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REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1522 OF 2014 ARISING OUT OF

SPECIAL LEAVE PETITION (CRL.) NO. 278 OF 2013

RAMDAS S/O KHELUNAIK … APPELLANT

VERSUS

KRISHNANAND S/O VISHNU NAIK … RESPONDENT

JUDGMENT

N.V. RAMANA, J.

Leave granted.

2. This appeal by special leave arises out of Judgment dated 22nd  

August, 2012 passed by the High Court of Karnataka, Circuit Bench  

at Dharwad, in Criminal Appeal No. 832 of 2007 whereby the High  

Court set aside the Judgment and Order of the J.M.F.C. (II-Court),  

Karwar  acquitting  the  appellant  herein  of  the  offence  punishable  

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under Section 138 of the Negotiable Instruments Act, 1881 (for short  

‘the Act’).

3.  The  facts  leading  to  this  appeal,  in  a  nutshell,  are  that  a  

Cheque for  Rs.5,00,000/-  issued by the appellant  in  favour  of  the  

respondent was dishonoured by the Bank when it was presented for  

realization by the respondent,  as  the appellant  had  instructed the  

Bank to stop the payment. After receiving such information from the  

Bank, the respondent served a legal notice calling upon the appellant  

to pay the Cheque amount. Upon failure of the respondent to obey  

the  legal  notice  warranting  him  to  pay  the  Cheque  amount  of  

Rs.5,00,000/-,  the  respondent  filed  Complaint  Case  against  the  

appellant for the offence punishable under Section 138 of the Act.  

The Judicial Magistrate (First Class), Karwar took cognizance of the  

offence,  recorded  statement  of  the  complainant  under  oath,  

registered  the  case  and  summoned  the  accused-appellant.  The  

appellant pleaded not guilty and claimed trial.

4. Before the Trial Court,  the complainant-respondent solely led  

his own evidence as P.W. 1., whereas the appellant-accused in his  

defence led evidence of six witnesses. The case of the complainant  

was that he had given a hand loan of Rs.1,50,000/- to the accused-

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appellant  and  three  and  half  years  thereafter  he  had  again  given  

Rs.25,000/- as hand loan, thus in all, the accused-appellant owed him  

Rs.  1,75,000/-  and  to  discharge  this  liability  the  cheque  for  

Rs.5,00,000/-  was  drawn,  but  the same stood  dishonoured  at  the  

instructions  of  the  accused-appellant.  Whereas,  the  case  of  the  

appellant  before  the  Trial  Court  was  that  he  had  entered  into  an  

agreement  with  the  complainant  to  purchase  3  acres  of  land  

belonging  to  the  complainant  for  a  total  consideration  of  

Rs.10,00,000/- and for that  purpose, an advance of Rs.30,000/-  in  

cash was paid and the Cheque in question for  Rs.5,00,000/-  was  

handed over  to  the  complainant  in  presence of  B.S.  Pai  (DW 2).  

When the complainant failed to execute the sale agreement and not  

even willing to return the advance amount  of  Rs.30,000/-  and the  

Cheque of Rs.5,00,000/-, he had to instruct the Bank to stop payment  

against the said Cheque.

5.  The  Trial  Court,  taking  note  of  financial  condition  of  the  

complainant who was working under the accused, observed that the  

complainant  has  failed  to  lead  any  evidence  to  corroborate  his  

version that the Cheque issued by the appellant was to discharge the  

liability towards the complainant. Keeping in mind the corroborative  

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and unshaken defence version, the Trial Court found fault with the  

complainant-respondent and observed that instead of executing an  

agreement to sell and instead of repaying the advance money and  

returning the Cheque, a false complaint was filed by the complainant-

respondent against the accused-appellant. The Trial Court, therefore,  

dismissed the complaint and acquitted the accused-appellant of the  

offence.

6. Against  the  judgment  of  the  Trial  Court  dismissing  the  

Complaint  and  acquitting  the  accused,  the  complainant  preferred  

Criminal Appeal before the High Court. The High Court while allowing  

the appeal, set aside the judgment of the Trial Court and sentenced  

the appellant-accused to pay a fine of Rs.8,50,000/- within a period of  

eight weeks, failing which, to suffer simple imprisonment for a period  

of  six  months.  Aggrieved  by  the  reversal  of  his  acquittal,  the  

appellant-accused filed the present appeal.

7. Learned counsel for the appellant-accused contended that the  

Cheque in question was in fact issued as part payment of the agreed  

sale/purchase of 3 acres of land belonging to the complainant for a  

total consideration of Rs.10,00,000/-, out of which an initial amount of  

Rs.30,000/-  was  also  paid  by  the  appellant  in  cash  and  the  

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complainant was supposed to execute a written sale agreement. As  

the  complainant  had  not  come  forward  for  giving  finality  to  the  

commitment by execution of written Sale Agreement and even denied  

to  return  the advance payment  of  Rs.30,000/-  and the Cheque in  

question, the appellant had no option but to request his banker to not  

honour the Cheque. The complainant mischievously cooked up the  

story of giving hand loan to the appellant which the Trial Court had  

rightly  disbelieved  and  dismissed  the  complaint.  Although  the  

complainant-respondent miserably failed to establish the fabricated  

story of giving hand loan to the appellant with any reliable evidence,  

the High Court  took an erroneous view and wrongly set  aside the  

judgment  of  the  Trial  Court  and  sentenced  the  appellant  under  

Section 138 of the Act. Learned counsel, therefore, submitted that the  

impugned order  is  not  justified  and  the  same deserves  to  be  set  

aside.

8. On  the  other  hand,  learned  counsel  for  the  respondent-

complainant  submitted  that  there  was  no  error  in  the  impugned  

judgment and the High Court has rightly allowed the appeal of the  

complainant. The complainant had raised a sum of Rs.1,50,000/- by  

obtaining loan from Akshya Bank to extend hand loan to the accused-

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appellant and 3½   years thereafter, a further sum of Rs.25,000/- was  

also given and the Cheque for Rs.5,00,000/- was meant for the total  

repayment  of  the  advanced  amount  of  Rs.1,75,000/-.  He  further  

submitted  that  there  was  no  transaction  of  sale/purchase  of  land  

between the parties and the accused wanted to avoid repayment of  

the hand loan, in the process of which he instructed the banker not to  

pass the Cheque. The High Court has, therefore, correctly dealt with  

the matter and rightly sentenced the accused who, knowing fully the  

eventuality of the offence, committed the same deliberately. Hence  

the learned counsel prayed that the appeal lacks merit and the same  

deserves to be dismissed.

9. We  have  heard  rival  contentions  of  the  learned  counsel  at  

length. We find from the record that admittedly, the accused appellant  

deals  with  sale  and  purchase  of  landed  properties  and  the  

respondent-complainant  works as a Lorry Driver  under  him with a  

salary of Rs.2,500/- p.m. and Rs.20/- per day towards miscellaneous  

expenses  (bhatta).   Admittedly,  the  Cheque  in  question  was  for  

Rs.5,00,000/- and all the way the stand of the complainant was that  

he had given a hand loan of Rs.1,75,000/- to the accused-appellant.  

We  find  no  material  on  record  in  support  of  the  claim  of  the  

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complainant giving hand loan to the accused-appellant.  There was  

also no calculation of account or  stipulation of any interest  on the  

alleged loan amount to show as to how the amount of Rs.5,00,000/-  

was figured, in return of a hand loan of Rs.1,75,000/-, if at all taken by  

the appellant from the complainant. It is also not on record whether  

there was sufficient balance amount or not in the bank account of the  

accused  when  the  Cheque  was  dishonoured  by  the  Bank.  The  

complainant  himself  stated  in  the  cross-examination  that  after  the  

Cheque was returned without payment, he has not made any enquiry  

with the Bank as to whether sufficient funds were available or not in  

the account of the accused. In the absence of any authenticated and  

supporting  evidence,  we  cannot  believe  that  the  complainant-

respondent who is employed under the appellant-accused, has raised  

an  amount  of  Rs.1,75,000/-  that  too  by  obtaining  loan  of  

Rs.1,50,000/- from a Bank, only to give hand loan to his employer. As  

the complainant himself admitted that his net savings in a year comes  

to about Rs. 10,000/-, it is not trustworthy that he was in a position to  

extend hand loan of such big amount to the appellant.

10. Whereas,  the  evidence  of  Mr.  B.S.  Pai  (D.W.  2)  fully  

corroborates the version of the appellant. He deposed that the talks  

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of sale/purchase of 3 acres of land were held between the parties in  

his  presence.  The  appellant  agreed  to  purchase  3  acres  of  land  

belonging to the complainant and the appellant had paid an amount  

of  Rs.30,000/-  as  advance  and  handed  over  a  Cheque  for  

Rs.5,00,000/-  .  It  is  also noteworthy that  the complainant  has not  

rebutted the evidence of D.W. 2 in the cross examination. Further, the  

firm  and  unshaken  evidence  of  Mr.  D.R.  Bhat,  a  member  of  the  

Karwar Bar Association (D.W. 6) also corroborates the sale purchase  

deal between the parties. It is evident from the record that DW 6 has  

clearly  and categorically  deposed that  the  appellant  stated to  him  

about four years back that he had entered into an agreement with the  

complainant in presence of B.S. Pai (DW 2) to purchase 3 acres of  

land belonging to the complainant and also paid Rs.30,000/- in cash  

as advance money and issued a Cheque for Rs.5,00,000/-. Looking  

at the corroborative evidence adduced by the defence witnesses and  

more particularly, in the absence of any material evidence in support  

of  the claim of  the respondent-complainant,  we cannot uphold the  

impugned judgment.  

11. For  all  the  aforesaid  reasons,  the  appeal  deserves  to  be  

allowed and is accordingly allowed. The impugned judgment of the  

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High  Court  is  set  aside  and  the  judgment  of  the  Trial  Court  is  

restored.  The  appellant  is  at  liberty  to  withdraw  the  amount  of  

Rs.1,75,000/- with accrued interest if any, deposited by him before  

the  Trial  Court  in  accordance  with  this  Court’s  order  dated  30 th  

November, 2012.

….……………………………….J. (RANJANA PRAKASH DESAI)

.....………………………………J.         (N.V. RAMANA)  

NEW DELHI JULY  23, 2014

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