Bangalore District Court
M/S Rajamurugan Textiles vs M/S Religare Finvest Limited on 26 March, 2026
KABC0A0003952022
IN THE COURT OF LXXIII ADDL.CITY CIVIL &
SESSIONS JUDGE, MAYOHALL UNIT, BENGALURU.
(CCH.74)
PRESENT:
Smt. Anitha N.P., B.A.L., L.L.M.,
LXXIII Addl.City Civil & Sessions Judge,
Mayohall Unit, Bengaluru.
Dated this the 26th day of March 2026
Crl. Appeal. No.25013/2022
Appellants/ 1. M/s. Rajamurugan Textiles,
Accused:- D.No.25, Pulikuthi Street No.6,
Gugai Salem-636006.
2. Jagadeesan N.S,
S/o. Siddhalingam Chettair,
Aged about 53 years,
D.No.25, Pulikuthi Kilakku,
Street No.6, Salem Corporation Gugai,
Salem- 636003.
(By Sri. Sadiq I.J. - Adv.,)
V/s
Respondents/ 1. M/s. Religare Finvest Limited,
Complainant: Sangeeta Tower, No.3, 80 feet road,
Indira Nagar Stage-1,
Near CMH Hospital,
Bengaluru-560038.
2 Crl.Appeal No.25013/2022
2. Mr. Bijay Kumar Mahana,
Represented by its Director,
duly constituted Attorney/
Authorized representative
S/o. Surjya Mani Mahana,
Aged about 43 years.
By Sri. P.S., - Adv.,)
JUDGMENT
This is an Appeal filed by Accused under Section 374 of Cr.P.C., being aggrieved by the Judgment dated 29.12.2021 passed in C.C. No.60120/2018 on the file of XXXIII ACJM, Mayohall Unit, Bengaluru, convicting him for an offence punishable under Section 138 of the Negotiable Instruments Act [hereinafter referred to as 'NI Act', for brevity] and sentencing him to pay fine of Rs.3,55,000/- and in default of payment of fine, to undergo simple imprisonment for 6 months. Out of the fine amount, a sum of Rs.3,50,000/- is directed to be paid to the respondent/complainant as compensation and remaining Rs.5,000/- is ordered to be remitted towards State expenses.
2. For the sake of convenience the parties hereinafter will be referred to with their ranking assigned 3 Crl.Appeal No.25013/2022 before the trial court. The appellant is the accused and the respondent is the complainant before the trial court.
3. The facts of the case:-
The complainant is a non banking financial institution carrying on business of advancing loan and credit facilities. During the course of it's financial services the accused approached seeking mortgage/SME loan. The complainant sanctioned loan and the accused agreed to repay the loan as per the loan agreement. The accused executed loan agreement. The accused is represented by it's proprietor and he is responsible for day to day affairs of the business and management of accused. Towards discharge of the liability, the accused issued cheque bearing No.114 dated 24.09.2018 for a sum of Rs.3,20,352/- to the complainant. The complainant believing the representation of accused presented the said cheque for encashment before it's banker. However, the said cheque returned dishonored with endorsement "Payment Stopped by Drawer" on 26.09.2018. Thereafter, the complainant issued legal notice dated 09.10.2018 through registered post on 12.10.2018. The said notice was came to be served on 5.10.2018 to the accused. Inspite of service of notice, 4 Crl.Appeal No.25013/2022 the accused not given reply nor complied the demands of notice. Thereby, the Appellant/accused has committed the offence punishable under Sec.138 of NI Act.
Thereafter the Complainant approached the Trial Court for appropriate legal action against the Accused.
4. Pursuant to summons the Accused entered appearance through his Counsel before the Trial Court. The substance of the accusation was read over and explained to the Accused in the language known to him. The Accused pleaded not guilty and claimed to be tried. The Complainant got examined himself as PW.1 and got marked Ex.P.1 to Ex.P.7 documents and closed his side. and the Accused got examined as DW-1 and got marked Ex.D1 and Ex.D2.
5. The trial court after hearing the counsel for Complainant and accused, convicted the Accused for the offence punishable U/Sec.138 of NI Act vide Judgment dtd 29.12.2021
6. Feeling aggrieved by the said judgment of conviction, the Accused is in appeal on the following grounds:
5 Crl.Appeal No.25013/20221. The trial court not applied its mind to the facts and circumstances of the case and appreciated the evidence and materials on record in accordance with law.
2. The appellant was not given the opportunity to defend his case. The appellant is wrongly implicated in this case. The allegation of the complainant that, the accused borrowed loan is itself is in dispute. It is to destroy the reputation of the accused, the complainant has filed this case.
3. The impugned Judgment is contrary to facts materials and evidence placed on record.
Under the above grounds the Appellant sought for acquittal by allowing the appeal and also prays to remand the matte.
7. Heard both sides arguments. Appellant filed his written arguments.
8. Perused the evidence, documents on record and also impugned Judgment of conviction passed by the Trial Court.
9. On re-appreciation of the evidence, documents on record, the following points would emerge for the consideration of this court.
6 Crl.Appeal No.25013/20221. Whether the Appellant proves that the cheque in question was not issued towards any legally recoverable debt?
2. Whether the Judgment of conviction passed by the Trial Court calls for interference by the hands of this court?
3. What Order?
10. My finding on the above points are as under:
Point No.1 : In the Negative.
Point No.2 : In the Negative.
Point No.3 : As per final order for the following:
REASONS
11. POINT NOs.1 and 2:-
Since the above two points are interlinked, in order to avoid repetition of facts the above points have been taken up together for consideration.
Before re-appreciating the evidence on record, it is necessary to refer some of the latest rulings of the Hon'ble Apex Court reported in 2019 (3) KCCR 2473 (SC) (Basalingappa V/s Mudibasappa), the Hon'ble Apex Court while considering several earlier rulings on the 7 Crl.Appeal No.25013/2022 offence U/Sec.138 of NI Act and also on the presumption U/Sec.118 and 139 of NI Act, at Para 23 was pleased to observe as follows:
23. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:-
(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the Accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the Accused to rely on evidence led by him or Accused can also rely on the materials submitted by the Complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
(iv) That it is not necessary for the Accused to come in the witness box in support of his defence, Sec.139 imposed an evidentiary burden and not a persuasive burden.
(v) It is not necessary for the Accused to come in the witness box to support his defence.8 Crl.Appeal No.25013/2022
12. In another ruling reported in AIR 2010 SC 1898 (Rangappa V/s Mohan), observed as under:-
"Existence of legally recoverable debt or liability- The presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. 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 contested. However, there can be no doubt that there is an initial presumption which favours the Complainant. 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 Accused/defendant cannot be expected to discharge an unduly high standard or proof. 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 9 Crl.Appeal No.25013/2022 '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. The Accused can rely on the materials submitted by the Complainant and it is conceivable that in some cases the Accused may not need to adduce evidence of his/her own."
13. Keeping in view the broad principles laid down by the Hon'ble Apex Court, let me re-appreciate the evidence and documents on record.
14. The definite case of the Complainant/Respondent is that it is non banking financial institution engaged in business of advancing loan and credit facilities to it's customers. During the course of it's business, the accused approached seeking mortgage/SME loan facilities and considering his request, the complainant sanctioned loan to the accused and towards discharge of the loan liability, the accused has issued a cheque bearing No.114 dated 24.09.2018 for a sum of Rs.3,20,35 2/-. As per the representation of the accused, the complainant presented the said cheque before his banker and the same returned unpaid with endorsement "Payment Stopped by the Drawer" on 26.09.2018. Thereafter, the complainant issued legal 10 Crl.Appeal No.25013/2022 notice dated 09.10.2018 and the same was served accused on 15.10.2018. Inspite of service of notice, the accused not complied the terms of notice nor given reply.
15. The complainant in order to prove his case got examined it's Power of Attorney Holder/Authorized Signatory by name Bijay Kumar Mahana as P.W.1. This P.W.1 got marked in all 7 documents as per Ex.P1 to Ex.P7 and closed his side evidence. The accused examined N.S. Jagadeesan as D.W.1 and got marked 2 documents as per Ex.D1 and Ex.D2.
16. Let me go through the documentary evidence placed by the Complainant in this case. Ex.P.1 is copy of Power of Attorney issued by the complainant to this P.W.1, Ex.P2 is the original cheque dated 24.09.2018 bearing No.00014 for a sum of Rs.3,20,352/-, Ex.P.3 is the memo issued by HDFC Bank Limited on 26.09.2018 stating the Ex.P.2 cheque returned unpaid on 26.09.2018 for the reasons "Payment Stopped by the Drawer". Ex.P4 is copy of notice dated 09.10.2018. Ex.P5 is postal receipt dated 12.10.2018, Ex.P6 and P7 are postal acknowledgments.
11 Crl.Appeal No.25013/202217. Now let us go through the cross-examination of PW-1/complainant. This P.W.1 in his cross-examination deposed that, the complainant has passed resolution authorizing him to file this complaint and also to prosecute this case. He has not produced board resolution. Jagadeeshan N.S. is the authorized signatory of M/s. Rajamurugan Textiles. The cheque produced by them shows that, the said Jagadeeshan N.S. is the authorized signatory of accused. The said Jagadeeshan N.S. applied for loan in the month of February 2016 at Salem Branch. He has borrowed Rs.17,70,000/-. Copy of loan sanction letter is not produced. When it is suggested that, the accused has lost his cheque while traveling in a local bus at Salem and the said cheque has been misused by the complainant, the same was denied by P.W.1. When it is suggested that, the said cheque was blank cheque and the complainant had filled the said cheque and also the signature in the cheque the same was denied by P.W.1.
18. On perusal of the evidence of accused, he deposed that, he is not owner of Rajamurugan Textiles and also not the authorized signatory. He never approached complainant for any loan and not executed 12 Crl.Appeal No.25013/2022 any loan agreement. Ex.P2 cheque belongs to him but the signature on Ex.P2 is not his signature. He don't know how the cheque Ex.P2 has gone into the possession of the complainant. While he was traveling in bus at Salem, his cheque has been misplaced and same came to his knowledge in second week of February 2018. Immediately, he issued stop payment instructions to his banker.
19. During the course of cross examination D.W.1 deposed that, the residential address shown in the cause title is his correct address and the phone number shown in the cause title is also correct number.
20. This accused in his further cross-examination deposed that, Ex.P2(a) signature is his signature and he lost signed blank cheque. Even the signature found on Ex.P6 and P7 are his signatures. Ex.D1 and D2 are produced by him but he do not know for what purpose they were produced.
21. It is pertinent to note that, from the above admission of D.W.1 it is clear that, there is no dispute that the Ex.P2 cheque is pertains to the account of accused and the signature on Ex.P2 is that of accused.
13 Crl.Appeal No.25013/2022On perusal of Ex.P.2 the said cheque is pertains to Rajamurugan Textiles and the said cheque is signed by it's authorized signatory. D.W.1 has not denied his signature on Ex.P.2.
22. With this factual matrix, firstly the court has to appreciate whether there are materials to ascertain the existence of legally enforceable debt. At the outset, the Court has to appreciate whether Section 138 of The Act is made out. When the cheque is produced before the Court and when it came to be dishonored for funds insufficient or for any other reason and when the legal notice was issued within the statutory period then the presumption available under Sections 118 & 139 of The Act is made out in favour of the complainant. The provisions of Section 118 of The Act are separated from the general rule applicable to the contracts and it provides presumption in favour of the party. The said presumptions are that: unless the contrary is proved the Court has to presume that the consideration had passed between the parties as enumerated under Section 118 of NI Act. Likewise, unless the contrary is established Section 139 of the NI Act clearly establishes that the holder of the cheque had received the same towards 14 Crl.Appeal No.25013/2022 discharge of the legally enforceable debt either towards whole or partial liability. The said presumptions have to be read conjointly in order to ascertain whether the ingredients are made out. Further, the said presumptions are rebuttable and the same has to be appreciated with the factual aspects of the case. The impugned cheque at Ex.P2 was drawn during the period of its validity and was accordingly presented to the bank and after its dishonor the notice was also issued and later on after completing all the statutory bound obligations. The complaint came to be filed. This clearly indicates that initial presumption is drawn in favour of the complainant. It is also relevant to note that the said presumption is rebuttable one and as such the defence of the accused has to be appreciated in order to ascertain whether the presumption which is drawn initially in favour of the complainant has been successfully rebutted.
23. The law is well settled that the accused need not enter the witness box to rebut initial presumption. At the same time, the defense which is taken up by the accused is to be appreciated so as to ascertain whether the same was probable or not. The accused has taken 15 Crl.Appeal No.25013/2022 contention that, he is not the proprietor of accused/Raja Murugan Textiles and he is not authorized signatory of accused. However, as discussed supra Ex.P.2 is admittedly pertains to the account of Rajamurugan Textiles ad as admitted by the accused the signature on Ex.P.2 cheque is that of accused. In the cross- examination dated 20.09.2021 before the trial court this accused has categorically admits as follows:-
"The signature found on my vakalath is my signature. Ex.P2 (a) is my signature, the witness volunteers that I have lost a signed blank cheque. It is true to suggest that signatures found on Ex.P6 and P7 are belongs to me".
24. If the above unequivocal admission of D.W.1 is considered this accused has not denied his signature on Ex.P.2 cheque. However, this accused has taken specific contention that, he lost signed blank cheque in Salem while he was traveling in bus in the year 2018. However, the very same accused in his chief examination deposed that, he has not signed Ex.P.2 cheque and Ex.P.2(a) is not his signature. This accused at one breath denies the signature on Ex.P.2 cheque and at another breath admits his signature on Ex.P.2 cheque.
25. It is necessary to note that, the accused has taken such a specific contention that, he lost cheque while traveling in bus at Salem and hence the burden is 16 Crl.Appeal No.25013/2022 on the accused to establish the said fact. Generally, if a person lost any document that too a document like., Negotiable Instrument, immediately an ordinary prudent man will obviously approach the concerned jurisdictional Police Station and will lodge a complaint in respect of said lost cheque and one will take publication in the news paper, or publication in print and electronic media. That apart, the said person who lost cheque will immediately intimate his banker to stop payment on the ground that, his cheque is lost. In the case on hand, this accused except taking contention that, he lost his cheque while traveling in bus at Salem, he has not taken any action in respect of said loss of cheque. No doubt when the complainant presented cheque it returned as payment stopped by drawer. However when the accused has issued such an instructions to his banker and whether he had sufficient balance in his account on the said date to honour the said cheque is not proved.
26. It is also vital to note that, this accused has produced and got marked 2 documents as per Ex.D1 and D.2. Ex.D1 is letter dated 10.03.2017 of Religare Finvest Limited and Ex.D2 is letter dated 30.05.2019 of Religare Finvest Limited. It is very essential to note that, Ex.D1 is a letter addressed to Jagadeesan Sujatha, Proprietor of 17 Crl.Appeal No.25013/2022 Kavitha Exports and it is in respect of TDS towards Religare Finvest Limited. Similarly, on perusal of Ex.D2 the said letter is addressed to Sujatha C stating that, it is for KYC completion on loan facility. In both the letters, there is reference of loan account No.XSMESEM00070563. It is necessary to note that, Ex.D2 is subsequent to filing of the present complaint. The accused though produced these two documents, how they are relevant to the case on hand is not stated by the accused. These Ex.D1 and Ex.D2 are produced before the court by this accused on 06.12.2021. The accused was very much in possession of Ex.D.1 as on 10.03.2017. However, nothing is elicited from the mouth of P.W.1 in respect of this Ex.D.1. Not even a single suggestion is posed to this P.W.1 that the accused is not signatory of Rajamurugan Textiles. Even Ex.D2 is looked into it is letter dated 30.05.2019 and even in respect of said Ex.D2 how the same is relevant to the case on hand is not explained by the accused. If the accused was not the proprietor of Rajamurugan Textiles how he put his signature to Ex.P.2 is not explained and same creates doubt about the defence of the accused.
18 Crl.Appeal No.25013/202227. In respect of Ex.D1 and Ex.D2 nothing is elicited from the mouth of P.W.1. The document at Ex.D1 and Ex.D2 clearly establishes the borrowing of loan by the accused from complainant company. If the accused has not given Ex.P.2 cheque to the complainant to discharge the loan liability with complainant then nothing prevented this accused to take appropriate steps to get compare the signature found on Ex.P.2 with that of other documents where there are admitted signatures of complainant. If this cheque was misplaced while traveling in bus then why this accused kept quite without taking any action against this complainant is not explained.
28. On presentation of Ex.P.2 cheque the same returned as "Payment stopped by Drawer". The counsel for the accused vehemently argued that, in the month of February 2018 he came to know about missing of cheque. However, from 2018 till today, the accused has not lodged any complaint as against this complainant.
29. In the appeal memorandum, the accused has taken defense that, the complainant has not proved the existence of legally recoverable debt. However, the very documents relied on by the accused at Ex.D1 and Ex.D2 19 Crl.Appeal No.25013/2022 shows that, this accused has borrowed loan from the complainant. The same shows that, the accused has taken contradictory defenses and failed to prove his defense.
30. The accused also taken defense that, the complainant has not produced any document to prove the existence of loan liability. However, the very document relied on by the accused at Ex.D1 and D2 shows the loan borrowed by the accused from the complainant.
31. The fact that, Ex.P4 is legal notice is duly served on accused is not denied or disputed. The accused though he has received the legal notice has not given reply. The accused has fully cross examined complainant and also led defense evidence and produced documents at Ex.D1 and Ex.D.2. Hence the contention of accused that, he has not given with opportunity to prove his defense also cannot be accepted.
32. The court is well aware of the cardinal principle of law, that the burden will be upon the prosecution to prove the case beyond reasonable doubt. However, a duty is also casted upon the Accused to successfully 20 Crl.Appeal No.25013/2022 rebut the presumption which is raised by the complainant. Admittedly, the complainant has discharged the initial burden as already discussed supra and as such the onus will be shifted upon the accused to rebut the same.
33. In the above case the only defense of the accused is there is no relationship between accused and Rajamurugan Textiles. However, as discussed supra, the accused himself admits that, Ex.P.2 cheque is pertaints to his account and the signature on said cheque is his signature. Hence, there is presumtption in faovur of complainant. With respect to the presumption and also the defense of misuse of cheque taken up by the Appellant the court has relied upon the judgment of the Hon'ble Apex Court reported in (2018)8 SCC 165 (Kishan Rao V/s Shankaregowda) wherein it has been held thus:
Section 139 of the Act, 1881 provides for drawing the presumption in favour of holder. Section 139 is to the following effect:
"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."21 Crl.Appeal No.25013/2022
18. This Court in Kumar Exports vs. Sharma Carpets, 2009 (2) SCC 513, had considered the provisions of Negotiable Instruments Act as Referring to 139, this Section well Evidence Court laid following in paragraphs 14, 15, 18 and 19:
Section 139 of the Act provides that 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. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume"
(rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference, affirmative or disaffirmative of the existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".
18. Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under 22 Crl.Appeal No.25013/2022 Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over."
19. This Court held that the accused may adduce evidence to rebut the presumption, but mere denial regarding existence of debt shall not serve purpose. Following was held in paragraph 20:
"20....The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of 23 Crl.Appeal No.25013/2022 proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist..."
20. In the present case, the trial court as well as the Appellate Court having found that cheque contained the signatures of the accused and it was given to the appellant to present in the Bank of the presumption under Section 139 was rightly raised which was not rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. The accused even did the not come in the presumption. The accused even did not come in the witness box to support his case. In the reply to the notice which was given by the appellant the accused took the defence that the cheque was stolen by the appellant. The said defence was rejected by the trial court after considering the evidence on regard with regard to which no contrary view has also been expressed by the High Court.
21. Another judgment which needs to be looked into is Rangappa vs. Sri Mohan, 2010 (11) SCC 441. A three Judge Bench of this Court had occasion to examine the presumption under Section 139 of the Act, 1881. This Court in the aforesaid case has held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. Following was laid down in paragraphs 26 and 27:
"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, (2008) 4 SCC 54, may not be correct.24 Crl.Appeal No.25013/2022
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 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 the17 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."
22. No evidence was led by the accused. The defence taken in the reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High court coming to the conclusion that the accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. How the presumption under Section 139 can be rebutted on the evidence of PW.1, himself has not been explained by the High court.
25 Crl.Appeal No.25013/202234. The sum and substance is that there is a presumption in favour of holder of cheque in due course. The accused failed to prove contrary. Lastly the Court has also appreciated the statement of Accused recorded under Sec.313 of Cr.P.C. regarding the evidence under Sec.313 of Cr.P.C., is not a bald formality. In fact, it is an opportunity rendered to the Accused to explain the incriminating materials against him. However, the Accused has only denied and failed to rebut the presumption available in favor of complainant. Whether this Accused has taken any legal action as against the complainant in respect of misusing of his cheque is not forthcoming. The accused not placed any evidence to establish that, on the date of issuing instructions to his banker to stop payment what was the amount avialble in his account. The accused not proved that, there was sufficient balance in his account so as to honor the cheque in question. Under the circumstances, the burden of proof is successfully established by the complainant and as such, with respect to the existence of legally enforceable debt and its presumption, the Court has relied upon the judgment of Hon'ble Apex Court reported in (2019) 10 SCC 287 (Uttam Ram V. 26 Crl.Appeal No.25013/2022 Devinder Singh Hudan and another) wherein it has been held as;
18. We find that the approach of the learned Trial Court and that of the High Court is perverse; irrational as well as suffers from material illegality and irregularity, which cannot be sustained in complaint filed under Section 138 of the Act.
19. A negotiable instrument including a cheque carries presumption of consideration in terms of Section 118(a) and under Section 139 of the Act. Sections 118(a) and 139 read as under:
"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, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;....
xxx xxx xxx
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."
20. The Trial Court and the High Court proceeded as if, the appellant is to prove a debt before civil court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. A dishonour of cheque carries a statutory presumption of consideration. The 27 Crl.Appeal No.25013/2022 holder of cheque in due course is required to prove that the cheque was issued by the accused and that when the same presented, it was not honoured. Since there is a statutory presumption of consideration, the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability.
21. There is the mandate of presumption of consideration in terms of the provisions of the Act. The onus shifts to the accused on proof of issuance of cheque to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of Section 138 of the Act which reads as under:
"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...."
22. In Kumar Exports, it was held that mere denial of existence of debt will not serve any purpose but accused may adduce evidence to rebut the presumption. This Court held as under:
"20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no 28 Crl.Appeal No.25013/2022 consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act." (emphasis supplied)
23. In a judgment reported as Kishan Rao v. Shankargouda6, this Court referring to Kumar 29 Crl.Appeal No.25013/2022 Exports and Rangappa returned the following findings:
"22. Another judgment which needs to be looked into is Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441 : (2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] . A three-Judge Bench of this Court had occasion to examine the presumption under Section 139 of the 1881 Act. This Court in the aforesaid case has held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. Following was laid down in paras 26 and 27: (SCC pp. 453-54) "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 [Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 : (2008) 2 SCC (Cri) 166], 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 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 30 Crl.Appeal No.25013/2022 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 of proof."
24. In a judgment reported as Bir Singh v. Mukesh Kumar7, this Court held that presumption under Section 139 of the Act is a presumption of law. The Court held as under:
"20. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact as held in Hiten P. Dalal [Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 :
2001 SCC (Cri) 960] .
xxx xxx xxx
33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and 31 Crl.Appeal No.25013/2022 makes it over to the 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, the penal provisions of Section 138 would be attracted.
xxx xxx xxx
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."
25. In other judgment reported as Rohitbhai Jivanlal Patel v. State of Gujarat and Another8 this Court held as under:
"18. So far the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 the NI Act is concerned, apparent it is that the accused- appellant could not deny his signature on the cheques in question that had been drawn in favour of the complainant on a bank account maintained by the accused for a sum of Rs. 3 lakhs each. The said cheques were presented to the Bank concerned within the period of their validity and were returned unpaid for the reason of either the balance being insufficient or the account being closed. All the basic ingredients of Section 138 as also of Sections 118 and 139 are apparent on the face of the record. The Trial Court had also consciously taken note of these facts and had drawn the requisite presumption. Therefore, it is required to be presumed that the cheques in question were drawn for consideration and the holder of the 32 Crl.Appeal No.25013/2022 cheques i.e., the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the accused-appellant to establish a probable defence so as to rebut such a presumption."
xxx xxx xxx
20. On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its nonexistence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as 8 AIR 2019 SC 1876 envisaged under Section 118 and 139 of the NI Act.....
xxx xxx xxx
32. The result of discussion in the foregoing paragraphs is that the major considerations on which the Trial Court chose to proceed clearly show its fundamental error of approach where, even after drawing the presumption, it had proceeded as if the complainant was to prove his case beyond reasonable doubt. Such being the fundamental flaw on the part of the Trial Court, the High Court cannot be said to have acted illegally or having exceeded its jurisdiction in reversing the judgment of acquittal. As noticed hereinabove, in the present matter, the High Court has conscientiously and carefully taken into consideration the views of the Trial Court and after examining the evidence on record as a whole, found that the findings of the Trial Court 33 Crl.Appeal No.25013/2022 are vitiated by perversity. Hence, interference by the High Court was inevitable; rather had to be made for just and proper decision of the matter."
35. To sum up it is noticed that the Accused has admitted the impugned cheque at Ex.P2 and also its issuance is categorically admitted by him, whereas it is stated that the cheque was lost while accused was traveling in bus and he came to know about the same only in the month of February 2018 is not corroborated by any evidence. There is absolutely no explanation that why he had kept quiet from February 2018 till date without lodging any complaint before jurisdictional police about misuse of cheque by the complainant. In the entire defence of the accused there is no explanation in this regard. The same shows that the accused has not taken defence which is certain and which is probable and as such the Accused has failed to rebut the presumption. By looking into the same, the impugned judgment and order of conviction passed by the Trial Court is apt and correct and the same does not call for interference of this court. The trial court has rightly appreciated the oral and documentary evidence in proper perspective. Accordingly, I answered Point Nos.1 & 2 in the Negative.
34 Crl.Appeal No.25013/202236. Point No.3: In view of the findings on the above points the appeal filed by the Appellant deserves to be dismissed. Accordingly, I proceed to pass the following:-
ORDER The appeal filed by the Appellant u/sec.374 (3) of Cr.P.C. is hereby dismissed with costs.
The Judgment of conviction passed by the Learned XXXIII ACJM Bengaluru, in CC.No.60120/2018, dtd. 29.12.2021, is hereby confirmed.
Send back the records with a copy of this Judgment to the Trial Court.
(Dictated to the Stenographer, typed by her, corrected, signed and then pronounced by me, in the open court on this the 26th day of March 2026.) Digitally signed by ANITHA ANITHA NANJANAGUDU NANJANAGUDU PARASHIVAMURTHY PARASHIVAMURTHY Date: 2026.03.27 17:41:02 +0530 [Smt. Anitha N.P] LXXIII Addl.City Civil & Sessions Judge, Bengaluru. (CCH-74).