Sri Muralidhar Rao Vs. Sri P Nagesh Rao - Court Judgment

Excerpt:
1 r in the high court of karnataka at bengaluru dated this the20h day of november, 2020 before the hon’ble mr. justice h.p.sandesh criminal appeal no.140/2011 between: sri muralidhar rao s/o late m. vardharaja rao hindu residing at no.121, 4th cross vidhyapeeta main road bengaluru-560 085. ...appellant (by sri s. ravishankar, advocate) and: sri p. nagesh rao s/o late p. narayana rao aged about53years panayar house, yellur village nandikoor post via. padubedari udupi district. …respondent (by sri a.n. radhakrishna, advocate) this criminal appeal is filed under section3784) of cr.p.c praying this court to set aside the order dated2912.2010 passed by the xviii acmm, and xx ascj, bangalore in c.c.no.3336/2006 - acquitting the2respondent/accused for the offence punishable under.....

Judgment:

1 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE20H DAY OF NOVEMBER, 2020 BEFORE THE HON’BLE MR. JUSTICE H.P.SANDESH CRIMINAL APPEAL NO.140/2011 BETWEEN: SRI MURALIDHAR RAO S/O LATE M. VARDHARAJA RAO HINDU RESIDING AT NO.121, 4TH CROSS VIDHYAPEETA MAIN ROAD BENGALURU-560 085. ...APPELLANT (BY SRI S. RAVISHANKAR, ADVOCATE) AND: SRI P. NAGESH RAO S/O LATE P. NARAYANA RAO AGED ABOUT53YEARS PANAYAR HOUSE, YELLUR VILLAGE NANDIKOOR POST VIA. PADUBEDARI UDUPI DISTRICT. …RESPONDENT (BY SRI A.N. RADHAKRISHNA, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION3784) OF CR.P.C PRAYING THIS COURT TO SET ASIDE THE

ORDER

DATED2912.2010 PASSED BY THE XVIII ACMM, AND XX ASCJ, BANGALORE IN C.C.NO.3336/2006 - ACQUITTING THE2RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION138OF N.I. ACT. THIS APPEAL HAVING BEEN HEARD AND RESERVED ON5H NOVEMBER2020FOR HEARING AND COMING ON FOR PRONOUNCEMENT OF

JUDGMENT

, THIS DAY, H.P.SANDESH J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal is filed challenging judgment of acquittal passed in C.C.No.3336/2006 dated 29.12.2010, on the file of XVIII Additional Chief Metropolitan Magistrate and XX ASCJ, Bangalore City for the offence punishable under Section 138 of Negotiable Instruments Act (hereafter for short ‘ N.I. Act’).

2. For the sake of convenience, the parties are referred to as they are referred to in the original suit before the Trial Court.

3. Brief facts of the case: Complainant filed complaint under Section 200 of Cr.P.C. against the accused under Section 138 of the N.I. Act and made an allegation that accused being a close relative of the complainant, on 7.12.2003, borrowed hand loan of Rs.6,00,000/- from the complainant, promising to repay the said 3 loan amount within one month and in respect of the above said transaction, complainant demanded the accused for repayment of loan amount, for which, accused had issued a cheque bearing No.085571 dated 31.08.2005, drawn on Syndicate Bank, Nandikoor branch. When the said cheque was presented by the complainant for clearance on 31.08.2005 with his banker, the same was returned unpaid with an endorsement ‘funds insufficient on 05.09.2005.

4. The complainant issued legal notice against the accused which was duly served on him. The accused did not comply the demand and hence complaint was filed against the accused.

5. Accused was secured before the Trial Court and he has pleaded not guilty. Hence, the complainant examined himself as P.W.1 and got marked documents Ex.P.1 to Ex.P.14 and on the other hand accused examined himself as D.W.1 and got examined two witnesses as DWs. 2 and 3 and got marked documents Exs.D.1 and D.2. 4

6. The Trial Court after perusing both oral and documentary evidence has acquitted the accused. Hence, the present appeal is before this Court.

7. The complainant in the present appeal who contended that the Trial Court has committed error in not appreciating both oral and documentary evidence and it has erred in casting the burden on the complainant.

8. Nature of the presumption under Section 139 is subject to three conditions specified relating to presentation, giving of the notice and the non-payment after receipt of notice by the drawer of the cheque. All three conditions referred to supra have not been denied by the accused in this case. The Trial Court unnecessarily embarked upon the evidence of the complainant with out raising presumption under Section 139 of N.I. Act. The Trial Court even not bothered about to discuss the evidence of the accused-respondent though it is undisputed fact that the accused-respondent has issued the cheque in question. The Trial Court erred in not appreciating the evidence properly and it is not been disputed the fact that the cheque was issued 5 in favour of the complainant and as such it is mandatory on the part of the Trial Court to raise the presumption under Section 139 of N.I. Act.

9. The Trial court dismissed the complaint on the ground that the complainant had no financial capacity to pay the loan amount and he has not complied Section 269 of Income Tax Act and failed to prove the existence of legally recoverable debt. The Trial Court has not appreciated Exs.P.8 to 14 which are admitted by the accused-respondent, Exbit D1 was in confronting the same marked in the Cross-examination of PW1, in proper perceptive. It is also contented that the statutory notice was issued and the same was acknowledged and no reply was given and the only defense taken by the accused is that he has issued cheque as security purpose and the same has not been substantiated in his evidence and no cogent evidence has been led by the accused in respect of the same, inspite of the Trial Court has committed an error.

10. The learned counsel appearing for the appellant/complainant in his argument has vehemently 6 contended that the witness who has been examined on behalf of the accused as D.W.3 has categorically admitted with regard to the capacity of the complainant to advance the loan amount. The accused in the cross-examination, admitted that he has not given any reply and admits that there is no difficulty for him to give any reply. Accused/DW1 has also admitted that the complainant was having a car and also his brothers are settled in abroad and also admitted in the cross examination that he was having bank account in different banks, in spite of the same the Trial Court has committed an error in coming to the conclusion that Complainant was not having the capacity to advance the loan amount. Defense was taken in the cross-examination that the cheque was given for security purpose to avail loan by the complainant from other financiers and the same has not been proved. The notice was served on him and only during the cross-examination the said defense was taken and not given any reply. The counsel also submitted that the trial Court has committed an error in not invoking presumption under Section 139 of N.I. Act and without invoking presumption proceeded to discuss the case of the complainant and not considered the 7 evidence of the accused and also his witnesses evidence. Hence, it is clear that the Trial Court has not considered both oral and documentary evidence of both complainant and the accused while coming to the conclusion that the complainant has not proved the case.

11. The counsel appearing for the appellant in support of his contention relied upon the judgment of the Apex Court reported in 2010 (4) Supreme 169, Rangappa vs. Sri Mohan and referring this judgment the learned counsel brought to the notice of this Court, paragraphs 14 and 15 with regard to invoking presumption under Section 139 of N.I. Act and the accused had failed to reply to the statutory notice issued under Section 138 of the N.I. Act and contended that inference can be drawn in favour of the complainant’s version since no reply was given.

12. Learned counsel also relied upon the judgment of the Apex Court in Bir Singh Vs. Mukesh Kumar dated 14.09.2020 referred at paragraphs 15, 16 and 36 to 43. Referring to the relevant paragraphs, counsel for the accused did not dispute the 8 issuance of the cheque and admitted the issuance of the cheque and in this judgment the Apex Court held that even a blank cheque voluntarily signed and hand over by the accused which is towards some payment, would attract presumption under Section 139 of N.I. Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.

13. The counsel also relied upon the judgment dated 14.09.2020 of the Apex Court in the case of Rohitbhai Jivanlal Patel Vs. State of Gujarat and Another and referring this judgment the learned counsel brought to the notice of this Court, paragraphs 12 to 23 and would submit that non examination of two witnesses from whom the amount was borrowed to advance the amount need not be necessary to examine these witnesses. In paragraph No.17, the Apex Court has observed that even after purportedly drawing the presumption under Section 139 of the N.I. Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for 9 advancing it to the accused. The Apex Court held that said 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 accused-appellant.

14. The learned counsel relied upon the judgment dated 14.09.2020 in the case of Uttam Ram Vs. Devinder Singh Hudan and Another and referring to paragraphs 18 to 33 of this judgment the counsel appearing for the appellant would submit that Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and 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. The Court drawn as presumption that the cheques in question were drawn for 10 consideration and the holder of the cheques i.e. the appellant- complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the accused to establish a probable defense so as to rebut such a presumption and the same has not been done in the present case for adducing the defense evidence.

15. The counsel also relied upon this Court’s judgment reported in 2019 ACD1037or 2019 STPL13612Karnataka in the case of Lokesh N. Reddy vs. K.V. Nagaraja and brought to the notice of this Court paragraph 10 of the judgment and in this judgment the Court mandates that the Court has to draw a presumption that there exists a legally recoverable debt or liability, then under such circumstances, other discussions held by the Court below that the complainant has not produced any documents to show about the said transaction and that he is a income tax assessee and said amount has not been shown in the income tax return are not the criteria to come to different conclusion and until and unless the said presumption has been rebutted by the accused by cogent and acceptable evidence. 11

16. Counsel referring to the above judgments would submit that judgments referred supra are answers to the findings of the Trial Court with regard to the source of income and non disclosure of advance of loan amount in the income tax returns and the trial Court has not drawn any presumption in favour of the complainant and proceeded erroneously that the complainant had not proved the case. Hence, it requires interference of this Court.

17. Learned counsel appearing for the accused/respondent would submits that in the cross-examination of the complainant has categorically admitted that he had borrowed Rs.3,00,000/- from two persons and the same is not forthcoming in the complaint. Learned counsel also submits that Ex.P.14 which was marked by the complainant himself would goes to show that the complainant has received the money from other persons and father-in-law of the complainant has written a letter to the complainant that he has paid the interest on his behalf and hence it shows that he was not having the source of income to pay the money in favour of the accused. The counsel 12 also brought to my notice that the said letter was written immediately in the month of February 2004 and the loan transaction was in the year 2003 December.

18. The other contention of the counsel is that though he deposed that he has received the amount of Rs.3,00,000/- from two different persons in order to advance the said amount to the accused he has not examined those two persons before the Court and hence the case of the complainant cannot be accepted for the above two reasons. In respect of his contentions, the learned counsel has relied upon the judgment reported in (2019) 2 SCC (Cri) 571 in the case of Basalingappa vs. Mudibasappa and referring to this judgment the counsel would contend that dispute is with regard to financial capacity of the complainant to pay the amount and leading evidence to prove the same, the accused had led probable defense in this case and hence burden would be on the complainant to establish his financial capacity. Further the counsel referring to the judgment would submit that principles relied upon in the judgment is aptly applicable to the case on hand. The Counsel also relied upon the 13 judgment of the Apex Court reported in (2008) 1 SCC (Cri) 200 in the case of K. Prakashan vs. P.K. Surenderan, the counsel referring to this judgment would contend that in order to prove his source of income, burden is on the complainant to prove beyond reasonable doubt. The burden of proof lying on accused required to be discharged by preponderance of probability. The Accused need not step into witness box to discharge his burden. The Trial Court on detailed analysis of evidence found that accused discharged the burden of proof which lay upon him but High Court reversed the judgment of Trial Court holding that accused had not adduced any evidence to establish the specific case set up by him. The counsel would submits that the Apex Court in coming to the conclusion that judgment of Trial Court being neither perverse nor legally infirm set aside the order of the High Court. The Counsel also brought to the notice of this Court that when two views are possible, appellate court should not reverse the judgment of acquittal merely because the other view was possible when the judgment of the Trial Court was neither perverse, nor suffered from any 14 legal infirmity or non-consideration/mis-appreciation of evidence on record, reversal thereof by High Court was not justified.

19. The counsel also relied upon the judgment of Apex Court reported in (2015) 1 SCC (Cri) 576 in the case of K. Subramani Vs. K. Damodara Naidu. The counsel referring to this judgment would submit that the complainant has to prove the source. In this Judgment, Trial Court acquitted the appellant for want of proof of legally recoverable debt payable by accused and trial Court rightly comes to the conclusion that complainant had no source of income to lend a sum of Rs.14 lakhs to the accused and he failed to prove that there was any legally recoverable debt. Counsel referring to the above judgment would contend that principles relied upon in the above referred judgment supra are aptly applicable to the case on hand with regard to the source of income of the complainant and also with regard to the presumption. In the case on hand the accused examined himself as D.W.1 and examined two witnesses to rebut the case of the complainant and hence the judgment of the 15 trial Court is legally sustainable and the same cannot be reversed by this Court.

20. The counsel in reply to the arguments of the accused counsel would submit that the Apex Court in the judgment decided on 14.02.2020 in the case of APS FOREX SERVICES PVT. LTD. VS. SHAKTHI INTERNATIONAL FASHION LINKERS & ORS has categorically held that issuance of cheque and signature thereon not disputed by accused and transaction between the parties also not disputed. There is a Presumption of a legally enforceable debt or liability under Section 139 of NI ACT. The accused after dishonor of earlier cheques, again issued consolidated cheque and thereafter the cheque was dishonoured for ‘Stop Payment’. It is held Courts wrongly acquitted the accused/respondent. In the case on hand also notice was given and no reply was given and the trial Court has not invoked Section 139 of N.I. Act and there is no evidence against the rebuttal complainant evidence. The learned counsel brought to the notice of paragraph No.7 of the judgment and would contend that to rebut the presumption the accused was required to lead 16 the evidence. The counsel would submit that the Apex Court held that the story put forward by the accused that the cheques were given by way of security is not believable in the absence of rebuttal evidence to rebut the presumption and more particularly the cheque in question was issued for second time, after the earlier cheques were dishonoured. Therefore, presumption under Section 139 of N.I. Act ought to have been invoked and Section 139 of the N.I. Act is an example of reverse onus clause and therefore once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter it is for the accused to rebut such presumption by leading evidence.

21. Counsel referring these judgments would submit that even though the defense evidence has been adduced, evidence of P.W.2 and 3 helps evidence of the complainant. Though the accused has been examined and in his defense though says the cheque was given for security it has not been substantiated by 17 leading cogent evidence and hence the impugned judgment is liable to be set aside.

22. Having heard the arguments addressed by the learned counsel appearing for the complainant and also learned counsel appearing for the accused and also on perusal of the material available on record the question that arises for consideration of this Court are; “1. Whether the Trial Court committed an error in acquitting the accused in coming to the conclusion that the complainant has not proved legally recoverable debt?.

2. Whether the trial Court has committed an error in not invoking the presumption under Section 139 of N.I Act ?.

3. What order?.

23. Point No.(ii): Having considered the respective submissions of the learned counsel appearing for both the parties and also on perusal of the Judgment of the Trial Court, the Trial Court while passing the order on acquittal, considering point No.1 discussed the Judgment of the Apex Court in Rangappa’s case (supra), 18 and extracted the said judgment of the Apex Court with regard to the presumption under Section 139 of the NI Act and comes to the conclusion that the observations made by the Division Bench in the case of Krishna Janardhana Bhat v. Datatreya G. Hegde reported in 2008 AIR SCW738 may not be correct. It is also discussed that however, the full Bench of Apex Court in the said Judgment held that this does not in any way cast doubt on the correctness of the other observations made by their Lordship of Division Bench in Krishna Janardhana Bhat’s case. The Trial Court also discussed the Judgment of Krishna Janardhana Bhat’s case and extracted the principles laid down in the Judgment regarding prosecution must prove the guilt of the accused beyond all reasonable doubt, the standard of proof, so as to prove a defense on the part of an accused is ‘preponderance of probabilities’. The Trial Court after extracting the Judgment of Rangappa’s case and Krishna Janardhana Bhat’s case has come to the conclusion that the burden of proof on the accused is preponderance of probabilities and the probabilities can be drawn not only from the material brought on 19 record by the parties but also by reference to the circumstances upon which they relied upon.

24. Thereafter, the Trial Court has discussed the evidence of P.W.1 and in detail dealt with, with regard to the source of income of the complainant to advance the amount of Rs.6 lakhs. It is rightly pointed out by the learned counsel appearing for the appellant that the trial Judge no where discussed the evidence of DWs.1 to 3, who have been examined on behalf of the accused. The trial Judge while appreciating the material before the Court, consider the evidence of both the complainant as well as the accused, there is no single word discussing the evidence of the accused, who has led the evidence and also examined two witnesses. It is rightly pointed out by the learned counsel for the appellant/complainant that the trial Judge has failed to consider both oral and documentary evidence available on record inclusive of complainant as well as the accused and no where given any finding with regard to the presumptions to be invoked under Section 139 of the NI Act, 20 except discussing the case of Krishna Janardhana Bhat’s case and also Rangappa’s case.

25. Learned Counsel for the appellant/complainant also relied upon the Judgment of the Apex Court in Rangappa v. Mohan (AIR2010SC1898 and brought to my notice at paragraph Nos.14 and 15 with regard to invoke the presumption under Section 139 of NI Act. On perusal of the Judgment of the Apex Court in the case of Rangappa v. Mohan, the Apex Court regarding presumption is concerned, it is observed that 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 dishoour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. It is further observed that the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties 21 involved in commercial transactions. It is further observed that, in such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused 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 ‘preponderance of probabilities’. Therefore, if the accused is able to raise a probable defense which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.

26. In view of the principles laid down in the Judgments referred supra, it is clear that the accused has to raise the defense and to rebut the presumption; he has to lead the ‘preponderance of probabilities’. The Trial Judge has failed to consider particularly, the evidence of DWs.1 to 3 and even not discussed anything in the Judgment. 22

27. In the case on hand, it has to be noted that there is no dispute with regard to the issuance of the cheque and the same is also not denied by the accused and also has not given any reply notice when the notice was served on him and the defense was set up during the cross-examination that the said cheque was for security purpose to avail the loan by the complainant from the other financier and the same is not proved. It is also important to note that in the cross- examination, DW.1 has categorically admitted that he has not given any reply and further admits that there is no difficulty for him to give any reply. When such being the circumstances, as held in the Judgment of Rangappa’s case, the Trial Court ought to have invoked the presumption under Section 139 of the NI Act. No doubt, the said presumption is rebuttable presumption and the Court has to take note of the fact that whether he has raised the plausible defense and the defense raised is acceptable. No doubt, there is no dispute with regard to the fact that the primary burden is on the complainant to prove with regard to the transaction and presumption has to be drawn if the cheque is admitted and no reply was given. Whether the 23 probable defense was raised by the accused has to be considered. In the case on hand, the Trial Court has not at all invoked the presumption in favour of the complainant and also not discussed the evidence of the defense, particularly, the evidence of the accused, who has been examined as D.W.1 and also two witnesses, who have been examined as D.Ws.2 and 3 on behalf of the accused. Hence, I am of the view that the Trial Court has committed an error in not invoking the presumption in favour of the complainant. Hence, I answer point No.2 as ‘affirmative’.

28. Point No.(i): Now, the question before this Court is, whether the Trial Court has committed an error in acquitting the accused in coming to the conclusion that the complainant has not proved legally recoverable debt. On perusal of the entire Judgment of the Trial Court, the Trial Court mainly discussed with regard to the capacity of the complainant in advancing the money of Rs.6 lakhs. In keeping the grounds urged in the appeal memo, this Court has to re-consider the evidence available on record both 24 complainant as well as the accused and also the documentary evidence. On perusal of the documentary evidence of P.W.1, he reiterated the averments of complaint with regard to the accused approaching the complainant and advancing the amount in favour of the accused. The defense of the accused in the cross- examination that the complainant had approached him for blank Cheque in order to get the loan from the financiers to start a Hotel business at Bengaluru. Hence, he gave the cheque in favour of the complainant. The complainant was subjected to cross-examination. He categorically admits that the accused is his maternal uncle. It is suggested that there was no occasion arisen to avail the loan from him and the said suggestion was denied. It is elicited that he gave the money of Rs.6 Lakhs in his house on 07.12.2003 and at that time, no other persons were present. He also admits that when he advance the money, he did not obtain any receipt, pro-note or any agreement and also not given any cheque. The accused gave Ex.P1-Cheque on 31.08.2005. It is also his evidence that the cheque – Ex.P1 contains the handwriting of the accused. It is suggested that the accused gave the cheque in order to commence the Hotel to the 25 Complainant in the year 2002 and the said suggestion was denied. He also admits that his wife took the loan on 28.1.2005 in Udupi Mahalakshmi Bank by pledging the gold ornaments and the said loan is not yet cleared. It is suggested that he was involved in kidnapping the daughter of the complainant and the same was denied. However, he admits that in the said kidnapping case his Maruti Omni Car belongs to him was involved. He also admits that in order to advance the amount, he has borrowed an amount of Rs.1 Lakh from Madhusudan Pejaathhaya @ Kesari and also an amount of Rs.2 Lakhs from his relative U.B.Venkatesh. He also admits that in kidnapping case, the complainant is his mother. Ex.P8 was confronted to him and a suggestion was made that an amount of Rs.6,000/- was sent by his brother to take care of his parents and the same was denied. He also admits that he has not produced any document to show that he was having Rs.6 lakhs to advance the money but he volunteers that he was having the said amount and no entry in the Income Tax Returns. He also admits that, the loan taken and reference made in Ex.P14 is not yet cleared. 26

29. DW.1 also filed an affidavit reiterating his defense that he gave the cheque as security in order to avail the loan by the complainant to start his business. DW.1 was subjected to cross-examination. In the cross-examination, he admits that the complainant and his family members spent more than an amount of Rs.3 Lakhs when their father passed away. He also admits that Sri K.Nagesh Bhat and brother of the complainant constructed ‘Krishnaprasad Apartment’ and the complainant himself is taking care of the construction. He also admits that the Maruti Omni Car bearing registration No.KA-04 M-8402 belongs to the complainant. He also admits that he was running a Municipal Canteen at Shidlaghatta and he has suffered the loss. It is suggested that when he was suffered the loss, he went and settled in his village, the same was denied. However, he admits that his house was brought for sale when they did not pay the Hotel Sales Tax. He admits that in the year 1990, he returned to his village and started the agriculture work and he is having 6½ acres of land and he himself taking care of the said land. The said land is also the ancestral property. It is suggested that the complainant was having Rs.3 lakhs in his account and 27 taking the amount from U.B.Venkatesh and other relatives he paid the amount of Rs.6 Lakhs and the said suggestion was denied.

30. In the further cross-examination, he admits that the complainant was having the Hotel at Bengaluru, but he does not know when the same was started. But he says the same was started in the year 2001. He did not attend the opening ceremony of the said Hotel and also he does not know how much amount he spent to start the Hotel, but he claims that after commencing the Hotel, the complainant came to his house and he cannot tell the date and the month. He also admits that he did not visit the said Hotel even once after the commencement of the said Hotel and also he had not seen the said Hotel and also not visited the house of the complainant at Bengaluru and except meeting the complainant when he came to his house, he never met him. However, he claims the complainant had visited his house twice after the commencement of his Hotel and again he cannot tell the date. He also cannot tell at what date, he had met the complainant. 28

31. Regarding the receipt of notice, he says after receipt of notice, he met his Advocate Balakrishna, but he did not show the said notice to him, but he told about issuance of legal notice and discussed with regard to the same. He categorically admits the cheque – Ex.P1 and also the signature. However, he admits the address mentioned in Ex.P6 and also admits the signature on Ex.P6 and there was no difficulty to reply to the notice. He also admits that there was no impediment to give complaint against the complainant when the said cheque was misused. The other witness is DW.2, who is the younger brother of the complainant and this witness reiterates the defense of the accused in his affidavit regarding handing over the cheque and he also says the complainant is not having any capacity to lend the money and the cheque was given for security. He was subjected to cross- examination. In the cross-examination, he admits that the accused called him to come to the Court stating that there is a blank cheque and to give evidence. He admits that the said cheque was not given in his presence. It is suggested that a criminal case was registered against him and the same was denied. However, he admits Crime No.146/2000 but he claims 29 that his mother gave the complaint against him by mistake. He also admits that he does not know the avocation of the accused and also to whom he gave the cheque. He admits that at the instance of the accused without the summons from the Court, he came to give evidence before the Court. He also does not know how much amount the complainant has spent for starting a Hotel at Bengaluru, but he commenced the Hotel in the year 2003. He also admits that he did not give any suggestions to his maternal uncle to proceed against the complainant in accordance with law.

32. DW.3, in his evidence, he says the complainant is the nephew of the accused. During the year 2001-02, the complainant visited the accused house and at that time, he himself and one Varadaraj Rao were present in the house of the accused and accused has issued duly a signed blank cheque to the complainant in their presence. He was subjected to cross- examination. In the cross-examination, he admits that the mother of the accused used to take care of him. In the house of the accused, he himself and his mother were working in the garden land of the accused, he was not getting any salary, but 30 he was getting the food. He also admits that he used to get the money from the accused whenever he was in need of the same. He also admits that he is giving evidence on the say of the accused. He also does not know who are all he gave the money. But he knows about the issuance of cheque of this case. He also admits they came and stayed in the lodge and the accused had taken care of lodge facility and he made the food arrangement and he does not know anything about the complainant’s transaction. He admits that the complainant was having a big Hotel, he was earning and his financial capacity was sound. He also admits that the accused was having the Hotel in different places but he does not know about the loss occurred to him, but he admits that after he suffered loss he came and settled in the village. A suggestion was made that the accused gave a cheque for a sum Rs.6 Lakhs and witness admits the issuance of the said cheque, but he does not know anything.

33. Having considered the evidence of the complainant and also the accused – DW.1 and other two witnesses, the contention of the complainant is that he gave the money in the 31 year 2003 in favour of the accused. It is the contention of the accused that the complainant has approached him that he is in need of a blank cheque to get the amount from the financiers. It has to be noted that, it is emerged in the evidence of the witnesses, the Hotel was started in the year 2001 and the witness, who is also the relative of the complainant and accused, who has been examined as DW.2 claims that the complainant has started the Hotel business in the year 2003. The evidence of DW.2 is contrary to the evidence of the accused. It has to be noted that the main defense of the accused is that the complainant had approached to issue a blank cheque and DW.3 claims that he was present at the time of issuing the cheque in favour of the complainant. In the evidence of DW.3, it has categorically elicited that he came and gave evidence on behalf of the accused at his request and the accused only taken care of him when he came to Bengaluru along with him. The evidence of DW.2 is clear that the complainant was having a big hotel at Bengaluru and his financial capacity was good and this evidence has not been discussed by the Trial Court. It appears that, if this evidence is discussed by the Trial Court, the same goes against 32 the accused. DW.3 also admits that the accused has suffered loss in the hotel which he was running in different places and after that he came and settled in the village. DW.2 categorically in his evidence admits that in the year 1990 itself, the accused came and settled at his village after he has suffered loss.

34. DW.2 also categorically admits that the accused only called him to come and give evidence and he categorically admits the said cheque was not given in his presence and no summons was received from the Court. A case was registered against him based on the complaint of his mother. He did not advice his maternal uncle to initiate complaint against his brother. Having taken note of particularly, the evidence of DWs.2 and 3 regarding financial capacity of the complainant, he was having the business at Bengaluru and also his financial status was good. The financial status of the accused was not sound and the house of the accused was also brought for sale when the sales tax was not paid in respect of the hotel which he was running. These are the materials are not discussed by the Trial Court. The Trial Court kept ‘mum’ with regard to the 33 evidence of accused as well as the evidence of DWs.2 and 3. DW.1-accused also in his cross-examination, he categorically admits that the complainant is having a Car and spent an amount of Rs.3 lakhs when the father of the complainant was passed away for funeral and obsequies. DW.1 also admits that his house was brought for sale when he did not pay the Hotel Sales Tax and he is having only 6½ acres of land. It is the case of the accused that the complainant has started the hotel business at Bengaluru in the year 2001 and immediately after starting the hotel business he came and took the cheque. DW.1 categorically admits that he did not visit Bengaluru when the Hotel was commenced and he never visited the said Hotel and complainant only came to his house twice. Though he claims that, he helped the complainant in giving a blank cheque in order to get the finance from the financiers in favour of the complainant, he never participated in the Hotel inauguration and also on subsequent dates. It is also important to note that he categorically admits in the cross-examination that the cheque belongs to him and it contains his signature and also he admits the receipt of legal notice. There was no difficulty for him to 34 give reply to the notice. He also categorically admits that there was no impediment for him to give any complaint against the complainant when the said cheque was mis-used. First of all, the accused did not dispute the issuance of the cheque and the same bears his signature and also did not dispute the fact that he has received the notice and he has not given any reply and there was no difficulty to give reply and also there was no impediment to give complaint against the complainant when the cheque was mis-used. No doubt, PW.1 in the cross-examination, he admits that he has borrowed an amount of Rs.2 lakhs from other two persons and other two persons were not examined before the Trial Court and also admits that on 28.01.2005, by pledging the gold ornaments of his wife, the loan was taken. It has to be noted that the transaction between the accused and the complainant was of the year 2003. The accused mainly relies upon the document-Ex.P14. No doubt, on perusal of Ex.P14, it clearly discloses that father-in-law of the complainant wrote a letter stating that he has paid the interest of Rs.8,000/- in respect of the loan transaction of the complainant. 35

35. The learned counsel appearing for the accused brought to the notice of this Court to see the date of letter. No doubt, the said letter was written on 21.02.2004 i.e., immediately, after the transaction i.e., in the year 2003. The Trial Court also mainly relied upon the document Ex.P14. It has to be noted that the complainant himself has relied upon the said document and it is also his case that he has advanced the amount in the year 2003. The fact that the Hotel was started in the year 2001 itself is not in dispute and DW.1 himself admits the same. DW.2 claims that the Hotel was started in the year 2003 and the same is contrary to the evidence of the accused. Only basing on Ex.P14, the Trial Court has come to the conclusion that he was not having the financial source to lend the money in favour of the accused.

36. Having considered the material available on record, only based on Ex.P14, the Court cannot come to a conclusion and first of all the Trial Court has not considered the evidence of the accused and also the evidence of DWs.2 and 3. DW.3’s evidence is contrary to the defense of the accused. DW.3 36 categorically admits the financial soundness of the complainant. The complainant also relied upon the document – Ex.P9 to show that the Car is standing in the name of the complainant and the documents – Exs.P8 to 11 are confronted to DW.1 in the cross- examination. There is no explanation on the part of the accused even though he has received the legal notice he has not given a reply and there was no difficulty for him to give reply and also he has not given any complaint for mis-using of the said cheque. No doubt, the Complainant as well as the accused persons are relatives and the evidence of DWs.2 and 3 instead of helping the accused, the same helps the complainant. First of all, no reply was given and there was no difficulty in giving reply and no complaint was given and the accused did not dispute the signature available on the cheque and no plausible defense was set up by the accused except stating that the said cheque was given as security. The defense of the accused that the said blank cheque was given to avail the financial assistance from the financiers and it is not the case of the accused from whom the complainant has borrowed the money to start the business. It is also an admitted fact that the Hotel Business was commenced in 37 the year 2001 itself and this cheque pertains to the year 2005. When the accused admits his signature available on cheque – Ex.P1 and also on Ex.P6 notice served on him, the accused did not setup any defense immediately and during the course of cross-examination after thought set up a defense that the said cheque was given as security. The Trial Judge failed to consider the evidence in toto both the evidence of complainant and DWs.1 to 3 and not considered the documentary evidence available on record and mainly considered the evidence of P.W.1 and particularly, Ex.P14 – the letter and the said letter is not disputed by the complainant himself, he only got marked the document and the trial Court only concentrated on the source of the complainant.

37. Learned Counsel appearing for the appellant relied upon the Judgment of the Apex Court reported in (2019) 4 SCC197in the case of Bir Singh v. Mukesh Kumar. In this judgment, the Apex Court held that, when the accused did not dispute the issuance of cheque and admitted the issuance of cheque and even a blank cheque voluntarily signing and handed 38 over by the accused towards some person, it would attract presumption under Section 139 of the NI Act. The Apex Court also in the case of Rohitbhai Jivanlal Patel v. State of Gujarat and Anr. reported in 2019 SCCONLINE SC662 held that, non-examination of two witnesses from whom the amount was borrowed to advance the amount need not be necessarily examined these witnesses. The Trial Judge has mainly concentrated the case of the accused on the ground that from whom he has borrowed an amount of Rs.3 lakhs, were not examined. The Apex Court in the Judgment has observed in paragraph No.17 that, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him and the very said approach of the Trial Court is against 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 39 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.

38. Both the judgments are aptly applicable to the case on hand regarding the presumption as well as non-examination of the witnesses. The Apex Court also in the judgment reported in (2019) 10 SCC287in the case of Uttam Ram v. Devinder Singh Hudan and Another, held that, a person who signs a cheque and make it over to the Payee remains liable unless he adduces the evidence and rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability the ownership on the accused to establish a probable defense. There is no any plausible evidence to come to the conclusion that the accused has rebutted the evidence of the complainant and even failed to bring his case within the ‘preponderance of probabilities’.

39. Having considered the material available on record both oral and documentary evidence, first of all, the Trial Judge did not consider the evidence available on record in toto and 40 failed to discuss the evidence of DWs.1 to 3 and only considered the evidence of PW.1. It is a settled law that the complainant has to prove his case and in the case on hand, the accused also did not dispute the cheque as well as his signature and also he has not given any reply and no complaint was given when the notice was given. If really the said cheque was mis-used he would have given the complaint and categorically admits that he is not having any impediment to give complaint and also no difficulty to give any reply. When such being the case, the presumption is available in favour of the complainant and no doubt the said presumption is rebuttable presumption and the question before this Court is whether the accused rebutted the presumption and I have already discussed in detail, the evidence of DWs.1 to 3, it is clear that the accused himself has suffered the loss in Hotel business and his house was also brought for sale when the Sales Tax of the Hotel was not paid. DW.3 categorically admitted the financial condition of the complainant was sound and he was running a big hotel in Bengaluru and in order to substantiate the defense of the accused also, no material is placed before the Court that he gave the cheque in 41 favour of the complainant as security to get the financial assistance. DWs.2 and 3 have categorically admitted that they were not having any knowledge of issuance of cheque by the accused and in their presence no transaction was taken place and though DW.3 claims that in his presence the said cheque was given and the evidence of DWs.2 and 3 is very clear that on the instance of the accused only they came and gave the evidence before the Court and the accused only taken care of the Hotel and Food expenses and they had given evidence at the instance of the accused. When such being the case, the accused though led the defense evidence to rebut the case of the complainant and in the absence of cogent rebuttal evidence this Court has to accept the evidence of the complainant and the presumption is also in favour of complainant and in the cross- examination of P.W.1, nothing is elicited to come to the conclusion that the cheque was not given for legally recoverable debt and the Trial Court mainly concentrated with regard to the source and the evidence of the defense itself shows the complainant was having the source and financial status of the complainant is also not disputed except the suggestions. The 42 principles laid down supra are clear that when the presumption was drawn, the Trial Judge ought not to have come to the conclusion that the source has not been proved and non- examination of two witnesses from whom the complainant has received the money to advance the same in favour of the accused is not fatal. Hence, I am of the opinion that the Trial Court has committed an error in acquitting the accused and not drawn the presumption in favour of the complainant and therefore, it requires an interference of this Court.

40. In view of the discussions made above, I proceed to pass the following:

ORDER

(i) The appeal is allowed. (ii) The impugned Judgment and order passed in C.C.No.3336/2006 dated 29.12.2010 by the XVIII Additional Chief Metropolitan Magistrate and XX ASCJ, Bengaluru, is hereby set-aside. (iii) The accused is convicted for the offence punishable under Section 138 of the NI Act and directed to pay the amount of Rs.10 lakhs in favour of the 43 complainant within eight weeks from today. If the accused fails to pay the amount he shall undergo simple imprisonment for a period of one year. (iv) The Registry is directed to transmit the Trial Court Records, forthwith. Sd/- JUDGE HR/cp*