Karnataka High Court
Sri Prasad S Rajanalli vs Sri B Shiva Kumar on 5 January, 2023
Author: P.N.Desai
Bench: P.N.Desai
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CRL.A No. 169 of 2012
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF JANUARY, 2023
BEFORE
THE HON'BLE MR JUSTICE P.N.DESAI
CRIMINAL APPEAL NO. 169 OF 2012
BETWEEN:
SRI. PRASAD S. RAJANALLI
S/O. SRI. R.L.S. SETTY,
AGED ABOUT 48 YEARS
R/AT NO.175, 2ND CROSS
AECS LAYOUT, RMV II STAGE
SANJAYA NAGARA
BANGALORE-560094
...APPELLANT
(BY SRI. G.S.VENKAT SUBBARAO.,ADVOCATE)
AND:
SRI. B. SHIVA KUMAR
S/O. SRI. BASAPPA
AGED ABOUT 43 YEARS
R/O.NAGARAKATTE GRAMA
KADAJJI POST
Digitally
signed by
DAVANAGERE TQ & DIST
NAGARATHNA
M
Location: ...RESPONDENT
HIGH COURT
OF
KARNATAKA (BY SRI. HAREESH BHANDARY T.,ADVOCATE)
THIS CRL.A. FILED U/S.378(4) CR.P.C BY THE ADV.,
FOR THE APPELLANT PRAYING THAT THIS HON'BLE COURT
MAY BE PLEASED TO SET ASIDE THE JUDGMENT OF
ACQUITTAL DT.28.12.2011 PASSED BY THE XII ADDL. CMM.,
BANGALORE IN C.C.NO.2427/2009 - ACQUITTING THE
RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I.
ACT.
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CRL.A No. 169 of 2012
THIS APPEAL, COMING ON FOR FURTHER ARGUMENTS,
THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal arises out of the judgment of acquittal dated 28.12.2011 passed in C.C.No.2427/2009 by XII Additional Chief Metropolitan Magistrate at Bengaluru City, for the offences punishable under Section 138 of Negotiable Instruments Act, 1881, (for short hereinafter referred to as 'N.I. Act.).
2. The appellant was the complainant and the respondent was the accused before the Trial Court and they will be referred as per their respective ranks held before the Trial Court for the sake of convenience in this appeal.
3. The complainant filed a complaint before the Trial Court for the offences punishable under Section 138 of N.I. Act against the accused. It is alleged by the complainant that the complainant and accused were friends since many years. On the basis of the said friendship accused approached the complainant for financial assistance on 09.5.2008 for lending a loan of Rs.12,00,000/- stating that he will pay the same in -3- CRL.A No. 169 of 2012 two weeks. Accordingly, the complainant lend a sum of Rs.12,00,000/- to the accused. Towards the discharge of the said legal liability, the accused issued cheque bearing No.0798186 dated 26.05.2008 for Rs.12,00,000/- drawn on Chitradurga Gramina Bank, Rampura, Davangere Taluk. When the complainant presented the said cheque for encashment, the same came to be disnourned with an endorsement 'insufficient funds' in the account of accused. Then the complainant got issued statutory notice to the accused dated 02.07.2008 through RPAD. The said notice was served on the accused. But the accused neither gave reply to the said notice nor repaid the amount. Hence, the complainant filed a complaint.
4. In order to prove his case, the complainant got examined himself as PW.1 and got marked nine documents as Exs.P1 to P9. On behalf of respondent/accused, accused got examined himself as DW.1 and one Jagadish B.N., got examined as DW.2 and got marked two documents as Exs.D1 and D2. After hearing the arguments, learned ACMM has acquitted the accused. Hence, this appeal. -4- CRL.A No. 169 of 2012
5. Heard Sri. G.S.Venkat Subba Rao, learned counsel for the appellant and Sri. Hareesh Bhandary, T, learned counsel for the respondent.
6. Learned counsel for the appellant argued that the Trial Court has not properly appreciated the evidence on record. Therefore, the impugned judgment of acquittal needs to be set aside. The learned counsel further argued that the Trial Court has not at all framed proper points for consideration and not considered the fact that as to whether the ingredients of Section 138 of N.I. Act are proved or not. The Trial Court never referred in its judgment regarding the presumption arising under Sections 118 and 139 of N.I. Act. In spite of complainant proving his financial capacity, only based on the defence evidence of accused, acquitted the accused, which has resulted in miscarriage of justice. The Trial Court failed to consider the fact that the accused has failed to rebut the presumption by adducing legally admissible evidence. Learned counsel argued that the Trial Court has not properly read the evidence of the complainant as a whole, but only on considering the statement of the complainant that he has paid the amount through a cheque has dismissed the -5- CRL.A No. 169 of 2012 complaint which is not correct. The learned counsel argued that the appellant and accused are friends and the complainant himself withdrawn the amount through a 'self cheque' which is evident from Ex.D2, whereby the complainant has withdrawn a sum of Rs.12,00,000/- on 09.05.2008 and given to the accused on the same day. Simply because, the complainant has stated that the amount paid through cheque and given to the accused, does not mean that amount was paid through cheque to the accused, but it is his self drawn cheque, which was encashed by him and paid to the accused. In that context, the evidence of the complainant has to be appreciated.
7. Learned counsel argued that the defence of the respondent/accused that he has given the cheque as a security to one R.B.Rehmathulla who is his friend in connection with chit business run by the complainant and the complainant has misused the same. But the said Rehmathulla was not examined on behalf of the respondent/accused. Learned counsel argued that the complainant has discharged his initial burden and accused has failed to rebut the said presumption by preponderance of probability. But the Trial -6- CRL.A No. 169 of 2012 Court wrongly acquitted the accused. With these main arguments, learned counsel prayed to convict the accused and to allow the petition. In support of his arguments the learned counsel relied on the following decisions:
1) Rohitbhai Jivanlal Patel Vs. State of Gujarat and another - (2019) 18 SCC 106
2) Shree Daneshwari Traders Vs. Sanjay Jain and another - (2019) 16 SCC 83
3) Bir Singh Vs. Mukesh Kumar - (2019) 4 SCC 197
4) Sumeti Vij Vs. Paramount Tech Fab Industries -
2021 SCC Online SC 201
5) M/s. Kalamani Tex & Anr. Vs. P.Balasubramanian
- Crl.A.No.123/2021 dated 10.02.2021
6) P. Rasiya Vs. Abdul Nazer and another - (2022) SCC Online SC 1131
8. Against this, the learned counsel for the respondent/accused argued that no where either in the complaint or in the legal notice, the complainant has stated about the mode of payment. No documents are produced to show that as to whether the amount paid by way of cash or through cheque. Therefore, there is no proof for payment of -7- CRL.A No. 169 of 2012 consideration amount. The learned counsel drawn attention of the Court to the cross-examination of complainant, wherein he has clearly stated that the amount was paid through cheque. But no documents are produced to prove that the accused has issued cheque to the complainant. The accused has given his defence evidence and has examined the manager of the bank and got secured cheque of the complainant through which the complainant has withdraw the amount and on that cheque also there is no signature of the accused stating that the amount is paid to the accused. Therefore, in the absence of any such signature of the accused appearing on the said cheque, the Court cannot presume that the payment was made through cheque to the accused. Therefore, the complainant has failed to prove the mode of payment through cheque. On the other hand, the accused has given probable defence by leading his defence evidence that there was a chit transaction with one Rehamuthulla and the complainant and in that connection at the request of said Rehamathulla, as the surety to Rehamathulla, the accused has issued a said cheque for -8- CRL.A No. 169 of 2012 Rs.12,00,000/- to the Rehamathulla. The complainant has misused the same and filed this case.
9. Learned counsel further argued that, the complainant has failed to prove as to how the payment was made and has not produced any document to show that the accused has received any such amount and there is no necessity to the accused to borrow such huge amount. The defence set up by the respondent/accused is probable one. On the other hand, the complainant has failed to prove that the accused borrowed any amount from him. Therefore, there is no question of any legally recoverable debt due by the accused. In support of his arguments, learned counsel relied on the decision of Hon'ble Supreme Court in the case of Kamala S. Vs. Vidyadharan M.J. - AIR 2007 SC (SUPP) 1142. Further the learned counsel argued that the Trial Court has appreciated the defence evidence of the accused in a proper perspective and has rightly come to the conclusion that the complainant has failed to discharge his initial burden and the complainant has failed to prove that he has lend the amount to the accused. Therefore, the Trial Court has rightly acquitted the accused and dismissed the appeal. With these -9- CRL.A No. 169 of 2012 main arguments learned counsel prayed to dismiss the appeal.
10. I have perused the judgment of acquittal passed by the Trial Court and other material placed on record.
11. Learned ACMM in his judgment has rasied three points for consideration which are as under:
1) Whether complainant proves that accused has issued three cheques in different dates so as to discharge the legal debt of Rs.12,00,000/- in favour of the Complainant which came to be bounced?
2) Whether complainant further proves that she issued legal notice to accused which came to be served on her. Despite the accused has not paid cheque amount. Thereby accused committed an offence punishable under Sec.138 of N.I Act?
3) To what order?
12. On perusing the first point framed by the Trial Court for consideration, it is evident that the learned ACMM has mistook the complaint and evidence. Neither it is the evidence of the complainant, nor it is the defence of the accused that three cheques on different dates were issued by
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the accused to the complainant. Therefore, the first point framed by the Trial Court for consideration is not correct. In a cases filed under Section 138 of N.I. Act, firstly, the complainant is required to prove that there was a legally enforceable debt or liability which is recoverable by him. Then the Court has to see whether the complainant has discharged his initial burden, then the Court has to consider that whether the accused has discharged his burden either by way of cross- examining the complainant or by way of leading the defence evidence and to ascertain who has discharged onus casted upon them. Instead of that, the Trial Court misdirected itself and not framed proper points for consideration. The second point for consideration is also regarding the service of legal notice on the accused and no where it is stated that either legal notice was not issued or it was served on the accused. The learned ACMM has misdirected himself and raised irrelevant points for consideration and acquitted the accused.
13. I have also perused the reasons assigned by the learned ACMM for acquittal of the accused. The learned ACMM has referred to the affidavit filed by the complainant, defence of the accused and evidence of PWs.1 and 2 and referred to
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CRL.A No. 169 of 2012Ex.P1/cheque. Learned ACMM has referred to the evidence of the bank manager/DW.2 and found that the said cheque is a self cheque of the complainant for a sum of Rs.12,00,000/- and there is no signature of the accused/withdrawer on the back side of the said cheque. It is only the signature of the complainant appearing on the said cheque. The learned ACMM has held that the complainant has failed to prove that he has lend a sum of Rs.12,00,000/- through EX.D2-cheque. The learned ACMM has further held at paragraph No.9 that the accused has issued Ex.P1/cheque to one Rehamathulla who is having a chit transaction with complainant and the same is reiterated by the accused in his defence evidence and the learned ACMM has held that it appears to be true facts and referred to the decision of Hon'ble Supreme Court in the case of Rangappa Vs. Mohan reported in AIR 2010 SC 1898 and held that the complainant has failed to prove that he has lend the amount to the accused and accused has rebutted the presumption arising under section 138 of N.I. Act and acquitted the accused.
14. I have considered the evidence on record and perused the complaint filed before the Trial Court.
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CRL.A No. 169 of 2012
15. This Court being the First Appellate Court has to re-appreciate evidence on record.
16. As stated above, the initial burden of proving the ingredients of Section 138 of N.I. Act is on the complainant only. In order to prove the same, the complainant has filed his examination-in-chief affidavit and sworn statement, wherein he has reiterated the complaint averments and at paragraph No.4 of the affidavit, he has stated that on 09.05.2008, the accused borrowed a sum of Rs.12,00,000/- and has promised to pay the same within two weeks. He has also stated that the accused is his friend and he has requested for financial assistance to meet his legal necessities. The complainant has stated that towards the discharge of the said legal liability, the accused in turn has issued a cheque bearing No.0798186 dated 26.05.2008 for a sum of Rs.12,00,000/- and when the complainant presented the cheque for encashment, the same came to be dishonored with an endorsement that 'funds insufficient'. Therefore, the complainant issued a legal notice. Hence, he has filed the complaint. In support of his oral evidence, he has produced
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CRL.A No. 169 of 2012documents as per Exs.P1 to P9. Ex.P1 is the cheque wherein the said cheque shows that it was issued in favour of the complainant and it is signed by the accused. Ex.P2 is the bank endorsements wherein it is stated that the cheque came to be dishonored, as the 'funds were insufficient'. Ex.P3 is the legal notice dated 02.07.2008, wherein it is stated that the complainant has lend a sum of Rs.12,00,000/- and issuance of cheque bearing No.0798186 by the accused and the said cheque came to be dishonored. Ex.P3(a) is the postal acknowledgment. It is stated that the said notice is served on the complaint. Ex.P4 is the certificate of posting. Ex.P5 is the intimation issued by the bank wherein it is stated that the cheque has come back with an endorsement 'funds insufficient'. Ex.P6 is the pass book of the complainant wherein the entry at Ex.P6A shows that a sum of Rs.12,00,000/- was withdrawn through a self cheque on 9.5.2008. From these documents produced by the complainant and also on perusing the examination-in-chief affidavit and other documentary evidence, at this stage, it is evident that the complainant has complied with the ingredients of Section 138 of N.I. Act. From the perusal of
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CRL.A No. 169 of 2012the complaint averments, oral evidence and documentary evidence, the presumption under Sections 118 and 139 of N.I. Act arise in favour of holder of the cheque. The Hon'ble Supreme Court in the above referred decisions relied on by the learned counsel for the appellant, has discussed in detail as to how the presumption can be rebutted. It is the settled principles of law that the accused can rebut the said presumption either by way of cross-examining the complainant or by leading defence evidence and to show before the Court by preponderance of probability that the case made out by the complainant is not probable and cannot be believed and accused defence is probable.
17. In order to appreciate the same, I have considered the cross-examination of PW.1 and it is no doubt true that the complainant neither in his examination-in-chief nor in complaint or legal notice has stated as to how a sum of Rs.12,00,000/- was paid. But from Ex.P6/pass book of the complainant, it is evident that the complainant on 09.05.2008 through a self cheque has withdrawn the said amount.
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CRL.A No. 169 of 2012
18. Learned counsel for the respondent drawn attention of the Court to the cross-examination of PW.1/complainant and at page No.6 of his deposition, PW.1/complainant has stated that the accused has approached him and out of the friendship to meet the personal problems of the accused, the complainant has lend the amount. The complainant has lend a sum of Rs.12,00,000/- and he has stated that he has lend the said sum through cheque and he has produced the document to that effect. Further PW.1 has stated that on the basis of cheque, he has paid a sum of Rs.12,00,000/- to the accused. PW.1/complainant has not taken any other document from the accused for lending the said amount, except the cheque and it is only out of friendship, he has lend the amount to the accused. PW.1 has stated that he could not explain how much income, he had in the year 2008, when he lend loan to accused and he further stated that he has to enquire his auditor about his source of income and he has stated that he could produce documents to that effect. PW.1 has stated that he is an income tax assessee and he can produce documents pertaining to his assessment or income tax returns to the Court if required. PW.1 has stated that he got
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CRL.A No. 169 of 2012sufficient source of income from agriculture and estate business. He has also stated that he has let his property on rent basis to run factory and have sufficient source of income from said rent also. Even PW.1 has got dry lands. PW.1 stated that he has not produced documents pertaining to above said source of income and he states that he would produce the documents to that effect. A suggestion was made to PW.1 that he has filled the cheque of accused to his convenience which is denied by PW.1. It is suggested as accused has no capacity to repay Rs.12,00,000/- Even accused has no property worth of Rs.5,00,000/-. It is also suggested that he has filled the blank cheque and filed false complaint. It is suggested that PW.1 used to lend amount and take cheque from concerned person as security and used to misuse such blank cheques and used to file false complaint on his whims and fancies. But PW.1/complainant denied the all such suggestions. Then again in the cross-examination he was confronted with Ex.P6/pass book. The complainant denied the suggestions that he has kept other two blank cheques of accused and the accused has not borrowed any amount from him and not issued Ex.P1/cheque to discharge said debt. In the further cross-
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CRL.A No. 169 of 2012examination of PW.1, he has also produced his income tax returns as per Exs.P8 and P9. Further PW.1 has denied the suggestion that he has prepared and created Ex.P8 for the convenience of this case by colluding with his auditor.
19. Therefore, on perusing the evidence of PW.1 and reasons assigned by the learned ACMM, it is evident that the accused has not rebutted presumption in favour of complainant and not discharged his burden in cross-examination of PW.1. The defence evidence lead by the accused is that the cheque in question was given by the accused as a security to one Rehamuttala, who was the subscriber of chit business run by the complainant and in turn the complainant has misused the same and filed a false complaint. With regard to the said aspect, while cross-examining the complainant, the accused has neither put any suggestions regarding the same and no such answers were elicited from the complainant. On the other hand, contradictory suggestions were made stating that a blank cheque was given to complainant and the complainant has also kept other two to three cheques of accused and the complainant has misused them. For what purpose the blank cheque was given and why other two to three cheques were
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CRL.A No. 169 of 2012given to complainant is not forthcoming. If at all the accused has issued a blank cheque and the complainant has misused the same, why the accused has not taken any action against the complainant is not forthcoming. Absolutely nothing is elicited from the cross-examination of complainant to show that the accused has rebutted the presumption.
20. The complainant has stated that on 09.05.2008, he has lend the amount to the accused by withdrawing the said amount through a self drawn cheque, but the complainant has not issued cheque in favour of the accused and that does not mean that the amount was not lent to the accused. On the other hand, it is evident from Ex.P6-pass book and Ex.P1/cheque that the complainant has withdrawn the amount through his self cheque on 09.05.2008 and lend to the accused. There is some force in the argument of learned counsel of the appellant that the complainant and the respondent being friends, out of friendship, the complainant has withdrawn the amount and lend the same to the accused.
21. If the cross-examination of complainant and the defence put forth by the accused is considered, there is absolutely nothing to show that the accused has not received
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CRL.A No. 169 of 2012the said amount. If he has not received the amount, then why he has given cheque in the name of complainant is not forthcoming. On the other hand, totally contradictory and inconsistent defence is set up by the accused which cannot be believed at all.
22. Therefore, on perusing the evidence of the complainant, it is evident that the complainant has issued legal notice which is served on the accused, but the accused has not replied to the said notice. If at all the accused has issued cheque to one Rehamathulla, if at all the complainant has misused the blank cheque issued to the said Rehamathulla, issued in his name, if at all he has issued two or three cheques to the complainant, accused could have replied to the legal notice issued by the complainant. Even the legal notice is served on the accused. The notice has got its own importance and it is the statutory notice which is to be issued mandatorily before instituting any such complaint.
23. I have perused the evidence adduced by the accused. In his examination-in-chef-affidavit, he has stated that he has not borrowed a sum of Rs.12,00,000/- from the complainant. The accused has stated that the complainant
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CRL.A No. 169 of 2012was conducting the chit business and one Rehamathulla was the subscriber to the said chit and the chit amount was Rs.5,00,000/- The said Rehamathulla had participated in the chit transaction which is stated to have been conducted in the year 2001 and he won the bid amount and at the time of payment of chit amount, the complainant insisted for one surety and Rehamathulla who is the close friend of accused requested him to sign the surety, hence the accused agreed and issued blank cheque to Rehamathulla in the year 2001 and the said cheque is misused by the complainant and he got presented the same for encashment in the year 2008.
24. Therefore, this defence of accused has no basis at all. According to the accused, the said Rehamathulla is no more. The legal representatives if any of Rehamathulla are examined. Accused has failed to prove that said Rehamathula had such transaction with the complainant. When there being no evidence placed by the accused by way of reply or by proving the same by preponderance of probability, it is evident that the accused has failed to rebut the presumption.
25. It is not the defence of the accused that the hand writing in the cheque is not his writing or signature is not his
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CRL.A No. 169 of 2012signature. Therefore, an adverse inference will have to be drawn against the accused for not producing any such evidence to believe that the accused has rebutted the presumption arising in favour of complainant by way of preponderance of probability. In the cross-examination, the accused has clearly admitted that himself and the complainant are friends. He know the complainant since the year 2000. Even when the complainant shifted to Bangalore his friendship continues with him and the accused has also admitted that the complainant used to visit him. Accused has clearly stated that he does not know the name of chit business run by the complainant and he has stated that the complainant was running chit business from the year 2001 and 2003, then how in the year 2008, the complainant filed the complaint is not forthcoming. Accused has admitted that he has no document to show that the complainant was running such chit business. He again stated that he came to know about Rehamathulla only through the complainant. On the other hand, in the examination-in-chief, he has stated that Rehamathulal is his friend and he cannot say when the Rehamathulla become highest bidder in the chit and when he has taken chit amount
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CRL.A No. 169 of 2012and even he cannot say when he stood as surety to the said Rehamathulla. Again accused stated in his cross-examination that he has not issued the cheque to Rehamathulla and this again goes against the accused. At one instance the accused stated that he has issued cheque to Rehamathulla. Then the defence of the accused is that he has issued blank cheuqe to Rehamathull is falsified and the rest of the cross-examination of accused is one of denials.
26. Learned counsel for the appellant has relied on the decision of Hon'ble Supreme Court in the case of ROHITBHAI JIVANLAL PATEL VS. STATE OF GUJARAT AND ANOTHER1 and at paragraph Nos.15, 17, 18, 19.6, 20, 21 and 22 held as under:
15. So far the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 the NI Act is concerned, apparent it is that the appellant-accused could not deny his signature on the cheques in question that had been drawn in favour of the complainant on a bank account maintained by the accused for 1 (2019) 18 SCC 106
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a sum of Rs.3 lakhs each. The said cheques were presented to the bank concerned within the period of their validity and were returned unpaid for the reason of either the balance being insufficient or the account being closed. All the basic ingredients of Section 138 as also of Sections 118 and 139 are apparent on the face of the record. The Trial Court had also consciously taken note of these facts and had drawn the requisite presumption. Therefore, it is required to be presumed that the cheques in question were drawn for consideration and the holder of the cheques i.e., the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the accused-appellant to establish a probable defence so as to rebut such a presumption.
17. On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its non- existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial
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CRL.A No. 169 of 2012would not fulfil the requirements of rebuttal as envisaged under Section 118 and 139 of the NI Act. This court stated the principles in the case of Kumar Exports (supra) as follows:
"20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence
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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.
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
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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, therefore, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue."
18. 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
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CRL.A No. 169 of 2012probabilities 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 accused-appellant. The aspect relevant for consideration had been as to whether the accused-appellant has brought on record such facts/material/circumstances which could be of a reasonably probable defence. 19.6 The fact of the matter remains that the appellant could not deny his signatures on the said writing but attempted to suggest that his signatures were available on the blank stamp paper with Shri Jagdishbhai. This suggestion is too remote and too uncertain to be accepted. No cogent reason is available for the appellant signing a blank stamp paper. It is also indisputable that the cheques as mentioned therein with all the relevant particulars like cheque numbers, name of Bank and account number are of the same cheques which form the subject matter of these complaint cases. The said document bears the date 21.03.2007 and the cheques were post- dated, starting from 01.04.2008 and ending at 01.12.2008. There appears absolutely no reason to discard this writing from consideration.
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20. Hereinabove, we have examined in detail the findings of the Trial Court and those of the High Court and have no hesitation in concluding that the present one was clearly a case where the decision of the Trial Court suffered from perversity and fundamental error of approach; and the High Court was justified in reversing the judgment of the Trial Court. The observations of the Trial Court that there was no documentary evidence to show the source of funds with the respondent to advance the loan, or that the respondent did not record the transaction in the form of receipt of even kachcha notes, or that there were inconsistencies in the statement of the complainant and his witness, or that the witness of the complaint was more in know of facts etc. would have been relevant if the matter was to be examined with reference to the onus on the complaint to prove his case beyond reasonable doubt. These considerations and observations do not stand in conformity with the presumption existing in favour of the complainant by virtue of Sections 118 and 139 of the NI Act. Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the complainant. When such a presumption is drawn, the factors relating to the want of documentary evidence in the form
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CRL.A No. 169 of 2012of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the accused has been able to rebut the presumption or not. The other observations as regards any variance in the statement of complainant and witness; or want of knowledge about dates and other particulars of the cheques; or washing away of the earlier cheques in the rains though the office of the complainant being on the 8 th floor had also been of irrelevant factors for consideration of a probable defence of the appellant. Similarly, the factor that the complainant alleged the loan amount to be Rs. 22,50,000/- and seven cheques being of Rs. 3,00,000/- each leading to a deficit of Rs. 1,50,000/-, is not even worth consideration for the purpose of the determination of real questions involved in the matter. May be, if the total amount of cheques exceeded the alleged amount of loan, a slender doubt might have arisen, but, in the present matter, the total amount of 7 cheques is lesser than the amount of loan. Significantly, the specific amount of loan (to the tune of Rs. 22,50,000/-) was distinctly stated by the accused-appellant in the aforesaid acknowledgment dated 21.03.2017.
21. On perusing the order of the Trial Court, it is noticed that the Trial Court proceeded to pass the
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CRL.A No. 169 of 2012order of acquittal on the mere ground of 'creation of doubt'. We are of the considered view that the Trial Court appears to have proceeded on a misplaced assumption that by mere denial or mere creation of doubt, the appellant had successfully rebutted the presumption as envisaged by Section 139 of the NI Act. In the scheme of the NI Act, mere creation of doubt is not sufficient.
22. The result of discussion in the foregoing paragraphs is that the major considerations on which the Trial Court chose to proceed clearly show its fundamental error of approach where, even after drawing the presumption, it had proceeded as if the complainant was to prove his case beyond reasonable doubt. Such being the fundamental flaw on the part of the Trial Court, the High Court cannot be said to have acted illegally or having exceeded its jurisdiction in reversing the judgment of acquittal. As noticed hereinabove, in the present matter, the High Court has conscientiously and carefully taken into consideration the views of the Trial Court and after examining the evidence on record as a whole, found that the findings of the Trial Court are vitiated by perversity. Hence, interference by the High Court was inevitable; rather had to be made for just and proper decision of the matter.
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27. The Hon'ble Supreme Court in the case of SHREE DANESHWARI TRADERS VS. SANJAY JAIN AND ANOTHER2 at paragraph Nos.17, 18 and 20 held as under:
17. Under Section 138 of the Negotiable Instruments Act, once the cheque is issued by the drawer, a presumption under Section 139 of the Negotiable Instruments Act in favour of the holder would be attracted. Section 139 creates a statutory presumption that a cheque received in the nature referred to under Section 138 of the Negotiable Instruments Act is for the discharge in whole or in part of any debt or other liability. The initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt.
18. It is for the accused to adduce evidence of such facts and circumstances to rebut the presumption that such debt does not exist or that the cheques are not supported by consideration.
20. In the present case, by examining himself as PW-1, the complainant has discharged the initial burden cast upon him that the cheques were issued for the rice bags purchased on credit. With 2 (2019) 16 SCC 83
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the examination of PW-1, the statutory presumption under Section 139 of the Act arises that the cheques were issued by the respondent- accused for the discharge of any debt or other liability in whole or in part. The courts below disbelieved the evidence of the complainant on the ground that there are no averments in the complaint that the commodities were sold for cash and that the rice bags were sold on credit and the cheques were issued for the goods sold on credit. Though the complaint contains no specific averments that the cheques were issued for the purchase made on credit, in his evidence, PW-1 clearly stated that the cheques were issued for the commodities purchased on credit. The courts below erred in brushing aside the evidence of PW- 1 on the ground that there were no averments in the complaint as to the purchases made by cash and purchase. The courts below also erred in not raising the statutory presumption under Section 139 of the Act that the complainant received the cheques to discharge the debt or other liability in whole or in part."
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28. The Hon'ble Supreme Court in the case of BIR SINGH VS. MUKESH KUMAR3 held at paragraph Nos.32, 33, 37 and 38 as under:
32. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act.
33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.3
(2019) 4 SCC 197
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37. The fact that the appellant-complainant might have been an Income Tax practitioner conversant with knowledge of law does not make any difference to the law relating to the dishonour of a cheque. The fact that the loan may not have been advanced by a cheque or demand draft or a receipt might not have been obtained would make no difference. In this context, it would, perhaps, not be out of context to note that the fact that the respondent-accused should have given or signed blank cheque to the appellant- complainant, as claimed by the respondent-accused, shows that initially there was mutual trust and faith between them.
38. In the absence of any finding that the cheque in question was not signed by the respondent- accused or not voluntarily made over to the payee and in the absence of any evidence with regard to the circumstances in which a blank signed cheque had been given to the appellant-complainant, it may reasonably be presumed that the cheque was filled in by the appellant-complainant being the payee in the presence of the respondent-accused being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alteration. There was no change in the amount of the cheque, its date or the name of the payee. The High Court
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CRL.A No. 169 of 2012ought not to have acquitted the respondent- accused of the charge under Section 138 of the Negotiable Instruments Act.
29. Further the Hon'ble Supreme Court in the case of SUMETI VIJ Vs. PARAMOUNT TECH FAB INDUSTRIES4 held at paragraph Nos.22, 23 and 25 as under:
22. That apart, when the complainant exhibited all these documents in support of his complaints and recorded the statement of three witnesses in support thereof, the appellant has recorded her statement under Section 313 of the Code, but failed to record evidence to disprove or rebut the presumption in support of her defence available under Section 139 of the Act. The statement of the accused recorded under Section 313 of the Code is not a substantive evidence of defence, but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case of the accused. Therefore, there is no evidence to rebut the presumption that the cheques were issued for consideration.
23. The judgment on which learned counsel for the appellant has placed reliance i.e. K. Prakashan vs. P.K. Surenderan6 may not be of any 4 2021 SCC Online SC 201
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assistance for the reason that in the case dealing under Section 138 of the Act, the prosecution has to prove the case and these cases being quasi- criminal in nature are to be proved on the basis of the principles of "preponderance of probabilities", and not on the principles as being examined in the criminal case to prove the guilt of the accused beyond reasonable doubt. So far as other case cited by the learned counsel for the appellant i.e. Indus Airways Private Limited and Others Vs. Magnum Aviation Private Limited, (2014) 12 SCC 539 there was sufficiency of material on record to justify that the cheques were issued as advance payment for purchase of goods, and one of the terms and conditions of the contract was that the entire payment would be made to the supplier in advance. However, much within the time, the supplier complainant received the letter from the purchasers cancelling the purchase orders and requested the supplier to return both the cheques. The supplier pursuant thereto, sent response asking the purchasers as to when the supplier could collect the payment, and only thereafter, the suppler sent a legal notice to the purchasers and filed a complaint under Section 138 of the Act. In the given circumstances, it was observed by this Court that the complainant had failed even primafacie that there was a legally
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CRL.A No. 169 of 2012enforceable debt or other liability subsisting on the date of drawal of the cheque as contemplated under Section 138 of the Act. This judgment would not be of any help to the appellant in the instant case.
25. In the given circumstances, the High Court, in our view, has not committed any error in recording the finding of guilt of the appellant and convicting her for an offence being committed under Section 138 of the Act under its impugned judgment, which in our considered view, needs no further interference. Consequently, the appeals are without any substance, and are accordingly dismissed.
30. The Hon'ble Supreme Court in the case of M/S KALAMANI TEX AND AN VS P. BALASUBRAMANIAN5 held at paragraph No.14 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 5 Crl.A.No.123/2021 dated:10.02.2021
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established, then these 'reverse onus' clauses become operative. 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 v. State of Gujarat10 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 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
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CRL.A No. 169 of 2012was 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 (2019) 18 SCC 106, 18. teeth of the established legal position as discussed above, and amounts to a patent error of law.
31. Further the Hon'ble Supreme Court in the case of P. RASIYA VS ABDUL NAZER AND ANOTHER6 at paragraph No.7 as under:
7 Feeling aggrieved and dissatisfied with the judgment and orders passed by the Appellate Court affirming the conviction of the accused under Section 138 of the N.I. Act, the accused preferred three different Revision Applications before the High Court. By the impugned common judgment and order, the High Court has reversed the concurrent findings recorded by both the courts below and has acquitted the accused on the ground that, in the complaint, the Complainant has not specifically stated the nature of transactions and the source of fund. However, the High Court has failed to note the presumption 6 2022 SCC Online SC 1131
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under Section 139 of the N.I. Act. As per Section 139 of the N.I. Act, 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 discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the cheque was issued by the accused and the signature and the issuance of the cheque is not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary. The aforesaid has not been dealt with and considered by the High Court. The High Court has also failed to appreciate that the High Court was exercising the revisional jurisdiction and there were concurrent findings of fact recorded by the courts below.
32. The learned counsel for the respondent has relied on the decision of Hon'ble Supreme Court in the case of
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CRL.A No. 169 of 2012KAMALA S Vs. VIDHYADHARAN M J7 and at paragraph Nos.15 and 16 it is held as under:
15. The Act contains provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case.
The nature and extent of such presumption came up for consideration before this Court in M.S. Narayana Menon Alias Mani V. State of Kerala and Anr. [(2006) 6 SCC 39] wherein it was held :
"30. Applying the said definitions of "proved" or "disproved" to the 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 7 AIR 2007 SC (SUPP) 1142
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supposition that the consideration dos 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."
16. This Court clearly laid down the law that standard of proof in discharge of the burden in terms of Section 139 of the Act being of preponderance of a probability, the inference therefor can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon. Categorically stating that the burden of proof on accused is not as high as that of the prosecution, it was held;
"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." It was further observed that ;
"38. If for the purpose of a civil litigation, the defendant may not adduce any
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evidence to discharge the initial burden placed on him, a "fortiori" even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court.
39. A presumption is a legal or factual assumption drawn from the existence of certain facts."
33. But the decision relied on by the learned counsel for the respondent will not help the accused. On the other hand, it strengthens the case of complainant.
34. Therefore, if the evidence in this case is tested with the principles stated in the above referred decisions, it shows that accused has not rebutted the statutory presumption in favour of the complainant. The evidence of DW.2 the manager which shows that he has produced the account statement of complainant which is at Ex.D1 and he brought cheque-Ex.D2 and he has stated that they have nothing to do with encashment of any cheqque after due
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CRL.A No. 169 of 2012payment to concerned holder of cheque. His evidence either in no way rebut or falsify the case of the complainant.
35. Therefore, considering the entire evidence on record, it is evident that the complainant has satisfactorily proved by legally admissible evidence and discharged his initial burden that accused has borrowed Rs.12,00,000/- and in consideration of the same he has issued cheque and he did not repay the same and not replied the notice. On the other hand, the accused took false defence and which has no basis at all.
36. Learned ACMM by raising wrong points for consideration and without appreciating the ingredients of Section 138 of N.I. Act and considering the presumption and not discussing as to how the presumption is to be rebutted by the accused, has wrongly acquitted the accused. The judgment of acquittal passed by the learned ACMM being illegal, erroneous perverse needs to be set aside as held by Hon'ble Supreme Court in the catena of judgments rendered on cheque bounce cases.
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37. The Negotiable Instruments Act was amended with an intention to honur the cheuqe transaction in view of large number of disputes arising, stringent punishment is provided by directing the accused to pay double cheque amount so that some sanctity is attached to the transaction through cheque. Therefore, keeping in mind the object of enacting the N.I. Act and the amendment brought to it and in the light of the settled principles discussed above, if the evidence on record is appreciated in my considered view, the complainant has discharged his initial burden and proved offence under Section 138 of N.I. Act and the accused has failed to discharge his burden or rebutted statutory presumption in favour of complainant by way of cross- examination of complainant or by his defence evidence. Hence, the appeal deserved to be allowed.
38. According, I pass the following:
ORDER
1) The appeal is allowed.
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2) The judgment of acquittal dated 28.12.2011 passed in C.C.No.2427/2009 by the XII Additional Chief Metropolitan Magistrate, Bengaluru is hereby set aside.
3) The accused/respondent is convicted for the offences under Section 138 of N.I.Act and accused is sentenced to pay a fine of Rs.12,25,000/-. Out of the fine amount, a sum of Rs.12,00,000/- shall be paid as compensation to the complainant and a sum of Rs.25,000/- shall be deposited to the State as expenses of litigation.
4) In default of payment of fine, the accused shall undergo simple imprisonment for a period of one year.
5) Send back the records to the Trial Court.
4) No order as to costs.
Sd/-
JUDGE
HJ
List No.: 1 Sl No.: 33