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2024. KHC:29535 CRL.A No.40 of 2015 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE26H DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR CRIMINAL APPEAL No.40 OF2015(A) BETWEEN: SRI KRISHNA REDDY M S/O LATE CHIKKAMUNISWAMY, AGED ABOUT62YEARS, RES. OF NERIGA VILALGE, NERIGA POST, SARJAPURA VIA, BANGALORE- 562 125. …APPELLANT (BY SMT. THANIMA BEKAL, ADVOCATE A/W SRI HAREESH BHANDARY T, ADVOCATE) AND: SMT. N. SHARADAMMA W/O VENKATASWAMY REDDY, AGED ABOUT48YEARS, RES. AT NO.20 & 27, 26TH MAIN, SOUTH AND F CROSS ROAD, JAYANAGAR9H BLOCK, BANGALORE- 560 011. …RESPONDENT (BY SRI H.N. BASAVARAJU, ADVOCATE) THIS CRL.A. IS FILED U/S.378(4) OF CR.P.C PRAYING TO SET ASIDE THE
ORDERDATED2011.2014, PASSED BY THE XXIII ACMM, BANGALORE CITY, IN C.C.NO.46946/2010 ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S138OF N.I. ACT. THIS CRIMINAL APPEAL HAVING BEEN RESERVED FOR
JUDGMENTCOMING ON FOR PRONOUNCEMENT OF THIS DAY, RAMACHANDRA D. HUDDAR J., DELIVERED/PRONOUNCED THE FOLLOWING: - 2 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 CORAM: HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR CAV
JUDGMENT(PER:HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR) This appeal is filed by the complainant-appellant being aggrieved by the judgment of acquittal of accused- respondent for the offence punishable under Section 138 of the Negotiable Instrument (in short `the Act') passed in C.C.No.4696 of 2010 dated 20th November 2014 by the XXIII Additional Chief Metropolitan Magistrate, Nrupathunga Road, Bengaluru City.
2. Parties to this appeal are referred to as per their rank before the trial Court for the purpose of convenience.
3. That complainant-respondent filed a complaint under Section 200 of Cr.P.C against accused - respondent for the offence punishable under Section 138 of the NI Act alleging that, himself and accused are known to each other. It is stated that, in the second week of December 2009, accused approached the complainant for a financial assistance to the extent of Rs.6,00,000/- to meet her - 3 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 urgent legal requirements. It is stated that accordingly on the request of the accused, complainant advanced a loan of Rupees six lakhs to the accused on the 9.12.2009 by hard cash. The accused promised to repay the same within a period of six months time.
4. In repayment of the said loan amount, accused issued a cheque bearing No.762704, dated 04.01.2010 for rupees six lakhs drawn on Dena Bank, J.P. Nagar Branch, Bengaluru. At the request of accused, complainant presented the said cheque for encashment through his banker i.e., Canara Bank, Varthur Branch, Bengaluru. It is alleged that, said cheque came to be dishonoured for want of sufficient funds in the account of the accused as per the endorsement dated 20.04.2010.
5. It is stated that, because of the dishonour of the said cheque, within the statutory period, the complainant issued a legal notice on the 12.05.2010 both by way of registered post acknowledgment due as well as `Under Certificate of Posting'. The said notice was duly served upon the accused. On receipt of the said notice, - 4 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 accused issued reply denying the issuance of the cheque and also legally enforceable debt etc. As accused has not paid the cheque amount, the complainant was constrained to file a complaint as stated supra against the accused.
6. The records of the trial Court reveal that, after filing the complaint, the trial Court took the cognizance of the offence, recorded the sworn statement of the complainant and after satisfaction of making a prime facie case by the complainant, issued summons to the accused. In response to the summons, accused appeared before the trial Court and was enlarged on bail. The learned trial Court recorded the plea of the accused and for which, the accused pleaded not guilty.
7. To prove the offence made out against the accused, complainant himself entered the witness box as PW.1. Got marked Exs.P1 to P7 and closed the complainant's evidence. After recording statement of the accused under Section 313 of Cr.P.C., by denying all the incriminating evidence appearing in the evidence lead by the complainant, accused herself entered the witness box - 5 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 as DW.1. So also, examined DW.2 by name Smt.Bhagya Lakshmi as DW.2. On behalf of the accused, Exs.D1 to D29 were marked.
8. The learned trial Court, on hearing the arguments and on evaluation of the evidence placed on record by the complainant raised three points for its consideration and answered the important two points in the negative and passed an order of acquittal of the accused of the aforesaid offences. This is how the complainant-appellant is before this Court challenging the aforesaid judgment of acquittal passed by the trial Court.
9. It is argued by the counsel for the complainant- appellant that, the signature on the said cheque is admitted. Issuance of the cheque is admitted. Therefore, according to his submission, when the cheque is admitted and also the signature on the same, then the presumption which is available under the provisions of Section 118 and 139 of the NI Act comes into operation. Therefore, in view of the presumptions which are very much available to the complainant with regard to the issuance of the cheque as - 6 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 well as signature, it is deemed that, there was a loan transaction in between the complainant and accused. He submits that, the reasons assigned by the trial Court in acquitting the accused are erroneous and improper.
10. According to him, the trial Court has not drawn proper inference from the evidence placed on record. The defence so set up by the accused is that, the cheques having been misused by the complainant stating that they are taken over from one Chowdamma who was working in the house of the accused. The heavy burden lies on the accused to discharge the said onus of non-issuing the cheque etc. It is his submissions that the conclusions arrived by the trial Court with regard to the lack of income of the complainant is erroneous and contrary to law. It is his submission that the trial Court has committed a grave error in acquitting the accused for the aforesaid offence. Therefore, relying upon the evidence placed on record and the observations made by the trial Court, it is submitted that the accused is liable for conviction.-. 7 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 11. In support of his submission, he relied upon the judgment of a co-ordinate Bench of this Court in Criminal Revision Petition No.619 of 2021 disposed on 04.06.2024 in between A.M. Harish Gowda Alias A.M. Harisha, S/o late Arasegowda v. Sri Chaluvaraju H.S, S/o late Sanna Naika. He also relies upon the judgment of the Hon'ble Apex Court in Criminal Appeal Nos. 1233-1235 of 2022 [Arising out of SLP (Criminal) No.7430-7432 of 2022]. decided on 12.08.2022 in between P.Rasiya v. Abdul Nazer and Another. According to him, the judgment under challenge is required to be set aside. Therefore, he prays to allow the appeal and set aside the impugned judgment.
12. As against this submission, learned counsel for respondent-accused with all force submits that, first of all the financial capacity of the complainant is not proved in accordance with law. There was no occasion for the accused to raise loan from the complainant as he is financially sound. His children are working in America. When the alleged transaction took place, the accused was - 8 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 not in India. According to his submission, the whatever the presumption which has been relied upon by the complainant have been rebutted by the accused by leading cogent evidence through DW.1 and 2 and also documents so produced.
13. As per his submission, accused has not issued any cheque in the manner stated by the complainant. He admits the signature on the said cheque, but, it was misused by the complainant by getting it from one Chowdamma who was working in the house of the accused. As Chowdamma was won over by the complainant and it was she handed over the said cheque to the complainant, he has misused the same.
14. According to his submission, the trial Court has evaluated the evidence in proper perspective and has come to the conclusion that the accused has never issued the said cheque in discharge of any legally enforceable debt. There was no occasion for the accused to raise loan from the complainant.-. 9 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 15. It is his submission that, complainant himself is not at all financially sound. Therefore, considering all the aspect the learned trial Court has acquitted the accused. His submission is that, the well-reasoned judgment of the trial Court should not be interfered with. He prays to dismiss the appeal.
16. I have considered the submissions of the counsel for the parties and have perused the records.
17. In view of the rival submissions of the both sides, the following points arise for my consideration are: (i) Whether the complainant is able to prove the legally enforceable debt from the accused by issuing the cheque so produced in this case and whether the trial Court has committed illegality in acquitting the accused?. (ii) Whether the accused prove that the presumption which is available under the provisions of the NI Act has been properly rebutted by the accused by leading cogent and acceptable evidence?. Point Nos.1 and 2 discussed together:
18. To recapitulate the facts again, the cheque involved in this appeal is dated 04.10.2010. When the - 10 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 said cheque was presented by the complainant for encashment through the banker of the complainant, it was dishonoured for want of sufficient funds in the account of the accused on 20.04.2010. As per the case of the complainant, on 09.12.2009 at the request of the accused, he gave hand loan of Rs.6,00,000/- in cash to meet the family necessities of the accused. In discharge of the said loan, the accused issued a cheque dated 04.10.2010 drawn on Dena Bank, JP Nagar Branch, Bengaluru, but, it was dishonoured as stated above. Thereafter, complainant issued a statutory notice on 12.05.2010 which was duly served. To the said notice, the accused issued a false reply on 25.05.2010 and she has not paid the amount. The said cheque was issued in discharge of the legal liability by the accused.
19. This factual allegations so made out in the said complaint have been reiterated by the complainant in his evidence on oath. In support of his submission, he placed reliance upon Ex.P1 to P7.-. 11 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 20. This PW.1 has been thoroughly cross-examined by the counsel for the respondent-accused. It has come in the evidence of this complainant that, the house of the accused is situated at a distance of 25 kms from the house of the complainant. He admits that, husband of the accused was an Electrical Contractor. Complainant is an agriculturist by profession. It is stated that, from the said agriculture, the complainant gets income of rupees seven to eight lakhs per year. Even the children of the complainant are also doing agriculture. He is not an Income Tax assesse. He has studied upto 10th Standard. According to him, the sister of the complainant is married to the relations of accused. Since, 1990 the complainant know this accused.
21. For the first time, without any pleadings complainant states that, for the purpose of purchasing the site, accused demanded loan from the complainant. There is no pleading either in his examination-in-chief or in the complaint. According to the complaint on 09.12.2009, he advanced a loan to the accused. Further states that, along - 12 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 with accused at that time, one person was there but, he does not know who he was. He admits that when a cash of rupees six lakhs has to be advanced as loan, it has to be given by way of a cheque. For the first time, he states that because of urgent need of the accused, he paid Rs.6,00,000/- by way of cash. He gave the same in the Neriga village in his house.
22. The notice issued by the complainant is also silent about the advancing loan to the accused to purchase the site as per the admission given by PW.1 in the cross- examination. He states that, except the said cheque from the accused, he has not taken any document from the accused for having advanced rupees six lakhs on 9.12.2009. He deposed ignorance whether the children of accused are residing at America and earning there. Complete ignorance has been spoken to that effect by the complainant PW.1. Even he deposed ignorance that, one Chowdamma used to take care of the house of the accused when the accused was away from India. He denied a suggestion that the Chowdamma has misused - 13 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 said cheque by giving the said cheque to the complainant and the complainant has misused the same. He deposed ignorance that the accused has issued a letter to the said Chowdamma for having misused the said cheque etc.
23. On scrupulous reading of the evidence of PW.1, it shows that, except stating that the accused has issued the said cheque in discharge of the legally enforceable debt, the other evidence so directed to him is a complete ignorance. When the accused has set up a plea of non competency or capacity of the complainant to advance the loan of Rs.6,00,000/- lakhs to her and also the said cheque was misused by the complainant through that said Chowdamma, it is for the complainant to prove the ingredients of Section 138 of the NI Act with legal evidence. So also, the presumptions which are available under the provisions of Section 118 and 139 of the NI Act have to be proved legally by leading evidence. That means, evidential burden is on the complainant to prove the said ingredients of a presumption as well as the offence so made out against the accused.-. 14 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 24. Except the evidence of PW.1 about issuance of the cheque, there is no evidence at all. When such a defence has been raised by the accused in the cross- examination and even a reply notice was given by the accused as per the say of the complainant, it is for the complainant to prove the offence against the accused by acceptable evidence. Merely because a cheque has been issued and it belongs to the accused and it contains the signature of the accused, that doesn't mean that, the complainant has filed the complaint for legally enforceable debt and a cheque which was issued for legally enforceable debt only. That means, heavy burden lies on the accused. Unless this burden is discharged, the onus never shifts on the accused.
25. Evidently, the provision of Section 139 of the NI Act which speaks of presumption which is a rebuttable presumption. That means, the burden is on the complainant to prove the same beyond reasonable doubt and with all probabilities the accused has to prove the defence.-. 15 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 26. Ex.P1 is the cheque, Ex.P2 is an endorsement issued by the bank. It is the defence of the accused that, she has kept the blank cheque in the house towards the payment of electricity and that has been taken over by the said Chowdamma and handed over the same to the complainant who was his relative. The said complainant has presented the said cheque and when the alleged cheque was taken by the complainant, the accused was not in India.
27. After dishonour of the said cheque, the complainant has issued a notice as per Ex.P3 dated 12.05.2010. It was duly served upon the accused as per the postal shara and acknowledgment as per Ex.P4 and Ex.P5. For this accused has issued the reply notice as per Ex.P6 dated 24.05.2010. The entire assertions made in the notice Ex.P3 have been denied by the accused by issuing reply to notice. It is stated in the reply notice that, accused at no point of time, neither approached the complainant for financial help nor borrowed a loan of rupees six lakhs from the complainant. This reply is found - 16 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 in para 3 of the reply notice Ex.P6. For better appreciation this denial is incorporated in this judgment as under:
"3…… My client at no point of time approached you for financial crisis an at no point of time my client has borrowed a hand loan of Rs.6,00,000/- and no point of time, your client has paid a sum of Rs.6,00,000/- to my client by way of cash on 09.12.2009 much less at any point of time. When there is no such transactions between your client and my client the question of issuing post dated cheque dated 04.01.2010 for a sum of Rs.6 lakhs does not arise at all and also the question of assured your client that the said cheque would be honoured on his presentation to the bank".
28. Thus, it is specific defence of the accused that, there was no occasion for the accused to raise a loan from the complainant at any point of time. When such a defence has been set up by the accused, the heavy burden is on the complainant as stated supra to prove the offence under Section 138 of NI Act.
29. DW.1 the accused entered the witness box to prove the defence so set up by her. According to her evidence, the disputed cheque was being given by the Chowdamma in the hands of the complainant. The said cheque was given by the Chowdamma to the complainant - 17 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 when accused was in America for the purpose of attending the delivery of her daughter at America. At that time, accused gave key of her house to the Chowdamma. On 10.08.2008, accused was not in India. She is specific that, after return to India, in the month of November 2009, when she was cleaning, she noticed about missing of a cheque. She enquired the said Chowdamma but, she did not give any proper answer and she told that she will bring back the said cheque. But, she did not. Twice she asked her. To that effect, they wrote a letter to the said Chowdamma as per Ex.D3. The said notices were not served as Chowdamma was not in Bengaluru.
30. That means prior to filing of the complaint, a letter was addressed to Chowdamma by the accused stating that cheques kept in the house were found missing. It is the defence of the accused that, Chowdamma being a relative of the complainant, had taken the said cheques and handed over same to the Complainant. When accused asked Chowdamma, she promised to bring back the said cheques. This portion of - 18 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 the evidence spoken to by DW.1 is not denied by the complainant in the cross-examination. Even accused has issued a notice in the “Diganta News paper” stating that her cheques are found missing. To that effect a copy of paper at Ex.D15 is produced. While marking this document produced by the accused, no objections were raised by the complainant.
31. When it is a specific stand of the accused that, no loan transaction has taken place in between complainant - accused, the burden necessarily lies on the complainant. No effective cross-examination is directed to this DW.1 by the complainant. This DW.1 has withstood the test of cross-examination directed to her. Nothing worth is elicited so as to disbelieve her version given in the examination-in-chief.
32. Accused has also examined one Bhagyalakshmi, wife of R.M. Babu to prove that, during relevant period, this accused was not in India. According to her, in the month of August 2008 complainant went to America and returned in the month of February 2009. This fact is not - 19 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 denied by the complainant in the cross-examination. Even it has come in the evidence of DW.2 that, during August 2008 to February 2009 when the accused and her husband were out of India, it was Chowdamma and children of accused used to reside in the said house. There is no further denial of this fact by the complainant in the course of cross-examination.
33. So far as documents produced by the accused, they shows that, as per copy of passport, at the relevant time, this accused was not in India as per Ex.D1 & D2. A copy of the letter addressed to Chowdamma is produced dated 02.02.2010, wherein it is noticed that, accused has issued a notice stating that, she must have taken the said cheques which were kept in the house of the accused. The said Chowdamma is not available. The said notice so issued was returned. These documents came into existence prior to filing of the complaint. Complainant has produced signed cheque as per Ex.D14 bank passbook.-. 20 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 34. On scrupulous reading of all this documentary evidence, it shows that, transaction so set up by the accused has been denied by the accused in toto.
35. I have noticed the facts of the case and the evidence placed on record by both sides. Therefore, it is now necessary to know the legal principles regarding nature of presumptions to be drawn under Section 139 of the NI Act and how the accused has rebutted the said presumption available under the provisions of the NI Act.
36. To analyse the same, it is just and proper look into the relevant judgment of this Court as well the judgments of the Hon'ble Apex Court, where these aspects have been considered and elaborated.
37. Chapter -XIII of NI Act 1881 contains a heading, "Special rules of evidence" Section 118 provides for presumption as to negotiable instruments. It reads as under:
"118. Presumptions as to negotiable instruments.—Until the contrary is proved, the following presumptions shall be made:— - 21 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 (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; (b) as to date:—that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance:—that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer:—that every transfer of a negotiable instrument was made before its maturity; (e) as to order of endorsements:—that the endorsements appearing upon a negotiable instrument were made in the order in which they appear then on; (f) as to stamp:— that a lost promissory note, bill of exchange or cheque was duly stamped; (g) that holder is a holder in due course:— that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him".
38. The other provisions which have been relied by the complainant is Section 139 of NI Act and it provides - 22 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 presumption in favour of the holder of a cheque. Section 139 reads as under:
"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 section138 for the discharge, in whole or in part, of any debt or other liability".
39. In this case as stated supra, signature on the said cheque is admitted by the accused. Merely because cheque bears the signature of the accused, presumption shall not be drawn that, cheque was issued for discharge of any debt or other liability. As stated supra the presumption which is available under Section 139 of NI Act is a rebuttable presumption. Therefore, in view of the strict provisions of Section 118 and 139 of NI Act, it is just and proper to notice the general principles of pertaining to burden of proof on accused especially in case where some statutory presumption regarding the guilt of the accused has to be drawn.
40. A three judge bench of the Hon'ble Apex Court in Kali Ram v. State of Himachal Pradesh reported in - 23 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 (1973) 2 SCC808has laid down the following principle in para 23, thus it reads as under:
"xxxxx One of the cardinal principles which has always to be kept in view in our system of administration of justice for criminal cases is that a person arraigned as an accused is presumed to be innocent unless that presumption is rebutted by the prosecution by production of evidence as may show him to be guilty of the offence with which he is charged. The burden of proving the guilt of the accused is upon the prosecution and unless it relieves itself of that burden, the courts cannot record a finding of the guilt of the accused. There are certain cases in which statutory presumptions arise regarding the guilt of the accused, but the burden even in those cases is upon the prosecution to prove the existence of facts which have to be present before the presumption can be drawn. Once those facts are shown by the prosecution to exist, the Court can raise the statutory presumption and it would, in such an event, be for the accused to rebut the presumption. The onus even in such cases upon the accused is not as heavy as is normally upon the prosecution to prove the guilt of the accused. If some material is brought on record consistent with the innocence of the accused which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal".
41. Likewise in Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal, reported in (1999) 3 SCC35has considered the provisions of the Section 118(a) of the NI Act. The Hon'ble Apex Court in para.12 of the said judgment held as under: - 24 - NC:
2024. KHC:29535 CRL.A No.40 of 2015
"12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist".-. 25 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 42. Similarly, yet in another judgment of the Hon’ble Apex Court in M.S. Narayana Menon Alias Mani v. State of Kerala and Another reported in (2006) 6 SCC39 the provisions of Section 118(a), 138 and 139 of NI Act were considered. In the said judgment, it was held by the Hon'ble Apex Court with regard to the presumption both under Section 118(a) and 139 of the NI Act which are rebuttable in nature. The Hon'ble Apex Court has observed with regard to the "may presume" and "shall presume". So relying upon the said judgment the Hon'ble Apex Court noted that, the expression "shall presume" cannot be held to the synonymous with conclusive proof. Referring to definition of the words "proved and disproved" under Section 3 of the Evidence Act, 1872, para 28 and 30 of the said judgment reads as under:
28. What would be the effect of the expressions “may presume”, ‘shall presume” and “conclusive proof” has been considered by this Court in Union of India v. Pramod Gupta [(2005) 12 SCC1 in the following terms: (SCC pp. 30-31, para
52) “It is true that the legislature used two different phraseologies ‘shall be presumed’ and ‘may be presumed’ in Section 42 of the Punjab Land Revenue Act and furthermore although provided for the mode and manner of rebuttal - 26 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 of such presumption as regards the right to mines and minerals said to be vested in the Government vis-à-vis the absence thereof in relation to the lands presumed to be retained by the landowners but the same would not mean that the words ‘shall presume’ would be conclusive. The meaning of the expressions ‘may presume’ and ‘shall presume’ have been explained in Section 4 of the Evidence Act, 1872, from a perusal whereof it would be evident that whenever it is directed that the court shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression ‘shall presume’ cannot be held to be synonymous with ‘conclusive proof’.
30. Applying the said definitions of “proved” or “disproved” to the principle behind Section 118(a) of the Act, the court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon".
43. If this analogy is applied to the present facts of the case, it is quite necessary to raise a probable defence by the accused for which it is not necessary for the accused to disprove the existence of the consideration by way of direct evidence and even the evidence adduced on - 27 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 behalf of the complainant can be relied upon. That means standard of proof evidently is preponderance of probabilities which can be drawn not only from the materials on record, but, also by reference to the circumstances upon which he relies, in Krishna Janardhan Bhat v. Dattatraya G. Hegde, reported in (2008) 4 SCC54 the Hon'ble Apex Court in para 32, has held as under:
"An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record".
44. This principle is again reiterated by the Hon'ble Apex Court in other subsequent judgments. So we have to apply the definition of the word 'proved' in Section 3 of the Evidence Act, 1872 to the provisions of Section 118 and 139 of the NI Act. That means it becomes evident that, in a trial under Section 138 of the NI Act, a presumption will have to be drawn that, every negotiable instrument was made or drawn for consideration and that it was executed in discharge of debt or liability, once execution of negotiable instrument is either proved or admitted.-. 28 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 45. In this case, there is no admission on the part of the accused that, she has issued cheque in discharge of legally enforceable debt. Her defence is that, the said cheque was taken over by Chowdamma and handed over same to the complainant and he had misused the said cheque. When the said cheque was handed over to the complainant, accused was not in India. She had been to America to attend the delivery of her daughter. Therefore, 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 the definitions of "may presume" and "shall presume" as given under Section 4 of the Evidence Act, makes it very 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 the party has produced evidence fairly and reasonably to show that the real fact is not as presumed, the purpose of the presumption is over.-. 29 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 46. It is also not mandatory on the part of the accused to prove the evidence. That means, accused's has to prove that, cheque in question was not supported by consideration and that there was no debt or liability to be discharged by him.
47. Even the laws says that, 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 permissible nor contemplated as discussed above.
48. Thus, on reading the entire provisions of Section 118 and 139 of the NI Act, the Hon'ble Apex Court has held that Section 139 of the NI Act is an example of a reverse onus and the test of proportionality should guide the construction and interpretation of reverse onus on defendant-accused and accused cannot be expected to discharge unduly high standard of proof.-. 30 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 49. In a recent judgment of the Hon'ble Apex Court in Kishan Rao v. Shankargouda reported in (2018) 8 SCC165 it has been observed while examining Section 139 of the NI Act that, "the only defence which was taken by the accused was that cheque was stolen by the appellant".
50. In this judgment the trial Court has rejected the said defence of the accused. But subsequently, while answering regarding the defence of the accused, it is observed that the presumption which is mandated by Section 139 of the NI Act does not indeed include the existence legally enforceable debt or liability.
51. In this present case as stated supra, DW.1 has spoken before the Court about non issuing of the said cheques in favour of the complainant as there was no occasion for her to raise loan from the complainant. She was in America along with her husband and to that effect she has produced the copy of her passport showing that, she was out of India. After return as per her evidence, when she searched, she noticed missing of cheques and - 31 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 therefore she gave a notice to Chowdamma and copy of the same is produced before the Court which is marked in the evidence. She also gave a paper publication in 'Diganta news paper' about missing of the said cheques. Except the self serving testimony of PW.1 there is no evidence placed on record by the complainant.
52. On reading the aforesaid judgments and the law laid down by the Apex Court with regard to the provisions of Section 118(a) and 139 of NI Act, the following principles can be enumerated with regard to the presumption which is available under the provisions of NI Act. They are:
1. Once the execution of a cheque is admitted Section 139 of the NI Act mandates a presumption that the cheque was discharge of the any debt or other liability.
2. The presumption under Section 139 is a rebuttable presumption and onus is on the accused to raise the probable defence. The standard of proof is rebutting the presumption is that of a preponderance of probabilities.
3. To rebut the presumption, it is open for the accused to rely on evidence lead by him, he can also rely on the materials submitted by the complainant and raise probable defence. Inference of preponderance probability can be drawn not only from the material brought on record by the parties - 32 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 but also by reference to the circumstances upon which rely.
4. That it is not necessary for the accused come to enter the witness box in support of his defence. Section 139 imposes an evidentiary burden and not a persuasive burden as held by the Hon'ble Apex Court in various judgments.
53. If these principles and proposition are applied to the present facts of the case, DW.1 specifically state that, she has not issued any cheque in favour of the complainant in discharge of said loan as she has no occasion to raise a loan from the complainant as she is financially sound. She was in America when the said cheque was taken over by the complainant through the said Chowdamma.
54. DW.2 Bhagyalakshmi has spoken before the Court that during the aforesaid period, accused was not in India. It is elicited in the cross-examination that, during August 2008 to February 2009, accused and her husband were in America. It was Chowdamma used to take care of the house and accused's brother's children used to reside. This fact is not denied by the complainant in the further cross-examination.-. 33 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 55. The learned trial Court by giving sound finding has held that, presumption which was very much available to the accused has been rebutted by her by leading evidence. I do not find any factual or legal error committed by the trial Court in acquitting the accused.
56. The learned counsel for the complainant relied upon a judgment of the Co-ordinate Bench of this Court dated 04.06.2024 stated supra in A.M. Harish Gowda case. The facts of this case are quite different than the facts of the said judgment. The evidence spoken to by the witnesses show that, there was missing of cheques from the house of accused and it was handed over to the Chowdamma in the hands of the complainant. Therefore, initial burden which was cast on the complainant though he discharged. But, his financial capacity to advance the loan is not duly proved in accordance with law. Except the cheque, he has not produced any documents to shows that, he was financially sound to advance loan of Rs.6 lakhs.-. 34 - NC:
2024. KHC:29535 CRL.A No.40 of 2015 57. No contra evidence is placed on record by the complainant to prove his financial capacity. The said judgments relied upon by the complainant cannot be justifiably applied to the facts of this case.
58. Therefore, the aforesaid points are answered against the complainant and in favour of the accused. Resultantly I pass the following:
ORDER(i) Appeal is dismissed. The impugned judgment dated 20.11.2014 passed by the XXIII ACMM, Bangalore City, in C.C. No.46946/10, is hereby confirmed. (ii) The bail bonds of the accused shall stand cancelled. (iii) Send back the trial Court records along with copy of this judgment forthwith. Sd/- (RAMACHANDRA D. HUDDAR) JUDGE SK List No.:
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