Karnataka High Court
Sri Madhu Rao vs Sri Muniraju K on 4 January, 2024
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CRL.A No. 270 of 2017
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 04TH DAY OF JANUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE S RACHAIAH
CRIMINAL APPEAL NO. 270 OF 2017 (A)
BETWEEN:
SRI MADHU RAO
S/O LATE D R SRINIVASA MURTHY
AGED ABOUT 61 YEARS
R/O S.V.G ROAD, MAIN ROAD
DEVANAHALLI
BANGALORE DISTRICT - 561 110.
...APPELLANT
(BY SRI. G S BALAGANGADHAR, ADVOCATE)
AND:
SRI MUNIRAJU K
AGED ABOUT 50 YEARS
CHAIRMAN, AKASH EDUCATION &
DEVELOPMENT TRUST
WARD NO.22, PRASHANTH NAGARA
DEVANAHALLI
BANGALORE DISTRICT - 562 110.
...RESPONDENT
(BY SRI. BIPIN HEGDE, ADVOCATE)
THIS CRL.A IS FILED U/S.378(4) OF CR.P.C PRAYING TO SET
ASIDE THE JUDGMENT OF ACQUITTAL PASSED IN
C.C.NO.14355/2015 DATED 13-01-2017 PASSED BY XVIII
ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, BANGALORE AND
ETC.,
THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED
ON 06.10.2023, COMING ON FOR PRONOUNCEMENT OF JUDGMENT,
THIS DAY, THE COURT DELIVERED THE FOLLOWING:-
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CRL.A No. 270 of 2017
JUDGMENT
1. This appeal is filed by the complainant/appellant being
aggrieved by the judgment and order of acquittal dated
13.01.2017 passed in C.C.No.14355/2015 on the file of
XVIII Additional Chief Metropolitan Magistrate, Bengaluru
City, wherein the Trial Court acquitted the
accused/respondent for the offence punishable under
Section 138 of the Negotiable Instruments Act, 1881 (for
short 'N.I. Act').
2. The rank of the parties in the Trial Court henceforth will
be considered accordingly for convenience.
Brief facts of the case:
3. It is the case of the complainant that the complainant and
his brothers are the owners of joint family property
bearing Sy.No.70, situated at Akkupete Village, Kasaba
Hobli, Devanahalli Taluk, Bengaluru District. His elder
brother Sri.D.S.Adinarayana sold the property on
31.07.2013 to Akash Education and Development Trust
through registered sale deed. The complainant and his
brothers have executed confirmation deeds. The accused
had issued the following cheques for the purpose of
execution of confirmation deeds to the complainant and
his brothers:
Sl.No. Cheque No. Date Amount
1 111724 09/03/2015 50,00,000/-
2 111726 06/03/2015 60,00,000/-
3 111725 12/02/2015 50,00,000/-
4 111727 14/03/2015 50,00,000/-
5 388505 10/12/2014 25,00,000/-
4. When the cheques were presented for encashment, those
cheques were dishonoured as 'payment stopped by
drawer'. The legal notice was issued to the accused in
that regard. Inspite of notice having been received by
the accused, he has not replied. Hence, it was
constrained the complainant to file a complaint before the
jurisdictional Magistrate for taking necessary action
against the accused.
5. To prove the case of the complainant, the complainant
examined himself as PW.1 and got examined other
witnesses as PWs.2 to 4 and also got marked 20
documents as Exs.P1 to P20. On the other hand, the
accused examined himself as DW.1 and got marked 9
documents as Exs.D1 to D9. The Trial Court after
appreciating the oral and documentary evidence on
record, opined that the complainant has failed to prove
the existence of legally recoverable debt or liability and in
the absence of proof of consideration, the accused would
not be liable to be paid the amount.
6. Heard Sri.G.S.Balagangadhar, learned counsel for the
appellant and Sri.Bipin Hegde, learned counsel for the
respondent.
7. It is the submission of the learned counsel for the
complainant/appellant that the judgment and order of
acquittal passed by the Trial Court is opposed to the
evidence, facts and law. The impugned judgment is
passed without appreciating the evidence properly,
therefore, the impugned judgment is liable to be set
aside.
8. It is further submitted that the signatures on the cheques
are admitted and it is also undisputed that the cheques
are belonging to the accused. The accused, however,
disputed the transaction and also the issuance of the
cheques to the complainant. It is further submitted that
even though the accused has contended that he had lost
the signed blank cheques and also produced the copy of
the complaint lodged before the police and the
acknowledgement for having filed the complaint, the
complainant has successfully proved that the cheques
were issued for the discharge of legally enforceable debt
or liability. Inspite of proof having been made, the Trial
Court has ignored in considering the evidence, both oral
and documentary on record properly and recorded the
acquittal.
9. It is further submitted that once the ingredients of
Section 138 of the N.I Act are proved, the Trial Court
ought to have raised the mandatory presumption
envisaged under Section 139 of the N.I Act. However,
the Trial Court has not raised the presumption, as a result
of which, the impugned judgment is passed which is
required to be set aside. Making such submission, the
learned counsel for the appellant prays to allow the
appeal.
10. Per contra, the learned counsel for the respondent
justified the judgment and order of acquittal passed by
the Trial Court and submitted that the accused is one of
the Directors of Akash Education and Development Trust.
The Trust has purchased the property bearing Sy.No.70
measuring 6 acres 9 guntas. The alleged cheques were
stolen in the office of the accused at Devanahalli, a
complaint came to be registered by the accused to that
effect and an endorsement was also issued by the
jurisdictional police. The accused has rebutted the
presumption by producing those documents.
11. It is further submitted that the complainant has relied on
the execution of confirmation deed executed by the legal
heirs including the original vendor. However, in the
recital of the said deed, nowhere, it is stated that the
amount mentioned in the cheques was to be paid as sale
consideration. The complainant has not produced any
documents to show that the accused is liable to pay the
amount mentioned in the cheques. Even though there
are other brothers who have executed the sale deed and
also the confirmation and rectification deeds, there is no
whisper regarding the authorization given to the
complainant to lodge a complaint on behalf of other
brothers.
12. It is further submitted that the complainant has not made
any efforts to examine the other brothers in respect of
the transaction and also not made any efforts to approach
the Civil Court for cancellation of rectification deed as he
could not obtain the necessary consideration for the
execution of confirmation deed. In the absence of
evidence regarding non-receipt of valuable consideration,
it is not appropriate to hold that the accused is liable to
pay the amount stated in the cheques. Therefore, the
Trial Court has rightly held that the complainant has
failed to prove the existence of legally enforceable debt or
liability and recorded the acquittal. The reasons assigned
in the findings of acquittal are appropriate and relevant,
therefore, interference with the said findings may not be
warranted. Making such submission, the learned counsel
for the respondent prays to dismiss the appeal.
13. After having heard the learned counsel for the respective
parties and also perused the findings of the Trial Court in
recording the acquittal, the points which would arise for
my consideration are:-
i. Whether the finding of the Trial Court in
recording the acquittal for the offence
punishable under Section 138 of N.I Act is
justified?
ii. Whether the appellant has made out grounds to
interfere with the said findings?
14. Before adverting to the facts of the case, now it is
relevant to refer to the proposition of law relating to
interference by the Appellate Court in case of appeal
against acquittal. It is well settled principle of law that
the Appellate Court in case of appeal against acquittal has
to interfere only where it appears that the findings are
perverse or illegal. The Appellate Court is not empowered
to interfere in a case of appeal against acquittal as a
matte of routine.
15. Having considered the legal proposition in respect of
interference by the Appellate Court, now it is relevant to
refer to the proposition of law in respect of Negotiable
Instruments Act. For better understanding, now it is
relevant to refer to the judgment of the Hon'ble Supreme
Court in the case of BASALINGAPPA v.
MUDIBASAPPA1, paragraph No.25 reads thus:
"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 a for rebutting the presumption is that of
preponderance of probabilities.
25.3. To rebut the presumption, it is open for the
accused to rely on evidence led by him or the accused
(2019) 5 SCC 418
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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."
16. Also in the case of KISHAN RAO v. SHANKARGOUDA2,
paragraph Nos. 18 to 22 read thus:
"18. Section 139 of the 1881 Act provides for
drawing the presumption in favour of holder.
Section 139 is to the following effect:
"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.
19. This Court in Kumar Exports v. Sharma
Carpets, had considered the provisions of the
Negotiable Instruments Act as well the Evidence
Act. Referring to Section 139, this Court laid
(2018) 8 SCC 165
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down the following in paras 14, 15, 18 and 19:
(SCC pp. 519-20)
"14. Section 139 of the Act provides that 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.
15. Presumptions are devices by use of
which the courts are enabled and entitled to
pronounce on an issue notwithstanding that there
is no evidence or insufficient evidence. Under the
Evidence Act all presumptions must come under
one or the other class of the three classes
mentioned in the Act, namely, (1) "may presume"
(rebuttable), (2) "shall presume" (rebuttable),
and (3) "conclusive presumptions" (irrebuttable).
The term "presumption" is used to designate an
inference, affirmative or disaffirmative of the
existence of a fact, conveniently called the
"presumed fact" drawn by a judicial tribunal, by a
process of probable reasoning from some matter
of fact, either judicially noticed or admitted or
established by legal evidence to the satisfaction of
the tribunal. Presumption literally means "taking
as true without examination or proof".
18. Applying the definition of the word
"proved" in Section 3 of the Evidence Act to the
provisions of Sections 118 and 139 of the Act, it
becomes evident that in a trial under Section
138 of the Act a presumption will have to be
made that every negotiable instrument was made
or drawn for consideration and that it was
executed for discharge of debt or liability once the
execution of negotiable instrument is either
proved or admitted. As soon as the complainant
discharges the burden to prove that the
instrument, say a note, was executed by the
accused, the rules of presumptions
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under Sections 118 and 139 of the Act help him
shift the burden on the accused. The
presumptions will live, exist and survive and shall
end only when the contrary is proved by the
accused, that is, the cheque was not issued for
consideration and in discharge of any debt or
liability. A presumption is not in itself evidence,
but only makes a prima facie case for a party for
whose benefit it exists.
19. The use of the phrase "until the
contrary is proved" in Section 118 of the Act and
use of the words "unless the contrary is proved"
in Section 139 of the Act read with definitions of
"may presume" and "shall presume" as given
in Section 4 of the Evidence Act, makes it at once
clear that presumptions to be raised under both
the provisions are rebuttable. When a
presumption is rebuttable, it only points out that
the party on whom lies the duty of going forward
with evidence, on the fact presumed and when
that party has produced evidence fairly and
reasonably tending to show that the real fact is
not as presumed, the purpose of the presumption
is over."
20. This Court held that the accused may adduce
evidence to rebut the presumption, but mere
denial regarding existence of debt shall not serve
any purpose. Following was held in paragraph 20
(Kumar Exports v. Sharma Carpets):
"20....The accused may adduce direct
evidence to prove that the note in question was
not supported by consideration and that there
was no debt or liability to be discharged by him.
However, the court need not insist in every case
that the accused should disprove the non-
existence of consideration and debt by leading
direct evidence because the existence of negative
evidence is neither possible nor contemplated. At
the same time, it is clear that bare denial of the
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passing of the consideration and existence of
debt, apparently would not serve the purpose of
the accused. Something which is probable has to
be brought on record for getting the burden of
proof shifted to the complainant. To disprove the
presumptions, the accused should bring on record
such facts and circumstances, upon consideration
of which, the court may either believe that the
consideration and debt did not exist or their non-
existence was so probable that a prudent man
would under the circumstances of the case, act
upon the plea that they did not exist..."
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
of 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.
22. Another judgment which needs to be looked
into is Rangappa vs. Sri Mohan, 2010 (11) SCC
441. A three Judge Bench of this Court had
occasion to examine the presumption
under Section 139 of the Act, 1881. 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 paragraphs 26 and 27:
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"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, (2008) 4 SCC 54, 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 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 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 or proof."
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17. On careful reading of the dictums of the Hon'ble Supreme
Court, it makes it clear regarding presumption of law that
once the ingredients of Section 138 of N.I Act are
established, the Court has to raise the presumption. Of
course, the said presumption is rebuttable in nature. The
accused has to rebut the presumption either by leading the
evidence himself or elicit the contradiction in respect of
transaction in the cross-examination of PW.1. In other
words, the accused can rely on the documents produced by
the complainant to rebut the presumption.
18. In the present case, the accused has not issued any reply
notice to the notice of the complainant regarding the
dishonour of cheques. However, the accused has conducted
cross-examination and took a contention that he being a
Director of Akash Education and Development Trust
purchased the property after having paid the sale
consideration from the vendor and the vendor himself
undertook the task of obtaining the confirmation deeds
from his brothers in respect of the property which he has
sold. It is further contended that the accused had lost
signed blank cheques which were kept in his office at
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Devanahalli and a complaint has been lodged regarding the
theft of the signed blank cheques.
19. On the other hand, the complainant has contended that for
the purpose of execution of confirmation deeds by the
family members of him, the accused had issued five
cheques which are marked as Exs.P1 to P5. The
complainant has produced Ex.P18 which is an undertaking
letter and Ex.P20 is the deed of undertaking which clearly
indicates that the accused had issued five cheques for the
purpose of execution of confirmation deeds. In addition to
his examination, the complainant got examined other three
witnesses to substantiate his contention regarding the
cheques have been issued by the accused.
20. PW.2 is the friend of PW.1. He has stated that the
complainant is the friend of his father and he has stated in
his evidence that he has witnessed the transaction of
issuance of the cheques to the complainant by the accused.
However, he did not say how many cheques have been
given to the complainant. PW.3 has stated that he knew
the transaction of sale of property by the brother of the
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complainant to Akash Education and Development Trust,
however, he denied that he was present and witnessed the
transaction between the accused and the complainant.
21. PW.4 was working as Assistant Manager of Vijaya Bank.
He has stated that cheques have been dishonoured when
those cheques were presented for encashment.
22. On careful reading of the sale deed dated 31.07.2013
executed by Sri.D.S.Adinarayan in favour of Akash
Education and Development Trust represented by its
Chairperson Smt.M.Pushpa, in the recital of the sale deed,
it is stated that the vendors are the absolute owners of the
said property. The confirmation deeds said to have been
executed by the complainant and other brothers indicate
that the accused had paid the consideration amount of
Rs.1,00,000/- each to the persons who have executed the
confirmation deeds.
23. On reading of the entire complaint and the evidence of
PW.1, though the complainant filed a complaint for
necessary action against the accused, he has not obtained
authorization from the other brothers. Filing a complaint
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on behalf of other brothers without obtaining the
authorization appears to be erroneous and such complaint
is not maintainable.
24. As regards the liability of the cheques are concerned, the
confirmation deeds have been executed by the family
members of the vendors indicate that the persons who
have executed the deeds have obtained consideration of
Rs.1,00,000/- each. The complainant has not produced
any other documents relating to the transaction pertaining
to the cheques. If there are grievance regarding the sale
consideration and also share of the immovable property,
the complainant should have filed a suit either for
cancellation of confirmation deeds or for partition of the
property. In the absence of any suit being filed, the
liability of the cheques would not arise.
25. It is needless to say that, there are some contradictions or
discrepancies in the evidence of accused regarding issuance
of the cheques. Even though the accused contended that
the signed blank cheques have been lost in his office, in the
cross-examination of PW.1, it is contended that, those
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cheques were issued to the complainant for the purpose of
execution of confirmation deeds as security. Further it is
contended that those cheques should have been returned
to the accused after execution of confirmation deeds.
However, the complainant has misused those cheques and
presented it for encashment.
26. Overall consideration of the evidence, both oral and
documentary on record, it appears that the accused had
issued cheques in his personal capacity and not on behalf
of the Akash Education and Development Trust.
Admittedly, sale deed executed by the brother of the
complainant in favour of Akash Education and Development
Trust and the complainant and other brothers were not
parties to the said sale deed. The share of the brothers in
respect of the property which his elder brother had sold has
not been determined among the brothers. There is no
whisper regarding the rights of the complainant and others
in respect of the said property. Unless it is specifically
stated that the complainant and others had also share in
the said property, the liability in respect of the cheques
certainly would not arise. In the light of aforementioned
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discussion, it can be inferred that the complainant has not
proved the case beyond reasonable doubt regarding the
liability of the accused to pay the amount stated in the
cheques. Therefore, I am of the considered opinion that,
the findings of the Trial Court in recording the acquittal is
appropriate and there is no occasion for this Court to
interfere with the said findings.
27. In the light of the observations made above, the points
which arose for my consideration are answered as:
Point No.(i) : in the "Affirmative"
Point No.(ii) : in the "Negative"
28. Hence, I proceed to pass the following;
ORDER
i) The Criminal Appeal stands dismissed.
ii) The judgment and order dated 13.01.2017 passed in
C.C.No.14355/2015 by the XVIII Additional Chief
Metropolitan Magistrate, Bengaluru City, is confirmed.
iii) In view of disposal of the main appeal, I.A No.2/2021
filed for production of additional documents does not
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survive for consideration and therefore, I.A
No.2/2021 stands disposed of accordingly.
Sd/-
JUDGE
BSS/UN
