Bangalore District Court
Sri.Eashwar Rao vs Maruthi Merchants Fianance Company on 10 January, 2023
KABC030052602019
IN THE COURT OF XX ADDL.CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY
PRESENT: BHOLA PANDIT,
B.Com.,LL.M.,
XX ADDL. C.M.M.
Bengaluru.
Dated this the 10th day of January 2023
C.C.No.1808/2019
Complainant : Sri.Eashwar Rao,
S/o Ranaji Rao,
Aged about 76 years,
R/at No.13/5,
Eashwar Rao Compound,
Near Vijaya Bank,
8th Mail Circle, T.Dasarahalli,
Bengaluru- 560 057.
{ By Punya Law Chambers - Advocate }
Vs.
Accused : 1. Maruthi Merchants Fianance Company,
Sri Maruthi Residency,
No.179, 1st Floor, 3rd Main Road,
Kempegowda Nagar,
T.Dasarahalli,
Bengaluru- 560 057.
2 C.C.1808/2019
Represented by its proprietor,
Sri.Manjaiah B.H.
2. Sri.Manjaiah.B.H.
S/o Hanumaiah,
Aged about 41 years,
R/at No.20,
"Sri Maruthi Venkateshwara Nilaya,
6th Cross, Near Ramesh Road,
Prashanth Nagar, T.Dasarahalli,
Bengaluru- 560 057
{ By Sri.K.B.Chandrashekar - Advocate }
Offence complained : U/S. 138 of N.I. Act.,
Plea of accused : Pleaded not guilty
Final Order : Accused are Convicted
Date of Order : 10-01-2023
JUDGMENT
The present complaint is filed under section 2(d) read with section 200 of code of criminal procedure against the 3 C.C.1808/2019 accused seeking to punish him for the offence punishable under section 138 of the Negotiable Instruments Act ( in short referred as "N.I. Act").
02. The factual matrix of the complaint is summarized as under;
It is averred in the complaint that, the accused approached the complainant, N.R.Mahadeva Rao and his wife Smt.Lakshmi Bai for financial assistance of Rs.34,00,000/- and promised to rapay the same with interest and also entered into loan agreement with N.R.Mahadeva rao for a sum of Rs.22,00,000/- on 20.11.2017. During the said loan agreement period, the complainant has paid Rs.12,00,000/- to the accused by way of cash and the accused had agreed to repay the same within one year together with interest. But, later the accused has started neglecting the complainant, N.R.Mahadeva Rao for the repayment of the loan amount 4 C.C.1808/2019 borrowed from them. It is further averred that, as per their persistence demand, the accused has issued the following cheques in the name of complainant, Sri.NR. Mahadeva Rao and his wife Smt. Lakshmi Bai as detailed below;
In favour of Bank & Cheque Cheque date
Branch Number &
Amount
Eashwar Rao The Catholic Chq No.689233 02.11.2018
Syrian Bank Rs.12,00,000/-
Ltd,
Dasarahalli
Branch
That on 02.11.2018, the complainant has presented cheque bearing No.689233 for Rs.12,00,000/- with her bank for encashment, but it returned unpaid along with bank memo dated 03.11.2018 with a shara as "Funds Insufficient" In this regard, the husband of complainant has lodged a private complaint in NCR No.861/2018 before Bagalagunte police on 10.11.2018 against the accused. Accordingly, the accused has appeared before the said police and promised to pay the amount to the complainant. 5 C.C.1808/2019 Thereafter, on 03.12.2018 the complainant has issued demand notice to the accused by RPAD. The demand notice issued by RPAD has been duly served on the accused. In spite of service of legal notice on 04.12.2018, the accused neither has paid the cheque amount nor has given any reply. On these grounds, it is sought to convict the accused for the offence punishable under section 138 of NI Act and grant compensation as per section 357 of Code of Criminal Procedure.
03. On presentation of complaint, this court has verified the averments of complaint along with records and thereby had taken cognizance for the offence punishable under section 138 of NI Act. Thereby, as per the verdict of the Hon'ble Apex court reported in AIR 2014 SC 1983 in the case of Indian Bank Association and others V/s Union of India and others, the sworn statement of the complainant has been recorded as PW.1 and got exhibited 6 C.C.1808/2019 seven documents at Ex.P.01 to 07. Having been made out the prima-facie case, the complaint has been registered in Register No. III and issued process against the accused.
04. In response to the summons, the accused has put appearance before the court through his counsel and filed bail application under section 436 of Code of Criminal Procedure, the accused has been enlarged on bail. The substance of accusation has been recorded and read over to the accused, he pleaded not guilty and stated his defense that, he don't know the complainant. On filing application by the complainant under section 145(1) of NI Act, sworn statement of the complainant has been treated as examination in chief. Similarly, on filing application under section 145(2) of NI Act, the accused has been permitted to cross examine PW.1. On completion of the trial of the complainant's side, the statement of accused under section 313 of Code of Criminal Procedure has been recorded and 7 C.C.1808/2019 read over to the accused, the incriminating material found in the trial of the case of the complainant. The accused has denied the same in toto and stated his defense that, notice did not served on the accused and he do not know the complainant and the accused also wants to lead his defense evidence, but the accused did not has entered in the witness box and stated that he has no defense evidence. During cross examination of the PW.1, Ex.D.1 got marked on confrontation.
05. Heard the oral argument from both side. Both Learned counsels filed written arguments. Perused the materials available on record.
In support of his written argument, the Learned counsel for the accused relied the following verdicts;
01. (2011)Cri.L.552
02. AIR 2011(NOC)75(KAR)
03. (2008)AIR (SC)278 8 C.C.1808/2019
04. (2008)AIR (SCW)7702
05. (2006)AIR (SC)3366
06.(2009) ILR (Karnataka) 2331
07. (2019)AIR (SC)1983
08. (2014)3 Crimes 291
09. (2008)AIR (SCW) 738
10. 2016(1) AKR 211
11. (2011)3 KCCR 1825
12. (2013)8 SCC 71
13. 2021(1) Kar.L.R.615
14. Crl.Apl.No.1371 of 2017 B.Girish Vs. S.Ramaiah I have carefully and meticulously gone through the above relied precedents.
06. The following points that arise for my consideration are as under;
9 C.C.1808/2019
POINTS
1. Does the complainant proves beyond reasonable doubts that, the accused has issued a Chq No.689233 dated 02.11.2018 for Rs.12,00,000/-
towards the discharge of his lawful liability of the complainant and when the said cheque was presented for encashment, it was returned unpaid due to "Funds Insufficient" in the account of the drawer as per banker's memo and inspite of issuance of demand notice, the accused has failed to pay the cheque amount, thereby has committed the offence punishable under section 138 of NI Act?
2. What Order or sentence ?
07. My findings to the above points is as follows;
1. Point No.1: In the affirmative
2. Point No.2: As per final order for the following;
REASONS
08. POINT No.1: It is the specific case of the complainant that, the accused has issued the disputed cheque for Rs.12,00,000/- in favour of the complainant and when the 10 C.C.1808/2019 said cheque was presented for encashment, it returned unpaid due to "Funds Insufficient" in the account of the drawer and inspite of receipt of demand notice, the accused has failed to make the payment of the cheque amount.
09. To substantiate and establish this fact before the court beyond reasonable doubts as per the verdict of the Hon'ble Apex court in the case of Indian Bank Association and others V/s Union of India and others , the sworn statement of the complainant has been treated as affidavit evidence. In his affidavit evidence, PW.1 has replicated the averments of the complainant. To corroborate the evidence of PW.1, the complainant has placed on record in all seven documents as per Ex.P.01 to 07. Ex.P.1 is the disputed cheque dated 02.11.2018, Ex.P.1 (a) is the signature of accused, Ex.P.2 is the banker's memo dated 03.11.2018, which shows the reasons for the return of the cheque at Ex.P.1 for unpaid is as "Funds Insufficient" , Ex.P.3 is the 11 C.C.1808/2019 legal notice dated 03.12.2018 demanding for payment of cheque amount by replicating the averments of complaint, which was duly served to the accused on 04.12.2018. Ex.P.4 & 5 are the the postal receipts about sending legal notice at Ex.P.3, Ex.P.6 & 7 are the postal acknowledgements about receipt of the demand notice. PW.1 has been substantially cross examined by the counsel of accused.
10. To disprove the case of the complainant and also to rebut the mandatory presumptions which could be drawn under section 139 of NI Act, the accused did not entered in the witness box and submitted no oral evidence and during cross examination of PW.1 got marked one document at Ex.D.1 on confrontation.
11. Both the Learned counsels have filed their written arguments. In his written argument, Learned Prosecuting 12 C.C.1808/2019 Counsel contended that, the signature on the cheque is not at all disputed by the accused, therefore the presumption under section 118(a) & 139 of NI Act shall be raised in favour of the complainant and to rebut the statutory presumption under sections 118(a) & 139 of NI Act, the accused should adduce evidence on preponderance of probabilities, but the accused has not made any attempt to do so. It is further argued that, without issuing reply notice and taking of a defense, this shows that, there is a transaction between the parties and in view of the same, the disputed cheque has been issued. It is further contended that, the complainant has lost all other relevant documents such as agreement, NCR and receipts, hence complainant could not produced the same before the court. However, the complainant has produced disputed cheque, banker's memo, legal notice and postal receipts, which fulfills mandatory requirements of the provisions of NI Act. Accordingly, it is sought to convict the accused. 13 C.C.1808/2019
Per contra, the Learned Defense Counsel has also filed his written argument, which runs more than 25 pages and wherein the brief description of the verdicts of the 11 judgments has been narrated. Further, in this written argument, the evidence elicited during the cross examination of PW.1 has been replicated. Inter alia contended that, the defense of the accused is very specific that there is no debt or liability as claimed by the complainant and the cheque at Ex.P.1 is not issued for the due discharge of any debt or liability and on 10.01.2017, a sum of Rs.2,76,000/- and a sum of Rs.50,000/- from the account of complainant and his wife in total sum of Rs.3,26,000/- was transferred to the account of the accused. Subsequently, the accused has repaid some amount together with interest and in this regard, he has produced Ex.D.2 and thereby has successfully discharged his burden and proved before the court that, there was no debt or liability to be payable by the accused as claimed by 14 C.C.1808/2019 the complainant. It is further contended that, the complainant has filled up the blank cheque and has filed false complaint knowing fully well that, there is no debt or liability and Ex.P.1 not issued for the discharge of the same. It is further contended that, now the burden is on the complainant to prove his case, but he did not produced any documents before the court of his income of Rs.12,00,000/-. With these assertions and also relying these 14 judgments of the Hon'ble Apex Court and Hon'ble High Court of Karnataka has sought to dismiss the complaint and sought to acquit the accused. The Learned Defense Counsel also advanced oral argument contending that, section 138(b) of NI Act is not complied and on this ground alone, the complaint is not maintainable.
12. Before to appreciate the oral and documentary evidences produced by the respective parties and also the contentions raised in the written arguments, it is necessary 15 C.C.1808/2019 to find out whether the present complaint has been filed in consonance with the provisions of section 138 of NI Act or not?. On perusal of the cheque, banker's memo and demand notice it appears that, the cheque has been presented with the bank within its validity period for encashment and after receipt of bank memo within 30 days, the demand notice has been issued. On perusal of the postal receipts and acknowledgements as per Ex.P.4 to 7 particularly as per Ex.P.6 it can be seen that, the demand notice sent to the office address of the accused has been served. On the other hand , during cross examination of PW.1 and also at the time of recording statement under section 313 of Code of Criminal Procedure, it is the defense of the accused that, complainant is unknown to him and he did not received notice. In this regard, Learned Defense Counsel much has cross examined PW.1 and made suggestion that, as per the photograph produced at Ex.D.1, the accused has sold out his house prior to the 16 C.C.1808/2019 issuance of demand notice, therefore the said notice was not all served upon the accused. Similarly, PW.1 was suggested that, the accused has also sold out his office building prior to issuance of demand notice and based upon these two suggestions, his contention is that, the demand notice was not all served upon the accused. The said suggestion made by the defense counsel is not admitted by PW.1, but he has simply replied that, he do not know about disposal of house property and office property of the accused. When such being his reply, it clearly appears that, the complainant is unaware of selling the property of accused and on the other hand, the accused has not disputed his addresses shown in the demand notice as well as in the cause title of the complaint. Therefore, when the accused is admitting the addresses shown as correct then, as per section 27 of General Clauses Act it is held that, ' when the notice issued to the correct and proper addresses of the accused, there is a presumption about the 17 C.C.1808/2019 deemed service of demand notice to the accused. Therefore, I do not find any force in the defense of the accused about non service of notice and the same is rejected. Therefore, it can be clearly seen that, the demand notice has been served upon the accused and looking to the presentation of complaint on 07.01.2019 before the court, I am of the considered opinion that, only after compliance of requirements of section 138 of NI Act, the present complaint has been filed.
13. As per sections 118(a) & 139 of NI Act these are the legal presumptions which could raised in favour of the complainant when the accused has issued the cheque for some consideration towards the discharge of legal debt or liability of the complainant and that the complainant is the payee of the said cheque and due holder of the same. 18 C.C.1808/2019
14. In the instant case on hand, the Learned Defense Counsel has cross examined the complainant at length and during his cross examination, it is culled out from his mouth that, he works as a contractor and his monthly income is Rs.50,000/-. During his further cross examination PW.1 stated that, he has advanced disputed loan amount not on interest and he volunteers that, since the accused told him that, Mahadeva Rao and Lakshmi Bai have paid amount to the accused to provide employment to their son, Accordingly at their instance he has paid amount to the accused. For better appreciation, the relevant portion of the cross examination of the PW.1 in page No.7 is reads as under;
" ಆರರರಪ, ಮಹದರವರವ ಮತತತ ಆತನ ಹಹಡತ ಲಕಬಯ ಮರರತ ಜನ ನಮಮ ಹತತರ ಬಹದತ ಆರರರಪತನತ ನಮಮ ಮಗನಗ ಕಲಸ ಕರಡಸತತತನ ಅದರಹತ ನನತ ಆರರರಪಗ ಹಣವನತ ನ ಕರಟಟದನ."
But, during his further cross examination in the same line he admitted that, he has not produced any bank 19 C.C.1808/2019 records in respect of his withdrawing any amount and the same was paid to the accused. He further admitted that, he has not taken any security document from the accused in respect of payment of the said amount.
The suggestion made to him is that, the accused never had borrowed disputed loan amount from him. It is tried to elicitate from the mouth of PW.1 to show the variance in between writings on the cheque and signature on Ex.P.1(a), but the witness simply answered, he do not know the same. On page No.10, a suggestion is made that, on 10.01.2017 an amount of Rs.2,76,000/- and Rs.50,000/- was deposited to the account of accused and in all a total amount of Rs.3,26,000/- has been deposited, except that amount, either himself or Lakshmi Bai or Mahadeva Rao have not paid any amount to the accused, the said suggestion is denied by the witness. 20 C.C.1808/2019
15. During further cross examination of PW.1 it is suggested that, the cheque at Ex.P.1 do not belongs to accused No.1 finance, therefore the present complaint is not valid in the eye of law, but the witness has denied the same. Looking to the cause title of the complaint of course Maruthi Merchants Finance Company is arrayed as accused No.1 and accused No.2 by name Manjaiah B.H. arrayed as the proprietor of accused No.1. It is well settled law that, the proprietorship has no separate legal entity and it is the sole trading business of an individual who is called as proprietor. In catena of decisions by the Hon'ble Apex Court, it is held that, "There is no necessary to array the proprietorship firm to the 138 proceedings when the proprietor is arrayed as an accused person." In the light of this settled law, when the cheque at Ex.P.1 has been drawn in the individual name i.e., accused No.2, the question of arraying the said proprietorship as accused No.1 does not arise and even arraying the proprietor firm to the present 21 C.C.1808/2019 complaint as accused No.1 do not hit the provisions of section 138 of NI Act. Therefore, this suggestion made to PW.1 do not help the accused to disprove the case of the complainant. During further cross examination of PW.1, it is elicited that, the complainant, Lakshmi Bai and her husband have not produced any documentary evidences before the court to show that, how they have accumulated an amount of Rs.22,00,000/- and has been paid the same to the accused. Further, the financial capacity of the complainant is also disputed in the cross examination contending that, he has no financial capacity to advance hand loan of Rs.12,00,000/- to the accused and for the said suggestion, PW.1 has denied the same. By considering the entire above cross examination of PW.1, no where the accused has denied the cheque at Ex.P.1 and also has not denied his signature on the cheque at Ex.P.1(a). The complainant did not get an opportunity to confront the cheque at Ex.P.1 and signature at Ex.P.1(a) to 22 C.C.1808/2019 the accused, as such the accused did not step into the witness box. Further, in the written argument, it is only contended that, the complainant has failed to establish their case before the court and also the accused did not issue the cheque at Ex.P.1 for the discharge of any debt or liability owes towards the complainant. By considering this argument and also it can be safely held that, since the accused is admitting the issuance of cheque at Ex.P.1 from his account for some consideration and also admitting his signature on Ex.P.1(a), then the legal presumption shall go in favour of the complainant that, the accused has issued the said cheque towards payment of his legally enforceable debt or liability and that the complainant being the payee of the said cheque and due holder of the same. On the basis of the aforesaid evidence culled out from the mouth of PW.1 and the argument of the Learned Defense Counsel that, the complainant has failed to prove his financial capacity to advance disputed loan amount and further contended that, 23 C.C.1808/2019 the complainant has not produced any documentary evidences before the court to show about the advancement of very loan amount to the accused. On the other hand, the accused has disproved the case of the complainant. In support of his argument, the Learned Defense Counsel has relied the judgments at Sl No.1 to 6 as listed above. With due respect to the ratio laid held in the above six judgments. The judgments of the Hon'ble High Court of Karnataka, in the case of Amzad Pasha Vs. H.N.Lakshmana reported in 2010(3) KCCR 1950, wherein the Hon'ble High Court of Karnataka pleased to held that;
" The complainant has failed to establish his financial capacity."
The judgment at Sl.No.2 in the case of John K John Vs. Tom Varghese and another, wherein the revisional powers of the Hon'ble Higher Courts have been discussed, the ratio is not applicable to the case on hand. 24 C.C.1808/2019
Relying the judgment at Sl.No.3 in the case of P.Venugopal Vs. Madan P.Sarathi of Hon'ble Apex Court , relying another judgment of Hon'ble Apex Court at Sl.No.4 in the case of M.S.Narayana Menon @ Mani Vs. State of Kerala and another and relying another judgment of Hon'ble Apex Court at Sl.No.6 in all these judgments the law is laid down as under;
"The presumption under section 118(a) & 139 of NI Act does not extent to the fact that, the disputed cheque has been issued towards discharge of legally enforceable debt or liability of the complainant and it has to be proved by the complainant."
However, the larger bench of the Hon'ble Apex Court in the case of Rangappa Vs. Mohan it has been clearly held that;
" The legal presumption under section 139 of NI Act includes existence of legally enforceable debt or liability and the reverse onus shifts on the accused to prove before the court that he has issued the disputed cheque for any legally enforceable debt or liability to the complainant."25 C.C.1808/2019
Even in the recent judgments reported in 2019(18) SCC 106 , Rohitbhai Jeevan Lal Patel Vs. State of Gujarath and another, In the recent judgment reported in, 2021(5) SCC 283, in the case of Kalamani Tex and Another Vs. P.Balasubramaniyan, In the recent judgment reported in, 2022(1) SCC 742 in the case of Triyambak S. Hegde Vs. Sripad, in these latest judgments, the larger bench of the Hon'ble Apex Court clearly held that;
" The presumption mandated under section 139 of NI Act does indeed includes the existence of legally enforceable debt or liability and there can be no doubt that, there is a initial presumption which raises on the complainant."
In the light of the larger bench judgments of the Hon'ble Apex Court, I am of the considered opinion that, the aforesaid listed judgments relied by the Learned Defense Counsel are not applicable to the case on hand. The Learned Defense Counsel also relied the judgments of the Hon'ble Apex Court in the case of Krishna Janardhana 26 C.C.1808/2019 Bhat and in respect of this judgment in the case of Rangappa Vs. Mohan the Hon'ble Larger Bench of the Supreme Court held that to the extent of drawing presumption in respect of legally enforceable debt or liability, the judgment of Krishna Janardhana Bhat has been held as not correct law. The Learned Defense Counsel also relied judgments of Hon'ble Apex Court in the case of Basalingappa Vs. Mudibasappa, wherein also the Hon'ble Apex Court pleased to reiterate the ratio laid down in the case of Rangappa Vs. Mohan, the Hon'ble Apex Court further held that;
" Once, the accused rebuts the legal presumption and has disputed the financial capacity of the complainant, then the complainant shall prove the same beyond all reasonable doubts."
The Learned Defense Counsel also relied the recent judgment of the Hon'ble Apex Court, which is listed at Sl.No.10 in the aforesaid list, wherein also the Hon'ble High Court of Karnataka pleased to held that; 27 C.C.1808/2019
" The initial presumption under section 139 of NI Act shall lie in favour of the complainant and once the accused discharges his burden, the complainant has to establish and prove above accused borrowing loan amount".
Further, the Learned Defense Counsel has relied the judgment of Hon'ble High Court of Karnataka at Sl.No.11, wherein the facts of the case was relating to the purchase and sale of refrigerator and washing machine and towards the payment of due amount, the alleged cheque was issued and when the said cheque was presented for encashment and it was dishonored, then the proceedings under section 138 of NI Act has been initiated. In the said judgment at para No.10, the Hon'ble High Court of Karnataka pleased to held that;
" The initial presumption under section 139 of NI Act lies in favour of the holder of the cheque and it shall be rebutted by producing contrary material by the accused in order to dislaws the case of the complainant."
Hence, this ratio is more helpful to the case of the complainant than that of the accused.
28 C.C.1808/2019
The Learned counsel relied judgment of Hon'ble Apex Court at Sl.No.12, wherein the provisions to relying to section 141 of NI Act. The ratio is laid down and the same not an order before the court, hence the said relied judgments is also not applicable to the case on hand. Further, the Learned Defense Counsel relying another recent judgment of Hon'ble High Court of Karnataka at Sl.No.13, wherein the Hon'ble High Court of Karnataka please to laid down the law in respect of time barred debt and the same cannot be considered as legally recoverable debt, so also it do not attract the penal offence under section 138 of NI Act. Hence, this judgment is also do not help the accused in support of his defense and same cannot be reliable to the case on hand. Lastly the Learned Defense Counsel has relied another judgment at Sl.No.14 of the Hon'ble High Court of Karnataka, which was decided on 13.01.2010, wherein it is held that;
29 C.C.1808/2019
" When the complainant has failed to prove existence of debt, then it leads to rebuttal of primary presumption under section 139 of NI Act."
However, the larger bench of the Hon'ble Apex Court in the case of Rangappa Vs. Mohan it has been clarified that, the presumption under section 118(a) & 139 of NI Act includes the issuance of cheque towards the discharge of legally enforceable debt or liability and it is a primary presumption which focus on the complainant, hence the judgment of Hon'ble High Court of Karnataka relied at Sl.No.14, do not come to the aid of accused in the present case. Further, the Learned Defense Counsel has relied another judgment reported in AIR 2011 KAR 434 in the case of B.Girish Vs. S.Ramaiah, wherein the Hon'ble High Court of Karnataka by relying the verdict of Hon'ble Apex Court in the case of Krishna Janardhana Bhat held that, since the complainant has failed to produce any documentary evidence with regard to alleged transaction of 30 C.C.1808/2019 lending money nor has produced any agreement entered between parties except the disputed cheque. Under such circumstances, it is held that, the presumption under section 139 and 118(a) of NI Act stood rebutted, but as discussed above, in the case of Rangappa Vs. Mohan the Hon'ble larger bench of the Apex Court held that, the ratio in the Krishna Janardhana Bhat case to the extent of keeping burden on the complainant to prove the transaction before raising presumption under section 118(a) & 139 of NI Act has been held as not correct proposition of law, hence, this relied judgment of the Hon'ble High Court of Karnataka also do not come to the aid of accused. In one of the judgment reported in 2015(4) KCCR 2881(SC) in the case of T.Vasanthkumar Vs. Vijayakumari while interpreting the provisions of sections 138 and 139 of NI Act and also by relying the well known judgment reported in 2010(11) SCC 441 in the case of Rangappa Vs. Mohan, the Hon'ble Apex Court held as under;
31 C.C.1808/2019
" U/s.138 & 139 NI Act:-
Whether the complainant has to prove existence of legally enforceable debt before operating presumption u/s 139- held- No- when the cheque as well as signature has been accepted by the accused, the presumption u/s 139 would operate. The burden is on the accused to disprove the cheque or the existence of legally enforceable debt or liability."
Further, in another judgment of the Hon'ble Apex Court reported in, 2020(12) SCC 724, APS Forex Services (P) Ltd., Vs.Shakthi International Fashion Linkers , wherein also the similar ratio has been laid down by the Hon'ble Apex Court. In the case of Basalingappa Vs. Mudibasappa is is held as under;
" If the accused rebuts the legal
presumption and raises question of
financial capacity of the complainant, then onus shifts on the complainant again to prove his financial capacity by leading evidence particularly, when the loan was given by cash."
32 C.C.1808/2019In the latest judgments reported in 2022(1) SCC 742 in the case of Triyambak S. Hegde Vs. Sripad & in another judgment 2021(5) SCC 283, in the case of Kalamani Tex and Another Vs. P.Balasubramaniyan, wherein the larger bench of the Hon'ble Apex Court very clearly held that, the presumption mandated under section 139 of NI Act includes legally enforceable debt and the very fact that, when the cheque and signature therein has been admitted and the burden lies on the drawer to rebut it by adducing cogent evidence to the contrary and this presumption is not in conflict with human right of presumption of innocence of accused which prosecution is required to dislodge by proving the case against the accused beyond all reasonable doubts. Even in another judgment reported in 2022 SCC online SC 1131 in the case of P.Rasia Vs. Abdul Nazeer with reference to section 139 of NI Act, it is held that;
33 C.C.1808/2019
" Once, the cheque and signature admitted, the initial presumption lies in favour of the complainant and the complainant has discharged his primary burden, the onus shifts on the accused to prove that, the cheque was not issued for discharging any debt or liability".
Even in one of the recent judgment of the Hon'ble Apex Court reported in 2022(6) SCC 735 , in a latest judgment in the case of Tedhi Singh Vs. Narayan Das Mahant, in Crl.Appeal No.362/2022 also reported in 2022 Live Law (SC) 275, in para No.9, it is held that;
" Under section 139 of NI Act, unless a case is setup in the reply notice regarding financial capacity of complainant there was no requirement of complainant to leading such evidence".
Thus, from the discussions made by relying the above various judgments of the Hon'ble Apex Court, now the law is well settled that, once the cheque and signature is admitted, it leads to raise presumption under section 118(a) & 139 of 34 C.C.1808/2019 NI Act in favour of the complainant that, the accused has drawn the cheque for some consideration and issued the same to discharge the legally recoverable debt or liability and the complainant being the payee and the due holder of the said cheque. The onus or burden shifts on the accused to rebut the statutory presumption under section 118(a) & 139 of NI Act. To rebut the said statutory presumption under section 118(a) & 139 of NI Act, the standard of proving the evidence is not required, so much as required to prove by the complainant. If he brought on record the probable evidence which is on preponderance of probabilities. That amounts to his successful discharge of burden and again the onus shifts on the complainant to establish before the court his financial capacity and the source of income, out of which he has lent hand loan amount to the accused.
35 C.C.1808/2019
16. Herein the case on hand, the mute question arises as to what is the probable defense and whether the raising of probable defense is mandatory and to prove the same by leading cogent and acceptable evidence is another requirement. To answer this question, there is a recent judgment of the Hon'ble High Court of Culcutta reported in 2022 live law (Cal) 334 in the case of Subrata Bose Vs. Mithu, it is held as under;
" The accused must raises probable defense to rebut the statutory presumption under section 118(a) & 139 of NI Act and meat the test of proportionality. Before to shift the burden on the complainant, the accused must raise probable defense. Mere denial is not sufficient and the accused must setup the initial defense by the reply notice or by examining its witness.
Further held that;
" No material were produced by the accused to show as to how the cheque was in possession of the complainant and there was no allegation of lost cheque or that the signature in the cheque was forged, it is permitted in a case of such another to raise a probable defense from available material in the cross examination of prosecution 36 C.C.1808/2019 witness only, but the cross examination and the probable defense raised by the accused do not qualify as a rebuttal to the provisions of section 139 of NI Act. The test of proportionality in such cases must be guide the determination of the issue of rebuttal".
In the instant case on hand by scrutinizing the entire cross examination of PW.1, no where it has been suggested to PW.1 about how the cheque in question has gone to the possession of the complainant and also no suggestion has been made to PW.1 stating that, for the repayment of a sum of Rs.3,26,000/- as contended by the accused himself or for the payment of Rs.50,000/- as per Ex.D.2, the accused has issued cheque at Ex.P.1 as a security. Apart from that, it is not the case of the accused that, he has lost the cheque in question and the same has been misused by the complainant for wrongful gain. During the entire marathon cross examination of PW.1 only the questions with regard to the avocation of the complainant, the income of the complainant and her capacity to advance questioned loan amount has been asked and in respect of 37 C.C.1808/2019 such questions, of course the complainant have not produced any documentary evidences before the court, but the question asked to PW.1, which are listed above themselves shall not became probable defense of the accused . The accused shall put his defense contending and explaining that as to how the cheque in question has went to the custody of complainant and to prove the same either by producing his own evidence or by extracting during the cross examination of PW.1 only there upon the onus shifts on the complainant to establish and prove before the court beyond all reasonable doubts with regard to alleged transaction of the case, her source of income and her financial capacity to lent loan of Rs.14,00,000/- which is in question. Thus, the judgment of Hon'ble Culcutta High Court is aptly applicable to the case on hand. From the ratio in the judgment of Hon'ble Apex Court in the case of Tedhi Singh Vs. Narayan Das Mahant and the recent verdict of the Hon'ble Culcutta High Court in the 38 C.C.1808/2019 case of Subrata Bose Vs. Mithu, the accused has failed to raise probable defense before the court and thereby also failed to prove the said probable defense on preponderance of probabilities. Therefore, the question of shifting onus on the complainant does not arise at all. Hence, I answered point No.1 in the affirmative.
17. POINT NO.2: In view of the reasons stated and discussed above, the complainant has proved the guilt of the accused punishable under section 138 of N.I. Act It is worth to note that, the offence is of the nature of civil wrong. Hence, it is proper to award sentence of fine, instead of awarding sentence of imprisonment. Accordingly, this court proceed to pass the following;
ORDER
Acting under section 255 (2) of
Criminal Procedure Code, accused is
hereby convicted for the offence
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punishable under section 138 of
Negotiable Instrument Act and
sentenced to pay fine of
Rs.14,10,000/-(Rupees Fourteen
Lakhs Ten Thousand only). In
default, he shall undergo simple
imprisonment for Six (6) months.
Acting under section 357(1) of
code of criminal procedure, it is ordered that an amount of Rs.14,00,000/-
( Rupees Fourteen Lakhs only), there from shall be paid to the complainant as a compensation, remaining fine amount of Rs.10,000/-
(Rupees Ten Thousand only) is defrayed to the state for the expenses incurred in the prosecution.
40 C.C.1808/2019
The bail bond of accused stands canceled subject to appeal period.
Supply free copy of judgment to the accused.
{Dictated to the stenographer, transcribed and computerized by her, revised corrected and then pronounced in the open court on this 10th day of January 2023}.
(BHOLA PANDIT) XX ACMM, Bengaluru.
ANNEXURE List of witnesses examined on behalf of complainant:
P.W.1 Sri.Eshwar Rao List of documents produced on behalf of complainant:
Ex.P.1 Cheque
Ex.P. 1(a) Signature of the accused
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Ex.P. 2 Bank endorsement
Ex.P. 3 Copy of the legal notice
Ex.P. 4 & 5 Postal receipts
Ex.P. 6 & 7 Postal acknowledgements
List of witnesses examined on behalf of accused:
-Nil-
List of documents produced on behalf of accused:
Ex.D.1 Photograph
XX A.C.M.M.,
Bengaluru.