Bangalore District Court
Lead Evidence In Both The Cases ... vs Issued Cheque Bearing No.000146 on 27 February, 2023
1 CC.10429/2018
KABC030303652018
Presented on : 28-04-2018
Registered on : 28-04-2018
Decided on : 27-02-2023
Duration : 4 years, 9 months,
29 days
IN THE COURT OF THE XV ADDL CHIEF METROPOLITAN
MAGISTRATE AT BANGALORE CITY.
Dated this the 27 th Day of February 2023
Present: Lokesh Dhanapal Havale. B.A.L.L.B.,
XV Addl.C.M.M., Bangalore.
Judgment U/s.355 of the Cr.P.C. 1973.
1.Sl.No.of the case CC.No.10429/2018
2.Name of the Complainant: Sri. Prabhakar,
also known as Prabhakar Hegde,
Aged about 52 years,
S/o. Bangareshwar,
No.567, 1st Cross,
1st Main, 1st Floor, R.T.Nagar,
Bengaluru -560 032.
3.Name of the accused: Sri. Venkatesh L. Kamath,
S/o. Lakshminarayana Kamath,
No.15, Manjunatha Layout,
Near Mamatha School,
Opp: R.T.Nagar Post,
Bengaluru -560 032.
2 CC.10429/2018
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(1) Cr.P.C.,
accused is Acquitted.
7.Date of final Order 27.02.2023
* * *
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 accused is known to the complainant as he is
permanent resident of R.T.Nagar, Bengaluru. On 22.12.2017 the
accused approached him and sought to financial assistance of
Rs.3,20,000/-. The complainant considering his request paid
Rs.3,20,000/- on 22.12.2017. The accused assured to repay the
said amount within a short span of time. The accused failed to
repay the amount within the stipulated time. On his persistent
demands, the accused issued a cheque bearing No.000146 dt:
22.12.2017 for Rs.3,20,000/- drawn on Karur Visya Bank,
R.T.Nagar, Bengaluru for discharge of legally recoverable debt.
3 CC.10429/2018
On presentation of the cheque for encashment, it was returned
dishonoured with an endorsement of "Funds Insufficient" on
08.02.2018. He issued legal notice on 26.02.2018 demanding
repayment of the cheque amount, the said notice returned
unserved with shara "Not claimed" on 28.02.2018. Hence
prayed to punish the accused and compensate the complainant.
3. After the institution of the complaint, cognizance
was taken and the case was registered as PCR No.4444/2018.
The sworn statement of the complainant was recorded and on
the basis of sworn statement and other materials on hand, the
criminal case was registered against the accused and summons
was issued to him. The accused appeared before the court and
he got enlarged on bail. The prosecution papers supplied to the
accused and the substance of accusation for the offence
punishable U/s.138 of Negotiable Instruments Act was read over
to the accused. He pleaded not guilty and claimed to be tried.
4. During the trial complainant examined himself as
PW-1 and got marked Ex.P.1 to P.6. The statement of the
accused U/s. 313 of Cr.P.C. was recorded. The accused
examined himself as DW.1 and got marked Ex.D1 to D.4. It is
pertinent to note that the complainant filed another case against
the accused herein in this Court in CC.No.10430/2018. Both the
cases are tried simultaneously. The present case is filed for
dishonour of cheque of Rs.3,20,000/- and the CC.No.10430/2018
4 CC.10429/2018
is filed for dishonour of cheque of Rs.3,50,000/-. The
complainant lead evidence in both the cases simultaneously.
While adducing the evidence the complainant by oversight filed
the affidavit in lieu of examination in chief in
CC.No.10430/2018 in this case and vise-versa. It is pertinent to
note that the complaint, sworn statement and documents in this
case are correct and they are pertaining to the dishonour of
cheque of Rs.3,20,000/-. However as the affidavit filed in lieu
of examination in chief in this case is in respect the dishonour
of cheque of Rs.3,50,000/-, the counsel for the accused cross
examined PW.1 as if the transaction is for Rs.3,50,000/-
disregarding the complaint, notice, sworn statement and
documents which show that the transaction in this case is for
Rs.3,50,000/-. The mistake of filing wrong affidavit was not
brought to the notice of the Court. The cross examination so
done created ambiguities in the evidence. It came to the notice
of the Court and the Court afforded opportunity to both the
parties to correct the mistake in order to avoid injustice being
done to both the parties. Thereafter the counsel for the accused
further cross examined PW.1 in respect of the transaction of
Rs.3,50,000/-. Hence it is necessary in the interest of justice to
discard the evidence that has come on record on the basis of
wrong affidavit. No doubt it is trial afresh but it is necessary
in order to avoid disposal of case on technical grounds rather
than the disposal of the case on merits.
5 CC.10429/2018
5. I have heard the argument of both learned counsels
and perused the entire materials. The following points would
arise for my consideration.
1. Whether the complainant proves that the
accused issued cheque bearing No.000146
dated 22.12.2017 for a sum of Rs.3,20,000/-
drawn on Karur Vysya Bank, R.T.Nagar,
Bengaluru in his favour towards the discharge
of legally enforceable debt/liability and on its
presentation for encashment, it was
dishonored with an endorsement of "Funds
Insufficient" in the account maintained by
the accused and the accused has not paid the
amount even after 15 days from the date of
returning of notice as "unclaimed" which
was sent to the correct address 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 N.I.Act?
3. What order?
6 CC.10429/2018
6. My answers to the above points are as under:
Point No.1 : In the Negative
Point No.2 : In the Affirmative
Point No.3 : As per final order for the
following;
REASONS
7. Point No.1 & 2:- The points are taken together for
discussion to avoid repetition of facts and evidence. At this
juncture, it is necessary to go through the provisions of N.I.Act
before proceeding further. The provisions under Section 118(a)
and 139 of the Act., 1881 are extracted and they reads thus;
"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,
7 CC.10429/2018
negotiated or transferred for
consideration.
(b) as to date:- that every
Negotiable Instrument bearing date
was made or drawn on such date;
"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 provisions under Section
118(a) and 139 of the N.I.Act., as extracted herein above, it
can be seen that initially the presumptions constituted under
these two provisions favour the complainant. However, 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 for
discharging the burden of proof placed upon him under a
statute need not examine himself. He may discharge his burden
on the basis of the materials already brought on record. An
8 CC.10429/2018
accused has constitutional rights to maintain silence. Standard
of proof on part of the accused and that of the prosecution in a
Criminal case is different. The prosecution must prove the guilt
of an accused beyond all reasonable doubts, the standard of
proof so as to prove a defence on the part of an accused is
"Preponderance of probabilities".
10. Under the light of above extracted provisions of the
Act, I have perused the oral and documentary evidence on
record. In order to prove his case the complainant examined
himself as PW.1 and got marked Ex.P.1 to P.6. Ex.P.1 is the
cheque bearing No.000146 dated 22.12.2017 for a sum of
Rs.3,20,000/- drawn on Karur Vysya Bank, R.T.Nagar branch,
Bengaluru and Ex.P.1(a) is the signature of the accused on the
cheque. Ex.P.2 is the Bank endorsement dated 08.02.2018,
which was issued with a Shara "Funds Insufficient". Ex.P.4 is
the office copy of the statutory notice dated 26.02.2018. Ex.P.5
is the postal receipt for having sent the notice to the accused.
Ex.P.6 is the postal envelope which was returned with shara
Not Claimed on 28.02.2018. Ex.P.3 is the Hand Loan Agreement
dated 17.10.2017. As per the recitals of the Ex.P3, the accused
took the hand loan amount of Rs.3,20,000/-. He agreed to
repay the same with interest at the rate of 3% per month.
11. I have perused the exhibits on which the
complainant has placed his reliance. On perusal of the exhibits,
9 CC.10429/2018
it is clear that the cheque at Ex.P.1 bearing No.000146 dated
22.12.2017 for a sum of Rs.3,20,000/- drawn on Karur Vysya
Bank, R.T.Nagar branch, Bengaluru was presented through the
Bank within its validity for encashment. The issuance of cheque
and signature in the cheque are admitted by the accused.
12. The Bank issued endorsement as per Ex.P.2 on
08.02.2018 with shara "Funds Insufficient". The complainant
issued statutory notice dated 26.02.2018 as per Ex.P.4 within
time from the date of receipt of Bank Memo. Ex.P.6 is the
postal envelope returned with shara "Not claimed" on
28.02.2018. The notice was sent to the accused at the address
No.15, Manjunath Layout, Near Mamatha School, R.T. Nagar
post, Bengaluru through RPAD. 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
10 CC.10429/2018
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 the
notice issued to the accused is deemed to have been served and
the burden is on the accused to show that the address
mentioned in the notice is not the correct address. It is the
defence of the accused that he had been residing at the address
flat No.5, House No.4, Basasveshwara Complex, Manjunatha
Layout, R.T.Nagar, Bengaluru-32 from 2011 to 2018. The
address of his hotel is No.11, A.K. Lunch Home, Kaval
Byrasandra Main Road, R.T.Nagar, Bengaluru. The complainant
visited his house as well as his hotel. He produced certified
copy of Aadhaar card as per Ex.D1 to show that he has been
residing at flat No.5, House No.4, Basasveshwara Complex,
Manjunatha Layout, R.T.Nagar, Bengaluru-32 from 2011 to
2018. On perusal of Ex.D1, it is found that it was issued on
08.10.2013. The counsel for the complainant cross examined the
accused and it was elicited that he has been residing at the
address No.4/1, Dasappa Garden, R.T.Nagar, Bengaluru-32 from
past 2 years. Prior to that, he had been residing in the address
at No.26, 4th Cross, Chowdaiah Block, R.T.Nagar, Bangalore-32.
The address in the Aadhar card is No.5, flat No.45,
Basaveshwara Complex, R.T.Nagar, Bangalore. The said address
continued in his Aadhar card till today. He did not know
whether the authority has verified about my residential address
before issuance of Aadhar card. This shows that the accused has
been residing at various addresses which are rented houses and
11 CC.10429/2018
therefore the address in the Aadhar card at ExD.1 could not be
considered as correct address in view of answers elicited in his
cross-examination. On the other hand, the counsel for the
accused cross examined PW.1 and it was elicited that the
accused is his friend and he has been running a hotel. He used
to visit the hotel of the accused. He knew the address of the
hotel of the accused as well as the residential address. He did
not send the notice to the accused to the address mentioned in
the agreement at Ex.P.3. He denied that the address mentioned
in the notice at Ex.P.4 is not the address of the accused. He
stated that he had no hurdle to issue notice to the address of
the accused as mentioned in Ex.P.3. He had no hurdle to issue
notice to the accused to his hotel address. It is pertinent to
note that loan agreement filed by the complainant as per Ex.P3
bears the same address. The counsel for the accused relied on
the judgments of Hon'ble High Court as under:-
1. The Hon'ble High Court of Delhi at New Delhi in the
case of R.L.Verma and Sons HUF Vs. P.C.Sharma in
Crl.R.P. No.438 of 2017 dated 01.07.2019 held as
under;
22. Legal presumption of service of notice can only
arise in case the notice is correctly addressed. If the
notice is incorrectly addressed no legal presumption can
arise. In the present case, the complainant had annexed
the letter head of the petitioner containing the address
12 CC.10429/2018
mentioned in the statutory notice but specifically
mentioning there in the correspondence address as that of
New Friends Colony.
24. Section 138 of the Negotiable Instrument Act
mandates the issuance of the statutory notice as a pre
condition to filing of a compliant. The cause of action to
file a complaint under section 138 of the Negotiable
Instrument Act arises only on issuance of service of
statutory notice and failure of the accused to comply with
the statutory notice. In the absence of service of statutory
notice the cause of action would not accrue. Service of
statutory notice would also include legal presumption of
service if circumstances so warrant.
25. As noted above, in the present case there was
admittedly no service of statutory notice and the
presumption of service of the statutory notice also does
not arise in the facts of the present case as the notice
was not correctly addressed.
2. The Hon'ble High Court of Jammu & Kashmir and
Ladakh in the case of Engineering Control Vs. Banday
Infratech Pvt. Ltd. reported in IV (2022) BC 414
(J&K, Lad) held as under;
15. In the instant case, the Trial Court record
clearly shows that the address of the petitioner/accused is
not correctly mentioned either in the complaint or in the
13 CC.10429/2018
notice of demand. It is for this reason that the
respondent/complainant was directed by the Trial
Magistrate to furnish fresh particulars of the
petitioner/accused. The address of the petitioner shown as
"Vasundra Enclave, Jammu" which is patently incorrect.
The second address of the petitioner shown in the notice
of demand and the complaint as "Anand Prabat, New
Delhi' is incomplete, inasmuch as it lacks necessary
details that would enable a postman to locate the
addresses. Once the material on record clearly suggests
that the statutory notice of demand was sent by the
respondent/complainant on a wrong address, the
presumption of receipt of notice by the petitioner/accused
does not arise. Thus, the pre-condition of filing a
complaint under section 138 of the N.I Act of sending a
statutory notice has not been satisfied in the present case.
Therefore, no cause of action arose in favour of the
respondent/complainant to file the subject complaint. He,
therefore, could not have instituted the complaint nor the
Trial Court could have taken cognizance of the offence
and issued process against the petitioner.
13. On perusal of the address mentioned in notice at
Ex.P4 and the address of the accused in Ex.D1 and ExP.3, it is
clear that Manjunath Layout, near Mamatha School, R.T. Nagar,
Bengauru is same in both the addresses. In Ex.P4 the house
number is mentioned as 15, whereas in Ex.D1 and Ex.P3 the
14 CC.10429/2018
house number is mentioned as No.5, Flat No.4, 1 st floor, 1st
Cross, Basaveshwara Complex. The notice is returned with shara
'not claimed' on 28.02.2018. It is clear from the envelope that
the intimation has been delivered by the postal authority to the
accused but the accused has not claimed the notice and
therefore it was returned to sender. The endorsement on the
envelope shows that though there is difference in the house
number, the postal authority delivered the intimation instead of
returning the envelope with shara 'insufficient address'.
Therefore the notice at Ex.P4 is deemed to have been served on
the accused. The counsel for the accused cross examined PW.1
in respect of the address mentioned in notice at Ex.P4 in
respect of mentioning of 'Opp: RT Nagar Post' stating that the
RT Nagar post office is on the main road and admittedly it is
at the distance of 4 to 5 kilometers from the address of the
accused. However the said contentions could not be taken into
consideration as it is the typographical mistake in Ex.P4 and it
is not wrong mentioning of address, which is clear from the
aforesaid discussion. The accused stated in his defence evidence
that he came to know about filing of the case as the summons
was received by him at his hotel address. On perusal of the
order sheet, it is found that the case was registered on
28.04.2018 and summons was issued to the accused at the
address mentioned in the notice at Ex.P4 i.e., No.15, Manjunath
Layout, Near Mamatha School, R.T. Nagar post, Bengaluru and
it was served personally on the accused and accused himself
signed the original summons on 24.05.2018 and received it. The
15 CC.10429/2018
complainant has not taken summons from the Court by giving
fresh address of the hotel of the accused. Therefore the version
of the accused that he was served with summons at his hotel
address can not be believed. Further it was elicited in the cross
examination of PW.1 that he knew the hotel address of the
accused and he visited the same many times. The notice was
not issued to the accused on the hotel address. However it is
sufficient if notice is sent to one address and adverse inference
can not be drawn for not sending notice to another known
address. Apart from that as per the Judgment of the Hon'ble
Supreme Court of India in the case of C.C. Alavi Haji v.
Palapetty Muhammed 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
16 CC.10429/2018
summons (by receiving a copy of complaint
with the summons) and, therefore, the
complaint is liable to be rejected. A person
who does not pay within 15 days of receipt of
the summons from the Court along with
the copy of the complaint u/s.138 of
the Act, cannot obviously contend that there
was no proper service of notice as required
u/s.138, by ignoring statutory presumption to
the contrary u/s.27 of the G.C. Act and Section
114 of the Evidence Act. In our view, any
other interpretation of the proviso would
defeat the very object of the legislation. As
observed in Bhaskaran's case (supra), if the
'giving of notice' in the context of Clause (b) of
the proviso was the same as the
'receipt of notice' a trickster cheque
drawer would get the premium to avoid
receiving the notice by adopting different
strategies and escape from legal consequences of
Section 138 of the Act.
In a nutshell it can be said that the statutory notice is an
opportunity given to the accused to make payment and avoid
the consequences of 138 of N.I.Act. In the case on hand, the
summons has been served to accused. He appeared before the
Court, obtained bail and contested the case by taking all the
17 CC.10429/2018
probable defences. Therefore he cannot take the shelter of
statutory requirement of service of notice to avoid the
consequences of Section 138 of N.I.Act.
14. The complaint was filed on 04.04.2018. Therefore,
the documents on record clearly show that the complainant has
prima facie complied the ingredients of Section 138(a) to (c) of
the N.I.Act. The accused admitted the issuance of cheque and
signature. Therefore the presumptions U/s.118 and 139 of the
N.I.Act arise in favour of the complainant. The presumptions
are rebuttable and the burden is on the accused to rebut the
presumptions. Once the issuance of cheque is proved, the
presumption arises in respect of the fact that the cheque was
issued for legally enforceable debt/liability. The accused can
rebut the presumption by raising probable defence and proving
it relying on the evidence of the complainant or by leading his
direct evidence.
15. In the following decisions the law in respect of the
presumptions, burden of proof and rebuttal of presumptions is
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:-
18 CC.10429/2018
"30. Applying the said definitions of 'proved' or
'disproved' to principle behind Section 118(a) of the Act,
the Court shall presume a negotiable instrument to be for
consideration unless and until after considering the matter
before it, it either believes that the consideration does
not exist or considers the non-existence of the
consideration so probable that a prudent man ought,
under the circumstances of the particular case, to act
upon the supposition that the consideration does not
exist. For rebutting such presumption, what is needed is
to raise a probable defence. Even for
the said purpose, the evidence adduced on behalf of the
complainant could be relied upon.
31. A Division Bench of this Court in Bharat Barrel &
Drum Manufacturing Company v. Amin Chand
Payrelal reported in (1999) 3 SCC 35 albeit in a civil
case laid down the law in the following terms:
"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
19 CC.10429/2018
onus of proof showing that the existence of
consideration was improbable or doubtful or the
same was illegal, the onus would shift to the
plaintiff who will be obliged to prove it as a matter
of fact and upon its failure to prove would
disentitle him to the grant of relief on the basis of
the negotiable instrument. The burden upon the
defendant of proving the non- existence of the
consideration can be either direct or by bringing on
record the preponderance of probabilities by
reference to the circumstances upon which he
relies. In such an event, the plaintiff is entitled
under law to rely upon all the evidence led in the
case including that of the plaintiff as well. In case,
where the defendant fails to discharge the initial
onus of proof by showing the non- existence of the
consideration, the plaintiff would invariably be held
entitled to the benefit of presumption arising under
Section 118(a) in his favour. The court may not
insist upon the defendant to disprove the existence
of 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."
20 CC.10429/2018
This Court, therefore, clearly opined that it is not
necessary for the defendant to disprove the existence of
consideration by way of direct evidence.
32. The standard of proof evidently is preponderance of
probabilities. Inference of preponderance of probabilities
can be drawn not only from the materials on records but
also by reference to the circumstances upon which he
relies.
33. Presumption drawn under a statute has only an
evidentiary value. Presumptions are raised in terms of the
Evidence Act. Presumption drawn in respect of one fact
may be an evidence even for the purpose of drawing
presumption under another."
(b) The Hon'ble Supreme Court in Kumar Exports Vs.
Sharma carpets reported in (2009) 2 SCC 513, held as
under;
"20. The accused in a trial under Section 138 of the Act
has two options. He can either show that consideration
and debt did not exist or that under the particular
circumstances of 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
21 CC.10429/2018
expected to prove his defence beyond reasonable doubt as
is expected of the complainant in a criminal trial. The
accused may adduce direct evidence to prove that the
note in question was not supported by consideration and
that there was no debt or liability to be discharged by
him. However, the court need not insist in every case
that the accused should disprove the non- existence of
consideration and debt by leading direct evidence because
the existence of negative evidence is neither possible nor
contemplated. At the same time, it is clear that bare
denial of the passing of the consideration and existence of
debt, apparently would not serve the purpose of the
accused. Something which is probable has to be brought
on record for getting the burden of proof shifted to the
complainant. To disprove the presumptions, the accused
should bring on record such facts and circumstances,
upon consideration of which, the court may either believe
that the consideration and debt did not exist or their
non-existence was so probable that a prudent man would
under the circumstances of the case, act upon the plea
that they did not exist. Apart from adducing direct
evidence to prove that the note in question was not
supported by consideration or that he had not incurred
any debt or liability, the accused may also rely upon
circumstantial evidence and if the circumstances so relied
upon are compelling, the burden may likewise shift again
on to the complainant. The accused may also rely upon
22 CC.10429/2018
presumptions of fact, for instance, those mentioned in
Section 114 of the Evidence Act to rebut the
presumptions arising under Sections 118 and 139 of the
Act.
21. The accused has also an option to prove the non-
existence of consideration and debt or liability either by
letting in evidence or in some clear and exceptional
cases, from the case set out by the complainant, that is,
the averments in the complaint, the case set out in the
statutory notice and evidence adduced by the complainant
during the trial. Once such rebuttal evidence is adduced
and accepted by the court, having regard to all the
circumstances of the case and the preponderance of
probabilities, the evidential burden shifts back to the
complainant and, thereafter, the presumptions under
Sections 118 and 139 of the Act will not again come to
the complainant's rescue.
(c) The Hon'ble Supreme Court in Rangappa Vs. Mohan
reported in (2010)11 SCC 441 held as under:
26. In light of these extracts, we are in
agreement with the respondent-claimant that the
presumption mandated by Section 139 of the Act does
indeed include the existence of a legally enforceable debt
or liability. To that extent, the impugned observations in
23 CC.10429/2018
Krishna Janardhan Bhat (supra) may not be correct.
However, this does not in any way cast doubt on the
correctness of the decision in that case since it was based
on the specific facts and circumstances therein. As noted
in the citations, this is of course in the nature of a
rebuttable presumption and it is open to the accused to
raise a defence, wherein the existence of a legally
enforceable debt or liability can be contested. However,
there can be no doubt that there is an initial
presumption, which favours the complainant.
27. Section 139 of the Act is an example of a
reverse onus clause that has been included in furtherance
of the legislative objective of improving the credibility of
negotiable instruments. While Section 138 of the Act
specifies a strong criminal remedy in relation to the
dishonour of cheques, the rebuttable presumption under
Section 139 is a device to prevent undue delay in the
course of litigation. However, it must be remembered that
the offence made punishable by Section 138 can be better
described as a regulatory offence since the bouncing of a
cheque is largely in the nature of a civil wrong whose
impact is usually confined to the private parties involved
in commercial transactions. In such a scenario, the test of
proportionality should guide the construction and
interpretation of reverse onus clauses and the
24 CC.10429/2018
accused/defendant cannot be expected to discharge an
unduly high standard or proof.
28. In the absence of compelling justifications,
reverse onus clauses usually impose an evidentiary burden
and not a persuasive burden. Keeping this in view, it is a
settled position that when an accused has to rebut the
presumption under Section 139, the standard of proof for
doing so is that of `preponderance of probabilities'.
Therefore, if the accused is able to raise a probable
defence which creates doubts about the existence of a
legally enforceable debt or liability, the prosecution can
fail. As clarified in the citations, the accused can rely on
the materials submitted by the complainant in order to
raise such a defence and it is conceivable that in some
cases the accused may not need to adduce evidence of
his/her own.
(d) The the Hon'ble Supreme Court in Basalingappa
Vs. Mudibasappa reported in (2019) 5 SCC 418 held as
under:-
"25. We having noticed the ratio laid down by this Court
in the above cases on Sections 118 (a) and 139, we now
summarise the principles enumerated by this Court in
following manner:
25 CC.10429/2018
25.1. Once the execution of cheque is admitted
Section 139 of the Act mandates a presumption that
the cheque was for the discharge of any debt or
other liability.
25.2. The presumption under Section 139 is a
rebuttable presumption and the onus is on the
accused to raise the probable defence. The standard
of proof for rebutting the presumption is that of
preponderance of probabilities.
25.3. To rebut the presumption, it is open for the
accused to rely on evidence led by him or the
accused can also rely on the materials submitted by
the complainant in order to raise a probable
defence. Inference of preponderance of probabilities
can be drawn not only from the materials brought
on record by the parties but also by reference to
the circumstances upon which they rely.
25.4. That it is not necessary for the accused to
come in the witness box in support of his defence,
Section 139 imposed an evidentiary burden and not
a persuasive burden.
25.5. It is not necessary for the accused to come in
the witness box to support his defence.
26 CC.10429/2018
(e) The Hon'ble Supreme Court of India in the case of
A.P.S Forex Services Pvt Ltd Vs. Shakthi Internatonal
Fashion Linkers & Others reported in 2020 STPL 5773 SC ,
held at para No.7 as under:
7. Coming back to the facts in the present case
and considering the fact that the accused has admitted
the issuance of the cheques and his signature on the
cheque and that the cheque in question was issued for
the second time, after the earlier cheques were
dishonoured and that even according to the accused some
amount was due and payable, there is a presumption
under Section 139 of the N.I. Act that there exists a
legally enforceable debt or liability. Of course such
presumption is rebuttable in nature. However, to rebut
the presumption the accused was required to lead the
evidence that full amount due and payable to the
complainant has been paid. In the present case, no such
evidence has been led by the accused. The story put
forward by the accused that the cheques were given by
way of security is not believable in absence of further
evidence to rebut the presumption and more particularly
the cheque in question was issued for the second time,
after the earlier cheques were dishonoured. Therefore,
both the courts below have materially erred in not
properly appreciating and considering the presumption in
27 CC.10429/2018
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 has not disputed the signature on the cheque.
If that be the position, as noted by the courts below a
28 CC.10429/2018
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."
(g) The Hon'ble Supreme Court of India in the case of
M/s. Kalamani Tex v. P. Balasubramanian reported in 2021
STPL 1056 observed at para No.14 to 18 as under:-
29 CC.10429/2018
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 crystalized by this Court in Rohitbhai
Jivanlal Patel Vs. State of Gujarat, (2019) 18 SCC 106 in
the following words:
"In the case at hand, even after purportedly
drawing the presumption under Section 139 of the NI
Act, the trial Court proceeded to question the want of
evidence on the part of the complainant as regards the
source of funds for advancing loan to the accused and
want of examination of relevant witnesses who allegedly
extended him money for advancing it to the accused. This
approach of the Trial Court had been at variance with
the principles of presumption in law. After such
presumption, the onus shifted to the accused and unless
the accused had discharged the onus by bringing on
record such facts and circumstances as to show the
preponderance of probabilities tilting in his favour, any
30 CC.10429/2018
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 of Kumar Exports (supra), wherein it was further
held that a bare denial of passing of consideration would
not aid the case of accused.
31 CC.10429/2018
17. Even if we take the arguments raised by the
appellants at face value that only a blank cheque and
signed blank stamp papers were given to the respondent,
yet the statutory presumption cannot be obliterated. It is
useful to cite Bir Singh v. Mukesh Kumar, (2019) 4 SCC
197, 36 where this court held that:
"Even a blank cheque leaf, voluntarily signed
and handed over by the accused, which is
towards some payment, would attract
presumption under Section 139 of the
Negotiable Instruments Act, in the absence of
any cogent evidence to show that the cheque
was not issued in discharge of a debt."
18. Considering the fact that there has been an
admitted business relationship between the parties, we are
of the opinion that the defence raised by the appellants
does not inspire confidence or meet the standard of
'preponderance of probability'. In the absence of any
other relevant material, it appears to us that the High
Court did not err in discarding the appellants' defence
and upholding the onus imposed upon them in terms of
Section 118 and Section 139 of the NIA.
16. Therefore on perusal of the above judgments, it is
clear that it is well established that if the cheque and signature
32 CC.10429/2018
are admitted, the presumptions U/s. 139 and 118 of NI Act
arise that the cheque was issued for legally enforceable
debt/liability and the cheque was made or drawn for
consideration. The presumptions are 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. 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 and the standard of
proof so as to prove a defence on the part of an accused is
preponderance of probabilities. The 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. He need not lead defence
evidence for the said purpose and it can be done by relying on
the evidence of the prosecution on record. It is the duty of the
Courts to consider carefully and appreciate the totality of the
evidence and then come to a conclusion, whether in a given
case, the accused has shown that the case of the complainant is
in peril for the reason that the accused has established a
33 CC.10429/2018
probable defence either by leading direct defence evidence or
by relying on the evidence of the complainant.
17. It is the defence of the accused that he knew the
complainant since long time. There are transaction between him
and the complainant. He used to take money from the
complainant. He has already paid Rs.5 Lakhs from 2012 to 2017
to the complainant. He repaid the principal amount as well as
the interest to the complainant. Even though he repaid the loan
amount with interest, the complainant filed false case against
him. The agreement between him and the complainant was
entered into for the first time for Rs.3,50,000/- and out of the
said amount, he paid Rs.30,000/- through bank transfer to the
complainant on 7.9.2017. After deduction of the said amount,
he executed another agreement in favour of complainant for
Rs.3,20,000/- in October 2017. He asked the complainant to
return the agreement executed by him for Rs.3,50,000/- but the
complainant told him that he would return it after payment of
Rs.3,20,000/-. He met complainant on 1.2.2018 to give him
Rs.2 Lakhs amount but he did not receive the said amount and
demanded for repayment of entire amount of Rs.3,20,000/-. On
03.02.2018 he approached the Manappuram Finance and
pledged the gold ornaments and obtained gold loan and paid
Rs.3,20,000/- to the complainant in his hotel. After payment of
Rs.3,20,000/-, he asked the complainant to return both the
agreements but the complainant told him that he would give
the agreements within 2-3 days. In order to prove his defence,
34 CC.10429/2018
he produced certified copy of the bank pass book as per
Ex.D.2, the certified copies of gold pledged documents of
Manppuram Finance as Ex.D.3 and D.4. On perusal of Ex.D2, it
is clear that on 01.02.2018 there is an entry of withdrawal of
cash amount of Rs.1,70,000/- from the account of the accused.
On perusal of Ex.D3 and 4, it is found that the accused pledged
the gold ornaments and took gold loan of Rs.82,650/- and
Rs.19,867/- on 03.02.2018.
18. The counsel for the complainant cross examined
DW.1. During the cross examination of DW.1, he stated that he
knew the complainant from past 12 years. He obtained loan
from the complainant. He had been doing loan transactions
with the complainant from 5 to 6 years. He received the loan
amount part by part and total loan amount taken by him is
Rs.3,50,000/-. He gave the cheque as security of the said loan.
He voluntarily stated that he did not give the cheque at the
time of taking the money but when the complainant demanded
for repayment of the amount. He admitted the cheque at Ex.P.1
and signature in it.
19. It is the defence of the accused that he issued
signed blank cheque and it was misused by the complainant by
filling it up as per his convenience. On perusal of Ex.P1, it is
found that the signature and the amount are in one ink and
hand writing, and the date and name of the complainant are
35 CC.10429/2018
written in one ink and hand writing. During his cross
examination PW.1 stated that when the cheques are given to
him, the signature was made and the amount was filled up but
the name and date are blank. It shows that the complainant
filled up the name and date. Further even if the blank signed
cheque was given and it was filled up later, it attracts the
ingredients u/sec.138 of N.I Act. As per Section 20 of the
N.I.Act, if the person signs and delivers Negotiable Instrument
and it is left incomplete and thereby he authorizes the holder
to complete the Negotiable Instrument and thereby he is liable
for the amount mentioned in the Negotiable Instrument. In the
Judgment rendered by the Hon'ble Supreme Court of India in
Bir Singh V/s.Mukesh Kumar reported in AIR 2019 SC
2446, it was held by the Hon'ble Apex Court that " If a signed
blank cheque is voluntarily presented to a payee, towards some
payment, the payee may fill up the amount and other
particulars. This in itself would not invalidate the cheque. The
onus would still be on the accused to prove that the cheque
was not in discharge of a debt or liability by adducing
evidence. Even a blank cheque leaf, voluntarily singed and
handed over by the accused, which is towards some payment,
would attract presumption under Section 139 of the Negotiable
Instruments Act, in the absence of any cogent evidence to show
that the cheque was not issued in discharge of a debt." The
judgment makes it clear that if the blank signed cheque is
issued towards some payment it would attract the presumption
36 CC.10429/2018
u/sec.139 of N.I Act. The burden is on the accused to prove
that there is no debt or liability.
20. It is the defense of the accused that there is no
transaction as alleged in the complaint and the complainant
misused the cheque given to him as security. The counsel for
the accused argued that it is proved that the cheque was issued
as security and therefore the provision u/sec.138 of N.I. Act is
not attracted. The counsel for the accused relied on the
following decisions;
1. The Hon'ble High Court of Tripura in the case of Raju
Saha Vs. Balai Chandra Das reported in I (2022) BC
479 (Tri.) held as under;
The complainant did not mention anything about
that episode of issuance of two cheques in his complaint
petition or during the Examination-in-Chief. He did not
even explain why those two cheques bearing No. 610768
and 610772 were given to him by the accused person.
His explanation is fragile and amounts to failure in
explaining the episode properly. The respondent [The
accused person] has made out a probable case that there
was no enforceable debt against him and that he was
under no obligation/liability to make payment. It appears
more probable that the cheque that has been dishonoured
is a security cheque.
37 CC.10429/2018
2. The Hon'ble High Court of Karnataka in the case of K.
Narayana Nayak Vs. M. Shivarama Shetty reported in
ILR 2008 KAR 3635 held as under;
The cheque issued by the respondent to the
appellant is only as a security and not for discharge of
any existing debt. So far as the presumption as to
issuance of the cheque for consideration and in discharge
of debt, the respondent/accused need not disprove the
appellant's case in its entirety. He can discharge his
burden on the basis of preponderance or probabilities
through direct or circumstantial evidence, for which he
can also rely on the evidence adduced by the
complainant Evidence on record clearly establishes that
the cheque was not issued towards discharge of any
legally enforceable debt, but the blank signed cheque was
issued as security
3. The Hon'ble High Court of Allahabad in the case of
Vijay Kumar Upadhyaya Vs. State of UP and Anr
reported in 2013 2 Crimes(HC) 529 held as under;
From a bare reading of Section 138 of the Act, it is
clear that the provision of the said Section are attracted
only on account of dishonour of cheque issued in
discharge of liability or debt and not on account of
38 CC.10429/2018
issuance of security cheques. Hence, the issuance of
security cheques is not covered under the aforesaid
Section 138 of the Act. As the security cheques are not
covered under the said Section, so in the present matter
the bouncing of cheque, which was issued as a security
cheque, is not punishable under Section 138 of the Act.
4. The Hon'ble High Court of Bombay in the case of
Sanjay Mishra Vs. Mrs. Kanishka Kapooar @ Nikki
and Anr reported in 2009 Cr.L.J. 3777 held as under;
The amount advanced by complainant to accused
was large amount not repayable within few months. The
amount advanced by complainant to accused was
unaccounted cash amount. It was not disclosed in Income
Tax Return. Liability to repay unaccounted cash amount
cannot be said to be legally enforceable liability within
meaning of explanation to S.138. Hence it is sufficient to
rebut the presumption U/s.139 of NI Act.
5. The Hon'ble High Court of Bombay in the case of
Joseph Vilangadan Vs. Phenomenal Health Care
Services Ltd. reported in LAWS (BOM) 2010 7 178
held as under;
When the accused issued the cheque as security
deposit for due performance on the terms of contract and
39 CC.10429/2018
not for discharge of any debt or liability, no case made
out under Section 138 of Act.
21. However the Hon'ble Supreme Court of India in its
recent decisions in the case of Sripathi Singh (Since
deceased) through his son Gourav Singh Vs. State of
Jharkhand and Anr in Crl.A.No.1269-1270 of 2021 arising
out of SLP (Crl) No. 252253 of 2020 dated 28.10.2021
reported in Live Law 2021 SC 606 held as under;
16. A cheque issued as security pursuant to a
financial transaction cannot be considered as a worthless
piece of paper under every circumstance. 'Security' in its
true sense is the state of being safe and the security
given for a loan is something given as a pledge of
payment. It is given, deposited or pledged to make
certain the fulfilment of an obligation to which the
parties to the transaction are bound. If in a transaction, a
loan is advanced and the borrower agrees to repay the
amount in a specified timeframe and issues a cheque as
security to secure such repayment; if the loan amount is
not repaid in any other form before the due date or if
there is no other understanding or agreement between the
parties to defer the payment of amount, the cheque
which is issued as security would mature for presentation
and the drawee of the cheque would be entitled to
40 CC.10429/2018
present the same. On such presentation, if the same is
dishonoured, the consequences contemplated under
Section 138 and the other provisions of N.I. Act would
flow.
17. When a cheque is issued and is treated as 'security'
towards repayment of an amount with a time period
being stipulated for repayment, all that it ensures is that
such cheque which is issued as 'security' cannot be
presented prior to the loan or the instalment maturing for
repayment towards which such cheque is issued as
security. Further, the borrower would have the option of
repaying the loan amount or such financial liability in
any other form and in that manner if the amount of loan
due and payable has been discharged within the agreed
period, the cheque issued as security cannot thereafter be
presented. Therefore, the prior discharge of the loan or
there being an altered situation due to which there would
be understanding between the parties is a sine qua non to
not present the cheque which was issued as security.
These are only the defences that would be available to
the drawer of the cheque in a proceedings initiated under
Section 138 of the N.I. Act. Therefore, there cannot be a
hard and fast rule that a cheque which is issued as
security can never be presented by the drawee of the
cheque. If such is the understanding a cheque would also
be reduced to an 'on demand promissory note' and in all
circumstances, it would only be a civil litigation to
41 CC.10429/2018
recover the amount, which is not the intention of the
statute. When a cheque is issued even though as
'security' the consequence flowing therefrom is also
known to the drawer of the cheque and in the
circumstance stated above if the cheque is presented and
dishonoured, the holder of the cheque/drawee would have
the option of initiating the civil proceedings for recovery
or the criminal proceedings for punishment in the fact
situation, but in any event, it is not for the drawer of the
cheque to dictate terms with regard to the nature of
litigation.
As per the above decision it is very much clear that
security cheque also attracts the provision u/sec.138 of N.I Act
and it is to be seen that whether there is any legally
enforceable debt as on the presentation of the cheque.
22. The accused can rebut the presumptions either by
leading direct evidence or by relying on the evidence of the
complainant. It is the specific case of the complainant that the
accused approached him on 22.12.2017 seeking financial
assistance of Rs.3,20,000/- and he lent an amount of
Rs.3,20,000/- on 22.12.2017. However the document at Ex.P3,
which is the loan agreement shows the date of loan of
Rs.3,20,000/- as 17.10.2017. The counsel for accused cross
examined PW.1 and it was elicited that he did not lend loan of
42 CC.10429/2018
Rs.3,20,000/- on 22.12.2017 but the amount was paid prior to
that. He stated that there might be the mistake of date in the
evidence affidavit. He clearly admitted that the loan agreement
at Ex.P3 dated 17.10.2017 was entered into between them in
respect of the loan transaction of Rs.3,20,000/-. He had been
doing financial transactions with the accused since 2012. He
had paid the amount part by part in a sum of Rs.10,000/-,
Rs.20,000/-, 30,000/- and Rs.50,000/- etc. It was further
elicited that there is a balance amount of Rs.6,70,000/- of the
loan taken by accused from 2012 to 2017. Therefore the version
in the complaint and the loan agreement at Ex.P3 and the
version elicited in the cross examination of PW.1 are
contradictory and inconsistent with each other. It creates doubt
on the transaction as alleged by the complainant in the
complaint.
23. It is the specific case of the complainant that on
persistent demands the accused issued the cheque bearing
No.000146 in his favour on 22.12.2017 for Rs.3,20,000/-. It was
further elicited in the cross examination of PW.1 that the
accused gave cheque on 17.10.2017. The accused gave cheque
at Ex.P.1 along with agreement at Ex.P.3. He knew the contents
of Ex.P.3. He admitted that there is mention of amount in 3%
interest in the agreement and about issuance of cheque as
security for the amount. He could not say as to quantum of
amount received by him as interest. He admitted that the
43 CC.10429/2018
accused transferred Rs.30,000/- to his account on 07.09.2017.
Thereafter PW.1 admitted that after deducting the amount of
Rs.30,000/-, he got executed second agreement from the
accused for Rs.3,20,000/-. It is also pertinent to note that if at
all the cheque is issued as on the date of execution of Ex.P3 on
07.10.2017, it would have been mentioned in the Ex.P3.
However there is no reference as to the issuance of post dated
cheque in the Ex.P3. It is also not at all the case of the
complainant that the accused issued post dated cheque as on
execution of Ex.P3. The complainant stated that the transaction
has taken place on 17.10.2017 but it is averred in the
complaint that the accused sought loan on 22.12.2017 and the
same has been continued in the affidavit evidence. When PW.1
was asked during the cross examination, he answered that it
might be a mistake. If that is considered, at least the accused
would have given the notice at Ex.P4 stating that the
transaction took place on 17.10.2017. However on perusal of
the notice at Ex.P4 also it is found that the complainant has
stated that the transaction took place on 22.12.2017 and hand
loan agreement dated 22.12.2017 was executed by the accused
for having borrowed an amount of Rs.3,20,000/-. Whereas the
hand loan agreement at Ex.P3 produced by the complainant is
dated 17.10.2017. Therefore there is inconsistency in the
complaint, affidavit evidence, documents and the answers
elicited in the cross examination of PW.1 in respect of the date
of issuance of cheque and the transaction alleged in the
complaint.
44 CC.10429/2018
24. On the other hand, the accused during his cross
examination also stated that he paid amount to the complainant
by way of cash. He withdrew Rs.1,70,000/- from the bank and
obtained gold loan of Rs.1 Lakh from Manappuram Finance and
remaining Rs.50,000/- was his savings amount. But he did not
have any documents to show that he paid Rs.3,20,000/- by way
of cash to the complainant. On going through the documents
produced by the accused, it is clear that the accused arranged
the amount as per Ex.D2 to 4. There is no document to show
that the said amount of Rs.3,20,000/- arranged by the accused
as per ExD.2 to 4 was handed over to the complainant on the
alleged date. If at all the amount has been paid and the
complainant did not return the cheques and agreements, the
accused would have issued notice to the complainant to take
back the cheques and agreements. At least he would have given
stop payment instructions to the bank in respect of the cheques.
The same has not been done. However the circumstances have
to be seen along with the oral and documentary evidence on
record. The amount of Rs.1,70,000/- as per ExD.2 was
withdrawn on 01.02.2018 and the cheque in question was
presented on 08.02.2018. The accused pledged the gold and
availed the loan on 03.02.2018 as per Ex.D3 and 4. Therefore
the circumstances show that the said amount was withdrawn to
pay to the complainant. It is admitted fact that the accused is
running hotel and to a person running a hotel having savings of
Rs.50,000/- is not a impossible fact. The burden is on the
45 CC.10429/2018
accused but the standard of proof is preponderance of the
probabilities. Therefore under circumstances as aforesaid the
accused proved his defence by preponderance of probabilities.
Further the answers elicited makes it very clear that there was
no liability to an extent of Rs.6,70,000/- but there was liability
of only Rs.3,20,000/- for which agreement at Ex.P3 was
executed and cheque at Ex.P1 and the complainant filed two
cases against the accused i.e., the present case for Rs.3,20,000/-
on the basis of agreement at Ex.P3 and security cheque at
Ex.P1 and another case in CC.No.10430/2018 for Rs.3,50,000/-
on the basis of first agreement. The evidence on record clearly
shows that the liability was only to an extent of Rs.3,20,000/-.
The said liability was discharged by the accused and it is
proved by the accused as per ExD.2 to 4 by way of
preponderance of probabilities. Therefore there is no legally
recoverable debt as on the date of presentation of the cheque.
It makes the case of the complainant as alleged in the
complaint doubtful.
25. It was elicited that he used to visit the house and
the hotel of the accused. When it was asked to PW.1 that the
accused used to repay him the loan amount when he visit the
hotel, PW.1 answered that the accused used to pay interest for
the loan amount. The accused paid once through bank transfer
and he gave Rs.80,000/- when accused came to his house. It
was further elicited that he was not doing any money lending
46 CC.10429/2018
business. He denied that he obtained interest for the loan given
to the accused. The receipt of amounts from the accused is
admitted but PW.1 claimed to have taken some money as
interests on the alleged principal amount at one point of time
and he changed the version and stated that he had not received
any money as interest from the accused at another point of
time. Therefore it creates doubt on the case of the complainant.
26. For the reasons mentioned herein above, it is
crystallized that the accused has proved 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.3,20,000/-. On the other hand, the complainant utterly failed
to prove that the accused issued the cheque for the legally
enforceable liability. The complainant failed to prove his case
beyond reasonable doubt. It is well settled that the accused
needs to prove his defence by preponderance of probabilities. It
is sufficient if the doubt is created on the alleged transaction.
The accused have created the doubt on the alleged transaction
and issuance of cheques in favour of complainant as alleged in
the complaint. Therefore this Court is of the opinion that the
accused proved his defence by pointing out the infirmities in
the case of the complainant. The accused rebutted the statutory
presumptions U/s.118(a) & (b) and 139 of the N.I.Act.
Accordingly the accused is not found guilty for the offence
47 CC.10429/2018
punishable U/s.138 of the N.I.Act. Hence, I proceed to answer
the Point No.1 in Negative and Point No.2 in the Affirmative.
27. Point No.3 : In view of the reasons assigned in Point
No.1 and 2 and considering the facts and circumstances of the
case, I proceed to pass the following:-
ORDER
As per the provisions of Sec.255(1) Cr.P.C. the accused is hereby acquitted of the offence punishable u/s.138 of NI Act, 1881.
The Personal Bond executed by the accused is hereby stands cancelled and the cash surety of Rs.3,000/- deposited by the accused shall be refunded to his after appeal period is over.
(Dictated to the Stenographer, transcript thereof is computerized and printout taken by her, is verified and then pronounced by me in Open Court on this the 27th day of February-2023.) (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.
48 CC.10429/2018ANNEXURE Witnesses examined for the Complainant:-
PW.1 Sri.Prabhakar Documents marked for the Complainant:-
Ex.P.1: Cheque
Ex.P.1(a) Signature of the Cheque.
Ex.P.2 Bank endorsement.
Ex.P.3 Hand loan agreement dt 17.10.2017
Ex.P.4 Legal Notice.
Ex.P.5 Postal receipt
Ex.P.6 Unserved postal cover
Witnesses examined For Defence:-
DW.1 Sri. Venkatesh Documents marked for Defence:-
Ex.D1 Certified copy of Aadhar card Ex.D2 Certified copy of Bank Pass book Ex.D3 & 4 Certified copies of the documents regarding pledging gold ornaments at Manapuram Finance Limited (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.49 CC.10429/2018 50 CC.10429/2018
27.02.2023 (Judgment Pronounced in the Open Court Vide Separate Order sheet) ORDER As per the provisions of Sec.255(1) Cr.P.C. the accused is hereby acquitted of the offence punishable u/s.138 of NI Act, 1881.
The Personal Bond executed by the accused is hereby stands cancelled and the cash surety of Rs.3,000/- deposited by the accused shall be refunded to his after appeal period is over.
XV Addl.CMM., Bengaluru.
51 CC.10429/2018