Madras High Court
S.K. Muthusami vs S. Bhuvaneswaran on 17 April, 2025
Author: Sathi Kumar Sukumara Kurup
Bench: Sathi Kumar Sukumara Kurup
Crl.A. No.635 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 17.04.2025
CORAM :
THE HON'BLE MR. JUSTICE SATHI KUMAR SUKUMARA KURUP
Criminal Appeal No.635 of 2016
---
S.K. Muthusami .. Appellant
Versus
S. Bhuvaneswaran .. Respondent
Criminal Appeal is filed under Section 378 of Cr.P.C., praying to set
aside the Judgment dated 25.04.2016 passed in C.C.No.36 of 2009 on the file
of the learned Judicial Magistrate-I, Erode.
For Appellant : Mr. M. Karthik
for Mr. I.C. Vasudevan
For Respondent : Mr. M. Guruprasad
JUDGMENT
This Criminal Appeal had been filed against the Judgment dated
25.04.2016 passed in C.C.No.36 of 2009 on the file of the learned Judicial
Magistrate-I, Erode.
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2. The brief facts, which are necessary for the disposal of this
Criminal Appeal, are as follows:-
2.1. The Appellant in this Appeal is the Complainant, who had filed the
Complaint in C.C. No. 36 of 2009. As per the complaint, on 05.04.2008, the
Respondent/Accused borrowed a sum of Rs.2,00,000/- and promised to repay
the same in two instalments. The first instalment of Rs.1,00,000/- will be paid
on 10.05.2008 and the other instalment of Rs.1,00,000/- will be paid on
20.05.2008. On receipt of the sum of Rs.2,00,000/- the Accused had issued
two cheques, each for Rs.1,00,000/-. When the cheques were presented for
collection through Federal Bank Limited, Erode Branch on 21.05.2008, they
were returned on 22.05.2008 for the reason 'insufficient funds'. Therefore, the
Appellant issued a statutory notice on 02.06.2008 calling upon the
Respondent/Accused to pay the cheque amount. Though the Accused received
the notice, he had not sent any reply and therefore, the complaint was filed.
2.2. In order to prove the averments in the complaint, the Appellant
examined himself as P.W-1 and marked Ex.P-1 to Ex.P-6. On conclusion of
Complainant side evidence, when the Accused was questioned under Section
313 (1) (b) of the Code of Criminal Procedure about the incriminating
materials made available against him, he had stated that a false complaint had
been filed against him. However, the Respondent/Accused had not examined
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any witness on his side.
2.3. The learned Judicial Magistrate No.I, Erode, on appreciation of
the oral and documentary evidence concluded that even though the
Complainant raised an initial presumption, it was successfully rebutted by the
Accused by raising doubt as to the source of income of the Complainant. In
fact, the Complainant had not satisfactorily explained about the source of
income to extend a sum of Rs.2,00,000/- as loan to the Accused. Further, the
Trial Court concluded that even prior to the transaction in question, the
Complainant and Accused had acquaintance, however, the Complainant had
stated as though he knew the Accused only through his business activities.
Accordingly, by Judgment dated 25.04.2016, the learned Judicial Magistrate
dismissed the complaint filed by the Complainant.
2.4. Aggrieved by the dismissal of the complaint by Judgment dated
25.04.2016 passed in C.C.No.36 of 2009 on the file of the learned Judicial
Magistrate-I, Erode, the Complainant had filed this Criminal Appeal.
3. The learned Counsel for the Appellant submitted that the
Appellant extended a loan of Rs.2,00,000/- to the Accused. On receipt of
which, the Accused handed over two cheques viz., Cheque No.010726 dated
10.05.2008 and Cheque No.010727 dated 20.05.2008 each for Rs.1,00,000/-
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towards repayment of the loan. Those cheques were returned on 22.05.2008
with an endorsement “funds insufficient”. Therefore, a legal notice was issued
on 02.06.2008 to the Accused, which he received on 03.06.2008, however, the
Accused neither replied nor paid the cheque amount. Thus, the Complainant-
Appellant raised a strong presumption in favour that he had paid money to the
Accused and for repayment of the same, the Accused had issued the two
cheques. It is the submission of the learned Counsel for the Appellant that the
learned Judicial Magistrate failed to consider that the presumption under
Sections 118 and 139 of the Negotiable Instruments Act, 1881 is in his favour.
Even though such a presumption is a rebuttal presumption, the
Respondent/Accused had neither issued a reply notice nor examined himself as
a witness. The Respondent/Accused also did not mark any document to rebut
the presumption. While so, the Trial Court ought to have recorded a finding of
guilt against the Accused by drawing a presumption against him. Instead, the
learned Judicial Magistrate-I, Erode dismissed the Complaint on the ground
that the Complainant did not have sufficient means to extend the loan for a
huge amount of Rs.2,00,000/-. The wherewithal or the capacity of the
Complainant cannot be questioned when the initial presumption raised by him
is stronger. When the Accused had not replied to the statutory notice and had
not settled the dues, the Accused cannot be heard questioning the wherewithal
of the Complainant. The learned Judicial Magistrate-I, Erode ignored those
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guidelines and acquitted the Accused which is perverse. Therefore, the
Judgment of the learned Judicial Magistrate-I, Erode dated 25.04.2016 in
C.C.No.36 of 2009 is perverse and it is to be set aside.
4. Per contra, the learned Counsel for the Respondent submitted that
the Complainant does not have the capacity to extend such huge amount as a
loan to the Respondent/Accused. The non-issuance of reply notice by the
Accused will not help the Complainant to claim that the Accused admitted the
claim of loan. As per the reported ruling of the Hon'ble Supreme Court in the
case of Krishna Janardhan Bhat Vs. Dattatraya G. Hegde reported in (2008)
4 SCC 54; and in the case of Rangappa Vs. Sri Mohan reported in (2010) 11
SCC 441, the Accused need not enter the witness box and examine himself to
rebut the presumption. The Accused can make use of materials available in the
course of the evidence by the Complainant and to raise a preponderance of
probabilities in his favour. In this case, the Accused cross-examined the
Complainant at length. During his cross-examination, the Complainant fairly
conceded that his income is too low by which it was proved that the
Complainant was not resourceful enough to extend such a huge amount of
Rs.2,00,000/- as loan to the Accused. The Complainant admitted that he is
working as a commission agent in the Textile Shops in Erode and he is earning
approximately Rs.30,000/- per month. Thus, it was established that the
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Complainant has no wherewithal to pay loan of Rs.2,00,000/- to the Accused.
Further, it was not disclosed as to what was the purpose for which the Accused
borrowed such a huge amount. The statutory notice as well as the complaint is
bereft of any material fact as to what was the acquaintance between the
Complainant and Accused, what was the mode in which the amount of
Rs.2,00,000/- was paid to the Accused. The complaint merely says that
Rs.2,00,000/- was paid and 2 cheques were issued by the Accused, but they
were dishonoured on presentation. Therefore, the Trial Court is wholly
justified in dismissing the complaint filed by the Complainant.
5. The learned Counsel for the Respondent invited the attention of
this Court to the cross-examination of P.W-1/Complainant in which he claimed
that he does not know the financial capacity of the Accused or his father. At the
same time, the Complainant admits that he was an acquaintance of his father.
The Complainant also admits that he was aware of the death of the father of the
Accused. However, these details were not disclosed in the statutory notice or
complaint, but were disclosed for the first time in the cross-examination. In
any event, when the Complainant claims that he is working as Commission
Agent in Textile Shops and earning from Rs.30,000/- to Rs.40,000/- per month,
he cannot be expected to lend a whooping sum of Rs.2,00,000/- as a loan.
According to the learned Counsel for the Respondent/Accused, the father of the
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Accused was running dying unit and he is an affluent person. On the other
hand, the Complainant admits in his cross-examination that he earns less than
Rs.30,000/- as Commission Agent and Rs.10,000/- from rental income. Even
to prove rental income, the Complainant had not marked any document. The
dismissal of the complaint by the learned Judicial Magistrate No.I, Erode is a
well reasoned judgment which does not warrant any interference by this Court.
Therefore, he prayed for dismissal of this Criminal Appeal as having no merit.
Point for consideration:
Whether the Judgment of the learned Judicial
Magistrate-I, Erode in C.C.No.36 of 2009 dated 25.04.2016 is
to be set aside as perverse?
6. Heard the learned Counsel for the Appellant and the learned
Counsel for the Respondent.
7. Perused the evidence of P.W-1 and the documents under Ex.P-1 to
Ex.P-6. Also, the judgment dated 25.04.2016 passed in C.C.No.36 of 2009 on
the file of the learned Judicial Magistrate-I, Erode.
8. The Complainant had filed the complaint in C.C. No. 36 of 2009
alleging that he had paid Rs.2,00,000/- to the Respondent/Accused and to
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repay the same, the two cheques were issued by the Accused. It is further
stated that on presentation of the cheques, they were dishonoured for the reason
“insufficient funds”. Further, it is stated that he had sent a notice dated
02.06.2008 under Ex.P-5 and it was also received by the Respondent/Accused,
under Ex.P-6, postal acknowledgment card, but he hads neither paid the
amount nor sent any reply notice.
9. It is evident that the complaint of the Complainant is bereft of any
material particulars. At the outset, the Complainant did not disclose as to how
he had paid the sum of Rs.2,00,000/- to the Respondent/Accused. It is not
known as to whether the sum of Rs.2,00,000/- was paid by way of cash or
cheque or any other mode. The Complainant, while filing a complaint under
Section 138 of The Negotiable Instruments Act, 1881, is bound to disclose the
manner in which the amount was paid. In this case, the Complainant had not
even filed the bank statement or any other document evidencing his
resourcefulness to pay the amount.
10. It is true that the Respondent/Accused, upon receipt of the
statutory notice dated 02.06.2008, had neither paid the cheque amount nor sent
a reply notice. For rebutting the initial presumption that may be raised by the
Complainant in a complaint under Section 138 of The Negotiable Instruments
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Act, 1881, it is essential for the Accused to issue a reply notice where he can
deny the receipt of the amount from the Complainant or call upon the
Complainant to disclose as to the manner in which the loan amount was paid to
him. This is one of the fundamental requirements for the Accused in a
complaint under Section 138 of The Negotiable Instruments Act, 1881 to rebut
the initial presumption. If the Accused missed this opportunity, then he had to
establish the preponderance of probabilities in his favour by cross-examining
the witnesses examined on behalf of the Complainant or by filing any other
documents, contrary to the case pleaded by the Complainant, to disprove the
case of the Complainant.
11. In this case, through the cross-examination of P.W-1, the
Respondent/Accused had successfully established the preponderance of
probabilities in his favour. Through the cross-examination of P.W-1, the
Respondent/Accused had brought out that the Complainant has no wherewithal
to extend such a huge amount of Rs.2,00,000/- to him. It was also brought out
in the cross-examination that the Complainant is working as a Commission
Agent in Textile shops apart from receipt of rental income of Rs.10,000/- per
month. However, even to prove that the Complainant is getting Rs.30,000/- as
monthly income, he had not produced any evidence such as statement of bank
etc., In the cross-examination, when P.W-1 was confronted as to the details of
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the property from which he is getting Rs.10,000/- per month as rent and
whether any document had been filed, he had replied that he had not filed any
such document. The cross-examination of P.W-1 would give a clear picture
that the averments made in the complaint had not been proved and established
by the Complainant in this case.
12. As mentioned above, in the complaint, the Complainant had not
even disclosed the relationship between him and the Accused which prompted
him to advance a sum of Rs.2,00,000/- as loan. On the contrary, only in the
cross-examination, P.W-1 could say that he had transactions with the father of
the Respondent/Accused, who owned a dying unit in Erode. He also states that
the father of the Respondent/Accused died in the year 2008. These factual
details ought to have been narrated by the Complainant while filing the
complaint. However, without disclosing the relationship between him and the
Respondent/Accused, the mode of payment of Rs.2,00,000/- and his
wherewithal to extend such a huge amount as loan, the complaint had been
filed. Merely by obtaining the cheques, presenting it and getting it
dishonoured, the Complainant cannot make out a case under Section 138 of
The Negotiable Instruments Act, 1881. It is needless to mention that an initial
presumption is raised by the Complainant by filing the cheques signed by the
Accused, however, such presumption shall exist till such time the Accused
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rebutting such presumption. When once the Accused successfully rebuts the
presumption, thereafter, the burden to prove the complaint shifts back to the
Complainant. In this case, the Respondent/Accused established the
preponderance of probabilities in his favour and therefore, the burden to prove
the averments in the complaint fell back on the shoulders of the Complainant,
but he had miserably failed to discharge such burden.
13. On perusal of the cross-examination of the Complainant as P.W-1,
it is noticed that the Complainant had evaded many suggestions put to him.
When he was asked as to whether, with the meager income of Rs.30,000/- per
month he could extend a loan of Rs.2,00,000/- to the Accused, his answer is
evasive. For the suggestion as to the financial capability of the Accused to
repay the amount, the Complainant had stated that in good faith, he had
extended the loan amount to the Respondent/Accused. It is noticed that the
Respondent/Accused was aged 22 years and he had lost his father a few
months back, prior to the date on which the Complainant alleged to have given
him loan of Rs.2,00,000/-.
14. It is also to be mentioned that the Respondent/Accused did not
issue a reply notice to the statutory notice sent by the Complainant. Normally,
when Accused in a complaint under Section 138 of The Negotiable Instruments
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Act, 1881, did not issue a reply notice, at the first blush, it will be difficult to
disprove the averments of the complaint. In this case, notwithstanding the fact
that the Respondent/Accused did not issue a reply notice, he successfully
established preponderance of probabilities in his favour by cross-examining
P.W-1. Merely because the Respondent/Accused did not reply to the statutory
notice, it cannot be presumed that he had admitted the contents contained in the
statutory notice.
15. The learned Judicial Magistrate-I, Erode, had in the course of
appreciation of evidence relied on several rulings as to how an initial
presumption could be raised by a Complainant and the opportunities available
to an Accused to rebut such presumption. For non-issuance of a reply notice to
the statutory notice sent by the Complainant reliance was placed on the
decision in P.Gnanambigai Vs. S.Krishnasamy and another reported in 2011
(1) MWN (Cr.) DCC 42 wherein it was held that though the Accused failed to
reply to the statutory notice, whether he is able to rebut the presumption in his
favour has to be looked into? In the instant case, though the Accused failed to
issue a reply to the statutory notice, he raised a valid rebuttal presumption in
his favour through the cross-examination of P.W-1. It was brought out in the
cross-examination of P.W-1 that Ex.P-1 and Ex.P-2 cheques were issued by the
Respondent/Accused towards security for the transaction between P.W-1 and
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his father. It is noticed that soon after the death of the father of the
Respondent/Accused, the present complaint had been filed by the Complainant
by utilising the cheques issued as security by the Respondent/Accused.
16. In the case of Vijay Vs. Laxman and another reported in 2013 (1)
MWN (Cr.) DCC 161 (SC), the Honourable Supreme Court held that the non-
disclosure of details of the loan or documentary evidence in support thereof are
fatal to the case of the Complainant. Similarly, in the case of S.Nagalakshmi
Vs. R.Nagalingam reported in 2012 (3) MWN (Cr.) (DCC) 34 (Mad.) it was
held that it was not disclosed as to how the Complainant had advanced loan to
the Accused, either by cash or cheque. In the absence of such material
particulars, the Accused is entitled to acquittal.
17. The learned Judicial Magistrate-I, Erode, in the Judgment of
acquittal, relied on the ruling of this Court in M.Palanisamy Vs. K.Karvannan
reported in 2013 (1) MWN (Cr.) DCC 72 (Mad.) and concluded that the
Complainant failed to establish his case after the Respondent/Accused rebutted
the initial presumption raised by him as required under Section 138 and 139 of
The Negotiable Instruments Act, 1881. The learned Judicial Magistrate-I,
Erode, on appreciation of evidence, particularly, the cross-examination of P.W-
1, accepted the defence of the Respondent/Accused that the Complainant was
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not resourceful enough to advance a whooping sum of Rs.2,00,000/- as loan to
him. Under those circumstances, the findings of the learned Judicial
Magistrate-I, Erode, dismissing the Complaint of the Complainant is well
founded and there is nothing for this Court to interfere with the same. The
learned Judicial Magistrate-I, Erode, on consideration of the entire evidence on
record rightly acquitted the Respondent/Accused.
18. In the light of the above discussion, the point for consideration is
answered in favour of the Respondent and against the Appellant. The
Judgment dated 25.04.2016 passed in C.C.No.36 of 2009 by the learned
Judicial Magistrate-I, Erode, is found proper which does not call for any
interference by this Court and the same is to be confirmed.
In the result, this Criminal Appeal is dismissed. The Judgment of the
learned Judicial Magistrate-I, Erode in C.C.No.36 of 2009, dated 25.04.2016, is
confirmed.
17.04.2025
dh
Index: Yes/No
Internet: Yes/No
Speaking Order/Non-speaking Order
To
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1.The Judicial Magistrate - I,
Erode.
2.The Section Officer,
Criminal Section,
High Court Madras.
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SATHI KUMAR SUKUMARA KURUP, J
dh
Judgment made in
17.04.2025
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