III AJMC COURT, CC.No.329/2021 ONGOLE 1 Dt.13-05-2026
APPR0A0002412019
IN THE COURT OF III ADDITIONAL JUDICIAL MAGISTRATE OF FIRST
CLASS :: ONGOLE.
Present: Smt. V. Navyashri, III-Additional Judicial Magistrate of First Class, Ongole.
Wednesday, this the 13th day of May, 2026
CALENDAR CASE NO . 329/2021
Between :
Mandava Ranga Rao, S/o Venkateswarlu, Aged 45 years, Hindu, Business,
R/o Ongole Town and Mandal....Complainant
- And -
Narne Venugopal Rao, S/o Panduranga Rao, Aged 56 years, Hindu, Business, R/o Indirani Estates,
4th floor, P2, 4th line Annavrapadu, Ongole...Accused
This case came before this court on 08-05-2026 for final hearing in the presence of Sri V.Ramamurthy, Advocate for the complainant and of Sri
K.Vasudeva Rao, Advocate for the accused, and upon perusing the material available on record and having stood over till this day for consideration, this court delivered the following :
J U D G M E N T
This private complaint is filed by the complainant against accused for the offence punishable under Section 138 read with Section 142 of Negotiable
Instruments Act, 1881 (for brevity ‘N.I. Act’).
III AJMC COURT, CC.No.329/2021 ONGOLE 2 Dt.13-05-2026
02. The averment of the complaint in brief are as follows:
i.Accused borrowed an amount of Rs.8,50,000/- from complainant on 25.03.2017 for his business purpose, agreeing to repay the same with interest at the rate of 36% per annum either to the complainant or his order on demand and executed a promissory note in favour of complainant with his own handwriting in the presence of attestors at Ongole. Accused promised to return the amount within 1 year but failed to repay the same. Complainant requested accused number of times to repay the promissory note amount with interest and accused postponed the same on some pretext or other. Then accused issued Cheque bearing number 000115 dated 12.03.2020 drawn on Bank of Baroda, Ongole, for Rs.9,00,000/- towards part payment of the promissory note debt. Complainant presented the cheque for collection in Andhra Pragathi Grameen Bank, Kurnool Road Banks,
Ongole on 13.03.2020, but the cheque was dishonored and returned with a memo
dated 17.03.2020 as “funds insufficient”. Then complainant informed accused about
dishonour of the cheque but accused did not give proper reply. Then complainant got issued statutory legal notice dated 19.03.2020 to accused demanding him to pay the promissory note debt with interest. Accused received the said notice but did not give any reply or pay the cheque amount. Accused issued cheque for discharge of legally enforceable debt under the promissory note dated 25.03.2017 without having sufficient funds in his account and wantonly cheated the complainant and the act of accused amounts to an offence punishable under Section 138 of NI Act.
Hence the complaint.
03.On consideration of sworn affidavit and other material on record, this Court took cognizance for the offence punishable under section 138 of N.I. Act against accused and registered the case as C.C.No.329/2021. On appearance of accused, this Court furnished copies of case documents to him under section 207
Cr.P.C.
III AJMC COURT, CC.No.329/2021 ONGOLE 3 Dt.13-05-2026
04.This Court examined the accused under section 251 Cr.P.C., for the offence under section 138 of Negotiable Instruments Act and explained the allegations leveled against him in the complaint, for which, he pleaded not guilty and claimed to be tried.
05.During the course of trial, the complainant got examined himself as PW.1 and got marked Ex.P1 to Ex.P6. He also got examined the attestor of Ex.P1 promissory note as PW.2. Accordingly, complainant side evidence is closed.
06. After closure of complainant side evidence, this Court examined accused under section 313 Cr.P.C., by explaining the incriminating material appearing against him in the evidence of complainant witnesses and he denied the same and reported defence evidence. The accused got examined himself as DW.1 and got examined one 3rd party as DW.2. No exhibits were marked on behalf of defence.
Accordingly, defence side evidence is closed.
07.Heard both sides arguments and perused the material on record.
08. Now the point for consideration is ;- “Whether the complainant has proved that the accused
issued Ex.P2 cheque towards part payment of legally enforceable
debt due under Ex.P1 promissory note without having sufficient
funds in his account and thereby committed offence U/sec. 138 of
N.I. Act?”
09. POINT:
i.While adducing arguments on behalf of the complainant, the learned counsel
for the complainant has submitted that accused borrowed an amount of
Rs.8,50,000/- from complainant/PW.1 and executed EX.P1 promissory note on 25- 03-2017 in the presence of PW.2. He further contended that after repeated
III AJMC COURT, CC.No.329/2021 ONGOLE 4 Dt.13-05-2026 demands, accused issued cheque under Ex.P2 for an amount of Rs.9,00,000/- on 12-03-2020 towards part satisfaction of the debt due under Ex.P1. He further contended that believing the words of accused, complainant deposited the cheque in his bank account and the same was returned with an endorsement “funds insufficient” under Ex.P4 and then complainant got issued Ex.P5 legal notice to accused and notice was received by the accused under Ex.P6 acknowledgment but he did not choose to repay the debt. He further contended that accused having knowledge of insufficient funds to honour the cheque, he issued Ex.P2 cheque and as such the acts of the accused attract the offence punishable under section 138 of
N.I.Act. The learned counsel for the complainant has further contended that the complainant got examined himself as PW.1 and got exhibited Ex.P1 to P6 and in support of his contentions, he also got examined the attestor of Ex.P1 as PW.2. He further contended that complainant complied the legal formalities under section 138 of NI act and filed this present complaint and that the presumption under section 139 of NI act is to be raised in favor of the complainant. He further contended that accused got examined himself as DW.1 and the evidence of DW.1 shows that the signature on Ex.P1 and P2 belongs to him. He further contended that this part of the evidence shows that accused issued Ex.P2 to PW.1 and the defence taken by the accused that Ex.P1 and P2 was issued as security purpose and he repaid the entire amount is not tenable in the absence of any proof of the same. He further contended that accused did not place any cogent evidence before this court to prove his contention and hence, accused could not rebut the statutory presumption raised in favour of the complainant under Section 139 N.I Act. Hence, he prayed the court to convict the accused for the offence under section 138 N.I. Act and that accused is liable to pay compensation to the complainant as per law.
ii. Per contra, learned counsel for the accused has contended that accused borrowed Rs.8,50,000/- from the complainant and issued Ex.P1 and P2 in favour of the complainant as security purpose. He further contended that he repaid the amount of Rs.9,00,000/- to PW.1 in the year 2019 in the presence of DW.2 and
III AJMC COURT, CC.No.329/2021 ONGOLE 5 Dt.13-05-2026 requested him to return the promissory note and cheque. But PW.1 did not return the promissory note and cheque and stated that they are in his locker and requested time. He further contended that he did not fill the contents of Ex.P2 and gave empty signed cheque to PW.1 and PW.1 misused the same and foisted false case against him. He further contended that only for wrongful gain PW.1 filed this false case against him though he repaid the entire amount to him. Hence, prayed the court to acquit the accused.
iii.Before adverting to the rival contentions, it is a well settled law that dishonor of cheque by itself is not a crime punishable under Section 138. To come within the purview of this section, certain requirements under section 138 of NI Act have to be fulfilled. Now it has to be seen whether the conditions stipulated under section 138
Negotiable Instruments Act are complied with as per the contents of the complaint or not. To avail any presumptions under N.I Act by the complainant, it is for the complainant to initially prove that he has complied all the legal requirements as enunciated U/sec.138 of NI Act. To prove the same, the complainant got examined himself as PW.1 and filed his affidavit in lieu of his examination-in-chief wherein he reiterated the complaint averments. The ocular evidence of PW.1 is well supported by exhibiting thedocumentary evidence under Ex.P1 to P6. On perusal of
Ex.P1/certified copy promissory note, it is said to be executed by the accused in favour of the complainant on 25-03-2017 by borrowing Rs.8,50,000/- in the presence of attestors of Ex.P1. In order to prove the same, PW.1 got examined the attestor of Ex.P1 as PW.2 and he filed his chief affidavit stating that he knew the transaction between PW.1 and accused and he acted as attestor of Ex.P1. As such, on perusal of evidence of PW.1 and PW.2 coupled with Ex.P1, it is crystal clear that the accused borrowed Rs.8,50,000/- from PW.1 and executed Ex.P1 promissory note in favor of the PW.1 on 25-03-2017.
iv.Further, it is the consistent evidence of PW.1 that on repeated demands, accused issued Ex.P2 / cheque bearing No.000115 dated 12-03-2020 for an
III AJMC COURT, CC.No.329/2021 ONGOLE 6 Dt.13-05-2026 amount of Rs.9,00,000/- drawn on Bank of Baroda, Ongole towards part payment of the debt due under Ex.P1/ promissory note and on presenting it, the said cheque was returned with a cheque return memo dt. 17-03-2020 under Ex.P4 as “funds insufficient”. So, PW.1 issued legal notice under Ex.P5 dated 119-03-2020 to accused demanding him for payment of cheque amount. This shows that the cheque was returned on 17-03-2020 and legal notice was issued by PW.1 on 19- 03-2020 which is well within one month from the date of dishonour of cheque. To show that legal notice was sent to the accused address, PW.1 filed Ex.P6 postal acknowledgment and the said legal notice was received by the accused under
Ex.P5. The present complaint was filed on 09-09-2020 which is beyond one month after expiry of 15 days from the date of service of legal-notice. In this regard, the complainant submitted that affidavit that the complainant was unable to file this complaint on or before 09.04.2020 in view of COVID-19 pandemic situation and the
Hon'ble Supreme Court of India in writ petition (civil) No. 3 of 2020 “The period of
limitation in all proceedings irrespective of limitation prescribed under the general law or special law shall stand extend with effect on 15.03.2020, till further orders to be passed by the Apex Court in the present proceedings” and hence he filed the complaint with delay. By considering the same, as the Hon’ble Supreme Court of
India in ‘In re: cognizance for extension of limitation’ has extended the time period for taking cognizance of offence during the Pandemic period, this Court has taken the complaint on file and numberes the same. This shows that PW.1 has complied all the legal requirements under sec.138 of N.I. Act.
v.In order to support the contentions of PW.1, he got examined the attestor of the promissory note by name P.Nagi Reddy as PW.2 and his evidence is to the effect that Accused borrowed Rs.8,50,000/- from complainant on 25.03.2017 and executed promissory note in favour of complainant, agreeing to repay the same with interest at the rate of 36% per annum either to the complainant or his order or demand, and accused borrowed the said promissory note amount for his business purpose. He further stated that he is the attestor of the promissory note dated
III AJMC COURT, CC.No.329/2021 ONGOLE 7 Dt.13-05-2026 25.03.2017 and at the time of execution of the promissory note himself, complainant and accused were present and accused scribed the promissory note with his own handwriting. He further stated that he signed as attestor on the advice of accused and the transaction took place before him. He further stated that he came to know that complainant filed the above case against accused and he is giving his evidence. The evidence of PW.1 and PW.2 is well corroborated.
vi.To put emphasis on the dishonor of cheque, the complainant / PW.1 has filed cheque return memo in Ex.P4. On perusal of Ex.P4, cheque return memo, it seems that the cheque in question was returned on the ground of “funds insufficient”. As per section 138 of NI act, where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence.
As per the said section, if a cheque is returned with an endorsement as “funds insufficient”, it amounts that such person committed the offence under section 138 of NI act.
vii.Now, it is the time to have a look at Sec.146 of the Negotiable Instruments
Act, which mandates as follows:- “Sec. 146 Bank's slip prima facie evidence of certain facts:- The court shall, in respect of every proceeding under this Chapter, on production of bank's slip or memo having thereon the official mark denoting the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved.” The above said Section would make it clear that the court shall presume the fact of dishonour on production of bank slips or memo having the official mark denoting the cheque has been dishonoured unless and until such fact
III AJMC COURT, CC.No.329/2021 ONGOLE 8 Dt.13-05-2026 is dis-proved. As per Ex.P3, the cheque in question was returned with an endorsement “funds insufficient” and there is the official mark on the said cheque return memo. Sec.146 of the Negotiable Instruments Act comes in aid to the complainant to avail the presumption that it shall be presumed the cheque in question was returned due to “funds insufficient” unless and until it is dis-proved. As the above said presumption stood in favour of the complainant, it is for the accused to rebut the said presumption.
viii.On perusal of the rival contentions of both the sides, the main contention of the learned counsel for the complainant is that accused did not adduce any probable evidence on his behalf. In cases under Sec.138 of NI Act, accused need not enter into the witness box and he can rebut the presumption by way of cross examination of the witnesses. In this present case, accused has examined himself as DW.1 and got examined DW.2. Hence, the cross examination of complainant side witnesses and evidence of DW.1 and DW.2 assumes more importance to accused to rebut the case of the complainant. The evidence of PW.1 to PW.2 and
DW.1 to DW.2 has to be looked into along with Exs.P1 to P6.
ix. In order to rebute the presumption raised in favor of the complainant, the evidence of DW.1 and DW.2 shall looked into along with the cross examination of
PW.1 and PW.2. Firstly, it is apt to discuss the evidence of DW.1 to appreciate the defence taken by the accused. DW.1 stated in his evidence that he borrowed amount of Rs.8,50,000/- from PW.1 in the year 2017 and executed promissory note in his favour. Later in the year 2019, he repaid the entire amount of Rs.9,00,000/- to
PW.1 as one time settlement and at that time he along with his friend by name
Pathakottu Venkateswara Reddy went to PW.1 and paid Rs.9,00,000/- to him. He further deposed that while executing promissory note in favour of PW.1, PW.1 obtained his empty signed cheque as security to the promissory note debt. After repaying the entire amount, he demanded PW.1 to return his promissory note and cheque but he postponed the same by stating that promissory note and cheque is
III AJMC COURT, CC.No.329/2021 ONGOLE 9 Dt.13-05-2026 in his locker. He further deposed that he demanded PW.1 several times to return his promissory note and cheque and he kept postponing it on one pretext or other.
He further deposed that without returning his promissory note and cheque PW.1 has foisted this false case against him. He further deposed that he has no legally enforceable debt with PW.1.
x.During the cross-examination of DW.1, it is elicited that when he repaid
Rs.9,00,000/- to PW.1 in the year 2019 he demanded him to return his promissory note and cheque but he stated that promissory note and cheque are in his locker. It is further elicited that Pathakottu Venkateswara Reddy is not a witness to the promissory note and he came along with him while repaying amount to PW.1. It is further elicited that he did not issue any legal notice to PW.1 to return his promissory note and cheque, so also he did not give any police report against PW.1 that he did not return his promissory note and cheque and misused the same. It is further elicited that he does not have any documentary proof to show that he repaid
Rs.9,00,000/- to PW.1. Witness volunteered that Pathakottu Venkateswara Reddy is a witness on his behalf. It is further elicited that he received legal notice sent by
PW.1 and he did not issue any reply notice for the same. It is further elicited that even after filing of this case he did not issue any written notice to PW.1 to return his promissory note and cheque. DW.1 admitted that a civil suit in OS No. 28 of 2021 regarding Ex.P1 is pending on the file of PJCJ, Court, Ongole. It is further elicited that he filed his written statement in the said OS and contented that he repaid the entire amount. It is further elicited that he did stone crushing business and presently he is not doing any work. It is further elicited that he filled the contents of Ex.P1 promissory note and witness volunteered that the contents of Ex.P2 cheque was written by PW.1 and he only signed on Ex.P2 and did not fill the contents of the same. It is further elicited that he received legal notice sent by PW.1 in OS No. 28 of 2019 and did not issue any reply notice for the same.
III AJMC COURT, CC.No.329/2021 ONGOLE 10 Dt.13-05-2026 xi.Now let us discuss the evidence of DW.2 and the evidence of DW.2 is to the effect that he knows the complainant and accused. He further stated that accused borrowed Rs.8,50,000/- from complainant and executed promissory note in his favour and accused repaid the entire amount of Rs.9,00,000/- towards final settlement of the promissory note with interest to the complainant in his presence.
He further stated that the transaction took place in his presence in the shop and accused asked the complainant to return the promissory note and cheque given towards security as he discharged the entire amount with interest. He further stated that the complainant informed that the promissory note and cheque were kept in the locker and he assured that he will return those documents in due course. Later he came to know that the complainant did not return the promissory note and cheque and got filed this case against the accused. During the cross examination of DW.2, it is elicited that he knows DW.1 and they are doing business together. It is further elicited that he was not present with DW.1 while he borrowed amount of
Rs.8,50,000/- from DW.1 and he was present with DW.1 while settlement talks were taking place between them. It is further elicited that he does not know why DW.1 borrowed Rs.8,50,000/- from PW.1. It is further elicited that DW.1 paid amount of
Rs.9,00,000/- at Gupta square, 60 feet road, Ongole. It is further elicited that DW.1 or he did not obtain any receipt for the payment made to PW.1. It is further elicited that DW.1 informed him that his cheque was returned and PW.1 sent legal notice to him and DW.1 did not give any reply notice to PW.1. It is further elicited that DW.1 did not give any complaint against PW.1 for misuse of cheque and promissory note.
xii.Now, it is apt to discuss the cross examinations of PW.1 and PW.2. During the cross-examination of PW.1, it is elicited that presently he is doing cultivation and maintaining cold storage facility along with other partners. It is further elicited that he has Ac.20 cents of dry land under his name. It is further elicited that he had filed 7 to 8 cases against several persons in different courts at Ongole and he had filed this present case against accused in his individual capacity. It is further elicited that he used to run Srinivasa Finance Company along with 10 partners but he does
III AJMC COURT, CC.No.329/2021 ONGOLE 11 Dt.13-05-2026 not know its registration number. It is further elicited that one Mandava Srinivasa
Rao, Manne Hanumantha Rao, Chunchu Seshaiah, Mandava Venkata Seshaiah,
Nuvvalla Raghavarao, Chunchu Anjaneyulu are the partners of Srinivasa Finance
Company along with him. PW.1 admitted that Chunchu Aruna, Mandava Venkat
Rao and Mandava Hari Babu acted as partners in Srinivasa Finance. PW.1 further admitted that he also used to run a finance company under the name Srinivasa
Auto Finance in the year 2015 and there were 6 partners in it namely Mandava
Rangarao, Mandava Maruthi Prasad, Marella Anjineya Prasad, Marella
Srimanarayana, Kalluri Sreenivasa Rao and Kalluri Subba Rao. It is further elicited that Srinivasa Finance Company was closed in the year 2014 and Srinivasa Auto
Finance Company is closed in the year 2022. It is further elicited that he has documentary proof to show that he closed Srinivasa Finance Company and
Srinivasa Auto Finance Company in their respective years. PW.1 denied the suggestion that he obtained empty signed promissory notes and cheques of accused at the time of finance business and thereafter he misused the same and foisted false case against the accused. PW.1 denied the suggestion that he misused the empty promissory notes and foisted five false suits in 1st AJCJ, Obgole against five different persons. PW.1 denied the suggestion that he obtained empty cheques from different persons in his finance business and filed 9 NI act cases against different persons on the file of 2nd AJCJ,Ongole. PW.1 denied the suggestion that he filed 11 cases against different persons on the file of this court by obtaining empty promissory notes and cheques from them. It is further elicited that he does not know whether he filed two cases on file of 2nd ADJ Court, Ongole, so also whether he filed one case against Vijay Kumar on the file of 3rd ADJ Court,
Ongole in the year 2018. Witness volunteered that he does not know about the stage of the above cases as they are old cases. PW.1 admitted that he filed two cases on the file of 2nd ADJ Court, Ongole and witness volunteered that the said two cases were already settled. PW.1 admitted that he filed one case against one
Hariban Exports Company under the name of Srinivasa Auto Finance Company on the file of 8th ADJ Court, Ongole. Witness volunteered that the suit is decreed in his
III AJMC COURT, CC.No.329/2021 ONGOLE 12 Dt.13-05-2026 favour. It is further elicited that he does not remember whether he had filed 47 cases in total in different courts at Ongole. It is further elicited that he does not know whether one Maruthi Prasad, who was his partner in his finance business had filed 24 cases at different courts in Ongole. It is further elicited that he used to run
Srinivasa Finance Company and Srinivasa Auto Finance Company based on their own investments. It is further elicited that he can file his IT returns to show that both finance companies were closed. It is further elicited that he did not show the cases filed in his individual capacity in his IT returns. It is further elicited that he did not show the amount of Rs.8,50,000/- given to accused in his IT returns. PW.1 denied the suggestion that accused never borrowed Rs.8,50,000 from him on 25.03.2017 and accused never issued Ex.P2 cheque to him as repayment of debt under Ex.P1.
PW.1 denied the suggestion that he obtained promissory note of accused from others and foisted this case against him.
xiii.During the cross-examination of PW.2, it is elicited that he is a resident of
Cheruvukompalem Village and he is doing cultivation and PW.1 is a native of
Basavanapalaem Village and resident of Ongole. It is further elicited that PW.1, one
Mandava Srinivasa Rao, Nuvala Raghava Rao, Kunduru Srinivasa Rao, Abburi
Seshagiri Rao run an auto finance business under the name Srinivasa Finance and he was working as a collection boy in that company. It is further elicited that the above said five members were partners in the said Srinivasa Finance. PW.2 admitted that along with above said 5 persons one Manne Hanumantha Rao,
Chunchu Seshaiah, Mandava Venkata Seshaiah, Chunchu Anjaneyulu, Mandava
Hari Babu, Muvvala Rangarao, Abburi Padmapriya, Chunchu Aruna are partners in
Srinivasa Finance. It is further elicited that he does not know the year in which
Srinivasa Finance was started and he does not know whether PW.1 also run
Srinivasa Auto Finance. PW.2 admitted that he is an employee in Srinivasa
Finance. PW.2 denied the suggestion that amount under Ex.P1 was given to accused under the name of finance company and not in his individual capacity.
Witness volunteered that amount was given by PW.1 in his individual capacity to
III AJMC COURT, CC.No.329/2021 ONGOLE 13 Dt.13-05-2026 accused. It is further elicited that he is not working in Srinivasa Finance since 2015.
It is further elicited that he signed as attestor to Ex.P1 at the request of accused. It is further elicited that he signed only on Ex.P1 as attestor and did not sign on any other promissory notes in his lifetime. PW.2 denied the suggestion that he signed on 45 promissory notes executed in favour of Mandava Rangarao / PW.1 and on 24 promissory notes executed in favour of Maruthi Prasada Rao in between 2015 to 2020. Witness volunteered that he only signed on Ex.P1 in the year 2017. PW.2 denied the suggestion that as he is working as a collection boy in the finance company of PW.1 and used to sign on empty promissory notes as attestor and fabricate the promissory notes. PW.2 further denied that Ex.P1 transaction did not take place in his presence and accused did not borrow any amount from PW.1 in his presence. PW.2 denied the suggestion that he nearly signed on 100 promissory notes under Srinivasa Finance Company.
xiv.On perusal of the cross examination of PW.1 and on perusal of the questions posed to the witness, accused has taken a defence that accused never borrowed any amount from PW.1 on 25.03.2017 and never issued Ex.P2 in his favour and that PW.1 obtained the promissory note and cheque of accused from others and foisted false case against him. Whereas during the chief examination of DW.1 he has taken defence that he borrowed amount from PW.1 in the year 2017 and later in the year 2019 he repaid the entire amount of Rs.9,00,000/- to him in the presence of DW.2 and PW1 did not return the promissory note and cheque obtained from him as security. This shows that DW.1 has accused has taken different pleas at different stages of the case and the said defence taken by him is not consistent.
xv.The main defence taken by accused is that he borrowed amount from PW.1 in the year 2017 and repaid the same in the year 2019 in the presence of DW.2 and to support the same he examined DW.2 on his behalf. On perusal of chief examination affidavit of DW.2, the date and time when accused borrowed amount
III AJMC COURT, CC.No.329/2021 ONGOLE 14 Dt.13-05-2026 from PW.1 in the year 2017 and the date and time when accused repaid amount of
Rs.9,00,000/- to PW.1 is not mentioned. Further, during the cross examination of
DW.1, he admitted that he does not have any documentary proof to show that he repaid Rs.9,00,000/- to PW.1 in the presence of DW.2. Further DW.2 also admitted in his evidence that neither himself nor DW.1 did not obtain receipt from PW.1 at the time of repaying the amount. Hence there is no evidence before the court to show that DW.1 repaid an amount of Rs.9,00,000/- to PW.1 as a discharge of the amount of Rs.8,50,000/- borrowed from him. Further, the evidence of DW.2 lacks specificities as to the date and time when DW.1 repaid the amount to PW.1. Though during the cross examination DW.2, he stated that accused repaid the amount in
Gupta square, the same is not mentioned in the chief affidavit of DW.2. When the said fact is already in the knowledge of DW.2 that DW.1 repaid the amount to PW.1 in Gupta Square, 60 feet road, Ongole then why he has failed to mention the same in his chief affidavit. Hence in view of the above discussions the evidence of DW.2 does not inspire confidence of the court to believe the version of DW.1.
xvi.Further there is no dispute with regard to service of legal notice on accused.
To show that legal notice was served on accused, PW1 has filed Ex.P6 postal acknowledgment and accused also did not deny the postal acknowledgment and service of legal notice on him. Moreover DW1 has admitted that he received the legal notice sent by PW1 in this case. Further DW2 has stated that DW1 informed him that the cheque was dishonored and PW1 has issued legal notice to him. So when DW1 has received the legal notice sent by PW1 about dishonour of the cheque and demanded him to repay the cheque amount, why he did not issue any reply notice to PW1 when he repaid the entire amount to him in the year 2019 itself.
xvii. Further during the evidence of DW.1, he admitted that the signature on
Ex.P1/promissory note and P2/cheque belongs to him, he further admitted that he scribe Ex.P1 in his own handwriting but stated that contents on Ex.P2 was not filed
III AJMC COURT, CC.No.329/2021 ONGOLE 15 Dt.13-05-2026 by him and the same was filled by PW.1. The specific defence of the accused is that the contents of Ex.P2 is not filled by him. In this regard, this court relies on the judgment of Hon’ble Supreme Court of India in the case of Bir Singh vs. Mukesh
Kumar (Criminal Appeal No. 230-231 of 2019). The Supreme Court has held as follows: "If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted." xviii. As DW.1 has admitted his signatures on Ex.P1 and P2 and the said
Ex.P2/Cheque was returned with an endorsement as "funds insufficient" and not as “drawers signature differs”. This shows that there is no dispute with regard to the correctness of the signature of accused on Ex.P1 and P2, hence it attracts the presumptions under section 118(a) and 139 of NI act in favor of the complainant.
Now it is apposite to extract the relevant provision of law for better determination of the point at hand and the relevant provision is Section 118(a) and Sec.139 of the NI
Act, which mandates as follows:
(i) sec.118 of the NI Act provides : "Presumptions as to negotiable instruments: Until the contrary is proved, the following presumptions shall be made:
(a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been
III AJMC COURT, CC.No.329/2021 ONGOLE 16 Dt.13-05-2026 accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
(ii) Sec.139 of the N.I Act further provides as follows: " Presumption in favour of holder it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Sec.138 for the discharge, in whole or in part, of any debt or other liability". Thus, the combined effect of Sec.118 (a) and Sec.139 of NI Act raises a presumption in favour of the holder of the cheque that he has received the same for discharge, in whole or in part of any debt or other liability.
xix.For appreciating such legal position, the law is well settled by virtue of the decision of Hon’ble Apex Court in between Krishna Janardhan Bhatt Vs.
Dattatreya G.Hegde, reported in AIR 2008 SC 1325 wherein, the Hon’ble court observed that “ once the accused has admitted his signature on the cheque, it is bounden duty of trial court to raise a presumption that the cheque involved in the case was issued towards discharge of any debt or other liability”. In their subsequent decision in betweenRangappa Vs. Sree Mohan reported in (2010) 11 SCC 441”Hon’ble court endorsed the same view and further observed that such presumption can be drawn to the extent that such debt or liability is legally enforceable one.
xx.For appreciating such legal position, reliance is placed on the Judgment of the Hon'ble Supreme Court in the case ofHiten P.Dalal Batrinandhanath
Banerjee (2001) 6 SCC 16 wherein it was held that: "Point No. 22. Because both
Sections 118 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras Vs. Vaidhyanath Iyer AIR 1958 SC 61, it is obligatory on the
Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the
III AJMC COURT, CC.No.329/2021 ONGOLE 17 Dt.13-05-2026 accused" (ibid). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non existence of the presumed fact." xxi.Further, recently the Hon'ble Supreme Court in the case titled asKalamani
Tex Anr V. P. Balasubramanian 2021 SCC Online SC 75 held that - “ Adverting to the case in hand, we find on a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Sec.118 and Section 139 of NIA. The Statute mandates that once the signature(s) of an accused on the cheque / negotiable instrument are established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him." xxii. From the ratio decidendi laid down in the aforesaid judgments, it is clear that for the offence under Sec.138 of the Act, the presumptions under Sec.118 (a) and
Sec.139 of NI Act have to be compulsory raised as soon as execution of cheque by accused is admitted or proved by the complainant and thereafter, burden is shifted upon the accused to prove otherwise. A presumption is not in itself evidence but only makes a prima facie case for a party for whose benefit it exists.Applying the above said Section to the case on hand, accused has admitted the signature on cheque Ex.P2 and contended that he issued empty signed promissory note and cheque to PW.1 as security when he borrowed Rs.8,50,000/- from him. In this regard, in view of above discussions and in the absence of any action taken by him against PW.1 for not returning his promissory note and cheque though he had discharge the entire due amount to PW.1, the defence taken by the accused does
III AJMC COURT, CC.No.329/2021 ONGOLE 18 Dt.13-05-2026 not hold good and not tenable. In the absence of dispute regarding the correctness of signature of accused and admission of signature of accused on Ex.P1 and P2, it shall be presumed that unless the contrary is proved, the complainant received
Ex.P2 / cheque from the accused for discharge of the debt due under Ex.P1 / promissory note. Hence, the presumptions under Sec.118 (a) and Sec.139 of
N.I.Act have to be compulsory raised in favor of the complainant. Presumptions under Sections 118 and 139 of NI Act are rebuttable in nature and it is for the accused to rebut the said presumption by placing probable evidence. If the accused succeeds in rebutting the presumption, the complainant is not further entitled to the presumption and it is for him to prove that Ex.P2 was issued by the accused to him for discharge of the amount due under Ex.P1 promissory note. The burden of the accused in rebutting the said presumption is not as high as that of the complainant and he need not rebut the presumption by proving beyond reasonable doubt and the burden of proof on the accused is upto preponderance of probabilities.
Therefore, in the absence of any dispute regarding correctness of drawer’s signature on the cheque, it is appropriate and necessary to draw a presumption as contemplated U/sec.139 of NI Act, that the cheque/Ex.P2 was issued towards payment of any debt or other liability.
xxiii. Moreover there is no dispute with regard to financial capacity of PW.1 to lend amount to accused as accused himself admitted that he borrowed amount of
Rs.8,50,000/- from PW.1 in the year 2017. The main contention of accused is that
PW.1 did not show Ex.P1 transaction in his IT returns and did not file the same
before the court. Further accused has contended that PW.1 is running Srinivasa
Finance and Srinivasa Auto Finance and PW.1 gave the amount to accused under
Srinivasa Finance Company but got executed Ex.P1 in his individual capacity. He further contended that accused is doing money lending business through his finance company and obtains empty promissory notes and cheques from the borrowers and though the borrowers repaid the entire amount, PW.1 used to foist false cases against accused and other borrowers. He further contended that it is
III AJMC COURT, CC.No.329/2021 ONGOLE 19 Dt.13-05-2026 admitted by PW.1 that there are several cases filed by him in different courts at
Ongole and his partners in the finance company also filed several cases against others in different courts at Ongole. Though he has contented that PW.1 gave amount to accused through finance company but got Ex.P1 in his favor in individual capacity. This shows that the documentary evidence available before the court only shows that accused executed Ex.P1 in favour of PW.1 in his individual capacity.
xxiv. With regard to the contention of accused regarding non filing of IT returns
before the court and not showing Ex.P1 transaction in his IT returns, this court
relied on the judgment of Hon’ble Calcutta High Court in Ashim Kumar Saha vs
Nepal Mahato and others 2006 (1) CHN 448 in para11 wherein the Hon’ble High
Court has held that “Production of papers of income tax is not a ground to disbelieve complainant's case and to throw his case out of the Court. It is the income tax
Authority who may take action against the complainant, if the complainant did not furnish returns properly before the income tax authorities showing correct income and expenditure. Merely for the failure to produce income tax papers by the complainant in the trial, the right of complainant to initiate a proceeding under section 138 of the N.I. Act for the dishonoured cheque cannot be curtailed.”.
xxv.Further this court relied on the judgment of Hon’ble Calcutta High Court in
Samarendra Nath Das vs Suprioyo Maitra 2006 (3) CHN 518 Para 9 the Hon’ble
High Court has held that “The Income-tax Act has no role to play at all in the present matter. It is a case under section 138 of the NI Act and this provision is based on a special statute being the NI Act which deals with negotiable instruments. It is true that according to the provisions of Income-tax Act transaction at a time exceeding Rs.
20,000/- has to be made through bank either by cheque or by draft but, that itself is not a ground to quash the complaint. If any one has violated provisions of Income-
III AJMC COURT, CC.No.329/2021 ONGOLE 20 Dt.13-05-2026 tax Act, the Income-tax authorities would take penal action against such person.
That a person has allegedly violated provisions of Income-tax Act is not a ground to curtail his right of taking the shelter of Court and law to enforce his remedy for violation of provisions of NI Act. At this stage, prima facie the complainant is the holder of cheque and the presumption under section 139 of the NI Act is in his favour. The cheque when presented by the complainant to bank was dishonoured and the cheque bears the signature of the accused/petitioner. The moment the cheque was dishonoured, it invited elements of offence under the NI Act and the offence under section 138 of the NI Act completed when after demand notice the petitioner did not make payment of the dishonoured cheque. If it was the intention of the legislature that different persons, companies, bankers, business concerns cannot issue cheque or cannot advance loan exceeding Rs. 20,000/- in a day, the legislature would not have introduced different provisions of NI Act. Alleged non- compliance of provisions of Income-tax Act relating to alleged transaction of payment of loan to petitioner is not at all a ground to quash the present criminal case.” On careful perusal of the above two citations of the Hon’ble High Court of
Calcutta, the contention with regard to non filing of income tax returns before this court is not a ground to disbelieve the version of PW.1 and hence the objection raised by the learned counsel for the accused cannot be considered on this aspect.
xxvi. As noted earlier, accused has admitted his signature on the cheque in issue and hence, in the present case, a presumption under Sec.139 NI Act has to be compulsorily raised in favour of the complainant. In view of the same, the burden of proof shifts upon the accused to rebut the presumption that such liability does not exist. The presumption raised under Sec.139 of NI Act is that of legally enforceable debt or liability and it is for the accused to raise a probable defence to rebut the said presumption. But accused has failed to raise probable defence and moreover, accused raised the defences discussed above. When the defence taken by accused is silent with regard to the action taken by him in the alleged misuse of promissory note and cheque, the said defence taken by accused also does not hold
III AJMC COURT, CC.No.329/2021 ONGOLE 21 Dt.13-05-2026 good and does not come in aid to him. Mere putting suggestions during the cross examination of PW.1 is not suffice to disbelieve the version of PW.1. Hence, the defence taken by accused is futile and the burden is on accused to prove his defence and when once accused has discharged his burden, the burden shifts to the complainant to prove his case. But, accused failed to discharge his burden.
xxvii. In view of the above discussions, this court is of considered opinion that the present complaint has disclosed the existence of a legally enforceable debt or liability vide the promissory note, cheque in issue, return memo and the legal notice brought on record i.e., Exs.P1 to P6. Moreover, the complainant has successfully proved all the necessary ingredients of Section 138 of NI Act. On the other hand, accused has failed to rebut the presumption in favour of complainant either on the basis of the material available on record or by adducing any cogent and reliable evidence, which were not at all substantiated by any reliable material on record.
xxviii. In view of the above discussion and considered opinion, this court has come to indomitable conclusion that Ex.P2/cheque was issued by accused in favour of the complainant for partial discharge of legally enforceable debt due under
Ex.P1/promissory note and the said cheque was dishonoured with an endorsement “funds insufficient” which act attracts the offence punishable under Section 138 of
N.I. Act and as such accused is liable to be convicted. Hence, this point is answered accordingly in favor of the complainant and against accused.
10 . In the result, accused is found guilty of the offence punishable under Section 138 and 142 of N.I. Act and thereby he is convicted under Section 255 (2) of Cr.P.C.
Typed, corrected and pronounced by me in the open court on this the 13 th day of May, 2026.
III-ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,
ONGOLE.
III AJMC COURT, CC.No.329/2021 ONGOLE 22 Dt.13-05-2026
QUANTUM OF SENTENCE:
Accused is heard on fixing of quantum of sentence for the offence punishable u/s.138 of NI Act, the accused is reported that he has family and young children, that he is a 63 years aged person suffering with heart ailments and he had
already undergone open heart surgery and pace maker is installed in him. He
further submitted that he has old aged mother of 86 years and he has to look
after her welfare and if he sent to jail, his family members would suffer and
pleaded to show mercy on him. The learned counsel for the accused requested the court to impose lesser amount of fine. Considering the plea of the accused, as the offence proved against the accused is economic offence, this court is not inclined to impose only fine in this case. However, considering the submissions made, this court is not inclined to impose maximum punishment prescribed for the offence u/s.138 of NI Act.
In the result, Accused is sentenced to under go simple imprisonment for a period of six months for the offence punishable u/sec.138 of NI Act, and the accused is also sentenced to pay a fine of Rs.9,00,000/- (Rupees Nine lakhs only) which is equal to the cheque amount, and the accused shall pay the fine amount within one month from the date of the Judgment, in default of payment of fine amount, the accused shall undergo simple imprisonment for a period of three months. The amount of Rs.9,00,000/- to be deposited by the accused shall be payable to the complainant as compensation as per Sec.357 of Cr.P.C.
Accused is questioned with regard to his right of appeal and his means to engage an advocate in the appellate court, Accused reported that he has knowledge about the same and he has means to engage an advocate before the appellate court.
Accused did not undergo any period of detention during trial, and as such
Sec.428 of Cr.P.C is not extended to the accused.
Free copy of Judgment was served to the accused.
III AJMC COURT, CC.No.329/2021 ONGOLE 23 Dt.13-05-2026
Typed, corrected and pronounced by me in the open court on this the 13 th day of May, 2026.
III-ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,
ONGOLE.
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For Complainant :-
PW.1 – M.Ranga Rao
PW.2 – P.Nagi Reddy
For Accused:-
DW.1- N.Venu Gopala Rao
DW.2 - P.Venkateswara Reddy
DOCUMENTS MARKED:
For Complainant :-
Ex.P1 :- Certified copy of promissory note executed by accused in favour of PW1 for Rs.8,50,000/- dated 25.03.2017.
Ex.P2 :- Cheque bearing number 000115 issued by accused in favour of complainant drawn on Bank of Baroda, Ongole for Rs.9,00,000/- dated 12.03.2020.
Ex.P3 :- Pay slip of APGB, Ongole dated 13.03.2020.
Ex.P4 :- Cheque return memo of “funds not sufficient” of Andhra Pragathi
Grameena Bank, Ongole dated 17.03.2020.
Ex.P5 :- Office copy of statutory legal notice issued to accused dated 19.03.2020.
Ex.P6 :- Postal acknowledgment of accused dated 23.02.2020.
For Accused:-
- NIL -
III-ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,
ONGOLE.
III AJMC COURT, CC.No.329/2021 ONGOLE 24 Dt.13-05-2026
IN THE COURT OF III-ADDITIONAL JUDICIAL MAGISTRATE OF FIRST
CLASS :: ONGOLE.
CALENDER AND JUDGMENT
C.C.329/2021
Date of dishonour of cheque : 17-03-2020
Date of receipt of legal notice : 20-03-2020
Date of complaint : 09-09-2020
Date of arrest of Accused : --
Date of Release of accused on bail : --
Date of commencement of Trial : 17-02-2023
Date of close of Trial : 06-05-2026
Date of sentence or order : 13-05-2026 ------------------------------------------------------------------------------------------------------------
Between :
Mandava Ranga Rao, S/o Venkateswarlu, Aged 45 years, Hindu, Business,
R/o Ongole Town and Mandal....Complainant
- And -
Narne Venugopal Rao, S/o Panduranga Rao, Aged 56 years, Hindu, Business, R/o Indirani Estates,
4th floor, P2, 4th line Annavrapadu, Ongole...Accused
----------------------------------------------------------------------------------------------------------
Section of Law : U/sec. 138 of negotiable Instruments Act Plea of Accused : Pleaded not guilty Finding of Court: Found guilty __________________________________________________________________
Explanation for delay : This case was taken on file by this court against the accused on 01-03-2021 and numbered as CC.329/2021. On 15-12-2021, accused called present, and copies furnished to him, and on 22-12-2022, accused was examined under Section 251 of Cr.P.C. Delay is caused due to Covid-19 pandemic.
During the course of trial PW.1 and PW.2 were examined and Ex.P1 to P6 are marked. On 12-02-2026 accused was examined under Section 313 Cr.P.C, and he was reported defence evidence. During the course of trial, accused was examined as
III AJMC COURT, CC.No.329/2021 ONGOLE 25 Dt.13-05-2026
DW.1 and DW.2 was examined on his behalf. Accordingly defence side evidence is closed. Heard complainant side arguments on 07-05-2026 and heard defence side arguments on 08-05-2026 and posted for judgment. On 13-05-2026, judgment is
pronounced. Hence, the delay.
____________________________________________________________________
SENTENCE OR ORDER :
In the result, the accused is found guilty of the offence punishable under
Section 138 and 142 of N.I. Act and thereby he is convicted under Section 255 (2) of Cr.P.C.
Accused is heard on fixing of quantum of sentence for the offence punishable under section 138 of NI Act, accused is reported that he is a 63 years aged
person suffering with heart ailments and he had already undergone open
heart surgery and pace maker is installed in him. He further submitted that he
has old aged mother of 86 years and he has to look after her welfare and if he
sent to jail, his family members would suffer and pleaded to show mercy on
him. The learned counsel for the accused requested the court to impose lesser amount of fine. Considering the plea of the accused, as the offence proved against the accused is economic offence, this court is not inclined to impose only fine in this case. However, considering the submissions made, this court is not inclined to impose maximum punishment prescribed for the offence u/s.138 of NI Act.
In the result, Accused is sentenced to under go simple imprisonment for a period of six months for the offence punishable u/sec.138 of NI Act, and the accused is also sentenced to pay a fine of Rs.9,00,000/- (Rupees Nine lakhs only) which is equal to the cheque amount, and accused shall pay the fine amount within one month from the date of the Judgment, in default of payment of fine amount, the accused shall undergo simple imprisonment for a period of three months. The amount of Rs.9,00,000/- to be deposited by accused shall be payable to the complainant as compensation as per Sec.357 of Cr.P.C.
III AJMC COURT, CC.No.329/2021 ONGOLE 26 Dt.13-05-2026
Accused is questioned with regard to his right of appeal and his means to engage an advocate in the appellate court, Accused reported that he has knowledge about the same and he has means to engage an advocate before the appellate court.
Accused did not undergo any period of detention during trial, and as such
Sec.428 of Cr.P.C is not extended to the accused.
Free copy of Judgment was served to the accused.
III-ADDL. JUDICIAL MAGISTRATE OF FIRST CLASS,
ONGOLE. Copy submitted to :
The Hon’ble I-Addl. District and Sessions Judge, Ongole.
NB:
As per orders in Crl.M.P.No. 2981/2026, 13-05-2026, suspended the
sentence imposed against the accused till 12-06-2026.