COMMISSIONER OF INCOME vs. M/S PRASAD TECHNOLOGY

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CRL.A.No.496 of 2013 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF FEBRUARY, 2024 BEFORE THE HON'BLE MR JUSTICE ANIL B KATTI CRIMINAL APPEAL No.496 OF 2013 (A) BETWEEN: JOHN KENNADY S/O.PONNUSWAMY, 40 YEARS, NO.36, 1ST MAIN ROAD, MUNIREDDU LAYOUT, HORAMAVU, BANGALORE-43. …APPELLANT (BY SRI. B.RAVINDRA, ADVOCATE) AND: K.NARASIMHA S/O. KANNAN, NO.E 4 P 73, ANNAELLAM, B.NO.3RD STREET ULSOOR, BANGALORE-560 008 …RESPONDENT (BY SRI. S.S.KOTI, ADVOCATE)

THIS APPEAL FILED UNDER SECTION 378(4) CR.P.C, PRAYING TO SET ASIDE THE ORDER DATED 9.4.2013 PASSED BY THE 17TH ADDL. SMALL CAUSED COURT AND 25TH ADDL. C.M.M., MAYO HALL, BANGALORE IN C.C.NO.27270/10- ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT.

THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 29.01.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:

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CRL.A.No.496 of 2013 JUDGMENT

Appellant/complainant feeling aggrieved by judgment of Trial Court on the file of XVII Addl.Small Causes Court and XXV ACMM, Mayohall, Bengaluru in C.C.No.27270/2010, dated 09.04.2013 preferred this appeal.

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CRL.A.No.496 of 2013 5. On careful perusal of oral and documentary evidence placed on record, it would go to show that complainant and accused are friends and known to each other for several years. In the month of August 2008 accused for his business purpose availed loan of Rs.2,00,000/- from complainant. Complainant has given the said money by withdrawing Rs.1,20,000/- from Karuru Vysya bank Ltd., where he maintained account and arranged Rs.80,000/-, thus in all paid Rs.2,00,000/- as demanded by accused. Accused again in the month of September 2008 sought for financial assistance of Rs.3,00,000/- from complainant to meet his urgent needs. Complainant by withdrawing money from Karuru Vysya Bank Ltd. and Canara Bank on different dates gave Rs.3,00,000/-. Accused has agreed to pay the interest with the rate of bank interest and return the principal amount as soon as possible. Accused in order to discharge legally enforceable debt issued cheque bearing No.684981 dated 29.05.2009 for Rs.5,00,000/-, drawn on Vijaya Bank Ulsoor branch, Bengaluru Ex.P.1. Complainant presented the said cheque on 29.05.2009 through Canara bank,

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CRL.A.No.496 of 2013 Indiranagara branch and the same was dishonoured as “Insufficient funds” vide bank endorsement Ex.P.2. Complainant issued demand notice dated 27.06.2009 through RPAD Ex.P.3, the postal receipt is produced at Ex.P.4 and UCP receipt Ex.P.5. Undelivered RPAD cover is produced at Ex.P.6 with the endorsement that “Not claimed”. Complainant has produced bank account statement Ex.P.7. Accused has not replied to the demand notice nor paid the amount covered under the cheque. Therefore, complainant filed the complaint on 13.08.2009. If the above referred documents are perused and appreciated with the evidence of PW.1, then it would go to show that complainant has complied all the necessary legal requirements in terms of Section 138(a) to (c) of Negotiable Instruments, Act, 1881 (hereinafter for brevity referred to as “N.I.Act”). Thereafter, complainant has filed complaint within a period of one month on 13.08.2009 from the date of accrual of cause of action in terms of Section 142(1)(b) of N.I.Act. Therefore, statutory presumption in terms of Section 118 and 139 of N.I.Act will have to be drawn in favour of complainant.

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CRL.A.No.496 of 2013 6. In this context of the matter, it is useful to refer the judgment of Hon'ble Apex Court in APS Forex Services Pvt. Ltd. Vs. Shakti International Fashion Linkers and others reported in AIR 2020 SC 945, wherein it has been observed and held that once the issuance of cheque with signature on cheque is admitted, there is always a presumption in favour of complainant that there exist legally enforceable debt or liability. Plea by accused that cheque was given by view of security and same has been misused by complainant is not tenable. 7. It is also profitable to refer another judgment of Hon'ble Apex Court in P. Rasiya vs. Abdul Nazer and another reported in 2022 SCC OnLine SC 1131, wherein it has been observed and held that:- " Once the initial burden is discharged by the complainant that the cheque was issued by the accused and signature of accused on the cheque is not disputed, then in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for discharge of any debt or other liability. The presumption under Section 139 of N.I. Act is statutory

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CRL.A.No.496 of 2013 presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the complainant/holder of the cheque, in that case it is for the accused to prove the contrary." In view of the principles enunciated in the aforementioned two judgments of Hon'ble Apex Court, it is evident that when once issuance of cheque with signature of accused on the account maintained by him is either admitted or proved then statutory presumption in terms of Section 118 and 139 of N.I. Act will have to be drawn. Now, it is up to the accused to place rebuttal evidence to displace the statutory presumption available in favour of the complainant. 8. It is the defence of accused that from 2005 to 2008 complainant and accused were doing real estate business and due to difference of opinion, the said business was stopped. Accused had given Rs.5,00,000/- cheque as a security. Accused demanded to return the cheque given as security, but complainant stated that the

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CRL.A.No.496 of 2013 same is misplaced and by misusing the said cheque has filed the present complaint. Accused to probabilise the said defence has not lead any evidence, but choose to rely on the evidence of PW.1 and the documents relied by complainant. 9. In this context of the matter, it is useful to refer the judgment of Hon'ble Apex Court in Basalingappa Vs. Mudibasappa reported in 2019 Cr.R. page No. 639 (SC), wherein it has been observed and held that: "Presumption under Section 139 is rebuttable presumption and onus is on accused to raise probable defence. Standard of proof for rebutting presumption is that of preponderance of probabilities. To rebut presumption, it is open for accused to rely on evidence laid by him or accused can also rely on materials submitted by complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from materials brought on record by parties, but also by reference to circumstances upon which they rely. It is not necessary for accused to come in witness box in support of his defence.

Section 139 imposed an

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CRL.A.No.496 of 2013 evidentiary burden and not a presumptive burden". 10. The Hon'ble Apex Court in it’s latest judgment in Rajesh Jain v/s Ajay Singh reported in 2023 SCC OnLine SC 1275, wherein it has been observed and held that, once issuance of cheque with signature of accused is either admitted or proved then, statutory presumption will have to be drawn in favour of the complainant. In view of the principles enunciated in both the aforementioned judgment, it is evident that the accused to probabilise his defence can rely on his own evidence or also can rely on material submitted by complainant. It is not necessary for the accused to step into witness box to probabilise his defence. 11. It is now up to the accused to probabilise aforementioned defence to displace the statutory presumption available in favour of complainant. Accused relied on the cross-examination of PW.1 and the documents produced by complainant to probabilise his

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CRL.A.No.496 of 2013 defence. Whether the said material evidence placed on record by accused is sufficient rebuttal evidence to displace the statutory presumption available in favour of complainant or not has to be decided. 12. Learned counsel for accused has argued that complaint is not filed within a period of 30 days from the date of accrual of cause of action in terms of Section 142(1)(b) of N.I.Act. In support of such contention reliance is placed on the judgment of Hon’ble Bombay High Court in M/s. Airsonic Travels Pvt. Ltd. Vs. Prem Motiram Jhangiani and Another reported in AIR 2011 (NOC) 267 (BOM.). On going through the records and evidence of PW.1, it would go to show that intimation of dishonour of cheque was given on 30.05.2009 Ex.P.2. In terms of Section 138(b) of N.I.Act demand notice is issued on 27.06.2009 Ex.P.3. The demand notice sent through RPAD returned as “Not claimed” as per the postal seal on 30.06.2009. The cause of action to file the complaint accrues to the complainant on 01.07.2009. In terms of Section 138(c) of N.I.Act 15 days time has to be

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CRL.A.No.496 of 2013 granted. The period of 15 days will come to an end on 15.07.2009. Complainant in terms of Section 142(1)(b) has to file the complaint within a period of one month from the date of accrual of cause of action in terms of Section 138(c) of N.I.Act. The cause of action to file the complaint will commence from 16.07.2009 and the complaint is filed on 13.08.2009 well within a period of one month from the date of accrual of cause of action in terms of Section 138(c) of N.I.Act. Therefore, in view of the said material evidence on record the contention of learned counsel for accused that complaint was not filed within one month cannot be legal sustained. 13. On careful perusal of the evidence of PW.1 and the bank statement Ex.P.7, it would go to show that complainant has withdrawn money from his bank account and also as per his oral evidence the remaining amount he has arranged by cash out of his savings and thus paid an amount of Rs.5,00,000/- to the accused. Accused in order to discharge the said legally enforceable debt has issued cheque in question Ex.P.1. The Trial Court has recorded

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CRL.A.No.496 of 2013 findings that there are no any documents to show that the money withdrawn from the bank account was paid to the accused, secondly there is

inconsistent evidence regarding the payment of money as to where it was paid, thirdly income tax returns have not been filed to show that loan transaction is recorded in the income tax returns and lastly without there being any supportive documents the claim of complainant that he has advanced loan of Rs.5,00,000/- covered under cheque Ex.P.1 and for lawful discharge of said debt accused has issued the cheque in question Ex.P.1. On these grounds the Trial Court has acquitted the accused. 14. The issuance of cheque Ex.P.1 with his signature on the account maintained by the accused is not disputed. Therefore, in terms of Section 118(a) of N.I.Act that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. The Court will have to presume the passing

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CRL.A.No.496 of 2013 of consideration. It is for the accused to prove by evidence on record that no consideration has been passed under Ex.P.1 and the cheque at Ex.P.1 was not issued for lawful discharge of debt. 15. It has been elicited in the cross-examination of PW.1 that complainant is an income tax assessee and he has shown the loan given to accused in income tax returns filed in the year 2008-09. Accused has not challenged the financial capacity of the complainant to lend money to accused covered under cheque Ex.P.1. If the entire cross- examination of PW.1 is appreciated, then there is nothing to show that cheque was not issued for lawful discharge of debt. The mere denial suggestion put to PW.1 regarding the misusing of cheque Ex.P.1 cannot be said as sufficient rebuttal evidence to displace the statutory presumption available in favour of complainant. It is for the accused to prove the requisite circumstances during the cross- examination of PW.1 or to place his own evidence to substantiate his defence of misusing his cheque given to complainant. There are no any circumstances brought on record in the cross-examination of PW.1 that earlier

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CRL.A.No.496 of 2013 complainant and accused were doing real estate business and accused has given cheque Ex.P.1 as a security. According to accused in his written submission while recording 313 Cr.P.C. statement that the real estate business was closed in the year 2008 itself. However, till the date of cross-examination of PW.1 accused has not taken any steps to secure cheque of Rs.5,00,000/- given to complainant as a security for the real estate business. Accused has also not issued any notice to complainant regarding withholding of his cheque Ex.P.1 given as security for doing real estate business. It is only for the first time during the course of cross-examination of PW.1 accused tried to make out the case that he has issued cheque Ex.P.1 for Rs.5,00,000/- as a security for the real estate business which was carried out by complainant and accused. However, the said defence is not supported by any other evidence on record nor any circumstances have been brought on record, so as to prove that how the complainant came in possession of the cheque Ex.P.1.

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CRL.A.No.496 of 2013 16. Learned counsel for accused relied on the judgment of Hon’ble Punjab and Haryana High Court in Suresh Vs. Narender Gautam, CRM-A-492-MA of 2012 (O & M) in the said decision it was found that there was nothing on record to show that applicant has advanced the amount in question to the respondent. Reliance is also placed on Co-ordinate Bench judgment of this Court in B.Girish Vs. Ramaiah reported in AIR 2011 (NOC) 422(KAR.), in the said case complainant claimed that he borrowed the money and lend to accused. However, no documents were produced. Therefore, in the absence of oral and documentary evidence from complainant, it was held that presumption under Section 118 and 139 stood rebutted. 17. Learned counsel for accused in order to substantiate his contention that there was no service of demand notice relied on the judgment of Hon’ble Madras High Court in K.Rajamanickam Vs. P.Arumugam, reported in AIR 2011 (NOC) 271 (MAD.), in the present case accused has not disputed the correctness of

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CRL.A.No.496 of 2013 his address shown in the cause title of the complaint and for the said address demand notice is issued to the accused. In view of Section 27 of General Clauses Act, 1897 when the notice is addressed to correct address of accused and accused did not claim the notice, then it will have to be held that there is deemed service of notice. In this context of the matter, it is useful to refer the judgment of Hon'ble Apex Court in C C Alavi Haji vs. Palapatti Muhammed and Another reported in (2007) 6 SCC 555 wherein it has been observed and held in para 13 and 14 as under : "13. According to Section 114 of the Act, read with Illustration (f) thereunder, when it appears to the court that the common course of business renders it probable that a thing would happen, the court may draw presumption that the thing would have happened, unless there are circumstances in a particular case to show that the common course of business was not followed. Thus, Section 114 enables the court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events,

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CRL.A.No.496 of 2013 human conduct and public and private business in their relation to the facts of the particular case. Consequently, the court can presume that the common course of business has been followed in particular cases. When applied to communications sent by post, Section 114 enables the court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. But the presumption that is raised under Section 27 of the GC Act is a far stronger presumption. Further, while Section 114 of the Evidence Act refers to a general presumption, Section 27 refers to a specific presumption. For the sake of ready reference, Section 27 of the GC Act is extracted below: "27. Meaning of service by post.- Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression 'serve' or either of the expression 'give' or 'send' or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by

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CRL.A.No.496 of 2013 properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post." 14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed. (Vide Jagadish Singh v. Natthu

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CRL.A.No.496 of 2013 Singh; State of M.P. v. Hiralal and V.Raja Kumari v. P.Subbarama Naidu). It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved." Therefore, in view of the principles enunciated in this judgment of Hon'ble Apex Court, the contention of accused that demand notice is not duly served to him cannot be legally sustained. 18. Learned counsel for accused also relied on the Co-ordinate Bench judgment of this Court in Shivanand Vs. Aravind Narayan Kulkarni reported in 2017(4) AKR 82, to substantiate his contention that there is material alteration in the cheque and penal action in terms of Section 138 of N.I.Act cannot be sustained. In the present case on going through the cheque Ex.P.1 produced by complainant, it would go to show that there are no any material alterations in the cheque. Therefore, the said

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CRL.A.No.496 of 2013 decision has no application to the facts of the present case.

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CRL.A.No.496 of 2013 involved in the said case it was held that complainant has failed to plead and prove the liability of accused to pay the amount covered under the cheque. 21. In the present case complainant has pleaded that accused has taken hand loan for his business. The bank statement Ex.P.7 produced by complainant also substantiate the evidence of PW.1. Learned counsel for accused lastly relied on the Co-ordinate Bench judgment of this Court in S.Timmappa Vs. L.S.Prakash reported in 2010 CRI.L.J. 3386. In view of the facts involved in the said case, it was found that no consideration has passed under the cheque on 06.03.1995 and even according to the complainant, the loan was advanced on 06.01.1995. Therefore, presumption under clause (a) of Section 118 of the Act stood rebutted. In the present case the said factual aspects of the matter are not involved and hence the said decision has no application to the facts of the present case.

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CRL.A.No.496 of 2013 accepted as a sufficient rebuttal evidence to displace the statutory presumption available in favour of complainant. When once the rebuttal evidence placed on record by accused in support of his defence is held to be not sustainable, then the statutory presumption available in favour of complainant in term of Section 118 and 139 of N.I.Act continues to operate. The complainant by virtue of evidence on record has proved that accused has issued cheque in question for lawful discharge of debt Ex.P.1 and the same was dishonoured on it’s presentation for want of sufficient fund in the account of accused. Thus, complainant has proved that accused has committed an offence under Section 138 of N.I.Act. 23. The question now remains is regarding imposition of sentence. Indisputably, complainant and accused are friends and on account of such relation, complainant has advanced loan to accused and the transaction does not involve any commercial transaction. The Court will have to take into consideration the nature of transaction, material evidence placed on record and

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CRL.A.No.496 of 2013 attending circumstances while imposing the sentence. If the said aspect are kept in mind and the evidence on record are appreciated, then if the accused is sentenced to pay a fine of Rs.5,10,000/- and in default of payment of fine shall undergo simple imprisonment for 6 months is ordered will the ends of justice. Consequently proceed to pass the following: ORDER

Appeal filed by appellant/complainant is hereby allowed.

The judgment of the Trial Court on the file of XVII Addl.Small Causes Court and XXV ACMM, Mayohall, division, Bengaluru in C.C.No.27270/2010, dated 09.04.2013 is hereby set aside.

Accused is convicted for the offence punishable under Section 138 of N.I.Act and sentenced to pay a fine of Rs.5,10,000/- and in default of payment of fine shall undergo simple imprisonment for 6 months.

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CRL.A.No.496 of 2013 In view of exercise of power under Section 357 of Cr.P.C. out of the fine amount Rs.5,00,000/- is ordered to be given to the complainant as compensation and remaining Rs.10,000/- is ordered to be defrayed as prosecution expenses.

Registry to send back the records to Trial Court with a copy of this order. Sd/- JUDGE GSR List No.: 1 Sl No.: 5