Bangalore District Court
Mithun.P.Kasal vs Sri.K.Pavan Reddy on 16 April, 2021
IN THE COURT OF XX ADDL.CHIEF METROPOLITAN
MAGISTRATE AT BENGALURU CITY
Dated this the 16th day of April 2021
PRESENT: KALPANA.M.S.,
B.Sc., LL.M.,
XX ADDL. C.M.M.
Bengaluru.
C.C.No.18394/2017
Complainant : Mithun.P.Kasal,
S/o K.G.Prabhakar,
Aged about 37 yeras,
R/at No.14, MEI Colony,
10th Main, Laggere Post,
Peenya Industrial Area,
Bengaluru- 560 058.
{ By Sri.C.R.V. Law Associates - Advocates}
Vs.
Accused : Sri.K.Pavan Reddy,
Aged about 42 years,
R/at No.46, Link Road,
Saptagiri Arcade,
Chenenahalli, Doddajala,
Bettadaulsoor,
Bengaluru.
Office at
ASR Developers,
No.23, 7th Cross,
2 C.C.18394/2017
5th Main, Krishnappa Block,
Ganganagar, Bengaluru- 560 032.
{ By Sri. R.Nataraj- Advocate}
Offence complained : U/S. 138 of N.I. Act.,
Plea of accused : Pleaded not guilty
Final Order : Accused is acquitted
Date of Order : 16-04-2021
JUDGMENT
The complainant has filed this complaint under section 200 of code of criminal procedure read with section 142 of the Negotiable Instruments Act ( in short referred as "N.I. Act") against the accused alleging that, he has committed the offence.
3 C.C.18394/2017
02. The sum and substance of the complaint, is as follows;
The accused is the friend of complainant and well known to him from 2014. He has doing real-estate business by name "ASR Developers". The complainant had running 'Shree Rajarajeshwari Engineering Enterprises' at Peenya, Bengaluru. The accused and his friend by Name N.Venkatasubbaraju have jointly made layout, situated at Bagalur Village, Hosakote Taluk, Bengaluru Rural District. In the month of February 2015, the accused had approached the complainant and requested for financial help to develop layout and asked loan amount of Rs.50,00,000/-. At that time, complainant shown interest to purchase five sites from the said layout. The accused has agreed to sell the sites through sale deeds at the rate of Rs.14,40,000/- per site. Thereafter, the complainant has paid an advance amount of Rs.20,00,000/- to the accused as on 02.03.2015. The accused has agreed to execute the sale deeds immediately after completion of the layout. After 4 C.C.18394/2017 completion of the layout, the complainant has approached the accused personally and through phone call, but accused intentionally not came forward to execute the sale deeds in favour of the complainant. After consistent demands, towards return of the advance amount, accused has issued four cheques dated 03.05.2017, 25.05.2017, 05.06.2017 and 12.06.2017, for an amount of Rs.5,00,000/- each. The complainant has presented the cheque bearing No.809691 dated 03.05.2017 for Rs.5,00,000/- drawn on Andhra bank, Vidyanagar Branch, Bengaluru, through his banker i.e., Kotak Mahindra bank Ltd., Peenya branch, Bengaluru and the said cheque returned with an endorsement "Account Blocked (Situation covered in 21025)", dated 05.05.2017. Thereafter, complainant got issued legal notice on 29.05.2017 to accused. The said notice was returned with shara ' Left ' and ' Refused'. Accused neither complied nor replied to the notice. It is contended that, accused intentionally not maintained sufficient amount in his bank account to 5 C.C.18394/2017 honour the cheque issued in favour of the complainant towards discharge of legally enforceable debt. On these allegations, present complaint is filed.
03. After presentation of the complaint, this court perused the documents and taken cognizance for the offence under section 138 of Negotiable Instrument Act, sworn statement of complainant was recorded. Being satisfied that there are prima-facie materials to proceed against accused, summons was issued. After appearance, accused enlarged on bail and plea was recorded as per section 251 of Cr.P.C. Accused has not stated the defense.
04. Learned Counsel for complainant prays to treat sworn statement as examination-in-chief and to consider the documents marked as Ex.P.1 to 7. In support of his case, complainant examined his relative one B.V.Balaji as PW.2. The statement under section 313 of code of criminal procedure is recorded, read over and explained to the 6 C.C.18394/2017 accused. Accused denied the incriminating circumstances. Further, accused and one N.Venkatasubbaraju were examined as DW.1 & DW.2 and relied on documents from Ex.D.1 to 5, out of which, Ex.D.1 & 2- documents were marked through confrontation in the cross examination of PW.2.
05. In this case, the evidence on record shows that summons trial procedure was adopted instead of summary trial. As per the judgment passed by Hon'ble Supreme Court reported in 2014 Cr.L.J. 1953, in a case of Mehsana Nagarik Sahakari Bank Limited V/s. Shreeji CAB Company Limited and others, conducting Denova trial does not arises.
06. Complainant relied on the following judgments;
1.Moideen Vs. Johny - LAWS (KER) 2006 5 2 KLT- 2006(3)- SN 62- Kerala High Court.
2. Bhaskaran Nair Vs. Abdul Karin- LAWS (KER) 2006 7 10 KLT-2006(4) KLT48- KERALA HIGH COURT 7 C.C.18394/2017
3. Lilly Kutty Vs. Lawrence - KERALA HIGH COURT LAWS (KER) 2006 8 48 KLT- 2003(30- KLT 721
4. M/S AMALOKTEXTILES BANGALORE VS.
UPAHAR FASHIONS, 2009(1)KCCR249 KARNATAKA HIGH COURT 5. LALE PATEL Vs. SHARANABASAPPA
2015(1) KCCR235 KARNATAKA HIGH COURT
6. T.VASNATH KUMAR VS. VIJAYAKUMARI 2015(4) KCCR2881 (SC) SUPREME COURT OF INDIA.
7. P.VENYGOPAL VS. MADAN P SARATHI (2009) 1 SUPREME COURT CASES 4003
8. A.K.CHOUDARY & ORS VS. NANDITA MALHOTRA 2007(4) CRIMINAL CASES (593) DELHI
9. UTTAM RAM Vs. DEVINDER SINGH HUDAN DTS 17/10/2019 CRML APP NO 1545 OF 2019 SUPREME COURT
10. JUDGMENT PASSED BY THE 12TH ACMM, BENGALURU IN C.C.NO.20087/2016, (S.M.LOKESH VS. RADHAMMA)
11. (2009)6 SUPREME COURT CASES 652 (VIJAYAN Vs. SADANANDAN K. AND ANOTHER)
12. JUDGMENT PASSED BY THE 25TH ADDL.JUDGE COURT OF SMALL CAUSES, BENGALURU IN C.C.26352/2012 8 C.C.18394/2017 (TOMMYHILFIGER ARVIND Vs. M/S. PRIMUS RETAIL PRIVATE LIMITED AND OTHERS.
13. 13TH ACMM, C.C. No. 22536/2017, Sri. Mithun K.Kasal Vs. Sri.K.Pavan Reddy.
07. Accused relied on the following judgments;
1.(2015)1 SCC 99, K.Subramani Vs. K.Damodar Naidu
2. 2014 AIR SCW 215, John K.Abraham Vs. Simon C.Abraham and another.
3. AIR 2019 SC 1983, Basalingappa Vs. Mudibasappa.
4. IV(2016) BC 423(P & H), Amit Kumar Vs. Yogesh Arora
5. 2010 (3) KCCR 1950, Amzad Pasha Vs. H.N.Lakshman
6. 2012(2) DCR 4, Bharatkumar Keshavlal Shah Vs. State of Gujarat
7. CC.52062/2013 M/s. M.M.Enterprises Vs. Sri. N.M.Murthy
08. Heard the Learned Counsel for complainant and accused. Perused the written arguments filed on behalf of the complainant, citations and materials on record. 9 C.C.18394/2017
09. The points that arise for my consideration are as follows;
POINTS
1. Whether the complainant proves that, accused issued a cheque bearing No.809691 dated 03.05.2017 for Rs.5,00,000/-
towards discharge of his liability, which was returned unpaid on presentation and also not complied the notice issued by the complainant and thereby committed an offence punishable under section 138 of Negotiable Instruments Act?
2. What Order?
10. My answer to the above points is as follows;
1. Point No.1: In the negative
2. Point No.2: As per final order for the following;
REASONS
11. POINT No.1: Complainant has filed this complaint alleging that accused has committed offence under section 138 of N.I. Act. He pleads and asserts that, towards 10 C.C.18394/2017 discharge of his liability, accused has issued a cheque bearing No.809691 dated 03.05.2017 for Rs.5,00,000/-. The said cheque came to be dishonoured on presentation. Complainant has issued notice within time stipulated calling upon the accused to pay the amount covered under cheque. In spite of service of notice, accused has not paid the amount within 15 days, which gave raise cause of action to file this complaint. He further relied on the documents from Ex.P.1 to 7. Complainant and eyewitness were examined as PW.1 & PW.2 and subjected to cross examination.
12. In this scenario, let us scrutinize the documents relied by complainant in order to examine the compliance of statutory requirements envisaged under section 138 of N.I. Act. Ex.P.1 is cheque dated 03.05.2017, Ex.P.1(a) is the signature of the accused, the said cheque returned with an endorsement "Account Blocked (Situation Covered in 21-
25)", Ex.P.2 is bank endorsement dated 05.05.2017, Ex.P.3 11 C.C.18394/2017 is legal notice dated 29.05.2017, which was returned with shara are " one is left and another one is refused" , Ex.P.4 & 5 are the postal receipts and Ex.P.6 & 7 are the returned Postal covers. This complaint came to be filed on 07.07.2017. Based on these documents, complainant relied on the statutory presumptions enshrined under section 118 read with section 139 of N.I. Act.
13. No doubt, the said presumptions of law are rebuttable in nature. The accused can take probable defense and rebut the presumption available to the complainant. Let us examine whether accused has successfully rebutted the presumptions of law. The accused denied the impugned transaction and also denied service of legal notice. He contends that, complainant is stranger and there was no such money or site transaction between them. One Venkatasubba Raju is the proprietor of ASR Developers. Accused is not holding any post in the said ASR Developers. He never assured complainant to sell the site 12 C.C.18394/2017 property and also not taken Rs.25,00,000/- from him. It is the specific contention of the accused that, he has issued disputed cheque in favour of one Balaji of Hosakote on 19.11.2016 at Sub- Registrar office. In this connection, there is written memorandum of understanding. Site transaction was taken place between Venkatasubba Raju , Balaji and accused . The documents executed at the time of issuance of the cheque was signed by accused , Balaji and Venkatasubba Raju. Complainant has not participated in the site transaction either directly or in-directly. Since, sale transaction was not completed, accused blocked the account pertaining to the disputed cheque. Accused also contends that, he was not residing in both the addresses mentioned in the complaint and legal notice. Complainant has misused the cheque to file this false complaint. To endorse this defense, accused examined himself as DW.1 and placed the testimony of Venkatasubba Raju, who was examined as DW.2 and relied the documents from Ex.D. 1 to 5. Ex.D.1 is the copy of the agreement of sale, Ex.D.2 is 13 C.C.18394/2017 the understanding agreement dated 19.11.2016, Ex.D.3 is the Andhra bank pass book of the accused, Ex.D.4 is the notarized copy of Voter ID card card of the accused and Ex.D.5 is the Registration Certificate of Establishment, Form -C.
14. Relying on the materials on record, Learned counsel for the complainant vehemently argued that, accused has assured sale of sites in favour of the complainant and received advance amount of Rs.20,00,000/-. But, he failed to execute registered sale deed in respect of the site property and hence returned the advance amount through disputed and other cheques. In order to cheat the complainant, he intentionally not honoured the cheque. The act of the accused attracts penal liability under section 138 of NI Act. It is also argued that, accused has relied on the concocted document as per Ex.D.1 & 2 to show the sale agreement between Balaji and Venkatasubba Raju wherein it is shown that, accused has issued disputed cheque as 14 C.C.18394/2017 security. Ex.D.1 & 2 are concocted documents to avoid penal liability. Complainant has good case on merits. Similar case filed before XIII ACMM, is ended up in conviction. Accused is habitual offender. Hence, complainant is entitled for compensation to the extent of double the cheque amount.
15. On the other hand, Learned counsel for the accused heavily relied on the Ex.D.1- registered agreement of sale dated 07.11.2016 entered between Venkatasubba Raju, who is examined as DW.2 and one Balaji, who has been examined as PW.2 before this court and Ex.D.2- understanding agreement executed between aforesaid Balaji and Venkatasubba Raju on 19.11.2016 signed by both of them along with the accused, wherein it is stated that, accused herein has issued disputed cheque for an amount of Rs.5,00,000/- in favour of the the Balaji as surety. Relying on these documents, it is vehemently argued that, the recitals of the aforesaid documents clearly 15 C.C.18394/2017 discloses that, site transaction taken place between DW.2 and PW.2, wherein accused has issued disputed cheque in favour of PW.2 as surety. Complainant is not at all involved in the said transaction. PW.2 misused the cheque and filed this complaint against the accused through the complainant, who is none other than his close relative. It is also argued that, immediately after non completion of the sale transaction, accused blocked the account related to the disputed cheque. No such sale transaction taken place between the complainant and the accused and hence the question of complainant paying advance amount of Rs.20,00,000/- in favour of the accused, does not arise. Complainant foisted false case against the accused for unlawful gain, which deserves dismissal.
16. In the light of rival submissions, I have given anxious consideration to the case papers. It is forth coming that, complainant asserts the payment of advance amount of Rs.20,00,000/- to the accused towards purchase of sites. 16 C.C.18394/2017 Whereas, accused denied site transaction with the complainant by asserting that, he is not holding any position in ASR developers and one Venkatasubba Raju running any such business. Infact, the agreement of sale of site property entered between Venkatasubba Raju and PW.2 as per registered agreement of sale, marked as Ex.D.1. In the said transaction, accused issued cheque in favour of B.V.Balaji on behalf of Venkatasubba Raju, as recited in Ex.D.2 document.
17. It is worth to note that, in the memorandum of written argument, Learned counsel appearing for the complainant submitted that, Ex.D.2 is a concocted document, after obtaining the signature of PW.2 on blank stamp paper. This line or argument appears to be strange, because PW.2 clearly stated in his evidence as under;
" ನನನ ಮತತತ ವವಕಟ ಸತಬಬರಜತ ನಡತವ ಆಗರತವ ಕ ಕಯದ ಕರರತ ಪತ ಕದ ಸವಪರರ ಮಹತ ಇದ. ನಡ.2-ದಖಲಗ ನನತ ಸಹ ಮಡದನ. ಸಕ ಸಹಯನತ ನ ನಡ.2(ಎ) ಎವದತ ಗತರತತಸಲಯತತ. ನಡ.2- ದಖಲಯಲ ಬರದರತವ ಅವಶಗಳ ಬಗಗ ತಳತವಳಕ ಇದ."17 C.C.18394/2017
From this part of evidence of PW.2- B.V. Balaji, it is crystal clear that, said witness has affixed his signature to the Ex.D.2 document and fully aware of the contents of the said understanding agreement. In otherwords, PW.2 un- equivocally admits the contents of the Ex.D.2 document, wherein it is recited that, the cheque in question along with the other cheque was issued by the accused in favour of the said B.V.Balaji for surety towards the sale transaction between Venkatasubbaraju and B.V.Balaji. Therefore, this line of argument put forth by the complainant that, Ex.D.2 is a concocted document, is not acceptable, as it lacks merits.
18. Further, Ex.D.1- registered agreement of sale and Ex.D.2- understanding agreement executed by B.V.Balaji- PW.2, DW.2-Venkatasubba Raju and accused un- equivocally establishes that, there was sale transaction between PW.2 & DW.2, in which cheque in question was issued by the accused as security. Complainant neither 18 C.C.18394/2017 elicited material information contrary to Ex.D.1& Ex.D.2 nor produced counter documents. Thus, it goes without saying that, cheque in question was never issued by the accused in favour of the complainant. This aspect is further fortified by the evidence of DW.2, which reads as under;
" ಆರರರಪಯ ಪರಚಯವದ. ಹರಸಕರರಟ ಉಪನರವದಣಧಕರಗಳ ಕಚರರಯಲ ಒಬ ಬಲಜ ಪರವಗಬ ಕ ಕಯದ ಕರರತ ಪತ ಕ ಬರದತಕರಟಟದನ . ಸದರ ಬಲಜ ಈಗ ನನಯಲಯದ ಮತವದ ಇದರ. ದ.19.11.2016 ರವದತ ಸಸಟ ನವ.167 ಮತತತ 217 ಸಸತತತಗಳನತ ನ ಕ ಕಯದ ಕರರತ ಬಟದತಕರಟಟ ಸನವರರದಲ ನನತ, ಬಲಜ, ಆರರರಪ ಮತತತ ಗರರಪಲಕಕಷಷ ಇದವ. ರರ.33.60 ಲಕ ಮತತಕಕ ಕ ಕಯದ ಮತತಕತಯಗದತ ದ , ಮತವಗಡ ರರ.20 ಲಕ ಹರ ಪವತಸದರ. ಆ ಸವದರರದಲ ಬಲಜಯವರತ ಈ ಪ ಪಕರರದ ಆರರರಪಯದ ಪವನರಡಡಯವದ 4 ಚಕತ ಕ ಗಳನತ ನ ರದಪತಗಗ ಪಡದದರ. ಆ ಸವದರರದಲ ಒವದತ ಅವಡರ ಸಸವಡವಗ ಅಗಗರಮವಟ ಬರಯಲಗದ. ಸದರ ದಖಲತಯನತ ನ ಗತತರಸಬಲ. ಸದರ ದಖಲತ ನಡ.2 ರಲದ."
From this part of evidence of DW.2, it is crystal clear that, cheque in question was issued in favour of the of B.V.Balaji in-connection with the agreement of sale transaction as per Ex.D.1. Complainant is not successful in eliciting material admissions from DW.2 to disbelieve his testimony. The evidence of DW.2 clearly corroborates the 19 C.C.18394/2017 defense of the accused, which is supported with material documents i.e., Ex.D.1 & Ex.D.2. There is noting on record to disbelieve the agreement between B.V.Balaji and Venkatasubba Raju as per the registered agreement of sale exhibited as Ex.D.1 and understanding agreement as per Ex.D.2. Infact, the witness of the complainant, PW.2- B.V.Balaji has admitted the execution of understanding agreement as per Ex.D.2, which clearly establishes issuance of the disputed cheque in favour of the said B.V.Balaji. Thus, it is un- disputedly clear that, complainant is not holder of the cheque as per section 8 of NI Act. At the same time, it is not the case of the complainant that, he is authorized by the holder to present the cheque in question i.e., complainant is not holder in due course. Section 138 of NI Act, postulates that, holder or holder in due course of the cheque is entitled to launch prosecution i.e., file private complaint of this nature. On this count itself, this complaint is not maintainable at threshold. 20 C.C.18394/2017
19. That apart, it is pertinent to note that, on presentation, disputed cheque was returned unpaid for the reason " Account Blocked (Situation covered in 21-25)". As per Ex.P.2-bank return memo. Whether this bank endorsement attracts penal liability under section 138 of NI Act, is a question of consideration of this court. In the memorandum of written arguments, it is submitted on behalf of the complainant that, accused intentionally blocked the account to cheat the complainant. Hence, penal liability is attachable to the accused. It is further submitted in the written arguments at para No.25 that;
" In this case the cheque is bounced due to reason of Account blocked as mentioned bank cheque return memo. (by operation of law) This is reason code no.55 in Complete list of reasons for which a cheque can be returned unpaid by a bank - REASON FOR RETURN OF CHEQUES so the code no-55 says " Account blocked (situation aocer in 21-25)", as per standard format of chq return memo. 21-25 means the reason codes no.21-25, which are:21 C.C.18394/2017
21. Payment stopped by attachment order
22. Payment stopped by court order
23. Withdrawal stopped owing to death of account holder
24. Withdrawal stopped owing to lunacy of account holder
25. Withdrawal stopped owing to insolvency of account holder.
By this arguments putforth on behalf of the complainant, it is evident that, the account to which disputed cheque belongs was not blocked by the voluntary act of the accused. To put it other way, account was not blocked at the instance of the accused. The accused is not responsible for the blocking of his account by the bank for any other reasons. No doubt, accused stated that, to avoid misuse of cheque, he blocked his bank account. However, what merits the consideration is, this defense of the accused come to consideration only after proof of compliance of ingredients of section 138 of NI Act, by the 22 C.C.18394/2017 complainant. Moreover, complainant himself admits that, banker of the accused has blocked the account without any instructions or knowledge of the accused. Moreover, cheque return memo has got presumptive value under section 146 of NI Act, that reason mentioned in the said slip is presumed to be correct, until and unless such fact is disproved. Complainant has not taken steps to disprove the reason mentioned in the banker slip by way of positive suggestion to the accused that, as on the date of the presentation of cheque, there was insufficient fund in the bank account of the accused. For the reasons best known to him, no positive suggestions was posed to the accused on behalf of the complainant to that effect. It is settled point of law that, the burden is always on the complainant to prove that, bank endorsement meant that, there was insufficient fund in the account in which the cheque was drawn, as laid down in, Goa Plast Vs. Chico Ursula; (2003) 3 SCC 232. The complainant has not discharged the burden either by way suggestions to the accused or by summoning the bank 23 C.C.18394/2017 statement of the accused or by placing the testimony of the banker of the accused. Thus, the complaint fails on the technical ground of non compliance of ingredients of section 138 of NI Act.
20. Nevertheless, it is the specific case of the complainant that, he has paid an advance amount of Rs.20,00,000/- to the accused for purchase of sites formed in the layout made by ASR developers. He asserts that, no agreement was executed in respect of the said transaction. However, accused has passed a receipt towards receival of the said advance amount. For better appreciation, the relevant portion of the cross examination of the complainant, reads as under;
" ಸಸತತನ ಖರರದ ವನವಹರದಲ ಮತವಗಡ ಹರ ಪವತಸತವಗ ಕರರತ ಬರಯತತತರ ಎವದರ ಸರ. ನವ ಕ ಕಯದ ಕರರತ ಮಡಕರವಡಲಲ, ಸಕ ಮತವದತವರದತ ರಶರದ ಕರಟಟದರವದತ ನತಡಯತತತರ. ಸದರ ರಶರದಯನತ ನ ನನಯಲಯಕಕ ಹಜರತಪಡಸಲಲ."
From this part of evidence, it is clear that, complainant has not produced material document to show 24 C.C.18394/2017 the receipt of advance amount by the accused. Intentional withhelding of the material document, leads to the draw adverse inference against the complainant.
21. Furthermore, complainant asserts that, the impugned transaction taken place in the month of March 2015. Whereas, PW.2 - the witness of the complainant states that, impugned transaction taken place in his presence in the year 2017- 2018. For better appreciation, the relevant portion of the evidence of the PW.2, is culled as under;
" ನನನ ಸಮಕಮದಲ ದರರತದರರತ ಮತತತ ಆರರರಪಯ ನಡತವ ವನವಹರವಗದ. 2017-2018 ರಲ ಬವಗಳರರನಲ ವನವಹರವಗದ. "
This part of evidence of PW.2 shows that, there is inconsistency in the evidence of PW.1 & PW.2 regarding the year of transaction, which is not satisfactorily explained. This is one another aspect throwing shadow on the case of the complainant.
25 C.C.18394/2017
22. Further, Learned Counsel appearing for the complainant placed the judgment in CC.26352/2012 passed by XV Addl.Judge and 23rd ACMM, Bengaluru and judgment in CC.22536/2017 passed by XIII ACMM, Bengaluru, for reference in this case. It is suffice to say that, these judgments have no binding effect on this court.
23. Above all, accused has disputed the financial capacity of the complainant to pay Rs.20,00,000/- amount to any person much less the accused at given point of time. It is forthcoming from the cross examination of the PW.1 that, complainant has mobilized the funds by withdrawing the amount from the bank in addition to the cash amount available with him. Complainant has no impediment to produce bank statement. But, for the reasons best known to him, complainant has not produced bank statement or any other evidence to show the availability of funds on the date of impugned transaction. When the accused disputes the financial capacity, the initial burden of proving the 26 C.C.18394/2017 availability of funds heavily lies upon the complainant. In case of successful discharge of initial burden by the complainant, the question of placing burden of rebuttal on the accused arises.
24. In this context, it is profitable to refer the following decisions. The Hon'ble Superior Courts have pleased to held in plethora of decisions that, initial burden is on the complainant to show the availability of funds. In the decision reported in, (2014) 2 SCC 2376, between John K.Abraham Vs. Simon C.Abraham and another, it is held at para - 9 that, " It has to be stated that in order to draw presumption under section 118 read with section 139 of the Negotiable Instrument Act, the burden was heavily upon the complainant to have shown that he had the required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true; and that the accused was bound to made the payment as had been agreed while issuing the cheque in favour of the complainant".
27 C.C.18394/2017In another decision reported in, (2015) 1 Supreme Court Cases 99, between K.Subramani Vs. K.Damodara Naidu, wherein it is held that;
"Dishonour of cheque - Legally recoverable debt not proved as complaint could not prove source of income from which alleged loan was made to appellant- accused -
Presumption in favour of holder of cheque, hence, held, stood rebutted- Acquittal restored ".
In the decision reported in, ILR 2008 KAR 4629, in a case of Shiva Murthy Vs. Amruthraj, the Hon'ble High Court of Karnataka, it is held that;
"Before considering the conduct of accused to find out as to whether or not he has been able to rebut the presumption available under section 139, the court ought to have considered as to whether the complainant has proved the existence of legally enforceable debt. It is only after satisfying that the complainant has proved existence of legally enforceable debt or liability, the courts could have proceeded to draw presumption under section 139 of the NI Act and thereafter find out as to whether or not the accused has rebutted the said presumptions."28 C.C.18394/2017
In the decision reported in, AIR 2008 SC 278, between John K John Vs. Tom Verghees and another, it is held that, "The presumption under section 139 could be raised in respect of some consideration and burden is on the complainant to show that he had paid amount shown in cheque. Whenever there is huge amount shown in the cheque, though the initial burden is on the accused, it is equally necessary to know how the complainant advanced such a huge amount".
In the latest decision of Hon'ble Supreme Court reported in, AIR 2019 Supreme Court 1983, Basalingappa Vs. Mudibasappa, decided on 09.04.2019, it is held that;
" (A) Negotiable Instruments Act (26 of 1881), S.138, S.139, S.118(a)- Dishonour of cheque- Non mentioning of date of issuance of cheque by the complainant in complaint as well as in his evidence- Complainant not satisfactorily explaining contradiction in complaint vis-a-vis his examination-in-chief and cross-examination - His failure to prove financial capacity though he is a retired employee to advance substantial amount to different persons including accused-
Findings of Trial Court that complainant cannot prove his financial capacity, cannot 29 C.C.18394/2017 be termed as perverse with out discarding evidence laid by defence- Accused entitled to acquittal."
The proposition of law laid down in the above decisions is aptly applicable to the case on hand.
25. It is settled point of law that, the burden on the accused is not heavy and law permits him to rebut the presumptions by adopting the standard of proof through preponderance of probabilities. In this context, it is profitable to refer the decision of larger bench of the Hon'ble Apex Court reported in Rangappa Vs. Mohan reported in AIR 2010 SC 1898, Wherein their lordships pleased to observe that, "Keeping this in view, it is settled position that when an accused has to rebut the presumption.
under section 139, the standard of proof for doing so is that '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 30 C.C.18394/2017 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."
Further, in the decision reported in, (2006) 3 Supreme Court Cases (Cri) 30, in a case of M.S.Narayana Menon @ Mani Vs. State of Kerala and another, it is held that;
"Whether the initial burden has been discharged by accused is a question of fact- Burden of proof on accused is not heavy- He need not disprove the prosecution case in its entirety- He can discharge his burden on the basis of preponderance of probabilities through direct evidence or on the materials relied by the complainant".
In the light of he proposition of law laid down in the aforesaid decisions of Hon'ble Supreme Court of India, this court has no hesitation to hold that, in case of complainant discharging the initial burden by establishing financial capacity and availability of funds, then only the question of raising presumptions in favour of the complainant and 31 C.C.18394/2017 thus calling upon the accused to rebut the presumptions arises.
26. Admittedly, complainant has not disclosed the impugned transaction in his income tax returns. Further, as per the provisions of Income Tax Act and guidelines of RBI, no cash transaction more than Rs.20,000/- is permissible. Non production of the income tax returns of the complainant, is one more circumstances raises doubt in the mind of the court.
27. In this context, it is profitable to refer the decision of the Hon'ble High Court of Karnataka, Criminal Appeal No.1147 of 2016, dated 17th February 2018, Abhay Kumar Jain Vs. Pankaj R Makkanna, it is held that; 32 C.C.18394/2017
" 8. The cash in the hands of the appellant is admittedly unaccounted. When the cash is unaccounted, it would mean non-compliance of the requirements of law. Therefore, the appellant cannot except to seek protection of the law in order to recover unaccounted amounts. The appellant cannot be permitted to violate the law as and when he chooses and consequently seek protection of the law for such violations."
In another decision reported of the Hon'ble High Court of Bombay, in 2009 CRI.L.J.3777, Sanjay Mishra Vs. Kanishka Kapoor @ Nikki and Anr, it is held that;
" (A) Negotiable Instruments Act (26 of 1881), S.138, S.139 - Dishonour of cheque-
Presumption as to legally enforceable debt- Rebuttal of - Amount advanced by complainant to accused was large amount not repayable within few months- Failure by complainant to disclose the amount in his Income Tax Return of Books of Accounts - Sufficient to rebut presumption u/S.139."
" (B) Negotiable Instruments Act (26 of 1881), S.138, S.139- Dishonour of cheque-
Presumption as to issuance of cheque in discharge of legally enforceable debt-
Amount advanced by complainant to accused was unaccounted cash amount- It was not disclosed in Income Tax Return- Liability to repay unaccounted cash 33 C.C.18394/2017 amount cannot be said to be legally enforceable liability within meaning of explanation to S.138 Acquittal of accused proper. "
From the ratio laid down in the cited decisions, it is crystal clear that, the un- accounted cash amount cannot be considered as legally enforceable debt. This is one another circumstance goes against the case put forth by the complainant.
28. This court has carefully read the decisions relied by the complainant. In view of discussions in the forging paras, the decisions are not helpful to the case of the complainant.
29. From the overall consideration of the evidence on record, it is clear that, accused has taken probable defense of issuance of cheque in question in favour of third party i.e., PW.2, on behalf of DW.2 for security. So also, accused disputed the financial capacity of the complainant and thereby rebutted the presumptions of law. The standard of proof required for the accused is preponderance of 34 C.C.18394/2017 probabilities. Whereas, complainant has to prove the guilt of the accused beyond all reasonable doubt. Therefore, the onus shifts on the complainant to prove that, the disputed cheque was issued by the accused towards discharge of legally recoverable debt. No concrete and cogent evidence is placed to establish the same. Hence, this court opined that, complainant has not proved the guilt of the accused punishable under section 138 of NI Act. Consequently, this point No.1 is answered in the negative.
30. POINT NO.2: In view of the reasons stated and discussed above, the complainant has not proved the guilt of the accused punishable under section 138 of N.I. Act. Hence, this court proceed to pass the following;
O R DE R Acting under Section 255(1) of code of criminal procedure, the accused is acquitted for the offence punishable under Section 138 of Negotiable Instruments Act. 35 C.C.18394/2017
The bail bond and surety bond of accused stand canceled.
{Dictated to the stenographer, transcribed and computerized by her, revised corrected and then pronounced in the open court on this 16 th day of April 2021}.
(KALPANA.M.S.) XX ACMM, Bengaluru.
ANNEXURE List of witnesses examined on behalf of complainant:
P.W.1 Mithun P.Kasal PW.2 B.V.Balaji
List of documents produced on behalf of complainant:
Ex.P.1 Cheque
Ex.P. 1(a) Signature of the accused
Ex.P. 2 Bank endorsement
Ex.P. 3 Copy of the legal notice
36 C.C.18394/2017
Ex.P. 4 & 5 Postal receipts
Ex.P. 6 & 7 Returned postal covers
List of witnesses examined on behalf of accused:
D.W.1 K.Pavan Reddy DW.2 N.Venkatasubbaraju
List of documents produced on behalf of accused:
Ex.D.1 Copy of the agreement of sale.
Ex.D.2 Understanding agreement dated 19.11.2016.
Ex.D.3 Andhra bank pass book of the
accused.
Ex.D.4 Notarized copy of Voter ID card
card of the accused.
Ex.D.5 Registration Certificate of
Establishment, Form -C.
XX A.C.M.M.,
Bengaluru.