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- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF APRIL 2017
BEFORE
THE HON’BLE MRS.JUSTICE RATHNAKALA
CRIMINAL REVISION PETITION NO.536/2014
BETWEEN:
SRI C.N.DINESHA S/O NANJUNDAPPA AGED ABOUT 36 YEARS ELECTRICAL & CASSETTE CENTER RENUKAMBA ROAD CHANNARAYAPATNA TOWN – 573 116. …PETITIONER
(BY SRI VENKATESH R.BHAGAT, ADV.)
AND:
SMT.C.G.MALLIKA W/O GANGADHARA POOJARI AGED ABOUT 39 YEARS GAYATHRI EXTENSION THOTADAMANE CHANNARAYAPATNA TOWN – 573 116. ...RESPONDENT
(BY SMT.R.RADHA, ADV.)
THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 R/W 401 OF CR.P.C., PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED 11.7.2014 PASSED BY THE PRESIDING OFFICER, FAST TRACK COURT, CHANNARAYAPATNA IN CRL.A. NO.50/2013 AND SET ASIDE THE CONVICTION AND SENTENCE IN JUDGMENT DATED 8.3.2013 PASSED BY THE PRINCIPAL CIVIL JUDGE AND JMFC, CHANNARAYAPATNA IN C.C.NO.696/2006, CONVICTING THE PETITIONER FOR THE OFFENCE P/U/S 138 OF N.I.ACT AND ORDERING TO UNDERGO IMPRISONMENT FOR THE PERIOD OF ONE YEAR AND ALSO DIRECTING HIM TO PAY FINE OF RS.5,000/- AND ALSO
- 2 - DIRECTING TO APAY A SUM OF RS.4,00,000/-AS COMPENSATION TO THE COMPLAINANT AND THE PETITIONER MAY BE SET AT LIBERTY.
THIS CRIMINAL REVISION PETITION HAVING BEEN RESERVED ON 30/03/2017 AND COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R
This revision petition is filed aggrieved by the judgment of conviction and sentence returned by the trial court thereby sentencing the revision petitioner/accused to undergo simple imprisonment for one year and pay a fine of Rs.5,000/- with default clause in respect of the offence under Section 138 of the Negotiable Instruments Act, 1881 (for brevity ‘the Act’) and further, directing him to pay compensation of Rs.4,00,000/- to the complainant.
The appeal preferred against the said judgment was dismissed.
As the facts unfurl, the complainant issued a demand notice to the accused alleging that, during
- 3 - January 2006, he requested for a financial assistance of Rs.3,50,000/- and assured to return the amount within three months; he issued a post-dated cheque dated 16.6.2006 bearing cheque No.003675 drawn on Corporation Bank, Channarayapatna Branch for a sum of Rs.3,50,000/-. The complainant presented the cheque for encashment on 16.6.2006, but it was dishonoured with the endorsement “insufficient fund”. Despite service of notice through RPAD, the accused did not repay the loan amount.
On presentation of the complaint, the learned Trial Court registered the criminal case, accused was procured and he pleaded not guilty. The complainant examined herself as PW-1 and marked 7 documents as Exs.P1 to P7. The statement of the accused under Section 313 of Cr.P.C. was recorded and he denied the incriminating evidence appearing against him in the statements of complainant’s witnesses. Defence evidence
- 4 - was let in through the evidence of DWs-1 to 3 and three documents were marked as Exs.D1 to D3. After giving audience to both, learned Trial Judge convicted the accused. 5. Sri.Venkatesh R.Bhagat, learned Counsel appearing for the petitioner/accused assailing the judgment of Courts below submits, the amount involved in the cheque transaction was Rs.3,50,000/-, which is quite a heavy amount to be passed on without a documentary proof. The courts below overlooked the dent in the case of the complainant that she failed to establish her capacity to pay Rs.3,50,000/- as loan to the accused, that too, without obtaining any documents from him. For a naked eye, it is visible that number ‘3’ was inserted subsequently in the box of the cheque before the numbers ‘50,000’ to make it Rs.3,50,000/-. The cheque having been tampered by the complainant, the courts should not have overlooked this aspect of the matter. The sentence imposed was excessive though the guilt of
- 5 - the accused was not proved. In view of Section 269SS of the Income Tax Act (‘the I.T.Act’ for brevity), the loan transaction above Rs.20,000/- is to be made by way of cheque only, in the light of the judgment of the Apex Court in the matter of Krishna Janardhan Bhat –vs- Dattatraya G.Hegde reported in AIR 2008 SC 1325. Hence loan transaction by way of cash in this case is vitiated. The accused not only has rebutted the case of the complainant but also was able to dislodge the initial presumption arising under Sections 118 and 139 of the Act. The accused in his reply to the legal notice issued on 23.6.2006 had asserted that, he had issued a cheque for Rs.50,000/- only and said cheque was tampered by the complainant; he had called upon the complainant to get another cheque from him for getting replacement of the altered cheque. Learned Counsel continues, the courts below failed to consider above aspects of the matter and convicted him solely on the ground that he has taken contradictory
- 6 - stands at different stages; but being an accused, he is entitled to take such stands and is not liable to prove his defence beyond reasonable doubt. Standard of proof to prove defence on the part of accused is on preponderance of probability. In the above circumstance, judgment of Courts below is erroneous and illegal.
In reply, Smt.Radha, learned Counsel for respondent/complainant seeks to sustain the judgment of Courts below thus: The petitioner by raising contradictory defence failed to tilt the presumption arising under Sections 118 and 139 of the Act in favour of the complainant. To establish her financial capacity to lend Rs.3,50,000/-, the complainant had produced Ex.P7/registered sale deed dated 5.5.2005 under which she along with her husband had sold the property for a sum of Rs.5,75,000/- and had received the sale consideration in cash. The cheque was not dishonoured on the ground of not tallying but on the ground of insufficient funds. The
- 7 - accused did not make any attempt to subject the cheque for scientific examination. Much against his stand in his reply notice to the effect that he is not the owner/Proprietor/partner of the shop, during the trial, he took a defence that the complainant had matrimonial dispute with her husband and insisted him to marry her, which was refused by him and the complainant used to sit in his shop during lunch hours alone and at that time, she has stolen the cheque, etc. During the examination-in-chief, he stated that the complainant threatened him during 2005 of dragging him to the criminal case by using the cheque signed by him, if he does not agree to marry her. That confirms his knowledge about possibility of criminal prosecution on the basis of cheque, in the year 2005 itself. Till issuing legal notice during 2006, no step was taken by him in respect of his stolen cheque. Another fold of his defence was, he along with others had formed an Association for chit business and in that connection, he had issued
- 8 - cheque to DW-2 and DW-2 returned the cheque after the transaction was closed and the same was stolen by the complainant. But these facts were introduced during the trial stage, which were not at all there in his reply notice. The courts below on elaborate discussion of his defence have not found merit in his case and rightly convicted him and dismissed his appeal. No case to attract the revisional jurisdiction of this Court is made out by the petitioner. Hence, the revision is liable to be dismissed.
In the light of above rival submissions, the lower court records and the judgment impugned are perused.
Strong stress is placed on the following points:
(1) The complainant did not establish her financial capacity to lend Rs.3,50,000/- as loan to the accused;
(2) It is highly improbable that such a big sum is lent without collateral security or documentary proof; moreover, any cash transaction beyond Rs.20,000/- is punishable under Section 271D of the I.T.Act;
- 9 - (3) For a naked eye itself, the cheque in question is tampered; (4) Being an accused, he need not establish his case beyond doubt.
The statutory presumptions arising under Sections 119 and 139 of the Act since rebuttal, his case should have been believed as reasonably probable.
To commence from the premise of admitted facts, the parties were known to each other. If the case of the accused is to be accepted, though the complainant was a married lady, he had intimate relationship with her. On his own showing in the year 2005 itself, cheque bearing his signature was in the possession of the complainant and she had indicated to implicate him in a criminal case by using the said cheque. Even in his reply notice to the demand notice issued by the complainant, he alleged that cheque issued by him for a sum of Rs.50,000/- is tampered. Despite the same, he did not take any action against the complainant in respect of the said cheque. The complainant had produced the certified copy of the
- 10 - sale deed/Ex.P7 wherein she along with her husband and on behalf of their minor children had sold a immovable property for consideration of Rs.5,75,000/- vide registered sale deed dated 5.5.2005. The alleged loan transaction since is of January 2006 being in close proximity in time to the date of sale of her property, the complainant had successfully established her financial capacity to lend Rs.3,50,000/-. No acceptable evidence was brought on record to the effect that the sale amount did not reach the complainant. Thus, financial capacity of the complainant was accepted by the courts below.
The defence that parties were in intimate relationship with each other coincides with the case of complainant that without getting documentation, the amount was lent to the accused. Of course, for a naked eye, the first number ‘3’ appears to have been written with different pen pressure and ink. But at the same time, it is to be noted that author of the cheque while
- 11 - writing the figures in the box, why would he leave exact space, so that at a later stage, someone can implant figure ‘3’ before ‘50,000’. Having admitted the fact that the cheque bears his signature and issued from his account, the complainant never made attempt to seek scientific evidence to disprove the case of the complainant. It was the case of the complainant that the entire cheque is in the handwriting of the accused. It was never the case of the complainant that the accused wrote the cheque in her presence. Thus, the probability of the complainant tampering the cheque does not find a base.
Coming to the contention that since the alleged loan transaction was not by way of cash, it is violative of Section 269SS punishable under Section 271D of the I.T.Act – said statutory provisions read thus: “269SS. Mode of taking or accepting certain loans and deposits:- No person shall, after the 30th day of June, 1984, take or accept from any other person
- 12 - (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft [or use of electronic clearing system through a bank account] if, -
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is [twenty] thousand rupees or more.
Provided . . . . . .”
“271D. Penalty for failure to comply with the provisions of Section 269-SS.- (1) If a person takes or accepts any loan or deposit in contravention of the provisions of section 269- SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.
(2) Any penalty impossible under sub-section (1) shall be imposed by the Joint Commissioner.”
- 13 -
It is clear from the above that the loanee, who receives loan amount by way of cash above Rs.20,000/- is liable to be penalized. There is no corresponding provision under the N.I.Act, which would vitiate the entire loan transaction for dealing with cash amount above Rs.20,000/-. The culpability of offence under Section 138 of the Act will not freeze for the reason of violation of Section 269SS of the I.T.Act and nothing prevents the operation of the statutory presumption under Sections 118 and 139 of the Act. The accused in his attempt to dislodge the initial presumption arising out of the evidence of complainant produced the order sheet pertaining to the proceedings under Section 13-B of the Hindu Marriage Act filed by the complainant and her husband and also the copy of the joint petition filed therein. The petition for divorce by mutual consent was filed on 30.5.2005 and it was disposed of on 12.9.2006, since the complainant was not willing for divorce by mutual consent. A cheque said to have been issued by
- 14 - the accused in respect of a chit transaction allegedly along with that of the cheque in question in this case was also placed by him. But this piece of evidence fail to choke the presumption flowing in favour of holder of the cheque after initial burden was discharged by the complainant by her evidence. The eventuality was, statutory presumption under Section 118(a) of the Act that cheque was issued towards consideration received and next presumption under Section 139 of the Act that there existed a legally enforceable debt came into play.
In Krishna Janardhan Bhat’s case (supra) at para-34 it was observed thus: “34. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not
- 15 - say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same.”
Even balancing those two aspects i.e., innocence of the accused on one side and the statutory presumptions arising under Sections 139 and 119 of the Act on the other side, the needle still tills towards statutory presumption in this case. In the case (supra) in the earlier paragraphs of discussion, it was held to the effect that existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act, it merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or liability. The said proposition was overruled by a later judgment in the case of Rangappa –vs- Sri Mohan reported in (2010) 11 SCC 441. It was held that above
- 16 - principle in Krishna Janardhan Bhat (supra) is in conflict with the statutory provisions as well as established line of precedents of the Apex Court. After examining several line of precedents at paras-26 to 28, it was observed thus: “26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.
Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a
- 17 - device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant- accused cannot be expected to discharge an unduly high standard or proof.
In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, 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 liability, the prosecution can fail. As clarified in the citations, 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 his/her own”.
In the light of the above firm position of law on facts, it stands clear that the accused failed to dislodge
- 18 - the statutory presumption under Section 118(a) of the Act that he had issued the cheque for consideration; further, the presumption under Section 139 of the Act that the cheque was issued towards discharge of legally recoverable debt could not be shaken. The courts below have rightly found him guilty of the offence under Section 138 of the Act and the grounds urged in the revision petition lacks merits.
The revision petition is rejected.
Sd/-
JUDGE
KNM/-