Sri D.kiran Kumar

IN THE COURT OF XV ADDL.JUDGE-CUM-XIX ADDL.CHIEF

METROPOLITAN MAGISTRATE AT SECUNDERABAD.

MONDAY, THE 19 th DAY OF APRIL, 2021

Present : Sri D.Kiran Kumar XV Addl.Judge-cum-XIX A.C.M.M., Secunderabad.

C.C.NO.1478 OF 2018

Between:

Smt.Fatima Amalraj W/o Late A.Amalraj, Age: 59 years, Occ: Retired Employee, R/o Plot No.203, NarayanaApartments,WestMarredpally, Secunderabad. … Complainant

And

Smt.Belday Geeta W/o Belday Srinivas, Age: 57 years, Occ: Housewife, R/o Plot No.28, RK MDC Phase-2, Rukmini Devi Radhika Santhosha Colony, Cantonment Pump House Colony, Secunderabad. … Accused

This case is coming up for final disposal before me on 25.03.2021 in the presence of Sri P.Vamsheedhar Reddy, Gurmeet Sing Counselsfor the Complainant and Sri P.S.Rajasekhar, Counsel for the Accused and having been heard on both sides, and having stood over for consideration till this day, this Court delivered the following:

J U D G M E N T

1.This is a case instituted under section 138 of the Negotiable

Instruments Act, 1881 alleging that the accused Smt.Belday Geeta issued one cheque in favour of the complainant Smt.Fatima Amalraj which was dishonored with endorsement “Funds Insufficient”.

2.The case of the complainant in brief is as follows:-

The complainant and accused are well acquainted with each other, out of said acquaintance in the second week of June, 2015 the accused approached the complainant and requested for hand loan of

Rs.15,00,000/- promissing to repay it within six months expressing that she is in need of money to meet her family requirements, considering 2 of 18 C.C.1478 of 2018 the request of the accused the complainant accepted to advance money as hand loan to the accused and adjusted sum of

Rs.15,00,000/- out of her life time savings gave said amount to the accused in the third week of June 2015 as hand loan, while receiving the said amount the accused promised that she will clear the hand loan within period of six months. After six months the complainant aproached the accused for repayment, but the accused requested that she is expecting to get money thus requested for some more time, lastly after repeated requests the accused issued a cheque bearing No.914508dated04.05.2016for an amount of

Rs.15,00,000/- drawn on M/s.Syndicate Bank, Wellington Road,

Picket, Secunderabad Branch, the complainant presented said cheque with her banker M/s State Bank of India, Old Airport Branch,

Hyderabad, but said cheque dishonoured with endorsement “Funds

Insufficient” in the account of the accused vide cheque return memo dated 24.05.2016, the complainant informed to the accused about return of the cheque, having left with no other option, the complainant got issued statutory demand notice dated 10.06.2016 demanding the accused to pay cheque amount within 15 days of receipt of said notice. On receipt of notice the accused issued a reply denying hand loan transaction and failed to pay the cheque amount, hence this complaint.

3.After recording the sworn statement of the complainant

XI-Addl.Chief Metropolitan Magistrate, Secunderabad has taken cognizance and as per the orders of the Hon’ble Metropolitan

Sessions Judge, Hyderabad this case is transferred to this Court and it

is renumbered as C.C.No.1478 of 2018.

3 of 18 C.C.1478 of 2018

4.Summons were issued to the accused, she appeared through counsel. The copy of the complaint was furnished to her. The accusation was read over and explained to the accused, for which she pleaded not guilty and claimed to be tried.

5.During the course of trial the complainant was examined as

PW1 and Exs.P1 to P5 documents are exhibited. Ex.P1 is Cheque,

Ex.P2 is cheque return memo, Ex.P3 is office copy of legal notice,

Ex.P4 is postal acknowledgment card and Ex.P5 is reply notice.

6.The statement of the accused U/s.313 Cr.P.C. has been recorded by explaining incriminatory circumstances appearing in the evidence of the complainant. The accused denied the incriminating evidence appeared against her and reported defence evidence. The accused herself examined as DW1, two others as Dws 2 and 3 and

Exs.D1 to D7 documents are exhibited. Ex.D1 is mortgaged agreement, Ex.D2 is FIR, Ex.D3 is Bank statement, Ex.D4 is original

PAN card, Ex.D5 is Secunderabad Club membership card, Ex.D6 is

Deccan Club membership card and Ex.D7 is passport.

7.I have heard the learned counsels appearing for the complainant and the accused. Upon hearing and on perusal of record

I have framed the following points for determination in order to arrive at a definite finding as regards the dispute in this case-

1. Whether there exist legally enforceable debt or liability on the part of accused, whether the accused rebuts the statutory presumption under section 118, 139 of Negotiable Instrument Act?

2. Whether the complainant proved that accused has committed an offence Punishable Under Section 138 of NI Act?

3. What order?

4 of 18 C.C.1478 of 2018

8.POINT NOS.1 AND 2: I have carefully gone through the case record and perused the entire evidence on record both oral and documentary. I have heard and perused the arguments advanced and the submissions made by the learned advocate on behalf of the complainant and the learned advocate for the accused person.

9.The present case is for the offence under Section 138 of the

Negotiable Instruments Act, it is necessary to mention here five essential ingredients for completing the offence under Section 138 of the Act, they are as below:-

i) Drawing of the cheque in discharge of legally recoverable debt, ii) Presentation of the cheque with the bank, iii) Returning of the cheque unpaid by the drawee bank, iv) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, and

v) Failure of the drawer to make payment within 15 days of the receipt of the notice.

10. It is pertinent to mention here that there are two presumptions of law as mandated by the Negotiable Instruments Act. Under section 118 of the Negotiable Instruments Act, there is a legal presumption in favour of the complainant that every negotiable instrument (which includes a cheque) was made or drawn for consideration. The legal presumption is also regarding date of cheque, time of its acceptance, time of transfer, order of endorsement and also as to stamps.

11. According to Section 139 of NI Act "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." Under Section 139 NI Act there is a legal presumption that 5 of 18 C.C.1478 of 2018 the cheque was issued for discharging a liability and that presumption can be rebutted only by the person who drew the cheque. This presumption can be rebutted by the accused by adducing evidence.

So the burden of proof is on the accused.

12. In Hiten P. Dalal Vs. Bratindranath Banerjee AIR 2010 SC 1898 It was held "The words 'unless the contrary is proved' which occur in this provision (Section 139) make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted......".

13. To punish an accused for offence under section 138 of

Negotiable Instruments Act, it is to be seen as to whether the above mentioned five essential ingredients have been proved by the complainant or not and whether the accused has been able to rebut the presumptions raised against him U/s 118 and 139 of N.I. Act or not.

14. So far as the above said five ingredients for the offence U/s 138

Negotiable Instruments Act in the present case are concerned,

Firstly, the accused not disputed that Ex.P1 cheque bearing

No.914508, belongs to her account it is the case of the accused that she gave exhibit P1 in the blank form to one Ch.prabhakar as security of her husband loan transaction and it bears the signature of the

Accused. Secondly, presentation of the cheque for encashment and return of the same unpaid by the drawee bank also been proved and 6 of 18 C.C.1478 of 2018 the same has not been denied by the accused. Thirdly, the statutory demand notice Ex.P3 also been served upon the accused and in fact the accused duly replied to the statutory demand notice in Ex.P5 reply notice. It is the fact that the accused not made payment within 15 days of receipt of the legal demand notice because the accused denying transaction.

15.Learned counsel for the complainant submitted oral arguments contending that there is legally enforceable debt on the part of the accused, the acquaintance between the accused and complainant is not in dispute. The accused as DW1 in her cross-examination clearly admitted that she is having money transactions with the complainant.

The defence of the accused is not acceptable and it is also contended that since the accused admitted her signature on Ex.P1 cheque there is legally enforceable debt on the part of the accused. The Accused taking multiple defences contrary to reply notice and evidence that her signature on Ex.P1 is forged, the statutory presumptions are infavour of the complainant as to existence of legally enforceable debt on the part of the Accused, the acccused failed to rebut the presumptions, therefore prayed to convict the Accused.

16.In support of his contention learned counsel for the complainant relied on the following decision:-

Bir Singh Vs. Mukesh Kumar reported in Crl. Appeal

Nos.230 – 231 of 2019 wherein the Hon’ble Supreme Court held that “the onus to rebut the presumption U/s.139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of the cheque of the penal consequences of Section 138 of 7 of 18 C.C.1478 of 2018

Negotiable Instruments Act. 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 has been issued for payment of debt or in discharge of liability”.

17.On the other hand, learned counsel for the accused submitted oral arguments contending that the burden of proof is always on the complainant, the complainant failed to establish the legally enforceable debt or liability on the part of the accused, there is no such transaction between the accused and the complainant, the complainant in collusion with one Ch.Prabhakar misused blank signed cheque of the accused and forged the cheque filed a false complaint.

It is also contended that the date of request by the accused and date of advancing hand loan is not mentioned in the complainant, no promissory note or any other document is filed to show the transaction between them. PW1 in her evidence stated that her son and other person were present at the time of transaction, but those witnesses are not examined. It is also contended that PW1 is not having capacity to give such huge amount as hand loan. Further, the signature on Ex.P1 is forged signature, Exs.D4 to D7 documents clearly shows the correct signature of the Accused. DW3 Bank

Manager also clearly stated that, on presentation of cheque whether amounts are there or not in the account will be seen there is no chance of verify in the signature when there are no sufficient funds to

honour the cheque, therefore prayed to dismiss the complaint and

acquit the accused.

8 of 18 C.C.1478 of 2018

18.As far as standard of proof required to rebut the presumption raised under Ss.118 and 139 of the Act is concerned, a defence of non-existence of liability or the cheque being given as a security, cannot be taken merely on the pleadings of the accused. The accused has to prove her innocence either by adducing her own evidence or by relying the evidence of the complainant.

19. It was held by Hon'ble Supreme Court in the case Rangappa vs. Sri Mohan (2010) 11 SCC 441 that: - "26. In the 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 is based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttal 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.

20.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 above citation, the accused can rely on the materials submitted by the complainant in order to raise such a 9 of 18 C.C.1478 of 2018 defence and it is conceivable that in some cases the accused may not need to adduce evidence of her own.

21.The important aspect in this case is that signature of the accused on Ex.P1 cheque is not disputed, the accused in her evidence as DW1 deposed that Ex.P1 cheque was issued in the year 2012, she mentioned in her reply notice Ex.P5 that, her husband borrowed

Rs.35,000/- from Prabhaker as security, her husband gave blank signed cheque of her bank account. The dispute is with regard to handing over of Ex.P1 cheque by the accused to the complainant. It is a common plea that in most of the dishonour of the cheque cases that the cheque in question was issued as a security cheque. The expression security cheque is not a statutorily defined expression in the act and it is not an exception for prosecution U/s.138 of

Negotiable Instruments Act.

In the case of I.C.D.S Ltd. Vs. Beena Shabbir and another reported in AIR 2002 SC 3014 the Hon’ble Supreme Court has observed as follows:- “The commencement of the section stands with the words “where any cheque”, the above noted three words are extreme significance in particular reason of the user of the word “any” the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with the banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt, that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been carefully handed over to record not only discharge in whole or in part of any debt, but the same includes other liability as well”.

10 of 18 C.C.1478 of 2018

22.Thus, even if the dishonoured cheque in question was issued as a security, it will still comes under the ambit of Section 138 of the act. The only condition is that the cheque must be supported by some form of legally enforceable debt or liability towards the holder.

As per Section 118(a) of the Negotiable Instrument Act there is a presumption in favour of the holder of the cheque that the

Negotiable Instrument Act is made or drawn for consideration.

Hon’ble Supreme Court in a recent decision between Bir Singh vs.

Mukesh Kumar reported in (2019) 4 SCC 197, as to blank signed cheque given its findings as follows:

“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.

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.

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.

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 11 of 18 C.C.1478 of 2018

Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”

23.The principles laid down in the above case are squarely applicable to the facts and circumstances of present case. In the light of the above dictum, even the Accused given blank signed cheque, the holder in due course of a cheque can fill the blanks as per section 20 of Negotiable Instruments Act, thus the contention of accused as to alteration, forgery and fabrication of security check are not acceptable.

24.It is bone contention of Learned counsel for the accused that,

Ex.P1 cheque was given to one Ch.Prabhakar in the year 2012 by the husband of Accused as a security of hand loan transaction, the same is also mentioned by the accused in her reply notice Ex.P5 and in evidence of DW1. Husband of the Accused examined as DW2 and deposed in the same lines that he gave Ex.P1 to Prabhaker for hand loan of Rs.35,000/- even after repayment said prabhaker not returned the cheque and in collusion with the complainant fabricated Ex.P1.

Except oral statements no kind of evidence placed by the accused, the complainant denied the defence of the Accused. According to the accused she gave blank cheque in the year 2010 to Prabhaker as security for hand loan and repaid, the accused not issued any letter or notice to Prabhaker for return of cheque, she has not initiated any proceedings, even the accused did not give any instructions to her banker for stopping the payment in the event of presentation of cheque. Ex.P1 is presented in the year 2016 and dishonoured, the accused not given any kind of explanation why she did not taken any steps to get back her cheque, therefore the contention of Accused is 12 of 18 C.C.1478 of 2018 against to the conduct of human being in the natural course of day to day events, no prudent person would remain silent for years together by keeping his signed blank cheque with others. The Accused filed

Ex.D2 FIR dated 10-08-2017 registered against Prabhaker and

Complainant alleging that the complainant and Prabhker have used blank signed security cheque. Ex.D2 is subsequent to dishonour of

Ex.P1, after Ex.P5 Reply notice by the Accused and filing of this complaint, thus it is an after thought.

25.It is further contended by learned counsel for the accused that,

Ex.P1 cheque is of the year 2010, the accused has used same series cheques in the year 2012 itself thus there is no question of the

Accused issuing Ex.P1 cheque in the year 2016, in support of her contention relied on Ex.D3 statement of Bank Account of the Accused for the period from 1-1-2011 to 31-12-2012, on examination of this statement on 31-03-2012 the accused used cheque numbers 914509 and 914510 by self cash cheque withdrawals. Ex.P1 Cheque Number is 914508. The Accused did not filed her Bank statement upto May 2016 to show completely whether the accused not used Ex.P1 series cheques till the date of Presentation of Ex.P1 cheque. Therefore merely basing on Ex.D3 it cannot be concluded that, the Accused gave Ex.P1 cheque to Prabhaker in the year 2010. Accordingly contention of Learned counsel for the Accused not acceptable.

26.It is another contention of Learned counsel for the Accused that, the complainant is not having capacity to lend such huge amount to the Accused, the complainant failed to mention date of advancing hand loan, no promissory note is executed, no receipt is 13 of 18 C.C.1478 of 2018 filed, the complainant not filed income tax reports, thus there is no transaction between the accused and complainant as such the claim of the complainant is false. Now the point is to be seen whether filing of receipts, promissory note, Income tax returns in the present case are mandatory.

27.Hon’ble Supreme Court, in recent decision between Uttam

Ram vs Devinder Singh Hudan i n CRIMINAL APPEAL NO. 1545 OF

2019 (ARISING OUT OF SLP (CRL) NO. 3452 OF 2019),dated 17-10- 2019 held that:

“ In cases under section 138 of NI Act, the complainant not required to prove the amount due as if proving debt before civil court, in view of statutory presumption.”

28.Hon'ble Supreme Court of India in the case of Rohitbhai

Jivanlal Patel v. State of Gujrat, 2019 SCC OnLine SC 389 :

2019 (5) SCALE 138 (decided on 15.03.2019) has held as follows:

“ “In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial

Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial

Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of 14 of 18 C.C.1478 of 2018 evidence regarding the source of funds for advancing loan to the accused-appellant. The aspect relevant for consideration had been as to whether the accused- appellanthasbroughtonrecordsuch facts/material/circumstances which could be of a reasonably probable defence”.

29.As per the dictum of Hon’ble Supreme Court in the above said

Judgment, filing of Income tax returns, receipts and other documents are not required by the complainant in view of statutory presumption, if the accused rebuts presumption by adducing probable evidence then the burden is on the complainant, It is fact that the complainant is a retired government servant, as seen from Ex.D1 the complainant is having own house, in the complaint and Ex.P3 statutory notice the complainant clearly mentioned that, out of her life time savings she has advanced money to the Accused, in these circumstances it cannot be concluded that the complainant is not having capacity to advance money to the Accused.

30.Learned counsel for the Accused specifically contended that, the signature of the Accused on Ex.P1 is forged, it is different from admitted signatures of the accused on Exs.D4 to D7, and also contended that, DW3 clearly deposed bank will not compare the signatures on cheque. The Accused in the present case taken defence initially that, her husband gave her blank signed cheque to one Prabhaker as security for loan transaction, when the matter came up for defence evidence it is the stand of the Accused that, her signature on Ex.P1 is forged. The Accused in Ex.D2 FIR clearly mentioned that, her signed blank cheque misused by the 15 of 18 C.C.1478 of 2018 complainant, it is also mentioned in Ex.P5 reply notice that, Accused gave signed blank cheque to her husband and her husband gave it to

Prabhaker. As per Ex.P2 cheque return memo cheque is not returned for the reason of signature not matching it is returned with endorsement funds insufficient in the account of the Accused. The

Accused as DW1 when her signature on Ex.P1 is confronted did not denied as to her signature, she stated that, she cannot say whether the signature on Ex.P1 belongs to her or not, for all these reasons the defence of Accused as to forgery of her signature on Ex.P1 is not acceptable.

31.In view of the aforesaid reasons, in my considered opinion the accused has not been able to prove any probable defence and has failed to rebut the presumption raised U/s 139/118 of the NI Act.

Since the accused has failed to rebut the presumption raised U/s. 139 of the NI Act. The complainant has proved that the cheque was belonged to the accused and the same was dishonoured. Further, the complainant has also proved that the legal notice was received by the accused and she did not pay the amount within 15 days of receiving the same. However, as far as the existence of legally enforceable debt is concerned statutory presumptions is drawn infavour of the complainant the accused failed to substantiate her defence. Therefore, the complainant has been able to prove her case that the cheque in question Ex.P1 was issued in discharge of legally recoverable liability to the complainant by the accused. Accordingly, point Nos.1 and 2 are answered in favour of the complainant.

16 of 18 C.C.1478 of 2018

POINT No.3:

In the light of aforesaid discussion, this Court is of the view that the complainant has been able to prove all the necessary ingredients in respect of offence U/s 138 of Negotiable Instruments Act.

Consequently, the accused is held guilty in respect of offence U/s 138 of Negotiable Instruments Act.

In the result, the accused is found guilty for the offence punishable U/s.138 of Negotiable Instruments Act and accordingly she is convicted U/s.255(2) Cr.P.C.

Dictated to the Personal Assistant, transcribed by her, corrected and

pronounced by me in the open Court on this the 19th day of April, 2021.

XV Addl. Judge–Cum-XIX ACMM, Secunderabad.

1.On appearance of the accused she is questioned with regard to the quantum of sentence for which she prayed to take a lenient view and also stated that her entire family depending on her and she has not committed any offence, false case filed by the complainant.

2.For the offence U/s.138 of N.I.Act the punishment prescribed is imprisonment for a period which may extended to 2 years or with fine which may extended by twice the cheque amount or both.

Considering the transaction in question was taken place in the year 2016, there is no material on record that the accused is habitual or repeated offender, the complainant also not claiming interest. On the other hand the complainant also should not suffer loss, therefore if cheque amount is ordered to be paid to the complainant as compensation the same would meet ends of justice. In these circumstances imposition sentence of imprisonment of six months 17 of 18 C.C.1478 of 2018 and fine of Rs.15,01,000/- on accused would meets ends of justice, out of which Rs.15,00,000/- is ordered to be paid to complainant as a compensation U/s.357(1)(b) Cr.P.C., in default of payment the simple imprisonment for 6 months would suffice.

The accused is sentenced to undergo simple imprisonment for a period of six months and also sentenced to pay fine of Rs.15,01,000/-, out of which Rs.15,00,000/- shall be paid as compensation to the complainant in terms of 357(1)(b) Cr.P.C., Rs.1000/- shall be remitted to the state. In default of payment of fine the accused shall suffer simple imprisonment for a period of six months. Both sentence and default sentence are ordered to be run concurrently. The bail bonds of the accused are ordered to be in force for a period of 6 months in terms of section 437-A Cr.P.C. A free copy of this judgment is handed over to the accused. The accused appraised as to her right of appeal.

There is no remand period to give set off Under Section 428 of Cr.P.C.

Dictated to the Personal Assistant, transcribed by her, corrected and

pronounced by me in the open Court on this the 19th day of April, 2021.

XV Addl.Judge-cum-XIX ACMM, Secunderabad.

18 of 18 C.C.1478 of 2018

APPENDIX OF EVIDENCE

WITNESSES EXAMINED

FOR PROSECUTION : FOR DEFENCE:

PW1 : Fatima Amalraj DW1: Belday Geeta DW2 : Belday Srinivas DW3 : Indira Selvaraj

DOCUMENTS MARKED

FOR PROSECUTION : Ex.P1 : Cheque No.914508 dated 04.05.2016 for Rs.15,00,000/- Ex.P2 : Cheque return memo dated 24.05.2016 Ex.P3 : Office copy of legal notice dated 10.06.2016 Ex.P4 : Postal acknowledgment card Ex.P5 : Reply notice dated 16.07.2016

FOR DEFENCE : Ex.D1 : Mortgage Agreement dated 01.05.2012 Ex.D2 : FIR No.165/2017 dated 10.08.2017 Ex.D3 : Statement of Bank Account

Ex.D4 : Original PAN card Ex.D5 : Secunderabad Club Membership card Ex.D6 : Deccan Club Membership card Ex.D7 : Expired original passport

XV Addl.Judge-cum-XIX ACMM, Secunderabad

IN THE COURT OF XIV ADDL. JUDGE – CUM – XVIII ADDL. CHIEF

METROPOLITAN MAGISTRATE, SECUNDERABAD

WEDNESDAY, THE 14TH DAY OF AUGUST, 2019

 Present : Sri D. Kiran Kumar FAC XIV Addl. Judge – Cum – XVIII ACMM, Secunderabad

C C. No : 440 OF 2017

BETWEEN : 

T. Maladri, S/o T. Kondaiah, aged 39 years, Occ: Pvt. Service, R/o H.No. 2­31­C/61, Gandhi Nagar, Sikh Village, Secunderabad

.... Complainant

AND

Taneru Subba Rao, S/o T. Hanumaiah, aged 55 years, Occ: Business, H.No. 11­172, Srinivasa Nagar, Tangaturu Village & Post, Prakasham District – AP 523 274

.... Accused

 This case is coming for final disposal before me on 14.08.2019 in the presence of Sri G. Maruthi Rao, counsel for the complainant and Sri Ravi Kiran, counsel for the accused, having been heard and having stood over for consideration till this day, this court delivered the following

J U D G M E N T

1. The complainant filed complaint U/s. 200 Cr.P.C for the offence punishable U/s. 138 of Negotiable Instrument Act.

2.The case of the complainant in brief is as follows :

The accused is uncle of the complainant and with that acquaintance accused approached the complainant to meet his business needs and for purchasing four wheeler, on 07.12.2015 borrowed an amount of Rs.

4,72,500/­ and promised to repay the loan within short period along with interest @ 2% per month and also executed a promissory note on the same day. The accused has not paid the borrowed money he was postponing the same on one pretext or other, after repeated requests and demands by the complainant the accused has issued a cheque bearing No.020621,

Dt.04.10.2016 for Rs.5,00,000/­ drawn on M/s.Andhra Bank­89, Court - 2 - CC. No : 440 of 2017

Street (Ongole) Branch, Ongole, Prakasham District towards repayment, when the complainant has presented the said cheque on 04.10.2016 with his banker i.e., M/s.Andhra Bank, Diamond

Point Branch, Secunderabad, the same was dishonoured with an endorsement as “Funds Insufficient” along with cheque return memo dt 07.10.2016. Then complainant has issued statutory notice dated 31.10.2016 calling upon the accused to repay the amount covered under the dishonoured cheque within 15 days from the date of receipt of notice despite receiving the notice on 07.11.2016 the accused has neither paid the due amount nor issued reply notice. Hence the complainant constrained to file the present case against the accused to punish him as per law.

3.After recording the sworn statement of the complainant XI

Addl. Chief Metropolitan Magistrate, Secunderabad has taken cognizance and as per the orders of the Hon’ble Metropolitan

Sessions Judge, Hyderabad this case was transferred to this case

and it is renumbered as C C No. 440 of 2017

4. Summons was issued to the accused, he has appeared through counsel. The copy of the complaint was furnished to him. The accusation was read over and explained to the accused, for which he pleaded not guilty and claimed to be tried.

5. During the course of trial the complainant to prove his case examined herself as PW1 and also examined one Taneru Tirupathi as PW2 and got marked Ex's.P1 to P6 on his behalf.

6. The statement of the accused U/sec. 313 of Cr.P.C has been - 3 - CC. No : 440 of 2017 recorded. The accused denied the incriminating evidence appeared against her and reported no defence evidence.

7. Heard the arguments of both sides. Learned Counsel for accused filed written arguments.

8. On consideration of contentions of both sides and material on record, points that arise for determination are as follows.

1. Whether the cheque in question was issued in discharge of debt? If so whether accused rebuts the presumption under section 118, 139 of Negotiable Instrument Act?

2. Whether the complainant proves that accused has committed an offence punishable under Section 138 of NI

Act? 

3. What order?

9. My answers to the above points are as follows:

10. POINTS 1 AND 2:Both points are interconnected, to avoid repetitions of the facts both points are taken together.

11.Admittedly, the accused is none other than maternal uncle of the wife of the complainant, there is no dispute as to acquaintance and relationship between the parties. It is the case of the complainant that, On 07.12.2015 accused borrowed sum of Rs.

4,72,500/­ to meet his business needs and also for purchase of four wheeler. It is further case of the complainant that the accused promised to repay the loan amount within a short period along with interest @ 2% per month and also executed promissory note. On 4.10.2016 in discharge of said debt the accused has issued Ex.P1 cheque for Rs.5,00,000/­, on presentation of cheque it was - 4 - CC. No : 440 of 2017 dishonoured with an endorsement ‘funds insufficient’ are in the account of the accused.

Subsequently the complainant issued statutory notice in Ex.P4, the accused received the said notice vide Ex.P6 postal acknowledgment card. In spite of demand the accused failed to pay the said amount.

12.It is the specific defence of the accused as seen from cross examination of the witness and also from written arguments, the accused denied loan transaction and contended that, the complainant is not having capacity to lend such a huge amount,

Ex.P1 signed cheque was taken for security purpose, further accused did not disputed that Ex.P1 cheque bears his signature.

13. Learned counsel for complainant submitted oral arguments stating that evidence of PW1 is consistent, he has deposed the facts about the borrowing of money by the accused, PW2 is witness to the said loan transaction he supported the case of the complainant.

The complainant is getting salary of Rs. 18,000/­ and also Rs.

5,000/­ apart from his salary and he has advanced a sum of Rs.

4,75,500/­ to the accused from his savings and therefore prayed to convict the accused. Learned counsel for the complainant in support of his contention relied on the following rulings:

1. 2015 (2) ALD (Crl) 214 (SC) between T.Vasantha Kumar vs

Vijayakumari – wherein Hon’ble supreme court held that “ The cheque as well as the signature has been accepted by the accused the presumption under section 139 of NI Act would operate, Thus the - 5 - CC. No : 440 of 2017 burden was on the accused to disprove the cheque or the existence of any legally recoverable debt or liability.”

2. 2016 (1) ALD (Crl) 81. Omprakash vs L.sunitha and another – where in Hon’ble high court of Hyderabad held that, “ once holder of cheque establishes that he legally received cheque from the drawer, presumption under section 139 follows to the effect that there existed a legally enforceable debt reverse burden will be on the accused”.

3. 2008 (5) Supreme Court 351.between m/s. Indo automobiles vs m/s Jail durga enterprises­ where in Hon’ble supreme court of

India held that “ once notice has been sent by registered post with acknowledgment due to a correct address, it must be presumed that, the service has made effective”. ­ In the present case in view of

Ex.P5 Acknowledgement there is no dispute regard to service of notice.

4. 2002 6 SCC 259 between Assistant director of inspection investigation vs A.B.Shanthi hon’ble supreme court held that “ provision in, seeking to penalise the borrower alone and not the lender, held, not discrimnatory a tax legislation is a policy matter and it is for parliament to decide the manner in which the legislation should be made”. ­

In the present case learned counsel for the accused raised contention that, as per section 269 SS of Income tax act, loan amount must be by way of bank or cheque transaction but complainant stating he gave Rs. 4,72,500/­ in cash, in view of the findings of hon’ble apex court in the above referred decision the - 6 - CC. No : 440 of 2017 complainant cannot be penalized.

14. On the other hand learned counsel for the accused submitted oral as well as written arguments, that there is no such transaction between complainant and accused and the complainant is not having capacity to lend such huge amount, It is also contended that Ex.P1 cheque contains material alteration and it is a blank cheque. No explanation given by complainant why pronote not executed, On Ex.P1 cheque payee column name of the accused and complainant mentioned thus cheque is not infavour of the complainant, Pw.2 in evidence deposed that cheque was issued on the date of alleged borrowing money where as in complaint it is mentioned after 8 months, Therefore no offence U/sec.138 of

Negotiable Instrument Act, is constituted and accordingly prayed this court to dismiss the petition and acquit the accused.

Learned counsel for accused specifically contended that Ex.P3 promissory note contains two signatures i.e., one on revenue stamp and another is below the said signature. According to him Ex.P3 is a promissory note. 

As stated above the accused failed to adduce any evdience in support of his contention that he has given blank signed promissory note to the complainant. Whereas the complainant examined PW2 who is an attestor/witness to Ex.P3, his evidence is clearly establishing the case of the complainant. PW2 deposed that he was present at the time of transaction, he signed as a an attestor No.2. However there is a discrepancy as to year in cross - 7 - CC. No : 440 of 2017 examination of PW2, the same is a minor discrepancy and it will not affect the case of the complainant. 

15. On careful consideration of submissions of learned counsel for both sides, I have perused the record and evidence adduced by them, since the accused in this case alleged to have committed an offence U/sec.138 of Negotiable Instrument Act to constitute offence the following ingredients are required to proved:

i.The accused issued cheque on the account maintained by him with a bank for payment of money to another out of that account.

ii. The cheque has been issued for discharge of liability (either in whole or in part ) of any debt or liability iii. The cheque has been presented with the bank within period of its validity.

iv. The cheque has been returned by the bank unpaid. The amount of money considering to the credit of the account is insufficient to

honour the cheque or exceeds the amount arranged to be paid from that

account by the agreement made with the bank.

v.The payee or the holder in due course of the cheque makes demand for payment of money by giving notice in writing to the drawer of the cheque within 30 days of the receipt of informationby him from the bank regarding the return of cheque as unpaid.

vi.The drawer of the cheque failed to make payment of said amount of money to the payee or the holder in due course of the cheque within 15 days of receipt of the said notice.

16. In the case on the hand, the accused has not taken any defence as to the cheque in question i.e., Ex.P1 not having been issued on the account maintained by him with the bank. The accused has admitted his signatures on the cheque in question and has not disputed the factum of dishonour of the cheque vide Ex.P2 cheque return memo dt. 07.10.2016. it is also not the case of the - 8 - CC. No : 440 of 2017 accused that the cheque in question was not presented within the period of its validity or that he has already made the payment to the complainant in respect of cheque in question. Hence ingredients No. i,iii, iv & vi are deemed to be proved as not disputed.

17.In respect of ingredient No. V, i.e., whether the complainant made demand for the payment of said amount of money by giving notice in writing to the accused within 30 days of receipt of information. The complainant relied on Ex.P4 i.e., legal notice

dt. 31.10.2016, Ex.P1 cheque was returned on 07.10.2016, Ex.P4

notice was issued on 31.10.2016, it was dispatched through registered post on 01.11.2016 by Ex.P5 postal receipt. Therefore it is within 30 days of return of cheque the complainant has issued statutory notice to the accused, the accused in this case not disputed about the receipt of said notice. Ex.P3 notice was duly served on accused on 7.11.2016 vide Ex.P6 postal acknowledgment receipt. Ex.P6 contains the signature of the accused. Therefore the ingredient No.v is also established by the complainant as to service of mandatory notice U/sec. 138 of Negotiable Instrument Act. The complaint in this case is filed on 02.12.2016 i.e.,after accrual of cause of action and wwithin period of limitation. Therefore there is no infirmity with regard to cause of action and filing of complainant within stipulated period. 

18. Now with regard to the Ingredient (ii) whether the cheque has - 9 - CC. No : 440 of 2017 been issued for the discharge (either in whole or in part) of any debt or other liability. The complainant as PW1 deposed that the accused for repayment of hand loan amount issued Ex.P1 cheque.

Whereas the accused contended that he has not issued Ex.P1 cheque. However during the cross examination of PW1 it was clearly stated that the accused is the relative of his wife. It is elicited in the cross examination of PW1 that as to the date of said hand loan as on 10.02.2015. further in the cross examination

PW.1 learned counsel for accused elicited the fact, that PW1 is getting a salary of Rs. 18,000/­ and also earning an amount of Rs.

5,000/­ apart from his salary and also lifted some chits, out of that income she lent the above said amount to the accused For the suggestion by the accused that he obtained blank cheques and pronotes for which PW1 denied stating that the accused is her close relative, one K V Narayanrao who is also her relative filed the blanks in the cheques and blank pronote. 

19. As seen from Ex.P1 cheque signature of accused is in Telugu language, remaining contents are filled in English language, apparently they are not in the hand written of the accused,Now it is to be seen whether the said discrepancy amounts to material alteration or not. Section 20 of Negotiable Instruments Act says that “when a person signs and delivers to another a cheque by subscribing his signature the person who receives it is having authority to fill the blanks”. In the present case the accused clearly admitted that he has handed over Ex.P1 cheque by subscribing his - 10 - CC. No : 440 of 2017 signature to the complainant. Therefore, the complainant is having authority to make it complete by filling up the blanks. For that there is no prohibition under Negotiable Instruments Act, therefore it does not amounts to material alteration. Accordingly I find no substance in the argument of learned counsel for the accused.

20.In the citation reported in2010 (1) ALD Crl. 59 in between

D.Achutha Reddy Vs. State of A.P. and another. The Hon’ble High

Court has held that “the body of the cheque need not necessarily

be written by the accused and it can be in the hand writing of

anybody else or typed on the type machine, so long as the

accused does not dispute the genuineness of the signature on

the cheque”.

21.In this case on hand, the accused is not disputing his signature found on Ex.P1 cheque. It is not the case of the accused that Ex.P1 cheque is not drawn from the account maintained by him. In the the payee column clearly name of the complainant is mentioned, the signature of the accused is above the name of the complainant it may be because the accused signed in telugu, the contents written in English the drawer subscribed his signature above the name of payee, Thus, the accused gave authorization to the holder of cheque to complete it. As stated above once the signature is admitted on cheque the statutory presumption is in favour of the complainant, the contrary is to be proved by the accused.

22. As seen from cross examination of PW1 the contention of the - 11 - CC. No : 440 of 2017 accused is that blank cheque was given to the complainant, the tenor of the cross examination of PW1 is that the accused was in disagreement about the amount of Rs. 5,00,000/­ mentioned in

Ex.P1 cheque, if it is so it is for the accused to adduce evidence to clarify the stand about the cheque amount.

23.The statutory presumption U/sec. 118 of NI Act more particularly (a & b) ensures in favour of the holder of the instrument/complainant until the contrary is proved which reads as follows “Section 118 – Presumptions as to negotiable instruments”

Untill the contrary is proved, the following presumptions shall be made:

(a) of consideration – that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.

(b) that holder is a holder in due course – that the holder of a negotiable instrument is a holder in due course.”

23.However, such presumption is rebuttable and the accused can prove the non­existence of a consideration by raising a probable defence. The burden upon the accused of proving the non­ existence of the debt can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. To disprove the presumption, - 12 - CC. No : 440 of 2017 the accused has to bring on record such facts and circumstances upon consideration for which the court may either believe that the consideration did not exist or its non­existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist.

24. The Negotiable Instruments Act Section 139 provides that there is a presumption in favour of the holder of the cheque that the holder of the cheque received the cheque in hole or in part of any debt or any other liability. The accused has to rebut the said presumption. The standard for doing so as that of preponderance of probabilities. Hon’ble Apex court in Rangappa Vs. Sri Mohan (2010) 11 SCC 441),  held that “the accused need not to examine him self as witness to rebut presumption, he can rely on the evidence of the complainant”.

25. In the present case the accused not examined any witness, he relied on cross examination of the witness i.e., PW.1, 2 and written arguments. Now it is to be seen whether the accused has rebutted the presumption available in favour of the complainant. It is the specific defence of the accused that the complainant/PW1 is not having capacity to lend such a huge amount. It is also contended that no promissory note is executed between the accused and complainant. For this PW1 in her evidence clearly stated that she is having own house, getting rental income, and also doing tailoring business. This aspect is not denied by the accused.

26.Hon’ble Apex court in latest decision rendered between Rohit - 13 - CC. No : 440 of 2017

Jivanlal Patel Vs. State of Gujarat & Anr in Criminal Appeal

No. 508 of 2019 dt. 15.03.2019 while confirming order of High

Court in reversing the acquittal held that:

“The observations of trial court that there was no documentary evidence to show the source of funds with the complainant to advance the loan, there is no recorded transaction in the form of receipt, notes are do not stand inconformity with the presumption existing in favour of the complainant by virtue of Sections 118 & 139 of NI Act”. It is also held that “presumption is in favour of complainant, when such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or for want of source of funds were not relevant for consideration”. 

Further Hon’ble Apex Court in recent decision between Pavan

Diliprao Dike Vs. Vishal Narendrabhai Parmar (arising out of

S.L.P (crl) Nos. 3858/2019) held that “The trial court shall not place heavy burden on the complainant to prove the debt.”

The principles in the above decisions are applicable to the present case therefore the contention of learned counsel for accused that the complainant is not having source or financial capacity is not acceptable.

26. Learned counsel for accused further contended that, the complainant not filed income tax returns. In this case the complainant and accused are close relatives, for the short period the amount stated to be advanced by the complainant to the accused. Merely because amount advanced is not shown in Income - 14 - CC. No : 440 of 2017

Tax Return, in every case, one cannot jump to the conclusion that the presumption under section 139 of the said Act stands rebutted.

There may be cases where money is advanced in cash by way of loan which may be repayable within few days or within few months.

A complainant may not show the said amount in the Income Tax

Return as it is repayable within few days or few months in the same financial year. In the present case date of alleged hand loan is 07.12.2015 Ex.P1 cheque is dated 04.10.2016 which is after 10 months of said hand laon. In such a case the failure to show the amount in the Income Tax Return may not by itself amount to rebuttal of presumption under section 139 of the said Act. However it is settled principle of law that merely on the ground of non filing of income tax returns the complaint U/sec. 138 of NI Act cannot be dismissed.

27. The complainant as PW1 clearly stated that on 07.12.2015 he advanced sum of Rs. 4,72,500/­ to the accused. The accused while admitting Ex.P1 cheque not adduced any kind of evidence in support of his contention that Ex.P1 cheque was given to the complainant in the blank form. When the accused takes such stand his blank signed cheque is with the complainant he has to adduce positive evidence under what circumstance his signed blank cheque, how it has come into the hands of the complainant but there is no such evidence.

28. There are no doubtful circumstances or inconsistencies in the evidence of PW1/complainant, PW2 is relative of accused as well as - 15 - CC. No : 440 of 2017 complainant he deposed about the advancing of money to accused by complainant. Stated in cross examination by learned counsel for the accused that, Ex.P1 cheque was issued on the same day of advancing money, even assuming that, Ex.P1 cheque was given on the same day of lending money, in law a post dated cheque is valid and in its dishonour prosecution under section 138 of NI act is maintainable. Further nothing elicited in cross examination of PW2 to doubt his presence at the time of said loan transaction.

29.With regard to the aspect of ingredients of Section 269SS of the Income Tax Act, 1961, it is to be noted that no individual can accept any loan or deposit to extent of Rs.20,000/­ or more otherwise than by an 'Account payee cheque or an Account payee

Bank Draft'. As a matter of fact, the said Section does not say in an unambiguous and unequivocal term that an individual cannot lend or advance over and above Rs.20,000/­ in cash to the other, an individual who receives an advance in breach of Section 269SS of the Income Tax Act, 1961 is to face the necessary consequences of

Law arising thereto. In short, Section 269SS of Income Tax Act cannot be pressed into service for precluding / preventing an individual from recovering the money over and above Rs.20,000/­ he had lent or advanced to another, therefore such contention of accused not acceptable.

30.In view of the aforesaid facts and circumstances, the complainant has succeeded in proving that the accused has issued the dishonored cheque in discharge of legally enforceable liability - 16 - CC. No : 440 of 2017 and that the accused failed to make payment of the cheque amount within fifteen days from the date of service of the demand notice.

The demand notice had been issued within the period stipulated by law. The complaint has been filed within the period of limitation.

31. Since in the instant case, the accused has failed to lead any convincing evidence to aid him in discharge of his onus, the presumption of law operates in favour of existence of debt or liability. I am of the opinion that the defence set up by the accused is not proved, It is the sole burden and duty of accused to prove absence of liability by raising a ''probable'' defence. However, he has failed to discharge his onus. Having considered the entire evidence,

I am of the opinion that the complainant has successfully proved all the essential ingredients of Section 138 of the Act. Accordingly, accused is held guilty for committing the offence punishable u/s 138 of the Act. Accordingly Point No.1 and 2 answered infavour of the complainant.

POINT No.3:

In view of my findings in point Nos.1 and 2 the accused herein is liable to be convicted for the offence U/s.138 of Negotiable

Instruments Act.

In the result, the accused is found guilty for the offence punishable U/s.138 of Negotiable Instruments Act and accordingly - 17 - CC. No : 440 of 2017 he is convicted U/s.255(2) Cr.P.C. 

Dictated to Stenographer Gr.II, typed by her and corrected and

pronounced by me in the open court on this the 14 th day of August 2019. 

Sd/-

D. Kiran Kumar FAC XIV ADDL. JUDGE – CUM – XVIII ACMM

SECUNDERABAD.

QUESTION OF SENTENCE

 On appearance of the accused , he is questioned with regard to the quantum of sentence for which he prayed to take a lenient view and also stated that his entire family is depending upon him, he is senior citizen aged about 68 years. The accused further stated that he is not a habitual offender and this is the first case U/Sec. 138 of NI Act. 

Under Section 138 of NI Act the punishment prescribed for the offence is imprisonment for a period which may extended to 2 years or with fine which may extended twice the cheque amount or both. 

On considering the nature of the offence, age of the accused, I feel that it is fit and proper to sentence the accused to undergo Simple imprisonment for 3 months, and to pay a fine of Rs. 5,01,000/­, out of which Rs. 5,00,000/­ is ordered to be paid to the complainant as a compensation under Sec. 357 (1) (b) Cr.P.C, and Rs. 1,000/­ ordered to be remitted to the state, in default of payment the said fine, 3 months simple imprisonment would suffice.

- 18 - CC. No : 440 of 2017

In the result, the accused is sentenced to undergo simple imprisonment for a period of three months and to pay fine of Rs.

5,01,000/­ (Rupees Five lakhs One Thousand Only) in default of payment of file he shall under go simple imprisonment for a period of 3 months. Out of fine amount i.e., Rs. 5,01,000/­ a sum of Rs. 5,00,000/­ shall be paid s a compensation under Sec. 357 (1) (b) Cr.P.C, Rs. 1,000/­ shall be remitted to the state. The bail bonds of the accused ordered to be in force for 6 months interms of section 437­A IPC, There is remand period of the accused to give set off under section 248( 2) Cr.P.C, the accused appraised of his right of free legal aid and appeal.

APPENDIX OF EVIDENCE

 WITNESS EXAMINED

FOR COMPLAINANTFOR ACCUSED

PW1 – T. MaladriNil PW2 – Taneru Tirupathi

EXHIBITS MARKED ON BEHALF OF COMPLAINANT

Ex. P1 : Cheque No. 020622, dt. 04.10.2016 drawn on Andhra Bank, Ongole Prakasham District for Rs. 5 lakhs

Ex. P2 : Cheque return memo, dt. 13.10.2016.

Ex. P3 : Office copy of legal notice dt. 31 .10.2016.

Ex. P4 : Postal receipt, dt. 01.11.2016.

Ex. P5 : Postal acknowledgment receipt dt. 07.11.2016.

EXHIBITS MARKED ON BEHALF OF ACCUSED

Nil

Sd/-

D. Kiran Kumar FAC XIV ADDL. JUDGE – CUM – XVIII ACMM - 19 - CC. No : 440 of 2017

SECUNDERABAD.

 IN THE COURT OF XIV ADDL. JUDGE – CUM – XVIII ADDL. CHIEF

METROPOLITAN MAGISTRATE, SECUNDERABAD

WEDNESDAY, THE 14TH DAY OF AUGUST, 2019

 Present : Sri D. Kiran Kumar FAC XIV Addl. Judge – Cum – XVIII ACMM, Secunderabad

C C. No : 439 OF 2017

BETWEEN : 

T. Govardhani, W/o T. Maladri, aged 35 years, Occ: Business, R/o H.No. 2­31­C/61, Gandhi Nagar, Sikh Village, Secunderabad

.... Complainant

AND

Taneru Subba Rao, S/o T. Hanumaiah, aged 55 years, Occ: Business, H.No. 11­172, Srinivasa Nagar, Tangaturu Village & Post, Prakasham District – AP 523 274

.... Accused

 This case is coming for final disposal before me on 14.08.2019 in the presence of Sri G. Maruthi Rao, counsel for the complainant and Sri Ravi Kiran, counsel for the accused, having been heard and having stood over for consideration till this day, this court delivered the following

J U D G M E N T

1. The complainant filed complaint U/s. 200 Cr.P.C for the offence punishable U/s. 138 of Negotiable Instrument Act.

2.The case of the complainant in brief is as follows :

The accused is uncle of the complainant and with that acquaintance accused approached the complainant to meet his business needs and for purchasing fixed assets, on 10.02.2016 borrowed an amount of Rs.

5,00,000/­ and promised to repay the loan within short period. The accused has not paid the borrowed money he was postponing the same on one pretext or other, after repeated requests and demands by the complainant the accused has issued a cheque bearing No.02062, Dt.04.10.2016 for

Rs.5,00,000/­ drawn on M/s.Andhra Bank­89, Court Street (Ongole) Branch, - 2 - CC. No : 439 of 2017

Ongole, Prakasham District towards repayment of principal, when the complainant has presented the said cheque on 13.10.2016 with her banker i.e., M/s.Andhra Bank, Diamond Point Branch,

Secunderabad, the same was dishonoured with an endorsement as “Funds Insufficient” along with cheque return memo dt 13.10.2016. Then complainant has issued statutory notice dated 31.10.2016 calling upon the accused to repay the amount covered under the dishonoured cheque within 15 days from the date of receipt of notice despite receiving the notice on 07.11.2016 the accused has neither paid the due amount nor issued reply notice.

Hence the complainant constrained to file the present case against the accused to punish him as per law.

3.After recording the sworn statement of the complainant XI

Addl. Chief Metropolitan Magistrate, Secunderabad has taken cognizance and as per the orders of the Hon’ble Metropolitan

Sessions Judge, Hyderabad this case was transferred to this case

and it is renumbered as C C No. 439 of 2017

4. Summons was issued to the accused, he has appeared through counsel. The copy of the complaint was furnished to him. The accusation was read over and explained to the accused, for which he pleaded not guilty and claimed to be tried.

5. During the course of trial the complainant to prove her case examined herself as PW1 and also examined one Taneru Tirupathi as PW2 and got marked Ex's.P1 to P5 on her behalf.

- 3 - CC. No : 439 of 2017

6. The statement of the accused U/sec. 313 of Cr.P.C has been recorded. The accused denied the incriminating evidence appeared against her and reported no defence evidence.

7. Heard the arguments of both sides. Learned Counsel for accused filed written arguments.

8. On consideration of contentions of both sides and material on record, points that arise for determination are as follows.

1. Whether the cheque in question was issued in discharge of debt? If so whether accused rebuts the presumption under section 118, 139 of Negotiable Instrument Act?

2. Whether the complainant proves that accused has committed an offence punishable under Section 138 of NI

Act? 

3. What order?

9. My answers to the above points are as follows:

10. POINTS 1 AND 2:Both points are interconnected, to avoid repetitions of the facts both points are taken together.

11.Admittedly, the accused is none other than maternal uncle of the complainant, there is no dispute as to acquaintance and relationship between the parties. It is the case of the complainant that, On 10.2.2016 accused borrowed sum of Rs. 5,00,000/­ to meet his business needs and also for purchase of fixed assets. It is further case of the complainant that the accused promised to repay the loan amount within a short period. On 4.10.2016 in discharge of said debt the accused has issued Ex.P1 cheque for

Rs.5,00,000/­, on presentation of cheque it was dishonoured with - 4 - CC. No : 439 of 2017 an endorsement ‘funds insufficient’ are in the account of the accused. Subsequently the complainant issued statutory notice in

Ex.P3, the accused received the said notice vide Ex.P5 postal acknowledgment card. In spite of demand the accused failed to pay the said amount.

12.It is the specific defence of the accused as seen from cross examination of the witness and also from written arguments, the accused denied loan transaction and contended that, the complainant is not having capacity to lend such a huge amount,

Ex.P1 signed cheque was taken for security purpose, further accused did not disputed that Ex.P1 cheque bears his signature.

13. Learned counsel for complainant submitted oral arguments stating that evidence of PW1 is consistent, she has deposed the facts about the borrowing of money by the accused, PW2 is witness to the said loan transaction he supported the case of the complainant, on good faith and out of relationship the complainant did not get executed promissory note or receipt in her favour. The complainant is having own house, and is getting rental income and she is also doing tailoring work, out of her savings she advanced sum of Rs. 5,00,000/­ to the accused and therefore prayed to convict the accused. Learned counsel for the complainant in support of his contention relied on the following rulings:

1. 2015 (2) ALD (Crl) 214 (SC) between T.Vasantha Kumar vs

Vijayakumari – wherein Hon’ble supreme court held that “ The cheque as well as the signature has been accepted by the accused - 5 - CC. No : 439 of 2017 the presumption under section 139 of NI Act would operate, Thus the burden was on the accused to disprove the cheque or the existence of any legally recoverable debt or liability.”

2. 2016 (1) ALD (Crl) 81. Omprakash vs L.sunitha and another – where in Hon’ble high court of Hyderabad held that, “ once holder of cheque establishes that he legally received cheque from the drawer, presumption under section 139 follows to the effect that there existed a legally enforceable debt reverse burden will be on the accused”.

3. 2008 (5) Supreme Court 351.between m/s. Indo automobiles vs m/s Jail durga enterprises­ where in Hon’ble supreme court of

India held that “ once notice has been sent by registered post with acknowledgment due to a correct address, it must be presumed that, the service has made effective”. ­ In the present case in view of

Ex.P5 Acknowledgement there is no dispute regard to service of notice.

4. 2002 6 SCC 259 between Assistant director of inspection investigation vs A.B.Shanthi hon’ble supreme court held that “ provision in, seeking to penalise the borrower alone and not the lender, held, not discrimnatory a tax legislation is a policy matter and it is for parliament to decide the manner in which the legislation should be made”. ­

In the present case learned counsel for the accused raised contention that, as per section 269 SS of Income tax act, loan amount must be by way of bank or cheque transaction but complainant stating she gave Rs. 5,00,000/­ in cash, in view of the - 6 - CC. No : 439 of 2017 findings of hon’ble apex court in the above referred decision the complainant cannot be penalized.

14. On the other hand learned counsel for the accused submitted oral as well as written arguments, that there is no such transaction between complainant and accused and the complainant is not having capacity to lend such huge amount, It is also contended that Ex.P1 cheque contains material alteration and it is a blank cheque. No explanation given by complainant why pronote not executed, On Ex.P1 cheque payee column name of the accused and complainant mentioned thus cheque is not infavour of the complainant, Pw.2 in evidence deposed that cheque was issued on the date of alleged borrowing money where as in complaint it is mentioned after 8 months, Therefore no offence U/sec.138 of

Negotiable Instrument Act, is constituted and accordingly prayed this court to dismiss the petition and acquit the accused.

15. On careful consideration of submissions of learned counsel for both sides, I have perused the record and evidence adduced by them, since the accused in this case alleged to have committed an offence U/sec.138 of Negotiable Instrument Act to constitute offence the following ingredients are required to proved:

i.The accused issued cheque on the account maintained by him with a bank for payment of money to another out of that account.

ii. The cheque has been issued for discharge of liability (either in whole or in part ) of any debt or liability iii. The cheque has been presented with the bank within period of its validity.

- 7 - CC. No : 439 of 2017 iv. The cheque has been returned by the bank unpaid. The amount of money considering to the credit of the account is insufficient to honour the cheque or exceeds the amount arranged to be paid from that account by the agreement made with the bank. v.The payee or the holder in due course of the cheque makes demand for payment of money by giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of cheque as unpaid.

vi.The drawer of the cheque failed to make payment of said amount of money to the payee or the holder in due course of the cheque within 15 days of receipt of the said notice.

16. In the case on the hand, the accused has not taken any defence as to the cheque in question i.e., Ex.P1 not having been issued on the account maintained by him with the bank. The accused has admitted his signatures on the cheque in question and has not disputed the factum of dishonour of the cheque vide Ex.P2 cheque return memo dt. 13.10.2016. it is also not the case of the accused that the cheque in question was not presented within the period of its validity or that he has already made the payment to the complainant in respect of cheque in question. Hence ingredients No. i,iii, iv & vi are deemed to be proved as not disputed.

17.In respect of ingredient No.v, i.e., whether the complainant made demand for the payment of said amount of money by giving notice in writing to the accused within 30 days of receipt of information. The complainant relied on Ex.P3 i.e., legal notice

dt. 31.10.2016, Ex.P1 cheque was returned on 04.10.2016, Ex.P3

notice was issued on 31.10.2016, it was dispatched through registered post on 01.11.2016 by Ex.P4 postal receipt. Therefore it - 8 - CC. No : 439 of 2017 is within 30 days of return of cheque the complainant has issued statutory notice to the accused, the accused in this case not disputed about the receipt of said notice. Ex.P3 notice was duly served on accused on 7.11.2016 vide Ex.P5 postal acknowledgment receipt. Ex.P5 contains the signature of the accused. Therefore the ingredient No.v is also established by the complainant as to service of mandatory notice U/sec. 138 of Negotiable Instrument Act. The complaint in this case is filed on 02.12.2016 i.e.,after accrual of cause of action and within period of limitation. Therefore there is no infirmity with regard to cause of action and filing of complainant within stipulated period. 

18. Now with regard to the Ingredient (ii) whether the cheque has been issued for the discharge (either in whole or in part) of any debt or other liability. The complainant as PW1 deposed that the accused for repayment of hand loan amount issued Ex.P1 cheque.

Whereas the accused contended that he has not issued Ex.P1 cheque. However during the cross examination of PW1 it was clearly stated that the accused is her relative, within good faith as the accused is the husband of her paternal aunt, no promissory note was executed. It is elicited in the cross examination of PW1 that as to the date of said hand loan as on 10.02.2015. further in the cross examination PW.1 learned counsel for accused elicited the fact, that PW1 is having a house at Suraram colony from that house she is getting monthly rent and she also doing tailoring - 9 - CC. No : 439 of 2017 work, out of that income she lent the above said amount to the accused. For the suggestion by the accused that she obtained blank cheques and pronotes for which PW1 denied stating that the accused is her close relative, one K V Narayanrao who is also her relative filed the blanks in the cheques. 

19. As seen from Ex.P1 cheque signature of accused is in Telugu language, remaining contents are filled in English language, apparently they are not in the hand written of the accused,Now it is to be seen whether the said discrepancy amounts to material alteration or not. Section 20 of Negotiable Instruments Act says that “when a person signs and delivers to another a cheque by subscribing his signature the person who receives it is having authority to fill the blanks”. In the present case the accused clearly admitted that he has handed over Ex.P1 cheque by subscribing his signature to the complainant. Therefore, the complainant is having authority to make it complete by filling up the blanks. For that there is no prohibition under Negotiable Instruments Act, therefore it does not amounts to material alteration. Accordingly I find no substance in the argument of learned counsel for the accused. 

20.In the citation reported in2010 (1) ALD Crl. 59 in between

D.Achutha Reddy Vs. State of A.P. and another. The Hon’ble High

Court has held that “the body of the cheque need not necessarily

be written by the accused and it can be in the hand writing of

anybody else or typed on the type machine, so long as the

- 10 - CC. No : 439 of 2017

accused does not dispute the genuineness of the signature on

the cheque”.

21.In this case on hand, the accused is not disputing his signature found on Ex.P1 cheque. It is not the case of the accused that Ex.P1 cheque is not drawn from the account maintained by him. In the the payee column clearly name of the complainant is mentioned, the signature of the accused is above the name of the complainant it may be because the accused signed in telugu, the contents written in English the drawer subscribed his signature above the name of payee, Thus, the accused gave authorization to the holder of cheque to complete it. As stated above once the signature is admitted on cheque the statutory presumption is in favour of the complainant, the contrary is to be proved by the accused.

22. As seen from cross examination of PW1 the contention of the accused is that blank cheque was given to the complainant, the tenor of the cross examination of PW1 is that the accused was in disagreement about the amount of Rs. 5,00,000/­ mentioned in

Ex.P1 cheque, if it is so it is for the accused to adduce evidence to clarify the stand about the cheque amount.

23.The statutory presumption U/sec. 118 of NI Act more particularly (a & b) ensures in favour of the holder of the instrument/complainant until the contrary is proved which reads as follows “Section 118 – Presumptions as to negotiable instruments” - 11 - CC. No : 439 of 2017

Untill the contrary is proved, the following presumptions shall be made:

(a) of consideration – that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.

(b) that holder is a holder in due course – that the holder of a negotiable instrument is a holder in due course.”

23.However, such presumption is rebuttable and the accused can prove the non­existence of a consideration by raising a probable defence. The burden upon the accused of proving the non­ existence of the debt can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. To disprove the presumption, the accused has to bring on record such facts and circumstances upon consideration for which the court may either believe that the consideration did not exist or its non­existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist.

24. The Negotiable Instruments Act Section 139 provides that there is a presumption in favour of the holder of the cheque that the holder of the cheque received the cheque in hole or in part of any debt or any other liability. The accused has to rebut the said presumption. The standard for doing so as that of preponderance of probabilities. Hon’ble Apex court in Rangappa Vs. Sri Mohan (2010) 11 SCC 441),  held that “the accused need not to examine - 12 - CC. No : 439 of 2017 him self as witness to rebut presumption, he can rely on the evidence of the complainant”.

25. In the present case the accused not examined any witness, he relied on cross examination of the witness i.e., PW.1, 2 and written arguments. Now it is to be seen whether the accused has rebutted the presumption available in favour of the complainant. It is the specific defence of the accused that the complainant/PW1 is not having capacity to lend such a huge amount. It is also contended that no promissory note is executed between the accused and complainant. For this PW1 in her evidence clearly stated that she is having own house, getting rental income, and also doing tailoring business. This aspect is not denied by the accused.

26.Hon’ble Apex court in latest decision rendered between Rohit

Jivanlal Patel Vs. State of Gujarat & Anr in Criminal Appeal

No. 508 of 2019 dt. 15.03.2019 while confirming order of High

Court in reversing the acquittal held that:

“The observations of trial court that there was no documentary evidence to show the source of funds with the complainant to advance the loan, there is no recorded transaction in the form of receipt, notes are do not stand inconformity with the presumption existing in favour of the complainant by virtue of Sections 118 & 139 of NI Act”. It is also held that “presumption is in favour of complainant, when such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or for want of source of funds were not relevant for consideration”. 

- 13 - CC. No : 439 of 2017

Further Hon’ble Apex Court in recent decision between Pavan

Diliprao Dike Vs. Vishal Narendrabhai Parmar (arising out of

S.L.P (crl) Nos. 3858/2019) held that “The trial court shall not place heavy burden on the complainant to prove the debt.”

The principles in the above decision are applicable to the present case therefore the contention of learned counsel for accused that the complainant is not having source or financial capacity is not acceptable.

26. Learned counsel for accused further contended that, the complainant not filed income tax returns. In this case the complainant and accused are close relatives, as seen from the pleadings no rate of interest is claimed, for the short period the amount stated to be advanced by the complainant to the accused.

Merely because amount advanced is not shown in Income Tax

Return, in every case, one cannot jump to the conclusion that the presumption under section 139 of the said Act stands rebutted.

There may be cases where money is advanced in cash by way of loan which may be repayable within few days or within few months.

A complainant may not show the said amount in the Income Tax

Return as it is repayable within few days or few months in the same financial year. In the present case date of alleged hand loan is 10­ 02­2016, Ex.P1 cheque is dated 04­1­2016 which is after 8 months of said hand laon. In such a case the failure to show the amount in - 14 - CC. No : 439 of 2017 the Income Tax Return may not by itself amount to rebuttal of presumption under section 139 of the said Act. However it is settled principle of law that merely on the ground of non filing of income tax returns the complaint U/sec. 138 of NI Act cannot be dismissed.

27. The complainant as PW1 clearly stated that on 10.02.2015 she advanced sum of Rs. 5,00,000/­ to the accused. There is no agreement for payment of interest between them. The accused while admitting Ex.P1 cheque not adduced any kind of evidence in support of his contention that Ex.P1 cheque was given to the complainant in the blank form. When the accused takes such stand his blank signed cheque is with the complainant he has to adduce positive evidence under what circumstance his signed blank cheque, how it has come into the hands of the complainant but there is no such evidence.

28. There are no doubtful circumstances or inconsistencies in the evidence of PW1/complainant, PW2 is relative of accused as well as complainant he deposed about the advancing of money to accused by complainant. Stated in cross examination by learned counsel for the accused that, Ex.P2 cheque was issued on the same day of advancing money, even assuming that, Ex.P1 cheque was given on the same day of lending money, in law a post dated cheque is valid and in its dishonour prosecution under section 138 of NI act is - 15 - CC. No : 439 of 2017 maintainable. Further nothing elicited in cross examination of PW2 to doubt his presence at the time of said loan transaction.

29.With regard to the aspect of ingredients of Section 269SS of the Income Tax Act, 1961, it is to be noted that no individual can accept any loan or deposit to extent of Rs.20,000/­ or more otherwise than by an 'Account payee cheque or an Account payee

Bank Draft'. As a matter of fact, the said Section does not say in an unambiguous and unequivocal term that an individual cannot lend or advance over and above Rs.20,000/­ in cash to the other, an individual who receives an advance in breach of Section 269SS of the Income Tax Act, 1961 is to face the necessary consequences of

Law arising thereto. In short, Section 269SS of Income Tax Act cannot be pressed into service for precluding / preventing an individual from recovering the money over and above Rs.20,000/­ he had lent or advanced to another, therefore such contention of accused not acceptable.

30.In view of the aforesaid facts and circumstances, the complainant has succeeded in proving that the accused has issued the dishonored cheque in discharge of legally enforceable liability and that the accused failed to make payment of the cheque amount within fifteen days from the date of service of the demand notice.

The demand notice had been issued within the period stipulated by law. The complaint has been filed within the period of limitation.

31. Since in the instant case, the accused has failed to lead any convincing evidence to aid him in discharge of his onus, the - 16 - CC. No : 439 of 2017 presumption of law operates in favour of existence of debt or liability. I am of the opinion that the defence set up by the accused is not proved, It is the sole burden and duty of accused to prove absence of liability by raising a ''probable'' defence. However, he has failed to discharge his onus. Having considered the entire evidence,

I am of the opinion that the complainant has successfully proved all the essential ingredients of Section 138 of the Act. Accordingly, accused is held guilty for committing the offence punishable u/s 138 of the Act. Accordingly Point No.1 and 2 answered infavour of the complainant.

POINT No.3:

In view of my findings in point Nos.1 and 2 the accused herein is liable to be convicted for the offence U/s.138 of Negotiable

Instruments Act.

In the result, the accused is found guilty for the offence punishable U/s.138 of Negotiable Instruments Act and accordingly he is convicted U/s.255(2) Cr.P.C. 

Dictated to Stenographer Gr.II, typed by her and corrected and

pronounced by me in the open court on this the 14 th day of August 2019. 

FAC XIV ADDL. JUDGE – CUM – XVIII ACMM

QUESTION OF SENTENCE

 On appearance of the accused , he is questioned with regard to the quantum of sentence for which he prayed to take a lenient view and also stated that his entire family is depending upon him, he is senior citizen - 17 - CC. No : 439 of 2017 aged about 68 years. The accused further stated that he is not a habitual offender and this is the first case U/Sec. 138 of NI Act. 

Under Section 138 of NI Act the punishment prescribed for the offence is imprisonment for a period which may extended to 2 years or with fine which may extended twice the cheque amount or both. 

On considering the nature of the offence, age of the accused, I feel that it is fit and proper to sentence the accused to undergo Simple imprisonment for 3 months, and to pay a fine of Rs. 5,01,000/­, out of which Rs. 5,00,000/­ is ordered to be paid to the complainant as a compensation under Sec. 357 (1) (b) Cr.P.C, and Rs. 1,000/­ ordered to be remitted to the state, in default of payment the said fine, 3 months simple imprisonment would suffice.

In the result, the accused is sentenced to undergo simple imprisonment for a period of 3 months and to pay fine of Rs. 5,01,000/­ (Rupees Five lakhs one thousand only) in default of payment of file he shall under go simple imprisonment for a period of 3 months. Out of fine amount i.e., Rs. 5,01,000/­ a sum of Rs. 5,00,000/­ shall be paid s a compensation under Sec. 357 (1) (b) Cr.P.C, Rs. 1,000/­ shall be remitted to the state. The bail bonds of the accused ordered to be in force for 3 months interms of section 437­A IPC, There is remand period of the accused to give set off under section 248( 2) Cr.P.C, the accused appraised of his right of free legal aid and appeal..

Sd/-

D. Kiran Kumar FAC XIV ADDL. JUDGE – CUM – XVIII ACMM

SECUNDERABAD.

- 18 - CC. No : 439 of 2017

APPENDIX OF EVIDENCE

 WITNESS EXAMINED

FOR COMPLAINANTFOR ACCUSED

PW1 – T. Govardhani,Nil PW2 – Taneru Tirupathi

EXHIBITS MARKED ON BEHALF OF COMPLAINANT

Ex. P1 : Cheque No. 020622, dt. 04.10.2016 drawn on Andhra Bank, Ongole Prakasham District for Rs. 5 lakhs

Ex. P2 : Cheque return memo, dt. 13.10.2016. Ex. P3 : Office copy of legal notice dt. 31.10.2016. Ex. P4 : Postal receipt, dt. 01.11.2016. Ex. P5 : Postal acknowledgment receipt dt. 07.11.2016.

EXHIBITS MARKED ON BEHALF OF ACCUSED

Nil

Sd/-

D. Kiran Kumar FAC XIV ADDL. JUDGE – CUM – XVIII ACMM

SECUNDERABAD.

IN THE COURT OF XIV ADDL. JUDGE – CUM – XVIII ADDL. CHIEF

METROPOLITAN MAGISTRATE, SECUNDERABAD

Thursday, THE 29 TH DAY OF AUGUST, 2019

 Present : Sri D. Kiran Kumar XV Addl. Judge – Cum – XIX ACMM, FAC XIV Addl. Judge – Cum – XVIII ACMM,

C C. No : 719 OF 2018

BETWEEN : 

R.S. Babu Prasad, S/0 Late R. Subbarayappa, aged about 52 yrs Occ: Private Employee, R/o H.No. 7­1­157, Maruthi Veedhi, Bandimet, Secunderabad 500003, Telanganga

.... Complainant

AND

Mr. Raj Kamal Kuldeep S/o Late Kuldeep Kumar, aged about 36 yrs, Occ: Carrying on business under the name & Style of “M/s Naine Pork Shop” at # 110, S D Road, Opposite to Abhiruchi Hotel, Paradise, Secunderabad 500003, Telangana and R/o H.No.31­4­3, PandulaBasthi,Ramakrishnapuram, Secunderabad 500056, Telangana

.... Accused

 This case is coming for final disposal before me on 26.08.2019 in the presence of Sri Dinesh Kumar Ranka, Counsel for the complainant and Sri T. Shyam Kumar, counsel for the accused, having been heard and having stood over for consideration till this day, this court delivered the following

J U D G M E N T

1. This complainant filed complaint U/s. 200 Cr.P.C for the offence punishable

U/s. 138 of Negotiable Instrument Act.

2.The case of the complainant in brief is as follows :

The accused along with his brothers Mr. K. Ashish Kumar and Mr. Keshav

Khatik are jointly carrying on pork business under the name and style of M/s “Naine Pork Shop”. The complainant and accused are close friends and known to each other since 10 years. Due to such acquaintance on 10.01.2017 the accused has approached the complainant for hand loan of Rs. 2,50,000/­ to meet his business requirements and to clear his debts. On considering the request of the accused on 15.01.2017 the complainant has lent an amount of Rs. 2,50,000/­ to - 2 - CC. No : 719/2018 the accused in cash. On the same day the accused had executed a promissory note and receipt in favour of the complainant. It is agreed by the accused that he will discharge the debt within the 5 months from the date of receipt of the hand loan along with the interest @ 2% per month. After 5 months the complainant repeatedly requested the accused for repayment of loan amount, on 16.08.2017 the accused had issued an account payee cheque bearing No. 009228 dt. 16.08.2017 for Rs. 2,50,000/­ drawn on

Bank of India, Ramakrishnapuram Branch, Secunderabad, and promised to

honour the same as and when presented. Accordingly the complainant

presented the said cheque for clearance on 17.08.2017 with his banker i.e.,

State Bank of India, Mrket Street Branch, Secunderabad it was returned dishonoured by on 18.08.2017 with an endorsement “Refer to drawer”. On 26.08.2017 the complainant issued statutory notice calling upon the accused to pay the cheque amount of Rs. 2,50,000/­ to residential address as well as to the business address of the accused. On 28.08.2017 notice sent to residential address was received by the accused, on 29.08.2017 notice sent to business address of the accused was received. The accused not given any reply and after waiting for 15 days and on accrual of cause of action the complainant filed this case to punish the accused for the offence punishable

U/sec. 138 of Negotiable Instrument Act.

3. After recording the sworn statement of the complainant XXII Addl. Chief

Metropolitan Magistrate, Secunderabad has taken cognizance and as per the orders of the Hon’ble Metropolitan Sessions Judge, Hyderabad this case was transferred to this Court and it is renumbered as C C No. 719 of 2018

4. Summons were issued to the accused, he has appeared through his - 3 - CC. No : 719/2018 counsel. The copy of the complaint was furnished to him. The accusation was read over and explained to the accused, for which he pleaded not guilty and claimed to be tried.

5. During the course of trial the complainant himself examined as PW1 in support of his case, Exs.P1 to P9 documents are exhibited.

6. The statement of the accused U/sec. 313 of Cr.P.C has been recorded.

The accused denied the incriminating evidence appeared against him and reported no defence evidence.

7. Heard the arguments of both sides. Learned Counsel for accused filed written arguments.

8. On consideration of contentions of both sides and material on record, points that arise for determination are as follows.

1. Whether the cheque in question was issued in discharge of debt? If so whether accused rebuts the presumption under section 118, 139 of Negotiable Instrument Act?

2. Whether the complainant proves that accused has committed an offence punishable under Section 138 of NI Act? 

3. What order?

9. My answers to the above points are as follows:

 POINTS 1 AND 2: Both points are interconnected, to avoid repetitions of the facts both points are taken together.

10.The case of the Complainant is that the accused is a close friend of him - 4 - CC. No : 719/2018 and having acquaintance with him since 10 years, out of such acquaintance on 10.01.2017 he has taken hand loan of Rs. 2,50,000/­ by executing Ex.P1 promissory note. It is also the case of the Complainant that the Accused failed to pay the said debt amount within the period of 5 months, and on repeated request he had issued an account payee cheque for Rs. 2,50,000/­ in Ex.P2, on presentation of said cheque it was dishonoured with an endorsement “Refer to Drawer”, consequently the Complainant issued notice as the Accused failed to pay the amount.

11.The defence of the Accused as seen from the cross examination of PW1 and written arguments is that there is no such hand loan transaction between the Complainant and Accused. Ex.P1 promissory note is created document. However the Accused admitted that one blank pronote obtained by the Complainant. The Accused has taken an amount of Rs.50,000/­ as daily finance basis from the counsel for the Complainant namely Sudhakar who is doing finance business and handed over Rs.42,500/­ by deducting interest for 100 days and he will collect Rs. 500/­ per day, that at the time of advancing loan amount said Sudhakar taken empty cheque i.e., Ex.P2, drawn on Bank of India, Ramakrishnapuram branch, Neredmet,

Secunderabad, and cheque bearing No. 792836 of SBH Neredmet branch, and promissory note was also obtained from the Accused and also from the brother and mother of the accused namely Keshav and Santoshi Devi jointly as security purpose for said Rs.50,000/­ towards loan transaction. The

Accused has repaid the entire amount, but Sudhakar not returned blank cheque and promissory note. Two statutory notices were received by the

Accused from the Complainant for Rs. 2,50,000/­ and another from one

Zakiya Begum to accused’s brother and mother demanding to pay Rs.

- 5 - CC. No : 719/2018 3,00,000/­, then the Accused came to know that the said blank cheque and promissory note are misused.

12. The learned counsel for Complainant submitted oral as well as written arguments stating that, there is legally enforceable debt on the part of the

Accused, Ex.P1 and P2 clearly proves that the Accused have borrowed money, Ex.P2 cheque pertains to the account of the Accused, signature on

Ex.P2 is not denied or disputed by the Accused, presumption is in favour of the Complainant. The Accused has to rebut said presumption. No kind of oral or documentary evidence adduced by the Accused in support of their contention. Therefore prayed to convict the Accused.

13.per contra, learned counsel for Accused filed written arguments stating that there is no such loan transaction between the Accused and the

Complainant, as a matter of fact one Sudhakar who is doing money lending business, he used to lend money for interest to the petty business people at

Honkong bazar, Secunderabad on daily collection basis, the accused who is

running pork shop along with his brothers opposite to said Honkong bazar taken an amount of Rs. 50,000/­ as daily basis finance, for security of said finance, Ex.P1 promissory note and Ex.P2 blank signed cheque were issued.

The same were misused by the Complainant. The Complainant as PW1 stated that he is working as private employee and he used to earn an amount of Rs.

20,000 to Rs. 30,000/­ per month, PW1 is not an income tax assessee. The

Complainant lent money to Harish Kumar, Tandani. Amount lent by the

Complainant is unaccounted money, he is not an income tax assessee, there is no legally enforceable debt on the part of the Accused, and therefore prayed to acquit the Accused.

- 6 - CC. No : 719/2018

14. On careful consideration of submission of learned counsels for both sides, I have perused the record and citations relied by the parties keeping in mind the principles laid down in the above case law, Since the accused is alleged to have committed an offence under section 138 NI Act, it is required to be proved that :

i) The accused issued a cheque on an account maintained by him with a bank for payment of money to another from out of that account;

(ii) The cheque has been issued for the discharge (either in whole or in part) of any debt or other liability;

(iii)The cheque has been presented to the bank within the period of its validity;

(iv) The cheque has been returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or it exceeds the amount arranged to be paid from that account by an agreement made with the bank;

(v) The payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(vi) The drawer of such cheque failed to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.

15. In the case at hand, the accused has not taken any defence as to the - 7 - CC. No : 719/2018 cheque in question Ex.P2 not having been issued on an account maintained by him with a bank. Accused have admitted his signature on the Ex.P2 cheque in question and have not disputed the factum of dishonour of the cheque in question vide memo Ex P3 memo. It is also not the case of the accused that the cheque in question was not presented during the period of its validity or that they have already made the payment to the complainant in respect of the cheque in question. Hence the ingredient (i), (iii) (iv) and

(vi) are deemed to be proved as not disputed.

16.In respect of ingredient (v), the complainant has testified as PW.1 that upon dishonour of the cheque in question, Ex.P4 legal notice dated 07.09.2017 sent to the accused for return of Rs 2,50,000/­ to two addresses of the Accused (Residential and business), Ex.P5 two postal receipts shows that Ex.4 notice was sent to resident and business address of Accused separately. As per Ex.P6 and Ex.P7 which are the postal acknowledgment cards notice sent by the Complainant received by the

Accused. Further the Complainant adduced evidence in Exs.P8 to P9 which are postal track reports. Exs.P5 to P9 clearly shows that, notice under

Ex.P4 duly served on Accused on 22.02.2016 itself. Ex.P4 notice sent within 30 days of dishonour of the cheque and it was served, the case of the

Accused is that, signature on Ex.P5 and P6 Postal Acknowledgment cards not belongs to them they are forged.

17. As per Section 114 of Evidence Act, 1872 which is applicable to communications sent by post, the courts are to presume that in the common course of natural events, the communications would have been delivered at the address of the addressee. Section 27 of the General Clauses Act - 8 - CC. No : 719/2018 envisages that when a registered notice is posted, it is presumed to have been served unless rebutted. The accused however generally denied having received any legal notice, took defence as forgery, It is not the case of the accused that the addresses on which the notices were sent was not the correct addresses nor any evidence has been led by them to prove the actual addresses of the accused at that time. That being so, it is held that the notice was sent by the complainant at the correct address of the accused.

When the legal notice having been sent after being correctly addressed, a presumption arises as to the same having been served upon the accused. So now it was for the accused to lead rebuttal evidence to disprove the service of the legal notice. However, for reasons best known to them, the accused neither led any evidence in rebuttal nor examined any postal official to disprove the service of the legal notice.

18.The Hon'ble Supreme Court in CC Alavi Haji Vs. Palapetty

Muhammed & Anr. (Crl. Appeal No. 767 of 2007), reported in 2007 AIR

SCW 3578 has held that :

"Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the Court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along­with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was - 9 - CC. No : 719/2018 no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the

General Clauses Act and Section 114 of the Evidence Act". 

19.Thus, keeping in view that except mere denial of receipt of notice of demand, no evidence in rebuttal has been led by the accused, also keeping in view the dictum of the Hon'ble Apex Court, the legal notice is held to have been duly served upon the accused, accordingly Ingredient (v)to constitute offence is proved by the Complainant.

20.Now with regard to the Ingredient (ii) The cheque has been issued for the discharge (either in whole or in part) of any debt or otherliability,though the accused could not build up a definite defense for himself, however during the cross­examination of PW.1, it was suggested that the accused not due any money. The Complainant relied on Ex.P1 and P2 promissory note and cheque. It is not disputed that Ex.P1 and P2 bears the signatures of the

Accused. It is also not disputed that Ex.P2 cheque in question was dishonoured vide return memo under Ex.P3 with an endorsement “Refer to

Drawer”. In the present case it is the specific defence of the Accused that

Ex.P2 cheque was given to one Sudhakar who is doing daily finance business, the Accused at the time of obtaining Rs.50,000/­ hand loan gave blank promissory note and cheque. Complainant did not returned said blank cheque. It was filled by the Complainant by typing his name, date and amount in the columns, contended that there is no liability on the part of the

Accused.

21. As seen from the evidence of PW1 and Ex.P2 cheque except the signatures the remaining columns were typed in English i.e., date, amount - 10 - CC. No : 719/2018 column and payee’s name, signatures on Ex.P2 are admitted. There is no correction in the columns. As per the Sec. 20 of NI Act “When a person signs and delivers to another a cheque whether in blank or partly blank he there by gives primafacie authority to the holder there off to make or complete it.

22. In the citation reported in 2010 (1) ALD Crl. 59 in between D.Achutha

Reddy Vs. State of A.P. and another. The Hon’ble High Court has held that “the body of the cheque need not necessarily be written by the Accused and it can be in the hand writing of anybody else or typed on the type machine, so long as the Accused does not dispute the genuineness of the signature on the cheque”.

23.In the present case the Accused not disputed the signatures on the cheque. In view of the above principles the Complainant can fill up the blanks in the cheque and present it.

24.In the present case the Defence of the accused not substantiated there is no evidence on record to get an inference that, Accused gave blank signed cheque and pronote to Sudhakar advocate, and how those cheques have come into the hands of the complainant, there is nothing on record when said daily finance started when the accused repaid money, why the accused have not taken back signed cheque and promissory note. Once Ex.P2 Cheque is admitted to be of the account of the accused and signed by them presumption is in favour of the complainant that, it is issued in discharge of legally enforceable debt. Once the complainant fulfilled the provisions section 138 (a) to (c) of NI Act the mandatory presumption U/s 139 of NI Act would arise. As per the decisions in (2010) 11 SCC 4413 Rangappa Vs Sri Mohan

Hon’Ble Supreme Court pleased to observe that;

- 11 - CC. No : 719/2018 “the presumption mandate by section 139 of the Act does indeed include existence of legally enforceable debt or liability. It is further observed in the judgment that the same is of course in the nature of a rebuttal presumption and it is open to the accused to raise a defense, wherein the existence of legally enforceable debt or liability can be contested. The proof on behalf of the accused is on the basis of preponderance of probabilities.”

25. In the instant case which is specific case of the complainant that he has advanced loan of Rs. 2,50,000/­ to the accused. The complainant has deposed he has mobilized amount of Rs.2,50,000/­ and advanced the loan to the accused. The above said version of complainant establish the loan transaction with accused. The defense of the accused is without any probable material on record.

26.It is contended by learned counsel for the accused that, the complainant not shown Rs.2,50,000/­ in income tax returns, therefore it is an unaccounted money. As seen from cross­examination of PW.1 it is evidence of PW1. That he is not an income tax assessee. As seen from complaint and evidence on record alleged advancing money by complainant is on 15.01.2017 Ex.P2 cheque was issued on 16.08.2017 the period between Ex.P2 and Ex.P1 promissory note is 7 months, there is clear averment that, money advance for a period of 5 months, when money advanced for short period as hand loan the same need not to be shown as income in annual income tax returns, it cannot be termed as un accounted money. Therefore, in my considered opinion the contention of learned counsel for the accused as to unaccounted money not acceptable.

- 12 - CC. No : 719/2018

27. The main contention of the Accused that the Complainant is not having capacity or source of income to lend money. For this he relied on cross examination of PW1. PW1 in his cross examination stated that he used to earn Rs. 20,000/­ to Rs. 30,000/­ per month. However the learned counsel

for the Complainant relied on recent decision of Hon’ble Supreme Court

reported between Rohitbhai Jivanlal Patel Vs. State of Gujarat and another reported in 2019 (1) crimes (SC) 291  where in Hon’ble Supreme

Court held that “No documents are required to be filed by the Complainant to prove her financial capacity, filing of IT returns and to prove that it is an accounted money in view of Sec. 118 & 139 of NI Act. The result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the Complainant. When such a presumption is drawn the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds not relent for considering while examining if the Accused has been able to rebut the presumption or not”.

28. The principles laid down in the above case are squarely applicable to the present case. Therefore the contention of learned counsel for the Accused that PW1 is not having capacity to lend money, she has not filed IT returns, it is not accounted money are not applicable.

29. Learned counsel for the Accused further contended that PW1 along with one Sudhakar doing money lending business for interest. he has misused cheques issued to the Complainant. It is also the contention that lending money without license is an offence, as stated above if a hand loan given for short period it will not amounts to doing money lending business.

- 13 - CC. No : 719/2018

30. In the present case PW1 in his cross examination clearly stated that he is not doing money lending business. The Accused alleged that PW1 along with Sudhakar doing money lending business. This allegation is to be proved by the Accused by placing positive evidence. But in this case no such evidence is available on record that whether there was any daily finance transaction between the Accused and Sudhakar, whether the Accused gave

Ex.P1 and Ex.P2 in blank form to the said Sudhakar? Further either in written arguments or in cross examination the dates on which alleged transaction took place between the Accused and Sudhakar are also not mentioned. Therefore the defence of the Accused is not substituted by satisfactory evidence.

31. It is further contended by the learned counsel for Accused that no witness signed on Ex.P1 promissory note, without witness it is Invalid. Said contention is not acceptable because promissory note is defined U/sec. 4 of

NI Act “that it is an unconditional undertaking given by one person to other to pay the amount mentioned therein on demand”. This section not mandates the attestation of promissory note by witnesses, promissory note is not compulsory attestable document.

32. The defence set up by the accused has not been probablised and has not been able to rebut the presumption arising in favour of the complainant.

I am of the considered view that the cheque in question was issued by the accused in discharge of a legally recoverable debt. It has also proved that the said cheque has been dishonoured upon presentation and, despite issuance of statutory notice of demand within the period of limitation, the amount has not been paid by the accused, consequently the accused is held guilty for commission of the offence U/s.138 of Negotiable Instruments Act.

- 14 - CC. No : 719/2018

Accordingly, he stands convicted of the offence U/s.138 of Negotiable

Instruments Act. Accordingly I answered point No.1 and point No.2 in favour of the complainant

POINT No.3:

For the afore said reasons and finding I proceed to pass the following order:

In the result, the accused is found guilty for the offence punishable

U/s.138 of Negotiable Instruments Act and accordingly he is liable for conviction U/s.255(2) Cr.P.C. 

Dictated to Stenographer typed by her and corrected and pronounced by

me in the open court on this the 29 th day of August 2019. 

XV Addl. Judge–Cum­XIX ACMM, FAC XIV ADDL. JUDGE – CUM – XVIII ACMM Secunderabad.

The accused is questioned with regard to the quantum of sentence for which he prayed to take a lenient view and also stated that his entire family is depending upon him. 

2.Under Section 138 of NI Act the punishment prescribed for the offence is imprisonment for a period which may extended to 2 years or with fine which may extended by twice the cheque amount or both. Considering the transaction in question was taken place in the year 2017, there is no material on record that the accused are habitual or repeated offender. On the other hand the complainant also should not suffer loss therefore if cheque amount and interest is ordered to be paid to the complainant as compensation and the accused sentenced to undergo SI of 3 months the same would meet ends of justice, In these circumstances imposition of 3 months SI and fine of Rs.2,51,000/­ on accused would meets ends of justice, out of fine Rs.2,50,000/­ is ordered to be paid to complainant as a compensation Under section 357 (1)(b) Cr.p.c in default of payment the said fine 3 months simple imprisonment would suffice. 

- 15 - CC. No : 719/2018

3.The accused is sentenced to undergo simple imprisonment for a period of three months and also sentenced to pay fine of Rs.2,51,000/­, out of which

Rs. 2,50,000/­ shall be paid as compensation to the complainant in terms of 357(1)(b) Cr.P.C., Rs.1000/­ shall be remitted to the state. In default of payment of fine the accused shall suffer simple imprisonment for a period of three months. The bail bonds of the accused are ordered to be in force for a period of 6 months in terms of section 437­A Cr.P.C. A free copy of this judgment is handed over to the accused. The accused appraised as to their right of appeal and free legal aid. There is no remand period to give set off

Under Section 428 of Cr.P.C.

Dictated to Stenographer typed by her and corrected and pronounced by

me in the open court on this the 29 th day of August 2019. 

Sd/-

D. Kiran Kumar XV Addl. Judge–Cum­XIX ACMM, FAC XIV ADDL. JUDGE – CUM – XVIII ACMM Secunderabad.

APPENDIX OF EVIDENCE

 WITNESS EXAMINED

FOR COMPLAINANTFOR ACCUSED

PW1 – R S Babu PrasadNil

EXHIBITS MARKED ON BEHALF OF COMPLAINANT

Ex. P1 : Original promissory note and receipt for Rs. 2,50,000/­ executed by the accused in favour of the complainant. 

Ex. P2 : Original cheque bearing No. 009228 for Rs. 2,50,000/­ drawn on Bank of India, Ramakrishnapuram Branch, Sec­bad

Ex. P3 : Original bnank return memo of the complainant banker State Bank of India, Market street Branch, Sec­bad

Ex. P4 : Office copy of the legal notice got issued by the complainant. 

Ex. P5 : Original postal registration slips (2 in numbers)

Ex. P6 : Original postal acknowledgment card - 16 - CC. No : 719/2018

Ex. P7 : Original postal acknowledgment card 

Ex. P8 : Status report of the regd. Letter No. RN015169524IN.

Ex. P9 : Status report of the regd. Letter No. RN015169484IN..

EXHIBITS MARKED ON BEHALF OF ACCUSED

Nil

Sd/-

D. Kiran Kumar XV Addl. Judge–Cum­XIX ACMM, FAC XIV ADDL. JUDGE – CUM – XVIII ACMM Secunderabad.

IN THE COURT OF XV ADDL.JUDGE-CUM-XIX ADDL.CHIEF

METROPOLITAN MAGISTRATE AT SECUNDERABAD.

MONDAY, THE 2 nd DAY OF DECEMMBER, 2019

Present : Sri D.Kiran Kumar XV Addl.Judge-cum-XIX A.C.M.M., Secunderabad.

C.C.NO.33 OF 2018

Between:

Sri. Adhi Laxman Rao S/o Adhi Kistaiah, Age: 62 years, Occ: Business, R/o D.No.12-5-35/A/9, Flat No.S-6, Ballad Estate, Tarnaka, Secunderabad. … Complainant

And

Sri. Mahender Kumar Agarwal S/o Shiv Shanker Agarwal, Age: 55 years, Occ: Business, R/o. H.No. 3-6-305/83, Opp Park, Avanti Nagar, Hyderguda, Hyderabad, Telangana State. … Accused

This case is coming up for final disposal before me on 26.11.2019 and 28.11.2019 in the presence of Sri K.R.Vijay, Advocate Counselfor the Complainant and Sri V.Gururaja Rao, Advocate Counsel for the Accused and having been heard on both sides, and having stood over for consideration till this day, this court delivered the following:

J U D G M E N T

1. This case is filed U/s.190(1)(a) R/w Section 200 of Cr.P.C. for the offence U/s.138 & 142 of Negotiable Instrument Act, 1881.

2.The case of the complainant in brief is as follows :-

The complainant and accused are known to each other, out of said acquaintence accused approached complainant at his office in the third week of February, 2016, and expressed that he is getting business opportunity in Indian Railways through Railway Board members in a contract worth of Rs.5 Crores, for obtaining said contract he is need of sum of Rs.50,00,000/-, by that time the accused was having sum of Rs.25,00,000/- with him and need of hand loan of

Rs.25,00,000/- and requested the complainant to arrange said hand loan. Believing the accused the complainant for raising funds has arranged a meeting with his friends in the presence of accused, has 2 C.C.33 OF 2018 mobilized funds with his two known friends and advanced

Rs.20,00,000/- as hand loan on these dates i.e. Rs.10,00,000/- on 02.04.2016 arranged from P.V.Sambasiva Rao, Rs.7,00,000/- arranged from Jagan Mohan Reddy by withdrawing from ICICI Bank, S.R.Nagar

Branch on 24.03.2016 and the complainant arranged Rs.3,00,000/- on 24.03.2016 by withdrawing from M/s.Andhra Bank, Tarnaka. The accused agreed to repay the borrowed money within six months along with interest @ 24% per annum, after completion of six months the complainant requested the accused to repay the said hand loan with interest of Rs.2,50,000/-. In discharge of Part payment of hand loan accused has issued a cheque bearing No.7247496 dated 13.10.2016 for an amount of Rs.5,00,000/- drawn on M/s State Bank of Indian, Old

MLA Quarters, Basheerbagh, Hyderabad, complainant presented said cheqqu with his banker M/s State Bank of India, Lalaguda Branch on 17.10.2016, the said cheque was returned dishonoured and returned unpaid with reasons “Insufficient Funds” in the account of the accused. On 31.10.2016 the complainant got issued statutory notice through his counsel as required U/s.138(b) of Negotiable Instruments

Act, the same was deliver on 01.11.2016 and received by the accused.

The accused failed to make the payment within 15 days of receipt of notice, thus this complaint is filed to punish the accused for the offence

U/s.138 of Negotiable Instruments Act and for compensation.

3.After recording the sworn statement of the complainant XI-Addl.

Chief Metropolitan Magistrate, Secunderabad has taken cognizance and as per the orders of the Hon’ble Metropolitan Sessions Judge,

Hyderabad this case is transferred to this Court and it is renumbered as C.C.No.33 of 2018.

3 C.C.33 OF 2018

4.Summons was issued to the accused, he appeared through counsel. The copy of the complaint was furnished to him. The accusation was read over and explained to the accused, for which he pleaded not guilty and claimed to be tried.

5.During the course of trial the complainant himself examined as

Pws 1 and 2 examined, Exs.P1 to P5 documents are exhibited. Ex.P1 is cheque No.724496 dated 13.10.2016, Ex.P2 is cheque return memo

dated 17.10.2016, Ex.P3 is legal Notice dated 31.10.2016, Ex.P4 is

Postal track report and Ex.P5 is reply notice dated 12.11.2016.

6.On report of closure of complainant’s evidence, the accused examined U/s.313 Cr.P.C. by explaining incriminatory circumstances appearing in the evidence of the complainant. The accused denied the incriminating evidence appeared against him and reported defence evidence. The accused himself examined as DW1 and also examined

DW2 and no documents are exhibited.

7.Heard the arguments of learned counsel for both sides. Learned counsel for the complainant and accused filed written arguments.

8.On consideration of contentions of both sides and material on record, points that arise for determination are as follows:

1. Whether accused issued cheque in discharge of legally enforceable debt, if so whether the accused rebuts the presumption under section 118, 139 of Negotiable Instrument

Act?

2. Whether the complainant proved that accused has committed an offence Punishable Under Section 138 of NI

Act?

3. What order?

4 C.C.33 OF 2018

9.My answers to the above points are as follows:

10.POINTS 1 AND 2: Both points are interconnected, to avoid repetition of facts both points are taken together.

11.Undisputed facts in this case are that, complainant and accused are known to each other, according to the complainant the accused to get Railway contract borrowed sum of Rs.20,00,000/-, the complainant arranged said money by accumulating from his two friends, the accused in discharge of part liability issued Ex.P1 cheque dated 13.10.2016, on presentation it was dishonoured. Demand statutory notice was given, despite accused failed to make the payment. The accused has specifically contended that there is no such hand loan transaction between himself and complainant, the complainant engaged in real estate business, he approached the accused on several occasions and requested him to invest his money in purchase of land in GHMC area. In April, 2016 the complainant approached with title documents of Bhuvanagiri land and advised Accused to invest money to purchase agricultural land to an extent of Ac.4.20 gts since there was a lot of demand for lands in that area. As such the complainant requested the accused sum of Rs.5,00,000/- as advance to secure said land. Though the accused was not interest to invest considering the request of the complainant in good faith he has issued un-named, undated signed blank cheque to the complainant as a security for said land transaction. Thereafter he dropped said intention to purchase the land and in the last week of May, 2016 he requested the complainant to return the said cheque, but the complainant misused said blank signed cheque, got issued demand notice, for which on 12.11.2016 the accused issued reply.

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12.Learned counsel for the complainant submitted oral arguments stating that the complainant examined himself as PW1 and PW2 who is a common friend to the accused and complainant deposed before this

Court stating in his presence said transaction took place, evidence of

Pws 1 and 2 is consistent, the accused admitted his signature on Ex.P1 cheque, in view of Section 139 of Negotiable Instruments Act statutory presumption is in favour of the complainant, the accused failed to adduce any kind of evidence to substantiate his defence. DW2 is friend of the accused, his evidence is not believable and therefore prayed to convict the accused.

13.On the other hand, learned counsel for the accused submitted oral arguments contending that the complainant is having acquaintance with the accused, there is no such Railway contract between the accused and Railway authorities, the accused never approached the complainant for hand loan, the accused is financially sound person has got his own source of income, this fact is well known to the complainant. As a matter of fact the complainant has obtained blank signed cheque of the accused for Rs.5,00,000/- in May, 2016 for purchase of agricultural land an extent of Ac.4.20 gts. At Bhuvanagiri,

Nalgonda District, the same is informed to the complainant by way of

Ex.P5 reply notice. Thus the complainant misused the cheque. There is no legally enforceable debt on the part of the accused. During cross- examination of PW1 he stated that he studied upto Intermediate and doing business. There is no source of income to PW1 to advance money, the evidence of PW2 is false. It is also contended by learned counsel for the accused that the complainant failed to file income tax returns and also any other documents to show that he has advanced 6 C.C.33 OF 2018

Rs.3,00,000/- to the accused. There is no document to show that the complainant has advanced Rs.20,00,000/- to the accused and therefore prayed to dismiss the complaint. In support of his contention learned counsel for the accused relied on following decisions :-

1. LAWS (APH) 2016 12 41 in between K.Ashok Kumar Goud

Vs. Sree Ramulu and another: where in the Hon’ble High Court of

A.P. held that, “to prove advancing money by the complainant to the accused the complainant has to establish his source, file bank statements”.

2. Crl. Appeal No.518 of 2006 in between Krishna Janardhan

Bhat Vs. Dattatraya G. Hegde: wherein theHon’ble Supreme Court held that, “producing books of accounts or any other proof to show that the complainant got so much of money from the bank are necessary in view of chances of false implication”.

3.Crl. Appeal No.4694 of 2008 in between Sanjay Mishra Vs.

Ms. Kanishka Kapoor @ Nikki: wherein the Hon’ble Bombay High

Court held that, “merely because amount advanced is not shown in income tax returns in every case one cannot jump to the conclusion that the presumption U/s 139 of the Act stands rebutted, there may be cases of small amounts advanced in cash by way of loan. If there is large amount filing of income tax returns or books of account of the complainant are necessary”.

4.LAWS (MAD) 2005 272 in between Poppys Spinning Mills

(p) Ltd., Vs. C.Visalakshi: wherein the Hon’ble High Court of Madras as defect in statutory legal notice held that “demand for amount covered by bounced cheque if it is absent in the notice issued notice is imperfect since it does not contain any demand for payment of the cheque amount and this decision is not applicable to the present case in view of decision of Hon’ble High Court in this case in

Crl.P.No.4403/2018”.

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14.On careful consideration of submissions of learned counsel for both sides, I have perused the record and citations relied by the parties keeping in mind the principles laid down in the above case law. Since the accused is alleged to have committed an offence under section 138 of NI Act, the following ingredients are required to be proved :

i . The accused issued cheque on the account maintained by him with a bank for payment of money to another out of that account.

ii. The cheque has been issued for discharge of liability (either in whole or in part ) of any debt or liability.

iii. The cheque has been presented with the bank within period of its validity.

iv. The cheque has been returned by the bank unpaid. The amount of money considering to the credit of the account is insufficient to honour the cheque or exceeds the amount arranged to be paid from that account by the agreement made with the bank.

v. The payee or the holder in due course of the cheque makes demand for payment of money by giving notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of cheque as unpaid.

vi. The drawer of the cheque failed to make payment of said amount of money to the payee or the holder in due course of the cheque within 15 days of receipt of the said notice.

15.For the purpose of brevity, I would like to note that on going through the record and evidence of both the sides, it is clear that the following facts are not in dispute -

i) That having a good relationship between both the complainant and the accused are known to each other;

(ii) That the Ex.P1, cheque belongs to the accused and it belongs to the bank account of the Accused, and that the said cheque was presented by the complainant and was dishonoured due to insufficient fund as mentioned in the return memo (Ex.P2) and was duly proved by PW1. It is also not in dispute that, the complainant sent statutory demand 8 C.C.33 OF 2018 notice to the accused demanding cheque amount in Ex.P3 the same served on the Accused in Ex.P4 postal track report, The Accused also issued Reply to Ex.P3 notice in Ex.P5. It is also not the case of the accused that the cheque in question was not presented during the period of its validity or that he has already made the payment to the complainant in respect of the cheque in question. Hence the ingredient

(i), (iii) (iv) (v) and (vi) are deemed to be proved as not disputed.

16.In respect of ingredient (ii) ie., Debt/Liability, It is a well settled proposition of law that once execution of the negotiable instrument is admitted, the presumption under Section 118(a) NI Act would arise that it is supported by a consideration. However, such presumption is rebuttable and the accused can prove the non-existence of a consideration by raising a probable defence.

17.The burden upon the accused of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. To disprove the presumption, the accused has to bring on record such facts and circumstances upon consideration of which this Court may either believe that the consideration does not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it does not exist.

18.The Negotiable Ingredients Act, also provides under Section 139 that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in

Section 138 for the discharge, in whole or in part, of any debt or other liability. Thus, 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. As per 9 C.C.33 OF 2018 decision of Supreme court in Rangappa vs Sri Mohan, (2010) 11

SCC 441 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.

19. Section 118(a) of the Act provides that until the contrary is proved, it shall be presumed that "that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration."

20.Further, Section 139 of the Act lays down that "it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."

21.Now coming on merits of this case, the prime question for determination before this court is (ingredient No.ii) –

(i) whether the accused issued the cheque in discharge of any legally enforceable debt or liability and

(ii) Whether the accused has successfully rebutted the legal presumption available infavour of the complainant.

22.In this case, the accused has taken specific defence that he has not taken money from the complainant, he gave Ex.P1 cheque for

Rs.5,00,000/- to the complainant for a land purchase transaction without mentioning the date, name of the payee.

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23.The Accused contended that, he gave blank signed cheque to the complainant, Hon’ble Supreme Court reported in (2019) 4 SCC 197 between Bir Singh vs. Mukesh Kumar wherein the Hon’ble

Supreme Court in Para-34 held that “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”.

24.It is not the case of the accused that he has not signed Ex.P1 cheque, it is not the case of the accused that Ex.P1 was obtained by the complainant by using threat or coersion or it was stolen from his possession. The Hon’ble Apex Court in the above decision in para-36 held that “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 Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.”

25.Therefore the accused has to adduce evidence stating that he has not issued Ex.P1 cheque in discharge of any debt or other liability which probabilises the defence of the accused about issuance of blank signed cheques for security.

26.Now the only point is to be seen whether the accused has rebutted said presumption available in favour of the complainant by adducing probable evidence or by relying evidence of the complainant. In this case the accused himself examined as DW1 deposed that he has not issued Ex.P1 cheque in discharge of any 11 C.C.33 OF 2018 legally enforceable debt or liability. According to him the complainant doing real estate business, in May 2016 the complainant has taken his cheque of Rs.5,00,000/- without name and date, said cheque not returned by the complainant. It is further contended that in Ex.P5 he has issued reply to the complainant denying the hand loan transaction. DW2 examined on behalf of the accused who is a third party in this proceedings. This witness stated that in April, 2016 for the purpose of purchase of agricultural land the accused gave Ex.P1 cheque to the complainant, but in cross-examination this witness stated that he has not seen any document, he cannot say date when the accused handed over cheque to the complainant.

27.Learned counsel for the accused specifically contended that there is no document to the loan transaction, the complainant failed to file any documentary evidence in support of his contention, even promissory note, receipt or any other document to show payment made by the complainant to the accused. Further contended that no income tax returns are filed. In support of his contention learned counsel relied on decision of Hon’ble High Court reported in LAWS

(APH) 2016 12 41 in between K.Ashok Kumar Goud Vs. Sree

Ramulu and another wherein it is held that “to prove that the complainant has advanced money he has to establish his source, no bank statements were filed, income tax returns are to be filed. In the absence of the same evidence of the complainant not believable.

Learned counsel for the complainant further relied on decision of

Hon’ble Supreme Court in Krishna Janardhan Bhat Vs. Dattatraya

G. Hegde wherein the Hon’ble Supreme Court held that “the complainant has to produce books of accounts or any other proof to show that he got so much of money from the bank.

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28.The Hon’ble Supreme Court of India in the recent decision between Rohitbhai Jivanlal Patel v. State of Gujrat, 2019 SCC

OnLine SC 389 : 2019 (5) SCALE 138 (decided on 15.03.2019) has given its findings as to the “presumption and filing of documentary evidence by the complainant stating that the consideration as such as filing of receipt, promissory note, income tax returns, account books are not required to be proved by a complainant in a case U/s.138 of

Negotiable Instruments Act in view of statutory presumption U/s.139.

The Hon’ble Supreme Court further held that filing of income tax receipts are not required to be proved by the complainant in view of the presumption”.

29Learned counsel for the accused further contended that Ex.P3 notice issued to the accused dated 31.10.2016 demanding for payment of money by the complainant is defective on the ground that

Ex.P3 notice mentioned loan amount of Rs.20,00,000/-, it is not a demand notice of cheque amount and therefore the notice is defective and prayed to acquit the accused. The complainant in this case issued

Ex.P3 notice, as seen from the contents in Ex.P3 last para shows that the complainant demanded the accused to pay an amount of

Rs.20,00,000/- covered by the cheque along with interest @ 24% per annum within 15 days from the date of receipt of the notice failing which the complaint is going to be ended in criminal prosecution

U/s.138 and 148 of Negotiable Instruments Act.

30.As seen from Ex.P1 cheque it is for Rs.5,00,000/- dated 13.10.2016. Apparently the cheque is for Rs.5,00,000/- and notice is for Rs.20,00,000/-, now it is to be considered whether Ex.P3 notice is a defective notice or not. For this the learned counsel for the complainant in written arguments contended that it is a typographical 13 C.C.33 OF 2018 mistake and also stated that the accused in this case filed

Crl.P.No.4403/2018 for quashment of the proceedings before the

Hon’ble High Court with the same ground that the statutory

presumption issued and served by the complainant, it was mentioned in the drawer column as cheque amount Rs.5,00,000/- whereas the notice amount is Rs.20,00,000/-. The matter was heard and

pronounced by the Hon’ble High Court on 05.11.2018 by referring

various judgments of Hon’ble Supreme Court and clearly given its findings that “it is not a case of the cheque was not drawn and issued from the account routed from the account of the accused, not a case that cheque not presented and not dishonoured and not a case is not for Rs.5,00,000/- and a mistake mentioned typographical instead of

Rs.5,00,000/- as Rs.20,00,000/- will not make a notice invalid”. The findings of the Hon’ble High Court in the above criminal petition are binding on this Court.

31.In terms of the orders of Hon’ble High Court in the above said case though the complainant demanded in Ex.P3 notice Rs.20,00,000/- the same is to be treated as demand for Rs.5,00,000/- in view of contents in demand notice.

32.The accused in this case has taken specific defence that he has issued Ex.P1 cheque by mentioning Rs.5,00,000/- and substantiate his signature to the complainant for purchase of agricultural land transaction in April, 2016. It is the case of the accused that subsequently he was not intended to purchase said land, thereafter he requested the complainant to return his cheque, in turn the complainant informed him that he misplace the cheque, whenever he traced out it he will return to the accused and further assured that he is not going to misuse the same. According to the accused in 14 C.C.33 OF 2018

May,2016 itself he has demanded the complainant for return of his signed cheque. Ex.P1 cheque is dated 13.10.2016, the accused in this case not made any demand from May, 2016 to October, 2016 either by addressing a letter to the complainant or by issuing stop payment instructions to his banker or he has not given any complaint against the complainant for these four months. No prudent man would remain silent by keeping his signed cheque of Rs.5,00,000/- with others for such a long time. The accused in this case to substantiate his defence not adduced any documentary evidence to show such land purchase transaction, evidence of DW1 is not inspiring confidence to believe his version that he was present at the time of handing over the blank cheque by accused to the complainant because DW2 failed to give particulars of the cheque, date, time and place in his cross- examination. So, for all these reasons the accused failed to substantiate his defence by adducing probable evidence. Accordingly, in my considered opinion the accused not rebutted the statutory presumption, for these reasons Points 1 and 2 are answered in favour of the complainant.

POINT No.3: In view of my findings in point Nos.1 and 2 the accused herein is liable to be punished for the offence U/s.138 of Negotiable Instruments

Act.

In the result, the accused is found guilty for the offence punishable U/s.138 of Negotiable Instruments Act and accordingly he is convicted U/s.255(1) Cr.P.C.

Dictated to Personal Assistant, transcribed by her, corrected and

pronounced by me in the open Court on this the 2nd day of December, 2019.

XV Addl. Judge–Cum-XIX ACMM, Secunderabad.

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1.The accused is questioned with regard to the quantum of sentence for which he prayed to take a lenient view and also stated that he is sole bread winner of his entire family.

2.U/s.138 of N.I.Act the punishment prescribed for the offence is imprisonment for a period which may extended to 2 years or with fine which may extended by twice the cheque amount or both. Considering the transaction in question was taken place in the year 2016, on the other hand the complainant also should not suffer loss, therefore if cheque amount is ordered to be paid to the complainant as compensation the same would meet ends of justice. In these circumstances imposition sentence of imprisonment of six months and fine of Rs.5,01,000/- on accused would meet ends of justice, out of which Rs.5,00,000/- is ordered to be paid to complainant as a compensation U/s.357(1)(b) Cr.P.C., in default of payment the simple imprisonment would suffice.

3.The accused is sentenced to undergo rigorous imprisonment for a period of six months and also sentenced to pay fine of Rs.5,01,000/-, out of which Rs.5,00,000/- shall be paid as compensation to the complainant in terms of 357(1)(b) Cr.P.C., Rs.1000/- shall be remitted to the state. In default of payment of fine the accused shall suffer simple imprisonment for a period of three months. The bail bonds of the accused are ordered to be in force for a period of 6 months in terms of section 437-A Cr.P.C. A free copy of this judgment is handed over to the accused. The accused appraised as to his right of appeal.

There is no remand period to give set off Under Section 428 of Cr.P.C.

Dictated to Personal Assistant, transcribed by her, corrected and

pronounced by me in the open Court on this the 2nd day of December, 2019.

XV Addl. Judge–Cum-XIX ACMM, Secunderabad.

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APPENDIX OF EVIDENCE

WITNESSES EXAMINED

FOR PROSECUTION : FOR DEFENCE:

PW1 : Adi Lakshmana Rao DW1 : Mahender Kumar Agarwal PW2 : K.V.Laxma Reddy DW2 : Anil Sharma

DOCUMENTS MARKED

FOR PROSECUTION :

Ex.P1 : Cheque No.724496 dated 13.10.2016 for Rs.5,00,000/- Ex.P2 : Cheque return memo dated 17.10.2016 Ex.P3 : Office copy of legal notice dated 31.10.2016 Ex.P4 : Copy of Postal track report Ex.P5 : Reply notice dated 12.11.2016

FOR DEFENCE :

- Nil -

XV Addl.Judge-cum-XIX ACMM, Secunderabad