Sri.R.K Venkata Ramana Suhas

C.C.N.I. No. 927 of 2021 1 of 33 10.02.2025

IN THE COURT OF XV ADDL. JUDICIAL MAGISTRATE OF FIRST

CLASS, MEDCHAL-MALKAJGIRI DISTRICT, AT KUKATPALLY

Monday, the 10th day of February, Two thousand and Twenty-five

Present: Sri R.K. VENKATA RAMANA SUHAS, XV Additional Judicial Magistrate of First Class,

KUKATPALLY, MEDCHAL-MALKAJGIRI DISTRICT

C.C. N.I. No. 927 of 2021

(Old C.C. No. 199 of 2014)

Between:

A.S. Gurappa, S/o V. Subaiah, Aged about 64 years, Occ: Retd Goverment Servant, R/o H.No. C2-3A, Sila Park Pride Colony, Hydernagar, Hyderabad …Complainant AND

Mr. Siva Subramanyam, S/o Yaganti Lingam Gantha, Aged about 45 years, Occ: Business, R/o Flat No. 201, Siva Sai Apartments, Hyderabad …Accused

This criminal case is coming on this day for Judgement before me in the presence of the Sri A. Rajeshwar Reddy, Ld. Counsel for the Complainant and Sri Konda Harish Babu, Ld. Counsel for the accused, the matter having stood over for consideration till this day, this court delivered the following:

JUDGEMENT

1.The present calendar case arises out of a complaint filed under section 200 of the Code of Criminal Procedure, by the complainant, against the accused, for the offence punishable under section 138 of the

Negotiable Instruments Act, 1881.

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2.The case of the Complainant, as can be culled out from the complaint, is as follows: The complainant is known to the accused since 2001 and out of the said acquaintance, in the first week of February, 2011, accused approached the complainant, with a request for a hand loan of 5 lakh, to meet his personal necessities. Considering the request₹ of the accused, the complainant arranged the said amount of 5 lakhs₹ and gave to the accused, on 20.02.2011 and in turn, the accused executed a receipt in the present of witness. The accused had offered to pay interest @ 12 p.a. The accused also executed a promissory note as a collateral security for the said amount and promised to repay the amount within six months. After the lapse of the said period, the complainant approached the accused and requested for the payment of the loan amount but the accused kept on postponing the matter. Finally, in the first week of April 2013, the accused issued a postdated cheque dt.

29.04.2013, bearing no. 494854, drawn on Indus Ind Bank Ltd.,

Secunderabad in favour of the complainant. The complainant presented the cheque on 28.06.2013 in his bank in State Bank of Hyderabad, Hyder

Nagar branch, but the same was dishonoured for the reason, “Insufficient

Funds”, vide cheque return memo dt. 28.06.2013. The complainant thus, got issued a legal notice dt. 10.07.2013 to the accused calling upon him, to repay the cheque amount within 15 days. The said notice was served to the accused on 12.07.2013. However, despite the same, the accused

C.C.N.I. No. 927 of 2021 3 of 33 10.02.2025 failed to repay the cheque amount. Thus, the complainant has filed the present complaint, praying that the accused be tried and punished for the offence under section 138 of the Negotiable Instruments Act, 1881.

3.The complaint was initially filed before the XIV Additional Chief

Metropolitan Magistrate, City Criminal Court, Red Hills, Nampally

Cyberabad, at Kukatpally, on which the Court took cognizance of the offence under section 138 of the Negotiable Instruments Act, 1881 i.e.

Dishonour of Cheque for insufficiency, etc. of funds in the account and the matter was registered as C.C. No. 2061 of 2013. Thereafter, the matter was transferred to the Court of VIII Special Magistrate Metropolitan Court,

City Criminal Courts, Erra Manzil, Court Comples, Nampally, Hyderabad and was renumbered as C.C. No. 199 of 2014.

4.On appearance of the accused, copies of case documents were furnished to him in compliance under section 207, Code of Criminal

Procedure, 1973 and he was examined under sec. 251 of the Code of

Criminal Procedure, read over and explained the accusation against him, for the offence under section 138 of the Negotiable Instruments Act, 1881, to which he pleaded not guilty and claimed to be tried.

5.The trial having so commenced, the complainant got herself examined as PW1. The contents of his chief-affidavit being a reproduction of the complaint averments, the same are not being repeated herein.

Through him, he first got marked Exs. P1 to P4, the cheque, the return

C.C.N.I. No. 927 of 2021 4 of 33 10.02.2025 memo, legal notice and postal acknowledgment marked on 12.05.2015.

In the cross-examination on the same day, he stated as follows: He got acquainted with the accused through one Sri Dilip, Proprietor of a

Software Company, who introduced the accused to him. He never mentioned the same in his Legal Notice or Complaint. He further states that he is not going to examine the said Dilip as a witness in this Case and that the said Dilip is not a witness to this transaction. While stating that there is a witness to this transaction, he admitted that he did not mention the name of the said witness in the Complaint and that only the bank officials are shown as witnesses in the complaint. The accused had given him the receipt to show that he received the amount from him on 20.02.2011, but he has not filed the said receipt in this Case as he filed the receipt along with the promissory note in civil court. He admits that he did not mention in the Complaint the details of the amount paid to the

Accused or where he got that amount. Accused did not pay interest at 12% to him. He is an Income Tax Assessee. He has not shown this amount in his IT Returns. He is not aware whether amounts exceeding

Rs.20,000/- & above have to be paid by way of Cheque or DD. He denied the suggestion that he has not paid Rs.5 Lakhs to the accused and that at the time he had no such amount with him. In the year 2013, he demanded repayment of the amount orally, but no notice was issued. In 2013, the accused had given him the post-dated Cheque. The post-dated

C.C.N.I. No. 927 of 2021 5 of 33 10.02.2025

Cheque was given to him by the accused during the 1st week of April 2013. At that time, his driver Sri Dharani Kumar was present. The columns of Ex. P1 cheque was filled up by the accused. On the reverse of the Cheque, he has written his name and cell number. He denied the suggestion that the accused never borrowed any amount from him and that he has filed a false Case against the accused. He admitted that he i.e. PW1 is having Land at Tirupati and the said Land is under Litigation.

The litigation was between K. Kumar & Others. He denied the suggestions that the accused got introduced to him in connection with the litigation of the land and that regarding the said Litigation, the local leaders of

Tirupati took security from him and also from the accused as a Third Party to settle the said issue. He admitted that the matter was not settled and he filed a Case before the Hon'ble High Court and that a Writ Petition is

Pending. He denied the suggestions that a third-party collected the security from him and the accused, that several times, accused requested him to return the security papers given by him, that he gave a reply stating that he has not taken any papers towards security from the accused, that when the accused demanded the return of the Cheque to him, he stated that in that issue, he sustained so much loss and refused to return the Cheque to him. He further also denied suggestion that in order to compensate for the loss sustained by him in connection with the land dispute, he presented this Cheque and has not lent any amount to

C.C.N.I. No. 927 of 2021 6 of 33 10.02.2025 the Accused. Ex. P4 acknowledgment was sent to the Accused. The signature on Ex. P4 is of G. Anitha, the wife of the accused. He denied the suggestion that the signature on Ex. P4 is not that of the wife of the

Accused. He cannot say whether the signature on ExP.4 and the address mentioned therein are in the same writing. He denied the suggestions that no Legal Notice was received by the Accused under Ex. P4

Acknowledgment, that the address mentioned in the Legal Notice is not the correct address of the accused and that as the accused did not receive the Legal Notice, he did not issue the Reply Notice within 15 days. He admitted that except for Ex. P1 Cheque, he did not file any other documents in supporting the cheque in this case.

6.Further cross-examination was then adjourned to 27.07.2015, on which day, he stated as follows: The transaction took place in February 2011 and as such, it was completed 4½ years ago. He denied the suggestion that Ex. P1 cheque in this case was taken by him in 2011 itself. He is not aware of the time frame within which he has to recover the amount lent to the accused. He is not aware of how many days after the cheque was returned, he has to file the complaint under Section 138 of the NI Act. He has not given notice in writing to the accused demanding the payment of the principal amount along with the interest from 2011. He denied the suggestion that no witness was present as alleged in the legal notice, Ex. P3, at the time of the payment of Rs.5

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Lakhs to the accused. He however admitted that he did not mention in the

Ex. P3 legal notice, the name and other particulars of the witness present at the time of payment and that he did not mention the same in his complaint or his evidence affidavit. He then denied the suggestion that he did not pay the amount to the accused in the presence of any witness, but he wrongly mentioned in the legal notice, complaint, and also in his evidence affidavit that the amount was paid in the presence of a witness.

The cheque was issued only for the principal amount and did not include the interest. The accused promised to pay interest at 12% per annum but failed to do so. He did not demand the accused pay the interest for one year up to 2012 and further interest. The accused promised to pay the interest separately but has not paid it. He demanded the accused orally for the payment of interest. The accused orally informed him to present the cheque for collection but did not provide it in writing. He presented the cheque for collection only once. He did not present the cheque for payment, immediately after taking the cheque on 29.04.2013 because of the request made by the accused to postpone the presentation of the cheque. It was only an oral request and not given in writing by the accused. There was no MOU reduced to writing between him and the accused. He denied the suggestion that the accused does not owe any legally enforceable debt or liability to him, but the cheque given by the accused to one K. Kumar and others was misused by him and this

C.C.N.I. No. 927 of 2021 8 of 33 10.02.2025 complaint was filed against the accused. He admitted that he did not mention the source of income to pay Rs.5 Lakhs to the accused but stated the he arranged the same. He denied the suggestion that he did not have the capacity to lend Rs.5 Lakhs to the accused and that he is deposing falsely. He is a retired IPS Officer. After his retirement from service, he lent this amount to the accused. It is not true to suggest that prior to his retirement from service, by using police influence, he took the cheque,

Ex. P1, from a third party. He took voluntary retirement in 2008. He denied the suggestion that the accused does not owe any amount to him and that a false case was filed against the accused.

7.After this one Smt. G. Yagnasri, Branch manager, SBH, Hydernagar branch, show in chief-examination, deposed as follows: She is working as the Branch Manager in SBH, Hydernagar Branch since 28-08-2015. The cheque (Ex. P1) was presented in SBH, Hydernagar Branch for collection and the cheque was returned for the reason "Funds Insufficient". Ex. P2 is the Cheque Return Memo issued by their Service Branch. In her cross- examination: The complainant has an account in their branch in SBH,

Hydernagar. She admitted that Hydernagar comes under Ranga Reddy

District and that the Hydernagar Branch of their bank is within the limits of KPHB Kukatpally PS. She cannot say the present address of their account holder, Gurappa. She has no idea whether the cheque is about a 10-year-old cheque. The Cheque Return Memo, Ex. P2, was issued from

C.C.N.I. No. 927 of 2021 9 of 33 10.02.2025 the service branch of their bank. She cannot identify the signature found on Ex. P2. She denied the suggestion that the Cheque Return Memo, Ex.

P2, is in no way concerned with their bank. It is mentioned in the Cheque

Return Memo, Ex. P2, as “AT PAR” Branch. The witness adds that this means the cheque can be drawn anywhere in India. She denied the suggestion that the cheque, Ex. P1, is in no way related to their branch, but at the request of the complainant, she came to give evidence.

8.However, while the trial was pending at this stage, the said court i.e. Court of VIII Special Magistrate Metropolitan Court, City Criminal

Courts, Erra Manzil, Court Comples, Nampally, Hyderabad, vide its order

dt. 29.03.2019, in Crl. M.P. No. 641 of 2019 in the said CC, found that

that court has no jurisdiction to proceed with the matter and returned the complaint for it being presented in the proper court, within 30 days. The complaint having been so returned on 29.03.2019, the same was represented to the Court of II Additional Junior Civil Judge-cum-X

Additional Metropolitan magistrate and numbered as C.C. No. 1312 of

2019.

9.Thereafter, one Sri Akkaladevi Kiran Kumar, Operation manager,

Indus-Ind Bank Ltd., was examined as PW3. He in his chief-examination, has stated as follows: He received summons from the court. The account belongs to Shiva Subhramanyam Gantha. He has been working in the bank for 7 years. The cheque number 494854 was returned on 28-06-

C.C.N.I. No. 927 of 2021 10 of 33 10.02.2025 2013 for "INSUFFICIENT FUNDS". Through him, Ex..X1, the Authorization

Letter, Ex. X2 is the Account Statement of the accused and Ex. X3 is the letter sent to the complainant by the bank. Ex.X.4 is the Xerox copy of cheque number 494854. In his cross-examination, he stated as follows:

The Bank Statement is for One Month Only. Six Months Statement of accused Account is not filed. The Account of Gurrappa is Select Account and minimum balance in the Account should be Rs. 50,000/-. No conditions were imposed by the accused. The Six Months Statement is not filed and so I cannot say how many times the Complainant presented the

Cheque. He denied the suggestion that he is deposing false.

10.After the deposition of PW3, the matter was again transferred to this court and was renumbered to its present case number.

11.After this, PW1 having already been recalled vide orders dt.

20.11.2018, in Crl. M.P. 2240/2015, was examined in chief further, on 02.05.2023, when he got marked, Exs. P5 to P7. Thereafter, in his further cross-examination, he deposed as follows: Currently his address is in

Medchal-Malkagjiri District but it might be that his address originally was in Ranga Reddy District. He admitted that he filed a civil suit in City Civil

Court, Hyderabad, based upon the address of the accused. He admitted that he filed the complaint originally in Nampally court, which was then transferred to Secunderabad Court. He then stated that he does not remember as to in which Court at Nampally, he filed the Complaint. He

C.C.N.I. No. 927 of 2021 11 of 33 10.02.2025 has further stated that he filed the complaint based upon the residential address of the accused. He has however denied the suggestion that since he filed the complaint basing upon the address of the accused, this is a defective complaint. He admitted that the complaint was transferred from

Nampally to Secunderabad. From Secunderabad, the matter was transferred to Irrummanzil court, from where the matter was again transferred to a court in Kukatpally complex. That transfer was made by the court itself. He denied the suggestion that the matter was transferred on his petition but instead admitted that the accused filed a petition in the

Irrummanzil court for dismissing the complainant on the ground that it is filed in a court without jurisdiction. He admitted that because of the said petition, the court might have transferred the matter. The accused himself filled up Ex. P5 receipt. He denied the suggestion that he filled up

Ex. P5. He also denied the suggestion that the receipt is generally given to the borrower and the lender only retains the promissory note. He did not take the cheque along with Ex. P7. He admitted that Ex. P7 does not contain any reference to the Ex. P1 cheque. He denied the suggestion that the handwriting in the Ex. P1 cheque is different from that in Ex. P7 receipt. He denied the suggestion that the promissory note was given as a security, which he filled up and later filed as a supporting document. He admitted that he issued two legal notices concerning the cheque but added that one was issued for civil suit while the other one was for the

C.C.N.I. No. 927 of 2021 12 of 33 10.02.2025 present case. He denied the suggestions that the legal notice he issued is a defective one, that he forged the signatures of the accused on Ex. P7 and that even according to Ex. P6, the Complaint is not filed in the proper court. He filed the present cheque bounce case and a civil suit against the accused. The civil suit was decreed but the accused disposed-off his property to render the decree in-executable.

12.After the prosecution evidence was closed, the accused was examined under section 313 of the Code for the incriminating material found against him.

13.Thereafter, the accused first got himself examined as DW1. In his chief-examination, he stated that he used to work as a public relations officer in a company name Wensoft India Pvt. Ltd., at Punjagutta, whose managing director was one Mr. Dileep. The Complainant approached Mr.

Dileep, for some land dispute on 20.02.2011 and he referred the complainant to him. He took the Complainant to the office one Mr. L.

Narasimha Reddy, Advocate. The land was situated at Tirupathi and belonged to the complainant and there was a dispute regarding the said land with one Mr. Bandla Suresh alias Kumar. He i.e. DW1 requested Mr.

L. Narasimha Reddy, advocate to take up case of the complainant and left from there. He came to know later that a case was filed regarding the same. He gave the said cheque and promissory note for the purpose of paying the fees in the said case since the complainant had stated that he

C.C.N.I. No. 927 of 2021 13 of 33 10.02.2025 being a police officer, cannot pay the advocate fees himself and promised to pay the advocate fees in cash and to take back the said cheque and promissory note and return the same. He gave the said cheque and promissory note in the presence of Mr. Bandla Suresh alias Kumar. Two years later, the said cheque was deposited and dishonoured and he received a legal notice regarding the same. He then asked Mr. Bandla

Suresh about the same, who told DW1 told that when the complainant came and asked him for the cheque, he gave the same to the complainant, that the complainant had taken the said cheque on the pretext of returning the same back to him i.e. DW1. DW1 then questioned the complainant about the same however, since then, the complainant has been threatening him stating that he is a police. He i.e. DW1 filed a case against the complainant in Punjagutta P.S. but no action was taken.

Complainant began harassing him by sending police to his house. The complainant also filed a civil suit against him at the Civil Court in

Narsaraopet. The complainant had initially filed the present case at

Hyderabad, then the same went to Secunderabad and then again to Irrum manzil. He i.e. DW1 is not due to pay any amount, he had not taken any amount from the complainant and the complainant is harassing him i.e.

DW1 to extort money from him. There is no legally enfoceable debt from

DW1. Mr. Bandla Suresh @ Kumar is also a witness to these events. The witness was cross-examined at length by the Ld. Counsel for the

C.C.N.I. No. 927 of 2021 14 of 33 10.02.2025 complainant. In his cross-examination, he stated as follows: He admitted that he stated in the chief that he gave the cheque and promissory note, for the case, for the advocate, but that the case was that of the complainant and that the cheque and the promissory note were for ₹ 5,00,000/-. He then most importantly admitted that the signature on Ex.

P1 cheque and Ex. P7 promissory note was his. He has also admitted he had not given any complaint against the said Mr. L. Narasimha Reddy and that he cannot call him as a witness but instead stated that his juniors may be called. He denied the suggestions that the said cheque and promissory note were not given to L. Narasimha Reddy, that he is deposing falsely and that the said Mr. L. Narasimha Reddy did not give the cheque and promissory note to one Mr. Bandla Suresh. He was in his cross-examination, confronted with the Judgment of and decree dt.

24.11.2016, of the Hon’ble II Senior Civil Judge, City Civil Court,

Hyderabad, in O.S. 1882 of 2013, filed by the complainant against him and the said judgment and decree was marked as Ex. P8. The written statement filed by him in the said suit was also confronted and marked as

Ex. P9. He admitted that in Ex. P9 written statement, he stated that no one present at the time of execution of the promissory note and cheque but stated that what is stated therein, is wrong. Again the chief- examination affidavit and cross-examination of the witness was confronted to him and he denied that he stated in the deposition in the

C.C.N.I. No. 927 of 2021 15 of 33 10.02.2025 civil suit, as “After made negotiations, I informed him initially has to pay a sum of Rs. 5,00,000/- to my service charges non refundable and it will be adjusted at the time of final settlement, thereafter we can sit together and make it final and settle the matter out of court”. The said portion ws therefore, marked as Ex. P10, as a contradiction.He admitted that he had stated in the deposition as follows “Accordingly, I have executed the promissory note and issued blank cheque in his favour on the same day itself ... ”. He denied the suggestion, that he had stated therein, that “I received the Rs. 5 lakhs on the ground that I will settle if the pliantiff closes the case in the court of law”. The said portion of the cross- examination was marked as Ex. P11, as contradiction. He admitted that he stated therein, that “It is true I also issued a post dated cheque on 29.04.2013 after execution of the promissory note”.

14.The accused then got examined one Sri Vandla Suresh, as DW2. In his chief-examination, this witness stated as follows: He knows the accused since about 15 years. The accused runs a chit finance and was working as PRO at a pharma company in Punjagutta. He i.e. DW2 knows the complainant and he got introduced to the complainant, through the accused. He knows the transaction between the two. Once when he was in the pharma office of the accused, in 2011, the complainant came there and told that there was dispute concerning his land near Tirupathi and asked him to speak about the same. Accused took him and the

C.C.N.I. No. 927 of 2021 16 of 33 10.02.2025 complainant to the office of one Mr. Narasimha Reddy, Bar council chairman. There was some discussion concerning the some land. He asked for a fees of 5 lakhs. Complainant and the accused told that they₹ did not bring cash. Accused had his cheque book in his car. He took the said cheque book and also a promissory note from a nearby shop and gave a cheque and a promissory note to the said Mr. Narasimha Reddy.

Date and amount were filled up in the said cheque and promissory note.

No name was mentioned in the same. The cheque was drawn on Indus

Indus bank, Secunderabad branch. Once when he i.e. DW2 went to the office of Mr. Narasimha Reddy, Advocate, on his personal work, their office gave him back, the cheque and promissory note, to be returned to the accused. When he called the accused, he did not answer the call and therefore, he gave the same to the complainant, to be given further to the accused since they two were regularly in touch with each-other.

Accused later told him that the said cheque was deposited and was dishonoured. He identified Ex. P1 cheque and Ex. P7 promissory note if as the cheque and promissory note as the said cheque and promissory note, respectively. At that time however, there was no name on them. The said cheque and promissory note were only given for the purpose of the said land dispute. In cross-examination, the witness stated as follows: At the time of giving the cheque to the complainant, he, the accused and the complainant were present. He does not know as to between whom, the

C.C.N.I. No. 927 of 2021 17 of 33 10.02.2025 land dispute was there or as to in which survey number the disputed land was in. He only knows that the land belonged to the complainant and that there was a land dispute. They approached the office of Mr. A. Narasimha

Reddy, Bar council chairman. The cheque was given to him i.e. DW2. He did not give any money to Mr. L. Narasimha Reddy. He admitted that the date and amount in Ex. P1 cheque was filled up by the accused and it was signed by him. Ex. P1 cheque and Ex. P7 promissory note were issued on the same date. But on being confronted with Exs. P1 and P7, he admitted that they bear two different dates. The accused is engaged in finance business alone and is also working in a pharma company and a software company. No receipt was given along with the promissory note. He did not give the cheque and promissory note to the accused but gave it to the complainant because the accused was out of station. He admitted that no undertaking was taken by me from the complainant when I returned the same to him. He does not know if any case was filed by Mr. L. Narasimha

Reddy. There were then various suggestions that were advanced to deny the entire version of DW1 and DW2, which were denied by the witness.

15.Heard both sides and perused the record. Perused the written arguments filed by the Ld. Counsel for the Complainant. The following points arise for the determination of this Court:

(i)Whether the complainant has been able to prove beyond reasonable doubt that the accused issued the cheque bearing

C.C.N.I. No. 927 of 2021 18 of 33 10.02.2025 no. 494854, dt. 29.04.2013, for 5,00,000/-, drawn on the₹

Indus Ind bank Ltd., Secunderabad?

(ii)Whether the said cheque was not issued for lawful consideration?

(iii)Whether the complainant has been able to prove beyond reasonable doubt, that the said cheque was dishonoured for reasons covered by section 138 of the Negotiable Instruments

Act, 1881?

(iv)Whether the complainant has been able to prove beyond reasonable doubt, that despite issuance and service of the statutory legal notice under section 138 of the Negotiable

Instruments Act, 1881, cheque amount has not been paid by the accused?

(v)Whether the complainant has been able to prove beyond reasonable doubt, that that the accused is guilty for the offence under section 138 of the Negotiable Instruments Act, 1881?

(vi)To what result?

Point (i):

16.The execution of Ex. P2 cheque is not really in question, even as per the defence version. The accused himself, having examined himself as

DW1, has deposed that he had signed Ex. P1 cheque and Ex. P7

C.C.N.I. No. 927 of 2021 19 of 33 10.02.2025 promissory note. He of course deposes that it was in fact issued to on Sri

L. Narasimha Reddy, Advocate. It is further stated that they were given empty. However, the signature and the execution of the cheque itself is not denied by the defence. Hence, point (i) is answered in favour of the complainant and against the accused.

Point (ii):

17.In view of the finding on point (i) that the accused has executed Ex.

P1 cheque, the complainant is entitled to raise presumption, both under section 118(a) and 139 of the Negotiable Instruments Act, 1881, that the said cheques were issued for lawful and valid consideration. It is for the accused to now prove that the same were not issued for lawful consideration. However, this presumption is a rebuttable one. Such rebuttal need not only be made through leading actual defence evidence but may also be rebutted by reference to the prosecution evidence itself also. The Hon’ble Supreme Court, in Kumar Exports v. Sharma

Carpets [reported in (2009) 2 SCC 513], summarising the law on the matter, observed as follows:

“20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no

C.C.N.I. No. 927 of 2021 20 of 33 10.02.2025 consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. 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 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 prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported

C.C.N.I. No. 927 of 2021 21 of 33 10.02.2025 by consideration 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. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the

Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.”

18.Further, in Basalingappa v. Mudibasappa [reported in (2019) 5

SCC 418], the Hon’ble Supreme Court further summarised the law regarding the presumption under section 139 of the Negotiable

Instruments Act, 1881:

“25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:

25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

C.C.N.I. No. 927 of 2021 22 of 33 10.02.2025 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.

25.5. It is not necessary for the accused to come in the witness box to support his defence.”

19.The version of the accused is that the same was issued by him, to one Sri L. Narasimha Reddy, Advocate. He states that there was some land dispute of the complainant, for which, complainant being a police officer, could not make the payment to the advocate directly and hence, requested the accused and hence, he issued the cheque and promissory note. There are multiple problems with this entire version of the accused, which we may now deal with, one by one.

20.First is that the said Sri L. Narasimha Reddy, advocate himself was never examined as a witness, in order to support this allegation. He in

C.C.N.I. No. 927 of 2021 23 of 33 10.02.2025 fact states that he cannot examine him as a witness but that he can examine any of the juniors under the said Sri L. Narasimha Reddy,

Advocate. However, it is a fact that no such junior was also examined as a witness.

21.Second, DW1 states that the complainant approached Sri Dileep, the managing director of the company in which the accused was working, for a land dispute and that the said Sri Dileep referred him to the accused, who took him to the said advocate. It is very doubtful whether for a person to whom, the accused got introduced recently, the accused would issue a blank cheque and promissory note. It may further be also noted that the accused states that he issued the cheque for payment. It is further also doubtful as to whether a person who wants to pay the money to an advocate for engaging his services, would give a blank cheque. He must and should have paid in a cheque with the specific name of the said advocate and not a blank cheque. Thus, on two scores, this entire version is unbelievable and it is improbable that any person in a reasonable state of mind, would issue such a cheque, without even mentioning the payee, when the cheque is for payment and not securiy.

22.Third, even the said Sri Dileep, who allegedly referred the complainant to the accused for the alleged land dispute was not examined as a witness. It is true that PW1 in his cross-examination had admitted that the accused got acquainted with him, through Dilip. However, that by

C.C.N.I. No. 927 of 2021 24 of 33 10.02.2025 itself is not tantamount to admission of the entire version of the accused.

It is the case of the accused, that the said Sri Dileep actually referred the complainant to the accused, for the legal problem. Hence it is for the accused to properly prove the same, not only for the reason just stated but also because the presumption is against him and it is for him to rebut the presumption. No steps were taken in fact, for having him summoned.

23.Fourth problem is that neither DW1 nor DW2 were able to give any detail as to what the dispute was or even as to where the land was situated, except to state that the land was in Tirupathi and that the disputes was between K. Kumar and others. PW1 did admit in his cross- examination, that he did have land in Tirupathi, which was under litigation. But for a person who has allegedly gone with PW1 to the advocate’s office and then also agreed to pay the advocate’s fees, the accused to not able to depose as to what this dispute was about. This further creates doubt as to the defence version.

24.Fifth and the final problem is that the DW1 states that the complainant promised to pay the advocate fees to him, in cash. He also states that he later came to know that the case was actually filed.

However, there is no mention as to whether the advocate fees were then given to him and indeed how the same was filed.

25.For all these reasons, it appears to the court, that the entire version of the accused therefore, appears to be a highly improbable one in itself.

C.C.N.I. No. 927 of 2021 25 of 33 10.02.2025

26.In his cross-examination, PW1 did initially admit that he had not filed the other documents such as the receipt and promissory note but later, PW1 was recalled and certified copies of these documents were also filed since these documents were filed in a civil suit between the same parties. The complainant admitted that the accused did not pay any interest and that he did not take any action on this. However, this is hardly a ground to doubt the version of the complainant. PW1 then also admitted that the money was not given in the presence of any witness and also admitted that it was wrongly mentioned in the legal notice, that the same was given in the presence of witnesses. This again, is not sufficient to doubt the version of the complainant.

27.The evidential standard upon the accused in rebutting the presumption is not that of proof beyond reasonable doubt but rather only that of preponderance of probabilities. However, the accused has certainly not managed to prove his version to that standard.

28.Hence, it appears to the court, that the accused has failed to rebut the presumption under section 118(a) and 139 of the Negotiable

Instruments Act, 1881.

29.The Ld. Counsel for defence has relied upon various precedents, in the course of his arguments and we may deal with the same now. The decision of the Hon’ble Supreme Court in Dattatraya v. Sharanappa [Criminal Appeal No. 3257 of 2024] is of no relevance here as it is

C.C.N.I. No. 927 of 2021 26 of 33 10.02.2025 different on facts. That was a case where the accused was able to cast a doubt as to the financial capacity of the complainant and also there was a contradiction as to when the cheque was actually issued. That is not the case here. That is also the case in K. Subramani v. K. Damodara

Naidu [reported in (2015) 1 SCC 99], where too, the accused was able to raise a doubt as to the financial capacity of the complainant. For similar reason, the reliance on Krishna Janardhan Bhat v. Dattatraya G.

Hedge [reported in (2008) 4 SCC 54] is also not applicable. That was a case where the accused had been able to prove that the cheque was one of various cheques issued in regard to a previous dispute with the complainant. However, the accused here, has failed to discharge his burden in the opinion of the court. In Jon K. John v. Tom Verghese [reported in (2007) 12 SCC 714] again, the acquittal of the accused was upheld on the ground that the amount was huge and that no document was executed at the time of the lending. However, already a receipt and a promissory note is marked in evidence here. It is another matter that the accused has contended that no witness for the same is examined.

However, a promissory note is not one which requires attestation and hence, it is not necessary to prove the same only through attesting witnesses. The said decision too therefore, is of no use to him. His reliance on the decision of Pratap Singh Yadav v. Atal Behari Pandey [reported in 2003 Cri LJ 705 (Del)] is also of no use. That was a case

C.C.N.I. No. 927 of 2021 27 of 33 10.02.2025 based on the basis of evidence of expert witness, on the cheque. There is no such material or circumstance in this case. Similarly, in Vijay v.

Laxman [reported in 2014 (1) ALT (Cri) 342], the Hon’ble Supreme Court had upheld the acquittal in a case where the accused was able to show that the cheque was issued as a security for a transaction and that the accounts were settled. The facts of the case are completely different from the present one. The precedents of Rahul Builders v. Arihant

Fertilisers and Chemicals [(2008) 1 SCC (Cri) 703], K.R. Indira v.

Adinarayana [(2003) 8 SCC 300] and Suman Sethi v. Ajay K.

Churiwal [(2000) 2 SCC 380] are cases where the terms of the legal notice were themselvs faulty. Those precedents therefore, have no application here.

30.Hence, the point is answered against the prosecution and in favour of the defence.

Points (iii) and (iv):

31.Exs. P3, cheque return memo clearly shows that Ex. P2 cheque was in fact dishonoured for the reason “funds insufficient”. PW2 and PW3, the bank officials were also examined to support this. Therefore, the dishonour in the present case is clearly covered by section 138 of the

Negotiable Instruments Act, 1881. Hence, the point is answered in favour of the complainant and against the accused.

Point (iv):

C.C.N.I. No. 927 of 2021 28 of 33 10.02.2025

32.The accused has sought to make the contention that the legal notice was not served to him. In his cross-examination, PW1 stated that the signature on Ex. P4 is of Smt. G. Anitha, the wife of the accused. There was a suggestion of course against this, which was denied. However, there is explanation forthcoming as to why then the wife of the accused was not examined. She is not the accused and hence, neither is there a requirement for a permission of the court under section 315 of the Code of Criminal Procedure, 1973 nor do the restrictions on the court or the advocates on commenting on the failure to depose under that section applies to failure to depose the wife of the accused as she is not the accused. Nor is the matter in question, whether the signature on Ex. P4, a matter covered by section 122 of the Indian Evidence Act, 1872. That section applies to communications made between spouses during marriage and not to any interaction with any one else, such as the postal official who made the delivery and took her signature.As such, the accused failed to prove that the legal notice was not served to him.

33.In this regard, it is essential to also further note another decision of the Hon’ble Supreme Court, in C.C. Alavi Haji v. Palapetty

Muhammed, [reported in (2007) 6 SCC 555], wherein the Hon’ble Court observed as follows:

“15. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of

C.C.N.I. No. 927 of 2021 29 of 33 10.02.2025 proviso (b) of Section 138 of the Act, in order to enable the court to draw presumption or inference either under Section 27 of the GC Act or Section 114 of the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion, therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause

(b) of proviso to Section 138 of the Act stands complied with.

It is needless to emphasise that the complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. It is well settled that at the time of taking cognizance of the complaint under Section 138 of the Act, the court is required to be prima facie satisfied that a case under the said section is made out and the aforenoted mandatory statutory procedural requirements have been complied with. It is then for the drawer to rebut the presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect. In our opinion, this interpretation of the provision would effectuate the object and purpose for

C.C.N.I. No. 927 of 2021 30 of 33 10.02.2025 which proviso to Section 138 was enacted, namely, to avoid unnecessary hardship to an honest drawer of a cheque and to provide him an opportunity to make amends.”

34.Thus, the complainant has clearly discharged his burden by proving that he had dispatched the notice to the accused, by post. There was also a suggestion to PW1, that the address to which the legal notice was sent was not that of the accused. However, even the real address was not really submitted to the court by the defence. Without even that much, it is not at all possible for the court to hold that the service was not proper.

Hence, the complainant has been able to prove the requirement of service of notice to the accused.

35.Point (iv) too is answered in favour of the complainant and against the accused.

Point (v):

36.In view of the findings on points (i) to (iv), it is held that the accused is guilty of the offence of dishonour of cheque, under section 138 of the Negotiable Instruments Act, 1881. Point (v) too is therefore, answered in favour of the complainant and against the accused.

Point (vii):

37.In the result, the accused is found guilty for the offence

under section 138 of the Negotiable Instruments Act, 1881 and is

therefore, convicted under section 255(2) of the Code of Criminal

C.C.N.I. No. 927 of 2021 31 of 33 10.02.2025

Procedure, 1973. Sureties stand discharged and the personal bond

stands cancelled. The accused being present in the court house,

shall be heard on the matter of sentencing.

Typed by me, corrected and pronounced by me in open court on this the 10th day of February, 2025.

SD/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT,

AT KUKATPALLY

Accused is heard on the quantum of sentence. The accused has stated that his wife is suffering from ill-health, undergoing radiation therapy for brain tumor, at Omega Hospital and has therefore, pleaded for a lenient view to be taken in sentencing.

Perused the record and heard the accused. In view of the nature of the offence in question, the beneficial provisions of the Probation of

Offenders Act, 1958 cannot be applied in this matter. Considering the facts and circumstances of the matter, as also the circumstances of the accused as submitted by him, it would appear to the court, that the interests of justice would be sufficiently served, if he is sentenced to 3 (three) months of simple imprisonment. The accused is further directed to pay 5,00,000/- (Rupees Five Lakhs Only) to the complainant, towards compensation under section 357(3) of the Code of Criminal Procedure, 1973. In default of payment of the same, the accused is further sentenced to undergo a further sentence of 3 (three) months of simple imprisonment.

C.C.N.I. No. 927 of 2021 32 of 33 10.02.2025

The accused further, shall be entitled to set-off, any period of detention already undergone by the accused, during the trial, under section 428 of the Code of Criminal Procedure, 1973.

The accused is hereby also informed of his right to appeal against the judgment and sentence to the Hon'ble Court of Sessions. He is further also informed of his right to free legal aid in preferring such appeal, in case he is unable to afford a lawyer. Office is hereby directed to furnish a copy of this judgment free of cost to the accused, forthwith.

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT,

AT KUKATPALLY

APPENDIX OF EVIDENCE

Witnesses examined

For the Prosecution: For the Defense:

PW1:Sri A.S. GurappaDW1:Siva Subramanyam PW2:Smt G. YagnasriDW2:Vandla Suresh PW3:Akkaladevi Kiran Kumar

Documents Marked

For the Prosecution: For the Defense:

Ex. P1:Cheque, dt. 29.04.2013, for Rs. 5,00,000/- Ex. P2:Cheque return memo, dt. 28.06.2013 Ex. P3:Office copy of legal notice

dt. 10.07.2013

Ex. P4:Postal Acknowledgment Ex. P5:Certified copy of receipt, dt. February 2011 Ex. P6:Letter from Indusind bank,

dt. 06.02.2016

Ex. P7:Certified copy of promissory

C.C.N.I. No. 927 of 2021 33 of 33 10.02.2025 note, dt. February 2011 Ex. P8:CC of Judgment and decree, dt. 24.11.2016, of the Hon’ble II Senior Civil

Judge, City Civil Court,

- NIL- Hyderad, in O.S. No. 1882 of 2013 Ex. P9:CC of written statement in

O.S. 1882 of 2013, before

the Hon’ble II Senior Civil

Judge, City Civil Court,

Hyderad. Ex. P10:Chief affidavit of DW1 Ex. P11:Cross examination of DW1 Ex. X1:Authorization letter Ex. X2:Account statement of Shiva Subramanyam Gantha (Accused) Ex. X3:Letter sent to complainant by bank Ex. X4:Xerox copy of cheque b.no. 494854 ::Material objects marked for::

-Nil-

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT

AT KUKATPALLY

C.C. N.I. No. 1041 of 20211 of 1824.09.2024

IN THE COURT OF XV ADDL. JUDICIAL MAGSTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT, AT KUKATPALLY

Tuesday, the 24th day of September, Two thousand and Twenty-four

Present: Sri R.K. VENKATA RAMANA SUHAS, XV Additional Judicial Magistrate of First Class,

KUKATPALLY, MEDCHAL-MALKAJGIRI DISTRICT

C.C. N.I. No. 1041 of 2021

Between:

T. Murali Krishna, S/o Late Purnachander Rao, aged about 51 years, Occ: Business, R/o LIG 799, Road No. 5, KPHB Colony, Kukatpally, Hyderabad …Complainant AND

G. Nagaraju Rahi Kumar, S/o G. V. Anjaneyulu, aged about 38 years, Occ: Business, R/o LIG 310, Bharatinagar, BHEL, Ramchandrapura, Hyderabad …Accused

This criminal case is coming on this day for Judgement before me in the presence of the Sri G. Srikar Rao, Ld. Counsel for the Complainant and Sri Thomas Lloyd and others, Ld. Counsels for the accused, the matter having stood over for consideration till this day, this court delivered the following:

JUDGEMENT

1.The present calendar case arises out of a complaint filed under section 200 of the

Code of Criminal Procedure, by the complainant, against the accused, for the offence punishable under section 138 of the Negotiable Instruments Act, 1881.

2.The case of the Complainant, as can be culled out from the complaint, is as follows:

The accused and his wife are known to the complainant, through his friend Sri K. Sridhar, since 6 years, as on the date of the complaint. Accused is engaged in ceramic raw material business (Pullspur), at Nellore and is staying at his father-in-law’s house while his wife is working as a teacher. On such acquaintance, the accused and his wife, approached the complainant on 20.05.2016, for a hand loan of 4,63,000/-, to purchase the house of his₹

C.C. N.I. No. 1041 of 20212 of 1824.09.2024 father-in-law, where he was residing at that time. The complainant arranged for the said amount, from one Sri T. Ravi Kishore, nephew of the complainant and gave the same to accused, on 04.06.2016, in the presence of the aforementioned mutual acquaintance, Sri K.

Sridhar. The accused executed a promissory note in the favour of the complainant and the said transaction was witnessed by both the said Sri K. Sridhar and the nephew of the complainant, Sri T. Ravi Kishore. Both the accused and his wife assured him that they will repay the amount within a period of one year. However, the accused and his wife failed to do so, and on repeated demands, on 14.11.2017, the accused issued a cheque bearing no.

638908, dt. 15.11.2017, for 63,000/-, drawn on SBI, Prashantinagar, Uppal, in favour of the₹ complainant, in part discharge of the said lawful liability. While another cheque is stated to be issued by the wife of the accused for the remaining amount, that is not the subject-matter of the present proceedings. The said cheque was presented by the complainant to his banker,

SBI, KPHB, Kukatpally, for encashment however, the same was returned dishonoured, with the reason being mentioned as “Funds Insufficient”, vide cheque return memo dt. 11.12.2017.

The complainant got issued a legal notice on 02.01.2018, calling upon the accused to repay the cheque amount within 15 days from the date of receipt of notice, through his counsel and the same was served on the accused on 10.01.2018. Despite the service of the legal notice, the accused has neither paid the cheque amount nor issued any reply notice. Thus, the complainant has filed the present complaint, praying that the accused be tried and punished for the offence under section 138 of the Negotiable Instruments Act, 1881.

3.On filing of the complaint, the Court took cognizance of the offence under section 138 of the Negotiable Instruments Act, 1881 i.e. Dishonour of Cheque for insufficiency, etc.

of funds in the account. The matter was initially numbered as C.C. No 551 of 2018, before the XIX Metropolitan Magistrate, Kukatpally, Miyapur, but was later transferred to IV

C.C. N.I. No. 1041 of 20213 of 1824.09.2024

Special Metropolitan Magistrate, Kukatpally, in accordance with the directions of the

Hon’ble Principal District and Sessions Court, vide proceeding no. 1645/2018, dt. 27.06.2018

and renumbered as C.C. No. 305 of 2018. Thereafter, at the stage of arguments, the matter was again transferred to this court finally and numbered as C.C. NI 1041 of 2021.

4.On appearance of the accused, copies of case documents were furnished to him in compliance under section 207, Code of Criminal Procedure, 1973 and he was examined under sec. 251 of the Code of Criminal Procedure, read over and explained the accusation against him him for the offence under section 138 of the Negotiable Instruments Act, 1881, to which he pleaded not guilty.

5.During the course of trial, the complainant has gotten himself examined as PW1 and through him, Exs. P1 to P6 marked. He also got one Sri U. N. Srinivass Rao, Deputy Branch

Manager, SBI, Kukatpally branch examined as PW2. The accused was thereafter examined under section 313 of the Code for the incriminating material found against him. Thereafter, the accused got himself examined as DW1 and got through himself, marked Exs. D1 to D3.

6.Heard both sides and perused the record. Perused the written arguments filed by the

Ld. Counsel for the Accused. The following points arise for the determination of this Court:

(i)Whether the complainant has been able to prove beyond reasonable doubt that the accused issued the cheque bearing no. 638908, dt. 15.11.2017, for ₹ 63,000/-, drawn on SBI, Prashantinagar, Uppal?

(ii)Whether the said cheque was not issued for lawful consideration?

(iii)Whether the complainant has been able to prove beyond reasonable doubt, that the said cheque was dishonoured for reasons covered by section 138 of the

Negotiable Instruments Act, 1881?

C.C. N.I. No. 1041 of 20214 of 1824.09.2024

(iv)Whether the complainant has been able to prove beyond reasonable doubt, that despite issuance and service of the staturoy legal notice under section 138 of the Negotiable Instruments Act, 1881, cheque amount has not been paid by the accused?

(v)Whether the complainant has been able to prove beyond reasonable doubt, that that the accused is guilty for the offence under section 138 of the Negotiable

Instruments Act, 1881?

(vi)To what result?

Point (i):

7.The complainant has got marked through himself, the cheque bearing no. 638908, dt.

15.11.2017, for 63,000/-, drawn on SBI, Prashantinagar, Uppal, Ex. P2, deposing that the₹ same was issued by the accused to him, in part discharge of the handloan amount of ₹ 4,63,000/-. Besides this, the execution of Ex. P2 cheque is really not in dispute. The accused, having examined himself as DW1, has deposed that the Ex. P2, the case cheque belongs to him. He of course states that he borrowed an amount of 1,00,000/-, in the year 2013 and₹ that for security purpose, he gave his cheque and that of his wife. He further also deposes that he made a payment of 63,000/- towards this loan of 1,00,000/- by bank deposit and the₹₹ rest by cash, but this part we may come back to, at a later time. It is however very clear from this deposition of DW1, that he does not dispute that Ex. P2 cheque belongs to him and that he signed and gave the same to the complainant. Thus, the accused has not denied the execution of the Ex. P2 cheque but in facts admits that the signature on that cheques to be actually his. He of course states that this was later misused by the complainant, but still, the signature on the cheque and the execution thereof by itself is not denied.

8.Hence, point (i) is answered in favour of the complainant and against the accused.

C.C. N.I. No. 1041 of 20215 of 1824.09.2024

Point (ii):

9.In view of the finding on point (i) that the accused has executed Ex. P2 cheque, the complainant is entitled to raise presumption, both under section 139 of the Negotiable

Instruments Act, 1881, that the said cheque was issued for lawful and valid consideration. It is for the accused to now prove that the same was not issued for lawful consideration.

However, this presumption is a rebuttable one. Such rebuttal need not only be made through leading actual defence evidence but may also be rebutted by reference to the prosecution evidence itself also. The Hon’ble Supreme Court, in Kumar Exports v. Sharma Carpets [reported in (2009) 2 SCC 513], summarising the law on the matter, observed as follows:

“20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. 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 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

C.C. N.I. No. 1041 of 20216 of 1824.09.2024 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 prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration 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. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.”

10.Further, in Basalingappa v. Mudibasappa [reported in (2019) 5 SCC 418], the

Hon’ble Supreme Court further summarised the law regarding the presumption under section

139 of the Negotiable Instruments Act, 1881:

“25. We having noticed the ratio laid down by this Court in the above cases on

Sections 118(a) and 139, we now summarise the principles enumerated by this

Court in following manner:

25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of

C.C. N.I. No. 1041 of 20217 of 1824.09.2024 proof for rebutting the presumption is that of preponderance of probabilities.

25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.

25.5. It is not necessary for the accused to come in the witness box to support his defence.”

11.The defence of the accused is two-fold. First is that there was no such handloan transaction as alleged. Second is that he has already paid the cheque amount namely, ₹ 63,000/- by depositing the same into the account of the complainant. We may therefore deal with both of these defences.

12.At the first place it may be remembered that the accused is also alleged to have executed and delivered to the complainant, Ex. P1 promissory note. The only questions or suggestions that were put to the complainant/PW1, during his cross on this matter are that the wife of the accused has not signed on the same and that the accused did not scribe Ex. P1.

There are however suggestions that no such alleged handloan amount was taken and that security cheques issued by the accused were misused. However, besides these there are no other questions on the matter of execution of Ex. P1 itself. Rather there is a suggestion that

C.C. N.I. No. 1041 of 20218 of 1824.09.2024 the accused borrowed and repaid 1,00,000/- in 2013, but that the cheque nad pronote were₹ not returned. Thus, the execution of Ex. P1 promissory note is also not disputed.

13.Even besides this, it may be noted that nothing has been elicited in the cross- examination of PW1 nor is there anything in the evidence of DW1, to rebut the presumption under section 139 of the Act. PW1 was first questioned as to the source of funds. He has stated that he has a business named Laxmiganapathi Agarbatti business, that he is not an income tax assessee, that he has one bank account and that he knows the accused for the last 4 years. He has then also deposed that before this transaction, accused used to borrow ₹ 5,000/- or 10,000/- and used to repay the same. He has stated that Ravi Kishore is his₹ brother’s son, that he is an income tax assessee but that he does not know whether he has disclosed the transactions in his IT returns. He has then stated that the accused asked for the money in the presence of Sridhar, 15 days before the landing of money, that the accused himself brought Ex. P1 pronote and that the accused himself scribed it. He has also admitted that the accused did not sign the pronote and also that she was not present on the date of execution of pronote. He has then also deposed that the accused and his wife both came to his house and gave the cheques to his wife. There then are some questions as to depositing of the cheque etc., to which we will refer to later, when discussing as to the evidence of PW2, the

Deputy Branch manager. Besides that, PW1 has denied the suggestion that the accused took loan of 1,00,000/- in 2013 and repaid the same but that he i.e. PW1 did not return the₹ cheques and pronote to the accused. There then suggestions that no loan was taken and that the accused misused the security cheques to file this case, which were denied. Thus, there is no material in the cross of PW1, to rebut the presumption under section 139 of the Act. The question then arises as to whether there is anything in the deposition and evidence of DW1, to rebut this presumption since the accused has chosen to lead defence evidence by examining

C.C. N.I. No. 1041 of 20219 of 1824.09.2024 himself. He has stated that he took a loan of 1,00,000/- in 2013, that he repaid 63,000/-₹₹ out of the same, by depositing the same into the bank account of the complainant, in 2013 itself, for which Exs. D1 to D3 were marked. He has then further deposed that the rest of the amount was paid in cash. He has then deposed that the cheques issued by him and his wife for security purpose for this transaction was misused to file the present case. This version is not very believable for one simple reason namely that if the accused really issued the cheques as security and the transaction was later completed by repaying the handloan, why no demand was ever made for the return of the cheque. The accused is not an illiterate person or a person not in the know of the general way of business transactions. His own description in his deposition is that his occupation is business. It is odd then that he should allow the said cheque to lie in the hands of the complainant for so long i.e. almost three years between 2013 and November 2016. He admits in cross-examination that he did not issue any legal notice for their return. Leave alone issuance of any notice for the return of the cheque, DW1 in his chief-examination does not even state that he at least even made an oral demand for their return Thus, it is not credible and the court cannot believe this to be probable. It is admitted by him further in his cross-examination that there were prior transactions between him and the complainant. Thus, Exs. D1 to D3 are also not of very use to him when there is not clear material from which to deduce as to for what loan transactions these payments were made.

He admits as much in his cross-examination that there is no mention in Exs. D1 to D3, as to the nature of payments. Thus, on a complete perusal of the evidence of both PW1 and DW1, there is nothing to rebut the presumption under section 139 of the Act.

14.Before we may part with this point, we may deal with some of the contentions raised by the Ld. Counsel for the accused in his written submissions as also some of the authorities cited by him. It is contended that the complainant failed to show that his nephew Sri Ravi

C.C. N.I. No. 1041 of 202110 of 1824.09.2024

Kumar had actually given him the money to be lent to the accused, in an attempt to contend that the complainant has failed to show that he lent the amount to the accused and his wife.

That however is not tenable when the presumption puts the burden on the accused to show that the cheque is not supported by lawful consideration. He has further contended that the complainant has failed to show that he has the capacity to lend the amount in question namely ₹ 4,63,000/-. But there is no attempt whatsoever on the part of the accused at the first place to even dispute or challenge that the complaint lacks the financial capacity. In this regard and specifically to support his contention that the non-examination of Sri Ravi Kumar is fatal to the case of the complainant, reliance was placed upon the decision of the Hon’ble Supreme

Court, in C. Anthony v. K.G. Raghavan Nair [Appeal (Crl.) No. 1748 of 1996, dt.

01.11.2002, reported in (2003) 1 SCC 1]. However, that decision is markedly and completely different from this case on facts. That was a case where a mutual acquaintance of both the complainant and accused and to whom as alleged by the accused, the cheque was actually issued, was not examined as a witness despite he being present in the court at the time of the trial. The facts therefore bear no similarity and therefore, this authority is of no use to the accused. Reliance is placed upon the decision of the Hon’ble High Court of Karnataka, in H.

Manjunath v. A.M. Basavaraju [Crl. A. No. 952 of 2009, dt. 03.07.2012, reported in 2012

SCC OnLine Kar 8861 : ILR 2014 Kar 6572], to contend that no loan as alleged was evern given by the complainant to the accused. This contention is not tenable on the very facts and evidence of the case since as already held, the accused failed to rebut the presumption under section 139 of the Act. Besides, the authority cited is different in the facts of the case. That was a case where on the evidence and facts namely, that the complainant failed to even mention the date on which the money was lent in the complaint and it was shown before the court that the entries in the cheque were not in the handwriting of the accused. There is no

C.C. N.I. No. 1041 of 202111 of 1824.09.2024 such material in this case. The authority is thus not comparable on the facts of the case. The decision of Hon’ble Rajasthan High Court, in Smt. Asha Baldwa v. Ram Gopal [Crl. Misc.

(Pet.) No. 2726/2014, dt. 13.09.2017] cited is of no relevance whatsoever. Here, that was a petition under section 482 of CrPC, for quashing the proceedings in a case where cheque issued was of a company, on the ground that the petitioner therein is not liable under section 141 of Act. Neither the facts nor the law in that are relevent in this case even in the remotest of the manner. Then reliance is placed upon the decision of the Hon’ble Supreme Court in

John K. Abraham v. Simon C. Abraham [Criminal Appeal No. 2043 of 2013, dt.

05.12.2013, reported in (2013) 2 SCC 236]. That was again a case where in view of the admissions and the statements of the complainant in his cross-examiantion, it was found that it is improbable that the consideration for the cheque ever passed. The decision is distinguishable from the present on the evidence and facts of the case since, as already held, there is nothing in the facts and circumstances of the case here, to hold that the accused has been able to rebut the presumption under section 139 of the Act. For the same reason, the decision of Sri A. Somashekar v. P.R. Sarveshwar Reddy [which from a perusal of the copy of the decision furnished by the Ld. Counsel for the accused himself, is actually decision of the Hon’ble LXII Addl. City Civil and Sessions Judge, Bangalore and not of the Hon’ble

Karnataka High Court, as contended by him], is of no use to him. The decision of the Hon’ble

Patna High Court, in Brij Bihar Prasad v. Bir Bahadur Rai [reported in AIR 1968 Pat 203] is of no relevance in this matter. That case was not even on a promissory note or cheque but rather on the basis of a note or chitha which was executed by the defendant therein, concerning the due amount from him, to the plaintiff, from loan transactions between them. A perusal of the note or chitha reproduced in the said judgment itself clearly shows that the terms thereof actually show the calcuation of the due amount and not an unconditional

C.C. N.I. No. 1041 of 202112 of 1824.09.2024 undertaking to repay a certain amount, which is the basis for a promissory note as per its very definition under section 3 of the Negotiable Instruments Act, 1881. The said case thus, has no relevance here. The decision of the Hon’ble High Court in R. Chennakesava Rao v. P.

Laxmi Narasaiah [Crl. Appeal No. 394 of 2018, dt. 01.06.2017, reported in 2017 (4) ALT 488] is also distinguishable on facts. That was a case where the accused was able to rebut the presumption under section 139 of the Act, since it was proven that there was no prior acquaintance between the complainant and the accused and despite this, it was the contention of the complainant, that he lent a substantial amount, without any document being executed by the accused. That is clearly not the case here. There is prior acquitance as alleged by the complainant and not really challenged by the accused in the cross-examiantion or in his own evidence. There is further, also execution of Ex. P1 promissory note by the accused allegedly.

Hence, the said authority is clearly different from the one at hand. Then it is further contended that the non-examination of the attesting witnesses is fatal to the complainant. It is not really necessary to examine attesting witnesses to prove the execution of the document, unless it is a document required by the law to be attested. That much is very clear from section 72 of the Indian Evidence Act, 1872. That really cannot be held to be a basis to doubt the case of the complainant, when the accused himself failed to challenge the execution of the promissory note. It may be noted that there is merely a suggestion that the pro note was in fact given for 2013 transaction but was not returned. There is not even a suggestion that it was never in fact executed by the husband of the accused.

15.Hence, the accused has clearly failed to prove that Ex. P2 cheque was not supported by lawful and valid consideration.

16.Hence, point (ii) too is answered in favour of the complainant and against the accused.

C.C. N.I. No. 1041 of 202113 of 1824.09.2024

Point (iii):

17.Exs. P3, cheque return memo clearly shows that Ex. P2 cheque was in fact dishonoured for the reason “funds insufficient”. The accused has however, sought to raise a defence namely that Ex. P2 cheque was never in fact deposited into the bank, that it therefore does not bear the seal of the bank and also that the same was returned by the bank for the reason that the cheque was of 2013. Apparently in order to deal with these questions put to

PW1 in his cross-examination, the complainant got examined the deput branch manager of

SBI, KPHB branch, Kukatpaly. He was summoned vide order dt. 19.02.2019, in Crl. M.P.

No. 454 of 2019. He has clearly deposed that Ex. P2 was presented and was dishonored for the reason “FUNDS INSUFFICIENT”. He has stated in his cross-examination, that Ex. P2 does not bear the seal of the bank since it belongs to the same bank i.e. SBI. Thus, it appears to the court, that the complainant has clearly been able to prove that the cheque was presented and was dishonoured for the reason “Funds insufficient”. Therefore, the dishonour in the present case is clearly covered by section 138 of the Negotiable Instruments Act, 1881.

Point (iV):

18.The accused has in his cross-examination has deposed that he did not receive any notice in this case. In this regard, it would be beneficial to note section 27 of the General

Clauses Act, 1897, which reads as follows:

“27. Meaning of service by post.— Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression “serve” or either of the expressions “give” or “send” or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the

C.C. N.I. No. 1041 of 202114 of 1824.09.2024 document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

19.Thus, once the complainant is able to prove, by Ex. P5 postal receipt and Ex. P6, tracking report showing that the same was returned, unless the accused is by clear evidence able to prove that the address shown in the legal notice, postal receipt and returned postal cover are actually not his, there is little chance of the accused being able to show that no service of notice was actually made to him.

20.In this regard, it is essential to also further note another decision of the Hon’ble

Supreme Court, in C.C. Alavi Haji v. Palapetty Muhammed, [reported in (2007) 6 SCC 555], wherein the Hon’ble Court observed as follows:

“15. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, in order to enable the court to draw presumption or inference either under Section 27 of the GC Act or Section 114 of the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion, therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. It is needless to emphasise that the complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. It is well settled that at the time of taking cognizance of the complaint under Section 138 of the

Act, the court is required to be prima facie satisfied that a case under the said section is made out and the aforenoted mandatory statutory procedural requirements have been complied with. It is then for the drawer to rebut the

C.C. N.I. No. 1041 of 202115 of 1824.09.2024 presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect. In our opinion, this interpretation of the provision would effectuate the object and purpose for which proviso to Section 138 was enacted, namely, to avoid unnecessary hardship to an honest drawer of a cheque and to provide him an opportunity to make amends.”

21. DW1 in his deposition, while recording his particlars, has stated his address to be

BHEL. The address in Ex. P4 legal notice is “LIG 310, Bharatinagar, BHEL,

Ramachandrapuram, Hyderabad”. Ex. P5 postal receipt too shows the address as BHEL PIN 502032, Ramachandrapuram. Thus, it is difficult to believe the version of the accused that no legal notice was served to him. Thus, the complainant has clearly discharged his burden by proving that he had dispatched the notice to the accused, by post. Thus, the requirement of service of notice in itself is sufficiently complied with.

22.Furthermore, the Hon’ble Supreme Court, in the same decision namely, C.C. Alavi

Haji v. Palapetty Muhammed, [reported in (2007) 6 SCC 555], has further observed as follows:

“17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of criminal law, where there is no stipulation of giving of a notice before filing a complaint. 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

C.C. N.I. No. 1041 of 202116 of 1824.09.2024 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 along with the copy of the complaint under Section 138 of the

Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the GC Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran case [(1999) 7 SCC 510 : 1999 SCC (Cri) 1284] if the “giving of notice” in the context of Clause (b) of the proviso was the same as the “receipt of notice” a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.”

23.Thus, even if it were to be contended that the service of notice was not made to him, the accused needs to show that on the service of summons, he made the payment of the cheque. However, that is clearly not the case of the accused here. Hence, the complainant has been able to prove the requirement of service of notice to the accused.

24.Point (iv) too is answered in favour of the complainant and against the accused.

Point (v):

25.In view of the findings on points (I) to (iv), it is held that the accused is guilty of the offence of dishonour of cheque, under section 138 of the Negotiable Instruments Act, 1881.

Point (v) too is therefore, answered in favour of the complainant and against the accused.

Point (vii):

26.In the result, the accused is found guilty for the offence under section 138 of the

Negotiable Instruments Act, 1881 and is therefore, convicted under section 255(2) of the

C.C. N.I. No. 1041 of 202117 of 1824.09.2024

Code of Criminal Procedure, 1973. Accused is present in the court and shall be heard on the quantum of sentencing.

Typed by me, corrected and pronounced by me in open court on this the 24th day of September, 2024.

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT,

AT KUKATPALLY

Accused is heard on the quantum of sentence. The accused has stated that

he has a daughter, who is studying and that if he and his wife are punished, it

would be great injustice to her. He has therefore, pleaded for a lenient view to

be taken in sentencing.

Perused the record and heard the accused. There is no representation for

the complainant. In view of the nature of the offence in question, the beneficial

provisions of the Probation of Offenders Act, 1958 cannot be applied in this

matter. Considering the facts and circumstances of the matter, as also the

circumstances of the accused as submitted by him, it would appear to the court,

that the interests of justice would be sufficiently served, if he is sentenced to 3

(three) months of simple imprisonment. The accused is further directed to pay

63,000/- (Rupees Sixty Three Thousand Only) to the complainant, towards

compensation under section 357(3) of the Code of Criminal Procedure, 1973. In

default of payment of the same, the accused is further sentenced to undergo a

further sentence of 3 (three) months of simple imprisonment.

The accused further, shall be entitled to set-off, any period of detention

already undergone by the accused, during the trial, under section 428 of the

Code of Criminal Procedure, 1973.

C.C. N.I. No. 1041 of 202118 of 1824.09.2024

The accused is hereby also informed of his right to appeal against the

judgment and sentence to the Hon'ble Court of Sessions. He is further also

informed of his right to free legal aid in preferring such appeal, in case he is

unable to afford a lawyer. Office is hereby directed to furnish a copy of this

judgment free of cost to the accused, forthwith.

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT,

AT KUKATPALLY

APPENDIX OF EVIDENCE

Witnesses examined

For the Prosecution: For the Defense:

PW1:T. Murali Krishna/ComplainantDW1:G. Naga Raju Rahi Kumar/Accused PW2:U.N. Srinivas Rao/Deputy Branch Manager, SBI, Kukatpally branch

Documents Marked

For the Prosecution: For the Defense:

Ex. P1:Promissory note dt. 04.06.2016Ex. D1:SBH deposit slip dt. 09.09.2013 Ex. P2:Cheque bearing no. 638908, dt. 15.11.2017, for 63,000/-₹ Ex. P3:Cheque return memo dt.Ex. D1:SBH deposit slip dt. 28.05.2013 11.12.2017 Ex. P4:Office copy of legal notice dt. 02.01.2018 Ex. P5:Postal receipt dt. 02.01.2018Ex. D1:SBH deposit slip dt. 12.04.2013 Ex. P6:Postal Tracking delivery report ::Material objects marked for::

-Nil-

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT

AT KUKATPALLY

C.C. N.I. No. 1053 of 20211 of 1924.09.2024

IN THE COURT OF XV ADDL. JUDICIAL MAGSTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT, AT KUKATPALLY

Tuesday, the 24th day of September, Two thousand and Twenty-four

Present: Sri R.K. VENKATA RAMANA SUHAS, XV Additional Judicial Magistrate of First Class,

KUKATPALLY, MEDCHAL-MALKAJGIRI DISTRICT

C.C. N.I. No. 1053 of 2021

Between:

T. Murali Krishna, S/o Late Purnachander Rao, aged about 51 years, Occ: Business, R/o LIG 799, Road No. 5, KPHB Colony, Kukatpally, Hyderabad …Complainant AND

Gangaraju Nagasarada, W/o G. Nagaraju Rahi Kumar, aged abotu 38 years, Occ: School Teacher, R/o LIG 310, Bharatinagar, BHEL, Ramchandrapura, Hyderabad …Accused

This criminal case is coming on this day for Judgement before me in the presence of the Sri G. Srikar Rao, Ld. Counsel for the Complainant and Sri Thomas Lloyd and others, Ld. Counsels for the accused, the matter having stood over for consideration till this day, this court delivered the following:

JUDGEMENT

1.The present calendar case arises out of a complaint filed under section 200 of the

Code of Criminal Procedure, by the complainant, against the accused, for the offence punishable under section 138 of the Negotiable Instruments Act, 1881.

2.The case of the Complainant, as can be culled out from the complaint, is as follows:

The accused and her husband are known to the complainant, through his friend Sri K.

Sridhar, since 6 years, as on the date of the complaint. The husband of the accused is engaged in ceramic raw material business (Pullspur), at Nellore and is staying at her father’s house

C.C. N.I. No. 1053 of 20212 of 1924.09.2024 while his wife is working as a teacher. On such acquaintance, the accused and her husband, approached the complainant on 20.05.2016 , for a hand loan of 4,63,000/-, to purchase the₹ house of her father, where she was residing at the time of the complaint. The complainant arranged for the said amount, from one Sri T. Ravi Kishore, nephew of the complainant and gave the same to accused, on 04.06.2016, in the presence of the aforementioned mutual acquaintance, Sri K. Sridhar. The husband of the accused executed a promissory note in the favour of the complainant and the said transaction was witnessed by both the said Sri K.

Sridhar and the nephew of the complainant, Sri T. Ravi Kishore. Both the accused and her husband assured him that they will repay the amount within a period of one year. However, the accused and her husband failed to do so, and on repeated demands, on 14.11.2017, the accused issued a cheque bearing no. 638908, dt. 15.11.2017, for 63,000/-, drawn on SBH,₹

LIG colony, R.C. Puram Branch, in favour of the complainant, in part discharge of the said lawful liability. While another cheque is stated to be issued by the husband of the accused for the remaining amount, that is not the subject-matter of the present proceedings. The said cheque was presented by the complainant to his banker, SBI, KPHB, Kukatpally, for encashment however, the same was returned dishonoured, with the reason being mentioned as “Funds Insufficient”, vide cheque return memo dt. 11.12.2017. The complainant got issued a legal notice on 02.01.2018, calling upon the accused to repay the cheque amount within 15 days from the date of receipt of notice, through his counsel and the same was served on the accused on 10.01.2018. Despite the service of the legal notice, the accused has neither paid the cheque amount nor issued any reply notice. Thus, the complainant has filed the present complaint, praying that the accused be tried and punished for the offence under section 138 of the Negotiable Instruments Act, 1881.

C.C. N.I. No. 1053 of 20213 of 1924.09.2024

3.On filing of the complaint, the Court took cognizance of the offence under section 138 of the Negotiable Instruments Act, 1881 i.e. Dishonour of Cheque for insufficiency, etc.

of funds in the account. The matter was initially numbered as C.C. No 550 of 2018, before the XIX Metropolitan Magistrate, Kukatpally, Miyapur, but was later transferred to IV

Special Metropolitan Magistrate, Kukatpally, in accordance with the directions of the

Hon’ble Principal District and Sessions Court, vide proceeding no. 1645/2018, dt. 27.06.2018

and renumbered as C.C. No. 304 of 2018. Thereafter, at the stage of arguments, the matter was again transferred to this court finally and numbered as C.C. NI 1053 of 2021.

4.On appearance of the accused, copies of case documents were furnished to him in compliance under section 207, Code of Criminal Procedure, 1973 and he was examined under sec. 251 of the Code of Criminal Procedure, read over and explained the accusation against him him for the offence under section 138 of the Negotiable Instruments Act, 1881, to which he pleaded not guilty.

5.During the course of trial, the complainant has gotten himself examined as PW1 and through him, Exs. P1 to P6 marked. He also got one Sri U. N. Srinivass Rao, Deputy Branch

Manager, SBI, Kukatpally branch examined as PW2. The accused was thereafter examined under section 313 of the Code for the incriminating material found against him.

6.Heard both sides and perused the record. Perused the written arguments filed by the

Ld. Counsel for the Accused. The following points arise for the determination of this Court:

(i)Whether the complainant has been able to prove beyond reasonable doubt that the accused issued the cheque bearing no. 638908, dt. 15.11.2017, for ₹ 63,000/-, drawn on SBH, LIG colony, R.C. Puram Branch?

(ii)Whether the said cheque was not issued for lawful consideration?

C.C. N.I. No. 1053 of 20214 of 1924.09.2024

(iii)Whether the complainant has been able to prove beyond reasonable doubt, that the said cheque was dishonoured for reasons covered by section 138 of the

Negotiable Instruments Act, 1881?

(iv)Whether the complainant has been able to prove beyond reasonable doubt, that despite issuance and service of the staturoy legal notice under section 138 of the Negotiable Instruments Act, 1881, cheque amount has not been paid by the accused?

(v)Whether the complainant has been able to prove beyond reasonable doubt, that that the accused is guilty for the offence under section 138 of the Negotiable

Instruments Act, 1881?

(vi)To what result?

Point (i):

7.The complainant has got marked through himself, the cheque bearing no. 638908, dt.

15.11.2017, for ₹ 63,000/-, drawn on SBH, LIG colony, R.C. Puram Branch, as Ex. P2, deposing that the same was issued by the accused to him, in part discharge of the handloan amount of 4,63,000/-. Besides this, the execution of Ex. P2 cheque is really not in dispute.₹

During the cross-examination of PW1, the only challenge to Ex. P2 cheque was a suggestion that the accused had borrowed an amount of ₹ 1,00,000/-, in the year 2013 and that for security purpose, she gave her cheque and that the same was misused to file the present case.

However, the execution and issuance of the cheque itself is clearly not in dispute as there is no question on that aspect, in the cross-examination of PW1. In Jayalakshmidevamma v.

Janardhan Redd [reported in AIR 1959 AP 272], the Hon’ble High Court observed as follows:

C.C. N.I. No. 1053 of 20215 of 1924.09.2024 “If there is anything in a witness's statement which is disputed and the opponent avoids asking questions on those matters in cross-examination, the evidence in chief-examination must be accepted unless of course there are inherent improbabilities.”

8.Thus, the accused has not denied the execution of the Ex. P2 cheque. His version of course is that this was a security cheque later misused by the complainant, but still, the signature on the cheque and the execution thereof by itself is not denied.

9.Hence, point (i) is answered in favour of the complainant and against the accused.

Point (ii):

10.In view of the finding on point (i) that the accused has executed Ex. P2 cheque, the complainant is entitled to raise presumption, both under section 139 of the Negotiable

Instruments Act, 1881, that the said cheque was issued for lawful and valid consideration. It is for the accused to now prove that the same was not issued for lawful consideration.

However, this presumption is a rebuttable one. Such rebuttal need not only be made through leading actual defence evidence but may also be rebutted by reference to the prosecution evidence itself also. The Hon’ble Supreme Court, in Kumar Exports v. Sharma Carpets [reported in (2009) 2 SCC 513], summarising the law on the matter, observed as follows:

“20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the

C.C. N.I. No. 1053 of 20216 of 1924.09.2024 complainant in a criminal trial. 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 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 prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration 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. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.”

C.C. N.I. No. 1053 of 20217 of 1924.09.2024

11.Further, in Basalingappa v. Mudibasappa [reported in (2019) 5 SCC 418], the

Hon’ble Supreme Court further summarised the law regarding the presumption under section

139 of the Negotiable Instruments Act, 1881:

“25. We having noticed the ratio laid down by this Court in the above cases on

Sections 118(a) and 139, we now summarise the principles enumerated by this

Court in following manner:

25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.

C.C. N.I. No. 1053 of 20218 of 1924.09.2024 25.5. It is not necessary for the accused to come in the witness box to support his defence.”

12.The defence of the accused is that there was no such handloan transaction as alleged.

However, before we may proceed to that it may be noted that the consideration alleged namely, the lending of 4,63,000/- can ostensibly be said to have been made to the husband₹ of the accused since it is the husband of the accused who has executed the promissory note,

Ex. P1. This is also admitted by PW1 in his cross-examination, that the wife did not sign on the same. Section 2(d) of the Indian Contract Act, 1872, defines consideration as “When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”. The provision clearly departs from the rule of privity of consideration, which is the rule in England namely, that consideration can flow from only a party to the contract. The provision thus states, “when at the desire of the promisor, the promisee or any other person”. The first part is important here since the case we are dealing with is not one where the consideration has flown from a third party but rather one where the consideration has flown to someone other than the complainant and the accused i.e. the husband of the accused. Besides stating “at the desire of the promisor”, the provision gives no reference to cases where consideration flows to a third party. But this clearly indicates the rule that the consideration though flowing to a third party, must be at his desire or with his or her concurrence. Thus explaining the rule, the

Hon’ble High Court, in Krishna Devloor v. N. Madhavi [reported in AIR 2013 AP 138 :

2013 SCC OnLine AP 160], observed as follows:

C.C. N.I. No. 1053 of 20219 of 1924.09.2024 “Mere payment of money by one individual to another, does not, by itself, bring about the transaction of a particular description. It is only when there exists unity of opinion, or what is commonly known in the realm of contracts, as consensus ad idem, that it can be treated as a consideration of the contract of a particular description. The money can certainly constitute the consideration, in a given transaction. However, it is only when it is paid by one, to another, with a specific understanding, that it is the consideration for a contract, that the contract can be said to have come into existence. The money paid for one purpose, cannot be treated as consideration for another. Even if a person pays the amount to another, with an idea that it is the consideration for purchase of an item of property, law would recognize such event, if only the person who paid the amount establishes that the one, who received it, was also of the same idea and understanding.”

13.Thus, in such cases, where the consideration is paid to a third party, it would still be valid consideration if, such passing is with consensus ad idem of the parties, that it is as a consideration for the contract in question. The execution of Ex. P2 cheque for part of the lawful debt alleged would clearly show that the parties were at consensus ad idem as to the nature of the payment made to the husband of the accused as also the Ex. P1, promissory note. Thus, if it is held that the handloan as alleged was indeed advanced, that would be sufficient consideration for Ex. P2 cheque. The question is then whether this consideration actually passed. This would depend upon whether the accused has been able to rebut the presumption raised under section 139 of the Act.

C.C. N.I. No. 1053 of 202110 of 1924.09.2024

14.Nothing has been elicited in the cross-examination of PW1, to rebut the presumption under section 139 of the Act. PW1 was first questioned as to the source of funds. He has stated that he has a business named Laxmiganapathi Agarbatti business, that he is not an income tax assessee, that he has one bank account and that he knows the accused for the last 4 years. He has then also deposed that before this transaction, accused used to borrow ₹ 5,000/- or 10,000/- and used to repay the same. He has stated that Ravi Kishore is his₹ brother’s son, that he is an income tax assessee but that he does not know whether he has disclosed the transactions in his IT returns. He has then stated that the accused asked for the money in the presence of Sridhar, 15 days before the landing of money, that husband of the accused himself brought Ex. P1 pronote and that he himself scribed it. He has also admitted that the wife i.e. the accused did not sign the pronote and also that she was not present on the date of execution of pronote. He has then also deposed that the accused and her husband both came to his house and gave the cheques to his wife. There are then some questions as to depositing of the cheque etc., to which we will refer to later, when discussing as to the evidence of PW2, the Deputy Branch manager. Besides that, PW1 has denied the suggestion that the accused took loan of 1,00,000/- in 2013 and repaid the same but that he i.e. PW1₹ did not return the cheques and pronote to the accused. There then is a suggestions that no loan was taken and that the accused misused the security cheques to file this case, which was denied. Thus, there is no material in the cross of PW1, to rebut the presumption under section 139 of the Act. This version is not very believable for one simple reason namely that if the accused really issued the cheques as security and the transaction was later completed by repaying the handloan, why no demand was ever made for the return of the cheque. The accused is not an illiterate person. She is a teacher and thus, well-educated. It is odd then that

C.C. N.I. No. 1053 of 202111 of 1924.09.2024 she should allow the said cheques to lie in the hands of the complainant for so long i.e. almost three years between 2013 and November 2016. Leave alone issuance of any notice for the return of the cheque, DW1 in his chief-examination does not even state that he at least even made an oral demand for their return. Thus, on a complete perusal of the evidence of PW1, there is nothing to rebut the presumption under section 139 of the Act.

15.Before we may part with this point, we may deal with some of the contentions raised by the Ld. Counsel for the accused in his written submissions as also some of the authorities cited by him. It is contended that the complainant failed to show that his nephew Sri Ravi

Kumar had actually given him the money to be lent to the accused, in an attempt to contend that the complainant has failed to show that he lent the amount to the accused and his wife.

That however is not tenable when the presumption puts the burden on the accused to show that the cheque is not supported by lawful consideration. He has further contended that the complainant has failed to show that he has the capacity to lend the amount in question namely ₹ 4,63,000/-. But there is no attempt whatsoever on the part of the accused at the first place to even dispute or challenge that the complaint lacks the financial capacity. In this regard and specifically to support his contention that the non-examination of Sri Ravi Kumar is fatal to the case of the complainant, reliance was placed upon the decision of the Hon’ble Supreme

Court, in C. Anthony v. K.G. Raghavan Nair [Appeal (Crl.) No. 1748 of 1996, dt.

01.11.2002, reported in (2003) 1 SCC 1]. However, that decision is markedly and completely different from this case on facts. That was a case where a mutual acquaintance of both the complainant and accused and to whom as alleged by the accused, the cheque was actually issued, was not examined as a witness despite he being present in the court at the time of the trial. The facts therefore bear no similarity and therefore, this authority is of no use to the

C.C. N.I. No. 1053 of 202112 of 1924.09.2024 accused. Reliance is placed upon the decision of the Hon’ble High Court of Karnataka, in H.

Manjunath v. A.M. Basavaraju [Crl. A. No. 952 of 2009, dt. 03.07.2012, reported in 2012

SCC OnLine Kar 8861 : ILR 2014 Kar 6572], to contend that no loan as alleged was evern given by the complainant to the accused. This contention is not tenable on the very facts and evidence of the case since as already held, the accused failed to rebut the presumption under section 139 of the Act. Besides, the authority cited is different in the facts of the case. That was a case where on the evidence and facts namely, that the complainant failed to even mention the date on which the money was lent in the complaint and it was shown before the court that the entries in the cheque were not in the handwriting of the accused. There is no such material in this case. The authority is thus not comparable on the facts of the case. The decision of Hon’ble Rajasthan High Court, in Smt. Asha Baldwa v. Ram Gopal [Crl. Misc.

(Pet.) No. 2726/2014, dt. 13.09.2017] cited is of no relevance whatsoever. Here, that was petition under section 482 of CrPC, for quashing the proceedings in a case where cheque issued was of a company, on the ground that the petitioner therein is not liable under section 141 of Act. Neither the facts nor the law in that are relevent in this case even in the remotest of the manner. Then reliance is placed upon the decision of the Hon’ble Supreme Court in

John K. Abraham v. Simon C. Abraham [Criminal Appeal No. 2043 of 2013, dt.

05.12.2013, reported in (2013) 2 SCC 236]. That was again a case where in view of the admissions and the statements of the complainant in his cross-examination, it was found that it is improbable that the consideration for the cheque ever passed. The decision is distinguishable from the present on the evidence and facts of the case since, as already held, there is nothing in the facts and circumstances of the case here, to hold that the accused has been able to rebut the presumption under section 139 of the Act. For the same reason, the

C.C. N.I. No. 1053 of 202113 of 1924.09.2024 decision of Sri A. Somashekar v. P.R. Sarveshwar Reddy [which from a perusal of the copy of the decision furnished by the Ld. Counsel for the accused himself, is actually decision of the Hon’ble LXII Addl. City Civil and Sessions Judge, Bangalore and not of the Hon’ble

Karnataka High Court, as contended by him], is of no use to him. The decision of the Hon’ble

Patna High Court, in Brij Bihar Prasad v. Bir Bahadur Rai [reported in AIR 1968 Pat 203] is of no relevance in this matter. That case was not even on a promissory note or cheque but rather on the basis of a note or chitha which was executed by the defendant therein, concerning the due amount from him, to the plaintiff, from loan transactions between them. A perusal of the note or chitha reproduced in the said judgment itself clearly shows that the terms thereof actually show the calculation of the due amount and not an unconditional undertaking to repay a certain amount, which is the basis for a promissory note as per its very definition under section 3 of the Negotiable Instruments Act, 1881. The said case thus, has no relevance here. The decision of the Hon’ble High Court in R. Chennakesava Rao v. P.

Laxmi Narasaiah [Crl. Appeal No. 394 of 2018, dt. 01.06.2017, reported in 2017 (4) ALT 488] is also distinguishable on facts. That was a case where the accused was able to rebut the presumption under section 139 of the Act, since it was proven that there was no prior acquaintance between the complainant and the accused and despite this, it was the contention of the complainant, that he lent a substantial amount, without any document being executed by the accused. That is clearly not the case here. There is prior acquitance as alleged by the complainant and not really challenged by the accused in the cross-examination or in his own evidence. There is further, also execution of Ex. P1 promissory note by the accused allegedly.

Hence, the said authority is clearly different from the one at hand. Then it is further contended that the non-examination of the attesting witnesses is fatal to the complainant. It is

C.C. N.I. No. 1053 of 202114 of 1924.09.2024 not really necessary to examine attesting witnesses to prove the execution of the document, unless it is a document required by the law to be attested. That much is very clear from section 72 of the Indian Evidence Act, 1872. That really cannot be held to be a basis to doubt the case of the complainant, when the accused herself failed to challenge the execution of the promissory note. It may be noted that there is merely a suggestion that the pro note was in fact given for 2013 transaction but was not returned. There is not even a suggestion that it was never in fact executed by the husband of the accused. Then it is contended that the accused herself has not signed on Ex. P1 promissory note. This, as already observed before, is not a tenable ground. The rule of privity consideration as known in England is not applicable in the strict sence in India. Once it is shown clearly by issuance of Ex. P2 cheque that the consideration flowing to the husband of the accused was with her understanding and at her desire, this contention really has no leg to stand upon.

16.Hence, the accused has clearly failed to prove that Ex. P2 cheque was not supported by lawful and valid consideration.

17.Hence, point (ii) too is answered in favour of the complainant and against the accused.

Point (iii):

18.Exs. P3, cheque return memo clearly shows that Ex. P2 cheque was in fact dishonoured for the reason “funds insufficient”. The accused has however, sought to raise a defence namely that Ex. P2 cheque was never in fact deposited into the bank, that it therefore does not bear the seal of the bank and also that the same was returned by the bank for the reason that the cheque was of 2013. Apparently in order to deal with these questions put to

PW1 in his cross-examination, the complainant got examined the deput branch manager of

SBI, KPHB branch, Kukatpaly. He was summoned vide order dt. 19.02.2019, in Crl. M.P.

C.C. N.I. No. 1053 of 202115 of 1924.09.2024

No. 454 of 2019. He has clearly deposed that Ex. P2 was presented and was dishonored for the reason “FUNDS INSUFFICIENT”. He has stated in his cross-examination, that Ex. P2 does not bear the seal of the bank since it belongs to the same bank i.e. SBI. Thus, it appears to the court, that the complainant has clearly been able to prove that the cheque was presented and was dishonoured for the reason “Funds insufficient”. Therefore, the dishonour in the present case is clearly covered by section 138 of the Negotiable Instruments Act, 1881.

Point (iv):

19.PW1 has deposed that he has issued legal notice and has got through himself marked,

Ex. P4, office copy of the legal notice, Ex. P5 postal receipt and Ex. P6, tracking report showing that the same was returned, unless the accused is by clear evidence able to prove that the address shown in the legal notice, postal receipt and returned postal cover are actually not his, there is little chance of the accused being able to show that no service of notice was actually made to him. There is no question on the matter of issuance and receipt of legal notice in the cross-examination of PW1 and hence, there is no dispute as to the same. There is however contention in the written arguments that no legal notice was ever issued. But failing to challenge that is, in the opinion of the court does not give any foundation on which this contention can stand.

20.In this regard, it is essential to also further note another decision of the Hon’ble

Supreme Court, in C.C. Alavi Haji v. Palapetty Muhammed, [reported in (2007) 6 SCC 555], wherein the Hon’ble Court observed as follows:

“15. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, in order to enable the court to draw presumption or inference either under Section 27 of

C.C. N.I. No. 1053 of 202116 of 1924.09.2024 the GC Act or Section 114 of the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion, therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. It is needless to emphasise that the complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. It is well settled that at the time of taking cognizance of the complaint under Section 138 of the

Act, the court is required to be prima facie satisfied that a case under the said section is made out and the aforenoted mandatory statutory procedural requirements have been complied with. It is then for the drawer to rebut the presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect. In our opinion, this interpretation of the provision would effectuate the object and purpose for which proviso to Section 138 was enacted, namely, to avoid unnecessary hardship to an honest drawer of a cheque and to provide him an opportunity to make amends.”

21. Thus, the complainant has clearly discharged his burden by proving that he had dispatched the notice to the accused, by post. Thus, the requirement of service of notice in itself is sufficiently complied with.

22.Point (iv) too is answered in favour of the complainant and against the accused.

C.C. N.I. No. 1053 of 202117 of 1924.09.2024

Point (v):

23.In view of the findings on points (i) to (iv), it is held that the accused is guilty of the offence of dishonour of cheque, under section 138 of the Negotiable Instruments Act, 1881.

Point (v) too is therefore, answered in favour of the complainant and against the accused.

Point (vii):

24.In the result, the accused is found guilty for offence under section 138 of the

Negotiable Instruments Act, 1881 and is therefore, convicted under section 255(2) of the

Code of Criminal Procedure, 1973. Accused is present in the court and shall be heard on the quantum of sentencing.

Typed by me, corrected and pronounced by me in open court on this the 24th day of September, 2024.

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT

AT KUKATPALLY

Accused is heard on the quantum of sentence. The accused has stated that

she has a daughter and that if she and her husband are punished, the daughter

would be left alone. She has therefore, pleaded for a lenient view to be taken in

sentencing.

Perused the record and heard the accused. There is no representation for

the complainant. In view of the nature of the offence in question, the beneficial

provisions of the Probation of Offenders Act, 1958 cannot be applied in this

matter. Considering the facts and circumstances of the matter, as also the

C.C. N.I. No. 1053 of 202118 of 1924.09.2024

circumstances of the accused as submitted by him, it would appear to the court,

that the interests of justice would be sufficiently served, if she is sentenced to 3

(three) months of simple imprisonment. The accused is further directed to pay

4,00,000/- (Rupees Four Lakhs Only) to the complainant, towards compensation

under section 357(3) of the Code of Criminal Procedure, 1973. In default of

payment of the same, the accused is further sentenced to undergo a further

sentence of 3 (three) months of simple imprisonment.

The accused further, shall be entitled to set-off, any period of detention

already undergone by the accused, during the trial, under section 428 of the

Code of Criminal Procedure, 1973.

The accused is hereby also informed of his right to appeal against the

judgment and sentence to the Hon'ble Court of Sessions. He is further also

informed of his right to free legal aid in preferring such appeal, in case he is

unable to afford a lawyer. Office is hereby directed to furnish a copy of this

judgment free of cost to the accused, forthwith.

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT

AT KUKATPALLY

APPENDIX OF EVIDENCE

Witnesses examined

For the Prosecution: For the Defense:

PW1:T. Murali Krishna/Complainant-NONE- PW2:U.N. Srinivas Rao/Deputy Branch Manager, SBI, Kukatpally branch

Documents Marked

C.C. N.I. No. 1053 of 202119 of 1924.09.2024

For the Prosecution: For the Defense:

Ex. P1:Promissory note dt. 04.06.2016 Ex. P2:Cheque bearing no. 638908, dt. 15.11.2017, for 63,000/-₹ Ex. P3:Cheque return memo dt. 11.12.2017 Ex. P4:Office copy of legal notice dt. 02.01.2018 Ex. P5:Postal receipt dt. 02.01.2018 Ex. P6:Postal Tracking delivery report ::Material objects marked for::

-Nil-

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT

AT KUKATPALLY

C.C. N.I. No. 1391 of 2021 1 of 17 13.02.2025

IN THE COURT OF XV ADDL. JUDICIAL MAGISTRATE OF FIRST

CLASS, MEDCHAL-MALKAJGIRI DISTRICT, AT KUKATPALLY

Thursday, the 13th day of February, Two thousand and Twenty-five

Present: Sri R.K. VENKATA RAMANA SUHAS, XV Additional Judicial Magistrate of First Class,

KUKATPALLY, MEDCHAL-MALKAJGIRI DISTRICT

C.C. N.I. No. 1391 of 2021

(Old C.C. No. 514 of 2017)

Between:

1.Sri G.S.V.K. Avadhani, S/o Late Sri Gundu Venkatachalam, aged about 67 years, R/o Flat No. 505, Block No. 24, Malaysian Township,

Kukatpally, Hyderabad (Died through LR)

2.Sri G. Sai Kiran, S/o Late Sri G.S.V.K. Avadhani, aged 46 years, Occ:

Business, R/o Flat No. 505, Block No. 24, Malaysian Township, Kukatpally,

Hyderabad (LR of the deceased complainant, permitted to be brought on record, vide order dt. 07.07.2023, in Crl. M.P. No. 8 of 2023) …Complainant

AND

1.M/s. Simhadri Sai Constructions Pvt. Ltd., Rep. by its Managing

Director Sri Simhadri Saiji Rao, S/o Late S.K.P. Bhimasena Rao, aged about 46 years, having its registered office, at D. No. 48-8-18, Shop No. 2,

Ground Floor, Chikkala Residency, dwarakanagar, Vishakhapatnam – 530020

2.Sri Simhadri Saiji Rao, S/o Late S.K.P. Bhimasena Rao, aged about 46 years, residing at D. No. 48-8-18, Shop No. 2, Ground Floor, Chikkala

Residency, dwarakanagar, Vishakhapatnam – 530020 …Accused persons

C.C. N.I. No. 1391 of 2021 2 of 17 13.02.2025

This criminal case is coming on this day for Judgement before me in the presence of the Sri M. Anna Purnayya, Ld. Counsel for the

Complainant and Sri P. Chandra Shekar Reddy, Ld. Counsel for the accused, the matter having stood over for consideration till this day, this court delivered the following:

JUDGEMENT

1.The present calendar case arises out of a complaint filed under section 200 of the Code of Criminal Procedure, by the complainant, against the accused, for the offence punishable under section 138 of the

Negotiable Instruments Act, 1881.

2.The case of the Complainant, as can be culled out from the complaint, is as follows: Accused no. 2 representing accused no. 2 company, entered into an apartment development agreement dt.

14.12.2006, with complainant no. 1, for the purpose of construction of apartments on his land. After the completion of the said apartments, the accused sold away two apartments which belonged to the complainant’s share, as per the said agreement, without his knowledge and pocketed the entire sale consideration amount to ₹ 55,45,000/-. Further, the accused was also due to pay ₹ 24,40,000/- to the complainant as per the development agreement. Thus, the total due amount to be paid by the accused to the complainant was ₹ 79,85,000/-. Out of this entire amount, the accused had paid till the date of the complaint, ₹ 23,57,000/-. On persistent demands being made by the complainant, the accused issued four cheques bearing nos. 760963, 760964, 760965 and 760966, all dt.

C.C. N.I. No. 1391 of 2021 3 of 17 13.02.2025 16.01.2017, all drawn on Corporation Bank, Dwaraka Nagar Branch,

Vishakhapatnam and each for ₹ 4,50,000/- i.e. for a total amount of ₹ 18,00,000/-. The said cheques were deposited by the complainant on 23.01.2017, but were all returned dishonoured, for the reason funds insufficient, on 23.01.2017, along with cheque-return memos. The complainant issued a legal notice dt. 16.02.2017 to the accused calling upon him, to repay the cheque amount within 15 days. The said notice was served to the accused on 27.02.2017. However, despite the same, the accused failed to repay the cheque amount. Thus, the complainant has filed the present complaint, praying that the accused persons be tried and punished for the offence under section 138 of the Negotiable

Instruments Act, 1881.

3.The complaint was initially filed before the XIX Additional

Metropolitan Magistrate, Kukatpally, on which the Court took cognizance of the offence under section 138 of the Negotiable Instruments Act, 1881 i.e. Dishonour of Cheque for insufficiency, etc. of funds in the account, issued summons to the accused. The matter was initially registered as

C.C. No. 603 of 2017. Thereafter, the matter was transferred to the Court of IV Special Magistrate, Kukatpally and was re-numbered as C.C. No. 514 of 2017. Thereafter the matter was again transferred to this court, after which, the matter was renumbered to its present case number.

4.On appearance of the accused, copies of case documents were furnished to him in compliance under section 207, Code of Criminal

C.C. N.I. No. 1391 of 2021 4 of 17 13.02.2025

Procedure, 1973 . Accused persons (with accused no. 2 acting on behalf of accused no. 1), were examined under sec. 251 of the Code of Criminal

Procedure, read over and explained the accusation against them, for the offence under section 138 of the Negotiable Instruments Act, 1881, to which they pleaded not guilty and claimed to be tried.

5.During the course of trial, complainant no. 1 got himself examined as PW1 and through him, got marked Exs. P1 to P13. After PW1’s evidence, the accused was examined under section 313, CrPC. But while the matter was coming for arguments, complainant no. 1 died and hence, vide order dt. order dt. 07.07.2023, in Crl. M.P. No. 8 of 2023, complainant no. 2, the son of complainant no. 1 was permitted to come on record and represent complainant no. 1 as his LR. Thereafter, vide order 22.08.2024 in Crl. M.P. No. 1131 of 2024, complainant no. 2 was summoned as PW2 and through him, Exs. P14 and P15 were marked. Thereafter, the accused was again examined under section 313, CrPC.

6.Heard both sides and perused the record. The following points arise for the determination of this Court:

(i)Whether the complainant has been able to prove beyond reasonable doubt that the accused issued the cheques bearing nos. 760963, 760964, 760965 and 760966, all dt.

16.01.2017, all drawn on Corporation Bank, Dwaraka Nagar

Branch, Vishakhapatnam, for ₹ 4,50,000/- each?

C.C. N.I. No. 1391 of 2021 5 of 17 13.02.2025

(ii)Whether the said cheques were not issued for lawful consideration?

(iii)Whether the complainant has been able to prove beyond reasonable doubt, that the said cheque was dishonoured for reasons covered by section 138 of the Negotiable Instruments

Act, 1881?

(iv)Whether the complainant has been able to prove beyond reasonable doubt, that despite issuance and service of the statutory legal notice under section 138 of the Negotiable

Instruments Act, 1881, cheque amount has not been paid by the accused?

(v)Whether the complainant has been able to prove beyond reasonable doubt, that that the accused is guilty for the offence under section 138 of the Negotiable Instruments Act, 1881?

(vi)To what result?

Point (i):

7.It was through complainant no. 1, that Exs. P1 to P4 cheques were marked. His chief-examination affidavit is a reproduction of the complaint averments and hence, the same are not reproduced herein. In the cross- examination of PW1, nowhere has the defence sought to challenge his deposition that the accused issued Exs. P1 to P4 cheques. Rather, there were two suggestions put to PW1. One being that he had obtained blank

C.C. N.I. No. 1391 of 2021 6 of 17 13.02.2025 cheques from the accused, at the time of the Ex. P13 Development

Agreement, that the same was never returned after the flats were delivered to PW1 and that the same were misused to file the present case and the other being that these cheques do not relate to this transaction.

Besides being totally contradictory to each other, both of these suggestions were in fact denied by the accused. In these circumstances, there is really no proper denial of the issuance of Exs. P1 to P4 cheques by the accused. In Jayalakshmidevamma v. Janardhanreddi [reported in

AIR 1959 AP 252], the Hon’ble Andhra Pradesh High Court observed as follows:

If there is anything in a witness's statement which is disputed and the opponent avoids asking questions on those matters in cross-examination, the evidence in chief- examination must be accepted unless of course there are inherent improbabilities.

8.Hence, it appears to the court, in view of the failure of the defence to properly challenge the allegation in the chief of PW1, that the accused issued Exs. P1 to P4 cheques, the deposition of PW1 must be accepted.

9.Hence, the point is answered in favour of the complainant and against the accused.

Point (ii):

10.In view of the finding on point (i) that the accused has executed Exs.

P1 to P4 cheques, the complainant is entitled to raise presumption, both under section 118(a) and 139 of the Negotiable Instruments Act, 1881, that the said cheques were issued for lawful and valid consideration. It is

C.C. N.I. No. 1391 of 2021 7 of 17 13.02.2025

for the accused to now prove that the same were not issued for lawful

consideration. However, this presumption is a rebuttable one. Such rebuttal need not only be made through leading actual defence evidence but may also be rebutted by reference to the prosecution evidence itself also. The Hon’ble Supreme Court, in Kumar Exports v. Sharma Carpets [reported in (2009) 2 SCC 513], summarising the law on the matter, observed as follows:

“20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. 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 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

C.C. N.I. No. 1391 of 2021 8 of 17 13.02.2025 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 prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration 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. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the

Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.”

11.Further, in Basalingappa v. Mudibasappa [reported in (2019) 5

SCC 418], the Hon’ble Supreme Court further summarised the law regarding the presumption under section 139 of the Negotiable

Instruments Act, 1881:

C.C. N.I. No. 1391 of 2021 9 of 17 13.02.2025 “25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:

25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.

25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.

25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.

25.5. It is not necessary for the accused to come in the witness box to support his defence.”

C.C. N.I. No. 1391 of 2021 10 of 17 13.02.2025

12.The contention of the accused, as may be noted from the suggestions that I have already referred to, while discussing point (i), primarily is that the cheques were taken by complainant no. 1, at the time of Ex. P13 development agreement, as a security and that despite the delivery of the flats to complainant no. 1, he did not deliver back the cheques. There are two problems with this entire version.

13.First is that the accused himself is a business person and hence, it is very doubtful as to whether he would leave cheques signed by him, in the hands of complainant no. 1. It is quite against the expectation of a person such as accused, who is in business, to not know the consequences of not taking any action against for getting back the cheques.

14.Second problem is that the accused states that the flats were already delivered by the accused to complainant no. 1. But in such a case, there must be some acknowledgment that must have been executed by the complainant no. 1 for the same. Again it would not be expected from accused, who is a businessman, to not expect any subsequent dispute or litigation such as this and to not require the execution of some receipt or acknowledgment for the delivery of possession.

15.There is one more aspect that though is not mentioned in the complaint, is brought out as a part of the deposition of PW2. He got marked Exs. P14 and P15. There was a previous round of section 138 NI

Act litigation between the parties in Vishakhapatnam, which was settled between them, with the accused agreeing to sell another flat in the

C.C. N.I. No. 1391 of 2021 11 of 17 13.02.2025 constructed building, in favour of complainant no. 2, for a sum of ₹ 18,00,000/-. On the basis of this agreement, the criminal case under section 138 of NI Act, being C.C. No. 535 of 2014, before the Hon’ble I

Additional Chief Metropolitan magistrate, Vishakhapatnam was withdrawn

by complainant no. 1. Ex. P14 is the CC of the docket order. Ex. P15 is the agreement to sell dt. 02.01.2015. This then makes it clear as to how the amount of ₹ 18,00,000/- was arrived at.

16.In the cross-examination of PW2 again, no question was put to challenge these documents. Only suggestions put were to the effect that

PW2 was outside India at the time of the transaction and hence, does not know anything about the matter or the purpose of the cheques. These were denied by PW2 and really it is not very outlandish to believe that a son would have the knowledge of transactions concerning immovable properties of the father.

17.The Ld. Counsel for the accused had sought to contend first that the

GPA is not registered. But GPA is not a document requiring registration under section 17 of the Registration Act, 1908. Ld. Counsel for the accused had contended that PW1 had admitted that he had received the flats. But that does not appear to be true. PW1 was cross-examined on two dates, on 21.02.2018 and then again on 20.08.2018. There is no record of any such admission in either of these two documents. When questioned to point out the same, the Ld. Counsel had pointed to the following line: “After construction of building occupancy certificate will be

C.C. N.I. No. 1391 of 2021 12 of 17 13.02.2025 given in the name of the owner and occupation certificate is given for Two

Flats in the name of Venkata Lakhsmi”, in the cross-examination dt.

20.08.2018. In the previous line to this, PW1 admits that the building was to be in his name and in the name of his wife. There is no material to show that this Ms. Venkata Lakshmi is the wife of PW1. Even if it were, occupancy certificate is merely a certificate by the municipal authorities that the building is safe for human occupation and residence. It is not a document certifying that possession is delivered. Specifically, no such contention can be accepted when the document in question was never filed before this court, either in original or in any other form. It was again contended that PW2 admitted that he does not know about the transaction. This again is an admission that is not found anywhere in the cross-examination of PW2. When asked, the Ld. Counsel for accused was not able to point as to where this admission is. It was then contended again that the transaction occurred in Vishakhapatnam and that this court has no jurisdiction over the matter. That again is untenable in law. Exs. P5 to P8 clearly show that the cheques were returned as dishonoured, by SBI,

Pragathi Nagar branch. Thus, as per section 142(2) of the Negotiable

Instruments Act, 1881, this court, within whose limits, this bank (to which the cheque was given for collection) lies, has the jurisdiction over this matter.

C.C. N.I. No. 1391 of 2021 13 of 17 13.02.2025

18.In these circumstances, it appears to the court, that the accused has failed to rebut the presumption against him. Hence, the point is answered against the accused and in favour of the complainant.

Points (iii) and (iv):

19.Exs. P5 to P8, cheque return memos clearly shows that Exs. P1 to P4 cheques were in fact dishonoured for the reason “funds insufficient”.

Therefore, the dishonour in the present case is clearly covered by section 138 of the Negotiable Instruments Act, 1881. There is also no challenge to the fact that the legal notice was served to the accused. Exs. P9 to P12, the legal notice, postal receipts and RPAD acknowledgments were produced for the purpose. It is also not the contention of the accused, that after notice was received, he paid the cheque amounts to the complainant. Hence, points (iii) and (iv) are answered in favour of the complainant and against the accused.

Point (v):

20.In view of the findings on points (i) to (iv), it has to be held that the accused persons are guilty for the offence under section 138 of the

Negotiable Instruments Act, 1881. Specifically. So, since there is no material or even contention put forward that accused no. 2 was the person who is to be liable for the offence under section 141 of the Act, in respect of accused no. 1 company. There was no question put on this aspect to PW1 or PW2, no material produced to show any such contention and indeed no such contention was even made in the course of defence

C.C. N.I. No. 1391 of 2021 14 of 17 13.02.2025 arguments. Therefore, this point too is answered in favour of the complainant and against the accused.

Point (vii):

21.In the result, both accused nos. 1 and 2 are found guilty for

the offence under section 138 of the Negotiable Instruments Act,

1881 and are therefore, convicted under section 255(2) of the

Code of Criminal Procedure, 1973. Sureties stand discharged and

the personal bond stands cancelled. Accused no. 2 being present

in the court house and he being also the representative of

accused no. 1 company, shall be heard on the matter of

sentencing.

Typed by me, corrected and pronounced by me in open court on this the 13th day of February, 2025.

SD/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT,

AT KUKATPALLY

Accused no. 2 is heard on the quantum of sentence. He has stated that his entire family is dependent upon him and has pleaded for a lenient view to be taken in sentencing.

Perused the record and heard the accused. There is no representation for the complainant. In view of the nature of the offence in question, the beneficial provisions of the Probation of Offenders Act, 1958 cannot be applied in this matter. Considering the facts and circumstances of the matter, specifically the fact that the dispute is essentially one which

C.C. N.I. No. 1391 of 2021 15 of 17 13.02.2025 has already been litigated once, which was settled as can be seen from

Exs. P14 and P15 and the fact that though the present case itself is only of 2017 but the matter relates to 2014, as also considering the circumstances of the accused as submitted by him, it would appear to the court, that the interests of justice would be sufficiently served, if accused no. 2 is sentenced to 3 (three) months of simple imprisonment. Both the accused persons are further also directed to pay 27,00,000/- (Rupees

Twenty-seven Lakhs Only) to the complainant, towards compensation under section 357(3) of the Code of Criminal Procedure, 1973. In default of payment of the same, the accused no. 2 is further sentenced to undergo a further sentence of 3 (three) months of simple imprisonment.

The accused further, shall be entitled to set-off, any period of detention already undergone by the accused, during the trial, under section 428 of the Code of Criminal Procedure, 1973.

The accused is hereby also informed of his right to appeal against the judgment and sentence to the Hon'ble Court of Sessions. He is further also informed of his right to free legal aid in preferring such appeal, in case he is unable to afford a lawyer. Office is hereby directed to furnish a copy of this judgment free of cost to the accused, forthwith.

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT,

AT KUKATPALLY

APPENDIX OF EVIDENCE

Witnesses examined

For the Prosecution: For the Defense:

PW1:G.S.V.K. Avadhani PW2:Sri G. Sai Kiran

C.C. N.I. No. 1391 of 2021 16 of 17 13.02.2025

Documents Marked

For the Prosecution: For the Defense:

Ex. P1:Cheque bearing no. 760963,

dt. 16.01.2017

Ex. P2:Cheque bearing no. 760964,

dt. 16.01.2017

Ex. P3:Cheque bearing no. 760965,

dt. 16.01.2017

Ex. P4:Cheque bearing no. 760966,

dt. 16.01.2017

Ex. P5:Cheque return memo, dt. 25.01.2017 Ex. P6:Cheque return memo, dt. 25.01.2017 Ex. P7:Cheque return memo, dt. 25.01.2017 Ex. P8:Cheque return memo, dt. 25.01.2017 Ex. P9:Legal notice, dt. 16.02.2017 Ex. P10:Postal receipts (2 nos.), dt. 23.02.2017 Ex. P11:Postalacknowledgment cards, dt. 02.03.2017 Ex. P12:Postalacknowledgment cards, dt. 02.03.2017 Ex. P13:Development agreement, dt. 13.2.2006 Ex. P14:Certified copy of proceedings of the Special Magistrate-III, Visakhapatnam,dt. 05.08.2014 in CC. No. 462 of 2014 Ex. P15:Original Agreement of sale,

dt. 02.01.2015

::Material objects marked for::

-Nil-

Sd/-

C.C. N.I. No. 1391 of 2021 17 of 17 13.02.2025

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT

AT KUKATPALLY

C.C. No. 4066 of 20131 of 1218.12.2024

IN THE COURT OF XV ADDL. JUDICIAL MAGSTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT, AT KUKATPALLY

Wednesday, the 18th day of December, Two thousand and Twenty-four

Present: Sri R.K. VENKATA RAMANA SUHAS, XV Additional Judicial Magistrate First Class,

KUKATPALLY, MEDCHAL-MALKAJGIRI DISTRICT

C.C. No. 4066 of 2013

Between:

State of Telangana through Sub-Inspector of Police, P.S., KPHB …Complainant

AND A1) M/s. Quality Furniture located office at Plot No. 124, S24, S25, S26, Soubagyanagar Colony, IDPC, Hyderabad A2) Molakalapalli Seetharamaiah, S/o. Venkata Ramaiah, Aged about 32 years, Occ: Proprietor of M/s. Quality Furniture, R/o. Plot No. 21, Flat No. 202, Seetha Rama Nilayam, Kukatpally, Hyderabad. A3) S.V. Prabhakar Rao, Ex-Chief Manager of Indian Bank, Dharmareddy Colony, K.P.H.B. Branch, Cyberabad. …Accused persons

This criminal case is coming on this day for Judgement before me in the presence of the Ld. Assistant Public Prosecutor, for the State and Sri A. Rajeshwar Reddy, Ld. counsel for the accused, the matter having stood over for consideration till this day, this court delivered the following:

JUDGEMENT

1.The present calendar case arises out of charge Sheet filed in crime no.

494/2013, laid by Sub-Inspector of Police, P.S. KPHB, for the offences under section 403, 406, 420 and 426 r/w 120(b) of the Indian Penal Code, 1860.

C.C. No. 4066 of 20132 of 1218.12.2024

2.The case of the prosecution stated in brief, is that PW1, had filed a complaint, which is referred to P.S. KPHB, for investigation, stating as follows: LW1- Sri K. Venkata Surya Prakash Rao, through the Hon'ble court vide Dis No.683/13, dt: 08-5-13 in which he stated that the bank provided various loan facilities to the needy people as a part of its banking business having eligibility for discharge of the debts. Their bank sanctioned a cash credit of Rs.70 lakhs on 28-03-2012 and term loan of Rs.25 lakhs on 28-03- 2012, both facilities amounting to Rs.95,00,000/-, to M/s. Quality Furniture rep. By its Proprietor M. Seetharamaiah, Office at Plot No. 124, S24, S25,

S26, Soubagyanagar Colony. IDPL, Hyderabad, under CGTSME Scheme, for manufacturing and trading furniture. The accused drew the entire amount and had the benefit thereof and did not make any payment towards installments per the terms and conditions of the agreement between was no proper business activity and the particular unit was clubbed with other unit was clubbed with other units belonging to third persons and nit is not possible to identify separately, which clearly shows the diversion of funds and accused not utilised the funds for the purpose for which it was intended to i.e. manufacturing and trading of furniture. Accused at the time of availing the loans misrepresented the facts by playing fraud on their bank officials for getting the loan and mislead with misrepresentations with an intention from the beginning to deceive the officials. But for the misrepresentations made by accused, their official would have not sanctioned the loan and disbursed

C.C. No. 4066 of 20133 of 1218.12.2024 the loan amount to accused. They found that the accused obtained the loan by misrepresenting the facts and not conducting any business as envisaged and more over not paid any interest or installments as agreed by accused due to which their bank incurred huge financial loss. Accused A2 with an intention to gain wrongfully and cause wrongful loss to their bank and their by committed the offences cheating and miss utilised the funds by means of diverting the same from the vigilance of the bank officials. They have ample evidence against accused to prove guilt of the accused. When the vigilance wing of their bank made a surprise visit and found the mischief played by accused A2 and A3 and then immediately made enquiry in around the premises. He has therefore requested for necessary action to be taken.

3.As per the contents of the above complaint and as per the directions of the Hon’ble Court, LW3-Sri P. Rajesh, Sub-Inspector of Police, PS KPHB registered FIR crime No. 494/2017, under section 403, 406, 420 and 426 r/w 120(b) of the Indian Penal Code, 1860 and took up the investigation.

During the course of the investigation, LW3-Sri P. Rajesh examined the LW.1

Chief Manager, Indian Bank and recorded his detailed statement. LW3 examined LW2-Sri Goggula Shiva Kumar (Vigilance Officer) and recorded his detailed statement. LW.3 collected the death certificate of A3 Siripurapu

Venkata Prabhakar Rao, who was the Manager of Indian Bank and who abetted the commission of offence expired on 17.04.2013. LW.3 given a requisition to the Registrar of Companies with a request to furnish the

C.C. No. 4066 of 20134 of 1218.12.2024 certified copy whether-M/s. Quality Furniture has been registered with ROC or not and obtained letter from Sri V. Venkata Rami Reddy, Asst. Registrar of companies, vide RAP/C. Coy/(VVR)/2013, dt: 26-08-2008 in which he state that no company is registered with the name and style of M/S. Quality

Furniture. LW.1 is complainant: He stated that the bank provided various loan facilities to the to the people as a part of its Seetharafuatah, proprietor of accused no. 1 M/s. Quality Furniture applied for sanction of loan under

C.G.T.S.M.E (Credit Guarantee Trust Scheme Micro Small Enterprises) scheme to start manufacture and trading of furniture. Accused no. 3 has power to sanction loan 70,00,000/- on 28-03-2012 to account

No.6023142866 and term loan of Rs.25,00,000/- on 100303012 to account

No.6024246999, both facilities amounting to Rs.95,00,000/-, There is no banking business having eligibility for discharge of the debts. Da manufacture and trading of furniture. Accused no. 3 has power to sanction loan up to Rs.1 crore under the above scheme, Accused no. 3 the then

Manager of Indian Bank, KPHB sanctioned a open cash credit of need of collateral security for sanction of loan under the C.G.T.S.M.E. scheme.

Accused no. 2 drew the entire amount and had the benefit thereof and did not make any payment towards instalment as per the terms and conditions of the agreement between their bank and Accused no. 2. As per terms and conditions she has to purchase land and new machinery to establish plant, but on their verification it is found that the funds are not utilised as per the

C.C. No. 4066 of 20135 of 1218.12.2024 sanctioned terms and conditions, he diverted loan amounts to other purpose.

The details of some of the irregular transaction of OCC A/C No. 6023142866 for ex: i.c. 1) On 28-03-12 Rs.39.95 lakhs transferred to a/c No.997909588 of M/s. Furniture World; 2) On 28-03-12 Rs.39.94 lakhs transferred to a/c

No.6008084173 of M/s. Sai Bharadwaza Traders; and MTL A/C No.

6024246999 i.e. 1) On 28- 03-12 Rs.25 lakhs transferred to OCC a/c No.

6023142866. Accused no. 3, who was sanctioned loan by not following the rules was dismissed from service in the month of September, 2012 and expired on 17-04-2013 due to ill-health. LW.2 is Sr. Manager (Vigilance),

Indian Bank: He stated that he along with Sri N.M. Monga, Chief

Manager/Vigilance Officer, visited Kukatpally Branch from 22-08-2012 to 25- 08- 2012 and again from 17-09-2012 to 24-09-2012 and verified the loan documents, visited the units and met the borrowers and submitted report vide report dt:25-09-2012. They have visited A1) M/s. Quality Furniture,

Proprietor Sri M. Seetha Ramaiah Sy. No.144, S-24 to S-26, Sowbagya

Nagar Colony, IDPL, Hyderabad. The unit was for manufacturing, trading and sale of furniture and furniture products. Sai Deepthi Enterprises and Quality

Furniture, the units were) or existing and it is told that lease deed has been finalised for starting both the units after finishing the interior and exteriors.

Two separate name boards were displayed in front of the building in the main road of IDPL Colony that the two show rooms will be opened shortly.

There were no show rooms and no stocks existing on the date of visit. They

C.C. No. 4066 of 20136 of 1218.12.2024 also found lot of irregularities in Pre-sanction appraisal, Documentation, disbursal and Post-sanction made by A3 i.e. as per KYC norms. While the was in progress, on credible information LW3 along with staff apprehended accused no. 2 and that on 15.07.2013 at about 1620 hours and brought to

P.S. KPHB at 1720 hours. On interrogation, accused no. 2 admitted his guilt of his crime.

4.On filing of the charge-sheet, the Court took cognizance of the offences under section 403, 406, 420 and 426 r/w 120(b) of the Indian

Penal Code, 1860.

5.On appearance of the accused, copies of case documents were furnished to him in compliance under section 207, Code of Criminal

Procedure, 1973 and he was examined under sec. 239, Code of Criminal

Procedure, read over and explained the charges framed against them for the offences under sections 406, 420 and 426 r/w 120(b) of the Indian Penal

Code, 1860 to which they have pleaded not guilty.

6.During the course of trial, the prosecution has gotten examined PW1 to

PW3 and got marked Exs. P1 to P10. However, in the course of further trial, only PW1 appeared for cross-examination, which was only conducted partly since further cross-examination was closed on 16.07.2019, due to the repeated failures of the Ld. Counsel for the defence to cross-examine PW1 further. Later, when PW2 and PW3 were sumonned for cross-examination, on the failure of the police to secure their presence for cross-examination,

C.C. No. 4066 of 20137 of 1218.12.2024 despite multiple opportunities, their evidence was eschewed from the evidence. Hence, on record, only the evidence of PW1 and the Ex. P1 to P7, which were marked through him remain. After the evidence of PW2 and PW3 were eschewed from the record, the matter was coming for examination of the accused under section 313 of the Code of Criminal Procedure, 1973, on 06.12.2019, since the accused was absent and the Ld. Counsel for defence had reported no instructions, non-bailable warrant was issued for his arrest and production. However, later the same was recalled and the accused was examined under section 313 of the Code of Criminal Procedure, 1973, for the incriminating material against him.

7.Heard both sides and perused the record. The following points arise for the determination of this Court:

(i)Whether the prosecution has been able to prove beyond reasonable doubt, the charge against the accused, under section 406 of the Indian Penal Code, 1860?

(ii)Whether the prosecution has been able to prove beyond reasonable doubt, the charge against the accused, under section 420 of the Indian Penal Code, 1860?

(iii)Whether the prosecution has been able to prove beyond reasonable doubt, the charge against the accused, under section 426 the Indian Penal Code, 1860?

(iv)To what result?

C.C. No. 4066 of 20138 of 1218.12.2024

Points (i), (ii) and (iii):

8.Since the evidence with regard to these points are inextricably and inseparably inter-linked, the it would be beneficial to deal with all these points together.

9.PW1, the de facto complainant, has deposed as follows: He worked as

Chief-Manager, Indian Bank from 2012 to 2015 and his predecessor, accused no. 3, who died before the charge-sheet was filed, sanctioned loans to Surendra Babu, Vijay Kumat and their group i.e. M/s. Quality Furniture, accused no. 1 firm represented by accused no. 2. He availed loan under business scheme to open furniture outlets. The accused availed term loan of ₹ 25 lakhs on 28.03.2012, vide accoiunt no. 6024246999 and cash credit limit of ₹ 70,000/- on 28.03.2012, vide account no. 6023142866. After availing the loan facility, the accused had not utilised the loan amount for the purpose for which it was taken and the accused diverted the loan amount for other purposes. The term loan amount was transferred to OCC account no. 6023142866, standing in the name of Quality Furniture. From the said account, the funds were diverted to various other accounts, for some other purpose, other than the purpose for which it was availed. Four months after availing the loan facility, the OCC and the term loan accounts became bad and the bank identified these accounts as fraud accounts and classified them as NPA. Subsequently the bank tried for recovery of the amounts from the accused but the bank could not succeed. In 2012 itself,

C.C. No. 4066 of 20139 of 1218.12.2024 the accused closed the business operation and left the place. The accused cheated the bank to a tune of ₹ 95 lakhs, excluding the interest amount.

Therefore, a complaint was filed by him, before the court, which was later referred to police, for investigation. Through him, Ex. P1, the complaint was marked. The copy of the sanction ticket, copy of the demand promissory note, the copy of term loan agreement, coy of loan application, copy of statement of account of accused no. 1 firm and the copy of the hypothecation agreements were marked as Exs. P2 to P7.

10.Before even going into cross-examination of PW1, it may be noted here itself that PW1 has stated that no amount could be recovered from the accused and also that the amounts were transferred and mis-utilised for other purposes. For this purpose, Ex. P6, the copy of the statement of account of accused no. 1 firm was marked, which indeed shows two transactions on 28.03.2012, one for ₹ 39,95,211 and the other for ₹ 39,94,572/-. However, there is no material to show as to for what purpose these transfers were made. This could have been produced if the investigating officer had followed up these transactions and seen as to to whom this transfer was made. Thus, at the first place itself, this case has a fundamental problem namely that the alleged diversion of funds for purposes other than the one for which the loan was taken, is not properly proven.

C.C. No. 4066 of 201310 of 1218.12.2024

11.In the cross-examination further, PW1 has admitted that immovable properties worth 15 to 16 crores of Sri A. Sagar, Sri M. Venkata Ramaiah,₹

Sri V. Surendra Babu and Sri K. Vijay Kumar were taken as security and that symbolic possession of the same was taken by the bank, under SARFAESI

Act. However, this fact was not deposed in the chief-examination. To remember, these are the persons who in collusion with accused no. 2 here are alleged by PW1, in his chief-examination, to have diverted all the amounts taken from the bank, as loan. Thus, the prosecution case is already in substantial doubt since the prosecution has failed as to what accounts the money was transferred. In addition to this, it is now clear that there were other properties which were put as collateral, immovable properties no less, from which to recover the dues.

12.It therefore appears to the court, that the prosecution has failed to establish its case against the accused, for the offences under sections 406, 420 and 426 of the Indian Penal Code, 1860. Hence, the points are answered against the prosecution and in favour of the accused.

Point (iii):

13.In the result, the accused is found not guilty for the charge

framed against him for the offence under section 406 of the Indian

Penal Code, 1860 and is therefore, acquitted under section 248(1) of

the Code of Criminal Procedure, 1973. Furthermore, the accused is

found not guilty for the charge framed against him for the offence

C.C. No. 4066 of 201311 of 1218.12.2024

under section 420 of the Indian Penal Code, 1860 and is therefore,

acquitted under section 248(1) of the Code of Criminal Procedure,

1973. Further, the accused is found not guilty for the charge framed

against him for the offence under section 426 r/w 120(b) of the

Indian Penal Code, 1860 and is therefore, acquitted under section

248(1) of the Code of Criminal Procedure, 1973. The sureties if any,

are discharged and personal bonds if any stand cancelled.

Typed to my dictation by stenographer, corrected and pronounced by me in open court on this the 18th day of December, 2024.

Sd/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT,

AT KUKATPALLY

APPENDIX OF EVIDENCE

Witnesses examined

For the Prosecution: For the Defense:

PW1:Sri K.V.S. Prakash Rao/Complainant NONE PW2:Smt Shiva Kumar/ Vigilance Officer PW3:Sri P. Rajesh/ I.O and filed charge sheet

Documents Marked

For the Prosecution: For the Defense:

Ex. P1:Complaint Ex. P2:Copy of sanction ticket dt. 24.03.2012 (2 pages) Ex. P3:Copyofdemand promissory note (2 pages),

C.C. No. 4066 of 201312 of 1218.12.2024

dt. 24.03.2012

Ex. P4:Copy of term loan agreement, dt. 16.03.2012 Ex. P5:Copy of loan application form executed by the-NIL- accused Ex. P6:Copy of statement of accountofQuality Furniture represented by the accused Ex. P7:Copy of agreement of hypotheticationof movables, dt. 16.03.2012 Ex. P8:Report Ex. P9:FIR ::Material objects marked for::

-Nil-

SD/-

XV ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,

MEDCHAL-MALKAJGIRI DISTRICT

AT KUKATPALLY