Karnataka High Court

Sri M Krishna Reddy vs Mr S M Munireddy on 7 February, 2024

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                                         CRL.A.No.454 of 2014


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.454 OF 2014 (A)
BETWEEN:

SRI.M.KRISHNA REDDY
S/O. LATE CHIKKAMUNISWAMY,
AGED ABOUT 62 YEARS,
RES. AT NERIGA VILLAGE,
VIA SARJAPURA, NERIGA POST,
BANGALORE-562 125.
                                                   ...APPELLANT
(BY SRI.HAREESH BHANDARY T., ADVOCATE)

AND:

MR. S.M.MUNIREDDY
S/O. MUNISWAMY REDDY,
AGED ABOUT 68 YEARS,
RES. OF SOMAPURA VILLAGE,
VIA SARJAPURA,
BANGALORE-562 125.
                                                 ...RESPONDENT
(BY SRI. ASHOK PATIL, ADVOCATE)

       THIS APPEAL IS FILED UNDER SECTON 378(4) OF CR.P.C,
PRAYING TO SET ASIDE THE ORDER DATED: 08.05.2014 PASSED
BY THE II ACJM, BANGALORE RURAL DISTRICT, BANGALORE IN
C.C.NO.766/2011- ACQUITTING THE RESPONDENT/ACCUSED FOR
THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT
AND GRANT LEAVE TO APPEAL AGAINST THE JUDGMENT AND
ORDER    OF   ACQUITTAL   DATED    8.5.2014,   PASSED   BY   THE
LEARNED MAGISTRATE IN CC NO.766/2011.
                                   -2-
                                             CRL.A.No.454 of 2014


     THIS APPEAL HAVING BEEN HEARD AND RESERVED ON
24.01.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
                           JUDGMENT

Appellant/complainant feeling aggrieved by judgment

of Trial Court on the file of II Additional Chief Judicial

Magistrate, Bengaluru Rural District, Bengaluru In

C.C.NO.766/2011 dated 8.5.2014 preferred this appeal.

2. Parties to the appeal are referred with their ranks as

assigned in the Trial Court for the sake of convenience.

3. Heard the arguments of both sides.

4. After hearing arguments of both sides and on

perusal of Trial Court records, the following points arise for

consideration:

1) Whether the impugned judgment under appeal passed by Trial Court for the offence punishable under Section 138 of N.I.Act is perverse, capricious and legally not sustainable?

2) Whether interference of this Court is required?

5. On careful perusal of oral and documentary evidence

placed on record, it would go to show that one Syed

Farooq and accused jointly availed loan of Rs.4,50,000/-

under loan agreement dated 22.10.2008 Ex.P.5. On

25.11.2008, they took further loan of Rs.4,00,000/- vide

endorsement in Ex.P.5 dated 25.11.2008. Thus Syed

Farooq and accused S.M.Munireddy jointly availed loan of

Rs.8,50,000/- from the complainant. They have also

pledged their property document and cheque bearing

No.714150 and 862974. The said Syed Farooq has paid

amount of Rs.4,50,000/- on 15.6.2010 and the accused

has agreed to pay the balance amount of Rs.4,00,000/-

vide endorsement in Ex.P.5 dated 15.6.2010. Thereafter,

accused asked the complainant to present the cheque

bearing No.862974 on 6.8.2010. Complainant presented

the said cheque Ex.P.1 on 6.8.2010 through his banker

Canara Bank, Varthur branch, Bengaluru. The same was

dishonoured vide bank endorsement Ex.P.2 as "funds

insufficient". Complainant issued demand notice Ex.P.3

and the same is duly served to the accused on 25.8.2010

vide acknowledgement card Ex.P.7. Accused has replied

to the said notice dated 15.9.2010 Ex.P.4. Accused has

denied his liability to pay the amount covered under the

cheque Ex.P.1. The loan agreement is produced at Ex.P.5

and the property pledged by accused i.e. partition deed

dated 13.12.2001 is produced at Ex.P.6. If the

aforementioned documents are perused and appreciated

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

that complainant has complied necessary legal

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

Negotiable Instruments, Act, 1881 (hereinafter for brevity

referred to as "N.I.Act"). Accused has not paid the amount

covered under the cheque Ex.P.1. Therefore, complainant

has filed the complaint on 27.9.2010 within one month

from the date of accrual of cause of action in terms of

Section 138 of N.I.Act.

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

judgment of 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 of cheque

with signature on cheque is admitted, there is always a

presumption in favour of complainant that there exist

legally enforceable debt or liability. Plea by accused that

cheque was given by way of security and same has been

misused by complainant is not tenable.

It is also profitable to refer another judgment of

Hon'ble Apex Court in P. Rasiya vs. Abdul Nazer and

another reported in 2022 SCC OnLine SC 1131,

wherein it has been observed and held that:-

" Once the initial burden is discharged by the complainant that the cheque was issued by the accused and signature of 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 discharge of any debt or other liability. The presumption under Section 139 of N.I. Act is 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

when once issuance of cheque with signature of accused

on the account maintained by him is admitted or proved

then statutory presumption in terms of Section 118 and

139 of N.I. Act will have to be drawn. Now, it is up to the

accused to place rebuttal evidence to displace the

statutory presumption available in favour of the

complainant.

7. It is the specific defence of accused in the reply to

demand notice Ex.P.4 that he has not availed any loan

from the complainant. One Syed Farooq has availed loan

under the loan agreement and as a security to the said

loan availed by Syed Farooq, accused has given cheque

and title deed documents. The said cheque issued by the

accused as a security was misused by the complainant to

file this false case. The burden of proving this fact to

probabilise his defence to displace the statutory

presumption availed in favour of the complainant 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 reported in 2019 Cr.R. page No. 639 (SC),

wherein it has been observed and held that:

"Presumption under Section 139 is rebuttable presumption and onus is on accused to raise probable defence. Standard of proof for rebutting presumption is that of preponderance of probabilities. To rebut presumption, it is open for accused to rely on evidence laid by him or accused can also rely on materials submitted by complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from materials brought on record by parties, but also by 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 imposed an evidentiary burden and not a presumptive burden".

The Hon'ble Apex Court in it's latest judgment in

Rajesh Jain v/s Ajay Singh reported in 2023 SCC

OnLine SC 1275, wherein it has been observed and held

that, once issuance of cheque with signature of accused is

either admitted or proved then, statutory presumption will

have to be drawn in favour of the complainant.

In view of the principles enunciated in both the

aforementioned judgments, it is evident that the accused

to probabilise his defence can rely on his own evidence or

also can rely on material submitted by complainant. It is

not necessary for the accused to step into witness box to

probabilise his defence.

9. The accused to probablise his aforementioned

defence, apart from relying on the evidence produced by

the complainant also relied 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. The Trial Court

recorded the following finding :

1) The version of PW.1 that accused executed endorsement on Ex.P.5 agreeing to pay balance amount of Rs.4,00,000/- is not reliable;

2) The endorsement dated 15.6.2010 agreeing to pay the amount of Rs.4,00,000/- whether jointly or individually by accused is not clear;

3) The evidence of PW.1 does not inspire confidence of the Court; and

4) PW.1 has not produced any documentary evidence to prove that he has capacity to lend loan of Rs.50,000/-.

On recording these findings after appreciation of

evidence on record, the Trial Court has held that evidence

produced by the accused as rebuttal evidence is sufficient

to displace the statutory presumption available in favour

of complainant and acquitted the accused for the offence

punishable under Section 138 of N.I.Act.

10. Accused examined himself as DW.1 and deposed to

the effect that he came to know Krishna Reddy through

one Syed Farooq. Since he used to sell fire wood to Syed

Farooq, was acquainted with him. The said Syed Farooq

has borrowed loan from said Krishna Reddy and asked

him to issue cheque and property documents as a security

for the said transaction. Accused did not borrow any loan

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from Krishna Reddy and he has attested his signature on

Ex.P.5. The signature of accused appearing in Ex.P.5 at

page No.3 in the bottom after the endorsement is denied

as that of him. The disputed signature is marked as

Ex.P.5(a).

10 (a) In the cross-examination of DW.1, he admits that

himself and Syed Farooq are known to each other and

Syed Farooq was having fire wood depot in

Dommasandra. DW.1 has categorically admitted in the

cross-examination that himself and Syed Farooq have

signed on Ex.P.5 which he identified as Ex.P.5(e) and (f).

It is further admitted by him that Syed Farooq has repaid

the loan. DW.1 has also further admitted that himself

and Syed Farooq have pledged the property document

and executed loan agreement Ex.P.5 for the purpose of

availing loan. DW.1 further admits that he has issued

cheque bearing No.862974 Ex.P.1. If the above referred

admissions of DW.1 are appreciated in the light of the

reply given by the accused Ex.P.4 dated 15.9.2010 to the

demand notice issued by the complainant Ex.P.3, then it

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would go to show that accused is not disputing that

himself and Syed Farooq have jointly availed loan from

complainant by executing loan agreement Ex.P.5.

However, accused tried to make out a case that he did

not avail any loan, but he was surety for the loan availed

by Syed Farooq.

11. Looking to the categorical admission of DW.1 in his

cross-examination that himself and Syed Farooq both

have signed on Ex.P.5 and he identified his signature

Ex.P.5(e) and P.5(f). Thus, two admitted signatures of

accused are appearing after the endorsement dated

25.11.2008 and 15.06.2010. The first endorsement is

regarding availment of second loan of Rs.4,00,000/-

availed by accused and Syed Farooq and both accused

and Syed Farooq are signatories to the endorsement

dated 25.11.2018. In view of the reply given by accused

Ex.P.4 to the demand notice of complainant Ex.P.3 and

the aforementioned admission of DW.1 in admitting his

signature Ex.P.5(e) on the first endorsement dated

25.11.2008, now cannot disown that he has not taken

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any joint loan along with Syed Farooq. Complainant has

examined PW.2 Krishna Reddy who has spoken about

availment of loan under the loan agreement Ex.P.5 by

accused and Syed Farooq. The witness admits his

signature Ex.P.5(e) after the first endorsement. There is

no reason to disbelieve his evidence regarding Syed

Farooq and accused availing joint loan of Rs.4,00,000/-

on 25.11.2008 in addition to the loan already availed i.e. ,

Rs.4,50,000/-. Thus, agreed availment of loan of

Rs.8,50,000/-.

12. The second endorsement on Ex.P.5 loan agreement is

dated 15.6.2010 whereunder, Syed Farooq has paid an

amount of Rs.4,50,000/- and the remaining balance

amount of Rs.4,00,000/- accused has agreed to repay the

same. DW.1 has categorically admitted in his cross-

examination his signature appearing on the second

endorsement Ex.P.5(f), further Syed Farooq has also

signed after the second endorsement. If the above

referred evidence and endorsement found on Ex.P.5 dated

25.11.2008 and 15.6.2010 are perused and appreciated

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in the light of evidence of PW.1 and the reply of accused

Ex.P.4, then it would go to show joint loan was availed by

Syed Farooq and accused. Out of that, Syed Farooq has

paid Rs.4,50,000/- and accused has accepted his liability

to pay remaining amount of Rs.4,00,000/- and for the

said endorsement dated 15.06.2010, accused and Syed

Farooq both are signatories. If at all accused was only

surety for loan availed by Syed Farooq and given the

cheque in question Ex.P.1 and the property documents as

a security, then, after Syed Farooq having repaid his

portion of loan amount of Rs.4,50,000/-, accused should

have demanded back the cheque Ex.P.1 given as a

security and the property documents. The inaction of

accused all throughout till the evidence of DW.1 would

certainly goes to show that accused has accepted his

liability to pay the amount of Rs.4,00,000/- covered

under endorsement 15.6.2010. If at all there was no such

liability that remains with accused, then nothing has

prevented him to examine Syed Farooq to prove the fact

that it is Syed Farooq who has availed loan and that

accused has only issued signed cheque and the property

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documents as a security. It is accused who has taken

such defence referred above and burden is on him to

prove the said fact. Accused by virtue of his evidence as

DW.1 and material brought on record in the cross-

examination of PWs.1 and 2 would be insufficient to hold

that accused has probabalised his defence that he did not

avail any loan from complainant and loan was availed only

by Syed Farooq, further, he has given the signed cheque

and property documents to complainant only as a

security.

13. Learned counsel for the accused in support of his

contention that complainant has not produced any

documents to show the source of income, has relied on

the Co-ordinate Bench decision of this Court in

Hanumanthappa Hanchinmane vs. Agasanakatte A

Basavarajappa in Criminal Appeal No.1254/2010 dated

3.3.2015. This Court having appreciated the evidence on

record in the said case confirmed the judgment of the

Trial Court in acquitting the accused as complainant has

failed to prove the source of income. In the present case,

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indisputably complainant has advanced loan of

Rs.4,50,000/- jointly to accused and Syed Farooq. The

said loan amount has been repaid by Syed Farooq. The

said fact is also admitted by accused. The said

circumstance and the evidence on record would go to

show that complainant is capable of generating money to

give loan to accused and Syed Farooq. When accused

admits the financial capacity of complainant in lending

loan to Syed Farooq amounting to Rs.4,50,000/- and

subsequently Rs.4,00,000/- vide endorsement dated

25.11.2008, cannot at this point of time question the

source of income of complainant to generate fund to give

hand loan to accused and Syed Farooq. Therefore, in

view of the facts and circumstances of the present case,

the aforementioned judgment has no application.

14. The Trial Court only by referring to the evidence of

DW.1 and reply notice Ex.P.4, so also by questioning the

financial capacity of complainant to lend huge loan, has

proceeded to hold that accused has successfully rebutted

the statutory presumption available in favour of

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complainant. However, in view of the reasons recorded

as above, it has been held that accused has failed to

probabalise his defence by virtue of the evidence placed

on record. Therefore, when the rebuttal evidence placed

on record by accused is held to be not sustainable or

insufficient to displace the statutory presumption

available in favour of the complainant, then the statutory

presumption in terms of Section 118 and 139 of the N.I.

Act continues to operate in favour of complainant. The

Trial Court without appreciating the evidence placed on

record in a proper and perspective manner has recorded

erroneous finding contrary to evidence on record and the

same cannot be legally sustained. The complainant out of

the evidence placed on record has proved that accused

has committed the offence under Section 138 of the N.I.

Act.

15. The question now remains is regarding imposition of

sentence. The Court while imposing sentence should keep

in mind the nature of transaction, circumstances under

which the cheque in question Ex.P.1 has been issued,

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material evidence placed on record and the other

attending circumstances. Imposition of sentence must be

proportionate to prove the guilt of accused. If the above

referred factors are taken into consideration and in view of

the evidence on record, then if accused is sentenced to

pay a fine of Rs.4,10,000/- and in default of payment of

fine to undergo S.I. for 6 months is ordered, will meet the

ends of justice. Consequently, proceed to pass the

following :

ORDER

The appeal filed by the appellant/complainant is

hereby allowed.

The judgment of the Trial Court on the file of II

Additional Chief Judicial Magistrate, Bengaluru Rural

District, Bengaluru In C.C.NO.766/2011 dated 8.5.2014 is

hereby set aside.

Accused is convicted for the offence punishable under

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

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Rs.4,10,000/- and in default of payment of fine to undergo

S.I. for 6 months.

In exercise of power under Section 357 of Cr.P.C.,

out of the fine amount, Rs.4,05,000/- is ordered to be

given to the complainant as compensation and remaining

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

expenses.