Karnataka High Court

Mohammed Hassan vs Sri Asif Ahamed on 25 March, 2025

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                                                             NC: 2025:KHC:12632
                                                          CRL.A No. 938 of 2015




                     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                          DATED THIS THE 25TH DAY OF MARCH, 2025

                                             BEFORE
                            THE HON'BLE MR JUSTICE S RACHAIAH
                            CRIMINAL APPEAL NO. 938 OF 2015 (A)

                   BETWEEN:

                   MOHAMMED HASSAN S/O HASAN,
                   AGED 60 YEARS,
                   RESIDING M/S MADANI FISERIES,
                   NEW SOUTH WARF, BUNDER,
                   MANGALORE DK-575001.
                                                                     ...APPELLANT
                   (BY SRI S. SACHIN, ADVOCATE FOR
                    SRI. S. RAJASHEKARA.,ADVOCATE)

                   AND:

                   SRI ASIF AHAMED S/O FAROOQ,
                   AGED 38 YEARS,
                   RESIDING AT DOOR, NO. 103
                   M J M 103, AYESHA MANZIL
                   KASABA BAZAR, MANGALORE-575001.
Digitally signed                                                   ...RESPONDENT
by RENUKA          (BY SRI SRIKANTH A., ADVOCATE FOR
                    SRI. P. KARUNAKAR .,ADVOCATE)
Location:
HIGH COURT
                         THIS CRL.A. IS FILED U/S.378 CR.P.C PRAYING TO SET ASIDE
OF
                   THE ORDER DATED 12.6.2015 PASSED IN C.C.NO.788/2014 ON THE
KARNATAKA
                   FILE OF THE JMFC (V) COURT, MANGALORE, D.K. ACQUITTING THE
                   ACCUSED PERSON FROM THE ALLEGED OFFENCE UNDER SECTION
                   138 OF NEGOTIABLE INSTRUMENTS ACT, BY ALLOWING THIS
                   APPEAL AND CONVICT THE ACCUSED PERSON FOR THE OFFENCES
                   PUNISHABLE UNDER SECTION 138 OF N.I. ACT, AND ETC.

                        THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED
                   ON 13.02.2025 COMING ON FOR PRONOUNCEMENT OF JUDGMENT,
                   THROUGH VIDEO CONFERENCING, THIS DAY, THE COURT
                   DELIVERED THE FOLLOWING:
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                                               NC: 2025:KHC:12632
                                           CRL.A No. 938 of 2015




CORAM:   HON'BLE MR JUSTICE S RACHAIAH


                         CAV JUDGMENT

1. This appeal is filed by the appellant / complainant being

aggrieved by the judgment and order of acquittal dated

12.06.2015 in C.C. No.788/2014 on the file of the

J.M.F.C. (V) Court, Mangalore, D.K., wherein the Trial

Court acquitted the accused/respondent for the offence

punishable under Section 138 of the Negotiable

Instruments Act (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 he had advanced a

sum of Rs.5,00,000/- to the accused. The accused, in

discharge of the said liability, stated to have issued a

cheque for the said amount by writing the date as

03.04.2014. When the said cheque was presented for

encashment, it came to be dishonoured with an

endorsement as "Funds Insufficient" on 12.04.2014. A

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legal notice was issued on 22.04.2014. Though the said

notice was duly served, the accused did not repay the

amount nor replied to the said notice. Therefore, the

complainant filed a complaint.

4. To prove the case, the complainant examined himself as

PW.1 and got examined two witnesses as PWs.2 and 3

and also got marked seven documents as Exs.P1 to P7.

On the other hand, the accused examined himself as

DW.1 and got examined one witness as DW.2. The Trial

Court after appreciating the oral and documentary

evidence on record, recorded the acquittal. Hence, the

complainant has filed appeal.

5. Heard Sri S.Sachin, learned counsel for

Sri S.Rajashekara, learned counsel for the appellant and

Sri Srikanth A., learned counsel for Sri P.Karunakar,

learned counsel for the respondent.

6. It is the submission of the learned counsel for the

appellant / complainant that the Trial Court is not

justified in acquitting the accused especially, when the

accused himself has admitted execution of Ex.P7.

Further, he submitted that when the accused admitted

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the signature and issuance of the cheque, the Trial Court

should have raised the presumption in favour of the

complainant. Having failed to raise the presumption,

resulted in passing the impugned judgment, which is

required to be set aside.

7. It is further submitted that, initially, the complainant

need not prove his financial capacity, until the

presumption is rebutted. However, the Court below has

misread the law and opined that, initially, the

complainant has to prove the financial capacity and then,

the accused has to rebut the presumption, which is

contrary to the settled principle of law. Therefore, the

impugned judgment is liable to be set aside. Making such

submissions, the learned counsel for the appellant prays

to allow the appeal.

8. Per contra, the learned counsel for the respondent

justified the impugned judgment and order of acquittal

passed by the Trial Court and submitted that the defence

of the accused had been considered properly by the Trial

Court. Though Ex.P7 is said to have been executed, that

has not been proved properly. In fact, the accused had

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borrowed a sum of Rs.25,000/- in the year 2011 and

repaid the entire amount with interest. However, the

complainant has failed to return the cheque and bond

paper, as such, the liability on the cheque would not

arise. Making such submission, the learned counsel for

the respondent prays to dismiss the appeal.

9. Having heard the learned counsel for the respective

parties and also perused the findings of the Trial Court in

recording the acquittal, it can be gathered that the Trial

Court misread the law or settled principle of law and

recorded the acquittal, which is contrary to the said law.

10. In this context, it is relevant to refer to the judgment of

the Hon'ble Supreme Court in the case BIR SINGH v.

MUKESH KUMAR1, paragraph Nos.18 to 24 read thus:

"18. In passing the impugned judgment and order dated 21-11-2017, the High Court misconstrued Section 139 of the Negotiable Instruments Act, which mandates that unless the contrary is proved, it is to be presumed 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

(2019) 4 SCC 197

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any debt or other liability. Needless to mention that the presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque.

19. In Hiten P. Dalal v. Bratindranath Banerjee, this Court held that both Sections 138 and 139 require that the court shall presume the liability of the drawer of the cheques for the amounts for which the cheques are drawn. Following the judgment of this Court in State of Madras v. A. Vaidyanatha Iyer, this Court held that it was obligatory on the court to raise this presumption.

20. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing

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the reasonable possibility of the non-existence of the presumed fact as held in Hiten P. Dalal.

21. Presumption of innocence is undoubtedly a human right as contended on behalf of the respondent-accused, relying on the judgments of this Court in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and Rajesh Ranjan Yadav v. CBI. However the guilt may be established by recourse to presumptions in law and presumptions in facts, as observed above.

22. In Laxmi Dyechem v. State of Gujarat, this Court reiterated that in view of Section 139, it has to be presumed that a cheque was issued in discharge of a debt or other liability but the presumption could be rebutted by adducing evidence. The burden of proof was however on the person who wanted to rebut the presumption. This Court held "however, this presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of a post- dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act".

23. In Kumar Exports v. Sharma, this Court reiterated that there is a presumption that every negotiable instrument duly executed, is for discharge of a debt or liability, but the presumption is rebuttable by proving the contrary. In the facts and circumstances of the

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case it was found that the cheque in question was towards advance for purchase of carpets, which were in fact not sold by the payee of the cheque to the drawer, as proved from the deposition of an official of the Sales Tax Department, who stated that the payee had admitted that he had not sold the carpets.

24. In K.N. Beena v. Muniyappan, this Court held that in view of the provisions of Section 139 of the Negotiable Instruments Act read with Section 118 thereof, the Court had to presume that the cheque had been issued for discharging a debt or liability. The said presumption was rebuttable and could be rebutted by the accused by proving the contrary. But mere denial or rebuttal by the accused was not enough. The accused had to prove by cogent evidence that there was no debt or liability. This Court clearly held that the High Court had erroneously set aside the conviction, by proceeding on the basis that denials/averments in the reply of the accused were sufficient to shift the burden of proof on the complainant to prove that the cheque had been issued for discharge of a debt or a liability. This was an entirely erroneous approach. The accused had to prove in the trial by leading cogent evidence that there was no debt or liability."

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11. The Hon'ble Supreme Court in the case of

BASALINGAPPA v. MUDIBASAPPA2, held in paragraph

No.25 which 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 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 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

(2019) 5 SCC 418

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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."

12. On careful reading of the above dicta of the Hon'ble

Supreme Court, it makes it clear that, once the executin

of the cheque is proved, the Court has to raise the

presumption in favour of the complainant that the said

cheque had been issued for the purpose of discharge of

debt or liability. It is the accused who has to rebut the

presumption by leading cogent evidence. Mere denial of

the transaction is not sufficient to hold that the accused

has rebutted the presumption.

13. In the present case, though the accused has set up a

defence that he had borrowed Rs.25,000/- in the year

2011 and the same has been repaid along with interest.

In spite of having repaid the said amount, cheque and

agreement were not returned to him. The said defence

cannot be accepted for the reason that he has not

produced any documents to show that he had received

the amount of Rs.25,000/- and cleared the same nor has

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made any efforts to take back the cheque and

agreement.

14. On the contrary, the complainant has proved the case by

relying on Ex.P7 and also got examined another two

witnesses as PWs.2 and 3. Therefore, the findings of the

Trial Court in recording the acquittal is erroneous and

therefore, the same is liable to be set aside.

15. In the light of the observations made above, I proceed to

pass the following:-

ORDER

(i) The Criminal Appeal is allowed.

(ii) The judgment and order of acquittal dated

12.06.2015 passed in C.C. No.788/2014 on

the file of the J.M.F.C. (V) Court, Mangalore,

D.K., is set aside.

(iii) The respondent / accused is convicted for the

offence under Section 138 of N.I. Act and he

is sentenced to pay a fine of Rs.10,00,000/-

(Rupees Ten lakhs only), in default, he shall

undergo simple imprisonment for 1½ year.

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(iv) On depositing the fine amount, the Trial Court

is directed to release the amount of

Rs.9,90,000/- (Rupees Nine Lakhs Ninety

Thousand only) in favour of the

complainant/appellant, on proper