- 1 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 12TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR. JUSTICE K V ARAVIND CRIMINAL REVISION PETITION NO.100004 OF 2021 (397(Cr.PC)/438(BNSS)) BETWEEN: BASAVANTAPPA S/O. DEVENDRAPPA MUNDARGI, AGE. 65 YEARS, OCC. RETIRED CLERK, R/O. C/O. SIDDANNA HEGADAL-582101, BEHIND PETROL BUNK, HATHGERI NAKA, GADAG, DIST. GADAG. …PETITIONER (BY SRI. J.S. SHETTY, ADVOCATE) AND: SRINIDHI FINANCE AND INVESTMENT CORPORATION, BY ITS OWNER SIDDALINGAPPA TIPPANNA SATYAPPANAVAR, AGE. 61 YEARS, OCC. BUSINESS, R/O. SHIVANADNAGAR, GADAG, DIST. GADAG-582101. …RESPONDENT (BY SRI. HANUMANTHAREDDY SAHUKAR, ADVOCATE) THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 R/W 401 OF CR.P.C., PRAYING TO THE ORDER DATED 04.12.2020 PASSED BY THE I ADDITIONAL PRINCIPAL FAMILY COURT AT GADAG, IN CRIMINAL APPEAL NO.31/2019, CONFIRMING ORDER OF CONVICTION AND SENTENCE DATED 16.05.2019 PASSED BY THE FIRST ADDITIONAL CIVIL JUDGE AND JMFC 1ST COURT GADAG AT GADAG, IN CRIMINAL CASE NO.205/2011, CONVICTING THE PETITIONER FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENT ACT, MAY KINDLY BE SET ASIDE AND THE PETITIONER MAY KINDLY BE ACQUITTED FROM THE CHARGES FRAMED AGAINST HIM IN THE ENDS OF JUSTICE AND EQUITY. Digitally signed by CHANDRASHEKAR LAXMAN KATTIMANI Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 THIS CRIMINAL REVISION PETITION, COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: ORAL ORDER (PER: THE HON'BLE MR. JUSTICE K V ARAVIND) Heard Sri J.S. Shetty, learned counsel for the petitioner, and Sri Hanumanthareddy Sahukar, learned counsel for the respondent. 2. The present criminal revision petition is filed by the accused, assailing the judgment of conviction dated 16.05.2019 passed in C.C. No. 205/2011 by the Court of the I Addl. Civil Judge and I J.M.F.C., Gadag (hereinafter referred to as the ‘Trial Court’), and the judgment dated 04.12.2020 passed in Criminal Appeal No. 31/2019 by the I Addl. Principal Judge, Family Court, Gadag (hereinafter referred to as the ‘Appellate Court’), whereby the conviction was confirmed. 3. The complainant filed a private complaint under Section 200 of the Code of Criminal Procedure, 1973, against the accused for the offence punishable under - 3 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘N.I. Act’). According to the averments in the complaint, the accused availed a loan of Rs.1,50,000/- from the complainant on 04.02.2007 with an assurance to repay the same by executing a promissory note. In discharge of the said loan, the accused issued a cheque for a sum of Rs.1,00,000/- on 14.12.2009 bearing No. 988038, drawn on Sangli Bank, Gadag Branch. The said cheque, when presented for encashment, was returned unpaid with the endorsement ‘insufficient funds’. Thereafter, a statutory legal notice was issued to the accused on 30.12.2009. Though the accused did not repay the cheque amount, a reply was issued to the said notice. The accused entered appearance before the Trial Court through his counsel and contested the matter. The complainant examined himself as PW-1 and produced 13 documents, which were marked as Exhibits P-1 to P-13. The accused was examined under Section 313 of the Code of Criminal Procedure. - 4 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 4. The Trial Court, upon consideration of the evidence on record and the submissions advanced by the learned counsel on both sides, convicted the accused for the offence punishable under Section 138 of the N.I. Act and sentenced him to pay a fine of Rs.1,05,000/-, and in default of payment of fine, to undergo simple imprisonment for a period of six months. 5. The accused preferred Criminal Appeal No. 31/2019, challenging the judgment of conviction. The Appellate Court, upon re-appreciation of the evidence and on due consideration of the findings recorded by the Trial Court, dismissed the appeal and confirmed the judgment of conviction. 6. Sri J.S. Shetty, learned counsel appearing for the revision petitioner, while assailing the impugned orders, firstly submits that the cheque in question was issued in favour of one Satyappanavar S.T.; however, the proceedings under Section 138 of the N.I. Act were - 5 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 initiated by the complainant company. Hence, it is contended that the complaint itself is not maintainable. It is further submitted that the legal notice, as per Ex.P4, was issued by the finance company. The same was not towards discharge of the loan availed from Srinidhi Finance and Investment Corporation. Therefore, it is contended that the complainant is not the holder in due course and that the essential ingredients of Section 138 of the N.I. Act are not satisfied. In support of his contentions, learned counsel has placed reliance on the judgment of a Co-ordinate Bench of this Court rendered between the same parties in Criminal Appeal No. 2828/2011 dated 23.11.2020. 7. Sri Hanumanthareddy Sahukar, learned counsel appearing for the respondent, submits that the accused had availed a loan by executing a demand promissory note in favour of Srinidhi Finance and Investment Corporation. In discharge of the said loan, the accused issued a cheque in favour of its Proprietor, Satyappanavar S.T. It is - 6 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 contended that since the cheque was issued towards repayment of a legally enforceable debt, Satyappanavar S.T., acting through his proprietary concern, Srinidhi Finance and Investment Corporation, would fall within the definition of ‘holder in due course’ and thereby satisfy the essential ingredients of Section 138 of the N.I. Act. 8. Considered the submissions of the learned counsel for the parties and perused the material on record. 9. The complaint was filed on the basis of the on- demand promissory note marked as Ex.P7. The case of the complainant is that, in discharge of the loan, a cheque for a sum of Rs.1,00,000/- was issued, marked as Ex.P1. As Sri Satyappanavar S.T. was the Proprietor of Srinidhi Finance and Investment Corporation, the cheque was issued in his favour. It is the case of the complainant that the said cheque was issued towards a legally enforceable debt. Upon dishonour of the cheque for insufficiency of funds, the ingredients of Section 138 of the N.I. Act stand - 7 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 attracted. A perusal of the record indicates that the on- demand promissory note, Ex.P7, was executed in favour of Srinidhi Finance and Investment Corporation, whereas the cheque, Ex.P1, was issued in favour of Satyappanavar S.T. The statutory legal notice was issued by the said Finance Corporation. 10. A similar transaction between the same parties was the subject matter of earlier proceedings under Section 138 of the N.I. Act, which ultimately culminated in Criminal Appeal No. 2828/2011 before this Court. The facts involved in the said appeal are materially similar to those in the present case. Prima facie, the submissions advanced by the learned counsel in both proceedings are also identical. A Co-ordinate Bench of this Court, upon detailed scrutiny and evaluation of the evidence and upon referring to the relevant provisions of the Negotiable Instruments Act, concluded that although the cheque was issued in favour of Satyappanavar S.T., who was the payee and holder in due course, the legal notice was - 8 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 issued by the Finance Corporation, and the complaint was also instituted by M/s Srinidhi Finance and Investment Corporation. The Court, therefore, held that the mandatory requirements under Section 138 of the N.I. Act were not satisfied. 11. A careful perusal of the aforesaid judgment, in the context of the facts involved in the present revision petition, reveals that there is no material evidence on record to warrant a different view. The factual as well as legal positions in the referred case and the present matter stand on the same footing. Even the learned counsel for the respondent–Corporation is unable to dispute the applicability of the said decision and has not pointed out any distinguishing feature, either in facts or in law, which would enable this Court to take a different view. 12. In the light of the judgment referred to supra, the order of conviction passed by the Trial Court and its - 9 - HC-KAR NC: 2025:KHC-D:7580 CRL.RP No. 100004 of 2021 confirmation by the Appellate Court are not sustainable in law. 13. For the aforesaid reasons, following: ORDER i. The criminal revision petition is allowed. ii. The order of conviction dated 16.05.2019 in C.C.No.205/2011 on the file of I Addl. Civil Judge and I J.M.F.C., Gadag and order dated 04.12.2020 in Crl.A.No.31/2019 on the file of I Addl. Principal Judge, Family Court, Gadag are hereby set aside. iii. The petitioner is acquitted of offences punishable under Section 138 of the N.I. Act. iv. Bail bonds stand cancelled. v. No order as to costs. vi. Registry to return records to the Trial Court. Sd/- (K V ARAVIND) JUDGE CLK_CT: UMD