Karnataka High Court
Sri Prasanna vs Sabu Scaria on 14 February, 2025
Author: Shivashankar Amarannavar
Bench: Shivashankar Amarannavar
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CRL.A No. 535 of 2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR
CRIMINAL APPEAL NO.535 OF 2015
BETWEEN:
SRI. PRASANNA
AGED ABOUT 35 YEARS,
S/O BHEEMA
R/O MAUNA,
BYEPASS,
KARKALA KASABA VILLAGE,
KARKALA TLAUK,
UDUPI DISTRICT - 574 201.
...APPELLANT
(BY MR. PRASANNA K., ADVOCATE FOR
SRI. CHANDRANATH ARIGA K., ADVOCATE)
AND:
SABU SCARIA
S/O SEARIA,
Digitally signed by AGED ABOUT 40 YEARS,
HEMAVATHY
GANGABYRAPPA PARAXIL HOUSE,
Location: HIGH COURT
OF KARNATAKA
NARIYANGANAM POST, PLALA,
KOTTAYAM DISTRICT,
KERALA STATE - 577201.
...RESPONDENT
(BY SRI. PAVAN KUMAR G., ADVOCATE)
THIS CRIMINAL APPEAL IS FILED UNDER SECTION
378(4) CODE OF CRIMINAL PROCEDURE, PRAYING TO SET
ASIDE THE JUDGMENT DATED 07.04.2015 IN C.C. NO.7/2011
PRINCIPAL CIVIL JUDGE AND JMFC, KARKALA. SENTENCING
THE ACCUSED FOR THE OFFENCE PUNISHABLE UNDER
SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT.
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CRL.A No. 535 of 2015
THIS APPEAL, COMING ON FOR FINAL HEARING, THIS
DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR
ORAL JUDGMENT
1. This appeal is filed by the appellant - complainant
challenging the order of acquittal dated 07.04.2015 passed
in C.C.No.7/2011 by the Principal Civil Judge and J.M.F.C,
Karkala, whereunder, the respondent - accused had been
acquitted of the offence under Section 138 of the
Negotiable Instruments Act, 1881 (for short hereinafter
referred to as "N.I.Act").
2. Case of the appellant - complainant in brief is as
under;
The appellant - complainant and the respondent -
accused were well known to each other. On 27.02.2010,
the respondent - accused borrowed a sum of
Rs.3,00,000/- from the appellant - complainant for his
necessities, agreeing to repay the same within a short
period. In discharge of the said loan, the respondent -
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accused had issued a cheque bearing No.315612 dated
07.05.2010 of Corporation Bank, Mala Branch for
Rs.3,00,000/- in favour of the appellant - complainant.
The appellant - complainant presented the said cheque for
encashment and it came to be dishonoured with an
endorsement "insufficient funds". The appellant -
complainant got issued legal notice dated 01.06.2010
calling upon the respondent - accused to pay the cheque
amount. The said notice had been served on the
respondent - accused on 05.06.2010. The respondent -
accused did not pay the cheque amount. Therefore, the
appellant - complainant filed a private complaint against
the respondent - accused for the offence under Section
138 of the N.I.Act. The learned Magistrate took cognizance
and registered a case in C.C.No.7/2011 against the
respondent - accused for the offence under Section 138 of
the N.I.Act. The plea of the respondent - accused has
been recorded. The appellant - complainant in order to
prove his case, got examined himself as PW1 and got
marked Ex.P1 to P6. The statement of the respondent -
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accused has been recorded under Section 313 of Cr.P.C.
The respondent - accused examined himself as DW1 and
got marked Exs.D1 and D2. After hearing the arguments
on both sides, the learned Magistrate has formulated the
points for consideration and passed the judgment of
acquittal. The said judgment of acquittal has been
challenged by the appellant - complainant in this appeal.
3. Heard learned counsel for the appellant -
complainant and learned counsel for the respondent -
accused.
4. Learned counsel for the appellant - complainant
would contend that the respondent - accused has
admitted his signature on the cheque - Ex.P1 and
therefore, a presumption has to be drawn under Section
139 of the N.I.Act. The said presumption has not been
rebutted by the respondent - accused. The respondent -
accused had taken up the defence that he had lost the
cheque and he had intimated regarding the same to his
Banker, but he has not produced any iota of document in
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that regard. The appellant - complainant in order to
establish his capacity to lend money, has produced his
bank pass book at Ex.P5, wherein the entries dated
14.07.2009, 19.08.2009 and 21.01.2010 would indicate
that the appellant - complainant had drawn cash from his
bank account which is more than Rs.3,00,000/-.
Therefore, the appellant - complainant had cash of
Rs.3,00,000/- on 27.02.2010. Learned counsel for the
appellant - complainant submits that once the
presumption is not rebutted, the respondent - accused
requires to be convicted for the offence under Section 138
of the N.I.Act. On the points urged, learned counsel for
the appellant - complainant has placed reliance on the
following decisions;
(i) Kalamani Tex and Another Vs. P.
Balasubramanian, reported in (2021)5 SCC 283
(ii) Bir Singh Vs. Mukesh Kumar, reported in
(2019) 4 SCC 197
(iii) Rohitbhai Jivanlal Patel Vs. State of Gujarat
and Another, reported in (2019) 18 SCC 106
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On these grounds, learned counsel for the appellant -
complainant prayed to allow the appeal and convict the
respondent - accused for the offence under Section 138 of
the N.I.Act.
5. Learned counsel for the respondent - accused would
contend that the respondent - accused has taken up the
defence that he had lost the cheque and he had intimated
the same to his Banker and the same has been stated by
DW1 in his chief examination and also in the cross
examination. Ex.P1 - cheque is a bearer cheque and it is
not an Account Payee cheque or the crossed cheque and it
bears the signature of the respondent - accused on the
back page of the said cheque which itself would indicate
that it was kept signed for the other purpose and it had
been misused by the appellant - complainant. The bank
account of the appellant - complainant did not have
sufficient balance of Rs.3,00,000/- as on 27.02.2010 to
lend the same to the respondent - accused. Considering
all these aspects, the respondent - accused has rebutted
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the presumption. Considering the said aspects, the
learned Magistrate has rightly acquitted the respondent -
accused of the offence under Section 138 of the N.I.Act.
With this, he prayed for dismissal of the appeal.
6. Having heard the learned counsels, this Court has
perused the impugned judgment and the Trial Court
records. Considering the grounds urged, the following
point arises for consideration;
"Whether the Trial Court has erred in acquitting
the respondent - accused for the offence under
Section 138 of the N.I.Act?"
7. My answer to the above point is in the affirmative,
for the following reasons;
It is the specific case of the appellant - complainant
that, on 27.02.2010, he had lent Rs.3,00,000/- by cash to
the respondent - accused and the respondent - accused in
order to repay the said amount borrowed had issued a
cheque - Ex.P1 dated 07.05.2010 for Rs.3,00,000/- in
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favour of the appellant - complainant. The respondent -
accused has admitted his signature on Ex.P1 - cheque. As
the respondent - accused has admitted his signature on
the cheque, a presumption arises under Section 139 of the
N.I.Act that the cheque was issued for discharge of the
debt. The said presumption is a rebuttable presumption.
The standard of proof for rebutting the said presumption is
preponderance of probability.
8. It is the defence of the respondent - accused that he
had kept the signed cheque and it had been lost and the
same had been misused by the appellant - complainant.
The respondent - accused had been served with the
statutory notice demanding payment of the amount of
dishonoured cheque as per Ex.P3. Inspite of service of the
said notice, the respondent - accused did not choose to
give any reply putting forth his defence. The respondent -
accused who has been examined as DW1 has stated that
when he had gone to Cochin, he had given the blank
signed cheque to one Mr.Jose, who is his employee, in
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order to look after the expenses of his agricultural land
and it was kept in the house and he came to know
regarding misuse of the said cheque by the appellant -
complainant when he had received the notice got issued
by the appellant - complainant. DW1 in his cross
examination has stated that he had intimated the loss of
Ex.P1 - cheque to his Banker and the said intimation was
given in writing and it was sent through Mr.Jose and it was
available in the records of the Bank. In order to establish
the said defence, the respondent - accused did not place
on record any document or evidence. Even the respondent
- accused has not examined the said Mr.Jose, who is his
employee. The said defence of the respondent - accused
has not been established.
9. The appellant - complainant has placed on record
Ex.P5 - his bank account pass book which would indicate
that he had drawn cash of Rs.1,38,500/- on 14.07.2009,
Rs.1,18,500/- on 19.08.2009 and Rs.1,20,000/- on
21.01.2010. The amount of Rs.3,00,000/- lent by the
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appellant - complainant to the respondent - accused was
on 27.02.2010 Six months prior to the said date of
lending, the appellant - complainant had cash of more
than Rs.3,00,000/-. Ex.D1 - bank account statement of
respondent - accused would indicate that he had sent
some money to the appellant - complainant. The
appellant - complainant has stated that those money sent
by the respondent - accused to him were towards payment
of the amount borrowed earlier. The respondent - accused
has contended that he is financially well off and he is
having the land and Estate, but on looking to his
statement of account which is at Ex.D1 does not indicate
that he is financially well off. Considering all these
aspects, the respondent - accused has failed to rebut the
presumption drawn under Section 139 of the N.I.Act.
10. The Hon'ble Apex Court in the case of Bir Singh Vs.
Mukesh Kumar, reported in (2019) 4 SCC 197, has held
as under;
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"34. If a signed blank cheque is voluntarily
presented to a payee, towards some payment, the
payee may fill up the amount and other particulars.
This in itself would not invalidate the cheque. The
onus would still be on the accused to prove that the
cheque was not in discharge of a debt or liability by
adducing evidence.
36. Even a blank cheque leaf, voluntarily signed and
handed over by the accused, which is towards some
payment, would attract presumption under Section
139 of the Negotiable Instruments Act, in the
absence of any cogent evidence to show that the
cheque was not issued in discharge of a debt."
11. The Hon'ble Apex Court in the case of Rohitbhai
Jivanlal Patel Vs. State of Gujarat and Another,
reported in (2019) 18 SCC 106, has held as under;
"17. On the aspects relating to preponderance of
probabilities, the accused has to bring on record such
facts and such circumstances which may lead the
Court to conclude either that the consideration did
not exist or that its non-existence was so probable
that a prudent man would, under the circumstances
of the case, act upon the plea that the consideration
did not exist. This Court has, time and again,
emphasised that though there may not be sufficient
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negative evidence which could be brought on record
by the accused to discharge his burden, yet mere
denial would not fulfil the requirements of rebuttal as
envisaged under Sections 118 and 139 of the NI Act.
This Court stated the principles in Kumar Exports as
follows: (SCC pp. 520-21, paras 20-21)
"20. The accused in a trial under Section 138
of the Act has two options. He can either show
that consideration and debt did not exist or
that under the particular circumstances of the
case the non-existence of consideration and
debt is so probable that a prudent man ought
to suppose that no consideration and debt
existed. To rebut the statutory presumptions
an accused is not expected to prove his
defence beyond reasonable doubt as is
expected of the complainant in a criminal trial.
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
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bare denial of the 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.
Apart from adducing direct evidence to prove
that the note in question was not supported by
consideration or that he had not incurred any
debt or liability, the accused may also rely
upon circumstantial evidence and if the
circumstances so relied upon are compelling,
the burden may likewise shift again on to the
complainant. The accused may also rely upon
presumptions of fact, for instance, those
mentioned in Section 114 of the Evidence Act
to rebut the presumptions arising under
Sections 118 and 139 of the Act.
21. The accused has also an option to prove
the non-existence of consideration and debt or
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liability either by letting in evidence or in some
clear and exceptional cases, from the case set
out by the complainant, that is, the averments
in the complaint, the case set out in the
statutory notice and evidence adduced by the
complainant during the trial. Once such
rebuttal evidence is adduced and accepted by
the court, having regard to all the
circumstances of the case and the
preponderance of probabilities, the evidential
burden shifts back to the complainant and,
therefore, the presumptions under Sections
118 and 139 of the Act will not again come to
the complainant's rescue.
18. In the case at hand, even after purportedly
drawing the presumption under Section 139 of the NI
Act, the trial court proceeded to question the want of
evidence on the part of the complainant as regards
the source of funds for advancing loan to the accused
and want of examination of relevant witnesses who
allegedly extended him money for advancing it to the
accused. This approach of the trial court had been at
variance with the principles of presumption in law.
After such presumption, the onus shifted to the
accused and unless the accused had discharged the
onus by bringing on record such facts and
circumstances as to show the preponderance of
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probabilities tilting in his favour, any doubt on the
complainant's case could not have been raised for
want of evidence appellant-accused. The aspect
relevant for consideration had been as to whether
the appellant-accused has brought on record such
facts/ materials/circumstances which could be of a
reasonably probable defence."
12. The Hon'ble Apex Court in the case of Kalamani
Tex and Another Vs. P. Balasubramanian, reported in
(2021)5 SCC 283 has held as under;
"13. Adverting to the case in hand, we find on a plain
reading of its judgment that the trial court
completely overlooked the provisions and failed to
appreciate the statutory presumption drawn under
Section 118 and Section 139 of NIA. The statute
mandates that once the signature (s) of an accused
on the cheque/negotiable instrument are established,
then these "reverse onus" clauses become operative.
In such a situation, the obligation shifts upon the
accused to discharge the presumption imposed upon
him. This point of law has been crystallised by this
Court in Rohitbhai Jivanlal Patel v. State of Gujarat in
the following words: (SCC pp. 120-21, para 18)
"18. In the case at hand, even after
purportedly drawing the presumption under
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Section 139 of the NI Act, the trial court
proceeded to question the want of evidence on
the part of the complainant as regards the
source of funds for advancing loan to the
accused and want of examination of relevant
witnesses who allegedly extended him money
for advancing it to the accused. This approach
of the trial court had been at variance with the
principles of presumption in law. After such
presumption, the onus shifted to the accused
and unless the accused had discharged the
onus by bringing
on record such facts and circumstances as to
show the preponderance of probabilities tilting
in his favour, any doubt on the complainant's
case could not have been raised for want of
evidence regarding the source of funds for
advancing loan to the appellant-accused."
15. No doubt, and as correctly argued by the Senior
Counsel for the appellants, the presumptions raised
under Section 118 and Section 139 are rebuttable in
nature. As held in M.S. Narayana Menon v. State of
Kerala, which was relied upon in Basalingappas, a
probable defence needs to be raised, which must
meet the standard of "preponderance of probability",
and not mere possibility. These principles were also
affirmed in Kumar Exports, wherein it was further
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held that a bare denial of passing of consideration
would not aid the case of the accused.
17. Even if we take the arguments raised by the
appellants at face value that only a blank cheque and
signed blank stamp papers were given to the
respondent, yet the statutory presumption cannot be
obliterated. It is useful to cite Bir Singh v. Mukesh
Kumar, where this Court held that: (SCC p. 209,
para 36)
"36. Even a blank cheque leaf, voluntarily
signed and handed over by the accused, which
is towards some payment, would attract
presumption under Section 139 of the
Negotiable Instruments Act, in the absence of
any cogent evidence to show that the cheque
was not issued in discharge of a debt."
13. Even after purportedly drawing the presumption
under Section 139 of N.I.Act, the Trial Court has
proceeded to question the want of evidence on the part of
the appellant - complainant as regards the source of funds
for advancing the loan to the respondent - accused. This
approach of the Trial Court had been at variance with the
principles of presumption in law. As the respondent -
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accused has failed to rebut the presumption, the
presumption is in favour of the appellant - complainant
that cheque - Ex.P1 had issued for discharging the debt.
Considering the evidence of record, the appellant -
complainant has satisfied all the ingredients of the offence
under Section 138 of the Act. The cheque had been
dishonoured for the reason "insufficient funds" in the
account of the respondent - accused as per the bank
endorsement - Ex.P2 dated 10.05.2010. The statutory
notice had been issued as per Ex.P3 on 01.06.2010 and it
had been served on the respondent - accused and the
postal acknowledgment is at Ex.P4 and it is served on the
respondent - accused on 05.06.2010. The complaint had
been filed within the statutory period from the date of
cause of action. Considering the said aspects, the
judgment of acquittal passed by the Trial Court requires to
be set-aside and the respondent - accused is required to
be convicted for the offence under Section 138 of the
N.I.Act. In the result, the following;
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ORDER
The appeal is allowed. The impugned judgment of
acquittal dated 07.04.2015 passed in C.C.No.7/2011 by
the Principal Civil Judge and J.M.F.C, Karkala is set-aside.
The respondent - accused is convicted for the offence
under Section 138 of the N.I.Act and he is sentenced to
pay fine of Rs.3,10,000/- (Rupees three lakh ten thousand
only) and in default of payment of the said fine amount,
the respondent - accused shall undergo simple
imprisonment for a period of six months. Out of the fine
amount Rs.3,00,000/- (Rupees three lakh only) is ordered
to be paid to the appellant - complainant as compensation.
The respondent - accused shall deposit the fine amount
within two months from this day.
Sd/-
(SHIVASHANKAR AMARANNAVAR)
JUDGE
GH
