Karnataka High Court
Sri A Nagarajappa vs Sri Ravi on 23 October, 2024
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NC: 2024:KHC:42714
CRL.A No. 1028 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF OCTOBER, 2024
BEFORE
THE HON'BLE MRS JUSTICE M G UMA
CRIMINAL APPEAL NO.1028 OF 2013
BETWEEN:
SRI.A.NAGARAJAPPA
S/O ANJANAPPA
AGED ABOUT 62 YEARS
NO.15, SRI VARU LAYOUT
NEAR TARANG SOFTWARE
HOODI VILLAGE, K.E.B. QUARTERS
MAHADEVAPURA POST
BENGALURU-560048
...APPELLANT
(BY SRI. C SHANKAR REDDY, ADVOCATE)
AND:
SRI.RAVI
Digitally signed S/O SRI.ANNAIAH REDDY
by ALBHAGYA AGED ABOUT 28 YEARS
Location: HIGH R/AT A.KRISHNAPPA NAGAR
COURT OF
KARNATAKA HALANAYAKANAHALLI
VARTHUR HOBLI
BENGALURU - 560035
...RESPONDENT
(BY SRI.HARSHA D. JOSHI, ADVOCATE FOR
SRI.PRAKASHA M, ADVOCATE)
THIS CRL.A IS FILED U/SEC.378(3) AND (4) CR.P.C BY THE
ADVOCATE FOR THE APPELLANT PRAYING THAT THIS HON'BLE
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NC: 2024:KHC:42714
CRL.A No. 1028 of 2013
COURT MAY BE PLEASED TO SET ASIDE THE IMPUGNED
JUDGMENT DATED 05.09.2013 PASSED BY THE ADDL. C.J.M.,
BENGALURU IN C.C.NO.2616/2009 - ACQUITTING THE
RESPONDENT/ACCUSED FOR THE OFFENCE P/U/SEC.138 OF
N.I.ACT AND ETC.
THIS APPEAL, COMING ON FOR FURTHER HEARING, THIS
DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MRS JUSTICE M G UMA
ORAL JUDGMENT
The complainant in CC No.2616/2009 on the file of the learned Additional Chief Judicial Magistrate, Bengaluru District, Bengaluru is impugning the judgment dated 05.09.2013 acquitting the accused for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short 'NI Act').
2. For the sake of convenience, the parties shall be referred to as per their rank and status before the Trial Court.
3. Brief facts of the case are that, the complainant filed the private complaint in PCR No.12/2009 against the -3- NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 accused alleging commission of the offence punishable under Section 138 of NI Act. It is the contention of the complainant that the accused had borrowed an amount of Rs.2,55,000/- to meet his urgent financial needs and to purchase a Car during last week of June 2008. Towards repayment of the same, the accused had issued the cheque bearing No.1131712 dated 30.10.2008 for a sum of Rs.2,55,000/-. When the said cheque was presented for encashment, the same was dishonored as there was 'Insufficient Funds' in the account of the accused. The legal notice was issued informing the accused regarding dishonor of the cheque and calling upon him to repay the cheque amount. Even after service of notice, the accused had not repaid the cheque amount, but he had issued untenable reply and thereby, he has committed the offence punishable under Section 138 of NI Act. Therefore, he requested the Trial Court to take cognizance of the offence and to initiate criminal action.
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4. The Trial Court took cognizance of the offence registered CC No.2616/2009 and summoned the accused. The accused appeared before the Trial Court and pleaded not guilty and claimed to be tried. The complainant examined himself as PW.1 and got marked Exs.P.1 to 9 in support of his contention. The accused has denied all the incriminating materials available on record in his statement recorded under Section 313 of Cr.P.C, examined D.Ws.1 to 3 and got marked Ex.D.1 in support of his defence.
5. The Trial Court, after taking into consideration all these materials on record, came to the conclusion that even though the accused had admitted his signature on the cheque - Ex.P.1 and even though there is presumption under Section 139 of NI Act about the existence of legally enforceable debt, the burden is on the complainant to prove passing of consideration mentioned in the cheque in question. Since the complainant has not proved the lending of the amount or passing of consideration amount, the complaint shall fail. Accordingly, the accused was -5- NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 acquitted. Being aggrieved by the same, the complainant is before this Court.
6. Heard Sri.C.Shankar Reddy, learned counsel for the appellant and Sri.Harsha D. Joshi learned counsel for respondent. Perused the materials including the Trial Court records.
7. Learned counsel for the complainant contended that the complainant has specifically stated in the complaint that the accused had availed loan of Rs.2,55,000/- for the purpose of purchasing the Car. Admittedly, the Car was purchased in the name of the father of the accused. At the time of availing the loan, the cheque - Ex.P.1 was issued towards repayment of the loan amount. On presentation of the cheque, the same was dishonored. On receipt of legal notice, the accused has issued the reply as per Ex.P.6 and he has taken the defence that the blank cheque was issued to the complainant as security, but it is not stated as to why the accused had to furnish security to the Complainant. -6-
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8. Learned counsel submitted that there is absolutely no cross-examination to P.W.1 regarding the specific defence taken by the accused in the reply notice. Moreover, even when the accused is examined as D.W.1 and when his father is examined as D.W.2, they never spoke about the defence taken by the accused as stated in the reply notice. Interestingly, D.W.3 - an Independent Witness pleads totally different version saying that blank cheque was issued in favour of M/s.Prerana Motors as security, but the same was misused by the complainant. This defence was never spoken to either by the accused or his father, who is examined as D.W.2. Therefore, the accused has failed to probabilize the defence. He further submitted that when the accused admits his signature found on Ex.P.1, the presumption under Section 139 of NI Act would arise and on his failure to probabilize the defence, the accused is liable for conviction.
9. Learned counsel submitted that the Trial Court without proper appreciation of the materials on record and -7- NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 ignoring the legal presumption under Section 139 of NI Act proceeded to acquit the accused, which is perverse and illegal. Hence, he prays for allowing the appeal.
10. Per contra, learned counsel for the respondent opposing the appeal submitted that obtaining of the loan from the Complainant is categorically denied by the accused. In fact, the father of the accused had purchased the Car from Tata Motors by availing the loan. Therefore, there was no necessity for the accused to avail the loan from the complainant. Since the complainant had stood as surety for the loan obtained from M/s.Prerana Motors, he insisted for issuance of blank cheque as security and accordingly, blank cheque as per Ex.P.1 was issued and the same was misused by the Complainant. Such a defence was taken at the earliest point of time while issuing Ex.P.6
- the reply notice.
11. Learned counsel submitted that the complainant, who is examined as P.W.1, is cross-examined at length. During cross-examination, the witness states -8- NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 that he can furnish the documents for having lent the amount. He also states that loan was granted by way of cheque. He admits that he is an Income Tax Assessee, but, in spite of that, he had not shown lending of the amount to the accused in his IT Returns. The witness asserted that he can produce the passbook to show the advancement of the loan amount, but, in spite of that, nothing has been placed before the Court. Thereby, the complainant has not proved lending of the amount. When the accused had taken a specific defence and the complainant failed to prove lending of the amount, the accused is entitled for acquittal. Accordingly, the Trial Court has rightly acquitted the accused. There are no reasons to interfere with the impugned judgment of the acquittal and therefore, prays for dismissal of the appeal.
12. Learned counsel for the respondent has placed reliance on the decision of the Co-ordinate Bench of this Court in Criminal Appeal No.939/2010 disposed off on 07.08.2019 in support of his contention and contended that -9- NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 the complainant has not proved lending of the amount and has given fatal admission during cross-examination that he is not having any document to evidence lending of the amount and when the complainant has not proved either his financial capacity to lend or actual lending, the accused is entitled for acquittal. In view of the above, the learned counsel for respondent prays for dismissal of the appeal in the interest of justice.
13. In view of the rival contentions urged by learned counsel for both the parties, the point that would arise for my consideration is:
"Whether the impugned judgment of acquittal passed by the Trial Court suffers from perversity or illegality and calls for interference by this Court?"
My answer to the above point is in the 'Affirmative' and pass the following:
REASONS
14. It is the specific contention of the complainant that the accused had borrowed a sum of Rs.2,55,000/-
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 during last week of June 2008 for the purpose of purchasing the Car. As security, he had issued the cheque as per Ex.P.1 assuring him to make necessary arrangements for repayment of the cheque amount. When the cheque was presented for encashment, the same was dishonored as there was insufficient funds in the account of the accused. The legal notice as per Ex.P.3 was issued and the same was served on the accused. He had issued the reply as per Ex.P.6.
15. In Ex.P.6, a specific contention was taken that father of the accused by name Annaiah Reddy had purchased a Tata Indica Car from M/s.Prerana Motors Private Limited for a sum of Rs.3,34,457/-, which was registered on 14.08.2008 under Hire Purchase Agreement. Since the purchaser of the Car had only Rs.41,061/- with him, he availed the loan from M/s.Prerana Motors Private Limited. The Complainant stood as surety for the said amount and as security, the complainant insisted for issuance of blank cheque. Accordingly, Ex.P.1 - Blank
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 Cheque with the signature of the accused was issued only as a security. Later, the father of the accused had cleared the loan and therefore, there was no legally enforceable debt to be paid by the accused.
16. When the accused admits that Ex.P.1 - the Cheque belongs to his bank account and it bears his signature, the presumption under Section 139 of NI Act would arise. Even though it is the contention of the accused that the blank cheque was issued with his signature as a security, the presumption under Section 139 of NI Act would necessarily arise. In this regard, reliance could be placed on the decision of the Hon'ble Apex Court in the case of BIR SINGH VS. MUKESH KUMAR1, wherein the Hon'ble Apex Court at para Nos.34 and 36 has held as under;
"34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself 1 (2019)4 SCC 197
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 would not invalidate the cheque. the onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.
36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
17. Thus even when a blank cheque was issued as security, the legal presumption will arise. When presumption under Section 139 of NI Act would arise, the initial burden on the complainant gets discharged and burden shifts on the accused to rebut the presumption by probabilizing his defence.
18. In RANGAPPA VS. SRI.MOHAN2, the Hon'ble Apex Court has categorically held that the presumption 2 (2010) 11 SCC 441
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 under Section 139 of NI Act would include the existence of legally enforceable debt. Therefore, in view of the presumption under Section 139 of NI Act, the burden on the complainant to prove the actual lending of the amount gets discharged until the accused probabilizes his defence and rebuts the legal presumption. In RANGAPPA VS. SRI.MOHAN (cited supra), the Hon'ble Apex Court at para Nos.26 to 28 has held as under;
"26. In 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 was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 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 defendant-accused cannot be expected to discharge an unduly high standard or proof.
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28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
(Emphasis supplied)
19. Thus the position of law on the subject is very well settled. Therefore, it is clear that the accused, who admits issuance of the cheque - Ex.P.1 with his signature, is liable to rebut the presumption under Section 139 of NI Act. The degree of proof reexamined to rebut the
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 presumption by the accused is also reiterated by the Hon'ble Apex Court.
20. The accused has taken the specific defence while issuing the reply notice as per Ex.P.6 that his father had purchased the Tata Indica Car during August 2008 from M/s.Prerana Motors Private Limited for a sum of Rs.3,34,457/-. As his father had cash of only Rs.41,067/-, he availed loan from M/s.Prerana Motors Private Limited. For the said loan, the complainant had stood as guarantor and had insisted the accused to issue blank cheque as security. Under such circumstances, the accused had issued the blank cheque as per Ex.P.1.
21. The complainant examined himself as P.W.1 and he was cross-examined by the learned counsel for the accused. Strangely, the entire cross-examination of P.W.1 revolves around his financial capacity and actual lending of the amount. It is pertinent to note that there is absolutely no cross-examination to P.W.1 regarding the defence taken by the accused in Ex.P.6. There is not even a suggestion
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 to P.W.1 that he stood as surety for the loan obtained by the father of the accused from M/s.Prerana Motors and under such circumstances, the blank cheque as per Ex.P.1 was issued as security.
22. Strangely, in the chief-examination filed in the form of an Affidavit, there is absolutely nothing to suggest under what circumstances, the blank cheque came to be issued to the complainant. It is not explained as to what was the necessity for issuing the blank cheque to the complainant as security.
23. It is also pertinent to note that the accused had examined his father - Annaiah Reddy as D.W.2. He simply states that the complainant had obtained the blank cheque as security, but never states what was the necessity for giving the blank cheque to the Complainant as security when the loan was obtained from M/s.Prerana Motors Private Limited.
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24. The accused has examined one Gopal Krishne Gowda as D.W.3, who gives a different version saying that the blank cheque was obtained by M/s.Prerana Motors Private Limited while selling the Car to the father of the accused. The said cheque was taken by the complainant and misused by him by filling up the contents. This defence was never taken by the accused either in the reply notice nor suggested during cross-examination of P.W.1. It was also not deposed by D.W.1 or D.W.2. Therefore, it is clear that accused has taken inconsistent defence and even such inconsistent defence was never put to P.W.1 during cross-examination, nor it was spoken to by the accused. When the defence of the accused was never put to the complainant nor it was spoken to by the accused when he was examined as D.W.1, it cannot be said that the accused has probabilized his defence.
25. The accused had produced Ex.D.1 - the receipt issued by the Tata Motors for Rs.10,000/-, which is dated 24.10.2009. This document do not suggest availing of the
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 loan from M/s.Prerana Motors Private Limited or issuance of the cheque either blank or filled up, in favour of M/s.Prerana Motors Private Limited or in favour of the complainant. If in fact the accused had availed the loan from M/s.Prerana Motors Private Limited with the Complainant as security, he could have produced the documents to prove the same or at least, could have summoned M/s.Prerana Motors to produce the loan documents in proof of his contention. When no such attempt was made by the accused, it cannot be said that he has probabilized his defence.
26. Learned counsel for the accused has placed reliance on the decision in YESHWANTH KUMAR (supra) to contend that heavy burden lies on the complainant to prove actual lending of the amount. He draws the attention of the Court to para No.10, wherein the Court refers to the admissions by the Complainant to form an opinion that lending of the amount of Rs.1,00,000/- was not proved by the Complainant. In the said case, the Trial Court initially
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 convicted the accused for the offence punishable under Section 138 of NI Act. In the appeal preferred by the accused, the learned Sessions Judge had reversed the judgment of conviction and acquitted the accused. When the complainant had preferred an appeal before this Court, the Court had considered the facts of the case and formed an opinion that the accused had rebutted the presumption and therefore, he is not liable for conviction. The facts of the present case is entirely different. The above said decision, which is cited by the learned counsel for respondent, is not helpful to him in any manner.
27. The Hon'ble Apex Court in the case of ROHITBHAI JIVANLAL PATEL vs. STATE OF GUJARAT AND ANOTHER3 has reiterated the legal position that once the accused admits issuance of the cheque with his signature, the complainant is not reexamined to prove actual lending of the amount to the accused. But such admission will discharge the complainant of his initial 3 (2019) 18 SCC 106
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 burden and the presumption under Section 139 of NI Act would arise. Then the burden shifts on the accused to rebut the legal presumption. The Hon'ble Apex Court reiterated the degree of proof to rebut the presumption on the part of the accused and held in paragraph No.18 as under:
"In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 source of funds for advancing loan to the appellant-accused....."
(emphasis supplied)
28. It is relevant to refer to the decision of the Hon'ble Apex Court in M/s Kalamani Tex and another Vs P Balasubramanian4, wherein the Hon'ble Apex Court referring to its decisions in BASALINGAPPA vs. MUDDEBASAPPA5 and KUMAR EXPORTS vs. SHARMA CARPETS6 has held as under;
"15. No doubt, and as correctly argued by Senior Counsel for the appellants, the presumptions raised under Sections 118 and Section 139 are rebuttable in nature. As held in M.S. Narayana Menon v. State of Kerala, which was relied upon in Basalingappa, a probable defence needs to be raised, which must meet the standard of "preponderance of probability", and not mere possibility. These principles were also affirmed in Kumar Exports, wherein it was further 4 (2021) 5 SCC 283 5 AIR 2019 SC 1983 6 (2009) 2 SCC 513
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 held that a bare denial of passing of consideration would not aid the case of accused.
17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where this court held that:
"36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
(emphasis supplied)
29. Thus, the proposition of the law is very well settled and if the same is applied to the facts of the present case, since the accused admitted issuance of the cheque - Ex.P.1 with his signature, the presumption under Section 139 of NI Act would arise and the burden shifts on the accused to rebut the presumption. As discussed above, the accused has never probabilized his defence. On the other
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 hand, he has taken inconsistent defence and even such inconsistent defence was never suggested to P.W.1, when he was in the Box. The defence was never spoken to by the accused, who is examined as D.W.1 or his father, who is examined as D.W.2 even in their chief examination. Another witness examined as D.W.3 speaks of a defence which is totally inconsistent with Ex.P.6. Under such circumstances, I am of the opinion that the accused is not successful in rebutting the legal presumption and therefore, he is liable for conviction.
30. I have gone through the impugned judgment passed by the Trial Court. In para No.11 of its judgment, the Trial Court holds that no doubt, the presumption as contemplated under Section 139 of NI Act would arise about the existence of legally enforceable debt. But, however, it committed an error in proceeding to observe that the legal presumption under Section 139 of NI Act does not mean that the complainant need not have to prove passing of the consideration mentioned in the cheque
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 in question. This opinion expressed by the Trial Court is contrary to the well settled proposition of law highlighted above in Rangappa (supra). Thus, impugned judgment of the acquittal passed by the Trial Court is perverse and against the settled position of Law, which calls for interference by this Court. Accordingly, I answer the above point in the Affirmative.
REGARDING SENTENCE Heard learned counsel for the complainant and the accused regarding sentence.
Learned counsel for the complainant submitted that he has nothing to say about the sentence.
Learned counsel for the accused submitted that maximum leniency may be shown in sentencing the accused.
Considering the facts and circumstances of the case, the fact that the cheque in question is dated 30.10.2008 and also the fact that the Trial Court had acquitted the accused by passing the impugned judgment, I am of the
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 opinion that it is not a case for imposition of the maximum sentence.
In view of the above, I proceed to pass the following:
ORDER [i] The appeal is allowed.
[ii] The impugned judgment dated 05.09.2013 passed in CC.No.2616/2009 by the learned Additional Chief Judicial Magistrate, Bengaluru District, Bengaluru, acquitting the accused, is set-aside.
[iii] Consequently, the respondent-accused is convicted for the offence punishable under section 138 of the N.I. Act. He is sentenced to pay a fine of Rs.2,75,000/-
(Rupees Two Lakhs Seventy Five Thousand only) to be deposited before the Trial Court within eight weeks from today. In default to pay fine amount, he shall undergo simple imprisonment for a period of one year.
[iv] Out of the fine amount deposited by the accused, the complainant is entitled for a sum of Rs.2,60,000/- (Rupees Two Lakhs Sixty Thousand only) as compensation.
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NC: 2024:KHC:42714 CRL.A No. 1028 of 2013 Send back the Trial Court Records along with copy of this judgment to the Trial Court for information and for needful action i.e., securing the presence of the accused and for issuance of conviction warrant.
SD/-
(M G UMA) JUDGE NBM List No.: 2 Sl No.: 16