06 Jan 2121

The presumption has to be drawn in the favor of the complainant under section 138 of Negotiable Instruments Act, 1881 and also it is a rebuttable presumption - Karnataka High Court

Case : M/s. National Agricultural Co-Op and Bengaluru Branch Manager v. M/s. Disha Impex (pvt.) Ltd. and Ors. Criminal Appeal No 1145/2011, 1135/2011 and 1146/2011

Court : Karnataka High Court

Bench : Justice H. P. Sandesh

Decided on : 06 Jan 2121

Relevant Statutes

Section 138 of Negotiable Instruments Act, 1881

Brief facts and procedural history:

1. The complainant is the central government undertaking who entered into the memorandum of understanding on 10.03.2004 with Accused no.2 to finance Accused no.1 company of procurement of iron ore to the tune of Rs. 11. 86 crores. And the complainant will fund 80 % of the estimated cost and the accused no.2 will pay the remaining 20%. The accused had issued the cheque for Rs. 1 crore dated 28.08.2006 in c.c.no.14691/2007, cheque dated 28.08.2006 for rs.1.5 crores in c.c.no.14692/2007 and cheque for rs.1 crore dated 28.11.2006 in c.c.no.17140/2007.

2. Afterward, when the cheques were presented, they were dishonoured due to insufficient funds. The complainant issued a legal notice on 21.02.2007 in c.c.no.14691/2007 and c.c.no.14692/2007 and 11.01.2007 in respect of c.c.no.17140/2007. All the notices were served but the accused did not comply with this. Afterwards, the complainant filed a separate independent complaint against the accused persons. 

3. The complainant examined one witness named Sri R. Sundararajan as P.W. 1 and also got marked documents but the accused did not lead any defence evidence, confronted the documents and got marked the documents.  The trial court recorded the statement of the accused under section 313 of the Code of Criminal Procedure 1973 but the accused did not choose to lead any evidence. The trial court acquitted the accused. The present appeals were filed by challenging the judgment passed by the trial court.

The Issue of the Case

 Whether the trial court has committed an error in acquitting the accused of the offence punishable under section 138 of the Negotiable Instruments Act, 1881?

The Observations of the Court

The Honourable Karnataka High Court observed that once the issuance of the cheque has been admitted, the presumption has to be drawn in the favor of the complainant under section 138 of Negotiable Instruments Act,1881 and also it is a rebuttable presumption and further if it is rebutted then the onus shifts on the complainant to further prove his case. The honourable high court observed that there is no dispute regarding the issuance of cheques, legal notices and also no reply to the said notices.

2. The Honourable Karnataka High Court observed the evidence produced in cross-examination and held that para 2 of the complaint was false and the amounts based on invoices which the complainant was not produced before the court. The honourable high court also observed that there is no reference in the complaint regarding the mou dated 10.03.2004 and the document mou is marked through additional affidavit. 

3. The Honourable Karnataka High Court also observed that there is no dispute regarding the filing of a case at Delhi Court and also filing of arbitration proceedings. It was also observed that the transactions which took place exceed 20 crores and the complainant has not produced any statement of account with respect to the transaction of the accused and complainant which the accused had rebutted in the cross-examination. The honourable high court observed that issues regarding the cheques were raised in 2006 but the transaction has been continued till 30.04.2018 and also there was no material to show that the agreement was terminated. The honourable high court also observed that there was no document produced before the court for having paid the remaining amount in favour of the accused.

Decision held

The Honourable Karnataka High Court does not find any infirmity in the judgment of the trial court. The appeals are dismissed.

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