Karnataka High Court

Sri. Venkataramana Reddy vs Sri Mahesh B.S on 7 February, 2024

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                                     CRL.A.No.996 of 2013


IN THE HIGH COURT OF KARNATAKA AT BENGALURU

   DATED THIS THE 7TH DAY OF FEBRUARY, 2024

                       BEFORE
       THE HON'BLE MR JUSTICE ANIL B KATTI
        CRIMINAL APPEAL No.996 OF 2013 (A)
BETWEEN:

SRI.VENKATARAMANA REDDY
S/O. GURUVAREDDY,
AGED ABOUT 41 YEARS,
R/AT NO.3, 22ND BLOCK,
SRIRAMPURA, SBM COLONY,
CHAMARAJAMOHALLA,
MYSORE.
NOW RESIDING AT
NO.78, PRASHANTHI NAGAR EXTENSION,
BEHIND ISRO LAYOUT,
BANGALORE-78.
                                              ...APPELLANT
(BY SRI. SATHVIK M., ADVOCATE FOR
    SRI. MADHUSUDHAN M.N., ADVOCATE)
AND:
SRI. MAHESH B.S.,
S/O. D.SHIVAKUMAR,
AGED ABOUT 37 YEARS,
R/AT 959, 5TH MAIN,
VIVEKANANDANAGAR,
MYSORE-570001.
                                            ...RESPONDENT
(BY SRI. ROHITH S.V., ADVOCATE FOR
    SRI. M.SHARASS CHANDRA, ADVOCATE)

     THIS APPEAL IS FILED UNDER SECTION 378(4) CR.P.C,
PRAYING TO SET ASIDE THE ORDER DATED 31.7.2013 PASSED
BY THE III JMFC, MYSORE IN C.C.NO.1426/2006- ACQUITTING
THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE
UNDER SECTION 138 OF N.I. ACT.

     THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
31.01.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
                                          -2-
                                                           CRL.A.No.996 of 2013




                                 JUDGMENT

Appellant/complainant feeling aggrieved by judgment of

Trial Court on the file of III JMFC at Mysore in

C.C.No.1426/2006 dated 31.07.2013, has preferred this

appeal.

2. Parties to the appeal are referred with their

rankings, as assigned in the Trial Court, for the sake of

convenience.

3. Heard arguments of both the counsels.

4. After hearing the arguments of both sides and on

perusal of Trial Court records, so also the impugned judgment

under appeal, the following points arise for consideration:

1. Whether the impugned judgment of the Trial Court under the appeal is perverse, capricious and legally unsustainable?

2. Whether interference of this Court is required?

5. On perusal of the oral and documentary evidence

placed on record, it would go to show that complainant and

accused are known to each other and accused has approached

the complainant for financial help. Accused availed hand loan

of Rs.2,00,000/- from the complainant on 23.06.2003 on

execution of "On demand Promissory Note and consideration

receipt". Accused has also agreed to pay the interest at the

rate of 1.75% per month. Accused has not paid the interest as

agreed. Hence, the complainant has asked the accused to

repay the amount covered under the demand Promissory

Note. Accused in order to discharge the legally enforceable

debt, has issued cheque bearing No.354835 Ex.P-1 on

04.02.2006 for Rs.1,50,000/- of HDFC Bank, as part payment

of the loan availed by the accused. Complainant presented the

said cheque through his banker on 07.02.2006 Ex.P-2. The

said cheque was dishonoured as "Account Closed" vide bank

endorsement dated 07.06.2006 Ex.P-3. Complainant issued

demand notice dated 23.06.2006 Ex.P-4. Postal receipt for

having sent the demand notice through RPAD is produced at

Ex.P-5. The demand notice was duly served to accused vide

acknowledgment Ex.P-6. Accused has not replied to the

demand notice nor paid the amount covered under the cheque.

Therefore, complainant has filed the complaint on 16.03.2006.

If the aforementioned documents are perused and appreciated

with the oral testimony of PW-1, then it would go to show that

the complainant has complied with all necessary legal

requirements in terms of Section 138 (a) to (c) of the

Negotiable Instruments Act 1881 (hereinafter referred to as

"N.I. Act" for the sake of brevity). Complainant has filed the

complaint within a period of one month from the date of

accrual of cause of action in terms of Section 142 (1)(b) of the

N.I. Act. Therefore, statutory presumption in terms of Section

118 and 139 of the N.I. Act will have to be drawn.

6. In this contention of the matter, it is useful to refer to

the judgment of the Hon'ble Apex Court in APS Forex

Services Pvt. Ltd. Vs. Shakti International Fashion

Linkers and others reported in AIR 2020 SC 945.

Wherein it has been observed and held that once the issuance

and signature on the cheque is admitted, there is always a

presumption in favour of the complainant that there exists a

legally enforceable debt or liability. Plea of the accused that

the cheque was given in view of the security and the same has

been misused by the complainant is not tenable.

7. It is also profitable to refer to another judgment of

Hon'ble Apex Court in P RASIYA VS ABDUL NAZEER AND

ANOTHER reported in 2022 SCC online SC 1131, wherein it

is observed and held that :

"Once the initial burned is discharged by the complainant that the cheque was issued by the accused and the signature of the accused on the cheque is not disputed, then 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".

In view of the principles enunciated in the

aforementioned two judgments of Hon'ble Apex Court, it is

evident that once the issuance of the cheque with signature of

the accused on the account maintained by him is either

admitted or proved, then statutory presumption in terms of

Sections 118 and 139 of the N.I. Act will have to be drawn. It

is now up to the accused to place rebuttal evidence to displace

the statutory presumption available in favour of the

complainant in terms of Sections 118 and 139 of the N.I. Act.

The burden of placing the rebuttal evidence to displace the

statutory presumption is on the accused.

8. In this context of the matter, it is useful to refer the

judgment of Hon'ble Apex Court in BASALINGAPPA VS

MUDIBASAPPA repored in 2019 Cr.R page no. 639(SC)

Wherein it is observed and held that :

"The presumption under Section 139 is rebuttal presumption and onus is on the accused to raise probable defence. Standard of proof for rebutting the presumption is that of preponderance of probabilities. To rebut presumption it is open for accused to rely on the defence laid by him or accused can rely on the materials submitted by the complainant, in order to raise probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties, but also the reference to circumstances, upon which they rely. It is not necessary for accused to come in witness box in support of his defence. Section 139 imposes the evidentiary burden and not the presumptive burden".

9. The Hon'ble Apex Court in the latest judgment in

RAJESH JAIN VS AJAY SINGH reported in 2023 SCC online

SC 1275, has observed and held that the burden of placing

the rebuttal evidence to displace the statutory presumption

available in favour of the complainant is on the accused. In

view of the principals enunciated in both the aforementioned

judgments of Hon'ble Apex Court, it is evident that the

accused, to probabilize his defence, can rely on his own

evidence or also on the materials submitted by the

complainant. It is not necessary for the accused to step into

the witness box to probabilize his defence.

10. In the present case accused to probabilize his

defence, apart from relying on the material produced by the

complainant, also chose to rely on his own evidence as DW-1.

Whether the said material evidence brought on record by the

accused would be sufficient rebuttal evidence to displace the

statutory presumption available in favour of the complainant or

not is to be decided.

11. Accused DW-1 during the course of his evidence has

deposed to the effect that he does not know the complainant

and has not availed any loan from the complainant, so also not

issued any cheque to the complainant. Complainant was

running chit business in the name of 'Ravi Reddy'.

Complainant was introduced to accused through one

Sri.Sudesh and he has issued the signed demand Promissory

Note and the cheque as a security and delivered the same to

Sri.Sudesh. Complainant has misused the said cheque and filed

this case. He has further deposed to the fact that demand

notice is not served on him. It has been elicited in the cross

examination of DW-1 as to whether Sri.Sudesh is alive and he

answers that he does not know. He further states that the said

Sri.Sudesh was not running any chit business. DW-1 has given

evasive answer regarding conducting of chit business, as

someone was doing. DW-1 further states that he has no

documents to show that he was a member of any chit fund

business. DW-1 further states that he has tried to trace

Sri.Sudesh, but he is not traced. DW-1 categorically admits

his signature on the cheque Ex.P-1 as Ex.P-1(a) and his two

signatures in the "On Demand Promissory Note" Ex.P-7 as

Ex.P-7(a) and (b). DW-1 further states that as on 07.02.2006,

he cannot tell how much amount was in his savings account.

If the above referred evidence of DW-1 in the cross

examination is perused, then it would goes to show that he has

given evasive reply regarding chit business, issuance of signed

cheque and on demand Promissory Note to one Sri.Sudesh.

12. PW-1 was subjected to cross examination by the

defence counsel regarding execution of demand Promissory

Note Ex.P-7 and issuance of cheque Ex.P-1. However, nothing

worth material has been brought on record to discredit the

evidence of PW-1 regarding accused having issued the cheque

in question (Ex.P-1) for lawful discharge of debt.

13. Learned counsel for the respondent vehemently

argued that the cheque Ex.P-1 and demand Promissory Note

Ex.P-7, according to the evidence of DW-1, were issued on the

same day. There is sufficient time gap between execution of

demand Promissory Note Ex.P-7 i.e., on 23.06.2003 and

issuance of cheque Ex.P-1 i.e., on 04.02.2006. Secondly, the

demand Promissory Note is executed for Rs.2,00,000/-,

whereas the cheque in question is issued for Rs.1,50,000/-. It

is specific evidence of complainant PW-1 that accused has

availed loan of Rs.2,00,000/- after executing "On demand

Promissory Note" dated 23.06.2003 agreeing to pay interest at

the rate of 1.75% per month. Accused, during the cross

examination, has categorically admitted his signature on the

cheque Ex.P-1 as Ex.P-1(a) and his two signatures appearing

On Demand Promissory Note Ex.P-7 as Ex.P-7 (a) and (b).

Accused did not pay the interest as agreed by him. Therefore,

complainant has demanded his money back with interest.

However, accused has issued the cheque dated 04.02.2006 for

Rs.1,50,000/- Ex.P-1, being part payment of the loan amount

of Rs.2,00,000/- covered under On demand Promissory Note

Ex.P-7. Therefore, no fault can be found with the complainant

regarding above referred discrepancies in the amount shown in

Ex.P.1 and P.7. There is nothing worth material evidence

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brought on record in the cross-examination to discredit his

evidence that accused has issued the cheque Ex.P-1 for lawful

discharge of debt, being part payment of loan availed by him

out of Rs.2,00,000/- covered under On Demand Promissory

Note Ex.P-7. The claim of there being sufficient time gap

between the date of On Demand Promissory Note and the

cheque cannot be a ground to hold that the cheque was not

issued for legally enforceable debt.

14. Accused has also contended that the demand notice

is not duly served to him. The demand notice dated

23.02.2006 Ex.P-4 is sent through RPAD and the postal receipt

is produced at Ex.P-5. The demand notice is duly served to

the accused vide acknowledgment card at Ex.P-6. DW-1

during his cross examination has admitted that the address

shown in the On Demand Promissory Note Ex.P-7 is his correct

address. The same address is shown in the cause title of

complaint and also the accused has appeared after service of

summons to him on the very same address. The burden is on

the accused to show that the postal acknowledgment is

incorrect and no demand notice is served to him. Accused,

other than contending that the demand notice was not served

on him, has not placed any evidence on record to disbelieve

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the acknowledgment card Ex.P-6 for having served Demand

notice. The Trial Court has rightly held that the demand notice

is duly served to the accused.

15. The Trial Court has recorded the findings on the

following grounds:

1. If the accused was due for Rs.2,00,000/- with interest, then what made the complainant to receive a cheque for Rs.1,50,000/- only.

2. Complainant claims that cash was given in presence of Sri.Sudesh and sister-in-law of accused. However, both of them have not been examined.

3. While signing On Demand Promissory Note on 23.06.2023 Ex.P-7 and the cheque dated 04.02.2006 Ex.P-1 same pen is used, even after a lapse of 3 years, which appears to be a suspicious circumstance.

4. Complainant has not declared giving of loan in his income tax returns.

5. Complainant has not produced the bank account extract for the year 2006.

6. Complainant has not taken any action to recover the amount covered under demand Promissory Note Ex.P-7.

The Trial Court holding that these suspicious

circumstances would be sufficient to displace the statutory

presumption available in favour of the complainant, has

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acquitted the accused. The accused himself has not raised any

question regarding the financial capacity of the complainant

and not showing of loan transaction in the income tax returns,

so also there is time gap of nearly 3 years between Ex.P-7 and

Ex.P-1. Further non-examination of Sri.Sudesh and sister in

law of the accused would create a serious doubt in the case of

the complainant that accused has issued cheque Ex.P-1 for

recovery of discharge of debt. The Trial Court has drawn

inference of its own without there being any contention of

accused or defence evidence, challenging the said suspicious

circumstances. Therefore, the aforementioned grounds on

which the Trial Court has acquitted the accused holding that

the said circumstances would be sufficient to displace the

statutory presumption available in favour of the complainant

cannot be legally sustained.

16. When once the issuance of the cheque is admitted

or proved by the complainant, out of the evidence of PW-1 and

documents referred to above, then the statutory presumption

in terms of Section 118 and 139 of the N.I. Act will have to be

drawn. In the absence of rebuttal evidence of accused or when

the rebuttal evidence placed by the accused cannot be legally

sustained, then the statutory presumption will continue to

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operate in favour of the complainant. In view of the reasons

recorded as above, it has been held that the material evidence

brought on record in the cross examination of PW-1 and the

evidence of DW-1 would be insufficient to displace the

statutory presumption available in favour of the complainant.

Therefore, it will have to be held that the complainant has

proved that the accused issued the cheque Ex.P-1 for lawful

discharge of debt and the same has been dishonoured with

bank endorsement "Account Closed". The closure of the

account by the accused after issuance of the cheque attracts

penal action in terms of Section 138 of the N.I.Act. The

complainant by above referred evidence on record, has proved

that the accused has committed the offence punishable under

Section 138 of the N.I.Act.

17. Now the question that remains is the imposition of

sentence. The Court while imposing sentence shall have to

take into consideration the offence committed by the accused,

nature of transaction involved, material evidence placed on

record and other attending circumstances. If the above

referred factors are taken into consideration and the evidence

on record is appreciated, then if the accused is sentenced to

pay a fine of Rs.1,60,000/- and in default of payment of fine,

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he shall undergo simple imprisonment for 3 months is ordered

will meet the ends of justice. Consequently, proceed to pass

the following:

ORDER

Appeal filed by the appellant/complainant is hereby

allowed.

The Judgment of Trial Court on the file of III JMFC, Mysore

in C.C.No.1426/2006 dated 31.07,2013 in acquitting the

accused is hereby set aside.

Accused is convicted for the offence punishable under

Section 138 of the N.I.Act and he is sentenced to pay a fine of

Rs.1,60,000/-. In default of payment of fine, he shall undergo

simple imprisonment for 3 months.

In view of exercising power under Section 357 of Cr.P.C.,

out of the fine amount, Rs.1,55,000/- is ordered to be paid to

the complainant as compensation and the remaining amount of

Rs.5,000/- is ordered to be defrayed as prosecution expenses.