IN THE HIGH COURT OF KARNATAKA AT BENGALURU

Criminal Appeal No. 302 of 2010

Decided On: 16.03.2018

K.N. Raju
Vs.
Manjunath T.V.

Hon’ble Judges/Coram:
K. Somashekar, J.

1. This appeal is directed against the judgment of acquittal dated 17.12.2009 passed by the XVI Addl. Chief Metropolitan Magistrate, Bangalore City in C.C. No. 23063/2008 acquitting the accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the N.I. Act’, for brevity). The same is challenged in this appeal urging various grounds.

2. Heard the arguments advanced by the learned counsel for the respondent/accused in this appeal. Learned counsel for the appellant has not advanced any arguments and he was not present though the case was called several times.

3. The factual matrix of the appeal are as under:

The complainant is known to the accused as a family friend. The accused is running a travel agency business in Gandhinagar area and in the month of October 2004 the accused has approached the complainant and requested him to give hand loan of Rs. 70,000/- to meet his domestic problems and family commitments and also to invest some amount in the business. The complainant on considering the request of the accused, gave an amount of Rs. 70,000/- by way of cash to the accused on 29.10.2004. While receiving the said loan amount, the accused has also executed Loan agreement and he did give three cheques in favour of the complainant. The accused also promised the complainant that he would return the loan amount during the month of April 2008. As per the request made by the accused, the complainant presented the cheques for encashment. But the cheques in question were dishonoured with an endorsement Drawee signature differs/incomplete and insufficient funds. Subsequently, the complainant got issued a legal notice to the accused both under RPAD and under UCP. The notice sent to the accused by RPAD returned with an postal acknowledgment “No such person in the address”. But however, the notice sent through UCP was served on the accused. Despite receipt of legal notice, the accused neither replied nor paid any amount towards the amount mentioned in the aforesaid cheques in question. Hence, the complainant filed the complaint before the court below alleging that the accused has committed the offence punishable under Section 138 of the N.I. Act and to prosecute the case against the accused.

4. Upon initiation of proceedings, the Trial Court took cognizance of the offence under Section 190 of Cr.P.C. and summons was issued to the accused. On service of summons the accused had put his appearance before the Trial Court through his counsel and participated in the proceedings. The copies of the prosecution papers were furnished to the accused and plea was recorded. The accusation was read over to the accused, to which he pleaded not guilty and claimed to be tried.

5. Subsequently, in order to substantiate his contentions, the complainant examined himself as PW.1 and got marked 13 documents as per Ex. p1 to p13. Even Ex. P2(a), p3(a) and p4(a) were marked. On the defense part, the accused had examined himself as DW. 1 and did not produce any documentary evidence. The statement under of the accused under Section 313 of Cr.P.C. was recorded. Subsequently, the Trial Court, on hearing the arguments advanced by the learned counsel for both the parties, had framed the points that arose for its consideration and answered point No. 1 in the negative and point No. 2 as per the final order and thereby acquitted the accused. It is this acquittal judgment which is called in question in the present appeal.

6. Heard the learned counsel for the respondent/accused.

7. Ex. P1 is the original complaint. Ex. P2 is the cheque bearing No. 644021 dated 28.5.2008 for a sum of Rs. 20,000/-. Ex. P3 is the cheque bearing No. 644026 dated 28.5.2008 for a sum of Rs. 20,000/-. Ex. P4 is cheque bearing No. 644027 dated 28.5.2008 for a sum of Rs. 20,000/-. Ex. P2 to P4 are drawn on Sree Subramanyeswara Co-operative Bank Ltd., Rajatha Bhavana, Padmanabhanagar Branch, Bangalore. Complainant states that Ex. P2(a), P3(a) and P4(a) are the signature of the accused. Ex P2 to P4 supports the stand taken by the complainant. Ex. P5 to P7 are the endorsements issued by the banker showing that the aforesaid three cheques were dishonoured on 29.8.2008 with an endorsement “Drawers signature differs/incomplete and insufficient funds.

8. It is relevant to note that as per the provisions of N.I. Act, the complainant was required to make a demand for repayment of the loan amount within 30 days from the date of receipt of cheque as unpaid. Ex. P8 to P10 show that complainant has made a demand in writing, calling upon the accused to make repayment of the said loan amount by issuing notice dated 26.9.2008 which was within 30 days from the date of receipt of cheque as unpaid. Learned counsel for the respondent/accused vehemently contended that complainant had to file this complaint on or after 15.10.2008 and on or before 15.11.2008. But the complaint was filed on 30.10.2008 and of course, the complaint was well within time.

9. Ex. P12 is loan agreement. It contains the information that the accused and his wife and his son have jointly borrowed Rs. 70,000/- from the complainant and in-turn the accused and his family members issued the above referred cheques in favour of the complainant. But the amount mentioned in the aforesaid cheques, in all, comes to Rs. 60,000/-. Therefore, the cumulative effect of these facts is that on the date of issuance of the cheques in question there was legally recoverable debt, in fact, in existence. Admittedly, Ex. P12 was executed on 29.10.2004 and the cheques in question bear the dates as 28.5.2008. Learned counsel for the respondent/accused pointed out that as on the date mentioned in the cheque the amount alleged to have been borrowed by the accused under Ex. P12 had already become time barred debt and hence, it cannot be said that as on the date the cheque bear, there was a legally enforceable debt was in existence and hence, the complaint filed by the complainant needs to be dismissed.

10. On perusal of Ex. P12 it could be noticed that Ex. P12 stipulates 11 months for recovery of loan amounts. Considering the 11 months time as well as the assurance given by the accused in May 2008, the transaction was legal and there existed a recoverable debt. Therefore, the contention of the accused that the claim of the complainant is the time barred debt cannot be accepted. Hence, the Trial court observed that in Ex. P12 it is recited or stipulated that 11 months time has been given to the accused to pay the said amount.

11. Article 21 of the Indian Limitation Act, the period of limitation for recovery of loan amount starts from the date on which the amount has been paid. Further, as per Section 18 of the Limitation Act, a fresh period of limitation shall be computed if any acknowledgement of debt has been executed by the borrower within the prescribed period of limitation i.e., within three years from the date of borrowing of the loan. Further Section 19 of the Limitation Act makes it clear that a fresh period of limitation shall be computed from the date of payment of some money towards the loan in question. Therefore, it is relevant to extract Sections 18 and 19 of the Limitation Act for the purpose of deciding the issues under Section 138 of N.I. Act.

Section 18

18. Effect of acknowledgment in writing.–

(1) Where, before the expiration of the prescribed period for a suit of application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, afresh period of limitation shall be computed from the time when the acknowledgment was so signed.

(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.

Explanation.–For the purposes of this section,–

(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right;

(b) the word “signed” means signed either personally or by an agent duly authorised in this behalf and

(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.

Section 19

19. Effect of payment on account of debt or of interest on legacy.–Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made:

Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.
“Explanation.–For the purposes of this section,– ”

(a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment;

(b) “debt” does not include money payable under a decree or order of a court.”

12. In the context of limitation point the Trial Court observed in the impugned judgment that it is not the case of the complainant that the accused has paid some amount towards the repayment of the amount mentioned in the cheques in question. In that view it was held that the loan in question cannot be considered as a time barred debt.

13. In so far as bouncing of cheques relating to initiation of the proceedings as under Section 200 Cr.P.C. punishable under Section 138 of N.I. Act that the limitation point is to be taken into consideration and so also the contention urged by the complainant. In the instant case, it should be noted that the complainant who examined himself as PW. 1 specifically and categorically has admitted himself in his cross examination that the accused had given the undated cheques, and the validity of the loan agreement entered into between complainant and accused had lapsed which was for a period of three years. The complainant has categorically admitted that after the expiry of the loan agreement, he had presented the cheques mentioning the dates and upon bouncing of them had initiated the proceedings against the accused under Section 138 of N.I. Act. Therefore, on a careful reading of the said admission of PW.1 it makes it clear that when the cheques in question were issued by the accused the cheques were undated. Further according to the complaint himself the cheques in question have been issued to him on the date of execution of the agreement as per Ex. P12. Even this fact is mentioned in Ex. P12 which was executed on 29.10.2004. Therefore, these facts make it clear that the cheques in question have been presented for encashment after three years ten months from the date of issuance. Therefore, the question would be whether the facts and circumstances of this case fall within the ambit of Section 138 of N.I. Act. The Trial Court in this regard cited a decision reported in MANU/KA/8269/2006 : ILR 2007 Karnataka 1708 between Vishnudas v. Vijaya Mahantesh wherein this Court has held as under:

“N.I. Act 1881 Section 138 – Offence under -Acquittal – Appealed against the issue of cheque without mentioning the date-Admission of PW. 1 in the cross examination that there was no debt as on the date of issue of cheque. On facts, held that on the date of handing over the cheque, there was no debt due to be paid by the respondent and wherefore the cheque was not issued towards discharge of any debt. The facts elicited in the cross examination of P.W. 1 that the cheque was undated on the date of its issue and the same was presented for payment after 6 months from the date of issue. The order of acquittal is justified.”
The ratio laid down in the said decision squarely applies to the facts and circumstances of the present case and so also the initiation of the proceedings for the offence punishable under Section 138 of the N.I. Act against the accused.

14. Whereas in this appeal, though several opportunities were provided to the appellant, he has not come forward to address the arguments. Therefore having regard to the facts and circumstances contained in this appeal which is filed against the impugned judgment of acquittal passed by the Trial Court in C.C. No. 23063/2008 it is relevant to note the admission made by the PW. 1 in his cross-examination who specifically and categorically admits that when the cheques in question were issued by the accused, the cheques were undated and he further admits that the cheques in question have been issued to him on the date of execution of the loan agreement as per Ex. P12 i.e., on 29.10.2004. Further the cheques in question have been presented for encashment on 29.8.2008. Therefore, these facts make it clear that cheques in question have been presented for encashment after three years ten months from the date of issuance of the same. Therefore, the Trial Court has rightly held that the materials made available on record are not sufficient to conclude that the accused has committed the offence punishable under Section 138 of the N.I. Act.

15. The facts and circumstances of this case are identical to the decision stated supra and it is squarely applicable to the case on hand. In the aforesaid decision it was held that when the cheque was undated on the date of its issue and the same was presented for payment after 6 months from the date of issue then the Court had no other option but to acquit the accused. Keeping in view that position of law, the Trial Court rightly held that the complainant himself had admitted that the cheques in question were issued on 29.10.2004 and at the time of issuance the cheques were undated and the complainant had presented the said cheques for encashment in the year 2008. The said finding of the Trial court in the facts and circumstances of this case is just and proper and there is no need for this court to interfere with the said finding.

16. For the above reasons, I find that there is no infirmity in the judgment of acquittal rendered by the Trial Court. Hence, I am of the opinion that there is no necessity to revisit the impugned judgment. As the appeal is devoid of merits, the same is dismissed. As a consequence, the judgment of acquittal dated 17.12.2009 passed by the XVI Addl. Chief Metropolitan Magistrate, Bangalore City in C.C. No. 23063/2008 acquitting the respondent/accused for the offence punishable under Section 138 of N.I. Act, is hereby confirmed.