Introduction:

The Karnataka High Court, in the case of B R Anand v. V R Gisha (Criminal Appeal No. 567 of 2019), clarified the computation of the limitation period under Section 138 of the Negotiable Instruments Act regarding cheque dishonour cases. The appeal was filed by B.R. Anand, challenging the trial court’s acquittal of V.R. Gisha, who was accused of dishonouring a cheque issued towards repayment of a loan. The central issue pertained to whether the notice for payment was issued within the prescribed thirty days from the date of receiving information from the bank about the cheque’s dishonour, specifically whether the day of intimation from the bank is to be included or excluded in calculating the limitation period. The dispute also involved allegations of alterations in the cheque and the sufficiency of evidence for conviction.

Arguments of the Parties:

Advocate Lohit M appeared for the appellant, B R Anand, who contended that the trial court erred in holding that the notice under Section 138(b) was issued beyond the prescribed thirty-day period. The appellant relied on Supreme Court precedents, especially the judgment in Econ Antri Limited v. Rom Industries Limited (2014), which mandated the exclusion of the day on which the cause of action arose when calculating limitation periods under the Negotiable Instruments Act. He emphasised that the bank’s intimation date (05.08.2017) should be excluded, thereby making the notice dated 04.09.2017 well within the thirty-day limit. Additionally, the appellant challenged the trial court’s adverse findings on the alteration of the cheque, arguing that the corrections had counter-signatures by the complainant and no challenge was raised about the authenticity of the accused’s signature. He urged that these facts be ignored, resulting in an erroneous acquittal.

On the other hand, Advocate Chandrashekar P Patil represented the respondent, V R Gisha, asserting that the trial court’s findings were justified based on the evidence on record. The respondent contended that the notice was issued after the expiry of the thirty-day period and also relied on the trial court’s view that the complainant’s case was not sufficiently proved, especially due to the irregularities in the cheque, including alleged alterations. The respondent maintained that these factors warranted acquittal.

Court’s Judgment:

Justice H P Sandesh, delivering the judgment, revisited the relevant legal principles under Section 138(b) of the Negotiable Instruments Act and reiterated the binding precedent set by the Supreme Court in Econ Antri Limited v. Rom Industries Limited. The court held that the day on which the dishonour intimation is received from the bank must be excluded from the limitation period. Applying this principle, the court observed that the bank’s intimation was dated 05.08.2017, and the notice was sent on 04.09.2017, which falls within the thirty-day time frame. Thus, the trial court’s conclusion that the notice was issued after the limitation period was incorrect and legally unsustainable.

Regarding the alleged alterations in the cheque, the court scrutinised the evidence and noted that corrections in the cheque were counter-signed by the complainant, and there was no dispute regarding the accused’s signature. The trial court’s adverse conclusion about the complainant’s credibility on this ground was deemed unsupported by the material on record. The High Court opined that the trial court failed to properly consider the corroborative facts and hence committed a grave error in acquitting the accused.

In light of these findings, the Karnataka High Court set aside the trial court’s order of acquittal and restored the criminal liability of the accused under Section 138 of the Negotiable Instruments Act. The court directed the respondent to pay a total fine of Rs. 12,00,000, out of which Rs. 11,70,000 shall be paid to the appellant as the principal amount and Rs. 30,000 shall be remitted to the State as fine.

The judgment reinforced the strict interpretation of procedural timelines in cheque dishonour cases and underscored the necessity for courts to meticulously evaluate the documentary evidence before granting acquittals. The ruling also reaffirmed the protection of creditors’ rights and emphasised adherence to statutory timelines that safeguard the sanctity of negotiable instruments.