Bangalore District Court
However The Presumptions Are ... vs Ex.P7 Is The Postal Acknowledgment on 17 February, 2023
1 CC.16736/2019( J)
KABC030530812019
Presented on : 24-07-2019
Registered on : 24-07-2019
Decided on : 17-02-2023
Duration : 3 years, 6 months, 24 days
IN THE COURT OF THE XV ADDL CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY.
Dated this the 17th Day of February-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.16736/2019
2.Name of the Complainant: Smt. H. Latha
W/o Srinivasa Murthy,
Aged about 40 years,
R/at No.9/1, 1st G Cross,
Poojamma Temple Road,
Gorugunte Playa,
Bengaluru- 560022.
Occupation: Working in Race
Course, Bengaluru.
3.Name of the accused: Sri. K. Deepak,
S/o S. Krishnan,
Aged about 22 years,
2 CC.16736/2019( J)
R/at No.252, 3rd Main Road,
Prakash Nagara,
Rajajinagara,
Bengaluru- 560010.
Occupation: Travels and Tours,
Bengaluru.
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 17.02.2023.
* * *
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 mother of the accused Smt. Rekha and his family
members are known to the complainant from past 4 years and the
accused became family friend of the complainant. The accused is
doing travels business and he was in need of funds for running his
business and for investment. The mother of the accused
approached the complainant in the month of October 2018. The
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accused and his mother took hand loan of Rs.2,00,000/- in the
month of November 2018 and again they have taken amount of
Rs.2,00,000/- in the month of December 2018 by way of cash. The
accused assured to repay the said amount within 6 months. The
accused issued 2 cheques for Rs.2,00,000/- each on 13.05.2019
bearing No.000001 and 000002 both cheques drawn on Kotak
Mahindra Bank, Malleshwaram, Bengaluru. On presentaiton of the
cheques for encashment through her banker State Bank of India,
Madhavanagara branch, Bengaluru and they were returned
dishonoured with endorsement 'Funds Insufficient' on 14.05.2019.
She issued legal notice to the accused on 10.06.2019 through
RPAD. The said notice was duly served on the accused on
13.06.2019. 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.9138/2019. 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.
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4. During trial the complainant examined herself as PW-1
and got marked Ex.P1 to P7. The statement of the accused U/s.
313 of Cr.P.C. was recorded. The accused examined himself as
DW.1 and his mother got examined as DW.2 and got marked
Ex.D1 to 4.
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 two cheques bearing
Nos.000001 and 000002 dated 13.05.2019 for
Rs.2,00,000/- each drawn on Kotak Mahindra
Bank, Malleswaram branch, Bengaluru
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?
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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;
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;"
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"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."
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.
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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 her claim made in the complaint has adduced
evidence by examining herself as PW-1 and she got marked Ex.P1
to 7. PW-1 filed her evidence affidavit on oath and reiterated the
complaint averments. Ex.P1 is the and 2 are the cheques bearing
Nos.000001 and 000002 dated 13.05.2019 for Rs.2,00,000/- each
drawn on Kotak Mahindra Bank, Malleswaram Branch, Bengaluru.
Ex.P1(a) & 2(a) are the signatures of the accused. Ex.P3 & 4 are
the Bank endorsements with shara "Funds Insufficient" dated
14.05.2019. Ex.P5 is the office copy of Legal Notice dated
10.06.2019 issued by the complainant to the accused demanding
repayment of the cheque amount to the addresses of the accused.
Ex.P6 is the postal receipt for having sent the legal notice to the
accused. Ex.P7 is the postal acknowledgment.
11. On perusal of the documents, it is clear that the
cheques at Ex.P1 & 2 bearing Nos.000001 and 000002 dated
13.05.2019 for Rs.2,00,000/- each drawn on Kotak Mahindra Bank,
Malleshwaram branch, Bengaluru issued in favour of the
complainant were presented within their validity. Ex.P3 and 4 are
the bank endorsements with shara "Funds Insufficient"
dated:14.05.2019. Ex.P5 is the office copy of Legal Notice dated
10.06.2019, which was served on the accused on 13.06.2019 as
per Ex.P.6. The accused has not disputed the service of notice in
the cross examination of PW.1. The complaint was filed on
23.07.2019, which is within limitation. The cheques and the
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signatures are not disputed. 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 that he did not know
the complainant. He had no transaction with the complainant. On
09.08.2018 he gave two cheques to his mother Smt. Rekha. His
mother gave the said cheques to the complainant and took the
loan of Rs.1,00,000/-. She paid Rs.10,000/- per month including
principal and interest. She repaid the principal and interest in
October 2019. When she asked for retuning of cheques for
repayment of loan, the complainant told her that the cheques were
misplaced and she would give them later. He received notice but
he did not bother about it. Thereafter when he received summons
from the Court, he contacted his advocate.
13. In order to prove his defence, the accused produced
the bank statement and cheque book with cheque record slip as
per Ex.D1 and 2. He gave reply notice to the notice of the
complainant after filing of the complaint. He produced the reply
notice and postal receipt as per Ex.D3 and 4.
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14. The accused in order to support his defence also got
examined one witness i.e., his mother by name Smt. Rekha as
DW2. She stated in her examination in chief that on 09.08.2018
she took Rs.1,00,000/- loan from the complainant and she repaid
the said amount in October 2019 in monthly installments of
Rs.10,000/- per month. She gave two cheques of her son as
security to the complainant. She had the account but she did not
take the cheque book and therefore she gave the cheques of
accused to the complainant for repayment of the loan. She asked
for return of cheques and the complainant told her that she would
return the cheques but the complainant he did not return them.
The cheques at Ex.P1 and 2 are the cheques given by her to the
accused. When she gave the cheques, the cheques were signed
blank cheques. The said cheques were kept by his son in the
house. She herself took them to give them to the complainant and
later told his son that the cheques were given to the complainant.
15. The counsel for the accused argued that the cheque
record slip at Ex.D2 shows that the cheques were issued in the
year 2018. The cheques at Ex.P1 and 2 are dated 13.05.2019.
PW.1 admitted in her cross examination that the cheques are not
issued on 13.05.2019 but they are issued at the time of taking the
loan. Ex.D2 corroborates the fact that cheques are issued in the
year 2018. Therefore the case of the complainant is not believable.
Though there is delay in issuing reply notice, the accused issued
the reply notice taking specific defence that his mother obtained
loan of Rs.1,00,000/- from the complainant and repaid the same
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by way of monthly installments of Rs.10,000/-. The cheques of the
accused were given by mother of the accused and she has been
examined as DW.2 in the case. The evidence of DW.2 corroborates
the facts that she has obtained loan from the complainant and
cheques are given by her to the complainant. Therefore the
accused discharged the burden by preponderance of probabilities
and rebutted the presumption u/sec.139 of N.I Act. The onus shifts
on the complainant to prove that she has lent loan of
Rs.4,00,000/- to the accused as alleged by her in the complaint.
16. The counsel for the accused relied on the following
decisions in support of his defence-
a) The Hon'ble Supreme Court of India in its latest case
of Tedhi Singh v/s Narayan Dass Mahant in Crl Appeal
No.362/2022 arising out of SLP (Crl) No.1963/2019 dated
7.3.2022 observed at para No.9 as under:-
"The Trial Court and First Appellate Court have noted that
in the case u/sec.138 of N.I Act, the complainant need not
show in the first instance that he had the capacity. The
proceedings u/sec.138 of N.I Act is not a civil suit. At the
time when the complainant give his evidence unless a case
is set up in the reply notice to the statutory notice sent,
that the complainant did not have the fair wherewithal, it
can not be expected of the complainant to initially lead
evidence to show that he had the financial capacity. To that
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extent the courts in our view were right in holding on those
lines. However, the accused has the right to demonstrate
that the complainant in a particular case did not have the
capacity and therefore, the case of the accused is acceptable
which he can do by producing independent materials,
namely, by examining his witnesses and producing
documents. It is also open to him to establish the very same
aspect by pointing to the materials produced by the
complainant himself. He can further, more importantly,
achieve this result through the cross examination of the
witnesses of the complainant. Ultimately, it becomes the
duty of the courts to consider carefully and appreciate the
totality of the evidence and then come to a conclusion
whether in a given case, the accused has shown that the
case of the complainant is in peril for the reason that the
accused has established a probable defence.
(b) The Hon'ble Supreme Court in Basalingappa Vs.
Mudibasappa reported in (2019) 5 SCC 418 hed as under:
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
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
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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.
The Hon'ble Supreme Court summarized the principles as
under-
25. We having noticed the ratio laid down by this Court in
the above cases on Sections 118 (a) and 139, we now
summarise the principles enumerated by this Court in
following manner:
25.1. Once the execution of cheque is admitted Section 139
of the Act mandates a presumption that the cheque was for
the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable
presumption and the onus is on the accused to raise the
probable defence. The standard of proof for rebutting the
presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused
to rely on evidence led by him or the accused can also rely
on the materials submitted by the complainant in order to
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raise a probable defence. Inference of preponderance of
probabilities can be drawn not only from the materials
brought on record by the parties but also by reference to
the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the
witness box in support of his defence, Section 139 imposed
an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the
witness box to support his defence.
(c) The Hon'ble Supreme Court in APX Forex Services
Pvt. Ltd. vs. Shakti International Fashion Linkers & Ors
reported in AIR 2020 SC 945 it was held as under:
"Now so far as the reliance is placed by Learned Counsel
appearing on behalf of the accused on the decision of this
Court in the case of Basalingappa (supra), on going through
the said decision, we are of the opinion that the said
decision shall not be applicable to the facts of the case on
hand and/or the same shall not be of any assistance of the
accused. In that case before this Court, the defence by the
accused was that the cheque amount was given by the
complainant to the accused by way of loan. When the
proceedings were initiated under Section 138 of N.I Act the
accused denied the debt liability and the accused raised the
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defence and questioned the financial capacity. Therefore, this
Court was satisfied that the accused had a probable defence
and consequently in absence of complainant having failed to
prove his financial capacity, this Court acquitted the
accused. In the present case, the accused never questioned
the financial capacity of the complainant. We are of the
view that whenever the accused has questioned the financial
capacity of the complainant in support of his probable
defence, despite the presumption under Section 139 of the
N.I Act about the presumption of legally enforceable debt
and such presumption is rebuttable, thereafter the onus
shifts again on the complainant to prove his financial
capacity and at that stage the complainant is required to
lead the evidence to prove his financial capacity, more
particularly when it is a case of giving loan by cash and
thereafter issuance of a cheque".
(d) The Hon'ble Supreme Court in Kumar Exports Vs.
Sharma carpets reported in (2009) 2 SCC 513, held as
under;
"20. The accused in a trial under Section 138 of the Act has
two options. He can either show that consideration and debt
did not exist or that under the particular circumstances of
the case the non-existence of consideration and debt is so
probable that a prudent man ought to suppose that no
consideration and debt existed. To rebut the statutory
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presumptions an accused is not expected to prove his
defence beyond reasonable doubt as is expected of the
complainant in a criminal trial. The accused may adduce
direct evidence to prove that the note in question was not
supported by consideration and that there was no debt or
liability to be discharged by him. However, the court need
not insist in every case that the accused should disprove the
non- existence of consideration and debt by leading direct
evidence because the existence of negative evidence is
neither possible nor contemplated. At the same time, it is
clear that bare denial of the passing of the consideration
and existence of debt, apparently would not serve the
purpose of the accused. Something which is probable has to
be brought on record for getting the burden of proof shifted
to the complainant. To disprove the presumptions, the
accused should bring on record such facts and
circumstances, upon consideration of which, the court may
either believe that the consideration and debt did not exist
or their non-existence was so probable that a prudent man
would under the circumstances of the case, act upon the
plea that they did not exist. Apart from adducing direct
evidence to prove that the note in question was not
supported by consideration or that he had not incurred any
debt or liability, the accused may also rely upon
circumstantial 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
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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.
21. The accused has also an option to prove the non-
existence of consideration and debt or liability either by
letting in evidence or in 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.
(e) The Hon'ble Supreme Court in the case of Kamala S
v/s Vidyadharan M.J & Anr reported in (2007)5 SCC
264 held that once the accused has discharged his burden,
then onus shifts on the complainant to prove his case
beyond reasonable doubt.
17. However the aspects of presumptions and burden of
proof has been settled in the following judgments of the Hon'ble
Supreme Court.
17 CC.16736/2019( J)
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 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
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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.
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:-
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Therefore, in the present case since the cheque as well
as the signature has been accepted by the
accused/respondent,the presumption under sec.138 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 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
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the complainant as regards the source of funds for advancing
loan to the accused and want of examination of relevant
witnesses who allegedly extended him money for advancing
it to the accused. This approach of the Trial Court had been
at variance with the principles of presumption in law. After
such presumption, the onus shifted to the accused and
unless the accused had discharged the onus by bringing on
record such facts and circumstances as to show the
preponderance of probabilities tilting in his favour, any
doubt on the complainant's case could not have been raised
for want of evidence regarding the source of funds for
advancing loan to the appellant-accused....."
(d) The Hon'ble Supreme Court of India in the case of
Thriyambak S Hegade Vs. Sripad reported in 2021 STPL
10270 SC, held at para No.11 & 12 as under:
11. From the facts arising in this case and the nature of
the rival contentions, the record would disclose that the
signature on the documents at Exhibits P-6 and P-2 is not
disputed. Exhibit P-2 is the dishonoured cheque based on
which the complaint was filed. From the evidence tendered
before the JMFC, it is clear that the respondent has not
disputed the signature on the cheque. If that be the
position, as noted by the courts below a presumption would
arise under Section 139 in favour of the appellant who was
the holder of the cheque. Section 139 of the N.I. Act reads
21 CC.16736/2019( J)
as hereunder: "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."
12. Insofar as the payment of the amount by the appellant
in the context of the cheque having been signed by the
respondent, the presumption for passing of the consideration
would arise as provided under Section 118(a) of N.I. Act
which reads as hereunder:- "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."
(e) The Hon'ble Supreme Court of India in the case of
A.P.S Forex Services Pvt Ltd Vs. Shakthi Internatonal
Fashion Linkers & Others reported in 2020 STPL 5773
SC, held at para No.7 as under:
7. Coming back to the facts in the present case and
considering the fact that the accused has admitted the
issuance of the cheques and his signature on the cheque and
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that the cheque in question was issued for the second time,
after the earlier cheques were dishonoured and that even
according to the accused some amount was due and
payable, there is a presumption under Section 139 of the
N.I. Act that there exists a legally enforceable debt or
liability. Of course such presumption is rebuttable in nature.
However, to rebut the presumption the accused was required
to lead the evidence that full amount due and payable to
the complainant has been paid. In the present case, no such
evidence has been led by the accused. The story put forward
by the accused that the cheques were given by way of
security is not believable in absence of further evidence to
rebut the presumption and more particularly the cheque in
question was issued for the second time, after the earlier
cheques were dishonoured. Therefore, both the courts below
have materially erred in not properly appreciating and
considering the presumption in favour of the complainant
that there exists legally enforceable debt or liability as per
Section 139 of the N.I. Act. It appears that both, the
Learned Trial Court as well as the High Court, have
committed error in shifting the burden upon the complainant
to prove the debt or liability, without appreciating the
presumption under Section 139 of N.I. Act. As observed
above, Section 139 of the Act is an example of reverse onus
clause and therefore once the issuance of the cheque has
been admitted and even the signature on the cheque has
been admitted, there is always a presumption in favour of
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the complainant that there exists legally enforceable debt or
liability and thereafter it is for the accused to rebut such
presumption by leading evidence.
f) 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 source
of funds for advancing loan to the accused and want
24 CC.16736/2019( J)
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 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,
25 CC.16736/2019( J)
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."
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
26 CC.16736/2019( J)
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.
(g) In the case of Uttam Ram Vs. Devinder Singh
Hudan reported in 2019 INSC 0875, the Hon'ble Supreme
Court held that the burden of proving the due amount
should not be on the complainant as if he has to prove a
debt before a civil court. Rather, the burden to rebut the
presumption of debt in cheque bounce case under Section
138 of Negotiable Instruments Act is on the accused.
(h) In the case of Kishan Rao Vs. Shankargouda
reported in (2018) 8 SCC 165 the Hon'ble Apex Court
held that the presumption in favour of holder of cheque
under Section 139 of NI Act where court held that the
accused may adduce evidence to rebut the presumption, but
mere denial regarding existence of debt shall not serve any
purpose.
i) 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
27 CC.16736/2019( J)
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.
18. Therefore on perusal of the Judgments, it is clear that
an accused can discharge the burden by leading direct evidence or
by placing reliance on the evidence lead by the complainant. In is
not mandatory for the accused to 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. The Inference of
preponderance of probabilities can be drawn not only from the
materials brought on record by the parties but also by reference to
the circumstances upon which they rely. 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. As per
28 CC.16736/2019( J)
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. Therefore on perusal of the
Judgments relied on by both the sides it is clear that it is well
established that if the cheque and signature are admitted the
presumption arises that the cheque was issued for legally
enforceable debt/liability. The financial capacity of the complainant
can not be questioned unless the accused rebuts the presumption
by taking probable defence and by adducing cogent evidence
bringing on record the circumstances in tilting in his favour. The
complainant can not be expected at the initial stage to prove his
financial capacity. The burden of proving the debt should not be
placed on the complainant unlike the burden placed on the
plaintiff to prove the debt before civil Court.
19. Under the back ground of the principles laid down in
the aforesaid decisions, the evidence on record has to be
appreciated. The accused produced ExD.1 to 4 in support of his
defence. On perusal of Ex.D1, which is the bank statement of the
accused, it is found that there is no entry in the bank statement
for having paid any amount to the complainant. It is pertinent to
note that the alleged amount of Rs.1,00,000/- was repaid from
August 2019 to October 2019. However there is no such cash
withdrawal every month on a particular date or particular week
for having withdrawn the amount in order to give it to his mother
in order to repay the amount to the complainant. Therefore Ex.D1
does not come to the aid of the accused. It is alleged that the
29 CC.16736/2019( J)
amount of Rs.10,000/- per month was paid in cash. Admittedly
there is nothing on record to show that the mother of the accused
borrowed Rs.1,00,000/- on 09.08.2018 and repaid the said amount
in monthly installments of Rs.10,000/- till October 2019. It is also
petinent to note that the notice issued by the complainant is
admittedly served on the accused on 13.06.2019 and the complaint
was filed on 23.07.2019. Therefore it could not be believed that
the mother of the accused repaid monthly installments of
Rs.10,000/- till October 2019. Instead of paying monthly
installments till October 2019, the mother of the accused or the
accused would have taken action against the complainant for
misuse of cheques. It is alleged that the accused issued cheques to
his mother and it was recorded in the record slip in the cheque
book, which is at Ex.D2. On perusal of the Ex.D2, it is found that
the serial number of the cheques i.e., 000003, 000004 and 000005
have been mentioned in Ex.D2 and it is clearly forthcoming that
the cheque numbers 000004 and 000005 have been
overwritten/altered as 000002 and 000001, which are the cheque
numbers of cheques in question. It clearly shows that the accused
produced the said document by altering the cheque numbers in
cheque record slip only for the purpose of supporting his defence.
Further on perusal of Ex.D2, it is found that no other particulars
have been mentioned as per the columns of the cheque record
slip. There is also no mention of name of his mother in the
cheque record slip. Therefore ExD.2 does not come to the aid of
accused to prove his defence. Admittedly Ex.D3 is the reply notice
issued after filling of the complaint i.e., on 18.09.2020 taking the
30 CC.16736/2019( J)
defence as aforesaid. However there are no documents on record
to support the defence of the accused.
20. The counsel for the complainant cross examined the
accused/DW.1. During the cross examination of DW.1, he denied
his signatures in the cheques and stated that he gave blank
cheques to his mother without signing them. He admitted his
signatures in examination in chief, the statement recorded
u/sec.313 of Cr.P.C and reply notice at Ex.D3. He admitted that
he had no hurdle to mention in examination in chief, the
statement recorded u/sec.313 of Cr.P.C and reply notice that the
signatures in the cheques does not belong to him. He denied that
he has admitted in the reply notice that the signatures in the
cheques belong to him. On perusal of the signatures of the
accused in the cheques in question at Ex.P1 and 2 and the
vakalath, examination of chief of accused, the statement recorded
u/sec.313 of Cr.P.C and the reply notice issued by the accused at
Ex.D3 and comparison of signatures the signatures with bare eyes,
the signatures appear similar. On perusal of Ex.D3, it is
forthcoming that the cheques were duly signed by the accused and
given to his mother. This shows that the accused is giving
inconsistent statements, which shows the conduct of the accused.
It is alleged in the defence evidence that after repayment of the
loan amount of Rs.1,00,000/- when the mother of the accused
asked the complainant for return of cheques, the complainant told
her that the cheques were misplaced and she would give them
later. If that is so the accused would have given 'stop payment'
31 CC.16736/2019( J)
instructions to the bank. The same has not been done. Further
during the cross examination of DW.2, she stated that she did not
meet the complainant after service of notice. He did not take any
action against the complainant for misuse of the cheques.
21. On perusal of the evidence of DW.1 and DW.2, it is
clear that there are inconsistencies in the evidence of DW.1 and 2.
DW.1 denied his signature in the cheques. However DW.2 stated
that she gave signed blank cheques of his son to the complainant.
DW.1 stated that he gave the cheques to his mother for the loan
obtained by her from the complainant. However DW.2 stated that
she herself took the cheques of accused, which were kept by him
in the house, to give them to the complainant and later told
accused that she had given two cheques to the complainant.
During the cross examination of DW2, she admitted that the notice
was received by her and the acknowledgment bears her signature.
She also admitted that her son is doing travel business. She stated
that she had no documents to show that she has borrowed the
amount of Rs.1,00,000/- and repaid the same to the complainant.
It was elicited that there was no hurdle for herself and her son to
issue reply notice. She admitted that she did not meet the
complainant after receipt of notice. She had not issued the notice
to the complainant asking the return of cheques. She did not give
police complaint in respect of misuse of cheques by the
complainant. She admitted that she is the close friend of
complainant. She also admitted that generally her son did not
keep the signed blank cheques in the house. All these aspects
32 CC.16736/2019( J)
clearly show that there is transaction between accused and the
complainant through the mother of the accused, who is close
friend to the complainant. The accused and his mother knew
everything but kept quiet without taking any action against the
complainant for alleged misuse of cheques. The accused and his
mother took contradictory stands in respect of issuance of cheques.
There is nothing on record to support the defence taken by the
accused in the defence evidence. Therefore the defence of the
accused is not at all believable. The accused failed to prove the
defence by preponderance of probabilities. The said defence could
not be considered as probable one.
22. The counsel for the accused cross examined PW.1 and
challenged her financial capacity and asked her several questions
in respect of her source of income to lend the money to the
accused. It was elicited that she had income of Rs.15,000/- to
Rs.20,000/- per month and she had been working in the Race
Course as Computer Operator from past 25 years. When she was
asked in respect of the lending of loan to the accused, it was
elicited that she did not remember the exact dates on which
payments are made. It was elicited that she gave Rs.2,00,000/- in
October 2018 out of the chit amount received by her from
Shakambari Chits, at Cobbonpet in which she took chit for
Rs.2,00,000/-. She obtained the chit amount by cash but she did
not remember the date. She further stated that she had the chit
receipts but chit was closed long back. She did not have the
documents. She did not obtain any receipt from the mother of the
33 CC.16736/2019( J)
accused. She voluntarily stated that the accused gave the cheques.
She withdrawn PF amount in November 2018 and gave
Rs.2,00,000/- to the accused. When it was asked to PW.1 that
whether she obtained the cheque of mother of the accused, she
stated that the accused and his mother together came to seek for
financial assistance and as the accused went on his work, his
mother brought the cheques and gave them to her. It was elicited
that the accused has not given cheques on 13.05.2019. She
voluntarily stated that the cheques are given at the time of
receiving the loan amount i.e., in October 2018 and November
2018. The counsel for the accused has made suggestions in respect
of the defence of the accused, but PW.1 denied all the said
suggestions. Nothing was elicited in support of the defence of the
accused. It is pertinent to note that though the counsel for the
accused challenged the financial capacity of the complainant
during the cross examination and the above facts were elicited, the
accused/DW.1 and his mother/DW.2 did not whisper anything
about the financial capacity of the complainant. They did not
question her financial capacity to lend the amount. Further it is
pertinent to note that the complainant did not aver in the
complaint that the cheques are given on 13.05.2019. The
complainant averred in the complaint that the accused issued two
cheques dated 13.05.2019 for Rs.2,00,000/- each and as per the
request of the accused the cheques were presented on 13.05.2019.
It can be gathered from the above averments that the cheques
were issued prior to 13.05.2019 and the complainant did not
mention the date of issuance of cheques in the complaint. She
34 CC.16736/2019( J)
stated in the cross examination that the cheques were issued at the
time of taking the loan. On going through the entire evidence on
record, it can be gathered that it is not disputed that the loan was
borrowed from the complainant during the year 2018 and the
cheques were issued. The issuance of cheques and signatures are
not disputed. The accused took specific defence that he did not
borrow the loan but his mother borrowed the loan of
Rs.1,00,000/- from the complainant and repaid it in monthly
installments of Rs.10,000/- till October 2019. It is also penitent to
note that the notice issued by the complainant is admittedly served
on the accused on 13.06.2019 and the complaint was filed on
23.07.2019. Therefore it could not be believed that the mother of
the accused repaid monthly installments of Rs.10,000/- till October
2019. Instead of paying monthly installments till October 2019, the
mother of the accused or the accused would have taken action
against the complainant for misuse of cheques. It is alleged in the
defence that the mother of the accused asked complainant to
return the cheques. However mother of the accused/DW.2 stated in
her cross examination that she did not meet the complainant after
receipt of notice. The accused utterly failed to prove the defence
taken by them and therefore the burden does not shifts on the
complainant to prove her case. The presumption u/sec.139 of N.I
Act continue to operate in her favour and it shall be presumed
that the cheques are issued for legally enforceable debt.
23. PW.1 stood the test of cross examination and nothing
worth was elicited to disbelieve the case of the complainant. The
35 CC.16736/2019( J)
burden is on the accused to prove his defence. It is pertinent to
note that if at all the blank signed cheques issued by the accused
have been misused by the complainant, the accused would have
issued reply notice taking the specific defence within a reasonable
time. In the case on hand, the notice was served on the accused
as per Ex.P7 on 13.06.2019 and the accused did not dispute the
service of notice but he failed to issue reply notice at that time.
The reply notice as per Ex.D3 was issued on 18.09.2020 after
filing of the complaint taking specific defence of borrowal of
Rs.1,00,000/- amount by his mother and repayment of the same
and the cheques being misused by the complainant without
returning to his mother. He would have taken steps to issue stop
payment instructions to the bank but the same has not been done.
As per evidence of DW2, it is clear that she did not meet
complainant after receipt of notice. It shows that the accused and
his mother did not even bother to question the complainant. He
would have issued notice to the complainant to take back the
cheques. The same has not been done. At least after receipt of
notice, when he came to know about the misuse of cheques by the
complainant as alleged by him, he would have taken action
against the complainant for misuse of the cheques. The same has
not been done. Therefore there is nothing on record to show that
the defence taken by the accused is a probable defence. The
accused failed to prove the defence by preponderance of
probabilities. Therefore it appears that there is transaction between
the complainant and the accused as alleged in the complaint and
the accused is merely denying it in order to escape from liability.
36 CC.16736/2019( J)
24. It is the defense of the accused that there is no
transaction as alleged in the complaint and the complainant
misused the blank signed cheques issued as security for the loan of
his mother. The counsel for the accused made several suggestions
but the suggestions are denied by the complainant. Mere
suggestions are not sufficient. On perusal of the entire cross
examination of PW.1 nothing was elicited in support of the
defense of the accused. The issuance of cheques and signatures on
the cheques at ExP.1 and 2 are not disputed. The drawer's
signature on the cheque attracts the ratio laid down by the
Hon'ble Supreme Court of India in its decisions reported in 2011
(11) SCC - 441 - Rangappa V/s.Sri.Mohan and SCC 2015 (8) Page
No.378 - T.Vasanthakumar V/s.Vijayakumari and the recent
Judgment delivered in Crl. Appeal No.508/2019 - Rohit Bhai
Jeevanlal Patel V/s. State of Gujarath and another. The ratio is
that the cheque shall be presumed to be for consideration unless
and until the court forms a belief that the consideration does not
exist or considers the non-existence of consideration was tenable
that a prudent man would under no circumstances act upon the
plea that the consideration does not exist.
25. It is the defence of the accused that signed blank
cheques are issued. On perusal of Ex.P1 and 2, it is found that the
signatures and the contents are written with same 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
37 CC.16736/2019( J)
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."
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
cheques towards the discharge of legally enforceable liability of
Rs.4,00,000/-. On the other hand, the complainant has proved that
the accused issued the cheques for the legally enforceable liability;
the cheques were dishonored due to the reason 'Funds Insufficient'
and the notice issued by him was served on the accused. The
38 CC.16736/2019( J)
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:-
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.4,50,000/- (Rupees Four Lakhs Fifty Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.4,45,000/- (Rupees Four Lakhs Forty Five 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 two months.
39 CC.16736/2019( J) The personal bond executed by the accused is hereby stands cancelled and cash surety of Rs.3,000/- 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 17th day of February-2023.) (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.
40 CC.16736/2019( J) ANNEXURE Witnesses examined for the Complainant:-
PW.1 : Smt. Latha. H Documents marked for the Complainant:-
Ex.P1 & 2 : 2 cheques Ex.P1(a) & 2(a) : Signatures of the accused Ex.P3 & 4 : 2 Bank endorsements Ex.P5 : Office copy of the legal notice Ex.P6 : Postal receipt Ex.P7 : Postal acknowledgement Witnesses examined For Defence:-
DW.1 : Sri. K. Deepak
DW.2 : Smt. Rekha
Documents marked for Defence:-
Ex.D1 : Bank Statement
Ex.D2 : Cheque book
Ex.D3 : Reply notice
Ex.D4 : Postal receipt
(Lokesh Dhanapal Havale),
XV Addl.CMM., Bengaluru.
41 CC.16736/2019( J)
17.02.2023
(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.4,50,000/- (Rupees Four Lakhs Fifty Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.4,45,000/- (Rupees Four Lakhs Forty Five 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 two months.
The personal bond executed by the accused is hereby stands cancelled and cash surety of Rs.3,000/- 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.
42 CC.16736/2019( J)