Bangalore District Court
M/S Hvs Jewelers Rep By H A Abdul Akheel ... vs M/S Rajesh Exports Ltd on 23 December, 2025
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Cri Appeal No.1523/2023
KABC010283572023
IN THE COURT OF LV ADDL. CITY CIVIL AND SESSIONS
JUDGE, BENGALURU (CCH-56)
DATED: THIS THE 23rd DAY OF DECEMBER 2025
PRESENT
SRI. MOHAN PRABHU, M.A., LL.M.
LV ADDL. CITY CIVIL AND SESSIONS JUDGE, BENGALURU
CRIMINAL APPEAL NO.1523 / 2023
Appellant/ M/S HVS JEWELERS
accused PROPRIETORSHIP FIRM,
HAVING IT SOFFICE, AT SHOP No.1 & 2
BESIDE BALAJI NURSING HOME,
GUSWT HOUSE ROAD,
KADUR - 577 548,
REPRESENTED BY ITS PROPRIETOR,
H.A. ABDUL AKHEEL PASHA.
[R/by Sri.S. MADHU, Adv.]
Vs
Respondent/ M/S RAJESH EXPORTS LTD.
Complainant A COMPANY INCORPORATED UDNER THE
COMPANIES ACT, HAVING ITS OFFICE AT
No.4, BATAVIA CHAMBERS, KUMARA
KRUPA ROAD, KUMARA PARK EAST,
BENGALURU - 560 001,
REPRESNETED BY ITS
AUTHORIZED REPRESENTATIVE
MR. B.G. MALLIKARJUNA.
[R/by Sri P.R., Adv.]
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Cri Appeal No.1523/2023
JUDGMENT
This appeal is filed U/s.374[3] of Cr.P.C., by the accused against the judgment of conviction dated:
20.09.2023 passed in C.C. No.21376/2018 by learned XXVIII ACMM, Bengaluru for the offence under S.138 of Negotiable Instruments Act [for short 'N.I. Act''].
The parties are referred to their rank before the trial court.
The case of the complainant is briefly stated as follows:
The complainant is the company and it is represented by its authorized representative. The complainant company is engaged in the business of gold jewellery and gold bullion. The accused was interest in storing and selling gold jewellery and gold bullion of the complainant company. Hence, he had entered with an agreement with the complainant on 13.07.2015. In pursuance of the agreement the accused was receiving gold jewellery and gold bullion and the receipt of the same was duly recorded and acknowledged by the accused. The transaction of the accused with the complainant company is duly recorded in the books of 3 Cri Appeal No.1523/2023 account of the complainant company. As per the terms of the agreement, the accused was required to sell the gold jewellery and gold bullion provided by the complainant and the sale proceeds were to be deposited into the account of the complainant. The accused was entitled as per the terms of the agreement to a commission as specified therein. The accused had issued cheque bearing No. 815821 dated 23.02.2018 for Rs. 1.34crores drawn on Canara Bank, Kadur branch for discharge of liability towards the complainant company with an assurance that the said cheque would be honoured upon its presentation. As per the terms and assurance given by the accused the complainant presented the cheque bearing No. 815821 for realization through complainant's banker, Canara Bank, Madhavanagar, Bengaluru. But the cheque issued by the accused returned unrealized with an endorsement 'funds insufficient on 21.03.2018. The complainant company prepared demand notice dated 30.03.2018 and issued the same to the accused on 31.03.2018 calling upon the accused to pay cheque amount within 15 days from the date of receipt of the notice. The legal notice issued to 4 Cri Appeal No.1523/2023 the acucsed duly served on him. The accused has given untenable reply. The accused has failed to pay the cheque amount and thereby committed the offence punishable u/S./138 of NI Act. Hence, the complaint.
(2) After filing the complaint, the XXVIII ACMM, Bengaluru had taken cognizance of the offence punishable u/S.138 of NI Act and registered a case as PCR No.1912/2018. Thereafter recorded sworn statement of the representative of the complainant company. On the basis of the complaint averments the sworn statement of the complainant and the documents the learned XXVIII ACMM, Bengaluru passed an order dated 27.07.2018 to register criminal case against the accused for the offences punishable u/S.138 of NI Act in Register III and issued summons. Accordingly, the case in C.C.No.21376/2018 came to be registered. The accused entered appearance by engaging his counsel and released on bail. The substance of accusation read over to the accused for which the accused pleaded not guilty and claimed for trial. During the course of trial, the complainant company examined its legal officer as PW1 5 Cri Appeal No.1523/2023 and documents Ex.P1 to P15 are marked on the side of the complainant. After closure of the evidence on the side of the complainant the accused examined u/S/313 of CrPC. The accused has denied incriminating evidence. As defence evidence, the accused examined himself as DW 1 and documents Ex.D1 to D10 are marked on the side of the accused. Documents Ex.D1 to D3 were marked during the course of cross examination of PW1.
(3) After hearing both sides, the learned Magistrate pronounced the judgment on 20.09.2025 and acting u/S.255(2) of CrPC the accused convicted for the offence punishable u/S.138 of NI Act and sentence to pay fine of Rs.1,34,50,000/-, in default of payment of fine amount, the accused shall undergo simple imprisonment for one year. Out of fine amount, an amount of Rs.1,34,40,000/- shall paid to the complainant as compensation u/s/357(1)(b) of CrPC and remaining amount of Rs.10,000/- is remitted to the State.
(4) Aggrieved by the Judgment of conviction, the accused has preferred this appeal on following grounds. The learned Magistrate has erred in appreciating the 6 Cri Appeal No.1523/2023 evidence. The cheque issued by the accused was only for collateral security, which is for the purpose of dealership of Jewelry and other allied products and business transaction between the complainant and the accused. The learned Magistrate has failed to take note of the arguments of the accused that the board resolution extract not produced by the complainant in order to prove that the complainant company has authorised its representative Mallikarjuna B.G. to give evidence, defend and prosecute the case. It appears that the said board resolution produced by the complainant executed by the Chairman as per judgment reported in DIRECTOR MARUTI FEEDS AND FARMS VS. BASANNA PATTEKAR reported in 2008 CRL.L.J. 157 and 2007(5) KLJ 319, the accused is entitled for acquittal. The learned Magistrate erred in not considering the fact that in the cross examination of PW1 he has specifically and categorically admitted that the complainant company had received blank cheques from the accused and other documents. He relied upon the judgment reported in 2006 (3) KCCR 1779 (M/S SHREYAS AGRO SERVICES PRIVATE LIMITED VS. CHANDRAKUMAR S.B. The learned Magistrate erred in not appreciating the 7 Cri Appeal No.1523/2023 case of the accused that even as per the complaint whatever goods and material supplied by complainant to the accused firms are very well cleared and paid up to date. There is no balance or any mismanagement from the accused firm. The complainant supplied the materials and accused made payments promptly. The cheque in question is given for collateral security. The learned Magistrate has failed to consider that the complainant has not made out any case against the accused for the alleged repayment of dues as claimed in its complaint. The complaint is also not in accordance with law laid down in the decision reported in 2016 ACD151 (BOM), GOA BENCH and also reported in (2001) 6 KLJ 193 UMA GANGADHAR VS. CLASSIC COFFEE. It is specifically admitted in the cross examination of PW1 that when Franchise agreement was made the accused had given said cheque for security purpose. The complainant has not followed any mandatory procedure laid down in law. The cheque was given as collateral security for dealership of 'Shubh Jewelers', by taking undue advantage of possession of the cheque the complainant has foisted false complaint against the accused . If at all the 8 Cri Appeal No.1523/2023 accused is fallen due any amount to the complainant the accused is very much ready to pay the amount provided the complainant has to produce relevant indent invoice e- Sugama and as contemplated under Form-515. PW 1 has admitted in his cross examination that Franchise agreement till today in existence. In his cross examination PW 1 has admitted that he has not produced document to show how much gold sold. If the goods are sold then the amount will be remitted to the account of the complainant. If the goods are not sold the accused was not liable to deposit the amount. The accused hold some gold and he is ready to return the gold and release their properties pledged to the complainant firm. The complainant in order to knockout the properties of the accused, filed this false complaint. The learned Magistrate has failed to consider the crucial aspect of the matter that the complainant has completely failed to comply the order dated 30.09.2019 and to produce the documents such as income tax return for the year 2015- 16 to 2018-19 and ledger account for M/s HVS Jewellers Kadur with account statement from 13.07.2015 to 27.05.2017. The accused not Sundry Creditors and 9 Cri Appeal No.1523/2023 Sundry Debtors of the complainant company. The learned Magistrate has failed to consider that the complainant has not provided the goods as agreed in declaration agreement on 13.07.2015, because of the misunderstanding the complainant has filed this false complaint against the accused. There was violation of S.17 of Stamp Act. The complainant has not paid stamp duty on Ex.P3 and P4, which was highlighted before the learned Magistrate by the accused. Ex.P3 and P4 were also not properly notarized. The accused is innocent of the alleged offences. The accused never admitted execution of alleged declaration. The accused is mere stock holder who sells the gold items to the customer and remits the sale proceeds to the complainant company and receiving commission of it. The complainant who received the cheque of the accused for security purpose misused the same. The case of the accused was that the subject cheque was issued for security purpose and agreement was blank sheet in which the complainant has taken signature of the accused. The complainant not supplied the materials. The accused is not owe any money to the complainant. Taking undue advantage of 10 Cri Appeal No.1523/2023 the possession of the blank cheque and agreement false case filed against the accused. The learned Magistrate has failed to appreciate the document Ex.D1 to D10 produced by the accused. The accused never issued cheque in question for any debt. The original of Ex.P2 board resolution has not produced by the complainant. PW 1 has deposed that original resolution was produced in some other case. Ex.P2 did not bear the signature of all the Directors of the company. The minutes book of Ex.P2 not produced. PW 1 has not been authorized to represent the complainant company. PW 1 has no locus-standi to depose before the court. The learned Magistrate erred in not considering the fact that the complainant has miserably failed to prove its case with regard to possession of huge quantity of goods in possession of the complainant. The trial court has not appreciated the evidence on record. The impugned judgment is arbitrary one. Hence, on these grounds, the appellant prays to set aside the order and judgment passed by the XXVIII ACJM, Bengaluru in C.C.No.21376/2018 dated 20.09.2023.
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Cri Appeal No.1523/2023 (5) The trial court records received.
(6) The respondent / complainant entered appearance by engaging his counsel.
(7) I have heard the arguments of the learned counsel for respondent and perused the records. The learned counsel for the appellant submitted that arguments may be taken as heard.
(8) I have perused the entire record.
(9) The following points would arise for my consideration:-
Point No.1:- Whether the impugned judgment of conviction and order of sentence passed thereon is illegal, perverse and calls for interference?
Point No.2:- Whether there is sufficient grounds made out by the appellant to set side the judgment passed in C.C.No.21376/2018 as prayed for?
Point No.3:- What order?
(10) My findings to the above points are as below:-
Point No.1:- In the Negative
Point No.2:- In the Negative.
Point No.3:- As per the final order,
for the following
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Cri Appeal No.1523/2023
REASONS
(11) POINT NO.1&2:- These points are taken
up together for discussion to avoid repetition in
discussion of evidence.
(12) Prior to proceed further, at the outset, it is important to note that this appellate court passed an order dated 25.10.2023 and operation of the order in C.C.No.21376/2018 dated 20.09.2023 passed by the learned XXVIII ACJM, Bengaluru stayed subject to condition that the appellant shall deposit 20% of Rs.1,34,50,000/- before the trial court within 60 days from the date of order, in default, the order of suspension of sentence and judgment stands vacated. The appellant shall execute personal bond for Rs.10,000/-. For obvious reasons best known to the appellant/ accused he has not complied the order passed by this court by depositing 20% of the amount of Rs.1,34,50,000/- before the trial court within 60 days from the date of the order dated 25.10.2023. Since the appellant has failed to comply the order by depositing 20% of fine amount the learned counsel for the appellant submitted that the arguments may be taken as heard. The learned counsel for the 13 Cri Appeal No.1523/2023 respondent in his arguments submitted that the appellant ha snot deposited 20% of fine amount. He submitted that the accused has not disputed Ex.P5 cheque belongs to his bank account and Ex.P5(a) his signature. He argued that the accused also not disputed regarding agreement entered into between the accused and the complainant, and as the accused interested in storing and selling of gold jewellery and gold bullion of the complainant company hence, he entered agreement with the complainant company on 13.07.2015. He submitted that the agreement between the complainant and the accused firm is commercial transaction. The accused received gold jewellery and gold bullion, but not deposited the sale proceeds to the complainant company. He submitted that the accused in order to pay the dues issued Ex.P5 cheque for Rs.1.34 crores in favour of the complainant. When the complainant presented the cheque Ex.P5 for encashment, the same came to be dishonoured with endorsement 'funds insufficient' in the bank account of the accused. Thereafter even though the complainant issued legal notice Ex.P7 to the accused calling upon the accused to pay the cheque amount 14 Cri Appeal No.1523/2023 within 15 days the accused failed to pay the cheque amount, the accused issued untenable reply. He submitted that the complainant has produced documents such as Ex.P3 agreement. Ex.P4 declaration executed by the accused. Ex.P11 cash ledger account, Ex.P12 Online printout agreement, Ex.P13 and P14 two online printout mortgage deeds. He argued that the trial court rightly drawn presumption u/S.139 and 118 of NI Act and rightly convicted the accused for the offence punishable u/S.138 of NI Act and sentence him to pay fine amount of Rs.1,34,50,000/- with default sentence and to pay compensation amount, out of fine amount.
(13) On perusal of oral evidence of PW 1, in his examination in-chief affidavit by reiterating the complaint averments has deposed that the complainant company is engaged in the business of gold jewellery and gold bullion. The accused was interested in storing and selling gold jewels and gold bullion of the complainant company and hence, had entered into agreement with the complainant company on 13.07.2015. He has deposed that pursuant to the agreement the accused was 15 Cri Appeal No.1523/2023 receiving gold jewelry and gold bullion and receipt of the same was duly recorded and acknowledged by the accused. He has deposed that the transaction of the accused with the complainant company is duly recorded in the books of account of the complainant company. PW 1 has deposed that as per terms of the agreement, the accused was required to sell the gold jewelry and gold bullion provided by the complainant company and the sale proceeds were to be deposited in the account of the complainant. The accused was entitled as per terms of agreement to commission as specified therein. PW 1 has deposed that the accused due a sum of Rs.1.34 crores towards discharge of his debt / liability. The accused issued Ex.P5 cheque bearing No.815821 dated 23.02.2018 for Rs.1.34 crores drawn on Canara Bank, Kadur branch in favour of the complainant with an assurance that the said cheque would be honored upon its presentation. PW1 has deposed that when they have presented the cheque to the bank, the cheque came to be dishonoured with an endorsement 'funds insufficient on 21.03.2018.
(14) PW1 has deposed that thereafter the 16 Cri Appeal No.1523/2023 complainant had issued legal notice to the accused demanding him to pay the cheque amount. Even though the notice is duly served upon the accused, the accused has not paid the cheque amount. The accused has given reply notice with untenable defence. In order to substantiate these contentions, taken by PW1 document Ex.P1 to P15 are marked through him. Ex.P1 is the certified copy of the incorporation certificate, Ex.P2 is the copy of resolution passed in the complainant company, authorizing PW 1 to give evidence. Ex.P3 agreement entered into between the complainant and the accused. Ex.P4 is the declaration executed by the accused in favour of the complainant. Ex.P5 is the cheque and Ex.P5(a) is the signature of the accused. Ex.P6 is the bank endorsement for having dishonoured the cheque for funds insufficient. Ex.P7 is the office copy of the legal notice. Ex.P7(a) is the postal receipt for having served the notice to the accused. Ex.P9 is the reply notice given by the accused to the complainant. Ex.P9(a) is its postal cover. Ex.P10 is the complaint filed in this case. Ex.P11 is the cash ledger account showing transaction between the accused and the complainant. Ex.P12 is the Online 17 Cri Appeal No.1523/2023 print out agreement, Ex.P13 and 14 are two Online printout of mortgage deeds. Ex.P15 is the certificate u/S.65B of Indian Evidence Act.
(15) PW 1 cross examined by the learned counsel for the accused in length. During the course of cross examination of PW 1, the accused has not taken any such contention that Ex.P5 cheque is not of his bank account. Ex.P5(a) is not of his signature. On the other hand, the accused in the cross examination of PW 1 admitted Ex.P5 is the cheque of his bank account and Ex.P5(a) is his signature, but would contend that he had given Ex.P5 signed cheque to the complainant for the security purpose. When he had given Ex.P5 cheque to the complainant it was blank. The accused also taken contention that he had signed on Ex.P3 and P4 when it was blank. Thus according to the accused he has issued Ex.P5 blank cheque and also signed on Ex.P3 and P4, when it was blank. The accused neither disputed his signature on Ex.P5 nor disputed his signature on Ex.P3 agreement and Ex.P4 declaration.
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Cri Appeal No.1523/2023 (16) Now coming to the evidence of accused / DW 1 is concerned, in his examination in chief DW 1 has deposed that he had taken Franchise from the complainant. He states that as per agreement, the complainant has not given him gold ornaments. He states that the complainant has supplied jewellery under the voucher and e-Sugama, except the complainant supplying jewels under voucher and e-Sugama no other gold jewellery and gold bullion were received by him. He has produced and got marked documents Ex.D4 to D10. He has deposed that when he has signed on Ex.P3 agreement it was blank. He has deposed that he issued cheque in favour of the complainant for security purpose. During the course of cross examination of DW1 by learned counsel for the complainant DW 1 has admitted the suggestion that he is the owner of the accused firm. He has admitted suggestion that there was gold transaction between the complainant and him. He has admitted his signature on Ex.P3 agreement. He has also admitted his signature on Ex.P4 declaration. He has admitted the suggestion that he and his family members mortgaged the property in favour of the complainant. 19
Cri Appeal No.1523/2023 He has admitted his signature on Ex.P5 cheque. He has denied the suggestion that he had received 22 KT gold weighing 4300.30 grams from the complainant on 13.07.2015. He has admitted the suggestion that on 13.07.2015 he, his relatives Syed Khader Pasha, Syed Mousin Pasha and Syed Tasim Pasha have all executed mortgage deed in favour of the complainant. He has denied suggestion that he without making payment to the complainant retained 4300.3 grams of gold with him. He has admitted suggestion that he was due a sum of Rs.17,41,634/- payable to the complainant by way of cash. He has denied suggestion that he was in possession of 4300.30 grams of gold and due a sum of Rs.17,41,434/- by way of cash and in all he was due a sum of Rs.1.34 crores payable to the complainant. Thus, on perusal of the cross examination portion of DW 1 one thing is very clear that the accused admitted that he was due a sum of Rs.17,41,634/- payable to the complainant by way of cash. Even though he has denied the receipt of gold weighing 4300.30 grams, but in the cross examination of PW1 he has not seriously disputed the document. Ex.P11 cash ledger account, Ex.P12 Online 20 Cri Appeal No.1523/2023 printout agreement and Ex.P13 and P14 two online printout of mortgage deeds.
(17) The complainant who has taken contention that the accused due a sum of Rs.1.34 crores payable towards transaction, in order to substantiate the contention has produced Ex.P11 cash ledger account extract. Document Ex.P11 is reflecting the transaction from the month of August 2015 till February 2016. Ex.P11(a) is the ledger account extract as on updated till 01.04.2017 shows the balance amount of Rs.1.22 crores showing total balance of 4300.30 grams of 22 KT gold balance payable by the accused. Since the accused admitted that the accused was storing and selling the gold jewellery and gold bullion by receiving same from the complainant, but burden equally cast on the accused to show that as per account maintained by him he has not received any gold or gold jewellery and gold bullion from the complainant as on 23.02.2018. In this case, except bald denial on the side of the accused in order to substantiate the contention taken by the accused by preponderance of probabilities the accused has not 21 Cri Appeal No.1523/2023 produced the account statement of the accused firm. The complainant is the company. The accused is the firm. The accused being proprietor of the firm, if not due any amount payable to the complainant, towards gold jewellery and gold bullion he should have produced the documents i.e. account extract to show no balance amount was payable to the complainant. Mere taking defence that he had issued Ex.P5 cheque towards security purpose without there being any further supportive documents is not sufficient to hold that the accused is successful in rebutting presumption available to the complainant u/S.139 & 118 of NI Act.
(18) In this appeal, the appellant would contend that PW 1 is not an authorized person to give evidence. The document Ex.P2 copy of board resolution dated 14.08.2012 is produced by the complainant. On plain reading of Ex.P2 would go to show that it was resolved in the complainant's company that PW 1 Mallikarjuna B.G. has been authorized to sign Vakalathnama, plaint pleadings, written statement, affidavit, applications, declarations, undertakings and complaint and any such 22 Cri Appeal No.1523/2023 other relevant documents and to lead evidence in the appropriate court and to prosecute cases. Merely because Ex.P2 was signed only by the Chairman,it does not presupposes that there was no authority given to PW1 to prosecute the case on behalf of the complainant company. It is for the complainant to prove their case. When the complainant company not disputing the document Ex.P2, the accused cannot dispute this document by contending that no authorization is given to PW1 to give evidence. The accused has admitted his signature on each page of Ex.P3, but his contention is that he has signed on Ex.P3 when it was blank. The accused also admitted his signature on Ex.P4, but he would contend that he signed on the same when it was blank. Mere taking such contention by the accused that he signed on the blank sheet, it does not mean that the accused is successful in rebutting presumption available to the complainant u/S.139 & 118 of NI Act. It is for the accused to explain under which circumstances he signed Ex.P3 and Ex.P4 when it was blank. Even if it is presumed that the accused signed on blank paper after coming to know about the contents on Ex.P3 and P4 what 23 Cri Appeal No.1523/2023 was step taken by the accused against the complainant is also crucial point. But in the present case it appears that only in order to avoid to make payment of cheque amount to the complainant, the accused had taken such defence of signing on Ex.P3 and P4 when it was blank is an after thought. In Ex.P9 reply notice, the accused has not taken any such contention that he had signed the agreement and declaration when it was blank. In para 2 of this reply notice, as per Ex.;P9, the accused admitted agreement dated 13.07.2015. In para 4 of reply notice the accused admitted execution of mortgage deed dated 13.07.2015 in favour of the complainant company. In Ex.P9 reply notice, the accused would contend that he was due a sum of Rs.17 lakhs payable to the complainant. The document Ex.P11 is the account ledger maintained by the complainant in the regular course of business. If at all Ex.P11 is not reflecting correct, transaction the accused should have produced the account ledger extract maintained by him, regarding transaction taken place between his firm and the complainant company. The complainant has given more than sufficient evidence to show that the accused is due 24 Cri Appeal No.1523/2023 sum of Rs.1.34 crores payable to the complainant company. The complainant has produced document Ex.P3 agreement entered into between the complainant and the accused. Ex.P4 declaration executed by the accused. Ex.P11 copy of ledger account, Ex.P12 online printout agreement, Ex.P13 and P14 two online mortgage deeds. All these documents if read together with Ex.P5 cheque, it would go to show that accused who has liable to pay the due sum of Rs.1.34 crores and issued Ex.P5 cheque in favour of the complainant in order to discharge his legally enforceable debt or liability. It is not the case of the accused is that as on the date of issuance of Ex.P5 cheque or thereafter he had sufficient amount in his bank account so as to honour Ex.P5 cheque. The complainant soon after dishonour of cheque Ex.P5 as per Ex.P6 bank endorsement, issued legal notice to the accused within 30 days from the date of endorsement. The complainant had given 15 days time to the accused to pay cheque amount after he received legal notice. Since the accused has failed to pay the cheque amount after giving 15 days, within 30 days, the complainant has filed this complaint. Hence, the complainant has duly followed the provision 25 Cri Appeal No.1523/2023 u/S.138 and 142 of NI Act, while filing this complaint. The complainant is the holder of Ex.P5 cheque. Hence, the trial court has rightly drawn presumption u/S.139 of NI Act. It is important to refer some of the judgments.
(19) In the judgment of Hon'ble Supreme Court in the case of K.S. Ranganath Vs Vitthala Shetty reported in 2022 [1] Crimes 454-[SC] wherein head note reads as below:-
"Negotiable Instruments Act, 1881 - Section 138 read with Sections 118 and 139- Dishonour of cheque-Conviction and sentence
- When a cheque is drawn out and is relied upon by drawee, it will raise a presumption that it is drawn towards a consideration which is a legally recoverable amount - Onus is on accused to raise a probable defence and standard of proof for rebutting presumption is on preponderance of probabilities-Defence sought to be put forth and witnesses examined in instant proceedings are only by way of improvement in respect of same cause of action-Defence sought to be put forth relating to cheque and other documents having been obtained by force, cannot be accepted as a probable defence when respondent successfully discharged initial burden cast on him-Appeal dismissed.(Paras 11, 17 and 19)"
(20) The Hon'ble Supreme Court in Judgment in a case of Rangappa V/s Mohan in para no. 14 observed as follows:-
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Cri Appeal No.1523/2023 "In the light of these extracts, we are in agreement with the respondent/ claimant that 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 Krishnajanardhana Bhat case 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 circumstance therein. As noted in the citations, this is ofcourse in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However there can be no doubt that there is an initial presumption which favours the complainant." (21) In the decision of Hon'ble Supreme Court reported in 2019(1) DCR 401 between Bir Singh V/s Mukesh Kumar it is held that a meaningful reading of the provisions of the Negotiable Instrument Act including, in particular, sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to he payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, 27 Cri Appeal No.1523/2023 the penal provisions of section 138 would be attracted. In my humble view, the principles of these cited decision is aptly applicable to the present case because PW1 in his examination in chief clearly deposed regarding accused issuing Ex.P4 cheque towards payment of due amount payable by the accused. Further, in the judgment of Hon'ble Supreme Court in a case of Sumeti Vij V/s M.s Paramount Tech Fab Industries, wherein it is held that to rebut the presumption, facts must be proved by the accused on a preponderance of probability. In the decision of the Hon'ble High Court of Karnataka in M Ramesh Kumar Case wherein in para No.5 observed that section 138 of N.I. Act, on proof of issuance of the cheque, the onus shifts to the accused to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of section 138 of N.I. Act. In the decision of Hon'ble High Court of Karnataka in the case of Sitaram Gouda A V/s Isbu Kunhammade it is held that, accused not disputing issuance of cheque- but taking inconsistent stand later-
accused not initiating any proceedings as regards misuse, or forgery of cheque and making of wrongful 28 Cri Appeal No.1523/2023 claim- except denial, accused not proving his case beyond reasonable doubt as obligation was on him to do so when he took a special plea.
(22) On perusal of trial court records, the trial court has rightly drawn presumption under S.139 of N.I. Act, by following three ingredients as laid down by the Hon'ble Supreme Court in Rangappa Vs Mohan reported in 2010 SC 1898. Section 139 of N.I. Act empowers the court to presume that holder of cheque received it for discharge of any liability enforceable debt or liability. Burden is on the accused to rebut the said presumption.
(23) Section 118 of The Act reads thus:
118. Presumptions as to negotiable instruments. -- Until the contrary is proved, the following presumptions shall be made:--
(a) Consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration (24) Further, Section 138 of The Act reads thus:29
Cri Appeal No.1523/2023
138. Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either 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 by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless
(a) the cheque has been presented to 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;
(b) the payee or the holder in due course of the cheque, as the case may be, makes 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; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
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Cri Appeal No.1523/2023 Explanation.-- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
(25) Further, Section 139 of The Act reads thus:
139. Presumption in favour of holder.--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
(26) Section 118 of The Act pertains to presumption of negotiable instrument which mandates that 'unless the contrary is proved.' Similarly, Section 139 of The Act also mandates that 'unless the contrary is proved.' Therefore, it has to be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge in whole or in part of any debt or liability. Needless to say that the presumption contemplated under Section 139 of the Act is rebuttal presumption. However, the onus of proving that the cheque was not issued towards discharge of any debt or liability is on the accused. But in this case, the accused has failed to rebut the presumption available to complainant u/S.139 of NI Act. It is relevant to cite the 31 Cri Appeal No.1523/2023 decision of Hon'ble Supreme Court in the case of Sunil Todi and others V/s State of Gujurat and another and in judgment of Hon'ble High Court of Karnataka which are reported in 2021(2) KCCR SN 119 (DB), Judgment reported in 2006 (5) KLJ 323 and reported in 2006(3) KLR
333. When the cheque issued in blank, the holder of the cheque has authorized to fill the amount due.
(27) Further, The Hon'ble Apex Court in (2012) 13 SCC 3123 (Laxmi Dyechem v. State of Gujarat) has held thus:
"It has to be presumed that the cheque was issued in discharge of debt or other liability but the presumption could be rebutted by adducing evidence. The burden of proof was however on the person who wanted to rebut the presumption. However, this presumption coupled with the object of Chapter XIV of The Act leads to the conclusion that by countermanding payment of post dated cheque party should not be allowed to get away from the penal provision of Section 138 of The Act. "
(28) The learned trial judge on proper appreciation of the evidence on record has rightly come to the conclusion that the accused has committed offence punishable U/s.138 of N.I. Act.
32
Cri Appeal No.1523/2023 (29) The trial court rightly convicted the accused for the offence u/S.138 of NI Act. There is no infirmity in the impugned judgment of conviction and sentence passed thereon and warrants no interference at the hands of this appellate court.
(30) The oral evidence of PW1 is supported by the documents Ex.P1 to P15. The oral evidence of accused / DW1 and the documents Ex.D1 to D10 are not sufficient to hold that the accused has rebutted presumption available to the complainant u/S.139 & 118 of NI Act by preponderance of probabilities. The criminal case filed before Kadur Police Station is not sufficient to hold that the accused was not at all due a sum of Rs.1.34 crores payable to the complainant.
(31) The oral evidence of PW1 is supported by the documents Ex.P1 to P15 are sufficient to hold that the accused indeed issued Ex.P5 cheque in favour of the complainant company for discharge of his legally enforceable debt / liability. The accused has not specifically stated on which date he had issued Ex.P5 33 Cri Appeal No.1523/2023 cheque in favour of the complainant. Even if we presume that the accused issued blank cheque Ex.P5 then also provision u/S.138 of NI Act attracts. Since the accused himself admitted that he used to received the gold jewelry and gold bullion from the complainant company. It is for the accused firm to show that as on the date of Ex.P5 cheque he has not received any such gold jewelry and gold bullion. On the contrary, the document Ex.P11 account ledger extract would go to show that the accused was possessing gold weighing 4300.3 grams of gold of the complainant. The accused has failed to rebut the presumption available to the complainant u/S.139 & 118 of NI Act by preponderance of probabilities. The oral evidence of PW1 which is supported by documents Ex.P1 to P15 are sufficient to hold that Ex.P5 cheque indeed issued by the accused towards gold jewelry and gold bullion received from the complainant company.
(32) Considering on re-appreciation of entire evidence and after perusal of entire records, this court is of the opinion that there is no infirmity in the order passed by the trial court in C.C. No.21376/2018. Hence, I 34 Cri Appeal No.1523/2023 answer point No.1 &2 in the negative.
(33) POINT NO.3:- In view of my findings on point No.1 & 2, I proceed to pass the following.
ORDER The appeal filed by the appellant / accused U/s.374 [3] of Cr.P.C. is hereby dismissed.
The judgment of conviction and sentence passed by the learned XXVIII ACMM, Bengaluru, in C.C. No.21376/2018 dated 20.09.2023 is hereby confirmed.
The office is directed to send back TCR forthwith to learned XXVIII ACMM, Bengaluru, along with a copy of this judgment.
[Dictated to the SG-I, transcribed and typed by him, corrected and then pronounced in the open court on this the 23rd day of DECEMBER 2025 ] (MOHAN PRABHU), LV Addl. City Civil & Sessions Judge, Bengaluru. (CCH-56)