Bangalore District Court
Smt.M.K.Vijayalakshmi vs Smt.K.Chaya on 1 February, 2020
1 C.C.No.15776/2016 J
THE COURT OF THE XVI ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE, BENGALURU CITY
Dated:- This the 1st day of February 2020
i.
Present: Sri.S.B.HANDRAL, B.Sc., L.L.B(SPL).,
XVI Addl.C.M.M., Bengaluru City.
JUDGMENT U/S 355 OF Cr.P.C.,
Case No. : C.C.No.15776/2016
Complainant : Smt.M.K.Vijayalakshmi,
Aged about 53 years,
W/o. Sri. Annegowda,
R/at No.180/20,
3rd Cross, 8th Main Road,
Pramod Layout
(Pantharapalya),
Nayandahalli (PO),
Bengaluru -560 039.
(Rep.by Sri. Siddaiah.Adv.,)
- Vs -
Accused : Smt.K.Chaya,
Aged about 53 years,
W/o. Sri. Nanjunda,
R/at No.78, 7th Cross,
Kathriguppe,
Near Government School,
Near Vivekananda Nagara Bus
Stop,
Bengaluru - 560 085.
2 C.C.No.15776/2016 J
And also having address:
Smt.K.Chaya,
Aged about 53 years,
W/o. Sri.Nanjunda,
M/s. Veena Fashions,
No.11, Ranganathapura,
Near Vishal Theatre,
Kamakshipalya,
Bengaluru -560 079.
(Rep. by Sri. N.Nagaraja &
Associates., Adv.,)
Case instituted : 11.7.2016
Offence complained : U/s 138 of N.I Act
of
Plea of Accused : Pleaded not guilty
Final Order : Accused is convicted
Date of order : 1.2.2020
JUDGMENT
The Complainant has filed this complaint against the Accused for the offence punishable u/Sec.138 of the Negotiable Instruments Act.
2. Briefly stated the case of the Complainant is that, the Accused is known to her since 6 years and she became a friend to her. The Accused approached her for a hand loan of Rs. 2 Lakhs during the last 3 C.C.No.15776/2016 J week of December 2013 for the purpose of her M/s.Veena Fashions Expenditure and to meet her immediate domestic legal necessities, promising to repay the same within 3 months. Since the Accused was known to her, she arranged the funds with great difficulty through her friends and relatives and lent a sum of Rs.2 Lakhs to the Accused on 4/2/2014 in the presence of the witnesses to meet her immediate necessities at Bengaluru. The Complainant has further contends that, though the Accused had assured to repay the said loan amount to her within 3 months, even after the lapse of the stipulated period of 3 months she failed to keep up her promise. Thereafter when she approached her and demanded for the repayment of the loan amount, finally on her demand, the Accused issued a cheque bearing No.169606 dated 25/4/2016 for Rs.2 Lakhs drawn on the State Bank of India, Kathriguppe Branch, Bengaluru, towards the discharge of her legal liability for Rs.2 Lakhs. The Complainant further contends that, as per the instructions of the Accused, she has presented the said cheque for encashment on 25/4/2016 through her Banker, the same came to be returned dishonoured for the 4 C.C.No.15776/2016 J reason "Funds Insufficient" vide Bank endorsement dated 26/4/2016. Thereafter as per the instructions of the Accused, once again she presented the cheque for encashment on 23/5/2016, but once again the said cheque returned for the same reason "Funds Insufficient" vide Bank Endorsement dated 24/5/2016. The Complainant has further contends that, thereafter she got issued legal notice to the Accused on 2/6/2016 through RPAD calling upon her to repay the cheque amount within 15 days from the date of the receipt of the said legal notice. The said legal notice came to be returned with a postal shara "No such Firm" in the address and another notice sent to the residential address of the Accused came to be duly served upon her. Inspite of it, the Accused has neither replied to notice nor has she repaid the amount to her. The Complainant submits that, the dishonour of the cheque issued by the Accused has been malafide, intentional and deliberate. Feeling aggrieved by the conduct of the Accused, she has filed the present complaint praying that the Accused be summoned, tried and punished in accordance with Sec.138 of the Negotiable Instruments Act.
5 C.C.No.15776/2016 J3. The Complainant has led her Pre-
summoning evidence on 24.8.2016. Prima-facie case has been made out against the Accused and she has been summoned vide the order of the same date. In support of her oral evidence, the Complainant has relied upon the documents as per Ex.C.1 to C.11 i.e. Ex.C1 is the original cheque dated: 25.4.2016 in which, the signature is identified by P.W.1 as that of the Accused as per Ex.C1(a), the Bank memos as per Ex.C2 and C.3 respectively, the office copy of the Legal Notice as per Ex.C4, two Postal Receipts as per Ex.C5 & 6 respectively, the Postal acknowledgment as per Ex.C7, the Un-served Legal notice as per Ex.C8, the Postal Envelope as per Ex.C9, the Postal Receipt as per Ex.C10. During the cross-examination of DW.1 has produced blank signed original cheque as per Ex.C.11 and the signature found on the said cheque as that of the Accused as per Ex.C.11(a).
4. Prima facie case has been made against the Accused and summons was issued against her in turn the Accused has appeared before the Court and she has been enlarged on bail and the substance of 6 C.C.No.15776/2016 J the accusation has been read over to her, to which she has pleaded not guilty and has claimed the trial.
5. Thereafter complainant herself examined as PW.1 by adopting sworn statement filed by her and also adopted the documents which are marked as Ex.C.1 to C.10 at the time of recording of the sworn statement and closed her side.
6. Thereafter the statement of the Accused as required U/s.313 of Cr.P.C. has been recorded, the Accused has denied the incriminating evidence appearing against her and chosen to lead her rebuttal evidence.
7. The Accused herself examined as DW.1 and no documents have been produced on her behalf and one witness by name Smt. Manjula got examined as DW.2 on her behalf and closed her side.
8. Heard the arguments by both sides and perused the written argument submitted by the learned counsel for the complainant and Accused and decisions relied upon by the learned counsel for 7 C.C.No.15776/2016 J the Accused i.e.1) 2017 (1) DCR 519; 2) 2017 (2) DCR 159; 3) ILR 2009 KAR 1633; 4) 2013 (3) KCCR 1940; 5) ILR 2008 KAR 4629 6) 2008 Crl. L.J. 2405 ; 7) AIR 2008 SCC 1325; 8) 2016 Crl. L.J. and 9) 2012 (3) SCCR 2057.
9. On the basis of complaint, evidence of complainant and documents and having heard the arguments of both learned counsels for the complainant and the accused, the following points that are arise for consideration are:-
1. Whether the complainant proves that the accused has issued cheque for Rs.2,00,000 bearing No.169606 dated:-25.4.2016 drawn on State Bank of India, Kathriguppe, Bengaluru to discharge legally recoverable debt to the complainant and when the complainant has presented a cheque for encashment through his banker but the said cheque has been dishonoured for the reasons "Funds Insufficient" on 24.5.2016 and the complainant issued legal notice to the accused on 2.6.2016 and inspite of it the accused has not paid the cheque amount within prescribed period there by the accused has committed an offence U/s.138 of the Negotiable instruments Act?8 C.C.No.15776/2016 J
2. What Order?
10. The above points are answered as under:
Point No.1: In the Affirmative Point No.2:As per final order for the following:
REASONS
11. Point No.1: Before appreciation of the facts and oral and documentary evidence of the present case, it is relevant to mention that under criminal jurisprudence prosecution is required to establish guilt of the Accused beyond all reasonable doubts however, a proceedings U/s.138 of N.I.Act is quasi criminal in nature. In these proceedings proof beyond all reasonable doubt is subject to presumptions as envisaged U/s.118, 139 and 136 of N.I.Act. An essential ingredient of Sec. 138 of N.I.Act is that, whether a person issues cheque to be encashed and the cheque so issued is towards payment of debt or liability and if it is returned as unpaid for want of funds, then the person issuing such cheque shall be deemed to have been committed an offence. The offence U/s.138 of N.I. Act pre-supposes three conditions for prosecution of 9 C.C.No.15776/2016 J an offence which are as under:
1. Cheque shall be presented for payment within specified time i.e., from the date of issue or before expiry of its validity.
2. The holder shall issue a notice demanding payment in writing to the drawer within one month from the date of receipt of information of the bounced cheque and
3. The drawer inspite of demand notice fails to make payment within 15 days from the date of receipt of such notice.
If the above said three conditions are satisfied by holder in due course gets cause action to launch prosecution against the drawer of the bounced cheque and as per Sec.142(b) of the N.I. Act, the complaint has to be filed within one month from the date on which cause of action arise to file complaint.
12. It is also one of the essential ingredients of Sec. 138 of N.I.Act that, a cheque in question must have been issued towards legally recoverable debt or liability. Sec. 118 and 139 of N.I.Act envisages certain presumptions i.e., U/s.118 a presumption 10 C.C.No.15776/2016 J shall be raised regarding 'consideration' 'date' 'transfer' 'endorsement' and holder in course of Negotiable Instrument. Even Sec.139 of the Act are rebuttable presumptions shall be raised that, the cheque in question was issued regarding discharge of a legally recoverable or enforceable debt and these presumptions are mandatory presumptions that are required to be raised in cases of negotiable instrument, but the said presumptions are not conclusive and rebuttable one, this proportion of law has been laid down by the Hon'ble Apex Court of India and Hon'ble High Court of Karnataka in catena of decisions.
13. In the present case the complainant got examined as PW.1 by filing her affidavit evidence wherein she has reiterated the entire averments of the complaint and in her evidence testified regarding lending of loan amount of Rs.2 Lakhs to the Accused on 4.2.2014 for the purpose of her M/s. Veena Fashions Expenditure and to meet her domestic legal necessities and Accused promising to repay the said amount within three months in the presence of witnesses thereafter the Accused failed to repay the 11 C.C.No.15776/2016 J amount within three months and even after lapse of the period of three months thereafter she approached her and demanded for the repayment of the loan finally she issued a cheque in question i.e. Ex.P.1 for Rs.2 Lakhs towards discharge of her legal liability, thereafter she has presented the said cheque for encashment on 25.4.2016 and it was dishonoured for the reason of "Funds Insufficient"
dated; 24.6.2016 and thereafter again as per the instructions of the Accused, she presented the cheque for encashment on 23.5.2016 but once again the said cheque returned dishonoured with banker's endorsement that "Funds Insufficient" dated:
24.5.2016 thereafter on 2.6.2016 caused legal notice to the accused through RPAD to her firm address and also residential address calling upon her to pay the amount covered under the dishonoured cheque within 15 days from the date of receipt of notice and the notice sent to the firm address returned as "No such Firm" and another notice sent to residential address duly served upon her, inspite of it, the Accused has neither complied the notice nor repaid the amount to her.12 C.C.No.15776/2016 J
14. In support of her oral evidence, P.W.1 has relied upon the documentary evidence as per Ex.C.1 to C.11 i.e., Ex.C1 is the original cheque dated:
25.4.2016 in which, the signature is identified by P.W.1 as that of the Accused as per Ex.C1(a), the Bank memos as per Ex.C2 and C.3 respectively, the office copy of the Legal Notice as per Ex.C4, two Postal Receipts as per Ex.C5 & 6 respectively, the Postal acknowledgment as per Ex.C7, the Un-served Legal notice as per Ex.C8, the Postal Envelope as per Ex.C9, the Postal Receipt as per Ex.C10. During the cross-examination of DW.1 has produced blank signed original cheque as per Ex.C.11 and the signature found on the said cheque as that of the Accused as per Ex.C.11(a).
15. In the present case, there is no dispute between the complainant and Accused with regard to their acquaintance. It is also not in dispute by the accused that, the cheque in question belongs to her account and signature found at Ex.C.1(a) is also that of her signature. The Accused has also not disputed that the cheque in dispute presented for encashment and dishonoured for the reason of "Funds 13 C.C.No.15776/2016 J Insufficient' vide bank endorsement dated:
24.5.2016. As a matter of record and has been proved by Ex.C.2 issued by the concerned bank dated: 24.5.2016. Therefore the complainant has proved that, the cheque in question i.e Ex.C.1 was presented within its validity period and dishonoured as per bank endorsement issued by the banker of the Accused and the cheque in question belonging to the Accused account and signature of the Accused is at Ex.C.1(a).
16. In relation to the service of notice the Accused in the cross-examination of complainant and in her evidence has denied service of legal notice issued by the complainant to her. The complainant in order to prove service of notice upon the Accused, has produced the documents i.e copy of the legal notice, postal receipt, postal acknowledgement which are at Ex.C.4 to C.10 respectively. On perusal of the Ex.C.7 i.e. the postal acknowledgement it appears that, the legal notice caused by the complainant was received by affixing signature on the postal acknowledgement. The Accused during the course of cross-examination of 14 C.C.No.15776/2016 J the complainant though she has denied the sending of notices to her both addresses by the complainant as they are not her correct address, but the Accused has not denied a signature found on the Ex.C.7 i.e. postal acknowledgement and even it is not cross examined by the Accused in respect of receipt of the postal acknowledgement by affixing the signature on Ex.C.7. Even it is not the defence of the Accused that, the signature found on the Ex.C.7 is not of her signature and no notice has been received by affixing signature on Ex.C.7 either by her or on her behalf, hence in view of non disputing of the signature on the Ex.C.7 i.e the postal acknowledgement, it appears that, though the Accused has denied receipt of notice as per Ex.C.7 but the documents produced by the complainant i.e Ex.C.5 to C.7 are sufficient to hold that, the legal notice caused by the complainant to the residential address of the Accused was duly served on her. The Accused during the course of her cross-examination has admitted that, she has got two daughters by name Veena and Vani and though the Accused denied receipt of legal notice by her daughter by affixing of her signature on postal acknowledgement 15 C.C.No.15776/2016 J but the Accused has not denied in her evidence or during the course of cross-examination of the complainant that, the signature appearing on Ex.C.7 is not of her signature or signature of her daughter and even the Accused has not made any efforts to examine the concerned postal authorities to prove her defence that, the signature found at Ex.C.7 is not of either her signature or the signature of her daughter, even it is not the defence of the Accused that, the complainant got created the signature on Ex.C.7, in such circumstances in view of the admitted facts by the Accused , it can be held that the legal notice caused by the complainant has been duly served on the Accused.
17. It is also relevant here to mention that, the notice issued to the M/s.Veena Fashions, i.e Firm address of the Accused was returned with a postal shara that, no such firm as per the Ex.C.9 and C.10. The Accused during the course of cross-examination of complainant has not denied the firm address mentioned by the complainant in the legal notice, postal receipt and RPAD envelope cover as is not of her firm's address but admitted that, her husband 16 C.C.No.15776/2016 J is running garment business in the name of M/s. Veena Fashions, hence it goes to show that, the Accused has admitted that, there is an existence of M/s.Veena Fashions and running by the family members of the Accused. Though the Accused denied her address mentioned on Ex.C.9 & C.10 but in order to prove her defence that, the address mentioned by the complainant is not of her address, the Accused has not produced documentary proof though the court has directed to produce the documentary proof to show her correct address at the time of enlarging her on bail, in such circumstances only on the basis of bare denial it cannot be held that, the address mentioned by the complainant is not the correct address of the Accused. On the contrary the complainant has proved that, as per Ex.C.7 the legal notice caused by her was duly served on the Accused.
18. In addition to that, it is relevant here to refer that, the complainant has proved that, the legal notice issued by him was served on the Accused as per Ex.C.7, therefore this would also clearly substantiate the claim of the complainant that, the 17 C.C.No.15776/2016 J Accused has received the legal notice issued by the complainant. In addition to that, it is relevant here to refer the decision reported in 2007 AIR SCW 3578 in the case of C.C.Alavi Haji Vs. Palapetty Muhammed and another., wherein the Hon'ble Apex court held that " the drawer of the cheque is permitted to deposit the cheque amount within 15 days from the date of his appearance before the court in pursuance of the service of summons on him and in such situation, his defence of non service of the legal notice cannot be available to him'. Hence, in view of the said principles of law, even for sake of discussion, though there is no cogent and reliable documentary proof to substantiate the claim of the complainant with regard to address of the Accused to show there is due service of the legal notice on the Accused, in view of settled position of law by virtue of the above said decision of Hon'ble Apex Court of India, the Accused is not entitled to the technical defence of the alleged non service of the legal notice. Therefore, the contentions taken by the learned counsel for the accused that, the notice issued by the complainant was not served on the accused and the complainant 18 C.C.No.15776/2016 J has not complied the mandatory requirements of Sec.138(b) of N.I.Act and complaint is not maintainable cannot be acceptable and are not sustainable in law.
19. It is also the defence of the Accused that, the complainant had no source of income to lend alleged loan amount of Rs.2,00,000/= to the Accused and the Accused has not issued the cheque in question i.e Ex.C.1 to the complainant towards discharge of loan amount. In this regard, the learned counsel for the Accused cross-examined the complainant in length but nothing has been elicited to discredit or discard her evidence, instead of eliciting anything materials from the complainant the Accused rather concentrated her defence that, there was no financial transaction between her and the complainant, but the complainant has specifically stated that, She is working as Stenographer in Commercial Tax Department and her husband was also retired as ASI and the Accused came to her contact through her friends by name Shobha and Manjula and the Accused approached her in the last week of December and 19 C.C.No.15776/2016 J requested for financial assistance and on 4.2.2014 she has lent an amount of Rs.2 Lakhs to the Accused and the Accused had received the said amount for Veena Fashions expenditure and legal necessities. It is true that, the complainant/PW.1 admitted that, at the time of lending of loan amount of Rs.2 Lakhs to the Accused she had not collected any documents from the Accused but the complainant stated that, since the Accused is her friend and on the belief she had lent the loan amount to the Accused. It is also admitted by PW.1 that, she has no document to show that, she was possessing an amount of Rs.2 Lakhs as on 4.2.2014 but the complainant specifically stated that, she had collected the amount from her friends and lend the same to the Accused. The complainant/PW.1 specifically denied the suggestions made to her that, the Accused has issued the disputed cheque to one Manjula in respect of chit transaction and by colluding with the said Manjula she had filed this false case against the Accused. The complainant has also denied the suggestion that, the disputed cheque was issued as a blank signed cheque to the Manjula since the Accused was due of Rs.50,000/= 20 C.C.No.15776/2016 J to the said Manjula. It is true that, some discrepancies have been elicited during the cross- examination of complainant with regard to non collecting of documents by the complainant at the time of lending of the loan amount and non production of the document to show that, as on 4.2.2014 the Accused was having funds to lend the loan amount to the Accused, but only on the basis of said admissions it cannot be held that, there was no transaction took place between the complainant and Accused as admittedly the Accused has admitted issuance of cheque i.e Ex.C.1 to the complainant and during the course of cross- examination has suggested that, a blank signed cheque was issued to one Manjula in respect of chit transaction and same was misused by the complainant colluding with her, in such circumstances, unless and until the Accused has rebutted the presumption available to the complainant U/s.118 and 139 of N.I. Act., the discrepancies of the complainant in her evidence as elicited by the Accused cannot be taken into consideration to disbelieve her claim.
21 C.C.No.15776/2016 J20. It is important to note here that, on careful perusal of the entire oral and documentary evidence produced by the complainant i.e Ex.C.1 to C.10 and admitted facts by the Accused as it is already held in the above that, the complainant proved that the cheque in question belongs to the Accused i.e Ex.C.1 and signature found at Ex. C.1(a) is that of the signature of the Accused and also proved that, the cheque in question was presented within its validity period and it was dishonoured for the reason of "Funds Insufficient"
as per Ex.C.2 and thereafter the legal notice caused by him through RPAD to the Accused was served on her and Accused has not given any reply to the legal notice, in such circumstances, it can be held that, the complainant has discharged her initial burden by complying the mandatory requirements as required U/s.138 of N.I. Act and initial presumptions are available in favour of the complainant U/s.118a and 139 of the N.I. Act. Consequently it is for the Accused to rebut the said presumptions available in favour of the complainant to show that, the cheque in question was not issued either to the complainant or towards discharge of any legally recoverable debt 22 C.C.No.15776/2016 J by producing cogent and convincible evidence but not mere suggestions or even by plausible explanation. In such circumstances, when the presumptions U/s.118 and 139 of N.I.Act are available to the complainant, even a presumption can be drawn to the extent of existence of legally recoverable debt or liability against the Accused unless and until the said presumptions are rebutted by the Accused, even in the absence of documents produced by the complainant with regard to loan transaction in question.
21. It is true that, the complainant has not produced documents except the cheque in question i..e Ex.C.1 to show that, she has lent an amount of Rs.2 Lakhs to the Accused and in turn the Accused has issued the Ex.C.1 cheque towards discharge of the said debt and has also not produced documents to show her source of income. In this regard, it is relevant here to refer the decisions reported in 2001 AIR Karnataka HCR 2154 between 'M/s.Devi Tyres V/s.Navab Jan' and in 2011 ACD 1521 (KAR) between 'Smt. Usha Suresh V/s.
Shashidharn', in 2010 SC 1898 between 23 C.C.No.15776/2016 J 'Rangappa Vs. Mohan' and 2011 ACD 1412 (KAR) between 'N.Hasainar Vs. M.Hasainar, S/o. Ibrahim'. The Hon'ble High Court of Karnataka in the above decision i.e., 2001 AIR Karnataka HCR 2154 at para No.6 was pleased to hold that issuance of cheque itself was adequate proof of existence of debt or liability. In another decision of Hon'ble Apex Court of India i.e. Hon'ble Three Judges Bench Decision reported in (2010) 11 SCC 441 in the case of Rangappa Vs. Sri. Mohan ., wherein the Hon'ble Apex Court held that " A. Negotiable Instruments Act, 1881 - S.139 -
Presumption under - scope of - Held, presumption mandated by S. 139 includes a presumption that there exists a legally
enforceable debt or liability - However such presumption is rebuttable in nature - Criminal Trial - Proof - Presumptions - Generally. Further held that "Signature on the cheque was his, statutory presumption under S.139 comes into play and the same was not rebutted even with regard to the materials submitted by complainant Appellant not able to prove "lost cheque" theory - Apart from not raising a 24 C.C.No.15776/2016 J probable defence appellant was also not able to contest the existence of a legally enforceable debt or liability - hence, his conviction by High Court, held, proper. In another decision of Hon'ble Apex Court of India, reported in CRIMINAL APPEAL NO. 508 OF 2018 DT 15-03-2018 between ROHITBHAI JIVANLAL PATEL Vs STATE OF GUJARAT AND ANR held that "Negotiable Instruments Act facts like source of funds are not relevant if the Accused has not been able to rebut the presumption. It is further held that " When such a presumption is drawn, the facts relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the Accused has been able to rebut the presumption or not". In another decision of Hon'ble Apex court of India decided in Crl.Appeal No.1545 of 2019 dt.17/10/2019 by the Hon'ble Apex Court of India in the case of Uttam Ram Vs. Devinder Singh Hudan and Anr. Wherein the Hon'ble Apex Court held that, "
Dishonor of cheque - Statutory presumption under - burden to prove - the burden is on the 25 C.C.No.15776/2016 J accused to rebut the presumption that the cheque was issued not for any debt or other liability - it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer - even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment, would attract presumption U/s. 139 of NI Act - the accused is held guilty of dishonour of cheque for an offence U/s.s.138 of NI Act. It is also held that, " the accused has failed to lead any evidence to rebut the statutory presumption, a finding returned by both the Trial Court and High Court. Both courts not only erred in law but also committed perversity when the due amount is said to be disputed only on the account of discrepancy in the cartons, packing materials or the rate to determine the total liability as if the appellant was proving his debt before the civil court. Therefore it is presumed that, the cheque in question were drawn for consideration and the holder of the cheques received the same in existing debt". It is also held that, " the Trial court 26 C.C.No.15776/2016 J and the High Court proceeded as if, the appellant is to prove a debt before civil Court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. A dishonour of cheque carries statutory presumption of consideration. The holder of cheque in due course is required to prove that, the cheque was issued by the Accused and that when the same presented , it was not honoured Since there is a statutory presumption of consideration, the burden is on the Accused to rebut the presumption that, the cheque was issued not for any debt or other liability ". It is also relevant here to refer the decision of Hon'ble High Court of Karnataka reported in ILR 2019 KAR 493 in the case of Sri.Yogesh Poojary Vs. Sri.K.Shankara Bhat, wherein the Hon'ble High Court held that, the presumption mandated by Sec.139 of N.I Act includes the presumption that, there existed a legally enforceable debt or liability, however such presumption is rebuttable in nature". In another decision of Hon'ble High Court of Karnataka in the 27 C.C.No.15776/2016 J case of Shri.V.R.Shresti Vs. Shri. Bhaskara.P. in Crl. Appeal No. 2109/2017 dated: 15.10.2019 wherein the Hon'ble High Court of Karnataka held that "the Accused has not given any reply to the notice and also in the cross-examination, he categorically admits that, the cheque has bounced on account of no sufficient fund in the bank account of the Accused. Mere non producing of the document before the court with regard to the source of income to advance a loan is not a ground to dismiss the complaint. The Accused ought to have rebutted the contention of the complainant by producing cogent evidence before the court and mere denial is not enough".
22. Therefore on careful reading of the principles of law laid down by the Hon'ble Apex Court of India and High Court of Karnataka in the above referred decisions makes it very clear that, once the holder in due course i.e. the complainant proved that, the cheque in question belongs to the drawer and signature appearing on the cheque is that of the drawer i.e., Accused and complied the mandatory requirements as required U/s.138 of 28 C.C.No.15776/2016 J N.I.Act, a presumptions U/s.118a and 139 of N.I.Act indeed does extend to the existence of legally recoverable debt and when such presumption is drawn the facts relating to the want of documentary evidence in the form of receipts or accounts or want of evidence regarding source of funds were not of relevant unless the Accused rebutted the presumption available to the complainant as held by the Hon'ble Apex Court and High Court of Karnataka in the above decisions. In the present case also the complainant has complied mandatory requirements and has proved that, the Accused has issued the cheque in question in her favour and the Accused has admitted the cheque belongs to her and signature appearing on the cheque is that of her signature and even after service of the notice, the Accused has not given any reply or complied the terms of the notice, in such circumstances, presumptions have to be drawn towards existence of legally enforceable debt as per Sec.139 of N.I.Act. Therefore for the above said reasons the arguments canvassed by the learned counsel for the Accused in the written argument are not acceptable one and with due respect to the principles of law laid down in 29 C.C.No.15776/2016 J the decisions relied upon by the learned counsel for the Accused are not applicable to the defence of the Accused in this case, as the facts and circumstances of the present case and the decided cases are not one and the same.
23. The learned counsel for the defence in the written argument contended that, the complainant has admitted in her cross-examination that, she has not disclosed or declared the alleged loan amount lend to the Accused in her income tax returns for the year 2014, hence it goes to show that, the complainant has not lent the alleged loan amount to the Accused and also has no source of income as on the date of alleged lending of loan amount to the Accused and in view of the same, it cannot be enforceable under the law. It is true that, the complainant in her cross-examination admitted that, she has not disclosed about her loan transaction of Rs.2 Lakhs lend to the Accused in her I.T. Returns concerning the financial year 2014, but mere non declaration of the loan transaction in question in income tax returns could by itself invalidates the transaction or not is to be taken into consideration, 30 C.C.No.15776/2016 J in this regard, it is necessary here to refer the decision of our Hon'ble High court of Karnataka reported in 2019(1) Kar. L.R.185 in the case of Sri.Yogesh Poojary Vs. Sri.K.Shankara Bhat in the said case the Hon'ble High Court of Karnataka held that " Negotiable Instruments Act, 1881 - Sections 138 and 139 -Endorsement 'payment stopped by drawer' - The trial court in the instant case, merely considered a suggestion made from the Accused side in the cross- examination of PW-1 that the complainant was an income tax assessee and that he has not declared the alleged loan transaction in his returns and disbelieved the case of the complainant that too, ignoring that legal presumption under section 139 of the N.I. Act, was operating in favour of the complainant- For these reasons, it has to be held that the complainant has beyond reasonable doubt proved the guilt of the Accused punishable under Section 138 of the N.I. Act. As such, the impugned judgment of acquittal passed by the trial court deserves to be set aside and respondent/Accused is liable to be convicted for 31 C.C.No.15776/2016 J the offence punishable under Section 138 of the N.I. Act. Hence in view of the principles of law laid down by the Hon'ble High court of Karnataka in the above referred decisions, in the present case also the complainant admitted that, she has not declared the loan transaction in question in her I.T. Returns but as it is already held that, the complainant has discharged her primary burden by complying the mandatory provisions of Sec.138 of N.I. Act, therefore it is for the accused to rebut the presumption existing infavour of the complainant U/s.139 of Negotiable Instruments Act. Apart from that, the admissions of the complainant with regard to non declaration of loan transaction in I.T. Returns for the concerned year could not by itself draw an adverse inference and to hold that, there was no existence of legally enforceable debt or the presumption as envisaged U/s.139 of N.I.Act is successfully rebutted by the accused. In another decision of Hon'ble Madhya Pradesh High Court decided in C.R.R No.5263/2018 dated: 7.3.2019 in the case of Smt. Ragini Gupta Vs. Piyush Dutt Sharma Gwalior., wherein the Hon'ble High Court held that, mere non filing of income tax return 32 C.C.No.15776/2016 J would not automatically dislodge the source of income of the complainant and non payment of income tax is a matter between the revenue and assessee and if the assessee has not disclosed his income in the income tax return, then the income tax department is well within its right to reopen the assessment of income of the assessee and to take action as per provisions of Income Tax Act, however non filing of income tax return by itself would not mean that, the complainant had no source of income and thus no adverse inference can be drawn in this regard only because of absence of income tax return. Hence in view of the principles of law laid down by Hon'ble High Court of Madya Pradesh in the above said decision in the present case also though the complainant has admitted that, she has not disclosed the transaction in question in her income tax return that itself would not automatically dislodge the source of income of the complainant. Therefore the admissions of the complainant which are elicited in her cross-examination are not helpful for the accused to prove her defence that, in view of non disclosure of source of income of the complainant and transaction in question in her 33 C.C.No.15776/2016 J income tax returns that itself sufficient to hold that, the complainant has no source of income cannot be acceptable one.
24. It is relevant here to mention that, the Accused in order to rebut the presumption available to the complainant U/s.118 and 139 of N.I. Act herself examined as DW.1, in her evidence has stated that, she do not know the complainant and has not borrowed any amount from her and has not issued cheque to her and the signature and the contents of the cheque are not of her signature and her writings. The Accused/DW.1 further deposed that, she had a financial transaction with one Manjula in the year 2012 or 2013 and she was a due of Rs.50,000/= to her at that time she had given the cheque in question to the said Manjula and she has not received any notice issued by the complainant and she is not running any business under the name of M/s. Veena Fashions.
25. It is relevant here to mention that, the Accused has also examined one witness i.e. Manjula as DW.2 on her behalf but the said Manjula i.e., 34 C.C.No.15776/2016 J Dw.2 in her evidence has not supported the defence of the Accused and she has clearly stated that, she was having financial transaction with Accused and had received the cheque from the Accused and in respect of the said cheque a case was initiated by her and the said case was disposed off. According to the Accused she had given the disputed cheque in favour of Manjula i.e.,DW.2 in respect of financial transaction with her but the said Manjula herself stated in her evidence that, the case filed by her relating to the cheque which was received by her from the Accused was disposed off , hence it goes to show that, the cheque in dispute is not the cheque issued by the Accused to one Manjula, therefore the Accused has miserably failed to prove that, she had given the disputed cheque to one Manjula in respect of her financial transaction of Rs.50,000/= as alleged by her in the defence. It is also made it clear from the evidence of DW.2 that, the cheque in dispute and the cheque which was handed over to the Manjula are not one and the same, therefore the defence taken by the Accused that, the complainant by colluding with the said Manjula and by misusing the cheque in dispute which was given to the said 35 C.C.No.15776/2016 J Manjula in respect of chit transaction has filed this false case against her cannot be acceptable one.
26. The Accused in order to substantiate her defence has not produced any documents i.e. to show that, Manjula was running chit transaction and in respect of chit transaction she has issued the disputed cheque in favour of Manjula in respect of payment of Rs.50,000/= and the complainant and the said Manjula colluded to each other and has filed this false case by misusing the blank signed cheque given by the Accused to the said Manjula, the Accused except her oral evidence, nothing has been produced to believe her defence version.
27. In this regard, it is relevant here to refer the decision of Hon'ble Madras High Court reported in AIR 2009 (NOC) 726 MAD in the case of P. Armugam Vs. P. Veluswamy, wherein the Hon'ble High Court held that "Negotiable Instruments Act (26 of 1881) S.138 - Dishonour of cheque - Accused admits to have signed cheque and handed it over to complainant - Defence raised by accused that said cheque was issued as a 36 C.C.No.15776/2016 J blank cheque intended to be a collateral security for an unregistered chit conducted by complainant - However, no evidence has been adduced by Accused to prove that complainant was running an unregistered chit in which Accused joined as a subscribing member - there is no evidence to prove amount of chit or that Accused was a priced subscriber and the blank cheque had been issued to ensure proper payment of future subscriptions - can be held that, cheque was issued for payment of loan obtained by accused from complainant - Accused guilty of offence. In another decision of Hon'ble High Court of Karnataka reported in 2012 (4) KCCR 2634 in the case of Sri. Prakash @ Jnana Prakash Vs. Ms. T.S. Susheela wherein the Hon'ble High Court held that "NEGOTIABLE ISNTRUCTMETS ACT, 1881 - Section 138 - Complaint under - Cheque dishonoured for "insufficient funds" - Plea of accused as to non - receipt of demand notice, absence of legal liability, misuse of documents given as security in an independent chit transaction - Convicted by Trial Court- Confirmed by Appellate Court -
37 C.C.No.15776/2016 JRevision against- The plea as to misuse of documents would not be believed due to in action of the accused. Hence in view of the principles of law laid down by the Hon'ble High Courts in the above decisions, in the present case also the Accused has not proved that, the cheque in question has been issued to one Manjula in respect of chit transaction and the complainant has misused the cheque by colluding with the said Manjula and filed false case against her as alleged in her defence.
28. It is relevant here to mention that, according to the defence of the Accused that, she had a financial transaction with one Manjula in the year 2012 or 2013 and she was due of Rs.50,000/= to her in respect of chit transaction, at that time she had given the cheque in question to the said Manjula and the said cheque has been misused by the complainant colluding with the said Manjula. The Accused except her oral evidence has not produced documents to show that, she has made any efforts or taken any legal action against the complainant or Manjula in respect of alleged misusing of her signed 38 C.C.No.15776/2016 J blank cheque issued towards security of the chit amount. If really the complainant by colluding with the said Manjula has misused the blank signed cheque of the Accused which was allegedly given towards security of the chit amount, the accused would have made an efforts to get return of the said blank cheque either from the complainant or from Manjula. Admittedly she has not produced any document to show that, the said Manjula was running chit business and she was due of Rs.50,000/= amount to the said Manjula towards the chit amount and the said Manjula had collected the signed blank cheque from the accused, in such circumstances, the Accused would have made efforts either to issue notice to the complainant or to the Manjula in writing and to file complaint against the complainant or Manjula either before the police or competent authority for non returning of the alleged signed blank cheque. In this regard, it is relevant here to refer the decision of Hon'ble Apex Court of India reported in AIR 2018 SC 3601 in a case of T.P.Murugan(dead) Thr. Lrs.V. Bhojan Vs. Posa Nandi, rep. Thr. Lrs. PA holder, T.P. Murugan V. Bhojan, wherein the Hon'ble apex Court held that 39 C.C.No.15776/2016 J "Negotiable Instruments Act (26 of 1881) Ss.118, 138, 139 - Dishonour of cheque - Presumption as to enforceable debt- cheques allegedly issued by accused towards repayment of debt- Defence of accused that 10 cheques issued towards repayment of loan back in 1995 - behavior of accused in allegedly issuing 10 blank cheques back in 1995 and never asking their return for 7 years, unnatural - Accused admitting his signature on cheques and pronote, presumption under S.139 would operate against him - Complainant proving existence of legally enforceable debt and issuance of cheques towards discharge of such debt- Conviction, Proper." Hence by applying the above principles of law to the present facts of the case in the present case, the Accused has not produced any document to prove the said defence, under such circumstances, it can be held that, the accused has not made any efforts to get return of the cheque in question alleged to have been given to the Manjula for security of the amount given by her in respect of alleged chit business and thereafter the said cheque has been misused by the complainant by colluding 40 C.C.No.15776/2016 J with her, under such circumstances, the said unnatural conduct of the accused in non taking of action may leads to draw an adverse inference against the accused that, the cheque in question issued by the accused towards discharge of the liability and presumption U/s.139 of N.I. Act would operate against her, as she has admitted the signature and cheque in questions is belongs to her.
29. The Accused in her defence has also taken the contention that, she has given blank signed cheque as a security towards the chit amount to one Manjula and thereafter the complainant by colluding wit h the said Manjula has misused the said cheque and filed this case and the complainant/PW.1 in her cross-examination has specifically denied the suggestions made to her in that regard. As it is already held in the above that, the Accused has failed to prove her defence that, the said Manjula was running chit business and she had collected the alleged blank signed cheque from the Accused, in such circumstances the defence of the Accused cannot be acceptable one. However, even for sake of discussion if it is assumed that, the contents of the 41 C.C.No.15776/2016 J subject cheque are not filled in by the Accused even under such circumstances also, unless and until the Accused proved her defence by producing cogent and convincible evidence, it cannot be held that, the contents of the cheque have been filled in by the complainant. In this regard, it is a relevant here to refer the decision of Hon'ble Apex Court of India reported in AIR 2019 SC 2446 in the case of Birsingh Vs. Mukesh Kumar., wherein the Hon'ble apex Court held that, "presumption U/s.139 is presumption of law, distinguished from presumption of facts and also held that, presumptions are rules of evidence and do not conflict with presumption of innocence which requires prosecution to prove case against the Accused and also held that obligation on the prosecution may discharged with the help of presumptions of law and presumption of fact unless the accused adduces evidence showing reasonable plausibility of non existence of presumed fact." In the present case though the Accused has denied the contents of the cheque in question except her signature but she has failed to prove her defence or produced any documents or 42 C.C.No.15776/2016 J satisfactory evidence to rebut the presumptions as available U/s.139 of the N.I. Act, under such circumstances in view of the above principles of law, it can be presumed even on fact also that the complainant has proved her case by discharging her burden and complying the mandatory provisions. In the said decision the Hon'ble Apex court has also held that, "presumption as to legally enforceable debt is rebuttable, the signed blank cheque if voluntarily presented to payee towards payment payee may fill up amount and other particulars and it in itself would not invalidate cheque and onus would still be on the accused to prove that, cheque was not issued or discharge of debt or liability by adducing evidence." In another decision of Hon'ble Apex court of India decided in Crl.Appeal No.1545 of 2019 dt.17/10/2019 by the Hon'ble Apex Court of India in the case of Uttam Ram Vs. Devinder Singh Hudan and Anr. Wherein the Hon'ble Apex Court held that, "
Dishonor of cheque - Statutory presumption under - burden to prove - the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other 43 C.C.No.15776/2016 J liability - it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer - even a blank cheque leaf, voluntarily signed and handed over by the accused which is towards some payment, would attract presumption U/s. 139 of NI Act - the accused is held guilty of dishonour of cheque for an offence U/s.s.138 of NI Act. In such circumstances even if it is assumed that, the complainant admitted that, the contents of cheque in question were not filled in by the Accused in view of the principles of law laid down in the above decision that itself would not invalidates the cheque in question and it can be presumed that, the cheque was filled in by in presence of the Accused at her consent and the said cheque has been issued towards discharge of legally recoverable debt.
30. Therefore considering all these aspects of the case and totality of the circumstances and on careful and meticulous appreciation of evidence adduced on behalf of the complainant and accused the complainant has successfully established beyond 44 C.C.No.15776/2016 J all reasonable doubt that, she has lent a sum of Rs.2,00,000/= to the accused as a hand loan and the accused in turn the Accused has issued subject cheque to the complainant towards repayment of the loan amount, thereafter the complainant has presented the said cheque through her banker and same was returned dishonoured with an endorsement of "Funds Insufficient" and thereafter she got issued legal notice to the accused and inspite of service of the said notice, the Accused did not repaid cheque amount, hence the complainant filed the present complaint against the accused. On the other hand, the accused has failed to rebut the presumption available infavour of the complainant with regard to the existence of legally recoverable debt under Ex.C.1 Cheque. Therefore accused has committed an offence punishable U/s.138 of N.I. Act, accordingly for the above said reasons this point is answered in the Affirmative.
31. Point No.2: Negotiable Instrument Act was enacted to bring credibility to the cheque and the very purpose of enactment is to promote the use of negotiable instrument, while to discourage the 45 C.C.No.15776/2016 J issuance of cheque without having sufficient funds in their accounts. Such being the case the intention of the legislature is that, complainant be suitable compensated while accused be punished for her act. Hence while awarding the compensation the said fact is to be kept in mind and suitable compensation is awarded to the complainant certainly it will not cause injustice to the accused, accordingly the complainant is entitled for the compensation as ordered by the court and for the said reasons, it is just and proper to pass the following :-
ORDER Acting U/sec.255(2) of Cr.P.C.
the accused is convicted for the offence punishable U/sec.138 of N.I.Act.
The accused is sentenced to pay a fine of Rs.2,15,000/= (Rupees Two Lakhs and Fifteen Thousand only) within one month from the date of order, in default she shall under go simple imprisonment for a period of (3) three months for the offence punishable U/sec.138 of N.I.Act.
Further acting U/sec.357(1) of Cr.P.C. out of the fine amount on recovery, a sum of Rs.2,10,000/= 46 C.C.No.15776/2016 J (Rupees Two Lakhs and Ten Thousand only) shall be paid as compensation to the complainant.
Further acting U/sec.357(1)(a) of Cr.P.C. out of fine amount on recovery a sum of Rs.5,000/= (Rupees Five Thousand only) shall be defrayed as prosecution expenses to the state.
The Bail bond of the Accused stands cancelled.
Office is directed to furnish free certified copy of this judgment to the Accused incompliance of Sec.363(1) of Cr.P.C.
(Directly dictated to the stenographer online, printout taken by her, verified, corrected and then pronounced by me in the open Court on this the 1st February 2020).
(SRI.S.B. HANDRAL), XVI ACMM, Bengaluru City.
ANNEXURE
1. List of witness/s examined on behalf of the Complainant:-
P.W.1 : Smt.M.K.Vijayalakshmi;
2. List of documents exhibited on behalf of the Complainant:-
Ex.C-1 : Original Cheque;
47 C.C.No.15776/2016 J
Ex.C-1(a) : Signature of the Accused;
Ex.C.2 & C.3 : Bank Memos;
Ex.C.4 : Office copy of the Legal Notice;
Ex.C.5 & C.6 : Postal Receipts;
Ex.C.7 : Postal Acknowledgement;
Ex.C.8 : Un-served Legal notice
Ex.C.9 : Postal Envelope;
Ex.C.10 : Postal Receipt;
Ex.C.11 : Original blank signed cheque;
(Marked through DW.1)
Ex.C.11(a) : Signature of the Accused;
(Marked through DW.1)
3. List of witness/s examined on behalf of the Accused:-
DW.1 : Smt.K.Chaya; DW.2 : Smt. Manjula;
4. List of documents exhibited on behalf of the Accused:-
- Nil-
(SRI.S.B.HANDRAL), XVI ACMM, Bengaluru City.48 C.C.No.15776/2016 J
1.2.2020 Judgment pronounced in the open court vide separate order.
ORDER Acting U/sec.255(2) of Cr.P.C.
the accused is convicted for the offence punishable U/sec.138 of N.I.Act.
The accused is sentenced to
pay a fine of Rs.2,15,000/=
(Rupees Two Lakhs and Fifteen
Thousand only) within one
month from the date of order, in
default she shall under go simple
imprisonment for a period of (3)
three months for the offence
punishable U/sec.138 of N.I.Act.
Further acting U/sec.357(1) of
Cr.P.C. out of the fine amount on
recovery, a sum of Rs.2,10,000/=
(Rupees Two Lakhs and Ten
Thousand only) shall be paid
as compensation to the
complainant.
Further acting U/sec.357(1)(a)
of Cr.P.C. out of fine amount on
recovery a sum of Rs.5,000/=
(Rupees Five Thousand only)
shall be defrayed as prosecution
expenses to the state.
The Bail bond of the Accused
stands cancelled.
49 C.C.No.15776/2016 J
Office is directed to furnish free
certified copy of this judgment to
the Accused incompliance of
Sec.363(1) of Cr.P.C.
XVI ACMM, B'luru.