- 1 - CRL.RP No.100322 of 2019 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 19TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE K. V. ARAVIND CRIMINAL REVISION PETITION No.100322 OF 2019 BETWEEN: H.R.PADMINI W/O BHARAMAPPA, AGE: 63 YEARS, OCC: PENSIONER, C/O LIC OF INDIA, NAVALGUND, DIST: DHARWAD, NOW R/O CTS 29/27, A-16, 1ST CROSS, BAILAPPANAVARNAGAR, HUBBALLI. ...PETITIONER (BY SRI K. SURESH DESAI, ADVOCATE AND SRI SUHAS DESAI, ADVOCATE) AND: VENKATESH SOMAPPA BANTANUR, AGE: 47 YEARS, OCC: AGRICULTURE, R/O: HALIYAL, NOW AT HUBBALLI. NOW AT No.3, 1ST FLOOR, SHRI ULAVI CHANNABASAVESHWAR, AVENUE NEAR, SHIRUR PARK CIRCLE, VIDYANAGAR, HUBBALLI-580031. …RESPONDENT (BY SRI SHIVARAJ S. BALLOLI, ADVOCATE) THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 R/W 401 OF CR.P.C., PARYING TO SET ASIDE THE JUDGMENT AND ORDER DATED 27.09.2019 PASSED BY THE V-ADDL. DIST. & SESSIONS JUDGE, DHARWAD, SITTING AT HUBBALLI, IN CRL.A.No.123/2017 CONFIRMING THE CONVICTION AND SENTENCE DATED 03.10.2017 PASSED BY THE PRL. CIVIL JUDGE & JMFC COURT, HUBBALLI, IN C.C.No.2601/2014 AND SET THE PETITIONER/ACCUSED AT LIBERTY. - 2 - CRL.RP No.100322 of 2019 THIS CRIMINAL REVISION PETITION, HAVING BEEN HEARD AND RESERVED ON 25.07.2025, COMING ON FOR ‘PRONOUNCEMENT OF ORDER’, THIS DAY, THE COURT PRONOUNCED THE FOLLOWING: CORAM: THE HON'BLE MR. JUSTICE K V ARAVIND C.A.V. ORDER (PER: THE HON'BLE MR. JUSTICE K. V. ARAVIND) Heard Sri K. Suresh Desai and Sri Suhas Desai, learned counsel for the petitioner, and Sri Shivaraj S. Balloli, learned counsel for the respondent. 2. This criminal petition is filed by the accused–petitioner assailing the judgment and order dated 03.10.2017 passed in C.C. No.2601/2014 by the Court of the Principal Civil Judge and JMFC, Hubballi (hereinafter referred to as the ‘trial Court’), as well as the judgment dated 27.09.2019 passed in Crl.A. No.123/2017 by the V Additional District and Sessions Judge, Dharwad, sitting at Hubballi (hereinafter referred to as the ‘appellate Court’). 3. The factual matrix of the case is that the complainant and the accused were acquainted with each other. The accused approached the complainant seeking a - 3 - CRL.RP No.100322 of 2019 loan for the purpose of constructing a house and discharging certain private loans, to the extent of ₹9,65,000/-. The complainant lent a sum of ₹2,65,000/- in cash, ₹4,00,000/- by way of bank transfer on 07.12.2013, and a further sum of ₹3,00,000/- on 09.12.2013, thus making up a total of ₹9,65,000/-. Upon receipt of the said amount, the accused promised to repay the same within six to eight months. After the expiry of the said period, the complainant demanded repayment. Accordingly, the accused issued a cheque bearing No.372083 dated 12.11.2014 for a sum of ₹9,65,000/-, drawn on Corporation Bank. The cheque, when presented on 14.11.2014, was dishonoured with the endorsement ‘Funds Insufficient’. The complainant thereafter issued a legal notice dated 21.11.2014, calling upon the accused to make payment within fifteen days of its receipt. The notice was duly served, but no reply was given, nor was the amount paid. Consequently, the complainant lodged a complaint alleging commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, ‘NI Act’). - 4 - CRL.RP No.100322 of 2019 4. In order to establish his case, the complainant examined himself as PW.1 and produced 6 documents, which were marked as Exs.P1 to P6. The Legal Manager of LIC, Dharwad, was examined as CW.1, and the Postmaster of Navalgund was examined as CW.2, through whom one document was marked as Ex.C1. The statement of the accused was recorded under Section 313 of the Code of Criminal Procedure. The accused examined herself as DW.1 but did not produce any documentary evidence. The trial Court, upon consideration of the testimonies of the witnesses and the material on record, convicted the accused for the offence punishable under Section 138 of the NI Act and sentenced her to pay a fine of ₹11,35,000/-, in default of which she was directed to undergo simple imprisonment for a period of six months. Out of the total fine amount, a sum of ₹11,25,000/- was directed to be paid to the complainant as compensation, and ₹10,000/- was directed to be deposited towards prosecution expenses. - 5 - CRL.RP No.100322 of 2019 5. Aggrieved by the judgment and order of the trial Court, the accused preferred Crl.A. No.123/2017 before the appellate Court. The appellate Court, upon examination of the material on record, upheld the findings of the trial Court and dismissed the appeal. 6. Sri K. Suresh Desai, learned counsel for the petitioner, submits that the statutory notice of demand was not served on the petitioner. It is further submitted that in November 2013, the petitioner had approached one Sri Shivanand Bidnal for financial assistance to meet her family necessities, and the complainant only facilitated the said transaction. A sum of ₹7,00,000/- was paid to the petitioner on two occasions through bank transfer. It is contended that there was no direct financial transaction between the complainant and the petitioner, and the allegation regarding payment of ₹2,65,000/- in cash is incorrect. 6.1 It is submitted that the cheque in question was issued as security in favour of Sri Shivanand Bidnal. The learned counsel would further contend that the loan of - 6 - CRL.RP No.100322 of 2019 ₹7,00,000/- borrowed from Sri Shivanand Bidnal was repaid in December 2014; however, the cheque issued as security was not returned and has been misused by the complainant. 6.2 Learned counsel further submits that the trial Court erred in awarding interest by way of penalty, which is not contemplated under Section 138 of the NI Act. It is contended that even if the bank transfers are taken into account, the cheque amount is proved only to the extent of ₹7,00,000/-, and the alleged cash payment of ₹2,65,000/- has not been established as a loan and, therefore, does not constitute an enforceable debt. It is further submitted that both the trial Court and the appellate Court, without properly considering the aforesaid aspects, committed an error in imposing a penalty of ₹11,25,000/-. 7. Per contra, Sri Shivaraj S. Balloli, learned counsel appearing for the respondent–complainant, submits that the issuance of the cheque and the signature thereon are admitted. The petitioner has also admitted the - 7 - CRL.RP No.100322 of 2019 loan to the extent of ₹7,00,000/-. In such circumstances, the statutory presumption under Section 139 of the NI Act operates in favour of the complainant. It is further submitted that the petitioner did not reply to the demand notice by raising any probable defence. It is contended that the petitioner cannot be permitted to partially admit liability and deny the remaining. What is material to be seen is the issuance of the cheque and the existence of a legally enforceable debt. It is submitted that both the trial Court and the appellate Court, upon due consideration of the aforesaid aspects, rightly held that the petitioner had committed an offence under Section 138 of the NI Act and, having regard to the cheque amount, rightly imposed a penalty of ₹11,25,000/-. 8. Considered the submissions of learned counsel for the parties and perused the record. 9. The complainant claims to have advanced a loan of ₹9,65,000/-, of which ₹2,65,000/- was allegedly paid in cash and the balance amount was transferred through bank. It is further stated that the cheque in - 8 - CRL.RP No.100322 of 2019 question was issued towards repayment of the said sum of ₹9,65,000/-. A demand notice dated 21.11.2020 is said to have been issued and served on the petitioner. The petitioner, however, contends that only a sum of ₹7,00,000/- was received by way of bank transfer, and that the alleged cash payment of ₹2,65,000/- was never advanced. It is further contended that the said loan of ₹7,00,000/- was taken from one Mr. Shivanand Bidnal, and that the cheque was issued by way of security, which has been misused by the complainant, who acted merely as a facilitator, by presenting the cheque in his own name even after repayment of the said loan. These contentions, however, need not detain this Court in view of the categorical admission of the petitioner with regard to her liability to repay a sum of ₹7,00,000/-. The said admission stands corroborated by Ex.P6, the statement of bank account of the complainant, which reflects transfer of ₹4,00,000/- and ₹3,00,000/- on 06.12.2013 and 09.12.2013, respectively. When the matter was taken up on 18.07.2025, the petitioner, who was present before the Court and represented by her learned counsel, Sri Suresh - 9 - CRL.RP No.100322 of 2019 Desai, made a categorical statement admitting liability to the extent of ₹7,00,000/-, while disputing receipt of ₹2,65,000/-. Subsequently, on 25.07.2025, the petitioner filed a memo enclosing a Demand Draft in favour of the Additional Registrar, High Court of Karnataka, for a sum of ₹3,85,000/-. It is submitted that an earlier deposit of ₹3,15,000/- had already been made before the Court. Thus, in all, the petitioner has deposited a sum of ₹7,00,000/-. 10. In that view of the matter, the dispute between the parties which requires adjudication is confined to the sum of ₹2,65,000/-. The complainant asserts that the said amount was paid in cash. The petitioner did not reply to the statutory notice by raising any probable defence, and the trial Court, applying the presumption under Section 139 of the NI Act, proceeded to convict the petitioner for the entire cheque amount of ₹9,65,000/-. It is true that, once the issuance of cheque and the signature thereon are not disputed, the existence of a legally enforceable debt is to be presumed under Section 139 of the NI Act. - 10 - CRL.RP No.100322 of 2019 However, the present case stands on a different footing. The cheque is for a sum of ₹9,65,000/-, out of which ₹7,00,000/- is proved to have been advanced by bank transfer, while ₹2,65,000/- is claimed to have been paid in cash. The petitioner has admitted liability to the extent of ₹7,00,000/-, which stands corroborated by Ex.P6 and which amount has been deposited before the Court. Thus, there is no dispute as to enforceability of debt to the extent of ₹7,00,000/-. Insofar as the alleged cash payment of ₹2,65,000/- is concerned, the petitioner has raised a probable defence that no such loan was advanced. By doing so, the presumption under Section 139 of the NI Act, to that extent, stands rebutted, and the burden shifts on the complainant. The complainant has not adduced evidence to establish his financial capacity to lend ₹2,65,000/-. Consequently, the existence of debt to that extent has not been proved. The complainant, therefore, cannot claim the benefit of the presumption under Section 139 of the NI Act in respect of the sum of ₹2,65,000/-. - 11 - CRL.RP No.100322 of 2019 11. When the petitioner was present before the Court and agreed to repay a sum of ₹7,00,000/-, while disputing the balance of ₹2,65,000/-, a specific query was put to the learned counsel for the respondent. However, the learned counsel was unable to point out any evidence on record to establish the alleged cash loan of ₹2,65,000/-. The trial Court as well as the appellate Court, without adverting to the aforesaid aspect, committed an error in holding the accused guilty of the offence under Section 138 of the NI Act for the entire cheque amount. 12. The trial Court imposed a fine of ₹11,25,000/-, by calculating interest at the rate of 6% per annum on the cheque amount. The Hon’ble Supreme Court has held that, in exceptional cases, imposition of fine up to twice the cheque amount along with interest may be justified as a measure of leniency. In the present case, however, the appellant has admitted liability only to the extent of ₹7,00,000/-. While the fine of ₹11,35,000/- was under challenge, the appellant deposited ₹3,15,000/- before this - 12 - CRL.RP No.100322 of 2019 Court and, prior to the final hearing, deposited a further sum of ₹3,85,000/-, thereby making up the admitted liability of ₹7,00,000/-. Since the complainant has failed to establish the alleged cash loan of ₹2,65,000/-, the existence of an enforceable debt to that extent is not proved. In the peculiar facts and circumstances of the case, and having regard to the deposit of ₹7,00,000/-, being the admitted liability, the levy of fine calls for a lenient approach. Accordingly, the award of interest, in the present facts, is unsustainable. 13. Considering the fact that the petitioner, apart from admitting liability of ₹7,00,000/-, has fairly deposited the said amount, and having regard to the aforesaid aspects, the orders of the trial Court and the appellate Court warrant interference and require modification. Accordingly, the following: O R D E R (i) Revision petition is allowed-in-part. (ii) Conviction for the offence under Section 138 of the NI Act is confirmed. However, holding - 13 - CRL.RP No.100322 of 2019 that enforceable debt is only of Rs.7,00,000/-, accused is liable to pay fine of Rs.7,00,000/-. Respondent is at liberty to withdraw Rs.7,00,000/- in deposit before the Registry of this Court. (iii) The order of the trial Court and the appellate Court stands modified to the above extent. Registry to return the trial Court records. SD/- (K. V. ARAVIND) JUDGE VBS CT:PR