Karnataka High Court
Basappa S/O Gurusiddappa Galagali vs Dundappa S/O Gundappa Totad on 22 August, 2023
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NC: 2023:KHC-K:6608
CRL.A No. 200076 of 2017
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 22ND DAY OF AUGUST, 2023
BEFORE
THE HON'BLE MR. JUSTICE VENKATESH NAIK T
CRIMINAL APPEAL NO. 200076 OF 2017 (378)
BETWEEN:
1. BASAPPA
S/O. GURUSIDDAPPA GALAGALI
SINCE DEAD BY LRS.
1(A) RUDRAMBIKA
W/O. LATE BASAPPA GALAGALI
AGE ABOUT: 75 YEARS, OCC: HOMEMAKER
Digitally signed
by SHILPA R 1(B) RAJENDRA
TENIHALLI S/O. LATE BASAPPA GALAGALI
Location: HIGH AGE: 52 YEARS, OCC: MEDICAL PRACTITIONER,
COURT OF
KARNATAKA
BOTH R/O. NEAR BUS STAND NALATWAD
TQ. MUDDEBIHAL,
DIST. VIJAYAPURA-586212
1(C) SMT. JAYASHREE
D/O. LATE BASAPPA GALAGALI
W/O. MALLIKARJUN TARAPUR,
AGE: 50 YEARS, OCC: HOMEMAKER
R/O. BANDAL CROSS, SINDAGI,
DIST. VIJAYAPUR-586128.
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CRL.A No. 200076 of 2017
1(D) GANESH
S/O. LATE BASAPPA GALAGALI
AGE: 47 YEARS, OCC: MEDICAL PRACTITIONER
R/O NEAR BUS STAND, NALATWAD,
TQ. MUDDEBIHAL, DIST. VIJAYAPURA-586212.
...APPELLANTS
(BY SRI. KADLOOR SATYANARAYANACHARYA, ADVOCATE)
AND:
DUNDAPPA
S/O. GUNDAPPA TOTAD
AGED ABOUT: 72 YEARS,
OCC: RETIRED SERVANT & CONTRACTOR
R/O. VIJAYAPURA BUILDING KALYANAGAR,
BLDE COLLEGE ROAD,
VIJAYAPURA
TQ & DIST: VIJAYAPURA-586101
...RESPONDENT
(BY SRI. R S LAGALI, ADVOCATE)
THIS CRL.A. IS FILED U/S.378(4) OF PRAYING TO, ALLOW
THIS APPEAL AND SET ASIDE THE JUDGMENT AND ORDER OF
ACQUITTAL DATED:05.05.2017 PASSED IN C.C.NO.164/2007
ON THE FILE OF THE HON'BLE COURT OF JMFC, MUDDEBIHAL
AND TO PASS ALL OTHER APPROPRIATE ORDER AS MAY BE
NECESSARY IN THE FACTS AND CIRCUMSTANCES OF THE
CASE
THIS APPEAL COMING ON FOR FINAL HEARING AND
HAVING BEEN HEARD AND RESERVED ON 10.08.2023,
COMING ON FOR PRONOUNCEMENT THIS DAY, THIS COURT
DELIVERED THE FOLLOWING:
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CRL.A No. 200076 of 2017
JUDGMENT
The complainant-appellant has filed this appeal under Section 378(4) of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.'), praying to set aside the judgment and order of acquittal dated 05.05.2017 passed in C.C.No.164/2007 by learned JMFC, Muddebihal (for short 'Trial Court').
2. For the sake of convenience, the parties are referred to as per their ranking before trial Court. The appellant is complainant and respondent is accused.
3. The brief facts of the complainant's case are as under:
The complainant filed a private complaint under Section 200 of Cr.P.C., for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short 'N.I. Act'), contending that, the accused had borrowed loan of Rs.5,00,000/- from the complainant and in consideration -4- NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 thereof, accused issued cheque bearing No.398767 dated 16.08.2006 drawn on Sri Siddeshwar Co-operative Bank Limited, Vijayapura, in favour of complainant, said cheque was presented for encashment, but, returned with shara 'account closed', thus, on 16.02.2007, complainant issued legal notice calling upon the accused to pay amount due under the cheque, but, accused neither reply to the legal notice nor paid amount due under the cheque, hence, complainant filed a private complaint under Section 200 of Cr.P.C. for the offence punishable under Section 138 of N.I. Act.
4. After institution of the complaint, the Trial Court recorded the sworn statement of the complainant, took cognizance under Section 190(1)(a) of Cr.P.C., secured the presence of accused and recorded plea of accused; accused pleaded not guilty and claimed to be tried.
5. The complainant in order to prove his case, examined himself as PW.1 before Trial Court and got marked the documents as Exs.P1 to P11, the complainant -5- NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 also examined his son Ganesh as PW.2. The accused was examined under Section 313 of Cr.P.C. and his answers were recorded. In order to rebut the claim of complainant, accused himself examined as DW.1 and he also got marked 10 documents as Exs.D1 to D10.
6. On the basis of the oral and documentary evidence, the Trial Court acquitted accused for the offence punishable under Section 138 of N.I. Act, holding that, the complainant has failed to prove the ingredients of Section 138 of N.I. Act.
7. Aggrieved by the judgment of acquittal passed by the Trial Court, the complainant has filed this appeal contending that the judgment of acquittal passed by the Trial Court is not in accordance with law; the complainant proved the requirements of Section 138 of N.I. Act, as accused admitted issuance of cheque - Ex.P1 and his signature on Ex.P1, service of legal notice upon him; the Trial Court ought to have drawn presumption available under Section 139 of N.I. Act and convicted the accused. -6-
NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 But, the Trial Court held that, the alleged transactions are not established and the complainant had no capacity to lend loan and the amount due is not legally recoverable debt, accordingly, acquitted the accused without drawing presumption available under Section 139 of N.I. Act. It is contended that, the complainant has discharged initial burden casted upon him, but, the accused has not discharged the burden. The Trial Court has wrongly held that, the complainant had no capacity to lend loan to accused, but, the complainant has placed sufficient material to show that, complainant contributed a sum of Rs.1,22,000/- and his son contributed a sum of Rs.3,88,000/- and in all, the complainant paid a sum of Rs.5,00.000/- to the accused. In fact, the complainant and his son are Medical Practitioners by profession, they have sufficient income and source, as on the date of transaction. The Trial Court has wrongly held that, accused has handed over the cheque in question to Ayyappa Kambi, who is none other than father-in-law of PW.2, but, Ayyappa Kambi has misused the cheque and handed over the same to -7- NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 complainant. But, no complaint has been lodged by accused against complainant or Ayyappa Kambi, regarding misuse of cheque. It is contended that, the accused has taken contention that, the complaint has not disclosed material particulars, but, the accused has taken various contentions, hence in the evidence, the complainant has gave complete description about the transaction and therefore, the complainant has proved the transaction. On all these grounds, the counsel prays to set aside the acquittal judgment and also prayed to allow the complaint, consequently to convict the accused. The learned counsel for the complainant has relied upon the following decisions:
1. 2020 AIR (Crl.) 36 in case of Rahul Sudhakar Anantwar vs. Shivakumar Kanhiyalal Shrivastav.
2. 2022(1) KCCR 1 (SC) in case of K.S.Rangantha vs. Vittal Shetty.
8. The learned counsel for respondent Sri R.S. Lagali with vehemence submitted that, the accused never -8- NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 issued Ex.P1 - cheque in favour of complainant and the complainant has failed to prove the alleged transactions between himself and accused. Earlier the Trial Court acquitted the accused person on the ground that there was no transactionsbetween complainant and accused and debt in question was not legally recoverable debt and aggrieved by the judgment and acquittal, the complainant preferred an appeal and the First Appellate Court remanded the matter for fresh consideration. Again the Trial Court acquitted the accused on the ground that, the complainant has failed to establish his case. It is further contended that soon after remand, the complainant improved his case and relied upon Exs.P5 to P11 in order to prove source of income. As per Exs.P5 to P9 - income tax returns, the income of complainant was less than Rs.1,00,000/- per annum and the name of accused has not been shown in any of his income tax returns submitted for the assessment year 2002-03 to 2006-07 and as per Exs.P10 and P11, the son of complainant contributed Rs.3,88,000/- and hence, the complainant has improved his version, but, there is no -9- NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 such pleading in the complaint. Therefore, the complainant has taken contentions, which are contrary to the contents of complaint. As per the complaint, for the purpose of clearing JCB loan, the accused borrowed loan from complainant. But, as per Ex.D4, the accused had cleared the loan on 29.12.2005 itself. Hence, the contents of complaint are contrary to the evidence on record. It is contended that, the complainant has misused the blank cheque issued to one Ayyappa Kambi and hence, Sri Ayyappa Kambi filed original suit in O.S. No.63/2007 for recovery of money. After came to know about misuse of cheque, he instructed his banker to stop the payment and misplace of two blank cheques vide Ex.D2 and therefore, the banker has stopped payment and have issued an endorsement. Therefore, the Trial Court has rightly held that, the transaction in question is not legally recoverable debt and thus, the complainant failed to discharge his burden. The counsel further contended that no notice was served upon the accused, hence, the Trial Court has not drawn any presumption available under Section 139 of N.I.
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 Act and accordingly acquitted the accused. Therefore, the counsel justified the judgment of acquittal passed by the Trial Court. In support of his oral arguments, the learned counsel relied upon the following decisions.
1) 2023 LiveLaw (SC) 46 in case of Rajaram S/o. Sriramulu Naidu (Since DECEASED) Through L.RS. vs. Maruthachalam (Since DeceaseD) Through L.RS.
2) Criminal Appeal No.1233-
1235/2022 (Arising out of SLP (Crl.) Nos.7430-7432/2022 @ D.No.13470/2019) in case of P.Rasiya vs. Abdul Nazer and Another.
3. (2019) 2 SCC (Cri) 571 in case of Basalingappa vs. Mudibasappa.
4. (2010) 11 SCC 441 in case of Rangappa vs. Sri Mohan.
5. (2006) 3 SCC (Cri) 30 in case of M.S.Narayana Menon alias Mani vs. State of Kerala and Another.
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9. On the basis of the above submissions made by the parties to the lis, the points that would arise for Court's consideration are as under:
(1) Whether the complainant has proved that, he had lent loan to accused for a sum of Rs.5,00,000/- and inconsideration thereof accused issued Cheque to him and on presentation of the same, the same was dishonoured and in spite of service of legal notice, accused failed to repay the said amount, thus committed an offence under Section 138 of N.I. Act?
(2) Whether the judgment of acquittal passed by the Trial Court is perverse and called for interference by this Court?
(3) What order?
10. Point Nos.1 and 2:- Since both the points are interlinked and in order to avoid repetition of facts, they are taken up together for common discussion.
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11. Admittedly, the complainant filed a private complaint under Section 200 of Crl.P.C., against the accused for the offence punishable under Section 138 of N.I. Act. The complainant, in order to establish his claim, examined himself as PW.1 and got marked in all 11 documents as per Exs.P1 to P11. Ex.P1 is the cheque bearing No.398767 dated 16.08.2006 issued by accused in favour of complainant for a sum of Rs.5,00,000/-, Exs.P2 is the memorandum dated 01.02.2007, Ex.P3 is the postal cover with acknowledgement, Ex.P3(a) is the legal notice, Ex.P4 is the office copy of legal notice, Exs.P5 to P9 are the income tax returns of the year 2002-03 to 2006-07, Exs.P10 and P11 are the ODL passbooks, Exs.P10(A) to P10(G) are the portion of entry in ODL loan account, Ex.P11 is the portion of entry in ODL loan account. Further, the complainant also got examined his son - Ganesh as PW2.
12. Per contra, the accused himself examined as DW.1 and in support of his oral evidence, got marked 10 documents as Exs.D1 to D10. Ex.D1 is the telephone bill,
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 Ex.D2 is the letter issued by the accused, Ex.D3 is the under certificate of postal receipt, Ex.D4 is the letter issued by the Manager, Sri Siddeshwara Cooperative Bank Limited, Vijayapura, Ex.D5 is the certified copy of private complaint in P.C.No.53/2007, Ex.D6 is the certified copy of the order sheet in P.C.No.53/2007, Exs.D7 and D8 are the certified copy of the plaint and written statement in O.S.No.212/2005, Exs.D9 and D10 are the certified copy of plaint and written statement in O.S.No.63/2007.
13. On perusal of oral testimony of PWs.1 and 2, as also DW.1 and the documents relied upon by both the parties, the complainant has taken contention that, the accused had borrowed a sum of Rs.5,00,000/- from complainant and in consideration thereof, he had issued Ex.P1 - cheque for a sum of Rs.5,00,000/- drawn on Sri Siddeshwara Cooperative Bank Limited, Vijayapura dated 16.08.2006, when the complainant presented the said Cheque for encashment to his Banker viz., Sri Sharanveereshwar Cooperative Bank Limited, Nalatwad on
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 01.02.2007, the same was returned with shara as "account closed " in the account of accused dated 10.02.2007, hence, on 16.02.2007, the complainant got issued legal notice vide Ex.P3(a) calling upon the accused to pay the amount due under the cheque, in spite of issuance of legal notice, accused failed to repay the said amount due under cheque - Ex.P1.
14. In the instant case, the complainant has produced cheque in question and it is marked as Ex.P1. The signature of accused is also as per Ex.P1(a). The endorsements are marked as Exs.P2 and P3 and legal notice is marked as Ex.P3(a). Admittedly, accused has disputed issuance of Ex.P1 - cheque in favour of complainant, but, taken contention that, one Ayyappa Kambi stolen the cheque in question and handed over to the complainant. Therefore, the accused has disputed transaction with complainant and service of notice upon him.
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15. On perusal of evidence of accused (DW.1), he has stated that, the son of accused and one Ayyappa Kambi worked together in few projects, the accused misplaced cheque book of different account containing signed cheque leaves with amount written for his son's business, since it would be convenient to make payments in his absence, but, Ayyappa Kambi who was collogue of accused, was visiting the house of accused, illegally got two cheque leaves and one cheque was presented by him and one cheque Ex.P1 was handed over to complainant.
16. In the cross-examination, DW.1 admits that, he purchased a JCB, for his contract work. He admitted that, Ex.P1 cheque pertains to his account and signature found in Ex.P1 pertains to him, the contents written in Ex.P1 are in the handwriting of accused, he further admitted that, complainant got issued legal notice to him, he has not lodged any complaint against Ayyappa Kambi alleging that, he stolen Ex.P1 - cheque from the house of accused.
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 Accused did not inform his Banker Sri Siddeshwara Bank, about theft/lost of Ex.P1- cheque.
17. The accused on one hand has taken contention that, there was no occasion for him to borrow loan from financial institution or any private person. But, in the cross-examination, he admitted that, he borrowed loan from Bank of Baroda, Vijayapura Branch, and said loan yet to be clear. Further, accused borrowed car loan from Karnataka Bank, Vijayapura Branch. He does not know, when cheque was stolen, if any signed cheque was misplaced or stolen, he was in the habit of making enquiry, with his family members. But, in this case, he did not make any enquiry.
18. It appears that, once a cheque was signed and handed over by the accused, it would attract presumption under Section 139 of the N.I. Act, in the absence of any cogent evidence to show that, the cheque was not issued in the discharge of a debt. The defence raised by accused
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 does not inspire confidence or meet the standard "preponderance of probabilities" on the following points:
a) Though signed cheque was stolen, he did not lodge any complaint against Ayyappa Kambi,
b) The accused borrowed several loan,
c) The accused admits issuance of cheque and his signature in Ex.P1,
d) Complainant placed material to show his financial capacity.
19. So far as service of notice upon accused is concerned, the complainant has furnished Ex.P3 - postal cover with acknowledgement, Ex.P3(a) - legal notice. On perusal of cross-examination of DW.1 dated 27.01.2009, at paragraph No.3, DW.1 (accused), in categorical terms admitted about service of legal notice upon him on 16.02.2007 sent by the complainant. He further admits that, the address mentioned on Ex.P3 - envelope cover is
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 his true address. He further admits that, there was no animosity between himself and the postman.
20. As per the presumption available under Section 11 of the Post and Telegraphic Act, 1901, if any parcel addressed to particular addressee, it shall deems that, the parcel send to addressee, served on him. Whereas, in the instant case, the complainant sent legal notice vide Ex.P3(a) and DW1 admitted that, the complainant got issued legal notice on 16.02.2007. Thus, accused admitted issuance of legal notice upon him. Once fact admitted, need not be proved under Section 58 of the Indian Evidence Act. Contrary to this evidence, accused has not placed any rebuttal evidence. Therefore, the complainant has complied the legal requirements of Section 138 of N.I. Act as to service of legal notice on the accused. Now the burden shifts on the accused to disprove the case of the complainant, but, the accused has not placed any material to show that, notice was not issued to him.
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21. So far as the transaction held between the accused and complainant is concerned, on perusal of the evidence on record, the accused has taken contention that the cheque was issued to one Ayyappa Kambi and it was not issued to complainant, but the complainant has misused the cheque issued in favour of one Ayyappa Kambi.
22. In order to defend the case, the accused relied upon Exs.D9 and D10, the certified copy of plaint and written statement in O.S.No.63/2007. On perusal of plaint in O.S.No.63/2007, it appears that, one Ayyappa Kambi filed the said suit against the present accused for recovery of a sum of Rs.4,00,000/- based on cheque bearing No.061724, pertaining to District Central Cooperative Bank Limited, Vijayapura. On perusal of Ex.D10 - the written statement submitted on 04.06.2007, the accused has not stated about the name of complainant, who had misused the cheque in question. It appears that, the accused has not admitted the transaction held in Ex.D10. Thus, the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 accused denying the transactions held between Ayyappa Kambi and himself, he also denying transaction between himself and complainant, thereby he has taken divergent contentions. Again the fact remained that, the accused never discharged the alleged loan borrowed from Ayyappa Kambi and he has not placed any material to that effect.
23. As per the contention of accused, the cheque was not issued for legal enforceable debt. On the other hand, according to complainant, Ex.P1-cheque was issued by accused towards discharge of legally enforceable debts towards hand loan received by him, as accused was due to pay towards JCB loan, thus, he borrowed loan. In the cross-examination, DW.1 clearly admitted this aspect. Thus, it clears that, in order to clear JCB loan, the accused borrowed loan from complainant and in consideration thereof, he issued Ex.P1 - cheque. On the contrary, the accused has not placed any contra evidence to disbelieve the case of the complainant.
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24. Whenever, the execution of the negotiable instruments is admitted then, the Court may draw presumption under Section 118 of the N.I. Act, which reads as under:
"118 Presumptions as to negotiable instruments. --Until the contrary is proved, the following presumptions shall be made:--
(a) of consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date --that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance --that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
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(d) as to time of transfer --that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of indorsements --that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamps --that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course
--that the holder of a negotiable instrument is a holder in due course:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him."
25. Thus, the Court shall draw presumption under Section 139 of N.I. Act, which is as under:
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 "139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
26. In the present case, the complainant has proved that, the cheque was issued towards legally enforceable debts. In case of Don Ayenga v. State of Assam and Another reported in 2016 Criminal Law Journal 1346, the Hon'ble Apex Court clearly held that, if cheque issued towards discharge of any debt or any other liability, it is to be called as legally enforceable debt within the meaning of Section 138 of the N.I. Act. As a matter of fact, the existence of debt or liability disputed by accused. On the contrary, it was acknowledged by accused that, the cheque was misused/stolen by Ayyappa Kambi and he never issued to the complainant. But, accused did not lodge any complaint against complainant or Ayyappa Kambi, alleging misuse of cheque. In the absence of such action against
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 complainant, it deems that, the accused issued cheque in question in favour of complainant towards discharge of legally recoverable debt.
27. If cheque was issued in relation to other transactions or to Ayyappa Kambi, it should be construed as the same was issued towards legally enforceable debt or liability. There is a presumption that, negotiable instruments is supported by consideration, and cheque was issued in connection with discharge of liability.
28. In the instant case, the complainant has proved that on the relevant date, he lent money to the accused and in consideration thereof, accused issued Ex.P1 - cheque in favour of the complainant. Further, the accused has not placed any material before the Court to prove under what circumstances, he issued cheque in favour of the complainant.
29. The accused initially disputed the contents of Ex.P1, but, in cross examination, he clearly admitted that,
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 the contents of Ex.p1 is in his handwriting only. Where one person signs and delivers to another a negotiable instrument, either it is wholly blank or nothing written thereon, is an incomplete negotiable instruments, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it negotiable instrument, for any amount satisfied therein and not exceeding the amount covered by the stamp. The person so signing on the negotiable instruments shall not be denied such instrument under Section 20 of the N.I. Act. Therefore, the holder of cheque by invoking Section 20 of the N.I. Act, filled up the cheque and presents for encashment, but, in the instant case, the accused admitted the contents of Ex.p1, however, the Trial Court has not drawn presumption under Section 118 of the N.I. Act, so as to consideration, as to date, as to time of acceptance, as to time of transfer and as to order of endorsements, as to stamps and that, holder is a holder in due course.
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30. Thereby, the complainant proved the transaction and requirement of Section 138 of the N.I. Act. Now, the burden lies on the accused to prove non-existence of consideration which would lead the Court to believe non- existence of consideration either by direct evidence or by probable to show that the existence of consideration was improbable, doubtful or illegal, but, the accused has not produced any kind of evidence to show that existence of consideration was improbable, doubtful or illegal. Therefore, the Trial Court ought to have drawn presumption that the cheque was issued for legally enforceable debt, until contrary is established.
31. In the instant case, the complainant has filed a private complaint under Section 200 of Cr.P.C., for the offence punishable under Section 138 of the N.I. Act and he has fulfilled the ingredients as required under Section 138 of N.I. Act.
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32. When once issuance of cheque is proved, the presumption under Section 138 of N.I. Act would arise with regard to consideration. But, the accused has not discharged the burden casted on him. Whether the accused has issued cheque in favour of one Ayyappa Kambi, in respect of other transactions or for repayment of loan or as security or it was handed over to some financial institution, make no difference under Section 138 of N.I. Act and the legal consequences were same without distinction. Thus, the complainant proved the requirement of Section 138 of N.I. Act.
33. Once the appeal is entertained against the order of acquittal, the High Court would be entitled to re- appreciate the entire evidence independently and come to its own conclusion.
34. In the instant case, the Trial Court has absolutely made a wrong assumption of a very material and clinching aspect in the peculiar circumstances of the case
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 and it suffers from infirmities. The similar ratio is laid down by the Hon'ble Apex Court in the case of Vijay Mohan Singh vs. State of Karnataka reported in (2019) 5 SCC
436.
35. Further, the Appellate Court may reverse the order of acquittal in exercise of its powers and there is no indication in the code of any limitation or restriction having placed before the High Court in exercise of its power as an Appellate Court. It does not place any fetter in exercise of the power to reevaluate, at large the evidence upon which the order of acquittal was founded and reached the conclusion, that evidence, order of acquittal should be reversed. The similar ratio is laid down by this Court in case of Siju Kurian v. State Of Karnataka in Crl.A. No.64/2021 dated 17.04.2023.
36. In the case of Chandrappa vs. State of Karnataka reported in (2007) 4 SCC 415, the Hon'ble Apex Court has held that, the Appellate Court has full
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 power to review, re-appreciate and re-consider the evidence upon which the order of acquittal is founded.
37. In the case of Chaman Lal vs. State of Himachal Pradesh reported in (2020) SCC Online SC 988, the Hon'ble Apex Court has held that, if the complainant made out good and sufficient grounds, the Appellate Court can interfere with the order of acquittal and it can be review the evidence and to come to its own conclusion.
38. Whereas, in the instant case, on perusal of oral and documentary evidence of the parties, it appears that, the complainant has proved the transaction and the cheque in question has been issued by accused and the debt in question is legally recoverable debt. The complainant has made out sufficient grounds that, though the complainant proved the transaction, issuuance of cheque and its dishonour on being presentation, the Trial Court failed to draw presumption available under Section 118 of N.I. Act.
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 Therefore, the evidence of parties has been re-appreciated in the light of decisions cited supra.
39. The Trial Court wrongly held that, the complainant had no capacity to pay the loan to accused. Perhaps, the Trial Court had lost sight of the contents of Exs.P9 to P11, the income tax returns, ODL passbook and entries in ODL loan account. On perusal of these documents, it clearly transpires that, the son of complainant (PW.2), who is working as Medical Practitioner, paid a sum of Rs.3,78,000/- to complainant. In fact, the complainant is also a Medical Practitioner and during the year 2006, he possessed more than Rs.1,50,000/-, accordingly, he contributed Rs.1,22,000/-, hence, he lent loan of Rs.5,00,000/- to the accused. But, the oral evidence of PWs.1 and 2 and contents of Exs.P5 to P11, are not at all perused and appreciated by the Trial Court.
40. The Hon'ble Apex Court in the case of Rahul Sudhakar (supra), has held as under:
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 "The High Court has pointed that the appellant has not disputed his signature on the said cheque presented for clearance and that there is nothing on record to show that the said Firm by name Synergy and Solution Incorporation was a firm or a company and that the account was maintained by one Vipin Dhopte. The High Court has also held that it is not the case of the appellant-accused that other entries in said cheque is not in his own handwriting.
Contention of the appellant that the cheque issued in the name of the Firm, named, Synergy and Solution Incorporation was removed from his office table is not convincing nor the same is supported by any evidence. As pointed by the High Court in the statutory presumption under Section 139 of N.I. Act, the appellant-accused has not satisfactorily rebutted the statutory presumption."
41. The Hon'ble Apex Court in the case of K.S.Ranganatha (supra), has held as under:
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 "The defendant can prove the non- existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument.
The above noted provisions are explicit to the effect that such presumption would remain, until the contrary is proved. The learned counsel for the appellant in that regard has relied on the decision of this court in K. Bhaskaran vs. Sankaran Vaidhyan Balan and Anr.
(1999) 7 SCC 510 wherein it is held as hereunder: " 9. As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque received it for the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption.
Therefore, the defence sought to be put forth relating to the cheque and other documents having been obtained by force, cannot be accepted as probable defence when the respondent successfully discharged the initial burden cast on him of establishing that the cheque signed by the appellant was issued in his favour toward discharge of a legally recoverable amount.
42. The Hon'ble Apex Court in the case of Rajaram (supra), has held as under:
"12. This Court in the case of Baslingappa v. Mudibasappa (supra) has summarized the principles on Sections 118(a) and 139 of the N.I. Act. It will be relevant to reproduce the same.
"25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 principles enumerated by this Court in following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
13. It can thus be seen that this Court has held that once the execution of cheque is admitted, Section 139 of the N.I. Act mandates a presumption that the cheque was for the discharge of any debt or other liability. It has however been held that the presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. It has further been held that to rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. It has been held that inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017
14. In the said case, i.e. Baslingappa v. Mudibasappa (supra), the learned Trial Court, after considering the evidence and material on record, held that the accused had raised a probable defence regarding the financial capacity of the complainant. The accused was, therefore, acquitted. Aggrieved thereby, the complainant preferred an appeal before the High Court. The High Court reversed the same and convicted the accused. This Court found that unless the High Court came to a finding that the finding of the learned Trial Court regarding financial capacity of the complainant was perverse, it was not permissible for the High Court to interfere with the same."
43. The Hon'ble Apex Court in the case of P.Rasiya (supra), has held as under:
"As per Section 139 of the N.I. Act, it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 cheque was issued by the accused and the signature and the issuance of the cheque is not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary."
44. The Hon'ble Apex Court in the case of Basalingappa (supra), has held as under:
"20. Elaborating further, this Court held that Section 139 of the Act is an example of a reverse onus and the test of proportionality should guide the construction and interpretation of reverse onus clauses on the defendant-accused and the defendant- accused cannot be expected to discharge an unduly high standard of proof. In paragraph Nos. 27 and 28, following was laid down (Rangappa case, SCC pp.453-54):-
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NC: 2023:KHC-K:6608
CRL.A No. 200076 of 2017
"27. Section 139 of the Act is
an example of a reverse onus
clause that has been included in
furtherance of the legislative
objective of improving the
credibility of negotiable
instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under 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 defendant-accused
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017
21. We may now notice judgment relied by the learned counsel for the complainant, i.e., judgment of this Court in Kishan Rao Vs. Shankargouda, (2018) 8 SCC 165. This Court in the above case has examined Section 139 of the Act. In the above case, the only defence which was taken by the accused was that cheque was stolen by the appellant. The said defence was rejected by the trial court. In paragraph Nos. 21 to 23, following was laid down:-
"21. In the present case, the trial court as well as the appellate court having found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank, the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. The accused even did not come in the witness box to support his case. In the reply to the notice which was given by the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 appellant, the accused took the defence that the cheque was stolen by the appellant. The said defence was rejected by the trial court after considering the evidence on record with regard to which no contrary view has also been expressed by the High Court.
22. Another judgment which needs to be looked into is Rangappa v. Sri Mohan (2010) 11 SCC 441. A three-Judge Bench of this Court had occasion to examine the presumption under Section 139 of the 1881 Act. This Court in the aforesaid case has held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. Following was laid down in paras 26 and 27:
(SCC pp. 453-54) "26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 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, may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.
27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 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 defendant-accused cannot be
expected to discharge an unduly high standard of proof."
23. No evidence was led by the accused. The defence taken in the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High Court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. How the presumption under Section 139 can be rebutted on the evidence of PW 1, himself has not been explained by the High Court."
45. The Hon'ble Apex Court in the case of Rangappa (supra), has held as under:
"15. Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the `stop payment' instructions to his bank. Furthermore, the instructions to `stop payment' had not even mentioned that the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant- accused was not able to contest the existence of a legally enforceable debt or liability."
46. The Hon'ble Apex Court in the case of M.S.Narayana Menon alias Mani (supra), has held as under:
"27. In view the aforementioned backdrop of events, the questions of law which had been raised before us will have to be considered. Before, we advert to the said questions, we may notice the provisions of Sections 118(a) and 139 of the Act which read as under:
"118. Presumptions as to negotiable instruments - Until the contrary is proved, the following presumptions shall be made:
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017
(a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration."
"139. Presumption in favour of holder It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."
Presumptions both under Sections 118(a) and 139 of the Act are rebuttable in nature.
28. What would be the effect of the expressions 'May Presume', 'Shall Presume' and 'Conclusive Proof' has been considered by this Court in Union of India (UOI) v. Pramod Gupta (D) by L.Rs. and Ors., [(2005) 12 SCC 1] in the following terms:
"It is true that the legislature used two different phraseologies "shall be presumed" and "may be presumed" in Section 42 of the Punjab Land Revenue Act and
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 furthermore although provided for the mode and manner of rebuttal of such presumption as regards the right to mines and minerals said to be vested in the Government vis-
`-vis the absence thereof in relation to the lands presumed to be retained by the landowners but the same would not mean that the words "shall presume" would be conclusive. The meaning of the expressions "may presume" and "shall presume" have been explained in Section 4 of the Evidence Act, 1872, from a perusal whereof it would be evident that whenever it is directed that the court shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression "shall presume" cannot be held to be synonymous with 'conclusive proof'".
29. In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause) to mean: -
" 'Proved' A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists.
'Disproved' A fact is said to be disproved when, after considering the matters before it the Court either believes that it does not exist, or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist."
30. Applying the said definitions of 'proved' or 'disproved' to principle behind Section 118(a) of the Act, the Court shall
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
31. A Division Bench of this Court in Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal [(1999) 3 SCC 35] albeit in a civil case laid down the law in the following terms:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 defendant can prove the non-
existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non- existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-
existence of the consideration, the
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt"
This Court, therefore, clearly opined that it is not necessary for the defendant to disprove the existence of consideration by way of direct evidence.
32. The standard of proof evidently is pre-ponderance of probabilities. Inference of pre-ponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.
33. Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 even for the purpose of drawing presumption under another.
34. The Second Respondent herein was a member of a Stock Exchange. The transactions in relation to the Stock Exchange are regulated by the statutes and statutory rules. If in terms of the provisions of a statute, a member of a Stock Exchange is required to maintain books of accounts in a particular manner, he would be required to do so, as non-compliance of the mandatory provisions of the Rules may entail punishment. It is not in dispute that transactions comprising purchases and sales of shares by investors is a matter of confidence. Both parties would have to rely upon one another. For the said purpose, the courts of law may also take judicial notice of the practice prevailing in such business. The learned Appellate Judge rightly did so."
47. Adverting to the case in hand, the Court find on a plain reading of its judgment that, the Trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 Sections 118 and 139 of N.I. Act. The Statute mandates that once the signature of an accused on the cheque is established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystalized by the Hon'ble Apex Court in Rohitbhai Jivanlal Patel v. State of Gujarat in the following words:
"In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused....."
48. Once the accused had admitted his signatures on the cheque, the Trial Court ought to have presumed that, the cheque was issued as consideration for a legally enforceable debt. The Trial Court fell in error when it called upon the complainant to explain the circumstances under which the accused was liable to pay. Such approach of the Trial Court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law.
49. No doubt, and as correctly argued by the counsel for the appellant/complainant, the presumptions raised under Sections 118 and 139 are rebuttable in nature. As held in MS Narayana Menon v. State of Kerela (supra), which was relied upon in Basalingappa (supra), a probable defence needs to be raised, which
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 must meet the standard of "preponderance of probability", and not mere possibility. It appears that, a bare denial of passing of consideration would not aid the case of accused.
50. Even if the arguments raised by the accused at face value that, a blank cheque was issued to one Ayyappa Kambi, this contention have not been proved, hence, on the contrary, the complainant able to prove that, the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where the Hon'ble Apex Court held that:
"Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
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51. Considering the above propositions of law, it has to be held that, the Trial Court without looking into the factual aspects of oral and documentary evidence and the admissions made in the deposition of PW.1, has acquitted the accused of the offence under Section 138 of N.I. Act, which is perverse. Considering the fact that, there has been an admitted business relationship between the parties, this Court is of the opinion that, the defence raised by the accused does not inspire confidence or meet the standard of 'preponderance of probability'. In the absence of any other relevant material, it appears that, the Trial Court has erred in considering the claim of complainant and failure to upholding the onus imposed upon him in terms of Sections 118 and Section 139 of the NIA. Looking into any angle, the judgment of the Trial Court is perverse and contrary to the evidence available on record. Hence, interference with the findings of Trial Court is very much required in this case. Therefore, I answer point Nos.1 and 2 in the affirmative.
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52. In view of the foregoing discussion on point Nos.1 and 2, the appeal filed by the complainant deserves to be allowed. Hence, I proceed to pass the following:
ORDER The appeal filed by the appellant is allowed.
The impugned judgment and order dated 05.05.2017 passed by the JMFC, Muddebihal in C.C.No.164/2007 is hereby set aside.
The accused is found guilty. Acting under Section 255(2) of Cr.P.C., the accused is convicted for the offence punishable under Section 138 of the N.I. Act and he is sentenced to pay fine of Rs.5,10,000/-. In default of payment of fine amount, the accused shall undergo simple imprisonment for a period of six months.
Further, acting under Section 357(1)(b) of Cr.P.C., the appellant is entitled for
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NC: 2023:KHC-K:6608 CRL.A No. 200076 of 2017 compensation of Rs.5,00,000/- out of Rs.5,10,000/- and remaining cost of Rs.10,000/- shall be remitted to the State as expenses.
Office is directed to furnish a copy of this judgment to the accused forthwith.
Office to return the Trial Court records forthwith. The Trial Court shall secure the accused and issue the conviction warrant accordingly. The respondent/ accused shall surrender before the Trial Court forthwith.
Sd/-
JUDGE SRT List No.: 1 Sl No.: 1