANKAR AMARANNAVAR) JUDGE DSP,RKM/CT-ASC List No.: 1 Sl No.: 10