Bangalore District Court
Rajesh Gowda vs Raghu Nandan on 23 January, 2024
KABC0B0075072023
IN THE COURT OF THE XVII ADDL. JUDGE, COURT OF
SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH-21).
PRESENT: Sri. RAJESH M. KAMATE, B.Com., LL.B(Spl.)
XVII ADDL. JUDGE, Court of Small
Causes & A.C.M.M, Bengaluru.
Dated: This the 23rd Day of January 2024
C.C. No.57554/2022
Complainant/s : Mr. Rajesh Gowda
S/o Veerabhdre gowda,
R/at 1st main, 1st cross,
Srigandah nagar, Hegganahalli cross,
Bangalore-560091.
(By Sri. HKJ, Advocate)
V/s.
Accused/s : Mr. Raghu Nandan
Major,
S/o H R Venkatesh,
Muthugada Hosuru (V),
Dodda Magge(II), Dodda halli (Post),
Arakalagodu (T), Hassan (D).
(By Sri. AKN, Advocate)
SCCH-21 2 C.C. No: 57554/2022
JUDGMENT
The present complaint is filed for the offence punishable under Section 138 of Negotiable Instrument Act 1881, against the accused.
2. The summary of the complainant's case is that:
It is the case of the complainant that, the complainant and accused are well acquainted with each other and accused approached the complainant seeking hand loan of Rs.3,00,000/- in the month of March 2021 for the purpose of developing his bakery business and accused has assured to repay the amount within a period of 6 months with interest and as such complainant demanded the accused to repay the loan amount for which accused has issued a cheque for Rs.3,00,000/- bearing No.255824 dated 08-07-2022 drawn on State Bank of India, Whitefield road branch, Bangalore. Complainant has presented the cheque for encashment through South Indian Bank, Maruthi Seva Nagar branch, Bangalore but the same was returned with the bankers endorsement "Funds Insufficient" on 11-08-2022. Thereafter on 08-09-2022 the complainant got issued the legal notice through RPAD to the accused person which was duly served on 12-09-2022. After service of notice the accused neither replied to the notice nor repaid the loan amount and being aggrieved by the same, this complaint is filed on 19-10-2022 against the accused for the offence punishable U/Sec.138 of N.I. Act.SCCH-21 3 C.C. No: 57554/2022
3. On filing of the complaint, cognizance was taken against the accused for the offence punishable under section 138 of N.I. Act and sworn statement was recorded. As there was sufficient ground to proceed further, a criminal case has been registered against the accused and they were summoned. The substance of accusation is orally stated to the accused and plea were recorded. Accused pleaded not guilty and claimed to be tried and also submitted he has defence evidence.
4. In support of the complainant's case, the sworn statement of the complainant filed by way of affidavit during the pre-summoning stage is considered as evidence of the complainant as PW.1 and examined one witness by name M R Janardhan as PW.2 and got marked the documents from Ex.P1 to 9 and also denial of the photo and CD in the cross examination of DW.1 which are shown to him are marked as Ex.C1 and C2. The statement of the accused is recorded under Section 313 of Cr.P.C and answers were recorded.
5. Per contra the accused got examined as DW.1 but not marked any documents.
6. Heard the arguments on both sides.
The learned counsel for the complainant has relied up on the following citations:
SCCH-21 4 C.C. No: 57554/20221. AIR 2023 SC 5018 between Rajesh Jain Vs. Ajay Singh.
2. Criminal appeal No.1233-1235/2022 of Hon'ble Supreme Court of India between P Rasiya Vs. Abdul Nazer and another.
3. Criminal appeal No.2000/2022 (A) of Hon'ble High court of Karnataka between R Pramod Vs. Gangadharaiah and another.
4. 2022 (3) AKR 381 between M S Sathya Narayana Vs. Lingaraje Urs.
The learned counsel for the accused has relied up on the following citations:
1. AIR 2006 SC 3366 between M S Narayana Menon @ Mani Vs. State of Kerala and another.
2. ILR 2008 KAR 4629 between Shiva Murthy Vs. Amruthraj.
3. II (2016) BC 646 (Bom.) of Hon'ble High Court of Bombay between Kagal Co-op. Doodh Vyavsaik Sanstha Vs. Pankaj Dairy products and another.
4. (2008) 4 SCC 54 of Hon'ble Supreme Court between Krishna Janardhan Bhat Vs. Dattatraya G Hegde.
5. 2023 (4) AKR 627 between S P Rajkumar Vs. M J Prabhakar.SCCH-21 5 C.C. No: 57554/2022
6. 2023 (4) AKR 452 between R N Murthy Vs. Mustaq Ahmad.
7. (2015) 1 SCC 99 of Hon'ble Supreme Court between K Subramani Vs. K Damodara Naidu.
8. (2019) 5 SCC 418 of Hon'ble Supreme Court between Basalingappa Vs. Mudibasappa.
7. The points that arise for my consideration are:
1. Whether the complainant proves that it has complied the ingredients of Section 138 of N.I. Act in order to constitute an offence?
2. Whether the complainant further proves that accused has committed an offence punishable under Section 138 of N.I. Act 1881?
3. What order?
8. My answer to the above points is as follows:
Point No.1 : In the Affirmative,
Point No.2 : In the Affirmative,
Point No.3 : As per final order for
the following:
REASONS
9. POINT No.1:
In order to constitute an offence under Section 138 of N.I. Act, the cheque shall be presented to the bank within a SCCH-21 6 C.C. No: 57554/2022 period of 3 months from its date. On its dishonor, the drawer or holder of the cheque as the case may be shall cause demand notice within 30 days from the date of dishonor, demanding to repay within 15 days from the date of service of the notice. If the drawer of the cheque fails to repay the amount mentioned in the cheque within 15 days from the date of service of notice, cause of action arises for filing the complaint.
10. The sworn statement of the complainant filed by way of affidavit during the pre-summoning stage is considered as the evidence of the complainant. In the affidavit, the complainant has testified regarding the loan transaction, issuance of cheque and also failure of the accused to pay the cheque amount. It is the case of the complainant that accused has obtained a hand loan of Rs.3,00,000/- and in consideration of the same accused has issued Ex.P1 cheque bearing No.255824 dated 08-07-2022 for Rs.3,00,000/- drawn on State Bank of India, Whitefield road, Bangalore with the promise that the cheque will be honored on presentation. Thereafter, the complainant produced the cheque for encashment through its banker at South Indian Bank within 3 months from the date of issuance of cheque and the same was returned with memo of Insufficient Funds on 11-08-2022 as per Ex.P2. Thereafter, the complainant got issued legal notice on 08-09-2022 within the statutory period of time as per Ex.P3 and the said notice was served on 12-09-2022 as per Ex.P7 & 8 postal acknowledgments. Hence, after compliance of the SCCH-21 7 C.C. No: 57554/2022 statutory period, the complainant has filed this complaint against the accused for the offence u/S.138 of N.I. Act.
11. In the present case, the cheque is issued on 08-07-2022 and the same was presented for encashment within three months from the date of cheque as could be seen from Ex.P2. Ex.P2 further shows that cheque in question was dishonored on 11-08-2022 with endorsement "Funds Insufficient". The notice was issued within the statutory period of time of 30 days as per Ex.P.3 on 08-09-2022 and the same was duly served on them as per Ex.P.5 to 8 postal receipts and postal acknowledgments on 12-09-2022. The cause of action for filing the complaint arose on 27-09-2022 accordingly, the complainant has filed this complaint on 19-10-2022. Hence, the complainant has complied all the mandatory requirements of Section 138 of N.I. Act. Accordingly, I answer Point No.1 in the Affirmative.
12. Point No.2:
In this point the burden is on the complainant to prove that the accused has committed an offence under section 138 of N.I. Act by issuing cheque.
13. It is the case of the complainant that, complainant and accused are well acquainted with each other as such accused has approached the complainant seeking hand loan of Rs.3,00,000/- in the month of March 2021 for the purpose of SCCH-21 8 C.C. No: 57554/2022 developing his bakery business and agreed to repay the same with interest and thereafter when the complainant demanded the accused to repay the aforesaid amount he assured that he will pay the same within period of 6 months and after repeated requests the accused has issued a cheque for Rs.3,00,000/- bearing No.255824 dated 08-07-2022 drawn on State Bank of India, Whitefield road branch, Bangalore. Complainant has presented the cheque for encashment through South Indian Bank, Maruthi Seva Nagar branch, Bangalore but the same was retruned with bankers endorsement "Funds Insufficient"
on 11-08-2022. Thereafter on 08-09-2022 the complainant got issued the legal notice through RPAD to the accused person which was duly served on 12-09-2022. After service of notice the accused neither replied to the notice nor repaid the loan amount and being constrained by the same he has filed the present complaint.
14. In order to prove the case of the complainant himself examined as PW.1 and got marked Ex.P1 to 8 and another witness M R Janardhan as PW.2 and got marked Ex.P9 and also denial of the photo and CD in the cross examination of DW.1 which are shown to him are marked as Ex.C1 and C2.
15. Per contra, the accused denied the case of the complainant contending that, he has not taken any loan amount from the complainant and was not doing any bakery business but was in need of financial necessity and has met SCCH-21 9 C.C. No: 57554/2022 the complainant through his brother Sharma for which the complainant agreed to pay the loan of Rs.3,00,000/-, but has obtained the cheque for security purpose saying that the same is for processing fees of obtaining loan from the bank and thereafter has not given any amount to him but has misused the cheque at Ex.P1 bearing his signature and as such he has not taken any loan from the complainant but only issued the cheque for security purpose for which the complaint is filed by the complainant against the accused U/Sec.138 of NI Act which is liable to be dismissed.
16. As discussed at point No.1 it clearly goes to show that the ingredients of Sec.138 of NI Act with respect to technical aspect has been duly complied by the complainant and now as per contention of the accused that he has not raised any loan from the complainant for financial assistance to run his bakery and no where in the complaint or the affidavit it is mentioned that complainant has handed over the loan amount to the accused and also in the cross of PW.1 the said fact has been admitted by him and hence in the absence of averments in the complaint the same is liable to be dismissed. Whereas during the cross of PW.1 he has admitted that in the complaint no where it is mentioned that he has given the hand loan amount either to accused or his brother Sharma but it also goes to show that it has been also suggested that the accused has not approached the complainant but his brother Sharma had approached him for SCCH-21 10 C.C. No: 57554/2022 financial assistance to run the bakery and such being the fact even though the complainant has failed to make the averments of handing over of loan amount to the accused but in view of the suggestion made by the accused counsel that his brother Sharma has approached him for loan amount and also DW.1 in his defence has stated that as he was in need of financial assistance and his brother has taken him to meet the complainant which goes to show that there was a transaction between the complainant, accused and his brother Sharma with respect to financial assistance. Further it is pertinent to note here itself that in order to prove the same the complainant has also examined PW.2 Janardhan who has stated that, the cash transaction has taken place in his shop wherein the complainant has paid the amount of Rs.3,00,000/- through cash in his shop and in his cross by the accused counsel he has admitted that accused and himself are relatives and also that the accused and his brother Sharma has approached him for financial assistance and also reiterated that in the presence of himself Rs.3,00,000/- is paid to the accused but doesn't know that the denomination of the notes which may be Rs.500/- and the said discussion and the loan has taken place in his shop. Hence the evidence of PW.2 corroborates the case of the complainant in order to come to conclusion that the cash of Rs.3,00,000/- is paid by the complainant to the accused for running the bakery as financial assistance.
SCCH-21 11 C.C. No: 57554/202217. Apart form it it goes to show that, the accused in support of his contention has not examined his brother Sharma who was present during all the transactions and as per the defence, who was in need of money and who has obtained loan amount from the complainant and by non examining the said witness also creates doubt in the mind of court in order to come to conclusion that there was no financial transaction taken place between the complainant and accused in which he has not received any amount from the complainant. Hence in the said complaint and affidavit even though handing of money is not mentioned but in view of the suggestion and statement of DW.1 cannot be the sole ground to dismiss the complaint.
18. Another defence taken by the accused counsel is that the cheque in question at Ex.P1 is not given by him to the complainant for payment of loan amount but was handed over to the complainant for processing charges to get sanction loan from the bank and also the complainant has obtained the said cheque stating that in order to get sanction the loan some amount is required to be paid for processing charges and for the same he has issued the cheque at Ex.P1 which has been misused by him and false complaint is filed against the accused. On this aspect the accused has examined himself as DW.1 but in cross he has admitted that he has went to the complainant stating that he is in need of money to run condiments shop and at that time he has handed over the SCCH-21 12 C.C. No: 57554/2022 signed blank cheque to him as processing charges. Whereas he has also admitted that the amount is not mentioned in the cheque as the processing fees will be different in different banks and the said process amount will depend upon the processing charges of that bank, but has not obtained any endorsement for the same and also the complainant has not got sanctioned any loan to him. Apart from it DW.1 in his cross by defence counsel he has clearly admitted his signature at Ex.P1 but has stated that the same is not issued to the complainant. Whereas accused counsel on this aspect has cross examined PW.1 stating that the cheque has been obtained by him for processing charges for which he has admitted that he was doing finance business and contents of the cheque has been mentioned by the accused from his house before handing over to him and also that the contents of the cheque are in black pen and signature is in blue pen and he has given cash of Rs.3,00,000/- to the accused but has not produced any document to show that he was having said amount in his account.
19. Therefore considering the evidence available before this court it could be seen that the initial burden is on the complainant to prove his case and after leading evidence of PW.1 along with the documentary evidence at Ex.P1 to 9 and the supportive evidence of PW.2 it goes to show that the initial burden has been discharged by the complainant to prove his case and the accused by way of rebuttal evidence has to prove SCCH-21 13 C.C. No: 57554/2022 that the cheque is not issued by him to discharge his liability and in this case even though the accused has taken contention that he has handed over the cheque for payment of processing charges as asked by the complainant, but the complainant with the supportive documents of PW.2 has proved that the amount of Rs.3,00,000/- is handed over to the accused for running condiment shop and there is no other evidence available before this court except oral evidence of DW.1 to show that the cheque in question at Ex.P1 is not issued for payment of loan amount and only for processing charges to obtain and get sanction the loan and more particularly in this case the signature on the cheque at Ex.P1 is clearly admitted by DW.1 raises presumption U/Sec 139 of NI Act infavour of complainant which mandates that cheque was issued for discharge of debt or other liability and the same is rebuttable presumption and the standard of proof for rebutting the presumption is that of preponderance of probabilities and inference of preponderance of probability can be drawn from the materials brought on record and in this case the accused has lead the rebuttal evidence by way of evidence but the signature on the cheque is clearly admitted by him which categorically shows that the cheque in question at Ex.P1 is issued by him to the complainant and as discussed there is no other evidence available before this court to deny that the accused has not issued cheque for repayment of the hand loan amount obtained from the complainant and the contention of the accused that cheque in question was issued for security SCCH-21 14 C.C. No: 57554/2022 purpose for payment of processing charges has remained mere contention and also there is no evidence of his brother Sharma and in the absence of the same as per the Sec.139 of NI Act the presumption is infavour of the complainant to come to conclusion that the cheque in question is issued by the accused to the complainant for payment of the loan amount.
20. Now the other defence taken by the accused is that the complainant is a practicing advocate and also he was doing finance business for which he has no authority to lend the money to the accused and the act of the complainant is the professional misconduct as per rule 47 of advocates Act and hence the cheque in question issued by the accused to the complainant is not towards legally recoverable debt in which the accused is not liable to pay the said amount on this aspect PW.1 has been cross examined by the accused counsel wherein he has admitted that he has started his profession in the year 2010 but for a period of 4-5 years between 2015-2020 he was not practicing as advocate and during that period he was doing finance business but has not intimated the same to the bar counsel and was also having license to do the finance business and has not produced any document to show that how much amount has been paid from the finance business done by him. Apart from it he has admitted that his enrollment number is KAR2803/2010 and as per rule 47 of Advocates Act he shall not do any other business except the legal profession but has stated that during that period he was not practicing has the advocate.
SCCH-21 15 C.C. No: 57554/202221. Now considering the admission given by PW.1 and looking into the defence of the accused that the complainant was also doing financial business is not itself sufficient to come to conclusion that the act of lending the money to the accused is against the rule of Advocates Act as it could be seen that no where in the present case it has been shown before the court that the said amount of Rs.3,00,000/- is paid by the complainant from the said finance run by him and further it also goes to show that PW.1 in his cross has reiterated that during the said period he had not practiced as an advocate and in order to disprove the same the accused has not produced any piece of document of filing vakalath or to show that the complainant has practiced as a advocate before any court after obtaining enrollment as an advocate in the year 2010 and as such the said act of lending the money to the complainant will not amount to professional misconduct of Advocates Act. Hence as discussed earlier the accused after obtaining the hand loan amount of Rs.3,00,000/- has issued a cheque at Ex.P1 for payment of the said loan amount and as such considering the same it could be safely held that cheque in question is issued by the accused for payment of loan amount which is legally recoverable debt to be paid by him to the complainant.
22. Another point of contention taken by the accused is that the notice issued by the complainant is not duly served on the accused for which the complaint is liable to be dismissed.
SCCH-21 16 C.C. No: 57554/2022In support of service of notice the complainant has produced the document at Ex.P3, copy of the notice dated 03-09-2022 and Ex.P4 another notice without date, Ex.P5 & 6 are the post receipts and Ex.P7 & 8 are the acknowledgments. No doubt the notice at Ex.P4 doesn't bear the date but the postal receipts and acknowledgments at Ex.P5 to 8 clearly shows about the addresses of the accused as per the address mentioned in the notice which bears the signature on accepting the copy of notice and on this point DW.1 in his cross examination has admitted that the addresses mentioned at Ex.P3 is residential address and all the letter correspondence are received by him on the said address as per the postal acknowledgment at Ex.P7 & 8 but has denied the signature on postal acknowledgments and as such the said address mentioned in the notice is clearly admitted by PW.1 and the same is also shown in the cause title of the present complaint which goes to show that even though the accused is denying the service of notice on him but in view of admission given by him as per the address mentioned in the notice is tallying with the address mentioned in the complaint and acknowledgment and further after registering the CC the summons issued on the same address which is reported to be refused as per order dated 01-12-2022 but on the same day the accused counsel has appeared and fled vakalath U/Sec 205 which clearly shows that the notice has been duly served on the said address as mentioned in the complaint and copy of notice it itself is sufficient to come to conclusion that the SCCH-21 17 C.C. No: 57554/2022 notice issued by the complainant is duly served on the accused.
The learned counsel for the complainant has relied up on the following citations:
1. AIR 2023 SC 5018 between Rajesh Jain Vs. Ajay Singh.
2. Criminal appeal No.1233-1235/2022 of Hon'ble Supreme Court of India between P Rasiya Vs. Abdul Nazer and another.
3. Criminal appeal No.2000/2022 (A) of Hon'ble High court of Karnataka between R Pramod Vs. Gangadharaiah and another.
4. 2022 (3) AKR 381 between M S Sathya Narayana Vs. Lingaraje Urs.
I had gone through the citations relied by the complainant counsel and in this case it goes to show that the issuance of cheque infavour of complainant is proved by the complainant and as per the presumption U/Sec.139 of NI Act raises infavour of complainant and initial burden is discharged by the complainant and in this case the signature on the cheque is clearly admitted by the accused clearly shows the issuance of cheque by the accused infavour of complainant and the burden is shifted on the accused to disprove the case of the complainant by way of rebuttal evidence and in the cross of PW.1 accused has not raised any probable defence of way of preponderance of probabilities and such being the fact the accused has failed to show SCCH-21 18 C.C. No: 57554/2022 that he has not issued the cheque for the payment of loan amount and hence the citations relied by complainant counsel and the principle laid down in thte said citations are aptly applicable to the present case on hand.
The learned counsel for the accused has relied up on the following citations:
1. AIR 2006 SC 3366 between M S Narayana Menon @ Mani Vs. State of Kerala and another.
2. ILR 2008 KAR 4629 between Shiva Murthy Vs. Amruthraj.
3. II (2016) BC 646 (Bom.) of Hon'ble High Court of Bombay between Kagal Co-op. Doodh Vyavsaik Sanstha Vs. Pankaj Dairy products and another.
4. (2008) 4 SCC 54 of Hon'ble Supreme Court between Krishna Janardhan Bhat Vs. Dattatraya G Hegde.
5. 2023 (4) AKR 627 between S P Rajkumar Vs. M J Prabhakar.
6. 2023 (4) AKR 452 between R N Murthy Vs. Mustaq Ahmad.
7. (2015) 1 SCC 99 of Hon'ble Supreme Court between K Subramani Vs. K Damodara Naidu.
8. (2019) 5 SCC 418 of Hon'ble Supreme Court between Basalingappa Vs. Mudibasappa.SCCH-21 19 C.C. No: 57554/2022
I had gone through the citations relied by the accused counsel but in this case the accused has failed to prove that he has not issued the cheque towards legally enforceable debt and the same is for payment of loan amount and also as per Sec.139 of NI Actct the presumption is infavour of complainant if the signature on the cheque is admitted by him and hence the accused has failed to prove by preponderance of probabilities and rebuttal evidence that the cheque in question is not towards legally enforceable debt and with due respect to the principles of the citations relied by the accused counsel but looking in to the present facts and discussions made the same are not applicable to the present case in hand.
23. Further, as per Section 118 of N.I. Act lays down that until the contrary is proved, it shall be presumed that every Negotiable Instrument was made or drawn for consideration. Section 139 of N.I. Act, contemplates that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole of any debt or liability. In the decision reported in 2001 Crl.L.J. page 4647 (SC) (Hiten P.Dalal -Vs- Bratindranath Banerjee) and in various other decisions of the Hon'ble Supreme Court and our Hon'ble High Court has repeatedly observed that in the proceeding under Section 138 of N.I. Act the complainant is not required to establish either the legality or the enforceability of the debt or liability since he can avail the benefit of SCCH-21 20 C.C. No: 57554/2022 presumption under Section 118 and 139 of N.I. Act in his favour. It is also observed that by virtue of these presumptions, the accused has to establish that the cheque in question was not issued towards any legally enforceable debt or liability. Later in the year 2006, the Hon'ble Supreme Court in the decision of M.S. Narayan Menon @ Mani -vs- State of Kerala and another (2006 SAR Crl. 616) has held that the presumption available under Section 118 and 139 of N.I. Act can be rebutted by raising a probable defence and the onus cast upon the accused is not as heavy as that of the prosecution. It was compared with that of a defendant in civil proceedings. Subsequently in the year 2008, in Krishna Janardhana Bhat -Vs- Dattatreya G. Hegde (2008 Vo.II SCC Crl.166), the Hon'ble Supreme Court has held that the existence of legally recoverable debt is not a presumption under Section 138 of N.I. Act and the accused has a constitutional right to maintain silence and therefore, the doctrine of reverse burden introduced by Section 139 of N.I. Act should be delicately balanced.
24. In the decision, Rangappa - Vs - Mohan (AIR 2010 SC 1898), the Hon'ble Supreme has considered this issue and clarified that the existence of legally recoverable debt or liability is a matter of presumption under section 139 of N.I. Act. In para 14 of the judgment, the Hon'ble Supreme Court has observed as here below:
SCCH-21 21 C.C. No: 57554/2022"In light of these extracts, we are in agreement with the respondentclaimant 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. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better 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. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive SCCH-21 22 C.C. No: 57554/2022 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 and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "
In view of the above decision, now it is clear that the presumption mandated by Section 139 of N.I. Act does indeed include the existence of legally enforceable debt or liability. It is a rebuttable presumption. It is open to the accused to raise the defence wherein the existence of legally enforceable debt or liability can be contested. For rebutting presumption, the accused do not adduce evidence with unduly high standard of proof but, the standard of proof for doing so with that of preponderance of probabilities. If the accused is able to raise a probable defence, which creates doubt about the existence of legally enforceable debt or liability, the onus shifts back to the complainant. It is also clear for rebutting the presumption accused can rely on the materials submitted by the complainant or his cross-examination and he need not necessarily adduce his evidence in the case.
25. In so far as the payment of the amount by the accused in the cheque having been signed by him, the SCCH-21 23 C.C. No: 57554/2022 presumption for passing of the consideration would arise as provided u/s. 118(A) of N.I. Act as to presumption of Negotiable instrument until the contrary is proved and also that consideration of every negotiable instrument was made or drawn for consideration and that every such instrument, when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred to the effect that such presumption would remain until the contrary is proved. Hence, once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was issued for the discharge of the debt or other liability and the onus is on the accused to raise the probable defence and as such the standard of proof for rebutting the presumption is that of preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials brought on the record by the parties but also by reference to the circumstance upon which they rely.
26. As per section 118(a) and 139 of N.I. Act the presumption always in favour of the complainant, but such presumption is rebuttable if the accused can prove the non existence of a consideration by raising a probable defence and also proved that he has discharged the initial onus of proof wherein the existence of consideration was improbable or doubtful or the same was illegal, then automatically the onus will shift on the complainant to prove it as a matter of fact and upon his failure to prove he is not entitled to grant the relief on SCCH-21 24 C.C. No: 57554/2022 the basis of negotiable instrument. However, the burden on the defendant to prove the non-existence of consideration can be either direct or duly on record, the preponderance of probabilities by referring to the circumstances upon which it realized and in such case where the accused fails to discharge the initial onus of proof by proving the non existence of the consideration, the complainant invariably can be held that he is entitled to the benefit of presumption U/Sec.118(a) and 139 of N.I. Act.
27. Hence by considering all these aspect and materials place before this court, it goes to show that the accused has totally failed to prove or probabilise his defence and to rebut the statutory presumption in favour of the complainant and also it clearly appears from the evidence placed before the court that the defence put by the accused is without any basis and found to be too remote to accept its probabilities. As already stated, unless the accused rebuts the statutory presumption with convincing and cogent evidence the burden cannot be shifted on the complainant. Hence, the complainant has placed sufficient materials to establish his contention as put by him and the evidence place before the court is sufficient to accept the case of complainant that the accused has issued cheque at Ex.P.1 towards discharge of legally recoverable debt and has proved the requirements of Section 138 of N.I. Act, so as to constitute the offence against the accused.
SCCH-21 25 C.C. No: 57554/202228. Therefore, in view of my discussion it clearly goes to show that the complainant has proved that the accused has issued cheques as per Ex.P.1 dated 08-07-2022 for an amount of Rs.3,00,000/- towards the repayment of hand loan borrowed from him and hence, I am of the opinion that in this point the complainant has proved the guilt of the accused for the offence punishable under Section 138 of N.I. Act. Accordingly, Point No.2 is answered in the Affirmative.
29. POINT No.3:
Section 138 of N.I. Act empowers the Court to sentence the accused upto two years and also to impose fine which may extend to twice the amount of cheques or with both. These cheques in question was issued on 08-07-2022 totally for Rs.3,00,000/- (Rupees Three lakhs Only). The complainant was deprived of money that was rightfully due to him for a period of 01 year 06 months 10 days. Hence, if the interest is calculated at 7% p.a. on the cheque amount for the above period certainly the complainant is entitled for suitable compensation to the cheque amount as per Sec.80 of N.I. Act. Hence, in this case Rs.3,00,000/- is the cheque amount and interest at 7% for 1 year 6 months if calculated will amounts to Rs.31,500/- as the case is pending clearly about 1 year 6 months and as such the total amount including interest will be of Rs.3,31,500/-.SCCH-21 26 C.C. No: 57554/2022
30. However, having regard to the facts of the case and the amount involved, there are no warranting circumstances to award the sentence of imprisonment as substantive sentence. Directing the accused to pay fine and also awarding compensation to the complainant would meet the ends of justice. But adequate default sentence shall have to be imposed to ensure the recovery of fine imposed to the accused. Therefore, the complainant is required to be suitably compensated as per Section 80 and 117 of the Negotiable Instrument Act and also appropriate in default sentence. Accordingly, I pass the following:
ORDER Acting U/Sec.255(1) of Cr.P.C. the accused is found guilty for the offence punishable under Sec.138 of N.I. Act and he is sentenced to pay a fine of Rs.3,31,500/- (Rupees Three lakhs Thirty one thousand and five hundred Only).
In default to pay fine, the accused shall undergo simple imprisonment for a period of three months.
Further, acting U/Sec.357(1)(b) of Cr.P.C., out of the fine amount, a sum of Rs.5,000/-
(Rupees Five Thousand Only) on recovery shall be paid as compensation to the State.
SCCH-21 27 C.C. No: 57554/2022The office is directed to supply a free copy of judgment to the accused.
(Dictated to the Stenographer and typed by her, corrected, signed and then pronounced by me in the open court on this the 23rd day of January 2024) Digitally signed KAMATE by KAMATE RAJESH RAJESH M Date: 2024.02.02 M 13:12:28 +0530 (RAJESH M. KAMATE) XVII ADDL.JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.
ANNEXURE List of witnesses examined on behalf of the complainant:
P.W .1 : Sri. Rajesh Gowda. P.W. 2 : Sri M R Janardhan.
List of documents marked on behalf of the complainant:
Ex.P.1 : Cheque Ex.P.2 : Bank endorsement Ex.P.3 & 4 : Legal Notice Ex.P.5 & 6 : Postal Receipts Ex.P.7 & 8 : Postal Acknowledgments Ex.P.9 : N/c of aadhar card Ex.C1 and C2 : Photos and CD
List of witnesses examined on behalf of the accused:
DW.1 : Sri. Raghunandan.
SCCH-21 28 C.C. No: 57554/2022List of documents marked on behalf of the accused:
Nil KAMATE Digitally by KAMATE signed RAJESH RAJESH M Date: 2024.02.02 M 13:12:34 +0530 (RAJESH M. KAMATE) XVII ADDL. JUDGE, Court of Small Causes & ACMM, Mayo Hall Unit, Bengaluru.