Bangalore District Court
Nayanendra P vs Keshava on 14 October, 2025
SCCH-2 1 C.C.No. 3786/2018
KABC020194322018
IN THE COURT OF THE VI ADDL. JUDGE, COURT OF
SMALL CAUSES AND ADDL. CHIEF JUDICIAL
MAGISTRATE,
BENGALURU CITY (SCCH-2).
C.C.NO. 3786/2018
:: PRESENT ::
Sri. H.P. Mohan Kumar, B.Sc.,LL.B.,
6th Addl. Judge, Court of Small
Causes and ACJM, Bengaluru.
Dated: On this the 14th day of October, 2025.
Complainant : Sri. Nayanendra P
S/o Prakash,
Aged about 28 years,
R/at: No.68, Near Anjineyaswamy temple,
K Narayanapura village,
Kothanuru post, Bangalore 560077.
(By Sri. P M Narayana Swamy, Advocate)
- Vs. -
Accused : Sri. Keshava
S/o Anjinappa,
SCCH-2 2 C.C.No. 3786/2018
Aged about 35 years,
R/at: No.44, Near Anjineyaswamy
temple, K Narayanapura village,
Kothanuru post, Bangalore 560077.
(By Sri. H M Gopal, Advocate)
:: J U D G M E N T ::
The complainant has filed the present complaint U/Sec.200 of Cr.P.C., alleging that the accused has committed the offence punishable U/Sec.138 of Negotiable Instruments Act (herein after referred as N.I.Act).
: NOTE :
It is relevant to note that on 25.02.2019 the accused was convicted. Thereafter accused preferred Criminal Appeal No.1288/2019. The Hon'ble Appellate Court vide judgment dated 16.01.2023 set aside the judgment dated 25.02.2019 and remanded back to this court for fresh disposal in accordance with law.
2. The case of the complainant in brief is as follows:-
The complainant and accused were known to each other since they are the residents of K Narayanapura village. Based on such acquaintance, the accused approached the complainant on 18.09.2016 for financial assistance of SCCH-2 3 C.C.No. 3786/2018 Rs.18,00,000/- which is required for his business purpose. As per the request made by the accused, the complainant has paid a sum of Rs.18,00,000/- to the accused by way of cash on the same day itself. The accused after receiving the said amount has promised to repay the same within a period of one year. After the lapse of the stipulated period, the complainant has approached and demanded the accused in the 3rd week of September 2017 for repayment of the hand loan amount. At which point of time, the accused agreed to repay the said loan amount along with interest @ 18% p.a. and liable to pay Rs.21,24,000/-.
The accused in order to discharge his liability has issued three cheques i.e, cheque bearing No. 611198 dated 16.09.2017 for Rs.7,00,000/-, cheque bearing No. 611199 dated 19.09.2017 for Rs.8,00,000/- and cheque bearing No. 611200 dated 23.09.2017 for Rs.6,24,000/- which were drawn on Andhra Bank, Thanisandra branch, Bangalore. That apart, the accused also executed loan agreement dated 15.09.2017 in favour of the complainant for Rs.21,24,000/-.
Further, the accused also executed on demand promissory note in favour of the complainant.
As per the instructions of accused, the complainant has presented the said cheques on 14.11.2017 for encashment SCCH-2 4 C.C.No. 3786/2018 through his banker namely State Bank of India, Sulibele branch, Bengaluru. However, the said cheques got bounced for the reason as "Funds Insufficient" on 15.11.2017. Thereafter, the complainant has issued the legal notice to the accused on 08.12.2017 which was served to the accused. In spite of service of notice also the accused has neither repaid the amount nor sent any reply. Hence, cause of action arose to file the complaint.
3. The cognizance was taken for the offence punishable U/Sec.138 of N.I.Act. After filing of the complaint, the sworn statement of the complainant was recorded and it prima- facie found that the accused has committed the offence punishable U/Sec.138 of N.I.Act. Hence, criminal case was registered and the summons was issued to the accused.
4. In response to the summons, the accused appeared through his counsel and thereafter plea was recorded. The accused was denied the accusation leveled against him, claimed to be tried. Further, the statement of the accused as contemplated U/Sec.313 of Cr.P.C., was recorded. The accused has denied the incriminating evidence appeared against him in the evidence of complainant and submitted that he has defence evidence.
SCCH-2 5 C.C.No. 3786/20185. The Hon'ble Apex Court of India in Indian Bank Association and Others vs Union Bank of India and Another reported in AIR 2014 SC 2528, held that "Sworn Statement of the complainant has to be treated as examination in chief". In the instant case, the complainant examined himself as P.W.1 and marked Ex.P.1 to Ex.P.12 & Ex.P7(a). P.W.1 was subject to the process of cross- examination from the side of accused. Per contra, the accused examined himself as D.W.1 and got marked Ex.D.1 to Ex.D3. DW.1 was subject to the process of cross- examination from the side of complainant. The accused also examined two witnesses namely one Sri Byregowda and Ravikumar M as DW.2 & DW.3 and got marked the documents at Ex.D1(a) & Ex.D1(b).
6. Heard the arguments from both side. Perused the materials available on record.
7. Now the points that arise for consideration of this Court are as hereunder:
1. Whether the complainant has proved that the accused has committed the offence punishable U/Sec.138 of N.I.Act?
2. What Order?SCCH-2 6 C.C.No. 3786/2018
8. The findings of this Court to the above-referred points are as follows:
Point No.1: In the Negative.
Point No.2: As per final order,
for the following:-
REASONS
9. POINT No.1: In order to prove the case, the
complainant examined himself as P.W.1 by filing affidavit in support of his oral examination-in-chief. In the affidavit P.W.1 has reiterated the complaint averments in verbatim. Hence, this Court need not to recapitulate the same once again at this juncture. In support of his oral testimony, P.W.1 has marked documents at Ex.P.1 to Ex.P.12, Ex.P7(a). Per contra, the accused examined himself as D.W.1 and got marked Ex.D.1 to Ex.D3. It is relevant to note that, the accused examined two witnesses as DW.2 and DW.3, Ex.D1(a) and Ex.D1(b) marked through the witnesses.
10. Now itself it is appropriate to see the documents marked at Ex.P-Series and Ex.D-Series.
Ex.P-Series.
Ex.P.1 to Ex.P3 are the cheques in question. Ex.P.1(a) to Ex.P3(a) are the signatures of accused. Ex.P.4 to Ex.P.6 are SCCH-2 7 C.C.No. 3786/2018 the bank endorsements dated:15.11.2017. Ex.P.7 is the office copy of the legal notice dated:06.12.2017. Ex.P.7(a) is the RPAD receipt. Ex.P8 is the communication to postal department. Ex.P9 is the postal track consignment. Ex.P10 is the loan agreement dated 17.09.2017. Ex.P11 & Ex.P12 are the consideration receipt and on demand promissory note.
Ex.D-Series.
Ex.D.1 is the receipt. Ex.D1(a) and Ex.D1(b) are the signatures of DW.2 & DW.3. Ex.D2 is the bank pass book. Ex.D3 is the online copy of registered sale deed dated 23.01.2015.
11. Before going to discuss the main aspect, it is worth to reproduce the provisions of Sec.138 and 139 of N.I.Act, the same as hereunder:
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 SCCH-2 8 C.C.No. 3786/2018 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, without prejudice to any other provisions of this Act, be punished with imprisonment for (a term which may be extended to two years), or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless-
(a) the cheque has been presented to the bank within a period of Six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (The period of 6 months has been reduced to 3 months, vide R.B.I. notification No.RBI/2011-12/251,DBOD.AMLBC SCCH-2 9 C.C.No. 3786/2018 No.47/14.01.001/2011-12, dated:4th November 2011 (w.e.f. 01.04.2012))
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: - For the purposes of the section, "debt or other liability" means a legally enforceable debt or other liability.
139. Presumption in favour of holder:-
It shall be presumed, unless the contrary is proved, that the holder of a cheque SCCH-2 10 C.C.No. 3786/2018 received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
12. The learned counsel for complainant has relied on the following decisions:
i) AIR 2001 SC 3897 between Hiten P Dalal Vs. Bratindranath Banerjee.
ii) (2010) 11 SCC 441 between Rangappa Vs. S Mohan.
iii) Criminal Appeal No. 2045/2008
between M/s. Kumar Exports Vs. M/s.
Sharma Carpets.
iv) Criminal Appeal No. 508/2019 between Rohitbhai Jivanlal Patel Vs. State of Gujarat and another.
v) (2019) 4 SCC 197 between Bir Singh Vs. Mukesh Kumar.
13. The learned counsel for accused has relied on the following decisions:
SCCH-2 11 C.C.No. 3786/2018i) (2009) 2 SCC 513 between Kumar Exports Vs. Sharma Carpets.
ii) (2019) 5 SCC 419 between Basalingappa Vs. Mudibasappa.
iii) (2015) 1 SCC 99 between K Subramani Vs. K Damodara Naidu.
iv) (2014) 2 SCC 236 between John K Abraham Vs. Simon C Abraham and another.
v) 2009 CRI. L. J 3777 between Sanjay Mishra Vs. Ms. Kanishka Kapoor @ Nikki and another.
vi) (2010) 89 AIC 567 between B Girish Vs. S Ramaiah.
vii) AIR SC 471 between Rajaram Sriramulu Naidy (Since dead) through LR's Vs. Maruthachalam (Since deceased) through LR's.
viii) AIR 2024 SC 4103 between Sri Dattatraya Vs. Sharanappa.
ix) 2024 (1) KCCR 545 between Charles Harry Vs. Praveen Jain.SCCH-2 12 C.C.No. 3786/2018
This court has carefully gone through the decisions relied by both the counsels and applied the principles to the case on hand.
14. At this juncture it is worth to refer the decision of the Hon'ble Apex Court reported in AIR 2010 S.C. 1898, between Rangappa V/s Mohan wherein their lordships have observed at para 26 as hereunder:
"No doubt that there is a initial presumption which favours the complainant".
15. It is germane to note that the proceedings U/Sec.138 of N.I. Act is an exception to the general principle that the accused is presumed to be innocent until the charge leveled against him is proved beyond reasonable doubt. In the proceedings initiated U/Sec.138 of the N.I. Act proof of beyond reasonable doubt is subject to the presumption envisaged under Sec.139 of the N.I. Act. Once the requirement of Sec.138 of the N.I. Act is fulfilled, then it has to be presumed that the cheque was issued in discharge of legally recoverable debt or liability. The presumption envisaged under Sec.139 of N.I. Act is mandatory SCCH-2 13 C.C.No. 3786/2018 presumption and it has to be raised in every cheque bounce cases.
16. Now this court has to see whether the complainant has complied the ingredients of Sec.138 of N.I.Act or not? In this connection, Ex.P.1 to Ex.P.9 are relevant. Ex.P.1 to Ex.P3 are the cheques bearing No.611198, 611199 and 611200 dated: 16.09.2017, 19.09.2017 and 23.09.2017. Ex.P.4 to Ex.P6 are the bank endorsements dated:15.11.2017. Ex.P.7 is the office copy of legal notice dated:06.12.2017. Ex.P.7(a) is the RPAD receipt. Ex.P8 is the communication to postal department and Ex.P.9 is the postal track consignment.
17. On careful perusal of Ex.P.1 to Ex.P3 coupled with Ex.P.4 to Ex.P6, it appears to this court that, the complainant has presented the cheques dated 16.09.2017, 19.09.2017 and 23.09.2017 for encashment and same were got bounced on 15.11.2017. Therefore, it is crystal clear that, the complainant has presented the cheques for encashment within stipulated period.
18. Now, the next question before this court is whether the complainant has issued the notice in accordance with law or not? As per Ex.P.7, on 06.12.2017, the complainant SCCH-2 14 C.C.No. 3786/2018 has issued the legal notice to the accused. As per Ex.P.7(a), the complainant has dispatched the said notice on 08.12.2017. On combined perusal of Ex.P.4 to Ex.P6 coupled with Ex.P7 & Ex.P7(a), it is crystal clear that, the complainant has issued the legal notice within 30 days from the date of receipt of bank endorsements.
19. Now, the next question before this court is whether the legal notice issued by the complainant was served on the accused or not?. In this connection it is appropriate to take Ex.P.8 viz. postal track consignment. On perusal of this document, it appears to this Court that, the notice has been delivered on 09.12.2017. That apart, the accused examined himself as DW.1. In his examination in chief, he has deposed that he has not received notice from the side of complainant. However he has not disputed the address more fully described in Ex.P7. In other words, it is not the contention of the accused that the complainant has mentioned wrong address in Ex.P7. Therefore, it can be inferred that the notice issued by the complainant was duly served on the accused.
20. Now, the next aspect is whether Ex.P.1 to Ex.P3 are pertaining to the bank account of accused and Ex.P.1(a) to Ex.P3(a) are the signatures of accused or not? During the SCCH-2 15 C.C.No. 3786/2018 course of cross-examination of D.W.1, he has clearly deposed that he has signed the entire cheque book and handed over to the complainant. That apart, he has not deposed in his examination in chief regarding Ex.P1 to Ex.P3 are not pertaining to his bank account and Ex.P1(a) to Ex.P3(a) are not his signatures. Besides the above referred aspects, during the course of cross-examination of DW.1, he has clearly admitted his signatures found in Ex.P1 to Ex.P3. At this juncture, it is worth to reproduce the cross-examination of PW.1 here itself for better understanding: "ನಿ.ಪಿ.1 ರಿಂದ ನಿಪಿ.3 ರಲ್ಲಿರುವ ಸಹಿ ನನ್ನದೇ ಆಗಿರುತ್ತದೆ, ಸಾಕ್ಷಿ ಸ್ವತಃ ಮುಂದುವರೆದು ನಾನು ಚೆಕ್ಬುಕ್ಕನ್ನೇ ನೀಡಿರುತ್ತೇನೆ ಎಂದು ನುಡಿಯುತ್ತಾ ರೆ''. Therefore, it is crystal clear that Ex.P.1 to Ex.P3 are pertaining to the bank account of accused and Ex.P.1(a) to Ex.P3(a) are the signatures of accused. Besides the above referred aspects, the presumption under Sec.118 and 139 of Negotiable Instruments Act favours the complainant. Hence, the complainant has complied the ingredients of Sec.138 of N.I. Act.
21. Now, it is worth to refer the decision of the Hon'ble Apex Court between Hiten P Dalal V/s Brathindranath Manarji reported in 2001(6) SCC 16, wherein the Hon'ble Apex Court observed that, "under Sec.138 of Negotiable Instruments Act, the complainant is not required to SCCH-2 16 C.C.No. 3786/2018 establish either the legality or enforceability of the debt or liability since he can avail the benefit of presumption U/Sec.118 and Sec.139 of N.I. Act in his favour".
22. It is also settled position of law that, the presumption available U/Sec. 138 of N.I Act is a rebuttable presumption. Further, to rebut the said presumption the accused need not to enter into the witness box. However, the accused can establish his probable defence by creating a doubt about the existence of legally enforceable debt or liability.
23. Further, it is also settled position of law that, the standard of proof of rebutting the presumption is that of preponderance of probabilities. It is also settled position of law that, if the accused succeeded in rebutting the presumption then the burden shifts back to the complainant. At this juncture, again it is worth to refer the decision of the Hon'ble Apex Court reported in AIR 2010 S.C. 1898, between Rangappa Vs. Sri. Mohan, wherein the Hon'ble Apex Court has observed that, "the standard of proof to rebut the presumption is that one of preponderance of probabilities".
24. It is also settled position of law that, "it is immaterial that, the cheque may have been filled in by SCCH-2 17 C.C.No. 3786/2018 any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque otherwise valid, within the provisions of Sec.138 would be attracted".
25. Now, the question before this court is whether the accused has rebutted the presumption or not?. In the instant case, P.W.1 was cross-examined from the side of complainant. A scrupulous perusal of cross-examination of PW.1, it appears to this court that, the accused side has disputed the transaction and also disputed the financial capacity of complainant. At this juncture itself it is worth to reproduce the defence of the accused here itself for better understanding: "ಆರೋಪಿಗೆ ನೀವು ಹದಿನೆಂಟು ಲಕ್ಷ ಕೊಡುವಷ್ಟು ಸಾಮರ್ಥ್ಯ ನಿಮಗೆ ಇರಲಿಲ್ಲ ಎಂದರೆ ಸರಿಯಲ್ಲ. ಆರೋಪಿಗೆ ನೀವು ಹದಿನೆಂಟು ಲಕ್ಷ ನೀಡಿಲ್ಲ ಎಂದರೆ ಸರಿಯಲ್ಲ''. Therefore, it is crystal clear that the specific contention of the accused is that the complainant had no financial capacity and disputed the lending of Rs.18,00,000/-.
26. Now, this court has to analyze whether there was a transaction took place by and between the complainant and accused as alleged by the complainant in the complaint and the complainant had financial capacity to lend Rs.18,00,000/- or not?. Admittedly, the complainant has produced loan agreement which has been marked as Ex.P10 and on demand promissory note, consideration receipt which SCCH-2 18 C.C.No. 3786/2018 have been marked as Ex.P12 & Ex.P11. During the course of cross-examination of PW.1, the learned counsel for accused suggested that Ex.P10 to Ex.P12 have been created for the purpose of this case. Apart from that, during the course of cross-examination of DW.1, he has clearly deposed that at the time of affixing his signature and LTM mark, the said documents were not filled. It is relevant to note that, there is no suggestion from the side of complainant regarding Ex.P10 to Ex.P12 were not blank at the time of affixing signature by the accused. In spite of specific denial from the side of accused regarding execution of Ex.P10 to Ex.P12, the complainant has not made any endevour to examine the witnesses. The non examination of witnesses is fatal to the complainant in order to prove the due execution of Ex.P10 to Ex.P12.
27. That apart, according to the complainant he has lent hand loan of Rs.18,00,000/- on 18.09.2016. The accused was agreed to repay the same within one year. The complainant approached the accused during the 3 rd week of September 2017 and demanded for repayment of loan amount. At which point of time the accused executed loan agreement and also on demand promissory note, agreed to pay Rs.18,00,000/- with interest @ 18% p.a. and issued three cheques. A bare perusal of complaint averments, it is SCCH-2 19 C.C.No. 3786/2018 crystal clear that at the time of alleged loan transaction the complainant has not obtained any documents from the side of accused. However, during the course of cross-examination of PW.1, he has stated that, before issuing Ex.P1 to Ex.P3, the accused was also issued cheques pertaining to Andhra Bank. Further he has admitted that, the said aspect has not been disclosed in the complaint as well as in the affidavit and notice. This aspect clearly give an indication that the complainant has suppressed certain factual aspects before this court. The said aspect creates doubt about the transaction.
28. Apart from that, in the complaint the complainant has averred that the accused has sought for Rs.18,00,000/- for his business purpose. However, during the course of cross- examination of PW.1, he has deposed that, the accused has sought for amount for the purpose of purchasing land. Admittedly, the complainant has not obtained any documents from the accused at the time of lending alleged loan of Rs.18,00,000/-. Admittedly Rs.18,00,000/- is a hefty amount. What was the necessity for the complainant to lend hefty amount of Rs.18,00,000/- in cash without obtaining documents from the side of accused is not forthcoming.
SCCH-2 20 C.C.No. 3786/201829. During the course of cross-examination of PW.1, he has deposed that at the time of lending alleged loan his father was present. At the cost of repetition the accused has disputed the transaction. Therefore, the examination of father of complainant assumes importance in the present case. However, the complainant has not made single endevour to examine his father. Why he has not made endevour to examine his father is not forthcoming. Therefore, the non examination of father of complainant is fatal to the case of complainant and creates doubt about the alleged loan transaction.
30. At the cost of repetition, during the course of cross- examination of PW.1, the learned counsel for accused suggested that, the complainant had no financial capacity to lend Rs.18,00,000/-. Therefore, it is crystal clear that the accused side has clearly disputed the financial capacity of the complainant. It is settled position of law that initially the complainant need not to prove his financial capacity. However, if the accused seriously disputes the financial capacity of complainant, under such circumstances, it is the primary duty of the complainant to prove his financial capacity.
31. That apart, during the course of cross-examination of PW.1, the complainant has deposed he has accumulated the SCCH-2 21 C.C.No. 3786/2018 amount by selling his landed property and also from the compensation received by his father in the road traffic accident case. Further, he has deposed that during the year 2016, he has sold the property and he can produce the document. Further, the learned counsel for accused disputed the compensation amount received by the father of complainant. It is relevant to note that, the complainant has not produced any documents to show regarding accumulation of Rs.18,00,000/-. In other words, the complainant has not produced the sale deed to show that he has sold the property. Further, he has not produced the documents to show the sale consideration received by him has been withdrawn from the bank. Likewise he has not produced the documents regarding the compensation amount received by his father and same has been withdrawn from the bank. Why he has not produced those documents is not forthcoming and the complainant has not made any attempt to produce those documents to substantiate the accumulation of Rs.18,00,000/-. Further, in order to prove the accumulation of Rs.18,00,000/- examination of father of complainant and also production of bank statement is absolutely necessary. However, the complainant has not taken risk to examine his father as well as to produce the bank statement. The said aspect also is fatal to the case of SCCH-2 22 C.C.No. 3786/2018 the complainant and also creates suspicious about the alleged loan transaction.
32. Apart from the above referred aspects, during the course of his cross-examination, he has clearly admitted that between the year 2015 to 2020, he had no avocation. At this juncture, it is wroth to reproduce the cross-examination of PW.1 here itself for better understanding: "2015 ರಿಂದ 2020 ವರೆಗೆ ಕೆಲಸವನ್ನು ಮಾಡುತ್ತಿರಲಿಲ್ಲ ಎಂದರೆ ನಿಜ ಯಾಕೆಂದರೆ ನನಗೆ ಅಪಘಾತವಾಗಿತ್ತು ''.
"ನಾನು ಹೇಳಿದಂತೆ 2015 ರಿಂದ 2020 ರವರೆಗೆ ನನಗೆ ಯಾವುದೇ ಕೆಲಸ ಇರಲಿಲ್ಲ ಎಂದರೆ ನಿಜ''. Further deposed that, during that period they were in rented house and the rent has been paid by his brother. At this juncture it is relevant to reproduce the cross- examination of PW.1 here itself for better understanding:
"2015 ರಿಂದ 2020 ರವರೆಗೆ ಕೆಲಸ ಇಲ್ಲದ ಅವಧಿಯಲ್ಲಿ ಮನೆ ಬಾಡಿಗೆ ಯಾರು ಕಟ್ಟು ತ್ತಿದ್ದರು ಎಂದರೆ ನನ್ನ ತಮ್ಮ ಕಟ್ಟು ತ್ತಿದ್ದರು''.
33. By careful reading of the above referred cross- examination of PW.1, it can be inferred that, from 2015 to 2020 the complainant was not working. In other words, he had no source of income. Such being the case, without obtaining documents lending a hefty amount of Rs.18,00,000/- in cash creates doubt and unbelievable. Normally a prudent man cannot lend hefty amount like Rs.18,00,000/- without obtaining any documents. Moreover SCCH-2 23 C.C.No. 3786/2018 during that time the complainant has no avocation. Such being the case, it is not possible to believe he had lent Rs.18,00,000/- to the accused. It is relevant to note that Ex.P10 to Ex.P12 were not taken by the complainant at the time of alleged loan transaction. If really the complainant had lent hefty amount like Rs.18,00,000/-, certainly he would receive documents at the time of alleged loan transaction itself. Further suspicious circumstances is according to the complainant on 15.09.2017, the accused issued three cheques, executed loan agreement and also executed on demand promissory note. If really the accused has executed loan agreement which has been marked as Ex.P10, what was the necessity for the complainant to take Ex.P11 & Ex.P12. This aspect give an indication that the complainant has obtained signatures of the accused on blank paper. Therefore, it creates doubt about the alleged loan transaction.
34. The next suspicious aspect is that, according to the complainant he has lent Rs.18,00,000/- to the accused. However during the course of cross-examination of PW.1, he has expressed ignorance regarding the avocation of accused. However he has deposed that, the accused was informed him that he was doing real estate business. Further, PW.1 has deposed that on 18.09.2016, the accused was informed him SCCH-2 24 C.C.No. 3786/2018 that he had intending to purchase property and he had facing short fall of certain amount. Further during the course of cross-examination of PW.1, he has deposed that he had not enquired about sale agreement and also transaction. He also deposed that he has no impediment to questioned about the transaction and also to obtain sale agreement. Normally, any prudent man while lending hefty amount, certainly he would enquire about intending transaction of the accused and also endevour to verify the documents. However, in the instant case, the complainant has not taken any risk or endevour to enquire about the transaction of accused. This aspect also creates doubt about the alleged loan transaction.
35. Now, at this juncture, it is worth to rely on the decision of Hon'ble Apex Court reported in (2020) 12 SCC 724 between APS Forex Services Pvt., Ltd., Vs. Shakti International Fashion Linkers and Ors., wherein the Hon'ble Apex Court held as follows:
"We are of the view that whenever the accused has questioned the financial capacity of the complainant in support of his probable defence, despite the presumption under SCCH-2 25 C.C.No. 3786/2018 Section 139 of the N.I. Act about the presumption of legally enforceable debt and such presumption is rebuttable, thereafter the onus shifts again on the complainant to prove his financial capacity and at that stage the complainant is required to lead the evidence to prove his financial capacity, more particularly when it is a case of giving loan by cash and thereafter issuance of a cheque."
36. In the instant case, the accused has denied the financial capacity of the complainant. It is settled position of law that initially the complainant need not to prove the financial capacity. However, if the accused has disputed the financial capacity, under such circumstances it is the bounden duty of complainant to prove the financial capacity. At the cost of repetition, in the instant case the case of the complainant is that he had lent Rs.18,00,000/- in cash. However, the accused has disputed the financial capacity of the complainant. At this juncture, it is worth to rely on the decision of Hon'ble Apex Court reported in (2019) 5 SCC 418 between Basalingappa vs. Mudibasappa, wherein the Hon'ble Apex Court held that, "the accused can always SCCH-2 26 C.C.No. 3786/2018 show that the complainant had no financial capacity to advance the alleged loan and the same shall be a probable defence which the accused can raise". Further, it is absolutely necessary to rely on the judgment of Hon'ble Kerala High Court reported in 2020 SCC OnLine Ker 1750 between Sunitha Vs. Sheela Antony, wherein, the principles laid down by the Hon'ble Supreme Court of India in the above mentioned judgments have been summarized and it has been held as follows:
"The complainant has no obligation, in all cases under Section 138 of the Act, to prove his financial capacity. But, when the case of the complainant is that he lent money to the accused by cash and that the accused issued the cheque in discharge of the liability, and if the accused challenge the financial capacity of the complainant to advance the money, despite the presumption under Section 139 of the Act, the complainant has the obligation to prove his financial capacity or the source of the money SCCH-2 27 C.C.No. 3786/2018 allegedly lent by him to the accused.
The complainant has no initial burden to prove his financial capacity or the source of the money. The obligation in that regard would arise only when his capacity or capability to advance the money is challenged by the accused."
37. Again at the cost of repetition, the presumption favours the complainant. However, the accused has raised probable defence with respect to transaction and financial capacity. Further, at the cost of repetition, complainant herein has failed to establish that, he had paid a sum of Rs.18,00,000/- to the accused as hand loan on 16.09.2016. As per the admission of PW.1, from 2015 to 2020, he had no avocation. Further, he has not produced the documents to show regarding he has accumulated Rs.18,00,000/- from the source of selling the property and also received from his father. He also not examined his father, since he was the alleged eye witness to the alleged loan transaction. Apart from that, during the course of cross-examination of PW.1, he has deposed that the accused has taken earlier cheques and issued Ex.P1 to Ex.P3. However, the said aspect is missing in the notice, complaint and his chief examination.
SCCH-2 28 C.C.No. 3786/2018Hence, the evidence of PW.1 failed to inspire the confidence of this Court. As such, this court do not wish to take Ex.D1 and evidence of DW.2 & DW.3 for discussion. Further, the amount mentioned in Ex.D1 paid by the father of accused when the accused was in the police station. Apart from that, the complainant himself had no avocation to lent Rs.18,00,000/- and also failed to establish financial capacity. Hence, Ex.D1 will not come to the aid of accused.
38. It is crystal clear that when once the accused has disputed the financial capacity of the complainant, it is his bounden duty to prove the financial capacity to the extent of the amount paid to the accused. In this connection, it is appropriate to refer the decision of the Hon'ble High Court of Karnataka reported in 2012 (3) KCCR 2057, wherein the Hon'ble High Court of Karnataka held that, "No proof as to other source of income from land, no evidence that he had a bank balance of Rs.2,00,000/- on the day he has alleged to have advanced the loan. Mere issuance of cheque is no sufficient unless it is shown that cheque was issued towards discharge of a legally recoverable debt. When the financial capacity of the complaint is SCCH-2 29 C.C.No. 3786/2018 questioned, the complainant has to establish his financial capacity".
39. With the help of discussions referred to above, it is crystal clear that, complainant has utterly failed to prove the alleged loan transaction and also financial capacity to lent Rs.18,00,000/- to accused as a hand loan. The non production of the documents to show the financial capacity of the complainant clearly creates a serious doubt regarding the advancement of loan amount. If really he had lent an amount of Rs.18,00,000/- to the accused, certainly he would produce documents to substantiate his financial capacity. The non-production of the documents is fatal to the case of the complainant and also creates a serious doubt in the mind of this Court regarding alleged loan transaction. Though Ex.P10 to Ex.P12 produced by the complainant, the same will not come to the aid of complainant, since the accused has disputed the execution of said documents. Thus, the presumption formed in favor of the complainant stands successfully rebutted.
40. On evaluation of the entire evidence, this Court finds that, the evidence adduced by P.W.1 is improbable and difficult to believe. As such, the evidence of P.W.1 failed to inspire the confidence of this Court. The documentary SCCH-2 30 C.C.No. 3786/2018 evidence produced by the P.W.1 is not sufficient to hold that, the complainant had financial capacity to lent Rs.18,00,000/- to the accused. In other words, complainant had no financial capacity to lend Rs.18,00,000/- to the accused.
41. Therefore, from the available materials on record and contradictions pointed out by this court, clearly goes to show that, the contention of accused regarding he had given the entire cheque book to the complainant and also affixed signature on the blank papers appears to be nearer to the truth. The evidence also reveals that, there was no existence of legally enforceable debt for the amount mentioned in the cheques.
42. Therefore, it is crystal clear that the accused has raised the probable doubt regarding the advancement of loan by the complainant. Hence, this court holds that, the accused has raised plausible defence and successfully rebutted the presumption by creating doubt in the case of the complainant.
43. It is pertinent to note that, once the accused has rebutted the presumption, the burden shifts back to the complainant. However, the complainant has failed to prove SCCH-2 31 C.C.No. 3786/2018 his case. Hence, this court holds that, the complainant has failed to prove that, the accused has committed an offence punishable Under Sec. 138 of Negotiable Instruments Act. Accordingly, this Court is answered Point No.1 in the Negative.
44. Point No 2 : In view of the above findings, this Court proceeds to pass following:
:O R D E R:
Acting U/Sec.255(1) Cr.P.C., the accused is acquitted for the offence punishable under Section 138 of Negotiable Instruments Act, 1881.
The bail bond of the accused shall stands cancelled.
(Dictated to the stenographer directly on computer, typed by her, revised and corrected by me, and then pronounced in the open Court on this the 14th day of October, 2025) (H.P. Mohan Kumar) VI Addl. Judge and ACJM., Court of Small Causes, Bengaluru.SCCH-2 32 C.C.No. 3786/2018
:ANNEXURE:
LIST OF WITNESSES EXAMINED BY THE COMPLAINANT:
P.W.1 : Sri. Nayanendra P.
LIST OF DOCUMENTS MARKED ON BEHALF OF
COMPLAINANT:
Ex.P.1 to : Original Chequed bearing No.611198, 611199
Ex.P.3 and 611200 dated 16.09.2017, 19.09.2017
and 23.09.2017.
Ex.P.1(a) to : Signatures of the accused.
Ex.P.3(a) Ex.P.4 to : Bank endorsements. Ex.P.6 Ex.P.7 : Office copy of legal notice dated: 06.12.2017. Ex.P.7(a) : RPAD receipt. Ex.P.8 : Communication to postal department. Ex.P.9 : Postal track consignment. Ex.P.10 : Loan agreement. Ex.P.11 : Consideration receipt. Ex.P.12 : On demand promissory note.
LIST OF WITNESSES EXAMINED BY THE ACCUSED:
D.W.1 : Sri. Keshava.
SCCH-2 33 C.C.No. 3786/2018
D.W.2 : Sri M Byre Gowda.
D.W.3 : Sri Ravikumar M.
LIST OF DOCUMENTS MARKED ON BEHALF OF ACCUSED:
Ex.D.1 : Receipt.
Ex.D.1(a) : Signatures of DW.2 & DW.3
& Ex.D.1(b)
Ex.D.2 : Bank pass book.
Ex.D.3 : Online copy of registered sale deed dated
23.01.2015.
Digitally signed by
HP
HP MOHANKUMAR
MOHANKUMAR Date: 2025.10.23
11:01:01 +0530
(H.P. Mohan Kumar)
VI Addl. Judge and ACJM.,
Court of Small Causes,
Bengaluru.