Bangalore District Court
Examined As Pw-1 And Got Marked Ex.P1 To ... vs Examined Himself As Dw.1. No Documents ... on 6 May, 2023
1 CC.4410/2018( 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.4410/2018
2.Name of the Complainant: Aditya Enterprises
No.96, 2nd cross
KEB Layout, Sanjaynagar
Bengaluru- 560 094.
Represented by its
Power of Attorney Holder
Mr. Pradeep Kumar
aged about 49 years.
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.4410/2018( 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 is engaged in the business of Cement. The
accused approached the complainant seeking financial assistance of
Rs.3,25,000/- for his personal commitments. Accordingly during
the month of April 2017, the complainant paid the said amount to
the accused by way of cash on the condition that the accused
would repay it within six months along with interest. The accused
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agreed to the said condition and assured the complainant that he
would issue a cheque for repayment on due date along with
interest. On the expiry of six months, the accused failed to return
the amount and when the complainant requested for repayment,
the accused issued a cheque bearing No.000850 dated 20.12.2017
for Rs.3,57,350/- drawn on ICICI Bank, Kamanhalli branch,
Bengaluru in favour of the complainant. On presentation of the
said cheque for encashment, it was dishonoured for the reasons
'Payment stopped by the drawer' on 21.12.2017. 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.1829/2018. 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
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
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the accused in the language known to him. He pleaded not guilty
and claimed to be tried.
4. During trial the Power of Attorney holder of the
complainant examined as PW-1 and got marked Ex.P1 to P9. The
statement of the accused U/s. 313 of Cr.P.C. was recorded. The
accused examined himself as DW.1. No documents are marked 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 cheque bearing No.000850
dated 20.12.2017 for Rs.3,57,350/- drawn on
ICICI Bank, Kamanhalli branch, Bengaluru
towards the discharge of legally enforceable
debt/liability and on its presentation for
encashment, it was dishonored with an
endorsement "Payment Stopped by the
Drawer" and even after the service of legal
notice, the accused 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?
5 CC.4410/2018( J)
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:-
(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;"
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"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
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.
7 CC.4410/2018( J)
10. Under the light of position of the law, I have perused
the complaint and the evidence placed on record. The SPA holder
of the complainant in support of 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 is the SPA. On perusal
of Ex.P1, it is found that the Adithya Entrprises is standing in the
name of Neelam Gattani and she executed SPA in favour of her
husband conduct the case on behalf of Adithya Enterprises. Ex.P2
is the cheque bearing No.000850 dated 20.12.2017 for
Rs.3,57,350/- drawn on ICICI Bank, Kamanhalli branch, Bengaluru
in favour of the complainant. Ex.P1(a) is the signature of the
accused. Ex.P3 is the bank return memo dated 21.12.2017 with
shara "Payment Stopped by the Drawer". Ex.P4 is the office copy
of Legal Notice dated 09.01.2018 issued by the complainant to the
accused demanding repayment of the cheque amount. Ex.P5 & 6
are the postal receipts for having issued the notice through RPAD
to the accused. Ex.P7 is the postal acknowledgment for having
served the notice on the accused on 12.01.2018. Ex.P8 is the
postal envelope, which has been returned with shara 'Left' on
10.01.2018. Ex.P9 is the lost article report. On perusal of Ex.P9, 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
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loss of cheques is shown as Bengaluru. However the cheque
number of cheque in question is not mentioned in it.
11. On perusal of the documents, it is clear that the
cheque at Ex.P1 bearing No.000850 dated 20.12.2017 for
Rs.3,57,350/- drawn on ICICI Bank, Kamanhalli branch, Bengaluru
issued in favour of the complainant were presented within its
validity. Ex.P3 is the bank endorsement with shara "Payment
Stopped by the Drawer" dated: 21.12.2017. In the case of Laxmi
Dyechem v. State of Gujarat , reported in (2012) 13 SCC 375
the Hon'ble Supreme Court held the expression "amount of money
... is insufficient" appearing in Section 138 of the Act is a genus
and dishonour for reasons such as "account closed", "payment
stopped", "referred to the drawer" are only species of that genus.
Just as dishonour of a cheque on the ground that the account has
been closed is a dishonour falling in the first contingency referred
to in Section 138, so also dishonour on the ground that the
"signatures do not match" or that the "image is not found",
would constitute a dishonour within the meaning of Section 138 of
the Act. In view of the ratio laid down in the Laxmi Dyechem
case, the endorsement 'payment stopped by drawer' also attracts
the provision u/sce.138 of N.I Act. Further in the case of MMTC
Ltd. v. Medchl Chemicals and Pharma (P) Ltd., reported in
(2002) 1 SCC 234 the Hon'ble Supreme Court held that A
complaint under Section 138 can be made not only when the
cheque is dishonoured for reason of funds being insufficient to
honour the cheque or if the amount of the cheque exceeds the
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amount in the account, but also where the drawer of the cheque
instructs its bank to "stop payment". If the accused shows that in
his account there were sufficient funds to clear the amount of the
cheque at the time of presentation of the cheque and that the
stop-payment notice had been issued because of other valid
causes, then offence under Section 138 would not be made out.
Therefore the burden is on the accused to prove that he had
sufficient balance as on the date of presentation of the cheque and
he had issued stop payment for any other valid reason. He failed
to produce the bank statement to show that he had sufficient
balance. He also failed to produce document in respect of the
'stop payment' request made by him to the bank. If at all the stop
payment request document is produced, it would reflect the reason
for stop payment. The accused withheld the document and
therefore adverse inference can be drawn that if such document is
produced, it would go against him. Therefore under the facts of
the case, the endorsement payment stopped by drawer also attracts
the provision u/sec.138 of N.I Act. Ex.P4 is the office copy of
Legal Notice dated 09.01.2018 and it was issued within time from
the date of bank endorsement. The notice was served on the
accused on Shivamogga address on 12.01.2018 as per ExP.7 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.8. 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
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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. 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 received
the notice. In the case of C.C. Alavi Haji v. Palapetty
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.7 and it is deemed to have been served on
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the accused as per Ex.P.8. 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,
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
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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
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
in this case and the complainant in other case (CC.No.4409/2018)
are his friends. The complainant in CC.No.4409/2018 is working as
attender in his office. He used 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 cheque were missing. He asked about the same to the
complainant in CC.No.4409/2018 for which the complainant told
him that he did not know about it. One month after such
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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 in question was also in the said bag but he did
not know the number of the cheque and therefore he did not file
complaint in respect of the loss of the said cheque. He called the
bank and requested for stop payment. The blank cheque is
pertaining to his account but the signature and the contents are
not belonging to 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.
13. The counsel for the complainant cross examined DW.1
and it was elicited in the cross examination of DW.1 that he knew
the complainant Adithya Enterprises from past 4 to 5 years. He
used to go to the office of Adithya Enterprises. He admitted the
lost article report shown to him during the cross examination and
it was marked as Ex.P9 on his admission. He admitted that the
cheque number of cheque in question is not mentioned in the
Ex.P9. He admitted that he did not give police complaint either in
respect of loss of cheque in question or theft of cheque in
question. He has not taken any legal action against the
complainant for having misused the cheque or fabricating the
cheque.
14 CC.4410/2018( J)
14. The accused denied the signature in the cheque 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 accused used to got to the office of
complainant. He stated in his chief examination that he searched
his bag in August and September-2017 and found that 5-6 cheque
were lost. He asked the complainant in CC.No.4409/2018 but the
complainant did not know about it. It shows that the accused has
suspicion on the complainant in CC.No.4409/2018 about loss of his
cheque. 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 Ex.P9 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. Therefore the
versions of the accused are inconsistent and contradictory. It is
already observed above that he had suspicion on the complainant
in CC.No.4409/2018 in respect of the lost cheques. However when
he was cross examined and during the cross examination, he was
confronted with the lost article report at Ex.P9 and when he was
asked about Ex.P9, DW.1 stated that the cheque number of cheque
in question is not mentioned in the Ex.P9. He did not give police
complaint either in respect of loss of cheque in question or theft
of cheque in question. He has not taken any legal action against
the complainant for having misused the cheque or fabricating the
15 CC.4410/2018( J)
cheque. After the receipt of notice, it came to the notice of the
accused that the lost cheque is with the complainant but he failed
to take action against the complainant for misuse of cheque. 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 cheque. He failed to issue reply notice. Though he called
the bank and requested for stop payment, he failed to prove the
reason for such stop payment by producing the document. 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 cheque 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.
15. Further the accused himself stated in the defence
evidence that the signature in the cheque does not belong to him.
As per his version the signature is forged. He prayed to refer the
cheque to hand writing expert in his examination chief itself but
he did not take any steps to send the cheque 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.328/2019 and the case was remanded by the
Hon'ble High Court of Karnataka by observing that the trial Court
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disposed off the case on the point of the power of attorney holder
has no knowledge of the transaction and his evidence is not
sustainable and the trial Court has not considered the merits of
the case. The Hon'ble High Court remanded the matter with the
direction to re heard and dispose of the matter in accordance with
law. After the remand the matter was restored. Even though the
accused had opportunity to send the cheque to hand writing expert
for his opinion on the signature in the cheque, the accused failed
to take any steps. The complainant filed application and took steps
to send the cheque to the hand writing expert for his opinion on
the signatures in the cheque in question. The hand writing expert
gave the opinion that the admitted signatures and disputed
signature are authored by the same person and there is no
characteristics of forgery in the signature made in the cheque.
Expert report is on the record and it discloses that the disputed
signature in the cheque at Ex.P2 is marked as S1 and the admitted
signatures in the admitted signatures in the statement of the
accused u/sec.313 of Cr.P.C are marked as A1 & 2, the admitted
signatures in examination in chief of DW.1 are marked as A3 to 5,
the admitted signatures in the cross examination of DW.1 is
marked as A6, and the admitted signature in the vakalath is
marked as A7. The expert made observations of the admitted
signatures at A1 to 7 and disputed signatures at S1 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 A7 collectively demonstrate the characteristics of
the signature S1. The signature S1 was not observed with any
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characteristics of the forgery. Hence, I am of the opinion that all
the signatures S1 and A1-A7 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 A7 are not directly
matching with the signature at S1, which shows that the accused
tried to make the signature differently and therefore the expert
opined that the cumulative effect of signatures at A1 to A7
matches with the signature at S1. Further even though he signed
the cheque, he denied his signature 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
signature found in the cheque are that of the accused and that the
accused denied the signature knowing fully well that the signature
is his signature. Therefore the defence of the accused that
signature is forged is not probable one. Once the signature is
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.
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16. 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 he gave the amount to the accused on
5.04.2017. He did not mention about the same in the notice,
complaint and examination in chief. There are no witnesses at that
time. The cheque was obtained in the name of Adithya
Enterprises. The accused asked financial assistance for the medical
expenses of his sister and father. He gave the amount of
Rs.3,25,000/- by way of cash. He arranged the amount from his
friends by name Kumar and Reddy. He took Rs.1,25,000/- from
Kumar and Rs.75,000/- from Reddy. He did not mention about the
rate of interest in the complaint. When it was asked to PW.1 that
whether he can examine the witnesses, he answered that he had
to ask them. He took Rs.2,00,000/- from friend and he had
Rs.1,25,000/- with him. He did not produce the document to show
that so much amount was in his house. There is no agreement in
respect of the transaction. He did not produce any documents to
show that he had the amount in the account to lent the accused.
The accused issued the cheque in November 2017. He did not
know that the accused issued stop payment six months prior to the
date of cheque. It was suggested to PW1 that Adithya Enterprises
is in the business of cement and the accused used to take the
dealership from the Adithya Enterprises and used to sell the
cement to the customers. 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
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whispered anything about the financial capacity of the complainant
in his defence evidence.
17. 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
20 CC.4410/2018( J)
reported in (1999) 3 SCC 35 albeit in a civil case laid
down the law in the following terms:
"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
21 CC.4410/2018( J)
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
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;
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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
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
23 CC.4410/2018( J)
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 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
24 CC.4410/2018( J)
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 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 cheque, 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
25 CC.4410/2018( J)
proportionality should guide the construction and
interpretation of reverse onus clauses and the
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
26 CC.4410/2018( J)
summarise the principles enumerated by this Court in
following manner:
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.
27 CC.4410/2018( J)
25.5. It is not necessary for the accused to come in
the witness box to support his defence.
(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 cheque and his signature on the cheque and
that the cheque in question was issued for the second time,
after the earlier cheque 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 cheque 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
cheque were dishonoured. Therefore, both the courts
28 CC.4410/2018( J)
below have materially erred in not properly
appreciating and considering the presumption in favour
of the complainant that there exists legally enforceable
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
29 CC.4410/2018( J)
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
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."
30 CC.4410/2018( J)
(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:-
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
31 CC.4410/2018( J)
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
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
32 CC.4410/2018( J)
of Kumar Exports (supra), wherein it was further held that a
bare denial of passing of consideration would not aid the
case of accused.
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
33 CC.4410/2018( J)
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
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.
18. 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
34 CC.4410/2018( J)
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
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.
19. 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
knew each other. 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 cheque were missing. When the cheque was presented by the
complainant for encashment, he came to know that the cheque has
35 CC.4410/2018( J)
been taken by the complainant in CC.No.4409/2018 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 in CC.No.4409/2018, the signatures
of the accused were forged and the cheques of the accused were
misused by the complainant in CC.No.4409/2018 in collusion with
the complainant in this case, since they are friends, without there
being any transaction between him and the complainant in this
case. However he has not taken any action against the
complainant in this case and the complainant in CC.No.4409/2018
for having stolen the cheques and for having forged his signatures.
As per examination of chief of accused and Ex.P9, the accused
came to know about the missing of cheque during August,
September and October, 2017. He issued stop payment instructions
to the bank but he failed to produce any documents to prove the
reason for which the stop payment instructions were made. He
had suspicion on the complainant in CC.No.4409/2018 as per the
evidence on record. As per the examination in chief, the accused
came to know about the lost cheque being with the complainant
after the presentation of the cheque by the complainant for
encashment. The notice was served on the accused but he failed to
take action against the complainant for misuse of cheque. 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 cheque. 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
36 CC.4410/2018( J)
knowledge. No prudent man would keep quiet if his cheque is
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 circumstances. Hence the
accused failed to prove his defence as the probable one by
preponderance of probabilities.
20. It is the defense of the accused that there is no
transaction as alleged in the complaint and the complainant
misused the lost cheque, which was 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 signature in the cheque is that of
the accused but the accused deliberately denied the signature in
the cheque 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 cheque
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
37 CC.4410/2018( J)
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.P2, it is found that the signature and the
contents are written with same ink and at the same time except
the name of the complainant and 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 cheque 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
38 CC.4410/2018( J)
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."
21. 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.3,57,350/-. On the other hand, the complainant has proved that
the accused issued the cheque for the legally enforceable liability;
the cheque 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.
22. 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:-
39 CC.4410/2018( J)
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.3,65,000/- (Rupees Three Lakhs Sixty Five Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.3,60,000/- (Rupees Three Lakhs Sixty 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.3,000/- 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.
40 CC.4410/2018( J) ANNEXURE Witnesses examined for the Complainant:-
PW.1 : Sri. Pradeep Kumar Documents marked for the Complainant:-
Ex.P1 : SPA
Ex.P2 : Cheque
Ex.P2(a) : Signature of the accused
Ex.P3 : Bank endorsement
Ex.P4 : Office copy of the legal notice
Ex.5 & 6 : 2 Postal receipts
Ex.P7 : Postal acknowledgment
Ex.P8 : Postal envelope
Ex.P9 : Lost Article Report
Witnesses examined For Defence:-
DW.1 : Sri. Adarsha N.U Documents marked for Defence:-
Nil (Lokesh Dhanapal Havale), XV Addl.CMM., Bengaluru.
41 CC.4410/2018( 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.3,65,000/- (Rupees Three Lakhs Sixty Five Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.3,60,000/- (Rupees Three Lakhs Sixty 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.3,000/- 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.
42 CC.4410/2018( J)