1 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
IN THE COURT OF THE SPL.JUDICIAL MAGISTRATE OF FIRST
CLASS, SPECIAL MOBILE COURT, MAHABUBNAGAR
Tuesday, the 05th day of October, 2021.
Present: D.V.R.Tejo Karthik, Judl.Magistrate of First Class, Spl.Mobile Court, Mahabubnagar.
C.C.No. 237 of 2018
Between:
Rama Chary, S/o. Gopala Chary, age: 46 years, Occ: Govt., Servant, R/o. MIG-II 250, APHB Colony, Yedira, Mahabubnagar.
…Complainant. A N D
Ambaresh Goud, S/o. Raman Goud, age 35 years, Occ: Private employee and Business, R/o. Chinna Rajamoor village, Gotur (Post), Devarkadra Mandal, Mahabubnagar District. …Accused.
Section of law: U/Sec 138 of the Negotiable Instrument Act. Plea of the accused: Pleaded not guilty
Finding of the court: Found guilty
Sentence or order: In the result, the accused is sentenced to undergo Simple Imprisonment for a pe- riod of (3) months and he is also sentenced to pay fne of Rs.3,60,000/- and in default to undergo simple imprisonment for a pe- riod of (3) months as per Sections 65 to 68 r/w 53 (sixthly) IPC. Out of the fne amount of Rs.3,60,000/-, Rs.10,000/- shall go to the state and the remaining fne amount of
Rs.3,50,000/- shall go to the complainant as compensation U/Sec.357(1)(b) r/w Secs.
431 and 421 Cr.P.C. A free copy of Judg- ment shall be given to the accused as per
Sec.363 Cr.P.C r/w Rule 72 of Criminal
Rules of Practice and Circular Orders, 1990. As the accused was not remanded to judicial custody even for a single day be- fore trial or at the time of trial, therefore,
Section 428 Cr.P.C is not invoked.
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Date: 05-10-2021.
This case came before me for fnal hearing in the presence of learned counsel for the complainant Sri K.Pratap Kumar, Advocate and the learned counsel for the accused Sri U.Sathya Sheel, Sri
M.Venkatesh, Advocates and having stood over for determination, this day the court delivered the following:-
J U D G M E N T
1.This case is transferred to this court as per the proceedings of
Hon'ble Principal District and Sessions Judge, Mahabubnagar, vide
Order in Dis.No.6509, dated 20-12-2017 from the court of learned
J.M.F.C, Mahabubnagar.
2.This is a complaint fled under Sec.200 Cr.P.C., by Sri Rama
Chary, the complainant against Sri Ambaresh Goud, the accused for the ofence punishable U/Sec.138 of the Negotiable Instrument Act (hereinafter be referred to as N.I. Act).
3.A synoptical resume of the case of the complainant is as under:-
That the complainant and the accused are well known to each other. Due to that acquaintance, the accused approached the complainant in the month of February, 2016 and requested for hand loan of Rs.3,00,000/- for meeting his family, legal and other urgent needs. Considering the request made by the accused, the complainant agreed to lend the loan amount and in the frst week of March, 2016 on the assurance of the accused that the amount would be repaid within a month, the complainant gave the amount of Rs.3,00,000/- to the accused as hand loan and the complainant did not insist the accused for the interest, considering the assurance of the accused that the amount would be repaid within a month. The complainant believing the words of the accused did not obtain any document from the accused as a proof of lending the loan. However, the accused committed default in payment of the loan amount after the stipulated period of one month as agreed and the accused postponed the payment on one or the other pretext. The complainant made several oral demands for repayment of the loan. The accused had approached the complainant in the second week of the May, 2016 and in discharge of the loan amount, issued post dated cheque bearing No.104196,
dated 24-5-2016 of Oriental Bank of Commerce, Mahabubnagar branch
to the complainant. The cheque was presented on 24-05-2016 by the 3 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
complainant in his bank namely State Bank of Hyderabad (Now State
Bank of India) New town branch, Mahabubnagar. The said cheque was returned with endorsement “FUNDS INSUFFICIENT”. The dishonour of the cheque was intimated to the complainant through cheque return memo dated 25-5-2016. The complainant issued statutory notice to the accused on 06-06-2016 through Registered Post acknowledgment due calling upon the accused to repay the cheque amount of Rs.3,00,000/- within 15 days from the date of receipt of the notice. However, the accused being aware about the consequences of the legal notice refused to take the notice and the notice was returned to the complainant on 10-6-2016 with endorsement “refused”. Therefore, the accused committed the ofence punishable u/sec.138 of NI Act. Hence, the complaint by the complainant.
4.The complainant had originally fled the complaint before learned
JMFC, Mahabubnagar. The complainant fled sworn afdavit incorporating the contents as mentioned in the complaint.
5.Upon consideration of the complaint and sworn afdavit on 30- 08-2016 the cognizance as per Sec.190(1)(a) of Cr.P.C., for the ofence punishable u/sec.138 of NI Act was taken against the accused by the learned Judicial Magistrate of First Class, Mahabubnagar (herein after referred as JMFC, Mahabubnagar) and the case was numbered as
CC.491 of 2016 on the fle of J.M.F.C, Mahabubnagar and the process
was issued to the accused as per Sec.204 Cr.P.C. The accused refused the summons and therefore the learned JMFC, Mahabubnagar issued
NBW against the accused. Subsequently, the NBW was cancelled and the accused appeared before the learned J.M.F.C, Mahabubnagar. At that stage the case was transferred to this court by the Hon’ble Prl.
District Judge, Mahabubangar. The case record was received by this
court on 03-01-2018 and the case was numbered as CC.No.237 of 2018 by this court. The complainant and the accused have appeared before this court and on 31-10-2018 the accused was examined by this court under Sec.251 Cr.P.C., for the substance of accusation for the ofence punishable u/Sec.138 of NI Act, after notifying the substance of accusation and on question of plea of guilt the accused pleaded not guilty and claimed to be tried. Hence, the trial.
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Date: 05-10-2021.
6. The complainant got himself examined as PW.1 and he fled his examination in chief afdavit on 20-11-2018. The complainant as PW.1 in his examination in chief afdavit had reiterated the contents as mentioned in the complaint without any incongruity, therefore, narration of those factual matrix over again will not serve any useful purpose. He got exhibited Exs.P1 to P5 as documentary evidence on 14-03-2019.
7. The list of the documents exhibited are as follows:-
Ex.P1 – is the Original Cheque bearing No.104196, dt:24-05-2016 issued by the accused,
Ex.P2 – is the Original Cheque Return Memo, dt:25-05-2016,
Ex.P3 – is the Ofce Copy of Statutory Notice get issued by him to the accused, dt.06-06-2016,
Ex.P4 - is the Original Postal Receipt, dt:06-06-2016,
Ex.P5 is the Returned Postal Cover of accused, dt:10-06-2016.
8.The complainant (PW.1) was cross-examined by the learned counsel for the accused.
During cross-examination PW.1 testifed that he is working as a government Teacher. That he did not know whether as per Income
Tax Act and Reserve Bank of India. Guidelines that a cheque is to be issued if the amount exceeds Rs.20,000/- for any transaction. That he fles income tax returns every year and he did not disclose the loan amount lent to the accused in the income tax returns pertaining to the relevant assessment year and also in subsequent assessment years.
That he did not know whether the amount taken or lent is to be shown in the Income Tax returns though he is an income tax assessee. That as per the complaint the address of the accused and his address are at diferent villages and mandals. That he gave loan in denomination of
Rs.500/- currency notes. That he had lent the amount to the accused by getting the amounts from two of his friends namely Kalyan Rao and
Ananth Reddy. That he took Rs. 1,10,000/- from Kalyan Rao and Rs. 1, 40,000/- from Ananth Reddy and the balance amount of Rs.50,000/- was his amount and he gave loan of Rs.3,00,000/- to the accused.
Kalyan Rao and Ananth Reddy also gave Rs. 500/- currency notes. That he did not remember the date when the accused had approached him for loan but he came in the month of February, 2016. That he did not 5 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
remember the day of advancing the loan. Witness volunteered that he gave the loan in the frst week of March, 2016 to the accused. That in the statutory notice, complaint and in his chief afdavit he did not mention the exact date when the accused had approached him for loan and the exact date of advancing the loan. That as he did not have sufcient money therefore he took money from Kalyan Rao and Ananth
Reddy. That no promissory note was executed by the accused for taking the loan. Witness again volunteered that Kalyan Rao was present when loan was advanced to the accused. That the loan was advanced to the accused in Mahabubnagar. That orally he had requested the accused several times to repay the loan obtained from him. That he did not issue any legal notice calling up on the accused to repay the loan amount.
PW.1 denied the suggestions that as the accused never approached him seeking loan therefore he is unable to say the date, month and year of advancing such loan, that as no money was lent to the accused therefore no promissory note was executed by the accused acknowledging the receipt of loan, that as he did not lend any amount to the accused therefore the same was not refected in his income tax returns, that he obtained loan due to his weak fnancial status from Anantha Reddy and Kalyan Rao and that the accused was no way concerned with the alleged transaction and he never obtained any loan as alleged and a false case was foisted against the accused for the purpose of extorting money from him.
9.After closure of the complainant’s evidence the accused was examined u/Sec.313 r/w Sec.281 of Cr.P.C enabling him to explain personally the incriminating circumstances appeared against him in the evidence of the complainant for which the accused denied the truthfulness of the evidence and stated that he did not know anything about the dishonour of the cheque. That he gave the cheque to one
Dileep sarma who is a priest in discharge of loan of Rs.25,000/- which was taken by him. He did not know how the cheque went into the hands of the complainant and that he was innocent. The accused reported defence evidence on his side. However after taking couple of adjournments, the accused reported that there is no defence evidence on his side.
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Date: 05-10-2021.
10. Heard the learned Counsel for the complainant Sri K.Pratap
Kumar and the learned counsel for the accused Sri Uma Shanker
Agarwal on behalf of Sri U.Sathyasheel.
11.The learned Counsel for the complainant Sri K. Pratap Kumar in his arguments argued that the complainant gave an amount of
Rs.3,00,000/- to the accused as hand loan and the accused issued
Ex.P1 and on its presentation, it was dishonoured and it was communi- cated to the complainant vide Ex.P2 and thereafter legal notice was is- sued to the accused vide Ex.P3 and the accused refused to receive the legal notice and Ex.P4 and Ex.P5 would demonstrate the fact that the accused had refused to receive the notice. That once the cheque is dishonoured on its presentation, the presumption under Sec.139 of NI
Act would come into picture and the accused shall be liable for prose- cution U/Sec.138 of NI Act as the presumption is in favour of the com- plainant and it shall be presumed that the cheque was issued by the accused and was received by the complainant in discharge of legally enforceable debt in whole or in part of any debt or other liability and the documents exhibited by the complainant during evidence would demonstrate the fact of issuance of the cheque and dishonour of the cheque and further during cross-examination of the complainant noth- ing could be elicited by the accused to prove that the cheque was not issued by him to the complainant and therefore the learned counsel for the complainant prays the court to punish the accused U/Sec.138 of NI
Act.
12.Per contra, the learned counsel for the accused Sri Uma Shankar
Agarwal mainly argued apart from arguing other aspects which this court would discuss in the course of the discussion, that the com- plainant utterly failed to establish that there was legally enforceable debt and in discharge of such legally enforceable debt, the accused is- sued Ex.P1. It was also argued by the learned counsel that the date of lending of the loan was not mentioned by the complainant in Ex.P3 or in the complaint or in the chief afdavit of the complainant except stat- ing that the amount was lent in the frst week of March, 2016 and the story put forth by the complainant was cooked up and the complainant never gave any loan and the accused never took any money from the complainant as loan. It was vehemently argued by the learned counsel 7 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
that the alleged loan amount was not disclosed in income tax returns, therefore the alleged loan amount is an unaccounted money and as such it cannot be treated as legally enforceable debt. That there is no corroborative evidence to support the version of the complainant and though it was admitted by the complainant in his cross-examination that one Kalyan Rao was present when loan was advanced, however no steps were taken by the complainant to examine Kalyan Rao in order to prove that the alleged loan amount of Rs.3,00,000/- was lent to the accused. The complainant miserably failed to prove his fnancial capac- ity for lending the loan and the admission by the complainant that he took Rs.1,10,000/- from Kalyan Rao and Rs.1,40,000/- from Anantha
Reddy itself would demonstrate the fact of fnancial capacity of the complainant and therefore it is prayed by the learned counsel to dis- miss the complaint.
13.I have given my considerable thought to the respectivesubmis- sions made by the learned counsel for the parties and I have perused the record.
14.On consideration of the contentions of both parties and the ma- terial on record, the following points that arise for determination are as follows:-
1.Whether the complainant could establish that the cheque Ex.P1 was issued for discharging of legally enforceable debt and that the accused committed an ofence punishable u/sec.138 of N.I Act?.
2.Whether the accused rebutted the presumption under Secs.118 and 139 of N.I Act?.
3.To what order?.
15.The case of the complainant is that the accused issued cheque vide Ex.P1 on 24-05-2016 in discharge of the loan of
Rs.3,00,000/- which was obtained by the accused and when the cheque Ex.P1 was presented in the bank, it was returned for the reason “FUNDS INSUFFICIENT” and statutory notice was issued to the accused and the statutory notice was returned with the endorsement refused and the accused failed to repay the cheque amount within the stipulated statutory time, therefore he is before the court to prosecute the case against the accused U/Sec.138 of NI Act.
16.POINTS No.1 and 2:- 8 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
Since point Nos.1 and 2 are intertwined, therefore to avoid unneeded repetition of facts, both the points are decided together for better adjudication.
Before determining points No.1 and 2, it will be in the ftness of
things to reproduce the provisions of law as envisaged under Secs.118, 138 and 139 of NI Act for better understanding and appreciation of the facts of the case at hand.
U/Sec.138 of the Negotiable Instrument Act, is as follows:-
Dishonour of cheque for insufciency, etc., of funds in the
account:- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufcient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an ofence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fne which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless:
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, 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 thirty days of the receipt of information by him from the bank regard- ing the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within ffteen days of the receipt of the said notice.
Explanation: For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.
U/Sec.139 of the Negotiable Instrument Act, is as follows:-
Presumption in favour of holder:- 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.]
U/Sec.118 of the Negotiable Instrument Act, is as follows:-
Presumptions as to negotiable instruments:- Until the con- trary is proved, the following presumptions shall be made:
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(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, in- dorsed, negotiated or transferred for consideration;
(b) as to date, that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance, that every accepted bill of exchange was accepted within a reasonable time after its date and before its matu- rity;
(d) as to time of transfer, that every transfer of a negotiable instru- ment was made before its maturity;
(e) as to order of indorsements, that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamps, that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course, that the holder of a negotiable instrument is a holder in due course:
Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an ofence or fraud, or has been obtained from the maker or acceptor thereof by means of an ofence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
17.A bare reading of Section 138 of the NI Act would go to show that it has fve ingredients:-
(i) The cheque should have been issued in discharge of a legally enforceable debt or liability,
(ii) The cheque should have been presented within the period of its validity.
(iii) The cheque should have been dishonoured for want of funds in the account of the drawer.
(iv) The payee or the holder of the cheque should have issued, within a stipulated time limit (30 days) a notice in writing to the drawer demanding the amount of the cheque.
(v) The drawer must have failed to make payment within 15 days of receipt of the notice.
18. The Hon'ble Apex Court betweenMSR Leathers v.
S.Palaniappan, (2013) 1 SCC 177 held that there are three distinct conditions precedent, which may be satisfed before the dishonor of the cheque can constitute an ofence and become punishable.
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(1). The cheque ought to have been presented to the bank within a period of 6 months(3 months) from the date on which it is drawn or within the period of its validity, whichever is earlier.
(2). The payee or the holder in due course of the cheque, as the case may be ought to make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within the 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.
(3). The drawer of the cheque should have failed to make the payment of the said amount of money to the payee or as the case may be to the holder in due course of the cheque within 15 days of the receipt of the said notice.
It is only upon the satisfaction of all the three conditions mentions above and enumerated under the proviso to Sec.138 as clauses (a), (b) and (c) thereof that an ofence under Sec.138 can be said to have been committed by the person issuing the cheque.
19. The explanation appended to Section 138 of NI Act explains the meaning of the expression debt or other liability. This expression means a legally enforceable debt or other liability. Section 138 of the
NI Act treats and regards a dishonoured cheque as an ofence provided if the cheque has been issued in discharge of any debt or other liability, which is legally enforceable. The explanation to Sec.138 of NI
Act, leaves no manner of doubt that in order to attract an ofence u/Sec.138 of NI Act, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque, i.e., drawal of the cheque in discharge of existing or past adjudicated liability is sine qua non for bringing an ofence within the four corners of Section 138 of the NI Act. The proviso appended to the section 138 of NI Act provides for compliance of legal requirements before a complaint can be acted upon by the court of law and Sec.139 of the Act merely raises a presumption in favour of the holder of the cheque that the same has been issued for discharge of any debt or other liability. Section 139 of
NI Act does not contemplate that there is an existence of legally recoverable debt, but it only raises a presumption in favour of the holder of the cheque that the cheque was issued for the purpose of discharging any debt or liability and this presumption U/Sec.139 of NI 11 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
Act is a rebuttable presumption. The accused for discharging the burden placed upon him by virtue of Sec.139 of NI Act, he may discharge his burden by adducing positive evidence on his behalf or basing on the material already brought on record and the accused need not examine himself to rebut the presumption. The standard of proof on the part of the accused is preponderance of probabilities. The inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by the references to the circumstances upon which the accused relies. The accused can prove the non-existence of a consideration by raising a probable defence and if the accused is proved to have discharged the onus of proof showing that the existence of consideration was doubtful or improbable, the onus would shift on the complainant who will be obliged to prove it as a matter of fact and upon his failure to prove would dis-entitle him for the grant of relief U/Sec.138 of NI Act.
20.The complainant asserted that Ex.P1 was issued in discharge of legally enforceable debt by the accused for the loan obtained by the accused and the accused issued Ex.P1 on 24-05-2016 and when Ex.P1 was presented on the even date it was dishonoured for the funds insufcient in the account maintained by the accused and the said fact is evident from Ex.P2 and therefore, the accused is liable for punishment as Ex.P1 was issued for discharge of legally enforceable debt.
21.In order to prove that there was advancement of loan by the complainant, the complainant got himself examined as PW1 and got exhibited Ex.P1 Cheque to prove that the accused had issued the cheque to him and further relied on Ex.P2 to prove that there was dishonour of Ex.P1 cheque. The complainant also relied on Ex.P3 which is statutory notice to prove that notice was issued to the accused as contemplated u/Sec.138(b) of the Act and also relied on Ex.P4 and
Ex.P5 to prove that the postal receipt, postal cover with acknowledgment were addressed to the accused and they were returned with endorsement refused.
22.It was argued by the learned counsel for the accused in the course of his arguments that the statutory notice as contemplated under Sec.138(b) of the Act was not served on the accused. It was also 12 of 30 C.C.No. 237 of 2018
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argued that when the notice was returned with the endorsement refused as the complainant could successfully manage the postal authorities and got it endorsed as refused and therefore it cannot be said that there is proper service of notice on the accused.
I am not in agreement with the argument advanced by the learned counsel for the accused. If notice is returned with endorsement viz., door locked/refused/intimation served/unclaimed then it shall be presumed that notice was duly served (See. V.Raja Kumari
V.P.Subbarama Naidu, AIR 2005 SC 109). On perusal of Ex.P5 it would refect that the same was refused. Therefore, it can be safely concluded that notice under Sec.138(b) of NI Act was duly served on the accused. It is for the accused to prove by leading a positive evidence that such endorsement was not made by the post man and that such endorsement was forged. No such steps were taken by the accused to positively establish that Ex.P5 was not refused by the accused and that the endorsement made on Ex.P5 was a created one by the complainant. When there is no evidence to that efect this court cannot assume that there was no service of statutory notice on the accused and that there was no refusal on the part of the accused when the record vide Ex.P5 speaks otherwise. Admittedly the postman discharges his ofcial duties and the ofcial act of the postman is to be presumed by this court that such act had been regularly performed in view of illustration (e) of Section 114 of Indian Evidence Act.
It was also argued by the learned counsel for the accused that in the cross-examination of PW.1 it was admitted by PW.1 that he did not disclose the transaction of lending of loan by him to the accused in the income tax returns for the relevant assessment year and also in subsequent assessment years and therefore the loan if any advanced has to be treated as unaccounted money and therefore not enforceable in the eye of law.
23.The learned counsel for the accused in the course of his arguments relied on the judgment of Hon’ble High Court for the State of Telangana between R.Narender v. Yakamma Keloth or Kalyan,
2021 SCC OnLine TS 533, Criminal Appeal No.2852 of 2018,
decided on April 28, 2021. The learned counsel argued that where the complainant failed to disclose the amount lent in his income tax 13 of 30 C.C.No. 237 of 2018
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returns, such admission itself would sufce to conclude that the amount lent, if any, is unaccounted money and when the complainant admits that the amount was not disclosed in the income tax returns it would be unaccounted money and thereby it is not legally recoverable.
24. The argument of learned counsel for the accused that non- disclosure of the loan if any in the IT returns would itself sufce to dismiss the complaint does not hold much water as nonpayment of income tax is a matter between the revenue and assessee. If the assessee has not disclosed his income in the Income Tax return(s), then the Income Tax Department is well within its rights to reopen the assessment of income of the assessee and take action as per the provisions of Income Tax Act.
25.The Hon'ble High Court of Karnataka between Yogesh Poojary v. K.Shankara Bhat, 2018 Law Suit (Kar) 3199 held that when the accused is in the process of rebutting the presumption existing in favour of the complainant u/Sec.139 of the NI Act apart from making a mere suggestion as to absence of any documentation about the alleged loan transaction and absence of non disclosure of the loan transaction in the Income Tax returns is also required to place more material either in the form of favourable replies elicited in the cross- examination of the complainant or in the form of documents or at least bringing to the notice of the court and convincing it that the circumstances of the case warrants from drawing such a conclusion, particularly, mere making a suggestion to the complainant that he has not disclosed the alleged loan transaction in the Income Tax returns or eliciting the statements from the complainant that he has not disclosed the alleged loan transaction in his Income Tax returns by itself is not sufcient. It is also required for the accused to establish that the complainant is an Income Tax assessee or required to be an assessee and that the nature of his Income Tax assessment and the Income Tax returns which he fles, requires him to disclose the alleged transaction or the liability in question. In the absence of eliciting those details, by merely making a suggestion that the alleged debt or liability has not been refected in the Income Tax returns would not by itself sufce to draw an adverse inference and to hold that there was no legally 14 of 30 C.C.No. 237 of 2018
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enforceable debt or the presumption standing in favour of the complainant as successfully rebutted by the accused.
26.The Hon'ble High Court of Madhya Pradesh between Ragini
Guptha v. Piyush Dutt Sharma, 2019 Law Suit (MP) 191 held that non disclosure of the income in the Income Tax return cannot be a solitary basis for rejecting the evidence where issuance of cheque is proved beyond reasonable doubt and where the signature is not disputed by the accused the presumption u/Sec.139 of NI Act can be drawn against the accused. Mere non fling of Income Tax return would not automatically dislodge the source of income of the complainant.
Nonpayment of income tax is a matter between the revenue and assessee. If the assessee has not disclosed his income in the Income
Tax return, then the Income Tax Department is well within its rights to reopen the assessment of income of the assessee and to take action as per the provisions of Income Tax Act. However, non fling of Income
Tax return by itself would not mean that the complainant had no source of income and thus, no adverse inference can be drawn in this regard only because of absence of Income Tax returns.
27.In so far as the judgment of Hon’ble High Court for the State of
Telangana between R.Narender v. Yakamma Keloth or Kalyan,
2021 SCC OnLine TS 533, Criminal Appeal No.2852 of 2018,
decided on April 28, 2021,is concernedthe court was primarily dealing with a case where the complainant and the accused entered into an settlement agreement in pursuance of the compromise dated 15-10-2016, wherein the accused had agreed to pay an amount of
Rs.70,00,000/- to the complainant towards full and fnal settlement and out of which the accused had paid an amount of Rs.50,000/- to the complainant as advanced and further agreed to pay the remaining amount of Rs.69,50,000/- to the complainant on or before 01-11-2016 and the accused issued two cheques both dated 1-11-2016 bearing cheque Nos.627842 for Rs.34,50,000/- and 627844 for Rs.35,00,000/- in discharge of legal liability to the complainant and a document was executed on 31-10-2016 in favour of the complainant requesting the complainant to present the said two cheques in the frst week of
November, 2016. When the said cheques were presented they were dishonoured with the endorsement “payment stopped by the drawer”.
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Thereafter a statutory notice was issued to the accused and despite receipt of the notice the amounts were not paid and therefore a complaint was fled against the accused. In the said case, the Hon’ble
High Court of Telangana also discussed that the accused sought assistance of the complainant for establishing a petrol bunk of Bharath
Petroleum Corporation Limited promising to handover the petrol bunk for management by the complainant and the complainant identifed a suitable land in Ibrahimpatnam and invested Rs.3 crores for necessary works for opening retail outlets and the accused executed a notarized declaration, undertaking that the entire business was handed over to the complainant and received an amount of Rs.20,00,000/- as full and fnal settlement dated 15-4-2013 relinquishing the rights. That the complainant paid an amount of Rs.20,00,000/- as per the terms and conditions. Due to non issue of cheques by the accused the complainant could not operate the petrol bunk and therefore issued legal notice dated 27-9-2016 asking the accused to issue necessary cheques for petroleum loads and due to the intervention of elders the matter was compromised and as per the terms of compromise, the accused issued cheques towards discharge of legally enforceable debt.
When the complainant was put to the test of cross-examination, the complainant admitted that he has not fled any document to prove that he had incurred Rupees 3 crores for identifying the land and he also admitted that he has not fled any bank statement to that efect.
Further, the complainant admitted that he did not disclose the amounts spent in his Income Tax returns during that period despite the fact that the complainant being an income tax assessee. In that regard the trial court held that it created a doubt regarding the fnancial position of the complainant whether the complainant had really spent such amount and further there is no record of the withdrawl of the amount of Rupees 3 crores from the bank. In the settlement agreement it was categorically mentioned that the accused had handover two cheques as security. The Hon’ble High Court observed that the two cheques mentioned did not specifcally disclose one for
Rupees 34,50,000/- and another for Rs.35,00,000 and that there is no mention with regard to the cheque numbers. Therefore, in that regard agreeing with the conclusions arrived at by the trial court that the cheques were given for security purpose and further the cheques 16 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
exceeded the limits mentioned therein and therefore the cheques are invalid and further as it created a doubt whether the cheques fled in the court were the same cheques as mentioned in Ex.P6 settlement deed or otherwise therefore considering all these aspects the Hon’ble
High court held that the accused was successful in rebutting the presumption.
28.The facts of the case before the Hon’ble High Court are totally diferent from the facts stated herein, Therefore the non disclosure of the loan amount in the income tax returns by the complainant herein cannot be equated with the facts as stated and discussed by the
Hon’ble High Court to hold that the accused was successful in rebutting
the presumption under Sec.139 of NI Act on the ground that the loan amount was not disclosed in the income tax returns. The Hon’ble High
Court in the said case, made a categorical fnding that the settlement deed discloses that the cheques were issued only for security purpose and on verifcation of Exs.P1 and P2 which are the cheques they were valid each up to 10 lakhs where as the amounts mentioned in the cheques exceeded rupees 10 lakhs and the signatures of the accused on Exs.P1 and P2 are diferent from other writings in the cheques and therefore it appears that blank cheques were given to the complainant for security purpose. Therefore, in the backdrop of those circumstances the Hon’ble High Court opined that the accused therein was successful in rebutting the presumption under sec. 139 NI Act. There is cleavage of facts between the case relied upon by the accused herein with that of the facts at hand. The facts are distinguishable. Therefore, the precedent of the Hon’ble High Court of Telangana relied upon by the accused cannot be applied to this case. No where it came on record that the accused herein issued cheque in question for security purpose.
29. The learned counsel for the accused in the course of his arguments had fercely contended that the complainant did not lend any loan as alleged as he failed to give the details of the precise date on which the alleged amount was lent to the accused and further the alleged amount exceeded Rs.20,000/- therefore it was imperative on the part of the complainant to issue cheque for the loan which in this 17 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
case the complainant did not do so. It was also argued that the contention of the complainant is not believable that he had lent
Rs.3,00,000/- to the accused as no document was executed and further as admitted by the complainant that no document was executed by the accused. The learned counsel for the accused submitted that the case of the complainant is doubtful on cumulative analysis of the facts and circumstances and therefore learned counsel submits that the accused could successfully rebut the presumption which would entitle for his acquittal.
I am not in agreement with the submissions made by the learned counsel that the case of the complainant is suspicious on the ground that he did not issue cheque for the loan of Rs.3,00,000/- as it exceeded the limit of Rs.20,000/- as prescribed under the Income Tax
Act. In so far as non issuance of cheque for the amount exceeding
Rs.20,000/- I have given my considerable thought. As per the
Sec.269SS and Sec.271D of Income Tax Act if any amount exceeds
Rs.20,000/- then such amount must be given only by way of cheque and I have perused the provisions. The Sub Section (1) of Sec.271D says that if a person takes or accepts any loan or deposit in contravention of the provisions of Sec.269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of loan or deposit so taken or accepted. Sub Section (2) of Sec.271D says that any penalty imposable under sub Section (1) shall be imposed by the Joint
Commissioner. On plain reading of Sec.269SS it shows that no person can accept any loan or deposit of a sum of Rs.20,000/- or more otherwise than by an account payee cheque or account payee demand draft. The section does not preclude a person from advancing loan for more than Rs.20,000/- in cash to another person. The restriction on cash advances was on the person taking the cheque and not on the person who gives the advance. The penalty Under Sub
Section (2) of Sec.271D of Income Tax Act for taking such advance or deposit in contravention of Sec.269SS was to be sufered by the person who takes the advance. Therefore, it is absolutely impermissible to lay hands on these provisions thereby preventing a person from recovering the loan advanced which was made by him.
Thus, to the extent of non-issuance of cheque for the amount 18 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
exceeding Rs.20,000/-, in this case Rs.3,00,000/- by the complainant to the accused cannot be said that it would prevent from recovering the amount lent. Thus, to this extent the argument advanced by the learned Counsel for the accused has to be negated.
30.In the case at hand, there is no dispute about the cheque not belonging to the accused. It is not disputed by the accused that the signature on Ex.P1 cheque does not belong to him and that his signature was forged. Even in the cross-examination of PW.1 no suggestion was put that the signature on the cheque did not belong to the accused and that the cheque too did not belong to the accused.
In the case at hand, no contra evidence was adduced by the accused to establish that Ex.P1 cheque was not issued in discharge of a debt or liability. The line of argument in the cross-examination of
PW.1 with regard to non disclosure of the lending of the loan in the income tax returns would in indirect way signify that the accused had taken loan from the complainant and issued Ex.P1 cheque in discharge of the loan.
There is no cogent evidence to show that the cheque was not issued in discharge of a debt by adducing evidence by the accused or by eliciting positive responses from the mouth of the complainant during cross-examination in order to create a cloud about the transaction and the issuance of cheque by the accused. In Sec.313
Cr.P.C examination the accused stated that he did not know anything about the dishonour of the cheque and he gave cheque to one Dileep
Sarma who is a priest in discharge of loan of Rs.25,000/- which was taken by him and that he did not know how the cheque went into the hands of the complainant. It is well established principle of law that the statement of the accused under Sec.313 Cr.P.C is not a substantive piece of evidence. However the Hon’ble Supreme Court of India in
Mohan Singh v. Prem Singh and Others, AIR 2002 SC 3582
observed that the statement made in defence by accused under
Section 313, Cr.P.C. can certainly be taken aid of to lend credence to the evidence led by the prosecution, but only a part of such statement under Section 313 of the Code of Criminal Procedure cannot be made the sole basis of his conviction. The law on the subject is almost settled. The statement under Section 313 Cr.P.C. of the accused can 19 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
either be relied in whole or in part. It may also be possible to rely on the inculpatory part of his statement if the exculpatory part is found to be false on the basis of the evidence led by the prosecution. (also See
Nishi Kant Jha v. State of Bihar, 1969 CriLJ 671). It can be used for appreciating evidence led by the prosecution to accept or reject it.
It is, however, not a substitute for the evidence of the prosecution. If the exculpatory part of his statement is found to be false and the evidence led by the prosecution is reliable the inculpatory part of his statement can be taken aid of to lend assurance to the evidence of the prosecution. If the prosecution evidence does not inspire confdence to sustain the conviction of the accused, the inculpatory part of his statement under Section 313 of Cr.P.C cannot be made the sole basis of his conviction.
31.Similarly the Hon’ble Apex Court in a non reportable judgment between Rajender @ Rajesh @ Raju V. State (NCT of Delhi)
Criminal Appeal No.1889 of 2010 dated 24-10-2019 observed that a statement made by an accused u/Sec.313 Cr.P.C can be used as an aid to lend credence to the evidence led by the prosecution.
32. It is crucial to note that the reasonableness of the explanation ofered by the accused as to how he had parted with Ex.P1 cheque has a bearing on the efect of the case. As per Sec.106 of Indian Evidence
Act which provides that the burden of proof for any fact that is especially within the knowledge of the person lies upon such person.
In the case at hand, it had been categorically stated by the accused in his Sec.313 Cr.P.C examination that Ex.P1 cheque was given to one
Dileep Sarma from whom the accused had taken loan and in discharge of such loan he had parted with the cheque and gave the same to
Dileep Sarma. However he does not know how the cheque went into the hands of the complainant herein. It is not the case that the accused was totally ignorant about Ex.P1 cheque going into the hands of the complainant herein. When the accused was aware that Ex.P1 cheque which is a valuable security went into the custody of the complainant unauthorizedly, no steps were initiated by the accused against the complainant. The accused did not take any steps by issuing a notice to the complainant stating that the cheque Ex.P1 had been unauthorizedly came into the hands of the complainant and that he did 20 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
not issue Ex.P1 cheque to the complainant and that Ex.P1 cheque was issued by him to one Dileep Sarma in discharge of the debt. Further, the accused did not take any steps or pains to examine the said Dileep
Sarma in order to prove that Ex.P1 cheque was issued to the Dileep
Sarma but not to the complainant herein. The accused did not even take any pains to lodge a police report against the complainant for misusing Ex.P1 cheque. An adverse inference can be drawn against the accused in this regard. But such inference cannot be a substitute for the evidence which the prosecution/complainant must adduce to bring home the ofence of the accused. The complainant could establish that Ex.P1 cheque belongs to the accused and there is no dispute that
Ex.P1 cheque was not signed by the accused and that it was forged.
On the fulcrum of the issue with regard to what extent the accused could disprove the presumption available in favour of the complainant, the Hon’ble Apex Court between Rangappa v. Sri Mohan, (2010) 11
SCC 577 held that once the cheque relates to the account of the accused and he accepts and admits the signature on the said cheque, then initial presumption as contemplated U/Sec.139 of NI Act has to be raised by the court in favour of the complainant. The presumption referred to in Sec. 139 of N.I. Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption. What is required to be established by the accused in order to rebut the presumption is diferent from each case under given circumstances, but the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the court.
33.In M.S.Narayana Menon @ Mani v. State of Kerala and
Anr., 2006 Cri L.J 4607, it was held that once the accused is found to discharge his initial burden, it shifts to the complainant and the accused need not disprove the case of the complainant in its entirety, but such materials must be brought on record in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of a prudent man.
21 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
34.In Bharat Barrel and Drum manufacturing company v.
Amin chand Pyarelel, AIR 1999 SC 1008, it was held that the burden is on the accused is to bring on record by preponderance of probability either direct evidence or by referring to circumstances upon which he relies to get the beneft in discharge of onus against him.
35.In K.Prakashan v. P.K.Surenderan, (2008) 1 SCC 258, the
Hon’ble Supreme Court held that the Act raises two presumptions.
Firstly, in regard to the passing of consideration as contained in
Section 118 (a) therein and, secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 138 of N.I. Act discharged in whole or in part any debt or other liability.
Presumptions both under Sections 118 (a) and 139 of N.I.Act are rebuttable in nature. Having regard to the defnition of terms, proved and disproved as contained in Section 3 of the Evidence Act as also the nature of the said burden upon the prosecution vis-a-vis and accused. It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond reasonable doubt, the one on the accused is only mere preponderance of probability. The Hon’ble Supreme Court also took the similar view in Kamala v. Vidyadharan M.J and Another, (2007) 5
SCC 264.
36.The Hon’ble Apex Court in Krishna Janardhan Bhat v.
Dattatraya G.Hegde, AIR 2008 SC 1325 held that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in fnancial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the court shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not show how presumption drawn should be held to have rebutted. The other important principles of legal jurisprudence, namely presumption of innocence as human right and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts indisputably would largely depend upon the factual matrix of each case, the materials 22 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
brought on record and having regard to legal principles governing the same.
37.The Hon’ble Apex Court in Mallavarapu Kasi Visweswara
Rao v. Thadikonda Ramulu Firm and Others, AIR 2008 SC
2898 held that the initial presumption lays in favour of the complainant and Sec. 139 of N.I. Act is an example of reverse onus clause, which has been included in furtherance of legitimate objection of improving the credibility of the negotiable instruments.
While Sec. 138 of N.I.Act specifes a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption U/s.139 of N.I. Act is a device to prevent undue delay in the course of litigation. Dishonour of a cheque is largely in nature of civil wrong whose impact is usually confned to the private parties involved in commercial transactions and test of proportionality should guide the construction and interpretation of reverse onus clause and the accused cannot be expected to discharge an unduly high standard or proof and in the absence of compelling justifcations, reverse onus clause usually impose an evidentiary burden and not a persuasive burden to discharge by preponderance of probabilities by raising of doubt about the existence of a legally enforceable debt or liability and to fail the prosecution and for that the accused can rely on the material submitted by the complainant in order to raise such defence and he need not adduce any evidence of his own.
38.The Hon’ble Apex Court in its expression between Kumar
Exports v. Sharma Carpets, (2009) 2 SCC 513, had considered the provisions of Negotiable Instrument Act as well as the Evidence Act.
Referring to Sec.139 of NI Act, the Hon’ble Apex Court laid down following in Paragraphs No.14, 15, 18 and 19.
“14. Sec.139 of the Act provides that it shall be presumed, unless contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Sec.138 for the discharge, in whole or in part, of any debt or other liability.” “15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufcient evidence. Under the Indian Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume" (rebuttable),(2)"shallpresume" (rebuttable)and(3)"conclusive presumptions" (irrebuttable). The term 23 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
“presumption” is used to designate an inference, afrmative or disafrmative of the existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof.” “18. Applying the defnition of the word `proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptionsunder Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose beneft it exists.” “19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with defnitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.”
39.The Hon’ble Apex Court in Kumar Exports cited supra also held that the accused may adduce evidence to rebut the presumption, but mere denial regarding the existence of debt shall not be served any purpose. The Court held in Para 20 as follows:- “20. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative 24 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudentmanwouldunderthe circumstances of the case, act upon the plea that they did not exist....”
40.The Hon'ble Apex Court between Kishan Rao v. Shankar
Gouda,(2018) 8 SCC 165 alsoheld and reiterated that the accused may adduce evidence to rebut presumption U/Sec.139 of NI Act, but mere denial regarding existence of debt shall not serve any purpose and in the event accused is able to raise a probable defence which creates a doubt with regard to existence of debt or liability then only the presumption fails.
41. The Hon’ble Apex Court in Hiten P. Dalal v. Bratindranath
Banerjee, (2001) 6 SCC 16 compared the evidentiary presumptions in favour of the prosecution with the presumption of innocence in the following terms:- “22. Presumptions are rules of evidence and do not confict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non existence of the presumed fact.
23. In other words, provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary…”
42.The Hon'ble Apex Court between Uttam Ram v. Devinder Singh
Hudan, (2019) 10 SCC 287 held that to rebut the statutory presumption u/Sec.139 of the Act, the accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. Rather, something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To 25 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
disprove the presumption, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that it did not exist. Apart from adducing direct evidence to prove that the consideration did not exist or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. Accused may also rely upon the presumptions of fact, for instance, those mentioned in Sec.114 of the Evidence Act to rebut the presumptions arising under Secs.118 and 139 of the NI Act.
43.The Hon’ble Supreme Court in State of Madras v. Vaidyanatha
Iyer, AIR 1958 SC 61 held that it was obligatory on the court to raise presumption under Sec.139 of the NI Act when the cheque was drawn. In
Laxmi Dyechem v. State of Gujarat and Others, (2012) 13 SCC
375, it was held and reiterated that in view of Sec.139 of NI Act, it has to be presumed that a cheque was issued in discharge of a debt or other liability but the presumption could be rebutted by adducing evidence. The burden of proof was however on the person who wanted to rebut the presumption.
44. In K.N.Beena v. Muniyappan and Another, AIR 2001 SC 2895 it was held that under Sec.118 of the NI Act unless the contrary was proved, it is to be presume that the negotiable instrument (including a cheque) has been made or drawn for consideration.
U/Sec.139 the Court has to presume unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of debt or liability. Thus, in complaints under
Sec.138, the court has to presume that the cheque has been issued for a debt or liability. This presumption is rebuttable. However, the burden of a proving that the cheque had not been issued for a debt or liability is on the accused.
45.The Hon'ble Apex Court between Vasantha Kumar v. Vijaya
Kumari, (2015) 8 SCC 378 had an occasion to decide whether the complainant has to prove the existence of legally enforceable debt
before the presumption under Sec.139 of the Negotiable Instrument
26 of 30 C.C.No. 237 of 2018
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Act starts operating and burden shifts to the accused. The Hon'ble
Apex Court by relying on Rangappa v. Sri Mohan, (2010) 11 SCC 441 held that once the issuance of cheque and the signature has been accepted by the accused the presumption u/Sec.139 would operate.
Thus, the burden was on the accused to disprove the cheque or the existence of any legally recoverable debt or liability.
46.In T.P. Murugan (dead) through Lrs. v. Bojan, (2018) 8
SCC 469 it was held by the Hon'ble Apex Court that once a cheque has been signed and issued in favour of holder of cheque, there is statutory presumption under Sec.139 of NI Act that the cheque is issued in discharge of a legally enforceable debt or liability. However, the said presumption is a rebuttable one. Issuer of cheque can rebut the presumption by adducing credible evidence that the cheque was issued for some other purpose like security for loan.
47.Most recently the Hon’ble Supreme Court of India between
Triyanbak S.Hegde v. Sripad, Criminal Appeal Nos.849 and 850
of 2011, dated 23-09-2021 observed that if the signature on the cheque is admitted, then presumption under section 139 of NI Act that the cheque was issued in discharge of a legally enforceable debt raised upon such presumption being raised, it is incumbent upon the accused to rebut the same.
In the case at hand, it is clear that signature on the cheque Ex.P1 having been admitted presumption shall be raised u/Sec.139 of NI Act against the accused that the cheque was issued in discharge of debt of liability. This court is of the view that the accused failed to rebut the presumption. The Hon’ble Apex Court in Anil Sachar and Another v.
Shree Nath Spinners Private Limited and Others, AIR 2011 SC
2751 envisaged certain circumstances, wherein the accused could not be able to rebut the presumption u/Sec.139 of the NI Act. In the case at hand, the accused could not be able to rebut the presumption u/Sec.139 of NI Act proving that the cheque was not issued by the accused to the complainant for discharge in whole or in part, of any debt or other liability.
48.In I.C.D.S. Ltd v. Beena Shabeer & Another, (2002) 6 SCC 426, the Hon’ble Supreme Court of India had compactly explained that the words “any cheque” and “other liability” occurring in Section 138 27 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
are the two key expressions which stand as clarifying the legislative intent so as to bring the factual context within the ambit of the provisions of the statute. These expressions leave no manner of doubt that for whatever reason it may be, the liability under Section 138 cannot be avoided in the event the cheque stands returned by the banker unpaid.
49. On cumulative reading of the authorities discussed above it could be discerned that the statutory presumption in favour of the complainant under Sec.139 of the NI Act can be rebutted by the accused by raising a probable defence and the accused is not expected to prove his defence beyond reasonable doubt as expected in a criminal trial by the prosecution. In order to disprove the statutory presumption the accused could bring on record such circumstances which may make the court believe that the consideration and the debt did not exist and their non-existence was so probable that a prudent man would under the similar circumstances act upon the supposition that the consideration and debt did not exist. In the case at hand, on careful scrutiny of the judicial precedents cited supra and the facts at hand as discussed earlier in the preceding paragraphs by me, it is abundantly clear that the accused could not successfully disprove/rebut the presumption in favour of the complainant by successfully raising probable defence by eliciting the facts by virtue of cross-examining the complainant and thereby creating a serious doubt about the transaction in question and about the legally enforceable debt. The complainant could successfully prove his case by proving that the cheque Ex.P1 was issued in discharge of legally enforceable debt, therefore the point No.1 is answered in afrmative and point
No.2 is answered in negative. No positive or cogent evidence was led by the accused in rebutting the presumption available to the complainant in order to disprove the presumption U/Sec.139 of NI Act.
On the other hand, the complainant could establish his case by proving the advancement of loan and also issuance of cheque in discharge of legally enforceable debt by the accused.
50.POINT No.3:- 28 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
For the aforesaid reasons and fndings in Points No.1 and 2, I proceed to pass the following:-
In the result, the accused is found guilty for the ofence punishable U/Sec.138 of NI Act and consequently he is convicted
U/Sec.255(2) Cr.P.C.
Judl.Magistrate of First Class, Spl.Mobile Court, Mahabubnagar.
51.On hearing the accused on the quantum of sentence, accused submitted that he is the only bread winner for his family. He has to take care of his mother, wife, his unmarried younger sister and two children. That his daughter is aged about 7 years and his son is aged about 6 years. Therefore, he prays the court to take lenient view while imposing the sentence.
The ofence u/Sec.138 of NI Act is punishable with imprisonment for a term which may be extended to two years or with fne which may extend to twice the amount of the cheque or with both.
52.Upon hearing the accused on the quantum of sentence, the following sentence is passed:-
The Hon’ble Apex Court in its expression between Somnath
Sarkar v. Utpal Basu Mallick and Another, 2013 (12) SCALE 484
= 2014 (1) (Crl.) 145 = (2013) 9 SCR 935 heldthat a criminal
Court is competent U/Sec.138 of NI Act to levy fne up to twice the cheque amount and direct payment of such amount as compensation by way of restitution in regard to the loss on account of dishonour of cheque u/Sec.357 of Cr.P.C. Power to award compensation is not available u/s 138 of NI Act. It is only when court has determined the amount of fne that the question of paying compensation out of the same would arise. This implies that the process comprises two stages.
Firstly, when court determines the amount of fne and levies the same subject to the outer limit, if any. Secondly, it comprises invocation of the power to award compensation out of the amount so levied.
The Hon’ble High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra Pradesh following the dictum of
Somnath Sarkar’s case awarded compensation out of the fne 29 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
amount imposed in Omprakash Agarwal v. Khaja Krishna Prasad
and Another, 2015(1) ALT (Crl.) 68, Appolo Tyres Limited v.
H.M.Tyres and Another, 2014 LawSuit (Hyderabad) 184,
S.Ravinder v Bhasker Teja and Others, 2016(1) ALT (Crl.) 125
and B.Raghunandan Reddy v. Rajashekar Reddy and Another, 2015 (1) ALD (Crl.) 861. In all the said cases the Court observed that the Act not contemplated grant of compensation but envisages imposition of fne not exceeding twice the amount of dishonoured cheque and out of said fne amount, the complainant be compensated under Section 357 Cr.P.C. and that unlike for other forms of crime, the punishment here is not a means of seeking retribution, but is more a means to ensure payment of money. The complainant’s interest lies primarily in recovering the money rather than seeing the drawer of the cheque in jail. The threat of jail is only a mode to ensure recovery. As against the accused who is willing to undergo a jail term, there is little available as remedy for the holder of the cheque.
Further the Hon’ble High Court of Chhattisgarh in Meel Bai v.
Rameshvar Prasad Chauhan, 2015 SCC Online Chh 1622 = 2016
(2) CgLJ 340 after considering and following the ratio as laid down bt the Hon’ble Supreme Court of India in Somnath Sarkar’s observed that it is quite vivid that under Section 138 of the N.I. Act Criminal Court is competent to levy fne up to twice the cheque amount and direct payment of such amount as compensation by way of restitution in regard to the loss on account of dishonour of cheque under Section 357(1)(b) of the Cr.P.C., and as such, the power under Section 357(3) of the Cr.P.C.
cannot be exercised by Criminal Court in the cheque dishonour cases.
53.The cheque amount in this case is Rs.3,00,000/- and twice the amount of cheque would come to Rs.6,00,000/- and the court can impose fne on the accused up to Rs.6,00,000/-.
54.The Hon’ble Apex Court in Krishna Janardhan Bhat v. Datta- traya G.Hegde, AIR 2008 SC 1325 held that the provision Sec.138 of NI Act has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in fnancial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India.
30 of 30 C.C.No. 237 of 2018
Date: 05-10-2021.
55.Considering the facts and circumstances and also the judicial precedents the accused is sentenced to undergo Simple Imprisonment for a period of (3) months and he is also sentenced to pay fne of
Rs.3,60,000/- and in default to undergo simple imprisonment for a pe- riod of (3) months as per Sections 65 to 68 r/w 53(sixthly) IPC. Out of the fne amount of Rs.3,60,000/-, Rs.10,000/- shall go to the state and the remaining fne amount of Rs.3,50,000/- shall go to the complainant as compensation U/Sec.357(1)(b) r/w Secs. 431 and 421 Cr.P.C. A free copy of Judgment shall be given to the accused as per Sec.363 Cr.P.C r/ w Rule 72 of Criminal Rules of Practice and Circular Orders, 1990. As the accused was not remanded to judicial custody even for a single day
before trial or at the time of trial, therefore, Section 428 Cr.P.C is not
invoked.
Typed to my dictation by the Stenographer on my ofcial Laptop, corrected and pro- nounced by me in open court, on this the 05th day of October, 2021.
Judl.Magistrate of First Class, Spl.Mobile Court, Mahabubnagar.
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
FOR PROSECUTION:-
PW1 Rama Chary.
FOR DEFENCE: -None-
EXHIBITS MARKED
FOR PROSECUTION:
Ex.P1 – is the Original Cheque bearing No.104196, dt:24-05-2016 issued by the accused, Ex.P2 – is the Original Cheque Return Memo, dt:25-05-2016, Ex.P3 – is the Ofce Copy of Statutory Notice get issued by him to the accused, dt.06-06-2016, Ex.P4 - is the Original Postal Receipt, dt:06-06-2016, Ex.P5 is the Returned Postal Cover of accused, dt:10-06-2016.
FOR DEFENCE:- -Nil- Judl.Magistrate of First Class, Spl.Mobile Court, Mahabubnagar.