Bangalore District Court
Issued Legal Notice On 08.06.2019. It ... vs Appeared Through His Learned Counsel ... on 24 April, 2023
1 CC.17774/2019( J)
KABC030561612019
Presented on : 05-08-2019
Registered on : 05-08-2019
Decided on : 24-04-2023
Duration : 3 years, 8 months, 19 days
IN THE COURT OF THE XV ADDL CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY.
Dated this the 24th Day of April-2023
Present: Lokesh Dhanapal Havale. B.A.L.L.B.,
XV Addl.C.M.M., Bengaluru.
Judgment U/s.355 of the Cr.P.C. 1973.
1.Sl.No.of the case CC.No.17774/2019
2.Name of the Complainant: Sri. Prakash Chand Bafna
S/o Dungarmal Bafna,
Aged about 59 years,
R/at No.35, "Gyanprakash",
4th Cross, East "B" Link Road,
Malleshwaram,
Bengaluru- 560 003.
3.Name of the accused: Sri. Muniraju. R
S/o Late Ramaiah,
Aged about 53 years,
R/at No.597,
Channarayapatana Road,
Devanahalli Post,
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Bengaluru- 562 110.
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 24.04.2023.
* * *
This complaint is filed U/Sec.200 of Cr.P.C. against the
accused for the offence punishable U/Sec.138 of the Negotiable
Instruments Act, 1881.
2. The facts of the complaint in brief are as under:
The complainant is engaged in the business of vehicle finance.
The accused requested the complainant to finance the Ashoka
Layland lorry bearing No.KA.06.C.1393. He agreed for the same.
The accused failed to maintain financial discipline in paying the
installments within stipulated time. He personally met the accused
several times and contacted over the phone. He also sent
reminder letter to clear the out standing amount due. The accused
failed to pay the amount. The accused finally issued cheque
bearing No.759133 dated 27.05.2019 for a sun of Rs.4,78,500/-
drawn on South Indian Bank, Devanahalli branch, Bengaluru. On
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presentation of the said cheque for encashment, it was
dishonoured for the reasons 'Funds Insufficient' on 28.05.2019. The
complainant issued legal notice on 08.06.2019. It was served on
the accused on 11.06.2019. The accused did not pay the amount
even after the expiry of 15 days. The accused thereby committed
an offence punishable U/s.138 of the N.I.Act.
3. After the institution of the complaint, the cognizance
was taken and it has been registered as PCR No.9261/2019. The
sworn statement of the complainant has been recorded and on the
basis of sworn statement and other materials on hand, the criminal
case has been registered against the accused and summons was
issued to accused. In response to the service of summons, the
accused appeared through his learned counsel and got enlarged on
bail. The prosecution papers were supplied to the accused and the
substance of the accusation was read over and explained to the
accused in the language known to him. He pleaded not guilty and
claimed to be tried.
4. During trial the complainant examined himself as PW-1
and got marked Ex.P1 to P7. The statement of the accused U/s.
313 of Cr.P.C. was not recorded. The accused lead his evidence
and examined himself as DW.1. He did not get mark any
documents on his behalf.
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5. Heard the arguments. On perusal of the entire
materials on record, the points that arise for my consideration are
as under;
1. Whether the complainant proves that the
accused issued cheque bearing No.759133
dated 27.05.2019 for a sun of Rs.4,78,500/-
drawn on South Indian Bank, Devanahalli
branch, Bengaluru towards the discharge of
legally enforceable debt/liability and on its
presentation for encashment, it was
dishonored with an endorsement "Funds
Insufficient" and even after the service of
legal notice, the accused has not paid the
amount within 15 days and thereby accused
committed an offence punishable U/Sec.138 of
N.I. Act, 1881?
2. Whether the accused rebuts the
presumption U/s.139 of the N.I.Act?
3. What order?
6. My answers on the above points for consideration are
as under:
Point No.1 : Negative
Point No.2 : Affirmative
Point No.3 : As per final order for the following;
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REASONS
7. Point No.1 and 2 :- The points are taken together for
the common discussion to avoid repetition of facts and evidence. It
is necessary to discus the provisions U/s. 118(a) and 139 of the
Act., 1881 at this stage.
"118. Presumptions as to negotiable
instruments. - Until the contrary is
proved, the following presumptions shall
be made:-
(a) of consideration - that every
negotiable instrument was made or drawn
for consideration, and that every such
instrument, when it has been accepted,
indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or
transferred for consideration;"
"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
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discharge, in whole or in part, of any
debt or other liability."
8. On plain perusal of the provision U/s. 118(a) and 139
of the N.I.Act., it can be seen that initially the presumptions
constituted under these two provisions are in favour of the
complainant. However the presumptions are rebuttable and it is
open to an accused to raise a defence to rebut the statutory
presumptions. An accused can raise a defence, wherein the
existence of legally enforceable debt or liability can be contested.
9. It is also well established that an accused need not
examine himself for discharging the burden of proof placed upon
him under a statute. He may discharge his burden on the basis of
the materials already brought on record. An accused has
constitutional rights to remain silent. The standard of proof on
part of the accused and that of the prosecution in a Criminal Case
is different. The prosecution must prove the guilt of an accused
beyond all reasonable doubts, the standard of proof so as to prove
a defence on the part of an accused is preponderance of
probabilities.
10. Under the light of position of the law, I have perused
the complaint and the evidence placed on record. The complainant
in support of his claim made in the complaint has adduced
evidence by examining himself as PW-1 and he got marked Ex.P1
to 6. PW-1 filed his evidence affidavit on oath and reiterated the
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complaint averments. Ex.P1 is the cheque bearing No.759133 dated
27.05.2019 for a sun of Rs.4,78,500/- drawn on South Indian
Bank, Devanahalli branch, Bengaluru. Ex.P1(a) is the signature of
the accused. Ex.P2 is the bank endorsement with shara "Funds
Insufficient" dated 28.05.2019. Ex.P3 is the office copy of Legal
Notice dated 08.06.2019 issued by the complainant to the accused
demanding repayment of the cheque amount to the addresses of
the accused. Ex.P5 is the postal receipt for having sent the legal
notice to the accused. Ex.P4 is the postal acknowledgment for
having served the notice on the accused on 11.06.2019. Ex.P6 is
the hire purchase agreement entered into between the complainant
and the accused on 18.07.2016. On perusal of Ex.P6, it is found
that the owner has agreed to let and the hirer has agreed to take
on hire/rent the motor vehicle Ashoka Layoland 2003 model
bearing registration No.KA.06.C.1393 for a term of 30 calender
months commencing from 20.08.2016. The parties agreed that the
hire for first month is Rs.15,000/-. The payment schedule is shown
at schedule B, which shows that first 15 installments are of
Rs.15,000/- and next 15 installments are for Rs.13,000/- and the
total installments are 30. Ex.P7 is the B register extract issued by
the ARTO, Devanahalli, Transport Department, Government of
Karnataka. On perusal of Ex.P7, it discloses that the complainant
is the HPA holder in respect of the Ashoka Layland vehicle of the
accused bearing registration No.KA.06.C.1393.
11. On perusal of the documents, it is clear that the
cheque at Ex.P1 bearing No.759133 dated 27.05.2019 for a sun of
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Rs.4,78,500/- drawn on South Indian Bank, Devanahalli branch,
Bengaluru issued in favour of the complainant was presented
within its validity. Ex.P2 is the bank endorsement with shara
"Funds Insufficient" dated:28.05.2019. The Legal Notice dated
06.08.2019 at Ex.P3 was served on the accused on 11.06.2019 as
per Ex.P4. The accused admitted the service of notice. The
complaint was filed on 24.07.2019, which is within limitation. The
cheque and the signature are not disputed. Therefore, the
documents on record clearly show that the complainant has
complied the ingredients of Section 138(a) to (c) of the N.I.Act.
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. 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.
12. 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:-
"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
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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 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
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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."
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.
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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 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
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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.
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
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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 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
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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.
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.
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(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:
25.1. 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
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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.
(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
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the complainant has been paid. In the present case, no such
evidence has been led by the accused. The story put forward
by the accused that the cheques were given by way of
security is not believable in absence of further evidence to
rebut the presumption and more particularly the cheque in
question was issued for the second time, after the earlier
cheques were dishonoured. Therefore, both the courts below
have materially erred in not properly appreciating and
considering the presumption in favour of the complainant
that there exists legally enforceable 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:
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11. From the facts arising in this case and the
nature of the rival contentions, the record would disclose
that the signature on the documents at Exhibits P-6 and P-2
is not disputed. Exhibit P-2 is the dishonoured cheque based
on which the complaint was filed. From the evidence
tendered before the JMFC, it is clear that the respondent
has not disputed the signature on the cheque. If that be the
position, as noted by the courts below a presumption would
arise under Section 139 in favour of the appellant who was
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
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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:-
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
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Court had been at variance with the principles of
presumption in law. After such presumption, the onus
shifted to the accused and unless the accused had discharged
the onus by bringing on record such facts and circumstances
as to show the preponderance of probabilities tilting in his
favour, any doubt on the complainant's case could not 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
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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.
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
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the onus imposed upon them in terms of Section 118 and
Section 139 of the NIA.
13. Therefore on perusal of the above judgments, it is
clear that it is well established that if the cheque and signature
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
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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 probable defence
either by leading direct defence evidence or by relying on the
evidence of the complainant.
14. The accused lead defence evidence. He examined
himself as DW.1. It is the defence of the accused that he obtained
vehicle loan from the complainant in the year 2016. He purchased
old Ashok Layland vehicle bearing registration No.KA.06.C.1393 by
obtaining loan of Rs.2,70,000/- from the complainant. He repaid
the loan by way of installments of Rs.15,000/- per month. He paid
6 installments. At the time of obtaining the loan the complainant
took 5 signed blank cheques as security. After payment of 6
installments, he was unable to pay 2 installments. At that time the
complainant misused one cheque and presented it for Rs.3,00,000/-
and issued notice to him. He issued reply notice to the said legal
notice of the complainant. He sought three months time to clear
the loan and accordingly cleared the loan. He asked for HP cancel
letter to cancel the entry in RTO office but the complainant did
not give the letter. Thereafter the complainant misused another
cheque in February 2019 for Rs.4,78,500/-. The complainant issued
the notice. He had no liability to pay the amount to the
complainant.
15. In order to prove his defence, the accused did not
produce any documents. The counsel for the complainant cross
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examined DW.1. He admitted cheque at Ex.P1 and signature in it.
He admitted the hire purchase agreement at Ex.P6. He admitted
the service of notice. The accused did not issue reply notice. He
failed to take action against the complainant for misuse of cheque.
He failed to prove the repayment of entire amount by way of
cash. He failed to issue stop payment instructions to the bank in
respect of the security cheques.
16. The counsel for the complainant argued that the
cheque and signature are admitted. The issuance of cheque in
favour of the complainant is admitted. The transaction as per
Ex.P6 is admitted. The issuance of notice is admitted. The
presumptions u/sec.139 and 118 of N.I Act are raised in favour of
the complainant. The burden is on the accused to prove his
defence. The accused did not produce any documents in support of
his defence. The accused failed to prove his defence. Hence, he
may be convicted. On the other hand, the counsel for the accused
argued that the accused borrowed an amount of Rs.2,70,000/- and
executed hire purchase agreement. There is no mention of the
amount of loan in the agreement and the interest charges. The
amount mentioned in the agreement and the cheque do not match.
Even after the expiry of the stipulated period, the vehicle was not
seized. The accused issued four signed blank cheques as security.
The accused misused one cheque and he did not return the other
three cheques. Thereafter the accused misused another cheque and
he did not return the other two cheques. The complainant did not
file case on the basis of the first cheque, which was presented for
25 CC.17774/2019( J)
encashment and returned dishonoured and even though the
demand notice was served on the accused and the accused issued
reply notice. As per the version of the complainant, he paid loan
of Rs.3,00,000/- and he admitted that five installments have been
received but he presented the cheque for an amount of
Rs.4,78,500/-. The accused is not liable to the extent of cheque
amount. There are inconsistencies in the evidence of complainant.
Hence, the accused may be acquitted.
17. Though the accused did not produce any documents in
order to prove his defence, he relied on the evidence of the
complainant to prove the same. It is the case of the complainant
that there is transaction in respect of hire purchase between him
and the accused as per Ex.P6. Ex.P6 is admitted. However the
complainant failed to mention in the complaint and notice about
the amount of loan given by him under Ex.P6. There is also no
mention of the amount lent in the Ex.P6. It is the defence of the
accused that The counsel for the accused cross examined PW.1. It
was elicited in the cross examination of PW.1 that he gave loan of
Rs.3,00,000/- to the accused in respect of Ashok Layland vehicle
bearing No.KA.06.C.1393. If that is so the complainant would have
no hurdle to mention the said amount in the complaint.
Irrespective of the said fact, Ex.P6 is admitted document and the
accused agreed to pay 30 installments out of which 15 installments
are of Rs.15,000/- and 15 installments are of Rs.13,000/-.
26 CC.17774/2019( J)
18. It is the defence of the accused that he paid six
installments. The complainant did not mention in the complaint
and notice about the payment made by the accused. The counsel
for the accused cross examined PW.1 and it was elicited in the
cross examination of PW.1 that the accused repaid vehicle loan 3
times by way of bank transfer and 2 times by way of cash and the
accused signed while paying the installments by way of cash. He
can produce the bank statements. It shows that the accused paid
five installments of Rs.15,000/- amounting to Rs.75,000/-. It is
admitted fact and it need not be proved. Even in the cross
examination of DW.1 the counsel for complainant suggested DW.1
that he paid only three installments and the remaining amount is
due. This also shows that the accused has made part payment.
However the said part payment is not deducted from the total
amount of installments. Further the complainant stated that he can
produce the bank statement but he failed to produce. Therefore
adverse inference can be drawn that if the bank statement is
produced it would go against him.
19. It was further elicited in the cross examination of
PW.1 that the accused did not pay the installments as per the
payment schedule mentioned in the agreement at Ex.P6. On
perusal of Ex.P6, it is found that the owner has agreed to let and
the hirer has agreed to take on hire/rent the motor vehicle Ashoka
Layoland 2003 model bearing registration No.KA.06.C.1393 for a
term of 30 calender months commencing from 20.08.2016. The
parties agreed that the hire for first month is Rs.15,000/-. The
27 CC.17774/2019( J)
payment schedule is shown at schedule B, which shows that first
15 installments are of Rs.15,000/- and next 15 installments are for
Rs.13,000/- and the total installments are 30 and the total value is
Rs.4,20,000/-. As per the terms if the hirer makes default in
payment of hire or rent, or failed to comply the terms and
conditions of the hire purchase agreement, the agreement is
immediately terminated and the owner has can take the possession
of the vehicle. If the hirer failed to purchase the vehicle as per
the terms, the hirer shall continue to pay a sum of Rs.13,000/- on
20th of every month by way of damages along with the
compensation for delay in payments. On perusal of the evidence
on record, it is clear that the complainant stated that he lent
Rs.3,00,000/-. As per Ex.P6 there are 30 installments totally
amounting to Rs.4,20,000/-. The complainant admitted that the
accused paid five installments, which is amounting to Rs.75,000/-.
If the same is deducted, the due amount would be Rs.3,45,000/-.
It is clear from the recitals of hire purchase agreement at Ex.P6
that if the hirer committed default the vehicle can be seized by
the owner. If at all the accused committed default after paying
five installments, the complainant would have seized the vehicle of
the accused. The fifth installment as per the schedule B in Ex.P6 is
dated 20.12.2016. The sixth installment as per the schedule B in
Ex.P6 is dated 20.01.2017. It is hard to believe as to why the
complainant kept quiet till 20.01.2019, which is the last
installment as per Schedule B in Ex.P6, even though the accused
committed default in the month of January 2017 itself. It was
asked to DW.1 during his cross examination about the possession
28 CC.17774/2019( J)
of the vehicle and DW.1 answered that the vehicle is with him.
Thereafter it was suggested that even though the vehicle is not in
his possession, he is deposing falsely. Therefore it is clear that the
vehicle was not seized by the complainant on default of payment
of installments. He has not explained as to why he kept quiet
from 2017 to 2019. This creates doubt on the case of the
complainant. Further it is also clear that in view of admission by
the complainant about payment of five installments, there is no
legally enforceable debt to the extent of cheque amount.
20. It is the defence of the accused that after payment of
6 installments, he was unable to pay 2 installments. At that time,
the complainant misused one cheque and presented it for
Rs.3,00,000/- and issued notice to him. He issued reply notice to
the said legal notice of the complainant. He sought three months
time to clear the loan and accordingly cleared the loan. The
accused failed to prove that he paid six installments. However it is
admitted fact that the accused paid five installments. The accused
failed to produce any document to show that the complainant
presented the cheque for Rs.3,00,000/- and after its dishonour,
issued notice to him. He also failed to produce the reply notice
issued by him on the previous occasion. However the counsel for
the accused cross examined PW.1 and it was elicited that he did
not file any other case against the accused. He voluntarily stated
that another cheque was dishonoured and he issued the notice and
the accused issued the reply notice. Thereafter he did not file the
case. The accused issued the cheque in question at the time of
29 CC.17774/2019( J)
settlement. Therefore the voluntary statement given by the
complainant makes it clear that he presented the cheque on
previous occasion and issued notice for which the accused issued
the reply notice. However he did not explain anything about the
same. There is no reference about the same in the notice issued in
this case and the complaint. He has also not produced the said
documents. If at all the complainant has previously presented the
cheque for Rs.3,00,000/- and kept quiet without filing the case
against the accused, it amounts to suppression of facts in the
present case. Therefore case of the complainant is doubtful.
21. As the judgment of Hon'ble Supreme Court of India in
the case of Dasharathbhai Trikambhai Patel Vs. Hitesh
Mahendrabhai Pate and Anr. in Crl.A.No.1497 of 2022 dated
11.10.2022 reported in 2022 LiveLaw (SC) 830 wherein it was
held as under;
When a part-payment of the debt is made after the
cheque was drawn but before the cheque is encashed, such
payment must be endorsed on the cheque under section 56
of the Act. The cheque cannot be presented for encashment
without recording the part payment. If the unendorsed
cheque is dishonoured on presentation, the offence under
section 138 would not be attracted since the cheque does
not represent a legally enforceable debt at the time of
encashment.
30 CC.17774/2019( J)
For the commission of an offence under section
138, the cheque that is dishonoured must represent a
legally enforceable debt on the date of maturity or
presentation. If the drawer of the cheque pays a part or
whole of the sum between the period when the cheque
drawn and when it is encashed upon maturity, then the
legally enforceable debt on the date of maturity would not
be the sum represented on the cheque. When a part or
whole of the sum represented on the cheque is paid by the
drawer of the cheque, it must be endorsed on the cheque as
prescribed in Section 56 of the Act. The cheque endorsed
with the payment made may be used to negotiate the
balance, if any. If the cheque that is endorsed is
dishonoured when it is sought to be encashed upon
maturity, then the offence under section 138 will stand
attracted.
As per the above judgment the part or whole payment must
have been made during the period between the drawing of the
cheque and the presentation of the cheque for encashment. If any
such payment is made, it should be endorsed on the cheque. If
endorsement is not made and the cheque is presented for
encashment, then the offence U/s.138 of NI Act is not attracted as
there is no legally enforceable debt as on date of presentation of
cheque for encasement. The facts of the present case are different.
In the case on hand, the cheque in question is alleged to have
31 CC.17774/2019( J)
been issued in the year 2019. There is no part payment made
from the alleged date of drawing of the cheque and its
presentation for encashment. Admittedly the payments have been
made much prior to the drawing of the cheques. Though the facts
of the said case and the present case are different and it is not
applicable to the facts of the present case, the aspect of existence
of legally enforceable debt as on the date of presentation of the
cheque for encashment has to be considered. In order to attract
the provision u/sec.138 of N.I Act the debt must be legally
enforceable debt as per the explaination given in the said section.
It is clearly held by the Hon'ble Supreme Court in the aforesaid
case that For the commission of an offence under section 138, the
cheque that is dishonoured must represent a legally enforceable
debt on the date of maturity or presentation. In the case on hand,
as per Ex.P6, there are 30 installments totally amounting to
Rs.4,20,000/- for a period from 20.08.2016 to 20.01.2019. The
complainant admitted that the accused paid five installments,
which is amounting to Rs.75,000/-. If the same is deducted, the
due amount would be Rs.3,45,000/-. However the cheque amount
is Rs.4,78,500/-. It is not made clear as to how the said amount is
arrived at. The accused admittedly paid five installments and the
deduction has not been given. Therefore there is no legally
enforceable debt on the date of presentation of the cheque to the
extent of cheque amount. Therefore the provision u/sec.138 of N.I
Act is not attracted.
32 CC.17774/2019( J)
22. 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 to an extent of amount under the cheque and he has
not at all issued the instant cheque towards the discharge of
legally enforceable liability. On the other hand, the complainant
failed to prove that the accused issued the cheque for the legally
enforceable liability. The complainant failed to prove his case
beyond reasonable doubts. 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 has created the doubt on the transaction and issuance of
cheques in favour of complainant as alleged in the complaint. He
proved that there is no debt or liability in favour of the
complainant as alleged in the complaint. Therefore this Court is of
the opinion that the accused rebutted the statutory presumption
U/s.139 and 118(a) of the Act by pointing out the infirmities in
the case of the complainant. Accordingly, the accused is found not
guilty for the offence punishable U/s.138 of the N.I.Act. Hence,
the Point No.1 is answered in the Negative and Point No.2 is
answered in the Affirmative.
23. Point No.3 : In view of the reasons assigned in Point
No.1 and 2 Therefore considering the facts and circumstances of
the case, I proceed to pass the following:-
33 CC.17774/2019( J)
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 him after appeal period is over.
(Dictated to the Stenographer, transcript thereof is computerized and printout taken by him, is verified and then pronounced by me in Open Court on this the 24th day of April-2023.) (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.
34 CC.17774/2019( J) ANNEXURE Witnesses examined for the Complainant:-
PW.1 : Sri. Prakash Chand Bafna Documents marked for the Complainant:-
Ex.P1 : Cheque
Ex.P1(a) : Signature of the accused
Ex.P2 : Bank endorsement
Ex.P3 : Office copy of the legal notice
Ex.P4 : Postal acknowledgment
Ex.P5 : Postal receipt
Ex.P6 : Hire Purchase Agreement
Ex.P7 : B Register Extract
Witnesses examined For Defence:-
DW.1 : R. Muniraju Documents marked for Defence:-
Nil (Lokesh Dhanapal Havale), XV Addl.CMM., Bengaluru.
35 CC.17774/2019( J) 24.04.2023 (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 him after appeal period is over.
XV Addl.CMM., Bengaluru.
36 CC.17774/2019( J)