Karnataka High Court
Sri Krishna Reddy M vs Smt N Sharadamma on 26 July, 2024
-1-
NC: 2024:KHC:29535
CRL.A No. 40 of 2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 26 TH
DAY OF JULY, 2024
R
BEFORE
THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
CRIMINAL APPEAL NO. 40 OF 2015 (A)
BETWEEN:
SRI KRISHNA REDDY M
S/O LATE CHIKKAMUNISWAMY,
AGED ABOUT 62 YEARS,
RES. OF NERIGA VILALGE,
NERIGA POST, SARJAPURA VIA,
BANGALORE- 562 125.
...APPELLANT
(BY SMT. THANIMA BEKAL, ADVOCATE A/W
SRI HAREESH BHANDARY T, ADVOCATE)
AND:
SMT. N. SHARADAMMA
W/O VENKATASWAMY REDDY,
AGED ABOUT 48 YEARS,
RES. AT NO.20 & 27, 26TH MAIN,
Digitally signed by
SHAKAMBARI SOUTH AND F CROSS ROAD,
Location: HIGH JAYANAGAR 9TH BLOCK,
COURT OF
KARNATAKA BANGALORE- 560 011.
...RESPONDENT
(BY SRI H.N. BASAVARAJU, ADVOCATE)
THIS CRL.A. IS FILED U/S.378(4) OF CR.P.C PRAYING TO
SET ASIDE THE ORDER DATED 20.11.2014, PASSED BY THE
XXIII ACMM, BANGALORE CITY, IN C.C.NO.46946/2010
ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE
P/U/S 138 OF N.I. ACT.
THIS CRIMINAL APPEAL HAVING BEEN RESERVED FOR
JUDGMENT COMING ON FOR PRONOUNCEMENT OF THIS DAY,
RAMACHANDRA D. HUDDAR J., DELIVERED/PRONOUNCED
THE FOLLOWING:
-2-
NC: 2024:KHC:29535
CRL.A No. 40 of 2015
CORAM: HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR
CAV JUDGMENT
(PER:HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR)
This appeal is filed by the complainant-appellant
being aggrieved by the judgment of acquittal of accused-
respondent for the offence punishable under Section 138
of the Negotiable Instrument (in short `the Act') passed in
C.C.No.4696 of 2010 dated 20th November 2014 by the
XXIII Additional Chief Metropolitan Magistrate,
Nrupathunga Road, Bengaluru City.
2. Parties to this appeal are referred to as per
their rank before the trial Court for the purpose of
convenience.
3. That complainant-respondent filed a complaint
under Section 200 of Cr.P.C against accused - respondent
for the offence punishable under Section 138 of the NI Act
alleging that, himself and accused are known to each
other. It is stated that, in the second week of December
2009, accused approached the complainant for a financial
assistance to the extent of Rs.6,00,000/- to meet her
NC: 2024:KHC:29535
urgent legal requirements. It is stated that accordingly on
the request of the accused, complainant advanced a loan
of Rupees six lakhs to the accused on the 9.12.2009 by
hard cash. The accused promised to repay the same within
a period of six months time.
4. In repayment of the said loan amount, accused
issued a cheque bearing No.762704, dated 04.01.2010 for
rupees six lakhs drawn on Dena Bank, J.P. Nagar Branch,
Bengaluru. At the request of accused, complainant
presented the said cheque for encashment through his
banker i.e., Canara Bank, Varthur Branch, Bengaluru. It is
alleged that, said cheque came to be dishonoured for want
of sufficient funds in the account of the accused as per the
endorsement dated 20.04.2010.
5. It is stated that, because of the dishonour of
the said cheque, within the statutory period, the
complainant issued a legal notice on the 12.05.2010 both
by way of registered post acknowledgment due as well as
`Under Certificate of Posting'. The said notice was duly
served upon the accused. On receipt of the said notice,
NC: 2024:KHC:29535
accused issued reply denying the issuance of the cheque
and also legally enforceable debt etc. As accused has not
paid the cheque amount, the complainant was constrained
to file a complaint as stated supra against the accused.
6. The records of the trial Court reveal that, after
filing the complaint, the trial Court took the cognizance of
the offence, recorded the sworn statement of the
complainant and after satisfaction of making a prime facie
case by the complainant, issued summons to the accused.
In response to the summons, accused appeared before the
trial Court and was enlarged on bail. The learned trial
Court recorded the plea of the accused and for which, the
accused pleaded not guilty.
7. To prove the offence made out against the
accused, complainant himself entered the witness box as
PW.1. Got marked Exs.P1 to P7 and closed the
complainant's evidence. After recording statement of the
accused under Section 313 of Cr.P.C., by denying all the
incriminating evidence appearing in the evidence lead by
the complainant, accused herself entered the witness box
NC: 2024:KHC:29535
as DW.1. So also, examined DW.2 by name Smt.Bhagya
Lakshmi as DW.2. On behalf of the accused, Exs.D1 to
D29 were marked.
8. The learned trial Court, on hearing the
arguments and on evaluation of the evidence placed on
record by the complainant raised three points for its
consideration and answered the important two points in
the negative and passed an order of acquittal of the
accused of the aforesaid offences. This is how the
complainant-appellant is before this Court challenging the
aforesaid judgment of acquittal passed by the trial Court.
9. It is argued by the counsel for the complainant-
appellant that, the signature on the said cheque is
admitted. Issuance of the cheque is admitted. Therefore,
according to his submission, when the cheque is admitted
and also the signature on the same, then the presumption
which is available under the provisions of Section 118 and
139 of the NI Act comes into operation. Therefore, in view
of the presumptions which are very much available to the
complainant with regard to the issuance of the cheque as
NC: 2024:KHC:29535
well as signature, it is deemed that, there was a loan
transaction in between the complainant and accused. He
submits that, the reasons assigned by the trial Court in
acquitting the accused are erroneous and improper.
10. According to him, the trial Court has not drawn
proper inference from the evidence placed on record. The
defence so set up by the accused is that, the cheques
having been misused by the complainant stating that they
are taken over from one Chowdamma who was working in
the house of the accused. The heavy burden lies on the
accused to discharge the said onus of non-issuing the
cheque etc. It is his submissions that the conclusions
arrived by the trial Court with regard to the lack of income
of the complainant is erroneous and contrary to law. It is
his submission that the trial Court has committed a grave
error in acquitting the accused for the aforesaid offence.
Therefore, relying upon the evidence placed on record and
the observations made by the trial Court, it is submitted
that the accused is liable for conviction.
NC: 2024:KHC:29535
11. In support of his submission, he relied upon the
judgment of a co-ordinate Bench of this Court in Criminal
Revision Petition No.619 of 2021 disposed on 04.06.2024
in between A.M. Harish Gowda Alias A.M. Harisha,
S/o late Arasegowda v. Sri Chaluvaraju H.S, S/o late
Sanna Naika. He also relies upon the judgment of the
Hon'ble Apex Court in Criminal Appeal Nos. 1233-1235 of
2022 [Arising out of SLP (Criminal) No. 7430-7432 of
2022] decided on 12.08.2022 in between P.Rasiya v.
Abdul Nazer and Another. According to him, the
judgment under challenge is required to be set aside.
Therefore, he prays to allow the appeal and set aside the
impugned judgment.
12. As against this submission, learned counsel for
respondent-accused with all force submits that, first of all
the financial capacity of the complainant is not proved in
accordance with law. There was no occasion for the
accused to raise loan from the complainant as he is
financially sound. His children are working in America.
When the alleged transaction took place, the accused was
NC: 2024:KHC:29535
not in India. According to his submission, the whatever the
presumption which has been relied upon by the
complainant have been rebutted by the accused by leading
cogent evidence through DW.1 and 2 and also documents
so produced.
13. As per his submission, accused has not issued
any cheque in the manner stated by the complainant. He
admits the signature on the said cheque, but, it was
misused by the complainant by getting it from one
Chowdamma who was working in the house of the
accused. As Chowdamma was won over by the
complainant and it was she handed over the said cheque
to the complainant, he has misused the same.
14. According to his submission, the trial Court has
evaluated the evidence in proper perspective and has
come to the conclusion that the accused has never issued
the said cheque in discharge of any legally enforceable
debt. There was no occasion for the accused to raise loan
from the complainant.
NC: 2024:KHC:29535
15. It is his submission that, complainant himself is
not at all financially sound. Therefore, considering all the
aspect the learned trial Court has acquitted the accused.
His submission is that, the well-reasoned judgment of the
trial Court should not be interfered with. He prays to
dismiss the appeal.
16. I have considered the submissions of the
counsel for the parties and have perused the records.
17. In view of the rival submissions of the both
sides, the following points arise for my consideration are:
(i) Whether the complainant is able to prove
the legally enforceable debt from the
accused by issuing the cheque so produced
in this case and whether the trial Court has
committed illegality in acquitting the
accused?
(ii) Whether the accused prove that the
presumption which is available under the
provisions of the NI Act has been properly
rebutted by the accused by leading cogent
and acceptable evidence?
Point Nos.1 and 2 discussed together:
18. To recapitulate the facts again, the cheque
involved in this appeal is dated 04.10.2010. When the
- 10 -
NC: 2024:KHC:29535
said cheque was presented by the complainant for
encashment through the banker of the complainant, it was
dishonoured for want of sufficient funds in the account of
the accused on 20.04.2010. As per the case of the
complainant, on 09.12.2009 at the request of the accused,
he gave hand loan of Rs.6,00,000/- in cash to meet the
family necessities of the accused. In discharge of the said
loan, the accused issued a cheque dated 04.10.2010
drawn on Dena Bank, JP Nagar Branch, Bengaluru, but, it
was dishonoured as stated above. Thereafter,
complainant issued a statutory notice on 12.05.2010
which was duly served. To the said notice, the accused
issued a false reply on 25.05.2010 and she has not paid
the amount. The said cheque was issued in discharge of
the legal liability by the accused.
19. This factual allegations so made out in the said
complaint have been reiterated by the complainant in his
evidence on oath. In support of his submission, he placed
reliance upon Ex.P1 to P7.
- 11 -
NC: 2024:KHC:29535
20. This PW.1 has been thoroughly cross-examined
by the counsel for the respondent-accused. It has come in
the evidence of this complainant that, the house of the
accused is situated at a distance of 25 kms from the house
of the complainant. He admits that, husband of the
accused was an Electrical Contractor. Complainant is an
agriculturist by profession. It is stated that, from the said
agriculture, the complainant gets income of rupees seven
to eight lakhs per year. Even the children of the
complainant are also doing agriculture. He is not an
Income Tax assesse. He has studied upto 10th Standard.
According to him, the sister of the complainant is married
to the relations of accused. Since, 1990 the complainant
know this accused.
21. For the first time, without any pleadings
complainant states that, for the purpose of purchasing the
site, accused demanded loan from the complainant. There
is no pleading either in his examination-in-chief or in the
complaint. According to the complaint on 09.12.2009, he
advanced a loan to the accused. Further states that, along
- 12 -
NC: 2024:KHC:29535
with accused at that time, one person was there but, he
does not know who he was. He admits that when a cash of
rupees six lakhs has to be advanced as loan, it has to be
given by way of a cheque. For the first time, he states that
because of urgent need of the accused, he paid
Rs.6,00,000/- by way of cash. He gave the same in the
Neriga village in his house.
22. The notice issued by the complainant is also
silent about the advancing loan to the accused to purchase
the site as per the admission given by PW.1 in the cross-
examination. He states that, except the said cheque from
the accused, he has not taken any document from the
accused for having advanced rupees six lakhs on
9.12.2009. He deposed ignorance whether the children of
accused are residing at America and earning there.
Complete ignorance has been spoken to that effect by the
complainant PW.1. Even he deposed ignorance that, one
Chowdamma used to take care of the house of the
accused when the accused was away from India. He
denied a suggestion that the Chowdamma has misused
- 13 -
NC: 2024:KHC:29535
said cheque by giving the said cheque to the complainant
and the complainant has misused the same. He deposed
ignorance that the accused has issued a letter to the said
Chowdamma for having misused the said cheque etc.
23. On scrupulous reading of the evidence of PW.1,
it shows that, except stating that the accused has issued
the said cheque in discharge of the legally enforceable
debt, the other evidence so directed to him is a complete
ignorance. When the accused has set up a plea of non
competency or capacity of the complainant to advance the
loan of Rs.6,00,000/- lakhs to her and also the said
cheque was misused by the complainant through that said
Chowdamma, it is for the complainant to prove the
ingredients of Section 138 of the NI Act with legal
evidence. So also, the presumptions which are available
under the provisions of Section 118 and 139 of the NI Act
have to be proved legally by leading evidence. That
means, evidential burden is on the complainant to prove
the said ingredients of a presumption as well as the
offence so made out against the accused.
- 14 -
NC: 2024:KHC:29535
24. Except the evidence of PW.1 about issuance of
the cheque, there is no evidence at all. When such a
defence has been raised by the accused in the cross-
examination and even a reply notice was given by the
accused as per the say of the complainant, it is for the
complainant to prove the offence against the accused by
acceptable evidence. Merely because a cheque has been
issued and it belongs to the accused and it contains the
signature of the accused, that doesn't mean that, the
complainant has filed the complaint for legally enforceable
debt and a cheque which was issued for legally
enforceable debt only. That means, heavy burden lies on
the accused. Unless this burden is discharged, the onus
never shifts on the accused.
25. Evidently, the provision of Section 139 of the NI
Act which speaks of presumption which is a rebuttable
presumption. That means, the burden is on the
complainant to prove the same beyond reasonable doubt
and with all probabilities the accused has to prove the
defence.
- 15 -
NC: 2024:KHC:29535
26. Ex.P1 is the cheque, Ex.P2 is an endorsement
issued by the bank. It is the defence of the accused that,
she has kept the blank cheque in the house towards the
payment of electricity and that has been taken over by the
said Chowdamma and handed over the same to the
complainant who was his relative. The said complainant
has presented the said cheque and when the alleged
cheque was taken by the complainant, the accused was
not in India.
27. After dishonour of the said cheque, the
complainant has issued a notice as per Ex.P3 dated
12.05.2010. It was duly served upon the accused as per
the postal shara and acknowledgment as per Ex.P4 and
Ex.P5. For this accused has issued the reply notice as per
Ex.P6 dated 24.05.2010. The entire assertions made in
the notice Ex.P3 have been denied by the accused by
issuing reply to notice. It is stated in the reply notice that,
accused at no point of time, neither approached the
complainant for financial help nor borrowed a loan of
rupees six lakhs from the complainant. This reply is found
- 16 -
NC: 2024:KHC:29535
in para 3 of the reply notice Ex.P6. For better appreciation
this denial is incorporated in this judgment as under:
"3...... My client at no point of time
approached you for financial crisis an at no point of
time my client has borrowed a hand loan of
Rs.6,00,000/- and no point of time, your client has
paid a sum of Rs.6,00,000/- to my client by way of
cash on 09.12.2009 much less at any point of time.
When there is no such transactions between your
client and my client the question of issuing post
dated cheque dated 04.01.2010 for a sum of Rs.6
lakhs does not arise at all and also the question of
assured your client that the said cheque would be
honoured on his presentation to the bank".
28. Thus, it is specific defence of the accused that,
there was no occasion for the accused to raise a loan from
the complainant at any point of time. When such a defence
has been set up by the accused, the heavy burden is on
the complainant as stated supra to prove the offence
under Section 138 of NI Act.
29. DW.1 the accused entered the witness box to
prove the defence so set up by her. According to her
evidence, the disputed cheque was being given by the
Chowdamma in the hands of the complainant. The said
cheque was given by the Chowdamma to the complainant
- 17 -
NC: 2024:KHC:29535
when accused was in America for the purpose of attending
the delivery of her daughter at America. At that time,
accused gave key of her house to the Chowdamma. On
10.08.2008, accused was not in India. She is specific that,
after return to India, in the month of November 2009,
when she was cleaning, she noticed about missing of a
cheque. She enquired the said Chowdamma but, she did
not give any proper answer and she told that she will bring
back the said cheque. But, she did not. Twice she asked
her. To that effect, they wrote a letter to the said
Chowdamma as per Ex.D3. The said notices were not
served as Chowdamma was not in Bengaluru.
30. That means prior to filing of the complaint, a
letter was addressed to Chowdamma by the accused
stating that cheques kept in the house were found
missing. It is the defence of the accused that,
Chowdamma being a relative of the complainant, had
taken the said cheques and handed over same to the
Complainant. When accused asked Chowdamma, she
promised to bring back the said cheques. This portion of
- 18 -
NC: 2024:KHC:29535
the evidence spoken to by DW.1 is not denied by the
complainant in the cross-examination. Even accused has
issued a notice in the "Diganta News paper" stating that
her cheques are found missing. To that effect a copy of
paper at Ex.D15 is produced. While marking this document
produced by the accused, no objections were raised by the
complainant.
31. When it is a specific stand of the accused that,
no loan transaction has taken place in between
complainant - accused, the burden necessarily lies on the
complainant. No effective cross-examination is directed to
this DW.1 by the complainant. This DW.1 has withstood
the test of cross-examination directed to her. Nothing
worth is elicited so as to disbelieve her version given in the
examination-in-chief.
32. Accused has also examined one Bhagyalakshmi,
wife of R.M. Babu to prove that, during relevant period,
this accused was not in India. According to her, in the
month of August 2008 complainant went to America and
returned in the month of February 2009. This fact is not
- 19 -
NC: 2024:KHC:29535
denied by the complainant in the cross-examination. Even
it has come in the evidence of DW.2 that, during August
2008 to February 2009 when the accused and her husband
were out of India, it was Chowdamma and children of
accused used to reside in the said house. There is no
further denial of this fact by the complainant in the course
of cross-examination.
33. So far as documents produced by the accused,
they shows that, as per copy of passport, at the relevant
time, this accused was not in India as per Ex.D1 & D2. A
copy of the letter addressed to Chowdamma is produced
dated 02.02.2010, wherein it is noticed that, accused has
issued a notice stating that, she must have taken the said
cheques which were kept in the house of the accused. The
said Chowdamma is not available. The said notice so
issued was returned. These documents came into
existence prior to filing of the complaint. Complainant has
produced signed cheque as per Ex.D14 bank passbook.
- 20 -
NC: 2024:KHC:29535
34. On scrupulous reading of all this documentary
evidence, it shows that, transaction so set up by the
accused has been denied by the accused in toto.
35. I have noticed the facts of the case and the
evidence placed on record by both sides. Therefore, it is
now necessary to know the legal principles regarding
nature of presumptions to be drawn under Section 139 of
the NI Act and how the accused has rebutted the said
presumption available under the provisions of the NI Act.
36. To analyse the same, it is just and proper look
into the relevant judgment of this Court as well the
judgments of the Hon'ble Apex Court, where these aspects
have been considered and elaborated.
37. Chapter -XIII of NI Act 1881 contains a
heading, "Special rules of evidence" Section 118 provides
for presumption as to negotiable instruments. It reads as
under:
"118. Presumptions as to negotiable
instruments.--Until the contrary is proved, the
following presumptions shall be made:--
- 21 -
NC: 2024:KHC:29535
(a) of consideration:--that every negotiable
instrument was made or drawn for consideration,
and that every such instrument, when it has been
accepted, indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or transferred for
consideration;
(b) as to date:--that every negotiable
instrument bearing a date was made or drawn on
such date;
(c) as to time of acceptance:--that every
accepted bill of exchange was accepted within a
reasonable time after its date and before its
maturity;
(d) as to time of transfer:--that every
transfer of a negotiable instrument was made
before its maturity;
(e) as to order of endorsements:--that the
endorsements appearing upon a negotiable
instrument were made in the order in which they
appear then on;
(f) as to stamp:-- that a lost promissory note,
bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course:--
that the holder of a negotiable instrument is a
holder in due course: provided that, where the
instrument has been obtained from its lawful
owner, or from any person in lawful custody
thereof, by means of an offence or fraud, or has
been obtained from the maker or acceptor thereof
by means of an offence or fraud, or for unlawful
consideration, the burden of proving that the holder
is a holder in due course lies upon him".
38. The other provisions which have been relied by
the complainant is Section 139 of NI Act and it provides
- 22 -
NC: 2024:KHC:29535
presumption in favour of the holder of a cheque. Section
139 reads as under:
"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 section138 for the
discharge, in whole or in part, of any debt or other
liability".
39. In this case as stated supra, signature on the
said cheque is admitted by the accused. Merely because
cheque bears the signature of the accused, presumption
shall not be drawn that, cheque was issued for discharge
of any debt or other liability. As stated supra the
presumption which is available under Section 139 of NI Act
is a rebuttable presumption. Therefore, in view of the
strict provisions of Section 118 and 139 of NI Act, it is just
and proper to notice the general principles of pertaining to
burden of proof on accused especially in case where some
statutory presumption regarding the guilt of the accused
has to be drawn.
40. A three judge bench of the Hon'ble Apex Court
in Kali Ram v. State of Himachal Pradesh reported in
- 23 -
NC: 2024:KHC:29535
(1973) 2 SCC 808 has laid down the following principle in
para 23, thus it reads as under:
"xxxxx One of the cardinal principles which has
always to be kept in view in our system of
administration of justice for criminal cases is that a
person arraigned as an accused is presumed to be
innocent unless that presumption is rebutted by the
prosecution by production of evidence as may show
him to be guilty of the offence with which he is
charged. The burden of proving the guilt of the
accused is upon the prosecution and unless it
relieves itself of that burden, the courts cannot
record a finding of the guilt of the accused. There
are certain cases in which statutory presumptions
arise regarding the guilt of the accused, but the
burden even in those cases is upon the prosecution
to prove the existence of facts which have to be
present before the presumption can be drawn. Once
those facts are shown by the prosecution to exist,
the Court can raise the statutory presumption and
it would, in such an event, be for the accused to
rebut the presumption. The onus even in such
cases upon the accused is not as heavy as is
normally upon the prosecution to prove the guilt of
the accused. If some material is brought on record
consistent with the innocence of the accused which
may reasonably be true, even though it is not
positively proved to be true, the accused would be
entitled to acquittal".
41. Likewise in Bharat Barrel & Drum Mfg. Co. v.
Amin Chand Payrelal, reported in (1999) 3 SCC 35 has
considered the provisions of the Section 118(a) of the NI
Act. The Hon'ble Apex Court in para.12 of the said
judgment held as under:
- 24 -
NC: 2024:KHC:29535
"12. Upon consideration of various judgments as
noted hereinabove, the position of law which
emerges is that once execution of the promissory
note is admitted, the presumption under Section
118(a) would arise that it is supported by a
consideration. Such a presumption is rebuttable.
The defendant can prove the non-existence of a
consideration by raising a probable defence. If the
defendant is proved to have discharged the initial
onus of proof showing that the existence of
consideration was improbable or doubtful or the
same was illegal, the onus would shift to the
plaintiff who will be obliged to prove it as a matter
of fact and upon its failure to prove would disentitle
him to the grant of relief on the basis of the
negotiable instrument. The burden upon the
defendant of proving the non-existence of the
consideration can be either direct or by bringing on
record the preponderance of probabilities by
reference to the circumstances upon which he
relies. In such an event, the plaintiff is entitled
under law to rely upon all the evidence led in the
case including that of the plaintiff as well. In case,
where the defendant fails to discharge the initial
onus of proof by showing the non-existence of the
consideration, the plaintiff would invariably be held
entitled to the benefit of presumption arising under
Section 118(a) in his favour. The court may not
insist upon the defendant to disprove the existence
of consideration by leading direct evidence as the
existence of negative evidence is neither possible
nor contemplated and even if led, is to be seen with
a doubt. The bare denial of the passing of the
consideration apparently does not appear to be any
defence. Something which is probable has to be
brought on record for getting the benefit of shifting
the onus of proving to the plaintiff. To disprove the
presumption, the defendant has to bring on record
such facts and circumstances upon consideration of
which the court may either believe that the
consideration did not exist or its non-existence was
so probable that a prudent man would, under the
circumstances of the case, shall act upon the plea
that it did not exist".
- 25 -
NC: 2024:KHC:29535
42. Similarly, yet in another judgment of the
Hon'ble Apex Court in M.S. Narayana Menon Alias Mani v.
State of Kerala and Another reported in (2006) 6 SCC 39,
the provisions of Section 118(a), 138 and 139 of NI Act
were considered. In the said judgment, it was held by the
Hon'ble Apex Court with regard to the presumption both
under Section 118(a) and 139 of the NI Act which are
rebuttable in nature. The Hon'ble Apex Court has observed
with regard to the "may presume" and "shall presume". So
relying upon the said judgment the Hon'ble Apex Court
noted that, the expression "shall presume" cannot be held
to the synonymous with conclusive proof. Referring to
definition of the words "proved and disproved" under
Section 3 of the Evidence Act, 1872, para 28 and 30 of the
said judgment reads as under:
28. What would be the effect of the expressions
"may presume", 'shall presume" and "conclusive
proof" has been considered by this Court in Union
of India v. Pramod Gupta [(2005) 12 SCC 1] in the
following terms: (SCC pp. 30-31, para 52)
"It is true that the legislature used two
different phraseologies 'shall be presumed' and
'may be presumed' in Section 42 of the Punjab
Land Revenue Act and furthermore although
provided for the mode and manner of rebuttal
- 26 -
NC: 2024:KHC:29535
of such presumption as regards the right to
mines and minerals said to be vested in the
Government vis-à-vis the absence thereof in
relation to the lands presumed to be retained
by the landowners but the same would not
mean that the words 'shall presume' would be
conclusive. The meaning of the expressions
'may presume' and 'shall presume' have been
explained in Section 4 of the Evidence Act,
1872, from a perusal whereof it would be
evident that whenever it is directed that the
court shall presume a fact it shall regard such
fact as proved unless disproved. In terms of
the said provision, thus, the expression 'shall
presume' cannot be held to be synonymous
with 'conclusive proof'."
30. Applying the said definitions of "proved" or
"disproved" to the principle behind Section 118(a)
of the Act, the court shall presume a negotiable
instrument to be for consideration unless and until
after considering the matter before it, it either
believes that the consideration does not exist or
considers the non-existence of the consideration so
probable that a prudent man ought, under the
circumstances of the particular case, to act upon
the supposition that the consideration does not
exist. For rebutting such presumption, what is
needed is to raise a probable defence. Even for the
said purpose, the evidence adduced on behalf of
the complainant could be relied upon".
43. If this analogy is applied to the present facts of
the case, it is quite necessary to raise a probable defence
by the accused for which it is not necessary for the
accused to disprove the existence of the consideration by
way of direct evidence and even the evidence adduced on
- 27 -
NC: 2024:KHC:29535
behalf of the complainant can be relied upon. That means
standard of proof evidently is preponderance of
probabilities which can be drawn not only from the
materials on record, but, also by reference to the
circumstances upon which he relies, in Krishna Janardhan
Bhat v. Dattatraya G. Hegde, reported in (2008) 4 SCC
54, the Hon'ble Apex Court in para 32, has held as under:
"An accused for discharging the burden of
proof placed upon him under a statute need not
examine himself. He may discharge his burden on
the basis of the materials already brought on
record".
44. This principle is again reiterated by the Hon'ble
Apex Court in other subsequent judgments. So we have to
apply the definition of the word 'proved' in Section 3 of the
Evidence Act, 1872 to the provisions of Section 118 and
139 of the NI Act. That means it becomes evident that, in
a trial under Section 138 of the NI Act, a presumption will
have to be drawn that, every negotiable instrument was
made or drawn for consideration and that it was executed
in discharge of debt or liability, once execution of
negotiable instrument is either proved or admitted.
- 28 -
NC: 2024:KHC:29535
45. In this case, there is no admission on the part
of the accused that, she has issued cheque in discharge of
legally enforceable debt. Her defence is that, the said
cheque was taken over by Chowdamma and handed over
same to the complainant and he had misused the said
cheque. When the said cheque was handed over to the
complainant, accused was not in India. She had been to
America to attend the delivery of her daughter. Therefore,
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 the
definitions of "may presume" and "shall presume" as given
under Section 4 of the Evidence Act, makes it very 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 the
party has produced evidence fairly and reasonably to show
that the real fact is not as presumed, the purpose of the
presumption is over.
- 29 -
NC: 2024:KHC:29535
46. It is also not mandatory on the part of the
accused to prove the evidence. That means, accused's has
to prove that, cheque in question was not supported by
consideration and that there was no debt or liability to be
discharged by him.
47. Even the laws says that, 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 permissible nor contemplated as discussed above.
48. Thus, on reading the entire provisions of
Section 118 and 139 of the NI Act, the Hon'ble Apex Court
has held that Section 139 of the NI Act is an example of a
reverse onus and the test of proportionality should guide
the construction and interpretation of reverse onus on
defendant-accused and accused cannot be expected to
discharge unduly high standard of proof.
- 30 -
NC: 2024:KHC:29535
49. In a recent judgment of the Hon'ble Apex Court
in Kishan Rao v. Shankargouda reported in (2018) 8 SCC
165, it has been observed while examining Section 139 of
the NI Act that, "the only defence which was taken by the
accused was that cheque was stolen by the appellant".
50. In this judgment the trial Court has rejected the
said defence of the accused. But subsequently, while
answering regarding the defence of the accused, it is
observed that the presumption which is mandated by
Section 139 of the NI Act does not indeed include the
existence legally enforceable debt or liability.
51. In this present case as stated supra, DW.1 has
spoken before the Court about non issuing of the said
cheques in favour of the complainant as there was no
occasion for her to raise loan from the complainant. She
was in America along with her husband and to that effect
she has produced the copy of her passport showing that,
she was out of India. After return as per her evidence,
when she searched, she noticed missing of cheques and
- 31 -
NC: 2024:KHC:29535
therefore she gave a notice to Chowdamma and copy of
the same is produced before the Court which is marked in
the evidence. She also gave a paper publication in
'Diganta news paper' about missing of the said cheques.
Except the self serving testimony of PW.1 there is no
evidence placed on record by the complainant.
52. On reading the aforesaid judgments and the law
laid down by the Apex Court with regard to the provisions
of Section 118(a) and 139 of NI Act, the following
principles can be enumerated with regard to the
presumption which is available under the provisions of NI
Act. They are:
1. Once the execution of a cheque is admitted
Section 139 of the NI Act mandates a presumption
that the cheque was discharge of the any debt or
other liability.
2. The presumption under Section 139 is a
rebuttable presumption and onus is on the accused
to raise the probable defence. The standard of proof
is rebutting the presumption is that of a
preponderance of probabilities.
3. To rebut the presumption, it is open for the
accused to rely on evidence lead by him, he can
also rely on the materials submitted by the
complainant and raise probable defence. Inference
of preponderance probability can be drawn not only
from the material brought on record by the parties
- 32 -
NC: 2024:KHC:29535
but also by reference to the circumstances upon
which rely.
4. That it is not necessary for the accused come
to enter the witness box in support of his defence.
Section 139 imposes an evidentiary burden and not
a persuasive burden as held by the Hon'ble Apex
Court in various judgments.
53. If these principles and proposition are applied
to the present facts of the case, DW.1 specifically state
that, she has not issued any cheque in favour of the
complainant in discharge of said loan as she has no
occasion to raise a loan from the complainant as she is
financially sound. She was in America when the said
cheque was taken over by the complainant through the
said Chowdamma.
54. DW.2 Bhagyalakshmi has spoken before the
Court that during the aforesaid period, accused was not in
India. It is elicited in the cross-examination that, during
August 2008 to February 2009, accused and her husband
were in America. It was Chowdamma used to take care of
the house and accused's brother's children used to reside.
This fact is not denied by the complainant in the further
cross-examination.
- 33 -
NC: 2024:KHC:29535
55. The learned trial Court by giving sound finding
has held that, presumption which was very much available
to the accused has been rebutted by her by leading
evidence. I do not find any factual or legal error
committed by the trial Court in acquitting the accused.
56. The learned counsel for the complainant relied
upon a judgment of the Co-ordinate Bench of this Court
dated 04.06.2024 stated supra in A.M. Harish Gowda
case. The facts of this case are quite different than the
facts of the said judgment. The evidence spoken to by the
witnesses show that, there was missing of cheques from
the house of accused and it was handed over to the
Chowdamma in the hands of the complainant. Therefore,
initial burden which was cast on the complainant though
he discharged. But, his financial capacity to advance the
loan is not duly proved in accordance with law. Except the
cheque, he has not produced any documents to shows
that, he was financially sound to advance loan of Rs.6
lakhs.
- 34 -
NC: 2024:KHC:29535
57. No contra evidence is placed on record by the
complainant to prove his financial capacity. The said
judgments relied upon by the complainant cannot be
justifiably applied to the facts of this case.
58. Therefore, the aforesaid points are answered
against the complainant and in favour of the accused.
Resultantly I pass the following:
ORDER
(i) Appeal is dismissed. The impugned
judgment dated 20.11.2014 passed by the
XXIII ACMM, Bangalore City, in
C.C. No.46946/10, is hereby confirmed.
(ii) The bail bonds of the accused shall stand
cancelled.
(iii) Send back the trial Court records along
with copy of this judgment forthwith.
Sd/-
(RAMACHANDRA D. HUDDAR)
JUDGE
SK
