A Government college lecturer was at his wits’ end on Friday when the Supreme Court ruled that an amount of Rs14 lakh that he lent to his colleague in 1997 cannot be recovered as law required him to show source of money, which he failed to produce.
It resulted in a double whammy for K Damodara Naidu as he lost not only the money but also the nine-year-old case. His colleague, K Subramani, the beneficiary of the loan, incidentally was acquitted by the Court of any wrongdoing.
It was with good intention that Naidu decided to help his friend in starting a granite business. Both were lecturers of Government College, Bangalore. Naidu paid Rs14 lakh upfront in cash on the condition that the money will be repaid on demand at an interest of three per cent.
Subramani agreed to the condition when he received the cash on December 1, 1997. He even issued a post-dated cheque payable in three years. But on the date assigned, Subramani requested more time due to cash crunch and issued yet another cheque payable on August 16, 2005. The total sum that accrued to Naidu on that day was Rs73.8 lakh. The cheque bounced on presentation and from then on began a long drawn litigation.
Subramani was acquitted by the trial court but the Karnataka High Court reversed the finding and directed resumption of criminal proceedings under Negotiable Instruments (NI) Act. The conflicting orders presented a fit case for Supreme Court to decide whether the law favoured the accused or complainant in the present case.
The Bench of Justices V Gopala Gowda and C Nagappan upheld the trial court order acquitting the accused after arriving at a conclusion that the complainant (Naidu) had no source of income to lend the sum of Rs14 lakh. Consequently, “complainant failed to prove that there is legally recoverable debt payable by the accused to him,” added the Bench.
Naidu being a Government servant was governed by Government Servants' Conduct Rules that prescribes a mode of lending and borrowing that was not followed here. Although Naidu claimed the source to be savings from salary and sale of a plot that fetched him Rs5 lakh, neither sale deed was produced nor the sale was shown in the income tax assessment of the relevant year.