Bangalore District Court
S.S. Exports vs Lalith Kanunga Huf on 10 February, 2026
1
Cri Appeal No.643/2024
KABC010101172024
IN THE COURT OF LV ADDL. CITY CIVIL AND SESSIONS
JUDGE, BENGALURU (CCH-56)
DATED: THIS THE 10TH DAY OF FEBRUARY 2026
PRESENT
SRI. MOHAN PRABHU, M.A., LL.M.
LV ADDL. CITY CIVIL AND SESSIONS JUDGE, BENGALURU.
CRIMINAL APPEAL NO.643 / 2024
Appellant/ S.S. EXPORTS
accused EMBASSY CENTER No.11,
1ST FLOOR, No.105,
CRESCENT ROAD,
BANGALORE - 560 001,
REPRESENTED BY PROPRIETOR
H.B. MANJUNATHA
AGED ABOUT 49 YERS,
S/O H.R.BALASUBRAMANYA,
No.27, 1ST MAIN, CHIKKAGULAPPA
LAYOUT, KALYAN NAGAR,
BENGALURU - 560 043.
[R/by .SMT. KANCHAN S., Adv.]
Vs
Respondent/ LALITHA KUNUNGA HUF
Complainant AGED ABOUT 57 YEARS,
RESIDING AT No.23, A./M. ROAD,
4TH FLOOR, ARIHANTHA COMPLEX,
KALASI PALYAM, NEW EXTENSION,
BANGALORE - 560 043.
[R/by Sri G.M.H.K. Adv.]
2
Cri Appeal No.643/2024
JUDGMENT
This appeal is filed U/s.374(3)of Cr.P.C. by the accused against the judgment of conviction dated:
05.12.2023 passed in C.C.No.35537/2021 by learned XXI ACJM, Bengaluru, for the offence under S.138 of Negotiable Instruments Act [for short 'N.I. Act'] (2) The parties are referred to their rank before the trial court.
(3) The case of the complainant is briefly stated as follows:
The complainant is a businessman. The complainant represented by his General Power of Attorney holder. The accused is running proprietorship concern and running business under the name and style as 'S.S. Exports'. The complainant and the accused are known to each other from past several years. With this acquaintance in 2 nd week of January, the accused approached the complainant and requested for hand loan of Rs.10 lakhs to meet his legal necessity and to improve his business.
Hence, considering the difficulty of the accused, the complainant arranged money and paid an amount of 3 Cri Appeal No.643/2024 Rs.10 lakhs by way of cash to the accused on 27.01.2020. On the same day the accused has executed On Demand Promissory Note and consideration receipt in favour of the complainant. While borrowing the said amount, the accused assured that he will repay the amount in 10 installments commencing from 27.02.2020.
The last installment to be paid on 27.11.2020. Accordingly, the accused paid 4 installments to the complainant i.e. Rs.4 lakhs out of Rs.10 lakhs. Towards remaining six installments the accused has postponed due to Covid-19 pandemic. After several request and demands made by the complainant to pay balance hand loan amount, the accused had issued cheque bearing No.021552 for sum of Rs.6 lakhs on 26.08.2021, drawn on Axis Bank, Ganganagar Branch, Bengaluru in favour of the complainant. As per the instruction of the accused, the complainant has presented the said cheque for encashment on 27.08.2021 through his banker. To the shock and surprise of the complainant the cheque was returned with shara 'A/c Blocked' as per Bank memo dated 27.08.2021. Thereafter immediately the complainant informed about the dishonour of the cheque 4 Cri Appeal No.643/2024 to the accused. But the accused has failed to pay the cheque amount to the complainant. Thereafter the complainant got issued legal notice dated 16.09.2021. The accused calling him to pay the cheque amount within 15 days. The notice was duly served to the accused on 18.09.2021. The accused has sent untenable reply on 04.10.2021. The accused has failed to repay the cheque amount. Hence, the complaint.
(4) Based on the complaint filed by the complainant the, learned Magistrate taken cognizance of the offence punishable u/S.138 of NI Act and registered a case as PCR No.1967/2021. Thereafter recorded sworn statement of the complainant as he filed his affidavit, in lieu of sworn statement and the documents Ex.P1 to P6 came to be marked. On the basis of the sworn statement of the complainant, complaint averments and the documents, the learned Magistrate passed an order dated 09.12.2021 to register the case against the accused u/S.138 of NI Act in Register No.III and issued summons to the accused. Accordingly, the case in C.C.No.35537/2021 came to be registered. 5
Cri Appeal No.643/2024 (5) The accused entered appearance before the Magistrate and engaged his counsel and released on bail. That the accusation read over to the accused for the offence u/S.138 of NI Act for which the accused pleaded not guilty and claimed for trial. The learned Magistrate by following the judgment of Hon'ble Supreme Court reported in 2014 (5) SCC 59 between INDIAN BANK ASSOCIATION VS. UNION OF INDIA AND OTHERS, treated the sworn statement of the complainant as evidence. And examined the accused u/S.313 of CrPC. The accused denied incriminating evidence. The case posted for cross examination of PW1. The trial court records would go to show that PW1 partly cross examined by learned counsel for the accused. The accused has not led any defence evidence. The learned Magistrate pronounced the judgment on 05.12.2023 and acting u/S/255(2) of CrPC convicted the accused for the offence punishable u/S.138 of NI Act and sentenced to pay fine of Rs.6,10,000/-. In default, shall undergo simple imprisonment for one year. Out of fine amount, an amount of Rs.6 lakhs shall be paid to the complainant as compensation and Rs.10,000/- is ordered to be adjusted 6 Cri Appeal No.643/2024 towards cost of the State Exchequer.
(6) Aggrieved by the judgment of conviction, the accused has preferred this appeal, on the following among other grounds.
The impugned order passed by the learned Magistrate is neither maintainable in law nor in facts. The trial court has clearly ignored the evidence of PW1. The learned Magistrate ought to have seen that the material on record clearly established on the scale of preponderance of probabilities. That the cheque was not issued by the accused / appellant. The appellant and the respondent has no relationship at all. The alleged cheque stated in the complaint are false. The appellant has protected the respondent during the proceedings in CCB case under S.420 of IPC. During that time, the appellant came to know the respondent. The accused has given cheque to the complainant for security of hand loan of Rs.4 lakhs. The accused has repaid the loan amount of Rs.4 lakhs, but the complainant in order to cause loss to the appellant has presented the cheque for encashment. The matter between the parties is civil in nature. The wife of the appellant was suffering from 7 Cri Appeal No.643/2024 knee pain and undergone surgery. She was hospitalized for several times due to her ill-health. The appellant is only person who take care of his family members. Hence, the appellant could not appear before the trial court. The appellant has issued reply notice wherein he has stated that he borrowed sum of Rs.4 lakhs from the complainant and repaid the same. But the complainant misused the security cheque even after repayment of hand loan amount. The impugned order passed by the learned Magistrate is illegal and perverse and contrary to law. If the judgment and order is not set aside, the appellant will be put to heavy loss and injustice which cannot be compensated by any means. Hence, on these grounds, the appellant prayed to allow this appeal and to set aside the impugned order.
(7) The trial court records received.
(8) The respondent entered appearance by engaging its counsel.
(9) I have heard the arguments on the side of the learned counsel for the respondent. Despite sufficient opportunity given to the learned counsel for the appellant arguments are not addressed. This court also given an 8 Cri Appeal No.643/2024 opportunity to file written arguments. But the appellant / accused did not file written arguments also. I have perused the entire records.
(10) The following points would arise for my consideration:-
Point No.1:- Whether the impugned judgment of conviction and order of sentence passed thereon is illegal, perverse and calls for interference?
Point No.2:- Whether there is sufficient grounds made out by the appellant to set aside the judgment dated 05.12.2023 passed in C.C.No.35537/2021 as prayed for?
Point No.3:- What order?
(11) My findings to the above points are as below:-
Point No.1:- In the negative
Point No.2:- In the negative
Point No32:- As per the final order,
for the following
REASONS
(12) POINT NO.1 & 2:- These points are taken up together for discussion in order to avoid repetition of discussion in evidence and for the sake of convenience.9
Cri Appeal No.643/2024 (13) It is the specific contention of the complainant is that, the accused who known to him from past several years approached him and requested for hand loan of Rs. 10 lakhs to meet his legal necessity and to improve his business. Hence, by considering the necessity of the accused, the complainant paid sum of Rs.10 lakhs by way of cash to the accused on 27.01.2020. while borrowing the said amount the accused assured that he will pay the amount in 10 installments commencing from 27.02.2020. Accordingly, the accused paid 4 installments to the complainant i.e. Rs.4 lakhs, out of Rs.10 lakhs. The accused postponed to pay remaining installments due to Covid-19 pandemic. After several request and demands made by the complainant, the accused issued cheque bearing No.021552 for sum of Rs.6 lakhs dated 26.08.2021 drawn on Axis Bank, Ganganagar branch, Bengaluru in favour of the complainant. In order substantiate this contention taken by the complainant, General Power of Attorney holder of the complainant examined himself as PW 1 and reiterated the complaint averments. The document at Ex.P1 to P6 are marked through PW1. On perusal of trial court records, PW 1 has 10 Cri Appeal No.643/2024 not fully cross examined by the learned counsel for the accused. In this appeal appellant would contend that as his wife as suffering from knee pain and she underwent surgery hence, he could not appear before the trial court. In order to substantiate such contention taken by the appellant he has not produced any medical documents.
(14) The trial court records would go to show that despite sufficient opportunity given to the accused, the accused did not fully cross examined PW 1. The trial court records would go to show that PW1 recalled for cross examination twice, but the accused has failed to fully cross examine PW 1. In this appeal also for obvious reasons best known to the appellant his counsel not address arguments. The trial court records and appeal memo would go to show that the main contention taken by the appellant / accused is that he has borrowed sum of Rs.4 lakhs from the complainant. But he has paid that Rs.4 lakhs amount as admitted by the complainant. It is the contention of the appellant is that at the time of borrowing amount of Rs.4 lakhs the complainant has 11 Cri Appeal No.643/2024 taken his cheque. The complainant procured his cheque, thereafter even he had repaid the loan amount of Rs.4 lakhs. The complainant did not return his cheque, but he misused the cheque by filling the same and presented to the bank. It is the contention of the appellant is that he has sent reply notice to the complainant as per Ex.P6.
(15) In the appeal memo, the appellant would contend that he has issued reply notice to the complainant prior to presentation of the cheque by the complainant. Such contention taken by the appellant is not acceptable because records clearly shows that the accused issued Ex.P6 reply notice dated 04.10.2011, after he received legal notice from the complainant. The complainant issued legal notice to the accused as per Ex.P4 on 16.09.2021. Ex.P5 is the postal receipt for having sent notice to the accused. The accused sent his reply notice as per Ex.P6 on 04.10.2021. Thus, reply notice sent by the accused only when he received the legal notice dated 16.09.2021 issued by the complainant.
(16) It appears that the accused has set up his defence based on Ex.P4 legal notice. In Ex.P4 legal notice the complainant has stated that accused 12 Cri Appeal No.643/2024 borrowed sum of Rs.10 lakhs from him on 27.01.2020 and thereafter paid only 4 installments i.e. Rs.4 lakhs and he due sum of Rs.6 lakhs for which he has issued cheque bearing No.021552. The accused in his reply notice Ex.P6 admitted that he has obtained sum of Rs.4 lakhs and would contend that he has already repaid Rs.4 lakhs as stated in Ex.P4 notice. But he would contend that the complainant misused the blank cheque which was procured by the complainant towards security for payment of Rs.4 lakhs. Thus, one thing is very clear that the accused admitted Ex.P2 cheque is of his bank account. Ex.P2(a) is his signature. Only contention of the accused is that he had issued Ex.P2 cheque at the time of borrowing sum of Rs.4 lakhs from the complainant.
(17) It is pertinent to note that while examining the accused u/S.313 of CrPC by the trial court on 02.11.2022 the accused has stated that he has not at all received any amount from the complainant. In Ex.P6 reply notice the accused admitted that the cheque belongs to the bank account and cheque contained his signature. It is admitted by him that he borrowed loan amount from the complainant. But it is the contention of the accused is 13 Cri Appeal No.643/2024 that he borrowed only sum of Rs.4 lakhs, but he has repaid the same to the complainant. Since the accused himself admitted regarding borrowing of the amount form the complainant, it is for the accused to prove his defence by preponderance of probabilities. But the accused has failed to prove his defence by preponderance of probabilities by producing cogent evidence. Despite sufficient opportunity given to the accused he has notfully cross examined PW1. The accused also not led his defence evidence. Mere sending of Ex.P6 reply notice, will not suffice to prove the defence of the accused by preponderance of probabilities. As I already noted that the accused has taken his defence in order to suit Ex.P4 legal notice issued by the complainant by taking contention that he borrowed only sum of Rs.4 lakhs and at the time of borrowing the same the complainant procured his cheque for security purpose. If at all the complainant misused the cheque belongs to the accused why the accused kept silent even after the complainant filed his complaint is not made known by the accused. In Ex.P6 reply notice, the accused has stated that he would initiate legal action against the 14 Cri Appeal No.643/2024 complainant. But the accused has remained silent. Even after the complainant filed this complaint which indicates that the accused issued Ex.P2 cheque in order to discharge his liability to the complainant the trial court has rightly held that the complainant has proved his case by preponderance of probabilities.
(18) In the present case, the complainant has followed proper procedure as contemplated u/S.138 of NI Act. Ex.P4 cheque is dated 26.08.2021. The complainant presented the same to the bank within its validity. Soon after the complainant received the bank endorsement. within 30 days the complainant issued Ex.P4 legal notice dated 16.09.2021 to the accused. The complainant filed this complaint within 30 days after giving time to the accused. Thus, the complainant has followed proper procedure as contemplated u/S.138 & 142 of NI Act. The trial court has rightly drawn presumption as required u/S.139 & 118 of NI Act. It is important to refer some of the judgments.
(19) In the judgment of Hon'ble Supreme Court in the case of K.S. Ranganath Vs Vitthala Shetty reported in 2022 [1] Crimes 454-[SC] wherein head note reads as 15 Cri Appeal No.643/2024 below:-
"Negotiable Instruments Act, 1881 - Section 138 read with Sections 118 and 139- Dishonour of cheque-Conviction and sentence
- When a cheque is drawn out and is relied upon by drawee, it will raise a presumption that it is drawn towards a consideration which is a legally recoverable amount - Onus is on accused to raise a probable defence and standard of proof for rebutting presumption is on preponderance of probabilities-Defence sought to be put forth and witnesses examined in instant proceedings are only by way of improvement in respect of same cause of action-Defence sought to be put forth relating to cheque and other documents having been obtained by force, cannot be accepted as a probable defence when respondent successfully discharged initial burden cast on him-Appeal dismissed.(Paras 11, 17 and 19)"
(20) The Hon'ble Supreme Court in Judgment in a case of Rangappa V/s Mohan in para no. 14 observed as follows:-
"In the light of these extracts, we are in agreement with the respondent/ claimant that presumption mandated by section 139 of the act does indeed include the existence of a legally enforceable debt or liability. To that extent the impugned observations in Krishnajanardhana Bhat case may not be correct. However this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstance therein. As noted in the citations, this is ofcourse in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the 16 Cri Appeal No.643/2024 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."
(21) In the decision of Hon'ble Supreme Court reported in 2019(1) DCR 401 between Bir Singh V/s Mukesh Kumar it is held that a meaningful reading of the provisions of the Negotiable Instrument Act including, in particular, sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to he payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of section 138 would be attracted. In my humble view, the principles of these cited decision is aptly applicable to the present case because PW1 in his examination in chief clearly deposed regarding accused issuing Ex.P2 cheque towards discharge of legally enforceable debt. Further, in the judgment of Hon'ble Supreme Court in a case of Sumeti Vij V/s M/s Paramount 17 Cri Appeal No.643/2024 Tech Fab Industries, wherein it is held that to rebut the presumption, facts must be proved by the accused on a preponderance of probability. In the decision of the Hon'ble High Court of Karnataka in M Ramesh Kumar Case wherein in para No.5 observed that section 138 of N.I. Act, on proof of issuance of the cheque, the onus shifts to the accused to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of section 138 of N.I. Act. In the decision of Hon'ble High Court of Karnataka in the case of Sitaram Gouda A V/s Isbu Kunhammade it is held that, accused not disputing issuance of cheque- but taking inconsistent stand later- accused not initiating any proceedings as regards misuse, or forgery of cheque and making of wrongful claim- except denial, accused not proving his case beyond reasonable doubt as obligation was on him to do so when he took a special plea.
(22) On perusal of trial court records, the trial court has rightly drawn presumption under S.139 of N.I. Act, by following three ingredients as laid down by the Hon'ble Supreme Court in Rangappa Vs Mohan reported in 2010 18 Cri Appeal No.643/2024 SC 1898. Section 139 of N.I. Act empowers the court to presume that holder of cheque received it for discharge of any liability enforceable debt or liability. Burden is on the accused to rebut the said presumption.
(23) Section 118 of The Act reads thus:
118. Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:--
(a) Consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration (24) Further, Section 138 of The Act reads thus:
138. Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with 19 Cri Appeal No.643/2024 imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.-- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
(25) Further, Section 139 of The Act reads thus:
139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
(26) Section 118 of The Act pertains to presumption of negotiable instrument which mandates 20 Cri Appeal No.643/2024 that 'unless the contrary is proved.' Similarly, Section 139 of The Act also mandates that 'unless the contrary is proved.' Therefore, it has to be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge in whole or in part of any debt or liability. Needless to say that the presumption contemplated under Section 139 of the Act is rebuttal presumption. However, the onus of proving that the cheque was not issued towards discharge of any debt or liability is on the accused. But in this case, the accused has failed to rebut the presumptions available to complainant u/S.139 of NI Act. It is relevant to cite the decision of Hon'ble Supreme Court in the case of Sunil Todi and others V/s State of Gujurat and another and in judgment of Hon'ble High Court of Karnataka which are reported in 2021(2) KCCR SN 119 (DB), Judgment reported in 2006 (5) KLJ 323 and reported in 2006(3) KLR
333. When the cheque issued in blank, the holder of the cheque has authorized to fill the amount due.
(27) Further, The Hon'ble Apex Court in (2012) 13 SCC 3123 (Laxmi Dyechem v. State of Gujarat) has held thus:
21
Cri Appeal No.643/2024 "It has to be presumed that the cheque was issued in discharge of debt or other liability but the presumption could be rebutted by adducing evidence. The burden of proof was however on the person who wanted to rebut the presumption. However, this presumption coupled with the object of Chapter XIV of The Act leads to the conclusion that by countermanding payment of post dated cheque party should not be allowed to get away from the penal provision of Section 138 of The Act. "
(28) The complainant has followed the provision u/S.138 & 142 of NI Act. Ex.P2 cheque dated 26.08.2021 on presentation of Ex.P2 to the bank same came to be dishonoured as per Ex.P3 endorsement that 'A/c Blocked'.
Ex.P2 presented to the bank within a period of its validity. Soonafter receipt of Ex.P3 bank endorsement dated 27.08.2021 the complainant issued legal notice to the accused as per Ex.P4 on 16.09.2021 which is within 30 days from the ate of receipt of bank endorsement. The complainant had given 15 days time to the accused to pay the cheque amount. The complainant has filed this complaint before the trial court on 30.10.2021, which is within 30 days from the date of cause of action. Thereby the complainant has followed provision u/S/138 & 142 of NI Act. Even though the accused has taken the defence in 22 Cri Appeal No.643/2024 Ex.P6 reply notice that he has obtained hand loan of Rs.4 lakhs only from the complainant, at that time, the complainant procured his cheque and thereafter even though he had repaid the amount the complainant did not return the cheque in turn he has filed his complaint, in order to substantiate such contention taken by the accused he has not stepped into witness box and not produced any documents. Since the accused did not dispute Ex.P2 is of his bank account and Ex.P2(a) is his signature the trial court has rightly come to the conclusion that the accused has committed offence punishable u/S/138 of NI Act by appreciating the evidence of PW 1 and documents Ex.P1 toP6. The accused has failed to rebut the presumption available to the complainant u/S. 139 & 118 of NI Act. The trial court rightly convicted the accused for the offence u/S.138 of NI Act.
(29) The trial court on proper appreciation of the evidence on record has rightly come to the conclusion that the accused has committed offence punishable u/S.138 of NI Act. The accused has failed to rebut presumption available to the complainant u/S.139 & 118 23 Cri Appeal No.643/2024 of NI Act. There is no infirmity in the impugned judgment of conviction and sentence passed thereon and warrants no interference at the hands of this court.
(30) Considering on re-appreciation of entire evidence and after perusal of entire records, this court is of the opinion that there is no infirmity in the order passed by the trial court in C.C. No.35537/2021. Hence, I answer point No.1 & 2 in the negative.
(31) POINT NO.3:- In view of my findings on point No.1 and 2, I proceed to pass the following.
ORDER The appeal filed by the appellant/ accused U/s.374 [3] of Cr.P.C. is hereby dismissed.
The judgment of conviction and sentence passed by the learned XXI ACMM, Bengaluru, in C.C.No.35537/2021 dated 05.12.2023 is hereby confirmed.
The office is directed to send back TCR forthwith to learned XXI ACMM, Bengaluru along with a copy of this judgment.
[Dictated to the SG-I, transcribed and typed by him, corrected and then pronounced in the open court on this the 10th day of FEBRUARY 2026] (MOHAN PRABHU), LV Addl. City Civil & Sessions Judge, Bengaluru. (CCH-56)