- 1 - NC: 2025:KHC-D:2792 CRL.A No. 100529 of 2023 C/W CRL.A No. 100553 of 2023 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 12TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR CRIMINAL APPEAL NO. 100529 OF 2023 (A) C/W CRIMINAL APPEAL NO. 100553 OF 2023 IN CRL.A. NO.100529 OF 2023: BETWEEN: KARAN S/O. SHASHIDHAR PATIL AGE. 40 YEARS, OCC. BUSINESS, R/O. 12/B, 2ND MAIN, 4TH CROSS, KALYAN NAGAR, HUBBALLI-580031. …APPELLANT (BY SRI. SADASHIV S. PATIL, ADVOCATE) AND: MR. D. RAVI S/O. D. CHANDRAPPA @ RAVI CHANDRAPPA DEVASHETTY, AGE. 38 YEARS, OCC. BUSINESS, R/O. VILLAGE HOLALU TALUKA, HUVINAHADAGALI, DIST. BALLARY, NOW DISTRICT. VIJAYNAGARA-583217. …RESPONDENT (BY SRI. IRANAGOUDA K.KABBUR, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C., SEEKING TO SET ASIDE THE JUDGMENT PASSED IN CRIMINAL APPEAL NO.5042/2023 ON THE FILE OF THE HON’BLE IST ADDITIONAL DISTRICT AND SESSIONS JUDGE DHARWAD SITTING AT HUBBALLI ACQUITTING THE ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT VIDE DATED 30TH SEPTEMBER 2023, VIDE ANNEXURE-B AND CONFIRM THE CONVICTION OF ACCUSED AS PER THE TRIAL COURT JUDGMENT IN CC NO.4462/2017 BY HON’BLE IST JMFC COURT HUBBALLI FOR THE OFFENCE Digitally signed by B K MAHENDRAKUMAR Location: HIGH COURT OF KARNATAKA DHARWAD BENCH Date: 2025.02.19 13:15:15 +0530 - 2 - NC: 2025:KHC-D:2792 CRL.A No. 100529 of 2023 C/W CRL.A No. 100553 of 2023 PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENT ACT VIDE DATED 31ST MAY 2023 VIDE ANNEXURE A. IN CRL.A. NO.100553 OF 2023: BETWEEN: KARAN S/O. SHASHIDHAR PATIL AGE. 40 YEARS, OCC. BUSINESS, R/O. 12/B, 2ND MAIN, 4TH CROSS, KALYAN NAGAR, HUBBALLI-580031. …APPELLANT (BY SRI. SADASHIV S.PATIL, ADVOCATE) AND: D. SHANTAMMA W/O. CHANDRAPPA DEVASHETTI AGE. 61 YEARS, OCC. HOME MAKER, R/O. VILLAGE HOLALU TALUKA, HUVINAHADAGALI, DIST. BALLARY, NOW DISTRICT. VIJAYNAGARA-583217. …RESPONDENT (BY SRI. IRANAGOUDA K.KABBUR, ADVOCATE) THIS CRIMINAL APPEAL IS FILED U/S 378 (4) OF CR.P.C., SEEKING TO SET ASIDE THE JUDGMENT PASSED IN CRIMINAL APPEAL NO.5043/2023 ON THE FILE OF THE 1ST ADDITIONAL DISTRICT AND SESSIONS JUDGE, DHARWAD SITTING AT HUBBALLI, ACQUITTING THE ACCUSED FOR THE OFFENCE PUNISHABLE U/S 138 OF N.I. ACT, VIDE DATED 30TH SEPTEMBER 2023, VIDE ANNEXURE-B AND TO CONFIRM THE CONVICTION OF ACCUSED AS PER THE TRIAL COURT JUDGMENT IN CC NO.4428/2017 BY IST JMFC COURT, HUBBALLI, FOR THE OFFENCE PUNISHABLE U/S 138 OF N.I. ACT VIDE DATED 31ST MAY 2023 VIDE ANNEXURE A. THESE APPEALS, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR - 3 - NC: 2025:KHC-D:2792 CRL.A No. 100529 of 2023 C/W CRL.A No. 100553 of 2023 ORAL JUDGMENT 1. These appeals have been filed challenging the judgment of conviction for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). Since both appeals arise out of the same transaction, they are taken up together, heard, and disposed of by this common judgment. 2. In Crl.A.No.100529/2023, the respondent was convicted for an offence punishable under Section 138 of the NI Act and was directed to pay a sum of Rs.10,00,000/-. However, in appeal, the judgment of conviction was set aside on the ground that the appellant/complainant did not possess the financial capacity to lend a sum of Rs.5,00,000/-. 3. In Crl.A.No.100553/2023, the respondent was convicted for an offence punishable under Section 138 of the NI Act and was directed to pay Rs.16,00,000/- (double the cheque amount) as a fine. However, in appeal, the learned Sessions Court set aside the judgment of conviction, holding that the appellant/complainant did not possess the financial capacity to lend Rs.8,00,000/-. 4. Heard the learned counsel for the parties. 5. Upon perusal of the trial court records and appreciation of the evidence, it is clearly established that the accused/respondent issued two cheques—one for Rs.5,00,000/- and another for Rs.8,00,000/- towards the discharge of a hand loan. Ex.P6, the agreement executed by the accused, explicitly states that the accused promised to repay the amounts borrowed from the appellant/complainant, thereby confirming that the accused received Rs.5,00,000/- and Rs.8,00,000/-, respectively. Therefore, the learned Sessions Judge erred in holding that the - 4 - NC: 2025:KHC-D:2792 CRL.A No. 100529 of 2023 C/W CRL.A No. 100553 of 2023 appellant/complainant lacked the financial capacity to lend the said amounts. 6. Furthermore, the trial court imposed liability on the accused to pay double the cheque amount without assigning any reasons. The Hon’ble Supreme Court in P. Rasia v. Abdul Nazeer & Anr. (Crl.A.Nos.1233-1235/2022) has held that Section 139 of the NI Act creates a presumption in favor of the holder of a cheque, stating that unless the contrary is proved, the holder received the cheque for discharge of a legally enforceable debt or liability. Once the complainant discharges the initial burden by proving that the cheque was issued by the accused—and when the signature and issuance of the cheque are not disputed—the onus shifts to the accused to prove the contrary. 7. In the present case, the accused not only issued two cheques but also executed an agreement to repay the loan amount. Under such circumstances, the accused cannot claim that the complainant lacked financial capacity to lend the money. Additionally, the trial court failed to assign reasons for imposing a penalty double the cheque amount, despite the principle that such penalties are justified only in exceptional circumstances. Since the complainant has not established any exceptional circumstances, the impugned judgment of conviction and order of sentence passed by the trial court require modification. ORDER i. The criminal appeals are allowed in part. ii. The judgment of conviction and order of sentence dated 30.09.2023, passed by the 1st Additional District and Sessions Judge, Dharwad, sitting at Hubballi in Crl.A.No.5042/2023 - 5 - NC: 2025:KHC-D:2792 CRL.A No. 100529 of 2023 C/W CRL.A No. 100553 of 2023 (Crl.A.No.100529/2023) and Crl.A.No.5043/2023 (Crl.A.No.100553/2023), are set aside. iii. The judgment and order of sentence dated 31.05.2023, passed by the JMFC-I, Hubballi, in C.C.No.4428/2017 and C.C.No.4462/2017, are modified as follows: • The respondent/accused in C.C.No.4462/2017 is convicted for the offence punishable under Section 138 of the NI Act and is liable to pay Rs.5,00,000/-. In default of payment, the accused shall undergo simple imprisonment for a term of four months. • The respondent/accused in C.C.No.4428/2017 is convicted for the offence punishable under Section 138 of the NI Act and is liable to pay Rs.8,00,000/-. In default of payment, the accused shall undergo simple imprisonment for a term of six months. • The amount shall be deposited by the accused within a period of three months from today. Ordered accordingly. Sd/- (HEMANT CHANDANGOUDAR) JUDGE TIN Ct:vh List No.: 1 Sl No.: 58