M.S. Nagabhushan vs D.S.Nagaraja

2025 INSC 316 NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO(S). OF 2025 (ARISING OUT OF SLP(CRL.) NO(S). 11002-11009 OF 2024)

M.S. NAGABHUSHAN ….APPELLANT(S)

VERSUS

D.S. NAGARAJA ….RESPONDENT(S)

JUDGMENT

Mehta, J.

1. Leave granted.

2. The challenge in these appeals is laid to the common

judgment and final order dated 8th July, 2024, passed by the

learned Single Judge of the High Court of Karnataka at

Bengaluru1, whereby the criminal revision petitions2 filed by the

appellant3 herein were dismissed.

1 Hereinafter, being referred to as ‘High Court’. Signature Not Verified 2 The Criminal Revision Petitions filed by the appellant herein includes CRP No. 447 of 2018, Digitally signed by

448 of 2018, 449 of 2018, 450 of 2018, 451 of 2018, 452 of 2018, 453 of 2018, 454 of 2018, NEETU KHAJURIA Date: 2025.03.04 17:40:55 IST Reason:

466 of 2018, 467 of 2018, 468 of 2018 and 469 of 2018. However, it is pertinent to note that the present appeals are filed only against the judgment and order in Criminal Revision Petitions No. 447-454 of 2018.

3 Hereinafter, being referred to as ‘appellant-accused’.

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3. Brief facts relevant and essential for the disposal of the

appeals are noted hereinbelow.

4. The appellant-accused and respondent4 entered into a lease-

cum-rent agreement on 12th May, 2014 for Flat No. 206, 2nd Floor,

SAN VIL Apartment, 6th & 7th Cross, 50 Feet Main Road, Balaji

Nagar, Mallathahalli Extension, Bangalore-5600565 owned by the

appellant-accused. The respondent-complainant deposited a sum

of Rs.9,00,000/- with the appellant-accused by way of ‘security

deposit’. The rent for the subject flat was settled at Rs.2,500/- per

month as per the rent agreement which was valid for a period of

11 months and was to terminate on 11th April, 2015, whereupon

the appellant-accused would be required to refund the security

deposit of Rs.9,00,000/- and collect the keys and receive vacant

possession of the said flat from the respondent-complainant. Upon

completion of 11 months, the respondent-complainant issued a

notice dated 18th June, 2015, to the appellant-accused, imploring

him to refund the security deposit amount. However, the

appellant-accused could not arrange the said amount and thus,

he issued four post-dated cheques to the respondent-complainant.

The details of the cheques are mentioned hereinbelow: -

4 Hereinafter, being referred to as ‘respondent-complainant. 5 Hereinafter, referred to as ‘subject flat’.

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Serial Cheque No. Date Cheque Amount No. 1 681821 20.08.2015 Rs.2,00,000/-

2 681822 20.10.2015 Rs.2,00,000/-

3 681827 20.12.2015 Rs.2,00,000/-

4 681826 20.02.2016 Rs. 3,00,000/-

5. The respondent-complainant presented the above cheques

with his bank and the same came to be dishonoured with the

endorsement ‘funds insufficient’. Thereupon, the respondent-

complainant filed four separate complaints6 against the appellant-

accused before the learned XXII Additional Chief Metropolitan

Magistrate, Bangalore City7. The trial Court, vide judgment dated

9th November, 2016, convicted the appellant-accused in all the four

complaints for the offence punishable under Section 138 of

Negotiable Instruments Act, 18818 and sentenced him to pay a

total fine amount of Rs.3,00,000/- with simple interest @ 6% per

annum from the date of the cheques till realisation thereof. It was

directed that out of the said fine amount, the respondent-

complainant would be entitled to a sum of Rs.2,95,000/- as

compensation and the remaining amount of Rs.5,000/- would be

forfeited to the State Exchequer. The appellant-accused was

directed to pay the said amount to the respondent-complainant

6 Criminal Complaint Nos. 26639 of 2015, 1235 of 2016, 5198 of 2016 and 11151 of 2016. 7 Hereinafter, being referred to as ‘trial Court’. 8 Hereinafter, being referred to as ‘NI Act’.

3 Criminal Appeal @ SLP(Crl.) Nos. 11002-11009/2024

within a period of 30 days from the date of the order and in default,

he would have to undergo simple imprisonment for a period of one

year.

6. Being aggrieved by the judgment of the trial Court, the

appellant-accused9 as well as the respondent-complainant10

preferred four appeals each, before the learned LXVII Additional

City Civil & Sessions Judge, Bengaluru City11. The appellate Court

vide separate judgments dated 6th March, 2018, dismissed the

appeals filed by the appellant-accused and partly allowed the

appeals filed by the respondent-complainant, affirming the

conviction of the accused-appellant and enhancing the

compensation amount to Rs.9,00,000/-. In default, the appellant-

accused was directed to undergo imprisonment for one year.

7. Being aggrieved, the appellant-accused instituted multiple

revision petitions12, in the High Court, against the rejection of his

appeals and the confirmation of his conviction and also, against

the enhancement of the amount of compensation from

Rs.3,00,000/- to Rs.9,00,000/- by the appellate Court. The High

Court, vide common judgment dated 8th July, 2024, dismissed all

9 Criminal Appeal Nos. 1429 of 2016, 1430 of 2016, 1431 of 2016 and 1432 of 2016. 10 Criminal Appeal Nos. 411 of 2017, 412 of 2017, 414 of 2017 and 415 of 2017. 11 Hereinafter, referred to as ‘appellate Court’ 12 Supra note 2.

4 Criminal Appeal @ SLP(Crl.) Nos. 11002-11009/2024

the revision petitions filed by the appellant-accused and upheld

his conviction under Section 138 of the NI Act. Further, the High

Court also directed the appellant-accused to pay fine amount of

Rs.9,00,000/- to the respondent-complainant on or before 31st

July, 2024 (less the amount, if any, already deposited). In default,

the appellant-accused was directed to undergo simple

imprisonment for a period of two years. However, the amount of

Rs.5,000/-, awarded by the trial Court towards defraying expenses

to the State, was set aside.

8. Being aggrieved by the aforesaid judgment of the High Court,

the appellant-accused is before us, with the present set of appeals

by special leave.

9. Learned counsel for the appellant-accused urged that the

cheques in question were given in relation to the lease-cum-rent

agreement executed by the appellant-accused in favour of the

respondent-complainant for letting out his flat for a period of 11

months. In pursuance of the said agreement, the respondent-

complainant deposited a sum of Rs.9,00,000/- as security deposit

with the appellant-accused. The subject flat was to be vacated by

the respondent-complainant on completion of 11 months, i.e., on

11th April, 2015 only whereafter the appellant-accused would be

5 Criminal Appeal @ SLP(Crl.) Nos. 11002-11009/2024

under an obligation to refund the security deposit of Rs.9,00,000/-

and collect the keys of the flat. The appellant-accused had issued

four post-dated cheques by way of security in favour of the

respondent-complainant, who had acknowledged the receipt

thereof but refused to hand over the keys till the date of the last

cheque. He urged that the respondent-complainant did not vacate

the subject flat and started threatening the appellant-accused, by

demanding a huge amount. The respondent-complainant misused

the post-dated cheques and instituted the four malicious

complaints13 under the NI Act against the appellant-accused.

10. Learned counsel for the appellant-accused urged that during

the trial, the respondent-complainant admitted in his cross-

examination that he had not vacated the flat and continued to

occupy the same without paying any rent or maintenance charges.

He submitted that the appellant-accused was ultimately compelled

to institute a suit14 under the Karnataka Rent Act, 1999 seeking

ejectment of the respondent-complainant from the subject flat and

for damages. The said suit came to be partly decreed by learned

XVIII Additional Judge, Small Causes Court, Bengaluru, vide

judgment dated 27th September, 2019, and the respondent-

13 Supra note 6.

14 S.C. No. 1988 of 2016. 6 Criminal Appeal @ SLP(Crl.) Nos. 11002-11009/2024

complainant was directed to quit, vacate and hand over the vacant

possession of the subject flat to the appellant-accused within two

months from the date of the judgment.

11. The respondent-complainant was actually evicted from the

subject flat only on 8th January, 2020 pursuant to action taken in

the execution petition15 filed by the appellant-accused. He urged

that the respondent-complainant admittedly continued to occupy

the flat owned by the appellant-accused without paying any rent

for nearly 5 years and, hence, the conviction of the appellant-

accused for failing to refund the cheques given for covering the

security deposit amount is absolutely unjustified because the case

set up by the respondent-complainant does not satisfy the

parameters of a legally enforceable debt against the appellant-

accused so as to make him liable for the offence punishable under

Section 138 of the NI Act.

12. On these grounds, learned counsel appearing for the

appellant-accused implored this Court to accept the appeals, by

setting aside the impugned judgments passed by the Courts below

and thus, acquit the appellant-accused.

15 Execution Petition No. 1894 of 2019.

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13. E-converso, learned counsel appearing for the respondent-

complainant vehemently and fervently opposed the submissions

advanced on behalf of the appellant-accused. He urged that the

appellant-accused is unjustifiably trying to confuse the issue of

rent of the subject flat with the dishonour of cheques whereas both

have no corelation whatsoever. Indisputably, the respondent-

complainant had paid a sum of Rs.9,00,000/- to the appellant-

accused by way of security deposit when the subject flat was taken

on rent. Upon completion of tenure of the rent agreement, since

the security deposit amount was not refunded, the appellant-

accused issued four disputed post-dated cheques to the

respondent-complainant. These cheques were presented by the

respondent-complainant in his bank to cover his rightful claim and

the same came to be dishonoured on account of insufficient funds.

Hence, as per the learned counsel for respondent-complainant, the

appellate Court and the High Court were totally justified in

confirming the conviction of the appellant-accused and in

enhancing the amount of compensation from Rs.3,00,000/- (as

awarded by the trial Court) to Rs.9,00,000/-.

14. On these grounds, the learned counsel for respondent-

complainant urged that the present appeals are liable to be

8 Criminal Appeal @ SLP(Crl.) Nos. 11002-11009/2024

dismissed, and the decision of the appellate Court and the High

Court, enhancing the amount of compensation payable to

respondent-complainant should be upheld.

15. We have given our thoughtful consideration to the

submissions advanced at the bar and have gone through the

impugned judgments and the material placed on record.

16. It is evident from the record that the appellant-accused was

prosecuted for the dishonour of four post-dated cheques totalling

to an amount of Rs.9,00,000/- which were issued by him in favour

of the respondent-complainant and on presentation, had been

dishonoured with an endorsement ‘funds insufficient’. In regard

to the dishonour of these four post-dated cheques, the respondent-

complainant instituted four separate complaints16. The trial Court

convicted the appellant-accused under Section 138 of the NI Act

concluding that the specific plea taken by the appellant-accused

that he had repaid a sum of Rs.5,00,000/- to the respondent-

complainant was not controverted by the respondent-complainant

by way of any rejoinder or counter to the reply notice submitted by

the appellant-accused. The trial Court further accepted the

evidence of the appellant-accused and his witnesses who

16 Supra note 6.

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supported the plea that a sum of Rs.5,00,000/- had been repaid

to the respondent-complainant and the admission made by the

appellant-accused in his reply notice that the balance amount of

Rs.2,95,000/- (after deducting Rs. 80,000/- towards arrears of

rent and painting charges, Rs. 15,000/- towards maintenance

charges and Rs. 10,000/- for miscellaneous expenses) was due

and the same, would be paid to the respondent-complainant

within a month. Taking into account the aforesaid facts and

circumstances, the trial Court while convicting the appellant-

accused for the offence punishable under Section 138 of the NI Act

confined the sentence of fine, to Rs.3,00,000/- with simple interest

@ 6% per annum from the date of the cheques till realisation, to

be paid by the appellant-accused to the respondent-complainant.

From the said amount of Rs.3,00,000/-, a sum of Rs.5,000/- was

directed to be forfeited to the State Exchequer towards defraying

expenses. In default, the appellant-accused was directed to

undergo simple imprisonment for a period of one year.

17. It is undisputed that the cheques in question were given by

the appellant-accused to the respondent-complainant towards

refund of the security deposit to the tune of Rs. 9,00,000/- made

by the latter, when he had taken the flat owned by the appellant-

10 Criminal Appeal @ SLP(Crl.) Nos. 11002-11009/2024

accused on rent. The refund of the amount of security deposit was

contingent upon the respondent-complainant handing over the

vacant possession of the flat and returning the keys thereof to the

appellant-accused. Upon completion of the tenure of the lease, the

appellant-accused issued a legal notice calling upon the

respondent-complainant to vacate and hand over the vacant

possession of the subject flat, but the respondent-complainant did

not vacate the same. As a consequence, the appellant-accused

filed a suit17 seeking ejectment of the respondent-complainant

from the subject flat and for damages. In the said suit, the

respondent-complainant filed written statement but did not

depose or produce any document. The suit was partly decreed in

favour of the appellant-accused vide judgment and decree dated

27th September, 2019, and the respondent-complainant was

directed to quit, vacate and hand over the vacant possession of the

subject flat to the appellant-accused within two months from the

date of the order.

18. Despite the decree, the respondent-complainant failed to

vacate the subject flat on which the appellant-accused, being the

decree-holder, was compelled to institute execution proceedings18.

17 Supra note 14.

18 Supra note 15.

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The Small Causes Court, Bengaluru after perusing the bailiff

report which stated that the respondent-complainant(judgment

debtor) had locked the subject flat, vide order dated 2nd January,

2020, directed police assistance to break open the locks in order

to ensure that the decree is satisfied and possession of the subject

flat is handed over to the appellant-accused(decree holder). In

compliance of the aforesaid order, the locks were broken and

possession of the subject flat was handed over to the appellant-

accused(decree holder) on 8th January, 2020.

19. Further, the respondent-complainant in his cross-

examination, before the trial Court in the criminal complaints19

filed by him, has admitted that he had not vacated the subject flat

till the date of his examination. For ready reference, the relevant

portion of the cross-examination of the respondent-complainant is

extracted hereinbelow: -

“It is correct to state that accused and his wife are joint owners of the house where I am residing. It is correct to state that even now also I am residing in the house which was mortgaged. For the purpose of mortgage security, I had paid the amount of Rs. 2 lakhs, 4 lakhs and 3 lakhs at three times totalling to Rs. 9 lakhs. I paid said amount through cheque. Mortgage deed has not been executed concerning with payment made as stated above. Mortgage deed has not been executed between me and them. It is false to state that I have entered into lease agreement with them. It is false to state that every month I am paying Rs. 2,500/- as rent and Rs. 2,600/- as maintenance. It is correct to state that on 12.04.2015, I

19 Supra note 6.

12 Criminal Appeal @ SLP(Crl.) Nos. 11002-11009/2024

passed the message through phone to accused by mentioning I am vacating the house where I am residing. It is false to state that again on 22.05.2015, I passed the message to the accused that on (sic)0.05.2015, I vacated the house. But I have not vacated it. It is correct to state that on 18.06.2015, I wrote a letter to the accused. It is false to state that in the said letter, I mentioned that I will vacate the house if security amount of Rs. 9 lakh is returned. It is correct to state that for the purpose of security I issued 4 post-dated filled cheques. It is false to state that as stated above after receiving the cheque, I told if Rs. 9 lakh is returned, then said cheques will be returned. It is false to state that on 26.08.2015, accused along with witnesses gave a sum of Rs. 5 lakhs in cash by coming to my house. It is correct to state that from that day till this date I have not paid the rent amount and maintenance amount. It is correct to state that I have issued notice upon accused as per Ex.P-3. It is correct to state that as per Ex.P-7, accused has sent the reply notice. Advocate shown the letter dated 18.06.2015 to the witness, for that witness states it is correct this is the letter which was written by me. Because witness identified said letter, same is marked as Ex.D-1 on behalf of accused. The contents of Ex.D-1 letter are true. It is false to state that thereafter without vacating the house of accused, even without paying the rent, I misused the cheques issued for the purpose of security. On showing the photocopy of rent agreement executed between the witness and accused concerning with the house, witness admitted the same but further stated it was created for the purpose of income tax. Same is marked as Ex.D-2 subject to proving the same.” (emphasis supplied)

20. Hence, it is as clear as daylight that the respondent-

complainant continued to occupy the subject flat, for a period of

nearly 5 years beyond the last date of the rent agreement without

paying any rent or maintenance amount.

21. In this background, the appellant-accused was definitely not

liable to refund the entire security deposit amount of

Rs.9,00,000/- covered by the post-dated cheques, to the

respondent-complainant because he was entitled to deduct the

13 Criminal Appeal @ SLP(Crl.) Nos. 11002-11009/2024

amount of due rent and maintenance from the said amount.

Hence, the respondent-complainant failed to lead evidence to

conclusively establish that the entire amount under the post-dated

cheques was a legally enforceable debt against the appellant-

accused.

22. In wake of the above discussion, we are of the opinion that

the judgment dated 6th March, 2018, passed by the appellate Court

and the judgment dated 8th July, 2024 passed by the High Court,

whereby compensation awarded by the trial Court was enhanced

and the appellant-accused has been held liable to pay a sum of

Rs.9,00,000/- as compensation to the respondent-complainant

and in default to undergo simple imprisonment, do not stand to

scrutiny.

23. It is pertinent to note that the appellant-accused had

previously approached this Court by filing special leave petitions

(SLPs)20, against orders dated 19th April, 2022 and 16th June,

2022, passed by the High Court, wherein the application filed by

the accused-appellant seeking extension of time to deposit 50% of

the fine amount as awarded by the appellate Court for staying the

operation of the appellate Court’s judgment was dismissed. This

20 SLP(Crl.) No(s). 6701-6716 of 2022.

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Court, while issuing notice vide order dated 1st August, 2022, in

the said SLPs, recorded that the appellant-accused had produced

two demand drafts of a sum of Rs.2,10,000/- each, totalling to

Rs.4,20,000/-. The said demand drafts were directed to be

deposited with the learned Secretary General of this Court.

24. This Court vide order dated 8th August, 2023, disposed of the

said SLPs directing the Registry to transmit the said demand drafts

to the Chief Metropolitan Magistrate Court, Bangalore i.e., the trial

Court, and the amount covered by the said drafts was ordered to

be invested in an interest-bearing fixed deposit in a Nationalised

Bank. Evidently, the amount deposited by the appellant-accused

i.e., a sum of Rs.4,20,000/- (Two demand drafts of Rs.2,10,000/-

each) as recorded in the order dated 1st August, 2022 passed by

this Court, must also have generated interest.

25. Thus, while setting aside the judgments of the High Court

and the appellate Court and restoring that of the trial Court, we

direct that the sum of Rs. 3,00,000/- by way of compensation shall

be paid to the respondent-complainant. The remaining amount

over and above the sum of Rs.3,00,000/- awarded to the

respondent-complainant by way of compensation, shall be

reimbursed to the appellant-accused.

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26. In view of the above discussion, the impugned judgments,

dated 6th March, 2018 passed by the appellate Court and dated 8th

July, 2024 passed by the High Court are hereby, quashed and set

aside. The judgment dated 9th November, 2016 rendered by the

trial Court is restored. The trial Court shall reimburse the amount

in the above terms to ensure compliance of this judgment within a

period of two months from today.

27. Thus, the appeals are partly allowed in the aforesaid terms.

28. Pending application(s), if any, shall stand disposed of.

…………………………J. (VIKRAM NATH)

.………………………..J. (SANDEEP MEHTA) NEW DELHI;

MARCH 04, 2025.

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