M/s. Lanco Kondapalli Power Pvt. Ltd., vs. DCIT, Circle-16(1),

: 3 : cash and after the stipulated period of three months, the accused in order to discharge her debt and legal liability issued a post dated cheque bearing No.664310 dated 20.09.2007 drawn on Canara Bank, Mahalakshmi Layout Branch, Bangalore for a sum of Rs.5,00,000/-. As per the instructions of the accused, complainant presented the cheque for encashment with his banker on 21.09.2007. The same came to be dishonoured on account of insufficient funds by an endorsement dated 4.10.2007. The complainant intimated the accused about the same by issuing legal notice dated 30.10.2007 through RPAD and UCP. The same were served on the accused on 2.11.2007. Despite of service of legal notice, the accused failed to make payment towards the dishonour of the cheque and thereby committed the offence punishable under Section 138 of N.I.Act. 3. Subsequently, the Trial court took cognizance of the offence and issued summons to the accused. After service of summons, accused appeared through his counsel and there afterwards plea of the accused under

: 4 : Section 138 of N.I. Act was recorded. Accused pleaded not guilty and claimed to be tried. 4. Subsequently, in order to substantiate her contentions, the complainant examined herself as PW.1 and got marked nine documents as per Ex.P1 to P9. Subsequent to closure of the evidence of complainant, the accused was examined under Section 313 of Cr.P.C. wherein she denied the entire case of the complainant and in support her defence she examined herself as DW.1 and got marked four documents as Ex.D1 to Ex.D4. Subsequently, the Trial Court, on hearing the arguments advanced by the learned counsel for both the parties, and on appreciating the entire evidence on record and by assigning reasons, acquitted the accused for the offence punishable under Section 138 of N.I.Act. It is this acquittal judgment which is called in question in the present appeal urging various grounds. 5. Heard the arguments advanced by the learned counsel for the appellant/complainant and learned counsel for the respondent/accused in this appeal.

: 5 : 6. Learned counsel for the appellant/complainant during the course of his arguments contends that Trial Court was not proper in acquitting the accused without proper appreciation of the facts and records; the Trial Court has misread the facts and the deposition of the appellant and it has not relied on the documentary and oral evidence adduced by the appellant; the Trial Court by relying on a diary as per Ex.D4 which is created, concocted document and the signature of the complainant which has been forged, has passed the impugned order of acquittal. He further contends that the respondent /accused had undertaken and promised to return the entire loan amount along with bank interest at the rate of 12% p.a. which was also not paid and the matter was dodged by one or the other reason. The respondent/accused has manipulated the records and adopted a false method to deny the transactions between complainant and accused. Ex.D4 the diary is in single hand writing prepared at the advice of the teamed group of respondent after issue of notice by the appellant. He further submits that the Trial court has not given any

: 6 : specific findings for passing the acquittal order in favour of the accused. He further submits that prima facie the accused/respondent has committed an offence under the N.I. Act and intentionally cheated the appellant which the Trial Court has failed to appreciate and simply passed an order of the acquittal. 7. In support of his arguments, learned counsel for the appellant/complainant placed reliance on a decision of Hon’ble Supreme Court in Crl.A.No.1020 of 2010 between Rangappa vs. Sri Mohan. He contends that presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. He contends that the impugned observations in Krishna Janardhan Bhat case was overruled by the Supreme Court. It is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of ‘preponderance of probabilities’. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or

: 7 : liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of her own. He further contends that the court below has failed to appreciate the evidence on record in proper perspective. The finding given by the Court below is perverse and hence the judgment and order is not sustainable in law and sought for setting aside the same. 8. Per contra, learned counsel for the respondent/accused contends that accused had borrowed a sum of Rs.75,000/- in the year 2003 which was later completely repaid and inspite of that the complainant has misused the cheque. She specifically has taken the defence that she had issued reply notice to the legal notice issued by the complainant and the same was produced on behalf of complainant. The said legal notice was marked as Ex.D.1 wherein it is clearly stated with regard to payment of Rs. 75,000/- in detail and also the blank cheque drawn on Canara Bank, Mahalakshmipuram

: 8 : Branch along with four NSC Certificates as well as blank promissory note and consideration receipt executed by the husband of the accused. The accused in her evidence has denied the transaction alleged by the complaint in the first week of January 2007 for having borrowed Rs. 5,00,000/. It is her specific contention that during 2003 she had received 75,000/- from the complainant which was repaid in three installments. Later it was completely repaid on which time, the complainant had made an endorsement in a notebook for acknowledging the money received. Whenever the accused demanded to return all the documents as well as the cheque, complainant used to say it was misplaced and it will be returned when it is traced. Later the accused came to know that cheques and documents were misplaced at the hands of the complainant and she had not taken any action nor intimated her banker for stopping of the payment. In this regard a memo along with documents were produced on behalf of the complainant as well as the accused wherein the complainant has produced her salary certificate and income tax details. Accused had produced bank pass

: 9 : book to show that numbers in the very same cheque book to which Ex.P.1 belongs was used in the year 2003. But these documents were not marked. It was specifically contended that the amount borrowed was completely repaid in the year 2003 itself. The complainant has misused the cheque by filling it herself. On these grounds, learned counsel for the respondent/accused contends that the court below was right in acquitting the accused for the offence punishable under Section 138 of N.I. Act and there is no merit in the appeal filed by the complainant, hence sought for dismissal of appeal. 9. On perusal of the oral and documentary evidence, it is the case of the PW.1 - complainant that accused being well known to her had approached a hand loan of Rs.5,00,000/- to meet her legal liabilities and the complainant had advanced said amount in the month of April 2007 and the accused had agreed to repay the same within three months. The accused had issued a cheque dated 20.09.2007 for a sum of Rs.5,00,000/- which came to be dishonoured through an endorsement dated

: 10 : 4.10.2007 for insufficient funds. The accused failed to make payment despite service of legal notice. But it is the specific case of the accused that she had borrowed money from the complainant, but it was in the year 2003 and the amount was Rs.75,000/-. This amount was completely repaid in the year 2003 itself. The accused had received Ex.P.1 cheque from her as security, though the said amount has been entirely repaid. Complainant has mis- used the cheque by filling it herself. The same contention was taken by the accused in the reply to the notice issued which was marked as Ex.D1. The complainant has not denied the version of the accused nor the facts narrated therein. To substantiate her contention, accused had produced a diary in which an endorsement is said to have been made by the complainant for acknowledging the payment of Rs.75,000/-. The dairy in which the endorsement is made is also of the year 2003. The court below had even compared the signature of the complainant in her deposition as well as vakalath and the complaint which very much tally with the hand writing in Ex.D4 and D5. Even the passbook of the accused was also

: 11 : produced to make out that the cheque bearing number immediately previous to that of cheque number in Ex.P.1 are used in the year 2007 as she had not maintained fresh balance in her bank account after 2005. 10. The counsel on behalf of the accused had relied on decisions reported in 2008 Criminal Law Journal 1172 and also ILR 2008 Karnataka 172 and 2008(4) KCCR 2477. The Trial Court referring to the above decisions held that the burden is on the complainant to prove her case. As on the date of issuance of the cheque, there existed enforceable debt and the accused was liable to pay Rs.5,00,000/-. She also had produced the tax return statement and her salary certificate which was not marked. In the year 2007 her consolidated salary was Rs.1,20,000/- and she claims that she was earning by giving private tuitions. The Trial Court also observed that there was no document to show that as on the date and time of advancing the loan, she had Rs.3,00,000/- in her hand. The complainant had stated that the remaining amount of Rs.2,00,000/- was borrowed by her friends,

: 12 : but she had not opted to examine any of such person who had advanced her money of Rs.2,00,000/-. But in her cross examination she states that she did not know what work accused deals with. She had no source of income either through occupation or through any landed property. Inspite of that without knowing the refundable capacity of the accused, the complainant had advanced huge amount of Rs.5,00,000/-. 11. It is also relevant to note that Ex.P.4 and Ex.P.5 makes out that complainant had acknowledged the debt for Rs.75,000/- which issue gave raise to a doubt whether there was any transaction in the year 2007 as contended by the complainant. Even the cheque leaves with the cheque numbers bearing serial numbers prior to that of Ex.P.1 was used in the year 2003 itself. This aspect of the matter leads to a doubt in believing the version of the complainant. In so far as the oral evidence is concerned, the complainant had failed to make out that she had the capacity of advancing huge loan of Rs.5,00,000/- to the accused in the year 2007 and also

: 13 : the refundable capacity of the accused. A cursory glance of the entire evidence of PW.1 indicates that the complainant was not in a financial position to lend huge amount of Rs.5,00,000/- to the accused even without knowing the refundable capacity of the accused. 12. The court below was right in holding that unless the above facts are proved, presumption cannot be drawn under Section 139 of the N.I.Act. The accused had rebutted the presumption under Section 139 of NI Act in respect of the existence of legally enforceable debt by placing sufficient evidence. The Court below has rightly held that complainant has failed to prove the guilt of the accused beyond all reasonable doubt and the accused clearly established the case stating that Ex.P1, cheque has been misused by the complainant. 13. In so far as bouncing of cheques relating to initiation of the proceedings as under Section 200 Cr.P.C. punishable under Section 138 of NI Act that the limitation point is to be taken into consideration and so also the contention urged by the complainant. In the instant case,

: 14 : as rightly held by the court below, complainant had failed to prove that the cheque Ex.P1 had been issued towards the discharge of legally enforceable debt. The Trial Court also keeping in view the position of law, rightly held that the materials made available on record were not sufficient to conclude that the accused has committed the offence punishable under Section 138 of the NI Act. The respondent/accused has clearly established her case as per law stating that Ex.P1 has been misused by the complainant and the complainant has failed to bring home the guilt of the accused. The said finding of the Trial court in the facts and circumstances of this case is just and proper and there is no need for this court to interfere with the said finding. 14. For the above reasons, I find that there is no perversity or infirmity in the judgment of acquittal rendered by the Trial Court. Hence, I am of the opinion that there is no necessity to revisit the impugned judgment. As the appeal is devoid of merits, the same is dismissed. As a consequence, the judgment of acquittal

: 15 : dated 18.2.2010 passed by the XIII Addl.CMM, Bangalore, in C.C.No.642/2008 acquitting the respondent/accused for the offence punishable under section 138 of N.I.Act is hereby confirmed.

Sd/- JUDGE

DKB