K. SUBRAMANIversusK. DAMODARA NAIDU

•                  [2014] 11 S.C.R. 169


                      K. SUBRAMANI
                                                                A
                             v.
                   K. DAMODARA NAIDU
            (Criminal Appeal No. 2402 of 2014)
                   NOVEMBER 13, 2014                            B
     [V. GOPALA GOWDA AND C. NAGAPPAN, JJ.]

     Negotiable Instruments Act, 1881 - s. 138 - Complaint
under - Acquittal by trial court - High Court remanded the      C
matter for retrial - Held: Trial court rightly acquitted the
accused holding that the complainant failed to prove that
there was legally recoverable debt payable to the accused -
Therefore, order of High Court remanding the case for retrial
is unsustainable.
                                                                D
    Allowing the appeal, the Court

     HELD: On a consideration of entire oral and
documentary evidence the trial court came to the
conclusion that the complainant had no source of income         E
to lend a sum of Rs.14 lakhs to the accused and he failed
to prove that there is legally recoverable debt payable by
the accused to him. The said conclusion of the trial court
has been arrived at on proper appreciation of material
evidence on record. The impugned judgment of remand
                                                                F
made by the High Court is unsustainable and liable to be
set aside. [para 9-1 OJ [173-F-H]

   Rangappa VS. sri mohan 2010 (11) sec 441: 2010 (6)
SCR 507 - referred to.
                                                                G
                     Case Law Reference:
    2010 (6) SCR 507         referred to           Para 5


                            169                                 H
    170       SUPREME COURT REPORTS               [2014] 11 S.C.R. •


A       CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
    No. 2402 of 2014.

        From the Judgment & Order dated 10.10.2013 of the High
    Court of Karnataka at Bangalore in Crl. Appeal No. 368 of
B   2009 .

       . Girish Ananthamurthy, Vaijayanthi Girish for the Appellant.

          Anand Sanjay M., Nuli & Nuli for the Respondent.
                                        •
          The Judgment of the Court was delivered by
c
          C. NAGAPPAN, J. 1. Leave granted.

        2. This appeal is preferred against judgment and order
    dated 10.10.2013 passed by the High Court of Karnataka at
o   Bangalore in Criminal Appeal No.368 of 2009 wherein the High
    Court set aside the judgment of acquittal of the trial court and
    remanded the case to the trial court for retrial.

        3. The respondent herein/complainant and the appellant/
  accused y.tere working as lecturers in a Government College
E at Bangalore. The case of the complainant is that the accused
  borrowed a loan of Rs.14 lakhs in cash on 1.12.1997 from him
  to start granite business, promising to repay the same with 3%
  interest per month on demand and issued post-dated cheque
  dated 30.11.2000 for sum of Rs.29, 12,000/- which included
F principal and interest and few days prior to presentation of the
  cheque on its due date to bank for encashment, the accused
  requested him not to present the cheque and took extension
  of time of another three years for repayment and finally issued
  a cheque dated 16.08.2005 for a sum of Rs,i'.3,83,552/- which
G included principal and interest. The complainant presented 'the
  cheque on 19.8.2005 for encashment to his banker and it was
  dishonored with an endorsement 'fund insufficient' and the
  complainant issued legal notice on 12.9.2005 demanding
  repayment within 15 days from the date of its receipt thereof
H and accused sent reply but failed to comply with the demand
•     K. SUBRAMANI v. K. DAMODARA NAIDU
               [C. NAGAPPAN, J.]
and the complainant lodged complaint under Section 138 of the
                                                               171


                                                                       A
Negotiable Instrument Act, against the accused.

     4. In the trial the complainant examined himself as PW1
and examined CWs1 and 2 on his side and marked documents
Exh. P1 to P23. The accused examined himself as DW1 and                B
marked documents Exhs. 01 to 05. The trial court held that the
complainant had no source of income to lend a sum of Rs.14
lakhs to the accused and he failed to prove that there is legally
recoverable debt payable by the accused to him and that in
discharge of said liability he issued the cheque and accordingly       C
acquitted the accused for the alleged offence under Section
138 of N.I. Act. Aggrieved by the same the complainant
preferred appeal in the High Court in Criminal Appeal No.368
of 2009, and the High Court heard the appeal along with 9 other
appeals by framing two legal issues which are as under:
                                                                       D
     " i) Whether an action under Section 138 of the N. I. Act
     for dishonor of cheque is the complainant required to
     establish his financial capacity to lend money?

     ii) \/Viii not presumption under Section 139 of the N.1. Act      E
     accrues to the benefit of the complainant unless the
     accused rebuts that presumption?"

     5. Relying on the ratio laid down by this. Court in the
decision in Rangappa vs. Sri Mohan [(2010) 11 SCC 441]
the High Court answered the first issue in the negative and the        F
second issue in the affirmative. It further held that the orders of
acquittal recorded by the trial court in all the appeals suffer from
legal infirmity as the prosecution has been undone only on the
ground that complainant had not proved his capacity to lend
money and hence those orders are liable to be set aside.               G
Accordingly it allowed the appeals and set aside the respective
judgments of acquittal and remanded the cases to courts
concerned directing retrial. The present appeal is preferred
challenging the said judgment.
                                                                       H
                                                                       i
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    172     SUPREME COURT REPORTS                [2014] 11 S.C.R.


       6. The learned counsel appearing for the appellant/
                                                                 •
  respondent contended that the High Court erroneously clubbed
  a batch of 10 criminal appeals and formulated two questions
  of law and insofar as the present appeal is concerned the trial
  court never proceeded on the assumption that the presumption
B under Section 139 of the N.I. Act would enure to the benefit of
  the complainant only if he proves his financial capacity and on
  the contrary the trial court had for reasons recorded found that
  the accused has rebutted the presumption by placing cogent
  evidence that there was no legally recoverable debt or liability
c and the complainant had no capacity to lend huge amount of
  Rs.14 lakhs and, accordingly, dismissed the complaint by
  acquitting the accused. It is his further contention that the High
  Court without going into the merits proceeded to remand the
  present case to the trial court for being retried and it has
0 caused   great prejudice to the appellant herein and hence the
  impugned judgment is liable to be set aside.

       7. Learned counsel for the respondent/complainant
  submitted that the High Court answered the legal issues
  involved and has remanded the case to the trial court for fresh
E consideration and no exception can be taken to the impugned
  judgment.

       8. Three Judge Bench of this Court in the decision in
  Rangappa case (supra) laid down that the presumption
F mandated by Section 139 of the N.I. Act includes a presumption
  that there exists a legally enforceable debt or liability and that
  is a rebuttable presumption and it is open to the accused to
  ratse a defence ~~herein the existence of a legally enforceable
  debt or liability can be contested. Relying on the said ratio the
G High Court answered the two legal issues raised by it in the
  impugned judgment. Though the criminal appeals were
  preferred against the judgment of acquittal passed in all the
  cases arising under Section 138 of the N.I. Act, the factual
  matrix and the evidence adduced were different. The High
H Court after answering the two legal issues did not consider the
•         K. SUBRAMANI v. K. DAMODARA NAIDU                    173
                   [C. NAGAPPAN, J.]
    merits of each case individually and has simply remanded the      A
    matter to the trial court for fresh consideration.

         9. In the present case the complainant and the accused
    were working as Lecturers in a Government college at the
    relevant time and the alleged loan of Rs.14 lakhs is claimed to B
    have been paid by cash and it is disputed. Both of them were
    governed by the Government Servants' Conduct Rules which
    prescribes the mode of lenaing and borrowing. There is nothing
    on record to show that the prescribed mode was followed. The
    source claimed by the complainant is savings from his salary C
    and an amount of Rs.5 lakhs derived by him from sale of site
    No.45 belonging to him. Neither in the complaint nor in the chief-
    examination of the complainant, there is any averment with
    regard to the sale price of site No.45. The concerned sale deed
    was also not produced. Though the complainant was an
    income-tax assessee he had admitted in his evidence that he D
    tlad not shown the sale of site No.45 in his income-tax return.
                                    /
    On the contrary the complainant has admitted in his evidence
    that in the year' 1997 he had obtained a loan of Rs.1,49,205/-
    from L.l.C. It is pertinent to note that the alleged loan of Rs.14
    lakhs is claimed to have been disbursed in the year 1997 to E
    the accused. Further the complainant did not produce bank
    statement to substantiate his claim. The trial court took into .
    account the testimony of the wife of the complaint in another
    criminal case arising under Section 138 of the N.I. Act in which
    she has stated that the present appellant/accused had not taken F
    any loan from her husband. On a consideration of entire oral
    and documentary evidence the trial court came to the conclusion
    that the complainant had no source of income to lend a sum of
    Rs.14 lakhs to the accused and he failed to prove that there is
    legally recoverable debt payable by the accused to him.            G
         10. In our view the said conclusion of the trial court has
    been arrived at on proper appreciation of material evidence on
    record. The impugned judgment of remand made by the High
    Court in this case is unsustainable and liable to be set aside.
                                                                      H
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    174       SUPREME COURT REPORTS               [2014] 11 S.CR.


         11. In the result this appeal is allowed and the impugned
                                                                        •
    judgment insofar as the appellant is concerned is set aside and
    the judgment of acquittal passed by the trial court is restored.
    Kalpana K. Tripathy                               Appeal allowed.