Bangalore District Court
M/S Lakshmi Enterprises, Rep. By Its ... vs M/S Sethiya Brothers, Rep. By Its ... on 3 January, 2026
KABC0A0001872024
IN THE COURT OF LXXIII ADDL.CITY CIVIL &
SESSIONS JUDGE, MAYOHALL UNIT, BENGALURU.
(CCH.74)
PRESENT:
Smt. Anitha N.P., B.A.L., L.L.M.,
LXXIII Addl.City Civil & Sessions Judge,
Mayohall Unit, Bengaluru.
Dated this the 03rd day of January 2026
Crl. Appeal. No.25018/2024
Appellant/ M/s. Lakshmi Enterprises
Accused:- Prakruthi Jeevitha Nilaya,
5th Cross, KSVK School Road,
Near Anand Hardware,
Vinayaka Nagar, Hagaduru,
Whitefield Post,
Bengaluru - 560 066.
Rep.by its Partner
Chowdappa C.N.
S/o. B. Nagashetty
(By Sri. Mahendra.T - Adv.,)
V/s
Respondent/ M/s. Sethiya Brothers
Complainant: No.8, G.No.10th Street,
Jogupalya, Ulsoor,
Bengaluru 560 008.
2 Crl.Appeal No.25018/2024
Rep. by its Proprietor,
Mr. Deepak Sethiya,
S/o. H. Nemichand,
Aged about 56 years.
(By Sri. H.C. Ramesh - Adv.,)
JUDGMENT
This is an Appeal filed by Accused under Section 374(3) of Cr.P.C., being aggrieved by the Judgment dated 04.12.2023 passed in C.C. No.53469/2021 on the file of XXXIV ACMM, Bengaluru, convicting him for an offence punishable under Section 138 of the Negotiable Instruments Act [hereinafter referred to as 'NI Act', for brevity] and sentencing him to pay fine of Rs.4,18,320/- and in default of payment of fine, to undergo simple imprisonment for 6 months. Out of the fine amount, a sum of Rs.4,13,320/- is directed to be paid to the respondent/complainant as compensation and remaining Rs.5,000/- is ordered to be remitted towards State expenses.
2. For the sake of convenience the parties hereinafter will be referred to with their ranking assigned before the trial court. The appellant is the accused and the respondent is the complainant before the trial court.
3 Crl.Appeal No.25018/20243. The facts of the case:-
The Complainant initiated private complaint under Section 200 of Cr.P.C., against the Accused, alleging that the Complainant is doing the vehicle hire purchase business and other allied business. The Accused has entered into Hire Purchase Agreement with the Complainant for vehicle on 18.10.2018 upon his vehicle bearing No.KA-03-C-3864 TATA 1109 and towards the repayment of hire purchase, the Accused issued a Cheque bearing No.366315 dtd.24.12.2020 for Rs.3,60,000/- drawn on Syndicate Bank, Whitefield, Bengaluru and when the Complainant presented the said cheque through his banker i.e., Kotak Mahindra Bank, M. G. Road branch, Bengaluru, it was dishonoured for the reason "Funds Insufficient" on 29.12.2020. Therefore, the Complainant has got issued notice on 22.01.2021 through RPAD. But the same was returned with a shara 'unclaimed' on 28.1.2021. Despite knowledge of Legal Notice, the Accused has neither paid the Cheque amount nor replied to the notice and thereby, the Appellant has committed the offence punishable under Sec.138 of NI Act. Thereafter the Complainant approached the Trial Court for appropriate legal action against the Accused.4 Crl.Appeal No.25018/2024
4. Pursuant to summons the Accused entered appearance through his Counsel before the Trial Court. The substance of the accusation was read over and explained to the Accused in the language known to him. The Accused pleaded not guilty and claimed to be tried. The SPA holder of the Complainant got examined as PW.1 and got marked Ex.P.1 to Ex.P.6. later the Proprietor of the company who executed SPA in favour of PW.1 himself came on record and got examined himself as PW.2 and got marked Ex.P.1 to Ex.P.12 documents and closed his side. The Accused got examined its Partner as DW.1 and not marked any documents in support of its case.
5. The trial court after hearing the counsel for Complainant and accused, convicted the Accused for the offence punishable U/Sec.138 of NI Act vide Judgment dtd. 4.12.2023.
6. Feeling aggrieved by the said judgment of conviction, the Accused is in appeal on the following grounds:
1. The sentence passed by the Trial Court is not proper and same is liable to be set aside.5 Crl.Appeal No.25018/2024
2. The Cheque in question was not issued towards discharge of any liability as contended by the Respondent.
3. The defense of the Accused is that in the year 2018 the Accused approached the Complainant for loan of Rs.2,75,000/- out of loan amount, the Complainant had released Rs.2,20,000/- loan after deducting condition deduction as per the agreement and at that time, the Complainant took two Cheques and RC Cards of the Banker vehicle belongs to the Accused as security purpose, but though the Appellant cleared the loan amount, the Complainant did not returned two Cheques and RC Card to the Accused and by misusing the same has filed this false case.
4. The Complainant failed to prove the case beyond all reasonable grounds and he has not complied the necessary provisions as per the Negotiable Instruments Act. Without considering all these aspects the Trial Court has passed the impugned judgment and sentence.
5. The Trial Court failed to consider the cross-
examination made by the Appellant. The Respondent has got up the documents to suit the case. Under the above grounds the 6 Crl.Appeal No.25018/2024 Appellant sought for acquittal by allowing the appeal.
7. Heard both sides arguments.
8. Perused the evidence, documents on record and also impugned Judgment of conviction passed by the Trial Court.
9. On re-appreciation of the evidence, documents on record, the following points would emerge for the consideration of this court.
1. Whether the Appellant proves that the cheque in question was not issued towards any legally recoverable debt?
2. Whether the Judgment of conviction passed by the Trial Court calls for interference by the hands of this court?
3. What Order?
10. My finding on the above points are as under:
Point No.1 : In the Negative.
Point No.2 : In the Negative.
Point No.3 : As per final order for the following:7 Crl.Appeal No.25018/2024
REASONS
11. POINT NOs.1 and 2:-
Since the above two points are interlinked, in order to avoid repetition of facts the above points have been taken up together for consideration.
12. Before re-appreciating the evidence on record, it is necessary to refer some of the latest rulings of the Hon'ble Apex Court reported in 2019 (3) KCCR 2473 (SC) (Basalingappa V/s Mudibasappa), the Hon'ble Apex Court while considering several earlier rulings on the offence U/Sec.138 of NI Act and also on the presumption U/Sec.118 and 139 of NI Act, at Para 23 was pleased to observe as follows:
23. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:-
(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the Accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the Accused to rely on evidence led by him 8 Crl.Appeal No.25018/2024 or Accused can also rely on the materials submitted by the Complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
(iv) That it is not necessary for the Accused to come in the witness box in support of his defence, Sec.139 imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the Accused to come in the witness box to support his defence.
13. In another ruling reported in AIR 2010 SC 1898 (Rangappa V/s Mohan), observed as under:-
"Existence of legally recoverable debt or liability- The presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. This is of course in the nature of a rebuttable presumption and it is open to the Accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the Complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139, is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 9 Crl.Appeal No.25018/2024 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the Accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an Accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the Accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The Accused can rely on the materials submitted by the Complainant and it is conceivable that in some cases the Accused may not need to adduce evidence of his/her own."
14. Keeping in view the broad principles laid down by the Hon'ble Apex Court, let me re-appreciate the evidence and documents on record.
15. The definite case of the Complainant/Respondent is that the Complainant is doing the vehicle hire purchase business and other allied business. The Accused has entered into Hire Purchase 10 Crl.Appeal No.25018/2024 Agreement with the Complainant for vehicle on 18.10.2018 upon his vehicle bearing No.KA-03-C-3864 TATA 1109 and towards the repayment of hire purchase, the Accused issued a Cheque bearing No.366315 dtd.24.12.2020 for Rs.3,60,000/- drawn on Syndicate Bank, Whitefield, Bengaluru and when the Complainant presented the said cheque through his banker i.e., Kotak Mahindra Bank, M. G. Road branch, Bengaluru, it was dishonoured for the reason "Funds Insufficient" on 29.12.2020. Therefore, the Complainant has got issued notice on 22.01.2021 through RPAD. But the same was returned with a shara 'unclaimed' on 28.1.2021. Despite knowledge of Legal Notice, the Accused has neither paid the Cheque amount nor replied to the notice
16. Initially the SPA holder of the Complainant gor examined as PW.1 and got marked Ex.P.1 to Ex.P.6. later the Proprietor of the company who executed SPA in favour of PW.1 himself came on record and got examined himself as PW.2 and got marked Ex.P.1 to Ex.P.12 documents and closed his side. On the other hand, the Accused got examined its Partner as DW.1 and no documents marked on its behalf to prove the defense.
11 Crl.Appeal No.25018/202417. Let me go through the documentary evidence placed by the Complainant in this case. Ex.P.1 is the Cheque dtd: 24.12.2020 issued by the Accused in favour of the Complainant Company. Ex.P.2 is the Endorsement dtd: 29.12.2020 issued by the Kotak Mahindra Bank for dishonour of Cheque. Ex.P.3 is the Office copy of Legal Notice dtd: 22.1.2021. Ex.P.4 is the Postal Receipt dtd22.01.2021. Ex.P.5 is the Postal Cover. Ex.P.6 is the Hypothecation Agreement dtd: 18.10.2018 executed by the Accused in favour of the Complainant Company. Ex.P.7 is the B Register-Extract of Accused vehicle bearing No.KA-03-C-3864. Ex.P.8 is the Letter of Commitment dtd: 18.10.2018. Ex.P.9 is the Letter dtd:
20.12.2020 written by Accused to the Complainant Company. Ex.P.10 is the Ledger Extract of Complainant Company. Ex.P.11 is the Certificate U/Sec.65(B) of the Evidence Act and Ex.P12 is court summons.
18. The present complaint has been filed before the Trial Court on 20.2.2021. On perusal of all the above documents with date of filing of the complaint and dates of documents, it is clear that before filing of the complaint, the Complainant has complied with all the requirements of Section 138 of the Negotiable 12 Crl.Appeal No.25018/2024 Instruments Act and the present complaint is filed well within the period of limitation and it is in accordance with the provisions of Negotiable Instruments Act.
19. Now let us go through the cross-examination of PW-1, during the course of cross-examination PW1 deposed that complainant gives loan for vehicle on perusing the vehicle documents, they have received documents of vehicle belongs to accused. The accused borrowed loan in respect of vehicle Tata 1109 water tanker. He borrowed Rs.2.75,000/- and they paid the said amount to accused through 2 cheques. The rate of interest agreed was 21.6%. Person by name Venkatesh stood as guarantor to the loan transaction. It is including the interest amount the accused has given cheque.
20. This PW-1 in his further cross-examination deposed that the signature found on Ex.P2 and 6 is that of accused.
21. On perusal of the evidence of accused during the course of his chief examination he deposed that he borrowed Rs.2,75,000/- for his business from the complainant in the year 2018. At that time the complainant after deducting contractual deductions has 13 Crl.Appeal No.25018/2024 paid Rs.2,20,000/- and the complainant further had received the 2 cheques, RC card of his tanker vehicle for the purpose of security. He repaid the loan amount. When he asked for return of his cheques and RC card, the complainant not returned the same on the contrary he has misused his document. The accused further deposed that he has not received any notice from complainant.
22. During the course of cross-examination this DW-1/Accused deposed that complainant is known to him from since 10 years, he borrowed vehicle loan from the complainant. He borrowed said loan in respect of his tanker vehicle. This accused admits that Ex.P1 is pertains to his account and the signature on Ex.P1 is his signature. He has given the said cheque when he borrowed the vehicle loan. He don't remember how much loan he borrowed and how much he repaid. However in 3 installments by way of cash within 2 years he repaid the loan. However he has not obtained any receipt in this regard.
23. This DW-1 further deposed that the address found on summons is his address, the address found on 14 Crl.Appeal No.25018/2024 Ex.P4 is his address. The address found on Ex.P5, 12 & 4 are same addresses. In respect of another cheque he has given stop payment instructions about 3 days back to his banker. This admits that in the B-Register extract- Ex.P7 there is entry of vehicle loan.
24. With this factual aspects, firstly the court has to appreciate whether there are materials to ascertain the existence of legally enforceable debt. At the outset, the Court has to appreciate whether Section 138 of The Act is made out. When the cheque is produced before the Court and when it came to be dishonored for funds insufficient or for any other reason and when the legal notice was issued within the statutory period then the presumption available under Sections 118 & 139 of The Act is made out in favour of the complainant. The provisions of Section 118 of The Act are separated from the general rule applicable to the contracts and it provides presumption in favour of the party. The said presumptions are that: unless the contrary is proved the Court has to presume that the consideration had passed between the parties as enumerated under Section 118 of NI Act. Likewise, unless the contrary is established Section 139 of the NI Act clearly establishes that the 15 Crl.Appeal No.25018/2024 holder of the cheque had received the same towards discharge of the legally enforceable debt either towards whole or partial liability. The said presumptions have to be read conjointly in order to ascertain whether the ingredients are made out. Further, the said presumptions are rebuttable and the same has to be appreciated with the factual aspects of the case. The impugned cheque at Ex.P1 was drawn during the period of its validity and was accordingly presented to the back and after its dishonor the notice was also issued and later on after completing all the statutory bound obligations. The complaint came to be filed. This clearly indicates that initial presumption is drawn in favour of the complainant. It is also relevant to note that the said presumption is rebuttable one and as such the defence of the accused has to be appreciated in order to ascertain whether the presumption which is drawn initially in favour of the complainant has been successfully rebutted.
25. The law is well settled that the accused need not enter the witness box to rebut initial presumption. At the same time, the defense which is taken up by the accused is to be appreciated so as to ascertain whether 16 Crl.Appeal No.25018/2024 the same was probable or not. Admittedly, in the above case, the complainant has contended to have lent a sum of Rs.3,60,000/- lakh as vehicle loan in respect of tanker bearing No.KA-03-C-3864 TATA -1109
26. It is the submission of learned counsel for the appellant that no such vehicle loan transaction itself had taken place and the accused borrowed business loan of Rs.2,75,000/- from the complainant and he repaid the same and at the time of borrowing said loan the complainant collected 2 cheques and his vehicle document for security. The accused repaid the said loan and inspite of repayment the complainant misused his document i.e., cheque and RC card. At this juncture, initial presumption is proved by the complainant and as such, onus of rebutting the same will be shifted on to the accused person. The defense which has been taken up is with respect to business loan of Rs.2,75,000/- and its repayment. However, no materials are forthcoming in the above case to establish that the loan borrowed is not vehicle loan and on the contrary it is business loan and the loan borrowed is Rs.2,75,000/- and he repaid the said entire loan and his cheque and vehicle documents are misused. Even for the sake of arguments if it is 17 Crl.Appeal No.25018/2024 accepted that the same was misused by the complainant, necessarily it has to be supported by some materials. There is no explanation by the accused that why he had not initiated any police complaint after issuance of notice by the complainant or after receiving of summons by the court.
27. Even otherwise, the specific admission in the cross examination of this accused that he borrowed vehicle loan and at that time he issued Ex.P1 cheque to complainant falsifies the defence of the accused. That apart the silence on the part of accused in not producing any document in respect of his alleged business loan raises several questions, which has not been successively answered. The court is well aware of the cardinal principle of law, that the burden will be upon the prosecution to prove the case beyond reasonable doubt. However, a duty is also casted upon the Accused to successfully rebut the presumption which is raised by the complainant. Admittedly, the complainant has discharged the initial burden as already discussed supra and as such the onus will be shifted upon the accused to rebut the same.
18 Crl.Appeal No.25018/202428. No doubt, the law is also well settled that for the purpose of rebuttal evidence, the accused is not required to enter the witness box. However, the defense should be such that it substantiates his contention. In the above case, one and only defense which is taken up by the Appellant/Accused is with respect to type of loan as business loan and giving cheque and vehicle document as security. However the execution of Hypothication agreement in favour of complainant is not denied, even obtaining of vehicle loan is admitted by the accused and even issuing of cheque to the complainant for the said vehicle loan is admitted. The accused himself is not certain about his defence and he has come with contrary defences and admits the specific case of the complainant as far as obtaining vehicle loan from complainant. The accused failed to establish the loan repayment and no evidence is placed to establish the loan repayment. Per contra, the complainant has not only successively discharged his burden, but has also produced hypothecation agreement in respect of vehicle bearing No.KA03-C3864 TATA 1109, letter of commitment, letter written by accused admitting his liability, account ledger extract at Ex.P6 and 8 to 10 wherein in it is clearly mentioned the loan amount lent 19 Crl.Appeal No.25018/2024 to the accused is specifically shown. With respect to the presumption and also the defense of misuse of cheque taken up by the Appellant the court has relied upon the judgment of the Hon'ble Apex Court reported in (2018)8 SCC 165 (Kishan Rao V/s Shankaregowda) wherein it has been held thus:
Section 139 of the Act, 1881 provides for drawing the presumption in favour of holder. Section 139 is to the following effect:
"139.Presumption in favour of holder.-It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
18. This Court in Kumar Exports vs. Sharma Carpets, 2009 (2) SCC 513, had considered the provisions of Negotiable Instruments Act as Referring to 139, this Section well Evidence Court laid following in paragraphs 14, 15, 18 and 19:
Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume"
(rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference, affirmative or disaffirmative of the 20 Crl.Appeal No.25018/2024 existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".
18. Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is 21 Crl.Appeal No.25018/2024 not as presumed, the purpose of the presumption is over."
19. This Court held that the accused may adduce evidence to rebut the presumption, but mere denial regarding existence of debt shall not serve purpose. Following was held in paragraph 20:
"20....The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist..."
20. In the present case, the trial court as well as the Appellate Court having found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank of the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. The accused even did the not come in the presumption. The accused even did not come in the witness box to support his case. In the reply to the notice which was given by the appellant the accused took the defence that the cheque was stolen by the 22 Crl.Appeal No.25018/2024 appellant. The said defence was rejected by the trial court after considering the evidence on regard with regard to which no contrary view has also been expressed by the High Court.
21. Another judgment which needs to be looked into is Rangappa vs. Sri Mohan, 2010 (11) SCC 441. A three Judge Bench of this Court had occasion to examine the presumption under Section 139 of the Act, 1881. This Court in the aforesaid case has held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. Following was laid down in paragraphs 26 and 27:
"26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat, (2008) 4 SCC 54, may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.
27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence 23 Crl.Appeal No.25018/2024 made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the17 nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof."
22. No evidence was led by the accused. The defence taken in the reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. How the presumption under Section 139 can be rebutted on the evidence of PW.1, himself has not been explained by the High court.
29. The sum and substance is that there is a presumption in favour of holder of cheque in due course. The accused failed to prove contrary. Lastly the Court has also appreciated the statement of Accused recorded under Sec.313 of Cr.P.C. regarding the evidence under Sec.313 of Cr.P.C., is not a bald formality. In fact, it is an opportunity rendered to the Accused to explain the incriminating materials against him. However, the Accused has only denied and failed to rebut the presumption available in favor of complainant. Whether this Accused has taken any legal action as against the 24 Crl.Appeal No.25018/2024 complainant in respect of collecting his cheques as security is not forthcoming. Under the circumstances, the burden of proof is successfully established by the complainant and as such, with respect to the existence of legally enforceable debt and its presumption, the Court has relied upon the judgment of Hon'ble Apex Court reported in (2019) 10 SCC 287 (Uttam Ram V. Devinder Singh Hudan and another) wherein it has been held as;
18. We find that the approach of the learned Trial Court and that of the High Court is perverse; irrational as well as suffers from material illegality and irregularity, which cannot be sustained in complaint filed under Section 138 of the Act.
19. A negotiable instrument including a cheque carries presumption of consideration in terms of Section 118(a) and under Section 139 of the Act. Sections 118(a) and 139 read as under:
"118. Presumptions as to negotiable instruments.- Until the contrary is proved, the following presumptions shall be made:--
(a) of consideration--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;....
xxx xxx xxx
139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the 25 Crl.Appeal No.25018/2024 holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
20. The Trial Court and the High Court proceeded as if, the appellant is to prove a debt before civil court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. A dishonour of cheque carries a statutory presumption of consideration. The holder of cheque in due course is required to prove that the cheque was issued by the accused and that when the same presented, it was not honoured. Since there is a statutory presumption of consideration, the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability.
21. There is the mandate of presumption of consideration in terms of the provisions of the Act. The onus shifts to the accused on proof of issuance of cheque to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of Section 138 of the Act which reads as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account. -- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall...."26 Crl.Appeal No.25018/2024
22. In Kumar Exports, it was held that mere denial of existence of debt will not serve any purpose but accused may adduce evidence to rebut the presumption. This Court held as under:
"20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial 27 Crl.Appeal No.25018/2024 evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act." (emphasis supplied)
23. In a judgment reported as Kishan Rao v. Shankargouda6, this Court referring to Kumar Exports and Rangappa returned the following findings:
"22. Another judgment which needs to be looked into is Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441 : (2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] . A three-Judge Bench of this Court had occasion to examine the presumption under Section 139 of the 1881 Act. This Court in the aforesaid case has held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. Following was laid down in paras 26 and 27: (SCC pp. 453-54) "26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat [Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 : (2008) 2 SCC (Cri) 166], may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt 28 Crl.Appeal No.25018/2024 that there is an initial presumption which favours the complainant.
27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof."
24. In a judgment reported as Bir Singh v. Mukesh Kumar7, this Court held that presumption under Section 139 of the Act is a presumption of law. The Court held as under:
"20. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the 29 Crl.Appeal No.25018/2024 reasonable possibility of the non-existence of the presumed fact as held in Hiten P. Dalal [Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 :
2001 SCC (Cri) 960] .
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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.
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36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
25. In other judgment reported as Rohitbhai Jivanlal Patel v. State of Gujarat and Another8 this Court held as under:
"18. So far the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 the NI Act is concerned, apparent it is that the accused- appellant could not deny his signature on the cheques in question that had been drawn in favour of the complainant on a bank account maintained by the accused for a sum of Rs. 3 lakhs each. The said cheques were 30 Crl.Appeal No.25018/2024 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."
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20. 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 nonexistence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as 8 AIR 2019 SC 1876 envisaged under Section 118 and 139 of the NI Act.....
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32. The result of discussion in the foregoing paragraphs is that the major considerations on which the Trial Court chose to proceed clearly show its fundamental error of approach where, even after drawing the presumption, it had 31 Crl.Appeal No.25018/2024 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."
30. To sum up it is noticed that the Accused though taken defence that he borrowed business loan from the complainant and he cleared the said loan, no evidence is placed in this regard. The accused though taken defence that he has given his 2 signed blank cheques as security to the complainant, no action in respect of misuse of his 2 signed cheques is taken by the accused as against this complainant. The accused not even taken risk to given stop payment instructions to his banker, the accused not taken least risk to get remove the hypothecation entry from the B register extract. The accused though taken defence that hypothecation agreement is created document no steps to prove said contention is taken by the accused. Admittedly there is no explanation in this regard. The accused himself admits the correctness of 32 Crl.Appeal No.25018/2024 his address in the legal notice. Hence the legal notice issued by complainant is duly served on accused to his correct address. The above aspects clearly shows that the accused has not taken defence which is certain and which is probable and as such the Accused has failed to rebut the presumption. By looking into the same, the impugned judgment and order of conviction passed by the Trial Court is apt and correct and the same does not call for interference of this court. The trial court has rightly appreciated the oral and documentary evidence in proper perspective. Accordingly, I answered Point Nos.1 and 2 in the Negative.
31. Point No.3: In view of the findings on the above points the appeal filed by the Appellant deserves to be dismissed. Accordingly, I proceed to pass the following:-
ORDER The appeal filed by the Appellant U/Sec.374 (3) of Cr.P.C., is hereby dismissed with costs.
The Judgment of conviction passed by the Learned XXXIV ACMM, Bengaluru, in CC.No.53469/2021, dtd. 04.12.2023, is hereby confirmed.33 Crl.Appeal No.25018/2024
Send back the records with a copy of this Judgment to the Trial Court.
(Dictated to the Stenographer, typed by her, corrected, signed and then pronounced by me, in the open court on this the 3rd day of January 2026.) Digitally signed by ANITHA ANITHA NANJANAGUDU NANJANAGUDU PARASHIVAMURTHY PARASHIVAMURTHY Date: 2026.01.27 15:56:09 +0530 [Smt. Anitha N.P] LXXIII Addl.City Civil & Sessions Judge, Bengaluru. (CCH-74).