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THE COURT OF THE ADDL. SESSIONS JUDGE FOR TRIAL OF
COMMUNAL OFFENCES CASES -CUM – VII ADDL. SESSIONS
JUDGE -CUM- XXI ADDL. CHIEF JUDGE : AT HYDERABAD
PRESENT : SRI B.SUJAY, Addl.Sessions Judge for the trial of Communal Offence Cases, cum VII ADDL. SESSIONS JUDGE cum- XXI Add.Chief Judge, Hyderabad.
Dated this the 28th day of April 2026
Crl. APPEAL No.69 OF 2024
From which court this appeal isX Metropolitan Magistrate – cum- Judicial I preferredClass Magistrate, Manoranjan, Hyderabad
Number of the case in that Court CC.NI.No.376 of 2023
Number of the AppealCrl. Appeal No.69/2024
Name and description of the Potlapalli Manohar Rao, s/o. Late Potlapalli Appellant/AccusedKamala Manohar Rao, aged about: 77 years, Occ: Retd. R/o. Flat No.4, Ground Floor, Aura B-Block, Raja Pushpa Atria, Golden Mile Road, Kokapet, R.R. District, T.S
Name and description of theMale Govind Reddy, s/o. Late M. Venkat Respondent/ ComplainantReddy, aged about:72 years, R/o. Flat No.706, Clara Block, Raja Pushpa Atria, Golden Mile Road, Kokapet, R.R District T.S.
The sentence and law under In the result, accused is convicted for the which conviction/Acquittal was offence U.Sec.138 of the Negotiable imposed in the lower court:Instrument Act, 1881, U.Sec.255(2) of the Cr.P.C and sentenced to undergo simple imprisonment for a period of (6) months for the said offence. The accused shall also pay
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a sum of Rs.50,06,000/- (Rupees Fifty Lakhs Six Thousand Only) as compensation to the complainant U.Sec.357(3) of the Cr.P.C within two months from today, failing which he shall undergo simple imprisonment for further period of two months.
In the result, the appeal is dismissed, Whether confirmed, modified or thereby confirming the impugned Judgment Reserved, if modified the dt.30.01.2024 in CC.No.376 of 2023 (old Modification STC NI.No.4459 of 2022) Passed by the learned X Metropolitan Magistrate cum Judicial I Class Magistrate, Manoranjan Complex, Hyderabad convicting the appellant/ accused for the offence under section 138 of Negotiable Instrument Act and sentenced to undergo simple imprisonment for a period of six months for the said offence. Further, the appellant/accused shall pay the fine of Rs.50,06,000/- as imposed by the trial court towards compensation to the complainant U.Sec.357(3) of Cr.P.C., within two months from today, in default, he shall undergo simple imprisonment for a period of two months and out of the fine amount of Rs.50,06,000/- an amount of Rs.10,000/- shall be defrayed to the State after the expiry of appeal time and the remaining Rs.49,96,000/-shall be paid to the complainant as compensation U.Sec.357(1)
(b) of Cr.P.C to the complainant after expiry of the appeal time. The trial court is directed to secure the presence of appellant for execution of sentence. The office is directed to send back the case record to trial court forthwith duly indexed.
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DATE OF OR ON WHICH
Presentation of Appeal20-02-2024
Filing21-02-2024
Notice issued by the Court15-04-2024
Appearance of Respondent29-04-2024
This Appeal came before me on 28-04-2026 for final hearing in the presence of Sri S.K.Patil, Advocates for Appellant/Accused and Sri Maadugula Srinivas, Advocate for Respondent/Complainant upon perusing the material papers on record, upon hearing the arguments and having stood over for determination till this day, this Court delivered the following:
:: JUDGMENT ::
1.This Criminal Appeal is preferred under Sec.374 of Cr.P.C to set aside the Judgment in CC.NI.No.376 of 2023, dated 30.01.2024 on the file of X Metropolitan Magistrate cum Judicial First Class Magistrate,
Manoranjan Complex at Hyderabad.
2.For the sake of convenience and for better understanding of the facts, the parties to this Appeal will hereinafter be referred to as arrayed in the case before the Trial Court.
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3.The brief facts of the complaint filed by the complainant before the
Trial Court are that:
(a)Out of acquittance for the last three years as all of them reside in the same apartment, the accused along with his wife Smt.Potlapalli
Mamatha used to visit the house of complainant and projected as he is one of the top directors in the TATA group of companies, Mumbai and now retired and he owns agricultural land in Aswaraopally of
Jangaon District and further, the accused and his wife used to say that the wife has vast joint family properties at Vishakapatnam,
Peddapuram, Samarlakota, Chittoor, etc., and he fails from Jamindar
Family. The accused used to say that the said properties were under small dispute and it will be settled shortly, so that they would get crores of Rupees out of settlement. Both of them were able to convince the complainant and her husband that they have vast properties in Andhra Pradesh and would get huge amount within a short period as the dispute was going to be settled. Thus, by make believing the complainant that they are from very rich family and having reputation, the accused obtained hand loan of Rs.58,50,000/- from the complainant and his wife Smt.M.Vidhyulatha on different dates commencing from 24.05.2020 to 21.01.2021 for his personal
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and family necessities and agreed to repay the principal amount plus interest within six months and in the mean time to pay interest @1% per month. Out of the said amount, the complainant has lent amount of Rs.42,50,000/- and his wife has lent Rs.16,00,000/- to the accused.
The complainant and his wife have paid the amounts to the accused as per his exigencies either by way of cash or through bearer/account payee cheques by mentioning amount, date and signature and thereafter the accused used to fill them according to his convenience.
The complainant lent said amount of Rs.42,50,000/- to the accused on different dates i.e., Rs.10,00,000/- on 24.05.2020, Rs.5,00,000/- on 27.05.2020, Rs.5,00,000/- on 15.06.2020, Rs.5,00,000/- on 18.05.2020, Rs.7,50,000/- on 17.11.2020 and Rs.10,00,000/- on 21.01.2021. After obtaining the loan amounts from the complainant, the accused executed promissory notes with receipts in his favor.
After lapse of six months, the complainant requested the accused to repay the loan amount, but the accused postponed the same from time to time on one pretext or the another and finally, in repayment of his debt/liability, the accused has issued seven cheques in favor of the complainant i.e., (I) cheque dt.13.06.2022 bearing No.048923 for
Rs.10,00,000/-, drawn on SBI, Khileshapuram Branch of Warangal
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District (ii) cheque, dt.13-06-2022 bearing No.487801 for
Rs.5,00,000/- drawn on Axis Bank, Himayathnagar Branch
Hyderabad; iii) cheque, dt.13-06-2022 bearing No.487802 for
Rs.5,00,000/- drawn on Axis Bank, Himayathnagar Branch
Hyderabad; iv) cheque, dt.13-06-2022 bearing No.487803 for
Rs.5,00,000/- drawn on Axis Bank, Himayathnagar Branch
Hyderabad; v) cheque dt.13.06.2022 bearing No.048924 for
Rs.7,50,000/-, drawn on SBI, Khileshapuram Branch of Warangal
District; vi) cheque dt.13.06.2022 bearing No.048925 for
Rs.5,00,000/-, drawn on SBI, Khileshapuram Branch of Warangal
District vii) cheque, dt.13-06-2022 bearing No.487808 for
Rs.5,00,000/- drawn on Axis Bank, Himayathnagar Branch
Hyderabad; assuring their honour on presentation. Accordingly, the complainant deposited the aforementioned cheques into his account on 13.06.2022 in Canara Bank, Mid Corporate, Near Old MLA quarters, Hyderabad for realization, but all the cheques were dishonoured for the reason of “insufficient funds” with cheque return memo, dt.15.06.2022. The complainant got issued a Legal Notice dt.22.06.2022 through Registered post with acknowledgment due demanding the accused to repay the amount covered under the
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dishonoured cheques, but the accused unclaimed the legal notice on 23.06.2022 and returned it to the sender/counsel. Counsel on record also sent the text of notice to the accused through Whatsapp, on that the accused replied that he would clear the loan amount in between 5th and 30th of July, 2022. Despite the receipt of legal notice, the accused failed to repay the dishonoured cheques amount within 15 days. Hence, the complaint to punish the accused for the offence punishable U/s.138 of N.I. Act, 1881 and to award compensation to the complainant.
4.The case was taken on file for the offence punishable U/sec.138 of
Negotiable Instruments Act against the accused by the Trial Court. On appearance of the accused, furnished copies of documents and all the annexures thereto in strict compliance of Section 207 of Cr.P.C. The accused was examined U/s.251 of Cr.P.C. He having understood the same, denied the offence, pleaded not guilty and claimed to be tried. The accused was defended by his advocate.
5. During the trial before the Trial Court, the complainant himself was examined as PW1 and got marked Exs.P1 to P32. No witnesses were examined on behalf of accused and no documents marked.
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6. On completion of the complainant’s side evidence, the accused was examined under Section 313 Cr.P.C and the incriminating evidence was read over and explained to the accused and having understood the same, the accused denied the evidence denied the same stating that he has taken cash or Rs.5,00,000/- from the complainant and repaid the same and he has not taken any amount from his wife Vidhyulatha and issued two Blank signed cheques towards security and further, reported no defense evidence.
7.After completion of the trial and on hearing the arguments of both sides and after perusing the written arguments filed on behalf of both sides and the citations filed by the complainant, the trial Court passed the impugned Judgment, dt.30.01.2024, thereby found the accused guilty for the offence punishable U/s.138 of Negotiable Instruments Act and sentenced to undergo simple imprisonment for a period of 6 months for the said offence and also shall pay a sum of Rs.50,06,000/-- (Rupees Fifty lakhs and six thousand only) as compensation to the complainant
U/s.357(c) of Cr.P.C. within two months from the date of judgment, failing which he shall undergo simple imprisonment for 2 months.
8.Aggrieved by the said impugned Judgment of the trial Court, the appellant preferred this appeal on the following main grounds:
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i) The ingredients of the alleged offence of Sec.138 of NI Act were not made out to base the conviction of the accused in this case.
ii)There is no legal enforceable debt against the dishonoured cheques.
iii)PW1 did not disclose that when he has advanced the amount and also execution of the promissory notes. The respondent/complainant himself filled up the cheques as per her will and franchise for the purpose of filing false case against the appellant having custody of the signed blank cheques and promissory notes.
iv)PW1 has mentioned in his Legal Notice that the accused has executed an agreement dt.21.10.2021 stating that in the event of dishonour of cheques, PW1 has to register two acres of land situated at Aswaraopally, Ragunathaplly mandal in her favor and she also undertook to file suit for specific performance of contract along with damages and also for attachment of agricultural lands and further
PW1 stated that the loan amount of Rs.58,50,000/- be treated as total sale consideration paid for the property out of Survey No.211/1/1 to an extend of two acres situated at Ashwaraopally and under what capacity the complainant filed the present case against the
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appellant/accused when there is no transaction between the parties and only by taking advantage of the signed cheques and promissory notes in the custody of Govind Reddy and with an intention to extort more money, the respondent/complainant filed the case against the appellant/accused.
v)When the Regd. Agreement of Sale is not cancelled, the respondent/complainant has no right to file the cases and the trial
Court did not appreciate as to why the respondent/complaint not filed the Agreement of Sale, dt.21.10.2021.
vi)The trial Court failed to appreciate that the subject cheques issued for any existing debt or liability and that the respondent/complainant has no capacity to lend such amounts and further, the respondent failed to file their income tax returns to show that the amounts were paid to the appellant during the relevant year.
vii)The trial Court failed to appreciate the discharging of initial burden of complainant to prove the liability.
viii)The trial Court convicted the accused based on surmises and conjectures.
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9.On the registration of the appeal, a due notice was ordered to the respondent and the same was served. On receipt of the material papers from the trial Court, hearing of appeal was taken up.
10.Perused the written arguments filed on behalf of both sides and the material records on the file of this Court as well as the Trail Court.
11.Now the points arise for determination are :
1) Whether the complaint has brought home the guilt of the accused for the offence u/Sec.138 of Negotiable Instruments Act, 1881 beyond reasonable doubt, so as to sustain the conviction of the accused in the impugned Judgment?
2)Whether the impugned Judgment of the trial Court, dated 30.01.2024 in CC.NI.No.376/2023 in convicting and sentencing the accused for the offence u/Sec.138 of Negotiable Instruments Act, suffers from any infirmity or irregularity or illegality and called for the interference of this Court?
3)To what relief?
POINT No.1
12.It is the case set up by complainant before the trial Court, that, out of acquittance and by make believing the complainant that he is one of the top directors in the TATA group of Companies and retired and further he owns agricultural lands and joint family properties at different places, and they
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are in small dispute and are going to settle shortly, as such, he would get crores of rupees out of their settlement, and further, obtained a handloan of rupees 42,50,000/- from the complainant on different dates to meet his personal and family necessities with a promise to repay the same with interest @ 1% per month within six months. After obtaining the loan amounts, the accused executed demand promissory notes with the receipts in favour of complainant. Later, the accused issued the subject cheques assuring their encashment, but on presentation they were dishonoured for the reason in sufficient funds with cheque return memos dt.15.06.2022.
The complainant issued a legal notice through Registered Post with acknowledgement due demanding the accused to repay the amounts covered under the said cheques, but the accused unclaimed the legal notice on 23.06.2022 and returned it to the sender. To the text of notice sent by the counsel for complainant through Whatsapp, the accused replied that he would clear the loan amount in between 5th and 30th july 2022, but failed to keep up his promise and finally, the accused failed to repay the cheques amount. Hence, the accused is liable for punishment u/Sec.138 of N.I. Act, 1881 and also for payment of the compensation.
13. As seen from its Judgment, the trial Court observed that it is an undisputed fact that the complainant and accused are residing in the same
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apartment. Ex.P1 to P32 show that the accused has availed the loan amount of Rs.42,50,000/- from PW1 with a promise to repay the same with interest @ 1% per month and for which, he issued Ex.P1 to P7 cheques for Rs.10,00,000/-, Rs.5,00,000/-,Rs.5,00,000/-, Rs.5,00,000/-,
Rs.7,50,000/-, Rs.5,00,000/- and Rs.5,00,000/- respectively, and when the complainant deposited the above mentioned cheques on 13.06.2022 through his bank account, the same were returned with cheque return
Memos under Ex.P8 and P14, where upon the complainant got issued legal notice, dt.22.06.2022 under Ex.28 and the same was returned unclaimed under Ex.P30 on 23.06.2022 and the accused failed to pay the amounts covered under Exs.P1 to P7 cheques till the date of filing the complaint i.e., 18.07.2022. Further, the complainant filed his original pass book and pass book of his wife under Exs.P31 and P32 and further says that he advanced hand loan amount by way of cash as well as by way of cheques to the accused
14.Further, it is observed by the Trial Court that it is elicited from the cross-examination of PW1 that he is a doctor by profession. He knows the accused for the past 2 to 3 years and further, when he enquired the financial position of the accused, the accused showed his title deeds evidencing that he is having lands at Asvaraopallli of Janagon district and further the
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accused approached him for the purpose of meeting personal requirements of his wife, as the properties of his wife situated in Andhra Pradesh are having some disputes. He replied that he has advanced loan of
Rs.42,50,000/- to the accused. He advanced Rs.2,50,000/- on 17.11.2020 and Rs.7,00,000/- on 20.12.2020 by way of cash out of Rs.42,50,000/- and the remaining amounts he paid through cheques to the accused, for which the accused executed promissory notes under Ex.P22 to P27. Further, during 313 Cr.P.C. examination before the trial Court, the accused stated that he obtained loan of Rs.5,00,000/- from the complainant and issued two blank signed cheques towards security and further stated that he repaid
Rs.5,00,000/- and did not take any amount from his wife Vidhyulatha. It is observed by the Trial Court that when the accused admitted that the subject cheques were issued towards security, the presumption can be drawn
Us.118 and 139 of N.I. Act in favour of the complainant and thereby the complainant has proved that the accused is due an amount of
Rs.42,50,000/- and for which, the accused executed Ex.P1 and P7/post- dated cheques and the same were dishonoured for the reason “funds insufficient”. As such, the Trial court found that there existed the legally enforceable debt.
15.The Trial court in its judgment discussed about the citations relied
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upon by the learned Counsel for complainant, as follows:
(i)K.Arun Kumar Vs The State in CRL in REV. No. 1330 of 2013, wherein Hon'ble Telangana High Court held that Accused not disputed his signature on Subject cheque and Accused failed to adduce probable defence under section 138 N.I Act.
(ii) Rajesh Jain Vs Ajay Singh in Criminal Appeal No. 3126 of 2023, wherein Hon'ble Supreme Court of India held that once the cheque was issued by the accused for discharge of debt, accused to prove that the cheque was not towards the discharge of debt or any liability and the signature on cheque not disputed, and presumption under sections 118 and 139 having taken effect, complainant's case stood satisfied every ingredient necessary for sustaining conviction under Section 138 N.I Act.
(iii) CC Alavi Haji Vs Palapetty Muhammed in Crl Appeal No.
767 of 2007, wherein Hon'ble Supreme Court of India held that if accused claims that he did not receive the notice, he can make payment within 15 days from receipt of summons from court to escape prosecution and when a notice is sent by registered post and is returned with endorsement "Refused" or "Not available in house" or "House locked" or "Addressee not in station", due service has to be presumed and entire purpose of
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requiring a notice is to give an opportunity to the drawer to pay the cheque amount within 15 days of service of notice and thereby free himself from the penal consequences of section 138.
In view of above citations, the Trial Court observed that they are squarely applicable to the present case, as in the instant case, the accused not denied that the cheque as well as the signature do not belong to him and further, the Registered post with acknowledgment due is returned with an endorsement “Unclaimed”.
16.The trial Court further observed in its Judgment that it is a settled preposition of law that the presumption U/s.139 of the N.I. Act postulates that whenever a cheque or negotiable instrument is issued in favour of the other side, then the court can presume that it was issued in discharge of existing liability. It is true that there is no presumption as to the assumption of debt and liability and it is to be proved by the complainant before the floor of the court. PW1 candidly deposed that she advanced hand loan amount of Rs.42,50,000/- under Ex.P22 to P27/promissory notes. The testimony of PW1 was not denied by the accused, which clearly manifests that accused obtained hand loan and for which he executed said promissory notes and also issued post-dated cheques under Ex.P1 to P7 and the same is
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not denied by the accused. Apart from the above, the Trial Court observed the following:
(i) When it is the defence of the accused that the complainant has not discosed when he advanced subject loan amount to the accused and so also he has not mentioned that he advanced Rs.2,50,000/- on 17.11.2020, on 20.12 2020 Rs.7,00,000/- in his complaint and legal notice, it is obseved by the trial Court that PW1 in his cross- examination replied that he mentioned in his chief affidavit and further, it is elicited from the cross-examination of PW1 that he has transferred loan to the accused by way of cheque along with payment of Rs.2,50,000/- cash so also on 20.12.2020, he transferred loan to the accused by way of cheque along with payment of Rs.7,00,000/- cash and therefore, there is no separate promissory note for Rs.2,50,000/- and Rs.7,00,000/-. Further, it is observed by trial Court that upon perusal of the promissory note under Ex.P26, dt.17.11.2020, it appears that the accused executed the same for an amount of
Rs.7,50,000/- with a promise to repay the principal amount with interest @ 1% per month and also executed receipt in favour of the complainant. Likewise, the accused executed Ex.P27/ promissory note, dt.21.01.2021 for Rs.10,00,000/-. Further, from the cross-
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examination of PW1, it was elicted that he lent remaining amount of
Rs.33,00,000/- to the accused by way of cheque and to prove the same, he relied on his bank passbook/Ex.P31 and on perusal of the same, on 27.05.2020 an amount of Rs.5,00,000/- was transferred through cheque bearing No.332 to the accused, and on 29.05.2020 through cheque bearing No.36 an amount of Rs.5,00,000/-, on 16.06.2020 an amount of Rs.5,00,000/- through cheque bearing
NO.37, on 19.08.2020 an amount of Rs.5,00,000/- through cheque bearing No.38 and on 17.11.2020 an amount of Rs.5,00,000/- through cheque bearing No.40 and also on 21.12.2020 an amount of
Rs.3,00,000/- through cheque bearing No.41, to the wife of the accused.
(ii)Further, it is the defence of the accused that PW1 mentioned in his legal notice, dt.22.06.2022 in para No.6 that accused executed an agreement, dt.21.10.2021 in favour of the complainant stating that in the event of dishonor of cheques to PW1, the accused has to register Ac.2.00 gts land, situated at Ashwaraopalli, Ragunathpalli
Mandal in his favour and failing which, complainant has to file specific performance along with damages and also for attachment of agriculture lands by virtue of agreement of dale dt 21.10 2021 and
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further, it is clearly mentioned that the loan amount of Rs.58,50.000/ be treated as total sale consideration paid for the schedule property in
Sy.No.211/1/1/1 to an extent of Ac.2-00 land situated at
Ashwaraopalli and registered agreement of sale is not yet cancelled and complainant has no right to file the case and further contended that under what capacity the complainant filed this present case and when there is no transaction between the parties and taking advantage of signed cheques and the promissory notes in the custody of Govinda
Reddy and with an intention to extract more money from the accused filed this false case against the accused. In this regard, the trial Court observed that it is the contention the complainant counsel that the complainant obtained hand loan of Rs.58,50,000/-on various dates since 24.05.2020 for his personal and family necessities and agreed to repay the same on or before 10th June, 2022 and further contended that accused has undertaken that in the event of his failure to pay the cheque amount, the complainant is liberty to file case u/Sec.138 NI
Act and further, the accused has taken the plea that he has executed an agreement of sale in favour of the complainant and the same is not produced to prove his defense, and therefore, the trial Court did not hesistate to accept the unchallenged evidence of the complainant. It is
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further observed that, the accused has taken another plea that he has obtained loan of Rs.5 lakhs and repaid the same, but has not filed single receipt with regard to repayment of the same and though the accusd has reported settlement but did not come forward to settle the matter amicably.
(iii) Further, it is observed by the trial Court in its Judgment that
PW1 denied that he had executed promissory note before encashment of Rs.10,00,000/- and further denied that he has not advanced
Rs.42,50,000/- to accused and that accused not registered any land in his favour for said amount of Rs.42,50,000/- and he got managed the postal authorities and returned postal acknowledgment and the same is denied by PW1 and he also denied that there is no nexus between subject cheques, promissory notes and he did not advance any loan to the accused. Further, if at all, the accused had not issued the subject cheques to the complainant for any debt or liability, definitely, he had every opportunity to give stop payment instructions to his banker against the alleged cheques, but he did not to do so and further, if he has not issued the questioned cheque to the complainant for discharge of legally recoverable debt, accused could not have kept silent without taking any action against the complainant and therefore, the
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trial Court felt that it did not have any other go than to accept the evidence of PW1 that the questioned cheques were issued by the accused for discharge of existing legally recoverable debt and furthern, in this case, no reply was given by the accused to the legal notice issued by complainant.
(iv)On overall appraisal of the materials available on record, it was the considered opinion of the trial Court that the accused has failed to discharge initial burden to rebut the statutory presumption as well as the facts and circumstances placed by the complainant in the present case and thereby concluded the the complainant has proved the guilt of the accused and accordingly, the accused is liable to pay the amount covered under the Exs.P1 to P7 cheques. It is further observed tat, there is no substance in the probable defence of the accused, whereas the complainant has discharged his burden and proved the guilt of the accused and felt that it is a fit case to convict the accused, keeping in mind the very object of introduction of the
Negotiable Instruments Act.
17.As seen from the oral and documentary evidence of the complainant
before the Trial Court, the complainant herself examined as PW1 and in his
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chief-examination, he reiterated the contents of his complaint and relied on
Ex.P1 to P32. As seen from the evidence adduced by PW1 and the documentary evidence relied upon by him under Ex.P1 to P32, the accused has availed the loan amount of Rs.42,50,000/- from him with a promise to repay the same with interest @ 1% per month and for which, he issued
Ex.P1 to P7 cheques for Rs.10,00,000/-, Rs.5,00,000/-,Rs.5,00,000/-,
Rs.5,00,000/-, Rs.7,50,000/-, Rs.5,00,000/- and Rs.5,00,000/- respectively, and when the complainant deposited the above mentioned cheques on 13.06.2022 through his bank account, the same were returned with cheque return Memos under Ex.P8 and P14, where upon the complainant got issued legal notice, dt.22.06.2022 under Ex.28 and the same was returned unclaimed under Ex.P30 on 23.06.2022 and the accused failed to pay the amounts covered under Exs.P1 to P7 cheques till the date of filing the complaint i.e., 18.07.2022. Further, the complainant filed his original pass book and pass book of his wife under Exs.P31 and P32, so also the paying slips dated 13.06.2022 showing the deposit of the cheques issued by accused into his account.
18.Further, from the cross-examination of PW1, it was elicited that he is a doctor by profession. He knows the accused for the past 2 to 3 years and further, when he enquired the financial position of the accused, the accused
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showed his title deeds evidencing that he is having lands at Asvaraopallli of Janagon district and further the accused approached him for the purpose of meeting personal requirements of his wife, as the properties of his wife situated in Andhra Pradesh are having some disputes. He replied that he has advanced loan of Rs.42,50,000/- to the accused. He advanced
Rs.2,50,000/- on 17.11.2020 and Rs.7,00,000/- on 20.12.2020 by way of cash out of Rs.42,50,000/- and the remaining amounts he paid through cheques to the accused. He replied that he has not file promissory notes for
Rs.2,50,000/- and Rs.7,00,000/-, since on 17.11.2020 he has transferred loan amount to the accused by way of cheque along with payment of
Rs.2,50,000/- cash, so also on 20.12.2020 he has transferred loan amount to the accused by way of cheque along with payment of Rs.7,00,000/- cash, therefore, there is no separate promissory notes for Rs.2,50,000/- and
Rs.7,00,000/-. He replied that he lent remaining amount of Rs.33,00,000/- to the accused by way of cheques and that he filed Ex.P31/Passbook to support the same (showing his payments to the accused). He further replied that he has transferred loan of Rs.5,00,000/- from his account on 27.05.2020 and Rs.5,00,000/- from the account of his wife on 27.05.2020 and the accused executed promissory note for Rs.10,00,000/- in his favour on 24.05.2020. He replied that the Chartered accountant will take care of
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his IT returns. He denied the other suggestions.
19.From the above oral and documentary evidence adduced by the complainant, it is clear that there existed a legally enforcable debt covered under Ex.P22 to P27 promissory notes and the Exs.P1 and P7 were issued by the accused in discharge of such debts, but the same were dishonoured with Ex.P8 to P14 P4/cheque return memos. Further, nothing was elicited from the cross-examination of PW1 to disprove the case of complainant as setup by him. Further, to the legal notice, dt.22.06.2022 Under Ex.P28 got issued by the complainant/PW1 through Registered Post with acknowledgment due, which was returned unclaimed under Ex.P30 and the accused neither give any reply nor repay the amount till date of filing the complainant and further, the accused did not choose to rebut the presumption U/s.139 of N.I. Act by adducing any cogent evidence on his behalf and thereby commited the offense punishable Under Section 138 of
NI Act.
20.Learned counsel for appellant/accused filed written arguments reiterating the appeal grounds and most of the points raised in the written arguments were already discussed and clarified by the Trial Court and this
Court also, in the preceding pharagraphs. Learned counsel argued that
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mere possession of a cheque does not automatically establish liability and existence of a legally enforceable liability and the presumption Under
Sec139 of NI Act is rebuttable and the accused rebutted the same by asserting that there was no debt, no consideration and the cheques were issued only as security. The trial court has failed to appreciate and consider that PW1 has mentioned in his legal notice dated 22-06-2022 in para No.6 that they have executed an agreement dated 21-10-2021 and that in the event of dishonor of cheques, PW1 was going to enter into sale deed and to get register 2 acres of land at Ashwaraopalli, Raghunathpalli Mandal in favour of the respondent and the respondent has also undertaken to file suit for a specific performance along with damages and also for attachment of agricultural lands, but by going through the agreement of sale dated 21-10- 2021, in which PW1 in (CC NI. No. 375 and 376 of 2023) i.e,. respondent herein, clearly mentioned that the loan amount of 58,50,000/- be treated as total sale consideration paid for the scheduled property bearing
Sy.No.211/1/1 to the extent of 2 acres situated at Ashwaraopalli, then now the important point for consideration is that under what capacity the respondent in criminal appeal filed the present case against the Appellant, hence, the point for consideration is that when there is no transaction between the Appellant and PW1, taking advantage of the signed cheques
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and promissory notes in the custody of the Govind Reddy and with an intention to extort more money from the Appellant, filed the present cases against the Appellant and further, when the registered agreement of sale is not cancelled, the respondent / complainant has no right to file the cases and that the court below did not appreciate the fact that the respondent intentionally not filed the agreement of sale dated 21-10-2021 though the respondent categorically mentioned in his legal notice dated 22-06-2022 and the respondent has not come to the court with clean intention. But, as seen from the cross-examination of PW1, there is no whisper about the agreement of sale between the complainant and accused. However, except putting a suggestion that he has not advanced Rs.42,50,000/- to the accused and that accused not registered any land in his favour for said
Rs.42,50,000/-, which was denied by him. Further, as seen from the legal notice/Ex.P28, the complainant categorically mentioned that the accused has proposed to register Ac:2-00 land at Ashavraopally of Janagon District in favour of the complainant if the cheques are not honoured and to that effect, the accused has executed an agreement of sale on 21.10.2021. It is further mentioned in the above legal notice that the accused assured and undertaken to repay the entire amount before 10th june 2022 and if he fails to repay the amount with interest, the complainant was at liberty to deposit
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the cheqeus in his account for encashment and since, the accused failed to repay the amount by 10th june 2022, the complainant deposited all the cheques into his account on 13.06.2022 for realization i.e., after lapse of the agreed date of payment i.e., 10th june 2022, but to his surprise, all the cheques were dishonoured for the reason of “insufficient funds”. It is further mentioned in the legal notice that the accused has executed an agreement, dt.21.10.2021 with the complainant in the event of dishonour of cheques, as such, the accused is liable for offense U/s.138 of N.I. Act, besides criminal prosecution and the that the other terms are that in the event of dishonour of cheques, besides prosecution the accused has to register 2 acres of land situated Ashvaraopally Ragunathapally Mandal, in
Janagon District in his favour and further, the complainant has also contemplated to file a suit for specific perfomance along with damages and also for attachment of agricultural lands of accused. Further, it is also mentioned in the said legal notice that the accused has promised and executed an agreement to repay the amount by 10th June 2022, so also to deposit all the post dated cheques only in the 2nd week of June 2022 so that they would be honoured and in the case of dishonour, he has accepted for prosecution U/s.138 of N.I. Act and also for the offence U/s.420 IPC. In this regard, it is clear that the accused did not avail the opportunity to give
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proper reply to the legal notice issued by complaint, which was unclaimed, and further, failed to rebut any cozent evidence by adducing any copy of the said agreement between him and the complainant and when the cheques were dishonoured on presentation, the compainant has got liberty to file the complaint before the trial Court by issuing statutory notice. As such, the above contentions raised by the counsel for appellant/accused will not be sustained.
21.Learned counsel for the appellant/accused also referred in his written arguments the following citations to substantiate his contentions:
(a) In Basalingappa Vs. Mudibasappa, it is held by Hon’ble
Supreme Court that when the accused disputes the financial capacity of the complainant, the burden shifts to the complainant to prove his financial capacity;
(b) In Rangappa Vs. Sri Mohan, it isheld by Hon’be Supreme
Court that the accused can rebut the presumption on the basis of probabilities in the complainants own evidence.
(c) In Krishna Janardhan Bhat Vs. Dattatraya Hegde, it is held by Hob’ble Supreme Court that the complainant must prove the existence
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of legally enforcement debt and the presumption cannot be applied mechanically.
(d)In John K Abraham Vs. SimonC Abraham, the Hon’ble
Supreme Court held that when a complainat claims to have paid huge amounts, he must prove: the source of funds, financial capacity, actual transaction. Failure to do so makes the complaint doubtful.
22.Except mentioning the said citations in his written arguments, the counsel for appellant/accused did not choose to file the copies of above citations before this Court for their perusal. It is established before the trial court itself that in order to prove the payments of loan amounts to the accused, the complainant filed bank passbooks of himself and his wife, which clearly show the complainant and his wife had maintained sufficient balances at their credit to lend the amounts to the accused and further, at the outset, it is replied by PW1 in his cross-examination that he is a doctor by profession and as such, it is not correct to say that the complainant and his wife have no financial capacity to lend such huge amounts to the accused and the said contention cannot be sustained. Further, it is already discussed and come to conclusion in the preceeding pharagraph that the complainant could able to establish the legally enforceable debt by
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adducing oral and documentary evidence and further, the Exs.P22 to P27 and Exs.P31 and P32 clearly establish the amounts lent by the complainant to the accused and the transactions made by the complainant with the accused and his lending capacity. As such, the contentions raised by the counsel for appellant/accused and the citations relied upon by him do not in any way help the complainant to prove his version and to disprove the case of the complainant.
23.On the other hand, learned counsel for respondent/complainant filed his written arguments and submitted that from the date of his appearance, accused had been reporting to the court that he is going to settle the matter by paying amount to the complainant. On one occasion, the accused has executed and undertaking/memo stating that he was intending to settle the matter by paying the amount to the complainant with specific date, however, despite several adjournments and sufficient time granted by the court, the accused did not come forward for compromise and settle the matter. As such, the complainant is left with no other remedy except to proceed with the case. Even today, the accused is not ready to settle the matter by paying the amount to the complainant. In the entire cross- examination of PW1, accused did not dispute any of the transactions, including loan amount, signatures on the cheques, execution of promissory
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notes, receipt of legal notice etc, as such, the offence U/s.138 of N.I. Act is proved beyond any doubt. From the beginning the appellant had misrepresented before the Trial court and even at the time of imposition of quantum of sentence, the appellant has stated that his wife has committed sucide and prayed to take lenient view, but the fact remains that his wife is still alive. Even before thiscourt also, the appellant failed to comply the condition to deposit 20% of the cheque amount as ordered by this court at the time of institution of this appeal.
24.In view of the above discussion and the reasons given, this Court is of the considered opinion that the trial Court in its detailed and elaborate
Judgment has well appreciated the oral and documentary evidence adduced by PW1 by citing relevant decisions of Hon’ble Apex Court and rightly concluded that the accused has committed the offence punishable U/s.138 of N.I. Act and the appellant/accused also failed to rebut the evidence adduced by complainant and did not avail the presumptions as provided
U/s.118 and 139 of the Act, as held by the trial Court. As such, this Court has no hesitation to say that the Judgment of the trial Court does not suffer from any infirmity or irregularity or illegality to call for the interference of this Court, as contended by the appellant/accused and thereby, confirms the
Judgment of the trial Court by concluding that the appellant/ accused has
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committed the offence punishable U/s.138 of NI Act and liable for punishment as imposed by the trial Court. Points No.1 and 2 are answered accordingly.
Point No.3:-
25.In the result, the appeal is dismissed, thereby confirming the impugned Judgment dt:30.01.2024 in CC No.376/2023 (old STC N.I.
No.4459/2022) passed by the learned X Metropolitan Magistrate cum
Judicial I Class Magistrate, Manoranjan Complex, Hyderabad convicting the appellant/accused for the offence under Section 138 of Negotiable
Instruments Act and sentenced to undergo simple imprisonment for a period of six months for the said offence. Further, the appellant/accused shall pay the fine of Rs.50,06,000/- as imposed by the trial court towards compensation to the complainant U/s.357(3) of Cr.P.C., within two months from today, in default, he shall undergo simple imprisonment for a period of two months, and out of the fine amount of Rs.50,06,000/-, an amount of
Rs.10,000/- shall be defrayed to the State after the expiry of appeal time and the remaining Rs.49,96,000/- shall be paid to the complainant as compensation u/sec.357(1)(b) of Cr.P.C. to the complainant after expiry of the appeal time. The trial court is directed to secure the presence of
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appellant for execution of sentence. The office is directed to send back the case record to trial court forthwith duly indexed.
Typed to my dictation, corrected and pronounced by me in the open Court on this the 28 th day of April, 2026.
Sd/-
VII ADDL. SESSIONS JUDGE
HYDERABAD
APPENDIX OF EVIDENCE
NIL
Sd/-
VII ADDL. SESSIONS JUDGE,
HYDERABAD.