Heard Sri. N.Ravindranath Kamath, learned Senior
Counsel on behalf of Sri. Mohammed Ashhar, learned
2. Accused who suffered an order of conviction
dated 09.02.2023 by the Court of II Addl. District and
3. Facts in the nutshell which are utmost necessary
3.2. In the first week of March 2013, accused
approached the complainant and purchased 270 bags of
dry coffee worth ₹8,50,000/- and towards the sale
consideration, accused passed on a cheque (Ex.P1). The
said cheque, on presentation, returned with an
endorsement 'funds insufficient'.
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3.3. Complainant issued a legal notice calling upon
the accused to make good the amount covered under
cheque, which was duly served on accused and an
untenable reply vide Ex.P8 came to be issued.
4. Thereafter, complainant approached the learned
Trial Magistrate to take action against the accused for
commission of the offence punishable under Section 138 of
the Negotiable Instruments Act.
5. Learned Trial Magistrate, after completing the
necessary formalities, summoned the accused and
recorded the plea. Accused pleaded not guilty. Therefore,
trial was held.
6. In order to prove the case of the complainant,
he got examined himself as PW1 and placed on record
eight documents which were exhibited and marked as
Exs.P1 to P9.
7. As against the material evidence placed on
record on behalf of the complainant, accused got examined
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himself as DW1 and two more witnesses namely
Sri. P.U.Santhosh and Sri. K.D.Ramesh on behalf of the
accused, no documentary evidence were placed on record.
8. Thereafter, learned Trial Magistrate heard the
arguments of the parties and convicted the accused and
sentenced as under:
"ORDER
The accused is convicted for the offence
punishable under section 138 of Negotiable
Instruments Act.
Accused is sentenced to pay a fine of
Rs.12,30,000/- (Rupees Twelve Lakh Thirty
Thousand only). In default to pay the fine, accused
shall undergo simple imprisonment for a period of
six months.
Further, acting under Sec.357(1)(b) of
Cr.P.C., a sum of Rs.12,20,000/- (Rupees Twelve
Lakh Twenty Thousand only) on recovery shall be
paid to the complainant as compensation and
Rs.10,000/- [Rupees Ten Thousand] shall be
remitted to the state exchequer."
9. Being aggrieved by the same, accused filed an
appeal before the District Court in Crl. Appeal No.
5004/2018.
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10. Learned Judge in the First Appellate Court, after
securing the records, heard the arguments of the parties in
detail and on re-appreciation of the material evidence on
record, dismissed the appeal of the accused by considered
judgment dated 09.02.2023.
11. Subsequent thereto, the accused has preferred
the present revision petition on the following grounds:
12. Sri. Ravindranath Kamath, learned Senior
Counsel for the petitioner, reiterating the grounds urged in
the revision petition would contend that, there is a specific
stand taken by the accused in the reply notice vide Ex.P8
itself that the cheque in question was stolen by the
complainant. Therefore, there was no legally recoverable
debt involved under Ex.P1, which has not been properly
appreciated by both the Courts, resulting in miscarriage of
justice.
12.1. He would further emphasize that, complainant
was working as a servant under the accused and he had
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the access to the office room and other places which has
been misused by the complainant in stealing away five to
six cheques and one such cheque has been
misappropriated by the complainant and filed a false case
against the accused. Said aspect of the matter is not
properly appreciated by both the Courts.
12.2. He would also contend that, complainant had
no coffee estate of his own, therefore, selling 270 bags of
coffee to the accused would not arise, which has not been
appreciated. It is also his contention that, oral evidence of
DW2 and DW3 would make it clear that the cheque in
question was actually handed over to the complainant to
be given to them for supply of coffee, which has been
misused by the complainant and therefore, there is no
legally recoverable debt and thus, sought for allow the
reasoned petition.
13. Learned counsel for the respondent is not
present today.
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14. In the light of the argument put forth on behalf
of the petitioner, this Court perused the matter on record
meticulously.
15. On such perusal of the material on record, it is
crystal clear that there is no dispute that Ex.P1 cheque
belongs to the accused and signature found therein is that
of the accused. To explain as to how Ex.P1 reached the
hands of the complainant, accused has set up a theory that
Ex.P1 was stolen by complainant as he had the access to
the office room and all other places of the accused.
16. It is also the contention of the accused that
complainant was working as a servant in the office of the
accused right from his father's period. Therefore, he had
gained necessary trust from the members of the family of
the accused, namely his father and his elder brother
Sri. Basheer. Misutilising such trust reposed by the accused
in complainant, he has stolen Ex.P1 and misutilised the
same.
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17. To substantiate the said aspect of the matter,
there is no material evidence placed on record except the
oral testimony of DW1. It is also contention of the accused
that he used to send the blank signed cheques to different
persons from whom the accused used to purchase coffee
and after the payment is made in cash, the cheque used to
be returned which was sent as security by the accused.
18. To establish said aspect of the matter, on behalf
of the accused, two persons have been examined namely
Sri. P.U.Santosh and Sri. K.D.Ramesh as DW2 and DW3.
Both of them deposed before the Court stating that,
accused and complainant are known to each other.
19. While DW2 answered that, upto 2013,
complainant worked with the accused, his deposition is
silent about complainant working as a cook with the
accused in contrast to the oral testimony of DW1.
20. DW3 has not stated anything about the
complainant working as a servant with the accused. If the
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theory that is put forward by the accused is to be
appreciated that Ex.P1 is stolen, then the oral evidence of
DW2 and DW3 is unnecessary.
21. If it is the case of the accused that signed
cheque which was sent under trust to DW2 or DW3 by the
accused through the complainant which has been
misutilised, then there could be only one cheque which
could be misutilised.
22. Whether the cheque that has been issued by the
accused sent to DW2 is misutilised or cheque which has
been signed and sent to DW3 has been misutilised is not
forthcoming on record.
23. Moreover, DW1 has stated that five to six
cheques have been stolen and he does not remember the
date, number and the bank on which the signed cheques
were stolen away from the iron safe by misutilising the
trust reposed by the accused in complainant.
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24. Further, when the accused came to know that
there is a misutilisation of cheque marked at Ex.P1, a
detailed reply has been sent by the accused with the aid of
an Advocate. No normal prudent person would keep quiet
if the cheque in a sum of ₹8,50,000/- is stolen and
misutilised.
25. Non-filing of any complaint against the
complainant by the accused in this regard exposes the
hollowness in the defence setup by the accused.
26. Since the complainant has established before
the Court through his oral evidence and documentary
evidence placed on record about he managing the coffee
estate of Sathish, Vinu and Vishwanath, which has been
admitted by DW2 and DW3, sale of 270 bags of coffee by
the complainant to the accused cannot be ruled out. Thus,
the complainant having discharged the initial burden to
raise the presumption available to the complainant under
Section 139 of the Negotiable Instruments Act, it was for
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the accused to rebut the same by placing necessary
rebuttal evidence on record.
27. Accused has failed to rebut the said material
evidence on record and in this regard, the principles of law
enunciated by the Hon'ble Apex Court in the case of
Sanjabij Tari Vs. Kishore S. Borcar and Another
[2025 SCC OnLine SC 2069] assumes importance.
Relevant paragraphs in the said judgment are culled out
hereunder for ready reference:
"14. Consequently, this court is of the view that the
intent behind introducing Chapter XVII is to restore the
credibility of cheques as a trustworthy substitute for cash
payment and to promote a culture of using cheques.
Further, by criminalizing the act of issuing cheques
without sufficient funds or for other specified reasons, the
law promotes financial discipline, discourages
irresponsible practices and allows for a more efficient and
timely resolution of disputes compared to the previous
pure civil remedy which was found to involve the payee in
a long-drawn out process of litigation.
Once execution of cheque is admitted, presumptions
under sections 118 and 139 of the Negotiable Instruments
Act, arise
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15. In the present case, the cheque in question has
admittedly been signed by respondent No. 1-accused.
This court is of the view that once the execution of the
cheque is admitted, the presumption under section 118 of
the Negotiable Instruments Act, that the cheque in
question was drawn for consideration and the
presumption under section 139 of the Negotiable
Instruments Act, that the holder of the cheque received
the said cheque in discharge of a legally enforceable debt
or liability arise against the accused. It is pertinent to
mention that observations to the contrary by a two-judge
Bench in Krishna Janardhan Bhat v. Dattatraya G. Hegde
[(2008) 141 Comp Cas 665 (SC); (2008) 4 SCC 54;
(2008) 2 SCC (Cri) 166; 2008 SCC OnLine SC 106.] have
been set aside by a three-judge Bench in Rangappa v. Sri
Mohan [(2010) 11 SCC 441; (2010) 4 SCC (Civ) 477;
(2011) 1 SCC (Cri) 184; 2010 SCC OnLine SC 583.] .
16. This court is further of the view that by creating
this presumption, the law reinforces the reliability of
cheques as a mode of payment in commercial
transactions.
17. Needless to mention that the presumption
contemplated under section 139 of the Negotiable
Instruments Act, is a rebuttable presumption. However,
the initial onus of proving that the cheque is not in
discharge of any debt or other liability is on the
accused/drawer of the cheque (see : Bir Singh v. Mukesh
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Kumar [(2019) 5 Comp Cas-OL 560 (SC); (2019) 4 SCC
197; (2019) 2 SCC (Cri) 40; (2019) 2 SCC (Civ) 309;
2019 SCC OnLine SC 138.] .
18. The judgment of this court in APS Forex
Services P. Ltd. v. Shakti International Fashion Linkers
[(2020) 12 SCC 724; (2020) 4 SCC (Cri) 505; 2020 SCC
OnLine SC 193.] relied upon by learned counsel for
respondent No. 1-accused only says that the presumption
under section 139 of the Negotiable Instruments Act is
rebuttable and when the same is rebutted, the onus would
shift back to the complainant to prove his financial
capacity, more particularly, when it is a case of giving
loan by cash. This judgment nowhere states, as was
sought to be contended by learned counsel for respondent
No. 1-accused, that in cases of dishonour of cheques, in
lieu of cash loans, the presumption under section 139 of
the Negotiable Instruments Act does not arise.
Approach of some courts below to not give effect to
the presumptions under sections 118 and 139 of the
Negotiable Instruments Act, is contrary to mandate of
Parliament
19. Recently, the Kerala High Court in P.C. Hari v.
Shine Varghese [2025 SCC OnLine Ker 5535.] has taken
the view that a debt created by a cash transaction above
Rs. 20,000 (rupees twenty thousand) in violation of the
provisions of section 269SS of the Income-tax Act, 1961
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(for short "IT Act, 1961") is not a "legally enforceable
debt" unless there is a valid explanation for the same,
meaning thereby that the presumption under section 139
of the Act will not be attracted in cash transactions above
Rs. 20,000 (rupees twenty thousand).
20. However, this court is of the view that any
breach of section 269SS of the Income-tax Act, 1961 is
subject to a penalty only under section 271D of the
Income-tax Act, 1961. Further neither section 269SS nor
271D of the Income-tax Act, 1961 states that any
transaction in breach thereof will be illegal, invalid or
statutorily void. Therefore, any violation of section 269SS
would not render the transaction unenforceable under
section 138 of the Negotiable Instruments Act, or rebut
the presumptions under sections 118 and 139 of the
Negotiable Instruments Act, because such a person,
assuming him/her to be the payee/holder in due course,
is liable to be visited by a penalty only as prescribed.
Consequently, the view that any transaction above Rs.
20,000 (rupees twenty thousand) is illegal and void and
therefore does not fall within the definition of "legally
enforceable debt" cannot be countenanced. Accordingly,
the conclusion of law in P.C. Hari v. Shine Varghese [2025
SCC OnLine Ker 5535.] is set aside.
21. This court also takes judicial notice of the fact
that some district courts and some High Courts are not
giving effect to the presumptions incorporated in sections
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118 and 139 of the Negotiable Instruments Act, and are
treating the proceedings under the Negotiable
Instruments Act, as another civil recovery proceedings
and are directing the complainant to prove the antecedent
debt or liability. This court is of the view that such an
approach is not only prolonging the trial but is also
contrary to the mandate of Parliament, namely, that the
drawer and the bank must honour the cheque, otherwise,
trust in cheques would be irreparably damaged.
No documents and/or evidence led with regard to
the financial incapacity of the appellant
22. It is pertinent to mention that in the present
case, respondent No. 1- accused has filed no documents
and/or examined any independent witness or led any
evidence with regard to the financial incapacity of the
appellant- complainant to advance the loans in question.
For instance, this court in Rajaram v. Maruthachalam
[(2023) 16 SCC 125; 2023 SCC OnLine SC 48.] has held
that the presumptions under sections 118 and 139 of the
Negotiable Instruments Act, can be rebutted by the
accused examining the Income-tax Officer and bank
officials of the complainant/drawee.
When the evidence of PW-1 is read in its entirety, it
cannot be said that the appellant-complainant had no
wherewithal to advance loan"
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28. In the light of above principles of law, taking
note of factual aspects of the matter, the conviction order
recorded by the learned Trial Magistrate confirmed by the
First Appellate Court needs no interference by this court,
that too, under the revisional jurisdiction.
29. Accordingly, the following:
ORDER
The revision petition is meritless and hereby
dismissed.
Sd/-
(V SRISHANANDA)
JUDGE
PA
List No.: 2 Sl No.: 65
