Bangalore District Court
Arun vs Srinivas on 9 December, 2020
BEFORE THE LXVI ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU CITY.
(CCH-67)
DATED: This the 9 th day of December, 2020
PRESENT
Smt. K.KATHYAYANI, B.Com., L.L.M .,
LXVI Addl.City Civil & Sessions Judge,
Bengaluru.
Crl.Appeal No.234 of 2019
Appellant: Arun, M.J. S/o late Jayadeva,
Aged about 49 years,
R/at No.202, 37th A Cross Block,
Jayanagar, Bengaluru 560070.
(By Sri.G.Lakshman, Adv.)
/Vs/
Respondent : Srinivas, K.G. S/o Gangadhara,
R/at No.6, 12th Cross,
R.T.Street, Bengaluru 560 052.
(By Sri.TRN,Adv.)
JUDGMENT
The appellant/accused has preferred this appeal against the respondent/complainant under Section 374(3) of Cr.P.C. being aggrieved by the judgment of conviction passed in CC.No.15918/2015 dated 04.01.2019 by the learned XVI ACMM, Bengaluru.
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2. For the sake of convenience, the ranks of the parties are retained as they are before the learned Magistrate Court.
3. The brief facts of the case are that;
a) The complainant was a businessman in stationary as commission agent and was known to the accused since five years through a common friend Sri.Vinay.
b) The complainant used to visit accused for business purpose for more than a decade, seen and met him in his office many a times and became acquainted with each other.
c) Due to the said acquaintance, the accused borrowed a total sum of Rs.2,00,000/- on three occasions twice Rs.50,000/- and Rs.1,00,000/- once during the months of October and November-2013 from complainant through common friend Sri.Vinay who helped him in marketing his business, assuring to repay the same in a couple of months since he was expecting to realize the money from the credit sales.
d) After the stipulated period, the accused failed to return the amount in spite of repeated requests and went 3 Crl.A.No.234/2019 on prolonging the payment on the pretext that his financial condition was critical. Even after lapse of one year, the accused failed to repay the said amount.
e) With much pursuance by the complainant, the accused handed over three cheques dated 10.03.2015 bearing Nos.061716 and 061717 for Rs.50,000/- each and cheque No.064114 for Rs.1,00,000/- on 08.03.2015.
f) When the said cheques were presented for encashment, they were returned dishonoured with a shara "account closed".
g) In spite of issuance of legal notice dated 08.04.2015, the accused did not pay the amount due under the said cheques. Hence, the complaint in PCR.No.7710/2015 was filed which is registered as CC.No.15918/2015.
4. The trial Court record reveals that on receipt of the complaint, the learned Magistrate was pleased to record the sworn statement of complainant and on satisfaction, has taken cognizance and issued summons to the accused.
a) The accused put his appearance through his counsel and was enlarged on bail.
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b) Plea of the accused was recorded for the offence under Section 138 of the Negotiable Instruments Act of 1881 (for short, "the Act"), for which, the accused pleaded not guilty and claimed to be tried.
c) In support of his case, the complainant himself was examined as PW-1. Got exhibited 9 documents at Ex.P-1 to 9 and he did not let in any further evidence.
d) The statement of the accused under Section 313 of Cr.P.C. was recorded wherein the accused denied all incriminating evidence against him and in support of his defence, he himself entered into the witness box as DW-1 and exhibited 19 documents.
e) The learned Magistrate after hearing the arguments of both sides on merits of the case and on going through the evidence on record, has passed the impugned judgment convicting the accused for the offence punishable under Section 138 of the Act and sentenced accordingly.
5. Being aggrieved by judgment of conviction, the accused has approached this Court with the following grounds;
5 Crl.A.No.234/2019
a) The trial Court erred in convicting him by not judiciously considering the evidence adduced by him and sentenced him to pay a fine of Rs.2,25,000/- and if the fine amount is so realized, Rs.2,15,000/- ordered to be paid to the complainant as compensation and the balance of Rs.10,000/- ordered to be adjusted towards cost to the State exchequer and in default of payment, he shall undergo simple imprisonment for 6 months.
b) The trial Court judgment is erroneous, arbitrary and against the principles of natural justice.
c) The trial Court failed to appreciate his contention that the alleged cheques were given by him as security to one M.S.Shalini Patil for the money received by him and the said amount was repaid to her by way of cash and when demanded for return of the cheques given to her as security, she has not returned those cheques and was postponing the same on one pretext or the other saying that the said cheques were misplaced and she will return once the same is found.
d) He came to know about the misuse of the cheques by said Shalini Patil only when he received summons from 6 Crl.A.No.234/2019 the trial Court. He has also issued a legal notice to the said Smt.Shalini Patil to return the cheques through his counsel which was received by her on 06.10.2015 and her husband is representing her in the said case. A complaint is filed against her in Basavanagudi police station on 27.07.2016. The trial Court failed to take presumption on the said facts and documents and relied on the false oral evidence of the complainant.
e) The trial Court miserably failed to appreciate the fact that during his cross examination, the counsel for complainant asked all the questions on Shalini Patil which reveals that she and her husband have engaged the complainant to file false case and Ex.D-19 reveals that the husband of Shalini Patil is the counsel representing the complainant and Ex.D-14 notice is received by the same person.
f) The complainant is an utter stranger to him and the notice sent by the complainant is not served on him. The trial Court has also failed to note whether the complainant produced IT returns, business bills, receipts, 7 Crl.A.No.234/2019 credit bills to show the transactions between him and the complainant.
g) The trial Court has failed to observe that whether he has issued the cheques to the complainant or not, when he denies the contents of cheques and the complainant failed to say at what time he/the complainant lent the amount to him/the accused and to prove his/complainant's financial capacity and source of funds to lend him/the accused.
h) The trial Court miserably failed to appreciate the facts that even on the available evidence on record, it is clearly established that the complainant had filed a false case and he had brought out in the cross examination that the complainant had no source of income from his business and though the complainant had admitted that he is an income tax assessee, he had failed to produce the documents to show that he had shown the said transaction of Rs.2,00,000/- in his IT returns and hence, the said amount is not legally recoverable. Thus, the complainant had no capacity to lend the said amount and the judgment passed by the trial Court is liable to be set aside. Hence, 8 Crl.A.No.234/2019 prayed this Court to set aside the judgment of conviction and sentence passed and acquit him in the interest of justice and equity.
6. In response to the due service of notice from this Court, the respondent/complainant appeared through his counsel.
7. Secured the trial Court record.
8. Heard the respective counsels for both the parties on merits. In addition, the counsel for appellant filed written arguments along with xerox copy of the decision of the Hon'ble High Court of Delhi rendered in Crl.L.P.333/2019 in Kalicharan Goswamy Vs State and another.
a) The counsel for the complainant submitted that in view of the non compliance of interim order, as per the dictum laid down by the Hon'ble Apex Court in Crl.Appeal Nos.917-944/2019 dated 28.05.2019 in Surinder Singh Deswal Vs Virender Gandhi, the present appeal cannot be entertained. He has also relied on the dictum laid down in Crl.M.C.2605/2019 & Crl.M.A.11307/2019, 9 Crl.A.No.234/2019 Crl.M.A.10436/2019 in Birendra Shukla Vs State & Another.
b) This Court has carefully gone through the written arguments filed by the counsel for accused/appellant and the above judgments on which the respective counsels for both the sides have relied on.
9. On the basis of the grounds made out, following points are arisen for the due determination of this Court.
1. Whether the accused/the appellant proves the grounds urged by him in support of this appeal?
2. Whether the impugned judgment requires interference by this Court?
3. What Order?
10. The findings of this Court on the above points are answered in the;
1) Points Nos.1 and 2 : Affirmative.
2) Point No.3 : As per final order for the following reasons.
REASONS
11. POINTS Nos.1 AND 2:- Since the finding on point No.2 is consequential to the findings on point No.1, these points are taken together.
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12. Before venturing into the points for consideration on merits, let this Court first go through the provision of the Act to see the ingredients constituting the offence under Section 138 of the Act which is extracted here below;
"138. Dishonour of cheque for insufficiency, etc., of funds in the accounts.
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 bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the chque 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 extend 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 11 Crl.A.No.234/2019 months from the date of which it is drawn or within the period of its validity, whichever is earlier:
(b) the payee of 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
(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 purpose of this section , "debt or other liability"
means a legally enforceable debt or other liability".
13. So, the ingredients to constitute an offence under Section 138 of the Act are;
a) The cheque should be drawn by the drawer on an account maintained by him with his banker.
b) Such a cheque should be returned dishonoured for want of sufficient funds.
12 Crl.A.No.234/2019
c) Such a cheque should be presented to the bank within 6 months from the date of drawing the same or within the validity period whichever is earlier.
d) The payee or the holder in due course should make demand for the payment of such cheque amount by giving a written notice to the drawer within 30 days from the date of information about the dishonor of such cheque.
e) The drawer of such cheque should be failed to make payment of such cheque amount within 15 days from the receipt of written notice by the drawer.
14. At this stage, it is also pertinent to note the statutory presumptions under Sections 118 and 139 of the Act which are extracted here below;
"118. Presumptions as to negotiable instruments Until the contrary is proved, the following presumptions shall be made:-
(a) of consideration - that every negotiable instruments was made or drawn for consideration, and that every such instruments, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;13 Crl.A.No.234/2019
(b) as to date - that every negotiable instruments bearing a date was made or drawn on such date;
(c) as to time of acceptance - that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(e) as to order of endorsements -
that the endorsement appearing upon a negotiable instruments were made in the order win which they appear thereon;
(f) as to stamps - that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course - that the holder of a negotiable instrument is a holder in due course:
PROVIDED that, where the instrument has been contained from its lawful owner or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of any offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course is upon him.
"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 of 14 Crl.A.No.234/2019 for the discharge, in whole or in part, of any debt or other liability.
15. So, the plain reading of the above provisions clearly say that the initial presumption is in favour of the holder with regard to the cheque in respect of consideration, the date, the time of acceptance, the endorsements and the stamps of the negotiable instruments; the holder is a holder in due course; such a cheque is of the nature referred in Section 138 of the Act and the said presumptions are rebuttable.
16. The trail Court record also demonstrates that before the trial Court, the counsel for the complainant has relied on the following decisions with regard to the above statutory presumptions in favour of the complainant i.e.,
a) AIR 1999 SUPREME COURT 3762 (between K.Bhaskaran Appellant v. Sankaran Vaidhyan Balan and another Respondents in Criminal Appeal No.1015 of 1999 arising out of Spl. Leave Petn. (Crl.) No.146 of 1999 decided on 29.09.1999 before their Lordships K.T.Thomas J. and M.B.Shah J.), the highlated portion in the said decision 15 Crl.A.No.234/2019 shows that the counsel has relied on the observations of the Hon'ble Apex Court that;
"....
D. Negotiable Instruments Act (26 of 1881, S.138, S.118, S.139 - Cheque dishonor - Accused denied having issued the cheque although he owned his signature therein - Presumption that cheque was made or drawn for consideration on date which cheque bears, arise- Holder of cheque presumed to have received it for discharge liability - Burden is upon accused to rebut presumption. (para 9).
....
9. As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption. ... ...."
b) AIR 2001 SUPREME COURT 2895 (between K.N.Beena Appellant v. Muniyappan and another Respondents in Criminal Appeal No.1066 of 2001 arising 16 Crl.A.No.234/2019 out of SLP (Crl.) No.969 of 2001 decided on 18.10.2001 before their Lordships K.T.Thomas J and S.N. Variava, J.), the highlated portion in the said decision shows that the counsel has relied on the observations of the Hon'ble Apex Court that;
"Negotiable Insttuments Act (26 of 1881), S.138, S.139, S.118 -
Cheque dishonor compliant - Burden of proving that cheque had not been issued for any debt or liability - Is on the accused -
Denial/averments in reply by accused are not sufficient to shift burden of proof onto the compliant - Accused has to prove in trial by leading cogent evidence that there was no debt or liability - Setting aside of conviction on basis of some formal evidence led by accused - Not proper.
...."
c) (2018) 8 Supreme Court Cases 165 (between Kishan Rao Versus Shankargouda in Criminal Appeal No.803 of 2018 arising out of SLP (Crl.) No.10030 of 2016 arising from the Judgment and Order in Shankargouda v. Kishan Rao, 2016 SCC OnLine Kar 8467 (Karnataka High Court, Kalburgi Bench in CRP No.2605 of 2010 dated 18.03.2016 decided on July 2, 2018 before their Lordships 17 Crl.A.No.234/2019 Dr.A.K.Sikri and Ashok Bhushan, JJ.), the highlated portion in the said decision shows that the counsel has relied on the observations of the Hon'ble Apex Court that;
"A. Debt, Financial and Monetary Laws - Negotiable Instruments Act, 1881 - S.139 - Presumption under -
When may fail - Ingredients and
scope of S.139 - Principles
summarized.
- Reiterated, accused may adduce evidence to rebut presumption under S.139, but mere denial regarding existence of debt shall not serve any purpose - In the event accused is able to raise a probable defence which created doubt with regard to existence of debt or liability, the presumption may fail.
.....
- Trial Court as well as the Appellate Court found that cheque contained signature of accused and it was given to appellant to present in Bank - Presumption under S.139 was rightly raised which was not rebutted by accused ... .....
18. Section 139 of the 1881 Act provides for drawing the presumption in favour of holder. Section 139 is to the following effect:
"139. Presumption in favour of holder.- It shall be presumed, unless the contrary is proved, that 18 Crl.A.No.234/2019 the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, or any debt or other liability."
19. This Court in Kumar Exports v. Sharma Carpets, had considered the provisions of the Negotiable Instruments Act as well as Evidence Act. Referring to Section 139, this Court laid down the following in paras 14, 15, 18 and 19: (SCC pp.519 - 20)
14. Section 139 of the Act provides that 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.
15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence.
Under the Evidence Act all presumption must come under one or the other class of the three classed mentioned in the Act, names (1) "may presume" (rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions"
(irrebuttable). The term "presumption" is used to designate an inference affirmative or dis-
affirmative of the existence of a fact, conveniently called the "presumed fact" dawn by a judicial tribunal, by 19 Crl.A.No.234/2019 a process of probable reasoning from some matter of act either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal.
Presumption literally means "taking as true without examination or proof".
....
20. This Court held that the accused may adduce evidence to rebut the presumption, but mere denial regarding existence of debt shall not serve any purpose. The following was held in para 20:
(Sharma Carpets Case, SCC p. 520) "20 ... The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should disprove the non-
existence of consideration and debt by leading direct evidence because the existence of negative evidence neither possible not contemplated. At the same time, it is clear that bare denial or the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant.
To disprove the presumptions, the accused should bring on record 20 Crl.A.No.234/2019 such facts and circumstances upon consideration of which, the Court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist ...
..."
17. At this stage, it is also pertinent to go through the following decisions with regard to the statutory presumptions under Sections 118 and 139 of the Act in favour of the holder and rebutting of the said presumptions.
a) AIR 2018 SUPREME COURT 3601 (between T.P.Murugan (Dead) Their LRs. V. Bojan V. Posa Nandhi Rep. Their POA Holder, T.P. Murugan v. Bojan in Criminal Appeal Nos.950 - 951 of 2018 arising out of SLP (Crl.) Nos.10111 - 10112 of 2014 decided on 31.07.2018 before their Lordships Rohinton Fali Nariman and Ms.Indu Malhotra, JJ.), wherein the Hon'ble Apex Court has held that;
Negotiable Instruments Act (26 of 1881) Ss 118, 138, 139 -
.....
21 Crl.A.No.234/20192.7 The respondent contended that the signed blank Promissory Note was issued by him in favour of N.R.R. Finances Investments Pvt.
Ltd. Under a hire-purchase agreement for purchasing a lorry on loan basis. The said Promissory note was not issued in favour of the appellant-complainants. The Promissory Note was filled up by DW.2 Mahesh, an employee or N.R.R. Investments, after the signatures of the respondents were obtained on the same.
.....
8. We have heard Senior Counsel for both parties, and perused the record. Under Section 139 of the NI Act, once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability. This presumption is a rebuttable one, if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan.
9. The appellants have proved their case by overwhelming evidence to establish that the two cheques were issued towards the discharge of an existing liability and legally enforceable debt. The respondent having admitted that the cheques and Pronote were signed by him, the presumption under Section 139 would operate. The respondent failed to rebut the presumption 22 Crl.A.No.234/2019 by adducing any cogent or credible evidence. Hence, his defence is rejected.
....."
b) AIR 2019 SUPREME COURT 1876 (between Rohitbhai Jivanlal Patel v. State of Gujarat and another in Criminal Appeal No.508 of 2019 arising out of SLP (Crl.) No.1883 of 2018 decided on 15.03.2019 before their Lordships Abhay Manohar Sapre and Dinesh Maheshwari, JJ.), wherein the Hon'ble Apex Court has held that;
"(A) Negotiable instruments Act (26 of 1881), Ss.138, 139 - .....
.....
14. So far the question of existence of basic ingredients for drawing of presumption Under Sections 118 and 139 the NI Act is concerned, apparent it is that the accused appellant could not deny his signature on the cheques in question that had been drawn in favour of the complainant on a bank account maintained by the accused for a sum of Rs. 3 lakhs each. The said chques were presented to the Bank concerned within the period of their validity and were returned unpaid for the reason of either the balance being insufficient or the account being closed. All the basic ingredients of Section 138 as also of Sections 118 and 139 are apparent on the 23 Crl.A.No.234/2019 face of the record. The Trial Court had also consciously taken note of these facts and had drawn the requisite presumption. Therefore, it is required to be presumed that the cheques in question were drawn for consideration and the holder of the cheques i.e., the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the accused - appellant to establish a probable defence so as to rebut such a presumption.
.....
16. On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non-existence was so probable that prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfill the requirements of rebuttal as envisaged Under Section 118 and 139 of the NI Act. This Court stated the principles in the case of Kumar Exports (AIR 2009 SC 1518, Para11) (supra) as follows:
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"20. The accused in a trial Under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the 25 Crl.A.No.234/2019 consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may like wise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections118 and 139. .....
17. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such 26 Crl.A.No.234/2019 facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant. The aspect relevant for consideration had been as to whether the accused- appellant has brought on record such facts/ material/ circumstances which could be of a reasonably probable defence.
18. In order to discharge his burden, the accused put forward the defence that in fact, he had the monetary transaction with the said Shri Jagdishbhai and not with the complainant. In view of such a plea of the accused-appellant, the question for consideration is as to whether the accused-appellant has shown a reasonable probability of existence of any transaction with Shri Jagdishbhai? In this regard, significant it is to notice that apart from making certain suggestions in the Cross-examination, the accused- appellant has not adduced any documentary evidence to satisfy even primarily that they had been some monetary transaction of himself with Shri Jagdishbhai. Of course, one of the allegations of the appellant is that the said stamp paper was given to Shri Jagdishbhai and another factor relied upon is that Shri Jagdishbhai had signed on 27 Crl.A.No.234/2019 the stamp paper in question and not the complainant.
....."
18. So, in view of the principles rendered in the above decisions, it is clear that the statutory presumptions under Sections 118 and 139 of the Act are initially in favour of the holder/the complainant and it is the drawer/accused who is required to rebut the same with cogent and corroborative piece of evidence in support of his probable defence and if he succeeds in his such an attempt, then the burden shifts on the complainant.
19. In the above background of the provision of law and the settled proposition of law with regard to the statutory presumptions under Sections 118 and 139 of the Act, let this Court to see the facts of the case and the evidence let in by the parties.
20. The trial Court record demonstrates that it is the case of the complainant that the accused had borrowed a sum of Rs.2,00,000/- i.e., Rs.50,000/- two times and Rs.1,00,000/- once during the months of October and November-2013 through his common friend Sri.Vinay who helped the accused in marketing his business. 28 Crl.A.No.234/2019
21. On the other hand, it is the defence of the accused that he had borrowed loan of Rs.2,00,000/- from one Smt.Shalini Patil and towards the said loan, he had issued signed blank cheques. On repaying the said loan amount, he had demanded her to return the cheques who did not return the same on one or the other reasons.
a) On receipt of the Court summons in this case, he came to know that the said signed blank cheques are misused and the complainant has come up with this case.
22. So, it is clear that it is the case of the complainant that the cheques in question were issued towards discharge of the loan lent by him and on the other hand, it is the defence that those cheques were issued to Smt.Shalini Patil towards the security for the loan he had borrowed from her.
23. The other defence raised by the accused in the course of the cross examination of the complainant are that;
a) the cheques in dispute were drawn on the account maintained by the Progressive Marketing and not of his personal account.
29 Crl.A.No.234/2019
b) the complainant had no financial capacity to lend the alleged loan.
24. As noted above, it is well settled proposition of law that the statutory presumptions under Sections 118 and 139 of the Act are in favour of the complainant and it is the accused who is required to bring in the cogent and corroborative piece of evidence to rebut it.
a) Mere denial of existence of legally recoverable debt by the accused will not serve his purpose. If the accused succeeds in letting in the cogent and corroborative piece of evidence, then, the onus shifts on the complainant to prove his case that the disputed cheques were issued towards the discharge of legally recoverable debt.
25. The trial Court record demonstrates that to prove his case, the complainant in support of his oral evidence has let in the documents at Ex.P-1 to 9.
26. The complainant has filed his chief affidavit evidence reiterating his complaint averments. In his cross examination, he has deposed that he is doing stationary business with xerox shop. He knows the accused since 4 years. The accused had taken an agency of JK papers and 30 Crl.A.No.234/2019 he used to come to Avenue Road for distribution of JK papers and likewise, he knows the accused.
27. However, it is also in his cross examination that he has not produced any document to show that the accused had an agency of JK papers. He was purchasing paper from the accused and in turn selling the same to others on commission basis. He has not obtained any registration document to do the said business.
28. So, except the oral testimony of the complainant, admittedly, there is nothing on record to substantiate his business with the accused and also his JK papers business on commission.
29. It is also in his cross examination that one Vinay is a common friend to the accused and himself since 4 years and the said Vinay is his business friend.
30. There is no cross examination with regard to this fact. Hence, nothing is there to discard the case of the complainant that the said Vinay is the common friend to the accused and the complainant.
31. It is in his further cross examination that he paid Rs.2,00,000/- to the accused in cash as the accused 31 Crl.A.No.234/2019 wanted the money urgently. He did not take any document as security.
32. So, from the above evidence, it is clear that there is no document with regard to the payment of the alleged loan amount to the accused except the presumption under Sections 118 and 139 of the Act in his favour as the holder of the disputed cheques.
33. It is also in the cross examination of the complainant that the accused had issued the personal cheques. However, he had admitted the suggestion that the cheques at Ex.P-1 to 3 are relating to the Progressive Marketing. The same is supported by the proprietor seal at Ex.P-1 to 3. So prima facie, the cheques at Ex.P-1 to P-3 belongs to the Progressive Marketing Firm and not to the personal account of the accused.
34. The defence of misusing of the cheques is suggested to the complainant which is in turn denied by him.
35. So far the financial capacity of the complainant, it is in his cross examination that he is an income tax assessee; he has not disclosed the transaction of 32 Crl.A.No.234/2019 Rs.2,00,000/- in his IT returns. He has an annual income of about Rs.3,00,000/- and he has denied the suggestion that he has only a petty shop and he had no income of Rs.3,00,000/- per annum as claimed by him.
36. Even it is also in his cross examination that he has no impediment to produce IT documents before the Court, admittedly, he has not produced the IT documents. To overcome the same, the counsel for the complainant, before the trial Court has relied on the decision reported in;
ILR 2007 KAR 3614 (between Mr.Mohammed Iqbal vs. Mr.Mohammed Zahoor in CRP.No.602 of 2006 c/w CRP.No.603 of 2006 & 605/2006 decided on 12 th day of July, 2007 before his Lordship Ram Mohan Reddy, J.) the highlated portion in the said decision shows that the counsel has relied on the observations of the Hon'ble High Court of Karnataka that;
"INCOME TAX ACT, 1961 -
SECTION 269 - SS- AND THE KARNATAKA SMALL CAUSES COURTS ACT, 1964 - SECTION 18(1) - Revision under - Small Causes suits decreed with costs and interest - Whether the provisions of 33 Crl.A.No.234/2019 Section 269-SS of the Income Tax Act, 1961, dis-entitled the plaintiff from filing recovery suits - HELD, the main object of introducing the provision of Section 269-SS of the Income Tax Act is to curb and unearth black money - But the section does not declare the present transaction which is brought before the Court illegal, void, and unenforceable - ON FCTS, HLED, The trial Court .... ...."
37. He has also relied on the provisions of Section 269-SS of the Income Tax Act which is extracted here below;
"....
Mode of taking or accepting certain loans and deposits. 269SS. No person shall, after the th 30 day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheuqe or account payee bank draft if,-
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit: or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid 34 Crl.A.No.234/2019 (whether repayment has fallen due or not), the amount of the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is (twenty thousand rupees or more:
...
Penalty for failure to comply with the provisions of Section 269SS. 271D. (1) if a person takes or accepts any loan or deposits in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.
.....
Penalty for failure to furnish return of income.
271F. If a person who is required to furnish a return of his income, as required under sub-section (1) of section 139, fails to furnish such return before the end of the relevant assessment year, he shall be liable to pay, by way of penalty, a sum of the one thousand rupees:
Provided that a person who is required to furnish a return of his income, as required by the proviso to sub-section (1) of section 139, fails to furnish such return on or 35 Crl.A.No.234/2019 before the due date, he shall be liable to pay, by way of penalty, a sum of five hundred rupees. ..."
38. So, there is no dispute with regard to the fact and settled proposition of law that under Section 269-SS of the Income Tax Act, every money transaction involving more than Rs.20,000/- should be through cheque only. But, relying on the above decision, it is the contention of the complainant that the above provision does not declare that this transaction is illegal, void and unenforceable.
39. To meet the above decision relied on by the counsel for the complainant, the counsel for the accused has placed his reliance before the trial Court on the decision reported in 2009 CRI.L.J.3777 (between Sanjay Mishra Vs. Kanishka Kappor @ Nikki and another in Criminal Application No.4694 of 2008 decided on 24.02.2009 before his Lordship A.S.Oka, J.) wherein Hon'ble High Court of Bombay has held that;
"(A) Negotiable instruments Act, SS. 138 Explanation and 139 - .....
Failure by complainant to disclose the amount in his Income Tax Return or Books of Accounts -
36 Crl.A.No.234/2019Sufficient to rebut presumption under S.139.
.....
(B) Negotiable Instruments Act (26 of 1881), Ss.138, 139 - ....
Liability to repay unaccounted cash amount cannot be said to be legally enforceable liability within meaning of explanation to S.138 - Acquittal of accused proper.
.....
7. It is true that merely because amount advanced is not shown in Income Tax Return, in every case, one cannot jump to the conclusion that the presumption under Section 139 of the said Act stands rebutted. There may be cases where a small amount less than a sum of Rs.20,000/- is advanced in cash by way of loan which may be repayable within few days or within few months. A complaint may not show the said amount in the Income Tax Return as it is repayable within few days or few months in the same financial year. In such a case the failure to show the amount in the Income Tax Return may not by itself amount to rebuttal of presumption under section 139 of the said Act. If in a given case the amount advanced by the complainant to the accused is a large amount and is not repayable within few months, the failure to disclose the amount in Income-Tax return or Books of Accounts of the complainant may be sufficient to 37 Crl.A.No.234/2019 rebut the presumption Under Section 139 of the said Act.
8. In the present case, the amount was allegedly advanced in September, 2004. The amount is a large amount of Rs.15 lakhs. This is a case where not only that there is a failure to disclose the amount of loan in the Income Tax Return of the applicant till the year 2006 but there is a categorical admission on the part of the applicant that the amount was an "unaccounted"
amount.
.....
13. In the present case, there is a categorical admission that the amount allegedly advanced by the applicant was entirely a cash amount and that the amount was "unaccounted". He admitted not only that the same was not disclosed in the Income Tax Return at the relevant time but till recording of evidence in the year 2006 it was not disclosed in the Income Tax Return. By no stretch of imagination it can be stated that liability of repay an unaccounted cash amount is a legally enforceable liability within the meaning of explanation to Section 138 of the said Act. The alleged debt cannot be said to be a legally recoverable debt. .....
15. The Apex Court has held that the laws relating to the said Act are required to be interpreted in the light of the object intended to be 38 Crl.A.No.234/2019 achieved by it despite there being deviation from general law............ The provision of section 138 cannot be resorted to for recovery of an unaccounted amount. A cheque issued in discharge of alleged liability of repaying "unaccounted" cash amount cannot be said to be a cheque issued in discharge of a legally enforceable debt or liability within the meaning of explanation of section 138 of the said Act. Such an effort to misuse the provision of Section 138 of the said Act has to be discouraged.
....."
40. Both the decisions relied by the counsel for the complainant i.e., Mohammed Iqbal's case supra and by the counsel for the accused i.e., Sanjay Mishra's case supra are of single bench. The Sanjay Mishra's case is recent decision as it was pronounced on 24.02.2009 and Mohammed Iqbal's case was pronounced on 12.07.2007.
41. Of course, the decision in Mohammed Iqbal's case is binding on this Court as it is pronounced by the Hon'ble High Court of Karnataka and the decision of Sanjay Mishra's case has only a persuasive value as it is pronounced by the Hon'ble Bombay High Court. But, it is important to note that decision in Mohammed Iqbal's case 39 Crl.A.No.234/2019 was pronounced in a suit for recovery of money and the decision in Sanjay Mishra's case is directly on the offence under Section 138 of the Act.
42. At this stage, it is also pertinent to go through the decisions reported in;
a) (2008) 4 Supreme Court Cases 54 (between Krishna Janardhan Bhat Versus Dattatraya G. Hegde in Criminal Appeal No.58 of 2006 decided on 11.01.2008 before their Lordships S.B.Sinha and H.S.Bedi, JJ.) wherein the Hon'ble Apex Court has held that;
".....
B. Negotiable Instruments Act, 1881 - Ss.138 & 139- Dishonour of cheque - Presumption against accused - Rebuttal of Mode of -
Necessary considerations by Court............ No indication as to any business transaction between them - Complainant failed to produce any books of accounts or any other proof to show that he got so much money from Bank - Courts below failed to notice that ordinarily in terms of S.269 - SS, Income Tax Act, any advance taken by way of loan of more than Rs.20,000/- had to be made by an account payee cheque only - considering the peculiar fact a circumstances of the case, held, Courts below approached 40 Crl.A.No.234/2019 the matter on wrong application of the legal principles to fact situation of the case. - Hence, conviction and sentence set aside - Criminal trial - Evidence Act, 1972, SS. 101, 103, 4 and 3.
....."
b) The judgment passed by the Hon'ble High Court of Karnataka, Bengaluru in CRIMINAL APPEAL No.173/2016 between Sri.V.Puttaraju Versus Sri.Prasannakumar C., on 23.02.2018 by his Lordship Ravi Malimath J., wherein the Hon'ble High Court of Karnataka has held that;
"THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF THE .....
.....
8. Here is a case where a man has an unaccounted cash of Rs.10 lakhs. He has violated the law and is in possession of this unaccounted money. When he has violated the law, he cannot seek protection of law to protect the very same unaccounted cash that he has by violating the law. Therefore, the trial Court was justified in rejecting his compliant and acquitting the accused. .....
....."41 Crl.A.No.234/2019
43. So, the above decisions of the Hon'ble Apex Court which is of the division bench and the Hon'ble High Court of Karnataka, both are recent decisions to the decision of Mohammed Iqbal's case which is relied on by the counsel for complainant and both the above decisions are directly on Section 138 of the Act which clearly say that the person who violates law cannot seek the protection under law. Thus, the decision of Mohammed Iqbal's case is not helpful to the complainant.
44. It is also in the further cross examination of the complainant that he is running stationery business and xerox at No.6, 12th Cross, TR Street, Bengaluru - 53; in the above address, he is having the shop in the ground floor and the house in the first floor; he is not paying any rent to his father in law.
45. He has also deposed in his cross examination that his father in law's name is Narayan Sa. He has no impediment to produce the documents to show that the said building is in the name of his father in law. He has no proof to show that he is running the stationary and xerox business in the said building.
42 Crl.A.No.234/2019
46. He has denied the suggestion that he is not running any stationary or xerox business in the said address. However, admittedly he has not produced any documents to substantiate his above evidence in respect of running stationery and xerox business in the above address.
47. It is also in his cross examination that from the purchaser, he collects the commission. To the question that where he purchasing the material by investing his own money, he has answered that he purchases both by way of investing money and also on credit basis. He was not issuing any receipt while collecting the commission amount.
48. To substantiate his above evidence in respect of his commission business also, the complainant, admittedly has not produced any documents.
49. It is also in his cross examination that he has his bank account. To the question that he keeps the amount in his account, he has answered that he keeps the amount both in his shop and also in his account. But, admittedly it is the case of the complainant that he lent the alleged loan 43 Crl.A.No.234/2019 amount by cash and he has not produced his bank account details and any document in that regard.
50. To overcome the defence of the accused with regard to the financial capacity of the complainant to lend the loan, before the trial Court, his counsel has relied on the judgment passed by the Hon'ble High Court of Karnataka, Dharwad Bench in Criminal Appeal No.2541 of 2008 in the case between Lingaraj Vs. Babu Narayan Shetty decided on 28th day of August, 2013 before his Lordship Mr. Justice Anand Byrareddy and the highlated portion in the said judgment shows that the counsel has relied on the observations of the Hon'ble High Court of Karnataka that;
"....
5. In the above facts and ..... There is no law which requires such proof to be established when the ingredients of the offence under Section 138 of is with reference to the dishonor of the cheque issued by the accused and not recovery of monies lent under the said cheque, as a complaint brought under Section 138 does not always result in the Court directing payment of compensation out of the fine amount to reimburse the 44 Crl.A.No.234/2019 complainant in respect of the amount covered under the cheuqe. It would be wholly irrelevant for the complainant to establish his source of income in having lent the monies as if by virtue of any such punishment imposed, a loss would occasion to the accused in having to address that aspect of the matter. Therefore, it would be irrelevant to inquire into the source of income of the complainant in allegedly having lent any monies in respect of which the cheque had been issued. Secondly, having regard to the scope of inquiry in a proceeding for an offence punishable under Section 138 of the NI Act, such roving inquiry would be wholly out of place. Therefore, the fact whether the appellant had the source of income or whether he had filed his tax returns to establish that he had the capacity to lend such money, would be wholly irrelevant. The reliance placed on the decision in Veerayya and John K.John to held that the complainant was bound to establish the transaction by reference to documents other than the cheque itself, is with reference to the facts and circumstances of those particular cases that the Courts were dealing with and cannot be a general principle laid down with reference to the manner in which the complainant is to establish a case for an offence punishable under Section 138 of the NI Act.45 Crl.A.No.234/2019
Hence, in the opinion of this Court, the Court below was not justified in holding that he complainant has failed to establish his case against the respondents. ....
..."
51. To meet the above decision, the counsel for the accused, before the trial Court has relied on;
a) The judgment passed by the Hon'ble Apex Court in Criminal Appeal No.2402 of 2014 arising out of SLP (Crl.) No.6197 of 2014 between K.Subramani Versus K.Domdara Naidu decided on November 13, 2014 before their Lordships V.Gopala Gowda and C.Nagappan JJ.) wherein the Hon'ble Apex Court has held that;
"Debt, Financial and Monetary Laws - Negotiable Instruments Act, 1881-.....
.....
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 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 lending and borrowing. There is nothing on record to show that the prescribed mode was 46 Crl.A.No.234/2019 followed. The source claimed by the complainant is savings from his salary 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, is there any averment with regard to the sale price of Site No.45. The sale deed concerned was also not produced. Though the complainant was an income tax assessee he had admitted in his evidence that he had 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 LIC. It is pertinent to note that the alleged loan of Rs.14 lakhs is claimed to have been disbursed in the year 1997 to 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 complainant in another criminal case arising under Section 138 of the NI Act in which she has stated that the present appellant-accused had not taken 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 47 Crl.A.No.234/2019 legally recoverable debt payable by the accused to him.
10. In our view the said conclusion of the trial Court has been arrived at on proper appreciation of material evidence on record. .....
....."
52. In the present case on hand also, the complainant has admittedly not produced any document to show the source of income he has to lend the alleged loan. The above decision relied on by the counsel for the accused i.e., K.Subramani's case supra is recent one as it is dated 13.11.2014 and of the division bench of the Hon'ble Apex Court and hence, it prevails over the decision relied on by the counsel for the complainant i.e. Lingaraj's case supra.
53. At this stage, it is also important to go through;
a) (2014) 2 Supreme Court Cases 236 (between John K. Abraham Versus Simon C. Abraham and another in Criminal Appeal No.2043 of 2013 arising out of SLP (Crl.) No.9505 of 2011 decided on 05.12.2013 before their Lordships S.S.Nijjar and F.M.Ibrahim Kalifulla, JJ.) wherein the Hon'ble Apex Court has held that; 48 Crl.A.No.234/2019
"Debt, Financial and Monetary Laws - Negotiable instruments Act, 1881 - .....
.....
9. It has to be stated that in order to draw the presumption under Section 118 read along with Section 139 of the Negotiable Instruments Act, the burden was heavily upon the complainant to have shown that he had the required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing the cheque in favour of the complainant. ....."
b) The judgment passed by the Hon'ble High Court of Karnataka, Bengaluru in CRIMINAL APPEAL No.173/2016 between Sri.V.Puttaraju Versus Sri.Prasannakumar C., on 23.02.2018 by his Lordship Ravi Malimath J., wherein the Hon'ble High Court of Karnataka has held that;
"THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF THE .....
.....49 Crl.A.No.234/2019
6. A sum of Rs.10,00,000/- has been paid in cash. The presumption of issuing cheque with regard to legally enforceable debt has been rebutted by the accused. The complainant in order to show the Court that he has a source of income to lend Rs.10 lakhs in cash has produced various documents. Ex.P11 is the salary slip of his brother-in-law. The salary in terms of Ex.P11 is in a sum of Rs.20,771/-. Ex.P12 is the salary slip of his brother. As per Ex.P12, the income of his brother shows Rs.8,111/- per month; he left the Company and his one time settlement was at Rs.42,761/-. Exs.P13 to P15 are the salary slips said to have been belonged to his sister. Ex.P16 is the license issued by concerned APMC Authority in favour of the complainant. Therefore, he contended that these documents are sufficient to prove that he has cash of Rs.10 lakhs.
7. There is no income of the complainant. He seeks to rely on the income of his brother-in-law and sister to show that he has Rs.10 lakhs. His brother-in-law has a monthly income of Rs.20,770/-. His brother has an income of Rs.8,111/- per month and he left the job. Even though their salaries are taken into consideration, without any expenses, he can never ever have had Rs.10 lakhs in cash, even assuming for a while that the entire salary of both of these 50 Crl.A.No.234/2019 persons is given in totality to the complainant. Therefore, by any stretch of imagination, it is hard to expect that the complainant was in possession of Rs.10 lakhs. ....."
i) As noted above, in present case on hand, the complainant has not produced any document or at least the supportive oral evidence in respect of his financial capacity to lend the alleged loan.
c) 2020 SCC Online Ker 1750 : (2020) 3 KLT 340 (between Sunitha Versus Sheela Antony and Another in Criminal Revision Petition No.600 of 2019 decided on 20.05.2020 before his Lordship R. Narayana Pisharadi, J.) wherein the Hon'ble High Court of Kerala at Ernakulam has held that;
"The revision petitioner is the accused .....
.....
28. In my view, the crux of the decisions referred to above is the following: The complainant has no obligation, in all cases under Section 138 of the Act, to prove his financial capacity. But, when the case of the complainant is that he lent money to the accused by cash and that the accused issued the cheque in discharge of the 51 Crl.A.No.234/2019 liability, and if the accused challenges the financial capacity of the complainant to advance the money, despite the presumption under Section 139 of the Act, the complainant has the obligation to prove his financial capacity or the source of the money allegedly lent by him to the accused. The complainant has no initial burden to prove his financial capacity or the source of the money. The obligation in that regard would arise only when his capacity or capability to advance the money is challenged by the accused.
54. In this case also, the accused has challenged the financial capacity of the complainant to lend the alleged loan and thus, the complainant has an obligation to prove his financial capacity. But, the complainant did not let in any supportive evidence to substantiate his financial capability to lend the alleged loan.
55. It is also in cross examination of the complainant that he does not know the denomination of the amount which he has allegedly lent to the accused; he cannot say the dates on which, he has allegedly lent the amount to the accused. At the time of his allegedly lending the amount to 52 Crl.A.No.234/2019 the accused, one Vinay was present. He has lent the amount to the accused, during the business hours.
56. Admittedly, he has not got examined the above Vinay to prove the loan transaction i.e., lending the money to the accused. On the other hand as noted above, he has deposed that he cannot say the denomination of the amount he has allegedly lent to the accused and the date on which he has lent the alleged money/the loan amount.
57. At this stage itself, it is important to go through the judgment relied on by the counsel for the accused before this Court passed by the Hon'ble High Court of Delhi at New Delhi in CRL.L.P.No.333/2019 between Kali Charan Goswami Versus State and Another decided on 15 th May, 2019 before her Ladyship Mukta Gupata, J.) wherein he has drawn the attention of this Court to the observations of the above Hon'ble Apex Court that;
"....
6. Perusal of the record reveals that the petitioner was unable to provide the details of the disbursement of the loan or the date on which the cheque in question was handed over to him by Respondent No.2. The petitioner 53 Crl.A.No.234/2019 has relied upon the reply to the legal notice sent by Respondent No.2 wherein he has specifically denied the factum of him having taken any friendly loan and also specifically denied that the cheque in question was issued for discharge of any liability. Further more, the petitioner has also not mentioned the advancement of the above mentioned loan amount in his Income Tax Returns. The petitioner further testified that the loan was disbursed in the presence of his wife and son but has failed to examine them in Court.
..."
58. In the present case on hand also, it is the defence of the accused that the he had issued the cheques in dispute to Smt.Shalini Patil as security towards the loan amount he had borrowed by her and he had not raised any loan from the complainant and did not issue the disputed cheques in favour of the complainant.
59. In this case also, even the complainant has deposed that when he lend the loan, one Vinay was present, for the reasons best known to him, he did not get examined the above Vinay. On the other hand, it is in his cross examination that he would not examine the said Vinay. Thus, the above decision is helpful to the accused. 54 Crl.A.No.234/2019
60. It is also in the cross examination of the complainant that the accused had issued the cheques dated 10.03.2015 to him on 08.03.2015 and he had issued all the three cheques at once. The accused issued the cheques in the bank hours and the timing is from 10:30 a.m. to 2:30 p.m. The accused has personally written the cheques and given it to him.
61. But, to the question that there is difference in the handwriting between the name, the amount in words and figures and the date in Ex.P-1 to 3, he has answered that he/the accused has got it ready and issued them to him.
62. Interestingly, it is also in his cross examination that he does not know that the amount in words and in figures and the signatures in Ex.P-1 to 3 are in one hand writing, while the name and the date in Ex.P-1 to 3 are in one handwriting.
63. It is important to note that the complainant did not deny the above suggestions with regard to the alleged difference in the hand writings. Moreover, the plain perusal of Ex.P-1 to P-3 prima facie supports the above difference suggested on behalf of the accused. 55 Crl.A.No.234/2019
64. At this stage, it is important to go through the decision relied on by the counsel for the accused before the trial Court reported in 2004 (1) Crimes 567 (between Avon Organics Ltd. versus Poineer Products Limited & Ors in Criminal Appeal No.181 of 1999 decided on 04.07.2003 before his Lordship SRK Prasad, J.) the highlated portion in the said decision shows that the counsel has relied on the observations of the Hon'ble High Court of Andhra Pradesh that;
"Negotiable Instruments Act, 1881 - Sections 5, 6, 87, 138 and 139 - ... Respondent issued blank cheque without mentioning date and amount and sent it with a letter requesting compliant to present it after a month - Question whether blank cheque will come within definition of chque? - If cheque is not drawn for a specified amount it would not fall within definition of bill of exchange. - Act of complaint in filling up amount portion and date was material change and it could not be enforced even though it was issued for legal liability - Alteration without consent of party who issued the cheque rendered cheque invalid -
Acquittal called for no inference. ....
56 Crl.A.No.234/2019
10. Whenever blank cheques are filled up and presented, a presumption can be drawn under Section 139 of the Act. It is a rebuttal presumption. The question is whether the accused is able to rebut the presumption. I am of considered view that he has rebutted the presumption in this case as he has not given consent to fill up the cheque for a particular amount in figures and words and the date portion. It constitutes alteration of the chque. It cannot be done without the consent of the party who issued the cheque. ....
..."
65. In this case also, it is the defence of the accused that the amount in words and in figures and the signatures in Ex.P-1 to 3 i.e., the disputed cheques are in one hand writing, while the name and the date in Ex.P-1 to 3 are in one handwriting which is supported by the plain perusal of Ex.P-1 to 3 and interestingly, the complainant did not deny it. On the other hand, he has deposed that he does not know. Thus, the above decision is helpful to the accused.
66. To prove his defence, the accused has filed his chief affidavit evidence reiterating his defence of misuse of 57 Crl.A.No.234/2019 the cheques issued by him to Smt.Shalini Patil towards the security purpose for the loan he had raised from her.
67. In his cross examination, even he has denied the suggestion that Smt.Shalini Patil and himself have started a partnership firm in the name of Progressive Marketing, he has admitted the suggestion that the business of the said partnership firm was in respect of stationary and JK Papers distribution works and the said firm was a registered firm and the name of Smt.Shalini Patil finds place in the said partnership firm.
68. He has denied the suggestion that he had received Rs.25,00,000/- from Smt.Shalini Patil for the purpose of development of the said business. At this stage, the accused has voluntarily deposed that though it is mentioned in the partnership deed, he has not received any such amount from her.
69. The accused has also admitted the suggestion that in view of the cordial relationship between himself and Smt.Sahlini Patil, she had filed vakalath on his behalf in SC.No.105/2012. At this stage, he has voluntarily deposed that, she has got recovered about Rs.15,000/- to him. 58 Crl.A.No.234/2019
70. However, he has denied the suggestion that when the Progressive Marketing business suffered loss, he had availed a loan of Rs.25,00,000/- from the complainant.
71. He has denied the suggestion that when Smt.Shalini Patil started demanding for the repayment of Rs.25,00,000/- from him, there started difference between both of them and till then, the relationship between both of them was cordial and he used to visit the house of Smt.Shalini Patil occasionally. At this stage, he has voluntarily deposed that it was because of the acquaintance with her father that he knew her.
72. He has denied the suggestion that Smt.Shalini Patil had visited his house and sought for repayment of the amount of Rs.25,00,000/- for the purpose of the marriage of her daughter; at that time, Smt.Shalini Patil threatened him that she would lodge a police compliant and in order to escape from his liability towards the complainant and in respect of the complaint lodged against him by Smt.Shalini Patil, he has created the role of Smt.Shalini Patil and taken a false defence in this case.
59 Crl.A.No.234/2019
73. To the question that has he taken any legal action against Smt.Shalini Patil alleging that she has misused his cheques which was allegedly given by him to her, he has answered that his advocate has given legal notice to her.
74. It is also in his cross examination that he has not lodged any police complaint against Smt.Shalini Patil, even after filing of the present case. He has not produced any document to show that he had repaid Rs.2,00,000/- to Smt.Shalini Patil along with interest as claimed by him in para No.2 of Ex.D-1.
75. So, from the above evidence of the accused, it is clear that Smt.Shalini Patil is connected to Progressive Marketing firm of the accused. So far the accused receiving Rs.25,00,000/- from her for development of the business, he has denied the same.
76. At this stage, it is important to note Ex.D-16 i.e., the certified copy of the police complaint given by Smt.Shalini Patil on 27.07.2016 against the accused wherein she has stated that the accused had received 60 Crl.A.No.234/2019 Rs.30,00,000/- from her in the year 2011 and he has not been repaying the said amount.
77. But, there is no averment that the said amount was received by the accused for development of his business and the amount is also Rs.30,00,000/-, where as, in the above suggestions, it is Rs.25,00,000/-.
78. With regard to service of notice, it is in the cross examination of the complainant that he has signed on the legal notice sent to the accused and he does not know as to, if his advocate has signed the same. He has admitted the suggestion that Ex.P-7 does not contain the signature of either himself or his advocate. He has deposed that the said notice came to be returned.
79. By confronting a document to the complaint, a question was put to the complainant that, is that the notice sent to the accused by him, he has answered that he does not know about that and his advocate knows the same and the same document is exhibited as Ex.N-1.
80. He has denied the suggestion that Ex.N-1 does not contain his advocate's address and that it was blank 61 Crl.A.No.234/2019 envelope without any contents in it. He has only Manjunath as his advocate.
81. It is also in his cross examination that there are no acknowledgements with him to show the service of the legal notice on the accused. He has denied the suggestion that he has not issued any legal notice to the accused.
82. With regard to the present defence, it is in the chief affidavit evidence of the accused that in the course of recording of evidence, he came to know that the complainant has engaged one advocate by name Sri.Manjunath, then he realized that about an unregistered empty letter and without containing any sender's address received by him, prior to receipt of notice by the trial Court. Hence, he could not reply to the said letter as there was no any particulars of sender's address and the said envelop is Ex.N-1.
83. In his cross examination, the accused has admitted the suggestion that there is reference of the receipt of the legal notice issued by Sri.Manjunath R., Advocate on behalf of the complainant in para No.4 of 62 Crl.A.No.234/2019 Ex.D-1, 6 and 12 and the cheques' numbers found in the said paragraph are in respect of the cheques in dispute.
84. He has denied the suggestion that he was served with the legal notice got issued by the complainant and was able to set forth the said facts in para No.4 of Ex.D-1, 6 and 12. At this stage, he has voluntarily deposed that he was not served with the legal notice said to have been issued by the complainant.
85. He has also denied the suggestion that as per the recitals of Para No.4 of Ex.D-1, 6 and 12, there is reference to the receipt of the legal notice by him. At this stage, he has voluntarily deposed that it is in respect of the notice issued by the Court. He has denied the suggestion that it is only because of the service of the legal notice to him, he was able to state the contents of para No.4 of Ex.D-1, 6 and 12.
86. It is also in his cross examination that according to him, there was a blank paper inside the postal cover which was sent to him and there was no clear address of the sender on it.
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87. Ex.N-1 is the opened postal envelop with the "To Address" of the accused and the "From Address" is "Mnajunath R., Advocate, Bangalore". 88. The recitals at para No.4 of Ex.D-1, 6 and 12 read;
".....
4. That to astonishment of my client he received a notice issued by Manjunath, R., Advocate on behalf of his client by Name K.G.Srinivasa resident of R.T.Street, Bangalore claiming that my client borrowed money from K.G.Srinivas, and my client issued cheques bearing No.061716, 061717 and 064114 for an amount of Rs.2,00,000/- (Two Lakh) put together Drawn on National Co-Operative Bank Ltd.
....."
89. It is the case of the complainant that he had issued the legal notice on 08.04.2015 and the same was served on the accused on 10.04.2015. To establish the same, the accused has produced the office copy of the legal notice at Ex.P-7, but the date is not appearing on Ex.P-7 as the postal receipt at Ex.P-8 is affixed on the right hand side of Ex.P-7.
64 Crl.A.No.234/2019
90. However, the information attached to the postal reply at Ex.P-9, demonstrates that the article No.ARK 256789633IN which tallies with the article number at Ex.P-8 was delivered to the addressee on 10.04.2015.
91. The trial Court record demonstrates that the complaint was presented on 21.05.2015; the sworn statement was recorded, cognizance was taken and summons was issued on 04.07.2015 and on the next date of hearing i.e., on 03.09.2015, the accused appeared through his counsel.
a) The summons sent to the accused dated 10.07.2015 for the hearing date 03.09.2015 was received by the accused on 26.07.2018. Since, on 03.09.015, the accused put his appearance through his counsel, it appears that the year in the date of service was written as "2018" instead of "2015".
92. The notice at Ex.D-1 and 3 are one and same notice and it is dated 31.08.2015. Ex.D-6 and 8 are one and same notice and it is dated 16.09.2015. Ex.D-12 is dated 03.10.2015. So, all the above notices are subsequent 65 Crl.A.No.234/2019 to the service of summons to the accused in the present case i.e., after 26.07.2015.
93. So, the possibility of the explanation of the accused that the recitals at para No.4 of Ex.D-1, 6 and 12 are stated on service of notice of the case issued by the trial Court cannot be thrown out rightly.
94. At this stage, it is also pertinent to note that the postal cover at Ex.N-1 demonstrates the "From Address"
with only the name of the Advocate and the place as Bangalore. Hence, this Court can take the judicial notice that the said address is not a sufficient address to identify the person/the advocate to issue reply.
95. Of course, as per the postal department information attached to Ex.P-9, the article was delivered to the addressee and the accused is not disputing his address at Ex.N-1 and the postal seal on the front of Ex.N-1 demonstrates the date 08.04.2015 and on the back it is 10.04.2015.
96. Hence, prima facie it appears that the postal cover sent to the accused under the article at Ex.P-8 and 9 is the postal cover at Ex.N-1, but what was inside the cover 66 Crl.A.No.234/2019 is concerned, Ex.P-8 and 9 do not help the complainant.
97. Thus, the possibility of the accused that he did not receive any notice inside Ex.N-1 and it was an empty paper also cannot be thrown out rightly.
98. At this stage, it is important to note that as noted above, admittedly, the disputed cheques at Ex.P-1 to 3 pertain to the above Progressive Marketing. Of course, admittedly, it is signed by the accused, but as the proprietor of the above Progressive Marketing and not in his individual capacity and in the present case, the accused being tried in his individual capacity.
99. It is pertinent to note that it is the case of the complainant that the accused raised loan and towards the discharge of the same, had issued the cheques in dispute. It is neither his case that the accused had raised loan and for discharge of the same, had issued his firm's case; not his case that the accused raised loan for his business of Progressive Marketing and issued the cheques belong to Progressive Marketing.
100. On the other hand, even the seal over the disputed cheques at Ex.P-1 to 3 is of the Proprietor, 67 Crl.A.No.234/2019 Progressive Marketing, as noted above, the complainant himself has took the contention that it is partnership firm and Smt.Shalini Patil is also the partner of the same and elicited in the cross examination of the accused that her name finds place in Progressive Marketing.
101. As noted above, the main ingredient to attract the offence under Section 138 of the Act is that the cheque should be drawn by the drawer on an account maintained by him with his banker. The said ingredient finds no place in this case as admittedly, the disputed cheques at Ex.P-1 to 3 belong to the account of the Progressive Marketing.
102. So far the second ingredient i.e., dishonour of the cheque and the third ingredient i.e., the cheque should be presented to the bank within 6 months from the date of drawing the same or within the validity period whichever is earlier are concerned, there is no dispute with regard to dishonour of the disputed cheques at Ex.P-1 to 3 and their presentation within the validity period.
103. But, with regard to the fourth ingredient i.e., the payee or the holder in due course should make demand for the payment of such cheque amount by giving a written 68 Crl.A.No.234/2019 notice to the drawer within 30 days from the date of information about the dishonor of such cheque is concerned, the service of notice on the accused as noted above, the circumstances create doubt and support of the defence of the accused.
104. Moreover, admittedly, the complainant did not issue any notice of demand to the Progressive Marketing to which the disputed cheques belong. Thus, there is no question of fulfillment of the fifth ingredient i.e., the drawer should be failed to make payment of such cheque amount within 15 days from the receipt of written notice by the drawee.
105. Therefore, from the above admitted fact that the cheque belongs to the Progressive Marketing and not to the account of the accused and the accused being tried in this case in his individual capacity, the offence under Section 138 does not attract.
106. In view of no demand notice in writing to the Progressive Marketing, it is also hit by Section 138(1) of the Act. For that matter, as it is the case of the complainant that the accused had raised the loan and issued cheques 69 Crl.A.No.234/2019 independently, the Progressive Marketing is not at all the drawer also. Therefore, viewed from any angle, the present complaint is not sustainable under law.
107. In the above back ground, let this Court to see the grounds urged by the accused in support of this appeal.
108. The first ground of the accused is that the trial Court failed to appreciate his contention that the alleged cheques were given by him as security to one M.S.Shalini Patil for the money received by him and the said amount was repaid to her by way of cash and when demanded for return of the cheques given to her as security, she has not returned those cheques and was postponing the same on one pretext or the other saying that the said cheques were misplaced and she will return once the same is found.
109. With regard to the above ground, the only evidence on record is the oral evidence of the accused. However, in view of the fact that the complainant himself has elicited from the mouth of the accused that Smt.Shalini Patil is connected to Progressive Marketing and it is his contention that the accused had borrowed 70 Crl.A.No.234/2019 Rs.25,00,000/- from her; in the course of the transactions between her and the accused with regard to the repayment of the said loan, their relationship became strained and to avoid the said loan and the present loan, the accused has set up the false defence with the story of Smt.Shalini Patil, the complainant would have got examined her before the Court on his behalf, but he did not, which gives some force to this ground of the accused.
110. The second ground he has urged in support of this appeal is that he came to know about the misuse of the cheques by said Shalini Patil only when he received summons from the trial Court. The same is discussed above and the accused has let in probable evidence in that regard.
a) He has also issued a legal notice to the said Smt.Shalini Patil to return the cheques through his counsel which was received by her on 06.10.2015 and her husband is representing her in the said case.
i) To substantiate the same, he has produced the copies of the legal notices sent to Smt.Shalini Patil, the 71 Crl.A.No.234/2019 postal receipts, unserved postal cover and also the postal acknowledgement at Ex.D-1 to 14.
ii) Moreover, the complainant has not disputed those documents. On the other hand, to prove his case with regard to service of demand notice on the accused, as noted above, he has relied on the notices at Ex.D-1, 6 and
12.
c) A complaint is filed against Smt.Shalini Patil in Basavanagudi police station on 27.07.2016. But, he has not produced the copy of the said complaint.
d) The trial Court failed to take presumption on the above facts and documents and relied on the false oral evidence of the complainant.
i) As noted above, it is evident on record that the trial Court has not considered the facts observed above with regard to the legal notices at Ex.D-1/D-3, 6/8 and 12.
111. The third ground the accused has urged is that the trial Court miserably failed to appreciate the fact that during his cross examination, the counsel for the complainant asked all the questions on Shalini Patil which reveals that she and her husband have engaged the 72 Crl.A.No.234/2019 complainant to file false case and Ex.D-19 reveals that the husband of Shalini Patil is the counsel representing the complainant and Ex.D-14 notice is received by the same person.
112. As noted above, it is evident on record that the counsel for the complainant has cross examined the accused at length with regard to Smt.Shalini Patil and her husband is the counsel appearing for the complainant. Thus, even there is no direct evidence with regard to the alleged collusion between Smt.Shalini Patil and her husband with the complainant, in the circumstances of the case observed above, the possibility of the defence of the accused with regard to the said collusion also cannot be thrown out rightly.
113. The fourth ground urged by the accused is that the complainant is an utter stranger to him and the notice sent by the complainant is not served on him. The trial Court has also failed to note whether the complainant produced IT returns, business bills, receipts, credit bills to show the transactions between him and the complainant. 73 Crl.A.No.234/2019
114. As noted above, there is no cross examination to the complainant with regard to their alleged common friend one Vinay. Hence, it cannot be said that the complainant is an utter stranger to the accused. However, as noted above, the accused is successful in letting a doubt in the mind of a reasonably prudent man with regard to the service of the demand notice on him.
115. It is an admitted fact and evident on record that the complainant has not produced any document to substantiate the alleged transactions between him and the accused as well as his financial capability to lend the alleged loan.
116. The fifth ground urged by the accused is that the trial Court has failed to observe that whether he had issued the cheques to the complainant or not, when he denies the contents of the cheques and the complainant failed to say at what time he/the complainant lent the amount to him/the accused and to prove his/complainant's financial capacity and source of funds to lend him/the accused.
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117. As noted above, in his cross examination, the complainant has specifically stated that he cannot say the time he lent the money to the accused and failed to prove his financial capacity and the source of funds to lend the alleged loan.
118. It is the arguments of the counsel for the complainant that in view of the non compliance of interim order, as per the dictum laid down by the Hon'ble Apex Court in Crl.Appeal Nos.917-944/2019 dated 28.05.2019 in Surinder Singh Deswal Vs Virender Gandhi, the present appeal cannot be entertained. He has also relied on the dictum laid down in Crl.M.C.2605/2019 & Crl.M.A.11307/2019, Crl.M.A.10436/2019 in Birendra Shukla Vs State & Another.
119. But, as noted above, the facts of the case do not attract the offence under Section 138 of the Act and it is also hit by Section 138(b) of the Act. Hence, under the facts and circumstances of the case, the principles rendered in the above judgments are not helpful to the complainant.
120. As noted above, the accused is successful in establishing his grounds in support of the present appeal. 75 Crl.A.No.234/2019 Hence, point No.1 is answered in affirmative. Consequently, the impugned judgment needs intervention by this Court. Accordingly, point No.2 is also answered in affirmative.
121. POINT No.3:- For the reasons discussed above, this Court proceeds to pass following order.
ORDER The present Criminal Appeal filed by the appellant/accused under Section 374(3) of Cr.P.C. is hereby allowed.
In the result, the judgment of conviction and sentence passed by XVI ACMM., Bengaluru in CC.No.15918/2015 dated 04.01.2019 is hereby set aside.
Consequently, the accused is acquitted for the offence punishable under Section 138 of NI Act and the bail bond as well as the surety bond executed by him and on his behalf shall stand canceled.
Send back the TCR along with the copy of this judgment forthwith to the trial Court.
(Dictated to the Judgment Writer directly on computer, corrected by me and then pronounced in the open Court on this the 9th day of December, 2020).
(K. KATHYAYANI ), LXVI Addl.CC & SJ, Bangalore.
76 Crl.A.No.234/20199.12.2020 APP-GN Resp - RTV For Judgment-
The respective counsels for both the parties are absent.
No representation.
The Judgment is pronounced in the open Court (vide separate Order).
ORDER The present Criminal Appeal filed by the appellant/accused under Section 374(3) of Cr.P.C.
is hereby allowed.
In the result, the judgment
of conviction and sentence
passed by XVI ACMM.,
Bengaluru in
CC.No.15918/2015 dated
04.01.2019 is hereby set aside.
Consequently, the accused is acquitted for the offence punishable under Section 138 of NI Act and the bail bond as well as the surety bond executed by him and on his behalf shall stand canceled.
Send back the TCR along with the copy of this judgment forthwith to the trial Court.
LXVI Addl.CC & SJ, Bangalore.