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CRL.A No. 386 of 2017
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF MARCH, 2023 BEFORE THE HON'BLE MR. JUSTICE P.N.DESAI CRIMINAL APPEAL NO. 386 OF 2017 BETWEEN: SRI. KEVAL CHAND JAIN S/O. BADARMAL PROPRIETOR, M/S. KEVAL PLASTIC AGED ABOUT 54 YEARS SHOP NO.4, M.J. MARKET NO.6, GUNDOPANTH STREET, BANGALROE – 02. …APPELLANT (BY SRI. A.P.PULAKESHI, ADVOCATE)
AND:
SRI. DESA RAM M/S. VISHNU POLY PACK NO.16/4, PARVATHAMMA BUIDLING KUMBARPET MAIN ROAD BANGALORE – 560 002. …RESPONDENT (BY SRI. KARTHIK SHANKARAPPA FOR SRI. K.VENKATARAMANA, ADVOCATE)
THIS CRL.A. FILED U/S.378(4) CR.P.C PRAYING TO SET ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL AGAINST ACCUSED/RESPONDENT PASSED BY THE XXI ADDL. CHIEF METROPOLITAN MAGISTRATE AT BANGALORE IN C.C.NO.23594/2014 DATED 13.07.2016 AND CONVICT THE ACCUSED/RESPONDENT FOR THE OFFENCES PUNISHABLE U/S 138 OF NEGOTIABLE INSTRUMENTS ACT BY ALLOWING THIS APPEAL AND ETC.,
THIS APPEAL, COMING ON FOR FURTHER DICTATION, THIS DAY, THE COURT DELIVERED THE FOLLOWING:
Digitally signed by NAGARATHNA M Location: HIGH COURT OF KARNATAKA
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JUDGMENT
This appeal arises out of the judgment of acquittal passed by the learned XXI Additional Chief Metropolitan Magistrate, Bengaluru (for short hereinafter referred to as 'ACMM') in C.C No.23594/2014 dated 13.07.2016, whereby the respondent/accused was acquitted of the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (for short (N.I. Act').
Brief case of the appellant/complainant before the Trial Court is that the complainant and accused are friends. The accused approached the complainant in the last week of January, 2014 seeking hand loan to the tune of Rs.7,00,000/- to meet his immediate business needs and necessity and agreed to repay the same within two months. Accordingly, the complainant paid a sum of Rs.7,00,000/- by cash to the accused on 01.02.2014, but after two months, he did not repay the amount borrowed. When the complainant approached the accused and demanded to repay the said amount, for which, the accused issued post dated cheque bearing No.642483 dated 20.04.2014 for a sum of Rs.7,00,000/- drawn on Central Bank of India,
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Bengaluru. Thereafter, the complainant had presented the cheque for realization but the same was returned with endorsement ‘funds insufficient’. The complainant got issued legal notice on 31.07.2014 calling upon the accused to pay the cheque amount. Though the notice was served upon the accused, he has not replied nor paid the cheque amount. Hence, he filed a private complaint under Section 200 Cr.P.C for the offence punishable under Section 138 of N.I Act.
Before the Trial Court, the complainant got examined himself as P.W.1 and got marked nine documents as Exs.P1 to P9. In support of the defence, the accused got examined himself as D.W.1 and got marked three documents as Exs.D1 to D3. After hearing both sides, the learned ACMM acquitted the accused. Aggrieved by the same, the complainant has filed this appeal.
Heard Sri. A.P.Pulakeshi, learned counsel for appellant and Sri.Karthik Shankar, learned counsel appearing on behalf of Sri.K.Venkataramana, learned counsel for respondent.
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Learned counsel for the appellant argued that the findings of the Trial Court is perverse and illegal. The accused has admitted the cheque and also the signature but the Trial Court has failed to consider this aspect. The accused has stated that he is liable to pay a sum of Rs.5,92,000/- to the complainant, but Ex.D3(a) shows that cheque is for Rs.7,00,000/- in favour of the complainant. The accused has stated that he is running chit fund business for 14 months and each members has to pay every month Rs.50,000/- each i.e. for Rs.7,00,000/. The accused has also not proved the running of chit fund business. In the notice issued by the complainant, it is mentioned that the complainant is the proprietor of M/s.Keval Plastics, the same is not denied by the accused. The cheque was also issued in favour of M/s.Keval Plastics. The Trial Court has wrongly come to a conclusion that the complainant had no business with the accused which is illegal. The findings of the Trial Court that the complainant has no capacity to pay Rs.7,00,000/- is also illegal. On the other hand, the accused has no licence to conduct the chit business. The Trial Court ignoring the same has acquitted the accused.
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The findings of the Trial Court regarding income tax returns are not properly appreciated. The income tax returns for the year 2014-2015 discloses the details of loan of Rs.7,00,000/-. Inspite of this, the Trial Court ignoring the factual aspect of the matter has acquitted the accused. Ex.D3(a) record clearly shows that he is liable to pay a sum of Rs.7,00,000/-. When the accused once admits issuance of cheque and signature then the presumption arises in favour of the complainant under Section 139 of N.I Act, the same is not rebutted by the accused. The complainant has produced nine documents and positive evidence is lead. The findings of the Trial Court that accused has exclusively rebutted the presumption, has no basis. Therefore, the learned counsel for the appellant argued that the judgment of acquittal needs to be set aside and prays to convict the accused.
Learned counsel for the respondent argued that the Trial Court has rightly come to a conclusion that the complainant has failed to prove the transaction and has rightly acquitted the accused. The accused was doing a chit fund business since 2012. The complainant has subscribed
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two chits in the name of M/s.Keval Plastics and M/s.Marvel Cards. Since subscribers of the chit did not pay the amount regularly, the accused stopped the chit fund business after 14 months. The complainant has paid Rs.5,92,000/- each towards the chit in the name of M/s.Keval Plastics and M/s.Marvel Cards. Since the accused had suffered loss due to non payment of amount by the subscribers of the chit, he could not pay the amount to the complainant. Therefore, he issued two cheques to the complainant as security for the payment of the chit amount at the instance of the complainant. The said cheques being misused by the complainant and Sri.Mahendra Kumar Jain who is the proprietor of M/s.Marvel Cards have filed false cases against the accused. Both the cases were filed on the same day, same amount and cheques were also deposited on the same day and the handwriting in both the cheques were also same. That itself shows that the complainant by misusing the cheques falsely filed these cases.
The learned counsel argued that the contention of the complainant and defence of the accused are same. When the complainant has lent the amount and from where
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he has lent the said huge amount of Rs.7,00,000/- is also not forthcoming. Therefore, the Trial Court came to a conclusion that the complainant has failed to prove his financial capacity and lending of the said amount. The Trial Court relying upon the decision of this Court in the case of B.GIRISH v. S.RAMAIAH reported in 2010(2) KLJ 284 has come to a right conclusion that the complainant has failed to prove the initial burden. The income tax returns at Ex.P7 also does not show this amount. The gross income of the complainant is only shown as Rs.6,40,447/-. There is no disclosure of Rs.7,00,000/-. Therefore, that itself shows the financial incapacity of the complainant to pay such a huge amount. The accused has produced in his defence the note book-Ex.D1 wherein there is a note regarding payment of chit amount, transaction of chit and name of the person who subscribed the chit. The name of M/s.Keval Plastics and M/s.Marvel cards is also found in the said document. Ex.D3 also shows that he has issued two cheques.
Learned counsel for the respondent argued that in view of oral evidence and documentary evidence at Exs.D1 to D3, coupled with cross-examination of D.W.1, the
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accused has successfully rebutted the presumption, if any, in favour of the complainant, therefore the Trial Court has rightly acquitted the accused.
In support of his arguments, he relied upon the decision of this Court in the case of MOHD.IMTIYAZ AHMED KHAN v. MOHD.AZMAT in Criminal Appeal No.3536/2013 disposed of on 21.12.2020 at paragraph No.28 it is held as under:
”28. The Hon'ble Supreme Court in the case of John K. John vs. Tom Verghees & another reported in AIR 2008 SC 278 held that the presumption under Section 139 could be raised in respect of some consideration and burden is on the complainant to show that he had paid amount shown in the cheque, whenever there is huge amount shown in the cheque. Though the initial burden is on the accused, it is equally necessary to know how the complainant advanced such a huge amount. The Hon'ble Supreme Court in latest decision Uttam Ram case referred supra and in case of Don Ayengia vs. State of Assam and another reported in (2016) 3 SCC 1 elaborated the presumption with reference to earlier decision rendered by Hon'ble Supreme Court.”
With these arguments, learned counsel for the respondent prays to dismiss the appeal.
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I have perused the written complaint and evidence on record.
The appellant in his examination-in-chief has stated that the complainant and the accused were friends for more than a decade and it is stated that in order to meet an immediate business necessity, the accused borrowed a loan of Rs.7,00,000/- in February 2014 and in April, 2014 accused issued post dated cheque. In examination-in-chief, the appellant has reiterated the averments of the complaint. He further stated that when the cheque was returned with a Bank endorsement of "funds insufficient", he issued a legal notice to the accused through RPAD. As per postal net tracking, though it was served, the respondent neither repaid the loan amount nor replied. Hence, he has filed a complaint.
In order to substantiate his statement, he has produced the document at Ex.P.1-Cheque which
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was issued in the name of Keval Plastic. The accused signed the cheque as "for Vishnu Poly Pack", which is an authorized signature. Ex.P.2 is the Bank endorsement, which shows that the cheque was returned for insufficient funds. Ex.P.3 is the legal notice wherein the complainant has stated that he is the proprietor of M/s. Keval Plastic. For business needs and necessity, the accused borrowed a loan of Rs.7,00,000/- on 01.02.2014. Ex.P.4 is the postal acknowledgment, Ex.P.5 is the letter written to the post master seeking delivery report of article sent through RPAD. Ex.P.6 is the reply given by the Department of Posts, Customer Care Centre to Ex.P.5 stating that the said article i.e., RPAD was delivered to the address on 01.08.2014. These documents were filed along with the complaint. Subsequently, he has also filed the income tax returns, Balance Sheet and Profit and Loss Account statement of M/s. Keval Plastics for 31.03.2014.
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These documents prima-facie shows that the complainant has complied the ingredients of Section 138 of Negotiable Instruments Act, 1881. Further, Presumption under Sections 118 and 139 of N.I. Act is in favour of the holder of cheque. It shall be presumed, unless the contrary is proved that the holder of a cheque received the cheque for discharge in whole or in part, of any debt or other liability. Once the initial burden is discharged by the complainant that the accused has received the amount and that the same is not disputed by the accused, in that case, the onus will shift upon the accused to prove contrary that the cheque issued was not for any debt or liability. The presumption under Sections 118 and 139 of N.I. Act is a statutory presumption and once the initial burden is discharged, then it is for the accused to prove the contrary. The accused can rebut the said presumption either by way of cross-examining the complainant or by way of defence evidence. The proof of rebuttal evidence by the accused is not like proof beyond all reasonable
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doubt as in the criminal cases, but it is based on preponderance of probabilities. The accused can probabilize his defence by any of the modes or by both modes i.e., by way of cross-examining the complainant or by way of defence evidence.
In the light of these principles, I have considered the cross-examination of P.W.1 particularly the observations made by the Trial Court. In the cross- examination, the complainant stated that he was doing plastic bag business, viz., M/s. Kavel Plastics at M.G. Road. He has stated that there is a business transaction about Rs.30,000/ - Rs.35,000/- every day. He has also stated that every day he maintains accounts and he has no difficulty to produce the said accounts before the Court. He stated that the accused is doing wholesale business of selling plastic carry bags. It is also stated that he is not purchasing carry bags from the accused. He has two accounts, one at Syndicate Bank and another at Kotak Mahindra Bank. A suggestion was
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made that the accused was running the chit business for Rs.10,00,000/- and the witness stated that he did not know about the same. He denied the suggestion that he has taken two chits in the name of Keval Plastics and Marvel Cards and there were 20 members in the chit. The complainant denied the suggestion that for the security of the said chit transaction, the accused had issued the cheque and the complainant himself had misused the same. Further, when a question was posed as to whether the complainant had taken any documents from the accused, he answered that since the accused was a friend, he had not taken any documents. 16. It is also admitted that the cheque was issued on behalf of Vishnu Poly Pack. He also deposed that he has not transacted with Vishnu Poly Pack. He denied the suggestion that he has also filed C.C. No.23593/2014 through Mahendra Kumar Jain. He deposed that he is not a member of any chit business. A
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suggestion was made that he has not given any amount to the accused he denied the same. Again, the suggestion was made that for the purpose of security to chit business, the cheque was issued and the same was denied. Nowhere in the cross-examination of P.W.1, the financial capacity of the complainant was questioned and not a single suggestion was made that the complainant had no such capacity to pay the said amount to accused. It is also not denied that the complainant was doing plastic bag business and he had enough turnovers to give the said amount. 17. No such efforts are made by the accused to call for any such accounts maintained by the complainant. He has simply made allegations that he is not ready to produce the accounts before the Court, though the complainant is ready to produce the accounts and no adverse inference has been drawn. In the entire Cross-examination, the financial capacity stated by the complainant i.e., having transaction about
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Rs.30,000/- to 35,000/- per day turn over business is not at all denied by the accused and he has also not denied such business and the income. Only suggestion was made that he was subscriber to the chit and for the purpose of security to the chit fund business, the accused issued the cheque. The cross-examination shows that, the accused admits the issuance of cheque and his signature on cheque. It is also pertinent to note that, no reply was given by the accused to the legal notice by taking such stand. Though the respondent contended that legal notice was not served upon him, the postal documents show that the notice sent to the address of the respondent is delivered and to that effect, RPAD receipt is produced. Added to that, the postal authorities have given a shara which indicates that the said article was delivered. The financial capacity of the complainant was neither questioned in the cross- examination nor by way of giving reply. On the other hand, cross-examination of complainant was financially sound. The complainant has given an explanation that
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they were close friends and no documents were obtained at the time of giving hand loan.
On perusal of the evidence of P.W.1 and the documentary evidence and the defence of the accused coupled with the presumption arising under Sections 118 and 139 of N.I. Act, the complainant has discharged his initial burden. Therefore, there is a statutory presumption in his favour. Now it is to be seen whether the accused has rebutted the presumption by way of defence evidence.
In order to rebut the presumption, the accused himself was examined as D.W.1. In his examination-in-chief, he states that he knows the complainant since four to five years. But he does not know Mahendra Kumar Jain, who filed C.C. No.23593/2014. He states that there were 20 members in the chit fund business. The chit was for a sum of Rs.10,00,000/-. Kavel Chand Jain has taken two chits in the name of Kavel Plastics and Marvel Cards. The period
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of chit was 20 months. The complainant had paid Rs.5,92,000/- each towards the two chits in the name of Keval Plastics and Marvel Cards. Since the persons who had bid the amount failed to repay the amount, he sustained loss and stopped the chit after 14 months. Since the accused could not repay the sum of Rs.5,92,000/- each collected in the name of Keval Plastics and Marvel Cards paid by the complainant, he had issued two cheques for security purpose to Keval Chand Jain. He stated in the cross-examination that he was doing plastic materials business with Kavel Chand Jain, but he has no transaction with Mahendra Kumar Jain. He states that no notice was served on him.
His examination-in-chief shows that he is having business transaction with the complainant. He knew the complainant very well. According to him, he was due for a sum of Rs.5,92,000/- but it is a chit amount not any loan amount borrowed by him from the complainant. But the reason as to why the accused has
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given the said cheque for a sum of Rs.7,00,000/- is not forthcoming. If he is due for Rs.5,92,000/-, then why did the accused give a cheque for a sum of Rs.7,00,000/- and to that effect, he has not offered any explanation in the examination-in-chief. He has produced one note book as Ex.D.1. 21. I have perused the said note book. Nothing is mentioned in the note book and for what purpose and for what transactions it is maintained is not forthcoming. However, Ex.D.1 does not disclose that it is connected to the chit fund and the persons who have paid amount every month has not been specifically mentioned. The book starts from 30.12.2012 i.e., at page No.10, names of 20 persons are mentioned. Below that names, one entry is mentioned as Rs.3,72,000/- and what is this entry is also not forthcoming.
Ex.D.2 is the certified copy of complaint filed by one Mahendra Kumar Jain, who is proprietor of
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Marvel Cards. Ex.D.3 cheque book of M/s. Vishnu Poly pack and Ex.D.3(a) record slip, wherein he has mentioned that on 20.04.2014 he has issued cheque bearing Nos.642483 and 642484 for a sum of Rs.7,00,000/- each in favour of Kavel Plastics and Marvel Cards respectively. Ex.D.3 and Ex.D.3(a) supports the case of the complainant i.e., cheque was issued by the accused for Rs.7,00,000/- which is also admitted and not denied by the accused. The accused has not produced any document to prove his defence.
It appears that the accused has no license to run any chit business. Not a single person who was the subscriber of the said chit was examined to show that the complainant was also the member of the said chit, though the accused has stated that there are about twenty persons who have subscribed for the said chit transaction. Ex.D1 - note book will not help any way to show that what was the amount paid by the complainant towards chit amount as subscriber and
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what is the amount due by him. On the other hand, Ex.D3 – cheque book corroborate the evidence of complainant. The evidence of accused shows that he had business transaction with the complainant. He is in good terms and he know compalinant very well and he has issued the cheque. Absolutely there is nothing on record to show that why he has given the cheque by mentioning sum of Rs.7,00,000/- to the complainant. It is for the accused to explain why he has given Rs.7,00,000/- if he has not borrowed the said amount. Not a single sentence is forthcoming in his examination or cross-examination or there is any such suggestion to the complainant that they have forced the accused to issue cheque for Rs.7,00,000/-. In the absence of any suggestions or evidence or documents, i.e., oral evidence or documentary evidence, the defence of the accused that as a security for the chit amount as he is due only for Rs.5,92,000/-, the cheque was given as a security for the said amount cannot be believed at all.
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Now coming to his cross-examination, the accused has stated that he was running the chit business and about twenty persons were subscriber for the said chit. The total chit amount was Rs.10,00,000/- for a period of 20 months everybody has to pay Rs.50,000/- each month. The members used to deduct the commission amount and used to pay chit amount and the said chit business was running at his shop situated at Kumbara pet. He has stated that he has not produced any document before the Court with regard to payment of chit amount by the subscribers. There is no agreement between himself and the members of chit group. To a question by the complainant that whether he has any document with regard to the persons who bid the amount every month, he has stated that he has produced the documents, but no such document is produced. He has also admitted that he has no such license to run said chit business. He has not taken any documents from the members that they were subscribers for the total chit amount of Rs.10,00,000/-.
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He has stated that he has produced the document regarding the payment of chit amount to the chit bidder of particular month. But no documents are produced. The chit business was carried out for a period of 14 months. But as the members who have taken the chit amount did not repay the same, he has sustained loss and business was stopped. He has not stated whether he has taken any action against the said members, he has stated that they have left the Bengaluru. Even he has not lodged the complaint against them, as he does not have their address. So this answer shows that even he does not know the address of the persons who according to him are the members of chit. He has also stated that even he has not secured the address of the members of the chit prior to commencement of chit business. He has collected only their names. This evidence shows that there is a doubt about accused running any chit business. He has denied the suggestion that the complainant never had any such chit transaction with him and he has created Ex.D1. On
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the other hand, he has admitted that the complainant and himself were friends but he has denied that he has borrowed Rs.7,00,000/- for his financial necessities and agreed to repay the same within two months. He has denied that as he do not repay the same, he has issued the postdated cheque as per Ex.P1. He has denied the suggestion that he has intentionally not kept the amount in bank and issued the cheque and he is liable to pay the amount. As stated above, no documents were produced by the accused to show that the accused was running the chit business and no person was examined to show that the complainant is a member of chit business run by him. According to his own admission, he do not know the address of the subscribers of the chit. He has not taken any steps against the persons who have taken the bid amount and not returned the amount. On the other hand, he admits that he knew the complainant very well and he had business transaction and he has issued the cheque for Rs.7,00,000/-. He has produced his bank cheque book
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leaf, wherein he has made entry regarding payment of Rs.7,00,000/- in favour of this complainant and another complainant in another case. For what purpose he has issued the said sum of Rs.7,00,000/- is not at all explained by him nor any such suggestions were made in the cross-examination.
I have perused the judgment of this Court in the case of Mohd.Imtiyaz Ahmed Khan Vs. Mohd.Azmat passed in Crl.A.No.3536/2013 disposed of on 21.12.2020 wherein this court referred to the decisions of Hon'ble Supreme Court in the case John K. John Vs. Tom Verghees and another reported in AIR 2008 SC 278 and in the case of Rangappa Vs. Sri Mohan - AIR 2010 SC 1898 and also other decisions. I have perused the entire judgment of Mohd.Imtiyaz's case but the facts of that case are totally different when compared with the facts and evidence before this court. But in the peculiar facts and circumstances of this case, the said decisions are not
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applicable regarding presumption. On the other hand, the learned counsel for the accused argued that in the written arguments, he has taken the contention that the income tax return shows that the income of the complainant is only Rs.6,00,000/- and odd. The said income tax return was filed subsequent to filing of complaint. Therefore, when the complainant has no financial capacity to repay such huge amount, the finding of the Trial Court that the complainant has failed to prove his financial capacity is not just and proper. Therefore, the finding of the Trial Court that unless the complainant proves his financial capacity, no presumption can be raised and accused cannot be held guilty. The said contention is not tenable for the following reasons.
First of all there is no such defence was taken at the earliest point when the legal notice was issued. Secondly there is no such suggestions were made to PW.1 in cross-examination that he has no such financial
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capacity to lend such amount. Thirdly, the evidence of complainant in the cross-examination that he is doing business and his turn over for a day is Rs.30,000/- to Rs.35,000/- also not denied. Lastly, the accused in his examination-in-chief has not taken any such defence nor stated that the complainant has no financial capacity or nor any defence that the complainant forced him to issue cheque for Rs.7,00,000/- though he is due only for Rs.5,92,000/-. The complainant has filed income tax returns as per the mandatory requirements under the income tax act. If the income tax returns are not filed properly, it is for the income tax authority to take any action in accordance with law, if the person files income tax showing less income. On the other hand, Ex.P7 - income tax return, it is stated to be filed by the complainant on 19.09.2014. The complainant has stated that his gross income is Rs.6,40,447/-. Ex.P8 - is the balance sheet which shows that the liability of Rs.27,77,185/- and in the assets column the total amounts shown is Rs.77,20,483/-. Ex.P9 is the trading
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and profit and loss account for the year ending 31st March, 2014, wherein the gross profit is shown as Rs.12,34,138/- and his net income is shown as Rs.13,64,883/-. But no questions were put to the complainant about these documents. From the oral evidence of complainant and documentary evidence, cross-examination of the complainant by the accused and the evidence of complainant it cannot be stated that the complainant has no such financial capacity to lend sum of Rs.7,00,000/-. When accused himself admits the issuance of cheque for Rs.7,00,000/- and failed to explain under what circumstances, he has issued the cheque for Rs.7,00,000/- by placing legally reliable and admissible evidence, therefore, the observation of the Trial Court that though the chit business run by the accused was unlawful, but from the defence taken by him, the Trial Court come to the conclusion that the accused has probablise his defence is not based on either oral evidence or documentary evidence which cannot be considered as legal evidence. The finding of
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the trial court that the complainant has failed to prove his financial capacity is also not correct without referring to any such evidence of complainant. Though the trial court given a finding that Ex.D1 is not a valid document, but still held that the accused has probablise his defence regarding chit business. But trial court held that though accused is liable to pay Rs.5,92,000/- to complainant, then why he has given cheque for Rs.7,00,000/- is not forthcoming. Simply taking the defence for the sake of defence will not help the accused in any way. The Hon’ble Supreme Court in Rohitbhai Jivanlal Patel Vs. State of Gujarat and another - AIR 2019 SC 1876 has discussed as to how a presumption is to be raised and how the accused has to rebut the presumption. For the first time, he has stated in the examination-in-chief that he issued two blank cheques and the said cheques were filled by the complainant.
Firstly, such defence is not tenable as Hon’ble Supreme Court in the case of BIR SINGH vs. MUKESH
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KUMAR reported in (2019) 4 SCC 197 held that even issuing a blank cheque by signing same, the accused will not have any effect on the presumption and at paragraph Nos.6, 33, 34, 35, 36, 38 to 40 it is held as under: "6. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility to negotiable instruments including cheques and to encourage and promote the use of negotiable instruments including cheques in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same.
A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
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If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. 35. It is not the case of the respondent- accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative. 36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt. 38. In the absence of any finding that the cheque in question was not signed by the respondent-accused or not voluntarily made over to the payee and in the absence of any evidence with regard to the circumstances in which a blank signed cheque had been given to the appellant- complainant, it may reasonably be presumed that the cheque was filled in by the appellant-complainant being the payee in the presence of the respondent-accused
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being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alteration. There was no change in the amount of the cheque, its date or the name of the payee. The High Court ought not to have acquitted the respondent- accused of the charge under Section 138 of the Negotiable Instruments Act. 39. In our considered opinion, the High Court patently erred in holding that the burden was on the appellant-complainant to prove that he had advanced the loan and the blank signed cheque was given to him in repayment of the same. The finding of the High Court that the case of the appellant- complainant became highly doubtful or not beyond reasonable doubt is patently erroneous for the reasons discussed above. 40. The appeals are allowed. The judgment and order of the High Court is set aside. The conviction of the respondent under Section 138 of the Negotiable Instruments Act is confirmed. However, the respondent-accused is sentenced only to fine, which is enhanced to Rs.16 lakhs and shall be paid as compensation to the appellant-complainant. The fine shall be deposited in the Trial Court within eight weeks from the date, failing which the sentence of imprisonment of one year as imposed by the Trial Court shall revive. There shall be no order as to costs."
It is also not the defence of accused that the complainant himself has written Rs.7,00,000/- in the cheque. Not even a single sentence is put to the
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complainant in his cross-examination with regard to the same. Without putting any such questions to the complainant, simply asking some other questions in cross-examination of the complainant will not help the accused.
The finding of the trial court with regard to violation of Section 259(SS) of Income Tax Act by relying on the decision of this Court in the case of B.Girish Vs. S.Ramaiah – 2010 (2) Kar.L.J. 284 is also no way help the accused. It is not the case of either complainant or the defence of the accused that for any such interest due by the accused coupled with chit amount, cheque was given for Rs.7,00,000/-. The finding of the trial court is not based on evidence on record. The Trial Court has not discussed anything about the presumption arising in favour of the complainant under Sections 118 and 139 of the N.I. Act. The Trial Court has not considered the evidence of complainant in proper perspective. Simply because he
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has not disclosed Ex.P7 – IT returns regarding payment of Rs.7,00,000/-, the trial court has come to the conclusion that the complainant has no financial capacity is against the evidence on record.
Learned counsel for the appellant argued that infact the statement was also produced before the trial court to show that payment of Rs.7,00,000/- and show the income tax return. But that document was not marked. May be due to inadvertence, before the trial court the said document is not available but the same is produced before this Court. He pointed out this document also wherein it is shown that payment of Rs.7,00,000/-. However, the said document is not marked along with Exs.P7, P8 and P9. Be that as it may.
If the entire evidence of complainant is considered in the light of the settled principles, regarding the initial burden on the complainant and the presumption arising under Sections 118 and 139 of N.I.
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Act and considering the probable defence of the accused in the light of principles stated by Hon’ble Supreme Court in my considered view, the finding of the trial court is not based on evidence on record. The trial court has not appreciated the evidence in proper perspective.
It is the settled principles of law that this Court will not interfere in the judgment of acquittal unless it is shown that the judgment of acquittal is perverse, erroneous and has resulted in miscarriage of justice.
In the light of these settled principles, if the present evidence on record and the judgment of trial court is considered in my considered view the judgment of trial court is perverse and erroneous not based on settled principles regarding the appreciation of evidence and needs to be set aside.
Accordingly, I pass the following:
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ORDER (i) The appeal filed by appellant-complainant under Section 378(4) of Cr.P.C. is allowed. (ii) The judgment of acquittal passed by XXI Additional Chief Metropolitan Magistrate, Bengaluru in C.C.No.23594/2014 dated 13.07.2016 is set aside. (iii) The respondent/accused is convicted for the offences punishable under Section 138 of N.I. Act and sentenced to pay a fine of Rs.7,05,000/-. In default of payment of fine, he shall undergo simple imprisonment for a period of six months. Out of fine amount of Rs.7,05,000/- a sum of Rs.7,00,000/- shall be paid to the appellant/complainant as compensation and remaining amount of Rs.5,000/- shall be credited to the State as cost of litigation. The said fine and compensation amount shall be paid within a
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period of six weeks from the date of receipt of certified copy of this order. (iv) Send back the record to the Trial Court. (v) On deposit of the said amount, the trial court shall proceed in accordance with law.
(vi) No order as to costs.
Sd/- JUDGE
UN,MBM,HJ List No.:1 Sl No.: 36