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2023. KHC-K:8083 CRL.A No.200030 of 2017 R IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE9H DAY OF OCTOBER, 2023 BEFORE THE HON'BLE MR. JUSTICE VENKATESH NAIK T. CRIMINAL APPEAL NO.200030/2017 BETWEEN: SHARANAPPA S/O. BASAPPA MATUR, AGE:
64. YEARS, OCC: LIC AGENT, R/O. GACHINKATTI COLONY, VIJAYAPUR-586103. …APPELLANT (BY SRI R.S. LAGALI, ADVOCATE) AND: MOHAMMAD ALI S/O. DAWALSAB CHITTARAGI (PINJAR), AGE:
36. YEARS, OCC: COMPUTER TEACHER, R/O. DARBAR GALLI, BEHIND DATRI MASJID, LANGESHWALI DARGA, VIJAYAPUR-586104. …RESPONDENT (BY SRI PREETAM DEULGAONKAR; SRI SHIVAPUTRA S. UDBALKAR, ADVOCATES ) - 2 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 THIS CRIMINAL APPEAL IS FILED UNDER SECTION3784) OF CR.P.C., PRAYING TO ADMIT THIS APPEAL, CALL FOR THE RECORDS FROM THE COURT BELOW AND ALLOW THIS APPEAL AND THEREBY SET ASIDE THE
JUDGMENTAND
ORDEROF ACQUITTAL DATED0601.2017 PASSED BY THE I ADDL. CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS-I VIJAYAPUR IN CRIMINAL CASE NO.2378/2013 AND CONVICT THE RESPONDENT/ ACCUSED AND AWARD DOUBLE THE CHEQUE AMOUNT TO APPELLANT BY WAY OF COMPENSATION. THIS APPEAL COMING ON FOR FINAL HEARING AND HAVING BEEN HEARD AND RESERVED ON0109.2023, COMING ON FOR PRONOUNCEMENT OF
ORDER, THIS DAY, THIS COURT DELIVERED THE FOLLOWING:
JUDGMENTThe complainant-appellant has filed this appeal under Section 378(4) of the Code of Criminal Procedure, 1973 (for short 'Cr.P.C.'), praying to set aside the judgment and order of acquittal dated 06.01.2017 passed in C.C.No.2378/2013 by I Additional Civil Judge and JMFC-I, Vijayapura (for short, 'trial Court').-. 3 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 2. For the sake of convenience, the parties are referred to as per their ranking before trial Court. The appellant is complainant and respondent is accused.
3. The brief facts of the complainant's case are as under: The complainant filed a private complaint under Section 200 of Cr.P.C., for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short 'N.I. Act'), contending that, the accused had borrowed loan of Rs.10,00,000/- from the complainant for his computer business, he executed a bond on stamp-paper worth of Rs.200/- and assured to repay the hand loan before 28.02.2013, thus, he executed a bond on 28.01.2013 and also issued Cheque for a sum of Rs.10,00,000/- drawn on Canara Bank, Vijayapura, branch, Cheque bearing No.094651 dated 28.02.2013 and the said Cheque was presented for encashment on 16.03.2013, but, it was returned with shara 'insufficient funds'; thus, on - 4 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 25.03.2013, complainant issued legal notice calling upon the accused to pay amount due under the Cheque, but, accused neither reply to the legal notice nor paid amount due under the Cheque, hence, complainant filed a private complaint under Section 200 of Cr.P.C., for the offence punishable under Section 138 of N.I. Act.
4. After institution of the complaint, the Trial Court recorded the sworn statement of the complainant, took cognizance under Section 190(1)(a) of Cr.P.C., secured the presence of accused and recorded plea of accused; accused pleaded not guilty and claimed to be tried.
5. The complainant in order to prove his case, examined himself as PW1 and also got examined other two witnesses as PWs.2 and 3 and got marked the documents as Exs.P1 to P28. The accused was examined under Section 313 of Cr.P.C., and his answers were recorded. However, in order to rebut the claim of complainant - 5 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 accused did not enter the witness box and not produced any documentary evidence.
6. On the basis of the oral and documentary evidence, the Trial Court acquitted accused for the offence punishable under Section 138 of N.I. Act, holding that, the complainant failed to prove the ingredients of Section 138 of N.I. Act.
7. Aggrieved by the judgment of acquittal passed by the Trial Court, the complainant has filed this appeal contending that the judgment passed by the Trial Court is not in accordance with law; the complainant proved the requirements of Section 138 of N.I. Act, and accused has admitted issuance of Cheque - Ex.P1 and his signature on Ex.P1, service of legal notice upon him. The Trial Court ought to have drawn presumption available under Section 139 of N.I. Act and convicted the accused, but, the Trial Court held that, the alleged transactions are not established - 6 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 and the complainant had no capacity to lend loan and the amount due is not legally recoverable debt, accordingly, acquitted the accused without drawing presumption available under Section 139 of N.I. Act. It is contended that, the complainant has discharged initial burden casted upon him, but, the accused has not discharged the burden. The Trial Court has wrongly held that, the complainant had no capacity to lend loan to accused, but, the complainant has placed sufficient material to show that, complainant had a sum of Rs.10,00,000/- with him on the date of transaction. It is further contended that, the trial Court has wrongly held that Cheque in question was issued for security purpose and not towards legally enforceable debt or liability. But, the trial Court has completely lost sight of Ex.P2 [Hand Loan Chit]., in fact, a perusal of Ex.P2 shows that the complainant has advanced Rs.10,00,000/- to accused on 27.01.2013, and on 28.01.2013 Ex.P2 was executed by accused in favour of complainant and in Ex.P2 it is mentioned that Ex.P1 - Cheque was issued as security. But the accused has not repaid a sum of Rs.10,00,000/- - 7 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 before 28.02.2013 and hence complainant presented the Cheque for encashment. It is contended that, the accused has taken contention that, the complaint has not disclosed material particulars, but, the accused has taken various contentions, hence in the evidence, the complainant has gave complete description about the transaction and therefore, the complainant has proved the transaction. On all these grounds, the counsel prays to set aside the acquittal judgment passed by the trial Court and prays to allow the complaint, consequently to convict the accused. He has relied upon the following decisions: (1) Sripati Singh (since Deceased) Though his Son Saurav Singh. v. State of Jharkhand - 2022 ACD27SC); (2) RANGAPPA Versus SRI MOHAN - (2010) Supreme Court Cases 441; (3) P. RASIYA VERSUS ABDUL NAZER AND ANR., - Crl.A. Nos.1233-1235/2022 - WWW.LAWTREND.IN - 8 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 (4) P. VENUGOPAL VERSUS MADAN P. SARATHI - Crl.A. No.1699/2008 - SC (5) A. Viwanatha Pai v. Vivekananda S. Bhat - Crl.Rev.Petn. No.172/2008, DD2009.2008 (6) BASALINGAPPA VERSUS MUDIBASAPPA - Crl.A. No.636/2019 - SC8 The learned counsel for respondent Sri Preetham Deulgaonkar with vehemence submitted that, the accused never issued Ex.P1 - Cheque in favour of complainant and the complainant has failed to prove the alleged transactions between himself and accused. The Trial Court acquitted the accused on the ground that there was no transaction between complainant and accused and the debt in question was not legally recoverable debt. It is contended that the complainant no where stated that he lent loan to accused, in fact, the Cheque was issued for assurance to provide job, but the complainant has misused the Cheque. It is further - 9 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 contended that, in Income-Tax return, the complainant has not stated that he paid a sum of Rs.10,00,000/- to accused; further, as per Ex.P11 - IT return form, the complainant paid tax of Rs.20,214/- and a sum of Rs.20,210/- was refunded and in fact, Ex.P15 - Balance- Sheet and Ex.P20 - Accounts Statement were prepared by complainant himself to show that, he lent Rs.10,00,000/- to accused. Except these documents, the complainant has not produced any document to show that he had sufficient income to lend loan to accused. It is further contended that Exs.P15 and P20 are created for own purpose, further, during the year 2013, the complainant himself had borrowed loan of Rs.75,000/-, hence, the question of he lending loan to accused would not arise. Hence, the counsel submits that the Trial Court has rightly held that, the transaction in question is not legally recoverable debt and thus, the complainant failed to discharge his burden. The counsel further contended that no notice was served upon the accused, hence, the Trial Court has not drawn any presumption available under Section 139 of N.I. Act and - 10 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 accordingly acquitted the accused. Therefore, the counsel justified the judgment of acquittal passed by the Trial Court. In support of his oral arguments, the learned counsel relied upon the following decision: Rajaram Sriramulu Naidu (Since Deceased) Through L.Rs. v. Maruthachalam (Since Deceased) Through L.Rs.-. AIR2023SUPREME COURT4719. On the basis of the above submissions made by the parties to the lis, the points that would arise for Court's consideration are as under: (1) Whether the complainant has proved that, he had lent loan to accused for a sum of Rs.10,00,000/- and inconsideration thereof accused issued Cheque to him and on presentation of the same, the same was dishonoured and in spite of service of legal notice, accused failed to repay the said amount, thus committed an offence under Section 138 of N.I. Act?. - 11 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 (2) Whether the judgment of acquittal passed by the Trial Court is perverse and called for interference by this Court?. (3) What order?.
10. Point Nos.1 and 2:- Since both the points are interlinked and in order to avoid repetition of facts, they are taken up together for common discussion.
11. Admittedly, the complainant filed a private complaint under Section 200 of Crl.P.C., against the accused for the offence punishable under Section 138 of N.I. Act. The complainant, in order to establish his claim, examined himself as PW1 and got marked in all 28 documents as per Exs.P1 to P28. Ex.P1 is the Cheque bearing No.094651 dated 28.02.2013 issued by accused in favour of complainant for a sum of Rs.10,00,000/-, Exs.P2 is the Hand Loan Chit, Ex.P2(a) is signature of accused and - 12 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 complainant, Ex.P3 is the receipt, Ex.P4 is the Postal Acknowledgment, Ex.P5 is the Legal Notice, Ex.P6 is Return memo, Ex.P7 is the Legal Notice, Ex.P8 is the Record of Right, Ex.P9 is the LIC Agent License, Ex.P10 is the Mutation Extract, Ex.P11 is the IT Return Form, Ex.P12 is the Statement of Total Income, Exs.P13 to P19 are the Insurance Commission Bills, Exs.P20 to P22 are the Lease Documents, Exs.P23 to P25 are the IT Return form and Exs.P26 to P28 are the Statements of Total Income.
12. The complainant to prove his case examined on oath as PW1. In his evidence, he has reiterated the contents of complaint in his chief-examination. PW1 was cross-examined. In cross-examination he admits that, accused issued Cheque (Ex.P1) for security of loan transaction, in this regard, accused also executed bond (Ex.P2). He further admits that, he lent loan of Rs.10,00,000/- to the accused on 27.01.2013, but, he has not narrated this aspect in the complaint.-. 13 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 13. The complainant got examined his friend Sri Parutayya, as PW2. In his evidence, he has stated that, accused had borrowed loan of Rs.10,00,000/- from complainant and executed bond Ex.P2 in favour of complainant. In the cross-examination, he admits that, the complainant paid cash in his presence to the accused. But he does not know the contents of bond. Further, complainant got examined Sri Sangaiah as PW3. In his evidence, he has reiterated the evidence of PW2 and corroborates his testimony.
14. On perusal of oral testimony of PWs.1 to 3 and the documents relied upon by complainant, it appears that the accused had borrowed a sum of Rs.10,00,000/- from complainant and in consideration thereof, he had issued Ex.P1 - Cheque for a sum of Rs.10,00,000/- drawn on Canara Bank, Vijayapura dated 28.02.2013, when the complainant presented the said Cheque for encashment to his Banker viz., Canara Bank on 16.03.2013, the same was returned with shara as "insufficient funds" in the account of - 14 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 accused, hence, on 25.03.2013 the complainant got issued legal notice vide Ex.P5 calling upon the accused to pay the amount due under the Cheque and in spite of issuance of legal notice, accused failed to repay amount due under Cheque - Ex.P1.
15. The complainant has produced Cheque in question as per Ex.P1, it bears the signature of accused as per Ex.P1(a) and the Hand Loan Chit marked as Exs.P2, receipt marked as Ex.P3 and legal notices marked as Exs.P5 and P7. In the instant case, accused has admitted issuance of Ex.P1 - Cheque and Ex.P2-chit in favour of complainant, but, he denied the transaction in the manner stated by complainant. Therefore, the accused has disputed transaction with complainant and service of notice upon him.
16. As per the provisions of Negotiable Instruments Act, once a Cheque is signed and handed over to the complainant by the accused, it would attract presumption - 15 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 under Section 139 of the N.I. Act, in the absence of any contra evidence to show that the Cheque was not issued in discharge of a debt.
17. So far as service of notice upon accused is concerned, the complainant has furnished Ex.P4 - Postal acknowledgment, Ex.P5 RPAD Cover and Ex.P7 - copy of Legal Notice. It shows that on 25.03.2013 the complainant got issued legal notice and the same was served on accused as per Ex.P4 - Postal Acknowledgment.
18. As per the presumption available under Section 11 of the Post and Telegraphic Act, 1901, if any parcel addressed to particular addressee, it shall deem that, the parcel send to addressee, served on him. Whereas, in the instant case, the complainant sent legal notice vide Ex.P7 to show that, he issued said notice soon after dishonour of Cheque, thus, under Ex.P7, the complainant called upon the accused to pay amount due under the Cheque. Contrary to this evidence, accused has not placed any rebuttal - 16 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 evidence. Therefore, the complainant has complied the legal requirements of Section 138 of N.I. Act as to service of legal notice on the accused. Now the burden shifts on the accused to disprove the case of the complainant, but, the accused has not placed any material to show that, notice was not issued to him.
19. As per the contention of accused, the Cheque was not issued for legally enforceable debt. On the other hand, according to complainant, Ex.P1-Cheque was issued by accused towards discharge of legally enforceable debt towards purchase of computers. Thus, it clears that, in order to purchase computers, the accused borrowed loan from complainant and in consideration thereof, he issued Ex.P1 - Cheque and Ex.P2 - Chit. On the contrary, the accused has not placed any contra evidence to disbelieve the case of the complainant.-. 17 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 20. Whenever execution of negotiable instruments is admitted, then, the Court may draw presumption under Section 118 of the N.I. Act, which reads 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; (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; - 18 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 (d) as to time of transfer —that every transfer of a negotiable instrument was made before its maturity; (e) as to order of indorsements —that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) as to stamps —that a lost promissory note, bill of exchange or cheque was duly stamped; (g) that holder is a holder in due course —that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been 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."
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2023. KHC-K:8083 CRL.A No.200030 of 2017 21. Thus, the Court shall draw presumption under Section 139 of N.I. Act, which 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.
22. In the present case, the complainant has proved that, the Cheque was issued towards legally enforceable debt. In the case of Don Ayenga v. State of Assam and Another reported in 2016 Criminal Law Journal 1346, the Hon'ble Apex Court has clearly held that, if Cheque issued towards discharge of any debt or any other liability, it is to be called as legally enforceable debt within the meaning of Section 138 of the N.I. Act. As a matter of fact, the existence of debt or liability is disputed by accused. However, no material is placed to support the defence of accused. In the absence of such action against - 20 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 complainant, it deems that, the accused issued Cheque in question in favour of complainant towards discharge of legally recoverable debt.
23. If Cheque was issued for security in relation to other transactions, it should be construed as the same was issued towards legally enforceable debt or liability. There is a presumption that, negotiable instruments is supported by consideration, and Cheque was issued in connection with discharge of liability.
24. In the instant case, the complainant has proved that on the relevant date, he lent money to the accused and in consideration thereof, accused issued Ex.P1 - Cheque in favour of the complainant. Further, the accused has not placed any material before the Court to prove under what circumstances, he issued Cheque in favour of the complainant.-. 21 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 25. The accused has clearly admitted his signature on Ex.P1. When one person signs and delivers to another a negotiable instrument, either it is wholly blank or nothing written thereon, is an incomplete negotiable instruments, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it negotiable instrument, for any amount satisfied therein and not exceeding the amount covered by the stamp, the person so signing on the negotiable instruments shall not be denied such instrument under Section 20 of the N.I. Act. Therefore, the holder of Cheque by invoking Section 20 of the N.I. Act, filled up the Cheque and presents for encashment, but, in the instant case, the accused admitted the contents of Ex.P1, however, the Trial Court has not drawn presumption under Section 118 of the N.I. Act, so as to consideration, as to date, as to time of acceptance, as to time of transfer and as to order of endorsements, as to stamps and that, holder is a holder in due course.-. 22 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 26. Thereby, the complainant proved the transaction and requirement of Section 138 of the N.I. Act. Now, the burden lies on the accused to prove non-existence of consideration which would lead the Court to believe non- existence of consideration either by direct evidence or by probable to show that the existence of consideration was improbable, doubtful or illegal. But, the accused has not produced any kind of evidence to show that existence of consideration was improbable, doubtful or illegal. Therefore, the Trial Court ought to have drawn presumption that the Cheque was issued for legally enforceable debt, until contrary is established.
27. In the instant case, the complainant filed a private complaint under Section 200 of Cr.P.C., for the offence punishable under Section 138 of the N.I. Act, and he fulfilled the ingredients as required under Section 138 of N.I. Act.-. 23 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 28. When once issuance of Cheque is proved, the presumption under Section 138 of N.I. Act would arise with regard to consideration. But, the accused has not discharged the burden casted on him. Whether the accused has issued Cheque in favour of complainant, in respect of other transactions or for repayment of loan or as security or it was handed over to some financial institution, make no difference under Section 138 of N.I. Act and the legal consequences were same without distinction. Thus, the complainant proved the requirement of Section 138 of N.I. Act.
29. Once the appeal is entertained against the order of acquittal, the High Court would be entitled to re- appreciate the entire evidence independently and come to its own conclusion.
30. In the instant case, the Trial Court has absolutely made a wrong assumption of the very material and clinching aspect in the peculiar circumstances of the - 24 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 case and it suffers from infirmities. A similar ratio is laid down by the Hon'ble Apex Court in the case of Vijay Mohan Singh vs. State of Karnataka reported in (2019) 5 SCC436 31. Further, the Appellate Court may reverse the order of acquittal in exercise of its powers and there is no indication in the code of any limitation or restriction having placed before the High Court in exercise of its power as an Appellate Court. It does not place any fetter in exercise of the power to reevaluate, at large the evidence upon which the order of acquittal was founded and reached the conclusion, that evidence, order of acquittal should be reversed. A similar ratio is laid down by this Court in the case of Siju Kurian v. State Of Karnataka in Crl.A. No.64/2021 dated 17.04.2023.
32. In the case of Chandrappa vs. State of Karnataka reported in (2007) 4 SCC415 the Hon'ble Apex Court has held that, the Appellate Court has full - 25 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 power to review, re-appreciate and re-consider the evidence upon which the order of acquittal is founded.
33. In the case of Chaman Lal vs. State of Himachal Pradesh reported in (2020) SCC Online SC988 the Hon'ble Apex Court has held that, if the complainant has made out good and sufficient grounds, the Appellate Court can interfere with the order of acquittal and it can review the evidence and to come to its own conclusion.
34. Whereas, in the instant case, on perusal of oral and documentary evidence of the parties, it appears that, the complainant has proved the transaction and the Cheque in question has been issued by accused and the debt in question is legally recoverable debt and its dishonour on being presentation, but the Trial Court failed to draw presumption available under Section 118 of N.I. Act. Therefore, the evidence of parties has been re-appreciated in the light of decisions cited supra.-. 26 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 35. The Trial Court wrongly held that, the complainant had no capacity to pay loan to accused. Perhaps, the Trial Court had lost sight of the contents of Ex.P9 - LIC Agent License, Ex.P10 - Mutation Extracts, Ex.P11 - the income tax return Form, Ex.P12 - Statement of total income, Ex.P13 to P19 - Insurance Commission Bills, Exs.P20 to P22 - Lease Documents, Exs.P23 to P25 - IT Returns and Exs.P26 to P28 - Statements of total income.
36. On perusal of Ex.P8 it shows that the complainant own an agriculture land bearing Survey No.438/2, measuring 10 acres at Nalvathwada Village, Muddebihal Taluk and as per Ex.P11 the complainant paid Income-Tax for a sum of Rs.20,210/- for the year 2012- 2013. Accordingly, the complainant had sufficient income during the relevant period, hence, he lent a loan of Rs.10,00,000/- to accused. But, the oral evidence of PWs.1 to 3 and contents of Exs.P8 to P28, are not at all perused and appreciated by the Trial Court.-. 27 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 37. The Hon'ble Apex Court in the case of Rajaram (supra), has held as under:
"12. This Court in the case of Baslingappa v. Mudibasappa (supra) has summarized the principles on Sections 118(a) and 139 of the N.I. Act. It will be relevant to reproduce the same. “25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:
25. 1. 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. 25.2. 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.-. 28 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the 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. 25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. 25.5. It is not necessary for the accused to come in the witness box to support his defence.
13. It can thus be seen that this Court has held that once the execution of cheque is admitted, Section 139 of the N.I. Act mandates a presumption that the cheque was for the discharge of any debt or other liability. It has however been held that 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 - 29 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 presumption is that of preponderance of probabilities. It has further been held that to rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. It has been held that 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.
14. In the said case, i.e. Baslingappa v. Mudibasappa (supra), the learned Trial Court, after considering the evidence and material on record, held that the accused had raised a probable defence regarding the financial capacity of the complainant. The accused was, therefore, acquitted. Aggrieved thereby, the complainant preferred an appeal before the High Court. The High Court reversed the same and convicted the accused. This Court found that unless the High Court came to a finding that the finding of the learned Trial Court regarding financial capacity of the complainant was - 30 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 perverse, it was not permissible for the High Court to interfere with the same.
38. The Hon'ble Apex Court in the case of P. Rasiya (supra), has held as under:
"As per Section 139 of the N.I. Act, 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 discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the cheque was issued by the accused and the signature and the issuance of the cheque is not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary."
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2023. KHC-K:8083 CRL.A No.200030 of 2017 39. The Hon'ble Apex Court in the case of Basalingappa (supra), has held as under:
"20. Elaborating further, this Court held that Section 139 of the Act is an example of a reverse onus and the test of proportionality should guide the construction and interpretation of reverse onus clauses on the defendant-accused and the defendant- accused cannot be expected to discharge an unduly high standard of proof. In paragraph Nos. 27 and 28, following was laid down (Rangappa case, SCC pp.453-54):- “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 - 32 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof.
28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the - 33 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 presumption under Section 139, the standard of proof for doing so is that of “preponderance of probabilities”. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.
21. We may now notice judgment relied by the learned counsel for the complainant, i.e., judgment of this Court in Kishan Rao Vs. Shankargouda, (2018) 8 SCC165 This Court in the above case has examined Section 139 of the Act. In the above case, the only defence which was taken by the accused was that cheque was stolen by the appellant. The said defence was rejected by the trial court. In - 34 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 paragraph Nos. 21 to 23, following was laid down:- “21. 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, 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 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 record with regard to which no contrary view has also been expressed by the High Court.-. 35 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 22. Another judgment which needs to be looked into is Rangappa v. Sri Mohan (2010) 11 SCC441 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, 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 - 36 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 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 - 37 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 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.
23. 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 - 38 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 139 can be rebutted on the evidence of PW1 himself has not been explained by the High Court.
40. The Hon'ble Apex Court in the case of Rangappa (supra), has held as under:
"15. Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the `stop payment' instructions to his bank. Furthermore, the instructions to `stop payment' had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not - 39 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 raising a probable defence, the appellant- accused was not able to contest the existence of a legally enforceable debt or liability.
41. Adverting to the case on hand, the Court find on a plain reading of its judgment that, the Trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Sections 118 and 139 of N.I. Act. The Statute mandates that once the signature of an accused on the Cheque is established, then these ‘reverse onus’ clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystallized by the Hon'ble Apex Court in Rohitbhai Jivanlal Patel v. State of Gujarat reported in AIR2019SC1876in the following words: “In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court - 40 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused…..
42. Once the accused had admitted his signature on the Cheque, the Trial Court ought to have presumed that, the Cheque was issued as consideration for a legally enforceable debt. The Trial Court fell in error when it called upon the complainant to explain the circumstances - 41 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 under which the accused was liable to pay. Such approach of the Trial Court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law.
43. No doubt, as correctly argued by the counsel for the appellant/complainant, the presumptions raised under Sections 118 and 139 are rebuttable in nature. In M.S. Narayana Menon v. State of Kerela, which was relied upon in Basalingappa's case (supra), a probable defence needs to be raised, which must meet the standard of “preponderance of probability”, and not mere possibility. It appears that, a bare denial of passing of consideration would not aid the case of accused.
44. Even if the arguments raised by the accused at face value that, the Cheque was issued for security to the complainant, even then also it would attract Section 138 of N.I. Act. In the instant case, the issue of Cheque by accused in favour of complainant is not disputed, signature found on Ex.P1 - Cheque is also not in dispute, - 42 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 the legal notice issued by complainant has not been replied by accused, no complaint has been lodged alleging that the Cheque has been misused by the complainant. Admittedly, the complainant proved his financial capacity and he got examined PW2 and PW3 who corroborate his contentions. But, the trial Court has not discussed as to why the evidence of PW2 and PW3 to be discarded. Admittedly, accused did not enter the witness box to discredit the evidence of complainant and his witnesses. On the contrary, the complainant able to prove his case, hence, the statutory presumptions can be raised. It is useful to cite the judgment in the case of Bir Singh v. Mukesh Kumar, reported in (2019) 4 SCC197 where in, the Hon'ble Apex Court has held that: “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 - 43 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 to show that the cheque was not issued in discharge of a debt.
45. Considering the above propositions of law, it has to be held that, the Trial Court without looking into the factual aspects of oral and documentary evidence and the admissions made in the deposition of PW.1, has acquitted the accused of the offence under Section 138 of N.I. Act, which is perverse. Considering the fact that, there has been an admitted business relationship between the parties, this Court is of the opinion that, the defence raised by the accused does not inspire confidence or meet the standard of ‘preponderance of probability’. In the absence of any other relevant material, it appears that, the Trial Court has erred in considering the claim of complainant and failure to upholding the onus imposed upon him in terms of Sections 118 and 139 of the N.I. Act. Looking into any angle, the judgment of the Trial Court is perverse and contrary to the evidence available on record. Hence, interference with the findings of Trial Court is very - 44 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 much required in this case. Therefore, I answer point Nos.1 and 2 in the affirmative.
46. Point No.3:- In view of the foregoing discussion on point Nos.1 and 2, the appeal filed by the complainant deserves to be allowed. Hence, I proceed to pass the following:
ORDERThe appeal filed by the complainant is allowed. The impugned judgment and order dated 06.01.2017 passed by the I Additional Civil Judge and JMFC-I, Vijayapura, in C.C.No.2378/2013 is hereby set aside. The accused is found guilty. Acting under Section 255(2) of Cr.P.C., the accused is convicted for the offence punishable under Section 138 of the N.I. Act and he is sentenced to pay fine of Rs.10,10,000/- (Rupees: Ten Lakhs Ten Thousand Only). In default of - 45 - NC:
2023. KHC-K:8083 CRL.A No.200030 of 2017 payment of fine amount, the accused shall undergo simple imprisonment for a period of six months. Further, acting under Section 357(1)(b) of Cr.P.C., the appellant is entitled for compensation of Rs.10,00,000/-, out of Rs.10,10,000/- and remaining cost of Rs.10,000/- shall be remitted to the State as expenses. Office is directed to furnish a copy of this judgment to the accused forthwith. Office to return the Trial Court records forthwith. The Trial Court shall secure the accused and issue the conviction warrant accordingly. The respondent/ accused shall surrender before the Trial Court forthwith. Sd/- JUDGE SBS List No.:
1. Sl No.:
2.