Bangalore District Court
S. Mohan Kumar vs A. Yeshwanth on 24 April, 2023
KABC020306092018
IN THE COURT OF ADDL. CHIEF METROPOLITAN
MAGISTRATE, BENGALURU CITY.
SCCH-6
PRESENT: SMT. K. LAKSHMI, B.A.L, LL.B.,
IV Addl., Small Cause Judge &
ACMM, Court of Small Causes,
BENGALURU.
C.C. No.5798/2018
Dated this the 24th day of April 2023
COMPLAINANT : S. Mohan Kumar
Residing at No.57,
New No.41, 1st Main,
2nd Stage, Okalipuram,
Srirampura,
Bangalore-560 021.
(By Advocate Shri. G.
Raghunandan)
V/s
ACCUSED : A. Yeshwanth
M/s M. S. Yash Tours and Travels
No.500B, 8th Main,
Opposite Deccan Paradise
Aprtment, Basaveshwarnagar,
Bangalore-560 079.
C.C. No. 5798 / 2018
Also at :
No.34, 5th Cross, 6th Block,
Rajajinagar,
Bangalore-560 010.
(By Advocate Shri. Vinay Bhat)
* * *
-: J U D G M E N T :-
The complainant has filed the present complaint
against the accused under section 200 of Cr.P.C for the
offence punishable under section 138 of Negotiable
Instrument Act.
2. According to the Complainant, the accused has
taken the vehicle bearing No. KA-02-AF-5139 on lease
from the complainant. The accused had entered into lease
agreement with the complainant on 01-06-2016. It is also
alleged that the accused has undertaken to pay the
amount of Rs. 31,500/- per month towards EMI to
Indian Overseas Bank, Peenya Industrial Town Branch,
Bangalore and also agreed to pay Rs. 20,000/- per month
to the complainant from June 2016 to June 2020. The
C.C. No. 5798 / 2018
accused has also obtained the financial assistant from him.
The accused has received the amount of Rs. 5,00,000/-.
It is further alleged that the accused has not paid the
amount towards EMI from November 2016 onwards nor
paid the lease amount. The accused has returned the
leased vehicle to the complainant and agreed to pay the
amount incurred by the complainant. Subsequently for
repayment of the said amount, the accused issued the post
dated cheques on 25-10-2016. The accused has issued th
impugned cheque bearing No.300644 dated 04-10-2018
for Rs. 6,54,500/- drawn on State Bank of India,
Rajajinagar Branch, Bengaluru. Thereafter, the cheque
was presented for collection in the account of the
complainant and the said impugned cheque was
dishonored by the said Bank on 06-10-2018 on the
ground that the " funds insufficient ".
3. Thereafter, the complainant issued a statutory
notice dated 02-11-2018 under section 138 of the
Negotiable Instrument Act, to the accused. The postal
C.C. No. 5798 / 2018
authorities has delivered the intimation to the accused.
The accused did not even sent any reply to the said
statutory notice. Since the said notice was not complied
with, the above said complaint is preferred by the
complainant.
4. In his pre-summoning evidence, complainant was
examined on affidavit. He reiterated the contents of
complainant and got marked eight documents as per Ex.
P-1 to Ex. P-8. Upon appreciation of pre-summoning
evidence, accused was summoned for an offence
punishable under section 138 of the Negotiable
Instrument Act. After receipt of summons, the accused
appeared before this Court through her counsel and he
was enlarged on bail. Plea of accusation has been read
over and explained to the accused and he pleads not
guilty and claims to be tried. The accused was examined
u/Sec.313 of Cr.P.C. He totally denied the entire case of
the complainant.
C.C. No. 5798 / 2018
5. The accused moved an application to cross
examine the complainant and said application came to be
allowed. The sufficient opportunity has given to the
accused to cross examine the complainant. The accused
has cross examined the complainant. On the other hand,
the accused has relied on the evidence of DW-1.
Thereafter, the case is posted for arguments.
6. Heard the arguments.
7. On the basis of the above facts, the following
points arise for my consideration :-
1. Whether the complainant proves beyond all
the reasonable doubt that, the accused has
obtained the financial assistant from him and
for repayment of said amount, the accused
issued a cheque bearing No. 300644 dated
04-10-2018 for Rs. 6,54,500/- drawn on State
Bank of India, Rajajinagar Branch, Bengaluru
and when the complainant presented the
cheque for encashment and the cheque was
C.C. No. 5798 / 2018
dishonored due to "funds insufficient", for
which the complainant has issued a legal notice
through RPAD and the same was served, but
the accused has not repaid the said amount and
thereby the accused has committed the offence
punishable under section 138 of Negotiable
Instruments Act?
2. What order ?
8. My answers to the above points are as follows :
Point No.1 : In the Negative,
Point No.2 : As per final order,
for the following:
-: R E A S O N S :-
POINT No.1 :-
9. The complainant has filed his affidavit in lieu of
his oral chief examination. In his affidavit he has testified
regarding issuance of the cheque, its dishonour, issuance
C.C. No. 5798 / 2018
of legal notice and failure of the accused to pay the
cheque amount. The complainant has produced the
cheque bearing No. 300644 dated 04-10-2018 for a sum
of Rs. 6,54,500/- drawn on State Bank of India,
Rajajinagar Branch, Bengaluru alleged to be issued by
the accused in favour of the complainant. Ex. P-1 stands
in the name of the complainant. Ex. P-2 is the Banker's
endorsement. Ex. P-3 is the office copy of the legal
notice, which is dated 02-11-2018. Ex. P-4 and Ex. P-5
are the postal receipts. Ex. P-6 and Ex. P-7 are the
unserved postal cover. Ex. P-8 is the lease agreement.
10. On the other hand, the accused has relied on the
evidence of DW-1. DW-1 deposed that the accused
borrowed a loan of Rs.25,00,000/- from him and
impugned cheque along with other four cheques were
given by the accused as a security purpose. He further
deposed that the accused has repaid the said amount to
him. The cheques given by the accused were misplaced
while he shifted his house. Later he came to know that
C.C. No. 5798 / 2018
the complainant has taken the cheque from his custody
and misused the same.
11. Learned counsel for the complainant argued that
the complainant has discharged his initial burden of
proving the case by his oral as well as documentary
evidence. It is also contention of the complainant that the
accused has not initiated the legal action against the
complainant to recover the disputed cheque. The accused
was aware of the fact that the disputed cheque was with
the complainant. He has also contended that the benefit
of presumption under Sections 118 and 139 of
Negotiable Instruments Act is in favour of the
complainant, and therefore the accused has failed to rebut
the presumption. Hence, the accused is liable to be
convicted. In support of his contention, he relied on the
following citations:-
1. AIR 2018 SC 3601: T. P.
Murugan (Dead) Thr. Lrs. Vs. Bojan.
C.C. No. 5798 / 2018
12. To counter these submissions, learned defence
Counsel argued that there was no money transaction
between the complainant and the accused, and the
accused never borrowed a loan of Rs. 5,00,000/- from
the complainant. The notice was not served on the
accused. The complainant has misused the impugned
cheque. It is also alleged that on 02-11-2018 the accused
was not staying in the address mentioned in the notice
and he was staying in the Shankar Matt Bengaluru. The
complainant has know the address and whereabouts of
the accused. Despite that the complainant has sent the
notice to wrong address. The accused borrowed a loan
from DW-1 and DW-1 has collected the impugned
cheque along with other four cheques from the accused as
a security purpose. The accused has repaid the said
amount to DW-1. DW-1 has not returned the said
impugned cheque even after the repayment of said
amount. The complainant is the friend of DW-1 and the
complainant has taken the impugned cheque from the
custody of DW-1 and misused the same. The accused is
C.C. No. 5798 / 2018
not liable to pay the cheque amount. The complainant
has approached the Court with unclean hands. It is
further contended that though there is presumption
under Sec.118 and 139 of Negotiable Instruments Act,
existence of legally enforceable debt is not a matter of
presumption u/Sec.139 of Negotiable Instruments Act.
In support of his contention, he relied on the following
citations:-
1. 2019 Cr. R. 577(Kant): Sidappa Vs. M.
K. Rathod.
2. 2019 Cr. R 200 (Kant) : Buday Miyan
Vs. M. C. Venkatesh.
3. Criminal Appeal No. 525/2005 : M/s
Rahul Builders Vs. M/s Arihant Fertilizers &
Chemicals & Anr.
13. In view of rival contentions raised by the
parties, it is necessary to consider the statutory provisions
in this regard and also proposition of law.
Section 118 of Negotiable Instrument Act lays
down that:
C.C. No. 5798 / 2018
"Until the contrary is proved, it
shall be presumed that every
Negotiable instrument was made or
drawn for consideration."
Section 139 of N.I. Act contemplates that :
"Unless the contrary is proved, it
shall presume that holder of the
cheque receive the cheque of the
nature referred to section 138 of
the N.I. Act for the discharge, in
whole or in part, of any debt or
other liability."
14. The presumption mandated by Section 139 of
N.I. Act does indeed show the existence of legally
enforceable debt or liability. It is a rebuttal presumption.
It is open to raise the defence, wherein the existence of
legally enforceable debt or liability can be contested. For
rebutting presumption accused is not required to adduce
evidence with unduly high standard of proof, but the
standard of proof for doing so is that preponderance of
probability. If the accused is able to raise probable
defence, which creates doubt about the existence of
C.C. No. 5798 / 2018
legally enforceable debt or liability, then the onus shift
back to the complainant. It is also clear that for rebutting
the presumption accused can rely on the material
submitted by the complainant or his cross examination
and he need not necessarily adduce his defence evidence
in all the cases.
15. The specific case of the complainant is that, the
accused has received the financial help from the
complainant. The accused issued the disputed cheque for
discharging of debt and the said disputed cheque was
dishonored. Thereafter a legal notice was issued and then
he filed complaint. It is further contended that once the
cheque relates to the account of the accused and the
signature is admitted on the cheque, then initial
presumption as contemplated u/Sec.139 of N.I. Act has
to be raised by the court in favour of the complainant.
16. According to the accused, he never received the
financial help from the complainant nor issued the
impugned cheque for the discharge of debt. In this case,
C.C. No. 5798 / 2018
the accused has not denied the cheque and also the
signature in the cheque. Section 20 of Negotiable
Instrument Act, 1881, states that when a person signs
and delivers blank cheque to another, he thereby gives
prima-facie authority to holder thereof to make or
complete it for any amount specified therein and not
exceeding the amount covered by stamp. After
combined reading of said section 20 and 138 of
Negotiable Instrument Act, it appears that to made out
an offence in question against the accused, the necessary
ingredient is that the cheque should be drawn on the
account of the drawer and it is immaterial the contents
therein are in whose handwriting as per section 20 of the
Negotiable Instruments Act. After perusal of said section
20, it appears that the drawer of a cheque can issue blank
cheque to other person and by his said act he gives an
authority to said concern person to fill up it contents. It
enables the holder of the cheque to fill up the incomplete
cheque. It is also settled law that the admission of
signature in a cheque leaf alone will not constitute
C.C. No. 5798 / 2018
admission of execution of the cheque. It can be treated
only as a cheque containing admitted signature of cheque.
The mere production of a cheque or making same as an
exhibit in a case will not prove that the cheque is drawn
by accused. The factum of drawing or execution of
cheque has to be proved by evidence of person or persons
who can vouchsafe for the truth of the facts in issued.
17. The position of law which emerges is that once
issuance of cheque is admitted, the presumption under
Section 118 (a) of Negotiable Instrument Act would arise
that it is supported by a consideration. Such a
presumption is rebuttal. The accused can prove the non-
existence of a consideration by raising a probable defence.
If the accused is proved to have discharged the initial
onus of proof showing that the existence of debt was
improbable or doubtful or the same was illegal, the onus
would shift to the complainant who will be obliged to
prove it as a matter of fact and upon it failure to prove
would dis-entitle him to grant of relief on the basis of
C.C. No. 5798 / 2018
the negotiable instrument. The burden upon the accused
of proving the non-existence of the consideration can be
either direct or by bringing on record the preponderance
of probability by reference to the circumstances upon
which he relies. In such event, the complainant is entitled
under law to rely upon all the evidence led in the case.
In case, where the accused fails to discharge the initial
onus of proof by showing the non-existence of the
consideration, the complainant would invariably be held
entitled to the benefit of presumption arising under
Section 118 (a) of Negotiable Instrument Act in his
favour. The Court may not insist upon the accused to
disprove the existence of consideration by leading direct
evidence as the existence of negative evidence. It is
neither possible not contemplated and even of led, is to
be seen with a doubt. The standard of proof evidently is
preponderance of probabilities. Inference of
preponderance of probabilities can be drawn not only
from the materials on records, but also by reference to
the circumstances upon which relies.
C.C. No. 5798 / 2018
18. The complainant shall make clear to Court,
each of the circumstances which is relied upon by him,
to establish drawing of the cheque by accused. The mere
fact that the cheque produce in Court came from
possession of complainant alone will not sufficient to
prove execution, even though it may be one of the
circumstances. No law allows a Court to presume that
the cheque which is produced and marked in Court was
handed over or delivered to complainant by accused.
The Court, at best, can say that the cheque was in
possession of complainant. But, under what
circumstances it came to his possession is to be stated by
complainant. In the absence of such statement, Court
cannot proceed on any assumption that it was handed
over to complainant by the accused. The Court shall
consider whether each of the circumstances is proved by
complainant, as per law and whether each of the
circumstances lead to an irresistible conclusion that the
cheque was drawn by the accused, as alleged by
complainant. In case in which only circumstantial
C.C. No. 5798 / 2018
evidence is produced before the Court to prove drawing
of cheque, Court shall follow the mode adopted for
appreciation of circumstantial evidence, to enter finding
whether cheque is drawn by accused, as alleged by
complainant. If any circumstance or circumstances
proved in the case can be explained on any hypothesis
which is inconsistence with the assertion of drawing of
cheque by accused, accused cannot be said to have drawn
the cheque.
19. Whether the cheque was handed over or
delivered to complainant by accused and whether it was
drawn by accused are independent facts, which requires
independent proof. The mere production of the cheque
in Court will not prove either of the above fact. The
Court must be satisfied from the allegations in the
complaint and from the evidence adduced that the cheque
was made, prepared or created by accused. The factum
of drawing or execution of cheque has to be proved by
evidence of person or persons who can vouchsafe for the
C.C. No. 5798 / 2018
truth of the facts in issue. It can be proved by direct or
circumstantial evidence, which is admissible in law.
20. In the case of Rajendra Prasad -Vs- M.
Shivaraj, 2006 Criminal Law Journal 3737, our
Hon'ble Apex Court held that " when once the issuance
of the cheque is validly established, the presumption
would arise under Section 118 as well as Section 139 of
the Negotiable Instrument Act in favour of the
complainant. It was for accused to lead evidence to the
contrary to displace the presumption. Further in the case
of R. Sankaralingam -Vs- Union of India (1997) 1
BC 541(Mad) (DB), Hon'ble High Court of Madras
held that under Section 138 Negotiable Instrument Act,
when an action is taken against a particular person, there
are certain admitted facts and circumstances, the law
raises a presumption that the accused is guilty. Then the
burden shifts on to the accused to prove that he is not
guilty by establishing that the cheque was not supported
by any consideration and it was not in discharge of debt.
C.C. No. 5798 / 2018
21. Thus, this Court has to consider whether the
complainant has to prove the existence of legally
recoverable debt. From the statement of the complainant
reveals that the accused has received the amount of Rs.
5,00,000/- and disputed cheque was issued in favour of
complainant. The accused has denied the issuance of
cheque in favour of complainant. In the present case, the
cheque is dated 01-05-2017 and the complainant has
presented the disputed cheque within 3 months from the
date of the cheque as it could be seen from endorsement.
Ex. P-2 further reveal that the cheque in question was
dishonored. The demand notice was issued within a
statutory period. Then the complainant has filed this
complaint within the statutory period. It is specific
defence of the learned Counsel for defence that the
complainant has sent notice willfully to the wrong
address in order to avoid the service of notice It is also
the defence of the accused that the complainant has no
financial capacity to lend such amount to the accused and
C.C. No. 5798 / 2018
accused never borrowed a loan from the complainant. In
this regard, it is suggested to PW-1 as hereunder :
"ನನನ ದದರನ 2 ನನ ಪಟದ 5 ನನ ಪಪರದಲ ಅಕಕಟಸಸನಟ
ಮಕಟ ಅನನ ದ ,
ನ ಹಜರನಪಡಸಲಗದ ಎಕದನ ನಮದದನ ಮಡದನ
ನಕತರ ಅದನನ
ನ ವವಟನರ ಇಕದ ಅಳಸಲಗದ ಎಕದರ ಸರ. ನನನ
ಹಜರನಪಡಸರನವ ದಖಲತ ಪಟಸಯಲಯದ ಸಹ ಬಪಕಕಸಸನಟ
ಮಕಟ ಅನನ ದ , ನಕತರ ಅದನನ
ನ ನಮದದನ ಮಡದನ ನ ವವಟ ನರ
ಇಕದ ಅಳಸಲಗದ ಎಕದರ ಸರ. ಸದರ ವವಟ ನರ ಅನನ
ನ ಯರನ
ಹಕದರ ಎಕದನ ನನಗ ಹನಳಲನ ಆಗನವದಲಲ...
ವಹನಕಕ ಸಕಬಕಧ ಪಟಸ ಡನಪನಮಕಟಅನನ
ನ ಆರದನಪತರನ
ಪವತ ಮಡರನತತರ ಎಕದರ ಸರ. ಆರದನಪತರನ ಡನಪನಮಕಟ
ಎಕದನ ರದ.2,60,000/- ಗಳನನ
ನ ಪವತ ಮಡರನತತರ ಎನನ
ನ ತತರ....
ದನಕಕಕ 01.06.2016 ರಕದನ ನನನ ಆರದನಪತರಗ ಕದಟಸ
ಎಕದನ ಹನಳಲದ 5 ಲಕ ಹಣ ನನನ ಬಳ ಇತನತ ಎಕದನ ತದನರಸಲನ
ನ ಹಜರನಪಡಸರನವದಲಲ. 5 ಲಕ ಹಣ ನನನ ಬಳ
ದಖಲತಯನನ
ಇತನತ ಎಕದನ ತದನರಸಲನ ಬಪಕಕ ಸಸನಟ ಮಕಟ ಅನನ
ನ
ಹಜರನಪಡಸರನವದಲಲ ಎಕದರ ಸರ....
ದನಕಕಕ 01.06.2016 ರಕದನ ನನನ ಬಳ 5 ಲಕ ಹಣವರಲಲಲ
ಎಕದರ ಸರ. ನನಗ 5 ಲಕ ಹಣವನನ
ನ ನನನ ಸನನಹತರದ ಪರಮನಶ
ಅವರನ ಕದಟಸರನತತರ....
ನ ಉಲಲಕಘನನ
ನ.ಪ-8 ರಲ ನಮದದನ ಮಡರನವ ಷರತನತಗಳನನ
ಮಡದ ಪಕದಲ ಕರರನ ಪಕಗರರನ ಪರಹರ ರದಪದಲ ಹಣ
C.C. No. 5798 / 2018
ಕದಡಬನಕನ ಎಕದನ ನಮದದನ ಇರನವದಲಲ ಎಕದರ ಸರ. ನ.ಪ-8
ಕರರನ ಪ ಪಕರ ನಡದನಕದಕಡರನವದಲಲ....
ನನನ ಆರದನಪತರ ಸಸಧನನದಕದ ಬಲವಕತವಗ
ವಹನವನನ
ನ ಪಡದನಕದಕಡನ ಹದನದ ಕರಣ ನಷಸದ ಹಣವನನ
ನ ಕದಡ
ನ ಕದಟಸರನವದಲಲ ಎಕದರ ಸರ....
ಎಕದನ ನದನಟನಸನನ
It is further suggested to PW-1 as hereunder :-
ದನಕಕಕ 02.11.2018 ನನನ ಮತನತ ನನನ ಸನನಹತ ಪರಮನಶ
ಅವರನ ವಕನಲರ ಮದಲಕ ನದನಟನಸನನ
ನ ಕದಟಸದವ ಎಕದರ ಸರ.
ದನಕಕಕ 02.11.2018 ರಲ ಆರದನಪತರಗ ನದನಟನಸ ಕದಡನವ
ಸಮಯದಲ ಆರದನಪತರ ಕಛನರ ಹಗದ ಅವರ ಮನ ಎಲತನತ
ಎಕಬನದರ ಬಗಗ ನನಗ ಹಗದ ಪರಮನಶ ಅವರಗ ಮಹತ ಇತನತ
ಎಕದರ ಸಕಯನ 2017 ರ ನಕತರ ನನನ ಆರದನಪತರನನ
ನ ಭನಟ
ಆಗರನವದಲಲ, ಅವರನ ಎಲರನತತರ ಎಕದನ ನನಗ ಗದತತರನವದಲಲ
ಎನನ
ನ ತತರ....
ನನಗ ಮತನತ ಪರಮನಶಅವರಗ ಆರದನಪತರನ ಬಕಗಳದರನ
ಶಕಕರ ಮಠದ ಹತತರ ವಸವದದರನ ಎಕದನ ಮಹತ ಇತನತ ಎಕದರ
ಸರ....
From the evidence of complainant reveals that the
alleged amount of Rs. 5,00,000/- given to the accused.
In this case, no evidence has been adduced by the
complainant to prove the transaction which had been
C.C. No. 5798 / 2018
categorically denied by the accused. Further, the
complainant has not placed any material to prove his
financial capacity. No presumption can be drawn that the
complainant has capacity to lend to the tune of Rs.
5,00,000/-, merely on the basis of self serving statement
of the complainant without the proof of income of the
complainant. There is a major contradiction in the
evidence of complainant. The statement of complainant
not corroborated by the material available on the record.
Further, the complainant has not produced his bank
statement. From the statement of complainant reveals
that the accused has paid the amount towards down
payment in respect of vehicle. The complainant has not
placed any material to show that the accused agreed to
pay the loss incurred to him. He has not also placed any
document to show that he has financial capacity to lend
the amount of Rs. 5,00,000/-. Hence, the contention of
complainant that the accused is liable to pay the cheque
amount cannot be accepted. According to the
complainant, the accused has executed the agreement i.e.,
C.C. No. 5798 / 2018
Ex. P-6. The complainant has not produced the bank
statement in order to show how much amount was paid
by the accused towards EMI. It is well settled that the
party who pleads has also to prove his case. Section 101
of the Indian Evidence Act, 1872 defines 'burden of
proof', which clearly lays down that whosoever desires
any Court to give judgment as to any legal right or law
dependent on the existence of facts which he asserts, must
prove that those facts exist. When a person is bound to
prove the existence of any fact it is said that the burden
of proof lies on that person. Mere production of the
agreement is not sufficient to prove the contents of the
said documents. The testimony of complainant merely
prove the document, but the contents of those documents
were not proved. Further, the complainant has not
placed any material to show that the accused was agreed
to pay the cheque amount. Thus, the evidence available
on record falsify the case of complainant.
C.C. No. 5798 / 2018
22. The complainant has not even been able to
clearly state the date on which loan of such a big amount
was given to the accused. He has not examined any third
person who would have knowledge of the loan
transaction. It is a well settled principle of law that
prosecution has to stand on its own leg and prove its case
beyond reasonable doubt. Also it has been held by
Hon'ble Supreme Court in Rahual Builders -Vs-
Arihant Fertilizers and Chemicals and another
[(2008) 2 SCC 321], Negotiable Act envisages
application of the penal provisions which needs to be
construed strictly. Therefore, even if two views in the
matter are possible, the Court should lean in favour of
the view which is beneficial to the accused. This is more
so, when such a view will also advance the legislative
intent, behind enactment of this criminal liability.
23. In Ashok Baugh -Vs- Kamal Baugh and
another [2015 (4) JCC (NI) 269], the Hon'ble High
Court of Delhi held that the respondent has rebutted the
C.C. No. 5798 / 2018
presumption under Section 139 of the NI Act of the
existence of a legally enforceable debt by establishing that
there was no receipt of the loan, such advance was not
shown in the ITR of the petitioner complainant and
paying capacity of the complainant being doubtful.
Similarly, in Kashyap and another [2017 (4) JCC (NI)
225], the Hon'ble High Court of Delhi held that the
absence of any evidence to show the solvency of the
respondent for him to have advances loan to the
petitioner leads to the presumption that there was no
existing debt. The Hon'ble High Court also observed
that it is difficult to accept the proposition that such
amount of loan would be paid on oral agreement. These
precedents are squarely applicable to the case in hand.
Despite various deficiencies in the version of the accused,
I am unable to overlook the fact that the loan transaction
itself is uncorroborated and unproved. The complainant
has failed to prove his case beyond all the reasonable
doubts and he has failed to fulfill all the ingredients of
offence under Section 138 NI Act against the accused.
C.C. No. 5798 / 2018
The accused has been able to rebut the presumption in
favour of the complainant as the standard of proof so as
to prove a defence on the part of the accused is only
'preponderance of probabilities' and 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 he
relies as the same was held by Hon'ble Supreme Court
in M/s Indus Aairways Private Limited and others
-Vs-Magnum Aviation Private Limited and another
[CA No. 830 of 2014]. In the light of the above
discussions and observations, this Court has no hitch to
hold that the complainant has failed in proving his case
beyond the shadow of reasonable doubts. This court
exonerates the accused for the offence punishable under
Section 138 of Negotiable Instrument Act.
24. Another contention of the defence counsel is
that the demand notice was not served to the accused.
The burden is on the complainant that the notice was
C.C. No. 5798 / 2018
dispatched by post with correct address. Per contra,
Learned Counsel for complainant argued that the notice
was duly served on the accused. Admittedly, the
requirements of Section 138 (b) of the Negotiable
Instrument Act is that notice should be sent to the
drawer of the cheque. Clause (b) of the proviso to
Section 138 of the Negotiable Instrument Act lays down
that notice regarding dishonor of the cheque should be
sent to the drawer of the cheque within 15 days of the
receipt of intimation regarding the dishonor of the
cheque. Considering the provision contained in Section
27 of the General Clauses Act once the sender establishes
the fact that the notice was dispatched by post with
correct address written thereon, it should be deemed to
have been served on the sendee unless he establishes that
it was not really served and that he was not responsible
for such non-service.
25. The Statue stipulates that the holder of the
cheque makes a demand for the payment of money
C.C. No. 5798 / 2018
covered by the cheque by issuing demand notice in
writing to the drawer of within thirty days of the receipt
of information by him from the bank regarding the
return of the cheque as unpaid. Notice in writing, which
is required under Section 138 (b) of Negotiable
Instrument Act, need not necessarily be only by a
registered post, and it can as well be by a telegram or by
a letter. Service of notice of demand in Clause (b) of
proviso t section 148 is a condition precedent for filing a
complaint under Section 138 of the Negotiable
Instrument Act. Whether the notice was served or not
and how it was served and which service was effected on
the accused person namely, whether by registered post,
or by hand, or by courier, is a matter imposes burden
on the complainant to service of demand notice upon the
accused.
26. In the case of Harman Electronics (P) Ltd. v.
National Panasonic India (P) Ltd., AIR 2009 SC 1168
Hon'ble Apex Court held that as hereunder:-
C.C. No. 5798 / 2018
' It is one thing to say that sending of a
notice is one of the ingredients for maintaining
the complaint but it is another thing to say
that dishonour of a cheque by itself constitutes
an offence. For the purpose of proving its case
that the accused had committed an offence
under Section 138 of the Negotiable
Instruments Act, the ingredients thereof are
required to be proved. What would constitute
an offence is stated in the main provision. The
proviso appended thereto, however, imposes
certain further conditions which are required
to be fulfilled before cognizance of the offence
can be taken. If the ingredients for constitution
of the offence laid down in provisos (a), (b) and
(c) appended to Section 138 of the Negotiable
Instruments Act are intended to be applied in
favour of the accused, there cannot be any
doubt that receipt of a notice would ultimately
give rise to the cause of action for filing a
complaint. As it is only on receipt of the notice
that the accused at his own peril may refuse to
pay the amount. Clauses (b) and (c) of the
proviso to Section 138 therefore must be read
together. Issuance of notice would not by itself
give rise to a cause of action but
communication of the notice would.'
C.C. No. 5798 / 2018
27. The requirement of giving notice is mandatory
for maintaining a complaint, but there is no procedure
prescribed under Sec.138 of the NI Act for serving notice
on the accused. Notice means notice in writing and not a
verbal demand to the drawer. The Hon'ble Apex court
in K.Bhaskaran v. Sankaran Vaidhyan Balan [(1999) 7
Supreme Court Cases 510] held that once notice has
been sent by a registered post with acknowledgment due
in the correct address, it must be presumed that the
service has been made effective. In V. Rajakumari v. P.
Subbarama Naidu [(2004) 8 Supreme 774] it was held
that statutory notice under Section 138(b) of the NI Act
sent in the correct address of the drawer but returned
with endorsement must be presumed to be served on the
drawer and the burden to show that accused/drawer had
managed to get an incorrect postal acknowledgment letter
on the complainant have to be considered during trial
and on the background facts of the case.
C.C. No. 5798 / 2018
28. The provision under Sec.138 of the NI Act
shows that where a cheque issued by a drawer in
discharge of any debt or liability, in whole or in part, is
returned by the bank unpaid, because of the amount of
money standing to the credit of that account is
insufficient to honour the cheque or that it exceeds the
amount arranged to be paid from that account, such
person shall be deemed to have committed an offence.
This is subject to the proviso to Section 138 that the
cheque should have been presented before the bank
within a period of six months from the date on which it
is drawn or within the period of its validity, whichever is
earlier. The payee must make a demand for the payment
of the said amount of money by giving a notice in
writing, to the drawer of the cheque, within thirty days
of the receipt of information by him from the bank
regarding the return of the cheque as unpaid. In spite of
the demand, if the drawer fails to make the payment of
the said amount of money to the payee within fifteen
days of the receipt of the notice, a cause of action would
C.C. No. 5798 / 2018
arise for prosecuting him under Section 138 of the NI
Act. It is mentioned under Sec.142 of the NI Act that the
court shall take cognizance of an offence punishable
under Sec.138 of the NI Act upon receipt of a complaint
in writing by the payee or as the case may be, the holder
in due course of the cheque. Proviso to Sec.138(c) says
that such complaint must be made within one month of
the date on which the cause of action arises. However,
discretion has been given to the court to take cognizance
of the complaint after the expiry of the period of
limitation, if the complainant satisfies the court that he
had sufficient reason for not making the complaint
within the limitation period.
29. A bare reading of Sec.138 of the Negotiable
Instruments Act shows that the purport of Sec.138 is to
punish the dishonest drawers of cheque who evade and
avoid their liability. As stated in Clause(b) of the
proviso, the payee or the holder of the cheque in due
course is necessarily required to serve a written notice on
C.C. No. 5798 / 2018
the drawer of the cheque within 15 days from the date of
intimation received from the bank about the dishonur of
the cheque. It is clear from Sec.27 of the General Clauses
Act, 1897 and Sec.114 of the Evidence Act, 1872, that
once a notice is sent by registered post by correctly
addressing to the drawer of the cheque, the service of
notice is deemed to have been completed. The
requirements under Sec.138(b) stand complied, if notice
is sent in the above prescribed manner. In this context, I
may refer an decision of the Hon'ble Apex court in
M/s. Dalmia Cement (Bharat) Ltd. v. M/s. Galaxy
Traders and Agencies Ltd. [AIR 2001 Supreme Court
676] in which it was held that the presumption is
rebuttable. But, in the subsequent decision M/s.
Harman Electronics (P) Ltd. and Anr. v. M/s.
National Panasonic India Ltd. [AIR 2009 Supreme
Court 1168] it was held that the presumption in support
of service of notice depends upon the facts and
circumstances of each case. In Jagdish Singh v. Natthu
Singh (1992) 1 SCC 647 , State of M.P. v. Hiralal
C.C. No. 5798 / 2018
(1996) 7 SCC 523 , V. Rajkumari v. P. Subrama
Naidu 2005 SCC (Cri) 393 Hon'ble Apex court held
that when a notice is sent by registered post and is
returned with postal endorsement "refused" or "not
available in the house" or "house locked" or "shop
closed" or "addressee not in station", due service has to
be presumed. However, the drawer is at liberty to rebut
this presumption either by adducing evidence or on the
basis of evidence produced by the complainant.
30. The Hon'ble Apex court in New India Sugar
Mills Ltd. v. CST [AIR 1963 SC 1207 ] held that the
interpretation of the statute should be based on the object
which the intended legislation has sought to achieve,
which reads as follows:
"It is a recognized rule of
interpretation of statutes that expressions
used therein should ordinarily be
understood in a sense in which they best
harmonise with the object of the statute,
and which effectuate the object of the
Legislature. If an expression is susceptible
of a narrow or technical meaning, as well
C.C. No. 5798 / 2018
as popular meaning, the Court would be
justified in assuming that the Legislature
used the expression in the sense which
would carry out its object and reject that
which renders exercise of its power
invalid."
31. My attention has been drawn to the decision of
the Hon'ble Apex court reported in D. Vinod
Shivappa v. Nanda Belliappa [(2006) 6 Supreme Court
Cases 456] which reads as follows:
"14. If a notice is issued and served
upon the drawer of the cheque, no
controversy arises. Similarly if the notice is
refused by the addressee, it may be
presumed to have been served. This is also
not disputed. This leaves us with the third
situation where the notice could not be
served on the addressee for one or the
other reason, such as his non-availability at
the time of delivery, or premises remaining
locked on account of his having gone
elsewhere, etc. etc. If in each such case the
law is understood to mean that there has
been no service of notice, it would
completely defeat the very purpose of the
Act. It would then be very easy for an
C.C. No. 5798 / 2018
unscrupulous and dishonest drawer of a
cheque to make himself scarce for some
time after issuing the cheque so that the
requisite statutory notice can never be
served upon him and consequently he can
never be prosecuted. There is good
authority to support the proposition that
once the complainant, the payee of the
cheque, issues notice to the drawer of the
cheque, the cause of action to file a
complaint arises on the expiry of the period
prescribed for payment by the drawer for
the cheque. If he does not file a complaint
within one month of the date on which the
cause of action arises under clause (c) of the
proviso to Section 138 of the Act, his
complaint gets barred by time. Thus, a
person who can dodge the postman for
about a month or two, or a person who can
get a fake endorsement made regarding his
non-availability can successfully avoid his
prosecution because the payee is bound to
issue notice to him within a period of 30
days from the date of receipt of
information from the bank regarding the
return of the cheque as unpaid. He is,
therefore, bound to issue the legal notice
which may be returned with an
endorsement that the addressee is not
available on the given address.
C.C. No. 5798 / 2018
32. We cannot also lose sight of the fact that the
drawer may by dubious means manage to get an incorrect
endorsement made on the envelope that the premises has
been found locked or that the addressee was not available
at the time when postman went for delivery of the letter.
It may be that the address is correct and even the
addressee is available but a wrong endorsement is
manipulated by the addressee. In such a case, if the facts
are proved, it may amount to refusal of the notice. If the
complainant is able to prove that the drawer of the
cheque knew about the notice and deliberately evaded
service and got a false endorsement made only to defeat
the process of law, the court shall presume service of
notice. This, however, is a matter of evidence and proof.
Thus even in a case where the notice is returned with the
endorsement that the premises has always been found
locked or the addressee was not available at the time of
postal delivery, it will be open to the complainant to
prove at the trial by evidence that the endorsement is not
correct and that the addressee, namely, the drawer of the
C.C. No. 5798 / 2018
cheque, with the knowledge of the notice had
deliberately avoided to receive notice.
33. In the above decision, it is held that each
question with regard to the service of notice has to be
answered by reference to the facts of the case and no rule
of universal application can be laid down in all cases
when notice is not served on account of non availability
of the addressee in the given address. If notice is served
upon the drawer of the cheque, no controversy arises.
However, if the addressee refuses the notice it may be
presumed that the notice have been properly served.
Another situation is that the notice could not be served
on the addressee on the ground of his non availability at
the time of delivery or the house is remaining locked on
account of his non availability in the station or in India
or he has gone elsewhere permanently etc., in each such
cases it means that there has been no service of notice. If
there is no service of notice in the aforesaid grounds, it
would completely defeat the purpose of the Negotiable
C.C. No. 5798 / 2018
Instrument Act. If complainant is able to prove that the
drawer of the cheque knew about the notice and
deliberately evaded from the premises making a false
endorsement, it will defeat the process of law and in such
situation the apex court held that the Court shall
presume that there was proper service of notice. This is
really a matter of evidence and proof. Therefore, if the
service of notice is fraudulently refused or avoided by the
accused in an unscrupulous manner, that is a matter of
evidence and that fact can be proved on the basis of
evidence.
34. In this case, the complainant knew that the
accused shifted to his house and he is not available in his
residence, even then, he issued a notice under Sec.138(b)
of the NI Act. The complainant has no case that the
accused deliberately evaded from his residence in order to
avoid service of notice. On the other hand, when
complainant issued notice under Section 138(b) of the NI
Act, he knew that the accused is not present in the said
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address, the question arises is whether the said service of
notice in the available address is sufficient for proper
compliance of Sec.138(b) of the Negotiable Instrument
Act. If the complainant is able to prove that the drawer
of the cheque deliberately evaded service, then the
presumption of service will attract. On the other hand, if
the registered notice as contemplated under Section
138(b) of the Negotiable Instrument Act was issued by
the complainant but it was returned with endorsement
"addressee left" and the complainant at the time of
issuance of notice knew that the accused is not residing in
the said address there is no deliberate avoidance of notice
and it is presumed that there is no notice under Section
138(b) and no presumption of service can be drawn
against the drawer. In such a situation, prosecution under
Section 138 of the Negotiable Instrument Act is not
possible and the complainant will have every right to
approach the civil court for proper remedies. However,
no evidence has been adduced by the complainant with
regard to the knowledge of the accused about notice.
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Therefore, the endorsement made by the postal
authorities in the notice itself is not sufficient to draw a
presumption of service of notice. An enquiry with regard
to the knowledge of non availability at the residence is
necessary in this matter. The evidence in a case can be
given of fact in issue and relevant fact alone. The court is
bound to prevent admission of inadmissible evidence.
When the relation of a relevant fact to the fact in issue is
proximate it is called direct evidence and is admissible.
The credibility of a fact depend upon various factors. If
one witness has no knowledge of a fact the evidence given
by that witness is worthless. Section 27 of the General
Clause Act gives a presumption of service of notice sent
by post and the dispatcher of the notice can claim the
benefit of presumption of service and it is a rebuttable
presumption. If the evidence of the witness discloses his
inability to speak about the service of notice, it is difficult
for the court to accept that evidence for drawing the
above presumption.
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35. The offence under Sec.138 of the NI Act is not
a natural crime like hurt or other offence under the
Indian Penal Code, but, it is an offence created by a legal
fiction in the statute, transformed civil liability into
criminal liability. The onus of proving all the ingredients
of the offence in a criminal case is on the prosecution.
When an accused person is charged with having
committed an offence, it is for the prosecution to prove
all the ingredients of the offence. It is only when this
burden is discharged, the accused has to explain the
essential elements in the prosecution case which would
negative it. Even after the civil liability transformed into
criminal liability under restricted conditions by
amendment of the Negotiable Instrument Act, by
introducing the relevant provisions, the strict liability
provided for criminal cases has not changed. In this
context, the decision of the Hon'ble Apex court in D.
Vinod Sivappa v. Nanda Belliappa [(2006) 6 Supreme
Court Cases 456] is relevant.
C.C. No. 5798 / 2018
36. Undoubtedly, the accused has a right to pay the
money within 15 days from the date of the service of
notice and only when it fails to pay, it is open for the
complainant to file a case under Section 138 of the
Negotiable Instruments Act. That being the position and
in the complaint itself having not been mentioned that
the notice has been served, on the assertions made in the
complaint itself is not maintainable. Absolutely, there
is no an iota of evidence on the record to show that legal
notice has been served on the accused. Admittedly, the
complainant has not examined the official of the Postal
Authorities to show that the notice was served on the
accused. Non-examination of postman is fatal to the case
of the complainant. Therefore, the contention of
complainant that the notice was severed on accused
cannot be acceptable.
37. Admittedly, once the cheque relates to the
account of the accused and he accepts and admits his
signature on the cheque, then initial presumption as
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contemplated u/Sec.139 of N.I. Act has to be raised by
the court in favour of the complainant. The presumption
referred to u/Sec.139 of N.I. Act is a mandatory
presumption and not a general presumption. But, the
accused is entitled to rebut the said presumption by
probable and acceptable evidence. Admittedly, in this
case, the accused did not give the reply to the notice
under Sec.138 of N.I. Act and he had also not taken any
legal action against the complainant after receipt of the
summons to recover the cheque in issue from him.
Merely, the accused has not given reply to the notice is
not sufficient to draw the presumption against him,
because in this case, the complainant failed to prove and
establish his financial capacity and also the service of
notice. In this case, the complainant failed to prove the
existence of legally enforceable debt. Hence, I answer
point No.1 in the "Negative".
POINT No.2:-
38. Section 139 of N.I. Act creates presumption
that the cheque received in the nature referred to Section
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138 of N.I. Act is always issued in discharge of debt or
other liability. For a successful prosecution of offence
under section 138 of the Act, complainant must allege
and prove that the cheque was drawn or executed by the
accused. In the absence of proof of lending loan to the
accused, presumption cannot be drawn in favour of the
complainant. In this case, the accused had a probable
defence and complainant failed to prove and establish his
financial capacity. Hence, the benefit of doubt given to
the accused. In view of my findings to the above point, I
proceed to pass the following :
ORDER
The accused is not found guilty of the offence punishable under Section 138 of Negotiable Instruments Act.
Hence, the accused is acquitted acting Under Section 255(1) of Cr.P.C of the charges leveled against her for the offence C.C. No. 5798 / 2018 punishable under Section 138 of Negotiable Instruments Act.
Bail bond of accused is canceled and surety stands discharged.
(Dictated to the Stenographer, transcribed and typed on Lap-top, then corrected by me, Print out taken, signed and then pronounced by me in the open court on this the 24th day of April 2023) (K. LAKSHMI) IV Addl. SCJ & ACMM., Bengaluru.
C.C. No. 5798 / 2018 ANNEXURE List of witnesses Examined for Prosecution:
PW.1 : S. Mohan Kumar List of documents marked for prosecution :
Exp.1 : Cheque Exp.1(a) : Signature of accused Exp.2 : Banker's endorsement Exp.3 : Office copy of Legal notice Exp.4&5 : Postal receipts Exp.6&7 : RPAD Covers Exp.8 : Vehicle lease agreement List of witnesses examined for accused :
DW-1 : Roopesh Singh Rathode List of documents marked for accused :
-Nil-
(K. LAKSHMI) IV Addl. SCJ & ACMM., Bengaluru.
C.C. No. 5798 / 2018 C.C. No. 5798 / 2018 Dt: 24.04.2023 C-
A-
For Judgment (Order pronounced in open court vide separate judgment) ORDER The accused is not found guilty of the offence punishable under Section 138 of Negotiable Instruments Act.
Hence, the accused is acquitted acting Under Section 255(1) of Cr.P.C of the charges leveled against her for the offence punishable under Section 138 of Negotiable Instruments Act.
Bail bond of accused is canceled and surety stands discharged.
(K. LAKSHMI) IV Addl. SCJ & ACMM, Bengaluru.
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