Bangalore District Court
Siddamma vs Vishwaprakash on 4 January, 2024
KABC010145992022
Presented on : 31-05-2022
Registered on : 01-06-2022
Decided on : 04-01-2024
Duration : 1 years, 7 months, 4 days
BEFORE THE LXVI ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU CITY.
(CCH67)
DATED: This the 4th day of January, 2024
PRESENT
Sri.S.Nataraj, BAL.,LL.B.,
LXVI Addl.City Civil & Sessions Judge,
Bengaluru.
Crl.A.No.649 of 2022
Appellant : Siddamma,
W/o Srinivas,
Aged about 50 years,
R/at Gokula Extension,
Kyathsandra, 3rd Cross,
Tumakuru.
(By Sri.Shivanna, Advocate.)
/Vs/
Respondent : Vishwaprakash,
S/o late M.Narayanappa,
Aged about 61 years,
R/at No.153/70, Shivanahalli,
Surabhi Layout,
Yelahanka,
Bengaluru North 560 064.
(By Sri.HMC., Advocate.)
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JUDGMENT
This is accused filed appeal under Section 374(3) CrPC challenging the impugned judgment in CC.No.23129/2017 dated 11.4.2022 passed by the Small Causes Judge and 26th Addl. Chief Metropolitan Magistrate (SCCH9) (for short herein after refereed to as 'trial Court'), wherein the appellant/accused was convicted for the offence punishable under Section 138 of NI Act and;
a) sentenced to pay a fine of Rs.6,05,000/ in default shall undergo simple imprisonment for 6 months;
b) out of fine amount of Rs.6,05,000/ sum of Rs.6,00,000/ is ordered to be paid to complainant as compensation and Rs.5,000/ to be defrayed to State.
2. The appellant is the accused, respondent is the complainant before the trial Court. For the sake of convenience the parties are referred by their ranks before the trial Court.
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3. The brief facts of the case are as follows; The complainant filed complaint before the trial Court alleging that the complainant and accused are known to each other for the past several years. On 1.5.2017 the accused approached the complainant for financial assistance of Rs.4,00,000/ and paid the above said amount. The accused assured to repay the amount within 3 months and issued post dated cheque No.026832 dated 7.7.2017 for a sum of Rs.4,00,000/ drawn on Axis Bank Ltd. Tumkur Branch. The said cheque was presented to his banker, Corporation Bank, Yelahanka Branch, Bengaluru which was returned with bankers slip dated 11.7.2017 as 'cheque irregularly drawn amount in words and figures differ'. The complainant got issued a legal notice on 28.7.2017 demanding the accused to pay the cheque amount within 15 days from the date of receipt of notice. The notice was duly served on 3.8.2017. The accused did not pay the amount within 15 days from the date of receipt of legal notice. Thereafter, within one month 4 Crl.A.No.649/2022 the complaint was filed against the accused for the offence under Section 138 of NI Act.
4. The trial Court recorded sworn statement of complainant by way of affidavit. Thereafter the cognizance was taken, the summons was issued against the accused for the offence under Section 138 NI Act. The accused appeared through his counsel, she was released on bail. The plea was recorded. She pleaded not guilty, claims to be tried. The sworn statement affidavit is treated as chief examination evidence on behalf of complainant as PW1, Ex.P1 to 5 documents are marked closed their side of evidence.
5. The statement of accused under Section 313 Cr.PC was read over, she denied the incriminating circumstances appeared against her. She examined as DW1. no are marked in her support. After hearing arguments of both sides. Considering, the material evidence on record, the trial Court passed the impugned judgment dated 11.4.2022. Wherein, the accused was convicted and sentenced to pay a fine of Rs.06,05,000/ out of which 5 Crl.A.No.649/2022 Rs.6,00,000/ was ordered to be paid to the complainant as compensation.
6. Being aggrieved by the impugned judgment the accused/appellant is before the Court on various grounds
(a) The judgment of the trial court is illegal, erroneous and unsustainable in law.
(b) The judgment of the trial Court is contrary to the facts and probabilities of the case.
(c) The legal notice was not served upon the appellant/accused.
(d) The trial Court has not considered that the cheque is defect the proceedings under Section 138 of NI Act is not maintainable.
(e) The complainant has no source of income no financial capacity, that the amount has lent to accused without knowing the repayment capacity of the loan is not considered by the trial Court.
(f) The complainant has not mentioned the date of demand of loan and the date of advancement of amount. 6
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(g) The trial court failed to consider the defence of the accused that the presumption has been rebutted, the burden is upon the complainant.
With the above said grounds he prayed to set aside the judgment of the trial court.
7. After registering the case on issuing notice to respondent, she appeared through counsel. Trial court records are secured.
8. Appellant counsel despite of opportunity has not chosen to address arguments. However, after posting the matter for judgment submitted written arguments. Heard counsel for respondent. Perused the trial court record, impugned judgment.
9. Out of above said facts and circumstances of the case, the points that arose for the due consideration of this Court are;
Point No.1: Whether the finding of trial Court that the accused failed to discharge the presumption under Section 139 of NI Act with probable defence that the cheque was not issued for discharge of legally enforceable debt or liability is justified?
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Crl.A.No.649/2022 Point No.2: Whether the finding of trial court that the complainant proved that the cheque is issued towards discharge of legally enforceable debt i.e., towards refund of loan amount is justified?
Point No.3: Whether the impugned judgment of trial Court is capricious and erroneous and liable to be interfered?
Point No.4 : What order?
10. The answer of this Court to the above points are;
Point Nos.1 & 2 : Not Justified
Point No.3 : Affirmative
Point No.4 : As per the final order for the
following reasons.
REASONS
11. POINT Nos.1 to 3: Since these points are
interlinked with each other, they are taken up together for discussion in order to avoid repetition.
The appellant in his written arguments has reiterated the appeal memo grounds contending that the complainant has not stated the date of demand of loan and payment of loan amount. The complainant has not stated purpose for which loan was advanced to the accused. The 8 Crl.A.No.649/2022 complainant has no financial capacity to advance the amount. The trial Court has failed to consider that the cheque is defective, 138 NI Act proceedings is not maintainable, the notice was not served upon the accused. The trial Court failed to consider the defence of the accused. The defence of the accused is probable and rebutted the presumption. The complainant failed to prove the transaction and prayed to allow the appeal and set aside the judgment of the trial Court.
12. The counsel for respondent argued that the accused to question No.6 of 313 CrPC statement has answered the issuance of cheque and signature. Once the cheque and signature is admitted the presumption in favour of complainant has to be drawn. The accused has contended the legal notice is not issued. There is no proof that the address mentioned in the legal notice is incorrect. The defene of the accused is not probable. Her husband is not examined to show that her husband has given cheque to the complainant as a security. The accused failed to prove that there is no existing legally enforceable debt. The 9 Crl.A.No.649/2022 trial Court has rightly convicted the accused and sentenced. There are no grounds to interfere in the judgment and prayed for dismissal of appeal.
13. After considering the contentions of appellant in the appeal Memo and arguments of respondent as well as citations. For determination of the point as to whether the trial Court was justified in convicting the appellant/accused for the offence under Section 138 of NI Act, the basic questions to be addressed are;
a) As to whether the complainant/respondent had established the ingredients of Section 118 and 139 of the NI Act, so as to justify drawing of the presumption envisaged therein?
b) If so, as to whether the appellant accused had been able to displace such presumption and to establish a probable defence, thereby, the onus would again shift to the complainant/respondent?
14. It is useful to take note of Section 118 and 139 of NI Act as follows:
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Crl.A.No.649/2022 " 118 Presumptions as to negotiable instruments. Until the contrary is proved, the following presumptions shall be made:
(a) of consideration - that every negotiable instrument was made or drawn for consideration.
And that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration:
(b) as to date - that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance - that every accepted bill of exchange was accepted within reasonable time after its date and before tis maturity
(d) as to time of transfer - that every transfer of a negotiable instrument was made before its maturity
(e) as to order of endorsements - that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamps - that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course -
that the holder of a negotiable instrument is a holder in due course PROVIDED that, where the instrument has been contained from its lawful owner, or from any person in lawful custody thereof, by means of an 11 Crl.A.No.649/2022 offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
Section 139: Presumption in favour of holder. It shall be presumed. Unless the contrary is proved. That the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge. In whole or in part, of any debt or other liability."
15. So for as, the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 of NI Act is concerned, apparent is that the accused has not denied her signature in Ex.P1 cheque that has been issued in favour of complainant on an account maintained by her for a sum of Rs.4,00,000/. The said cheque was presented to the bank within the period of its validity and which was returned as 'cheque irregularly drawn amount in words and figures differ' as per Ex.P2 bank memorandum. The accused contended that the cheque is defective, the proceedings under Section 138 is not maintainable. In the instant case a peculiar situation 12 Crl.A.No.649/2022 has been arisen where the very factum of the instrument being a valid cheque has been challenged.
16. In order to decide the controversy, it is necessary to refer Section 6 of NI Act in order to find out what is the cheque. Section 6 defines cheque as follows:
Section 6 of NI Act defines cheque as under:
"Cheque".--A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
Explanation I. ...
(a) .....
(b) .....
Explanation II. ....
Explanation III. ..
17. Therefore, in view of Section 6 of the NI Act, a cheque is a bill of exchange which is drawn on a specified banker and is payable otherwise than on demand. Therefore, to be a cheque, an instrument has to satisfy the conditions of being a bill of exchange first and thereafter, if 13 Crl.A.No.649/2022 it is a valid bill of exchange and directed to a banker, it will become a cheque.
18. The definition of bill of exchange is given in Section 5 of the NI Act, which reads as under:
5. "Bill of exchange".--A "bill of exchange"is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. A promise or order to pay is not"conditional", within the meaning of this section and section 4, by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified even which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain. The sum payable may be "certain", within the meaning of this section and section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an installment, the balance unpaid shall become due. The person to 14 Crl.A.No.649/2022 whom it is clear that the direction is given or that payment is to be made may be a "certain person", within the meaning of this section and section 4, although he is misnamed or designated by description only.
19. Thus, as per the aforesaid definition, a bill of exchange has to be: (1) an instrument in writing, (2) containing an unconditional order signed by the maker, (3) directing a certain person to pay, (4) a certain sum of money and, (5) only to, or to the order of, a certain person or to the bearer of the instrument.
20. If an instrument satisfies all the aforesaid five conditions and in place of condition No.3, the direction to pay is given to a specified banker, the said instrument will be a cheque within the meaning of the NI Act, 1881. Therefore, the instrument in question needs to be tested whether it fulfills the aforesaid conditions to make it a valid cheque.
21. On looking into Ex.P1 cheque reflects that this is an instrument in writing and therefore, satisfies condition 15 Crl.A.No.649/2022 No.1 as above. It is an unconditional order signed by the maker and thus, it satisfies condition No.2 of Section 5. A direction has been given to a specified banker that is Axis Bank ltd., Tumakuru Branch, Tumakuru and thus, it satisfies condition No.3 of the said Section. However, when it comes to condition No.4, that is a direction should be to pay a certain sum of money, according to the bankers endorsement at Ex.P2 cheque irregularly drawn amount in words and figures differ. As it can be seen amount written in figures is "4,00,000" and the amount written in words is "Four lake only". Coming to conditon No.5 the document also satisfies the condition No.5 as above, because it has been directed to be paid to N.Vishwaprakash i.e., a certain person.
22. As discussed above, there could have been no dispute about Ex.P1 instrument being a cheque within the definition of Section 6 of NI Act. Accordng to Bankers slip the cheque irregularly drawn amount in words and figures differ.
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23. However, as per the scheme of the NI Act 1881, an instrument does not become invalid merely because the amount ordered to be paid is stated differently in figures and in words. Section 18 of the NI Act provides the recourse to be taken in such eventuality. Section 18 of the NI Act reads as under:
"18. Where amount is stated differently in figures and words.--If the amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words shall be the amount undertaken or ordered to be paid."
24. Therefore, as per the provisions of Seciton 18 of NI Act, merely because amount to be paid as stated in figures and words is different, a cheque or an instrument does not become invalid and the amount stated in words shall be considered to be the amount undertaken or ordered to be paid. As per the endoresment of the banker, the cheque irregularly drawn amount in words and figures differ. In words except a spelling mistake as 'lakh' it is used as 'lake'. The meaning of words given a definite certain amount as four lakh. There is no ambiguity in the 17 Crl.A.No.649/2022 words mentioned as well as figures mentioned in the cheque. The effect of Section 18 of NI Act is that in case of amount is stated differently in words and figures the amount stated in figures would be immaterial and it is only the amount stated in words that has to be considered. In the considered opinion of the court there is no different amount in words and figures except in words instead of 'lakh' mentioned as 'lake'. It does not take away the meaning of words. Thus, the Ex.P1 is not invalid instrument and it is a cheque fulfilling all conditions as per Section 6 of NI Act. Therefore, there is no substance in the contention of counsel for appellant that the cheque is defective and proceedings under Section 138 is not maintainable.
25. Ex.P3 is the legal notice dated 28.7.2017 which was issued within 30 days from the date of dishonour of cheque. Ex.P4 is the postal receipt, Ex.P5 is postal acknowledgment for due service of notice. According to accused she has not received legal notice. However, in her evidence in the cross examination she has stated that she 18 Crl.A.No.649/2022 is residing in Baddyhalli, 3rd Cross, Gokul Layout, near Kyathasandra, Tumakuru. The notice at Ex.P3 address at No.25, 3rd Main, Janatha Gokul Layout, 6th Cross, near water tank, Baddyhalli, Tumakuru. The accused has not produced any documents to show that she is not residing in the above said address and she has not even explained if not residing in the above said address how she signed in Ex.P5 postal acknowledgment. In her evidence she has not disputed her signature in Ex.P5. Therefore, there is no material on behalf of accused tha the notice was sent to wrong address. If the article is sent to correct address of addressee there is deemed service of notice unless contrary is proved. No such contrary is proved by the accused. There is due service of notice. Even otherwise assuming for the sake of arguments that the notice was not served, after service of summons within 15 days she has not made payment to the complainant. Thus, all the basic ingredients of Section 138 as also of Section 118 and 139 are apparent on the face of the record. The trial Court had also taken note of these facts and had drawn the requisite 19 Crl.A.No.649/2022 presumption. Therefore, it is required to be presumed that Ex.P1 cheque in question was drawn for consideration and the holder of the cheque i.e., the complainant received the same in discharge of an existing debt. The onus, shifts on the accused/appellant to establish a probable defence as to rebut on such a presumption
26. In Rangappa Vs Mohan (2010) 11 SCC 441 Hon'ble Supreme Court has reiterated and summarised the principles relating to presumptions under Section 118 and 139 of NI Act and rebuttal thereof in the following:
"26. In the light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it is based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttal presumption and it is open to the accused to raise a defence wherein the existence of a 20 Crl.A.No.649/2022 legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.
27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendantaccused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused 21 Crl.A.No.649/2022 has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities".
Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
27. In view of above said judgment on the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and circumstances, which may lead the Court to conclude either that the consideration did not exist or that its non existence was so probable that a prudent man would under the circumstances of the case act upon the plea that the consideration did not exist. Mere denial would not fulfill the requirements of rebuttal as envisaged under Section 118 and 139 of NI Act.
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28. In the present case on hand, the trial Court drawn the presumption under Section 139 of NI Act holding that the defence of the accused/appellant is not probable. Regarding the issuance of cheque is towards discharge of liability, the complainant proved his case. It is further held the accused failed to discharge the presumption that the cheque was not issued for discharge of legally enforceable debt or liability.
29. The accused/appellant in order to discharge her burden has put forth her defence through cross examination of PW1 and also stepped into witness box and adduced evidence as DW1.
30. The defence of the accused through cross examination of PW1 and in her evidence that there ws no financial transaction with the complainant. She did not issue the cheque towards discharge of legally enforceable debt. In this regard in the cross examination of PW1 it elicited no documents are produced to show that the loan amount was paid to accused. There was no transaction between accused and complainant earlier to transaction in 23 Crl.A.No.649/2022 question. The accused had approached complainant 15 days prior to payment of amount. The complainant is agriculturist having 8 to 9 lakhs income per month. No documents are produced. By posing those questions the accused disputed the financial capacity of the complainant to advance the loan. As per the judgment of Hon'ble Apex Court in 2022 SCC Online 302 Tedhi Singh Vs Narayan Das Mahanth wherein Hon'ble Apex Court has observed:
the accused has the right to demonstrate that the complainant did not have the capacity to advance the loan by producing the material.
31. In the present case PW1 crossexamination elicited that he has not produced the documents to show he had 8 to 9 lakhs of income. There is no averment in the complaint about his source of income. The accused despite disputing the financial capacity, the complainant not chosen to place the material about his income as on the date of payment of amount.
32. The another circumstances, relied upon by the accused the admission of the complainant in his cross 24 Crl.A.No.649/2022 examination that he do not know what accused is doing, he does not know the income of the accused. Thus, it is improbable that the person who advanced the loan of Rs.4,00,000/ without ascertaining the capacity of borrower to repay the amount and the nature of work of borrower.
33. Apart from the above said circumstances, in the complaint, notice as well as in the sworn statement there is no averment when did the accused approached the complainant for financial assistance and what for the accused has borrowed the loan. In the complaint it has not stated mode of payment of amount. There is no other document except the cheque to show that the amount of Rs.4,00,000/ was advanced to the accused. The above said circumstances would demonstrate that the defence of the accused is probable. The presumption is rebutted. It is for the complainant to establish the transaction with cogent material placed before the Court. The complainant except his self serving testimony and cheque, there is no other material to show that he had financial capacity to 25 Crl.A.No.649/2022 lend Rs.4,00,000/. There is no proof that the cheque was issued by the accused towards discharge of legally enforceable debt. No doubt, the accused did not issued reply notice and did not file complaint for misuse of cheque by itself is not a ground to disbelieve the probable defence of the accused. The trial Court in the judgment has disbelieved the defence of the accused, but failed to appreciate the material elicited in the cross examination of PW1 about financial capacity of the complainant and that he has not ascertained the repayment capacity of the accused and her avocation. The said material itself is sufficient to rebut the presumption, thereafter, the burden shift on the complainant it is for him to prove the transaction for which he has not proved. The trial Court ignored this material evidence and wrongly convicted the accused on the pretext that there is a presumption in favour of complainant. The judgment of trial court in convicting the accused is not justified liable to be interfered. The accused is liable to be acquitted for the 26 Crl.A.No.649/2022 offence under Section 138 of NI Act. Accordingly, answer points No.1 and 2 not justified and 3 in Affirmative.
34. POINT No.4: In view of findings given on point Nos.1 to 3, this Court pass the following order.
ORDER The Appeal filed by the appellant under Section 374(3) of Cr.P.C. is allowed.
Consequently, the impugned Judgment of conviction and sentence in CC.No.23129/2017 dated 11.04.2022 passed by the Small Causes Judge & 26th Additional Chief Metropolitan Magistrate Bengaluru (SCCH9) is set aside.
The appellant/accused is acquitted for the offence under Section 138 of NI Act.
The fine amount of Rs.1,21,000/ deposited by the appellant before the trial Court, which was released in favour of the respondent/complainant is ordered to be refunded to the appellant within 60 days by the respondent with the interest at the bank rate prevalent at the beginning of this financial year.
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Crl.A.No.649/2022 Office is directed to transmit the record to the trial Court with copy of this Judgment. (Dictated to the Judgment Writer directly on computer, corrected by me and then pronounced in the open Court on this the 4th day of January, 2024) (S.NATARAJ), LXVI Addl.CC & SJ, Bengaluru.
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Crl.A.No.649/2022 4.1.2024 For Judgment The Judgment is pronounced in the open Court vide separate Judgment with following operative portion.
ORDER The Appeal filed by the appellant under Section 374(3) of Cr.P.C. is allowed.
Consequently, the impugned Judgment of conviction and sentence in CC.No.23129/2017 dated 11.04.2022 passed by the Small Causes Judge & 26th Additional Chief Metropolitan Magistrate Bengaluru, (SCCH9) is set aside.
The appellant/accused is acquitted for the offence under Section 138 of NI Act.
The fine amount of Rs.1,21,000/ deposited by the appellant before the trial Court, which was released in favour of the respondent/complainant is ordered to be refunded to the appellant within 60 days by the respondent with the interest at the bank rate prevalent at the beginning of this financial year.
Office is directed to transmit the record to the trial Court with copy of this Judgment.
LXVI Addl.CC & SJ, 29 Crl.A.No.649/2022 Bengaluru .