Bangalore District Court
Sri. Mohan Kumar T.H vs Sri. Muni Raju (Flower) on 8 January, 2020
1 C.C.No.1805/2017 J
THE COURT OF THE XVI ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY
Dated:- This the 8th day of January, 2020
i.
Present: Sri.S.B.HANDRAL, B.Sc., L.L.B(SPL).,
XVI Addl.C.M.M., Bengaluru City.
JUDGMENT U/S 355 OF Cr.P.C.,
Case No. : i. C.C.No.1805/2017
Complainant : Sri. Mohan Kumar T.H,
S/o. Hombale Gowda,
Aged about 29 years,
R/at No.9, Surekha Nivas,
3rd Cross, Naidu Layout,
Rajeev Gandhi Road,
Jaraganahalli,
Bengaluru - 560 078.
Rep. by Sri Manjunath M.R., Adv.,)
- Vs -
Accused : Sri. Muni Raju (Flower),
Major In Age,
No.59, 3rd cross,
Rajeev Gandhi Road,
Naidu Layout, J.P.Nagar (P)
Jaraganahlli,
Kanakapura Road,
Bengaluru -560 078.
(Rep. by Sri. A.C.Nagaraj and
Associates., Adv.,)
2 C.C.No.1805/2017 J
Case instituted : 7.1.2017
Offence complained : U/s 138 of N.I Act
of
Plea of Accused : Pleaded not guilty
Final Order : Accused is convicted
Date of order : 8.1.2020
JUDGMENT
The Complainant has filed this complaint against the Accused for the offence punishable u/Sec.138 of the Negotiable Instruments Act.
2. Briefly stated the case of the Complainant is that, he and Accused are known to each other since last six years and Accused approached him during the month of November 2016 and requested a hand loan of Rs.3 Lakhs for the purpose of improvement of his flower business, in order to help him he has paid sum of Rs.3 Lakhs on 15.11.2016 by way of cash while borrowing the said loan amount the Accused agreed to repay the said amount within 15 days, after 15 days he approached the Accused i.e. during last week of November and requested for repayment but the Accused went on postponing the same on 3 C.C.No.1805/2017 J one or other pretext finally during 1st week of December 2016 issued a cheque bearing No. 324772 dated: 1.12.2016 for sum of Rs.3 Lakhs, drawn on State bank of Hyderabad, J.P.Nagar Branch, Bengaluru in his favour by assuring him to honour the said cheque on its presentation , thereafter as per the instructions of the Accused, he has presented the said cheque through his banker i.e. Central bank of India, Jaraganahalli branch, Bengaluru for encashment but the said cheque was dishonoured for the reason "Funds Insufficient' vide endorsement dated: 2.12.2016 and thereafter he was intimated the said fact to the Accused but Accused did not pay the cheque amount, hence on 15.12.2016 issued legal notice to the Accused through RPAD, same has been returned as Intimation delivered dated: 19.12.2016, but the Accused has not made payment. Hence the complainant has filed this present complainant against the Accused for the offence punishable U/s.138 of Negotiable Instruments Act.
3. Before issuing process against the accused, the Complainant has filed his affidavit-in-lieu of his 4 C.C.No.1805/2017 J sworn statement, in which, he has reiterated the averments of the complaint. In support of his sworn statement, P.W.1 has relied upon the documentary evidence as per Ex.C.1 to C.7 i.e, Original Cheque dated:-1.12.2016 as per Ex.C.1, the signature on the said cheque identified by P.W.1 as that of the accused as per Ex.C.1(a), the Bank Memos as per Ex.C.2, the office copy of the Legal Notice as per Ex.C.3, the Postal Receipt as per Ex.C.4, returned notice as per Ex.C.5, RPAD cover as per Ex.C.6, and postal receipt as per Ex.C.7.
4. Prima-facie case has been made out against the accused and summons was issued against the accused in turn he has appeared before the court and got enlarged on bail and the substance of the accusation has been read over to him, to which he pleaded not guilty and claims to be tried.
5. In view of the principles of law laid down and as per the directions of the Hon'ble Apex Court in the decision of the Indian Bank Association Vs., Union of India, reported in 2014 (5) SCC 590, after recording the plea of the accused, as he 5 C.C.No.1805/2017 J intended to set out his defence, the learned counsel for the Accused cross examined the complainant and complainant side was closed.
6. Thereafter, the statement of the accused as required under Sec.313 of the Cr.P.C. has been recorded. He has denied the incriminating evidence appearing against him and has chosen to lead his rebuttal evidence.
7. Accused himself examined as DW.1 and no documents have been produced on his behalf and closed his side.
8. Heard and perused the written arguments submitted by both learned counsels for the complainant and the Accused and perused the decisions submitted by the learned counsel for the complainant and Accused and materials on record.
9. On the basis of complaint, evidence of complainant and documents and having heard the arguments of both learned counsels for the complainant and the accused, the following points that are arise for consideration are:-
6 C.C.No.1805/2017 J1. Whether the complainant proves that the accused has issued cheque for Rs.3,00,000/= bearing No.324772 dated:-1.12.2016 drawn on State bank of Hyderabad, J.P.Nagar Branch, Bengaluru to discharge legally recoverable debt to the complainant and when the complainant has presented a cheque for encashment through his banker but the said cheques have been dishonoured for the reasons "Funds Insufficient" on 2.12.2016 and the complainant issued legal notice to the accused on 15.12.2016 and inspite of it the accused has not paid the cheque amount within prescribed period there by the accused has committed an offence U/s.138 of the Negotiable instruments Act?
2. What Order?
10. The above points are answered as under:
Point No.1: In the Affirmative Point No.2:As per final order for the following:
REASONS
11. Point No.1: Before appreciation of the facts and oral and documentary evidence of the present case, it is relevant to mention that under criminal jurisprudence prosecution is required to establish 7 C.C.No.1805/2017 J guilt of the Accused beyond all reasonable doubts however, a proceedings U/s.138 of N.I.Act is quasi criminal in nature. In these proceedings proof beyond all reasonable doubt is subject to presumptions as envisaged U/s.118, 139 and 136 of N.I.Act. An essential ingredient of Sec. 138 of N.I.Act is that, whether a person issues cheque to be encashed and the cheque so issued is towards payment of debt or liability and if it is returned as unpaid for want of funds, then the person issuing such cheque shall be deemed to have been committed an offence. The offence U/s.138 of N.I. Act pre-supposes three conditions for prosecution of an offence which are as under:
1. Cheque shall be presented for payment within specified time i.e., from the date of issue or before expiry of its validity.
2. The holder shall issue a notice demanding payment in writing to the drawer within one month from the date of receipt of information of the bounced cheque and
3. The drawer inspite of demand notice fails to make payment within 15 days from 8 C.C.No.1805/2017 J the date of receipt of such notice.
If the above said three conditions are satisfied by holder in due course gets cause action to launch prosecution against the drawer of the bounced cheque and as per Sec.142(b) of the N.I. Act, the complaint has to be filed within one month from the date on which cause of action arise to file complaint.
12. It is also one of the essential ingredients of Sec. 138 of N.I.Act that, a cheque in question must have been issued towards legally recoverable debt or liability. Sec. 118 and 139 of N.I.Act envisages certain presumptions i.e., U/s.118 a presumption shall be raised regarding 'consideration' 'date' 'transfer' 'endorsement' and holder in course of Negotiable Instrument. Even Sec.139 of the Act are rebuttable presumptions shall be raised that, the cheque in question was issued regarding discharge of a legally recoverable or enforceable debt and these presumptions are mandatory presumptions that are required to be raised in cases of negotiable instrument, but the said presumptions are not conclusive and rebuttable one, this proportion of law has been laid down by the Hon'ble Apex Court of 9 C.C.No.1805/2017 J India and Hon'ble High Court of Karnataka in catena of decisions.
13. In the present case the complainant got examined as PW.1 by filing his affidavit evidence wherein he has reiterated the entire averments of the complaint and in his evidence testified regarding the lending of loan amount of Rs.3,00,000/= to the Accused for the purpose of improvement of his flower business at that time the Accused was agreed to repay the said amount within 15 days but inspite of his repeated requests did not repay the said amount finally in the first week of December 2016, issued cheque in question for Rs.3,00,000/= towards discharge of said loan amount. The complainant/ PW.1 further testified that, on the instructions of accused, he has presented the cheque in question i.e., Ex.C.1 for its encashment through his banker, but the said cheque returned dishonoured with banker's memo that "Funds Insufficient" dated:
2.12.2016. The complainant further testified that, on 15.12.2016 caused legal notice to the accused calling upon him to pay the amount covered under the dishonoured cheque through RPAD but the said 10 C.C.No.1805/2017 J notice was returned with an endorsement of "Intimation delivered" on 19.1d2.2016, thereafter he did not repay the loan amount.
14. In support of her oral evidence, P.W.1 has relied upon the documentary evidence as per Ex.C.1 to C.7 i.e., Original Cheque dated:-1.12.2016 as per Ex.C.1, the signature on the said cheque identified by P.W.1 as that of the accused as per Ex.C.1(a), the Bank Memos as per Ex.C.2, the office copy of the Legal Notice as per Ex.C.3, the Postal Receipt as per Ex.C.4, returned notice as per Ex.C.5, RPAD cover as per Ex.C.6, and postal receipt as per Ex.C.7.
15. In the present case, there is no dispute between the complainant and Accused with regard to their acquaintance. It is also not in dispute by the accused that, the cheque in question presented for encashment and dishonoured for the reason of "Funds Insufficient" since as matter on record, proved by return memo i.e. C.2 issued by the concerned bank dated: 2.12.2016, therefore it is a matter on record and has been proved that, the cheque in question was presented within its validity 11 C.C.No.1805/2017 J period and dishonoured as per the bank endorsement issued by the banker of accused. It is also not in dispute that, the cheque in question i.e. Ex.C.1 belongs to the account of the accused and has not denied his signature which is appearing at Ex.C.1(a).
16. In relation to the service of notice the Accused in his evidence has denied the service of legal notice issued by the complainant to him. The complainant in order to prove service of notice upon the Accused, has produced the documents i.e copy of the legal notice, RPAD cover along with postal receipt which are at Ex.C.5 to C.7. On perusal of the Ex.C.6 i.e. the RPAD returned cover with an endorsement of "Not claimed Retd to sender" and also mentioned " D.L" and "I.D". Hence, it goes to show that, the legal notice caused by the complainant through RPAD returned with postal endorsement of "Not claimed Retd to sender" " D.L." and "I.D". The Accused during the course of cross- examination of complainant and in his evidence has not stated or disputed that, the address mentioned by the complainant on RPAD cover is not of his 12 C.C.No.1805/2017 J correct address or he was/is not residing in the said address as on the date of issuance of the legal notice i.e. Ex.C.5 by the complainant. The Accused has also not produced any documents on his behalf to disprove the address mentioned by the complainant in the legal notice, RPAD cover is not of his correct address or was/is not residing in the said address as on the date of issuance of notice or return of notice. Therefore in view of the said reasons it can be held that, the Accused has admitted his address mentioned by the complainant in the legal notice as well as RPAD cover as that of his correct address. Even it is not the defence of the Accused that, the postal endorsement found on Ex.C.6 are not issued by the concerned postal authorities or have been created by the complainant and the Accused has not examined concerned postal authorities to disprove the endorsement found on Ex.C.6 RPAD cover. Therefore in view of non disputing of the address of the Accused in the legal notice as well as on the RPAD cover makes it clear that, the Accused has admitted that, the legal notice caused by the complainant was issued to his correct address through registered post, in such 13 C.C.No.1805/2017 J circumstances, it can be held that, the notice sent by the complainant to the correct address of the Accused is presumed to have been served on him U/s. 27 of General Clauses Act. In this regard, it is relevant here to refer the decision of Hon'ble High Court of Karnataka reported in 2011 ACD 1572 (KAR) in the case of Jayamma Vs. Lingamma, wherein the Hon'ble High Court held that, "Notice sent at correct address returned unclaimed - is deemed to be served. In another decision reported in 1998 KAR 1841 in the case of Shridhar M.A. Vs. Metalloy Steel Corporation and 1999 Cri.L.J. 4606 "K. Bhaskaran Vs. Vaidhanbalan wherein the Hon'ble Apex Court was concerned with the question as to when the service of notice could be inferred and it was held that if there is an endorsement like 'not available in the house' 'house locked' 'shop closed' 'unclaimed' the service should be deemed to have been effected. It is also relevant here to refer the decision reported in 2008(4) Civil code cases 027 (SC) "M/s. Indo Automobiles Vs., M/s. Jai Durga Enterprises and others." wherein the Hon'ble Apex Court held that, notice sent by registered post with acknowledgement 14 C.C.No.1805/2017 J to a correct address-service of notice has to be presumed. Therefore in view of the principles of law in the above decisions, it can be safely held that, the service of notice on accused in this case is presumed to have been served on him since in this case also the complainant has issued notice to the accused to his correct address through registered post and the said notice was returned with an endorsement of "Not claimed Retd to sender", " D.L" and "I.D", hence, the notice issued by the complainant through registered post is held to be proper service and for the above said reasons, the contentions taken by the learned counsel for the accused that, the notice issued by the complainant was not served on the accused and the complainant has not complied the mandatory requirements of Sec.138(b) of N.I.Act and complaint is not maintainable cannot be acceptable and are not sustainable.
17. It is the specific defence of the Accused that, the complainant has no source of income to lend alleged loan amount to him and has not borrowed alleged loan amount of Rs.3,00,000/= from complainant and has not issued the cheque in 15 C.C.No.1805/2017 J question i.e Ex.C.1 to the complainant towards discharge of the alleged loan amount. It is also the defence of the Accused that, prior to three months from the date of filing of this complaint, the complainant approached him and also collected blank signed cheque from him for providing loan from the bank for improvement of his flower business, but later he did not provide any loan through the bank but misused the said cheque and filed the present complaint against him. Hence, in this back ground now it is to be examined the oral and documentary evidence adduced by the complainant and Accused as to whether the Accused has rebutted the presumption available in favour of the complainant.
18. The learned counsel for the Accused cross- examined the complainant in length but nothing has been elicited to discredit or discard his evidence, instead of eliciting anything materials from the complainant the Accused rather concentrated his defence that, there was no financial transaction between him and admitted that, he is running finance business with valid license and has not 16 C.C.No.1805/2017 J collected the documents from the Accused at the time of lending of loan amount and has not produced any documents to prove that, he has paid alleged loan amount to the Accused and to show that, as on the date of lending of the loan amount he was having sufficient source of funds to lend the alleged loan amount to the Accused. It is true that, the complainant in his cross-examination has admitted that, he has lent loan amount of Rs.3 Lakhs to the Accused on 2.11.2016 and also admitted that, in his legal notice i.e. Ex.C.5 the date of lending is mentioned as 15.11.2016. On careful perusal of the entire cross-examination of the complainant, he nowhere admitted the defence of the Accused that, the cheque in question was not issued to him towards discharge of the loan amount and also denied a suggestion made to him that, he has collected the cheque in question from the Accused towards securing the loan to the Accused from the bank prior to 3 to 4 months from the date of filing of complaint.
19. The learned counsel for the Accused in his written argument much specifically argued that, the 17 C.C.No.1805/2017 J complainant in his legal notice, complaint and evidence stated that, he has paid an amount of Rs.3 Lakhs to the Accused on 15.11.2016 but in his cross-examination has admitted that, he has paid a sum of Rs.3 Lakhs to the Accused on 2.11.2016, hence there are two versions given by the complainant which is correct and which version is wrong on this ground alone the doubt will arise the date of alleged lending of loan amount by the complainant. It is also argued that, the complainant in his cross-examination admitted that, he has not produced any documents to show that, he had Rs.3 Lakhs with him as on 2.12.2016 and had disclosed about his transaction of Rs.3 Lakhs in his I.T. returns for the financial year 2016-17, hence the complainant has not produced single document to show that, he was having Rs.3 Lakhs on his hand or in the bank and have no capacity to lent a sum of Rs.3 Lakhs to the Accused , therefore complainant has failed to show his source of income, on this count also the Accused is liable to be acquitted. It is further argued that, the complainant has admitted that, he has maintained book in respect of his finance business in which he maintained the entries 18 C.C.No.1805/2017 J relating to his business income and has not produced document to show the profit that, he allegedly earned from his civil contract business and finance business, hence the complainant failed to establish that, the alleged loan amount of Rs.3 Lakhs paid either on 15.11.2016 or on 2.11.2016 hence he has not come with clean hands to this court which is the story created by the complainant and is not believable. In support of his argument, has relied upon the decisions reported in 1) AIR 2019 SC 1983 in the case of Basalingappa Vs. Mudibasappa; 2) 2017 (4) Crimes 1 (AP) in the case of R. Channakeshava Rao, Hyderabad, Vs. P. Lakshmi Narasaiah Hyderabad 3) 2015 AIR SCE 64 SC in the case of K.Subramani Vs. K.Damodara Naidu; 4) LAWS (KAR) 2015 6353 High Court of Karnataka in the case of A.M.Govindegowda Vs. B.V.Ravi; 5) 1 (2013) BC 743 (SC) in the case of Vijay Vs. Laxman and another; 6) 2009 (1) Crimes 201 (Jhar) in the case of Binod Kumar Lal Vs. State of Jharkhand and another ; 7) 2009 (1) Crimes 2003 (Bomb) in the case of Nandikishore Mehra vs. Sudheer Transport Ltd., 8) ILR 2008 KAR 4629 in the 19 C.C.No.1805/2017 J case of Shivamurthy Vs. Amruthraj; 9) 2008 (1) BCR 1 SC in the case of John k. John Vs. Tom Vargese and Anr. 10) (2006) 6 SCC 39 in the case of M.S. Narayana Menon @ Mani Vs. State of Kerala and another ; 11) AIR 2004 SC 4274 in the case of Menben Kethan Bhaisha and other Vs. State of Gujarath and other 12 ) AIR 2003 SC 182 in the case of C. Antony Vs. K.G Raghavan nair. The learned counsel for the defence argued that in view of the principles of law laid down by the Hon'ble Apex Court of India and High Courts, in the present case also the complainant has failed to prove by producing the documents about the lending of loan amount to the Accused and to show that as on the date of lending of loan amount he was having sufficient source of income and exact date of alleged lending of loan amount advanced by the complainant and has not examined any witness to substantiate his claim, in such circumstances the Accused is liable to be acquittal.
20. It is important to note here that, on careful perusal of the entire oral and documentary evidence produced by the complainant i.e Ex.C.1 to 20 C.C.No.1805/2017 J C.7 and admitted facts by the Accused as it is already held in the above that, the complainant proved that the cheque in question belongs to the Accused i.e Ex.C.1 and signature found at Ex.C.1(a) is that of the signature of the Accused and also proved that, the cheque in question was presented within its validity period and it was dishonoured for the reason of "Funds Insufficient" as per Ex.C.2 and thereafter the legal notice caused by him through RPAD to the Accused was served on him i.e., deemed served as it was returned with postal endorsement of not claimed and intimation delivered and door locked, and Accused has not given any reply to the legal notice, in such circumstances, it can be held that, the complainant has discharged his initial burden by complying the mandatory requirements as required U/s.138 of N.I. Act and initially the presumptions are available in favour of the complainant U/s.118a and 139 of the N.I. Act. Consequently it is for the Accused to rebut the said presumptions available in favour of the complainant to show that, the cheque in question was not issued either to the complainant or towards discharge of any legally recoverable debt by 21 C.C.No.1805/2017 J producing cogent and convincible evidence but not mere suggestions or even by plausible explanation. In such circumstances, when the presumptions U/s.118 and 139 of N.I.Act are available to the complainant, even a presumption can be drawn to the extent of existence of legally recoverable debt or liability against the Accused unless and until the said presumptions are rebutted by the Accused, even in the absence of documents produced by the complainant with regard to loan transaction in question.
21. In this regard, it is relevant here to refer the decisions reported in 2001 AIR Karnataka HCR 2154 between 'M/s.Devi Tyres V/s.Navab Jan' and in 2011 ACD 1521 (KAR) between 'Smt. Usha Suresh V/s. Shashidharn', in 2010 SC 1898 between 'Rangappa Vs. Mohan' and 2011 ACD 1412 (KAR) between 'N.Hasainar Vs. M.Hasainar, S/o. Ibrahim'. The Hon'ble High Court of Karnataka in the above decision i.e., 2001 AIR Karnataka HCR 2154 at para No.6 was pleased to hold that issuance of cheque itself was adequate proof of existence of debt or liability.
22 C.C.No.1805/2017 J22. In another decision of Hon'ble Apex Court of India i.e. Hon'ble Three Judges Bench Decision reported in (2010) 11 SCC 441 in the case of Rangappa Vs. Sri. Mohan ., wherein the Hon'ble Apex Court held that " A. Negotiable Instruments Act, 1881 - S.139 - Presumption under - scope of - Held, presumption mandated by S. 139 includes a presumption that there exists a legally enforceable debt or liability - However such presumption is rebuttable in nature - Criminal Trial - Proof - Presumptions - Generally. Further held that "Signature on the cheque was his, statutory presumption under S.139 comes into play and the same was not rebutted even with regard to the materials submitted by complainant Appellant not able to prove "lost cheque" theory - Apart from not raising a probable defence appellant was also not able to contest the existence of a legally enforceable debt or liability - hence, his conviction by High Court, held, proper.
23. In another decision of Hon'ble Apex Court of India, reported in CRIMINAL APPEAL NO. 508 OF 23 C.C.No.1805/2017 J 2018 DT 15-03-2018 between ROHITBHAI JIVANLAL PATEL Vs STATE OF GUJARAT AND ANR held that "Negotiable Instruments Act facts like source of funds are not relevant if the Accused has not been able to rebut the presumption. It is further held that " When such a presumption is drawn, the facts relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the Accused has been able to rebut the presumption or not". In another decision of Hon'ble Apex court of India decided in Crl.Appeal No.1545 of 2019 dt.17/10/2019 by the Hon'ble Apex Court of India in the case of Uttam Ram Vs. Devinder Singh Hudan and Anr. Wherein the Hon'ble Apex Court held that, " Dishonor of cheque - Statutory presumption under - burden to prove - the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability - it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer - even a blank cheque 24 C.C.No.1805/2017 J leaf, voluntarily signed and handed over by the accused which is towards some payment, would attract presumption U/s. 139 of NI Act - the accused is held guilty of dishonour of cheque for an offence U/s.s.138 of NI Act. It is also held that, " the accused has failed to lead any evidence to rebut the statutory presumption, a finding returned by both the Trial Court and High Court. Both courts not only erred in law but also committed perversity when the due amount is said to be disputed only on the account of discrepancy in the cartons, packing materials or the rate to determine the total liability as if the appellant was proving his debt before the civil court. Therefore it is presumed that, the cheque in question were drawn for consideration and the holder of the cheques received the same in existing debt". It is also held that, " the Trial court and the High Court proceeded as if, the appellant is to prove a debt before civil Court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. A dishonour of 25 C.C.No.1805/2017 J cheque carries statutory presumption of consideration. The holder of cheque in due course is required to prove that, the cheque was issued by the Accused and that when the same presented , it was not honoured Since there is a statutory presumption of consideration, the burden is on the Accused to rebut the presumption that, the cheque was issued not for any debt or other liability ".
24. It is also relevant here to refer the decision of Hon'ble High Court of Karnataka reported in ILR 2019 KAR 493 in the case of Sri.Yogesh Poojary Vs. Sri.K.Shankara Bhat, wherein the Hon'ble High Court held that, the presumption mandated by Sec.139 of N.I Act includes the presumption that, there existed a legally enforceable debt or liability, however such presumption is rebuttable in nature". In another decision of Hon'ble High Court of Karnataka in the case of Shri.V.R.Shresti Vs. Shri. Bhaskara.P. in Crl. Appeal No. 2109/2017 dated: 15.10.2019 wherein the Hon'ble High Court of Karnataka held that "the Accused has not given 26 C.C.No.1805/2017 J any reply to the notice and also in the cross- examination, he categorically admits that, the cheque has bounced on account of no sufficient fund in the bank account of the Accused. Mere non producing of the document before the court with regard to the source of income to advance a loan is not a ground to dismiss the complaint. The Accused ought to have rebutted the contention of the complainant by producing cogent evidence before the court and mere denial is not enough".
25. Therefore on careful reading of the principles of law laid down by the Hon'ble Apex Court of India and High Court of Karnataka in the above referred decisions makes it very clear that, once the holder in due course i.e. the complainant proved that, the cheque in question belongs to the drawer and signature appearing on the cheque is that of the drawer i.e., Accused and complied the mandatory requirements as required U/s.138 of N.I.Act, a presumptions U/s.118a and 139 of N.I.Act indeed does extend to the existence of legally recoverable debt and when such a presumption is 27 C.C.No.1805/2017 J drawn the facts relating to the want of documentary evidence in the form of receipts or accounts or want of evidence regarding source of funds were not of relevant unless the Accused rebutted the presumption available to the complainant as held by the Hon'ble Apex Court and High Court of Karnataka in the above decisions. In the present case also the complainant has complied a mandatory requirements and has proved that, the Accused has issued the cheque in question in his favour and the Accused has admitted the cheque belongs to him and signature appearing on the cheque is that of his signature and even the intimation is given by the postal authorities to the Accused regarding legal notice issued by the complainant to him but has not given any reply or complied the terms of the notice, in such circumstances, presumptions have to be drawn towards existence of legally enforceable debt as per Sec.139 of N.I.Act.
26. Therefore, for the above said reasons the arguments canvassed by the learned counsel for the defence i.e., the complainant has not produced any documents to show that, he had sufficient source of 28 C.C.No.1805/2017 J income to lend the amount of Rs.3,00,000/= to the accused and has failed to produce any document to prove that, he has lent the loan amount to the Accused and has not collected any documents from the Accused to show that, he has lent the loan amount to him, cannot be acceptable one as in this case also the learned defence counsel argued that, the complainant has to prove his claim by producing his evidence as if it is required for proving his debt before the Civil Court, as held by the Hon'ble Apex court of India in the above referred decisions, therefore in view of the principles of law laid down in the above referred decisions it is presumed that, cheque in question was drawn for consideration as the Accused has admitted the cheque in question belongs to him and signature found on the cheque in question is also that of his signature. It is also relevant here to mention that, on careful reading of the principles of law laid down by the Hon'ble Apex court of India and Hon'ble High Court relied upon by the learned counsel for the Accused with due respect to the principles of law the same are not helpful for the Accused in this case to prove his defence, as the fact and circumstances of the present case and facts 29 C.C.No.1805/2017 J and circumstances of the decided case are not one and the same.
27. The learned counsel for the defence has also argued that the complainant has admitted in his cross-examination that, he has not disclosed or declared the alleged loan amount lend to the Accused in his income tax returns , hence it goes to show that, the complainant has not lent the alleged loan amount to the Accused and also has no source of income as on the date of alleged lending of loan amount to the Accused and in view of non compliance of Sec.269 SS Income Tax Act, the complaint is liable to be dismissed and the alleged amount in question was unaccounted money and that, cannot be enforceable under the law. It is true that, the complainant in his cross-examination admitted that, he has not disclosed about his loan transaction of Rs.3 Lakhs lend to the Accused in his I.T. Returns concerning the financial year 2016-17, but mere non declaration of the loan transaction in question in income tax returns could by itself invalidates the transaction or not is to be taken into consideration, in this regard, it is necessary here to 30 C.C.No.1805/2017 J refer the decision of our Hon'ble High court of Karnataka reported in 2019(1) Kar. L.R.185 in the case of Sri.Yogesh Poojary Vs. Sri.K.Shankara Bhat in the said case the Hon'ble High Court of Karnataka held that " Negotiable Instruments Act, 1881 - Sections 138 and 139 -Endorsement 'payment stopped by drawer' - The trial court in the instant case, merely considered a suggestion made from the Accused side in the cross- examination of PW-1 that the complainant was an income tax assessee and that he has not declared the alleged loan transaction in his returns and disbelieved the case of the complainant that too, ignoring that legal presumption under section 139 of the N.I. Act, was operating in favour of the complainant- For these reasons, it has to be held that the complainant has beyond reasonable doubt proved the guilt of the Accused punishable under Section 138 of the N.I. Act. As such, the impugned judgment of acquittal passed by the trial court deserves to be set aside and respondent/Accused is liable to be convicted for the offence punishable under Section 138 of the 31 C.C.No.1805/2017 J N.I. Act. Hence in view of the principles of law laid down by the Hon'ble High court of Karnataka in the above referred decisions, in the present case also the complainant admitted that, he has not declared the loan transaction in question in his I.T. Returns but as it is already held that, the complainant has discharged his primary burden by complying the mandatory provisions of Sec.138 of N.I. Act, therefore it is for the accused to rebut the presumption existing infavour of the complainant U/s.139 of Negotiable Instruments Act. Apart from that, the admissions of the complainant with regard to non declaration of loan transaction in I.T. Returns for the concerned year could not by itself draw an adverse inference and to hold that, there was no existence of legally enforceable debt or the presumption as envisaged U/s.139 of N.I.Act is successfully rebutted by the accused. In another decision of Hon'ble Madhya Pradesh High Court decided in C.R.R No.5263/2018 dated: 7.3.2019 in the case of Smt. Ragini Gupta Vs. Piyush Dutt Sharma Gwalior., wherein the Hon'ble High Court held that, mere non filing of income tax return would not automatically dislodge the source of 32 C.C.No.1805/2017 J income of the complainant and non payment of income tax is a matter between the revenue and assessee and if the assessee has not disclosed his income in the income tax return, then the income tax department is well within its right to reopen the assessment of income of the assessee and to take action as per provisions of Income Tax Act, however non filing of income tax return by itself would not mean that, the complainant had no source of income and thus no adverse inference can be drawn in this regard only because of absence of income tax return. Hence in view of the principles of law laid down by Hon'ble High Court of Madya Pradesh in the above said decision in the present case also though the complainant has admitted that, he has not disclosed his income and transaction in question in his income tax return that itself would not automatically dislodge the source of income of the complainant. Therefore the admissions of the complainant which are elicited in his cross-examination are not helpful for the accused to prove his defence that, in view of non disclosure of source of income of the complainant and transaction in question in his income tax returns that itself sufficient to hold that, 33 C.C.No.1805/2017 J the complainant has no source of income cannot be acceptable one.
28. The Accused has also taken the contention that, he has given a blank signed cheque to the complainant as per his assurance to secure a loan of Rs.1 Lakh to him from the bank for the purpose of improvement of the his flower business and he had not filled up the contents in the cheque, when it was collected by the complainant. But the complainant in his cross-examination has denied the suggestions made to him that, as the Accused has learned only to sign in Kannada and he has filled up the rest of the contents in the cheque in dispute and he had collected the blank signed cheque in dispute from the Accused. In this regard, even for sake of discussion if it is assumed that, the contents of the subject cheque are not filled in by the Accused even under such circumstances also, unless and until the Accused has proved his defence by producing cogent and convincible evidence, it cannot be held that, the contents of the cheque have been filled in by the complainant. In this regard, it is a relevant here to refer the decision of Hon'ble Apex Court of 34 C.C.No.1805/2017 J India reported in AIR 2019 SC 2446 in the case of Birsingh Vs. Mukesh Kumar., wherein the Hon'ble apex Court held that, "presumption U/s.139 is presumption of law, distinguished from presumption of facts and also held that, presumptions are rules of evidence and do not conflict with presumption of innocence which requires prosecution to prove case against the Accused and also held that obligation on the prosecution may discharged with the help of presumptions of law and presumption of fact unless the accused adduces evidence showing reasonable plausibility of non existence of presumed fact." In the present case though the Accused has denied the contents of the cheque in question except his signature but he did not prove his defence or produced any documents or satisfactory evidence to rebut the presumptions as available U/s.139 of the N.I. Act, under such circumstances in view of the above principles of law, it can be presumed even on fact also that the complainant has proved his case by discharging his burden and complying the mandatory provisions. In the said decision the Hon'ble Apex court has also 35 C.C.No.1805/2017 J held that, "presumption as to legally enforceable debt is rebuttable, the signed blank cheque if voluntarily presented to payee towards payment payee may fill up amount and other particulars and it in itself would not invalidate cheque and onus would still be on the accused to prove that, cheque was not issued or discharge of debt or liability by adducing evidence." In another decision of Hon'ble Apex court of India decided in Crl.Appeal No.1545 of 2019 dt.17/10/2019 by the Hon'ble Apex Court of India in the case of Uttam Ram Vs. Devinder Singh Hudan and Anr. Wherein the Hon'ble Apex Court held that, "
Dishonor of cheque - Statutory presumption under - burden to prove - the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability - it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer - even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment, would attract presumption U/s. 139 of NI Act - the accused is 36 C.C.No.1805/2017 J held guilty of dishonour of cheque for an offence U/s.s.138 of NI Act. In such circumstances even if it is assumed that, the complainant admitted that, the contents of cheque in question were filled in by him in view of the principles of law laid down in the above decision that itself would not invalidates the cheque in question and it can be presumed that, the cheque was filled in by the complainant in presence of the Accused at his consent and the said cheque has been issued towards discharge of legally recoverable debt.
29. It is relevant here to mention that, the Accused in order to rebut the presumption available to the complainant U/s.118 and 139 of N.I. Act himself examined as DW.1, in his evidence has stated that, he knows the complainant since five years as he used to purchase flowers from his shop and has not borrowed any loan amount from him and has not issued cheque in question to him towards discharge of loan amount and no notice has been served on him. The Accused/DW.1 further stated that, prior to three months from the date of filing this complaint the complainant had collected 37 C.C.No.1805/2017 J his blank signed cheque by assuring him to secure a loan of Rs.1 lakh from the bank for improvement of his flower vending business but later he did not secure any loan to him and he asked the complainant for return of his cheque but complainant took quarrel with him, hence except the signature on the disputed cheque the rest of the contents are written by the complainant only.
30. On careful perusal of the defence of the Accused that, according to him the complainant had collected his blank signed cheque by assuring him to secure a loan of Rs.1 Lakh from the bank for improvement of his flower business but he did not secured loan through the complainant and asked for return of the cheque but he did not returned the same and took quarrel with him, in order to substantiate his defence the Accused except his oral and self serving statement has not produced any documentary evidence. Even the Accused has not stated on which date, month and year the complainant approached him and assured him to secure loan from the bank and on which date, month and year the complainant had collected his 38 C.C.No.1805/2017 J blank singed cheque, in such circumstances, in the absence of particulars of the handing over of the cheque in to the hands of the complainant , the oral evidence of the Accused appears to be bald defence and without there being any proof to it , hence the defence taken by the Accused appears to be denial in nature and to avoid liability to pay the cheque amount has taken such defence. If really the complainant has collected his blank singed cheque for securing loan from the bank and later he did not get the loan through the complainant and even the complainant did not return the alleged blank signed cheque collected by him, in such circumstances the Accused could have taken action against the complainant either by lodging the complaint before the police or competent authority or atleast issuing notice to the complainant for non return of his alleged blank signed cheque handed over to him but no such efforts have been made by the Accused even after his appearance in this case, therefore except the bare denial of the Accused is not sufficient to hold that, he has rebutted the presumptions available to the complainant U/s.118 and 139 of the N.I. Act. It is also relevant here to mention that, the 39 C.C.No.1805/2017 J conduct of the Accused in not taking the action against the complainant for alleged misuse of his blank signed cheque, an adverse inference can be drawn against him that, the Accused has not initiated any action against the complainant since the cheque in question has been issued by the Accused to the complainant towards discharge of the loan amount in question not for any other purpose i.e. as alleged by the Accused in his defence. In this regard it is relevant here to refer the decision of Hon'ble Apex Court of India reported in AIR 2018 SC 3601 in a case of T.P.Murugan(dead) Thr. Lrs.V. Bhojan Vs. Posa Nandi, rep. Thr. Lrs. PA holder, T.P. Murugan V. Bhojan, wherein the Hon'ble apex Court held that "Negotiable Instruments Act (26 of 1881) Ss.118, 138, 139 - Dishonour of cheque - Presumption as to enforceable debt- cheques allegedly issued by accused towards repayment of debt- Defence of accused that 10 cheques issued towards repayment of loan back in 1995 - behavior of accused in allegedly issuing 10 blank cheques back in 1995 and never asking their return for 7 years, unnatural - Accused admitting his 40 C.C.No.1805/2017 J signature on cheques and pronote, presumption under S.139 would operate against him - Complainant proving existence of legally enforceable debt and issuance of cheques towards discharge of such debt - Conviction, Proper". It is true that, the above principles of law pertains to the case of different set of facts but the preposition of law held by the Hon'ble Apex Court is aptly applicable to the case on hand since in the present case also the accused has not made any efforts to get return of cheque alleged to have been given to the complainant for securing loan to him from the bank, under such circumstances, the said unnatural conduct of the accused in non taking of action, an adverse inference can be drawn against the accused that, the cheque in question issued by the accused towards discharge of the liability and presumption U/s.139 of N.I.Act would operate against him, as he has admitted the signature and cheque in question is belongs to him.
31. In another decision reported in 2015 (4) KCCR 2881 (SC) in the case of T. Vasanthakumar Vs. Vijayakumari wherein the Hon'ble Apex court 41 C.C.No.1805/2017 J held that, " NEGOTIABLE ISNTRUCEMTNS Act, 1881- Section 138 and 139 - acquittal - If justified- Accused not disputing issuance of cheque and his signature on it - Plea that it was issued long back as security and that loan amount was repaid - Not supported by any evidence - Fact that date was printed, would not lend any evidence to case of accused- Acquittal not proper. Hence in the present case also it is the main defence of the Accused that the cheque in dispute alleged to have been issued towards security to the complainant and the complainant by misusing the said cheque has filed this complaint but the Accused has admitted the issuance of cheque and his signature on the said cheque and also taken defence that, the cheque was issued towards security but no documents or proof given by the Accused to prove his defence in such circumstances by applying the principles of law laid down in the above decision the defence of the Accused cannot be acceptable one. It is true that, the above principles of law pertains to the case of different set of facts but the preposition of law 42 C.C.No.1805/2017 J held by the Hon'ble Apex Court is aptly applicable to the case on hand, since in this case also the complainant proved the fact that he has lent an amount of Rs.3,00,000/= to the Accused and the accused in turn issued cheque for discharge of the said amount as per Ex.C.1. The accused has also failed to produce cogent and convincible evidence to rebut the statutory presumption in support of his defense in such circumstances the defense taken by the accused cannot be acceptable one.
32. It is also important to note here that, the Accused has not denied or disputed that the cheque in question as well as the signature therein do belong to him and though he has taken the specific defence that, the complainant had collected his blank signed cheque by assuring him to secure a loan of Rs.1 Lakh from the bank but later he did not secure the said loan and thereafter he asked for return of the said cheque but the complainant did not return the said cheque and took quarrel with him, but the Accused has not proved the said defence by producing cogent and convincible evidence , in such circumstances it can be held that, 43 C.C.No.1805/2017 J the Accused has failed to explain and prove how the cheque in question as come to the possession of the complainant, this would also give rise to an adverse inference against him. This preposition of law finds support from the decisions of Hon'ble High Court of Karnataka reported in 2010(1) KCCR 176 in the case of "Siddappa Vs. Manjappa" and in the decision of Hon'ble Apex court of India decided in Crl.A.No.664 of 2012 dated: 19.9.2019 in the case of "M.Abbas Haji Vs. T.M.Chennakeshava"
held that, " the Accused has to explain how the cheque entered into the hands of complainant".
Therefore for the above said reasons the defense taken by the accused cannot be acceptable one and accused has miserably failed to rebut the presumption available in favour of the complainant by producing cogent and convincible evidence.
33. Therefore for the above said reasons arguments canvassed by the learned counsel for the Accused in the written argument cannot be acceptable and are not sustainable and also in view of the discussions made and findings given by the court while appreciating the oral and documentary 44 C.C.No.1805/2017 J evidence of the complainant and Accused and the Accused has miserably failed to rebut the presumption available to the complainant as U/s.118a and 139 of N.I. Act.
34. Therefore considering all these aspects of the case and totality of the circumstances and on careful and meticulous appreciation of evidence adduced on behalf of the complainant and accused the complainant has successfully established beyond all reasonable doubt that, he has lent a sum of Rs.3,00,000/= to the accused as a hand loan and the accused in turn has issued cheque in question i.e. Ex.C.1 to the complainant towards repayment of the hand loan, thereafter the complainant has presented the said cheque through his banker and same was returned dishonoured with an endorsement of "Funds Insufficient" and thereafter he got issued legal notice to the accused and the said notice was returned with an endorsement of "Not claimed and Retd to sender, D.L. and I.D" i.e. intimation given by the postal authorities regarding legal notice caused by the complainant and inspite of it, the Accused did not repaid loan amount 45 C.C.No.1805/2017 J borrowed by him, hence the complainant filed the present complaint against the accused. On the other hand, the accused has failed to rebut the presumption available infavour of the complainant with regard to the existence of legally recoverable debt under Ex.C.1 Cheque. Therefore accused has committed an offence punishable U/s.138 of N.I. Act, accordingly for the above said reasons this point is answered in the Affirmative.
35. Point No.2: Negotiable Instrument Act was enacted to bring credibility to the cheque and the very purpose of enactment is to promote the use of negotiable instrument, while to discourage the issuance of cheque without having sufficient funds in their accounts. Such being the case the intention of the legislature is that, complainant be suitable compensated while accused be punished for his act. Hence while awarding the compensation the said fact is to be kept in mind and suitable compensation is awarded to the complainant certainly it will not cause injustice to the accused, accordingly the complainant is entitled for the compensation as ordered by the court and for the said reasons, it is 46 C.C.No.1805/2017 J just and proper to pass the following :-
ORDER Acting U/sec.255(2) of Cr.P.C. the accused is convicted for the offence punishable U/sec.138 of N.I.Act.
The accused is sentenced to pay a fine of Rs.3,15,000/= (Rupees Three Lakhs and Fifteen Thousand only) within one month from the date of order, in default he shall under go simple imprisonment for a period of (3) three months for the offence punishable U/sec.138 of N.I.Act.
Further acting U/sec.357(1) of Cr.P.C. out of the fine amount on recovery, a sum of Rs.3,10,000/= (Rupees Three Lakhs and Ten Thousand only) shall be paid as compensation to the complainant.
Further acting U/sec.357(1)(a) of Cr.P.C. out of fine amount on recovery a sum of Rs.5,000/= (Rupees Five Thousand only) shall be defrayed as prosecution expenses to the state.
The Bail bond of the Accused stands cancelled.47 C.C.No.1805/2017 J
Office is directed to furnish free certified copy of this judgment to the Accused incompliance of Sec.363(1) of Cr.P.C.
(Directly dictated to the stenographer online, printout taken by her, verified, corrected and then pronounced by me in the open Court on this the 8th day of January 2020).
(SRI.S.B. HANDRAL), XVI ACMM, Bengaluru City.
ANNEXURE
1. List of witness/s examined on behalf of the Complainant:-
P.W.1 : Sri.Mohan Kumar.T.H;
2. List of documents exhibited on behalf of the Complainant:-
Ex.C-1 : Original Cheque; Ex.C-1(a) : Signature of the Accused; Ex.C-2 : Bank Memo; Ex.C-3 : Office copy of the Legal Notice; Ex.C-4 : Postal Receipt; Ex.C-5 : Returned Notice; Ex.C-6 : RPAD Cover; Ex.C-7 : Postal receipt.
3. List of witness/s examined on behalf of the Accused:-
DW.1 : Sri. Muni Raju 48 C.C.No.1805/2017 J
4. List of documents exhibited on behalf of the Accused:-
-Nil-
(SRI.S.B.HANDRAL), XVI ACMM, Bengaluru City.49 C.C.No.1805/2017 J
8.1.2020 Judgment pronounced in the open court vide separate order.
ORDER Acting U/sec.255(2) of Cr.P.C.
the accused is convicted for the offence punishable U/sec.138 of N.I.Act.
The accused is sentenced to pay a fine of Rs.3,15,000/= (Rupees Three Lakhs and Fifteen Thousand only) within one month from the date of order, in default he shall under go simple imprisonment for a period of (3) three months for the offence punishable U/sec.138 of N.I.Act.
Further acting U/sec.357(1) of Cr.P.C. out of the fine amount on recovery, a sum of Rs.3,10,000/= (Rupees Three Lakhs and Ten Thousand only) shall be paid as compensation to the complainant.
Further acting U/sec.357(1)(a) of Cr.P.C. out of fine amount on recovery a sum of Rs.5,000/= (Rupees Five Thousand only) shall be defrayed as prosecution expenses to the state.
The Bail bond of the Accused stands cancelled.
Office is directed to furnish free 50 C.C.No.1805/2017 J certified copy of this judgment to the Accused incompliance of Sec.363(1) of Cr.P.C.
XVI ACMM, B'luru.