Bangalore District Court
However The Presumptions Are ... vs Demanding Repayment Of The Cheque ... on 28 April, 2023
1 CC.10324/2018( J)
KABC030300712018
Presented on : 27-04-2018
Registered on : 27-04-2018
Decided on : 28-04-2023
Duration : 5 years, 0 months, 1 days
IN THE COURT OF THE XV ADDL CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY.
Dated this the 28th Day of April-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.10324/2018
2.Name of the Complainant: Smt. Reshma Banu
W/o Sri. Syed Nasir,
Aged about 44 years,
R/at No.5, Venkatappa Layout,
Chamundi Nagar Main Road,
R.T Nagar Post,
Bengaluru- 560 032.
3.Name of the accused: Sri. Parveez Pasha
S/o Late Abdul Jabbar,
R/at No.15/2, 3rd cross,
Bhuvaneshwari Nagar,
R.T Nagar Post,
Bengaluru- 560 032.
2 CC.10324/2018( J)
4.The offence complained of : U/s.138 of Negotiable Instruments
Act.
5.Plea of the accused: Pleaded not guilty.
6.Final Order: Acting U/s.255(2) Cr.P.C., accused
is Convicted.
7.Date of final Order 28.04.2023.
* * *
This complaint is filed U/Sec.200 of Cr.P.C. against the
accused for the offence punishable U/Sec.138 of the Negotiable
Instruments Act, 1881.
2. The facts of the complaint in brief are as under:
The complainant and accused are known to each other from
last 10 to 15 years and they are friends. The accused has been
doing building constructions business in and around the Bengaluru
City. The accused had approached the complainant for hand loan
of Rs.25,00,000/- for his business purpose. On the request of the
accused, the complainant had given Rs.25,00,000/- to the accused
from 10th April 2017 to till 25th June 2017 on different dates
through account and also through cash. The accused had promised
to repay the said amount within 3 months from 25th June 2017.
After expiry of 3 months, the accused failed to repay the amount.
On several demands made by the complainant, the accused finally
3 CC.10324/2018( J)
on 01.03.2018 issued a cheque bearing No.012795 dated
01.03.2018 for Rs.25,00,000/- drawn on Axis Bank Ltd,
Sultanpalya branch, Bengaluru. On presentation of the said cheque
for encashment, it was dishonoured for the reasons 'Funds
Insufficient'. The complainant issued legal notice on 21.03.2018. It
was returned to the complainant on with a reason 'Door locked' on
26.03.2018. The accused did not pay the amount even after the
expiry of 15 days. The accused thereby committed an offence
punishable U/s.138 of the N.I.Act.
3. After the institution of the complaint, the cognizance
was taken and it has been registered as PCR No.5351/2018. The
sworn statement of the complainant has been recorded and on the
basis of sworn statement and other materials on hand, the criminal
case has been registered against the accused and summons was
issued to accused. In response to the service of summons, the
accused appeared through her 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 her. He pleaded not guilty
and claimed to be tried.
4. During trial the complainant examined himself as PW-1
and got marked Ex.P1 to P11. The statement of the accused U/s.
313 of Cr.P.C. was recorded. The accused examined himself as
DW.1 and got marked Ex.D1 to D15 on his behalf.
4 CC.10324/2018( J)
5. Heard the arguments. On perusal of the entire
materials on record, the points that arise for my consideration are
as under;
1. Whether the complainant proves that the
accused issued cheque bearing No.012795
dated 01.03.2018 for Rs.25,00,000/- drawn on
Axis Bank, Sultanpalya 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 notice is sent to the last known
correct address of the accused, it was returned
with shara 'door locked' which is deemed
service of notice, the accused has not paid the
amount within 15 days and thereby accused
committed an offence punishable U/Sec.138 of
N.I. Act, 1881?
2. Whether the accused rebuts the
presumption U/s.139 of the N.I.Act?
3. What order?
6. My answers on the above points for consideration are
as under:
5 CC.10324/2018( J)
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;"
"139. Presumption in favour of
holder.- It shall be presumed, unless the
contrary is proved, that the holder of a
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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.
10. Under the light of position of the law, I have perused
the complaint and the evidence placed on record. The complainant
in support of his claim made in the complaint has adduced
7 CC.10324/2018( J)
evidence by examining himself as PW-1 and he got marked Ex.P1
to 11. PW-1 filed his evidence affidavit on oath and reiterated
the complaint averments. Ex.P1 is the cheque bearing No.012795
dated 01.03.2018 for Rs.25,00,000/- drawn on Axis Bank Ltd,
Sultanpalya branch, Bengaluru in favour of the complainant.
Ex.P1(a) is the signature of the accused. Ex.P2 is the bank return
memo with shara "Funds Insufficient". Ex.P3 is the office copy of
Legal Notice dated 21.03.2018 issued by the complainant to the
accused demanding repayment of the cheque amount. Ex.P4 is the
postal receipt for having sent the legal notice to the accused.
Ex.P5 is the postal envelope returned with shara 'door locked' on
26.03.2018. Ex.P6 is the hand loan agreement. Ex.P6(a) is the
signature of the accused. On perusal of the hand loan agreement,
it discloses that the accused executed loan agreement in favour of
the complainant on 10.01.2018. Ex.P7 & 8 are the 2 certified
copies of money lending licneces. They discloses that the
complainant is carrying on the business of money lending during
the said period with licence. Ex.P9 is the bank statement. It
discloses that the complainant transferred amount of Rs.3,40,000/-
to the accused through bank account. Ex.P10 and 11 are the 2
lease agreements. Ex.P10 discloses that the accused executed lease
agreement in favour of the complainant by receiving Rs.6,00,000/-
as lease amount. Ex.P11 discloses that the accused executed lease
agreement in favour of Rinku Kumari, who is the worker of the
complainant in her beauty parlour, by receiving Rs.12,00,000/- as
lease amount.
8 CC.10324/2018( J)
11. On perusal of the documents, it is clear that the
cheque at Ex.P1 bearing No.012795 dated 01.03.2018 for
Rs.25,00,000/- drawn on Axis Bank Ltd, Sultanpalya branch,
Bengaluru issued in favour of the complainant was presented
within its validity. Ex.P2 is the bank endorsement with shara
"Funds Insufficient" dated:05.03.2018. Ex.P3 is the office copy of
Legal Notice dated 21.03.2018, which was unserved as per Ex.P5
with shara on 26.03.2018. The accused disputed the service of
notice. The counsel for the accused argued that the service of
notice is mandatory to attract the provision u/sec.138 of N.I Act.
The complainant has not served the legal notice to the accused.
During the cross examination PW.1 admitted that the notie was
not served on the accused. He relied on the judgment of Hon'ble
Karnataka High Court in the case of Udaya Shetty V/s Yogesh
Gudigar reported in 2022 (1) KCCR 188 wherein it was held
that 'Demand Notice allegedly sent both under certificate of
posting as well as by registered post -Former not returned and
latter returned with remark that 'addressee left and his address not
known". Presumption of deemed service not available as accused
has already left address mentioned on postal cover- If demand
notice was not served, it cannot be said that ingredients of
offences of dishonour of cheque were fulfilled - Accused acquitted
of offence punishable under sec.138 of N.I Act. In the case of C.C.
Alavi Haji v. Palapetty Muhammed reported in (2007) 6 SCC
555, the Hon'ble Supreme Court held that when the notice is sent
by registered post by correctly addressing the drawer of the
cheque, the mandatory requirement of issue of notice in terms of
9 CC.10324/2018( J)
clause (b) of proviso to Section 138 of the Act stands complied
with. It is needless to emphasise that the complaint must contain
basic facts regarding the mode and manner of the issuance of
notice to the drawer of the cheque. In the case of N.
Parameswaran Unni v. G. Kannan reported in (2017) 5 SCC
737 the Hon'ble Supreme Court held that it is clear from Section
27 of the General Clauses Act, 1897 and Section 114 of the
Evidence Act, 1872 that once notice is sent by registered post by
correctly addressing to the drawer of the cheque, the service of
notice is deemed to have been effected. However, the drawer is at
liberty to rebut this presumption. Such being the case, even where
the postal envelopes are returned with various sharas it has to be
deemed that the notice is served. The accused produced Adhaar
card as per Ex.D12 and pass book as per Ex.D.13. The address
mentioned in the Ex.P12 and 13 is No.24/1, 28th cross,
Kanakanagara, R.T Nagara, Bengaluru North, Bengaluru. He stated
that he has been residing at the said address from past 10 years.
The notice sent by the complainant was not served on him.
However during the course of cross examination DW.1, it was
elicited that cheque at Ex.P1 belongs to his savings bank account.
The address mentioned in Ex.P3 is the address of the account
pertaining to the cheque at Ex.P1. It was also elicited that He
resided in the addresses mentioned in Ex.D12 and 13 after
22.10.2018. The answers elicited in the cross examination of DW.1
clearly shows that the accused admits the address mentioned in
the notice at Ex.P3. In the case on hand, the envelope at Ex.P5
returned with shara 'Door lock' on 26.03.2018. Further the
10 CC.10324/2018( J)
judgment relied on by the counsel for the accused is not
applicable as the notice returned with shara door locked and not
with shara addresee left. Therefore on the basis of evidence on
record, this Court is of the opinion that the notice issued by the
complainant it is deemed to have been served on the accused as
per Ex.P5. Further as per Judgment of Hon'ble Supreme Court of
India in the case of C.C.Alavi Haji Vs. Palapetty Muhammed
and Another reported in (2007) 6 SCC 555, it was held at para
No.17 as under;
17. It is also to be borne in mind
that the requirement of giving of notice is a
clear departure from the rule of Criminal Law,
where there is no stipulation of giving of a
notice before filing a complaint. Any drawer who
claims that he did not receive the notice sent by
post, can, within 15 days of receipt of
summons from the court in respect of the
complaint U/s.138 of the Act, make payment of
the cheque amount and submit to the
Court that he had made payment within 15 days
of receipt of summons (by receiving a copy of
complaint with the summons) and, therefore, the
complaint is liable to be rejected. A person who
does not pay within 15 days of receipt of the
summons from the Court along with the
copy of the complaint u/s.138 of the Act,
cannot obviously contend that there was no proper
service of notice as required u/s.138, by ignoring
statutory presumption to the contrary u/s.27 of the
G.C. Act and Section 114 of the Evidence Act. In
our view, any other interpretation of the
11 CC.10324/2018( J)
proviso would defeat the very object of the
legislation. As observed in Bhaskaran's case
(supra), if the 'giving of notice' in the context of
Clause (b) of the proviso was the same as
the 'receipt of notice' a trickster cheque
drawer would get the premium to avoid receiving
the notice by adopting different strategies and
escape from legal consequences of Section 138 of
the Act.
In a nutshell it can be said that the statutory notice is an
opportunity given to the accused to make payment and avoid the
consequences of 138 of N.I.Act. In the case on hand, the summons
issued by the court on the address mentioned in the notice and
complaint was duly served on accused as per order sheet dated
03.12.2019 and the accused appeared through his counsel and
obtained the bail. The accused also admitted the service of
summons in his evidence stating that he came to know about the
case after receipt of summons from the Court. Therefore he cannot
take the shelter of statutory requirement of service of notice to
avoid the consequences of Section 138 of N.I.Act. The complaint
was filed on 19.04.2018, which is within limitation. The cheque
and the signature in the cheque 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
12 CC.10324/2018( J)
proving it relying on the evidence of the complainant or by
leading his direct evidence.
12. The counsel for the complainant argued that the
cheque and signature are admitted. The transaction by way of
account transfer as per Ex.P9 is admitted. The accused failed to
prove that he has not executed loan agreement as per Ex.P6. The
signature in Ex.P6 is admitted. The accused failed to rebut the
presumption by proving the defence. The accused challenged the
financial capacity of the complainant. The complainant proved the
transaction and financial capacity on the basis of the documents at
Ex.P1, Ex.P6 to 11 and on the basis of admissions given by the
accused in his cross examination. Hence, prayed to convict the
accused. On the other hand the counsel for the accused argued
that the complainant failed to prove the financial capacity and
transaction by way of cash. The complainant has not produced any
documents in respect of her businesses and income. The accused
failed to produce IT returns and bank account statements. The
accused failed to examine the witness. The documents at Ex.P6
and Ex.P10 and 11 are created. The complainant misused the
signed blank cheque and signed blank papers to create the
documents. The complainant stated to have transferred
Rs.5,00,000/- but no bank statement is produced. The complainant
failed to produce account audit in respect of her money lending
business. She did not mention the source of funds in her
complaint. She stated that she gave the amount by way of cash in
the denomination of Rs.500/- and 1,000/- which are banned as on
13 CC.10324/2018( J)
08.11.2016. There is no transaction between the complainant and
the accused as alleged in the complaint. The accused has no
liability to pay the cheque amount.
12.(a) The learned counsel for the complainant relied on the
following citations:-
1. The judgment of Hon'ble Supreme Court in the case of P.
Rasiya vs Abdul Nazeer and Another in Crl.Appeal No.1233-
1235/2022.
2. The judgment of Hon'ble Supreme Court in the case of
Oriental Bank of Commerce v/s Prabodh Kumar Tiwari
reported in 2022 Live Law (SC) 714.
3. The judgment of Hon'ble High Court of Karnataka in the
case of Sri. Yogesh Poojary v/s Sri. K. Shankara Bhat
reported in ILR 2019 KAR 493.
4. The judgment of Hon'ble Supreme Court in the case of H.
Pukhraj v/s D. Parasmal reported in (2015) 17 Supreme
Court Cases 368.
5. The judgment of Hon'ble Supreme Court in the case of
Triyabak S. Hegde v/s Sripad in Crl.Appeal Nos849-
850/2011.
14 CC.10324/2018( J)
12. (b) The learned counsel for the accused relied on the
following citations:-
1. The judgment of Hon'ble High Court of Karnataka in the
case of Sri. B.P Venkatesulu v/s Sri. K.P. Mani Nayar
reported in 2001(1) KCCR 212.
2. The judgment of Hon'ble Supreme Court of India in the
case of M.S Narayana Menon Alias Mani v/s State of Kerala
and Another reported in AIR 2006(6) SUPREME COURT
CASES 39.
3. The judgment of Hon'ble Supreme Court in the case of
Krishna Janardhan Bhat v/s Dattatraya. G. Hegde reported in
AIR 2008 SUPREME COURT 1325.
4. The judgment of Hon'ble High Court of Karnataka in the
case of Shiva Murthy v/s Amruthraj reported in ILR 2008
KAR 4629.
5. The judgment of Hon'ble Supreme Court in the case of K.
Prakashan v/s P.KI Surenderan reported in (2008) 1 Supreme
Court Cases 258.
6. The judgment of Hon'ble Bombay High Court in the case
of Sanjay Mishra V/s Ms. Kanishka Kappoor @ Bujju abd
Anr reported in 2009 Crl.L.J. 3777.
15 CC.10324/2018( J)
7. The judgment of Hon'ble Karnataka High Court, Circuit
Bench at Dharawad in the case of Veerayya v/s G.K
Madivalar reported in 2012(3)KCCR 2057.
8. The judgment of Hon'ble Andhra Pradesh High Court in
the case of Nagisetty Nagaiah v/s State of A.P and Another
reported in 2004 Crl.L.J. 4107.
9. The judgment of Hon'ble Supreme Court in the case of
K. Subramani. V/s K. Damodara Naidu reported in 2015 AIR
SCW 64..
10. The judgment of Hon'ble Karnataka High Court in the
case of Veerayya v/s G.K Madivalar reported in 2012(3)
KCCR 2057.
11. The judgment of judgment of the Hon'ble Supreme Court
of India in the case of Rajaram S/o Sriramulu Naidu (Since
deceased)through LR.sv/s Maruchachalam (since deceased)
through LR.s reported in Criminal Appeal No.1978/2013.
12. The judgment of judgment of the Hon'ble High Court of
Delhi in the case of Satish Kumar v/s State of Delhi
reported in Crl.L.P.95/2006.
13. The judgment of the Hon'ble High Court of Delhi in the
case of Ashok Baugh v/s Kamal Baugh & Anr reported in
Crl.L.P.358/2012.
16 CC.10324/2018( J)
14. The judgment of the Hon'ble High Court of Delhi in the
case of Sajidur Rehman v/s Rajiv Kashyap and Another
reported in Crl.Rev.P.500/2014.
15. The judgment of the Hon'ble Karnataka High Court of
Dharwad Bench, in the case of Vishal v/s Prakash Kadapa
Hegannahalli reported in 2020(3) KCCR 2373.
16. The judgment of the Hon'ble High Court of Karnataka
in the case of Kantharaj v/s Sham Shudin reported in
2022(2) AKR 264.
17. The judgment of the Hon'ble Karnataka High Court in
the case of Prakash Shetty v/s Venkatesh reported in
2022(2)AKR 640.
18. The judgment of the Hon'ble Supreme Court in the case
of Rajaram Sriramulu Naidu (since deceased) through LR.s
v/s Maruthachalam (since deceased) through Lrs reported in
AIR 2023 SC 471.
19. The judgment of the Hon'ble Karnataka High Court in
the case of Udaya Shetty v/s Yogesh Gudigar reported in
2022(1) KCCR 188.
17 CC.10324/2018( J)
20. The judgment of the Hon'ble Supreme Court in the case
of Basalingappa v/s Mudibasappa reported in AIR 2019 SC
1983.
21. The judgment of the Hon'ble Supreme Court in the case
of John K Abraham v/s Simon C Abraham and another
reported in (2014) 2 SCC 236.
22. The judgment of the Hon'ble Supreme Court in the case
of M.S. Narayana Menon Vs. State of Kerala reported in
(2006) 6 Supreme Court Cases 39
13. In the following land mark of judgments of the
Hon'ble Supreme Court, the aspect of presumptions, burden of
proof and aspect of the financial capacity of the complainant have
been settled.
(a) The Hon'ble Supreme Court in the case of M.S.
Narayana Menon Vs. State of Kerala reported in (2006)
6 Supreme Court Cases 39, held as under:-
"30. Applying the said definitions of 'proved' or 'disproved'
to principle behind Section 118(a) of the Act, the Court shall
presume a negotiable instrument to be for consideration
unless and until after considering the matter before it, it
either believes that the consideration does not exist or
considers the non-existence of the consideration so probable
18 CC.10324/2018( J)
that a prudent man ought, under the circumstances of the
particular case, to act upon the supposition that the
consideration does not exist. For rebutting such presumption,
what is needed is to raise a probable defence. Even for the
said purpose, the evidence adduced on behalf of the
complainant could be relied upon.
31. A Division Bench of this Court in Bharat Barrel &
Drum Manufacturing Company v. Amin Chand Payrelal
reported in (1999) 3 SCC 35 albeit in a civil case laid
down the law in the following terms:
"12. Upon consideration of various judgments as noted
hereinabove, the position of law which emerges is that
once execution of the promissory note is admitted, the
presumption under Section 118(a) would arise that it is
supported by a consideration. Such a presumption is
rebuttable. The defendant can prove the non-existence
of a consideration by raising a probable defence. If the
defendant is proved to have discharged the initial onus
of proof showing that the existence of consideration
was improbable or doubtful or the same was illegal,
the onus would shift to the plaintiff who will be
obliged to prove it as a matter of fact and upon its
failure to prove would disentitle him to the grant of
relief on the basis of the negotiable instrument. The
burden upon the defendant of proving the non-
existence of the consideration can be either direct or
19 CC.10324/2018( J)
by bringing on record the preponderance of
probabilities by reference to the circumstances upon
which he relies. In such an event, the plaintiff is
entitled under law to rely upon all the evidence led in
the case including that of the plaintiff as well. In case,
where the defendant fails to discharge the initial onus
of proof by showing the non- existence of the
consideration, the plaintiff would invariably be held
entitled to the benefit of presumption arising under
Section 118(a) in his favour. The court may not insist
upon the defendant to disprove the existence of
consideration by leading direct evidence as the
existence of negative evidence is neither possible nor
contemplated and even if led, is to be seen with a
doubt."
This Court, therefore, clearly opined that it is not
necessary for the defendant to disprove the existence of
consideration by way of direct evidence.
32. The standard of proof evidently is preponderance of
probabilities. Inference of preponderance of probabilities can
be drawn not only from the materials on records but also by
reference to the circumstances upon which he relies.
33. Presumption drawn under a statute has only an
evidentiary value. Presumptions are raised in terms of the
20 CC.10324/2018( J)
Evidence Act. Presumption drawn in respect of one fact may
be an evidence even for the purpose of drawing presumption
under another."
(b) 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
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
21 CC.10324/2018( J)
on record for getting the burden of proof shifted to the
complainant. To disprove the presumptions, the accused
should bring on record such facts and circumstances, upon
consideration of which, the court may either believe that the
consideration and debt did not exist or their non-existence
was so probable that a prudent man would under the
circumstances of the case, act upon the plea that they did
not exist. Apart from adducing direct evidence to prove that
the note in question was not supported by consideration or
that he had not incurred any debt or liability, the accused
may also rely upon circumstantial evidence and if the
circumstances so relied upon are compelling, the burden
may likewise shift again on to the complainant. The accused
may also rely upon presumptions of fact, for instance, those
mentioned in Section 114 of the Evidence Act to rebut the
presumptions arising under Sections 118 and 139 of the Act.
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
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presumptions under Sections 118 and 139 of the Act will not
again come to the complainant's rescue.
(c) 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
23 CC.10324/2018( J)
Section 139 is a device to prevent undue delay in the course
of litigation. However, it must be remembered that the
offence made punishable by Section 138 can be better
described as a regulatory offence since the bouncing of a
cheque is largely in the nature of a civil wrong whose
impact is usually confined to the private parties involved in
commercial transactions. In such a scenario, the test of
proportionality should guide the construction and
interpretation of reverse onus clauses and the
accused/defendant cannot be expected to discharge an
unduly high standard or proof.
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.
24 CC.10324/2018( J)
(d) The the Hon'ble Supreme Court in Basalingappa Vs.
Mudibasappa reported in (2019) 5 SCC 418 held 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 raise a probable defence.
Inference of preponderance of probabilities can be
drawn not only from the materials brought on record
25 CC.10324/2018( J)
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.
(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
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
26 CC.10324/2018( J)
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
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 the case of
Thriyambak S Hegade Vs. Sripad reported in 2021 STPL
10270 SC, held at para No.11 & 12 as under:
27 CC.10324/2018( J)
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
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
28 CC.10324/2018( J)
or transferred, was accepted, indorsed, negotiated or
transferred for consideration."
(g) The Hon'ble Supreme Court of India in the case of
M/s. Kalamani Tex v. P. Balasubramanian reported in
2021 STPL 1056 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 of examination of
relevant witnesses who allegedly extended him money for
advancing it to the accused. This approach of the Trial
29 CC.10324/2018( J)
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, 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
30 CC.10324/2018( J)
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 appears to us that the High Court did
not err in discarding the appellants' defence and upholding
31 CC.10324/2018( J)
the onus imposed upon them in terms of Section 118 and
Section 139 of the NIA.
h) The Hon'ble Supreme Court of India in its latest case of
Jain P Jose v/s Santhosh reported in SLP Crl.5241/2016
dated 10.11.2022 observed by referring to its earlier
Judgments in Vasanth Kumar v/s Vijaya Kumari, Rangappa
v/s Mohan and Kalamani Tex and Another v/s P.
Balasubramanian that the complainant is entitled to the
benefit of presumption u/sec.139 of N.I Act that the cheque
was issued for discharge of legally enforceable debt or
liability.
14. Therefore on perusal of the Judgments, it is clear that
an accused need not examine himself for discharging the burden of
proof placed upon him under a statute. He may discharge his
burden on the basis of the materials already brought on record.
An accused has constitutional rights to remain silent. The standard
of proof on part of the accused and that of the prosecution in a
Criminal Case is different. The prosecution must prove the guilt of
an accused beyond all reasonable doubt and the standard of proof
so as to prove a defence on the part of an accused is
preponderance of probabilities. If the cheque and signature are
admitted, the presumption arises that the cheque was issued for
legally enforceable debt/liability. The presumption is rebuttable.
The accused has to raise a probable defence and prove it by
adducing evidence, which must meet the standard of
32 CC.10324/2018( J)
preponderance of probabilities. Unless the same has been done,
doubt can not be raised on the case of the complainant. The
presumption raised in favour of the complainant u/sec.139 of N.I
Act operates until rebutted by the accused by proving probable
defence. As per the settled law that unless and until the accused
rebuts the presumption U/sec.139 of N.I Act, the onus does not
shift on the complainant to prove his case. Under the aforesaid
settled law the evidence on record has to be appreciated.
15. It is the defence of the accused that he knew the
complainant. He obtained the loan of Rs.3,40,000/- from the
complainant. The complainant came in contact with him during
the said transaction. He took the said amount in 2017 with
interest at the rate of 10%. He paid the interest by way of cash.
He had the factory of hollow blocks. The complainant sent her son
and asked to supply hollow blocks for their construction of
building. He supplied the hollow blocks to the complainant for the
principal amount, he gave signed blank cheque and signed blank
stamp paper and signed blank white sheets at the time of
obtaining the loan. Even though he repaid the principal amount by
supplying the hollow blocks, the complainant did not return the
documents and signed blank cheque. He had kept mineral water
agency. Even though he repaid the amount, the complainant came
along with 25 persons to his mineral water agency and quarreled
with him stating that no amount was repaid and assaulted him.
He filed complaint in DJ Halli police station and criminal case was
pending in Mayo Hall Court.
33 CC.10324/2018( J)
16. In order to prove his defence, the accused produced
the certified copy of the order sheet in CC.No.5944/2018 pending
before the Hon'ble XI ACMM, Meyo Hall, Bengaluru. Certified copy
of the charge sheet filed in the said case, certified copy of FIR in
the said case, certified copy of the statements in the said case.
Certified copy of the Spot Panchanama in the case, certified copy
of the further statement of the complainant in the said case,
certified copy of the statements of the two witnesses in the said
case and certified copy of the wound certificate in the said case as
per Ex.D1 to 11. On perusal of Ex.D1 to 11 it is clear that he
filed complaint against the complainant and 3 others on
04.03.2018. The FIR was registered against the complainant and 3
others on the same day. It is alleged in the complaint that on
04.03.2018 at 2.30 pm when he was sitting in his water filter shop
at Kanakanagara, the complainant herein and 3 others, who are
accused No.1 to 4 in the said case, entered into his shop and
quarelled with him in respect of finance matter; threw the water
cans and assaulted the accused herein, who is the complainant in
the said case, on his face and stomach and threatened him. The
said documents show that there is finance transaction between the
complainant and the accused. The accused did not explain about
the details of the finance transaction between him and the
complainant while giving police complaint in the said case. During
his cross examination, when it was suggested to DW.1 that there
is no connection between the loan transaction and the criminal
case pending before the 11th ACMM, Bengaluru in
34 CC.10324/2018( J)
CC.No.59448/2018, he admitted it. He voluntarily stated that after
filing of the cheque, the complainant came and quarrelled with
him. However there is no mention of transaction with respect to
the cheque in question anywhere in the documents at Ex.D1 to 11.
There is no mention anywhere in Ex.D1 to 11 about the loan of
Rs.3,40,000/- borrowed by him from the complainant during the
year 2017 by handing over blank signed cheque, blank signed
bond paper and blank signed white paper. Further there is no
mention in Ex.D1 to 11 about payment of interest at the rate of
10% and repayment of the said amount by way supplying hollow
blocks to the extent of principal amount. Therefore the documents
at Ex.D1 to 14 does not come to aid of the accused in proving his
defence.
17. It is the case of the complainant that she lent
Rs.25,00,000/- by way of bank transfer and by way of cash during
the period from 10.04.2017 to 25.06.2017. The complainant
produced bank statement as per Ex.P9 to show that she paid
Rs.3,40,000/- to the accused through account. On perusal of
Ex.P9, it is clear that she paid Rs.70,000/- on 10.04.2017,
Rs.70,000/- 23.05.2017, Rs.60,000/- on 26.05.2017 and
Rs.1,40,000/- on 21.06.2017 through cheque numbers 190912,
190916 to 190918. It was also suggested to her in the cross
examination by the counsel for the accused that she paid
Rs.3,40,000/- to the accused by way of open cheques and she
admitted it. The accused also stated in his defence evidence that
he borrowed Rs.3,40,000/-. The complainant produced the loan
35 CC.10324/2018( J)
agreement at Ex.P6 dated 10.01.2018 to show that she paid
Rs.3,40,000/- through bank account and Rs.21,60,000/- by way of
cash. The accused disputed the payment alleged to have been
made by the complainant by way of cash. It is the defence of the
accused in the cross examination of PW.1 by way of suggestion to
PW.1 that he obtained loan of Rs.3,40,000/- only in the year 2017
and he repaid the said amount in the year 2017 itself. However
that is not the defence taken by the accused in the defence
evidence. It is the defence of the accused in the defence evidence
that he took the loan of Rs.3,40,000/- in 2017 with interest at the
rate of 10%. He paid the interest by way of cash. He had the
factory of hollow blocks. The complainant sent her son and asked
him to supply hollow blocks for their building construction. He
supplied the hollow blocks to the complainant for the principal
amount. However the accused has not produced any documents to
show that he paid the interest at the rate of 10% to the
complainant by way of cash. He has also not produced any
documents to show that he had hollow blocks factory; the
complainant asked him to supply hollow blocks through her son
and he supplied the hollow blocks to the complainant. He would
have produced the registration certificate of his business, order
placed by complainant, bill/invoice raised by him, delivery
challan/e-way bill for having supplied the blocks or he would have
examined the person, who has supplied the blocks to the
complainant. Nothing has been done to prove the said facts. It is
also pertinent to note that the accused has not even specified the
details as to when the order was placed and when the hollow
36 CC.10324/2018( J)
blocks were delivered to the complainant. Therefore the defence of
the accused is not supported by any evidence and it is
inconsistent, contradictory and vague.
18. It is the case of the complainant that the accused
admitting the liability executed the loan agreement at Ex.P6 on
10.01.2018. It is the defence of the accused that he gave signed
blank cheque and signed blank stamp paper and signed blank
white sheet at the time of obtaining the loan. As per the version
of the accused, he obtained loan of Rs.3,40,000/- through account
in the year 2017. He admitted the credit of amounts as per Ex.P9,
which are dated 10.04.2017, 23.05.2017, 26.05.2017 and
21.06.2017 amounting to Rs.3,40,000. The accused has not made
clear as to when the blank signed cheque, blank signed stamp
paper and blank signed white paper were given in the above four
dates. The accused is not specific about the date. He stated that
he gave them while availing the loan in the year 2017. However
on perusal of Ex.P6, it is found that the stamp paper on which the
loan agreement was executed is dated 10.01.2018 and the name of
the purchaser of the stamp paper is shown as Parvez Pasha, who
is the accused. The date of execution of the agreement is also
same date. During the cross examination, the accused admitted
that he purchased the stamp paper at Ex.P6. It is the defence of
the accused in the cross examination of PW.1 that he repaid the
loan amount of Rs.3,40,000/- in the year 2017 itself. It is the
defence of the accused in the defence evidence that he supplied
hollow blocks worth Rs.3,40,000/- to the complainant. There is no
37 CC.10324/2018( J)
document on record to prove either of the defences of the
accused. If the accused had repaid the loan amount in the 2017
itself, it is not explained by the accused as to why he purchased
the stamp paper stating himself as the second party and the
complainant as first party with the description loan agreement by
paying the stamp duty of Rs.200/-. Therefore the defence of the
accused that he gave the blank signed stamp paper and blank
signed white paper during the year 2017 is not at all believable.
He admitted the signature found in Ex.P6, which is at Ex.P6(a). It
was suggested in the cross examination of PW.1 that the first page
of Ex.P6 is not signed by either of the parties and therefore it is
created. PW.1 denied it. The signature of the accused and
complainant not being on the first page i.e. stamp paper does not
make any difference as the stamp paper at Ex.P6 was purchased
by the accused himself with description loan agreement. The
admission of accused of purchase of stamp paper at Ex.P6 and his
signature in Ex.P6, clearly goes to show that the accused
purchased the said stamp paper in order to execute loan
agreement in favour of the complainant and he is merely denying
the execution in order to escape from the liability.
19. It is the case of the complainant that the accused
issued the cheque at Ex.P1 on 01.03.2018. It is the defence of the
accused that he gave signed blank cheque and signed blank stamp
paper and signed blank white sheet at the time of obtaining the
loan. As per the version of the accused, he obtained loan of
Rs.3,40,000/- through account in the year 2017. He admitted the
38 CC.10324/2018( J)
credit of amounts as per Ex.P9, which are dated 10.04.2017,
23.05.2017, 26.05.2017 and 21.06.2017 amounting to Rs.3,40,000.
The accused has not made clear as to when the blank signed
cheque, blank signed stamp paper and blank signed white paper
were given in the above four dates. The accused is not specific
about the date. He stated that he gave them while availing the
loan in the year 2017. On perusal of the ExP.1, it is clear that the
cheque was drawn on 05.03.2018. As per the provision U/s. 118
(a) and (b) of NI Act, until the contrary is proved, it shall be
presumed 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 and that every
negotiable instrument bearing a date was made or drawn on such
date. The burden is on the accused to prove that the cheque was
issued in the year 2017 and not as on 05.03.2018.
20. In order to prove his defence, the accused produced
ExD.14 and 15. ExD.14 is the bank account statement of the Axis
Bank account of the accused to which the cheque belongs. The
statement is produced to show that the cheque at ExP.1 was
issued in 2017 i.e. between 01.01.2017 to 31.12.2017. ExD.15 is
the cheque record slip. It discloses that the series cheque
No.012791 to 012810 have been taken by the accused. The cheque
number of the cheque at ExP.1 is 012795. ExD.15 is produced to
show that the accused utilized the said cheques including cheque
at ExP.1 in 2017 itself. On perusal of ExD.15, it discloses that the
39 CC.10324/2018( J)
cheque series number 012792 was utilized on 02.03.2017,
No.012793 and 012794 were utilized on 10.03.2017. The name of
the persons in whose favour cheques have been issued and the
amounts are also mentioned. However there is no mention of
name, date and amount in respect of the cheque at ExP.1. No.95
is only written in ExD.15 and in that number 9 is overwritten.
When the contents of ExD.15 are verified with ExD.14 bank
statement there is no debit in respect cheque series number
012792 to 012794. Moreover there is no entry in ExD.14 about the
any of the cheque series number from 012791 to 012810.
ExD.14(a) is the only cheque series found in ExD.14 on
09.03.2017, which is bearing No.012760. When the discrepancy is
elicited in the cross examination, the accused stated that he has
document and he can produce it. However no document is
produced. Therefore the entries in ExD.15 not being corroborated
with entries in ExD.14, it is not at believable that the cheque at
ExP.1 was issued in 2017.
21. On the other hand, it was elicited in the cross
examination of DW.1 that he has no bank pass book in respect of
the account pertaining to the cheque at Ex.P1. He voluntarily
stated that he has to obtain the bank statement. When it was
asked as to whether he can produce the bank statement of the
year 2018, he stated that the bank is not providing it and it can
be summoned by the Court. When the accused produced the bank
statement of the 2017, he would not have any hurdle to produce
the bank statement of the year 2018. The accused stated that he
40 CC.10324/2018( J)
asked for the said statement and the bank has not given it and he
can examine the bank official. Nothing has been done to produce
the statement and therefore adverse inference can be drawn that if
the statement of 2018 is produced it would go against him. The
accused stated that generally when the cheque is presented for
encashment, he receives the message to his mobile. He stated that
he did not receive the message in respect of presentation of the
cheque at ExP.1 on 05.03.2018. He voluntarily stated that on the
next day the complainant came along with her associates and
quarreled with him and he lost his mobile in the quarrel. He came
to know about the misuse of cheque after receipt of summons.
During his cross examination, when it was suggested to DW.1 that
there is no connection between the loan transaction and the
criminal case in CC.No.59448/2018 pending before the 11th
ACMM, Bengaluru, he admitted it. He voluntarily stated that after
filing of the cheque, the complainant came and quarreled with
him. On perusal of Ex.D1 to 11, it is clear that the incident took
place on 04.03.2018 at 2.30 pm. Therefore the evidence of accused
that he lost the mobile on the next day of 05.03.2018 is not
believable. It is also not believable that he came to know about
the misuse of cheque after receiving the summons.
22. Apart from that there is no mention of issuance of
blank signed cheque or blank signed paper in favour of the
complainant in Ex.D4 and 5. The accused admitted during cross
examination that the cheque at Ex.P1 and the stamp paper at
Ex.P6 are with the complainant. He stated that he had no hurdle
41 CC.10324/2018( J)
to mention about the cheque and the stamp paper being with the
complainant at the time of Ex.D4 and 5. He did not gave any
complaint till this day in respect of cheque and stamp paper being
with the complainant. He has not issued notice to the complainant
to return the cheque and stamp paper after repayment of loan as
alleged by him. He did not take any action against the
complainant for misusing the cheque and stamp paper. It was
suggested to PW.1 that Ex.P6 is created but the accused failed to
take any steps to prove the same. When the complainant failed to
return the cheque and stamp payment even after repayment as
alleged by the accused in the defence evidence, he would have
issued stop payment instructions to the bank but the same has not
been done. Therefore considering all the aspects, oral and
documentary evidence on record it is clear that the accused failed
to prove his defence as probable one by adducing cogent evidence
by preponderance of probabilities.
23. The accused can rebut the presumption either by
leading direct defence evidence or by relying on the evidence of
the complainant on record. The counsel for the accused disputed
the transaction and challenged the financial capacity of the
complainant to lent huge amount of Rs.21,60,000/- by way of
cash. The counsel for the accused cross examined PW.1 in respect
of the financial capacity. It was elicited in the cross examination
of PW.1 that she has been doing real estate business since 15
years but there is no name to the said business. She has not
maintained the account in respect of the real estate business. She
42 CC.10324/2018( J)
is doing the business of arranging the houses for rent. She is
earning Rs.10,000/- to 15,000/- per month from her real estate
business. She is the income tax assessee and she has been filing
the returns. She did not show the transaction by way of cash in
the IT returns. On perusal of the said cross examination, it is clear
that the complainant has not produced any documents to show
that she is doing real estate business and she is having income
from it. Though she has not reflected the transaction in the IT
returns, it does not have any bearing on the case. The Supreme
Court in the case of Assistant Director of Inspection v. A.B.
Shanthi, (2002) 6 SCC 259 has held as follows:--
"The object of introducing S. 269 is to ensure that a
tax payer is not allowed to give false explanation for his
unaccounted money, or if he has given some false
entries in his accounts, he shall not escape by giving
false explanation for the same. During search and
seizure unaccounted money is unearthed and the tax
payer would usually give the explanation that he had
borrowed or received deposits from his relatives or
friends sand it is easy for the so-called lender also to
manipulate his records later to suit the plea of the tax-
payer. The main object of S. 269 SS was to curb this
menace. "
In the light of the observations of the Supreme Court, it
cannot but be said that Sec. 269 SS only provided for the mode of
acceptance, payment or repayment in certain cases so as to
43 CC.10324/2018( J)
counteract evasion of tax. Sec. 269 SS does not declare all
transactions of loan, by cash in excess of Rs.20,000/- as invalid,
illegal or null and void, while as observed by the Supreme Court,
the main object of introducing the provision was to curb and
unearth black money.
24. It was further elicited in the cross examination of
PW.1 that she gave Rs.25,00,000/- to the accused between the
period from 10.04.2017 to 25.06.2017. She paid Rs.20,00,000/- by
way of cash but she did not know the date. She did not obtain
any acknowledgment receipt from the accused. She had the
amount to an extent of Rs.20,00,000/- during the month of June
2017 in her account. She got the said amount from her business.
Rinku Kumari was working in her parlour and she gave
Rs.12,00,000/- to her and she got Rs.6,00,000/- from the lease
business. She can examine the Rinku Kumari as a witness. Rinku
Kumari gave Rs.12,00,000/- in the month of June 2017. Rinku
Kumari is doing work with her and she had been paying
Rs.8,000/- as salary to her. Rinku Kumari gave the lease amount
of her father. It was further elicited that she transferred
Rs.5,00,000/- to the account of the accused and she can produce
the documents. She did not remember the date on which she
transferred Rs.5,00,000/- through her account. She did not
remember through which bank she has transferred the amount.
The amount of Rs.12,00,000/- given by the Rinku Kumari is
included in the amount of Rs.21,60,000/- lent by her to the
accused by way of cash. She did not mention the same in the
44 CC.10324/2018( J)
complaint. On perusal of the cross examination, it is clear that
PW.1 stated that she had amount in her account but she did not
produce the bank statement showing the same. She stated that she
can examine the witness Rinku Kumari but she failed to examine
her. Therefore adverse inference can be drawn that if the bank
statement is produced and the witness is examined, the evidence
would go against the complainant.
25. It was further elicited in the cross examination of
PW.1 that the audit account took place in respect of her money
lending business. When it was asked to PW.1 that whether she has
reflected the loan transaction with the accused in the account
audit between April 2017 to June 2017, PW.1 answered that
Rs.3,40,000/- was reflected in the account audit but the remaining
amount was given personally and therefore it is not reflected. She
can produce the account audit document. Even though the
complainant has not produced the audit account, adverse inference
can not be drawn as it is stated by the complainant that the
transaction in cash is not reflected in the audit account and the
transaction through account is admitted fact.
26. It was further elicited in the cross examination of
PW.1 that she paid the amount of loan to the accused in old
notes. She gave the amount before the ban of notes. She could not
say the denomination of the notes. Rinku Kumari gave the lease
amount in the denomination of notes of Rs.500 and Rs.1,000/- and
the said amount was given to the accused. The counsel for the
45 CC.10324/2018( J)
accused argued that as per the complaint she has stated that she
has given hand loan Rs.25,00,000/- to the accused from 10th April
2017 to 25th June 2017 but the Government of India on 08th
November 2016 announced ban of the notes of the denomination
of Rs.500 and Rs.1,000/- of the Mahathama Gandi Series. She has
stated in cross examination to given Rs.500 and Rs.1,000/- old
notes to the accused but on that time there is no such a
denomination of the notes available in India. The complainant has
given contradictory statement and produced created document. The
counsel for the complainant argued that the complainant has
clearly stated in her cross examination that the said amount is
given to accused through old notes (as per the complainant
version-used notes and not banned notes). During the cross
examination of PW.1 the counsel for the accused never put the
question that the money given to the accused by complainant was
old notes means banned notes. It is pertinent to note that after
completion of the evidence, when the case was posted for
argument on the accused side, the PW.1 was recalled for further
cross examination and during the said cross examination, the
counsel for the accused asked about the denomination of notes and
whether the complainant paid the amount to the accused by way
of cash in the old notes or new notes. PW.1 stated that she gave
the amount by way of cash in old notes of Rs.500/- and
Rs.1,000/-. The said amount was given by Rinku Kumari and she
gave the said amount to the accused. As per the notification dated
08.11.2016, the Government of India banned the old notes. The
transaction alleged in the present case is of the year 2017.
46 CC.10324/2018( J)
Therefore there is no question of availability of banned notes
during that period. Further the matter is pertaining to the year
2018 and the further cross examination of PW.1 was conducted in
the year 2023. Therefore there are chances of discrepancies in the
evidence. The Court has to consider the whole of the evidence and
not any portion of it. If the whole of the evidence is considered,
the answers elicited in respect of the banned notes, would not
have any bearing on the case of the complainant.
27. The accused failed to prove his specific defence by
preponderance of probabilities. Therefore the burden has not
shifted on the complainant either to prove her case or to prove
her financial capacity as per the settled law. Even then in order to
prove her financial capacity, the complainant produced Ex.P7 to
11. It is undisputed fact that the complainant is carrying on the
business of money lending as per Ex.P7 and 8. The accused also
admitted that the complainant is doing money lending business.
The complainant paid Rs.3,40,000/- through account as per Ex.P9.
Though the documents at Ex.P10 and 11 are not concerned to the
case in hand, they are produced to show the financial capacity of
the complainant. On perusal of Ex.P10 it is clear that it is the
lease agreement executed by the accused in favour of the
complainant on 22.05.2017, wherein the lease amount is shown as
Rs.6,00,000/-. It was suggested to PW.1 that it is created
document as it does not bear the signature of accused on all the
pages. On perusal of Ex.P10, it is found that the accused signed
on the first page i.e., stamp paper and on the last page. The
47 CC.10324/2018( J)
stamp paper at Ex.P10 is purchased by complainant on 22.05.2017.
The accused did not dispute his signature on the stamp paper and
on the last page of the document. The accused has not explained
as to when the said stamp paper was signed by him and for what
purpose. It is his specific defence that he gave signed blank
cheque, signed blank stamp paper at Ex.P6 and signed blank white
sheet. However there is no mention in the defence evidence about
the signature being made on the stamp paper purchased by the
complainant. Further there is no suggestion in the cross
examination of PW.1 as to under what circumstances the accused
signed Ex.P10. Such being the case, the burden is on the accused
to explain the things and disprove the document.
28. Similarly on perusal of Ex.P11, it is clear that it is the
lease agreement executed by the accused in favour of the Rinku
Kumari on 06.01.2018, wherein the lease amount is shown as
Rs.12,00,000/-. It was suggested to PW.1 that it is created
document as it does not bear the signature of accused on all the
pages. On perusal of Ex.P11, it is found that the accused signed
on the last page of the document. It is pertinent to note that not
only the accused but also the wife of the accused by name
Naseera Khanum signed the document at Ex.P11. The stamp paper
at Ex.P11 is purchased by accused and his wife on 06.01.2018
with the description lease agreement and the stamp duty is paid
by accused and his wife. The accused did not dispute his signature
on the document. The accused has not explained as to when the
said stamp paper was signed by him and his wife and for what
48 CC.10324/2018( J)
purpose. It is his specific defence that he gave signed blank
cheque, signed blank stamp paper at Ex.P6 and signed blank white
sheet. However there is no mention in the defence evidence about
the signature being made on document for which the stamp paper
was purchased by him and his wife. Further there is no suggestion
in the cross examination of PW.1 as to under what circumstances
the accused signed Ex.P11. Such being the case, the burden is on
the accused to explain the things and disprove the document.
29. The accused took inconsistent and contradictory
defences and failed to prove that the defence raised by him is
probable one. Such being the case, he can not question the
financial capacity of the complainant. Though there are
discrepancies in the evidence of the complainant, it is not that the
complainant has not produced any documents to prove her
financial capacity. The payment made as per Ex.P9 is admitted.
The document at Ex.P6, which is the loan agreement executed by
accused in favour of the complainant is proved. Apart from that
though the complainant failed to produce any document to show
that she is running real estate business, it is undisputed fact that
she is money lender having licence during that period. Though the
complainant has not produced any document to show that she has
beauty parlour, the accused admitted in the cross examination that
she is doing the said business. When the accused was cross
examined and suggested that the complainant has financial
capacity, he pleaded ignorance by stating that he did not know. If
at all the complainant has no financial capacity to lend the
49 CC.10324/2018( J)
amount, the accused would have stated that she has no such
capacity but the accused pleaded ignorance. He stated that he has
no such capacity to borrow the loan. It is forthcoming from the
evidence of the accused as per his version that he is doing
construction business, hollow blocks factory and mineral water
agency. He admitted that he has transactions in lakhs in the
construction business. Therefore the version of the accused is not
believable. Further the accused failed to take any action against
the complainant for either misuse of cheque or for creating
documents at Ex.P6, 10 and 11. He kept quiet without taking any
action. No prudent man would keep quiet if the amount of
Rs.25,00,000/- is involved, which is huge amount as per the
accused himself. He failed to mention about the loan transaction
and cheque and other document at least in the Ex.D4 and 5.
However there is no whisper of any word about the same in
Ex.D4 and 5. Therefore the defence of the accused that the
complainant has no financial capacity is not tenable.
30. It is the defence of the accused that he issued signed
blank cheques as security at the time of loan. On perusal of
cheque, it is found that the signature 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 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
50 CC.10324/2018( J)
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."
Therefore the blank signed cheque also attract the provision
U/s.138 of NI Act, if some amount due is shown. In the case on
hand the complainant proved that the amount is due. Hence the
accused is liable. Therefore the defence of the accused is not
tenable.
31. It is the defense of the accused that there is no
transaction as alleged in the complaint and the complainant
misused the blank signed cheque issued to him at the time of
borrowing the loan. 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
specific defence of the accused. The issuance of cheque and
51 CC.10324/2018( J)
signature on the cheque at ExP.1 are admitted. 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.
32. For the reasons mentioned herein above, it is
crystallized that the accused has utterly failed to prove that there
was no existence of legally enforceable debt/liability between him
and the complainant and he has not at all issued the instant
cheque towards the discharge of legally enforceable liability of
Rs.25,00,000/-. On the other hand, the complainant has proved
that the accused issued the cheque for the legally enforceable
liability; the cheque was dishonored due to the reason 'Funds
Insufficient' and the notice issued by her was deemed to have
been served on the accused. The complainant proved her case
beyond all reasonable doubts. 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
52 CC.10324/2018( J)
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.
33. Point No.3 : In view of the reasons assigned in Point
No.1 and 2 and under the facts and circumstances of the present
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.27,50,000/- (Rupees Twenty Seven Lakhs Fifty Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.27,40,000/- (Rupees Twenty Seven Lakhs Forty Thousand Only). The remaining balance amount of Rs.10,000/- is to be forfeited to the State.
In default of payment of the fine amount accused shall undergo simple imprisonment for three months.
The personal bond executed by the accused is hereby stands cancelled and cash surety of Rs.5,000/- furnished by the accused shall be refunded to him after expiry of appeal period.
The copy of the judgment shall be furnished to the accused at free of cost.
(Dictated to the Stenographer, transcript thereof is computerized and printout taken by him, is verified and then pronounced by me in Open Court on this the 28th day of April-2023.) (Lokesh Dhanapal Havale) XV Addl. CMM., Bangalore.
53 CC.10324/2018( J) ANNEXURE Witnesses examined for the Complainant:-
PW.1 : Smt. Reshma Banu Documents marked for the Complainant:-
Ex.P1 : Cheque
Ex.P1(a) : Signature of the accused
Ex.P2 : Bank endorsement
Ex.P3 : Office copy of the legal notice
Ex.P4 : Postal receipt
Ex.P5 : Postal envelope
Ex.P6 : Hand loan agreement
Ex.P6(a) : Signature of the accused
Ex.P7 & 8 : 2 certified copies of money
lending licences.
Ex.P9 : Bank statement
Ex.P10 & 11 : 2 lease agreements
Witnesses examined For Defence:-
DW.1 : Sri. Parveez Pasha Documents marked for Defence:-
Ex.D1 : C/c of order sheet in CC.No.59448/2018 Ex.D2 : C/c of Charge sheet Ex.D3 : C/c of FIR Ex.D4 to 6 : C/copies of 3 statements
54 CC.10324/2018( J) Ex.D7 : C/c of Spot Mahazar Ex.D8 : C/c of further statement of the accused Ex.D9 &10 : C/c of statements of 2 witnesses Ex.D11 : C/c of wound certificate Ex.D12 : Notarized copy of Aadhaar card Ex.D13 : Notarized copy of Pass port Ex.D14 : Statement of Axis bank Ex.D14(a) : Relevant portion in Ex.D14 Ex.D15 : Cheque record slip of Axis bank account (Lokesh Dhanapal Havale), XV Addl.CMM., Bengaluru.
55 CC.10324/2018( J) 28.04.2023 (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.27,50,000/- (Rupees Twenty Seven Lakhs Fifty Thousand Only). On deposit of fine amount, the complainant is entitled for compensation of Rs.27,40,000/- (Rupees Twenty Seven Lakhs Forty Thousand Only). The remaining balance amount of Rs.10,000/- is to be forfeited to the State.
In default of payment of the fine amount accused shall undergo simple imprisonment for three months.
The personal bond executed by the accused is hereby stands cancelled and cash surety of Rs.5,000/- furnished by the accused shall be refunded to him after expiry of appeal period.
The copy of the judgment shall be furnished to the accused at free of cost.
XV Addl.CMM., Bengaluru.
56 CC.10324/2018( J)