Sri Karibasappa Vs Sri Mallikarjun (Karnataka High Court)
The Hon’ble Karnataka High Court in Sri Karibasappa v. Sri Mallikarjun [Criminal Appeal No. 200106/2020, dated December 16, 2022] set aside the acquittal order passed by the Trial Court and sentenced the accused to pay a fine of INR 2,00,000/- or to undergo imprisonment of 3 months. Further, prescribed a list of grounds that wouldn’t exempt the borrower to escape from the prosecution and criminal liability for the dishonour of cheque under Section 138 of the Negotiable Instruments Act, 1881 (“the NI Act”).
Facts:
Sri Karibasappa (“the Appellant”) was approached by Sri Mallikaarjun (“the Respondent” or “the Accused”) on February 7, 2010 to give a loan of INR 2,00,000/- for its contract work. The loan was given by the Appellant on the assurance that the Respondent will return the amount within 9 months. The Respondent issued a cheque dated December 7, 2010 to discharge his debt which was presented by the Appellant for collection on January 27, 2011 and the same was dishonoured due to insufficient funds vide bank endorsement dated January 28, 2011.
Thereafter, a demand notice was issued by the Appellant dated March 14, 2011 (“the Impugned Demand Notice”) which was received by the wife of the Respondent on March 16, 2011, however, the Respondent neither replied to the notice nor paid the money.
Consequently, a complaint was filed by the Appellant on April 29, 2011, wherein, the Trial Court vide order dated July 06, 2020 (“the Impugned Order”) acquitted the Respondent from the charge levelled under Section 138 of the NI Act on the grounds that:
(i) the Impugned Demand Notice was not given to the Respondent;
(ii) there is material alteration in the Cheque;
(iii) the date as to when money was given has not been stated in the complaint;
(iv) the debt is time barred;
(v) the transaction is hit by Section 269-SS of the Income Tax Act, 1961 (“the IT Act”); and
(vi) the Cheque dated December 7, 2010 was issued by the Respondent as security for the loan of INR 50,000/-
Being aggrieved, this appeal has been filed by the Appellant challenging the correctness and legality of the acquittal order passed by the Trial Court.
Issue:
Whether the Respondent is liable to be charged under Section 138 of the NI Act for dishonour of cheque while discharging his debt?
Held:
The Hon’ble Karnataka High Court in Criminal Appeal No. 200106/2020 held as under:
