Bangalore District Court
Bharath Credit Co-Operative Society ... vs Yeshwanth. A on 3 March, 2025
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CC No.12297/2022
KABC030321502022
IN THE COURT OF THE XXVI ADDL. CHIEF JUDICIAL
MAGISTRATE, AT: BENGALURU
Present : Smt. NIRMALA .S.,
B.A.L., LL.M.,
XXVI Addl., Chief Judicial
Magistrate, Bengaluru.
DATED THIS THE 3rd DAY OF MARCH 2025
JUDGMENT U/S 355 OF Cr.P.C.1973
1. Serial number : C.C. No.12297/2022
2. Name of the : Bharath Credit Co-
complainant Operative Society Limited,
having its office at
No.748/18, 8th Main Road,
Near Panchamuki Ganesha
Temple, Mahalakshmi
Layout, Bengaluru-560 086.
Rep. by its
Authorised Secretary
(By Sri B.S.J. Advocates)
3. Name of the accused : Yeshwanth A.
S/o amarnath R.
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CC No.12297/2022
Aged about 32 years
R/at No.34, 5th Cross Road,
6th Block, Rajajinagar,
Bengaluru-560 010.
(By Sri.N.R.Adv.)
4. The offence : Section 138 of the N.I. Act
complained of or
proved
5. Plea of the accused : Pleaded not guilty
6. Final order : Accused is convicted
7. Date of order : 03-03-2025
******
JUDGMENT
This complaint is filed by the complainant i.e., Bharath Credit Co-Operative Society Limited against the accused for the offence punishable U/s.138 of Negotiable Instruments Act.
2. The brief facts of complainant case is that, the accused and his wife Smt. Neha approached the 3 CC No.12297/2022 complainant on 22-07-2017 for a Mortgage Loan of Rs.35,00,000/-. The said loan was sanctioned on 08-10-2017 with a condition that the accused shall pay the monthly installment regularly. As a security to the loan borrowed the accused mortgaged the property bearing New Municipal No.10/1, property No.7/31/10/1, 5th Cross, K.B.Temple Street, Rajajinagar 6th Block, Old PID No.22- 43-10/1, New PID No.108-W0193-37, BBMP Ward No.22, presently within the limits of BBMP Ward No.108, Bangalore . Subsequent to obtaining loan the accused has not paid regular installment and defaulted in paying the monthly installments. Upon numerous requests the accused issued a cheque bearing No.832125 dated 25-10-2019 for a sum of Rs.14,50,000/- drawn on Canara Bank, Magadi Road Branch, Bengaluru, towards part payment of the loan amount. Further it is stated that when the complainant has presented the aforesaid cheque 4 CC No.12297/2022 for encashment through its banker, it was dishonoured as 'Funds Insufficient' on 28-10-2019. Further even though the complainant brought the same fact to the knowledge of the accused through the legal notice dated 07-11-2019 by RPAD and it was returned unserved. Therefore the complainant aggrieved by the acts of the accused filed this complaint for dishonour of the cheque issued by the accused towards the discharge of legally recoverable debt. As such is the case failure on the part of the accused to repay the cheque amount the complainant has approached the court for the reliefs claimed in the complaint.
3. After filing this complaint, this court took cognizance of the offence and registered the criminal case against the accused and summons was issued to him. In response to summons, he appeared before the court through his counsel and he was enlarged on bail. Thereafter plea was recorded and accused pleaded not guilty.
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4. The complainant has represented by its0 Secretary, the complainant by name K.N. Puttaswamy and he has been examined as PW1 and he has produced 20 documents as per Ex-P1 to 20.
5. On perusal of entire case file and evidence available on record the following points would arise for my consideration are:
1) Whether the complainant proves that, the accused to due discharge of legally recoverable debt or other liability had issued the alleged cheque bearing No.8321125 dated 25-10-2019 for Rs.14,50,000/- drawn on Canara Bank, Magadi Road Branch, Bengaluru?
2) Whether the complainant proves that, on presentation of said cheque, same was returned unpaid as "Funds Insufficient" and despite of giving legal notice, he failed to pay the cheque 6 CC No.12297/2022 amount, thereby he committed an offence punishable under section 138 of NI Act ?
3) What order?
6. Heard on both sides and I have also perused the entire materials available on record.
7. My findings on the above points are as under:
Point No.1 : In the Affirmative, Point No.2 : In the Affirmative, Point No.3 : As per the final order for the following:-
REASONS POINTS NO.1 and 2 :
Both points 1 and 2 are taken up together for common discussion to avoid repetition of facts.
8. It is the case of the complainant that, the accused and his wife Smt. Neha approached the complainant on 7 CC No.12297/2022 22-07-2017 for a Mortgage Loan of Rs.35,00,000/-. The said loan was sanctioned on 08-10-2017 with a condition that the accused shall pay the monthly installment regularly. As a security to the loan borrowed the accused mortgaged the property bearing New Municipal No.10/1, property No.7/31/10/1, 5th Cross, K.B.Temple Street, Rajajinagar 6th Block, Old PID No.22-43-10/1, New PID No.108-W0193-37, BBMP Ward No.22, presently within the limits of BBMP Ward No.108, Bangalore . Subsequent to obtaining loan the accused has not paid regular installment and defaulted in paying the monthly installments. Upon numerous requests the accused issued a cheque bearing No.832125 dated 25-10-2019 for a sum of Rs.14,50,000/- drawn on Canara Bank, Magadi Road Branch, Bengaluru, towards part payment. Further it is stated that when the complainant has presented the aforesaid cheque for encashment through its banker, it was dishonoured as 'Funds Insufficient' on 8 CC No.12297/2022 28-10-2019. Further even though the complainant issued the legal notice on 07-11-2019 by intimating the dishonour of the cheque to the accused, the same was returned unserved.. Therefore, the accused having committed the offence punishable U/s.138 of N.I. Act. Hence, the complainant has come before the court with this complaint.
9. To prove the contentions of the complainant the Secretary of the complainant by name K.N. Puttaswamy has been examined as PW1. PW-1 has filed his examination-in-chief by way of affidavit which is replica of complaint averments. Further PW-1 has produced alleged Ex-P2 cheque which was issued by the accused towards part payment of Rs.14,50,000/-. On presentation of the said cheque same has been returned as per the Ex.P-3 return memo as "Funds Insufficient". Further as per Ex-P4 the complainant issued legal notice on 07-11-2019 through RPAD to the accused, the same was returned unserved, it 9 CC No.12297/2022 can be seen from Ex-P5 and Ex.P-6. The complainant has also produced other document such as authorisation letter which is got marked as Ex.P-1.
10. Before going to the merits of this case first of all I would like to glance over the law pertaining to the instant case. Admittedly the present case filed under section 138 of Negotiable Instruments Act to bring home guilt against the accused, the complainant must prove the following ingredients of Section 138 of Negotiable Instruments Act.
i) That, there is a legally enforceable debt.
ii) That the cheque was drawn from account of bank for discharge in whole or in part of any debt or other liability which presuppose a legally enforceable debt;
iii) Cheque so issued had been returned due to insufficiency of funds.
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CC No.12297/2022
11. In a proceeding under section 138 of NI Act, the first and foremost ingredient is that, the alleged cheque must be drawn on account maintained by the accused and signature on alleged cheque belongs to him. Admittedly the alleged cheque belongs to the accused but the accused denies the signature in the cheque.
12. On perusal of Ex-P2 cheque and bankers memo Ex-P3 it is clear that, on presentation of said cheque it was returned as "Drawer's signature differs". The complainant has issued legal notice through RPAD as required under section 138 (b) & (c) of NI Act to the address of the accused, but the said notice returned unserved, it is very clearly appears on perusal of the Ex.P-5 and 6 postal receipt and postal cover. Here one point has to be observed that with regard to the service of the notice to the accused is concerned on perusal of the legal notice Ex.P6 the address mentioned is Sri. Yeshwanth R/at No.34, 5 th Cross 11 CC No.12297/2022 Road, 6th Block, Rajajinagar, Bengaluru 560010. Further, I have perused the complaint in the cause title the address of the accused is as same as mentioned in legal notice. Further I have perused the Ex.P10 i.e., the Bharavase Pathra in which the address of the accused is same that of stated in the legal notice and also the cause title of the complaint. Therefore, it can be said that the notice contemplated U/s.138B of N.I. Act is issued to the accused to the correct address last known by the complainant as per sec.27 of the General clauses. Hence, it is said that the complainant has complied the provision U/s 138b of N.I. Act.
13. Further, with regard to the cheque, accused in his cross-examination he very clearly admits the cheque belongs to his account but he denies the signature in the cheque.
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CC No.12297/2022
14. Here at this point it has to be considered that it is the defence of the accused that accused has no right to execute any mortgage deed and accused denied the cheque and also denied the signature in the cheque. Further, accused denies execution of any document by him to the complainant. Further accused takes the defence that accused is not liable but the wife of the accused is liable.
15. With this regard firstly we have to consider that whether there is a legally enforceable debt and that the cheque was drawn from the account of accused for discharge in whole or in part of any debt or other liability which presuppose a legally enforceable debt. With this regard it is very pertinent to state about the content of the complaint that the accused and his wife Smt. Neha approached the bank for mortgage loan of Rs.35,00,000/- and same was sanctioned on 08-09-2017 and the accused has mortgaged the property as per the Mortgage Deed and 13 CC No.12297/2022 also he has executed the on demand promissory note along with other documents. But, later on the accused has not repaid the loan amount but when the complainant bank have demanded for the repayment for that the accused has issued cheque bearing No.832125 dt:25-10-2019 for the amount of Rs.14,50,000/- but on presentation of the same before the bank the same was returned as "Drawer's signature differs". Even though notice has been issued to the accused but accused has not repaid the loan amount. Hence the complainant has come up with this case.
16. Here in support of the contentions of the complainant K.N. Puttaswamy has been examined as PW.1 and marked Ex.P1 to Ex.P20. Ex.P1 is the Board Resolution, Ex.P2 is the cheque bearing No.832125 dt:25-10-2019 Ex.P3 is the Endorsement dt:28-10-2019, Ex.P4 is the Legal Notice dt:07-11-2019, Ex.P5 is the Postal Receipt, Ex.P6 is the Returned RPAD Cover, Ex.P7 is the Ledger Extract, Ex.P8 14 CC No.12297/2022 is the Loan application, Ex.P9 is the On demand promissory note, Ex.P10 is the Undertaking letter, Ex.P11 is the Mortgage Deed, Ex.P12 is the Notice, Ex.P13 is the Bank Proceedings and Ex.P14 is the Bylaw of the complainant, Ex.P15 is the Register certificate of the complainant, Ex.P16 is the Resolution of the complainant, Ex.P17 is the Undertaking Letter, Ex.P18 is the Genealogical tree, Ex.P19 is the accused income statement, Ex.P20 is the Khatha Certificate. On perusal of the these documents i.e the Board Resolution and Authorisation letter it is very clear that the complainant has got the authority to represent the complainant and prosecute this case. Here with regard to the legally recoverable debt is concerned accused admits the existence of loan availed by his wife. Further the complainant has also on producing the documents such as Ex.P8 the loan application, Ex.P9 on demand promissory note and also Ex.P11 mortgage deed 15 CC No.12297/2022 established that on presentation of the application for sanction of loan complainant bank has sanctioned the loan in the name of wife of the accused and has got executed bond and promissory note. And also executed the Ex.P11 i.e., the mortgage deed. By this it is very clear that loan has been sanctioned in the name of wife of accused. Further the accused has also admitted in the cross-examination that the accused's wife Smt. Neha has applied for the loan in the complainant bank. Further it has to be seen on perusal of the Ex.P11 it can be seen that it is a mortgage deed executed by the Neha in favour of the complainant. For that the accused is the witness. Further on perusal of the Ex.P10 i.e., the undertaking letter dt:06-09-2017 it is very clear that the accused has given an undertaking that he will be the surety for the loan of his wife Smt. Neha. Further accused has issued the Income details to the complainant bank. Further, in the cross-examination of 16 CC No.12297/2022 DW1 he also admits that given the genealogical tree copy to the complainant. Further he also admits that the Khata of the mortgaged property is of 13-03-2017. By this it is very clear that the accused know about the existence of the loan in the name of his wife Neha and he also know about the execution of the mortgage deed and he also given an undertaking that he will stand as surety for the loan taken by his wife and also provided the income details. On the other hand in the evidence of DW1 he has deposed that he has not taken any loan from the complainant he don't have any right to mortgage the property and he has not signed any promissory note but in the cross-examination DW1 very clearly admits that in the Ex.P11 the photo and the signature is of the accused and further he admits the photo but he denies the signature but he deposed that he do not remember that in the Sub Register Office, the Ex.P11 has been executed by himself and his wife. Further he admits 17 CC No.12297/2022 that in the Ex.P11 the photo of his wife and he do not remember the signature of his wife. Further submits that in the Khata certificate dated 13-03-2017 i.e., he mortgaged property stands in the name of this accused. Here the accused even though denies his signature in the Ex.P3, 10 and 11. But on perusal of the Ex.P-11 it is the registered document registered before the Sub Registrar and the accused admitting the photo but denies the signature in Ex.P11 i.e. Ex.P11(a) can not be accepted because in the column of this photo his signature exists.
17. Further here one point has to be observed that in the cross-examination of the PW1 he deposed that accused's wife is an house wife and she is not working but she has obtained the loan from the complainant for the amount of Rs.35,00,000/-. And she has mortgaged the property. Here one point has to be observed that the mortgaged property was in the name of the accused for which it has been 18 CC No.12297/2022 derived to the accused through the will deed executed by his grand mother and in view of the same, as per Ex.P20 the property has been transferred in the name of his wife as per admission of the accused in the as per the depositions of the PW1 that the accused has executed the gift deed in favour of the wife of the accused as such the property has been transferred in the name of Smt. Neha. Further at the time of applying for the loan both accused and his wife have approached the bank and also the accused has given an undertaking for repayment of the loan. As such is the case on the basis of undertaking given by the accused as per Ex.P10, even though the accused's wife Smt. Neha is a housewife who has not got her own earning and has no capacity to repay the loan amount the complainant has sanctioned the loan. Further it has to be seen that if the accused has no any interest and is not connected with the loan amount why the accused has given 19 CC No.12297/2022 his property details, genealogical tree and also the undertaking letter to the complainant society.
18. Further it has to be seen that accused contends that, the wife of the accused has obtained the loan but he is nowhere related for that. With this regard I perused the cross-examination of DW-1 in that he deposed that the wife of the accused is a housewife and with some reasons they are living separately and he has not produced any documents to show that they are living separately and also deposed that there is no any legal proceedings between them. Further it is also deposed by the accused that the complainant has misused the cheque and filed this false complaint but the accused also deposed that he has not filed any complaint before any police station or the court.
19. On perusal of this evidence adduced by the DW.1 it appears that even though the accused and his wife is said 20 CC No.12297/2022 to be living separately but the accused has not proved the same by relevant documents. Further even though the accused states that the complainant has misused the cheque but he has not taken any legal action against the complainant. By this it is very clearly established that even though the accused denies that he has no any relationship with the loan but has failed to prove the same.
20. On the other hand it is the complainant who have already furnished the sufficient document in its support Ex.P-10, 11 and Ex. P-13 that for the loan of the Smt. Neha i.e., the wife of the accused, this accused has undertaken to repay the same.
21. Further here one point has to be observed that in the cross-examination of DW-1 he has deposed that he do not know how his cheque has been to the custody of the complainant. For that even the complainant advocate has 21 CC No.12297/2022 suggested whether his wife has given the cheque of accused to the complainant for that the accused has stated he does not know. Further if that is the case if the accused has not given the cheque to the complainant the accused should have taken any legal action against the complainant for the alleged misusing of the cheque or he should have proved before the court under what circumstances the cheque might have reached the complainant. But in this case the accused has failed to prove the same.
22. Here, after perusal of the documents on record and the evidence on record it very clearly appears that the complainant has proved that the cheque is belonging to the account of the wife of accused, and they appeared before the complainant and had applied for the loan as per the Ex.P-8 and Ex.P-9. On Demand Pronote was executed by the Neha and for that the accused is the witness and also the accused as per Ex.P-10 has given the undertaking. 22
CC No.12297/2022 Further the accused is the witness for the Ex.P-11 i.e., Mortgage Deed and also as per Ex.P-13 accused signature is also present. Further Ex.P-12 the endorsement is made by the accused praying time to sell the property and repay the loan and signature of the accused is present at the back side of the Ex.P-12 and on perusal of Ex.P-18 and Ex.P-19 and 20 it very clearly appears that the accused has given these documents to the complainant and it is also admitted by the cross-examination it very clearly established by the complainant that the accused very well know about the borrowing of the loan and this accused has undertaken to repay the loan. Further at the time when the accused and his wife has defaulted in repayment of loan, this accused has issued the cheque belonging to his bank account.
23. Further in support of the contentions taken by the complainant, the complainant has filed citations 23 CC No.12297/2022
(i). In Crl. RV.P.No.540/2017 before T. Siddamma Vs K.S. Chandresh, it is held by Hon'ble High Court of Karnataka that;-
"the accused has to give explanation under what circumstances cheque has been to the custody of the complainant. The theory of misplacing the cheque that to along with four cheques is not substantiated in her evidence. The evidence of the complainant has to be rebutted placing probable evidence before the court. When there is no probable evidence before the court, the question of accepting the theory of accused does not arise".
(ii). In the 2020 (3) Civil CC (SC) R. Manimahalai Vs Banumathi.
(iii). In Crl.Apl.No.210/2014 between Anil V. Raikar Vs Abdul Munaf before the Hon'ble High Court of Karnataka. Citation No.2 and 3 is not applicable to the facts and circumstances of the case.
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(iv). In Crl.Apl.No.1871-1909/2012 in Lakshmi Dyechem Vs State of Gujrath and another. It is held by the Hon'ble Supreme court that the expression "amount of money---- is insufficient"
appearing in Sec.138 of N.I.Act 1881 is a genus and dishonour for reason such "as account closed".
Payment stopped, referred to the drawer are only specious of the that genus. Just as dishonour of the cheque on the ground that account has been closed is the dishonour falling in the first contingency referred to in Sec.138 so also dishnour on the ground that the signature do not match or that the image is not found, which too implies that the specimen signature do not match the signatures on the cheque which constitute a dishonour within the meaning of Sec.138 of the Act.
(v). Further in the W.P.No.108994/2015 Hiremane Kallappa Melage Vs Lokamanya Multipurpose Co- Operative Society Ltd. The facts and circumstances of this case is not applicable to the case of the complainant. 25
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24. On the other hand it is the citation furnished by the accused as per
(i). Crl.Apl.No.1012/1999 in M.S. Narayana Menan Vs State of Kerala, it is held by the Supreme Court of India that "In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause) to mean: -
"Proved A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists.
Disproved A fact is said to be disproved when, after considering the matters before it the Court either believes that it does not exist, or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist."26
CC No.12297/2022 Applying the said definitions of 'proved' or 'disproved' to principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
A Division Bench of this Court in Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal [(1999) 3 SCC 35] albeit in a civil case laid down the law in the following terms:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If 27 CC No.12297/2022 the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non- existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt".
" The words 'until the contrary is proved' in S. 118 do not mean that the defendant must 28 CC No.12297/2022 necessarily show that the document is not supported by any form of consideration but the defendant has the option to ask the Court to consider the non-existence of consideration so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that consideration did not exist. Though the evidential burden is initially placed on the defendant by virtue of S. 118 it can be rebutted by the defendant by showing a preponderance of probabilities that such consideration as stated in the pronote, or in the suit notice or in the plaint does not exist and once the presumption is so rebutted, the said presumption 'disappears'. For the purpose of rebutting the initial evidential burden, the defendant can rely on direct evidence or circumstantial evidence or on presumptions of law or fact. Once such convincing rebuttal evidence is adduced and accepted by the Court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the plaintiff who has also the legal burden. Thereafter, the presumption under S. 118 does not again come to the plaintiff's rescue. Once both parties have adduced evidence, the Court has to consider the same and the burden of proof loses all its importance."29
CC No.12297/2022 "We in the facts and circumstances of this case need not go into the question as to whether even if the prosecution fails to prove that a large portion of the amount claimed to be a part of debt was not owing and due to the complainant by the accused and only because he has issued a cheque for a higher amount, he would be convicted if it is held that existence of debt in respect of large part of the said amount has not been proved. The Appellant clearly said that nothing is due and the cheque was issued by way of security. The said defence has been accepted as probable. If the defence is acceptable as probable the cheque therefor cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act".
"We have gone through the oral evidences. The Second Respondent has even failed to prove that the Appellant had paid to him a sum of Rs. 5000/- by cash".
25. In Crl.Apl.No.2045/2008 M/s. Kumar Exports Vs M/s. Sharma Carpets, it is held by the Hon'ble Supreme Court of India that;
30
CC No.12297/2022 "Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability. 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.
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11. 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 not as presumed, the purpose of the presumption is over. 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 32 CC No.12297/2022 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 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. The accused has also an option to prove the non- existence of consideration and debt or liability 33 CC No.12297/2022 either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue".
26. In Crl.R.C.No.1163/2016 P. Selvaraj Vs K. Subramaniam, it is held by the Hon'ble High Court of Judicature at Madras that;
"The learned counsel for the revision petitioner/accused would contend that there is no dispute with regard to the fact that Exs.P1 & P2/cheque leaves herein are the cheque leaves supplied by the bank to the revision petitioner herein/accused in respect of his account maintained with banker. While so, the signature found in Exs.P1 & P2/cheques were not admitted by the accused and he has not borrowed any amount as alleged by the 34 CC No.12297/2022 respondent herein/complainant and the cheque leaves were not issued by the accused to the complainant and no consideration was passed from the respondent herein/complainant to the accused with respect to the case cheque leaves".
27. In Crl.Appeal.No.636/2019 Basalingappa Vs Mudibasappa, it is held by the Hon'ble Supreme Court of India that;
"14. This Court held that what is needed is to raise a probable defence, for which it is not necessary for the accused to disprove the existence of consideration by way of direct evidence and even the evidence adduced on behalf of the complainant can be relied upon. Dealing with standard of proof, following was observed in paragraph No.32:-
"32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies " .
15. In Krishna Janardhan Bhat Vs. Dattatraya G. Hegde, (2008) 4 SCC 54, this Court held that an accused for discharging the burden of proof placed upon him under a statute need not examine himself.35
CC No.12297/2022 He may discharge his burden on the basis of the materials already brought on record. Following was laid down in Paragraph No.32:-
"32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different."
16. This Court again reiterated 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". In paragraph No.34, following was laid down:-
"34. Furthermore, 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."
36
CC No.12297/2022 On perusal of the facts of this case and documents on record and also evidence recorded by this court and also the citations filed in this case, on total perusal of the same it is very clearly appears to the knowledge of this court that the wife of the accused has applied for the loan before the complainant society for sanction of loan of Rs.35,00,000/- on 22-07-2017 and executed the documents in favour of the complainant i.e., the Ex.P-8 i.e., the loan application and also executed Ex.P-9 i.e., On Demand Pronote. Further the wife of the accused has executed the Mortgage Deed in favour of the complainant party for which the accused is also a witness. On perusal of the Ex.P10 i.e., undertaking letter which was issued by accused in favour of the complainant society. Further the Ex.P-2 is the cheque issued by the accused for amount of Rs.14,50,000/-. Here it is also very clear that even though the accused denies the signature in the Ex.P-11 i.e., Mortgage Deed, Ex.P-10 37 CC No.12297/2022 undertaking letter and also Ex.P-2 cheque but here one thing has to be observed that even though the accused submits that he does not know anything about the loan transactions of his wife and also he does not know what is the loan amount and he does not know how the cheque has reached the complainant society, but the contentions taken by the accused cannot be believed by this court because in the Ex.P-11 i.e., the Mortgage Deed executed by the wife of the accused, this accused is a witness. Further the accused wife Smt. Neha is a house wife, she has no capacity to repay the loan amount and being a house wife there is no need for the Smt. Neha to obtain the loan of Rs.35,00,000/- even though she is no capacity to repay the same. As such the accused being the husband of the Smt. Neha very well know about the obtaining of the loan by Smt. Neha from the complainant and at the time of execution of the Mortgage Deed he being a witness to the same and further 38 CC No.12297/2022 he has given a undertaking letter as per Ex.P-10 and also furnished documents with regard to his income details as per Ex.P-19. As such the accused having taken responsibility of the loan of the Smt. Neha as per Ex.P-10 he has admitted that he will stand as a surety. Therefore he has issued the cheque as per Ex.P-2 for repayment of the loan amount. From the documents it is very clear. As such whatever the contentions and the defences taken by the accused holds no water.
28. It is true that, once the cheque relates to the accused and his signature on the said cheque is proved an initial presumption as contemplated U/s.139 of Negotiable Instruments Act has to be raised by the court in favour of the complainant. Sec.139 of the Negotiable Instrument Act contemplates that it shall be presumed unless contrary is proved that the holder of the cheque received the cheque of 39 CC No.12297/2022 the nature referred to in the Sec.138 for the discharge of the whole or in part any debt or liability. The presumption referred to U/s.138 of Negotiable Instruments Act is mandatory presumption and in general presumption.
29. Here as already stated above the complainant Bharath Credit Co-Operative Society Limited is represented through its Secretary by name K.N. Puttaswamy. In order to prove the same the complainant has produced the authorisation letter authorising the P.W.1 to prosecute the case. The Ex.P-1-authorisation letter which is clearly established that the present complainant is having an authority to represent the instant case on behalf of the complainant Society. Further to avail the presumption the complainant has been examined himself as PW-1 and marked exhibits Ex.P-1 to 18. Ex.P-1 is the authorisation letter for the PW-1 to prosecute the case. Ex.P-2 is the cheque bearing No.832125 dated 25-10-2019. 40
CC No.12297/2022 Ex.P-3 is the endorsement dated 28-10-2019 as the same is issued as a return memo for 'Funds Insufficient'. Further as per the memo mentioned the complainant has issued the legal notice to the accused dated 07-11-2019 and the same was returned unserved. On perusal of the these documents it very clearly appears the wife of accused in this case has availed the loan of Rs.35,00,000/- and the cheque was issued for the amount of Rs.14,50,000/- by the accused but when the same was presented before the bank for encashment but the same has been returned with the endorsement 'Funds Insufficient' as such even though the legal notice is issued, the accused has not repaid the same.
30. However, in the case on hand, the accused has failed to rebut the evidence of PW1. As such I am of the opinion that, the accused has issued Ex.P2 cheque for discharge of legally recoverable debt incurred by his wife. 41
CC No.12297/2022 Therefore the presumption has to be raised in favour of the complainant as contemplated under section 139 of N.I. Act.
31. Thus, it is clear that, the complainant has complied all the essential ingredients of Section 138 of NI Act to punish the accused for the alleged offence.
32. I have also relied upon a judgment of our Hon'ble Apex Court reported in (2018) 8 Supreme Court Cases 469 in the matter of T.P. Murugan (Dead) through Legal Representatives vs. Bhojan wherein their lordships have held that, 'mere raising a doubt sans cogent evidence, with respect to the circumstances, presumption under section 139 of NI Act cannot be discharged ' So on going through the above judgments of our Hon'ble Supreme Court, when the accused admitted issuance of cheque and her signature on cheque there is always a 42 CC No.12297/2022 presumption in favour of complainant that there exist legally enforceable debt or liability when no material evidence lead by accused to rebut the presumption. Even also cleared from the above ratio that once there is no rebuttal evidence, accept oral defence, presumption cannot be held to be rebutted. In the case on hand, the accused has not produced relevant and cogent evidence to rebut the case of the complainant.
33. Therefore the materials placed by the complainant corroborates with each other with respect to the involvement of legally recoverable debt. So these all documents are clearly established that, the alleged cheque amount is legally recoverable debt. So in the absence of disproof of complainant case, I have no hesitation to believe the case of the complainant i.e., it has proved their case as per the standard of proof by producing relevant and cogent evidence. Even the entire materials indicates to the court 43 CC No.12297/2022 that, complainant has filed the complaint in a proper manner i.e., within the stipulated time under section 138 of Negotiable Instruments Act and further there is no endeavors on behalf of the accused to disprove the case of the complainant by producing relevant and cogent evidence. Accordingly I am of the considered opinion that the accused is liable to be convicted for the offence punishable under section 138 of Negotiable Instruments Act and I answered these points No.1 and 2 in the affirmative. POINT No.3
34. In view of the findings on points No.1 and 2 to compensate the holder in due course the accused who has issued cheque without having sufficient funds in her account has to be punished suitably. Therefore considering the facts and circumstances, the accused is liable to pay the cheque amount with a reasonable interest thereon as 44 CC No.12297/2022 compensation and expenses to complainant. Hence, I proceed to pass the following:-
ORDER Acting U/s.255(2) of Cr.P.C., the accused is convicted for the offence punishable U/s.138 of Negotiable Instruments Act and sentenced to pay a fine Rs.22,04,166/- (Rupees Twenty Two Lakhs four thousand one hundred and sixty six only) In default of payment of fine amount he shall under go simple imprisonment for 03 (three ) months.
Further, acting U/s.357(1) of Cr.P.C. a sum of Rs.21,99,166/- (Rupees Twenty One Lakhs ninety nine thousand one hundred and sixty six only) is order to be paid to 45 CC No.12297/2022 complainant as compensation and remaining amount of Rs.5,000/- (Rupees Five thousand only) shall go to the state.
It is made it clear that in view of section 421 of Cr.P.C. the liability of accused to pay the compensation will not be absolved even if he under go default sentence.
The bail bond executed by the accused and surety stand canceled.
Supply free copy of judgment to the accused.
(Typed directly on computer to my dictation by the stenographer in the chamber, corrected and then pronounced by me in the open court on this the 3rd day of March 2025) Digitally signed by NIRMALA NIRMALA Date: 2025.03.07 12:01:44 +0530 (Smt. NIRMALA .S.) XXVI ACJM, Bengaluru.
ANNEXURE Witnesses examined for the Complainant:
PW.1 : K.N. Puttaswamy.
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CC No.12297/2022
Witness examined for the accused:
DW.1 : Yeshwanth.
List of Documents marked for the Complainant:
Ex. P-1 Authorisation letter
Ex. P-2 Cheque
Ex. P-2(a) Signature of the accused.
Ex. P-3 Bank Endorsement
Ex. P-4 Copy of legal notice
Ex. P-5 Postal receipt
Ex. P-6 Postal cover
Ex. P-7 Certificate U/s.65B.
Ex. P-8 Loan application
Ex. P-9 On Demand Pro-note
Ex. P-10 Assurance letter
Ex.P-11 Mortgage Deed
Ex.P-12 Notice
Ex.P-13 Proceedings of the society
Ex.P-14 Bye-law
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Ex.P-15 Registration Certificate
Ex.P-16 Resolution
Ex.P-17 Loan repayment assurance letter Ex.P-18 Genealogical Tree ExP-19 Income details of accused Ex.P-20 Katha Certificate.
List of Documents marked for the accused:
Ex.D-1 Will
(Smt. NIRMALA .S.)
XXVI ACJM, Bengaluru.