Bangalore District Court
Aditya Ganapa vs M/S Religare Finvest Limited on 30 December, 2025
KABC0A0006352023
IN THE COURT OF THE LXXIII ADDL. CITY CIVIL &
SESSIONS JUDGE AT MAYO HALL BENGALURU,
(CCH-74)
Present:
Smt. Anitha.N.P., B.A.L., L.L.M.,
LXXIII Addl. City Civil & Sessions Judge,
Bengaluru.
Dated this the 30th day of December 2025
Crl. Appeal. No.25037/2023
Appellant Sri. Aditya Ganapa
Accused:- Plot No.81/1, Old Marredpally,
Hyderabad, Andhra Pradesh,
Pin 500026
(By Sri. Kishan Dutt- Adv.,)
V/s
Respondent/ M/S Religare Finvest Limited
Complainant: No.1314, 1st and 2nd Floor,
Double Road, HAL 2nd Stage,
Next To KHT Motors,
Indiranagar,
Bengaluru-560038
Also At. M/S India Resurgence
ARC Pvt. Ltd., 3rd Floor, No.1133,
2 Crl.Appeal No.25037/2023
HAL 2nd Stage, Indiranagar,
Bangalore-560038
(Exparte)
JUDGMENT
This is an Appeal filed by Accused under Section 374 of Cr.P.C., being aggrieved by the Judgment dated 30.12.2022 passed in C.C. No.58569/2018 on the file of XXXIII ACMM, Bengaluru, convicting him for an offence punishable under Section 138 of the Negotiable Instruments Act [hereinafter referred to as 'NI Act', for brevity] and sentencing him to pay fine of Rs.16,55,000/- and in default of payment of fine, to undergo simple imprisonment for 6 months. Out of the fine amount, a sum of Rs.16,50,000/- is directed to be paid to the respondent/complainant as compensation and remaining Rs.5,000/- is ordered to be remitted towards State expenses.
2. For the sake of convenience the parties hereinafter will be referred to with their ranking assigned before the trial court. The appellant is the accused and the respondent is the complainant before the trial court.
3 Crl.Appeal No.25037/20233. Brief facts of the complainant before the trial court is as under:-
The Complainant is company carrying business of advancing loan and credit facilities to its customers. In the course of its financial service it introduced various loan facilities for the benefit of its customers. The accused company approached complainant seeking mortgage loan facilities (LAP). The complainant sanctioned loan and the accused agreed to repay the loan as per the terms of the facility. As a security towards said facilities the accused represented by its directors have entered into loan agreement. The accused No.1 to 3 are partners of accused No.1, the accused was supposed to pay the loan amount as agreed. So as to discharge the liability the accused No.1 issued cheque bearing No. 551911 dated 20.01.2016 for a sum of Rs. 15,17,361/- to the complainant. The complainant presented the said cheque through its banker and the same returned unpaid as "Refer to Drawer" on 27.01.2016. The complainant then issued demand notice on 22.02.2016 to the accused. The said notice is served on 26.02.2016. The accused have not given reply nor paid the amount. Thereby, Appellant/accused has committed the offense punishable under Sec.138 of Negotiable Instruments Act. Thereafter 4 Crl.Appeal No.25037/2023 the Complainant approached the Trial Court for appropriate legal action against the Accused.
4. Pursuant to summons the Accused entered appearance through his Counsel before the Trial Court. The substance of the accusation was read over and explained to the Accused in the language known to him. The Accused pleaded not guilty and claimed to be tried. The authorized signatory of the Complainant got examined himself as PW.1 and got marked Ex.P.1 to Ex.P.12 documents and closed his side. The Accused got examined hisself as DW1 and one document as per Ex.D1 is marked on his behalf.
5. The trial court after hearing the counsel for Complainant and accused, convicted the Accused for the offence punishable U/Sec.138 of NI Act vide Judgment dtd. 30.12.2022.
6. Feeling aggrieved by the said judgment of conviction, the Accused is in appeal on the following grounds:
1. The impugned Judgment is illegal, irregular and same is liable to be set aside. The trial court has not considered that the 5 Crl.Appeal No.25037/2023 complainant has to prove his case and has to prove the existence of legally enforceable debt. However, the complainant not produced any loan agreement document to show the existence of said agreement in respect of loan.
2. The trial court also not considered that the cheque in question is non-CTC cheque signed by accused as security during the time of availing loan. The complainant being non banking finance company (NBF) should aware of circular of RBI and they should not have accepted the cheque if it is given in 2016. The cheque in question was taken during the year 2012 while availing the loan and hence the claim is time barred debt.
3. The reasons of trial court in respect of the CTC cheques are not correct. The legal notice is not served on accused. Hence, there is no cause of action to the complainant. The finding of the trial court regarding the service of notice is not correct.
4. The complainant has to produce documents regarding the part payment and the due payment. The accused taken loan from Religare Finvest Limited and the complainant company on record is stranger to accused and it is has no locus standi to continue the case.6 Crl.Appeal No.25037/2023
5. When there is a endorsement stating that 'refer to drawer' then there is no reason to initiate proceeding u/sec.138 of NI Act. M/s India Resurgence ARC Pvt. Ltd. entered into the shoes of M/S Religare Finvest Limited filed an amendment to the complaint and in the new complaint they have clearly stated that notice to the accused returned un-served Under the above grounds the Appellant sought for acquittal by allowing the appeal and also to set-aside the impugned Judgment.
7. Heard both sides. Counsel for appellant apart from addressing arguments has also relied upon following citations and I have perused the same.
8. The learned counsel for Appellant has relied upon following citations:
i) Crl.R.C.No.727/2016 (R.Mathiyalagan Vs. Jayamani)
ii) (2002) 9 SCC 415 (Shakti Travels and Tours Vs. State of Bihar and another)
iii) AIR 2008 SC 2010 (T.Nagappa Vs. Y.R. Muralidhar) 7 Crl.Appeal No.25037/2023
iv) AIR 2014 SC 3057 M/s. Ajeet Seeds Ltd., Vs. K. Gopala Krishnaiah)
v) AIR 2006 SC 2179 (D.Vinod Shivappa Vs. Nanda Belliappa)
vi) AIR 2013 SC 3726 (Subodh Nath and Anr. Vs. State of Tripura)
8. Perused the evidence, documents on record and also impugned Judgment of conviction passed by the Trial Court.
9. On re-appreciation of the evidence, documents on record, the following points would emerge for the consideration of this court.
1. Whether the accused proves that the complainant has no locus standi to file this complaint as against accused?
2. Whether the Appellant proves that the cheque in question was not issued towards any legally recoverable debt?
3. Whether the Judgment of conviction passed by the Trial Court calls for interference by the hands of this court?
8 Crl.Appeal No.25037/20234. What Order?
10. My finding on the above points are as under:
Point No.1 : In the Negative.
Point No.2 : In the Negative.
Point No.2 : In the Negative.
Point No.3 : As per final order for the following:
REASONS
11. POINT NOs.1 to 3:-
Since these points are interlinked, in order to avoid repetition of facts the above points have been taken up together for consideration.
12. Before re-appreciating the evidence on record, it is necessary to refer some of the latest rulings of the Hon'ble Apex Court reported in 2019 (3) KCCR 2473 (SC) (Basalingappa V/s Mudibasappa), the Hon'ble Apex Court while considering several earlier rulings on the offence U/Sec.138 of NI Act and also on the presumption U/Sec.118 and 139 of NI Act, at Para 23 was pleased to observe as follows:
23. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:-9 Crl.Appeal No.25037/2023
(i) 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.
(ii) 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.
(iii) To rebut the presumption, it is open for the Accused to rely on evidence led by him or 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.
(iv) That it is not necessary for the Accused to come in the witness box in support of his defence, Sec.139 imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the Accused to come in the witness box to support his defence.
13. In another ruling reported in AIR 2010 SC 1898 (Rangappa V/s Mohan), observed as under:-
"Existence of legally recoverable debt or liability- The presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. 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 10 Crl.Appeal No.25037/2023 can be no doubt that there is an initial presumption which favours the Complainant. 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 Accused/defendant cannot be expected to discharge an unduly high standard or proof. 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. The Accused can rely on the materials submitted by the Complainant and it is conceivable that in some cases the Accused may not need to adduce evidence of his/ her own."11 Crl.Appeal No.25037/2023
14. Keeping in view the broad principles laid down by the Hon'ble Apex Court, let me re-appreciate the evidence and documents on record.
15. The definite case of the Complainant is The Complainant is company carrying business of advancing loan and credit facilities to its customers and the accused company approached complainant seeking mortgage loan facilities (LAP). The complainant sanctioned loan and the accused agreed to repay the loan as per the terms of the facility. As a security towards said facilities the accused represented by its directors have entered into loan agreement. The accused No.1 to 3 are partners of accused No.1, the accused was supposed to pay the loan amount as agreed. So as to discharge the liability the accused No.1 issued cheque bearing No. 551911 dated 20.01.2016 for a sum of Rs. 15,17,361/- to the complainant. The complainant presented the said cheque through its banker and the same returned unpaid as "Refer to Drawer" on 27.01.2016. The complainant then issued demand notice on 22.02.2016 to the accused. The said notice is served on 26.02.2016. The accused have not given reply nor paid the amount.
12 Crl.Appeal No.25037/202316. The Complainant in order to prove its case examined its authorized signatories as PW.1 and 2 and he got marked the documents at Ex.P.1 to Ex.P.12. On the other hand, the Accused got examined himself as DW1 and he has produced and got marked one document as per Ex.D1.
17. Let me go through the documentary evidence placed by the Complainant in this case. Ex.P.1 is notarized copy of power of attorney, Ex.P2 is cheque dated 20.01.2016, Ex.P.3 is Bank memo dated 27.01.2016, Ex.P4 is Office copy of Legal Notice dated 22.02.2016, Ex.P5 to 7 are 3 Postal track copies, Ex.P.8 to 10 are letter to the Postal authority, Ex.P.11 is copy of POA dated 26- 07-2021, Ex.P12 is statement of account. The accused has relied upon letter issued by his banker as per Ex.P1.
18. The present complaint has been filed before the Trial Court on 04.04.2016. On perusal of all the above documents with date of filing of the complaint and dates of documents, it is clear that before filing of the complaint, the Complainant has complied with all the requirements of Section 138 of the NI Act and the present complaint is 13 Crl.Appeal No.25037/2023 filed well within the period of limitation and it is in accordance with the provisions of NI Act.
19. Now let us go through the cross-examination of PW2-Ragini M.K. she deposed that she joined complainant company on 05.10.2020, she do not know whether Bijay Kumar Mahana filed this complaint without checking the records of complainant company. She further deposed that she is having personal knowledge about the transactions. She further deposed that the notice caused to the accused had been served. This PW-2 further deposed that Ex.P12 is system generated copy maintained by their company and there is seal and signature of authorized representative of complainant.
20. On perusal of the evidence of accused this accused during the course of evidence filed his chief examination affidavit stating that the claim of complainant is time barred debt, he already discharged the loan amount and the complainant has not given receipts for any cash payments. He availed loan of Rs.12 lakhs from M/S. Religare Finvest Limited. The present company on record is M/s. India Resurgence ARC Pvt. Ltd., and same is a stranger and has no locus standi to 14 Crl.Appeal No.25037/2023 continue the case. At the time of borrowing the loan the said M/S. Religare Finvest Limited has taken10 blank signed cheques from him. However inspite of discharge of entire loan they have not returned his cheques.
21. This accused further deposed that the said cheques were taken as security in the year 2011. The present case is filed in the year 2016. The cheque in question is non-CTS cheque. As there is advise by the RBI to use only CTS cheque and the cut off date was fixed as 31.07.2013. He was not served with legal notice, a certificate also issued by his banker in respect of the questioned cheque.
22. During the course of cross-examination this accused deposed that presently he is residing in flat No.81/1, old Mareddapalli, Sikunderabad, Andhra Pradesh. The complainant approached him for the purpose of loan in the year 2011. In the same year he received Rs.12 lakhs from the complainant and it is short term loan. The monthly premium was Rs.2,10,000/-. He repaid the entire loan amount of Rs.12,60,000/-by way of cash.
15 Crl.Appeal No.25037/202323. This DW-1 further deposed that he repaid the entire loan amount and he has no document to show that he repaid the entire amount by way of cash. This DW-1 further deposed that Ex.P2 cheque is belongs to him. He received the summons from the trial court.
24. From the careful consideration of the entire evidence of complainant and accused it is clear that it is not in dispute that the Ex.P2 cheque is pertains to the account of accused and the signature thereon is that of accused. It is also not in dispute that this accused has borrowed loan of Rs.12 lakhs from the complainant company i.e., M/S. Religare Finvest Limited. That apart in respect of the financial capacity of complainant is concerned there is no dispute.
25. With this factual aspects, firstly the court has to appreciate whether there are materials to ascertain the existence of legally enforceable debt. At the outset, the Court has to appreciate whether Section 138 of The Act is made out. When the cheque is produced before the Court and when it came to be dishonoured for funds insufficient or for any other reason and when the legal notice was issued within the statutory period then the presumption 16 Crl.Appeal No.25037/2023 available under Sections 118 & 139 of The Act is made out in favour of the complainant. The provisions of Section 118 of The Act are separated from the general rule applicable to the contracts and it provides presumption in favour of the party. The said presumptions are that:
unless the contrary is proved the Court has to presume that the consideration had passed between the parties as enumerated under Section 118 of The NI Act. Likewise, unless the contrary is established Section 139 of the Act clearly establishes that the holder of the cheque had received the same towards discharge of the legally enforceable debt either towards whole or partial liability. The said presumptions have to be read conjointly in order to ascertain whether the ingredients are made out. Further, the said presumptions are rebuttable and the same has to be appreciated with the factual aspects of the case. The impugned cheque at Ex.P2 was drawn during the period of its validity and was accordingly presenting to the back and after its dishonoured notice was also issued and later on after completing all the statutory bound obligations. The complaint came to be filed. This clearly indicates that initial presumption is drawn in favour of the complainant. It is also relevant to note that the said presumption is rebuttable one and as such the defence of 17 Crl.Appeal No.25037/2023 the accused has to be appreciated in order to ascertain whether the presumption which is drawn initially in favour of the complainant has been successfully rebutted.
26. The law is well settled that the Accused need not enter the witness box to rebut initial presumption. At the same time, the defense which is taken up by the Accused is to be appreciated so as to ascertain whether the same was probable or not. Admittedly, in the instant case, the complainant has contended that M/S. Religare Finvest Limited has sold the entire rights and loans to the M/s India Resurgence ARC Pvt. Ltd which is registered asset and reconstruction company pursuant to Sec.3 of SARFAESI Act and there is a Assignment deed dated 05.11.2019. It is necessary to note that the said assignment deed is referred in Ex.P11 power of attorney.
The complainant company has executed assignment deed in favour asset reconstruction company i.e., M/s India Resurgence ARC Pvt. Ltd. It is vital to note that it is during the pendency of the case before the learned trial court the said assignment deed was came to be executed. That apart as could be seen from the trial court records on 06.04.2021 the trial court has passed order in respect of the application filed by the accused u/sec.258 r/w 18 Crl.Appeal No.25037/2023 sec.203 of Cr.P.C. which was filed seeking to stay the proceedings and to drop the proceedings and the same was came to be rejected. It is pertinent to note that the accused has not challenged the said order.
27. The complainant on record is M/S. Religare Finvest Limited and it has lodged private complaint as against the accused in respect of the offence punishable u/sec.138 of NI Act. It is in view of the assignment of rights and also titles of the complainant company to the M/s India Resurgence ARC Pvt. Ltd. the same is stepped in to the shoes of the complainant and thereby prosecuted the case of complainant. Hence, the contention of the accused that the complainant has no locus standi and PW-2 has no locus standi to continue the case does not hold water.
28. It is from the careful consideration of the evidence of accused, he himself in clear terms admits that he borrowed loan Rs.12 lakhs from complainant company and he further contended that he has repaid the said loan amount of Rs.12,60,000/- by way of cash. Hence it is admitted fact that the accused borrowed a sum of Rs.12 lakhs from the complainant.
19 Crl.Appeal No.25037/202329. The accused has taken defence that he paid Rs.12,60,000/- to the complainant by way of cash that too in 6 installments of Rs.2,10,000/- the burden is on the accused to establish the said fact by placing cogent and convincing evidence. As could be seen from the trial court record and so also from the contention of the accused before this court even it is not in dispute that this accused borrowed loan of Rs.12 lakhs by way of Loan against property.
30. It is vital to note that when the accused takes contention about repayment of Rs.12,60,000/- in 6 installments that too to a complainant which is a limited company as per the loan agreement the complainant being a company will definitely going to issue a receipt or acknowledgment or otherwise the accused could have insisted for issue of receipt or endorsement. The loan installment according to this accused is Rs.2,10,000/- and it is not a small amount to pay in cash. That apart as the complainant is a Limited company registered under companies Act it has to maintain his day-today accounts. Even the account statement of the accused is produced as per Ex.P12 and the same shows that this accused has borrowed the loan of Rs.12 lakhs from the complainant 20 Crl.Appeal No.25037/2023 and he has not paid the loan EMI regularly and he was due to the complainant company. The account statement marked at Ex.P12 is not denied by the accused. Though this accused cross-examined PW-1 mainly on ground of locus standi to depose on behalf of the complainant nothing was suggested as regards to the account statement. Accused though contended that Ex.P12 is system generated copy it is to be noted that at the time of marking of said Ex.P12 neither the accused nor the counsel for the accused has raised any objection for its marking. Even for the sake of arguments if it is considered that Ex.P12 is system generated account statement this accused so as to establish that he has repaid the entire loan of Rs.12,60,000/- to the complainant has not placed any scrap of paper before the trial court.
31. From the careful consideration of ocular evidence of PW-1 & DW-1 it is crystal clear that totally inconsistent stand has been taken by the accused. At one breathe the accused admits the borrowing loan of Rs.12 lakhs from the complainant. At another breathe he takes contention that he repaid the said loan of Rs.12,60,000/-by way of cash without producing any receipt for making such a payment in cash. As admitted by the accused himself the 21 Crl.Appeal No.25037/2023 EMI was Rs.2,10,000/-. If the same is considered then he should have paid the said loan within 6 months i.e., in the year 2011 or 2012 itself. If that is the case then this accused should have asked for return of his cheque from the complainant in the year 2012 itself by showing appropriate receipt/s. The accused could have issued notice to the complainant asking for return of his cheque. The above facts clearly shows that the accused has taken up a improbable defence with malafide intention.
32. It is also one more contention of the accused that the debt claimed by the complainant is time barred debt. It is necessary to note that it is not the case of the accused that the cheque Ex.P2 is not pertains to his account and it is not issued to the complainant. Ex.P2 is issued in favour of complainant by mentioning the date as 20.01.2016. The accused taken contention that at the time of borrowing the loan from the complainant the complainant collected 10 blank signed cheques which are undated. However this accused has not furnished details of the cheques which were collected by him from the complainant. Except taking bald contention this accused has not placed any evidence to establish that he has given 10 signed blank cheques to the complainant.
22 Crl.Appeal No.25037/202333. If the accused had really given 10 blank signed cheques to the complainant in the year 2011 then nothing prevented this accused to obtained necessary acknowledgment from the complainant in respect of the details of said 10 cheques and also regarding not mentioning of date and amount in the said cheques. The same also shows that the accused has come up with improbable defence so as to evade his capacity. Ex.P2 is dated 20.01.2016. the name of the complainant is mentioned by way of seal. As discussed supra it is not the case of the accused that he has not given cheque to complainant. Hence the name of the complainant in seal does not takes away the case of the complainant. The account statement at Ex.P12 shows that the loan taken by the accused is loan against property and the said loan account statement clearly shows that this accused not repaid the loan borrowed from the complainant. The loan account extract shows that the loan amount borrowed by this accused is not discharged even in the year 2016 ie., as on the date mentioned in the cheque.
34. The contention of the accused that Ex.P2 was undated and blank signed cheque is not proved by any cogent and convincing evidence. Under the circumstances 23 Crl.Appeal No.25037/2023 the contention of the accused that the claim of the complainant is time barred debt does not holds good.
35. The one more contention of the accused is that the Ex.P2 is non CTS cheque and it was issued as security at the time of availment of loan amount. According to accused a non CTS cheque is an older physical cheque and it not attracts the offence u/sec.138 of NI Act. However the said contention of the accused cannot be accepted as because it is not the defence of the accused that he had already returned or intimated his banker about his Non-CTS cheques given to the complainant. As per Ex.D1 the letter of The Cosmos Co-Op Bank Ltd., the cheque with 551901 to 551920 were collected by the accused on 30.05.2011. It is pertinent to note that it is not the case of the accused that he surrendered the said non CTS cheques or surrendered the remaining cheques to his banker. It is also not the case of the accused that he intimated his banker about presence of his non-CTS cheque/s with complainant for the purpose of security. A non-CTS cheque is also a Negotiable Instrument. The accused if he had had surrendered the said non CTS cheque immediately after the notification of the RBI in respect of non CTS cheques then the question would be 24 Crl.Appeal No.25037/2023 different. Accordingly the contention of the accused that the complainant has misused the non CTS cheque which was issued as security has no weight. Even to establish that Ex.P2 was issued in the year 2011 no evidence is placed by the accused. Hence with due respect to the principles laid down in Crl.R.C.No.727/2016 (R.Mathiyalagan Vs. Jayamani) will not come to the assistance of accused.
36. The contention of the accused that he was not served with legal notice also cannot be accepted as because the accused in his cross-examination admits that he was duly served with summons of this case from the trial court. When that being the case to the very same address the demand notice is also issued. Accordingly the contention of the accused that he was not served with notice also cannot be accepted. Hence with due respect to the principle laid down in the decision reported in 1.(2002) 9 SCC 415 ( Shakti Travels and Tours Vs. State of Bihar and another) 2.AIR 2014 SC 3057 M/s. Ajeet Seeds Ltd., Vs. K. Gopala Krishnaiah) 3.AIR 2006 SC 2179 ( D.Vinod Shivappa Vs. Nanda Belliappa) will not come to the aid of the accused as the facts and circumstances of the case on hand is entirely different and as the 25 Crl.Appeal No.25037/2023 accused himself admits the due service of summons of trial court to his address shown in the cause title of the complaint.
37. In the above case, the major defense which is taken up by the Appellant/Accused is with respect to capacity of the complainant to file this complaint and his repayment of loan due in cash in 6 installments. As noticed, the accused had not even justified the same by tendering any evidence. Per contra, the complainant has not only successively discharged his burden, but has also produced loan account extract in respect of this accused which clearly shows the borrowing of loan by this accused as against property. It is well settled that the law will not support a person who will sleep over his rights as stated in the latin maxim vigilantibus non dormientibus jura inveniut. In the instant case, with respect to the presumption and also the defense of misuse of cheque taken up by the Appellant the Accused has not rebutted the presumption. The Court has relied upon the judgment of The Hon'ble Apex Court reported in (2018)8 SCC 165 (Kishan Rao V/s Shankaregowda) wherein it has been held thus:
26 Crl.Appeal No.25037/2023Section 139 of the Act, 1881 provides for drawing the presumption in favour of holder. Section 139 is to the following effect:
"139.Presumption in favour of holder.-It shall be presumed, unless the contrary is proved, that 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."
18. This Court in Kumar Exports vs. Sharma Carpets, 2009 (2) SCC 513, had considered the provisions of Negotiable Instruments Act as Referring to 139, this Section well Evidence Court laid following in paragraphs 14, 15, 18 and 19:
Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume"
(rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference, affirmative or disaffirmative of the existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".
18. Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that 27 Crl.Appeal No.25037/2023 every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over."
19. This Court held that the accused may adduce evidence to rebut the presumption, but mere denial regarding existence of debt shall not serve purpose. Following was held in paragraph 20: "20....The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same 28 Crl.Appeal No.25037/2023 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..."
20. In the present case, the trial court as well as the Appellate Court having found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank of the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. The accused even did the not come in the presumption. The accused even did not come in the witness box to support his case. In the reply to the notice which was given by the appellant the accused took the defence that the cheque was stolen by the appellant. The said defence was rejected by the trial court after considering the evidence on regard with regard to which no contrary view has also been expressed by the High Court.
21. Another judgment which needs to be looked into is Rangappa vs. Sri Mohan, 2010 (11) SCC 441. A three Judge Bench of this Court had occasion to examine the presumption under Section 139 of the Act, 1881. This Court in the aforesaid case has held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. Following was laid down in paragraphs 26 and 27:
"26. In light of these extracts, we are in agreement with the respondent claimant that the 29 Crl.Appeal No.25037/2023 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, (2008) 4 SCC 54, 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 the17 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 defendant-accused cannot be expected to discharge an unduly high standard or proof."
22. No evidence was led by the accused. The defence taken in the reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the 30 Crl.Appeal No.25037/2023 debt or liability. How the presumption under Section 139 can be rebutted on the evidence of PW.1, himself has not been explained by the High court.
38. The sum and substance is that there is a presumption in favour of holder of cheque in due course. The accused failed to prove contrary. Lastly the Court has also appreciated the statement of Accused recorded under Sec.313 of Cr.P.C. regarding the evidence under Sec.313 of Cr.P.C., is not a bald formality. In fact, it is an opportunity rendered to the Accused to explain the incriminating materials against him. However, the Accused has stated only that his cheque is misused. But failed to rebut the presumption available in favor of complainant. Whether this Accused has taken any legal action as against the complainant in respect of collecting his cheques as security is not forthcoming. Under the circumstances, the burden of proof is successfully established by the complainant and as such, with respect to the existence of legally enforceable debt and its presumption, the Court has relied upon the judgment of Hon'ble Apex Court reported in (2019) 10 SCC 287 (Uttam Ram V. Devinder Singh Hudan and another) wherein it has been held as;
31 Crl.Appeal No.25037/202318. We find that the approach of the learned Trial Court and that of the High Court is perverse; irrational as well as suffers from material illegality and irregularity, which cannot be sustained in complaint filed under Section 138 of the Act.
19. A negotiable instrument including a cheque carries presumption of consideration in terms of Section 118(a) and under Section 139 of the Act. Sections 118(a) and 139 read as under:
"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;....
xxx xxx xxx
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."
20. The Trial Court and the High Court proceeded as if, the appellant is to prove a debt before civil court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. A dishonour of cheque carries a statutory presumption of consideration. The holder of cheque in due course is required to prove that the cheque was issued by the accused and that when the same presented, it was not honoured. Since there is a statutory presumption of consideration, the burden is on the accused to rebut the presumption that 32 Crl.Appeal No.25037/2023 the cheque was issued not for any debt or other liability.
21. There is the mandate of presumption of consideration in terms of the provisions of the Act. The onus shifts to the accused on proof of issuance of cheque to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of Section 138 of the Act which reads as under:
"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...."
22. In Kumar Exports, it was held that mere denial of existence of debt will not serve any purpose but accused may adduce evidence to rebut the presumption. This Court 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 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 33 Crl.Appeal No.25037/2023 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 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." (emphasis supplied)
23. In a judgment reported as Kishan Rao v. Shankargouda6, this Court referring to Kumar Exports and Rangappa returned the following findings:
"22. Another judgment which needs to be looked into is Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441 : (2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] . A three-Judge Bench of this Court had occasion to examine the 34 Crl.Appeal No.25037/2023 presumption under Section 139 of the 1881 Act. This Court in the aforesaid case has held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. Following was laid down in paras 26 and 27: (SCC pp. 453-54) "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 in Krishna Janardhan Bhat [Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 : (2008) 2 SCC (Cri) 166], 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 35 Crl.Appeal No.25037/2023 the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof."
24. In a judgment reported as Bir Singh v. Mukesh Kumar7, this Court held that presumption under Section 139 of the Act is a presumption of law. The Court held as under:
"20. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact as held in Hiten P. Dalal [Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 :
2001 SCC (Cri) 960] .
xxx xxx xxx
33. A meaningful reading of the provisions of the Negotiable Instruments 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 the 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.36 Crl.Appeal No.25037/2023
xxx xxx xxx
36. 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."
25. In other judgment reported as Rohitbhai Jivanlal Patel v. State of Gujarat and Another8 this Court held as under:
"18. So far the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 the NI Act is concerned, apparent it is that the accused- appellant could not deny his signature on the cheques in question that had been drawn in favour of the complainant on a bank account maintained by the accused for a sum of Rs. 3 lakhs each. The said cheques were presented to the Bank concerned within the period of their validity and were returned unpaid for the reason of either the balance being insufficient or the account being closed. All the basic ingredients of Section 138 as also of Sections 118 and 139 are apparent on the face of the record. The Trial Court had also consciously taken note of these facts and had drawn the requisite presumption. Therefore, it is required to be presumed that the cheques in question were drawn for consideration and the holder of the cheques i.e., the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the accused- appellant to establish a probable defence so as to rebut such a presumption."
xxx xxx xxx
20. On the aspects relating to preponderance of probabilities, the accused has to bring on record 37 Crl.Appeal No.25037/2023 such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its nonexistence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as 8 AIR 2019 SC 1876 envisaged under Section 118 and 139 of the NI Act.....
xxx xxx xxx
32. The result of discussion in the foregoing paragraphs is that the major considerations on which the Trial Court chose to proceed clearly show its fundamental error of approach where, even after drawing the presumption, it had proceeded as if the complainant was to prove his case beyond reasonable doubt. Such being the fundamental flaw on the part of the Trial Court, the High Court cannot be said to have acted illegally or having exceeded its jurisdiction in reversing the judgment of acquittal. As noticed hereinabove, in the present matter, the High Court has conscientiously and carefully taken into consideration the views of the Trial Court and after examining the evidence on record as a whole, found that the findings of the Trial Court are vitiated by perversity. Hence, interference by the High Court was inevitable; rather had to be made for just and proper decision of the matter."
39. To sum up it is noticed that the Accused himself has admitted the impugned cheque at EX.P2 and also its issuance is categorically admitted by him, whereas it is 38 Crl.Appeal No.25037/2023 stated that the cheque was issued to the complainant as security. There is absolutely no explanation that why he had kept quiet if the same is given to the complainant as security and even after repayment of loan why he has not collected it back and not taken any action against complainant. Admittedly there is no explanation in this regard. The same shows that the accused has not taken defence which is certain and which is probable and as such the Accused has failed to rebut the presumption. By looking into the same, the impugned judgment and order of conviction passed by the Trial Court is apt and correct and the same does not call for interference of this court. The trial court has rightly appreciated the oral and documentary evidence in proper perspective. Accordingly, I answered Point Nos.1 to 3 in the Negative.
40. Point No.3: In view of the findings on the above points the appeal filed by the Appellant deserves to be dismissed. Accordingly, I proceed to pass the following:-
ORDER The appeal filed by the Appellant U/Sec.374 of Cr.P.C., is hereby dismissed with costs.39 Crl.Appeal No.25037/2023
The Judgment of conviction passed by the Learned XXXIII ACMM, Bengaluru, in CC.No.58569/2018, dtd. 30.12.2022, is hereby confirmed.
Send back the records with a copy of this Judgment to the Trial Court.
(Dictated to the Stenographer, typed by her, corrected, signed and then pronounced by me, in the open court on this the 30th day of December 2025.) Digitally signed by ANITHA ANITHA NANJANAGUDU NANJANAGUDU PARASHIVAMURTHY PARASHIVAMURTHY Date: 2026.01.12 15:45:13 +0530 [Smt. Anitha N.P] LXXIII Addl.City Civil & Sessions Judge, Bengaluru. (CCH-74).