Bangalore District Court
For His Financial And Legal ... vs Appeared Through His Learned Counsel ... on 19 January, 2023
1 CC.29498/2018( J)
KABC030802152018
Presented on : 03-11-2018
Registered on : 03-11-2018
Decided on : 19-01-2023
Duration : 4 years, 2 months, 16 days
IN THE COURT OF THE XV ADDL CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY.
Dated this the 19 th Day of January-2023
Present: Lokesh Dhanapal Havale. B.A.L.L.B.,
XV Addl.C.M.M., Bengaluru.
Judgment U/s.355 of the Cr.P.C. 1973.
1.Sl.No.of the case CC.No.29498/2018
2.Name of the Complainant: Sri. P. Eshanna
S/o late S. Parappa
Aged about 70 years,
R/at No.23, 1st Floor,
1st cross, RRMR Extension,
K.H. Road, Bengaluru- 560 027.
3.Name of the accused: Sri. Prakash. P.V
S/o Vijay Kumar .P
R/at No.168/7, 4th cross,
Wilson Garden,
Bengaluru-560 027.
2 CC.29498/2018( J)
4.The offence complained of : U/s.138 of Negotiable Instruments
Act.
5.Plea of the accused: Pleaded not guilty.
6.Final Order: Acting U/s.255(2) Cr.P.C., accused
is Convicted.
7.Date of final Order 19.01.2023.
* * *
This complaint is filed U/Sec.200 of Cr.P.C. against the
accused for the offence punishable U/Sec.138 of the Negotiable
Instruments Act, 1881.
2. The facts of the complaint in brief are as under:
The complainant and accused are good friends. The accused
borrowed hand loan of Rs.10,00,000/- on 12.04.2016 from the
complainant for his financial and legal necessities. He assured to
repay the loan amount within six months. After lapse of six
months, the accused did not pay the amount. After several
demands and requests, he issued cheque bearing No.042589 dated
23.07.2018 for Rs.10,00,000/- drawn on Canara Bank,
Hombegowdanagar branch, Bengaluru in favour of the complainant
in order to discharge legal debt/liability. On presentation of the
cheque for encashment through his banker K.S.C Apex bank Ltd,
M.S Building branch, Bengaluru, the cheque was returned with
3 CC.29498/2018( J)
bank memo 'Funds Insufficient' on 27.08.2018. The complainant
issued legal notice on 22.09.2018 to the accused through RPAD
demanding repayment of the cheque amount of Rs.10,00,000/-. It
was served on the accused on 25.09.2018. The accused did not
pay the amount even after the expiry of 15 days. The accused
thereby committed an offence punishable U/s.138 of the N.I.Act.
3. After the institution of the complaint, the cognizance
was taken and it has been registered as PCR No.13939/2018. The
sworn statement of the complainant has been recorded and on the
basis of sworn statement and other materials on hand, the criminal
case has been registered against the accused and summons was
issued to accused. In response to the service of summons, the
accused appeared through his learned counsel and got enlarged
on bail. The prosecution papers were supplied to the accused and
the substance of the accusation was read over and explained to
the accused in the language known to him. He pleaded not guilty
and claimed to be tried.
4. During trial the complainant examined himself as PW-1
and got marked Ex.P1 to P5. The statement of the accused U/s.
313 of Cr.P.C. was recorded. The accused examined himself as
DW.1 and he got examined his brother as DW.2 and got marked
Ex.D.1 and 2.
4 CC.29498/2018( J)
5. Heard the arguments. On perusal of the entire
materials on record, the points that arise for my consideration are
as under;
1. Whether the complainant proves that the
accused issued cheque bearing No.042589
dated 23.07.2018 for Rs.10,00,000/- drawn on
Canara Bank, Hombegowdanagar, Bangalore
towards the discharge of legally enforceable
debt/liability and on its presentation for
encashment, it was dishonored with an
endorsement "Funds Insufficient" and even
after the service of legal notice, the accused
has not paid the amount within 15 days and
thereby accused committed an offence
punishable U/Sec.138 of N.I. Act, 1881?
2. Whether the accused rebuts the
presumption U/s.139 of the N.I.Act?
3. What order?
6. My answers on the above points for consideration are
as under:
Point No.1 : Affirmative
Point No.2 : Negative
Point No.3 : As per final order for the following;
5 CC.29498/2018( J)
REASONS
7. Point No.1 and 2 :- The points are taken together for
the common discussion to avoid repetition of facts and evidence. It
is necessary to discus the provisions U/s. 118(a) and 139 of the
Act., 1881 at this stage.
"118. Presumptions as to negotiable
instruments. - Until the contrary is
proved, the following presumptions shall
be made:-
(a) of consideration - that every
negotiable instrument was made or drawn
for consideration, and that every such
instrument, when it has been accepted,
indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or
transferred for consideration;"
"139. Presumption in favour of
holder.- It shall be presumed, unless the
contrary is proved, that the holder of a
cheque received the cheque of the nature
referred to in section 138 for the
discharge, in whole or in part, of any
debt or other liability."
6 CC.29498/2018( J)
8. On plain perusal of the provision U/s. 118(a) and 139
of the N.I.Act., it can be seen that initially the presumptions
constituted under these two provisions are in favour of the
complainant. However the presumptions are rebuttable and it is
open to an accused to raise a defence to rebut the statutory
presumptions. An accused can raise a defence, wherein the
existence of legally enforceable debt or liability can be contested.
9. It is also well established that an accused need not
examine himself for discharging the burden of proof placed upon
him under a statute. He may discharge his burden on the basis of
the materials already brought on record. An accused has
constitutional rights to remain silent. The standard of proof on
part of the accused and that of the prosecution in a Criminal Case
is different. The prosecution must prove the guilt of an accused
beyond all reasonable doubts, the standard of proof so as to prove
a defence on the part of an accused is preponderance of
probabilities.
10. Under the light of position of the law, I have perused
the complaint and the evidence placed on record. The complainant
in support of his claim made in the complaint has adduced
evidence by examining himself as PW-1 and he got marked Ex.P1
to 5. PW-1 filed his evidence affidavit on oath and reiterated the
complaint averments. Ex.P1 is the cheque bearing No.042589 dated
23.07.2018 for Rs. 10,00,000/- drawn on Canara Bank,
7 CC.29498/2018( J)
Hombegowdanagara, Bengaluru. Ex.P1(a) is the signature of the
accused. Ex.P2 is the Bank endorsement with shara "Funds
Insufficient" dated 27.08.2018. Ex.P5 is the office copy of Legal
Notice dated 22.09.2018 issued by the complainant to the accused
demanding repayment of the cheque amount to the addresses of
the accused. Ex.P4 is the postal receipt for having sent the legal
notice to the accused. Ex.P3 is the postal acknowledgment for
having served the notice on the accused on 25.09.2018.
11. On perusal of the documents, it is clear that the
cheques at Ex.P1 bearing No.042589 dated 23.07.2018 for Rs.
10,00,000/- drawn on Canara Bank, Hombegowdanagara,
Bengaluru issued favour of the complainant was presented for
within its validity. The Bank endorsement dated 27.08.2018 at
Ex.P2 is returned with shara "Funds Insufficient". Ex.P5 is the
legal notice dated 22.09.2018, which was served on the accused
on 25.09.2018 as per postal acknowledgement at ExP.3. The
counsel for the accused has disputed the service of notice in the
cross examination of PW.1. The notice is sent through RPAD. In
the case of C.C. Alavi Haji v. Palapetty Muhammed reported
in (2007) 6 SCC 555, the Hon'ble Supreme Court held that when
the notice is sent by registered post by correctly addressing the
drawer of the cheque, the mandatory requirement of issue of
notice in terms of clause (b) of proviso to Section 138 of the Act
stands complied with. It is needless to emphasise that the
complaint must contain basic facts regarding the mode and
manner of the issuance of notice to the drawer of the cheque. In
8 CC.29498/2018( J)
the case of N. Parameswaran Unni v. G. Kannan reported in
(2017) 5 SCC 737 the Hon'ble Supreme Court held that it is clear
from Section 27 of the General Clauses Act, 1897 and Section 114
of the Evidence Act, 1872 that once notice is sent by registered
post by correctly addressing to the drawer of the cheque, the
service of notice is deemed to have been effected. However, the
drawer is at liberty to rebut this presumption. The address of the
accused in notice and complaint is not disputed and no evidence
was lead to show that the said address is not the correct address
of the accused. Moreover the accused/DW.1 himself stated in the
cross examination that he was out of town, when notice came and
his wife has received it. Therefore on the basis of evidence on
record, this Court is of the opinion that the notice issued by the
complainant was served on the accused on 25.09.2018 as per
Ex.P3. The complaint was filed on 02.11.2018, which is within
limitation. The cheque and the signature are admitted. Therefore,
the documents on record clearly show that the complainant has
complied the ingredients of Section 138(a) to (c) of the N.I.Act.
Therefore the presumptions U/s.118 and 139 of the N.I.Act arise in
favour of the complainant. The presumptions are rebuttable and
the burden is on the accused to rebut the presumptions. The
accused can rebut the presumption by raising probable defence and
proving it relying on the evidence of the complainant or by
leading his direct evidence.
12. It is the defence of the accused in the cross
examination of PW.1 that there is no transaction between the
9 CC.29498/2018( J)
complainant and the accused as alleged in the complaint. The
complainant has been doing the work of arranging loans for the
other persons and he took the cheque from the accused for
arranging loan for the accused and took the blank signed cheque
for the process of arranging loan. The transaction between the
complainant and the accused took place in the year 2013 and the
cheque in question was given for the said transaction in the year
2013. There are no documents in respect of the transaction as
alleged in the complaint. The complainant has no financial
capacity to lend such huge amount. A person by name B.V. Manju
was present when the accused gave the cheque in question in the
year 2013 to the complainant.
13. It is the defence of the accused in the defence
evidence that he has been doing the business of arranging loans
for the persons approaching him seeking loan. He knew the
complainant from 2012. He came in contact with the complainant
in respect of arranging loan for other persons. After the death of
his father, he required loan in respect of his own property. After
the death of his father, the said property was mutated in the
name of his brother. At that time, the complainant who was the
Director of Karnataka Government Secretariat Cooperative Housing
Society. He needed Rs.20,00,000/- loan in respect of the property
in the name of his brother. The complainant took the documents
from him for arranging the loan and along with the said
documents, he took one signed blank cheque. After lapse of one
month, the loan was not sanctioned, therefore he asked the
10 CC.29498/2018( J)
complainant to return the documents and cheque but the
complainant returned some of the documents but he did not return
the cheque. The said cheque was misused by the complainant to
file this false case.
14. The accused in order to prove his defence produced
certified copy of Memorandum of Deposit of Title Deeds dated
23.05.2008 as per Ex.D1 and Pocket Calender of Karnataka
Government Secretariat Co-operative Housing Society Limited as
per Ex.D2. On perusal of Ex.D.1, it is found that the mortgage
deed at Ex.D1 is executed by brother of the accused by name P.V
Suresh Babu S/o late Vijaya Kumar in favour of Karnataka State
Cooperative Housing Federation Limited at Basavanagudi,
Bengaluru on 23.5.2008 for loan of Rs.10,00,000/- obtained by
him. On perusal of Ex.D2, it is found that it is the pocket
calender of the year 2019. It discloses that complainant was the
Director in the Governing body of the said Society. The purpose of
establishment of the said Society is mentioned as allotment of sites
to its members for construction of houses, who are the officers
and employees of Secretariat.
15. The counsel for the complainant cross examined DW.1
at length in respect of the defence taken by him. It was elicited in
the cross examination of DW.1 that he did not know about the
directors of Karnataka Government Secretariat Cooperative Housing
Society. He admitted that it is necessarily mandatory to be a
member of Cooperative Society for obtaining the loan from it. It
11 CC.29498/2018( J)
was also elicited that Rs.20,00,000/- loan was required in respect
of the property of his brother but he did not depose anything
about the mortgage of the said property. He admitted that his
brother would have to be necessarily a member of Karnataka
Government Secretariat Cooperative Housing Society before
applying for loan of Rs.20,00,000/-. DW.1 voluntarily stated in his
cross examination that the complainant told him that the loan
application has already been filed and he has to become a member
at the time of obtaining loan. It was elicited that he did not know
that the said Society is limited to the Government Employees. He
did not know that the private persons could not be a member of a
Government Employees Society. He admitted that his brother did
not meet the Directors of the said society for obtaining the loan. It
was further elicited that he was working as loan and recovery
agent in Jammu and Kashmir bank. He knew everything about the
transaction of obtaining and repaying the loan. It was further
elicited in the cross examination of DW.1 that Ex.D1 belongs to
his brother and his brother obtained loan as per Ex.D.1. He did
not file application for taking over of his loan. DW.1 voluntarily
stated that the cheque in question was given to the complainant
for taking additional loan. He did not produce any other
documents pertaining to the loan of his brother.
16. The accused got examined his brother by name Suresh
Babu as DW.2. He deposed in his chief examination that he knew
the complainant. The accused is his brother. He obtained
Rs.10,00,000/- loan in State Co-operative Federation Bank,
12 CC.29498/2018( J)
Jayanagar branch in 2013. He told his brother to take over the
said loan. His brother told him that his friend would do the said
work. His brother obtained the photocopies of documents
pertaining to his house and gave it to his friend. He did not
mention the name of his friend. The friend of his brother told his
brother that cheque has to be given for processing the loan and
his brother gave his cheque to his friend. He sold his house in the
year 2014 and therefore there was no need of taking over of his
loan. He repaid the loan out of amount received by him by selling
the house. Thereafter he told his brother that the loan was not
necessary. His brother told him that the cheque given by him to
his friend was misused and when said matter was told by his
brother 10 days ago.
17. The counsel for the complainant cross examined DW.2
at length. It was elicited in the cross examination of DW.2 that he
did not obtain any loan apart from the loan obtained by him from
State Co-operative Federation Bank in the year 2013. His house
was kept for auction and therefore the necessity of taking over the
loan arose. He did not produce any documents in respect of his
loan and in respect of taking over of loan. He sold the house
during the pendency of loan and he repaid the loan out of sale
consideration amount. He did not produce any documents before
the Court which were given by him to his brother for taking over
the loan. He asked his brother about his friend but he neither met
him nor talked with him.
13 CC.29498/2018( J)
18. It is pertinent to note that the notice was served on
the accused. When it was asked to DW.1 that as to why he has
not issued reply notice, he answered that he was out of town and
the notice was received by his wife and therefore he did not issue
the reply. He gave vague reasons. No details have been specified.
His wife would have told him of the notice received by her after
his return, if he had actually gone out of town. The notice was
served on 25.09.2018. The summons was served on 14.03.2019.
The accused appeared and obtained bail on 29.04.2019. The
accused did not mention the period for which he was out of town.
He has to be specific. There was no hurdle for the accused to
issue reply notice taking specific defence. Therefore the reasons
assigned by the accused for not issuing reply are not acceptable.
The accused had the knowledge of the notice and he kept quiet
without issuing reply notice. It is the defence of the accused that
the cheque in question was given to complainant in the year 2013
in respect of the loan taking over process of his brother. He
produced Ex.D1 and 2 in support of his defence. Ex.D1 shows that
the brother of the accused obtained Rs.10,00,000/- loan on
23.5.2008 in Karnataka State Co-operative Housing Federation
Limited at Basavanagudi. However the brother of the accused, who
has been examined as DW.2, deposed that he obtained loan in
State Co-operative Federation Bank, Jayanagara in 2013. During
his cross examination DW.2 deposed that he did not obtain any
loan from any bank prior to 2013. He did not know the name of
complainant, he neither met him nor talked with him. He did not
14 CC.29498/2018( J)
become member of the society to obtain loan. He could not
become a member of the society as he is private individual and
ExD.2 makes it clear that the the purpose of housing society is to
allot sites to its member, who are the officers and employees of
Government Secretariat. Moreover he deposed that he came to
know from his brother about the misuse of cheque by the friend
of his brother around 10 days back. He gave evidence in 2022 and
the case has been filed in 2018. The accused is none other than
the brother DW.2. This itself shows that the defence is an
afterthought. The evidence of DW.2 does not inspire the
confidence. Therefore the evidence of DW.2 is inconsistent with
the evidence of DW.1 as well as Ex.D1. Therefore Ex.D1 and
evidence of DW2 are of no aid to the accused to prove his
defence. It is the defence of the accused that he approached the
complainant for loan of Rs.20,00,000/- that he had needed for
himself. He stated that the house in he name of his brother is the
property of his father and it is mutated in the name of his brother
and he needed loan on the basis of said house. It is not at all the
defence of the accused that the loan was needed for his brother to
take over his loan as the house of his brother came for auction.
The evidence of DW.1 and DW.2 are inconsistent. It is defence of
the accused that he approached the complainant for loan in the
year 2013 but Ex.D2 is the Pocket Calender of the year 2019.
Though the name of the complainant is shown as Director in the
Governing body in the said society in ExD.2, the purpose of
establishment of the society is mentioned in ExD.2, which states
that it was established for allotting sites to the officers and
15 CC.29498/2018( J)
employees of Government Secretariat. Therefore Ex.D2 is of no aid
to the accused to prove his defence. Further it is clearly elicited in
the cross examination of DW.1 that he has been working as loan
and recovery agent in Jammu and Kashmir Bank. Therefore he
knew all about the bank loans and the procedure. However he
pleaded ignorance in respect of the facts in respect of obtaining
the loan in the government employees society either by him or his
brother. When the accused himself is doing the work of arranging
the loan for others and he was working as loan and recovery
agent in Jammu and Kashmir Bank why would he approach
complainant for arranging loan for himself. Therefore the defence
of the accused is not probable.
19. On perusal of the defence taken in the cross
examination of PW.1 and the defence evidence, it is clear that the
accused took defence that the blank signed cheque given by him
to the complainant to obtain loan for himself / take over the loan
of his brother in the year 2013 was misused by the complainant.
It is stated in the defence evidence that when the loan was not
sanctioned after lapse of one month from the date of giving
cheque and the document, he asked complainant to return the
documents and his cheque and the complainant gave some of the
documents but he did not give the cheque. PW.1 was also cross
examined in respect of the defence taken by the accused but
nothing worth was elicited in the cross examination of PW.1.
Under the aforesaid circumstances, the accused would have issued
16 CC.29498/2018( J)
notice to the complainant to take back the cheque. At least he
would have issued stop payment instructions to the bank in
respect of said cheque. The accused is not an illiterate. He has
been working in the field of loan and recovery. He had knowledge
of consequences of issuance of cheque as he was working as loan
and recovery agent in Jammu and Kashmir Bank. In the case on
hand, the notice was served but the accused failed to issue reply
notice. He knew that the cheque was misused by the complainant
when the notice was received by him and the complaint was filed
against him. Even though the accused came to know that the
cheque had been misused as alleged by him, he did not take any
action against the complainant. He did not issue stop payment
instructions to the bank. He did not issue notice to the
complainant to take the cheque back. He did not file police
complaint against the complainant for misuse of cheque. If the
cheque is misused, no prudent man would keep quiet without
taking any legal action. Therefore the defence of the accused is
not at all probable and acceptable.
20. It is the defence of the accused that the cheque was
given in the year 2013. As per Sec.118-b of NI Act, which deals
with the presumptions, that it shall be presumed that every
Negotiable Instrument bearing a date was made or drawn on such
date until the contrary is proved. The cheque at Ex.P1 is dated
23.7.2018. Therefore it shall be presumed that the cheque is made
or drawn on the said date. The burden is on the accused to prove
17 CC.29498/2018( J)
the contrary. The counsel for the accused cross examined PW.1
and made several suggestions and asked several questions of the
cheque being issued in 2013 but nothing was elicited in the cross
examination of PW.1. When it was asked to PW.1 as to when the
cheque was issued, he stated that it was issued on 22.07.2018 by
referring to the piece of paper with him. But it alone could not be
considered to disbelieve the case of the complainant, when the
accused himself failed to prove his defence in respect of the
cheque. It is also pertinent to note that it was suggested in the
cross examination of PW.1 that the accused gave cheque in the
year 2013 to him in the presence of one B.V.Manju. If that is so,
then the accused would have examined the said witness. The
accused failed to prove the specific defence taken by him.
Therefore the defence taken by the accused does not appear to be
probable and acceptable.
21. The counsel for the accused cross examined PW.1 in
respect of defence of the accused, transaction and issuance of
cheque. The counsel for the accused also challenged the financial
capacity of the complainant during the cross examination of PW.1.
Nothing was elicited to prove the probable defence of accused. It
is pertinent to note that the accused did not whisper anything
about the financial capacity of complainant in his defence
evidence. The counsel for the accused cross examined PW.1 in
respect of his financial capacity. It was elicited in the cross
examination of PW.1 that he retired from the Government service
18 CC.29498/2018( J)
around 15 years back and he had no other source of income
except the pension. He had pension of Rs.15,000/- per month
during the year 2016. He has Rs.35,000/- pension at present. He
gave Rs.10,00,000/- loan to the accused by way of cash. He could
not say the denomination of the notes. There is no document in
respect of lending of loan. PW.1 stated that the accused issued
cheque on 22.07.2018 and he stated the date by referring to the
piece of paper he had along with him. He gave the loan in the
double road. He had Rs.10,00,000/- with him at the home. It was
also elicited that he was never a member or Director of any
society. He did not produce any documents to show the source of
funds of Rs.10,00,000/-. During his further cross examination PW.1
stated that he was the Director of Karnataka Government
Secretariat Housing Co-operative Society. It was also elicited that
the accused came to his house on 12.04.2016 and borrowed hand
loan. The accused came to his house after speaking with him over
phone. It was asked to PW.1 that whether he can produce the
bank statement to show that the pension amount was credited to
his account, he answered that there is no necessity of filing the
bank statement. He did not remember as to how much amount he
had saved out of the savings from pension amount of Rs.15,000/-
during the year 2016. When it was suggested to PW.1 that if he
had income of more than Rs.2,50,000/- during the year 2016, he
had to file income tax return and as he had no income more than
Rs.2,50,000/-, he did not file income tax return and to the said
suggestion, PW.1 answered that the said aspect has no nexus with
the case in hand.
19 CC.29498/2018( J)
22. The counsel for the accused argued that the
complainant alleged that the accused borrowed hand loan of
Rs.10,00,000/- for his legal necessities and claimed to have assured
to return it within six months. But the place of taking of money,
the nature of business for which the amount was lent and the
presence of any witness at the time of lending the loan are not
averred in the complaint. Rs.10,00,000/- amount is huge amount
and there is no proof for lending the said amount. The
complainant did not aver the source of funds in the complaint and
he did not produce any documents for having such a huge amount
with him at relevant point of time. The complainant stated in his
evidence that he had pension of Rs.15,000/- but he stated that
Rs.10,00,000/- was with him at his home by way of cash. He also
stated that he has no other source of income except the pension.
Therefore there is no legally enforceable debt as per Sec.269 SS of
the Income Tax Act. The loan of more than Rs.20,000/- should not
be made by way of cash. There are contradictions in the evidence
of PW.1. Therefore the case of complainant is doubtful. He relied
on the following decisions:-
1. The judgment of the Hon'ble Supreme Court of India in
the case of Basalingappa v/s Mudibasappa reported in
(2019) 5 SCC 418 wherein it was held that the non
mentioning of the date of issuance of cheque by the
complainant in the complaint as well as in the evidence and
the complainant not satisfactorily explaining the
20 CC.29498/2018( J)
contradiction in the complaint vis-a-vis his examination in
chief and cross-examination and his failure to prove the
financial capacity to advance the substantial amount, the
accused entitled for acquittal. It was also held that whereas
prosecution must prove the guilt of an accused beyond all
reasonable doubt, the standard of proof so as to prove a
defence on the part of an accused is "preponderance of
probabilities". 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 he relies."
2. The judgment of the Hon'ble Supreme Court of India in
the case of John K Abraham v/s Simon C Abraham and
Another reported in (2014) 2 SCC 236 wherein it was
held that it has to be stated that in order to draw the
presumption under Section 118 read along with 139 of the
Negotiable Instruments Act, the burden was heavily upon
the complainant to have shown that he had required funds
for having advanced the money to the accused; that the
issuance of the cheque in support of the said payment
advanced was true and that the accused was bound to make
the payment as had been agreed while issuing the cheque in
favour of the complainant.
21 CC.29498/2018( J)
3. The judgment of the Hon'ble Supreme Court of India in
the case of Anss Rajashekar v/s Augustus Jeba Ananth
reported in (2020) 15 SCC 348 wherein it was observed
on the basis of the facts of the said case that we find from
the record that admittedly, the accused appellant deals with
sale and purchase of landed properties and the respondent-
complainant works as a Lorry Driver under him with a
salary of Rs.2,500/- p.m. and Rs.20/- per day towards
miscellaneous expenses (bhatta). Admittedly, the Cheque in
question was for Rs.5,00,000/- and all the way the stand of
the complainant was that he had given a hand loan of
Rs.1,75,000/- to the accused-appellant. We find no material
on record in support of the claim of the complainant giving
hand loan to the accused-appellant.
4. The judgment of the Hon'ble Supreme Court of India in
the case of Krishna Janardan Bhat v/s Dathathreya G.
Hegde reported in AIR 2008 SC 1325 wherein it was
held that the existence of legally enforceable debt is not a
matter of presumption u/sec.139 of N.I Act. It was also
observed that in terms of Section 269SS of the Income Tax
Act, any advance taken by way of any loan of more than
Rs. 20,000/- was to be made by way of an account payee
cheque only.
5. The judgment of the Hon'ble High Court of Bombay in
the case of Sanjay Misra V/s Ms. Kanishka Kapoor @
22 CC.29498/2018( J)
Nikki and Another reported in 2009 Criminal Law
Journal 3777 wherein the Hon'ble High Court referred the
judgment of Hon'ble Supreme Court in the case of Krishna
Janardan Bhat v/s Dathathreya G. Hegde reported in
AIR 2008 SC 1325 and it was held that the amount lent
was entirely a cash amount and the amount was
unaccounted as it was not disclosed in the income tax return
at the relevant time till recording of evidence and the said
unaccounted cash could not be considered as legally
enforceable liability within the meaning of explanation to
Sec.138 of NI.Act.
23. However in the following judgments of the Hon'ble
Supreme Court, the aspect of presumptions and burden of proof
has been settled.
a) The Hon'ble Supreme Court in Rangappa Vs. Mohan
reported in (2010)11 SCC 441 held as under:
26. In light of these extracts, we are in agreement
with the respondent-claimant that the presumption
mandated by Section 139 of the Act does indeed
include the existence of a legally enforceable debt or
liability. To that extent, the impugned observations in
Krishna Janardhan Bhat (supra) may not be correct.
However, this does not in any way cast doubt on the
23 CC.29498/2018( J)
correctness of the decision in that case since it was based on
the specific facts and circumstances therein. As noted in the
citations, this is of course in the nature of a rebuttable
presumption and it is open to the accused to raise a
defence, wherein the existence of a legally enforceable debt
or liability can be contested. However, there can be no
doubt that there is an initial presumption, which favours the
complainant.
27. Section 139 of the Act is an example of a
reverse onus clause that has been included in furtherance of
the legislative objective of improving the credibility of
negotiable instruments. While Section 138 of the Act
specifies a strong criminal remedy in relation to the
dishonour of cheques, the rebuttable presumption under
Section 139 is a device to prevent undue delay in the course
of litigation. However, it must be remembered that the
offence made punishable by Section 138 can be better
described as a regulatory offence since the bouncing of a
cheque is largely in the nature of a civil wrong whose
impact is usually confined to the private parties involved in
commercial transactions. In such a scenario, the test of
proportionality should guide the construction and
interpretation of reverse onus clauses and the
accused/defendant cannot be expected to discharge an
unduly high standard or proof.
24 CC.29498/2018( J)
28. In the absence of compelling justifications,
reverse onus clauses usually impose an evidentiary burden
and not a persuasive burden. Keeping this in view, it is a
settled position that when an accused has to rebut the
presumption under Section 139, the standard of proof for
doing so is that of `preponderance of probabilities'.
Therefore, if the accused is able to raise a probable defence
which creates doubts about the existence of a legally
enforceable debt or liability, the prosecution can fail. As
clarified in the citations, the accused can rely on the
materials submitted by the complainant in order to raise
such a defence and it is conceivable that in some cases the
accused may not need to adduce evidence of his/her own.
b) The Hon'ble Supreme Court in T. Vasantha Kumar V/s
Vijaya Kumari reported in (2015) 8 SCC 378 held as
under:-
Therefore, in the present case since the cheque as
well as the signature has been accepted by the
accused/respondent, the presumption under sec.139
would operate. Thus the burden was on the accused to
disprove the cheque or the existence of any legally
recoverable debt or liability. To this effect, the accused
has come up with a story that the cheque was given to the
complainant long back in 1999 as a security to a loan; the
25 CC.29498/2018( J)
loan was repaid but the complainant did not, return the
security cheque. According to the accused, it was that very
cheque used by the complainant to implicate the accused.
However, if may be noted that the cheque was dishonoured
because the payment was stopped and not for any other
reason. This implies that the accused had knowledge of the
cheque being presented to the bank, or else how would be
accused have instructed her banker to stop the payment.
Thus, the story brought out by the accused is unworthy of
credit, apart from being unsupported by any evidence.
c) The Hon'ble Supreme Court of India in the case of
Rohitbhai Jivanlal Patel Vs. State of Gujarat, (2019) 18
SCC 106 held as under:
"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
26 CC.29498/2018( J)
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....."
d) The Hon'ble Supreme Court of India in its latest case
of M/s. Kalamani Tex v. P. Balasubramanian reported in
(2021) 5 SCC 283 observed at para No.14 to 18 as under:-
14. Adverting to the case in hand, we find on a
plain reading of its Judgment that the trial Court completely
overlooked the provisions and failed to appreciate the
statutory presumption drawn under Section 118 and Section
139 of NIA. The Statute mandates that once the signature(s)
of an accused on the cheque/negotiable instrument are
established, then these 'reverse onus' clauses become
operative. In such a situation, the obligation shifts upon the
accused to discharge the presumption imposed upon him.
This point of law has been crystalized by this Court in
Rohitbhai Jivanlal Patel Vs. State of Gujarat, (2019) 18
SCC 106 in the following words:
"In the case at hand, even after purportedly
drawing the presumption under Section 139 of the NI
Act, the trial Court proceeded to question the want of
evidence on the part of the complainant as regards the
27 CC.29498/2018( J)
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 was issued as
consideration for a legally enforceable debt. The trial Court
fell in error when it called upon the Complainant-
Respondent to explain the circumstances under which the
appellants were liable to pay. Such approach of the Trial
Court was directly in the teeth of the established legal
position as discussed above, and amounts to a patent error
of law.
16. No doubt, and as correctly argued by senior
Counsel for the appellants, the presumptions raised
28 CC.29498/2018( J)
under Section 118 and Section 139 are rebuttable in
nature. As held in M.S.Narayana Menon Vs. State of
Kerala, (2006) 6 SCC 39, which was relied upon in
Basalingappa (supra), a probable defence needs to be
raised, which must meet the standard of
"preponderance of probability", and not mere
possibility. These principles were also affirmed in the
case of Kumar Exports (supra), wherein it was further
held that a bare denial of passing of consideration
would not aid the case of accused.
17. Even if we take the arguments raised by the
appellants at face value that only a blank cheque and signed
blank stamp papers were given to the respondent, yet the
statutory presumption cannot be obliterated. It is useful to
cite Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, 36
where this court held that:
"Even a blank cheque leaf, voluntarily signed
and handed over by the accused, which is
towards some payment, would attract
presumption under Section 139 of the
Negotiable Instruments Act, in the absence of
any cogent evidence to show that the cheque
was not issued in discharge of a debt."
29 CC.29498/2018( J)
18. Considering the fact that there has been an
admitted business relationship between the parties, we
are of the opinion that the defence raised by the
appellants does not inspire confidence or meet the
standard of 'preponderance of probability'. In the
absence of any other relevant material, it appears to us
that the High Court did not err in discarding the
appellants' defence and upholding the onus imposed
upon them in terms of Section 118 and Section 139 of
the NIA.
e) The Hon'ble Supreme Court of India in its latest case of
Jain P Jose v/s Santhosh reported in SLP Crl.5241/2016
dated 10.11.2022 observed by referring to its earlier
Judgments in Vasanth Kumar v/s Vijaya Kumari, Rangappa
v/s Mohan and Kalamani Tex and Another v/s P.
Balasubramanian that the complainant is entitled to the
benefit of presumption u/sec.139 of N.I Act that the
cheque was issued for discharge of legally enforceable
debt or liability. It was also observed that the source of
income and the purpose for which the loan was lent
need not be averred in the compliant.
f) The Hon'ble Supreme Court of India in the case of
Assistant Director of Inspection v. A.B. Shanthi, (2002)
6 SCC 259 has held that the object of introducing S. 269 is
to ensure that a tax payer is not allowed to give false
30 CC.29498/2018( J)
explanation for his unaccounted money, or if he has given
some false entries in his accounts, he shall not escape by
giving false explanation for the same. During search and
seizure unaccounted money is unearthed and the tax payer
would usually give the explanation that he had borrowed or
received deposits from his relatives or friends sand it is easy
for the so-called lender also to manipulate his records later
to suit the plea of the tax-payer. The main object of S. 269
SS was to curb this menace.
24. Therefore on perusal of the Judgments, it is clear that
an accused need not examine himself for discharging the burden of
proof placed upon him under a statute. He may discharge his
burden on the basis of the materials already brought on record.
An accused has constitutional rights to remain silent. The standard
of proof on part of the accused and that of the prosecution in a
Criminal Case is different. The prosecution must prove the guilt of
an accused beyond all reasonable doubt and the standard of proof
so as to prove a defence on the part of an accused is
preponderance of probabilities. If the cheque and signature are
admitted, the presumption arises that the cheque was issued for
legally enforceable debt/liability. The presumption is rebuttable.
The accused has to raise a probable defence and prove it by
adducing evidence, which must meet the standard of
preponderance of probabilities. Unless the same has been done,
doubt can not be raised on the case of the complainant or the
financial capacity of the complainant or the source of his income
31 CC.29498/2018( J)
cannot be questioned. In the case on hand the accused failed to
prove that the defence taken by him is probable. He utterly failed
to prove the defence. On the other hand, it is clear from the
evidence on record that the complainant and accused are known
to each other. On perusal of the cross examination of PW.1, it is
clear that the complainant has not disclosed the source of income
of Rs.10,00,000/-. The documents have not been produced in
respect of the financial capacity. However the presumption raised
in favour of the complainant u/sec.139 of N.I Act operates until
rebutted by the accused by proving his probable defence. The onus
will not shift on the complainant to prove his financial capacity
until the presumption is rebutted. As per the settled law that
unless and until the accused rebuts the presumption U/sec.139 of
N.I Act, the onus does not shift on the complainant to prove his
case. The defence taken by the accused is not probable defence
and he failed to prove it either through his direct evidence or
relying on the evidence of the complainant. The accused failed to
give proper explanation of the possession of the cheque in
question with the complainant. Therefore doubt can not be raised
on the case of the complainant merely because of the reason of
financial capacity of the complainant. PW.1 stated that the amount
of Rs.10,00,000/- was with him by way of cash in his home. He
did not file income tax return. Therefore the amount with him by
way cash is unaccounted. The complainant had advanced a loan in
excess of Rs.20,000/- in cash. However the violation of the
provisions of the Income Tax Act does not render the debt or
liability of the accused illegal. The advancement of loan in cash
32 CC.29498/2018( J)
may entail negative consequences for a party especially an Income
Tax assessee as his having acted in breach of Section 269SS of
Income Tax Act, 1961. Chapter XXB provides for the requirement
as to the mode of acceptance, payment or repayment in certain
cases to counteract evasion of tax. Section 269SS mandates that no
person, after the cut off date shall take or accept from any other
person any loan or deposit otherwise than by an account payee
cheque or an account payee bank draft if the amount is more than
Rs. 20,000/-. Breach of Section 269SS of the Income Tax Act
provides penalty to which a person would be subjected to under
Section 271D. The contravention of Section 269 SS though visited
with a stiff penalty on the person taking the loan or deposit,
nevertheless, the rigor of Section 271D is whittled down by
Section 273B, on proof of bonafides and reasonable cause.
However, Section 271D does not provide that such transaction
would be null and void. The payer of money in cash in violation
of Section 269SS can always have the money recovered. In the
light of the observations of the Supreme Court in the case of
Assistant Director of Inspection v. A.B. Shanthi, it cannot but be
said that Sec. 269 SS only provided for the mode of acceptance,
payment or repayment in certain cases so as to counteract evasion
of tax. Sec. 269 SS does not declare all transactions of loan, by
cash in excess of Rs. 20,000/-as invalid, illegal or null and void,
while as observed by the Supreme Court, the main object of
introducing the provision was to curb and unearth black money.
To construe Sec. 269 SS as a competent enactment declaring as
illegal and unenforceable all transactions of loan, by cash, beyond
33 CC.29498/2018( J)
Rs. 20,000/- cannot be countenanced. Therefore the arguments of
counsel for the accused are not tenable.
25. It is the defence of the accused that he issued signed
blank cheque and it was misused by the complainant by filling it
up as per his convenience. On perusal of Ex.P1, it is found that
the signature and the contents are written with different ink.
However even if the blank signed cheque was given and it was
filled up later, it attracts the ingredients u/sec.138 of N.I Act. As
per Section 20 of the N.I.Act, if the person signs and delivers
Negotiable Instrument and it is left incomplete and thereby he
authorizes the holder to complete the Negotiable Instrument and
thereby he is liable for the amount mentioned in the Negotiable
Instrument. In the Judgment rendered by the Hon'ble Supreme
Court of India in Bir Singh V/s.Mukesh Kumar reported in AIR
2019 SC 2446, it was held by the Hon'ble Apex Court that "If a
signed blank cheque is voluntarily presented to a payee, towards
some payment, the payee may fill up the amount and other
particulars. This in itself would not invalidate the cheque. The
onus would still be on the accused to prove that the cheque was
not in discharge of a debt or liability by adducing evidence. Even
a blank cheque leaf, voluntarily singed and handed over by the
accused, which is towards some payment, would attract
presumption under Section 139 of the Negotiable Instruments Act,
in the absence of any cogent evidence to show that the cheque
was not issued in discharge of a debt." The judgment makes it
clear that if the blank signed cheque is issued towards some
34 CC.29498/2018( J)
payment it would attract the presumption u/sec.139 of N.I Act.
The burden is on the accused to prove that there is no debt or
liability. Therefore the defence of the accused is not tenable.
26. For the reasons mentioned herein above, it is
crystallized that the accused has utterly failed to prove that there
was no existence of legally enforceable debt/liability between him
and the complainant and he has not at all issued the instant
cheque towards the discharge of legally enforceable liability of
Rs.10,00,000/-. On the other hand, the complainant has proved
that the accused issued the cheque for the legally enforceable
liability; the cheque was dishonored due to the reason 'Funds
Insufficient' and the notice issued by him was served on the
accused. The complainant proved his case beyond reasonable
doubt. The accused failed to rebut the statutory presumptions
U/s.118(a) & (b) and 139 of the N.I.Act. Accordingly the accused
is found guilty for the offence punishable U/s.138 of the N.I.Act.
Hence, I proceed to answer the Point No.1 in Affirmative and
Point No.2 in the Negative.
27. Point No.3 : In view of the reasons assigned in Point
No.1 and 2 and considering the facts and circumstances of the
case, I proceed to pass the following:-
35 CC.29498/2018( J)
ORDER
As per the provisions of Sec.255(2) Cr.P.C. the accused is hereby convicted for the offence punishable u/s.138 of NI Act, 1881 and sentenced to pay fine Rs.10,55,000/- (Rupees Ten Lakhs Fifty Five Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.10,50,000/- (Rupees Ten Lakhs Fifty Thousand Only). The remaining balance amount of Rs.5,000/- is to be forfeited to the State.
In default of payment of the fine amount accused shall undergo simple imprisonment for three months.
The personal bond executed by the accused is hereby stands cancelled and cash surety of Rs.5,000/- furnished by the accused shall be refunded to him after expiry of appeal period.
The copy of the judgment shall be furnished to the accused at free of cost.
(Dictated to the Stenographer, transcript thereof is computerized and printout taken by him, is verified and then pronounced by me in Open Court on this the 19th day of January-2023.) (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.
36 CC.29498/2018( J) ANNEXURE Witnesses examined for the Complainant:-
PW.1 : Sri. P. Eshanna Documents marked for the Complainant:-
Ex.P1 : Cheque
Ex.1(a) : Signatures of the accused
Ex.P2 : Bank endorsement
Ex.P3 : Postal acknowledgment
Ex.P4 : Postal receipt
Ex.P5 : Office copy of the legal notice
Witnesses examined For Defence:-
DW.1 : Prakash P.V
DW.2 : Suresh Babu
Documents marked for Defence:-
Ex.D1 : Certified copy of Memorandum of Deposit of Title Deeds.
Ex.D2 : Pocket Calendar of Karnataka Government Secretariat Housing Cooperative Society.
(Lokesh Dhanapal Havale), XV Addl.CMM., Bengaluru.
37 CC.29498/2018( J) 19.01.2023 (Judgment Pronounced in the Open Court Vide Separate Order sheet) ORDER As per the provisions of Sec.255(2) Cr.P.C. the accused is hereby convicted for the offence punishable u/s.138 of NI Act, 1881 and sentenced to pay fine Rs.10,55,000/- (Rupees Ten Lakhs Fifty Five Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.10,50,000/- (Rupees Ten Lakhs Fifty Thousand Only). The remaining balance amount of Rs.5,000/- is to be forfeited to the State.
In default of payment of the fine amount accused shall undergo simple imprisonment for three months.
The personal bond executed by the accused is hereby stands cancelled and cash surety of Rs.5,000/- furnished by the accused shall be refunded to him after expiry of appeal period.
The copy of the judgment shall be furnished to the accused at free of cost.
XV Addl.CMM., Bengaluru.