Bangalore District Court
Prakash Anand Nayak vs H R Venkatesh on 18 November, 2025
1
Cri Appeal No.589/2024
KABC010091992024
IN THE COURT OF LV ADDL. CITY CIVIL AND SESSIONS
JUDGE, BENGALURU (CCH-56)
DATED: THIS THE 18th DAY OF NOVEMBER 2025
PRESENT
SRI. MOHAN PRABHU, M.A., LL.M.
LV ADDL. CITY CIVIL AND SESSIONS JUDGE, BENGALURU
CRIMINAL APPEAL NO.589 / 2024
Appellant/ PRAKASH ANAND NAYAK
accused S/O LATE ANAND NAYAK
AGED ABOUT 45 YEARS,
MALIGESHWARA NILAYA
5/24, 3RD CROSS,
NARASIMHAIAH LAYOUT,
SREE GALI ANJANEYASWAMY
WARD No.157, BYATARAYANAPURA,
BENGALURU - 26.
[R/by JAYAPRAKASH SHETTY, Advs.]
Vs
Respondent/ H.R. VENKATESH
Complainant S/O K.V. RAME GOWDA
AGED ABOUT 53 YEARS,
RESIDING AT No.FF-4,
SHIVAGANGA SWASTIK,
B-BLOCK, 1ST CROSS,
MARUTHI LAYOUT, VASANAPURA,
SUBRAMANYAPURA POST,
NEAR VASATAVALLABHA TEMPLE,
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Cri Appeal No.589/2024
BENGALURU - 560 061.
[R/by Sri J.S.C.N., Adv.]
JUDGMENT
This appeal is filed U/s.374[3] of Cr.P.C., 1973 by the accused against the judgment of conviction dated:
05.03.2024 passed in C.C. No.32596/2021 by learned XVI Addl. Chief Metropolitan Magistrate for the offence under S.138 of Negotiable Instruments Act [for short 'N.I. Act''] .
(2) The parties are referred to their rank before the trial court.
(3) The case of the complainant is briefly stated as follows:
The accused is well know to the complainant. The accused has approached the complainant to avail hand loan of R.2 lakhs in the last week of May 2019 for his personal reasons. The complainant advanced the said amount of Rs.2 lakhs to the accused in the last week of May and June 2019 in cash. On the date of borrowing hand loan the accused agreed and assured to repay the said amount within 20 months. During the last week of June 2019 the accused had issued two duly filled and 3 Cri Appeal No.589/2024 signed cheques (1) cheque bearing No.000128 dated 30.12.2020 for Rs.1 lakh and (2) cheque bearing No.000129 dated 31.12.2020 for Rs. 1 lakh. These cheques were drawn on HDFC Bank, Koramangala Industrial town Branch, Bengaluru, in favour of the complainant towards discharge of his liability. At the time of issuing of these cheques the accused assured the complainant that the amount will be available in his account on the date of the presentation. Believing the words of the accused, the complainant presented these two cheques for encashment. But these cheques came to be dishonoured with bank endorsement as 'Funds Insufficient' on 31.12.2020 and 02.01.2021. When the complainant informed regarding dishonour of cheque then the accused requested the complainant to re-
present these cheques to the bank. Hence, the complainant again presented the cheque for encashment. But these cheques dishonoured on 01.02.2021 for the reasons 'Funds Insufficient'. Thereafter the complainant got issued legal notice dated 25.02.2021 to the accused by RPAD. Notice duly served to the accused on 02.03.2021. Despite service of notice to the accused, the 4 Cri Appeal No.589/2024 accused has failed to pay the cheques amount to the complainant. Hence, the complaint.
(4) Based on the complaint filed by the complainant, the learned Magistrate registered a case in P.C.No.6816/2021. The sworn statement of the complainant recorded as the complainant filed his affidavit in lieu of sworn statement of the complainant, and documents Ex.P1 to P10 are marked. Based on sworn statement of the complainant, complaint averments and the documents, the learned magistrate taken cognizance of the offences punishable u/S.138 of NI Act and on 23.11.2021 ordered to register the case against the accused in Register-III and issued summons to the accused. Hence case in CC No. 32596/2021 came to be registered against the accused.
(5) On 28.04.2023 the accused appeared before the trial court and engaged his counsel and released on bail. The substance of the accusation read over to the accused for which the accused pleaded not guilty and claimed for trial. In view of the judgment of the Hon'ble 5 Cri Appeal No.589/2024 Supreme Court in the case of Indian Bank Association Vs. Union of India reported in 2014 (5) SCC 590, the sworn statement of the complainant was considered as evidence. Since the accused had moved an application u/S. 145(2) of NI Act praying to recall the complainant for cross examination, On that day the learned Magistrate by allowing the application posted the case for cross examination of PW1. PW1 was fully cross examined by learned counsel for accused. Accused examined u/S.313 of CrPC. He has denied incriminating evidence. The accused has not led any defence evidence.
(6) Thereafter the learned Magistrate after hearing arguments of both sides pronounced the judgment on 05.03.2024 and acting u/s/255(2) of CrPC the accused convicted for the offence punishable u/S/138 fo NI Act and sentenced him to pay fine of Rs.2,50,000/-, in default to pay fine amount, he shall undergo simple imprisonment for 6 months. Out of fine amount of Rs.2,40,000/- is ordered to be paid to the complainant as compensation u/S.357 CrPC and balance amount of Rs.10,000/- shall be remitted to the State as defraying 6 Cri Appeal No.589/2024 expenses.
(7) Aggrieved by the judgment of conviction, accused has preferred this appeal on following among other grounds:-
The impugned judgment passed by the learned XVI ACMM, Bengaluru is contrary to law and is opposed to material facts. The learned Magistrate has failed to appreciate and discuss the judgment of Hon'ble Apex Court reported AIR 2023 SC 471, wherein it is held that the complainant is not the income tax assessee, the N.I. Act is not attracted. The judgment passed by the trial court is one sided and without applying mind. The trial court convicted the accused solely on the basis of Ex.P1 and P2 which are totally irrelevant and incorrect. There is no legally recoverable debt. The learned Magistrate has failed to appreciate the fact that the respondent in his cross examination stated that, he is income tax assessee, he has not mentioned regarding amount in the income tax returns and also not disclosed any assets and liability submitted to the Government. The trial court has failed to appreciate the fact that the complainant is unable to prove the source of income from which the alleged loan 7 Cri Appeal No.589/2024 was made to the accused. The learned Magistrate has failed to appreciate the fact that PW1 has clearly admitted that the cheque amount was not legally recoverable debt. There is no relationship of creditor and debtor between the appellant and the respondent at any point of time. Hence, the question of issuing cheque by the accused in favour of the complainant does not arise. The trial court has failed to appreciate the fact that the legal notice is not served upon the appellant. The appellant was not residing in that address. The trial court has totally misread and misunderstood the documents and proceeded to pass impugned judgment solely on the basis of the cheque. PW1 has deposed that at the time of paying cash amount of Rs.2 lakhs no one was present. The complainant has concocted the documents Ex.P1 and P2. The impugned judgment and order passed by the learned Magistrate is illegal, improper and incorrect. At no point of time PW1 has given any hand loan of Rs.2 lakhs to the accused. There is no pleading either in the complaint or in the evidence about the source of income. Hence, on these grounds, the appellant prayed to set aside the judgment of conviction passed in 8 Cri Appeal No.589/2024 C.C.No.32596/2021 and acquit the accused.
(8) The trial court records received.
(9) The respondent / complainant entered appearance by engaging the counsel.
(10) I have heard the arguments on both sides and perused the entire records.
(11) The learned counsel for the appellant relied upon the following citations.
1. AIR 2024 SUPREME COURT 4103 (SRIDATTATRAYA VS. SHARANAPPA).
2. AIR 2023 SUPREME COURT 471 (RAJARAM SRIRAMULU NAIDU (SINCE DECEASED) THROUGH LRS. VS. MARUTHACHALAM (SINCE DECEASED THROUGH LRs).
3. AIR 2019 SUPREME COURT 942 (ANSS RAJASHEKAR VS. AUGUSTUS JEBA ANANTH).
4. 2020 (1) KCCR 505 (YESHWANTH KUMAR VS. SHANTH KUMAR N.) (12) The following points would arise for my consideration:-
Point No.1:- Whether the impugned judgment of conviction and order of sentence passed thereon is illegal, perverse and calls for interference?
Point No.2:- Whether there is sufficient grounds made out by the appellant to set aside the judgment passed in C.C.No. 32596/2021 as prayed for?9
Cri Appeal No.589/2024 Point No.3:- What order?
(13) My findings to the above points are as below:-
Point No.1:- In the NEGATIVE.
Point No.2:- In the NEGATIVE.
Point No.3:- As per the final order, for the
following
REASONS
(14) POINT NO.1 &2:- These two points are
taken together for discussion for the sake of convenience and in order to avid repetition of facts and evidence.
(15) The complainant who has examined himself as PW1, in his examination in-chief by reiterating the complaint averments has deposed that the accused who is known to him, has approached him to avail hand loan of Rs.2 lakhs in the last week of May 2019 for his personal reasons. Hence, he advanced the said amount to the accused in the last week of May and June 2019 in cash. He has deposed that on the date of borrowing the said loan, the accused a greed and assured him that he will repay the said amount within 20 months. He has deposed that during the last week of June 2019 the 10 Cri Appeal No.589/2024 accused had issued two duly filled and signed cheques i.e. (1) cheque bearing No.000128 dated 30.12.2020 for Rs.1 lakh for Rs. 1 lakh drawn on HDFC Bank, Koramangala Industrial town Branch, Bengaluru, in favour of the complainant and (2) cheque bearing No.000129 dated 31.12.2020 drawn on HDFC Bank, Koramangala Industrial town Branch, Bengaluru, in favour of the complainant, towards discharge of his liability. PW1 has deposed that as per request of the accused he presented the cheque for encashment. But these two cheques were dishonoured by way of endorsement citing 'Funds Insufficient', on 31.12.2020 and 02.01.2020. In order to substantiate these contentions, PW1 produced and got marked documents Ex.P1 and P2 cheques and produced and got marked Ex.P3 and P4 bank endorsement dated 31.12.2020 and 02.01.2020. PW1 has deposed that he conveyed the dishonour of the cheque to the accused.
Then in response, the accused, requested him to re- present the cheque. Hence, he again presented these cheques to the bank, but the cheques came to be dishonoured with an endorsement dated 01.02.2021 as 'Funds Insufficient'. He has produced and got marked 11 Cri Appeal No.589/2024 Ex.P5 and Ex.P6 bank endorsement for having dishonoured Ex.P1 and P2 cheques for 'funds insufficient'. PW1 has deposed that he got issued legal notice which duly served upon the accused on 02.03.2021. IN order to substantiate this contention PW1 has produced and got marked Ex.P7 legal notice dated 25.02.2021, Ex.P8 postal receipt for having sent notice, Ex.P9 postal acknowledgment for having served the notice to the accused.
(16) Thus, on plain reading of the oral evidence of PW1 which is supported by documents Ex.P1 to P9 one thing is very clear that the complainant has followed the procedure as contemplated u/S.138 and 142 of NI Act in filing this complaint. The Ex.P1 and P2 cheques are dated 30.12.2020 and 31.12.2020. These cheques came to be dishonoured on 01.02.2021 as per Ex.P5 and P6 bank endorsements. Within 30 days from the date of dishonour of these cheques on 25.02.2021 the complainant issued legal notice to the accused calling upon him to pay the cheque amount within 15 days from service of notice. Ex.P9 is the postal acknowledgment to 12 Cri Appeal No.589/2024 show that notice served on 02.03.2021. The complainant has filed this complaint on 15.04.2021 within 30 days after giving 15 days time to the accused to pay cheque amount.
(17) In this appeal, the accused taken contention that the legal notice was not duly served upon the accused. It is the contention of the accused is that he was not at all residing in the address mentioned in the legal notice. It is pertinent to note that the complainant in the cause title of the complaint has mentioned the very same address which is mentioned in Ex.P7 legally notice. On the basis of the court summons issued to the accused, the accused appeared before the trial court and defended the case. Even in the appeal memo also the appellant has mentioned the same address which is mentioned in Ex.P7 legal notice and Ex.P10 complaint. If at all the accused was not at all residing in the address mentioned in Ex.P7 legal notice he should have stated his correct address either before the trial court while taking defence or before this court while preferring this appeal. Mere taking such contention that the accused was not residing 13 Cri Appeal No.589/2024 in the address mentioned in the notice is not sufficient, unless the accused shows that the documentary evidence to show his correct address. Since the appellant / accused himself in this appeal mentioned the very same address, which is mentioned by the complainant in his complaint Ex.P10 and Ex.P7 legal notice, this court has to be held that the address mentioned in Ex.P7 legal notice is correct address of the accused. More than that there is postal acknowledgment as per Ex.P9 to show that the notice was duly served to the address of the accused. If at all any person on behalf of the accused received the legal notice, by signing on Ex.P9 postal endorsement it is for the accused to say who was that person received the notice sent to his address. Since the postal authorities have delivered the notice to the correct address mentioned in Ex.P7 it is deemed that the legal notice as per Ex.P7 duly served upon the accused.
(18) Now, other defence of the accused is concerned, during the course of cross examination of PW1, he has admitted suggestion that he is Government employee working as Staff Nurse, in KIDWAI Hospital. He 14 Cri Appeal No.589/2024 has admitted the suggestion that they have to file assets and liability statement submitted to his higher authorities. He has not mentioned regarding the amount of loan given to the accused in his asset and liability statement. He has admitted suggestion that he has not shown regarding lending of amount of Rs.2 lakhs to the accused in his income tax returns. He has admitted the suggestion that no person was present at the time of lending amount to the accused.
(19) PW1 has stated that he lent cash amount of Rs.2 lakhs to the accused in his house. He has denied the suggestion that the accused is not residing in the address mentioned in the notice. He has denied the suggestion that writings made in the cheques and signatures contained in the cheques are not that of the accused. He has denied suggestion that even though no such monetary transaction taken place, between him and the accused, he has filed false complaint against the accused. He has denied that he is doing money lending business. He has denied suggestion that he is seeing the accused for the first time before the court and not seen 15 Cri Appeal No.589/2024 prior to that.
(20) Thus, on perusal of the cross examination portion of PW1, the accused has not taken any such defence how his Ex.P1 and P2 cheques were gone to the hands of PW1 / complainant. The accused has not taken any such defence that his cheques were stolen or misplaced. At one stretch the accused would contend that the complainant has not lent any loan amount to the accused, but in another stretch the accused had taken contention that the complainant is doing money lending business. In this appeal the appellant / accused has taken contention that the complainant has not proved his financial capacity to lend the amount. Such contention taken by the accused is not acceptable because during the course of cross examination of PW1 suggestion is put to him that he is doing money lending business. In order to do money lending, person should have sufficient amount in order to lend the amount to the borrower. It is pertinent to note that the accused has not denied the fact that PW1 is a Government employee working as staff nurse in KIDWAI hospital. That itself indicates that PW1 is 16 Cri Appeal No.589/2024 drawing salary and having sufficient income. PW1 has deposed that he is working in KIDWAI hospital as staff nurse for the Past 24 years. He has deposed that the accused known to him for the past 13 years prior to the date of lending money. Since the accused during the course of cross examination of PW1, has not taken any such defence, the reason why the complainant is possessing Ex.P1 and P2 cheques belongs to the accused, merely on the ground that the complainant / PW1 has not mentioned regrading lending of amount in his assets and liability statement and not mentioned the same in the income tax returns that is not sufficient to hold that the complainant is not at all having financial capacity to lend money of R.2 lakhs to the accused.
(21) The learned counsel for the appellant /accused vehemently argued that as PW1 / complainant not mentioned the cheque amount in his income tax returns and in his assets and liability statement submitted to his higher authorities, hence the accused is liable to be acquitted. He relied upon the judgments of Hon'ble Supreme Court reported in AIR 2024 SUPREME COURT 17 Cri Appeal No.589/2024 4103 (SRIDATTATRAYA VS. SHARANAPPA), AIR 2023 SUPREME COURT 471 (RAJARAM SRIRAMULU NAIDU (SINCE DECEASED) THROUGH LRS. VS. MARUTHACHALAM (SINCE DECEASED THROUGH LRs), AIR 2019 SUPREME COURT 942 (ANSS RAJASHEKAR VS. AUGUSTUS JEBA ANANTH) and judgement of Hon'ble High Court of Karnataka reported in 2020 (1) KCCR 505 (YESHWANTH KUMAR VS. SHANTH KUMAR N.). On the other hand, the learned counsel for the respondent / complainant argued that it is the prerogative of the complainant to show or not to show regarding borrowing of hand loan by the third parties in the assets and liability statement and income tax returns. He argued that the decisions cited by the learned counsel for the appellant are not applies to the present case as the accused in the present case has not taken any such specific defence in the cross examination of PW1 and also not proved anything by preponderance of probabilities. He argued that if at all the accused had any such defence he should have given reply to the legal notice. He argued that the accused neither disputed his signatures on Ex.P1 and P2 nor taken any such defence is that the Ex.P1 and P2 are not of his 18 Cri Appeal No.589/2024 bank account. He submitted that PW1 / complainant has deposed in consonance with complaint averments and proved his case that the accused who borrowed sum of Rs.2 lakhs from the complainant and for repayment of the same issued Ex.P1 and P2 cheques. He submitted that the trial court has rightly drawn presumption as required u/S.139 and 118 o NI Act. The accused has failed to rebut presumption available to the complainant u/S.139 and 118 of NI Act.
(22) I have appreciated rival contentions. As I already noted that on perusal of the cross examination portion of PW1 the accused has not taken any such contention to show how his Ex.P1 and P2 cheques were gone to the hands of complainant. In usual course, no persons will keep silent if he came to know that his cheques have been misused by the third parties, who is not known to him / her. I have already held that Ex.P7 legal notice issued to the accused duly served on the accused. Ex.P7 sent to the correct address of the accused. If at all the accused had not issued Ex.P1 and P2 cheques in favour of the complainant he should have 19 Cri Appeal No.589/2024 issued reply notice to the complainant immediately after receiving notice.
(23) I have perused impugned judgment. The learned Magistrate in para 51 of the judgment observed that the complainant being Government servant as Staff nurse in KIDWAI hospital was expected to disclose the lending of loan to the accused in his assets and liabilities and also in his income tax returns, but he has not done so. It is also observed that when money transaction exists amount of Rs.20,000/-, it has to be done only through cheque as per provisions of S.269SS of Income Tax Act. In para 52 of the judgment, it is observed that merely because the complainant has lent amount to the accused by way of cash who not disclosed the same either in the assets and liability or in the income tax returns the entire case made out by the complainant and the entire evidence of the complainant and the documents cannot be discarded in toto. This appellate court is of the opinion that such finding given by the learned Magistrate is correct.
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Cri Appeal No.589/2024 (24) PW1 in his cross examination fairly admitted that he has not mentioned regarding hand loan given to the accused in his assets and liability and also not mentioned in income tax returns. Since PW1 himself has admitted the fact that he has not mentioned regarding payment of the hand loan to the accused in his assets and liability and in his income tax returns it is not possible for him to produce and show such documents, the assets and liabilities and income tax returns regarding payment of cash amount of Rs.2 lakhs to the accused. PW1 in his examination in -chief has clearly deposed that the accused approached him for hand loan of Rs.2 lakhs in the last week of May 2019. PW1 also clearly deposed that he advanced the said amount of Rs.2 lakhs to the accused in the last week of May and June 2019 by way of cash. It is not the case of the complainant / PW1` is that at the time of lending amount of Rs.2 lakhs to the accused he had received any promissory note or other documents, except Ex.P1 and P2 cheques. According to PW1, on the date of borrowing of hand loan amount of Rs.2 lakhs the accused issued Ex.P1 and P2 assuring him that he will repay the loan 21 Cri Appeal No.589/2024 amount within 20 months. Hence, according to PW1 the accused issued Ex.p1 and P2 post dated cheques by mentioning dates as 30.12.2020 and 31.12.2020. During the course of cross examination of PW1, nothing worth is elicited from his mouth to suggest that Ex.P1 and P2 came to his hand otherwise for discharge of debt by the accused. Since PW1 in his examination in-chief has clearly deposed regarding lending of money to the accused, month and year when the accused approached him to avail loan and month and year when the accused issued Ex.P1 and P2 for repayment of borrowed amount., no further evidence Is required to say that Ex.P1 and P2 were issued by the accused for repayment of borrowed amount.
(25) I have gone through the decisions cited by the learned counsel for the appellant / accused which are reported in AIR 2024 SUPREME COURT 4103 (SRIDATTATRAYA VS. SHARANAPPA), AIR 2023 SUPREME COURT 471 (RAJARAM SRIRAMULU NAIDU (SINCE DECEASED) THROUGH LRS. VS. MARUTHACHALAM (SINCE DECEASED THROUGH LRs), AIR 2019 SUPREME COURT 942 (ANSS RAJASHEKAR VS. AUGUSTUS JEBA ANANTH) 22 Cri Appeal No.589/2024 and judgment of Hon'ble High Court reported in 2020 (1) KCCR 505 (YESHWANTH KUMAR VS. SHANTH KUMAR N.).
(26) The Hon'ble Supreme Court in the judgment reported in AIR 2024 SUPREME COURT 4103 (SRIDATTATRAYA VS. SHARANAPPA) held that, while complainant claimed that the cheque was issued a security at the time of advancing of loan, in cross examination he deposed that the same was given when alleged demand for repayment of loan amount was raised before accused, after a period of six months of advancement - Financial capacity or acknowledgment by complainant to the effect of having advanced a loan to accused was not indicated in income tax returns - complainant failed to prove when the said loan was advanced and to explain as to how a cheque issued by the accused allegedly in favour of another person came to his hands - complainant was not able to plead even a valid existence of legally recoverable debt - Accused had inscribed hi signature on agreement drawn on a white paper and not on a stamp paper - Accused had rebutted presumption u/S.139 - acquittal was proper. In my 23 Cri Appeal No.589/2024 humble view, this cited decision can be distinguished on facts because in the present case, the complainant has clearly stated in his complaint as well as in chief examination that the accused approached him in the last week of May 2019 for a loan of Rs.2 lakhs for personal reasons. The complainant has clearly stated that he has advanced loan to the accused in the last week of May and June 2019 by way of cash. He has deposed that the accused who agreed to repay the loan amount within 20 months. During the last week of June 2019 issued these two cheques Ex.P1 and P2. Since in this case, there is clear evidence on the side of the complainant to show when the accused approached him seeking hand loan amount and when he had lent amount to the accused and when the accused issued Ex.P1 and P2. Since the complainant has given clear evidence regarding the demand for payment of loan made by the accused. The payment of loan by the complainant to the accused and issuance of cheque by the accused to the complainant. Hence, in my humble view the decision cited by the learned counsel for the appellant reported in AIR 2024 SUPREME COURT 4103 (SRIDATTATRAYA VS. 24
Cri Appeal No.589/2024 SHARANAPPA) can be distinguished on facts. No doubt in the present case, PW1 admitted that he has not mentioned regarding lending of loan in the assets and liability statement and in the income tax returns. Only on that ground, we cannot raise doubt on Ex.P1 and P2 cheques. The learned counsel for the appellant relied on the decision of Hon'ble Supreme court reported in AIR 2023 SUPREME COURT 471 (RAJARAM SRIRAMULU NAIDU (SINCE DECEASED) THROUGH LRS. VS. MARUTHACHALAM (SINCE DECEASED THROUGH LRs), wherein it is held that the complainant alleged that cheques issued by accused for repayment of amount lent by complainant were dishonoured - Income Tax Returns of complainant did not disclose that he lent amount to accused and the declared income was not sufficient to give loan of stated sum - Case of complainant that he had given a loan to accused fro his agricultural income was found to be unbelievable - Complainant had failed to produce promissory note alleged to have been executed by accused - Accused had rebutted presumption on basis of evidence of defence witnesses and attending circumstances - Defence was found to be possible defence - Defence raised by accused 25 Cri Appeal No.589/2024 satisfied standard of 'preponderance of probability - Accused was entitled to benefit of doubt - Decision of High Court, reversing order of acquittal was erroneous. In my humble view, this cited decision also can be distinguished on facts, because in the present case the accused has not taken any such specific defence to say how his Ex.P1 and P2 cheques were gone to the hands of the complainant. No doubt, in view of this cited decision, the standard of proof for rebutting presumption is preponderance of probability. In order to rebut the presumption the accused need not step into witness box, he can rebut presumption by cross examining PW1. But in the present case, the accused during the course of cross examination of PW1, except suggesting him that he had not mentioned loan amount in his assets and liability statement and income tax returns, no other defence are taken by the accused so as to explain why Ex.P1 and P2 cheques were gone to the hands of the complainant.
(27) I have also gone through the decision cited by the learned counsel for the appellant reported in AIR 2019 SUPREME COURT 942 (ANSS RAJASHEKAR VS. 26
Cri Appeal No.589/2024 AUGUSTUS JEBA ANANTH), wherein the Hon'ble Supreme Court held that, failure of complainant to establish source of funds alleged to be utilized for disbursal of loan to accused - Presence of doubt on transaction as complainant not disclosing facts as to cheques and any steps taken by him for recovery of same - Material on record rendered probability as to absence of legally enforceable debt. In my humble view, this cited decision can also be distinguished on facts because so far as source of income is concerned PW1 in his cross examination clearly deposed that he is working as Staff Nurse in KIDWAI Hospital since 24 years. The suggestion is also made to PW1 is that he is doing money lending business. These suggestions made to PW1 would go to show that he is having sufficient source of income so as to lend amount to the accused.
(28) The learned counsel for the appellant also relied upon the decision of Hon'ble High Court reported in 2020 (1) KCCR 505 (YESHWANTH KUMAR VS. SHANTH KUMAR N.), wherein it is held that the complainant has not shown the source of his income and that he had no 27 Cri Appeal No.589/2024 capacity to lend Rs.1,00,000/- as he was an auto driver. In my humble view, this cited decision also can be distinguished on facts as I already noted that as the complainant / PW1 working as Staff Nurse in KIDWAI Hospital from the last 24 years he is having sufficient source of income so as to give hand loan of Rs.2 lakhs to the accused. More than that from the suggestion made to PW1 is that he is doing money lending business would pre-supposes that the accused himself admitted the fact that PW1 is having sufficient income so as to lend amount. The accused without taking specific defence as to explain how his Ex.P1 and P2 cheques were gone to the hands of complainant / PW1. As no such other defence ae taken by the accused except that the complainant not mentioned lending of amount in his assets and liability statement and in income tax returns it cannot be a ground to held that the complainant has failed to prove that he has lent amount of Rs.2 lakhs to the accused and for repayment of the same the accused issued Ex.P1 and P2 cheques. Since the accused has not disputed regarding Ex.P1 and P2 is that of his bank account and Ex.P1(a) and Ex.P2(a) contains his signature, 28 Cri Appeal No.589/2024 the presumption u/S/139 and 118 of NI Act available to the complainant. Since the accused has not taken specific defence in the cross examination of PW1 for what reason PW1 / complainant holding Ex.P1 and P2 cheques belongs to the accused., we have to presume that Ex.P1 and Ex.P2 cheques issued by the accused for repayment of loan amount of Rs.2 lakhs borrowed from the complainant. The learned Magistrate has rightly raised presumption u/S/118 & 139 of NI Act.
(29) In the judgment of Hon'ble Supreme Court in the case of K.S. Ranganath Vs Vitthala Shetty reported in 2022 [1] Crimes 454-[SC] wherein head note reads as below:-
"Negotiable Instruments Act, 1881 - Section 138 read with Sections 118 and 139- Dishonour of cheque-Conviction and sentence
- When a cheque is drawn out and is relied upon by drawee, it will raise a presumption that it is drawn towards a consideration which is a legally recoverable amount - Onus is on accused to raise a probable defence and standard of proof for rebutting presumption is on preponderance of probabilities-Defence sought to be put forth and witnesses examined in instant proceedings are only by way of improvement in respect of same cause of action-Defence sought to be put forth relating to cheque and other documents having been obtained by force, cannot be accepted as a probable defence when respondent successfully discharged initial 29 Cri Appeal No.589/2024 burden cast on him-Appeal dismissed.(Paras 11, 17 and 19)"
(30) The Hon'ble Supreme Court in Judgment in a case of Rangappa V/s Mohan in para no. 14 observed as follows:-
"In the light of these extracts, we are in agreement with the respondent/ claimant that presumption mandated by section 139 of the act does indeed include the existence of a legally enforceable debt or liability. To that extent the impugned observations in Krishnajanardhana Bhat case may not be correct. However this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstance therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However there can be no doubt that there is an initial presumption which favours the complainant."
(31) In the decision of Hon'ble Supreme Court reported in 2019(1) DCR 401 between Bir Singh V/s Mukesh Kumar it is held that a meaningful reading of the provisions of the Negotiable Instrument Act including, in particular, sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to he payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued 30 Cri Appeal No.589/2024 for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of section 138 would be attracted. In my humble view, the principles of these cited decision is aptly applicable to the present case because PW1 in his examination in chief clearly deposed regarding accused issuing Ex.P1 & P2 cheques towards repayment of loan borrowed by the accused from complainant. Further, in the judgment of Hon'ble Supreme Court in a case of Sumeti Vij V/s M/s. Paramount Tech Fab Industries, wherein it is held that to rebut the presumption, facts must be proved by the accused on a preponderance of probability. In the decision of the Hon'ble High Court of Karnataka in M Ramesh Kumar Case wherein in para No.5 observed that section 138 of N.I. Act, on proof of issuance of the cheque, the onus shifts to the accused to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of section 138 of N.I. Act. In the decision of Hon'ble High Court of Karnataka in the case of Sitaram Gouda A V/s Isbu 31 Cri Appeal No.589/2024 Kunhammade it is held that, accused not disputing issuance of cheques, but taking inconsistent stand later- accused not initiating any proceedings as regards misuse, or forgery of cheque and making of wrongful claim- except denial, accused not proving his case beyond reasonable doubt as obligation was on him to do so when he took a special plea.
(32) On perusal of trial court records, the trial court has rightly drawn presumption under S.139 of N.I. Act, by following three ingredients as laid down by the Hon'ble Supreme Court in Rangappa Vs Mohan reported in 2010 SC 1898. Section 139 of N.I. Act empowers the court to presume that holder of cheque received it for discharge of any liability enforceable debt or liability. Burden is on the accused to rebut the said presumption.
(33) Section 118 of The Act reads thus:
118. Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:--
(a) Consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.32
Cri Appeal No.589/2024 (34) Further, Section 138 of The Act reads thus:
138. Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and 33 Cri Appeal No.589/2024
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation.-- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
(35) Further, Section 139 of The Act reads thus:
139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
(36) Section 118 of The Act pertains to presumption of negotiable instrument which mandates that 'unless the contrary is proved.' Similarly, Section 139 of The Act also mandates that 'unless the contrary is proved.' Therefore, it has to be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge in whole or in part of any debt or liability. Needless to say that the presumption contemplated under Section 139 of the Act is rebuttal presumption. However, the onus of proving that the cheque was not issued towards discharge of any 34 Cri Appeal No.589/2024 debt or liability is on the accused. But in this case, the accused has failed to rebut the presumption available to complainant u/S.139 of NI Act. During the course of cross examination of PW1, nothing worth elicited from his mouth to discard his examination in-chief and documents Ex.P1 to P9. It is relevant to cite the decision of Hon'ble Supreme Court in the case of Sunil Todi and others V/s State of Gujurat and another and in judgment of Hon'ble High Court of Karnataka which are reported in 2021(2) KCCR SN 119 (DB), Judgment reported in 2006 (5) KLJ 323 and reported in 2006(3) KLR 333. When the cheque issued in blank, the holder of the cheque has authorized to fill the amount due.
(37) Further, The Hon'ble Apex Court in (2012) 13 SCC 3123 (Laxmi Dyechem v. State of Gujarat) has held thus:
(38) "It has to be presumed that the cheque was issued in discharge of debt or other liability but the presumption could be rebutted by adducing evidence. The burden of proof was however on the person who wanted to rebut the presumption.
However, this presumption coupled with the object of Chapter XIV of The Act leads to the conclusion that by countermanding payment of post dated cheque party should not be allowed to get away from the penal provision of Section 138 of The Act. " 35
Cri Appeal No.589/2024 (39) The learned trial judge on proper appreciation of the evidence on record has rightly come to the conclusion that the accused has committed offence punishable U/s.138 of N.I. Act.
(40) The oral evidence of PW1 which is supported by the documentary evidence Ex.P1 to P9 are sufficient to hold that Ex.P1 & P2 cheques indeed issued by the accused in order to pay the loan amount availed by the accused from the complainant bank.
(41) The trial court rightly convicted the accused for the offence u/S.138 of NI Act. There is no infirmity in the impugned judgment of conviction and sentence passed thereon and warrants no interference at the hands of this appellate court.
(42) Considering on re-appreciation of entire evidence and after perusal of entire records, this court is of the opinion that there is no infirmity in the order passed by the trial court in C.C. No.32596/2021. Hence, I answer point No.1 & 2 in the negative.36
Cri Appeal No.589/2024 (43) POINT NO.3:- In view of my findings on point No.1, I proceed to pass the following.
ORDER The appeal filed by the appellant / accused U/s.374 [3] of Cr.P.C. is hereby dismissed.
The judgment of conviction and
sentence passed by the learned XVI
ACMM, Bengaluru, in C.C. No.32596/2021 dated 05.03.2024 is hereby confirmed.
The office is directed to send back TCR forthwith to learned XVI ACMM, Bengaluru, along with a copy of this judgment.
[Dictated to the SG-I, transcribed and typed by him, corrected and then pronounced in the open court on this the 18th day of NOVEMBER 2025 ] (MOHAN PRABHU), LV Addl. City Civil & Sessions Judge, Bengaluru. (CCH-56)