Bangalore District Court
Had Requested One Of His Friend To Lend ... vs Failed To Return The Amount And When The ... on 6 May, 2023
1 CC.4409/2018( J)
KABC030117472018
Presented on : 16-02-2018
Registered on : 16-02-2018
Decided on : 06-05-2023
Duration : 5 years, 2 months, 18 days
IN THE COURT OF THE XV ADDL CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY.
Dated this the 06th Day of May-2023
Present: Lokesh Dhanapal Havale. B.A.L.L.B.,
XV Addl.C.M.M., Bengaluru.
Judgment U/s.355 of the Cr.P.C. 1973.
1.Sl.No.of the case CC.No.4409/2018
2.Name of the Complainant: Mr. Kemkpegowda
No.213/214, 2nd Floor,
2 B 4th Main,
Kenchannapura cross,
Jagajyothi Layout,
Bengaluru-560 056.
3.Name of the accused: Mr. Adarsha. N.U
No.31, Sri. Veerabadresjwara
Nilaya, 2nd Floor, 11th Cross,
Papareddy Palya, Near Deepa
Complex, Bengaluru-560072.
2 CC.4409/2018( J)
ALSO AT
C/o Umapathi Gowda
Nelli Koppa
Sagar Taluk,
Shimoga-577417.
4.The offence complained of : U/s.138 of Negotiable Instruments
Act.
5.Plea of the accused: Pleaded not guilty.
6.Final Order: Acting U/s.255(2) Cr.P.C., accused
is Convicted.
7.Date of final Order 06.05.2023.
* * *
This complaint is filed U/Sec.200 of Cr.P.C. against the
accused for the offence punishable U/Sec.138 of the Negotiable
Instruments Act, 1881.
2. The facts of the complaint in brief are as under:
The complainant and accused are known to each other. The
accused had approached the complainant in the month of April
2017 seeking financial help of Rs.6,00,000/- for his personal
commitments and he would also pay interest at 12% p.a. The
complainant had requested one of his friend to lend him
Rs.6,00,000/- so that he could, in turn lend it to the accused. The
complainant after arranging the funds from his friends paid the
3 CC.4409/2018( J)
same to the accused on the condition that the accused would
repay it within six months. On the expiry of 6 months, the
accused failed to return the amount and when the complainant
contacted for repayment, the accused assured to pay within two
weeks. During the first week of November, 2017, the accused met
the complainant and agreed to repay the amount and issued two
cheques in his favour of the complainant towards repayment of the
loan amount along with interest of Rs.35,000/-. The cheque
bearing No.718390 dated 30.11.2017 for Rs.3,35,000/- and cheque
bearing No.718389 dated 30.11.2017 for Rs.3,00,000/- both
cheques drawn on Vijaya Bank, Vishweshwaraiah Layout branch,
Bengaluru. On presentation of the said cheques for encashment,
they were dishonoured for the reasons 'Funds Insufficient' on
14.12.2017. The complainant issued legal notice on 09.01.2018.
The legal notice sent to the Bangalore address of the accused was
returned to the complainant with an endorsement left the address.
Whereas the legal notice sent to the Shivamoga address of the
accused was duly served on 12.01.2018. The accused did not pay
the amount even after the expiry of 15 days. The accused thereby
committed an offence punishable U/s.138 of the N.I.Act.
3. After the institution of the complaint, the cognizance
was taken and it has been registered as PCR No.1828/2018. The
sworn statement of the complainant has been recorded and on the
basis of sworn statement and other materials on hand, the criminal
case has been registered against the accused and summons was
issued to accused. In response to the service of summons, the
4 CC.4409/2018( J)
accused appeared through his learned counsel and got enlarged
on bail. The prosecution papers were supplied to the accused and
the substance of the accusation was read over and explained to
the accused in the language known to him. He pleaded not guilty
and claimed to be tried.
4. During trial the complainant examined himself as PW-1
and got marked Ex.P1 to P9. The statement of the accused U/s.
313 of Cr.P.C. was recorded. Accused examined himself as DW.1
and got marked Ex.D1 on his behalf.
5. Heard the arguments. On perusal of the entire
materials on record, the points that arise for my consideration are
as under;
1. Whether the complainant proves that the
accused issued two cheques bearing
Nos.718390 dated 30.11.2017 for Rs.3,35,000/-
and No.718389 dated 30.11.2017 for
Rs.3,00,000/- drawn on Vijaya Bank,
Vishweshwaraiah Layout branch, Bengaluru
towards the discharge of legally enforceable
debt/liability and on its presentation for
encashment, it was dishonored with an
endorsement "Funds Insufficient" and even
after the service of legal notice, the accused
5 CC.4409/2018( J)
has not paid the amount within 15 days and
thereby accused committed an offence
punishable U/Sec.138 of N.I. Act, 1881?
2. Whether the accused rebuts the
presumption U/s.139 of the N.I.Act?
3. What order?
6. My answers on the above points for consideration are
as under:
Point No.1 : Affirmative
Point No.2 : Negative
Point No.3 : As per final order for the following;
REASONS
7. Point No.1 and 2 :- The points are taken together for
the common discussion to avoid repetition of facts and evidence. It
is necessary to discus the provisions U/s. 118(a) and 139 of the
Act., 1881 at this stage.
"118. Presumptions as to negotiable
instruments. - Until the contrary is
proved, the following presumptions shall
be made:-
6 CC.4409/2018( J)
(a) of 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;"
"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."
8. On plain perusal of the provision U/s. 118(a) and 139
of the N.I.Act., it can be seen that initially the presumptions
constituted under these two provisions are in favour of the
complainant. However the presumptions are rebuttable and it is
open to an accused to raise a defence to rebut the statutory
presumptions. An accused can raise a defence, wherein the
existence of legally enforceable debt or liability can be contested.
9. It is also well established that an accused need not
examine himself for discharging the burden of proof placed upon
him under a statute. He may discharge his burden on the basis of
7 CC.4409/2018( J)
the materials already brought on record. An accused has
constitutional rights to remain silent. The standard of proof on
part of the accused and that of the prosecution in a Criminal Case
is different. The prosecution must prove the guilt of an accused
beyond all reasonable doubts, the standard of proof so as to prove
a defence on the part of an accused is preponderance of
probabilities.
10. Under the light of position of the law, I have perused
the complaint and the evidence placed on record. The complainant
in support of his claim made in the complaint has adduced
evidence by examining himself as PW-1 and he got marked Ex.P1
to 9. PW-1 filed his evidence affidavit on oath and reiterated the
complaint averments. Ex.P1 and 2 are the cheques bearing
Nos718390 dated 30.11.2017 for Rs.3,35,000/- and No.718389
dated 30.11.2017 for Rs.3,00,000/- drawn on Vijaya Bank,
Vishweshwaraiah Layout branch, Bengaluru in favour of the
complainant. Ex.P1(a) and 2(a) are the signatures of the accused.
Ex.P3 and 4 are the bank return memos dated 14.12.2017 and
16.12.2017 with shara "Funds Insufficient". Ex.P5 is the office
copy of Legal Notice dated 09.01.2018 issued by the complainant
to the accused demanding repayment of the cheques amount.
Ex.P6 and 7 are the postal receipts for having issued the notice
through RPAD to the accused. Ex.P8 is the postal acknowledgment
for having served the notice on the accused on 12.01.2018. Ex.P9
is the postal envelope, which has been returned with shara 'Left'
on 10.01.2018.
8 CC.4409/2018( J)
11. On perusal of the documents, it is clear that the
cheques at Ex.P1 and 2 bearing Nos.718390 dated 30.11.2017 for
Rs.3,35,000/- and No.718389 dated 30.11.2017 for Rs.3,00,000/-
drawn on Vijaya Bank, Vishweshwaraiah Layout branch, Bengaluru
issued in favour of the complainant were presented within their
validity. Ex.P3 and 4 are the bank endorsements with shara
"Funds Insufficient" dated: 14.12.2017 and 16.12.2017. Ex.P5 is
the office copy of Legal Notice dated 09.01.2018 and it was issued
within time from the date of bank endorsements. The notice was
served on the accused on Shivamogga address on 12.01.2018 as
per ExP.8 and the notice sent to the accused to Bengaluru address
was returned unserved with a shara as 'left' on 10.01.2018 as per
ExP.9. The accused has disputed the service of notice. However
the accused did not dispute the addresses mentioned in the notice
and cause title of the complaint as wrong addresses. It is only the
defence of the accused as set up in the cross examination PW.1 by
way suggestion that the Bengaluru address was vacated three years
prior to the date of notice. PW.1 denied it. Similarly it was
suggested that the notice to Shivamogga address also was not
served on the accused. PW.1 denied it but he clearly stated that
the notice was served but he could not say who has received it.
The said address is not disputed. The accused also did not produce
any documents to prove his correct address. Therefore mere denial
would not be sufficient. Further during his cross examination that
he stated that he came to know about the misuse of cheque when
he receive the notice. In the case of C.C. Alavi Haji v. Palapetty
9 CC.4409/2018( J)
Muhammed reported in (2007) 6 SCC 555, the Hon'ble
Supreme Court held that when the notice is sent by registered
post by correctly addressing the drawer of the cheque, the
mandatory requirement of issue of notice in terms of clause (b) of
proviso to Section 138 of the Act stands complied with. It is
needless to emphasise that the complaint must contain basic facts
regarding the mode and manner of the issuance of notice to the
drawer of the cheque. In the case of N. Parameswaran Unni v.
G. Kannan reported in (2017) 5 SCC 737 the Hon'ble Supreme
Court held that it is clear from Section 27 of the General Clauses
Act, 1897 and Section 114 of the Evidence Act, 1872 that once
notice is sent by registered post by correctly addressing to the
drawer of the cheque, the service of notice is deemed to have
been effected. However, the drawer is at liberty to rebut this
presumption. Therefore on the basis of evidence on record, this
Court is of the opinion that the notice issued by the complainant
was served to the accused on his Shivamogga address on
12.01.2018 as per ExP.8 and it is deemed to have been served on
the accused as per Ex.P.9. Even otherwise as per the Judgment of
the Hon'ble Supreme Court of India in the case of C.C.Alavi Haji
Vs. Palapetty Muhammed and Another reported in (2007) 6
SCC 555, wherein it has been held by the Hon'ble Supreme Court
of India para No.17 as under;
17. It is also to be borne in mind
that the requirement of giving of notice is a
clear departure from the rule of Criminal Law,
10 CC.4409/2018( J)
where there is no stipulation of giving of a
notice before filing a complaint. Any drawer who
claims that he did not receive the notice sent by
post, can, within 15 days of receipt of
summons from the court in respect of the
complaint U/s.138 of the Act, make payment of
the cheque amount and submit to the
Court that he had made payment within 15 days
of receipt of summons (by receiving a copy
of complaint with the summons) and, therefore,
the complaint is liable to be rejected. A person
who does not pay within 15 days of receipt of the
summons from the Court along with the copy
of the complaint u/s.138 of the Act, cannot
obviously contend that there was no proper service
of notice as required u/s.138, by ignoring statutory
presumption to the contrary u/s.27 of the G.C. Act
and Section 114 of the Evidence Act. In our view,
any other interpretation of the proviso would
defeat the very object of the legislation. As
observed in Bhaskaran's case (supra), if the 'giving
of notice' in the context of Clause (b) of the
proviso was the same as the 'receipt of
notice' a trickster cheque drawer would get the
premium to avoid receiving the notice by adopting
different strategies and escape from legal
consequences of Section 138 of the Act.
In a nutshell it can be said that the statutory notice is an
opportunity given to the accused to make payment and avoid the
consequences of 138 of N.I.Act. In the case on hand, the summons
issued by the Court to the said addressees of the accused was duly
served on the accused as per order sheet dated 22.03.2018. The
11 CC.4409/2018( J)
accused made appearance through his counsel on the same day by
filing vakalath and application U/s.205 of Cr.P.C. and he obtained
the bail on 07.04.2018. It is also pertinent to note that the
accused admitted receipt of summons from the Court in his
evidence. Therefore he can not take the shelter of non service of
notice in order to avoid the liability. The complaint was filed on
09.02.2018, which is within limitation.
12. It is the defence of the accused that the complainant is
his friend. The complainant is working as attender in his office.
He use to keep all the files and bags on the table while going for
work. There is no transaction between him and the complainant.
He used to keep the cheque book, Aadhaar card, pan card and DL
in his bag. When he searched his bag in the month of August -
September 2017, he found out that 5-6 cheques were missing. He
asked about the same to the complainant for which the
complainant told him that he did not know about it. One month
after such incident, he filed the police complaint. When the
cheque was presented by the complainant for encashment, he
came to know that the cheque has been taken by the complainant
from his bag. The signature and the contents of the cheque are
not written by him. The cheque may be referred to the expert
opinion. All the members of his family healthy and therefore there
is no necessity of taking the loan for ill health of his family
members.
12 CC.4409/2018( J)
13. In order to prove his defence the accused produced the
lost article report as per ExD.1. On perusal of ExD.1, it discloses
that the report has been given for having lost the cheques and in
the brief facts, it is mentioned that the cheques bearing
No.718387, 718388, 718389 and 718390 pertaining to the account
in Vijaya Bank, Vishweshwaraiah Layout branch, Bengaluru were
lost on 29.10.2017 at 6.42 pm and the place of loss of cheques is
shown as Bengaluru.
14. The counsel for the complainant cross examined DW.1
and it was elicited in the cross examination of DW.1 that himself
and the complainant are working in the same company i.e., Birla
Shakthi and therefore he knew the complainant. It was further
elicited that he used to carry cheque book and pass book to his
office daily in his bag. He was trying to apply for the loan for
purchase of car during that period. When the notice was received
by him he came to know that 5-6 cheques have been missing from
his bag. He received the notice in February-March 2018. He filed
the complaint in respect of missing of cheques in November 2017.
The contents of Ex.D1 are true and he did not take any action
after receiving notice. He has not taken any action in respect of
the loss cheques after issuance of notice and before filing the
compliant. He has not filed any complaint. He has not given
complaint in respect of misuse of cheques. He has the doubt that
the complainant misused his cheques. He has not given any 'stop
payment' instructions in respect of the lost cheques. He deposed in
13 CC.4409/2018( J)
the examination in chief that 5-6 cheques have been lost but he
gave the police complaint in respect of loss of 4 cheques only.
15. The accused denied the signature in the cheques and
therefore the presumption does not arises in favour of the
complainant until it is proved that the signatures in the cheque
belong to accused. It is admitted fact that the complainant and the
accused knew each other and working in the same office. He
stated in his cross examination that he searched his bag in August
and September-2017 and found that 5-6 cheques were lost. He
asked the complainant but the complainant did not know about it.
It shows that the accused has suspicion on the complainant about
loss of his cheques. It was also elicited in the cross examination
that he has the doubt that the complainant misused his cheques.
As per his evidence, the accused came to know in the month of
August-September 2017 that the cheques were lost. He gave lost
article report one month after he came to know that cheques were
lost. However as per ExD.1 the cheques were stated to have been
lost on 29.10.2017 and the date of the lost article report is also
29.10.2017. It is not explained as to why he kept quiet for one
month to give the lost article report. Further it was elicited that
when the notice was received by him in February-March 2018, he
came to know that 5-6 cheques have been missing from his bag.
Therefore the versions of the accused in examination in chief and
in cross examination are inconsistent and contradictory. It is
already observed above that he had suspicion on the complainant
in respect of the lost cheques. However he has not taken any
14 CC.4409/2018( J)
action against the complainant for having stolen the cheques and
for having forged his signatures. After the receipt of notice, it
came to the notice of the accused that the lost cheques are with
the complainant but he failed to take action against the
complainant for misuse of cheques. He had sufficient time from
the date of notice till the filing of the complaint. He failed to
issue notice to the complainant asking return of cheques. He
failed to issue reply notice. He failed to even issue stop payment
instructions to the bank. All these aspects show that the accused
kept quiet without taking any action even though he had
knowledge. No prudent man would keep quiet if his cheques are
stolen, forged and misused. Therefore inference can be drawn that
there was transaction and therefore the accused kept quiet. If at
all there was no transaction and there is no liability, he would
have taken legal action against the complainant.
16. Further the accused himself stated in the defence
evidence that the signatures in the cheques do not belong to him.
As per his version the signatures are forged. He prayed to refer
the cheques to hand writing expert in his examination chief itself
but he did not take any steps to send the cheques to hand writing
expert. The Court after completion of evidence on both sides and
after hearing the arguments on both the sides, passed judgment
and acquitted the accused vide judgment dated 04.01.2019. The
complainant preferred the appeal to Hon'ble High Court of
Karnataka in Crl.A.No.329/2019 and the case was remanded by the
Hon'ble High Court of Karnataka with the direction to send the
15 CC.4409/2018( J)
cheques to hand writing expert for his opinion on the signatures in
the cheques. However the accused has not bothered to send the
cheques. The complainant filed application and took steps to send
the cheques to the hand writing expert for his opinion on the
signatures in the cheques in question. The hand writing expert
gave the opinion that the admitted signatures and disputed
signatures are authored by the same person and there is no
characteristics of forgery in the signatures made in the cheques.
Expert report is on the record and it discloses that the disputed
signatures in the cheques at Ex.P1 and 2 are marked as S1 and S2
and the admitted signatures in the examination in chief of DW.1
are marked as A1 to 3, the admitted signatures in the cross
examination of DW.1 are marked as A4 & 5, the admitted
signatures in the statement of the accused u/sec.313 of Cr.P.C are
marked as A6 & 7 and the admitted signatures in the vakalath is
marked as A8. The expert made observations of the admitted
signatures at A1 to 8 and disputed signatures at S1 and S2 and
gave conclusion that "On the cumulative effect of all the above
observations taken together, I have observed that the signatures
referred as A1 to A8 collectively demonstrate the characteristics of
the signatures S1 and S2. The signatures S1 and S2 were not
observed with any characteristics of the forgery. Hence, I am of
the opinion that all the signatures S1, S2 and A1-A8 are
authorized by one and the same person." The expert report
makes two things clear that the individual signatures of the
accused at A1 to A8 are not directly matching with the signatures
at S1 & S2, which shows that the accused tried to make the
16 CC.4409/2018( J)
signature differently and therefore the expert opined that the
cumulative effect of signatures at A1 to A8 matches with the
signatures at S1 and S2. Further even though he signed the
cheques, he denied his signatures deliberately. If at all the report
of expert is not correct according to him, the accused would have
objected the report and summoned the expert to give evidence.
The accused neither challenged the expert opinion by filing
objections nor summoned the expert for evidence. The report of
the expert remained unchalleged. Therefore it is clear that the
signatures found in the cheques are that of the accused and that
the accused denied the signature knowing fully well that the
signatures are his signatures. Therefore the defence of the accused
that signatures are forged is not probable one. Once the signatures
are proved to be that of the accused the presumption u/sec.118
and 139 of N.I Act arise in favour of the complainant. The
presumptions under sec.118 are that the cheque is drawn for
consideration and it is drawn on the date mentioned in it. The
presumption u/sec.139 is that the cheque is issued for legally
enforceable debt. Therefore the burden is on the accused to prove
that there is no legally enforceable debt.
17. The counsel for the accused cross examined PW.1. The
counsel for the accused challenged the financial capacity of the
complainant to lend the loan. It was elicited in the cross
examination of PW.l that the accused approached him in March
2017 and sought for hand loan. The accused asked financial
assistance for the treatment of his mother in March, 2017. He did
17 CC.4409/2018( J)
not mention about the same in notice, complaint and evidence
affidavit. He lent the loan in the month of April 2017. There are
no witnesses to the loan transaction. He gave the amount by way
of cash. But he could not say the denomination of the notes. He
did not produce any documents to show that he had the amount
to lent the accused. He voluntarily stated that he arranged the
amount from others and out of the amount with him. He
borrowed amount from Girish and Narayanappa. He had not taken
any documents except the cheques. He did not mention about
borrowing of loan from Girish and Narayanappa in his notice,
complaint and evidence and affidavit. He borrowed the amount
from Girish and Narayanappa in his village on 2017. He borrowed
Rs.1,75,000/- from Girish and borrowed Rs.2,00,000/- from
Narayanappa. He can examine the witnesses. There are no
documents to show that he obtained loan from Girish and
Narayanappa. It was also elicited that he has salary of Rs.55,000/-
per month and the said amount to credited to his bank account.
He did not know about the salary of the accused. He denied that
he has been residing in rented house. He voluntarily stated that he
had purchased house by obtaining loan. It is pertinent to note that
the counsel for the accused cross examined PW.1 in respect of the
financial capacity and elicited the above answers but the accused
has whispered anything about the financial capacity of the
complainant in his defence evidence.
18 CC.4409/2018( J)
18. In the following judgments of the Hon'ble Supreme
Court the aspect of presumptions and burden of proof have been
settled.
(a) The Hon'ble Supreme Court in the case of M.S.
Narayana Menon Vs. State of Kerala - (2006) 6 Supreme
Court Cases 39, held as under:-
"30. Applying the said definitions of 'proved' or 'disproved'
to principle behind Section 118(a) of the Act, the Court shall
presume a negotiable instrument to be for consideration
unless and until after considering the matter before it, it
either believes that the consideration does not exist or
considers the non-existence of the consideration so probable
that a prudent man ought, under the circumstances of the
particular case, to act upon the supposition that the
consideration does not exist. For rebutting such presumption,
what is needed is to raise a probable defence. Even for the
said purpose, the evidence adduced on behalf of the
complainant could be relied upon.
31. A Division Bench of this Court in Bharat Barrel &
Drum Manufacturing Company v. Amin Chand Payrelal
reported in (1999) 3 SCC 35 albeit in a civil case laid
down the law in the following terms:
19 CC.4409/2018( J)
"12. Upon consideration of various judgments as noted
hereinabove, the position of law which emerges is that
once execution of the promissory note is admitted, the
presumption under Section 118(a) would arise that it is
supported by a consideration. Such a presumption is
rebuttable. The defendant can prove the non-existence
of a consideration by raising a probable defence. If the
defendant is proved to have discharged the initial onus
of proof showing that the existence of consideration
was improbable or doubtful or the same was illegal,
the onus would shift to the plaintiff who will be
obliged to prove it as a matter of fact and upon its
failure to prove would disentitle him to the grant of
relief on the basis of the negotiable instrument. The
burden upon the defendant of proving the non-
existence of the consideration can be either direct or
by bringing on record the preponderance of
probabilities by reference to the circumstances upon
which he relies. In such an event, the plaintiff is
entitled under law to rely upon all the evidence led in
the case including that of the plaintiff as well. In case,
where the defendant fails to discharge the initial onus
of proof by showing the non- existence of the
consideration, the plaintiff would invariably be held
entitled to the benefit of presumption arising under
Section 118(a) in his favour. The court may not insist
upon the defendant to disprove the existence of
20 CC.4409/2018( J)
consideration by leading direct evidence as the
existence of negative evidence is neither possible nor
contemplated and even if led, is to be seen with a
doubt."
This Court, therefore, clearly opined that it is not
necessary for the defendant to disprove the existence of
consideration by way of direct evidence.
32. The standard of proof evidently is preponderance of
probabilities. Inference of preponderance of probabilities can
be drawn not only from the materials on records but also by
reference to the circumstances upon which he relies.
33. Presumption drawn under a statute has only an
evidentiary value. Presumptions are raised in terms of the
Evidence Act. Presumption drawn in respect of one fact may
be an evidence even for the purpose of drawing presumption
under another."
(b) The Hon'ble Supreme Court in Kumar Exports Vs.
Sharma carpets reported in (2009) 2 SCC 513, held as
under;
"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
21 CC.4409/2018( J)
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
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
22 CC.4409/2018( J)
circumstances so relied upon are compelling, the burden
may likewise 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 Sections 118 and 139 of the Act.
21. The accused has also an option to prove the non-
existence of consideration and debt or liability either by
letting in evidence or in some clear and exceptional cases,
from the case set out by the complainant, that is, the
averments in the complaint, the case set out in the statutory
notice and evidence adduced by the complainant during the
trial. Once such rebuttal evidence is adduced and accepted
by the court, having regard to all the circumstances of the
case and the preponderance of probabilities, the evidential
burden shifts back to the complainant and, thereafter, the
presumptions under Sections 118 and 139 of the Act will not
again come to the complainant's rescue.
(c) The Hon'ble Supreme Court in Rangappa Vs. Mohan
reported in (2010)11 SCC 441 held as under:
26. In light of these extracts, we are in
agreement with the respondent-claimant that the
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
23 CC.4409/2018( J)
in Krishna Janardhan Bhat (supra) 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 circumstances 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.
27. Section 139 of the Act is an example of a
reverse onus clause that has been included in
furtherance of the legislative objective of improving the
credibility of negotiable instruments. While Section 138
of the Act specifies a strong criminal remedy in relation to
the dishonour of cheques, the rebuttable presumption under
Section 139 is a device to prevent undue delay in the course
of litigation. However, it must be remembered that the
offence made punishable by Section 138 can be better
described as a regulatory offence since the bouncing of a
cheque is largely in the nature of a civil wrong whose
impact is usually confined to the private parties involved in
commercial transactions. In such a scenario, the test of
proportionality should guide the construction and
interpretation of reverse onus clauses and the
24 CC.4409/2018( J)
accused/defendant cannot be expected to discharge an
unduly high standard or proof.
28. In the absence of compelling justifications,
reverse onus clauses usually impose an evidentiary burden
and not a persuasive burden. Keeping this in view, it is a
settled position that when an accused has to rebut the
presumption under Section 139, the standard of proof for
doing so is that of `preponderance of probabilities'.
Therefore, if the accused is able to raise a probable defence
which creates doubts about the existence of a legally
enforceable debt or liability, the prosecution can fail. As
clarified in the citations, the accused can rely on the
materials submitted by the complainant in order to raise
such a defence and it is conceivable that in some cases the
accused may not need to adduce evidence of his/her own.
(d) The the Hon'ble Supreme Court in Basalingappa Vs.
Mudibasappa reported in (2019) 5 SCC 418 held as
under:-
"25. We having noticed the ratio laid down by this Court in
the above cases on Sections 118 (a) and 139, we now
summarise the principles enumerated by this Court in
following manner:
25 CC.4409/2018( J)
25.1. Once the execution of cheque is admitted
Section 139 of the Act mandates a presumption
that the cheque was for the discharge of any debt
or other liability.
25.2. The presumption under Section 139 is a
rebuttable presumption and the onus is on the
accused to raise the probable defence. The standard
of proof for rebutting the presumption is that of
preponderance of probabilities.
25.3. To rebut the presumption, it is open for the
accused to rely on evidence led by him or the accused
can also rely on the materials submitted by the
complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be
drawn not only from the materials brought on record
by the parties but also by reference to the
circumstances upon which they rely.
25.4. That it is not necessary for the accused to come
in the witness box in support of his defence, Section
139 imposed an evidentiary burden and not a
persuasive burden.
25.5. It is not necessary for the accused to come in
the witness box to support his defence.
26 CC.4409/2018( J)
(e) The Hon'ble Supreme Court of India in the case of
A.P.S Forex Services Pvt Ltd Vs. Shakthi Internatonal
Fashion Linkers & Others reported in 2020 STPL 5773
SC, held at para No.7 as under:
7. Coming back to the facts in the present case and
considering the fact that the accused has admitted the
issuance of the cheques and his signature on the cheque and
that the cheque in question was issued for the second time,
after the earlier cheques were dishonoured and that even
according to the accused some amount was due and
payable, there is a presumption under Section 139 of the
N.I. Act that there exists a legally enforceable debt or
liability. Of course such presumption is rebuttable in nature.
However, to rebut the presumption the accused was required
to lead the evidence that full amount due and payable to
the complainant has been paid. In the present case, no such
evidence has been led by the accused. The story put forward
by the accused that the cheques were given by way of
security is not believable in absence of further evidence to
rebut the presumption and more particularly the cheque in
question was issued for the second time, after the earlier
cheques were dishonoured. Therefore, both the courts
below have materially erred in not properly
appreciating and considering the presumption in favour
of the complainant that there exists legally enforceable
27 CC.4409/2018( J)
debt or liability as per Section 139 of the N.I. Act. It
appears that both, the Learned Trial Court as well as
the High Court, have committed error in shifting the
burden upon the complainant to prove the debt or
liability, without appreciating the presumption under
Section 139 of N.I. Act. As observed above, Section 139
of the Act is an example of reverse onus clause and
therefore once the issuance of the cheque has been
admitted and even the signature on the cheque has
been admitted, there is always a presumption in favour
of the complainant that there exists legally enforceable
debt or liability and thereafter it is for the accused to
rebut such presumption by leading evidence.
(f) The Hon'ble Supreme Court of India in the case of
Thriyambak S Hegade Vs. Sripad reported in 2021 STPL
10270 SC, held at para No.11 & 12 as under:
11. From the facts arising in this case and the
nature of the rival contentions, the record would disclose
that the signature on the documents at Exhibits P-6 and P-2
is not disputed. Exhibit P-2 is the dishonoured cheque based
on which the complaint was filed. From the evidence
tendered before the JMFC, it is clear that the respondent
has not disputed the signature on the cheque. If that be the
position, as noted by the courts below a presumption would
arise under Section 139 in favour of the appellant who was
28 CC.4409/2018( J)
the holder of the cheque. Section 139 of the N.I. Act reads
as hereunder: "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."
12. Insofar as the payment of the amount by the
appellant in the context of the cheque having been
signed by the respondent, the presumption for passing
of the consideration would arise as provided under
Section 118(a) of N.I. Act which reads as hereunder:-
"118. Presumptions as to negotiable instruments - Until
the contrary is proved, the following presumptions shall
be made: -
(a) of 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."
(g) The Hon'ble Supreme Court of India in the case of
M/s. Kalamani Tex v. P. Balasubramanian reported in
2021 STPL 1056 observed at para No.14 to 18 as under:-
29 CC.4409/2018( J)
14. Adverting to the case in hand, we find on a
plain reading of its Judgment that the trial Court completely
overlooked the provisions and failed to appreciate the
statutory presumption drawn under Section 118 and Section
139 of NIA. The Statute mandates that once the signature(s)
of an accused on the cheque/negotiable instrument are
established, then these 'reverse onus' clauses become
operative. In such a situation, the obligation shifts upon the
accused to discharge the presumption imposed upon him.
This point of law has been crystallized by this Court in
Rohitbhai Jivanlal Patel Vs. State of Gujarat, (2019) 18
SCC 106 in the following words:
"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 facts and circumstances as to
show the preponderance of probabilities tilting in his
favour, any doubt on the complainant's case could not
30 CC.4409/2018( J)
have been raised for want of evidence regarding the
source of funds for advancing loan to the appellant-
accused....."
15. Once the 2nd Appellant had admitted his
signatures on the cheque and the Deed, the trial Court
ought to have presumed that the cheque was issued as
consideration for a legally enforceable debt. The trial Court
fell in error when it called upon the Complainant-
Respondent to explain the circumstances under which the
appellants were liable to pay. Such approach of the Trial
Court was directly in the teeth of the established legal
position as discussed above, and amounts to a patent error
of law.
16. No doubt, and as correctly argued by senior
Counsel for the appellants, the presumptions raised under
Section 118 and Section 139 are rebuttable in nature. As
held in M.S.Narayana Menon Vs. State of Kerala, (2006) 6
SCC 39, which was relied upon in Basalingappa (supra), a
probable defence needs to be raised, which must meet the
standard of "preponderance of probability", and not mere
possibility. These principles were also affirmed in the case
of Kumar Exports (supra), wherein it was further held that a
bare denial of passing of consideration would not aid the
case of accused.
31 CC.4409/2018( J)
17. Even if we take the arguments raised by the
appellants at face value that only a blank cheque and signed
blank stamp papers were given to the respondent, yet the
statutory presumption cannot be obliterated. It is useful to
cite Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, 36
where this court held that:
"Even a blank cheque leaf, voluntarily signed and
handed over by the accused, which is towards
some payment, would attract presumption under
Section 139 of the Negotiable Instruments Act, in
the absence of any cogent evidence to show that
the cheque was not issued in discharge of a
debt."
18. Considering the fact that there has been an
admitted business relationship between the parties, we are of
the opinion that the defence raised by the appellants does
not inspire confidence or meet the standard of
'preponderance of probability'. In the absence of any other
relevant material, it appears to us that the High Court did
not err in discarding the appellants' defence and upholding
the onus imposed upon them in terms of Section 118 and
Section 139 of the NIA.
h) The Hon'ble Supreme Court of India in its latest case of
Jain P Jose v/s Santhosh reported in SLP Crl.5241/2016
32 CC.4409/2018( J)
dated 10.11.2022 observed by referring to its earlier
Judgments in Vasanth Kumar v/s Vijaya Kumari, Rangappa
v/s Mohan and Kalamani Tex and Another v/s P.
Balasubramanian that the complainant is entitled to the
benefit of presumption u/sec.139 of N.I Act that the
cheque was issued for discharge of legally enforceable
debt or liability. It was also observed that the
complainant need not mention in the complaint the
purpose for which loan was given and the source of
funds.
19. Therefore on perusal of the Judgments, it is clear that
an accused need not examine himself for discharging the burden of
proof placed upon him under a statute. He may discharge his
burden on the basis of the materials already brought on record.
An accused has constitutional rights to remain silent. The standard
of proof on part of the accused and that of the prosecution in a
Criminal Case is different. The prosecution must prove the guilt of
an accused beyond all reasonable doubt and the standard of proof
so as to prove a defence on the part of an accused is
preponderance of probabilities. If the cheque and signature are
admitted, the presumption arises that the cheque was issued for
legally enforceable debt/liability. The presumption is rebuttable.
The accused has to raise a probable defence and prove it by
adducing evidence, which must meet the standard of
preponderance of probabilities. Unless the same has been done,
doubt can not be raised on the case of the complainant. The
33 CC.4409/2018( J)
presumption raised in favour of the complainant u/sec.139 of N.I
Act operates until rebutted by the accused by proving probable
defence. As per the settled law that unless and until the accused
rebuts the presumption U/sec.139 of N.I Act, the onus does not
shift on the complainant to prove his case.
20. In view of the settled law, the burden is on the
accused to prove his defence by preponderance of probabilities and
rebut the presumption raised in favour of the complainant U/s139
of NI Act. It is admitted fact that the complainant and accused are
working in the same company. The complainant stated in the
complaint that he borrowed the amount from others to lend the
same to the accused. Though the complainant has not examined
witnesses to prove his financial capacity, the doubt can not be
raised on the case of the complainant unless the accused raised
probable defence and proved the same by preponderance of
probabilities. It is the defence of the accused that he used to keep
all the files and bags on the table while going for work. He used
to keep the cheque book, Aadhaar card, pan card and DL in his
bag. When he searched his bag in the month of August -
September 2017, he found out that 5-6 cheques were missing.
When the cheque was presented by the complainant for
encashment, he came to know that the cheque has been taken by
the complainant from his bag. The signature and the contents of
the cheque are not written by him. The defence taken by the
accused shows that the cheques were stolen by the complainant,
the signatures of the accused were forged and the cheques of the
34 CC.4409/2018( J)
accused were misused by the complainant without there being any
transaction between them. However he has not taken any action
against the complainant for having stolen the cheques and for
having forged his signatures. As per examination of chief of
accused and Ex.D1, the accused came to know about the missing
of cheque during August, September and October. However he
failed to even issue stop payment instructions to the bank. He had
suspicion on the complainant as per the evidence on record but he
failed to issue stop payment instructions in order to avoid misuse
of cheque. As per the examination in chief, the accused came to
know about the lost cheques being with the complainant after the
presentation of the cheques by the complainant for encashment. As
per the cross examination, it came to the notice of the accused
that the lost cheques are with the complainant after the receipt of
notice but he failed to take action against the complainant for
misuse of cheques. He had sufficient time from the date of notice
till the filing of the complaint. He failed to issue notice to the
complainant asking return of cheques. He failed to issue reply
notice to the demand notice of the complainant. All these aspects
show that the accused kept quiet without taking any action even
though he had knowledge. No prudent man would keep quiet if
his cheques are stolen, forged and misused. Therefore inference
can be drawn that there was transaction and therefore the accused
kept quiet. If at all there was no transaction and there is no
liability, he would have taken all possible legal actions against the
complainant. However the accused has not done anything that a
prudent man ought to have done under the aforesaid
35 CC.4409/2018( J)
circumstances. Hence the accused failed to prove his defence as
the probable one by preponderance of probabilities.
21. It is the defense of the accused that there is no
transaction as alleged in the complaint and the complainant
misused the lost cheques, which were not signed by him, by filling
them up as per his convenience. The counsel for the accused made
several suggestions but the suggestions are denied by the
complainant. Mere suggestions are not sufficient. It is proved from
the evidence on record that the signatures in the cheques are that
of the accused but the accused deliberately denied the signatures
in the cheques in order to avoid the liability. On perusal of the
entire cross examination of PW.1 nothing was elicited in support
of the defence of the accused. The drawer's signatures on the
cheques attracts the ratio laid down by the Hon'ble Supreme
Court of India in its decisions reported in 2011 (11) SCC - 441 -
Rangappa V/s.Sri.Mohan and SCC 2015 (8) Page No.378 -
T.Vasanthakumar V/s.Vijayakumari and the recent Judgment
delivered in Crl. Appeal No.508/2019 - Rohit Bhai Jeevanlal Patel
V/s. State of Gujarath and another. The ratio is that the cheque
shall be presumed to be for consideration unless and until the
court forms a belief that the consideration does not exist or
considers the non-existence of consideration was tenable that a
prudent man would under no circumstances act upon the plea that
the consideration does not exist. On perusal of Ex.P1 and 2, it is
found that the signatures and the contents are written with same
ink and at the same time except the name of the complainant and
36 CC.4409/2018( J)
the date. It is pertinent to note that the signature, the amount in
words and amount in digits are written with the same ink and at
the same time. This aspect also shows that the accused has the
liability and therefore he issued the cheques by mentioning the
amount and by signing them. However, he denied the contents
and even the signatures in order to avoid the liability. As per
settled law even if the blank signed cheque was given and it was
filled up later, it attracts the ingredients u/sec.138 of N.I Act. As
per Section 20 of the N.I.Act, if the person signs and delivers
Negotiable Instrument and it is left incomplete and thereby he
authorizes the holder to complete the Negotiable Instrument and
thereby he is liable for the amount mentioned in the Negotiable
Instrument. In the Judgment rendered by the Hon'ble Supreme
Court of India in Bir Singh V/s.Mukesh Kumar reported in AIR
2019 SC 2446, it was held by the Hon'ble Apex Court that "If a
signed blank cheque is voluntarily presented to a payee, towards
some payment, the payee may fill up the amount and other
particulars. This in itself would not invalidate the cheque. The
onus would still be on the accused to prove that the cheque was
not in discharge of a debt or liability by adducing evidence. Even
a blank cheque leaf, voluntarily singed and handed over by the
accused, which is towards some payment, would attract
presumption under Section 139 of the Negotiable Instruments Act,
in the absence of any cogent evidence to show that the cheque
was not issued in discharge of a debt."
37 CC.4409/2018( J)
22. For the reasons mentioned herein above, it is
crystallized that the accused has utterly failed to prove that there
was no existence of legally enforceable debt/liability between him
and the complainant and he has not at all issued the instant
cheque towards the discharge of legally enforceable liability of
Rs.6,35,000/-. On the other hand, the complainant has proved that
the accused issued the cheques for the legally enforceable liability;
the cheques were dishonored due to the reason 'Funds Insufficient'
and the notice issued by him was served on the accused. The
complainant proved his case beyond all reasonable doubts. The
accused failed to rebut the statutory presumptions U/s.118(a) & (b)
and 139 of the N.I.Act. Accordingly the accused is found guilty for
the offence punishable U/s.138 of the N.I.Act. Hence, I proceed to
answer the Point No.1 in Affirmative and Point No.2 in the
Negative.
23. Point No.3 : In view of the reasons assigned in Point
No.1 and 2 and under the facts and circumstances of the present
case, I proceed to pass the following:-
ORDER
As per the provisions of Sec.255(2) Cr.P.C. the accused is hereby convicted for the offence punishable u/s.138 of NI Act, 1881 and sentenced to pay fine Rs.6,40,000/- (Rupees Six Lakhs Forty Thousand Only). On deposit of fine amount, the complainant is entitled 38 CC.4409/2018( J) for compensation of Rs.6,35,000/- (Rupees Six Lakhs Thirty Five Thousand Only). The remaining balance amount of Rs.5,000/- is to be forfeited to the State.
In default of payment of the fine amount accused shall undergo simple imprisonment for two months.
The personal bond executed by the accused is hereby stands cancelled and cash surety of Rs.4,000/- furnished by the accused shall be refunded to him after expiry of appeal period.
The copy of the judgment shall be furnished to the accused at free of cost.
(Dictated to the Stenographer, transcript thereof is computerized and printout taken by him, is verified and then pronounced by me in Open Court on this the 6th day of May-2023.) (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.
39 CC.4409/2018( J) ANNEXURE Witnesses examined for the Complainant:-
PW.1 : Sri. Kempegowda Documents marked for the Complainant:-
Ex.P1 & 2 : 2 cheques Ex.P1(a) & 2(a) : Signatures of the accused Ex.P3 & 4 : 2 Bank endorsements Ex.P5 : Office copy of the legal notice Ex.P6 & 7 : 2 Postal receipts Ex.P8 : Postal acknowledgment letter Ex.P9 : Postal envelope Witnesses examined For Defence:-
DW.1 : Sri. Adarsha N.U Documents marked for Defence:-
Ex.D1 : Lost Article Report
(Lokesh Dhanapal Havale),
XV Addl.CMM., Bengaluru.
40 CC.4409/2018( J)
06.05.2023
(Judgment Pronounced in the Open Court Vide Separate Order sheet) ORDER As per the provisions of Sec.255(2) Cr.P.C. the accused is hereby convicted for the offence punishable u/s.138 of NI Act, 1881 and sentenced to pay fine Rs.6,40,000/- (Rupees Six Lakhs Forty Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.6,35,000/- (Rupees Six Lakhs Thirty Five Thousand Only). The remaining balance amount of Rs.5,000/- is to be forfeited to the State.
In default of payment of the fine amount accused shall undergo simple imprisonment for two months.
The personal bond executed by the accused is hereby stands cancelled and cash surety of Rs.4,000/- furnished by the accused shall be refunded to him after expiry of appeal period.
The copy of the judgment shall be furnished to the accused at free of cost.
XV Addl.CMM., Bengaluru.
41 CC.4409/2018( J)