IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 14th DAY OF OCTOBER, 2019 BEFORE THE HON’BLE MR.JUSTICE B.A.PATIL CRIMINAL APPEAL No.255/2019 BETWEEN:
H.R.Susheela W/o late H.S.Somashekar Aged about 58 years Agriculturist, R/at Heggadahalli Village Kushalnagar Kodagu District-571 234.
(By Sri M.N.Nehru, Advocate) AND:
M.S.Katha Raj S/o late Shankara Chari Aged about 40 years Shree Kalikamba Rice Mill Kudige Village, R/o Kudige Village, Kushalnagar Hobli Kodagu District-571 234.
(By Sri G.B.Nandish Gowda, Advocate for Sri E.Gopalakrishna, Advocate) …Appellant …Respondent This Criminal Appeal is filed under Section 378(4) of Cr.P.C praying to set aside the judgment and order dated 12.12.2018 passed by the Civil Judge and JMFC, Kushalnagar in C.C.No.2303/2013 acquitting the respondent/accused for the offence punishable under Section 138 of Negotiable Instruments Act.
This Criminal Appeal coming on for dictating judgment, this day the Court delivered the following:-
JUDGMENT Though this case is posted for admission, with the consent of the learned counsel appearing for the parties, it is taken up for final disposal.
2. The present appeal has been preferred by the complainant-appellant being aggrieved by the judgment of acquittal passed by Civil Judge & JMFC, Kushalnagar, in C.C.No.2303/2013 dated 12.12.2018.
3. I have heard the learned counsel for the appellant- complainant and the respondent-accused.
4. The factual matrix of the case of the complainant before the Court below is that complainant and accused were acquainted with each other. Accused had approached the complainant for financial assistance of Rs.2,50,000/- and complainant advanced a sum of Rs.2,50,000/- to the accused. Accused after receipt of the loan amount had issued a cheque bearing No.000995 dated 20.02.2013 drawn on ICICI Bank Limited, Kushalnagar. When the said cheque was presented for encashment through the banker of the complainant, the same was returned on 7.5.2013 with a shara ‘funds insufficient’. Thereafter, within the stipulated time accused failed to make the payment under the cheque. The complainant got issued a legal notice on 23.5.2013 calling upon the accused to make payment of the cheque amount within 15 days. Accused neither given reply nor comply the demand made by the complainant and as such the complaint was filed.
5. The learned Magistrate after recording the sworn statement took the cognizance and secured the presence of the accused and a plea of the accused was recorded. Accused pleaded not guilty and he claims to be tried and as such complainant got examined herself as PW1 and got marked 16 documents. Thereafter, the statement of the accused was recorded under Section 313 of Cr.P.C. Accused examined himself as DW1 and got marked Ex.D1. After hearing the learned counsel appearing for the parties, the Court below came to the conclusion that the complainant is not having any capacity to make the payment and as such the complaint came to be dismissed. Challenging the same, complainant-appellant is before this Court.
6. The main grounds urged by the learned counsel for the complainant is that though there is ample material to show that the complainant has paid an amount of Rs.2,50,000/- and the accused has not given any reply to the notice and he has also led the evidence and substantiated the fact that all the ingredients have been proved by the complainant, without considering the said facts the trial Court has erroneously dismissed the complaint. It is his further contention that during the course of cross-examination of PW1 it has been suggested that Ex.P1-cheque has been taken as a security for the chit transaction and the same has been misused. That itself clearly goes to show that the said cheque bears the signature of the accused and it has been issued by the accused from his account. Then under such circumstances the Court below ought to have drawn presumption as contemplated under Section 139 of the Negotiable Instruments Act. It is further submitted that the respondent-accused though taken up the contention that the appellant-complainant is not having any financial capacity, the complainant has made out a case that she was vending the milk by rearing the cow and she used to get an amount of Rs.20,000/- per week and after incurring the expenditure she used to get an amount of Rs.5,76,000/- per annum. Without considering the said aspect, the Court below has wrongly acquitted the accused. It is his further contention that she has produced Ex.P7 to show that she used to give the milk to the Society and thereby she used to get the income, but the certificate issued by the Milk Co-operative Society has not been properly appreciated by the trial Court. It is his further submission that the fact that the complainant has got 16 cows has not been seriously disputed by the accused. Then under such circumstances, the Court below ought to have convicted the accused. On these grounds, he prayed to allow the appeal and to set aside the impugned order and convict the accused.
7. It is the submission of the learned counsel for the respondent that there was no legally recoverable debt or liability. In the absence of the said material, the trial Court has rightly come to a right conclusion and has dismissed the complaint. It is his further submission that the evidence of PW1 goes to show that she was doing the chit transaction and the said cheque Ex.P1 has been issued as a security and the complainant has also not produced any satisfactory evidence to show that she was having a financial capacity to pay Rs.2,50,000/-. He further submitted that the certificate Ex.P7 issued by Milk Society does not substantiate the fact that it is issued by it. During the said period creation of such certificate used to be in digital form and not by handwritten. He further submitted that the complainant has produced the records pertaining to the agricultural land, but the said lands does not stand in the name of the complainant. On the contrary, she has raised loan from two or more persons. It is his further submission that she has lent loan to two more persons and no documents have been produced to show the sources. It is his further submission that merely raising a presumption in favour of the holder of a cheque is not sufficient, but he must show the financial capacity to lend the loan. In the absence of such material, the Court below has rightly come to a right conclusion and has rightly dismissed the complaint.
8. It is his further contention that when once the rebuttal evidence has been brought on record and if it is not disproved, then under such circumstances the accused is liable to be convicted. It is his further submission that when the complainant has not proved the sources of income from which the alleged loan was made to the accused, presumption in favour of the holder of the cheque stood rebutted and the accused is entitled to be acquitted.
In order to substantiate the said contentions he relied upon the decision in the case of Krishna Janardhan Bhat Vs. Dattatraya G. Hegde reported in 2008 AIR SCW 738 and another decision in the case of John K.Abraham Vs. Simon C.Abraham and Another reported in (2014) 2 SCC 236, another decision in the case of Ramdas S/o Khelu Naik Vs. Krishnanand S/o Vishnu Naik, reported in (2014) 12 SCC 625, another decision in the case of K.Subramani Vs. K.Damodara Naidu, reported in (2015) 1 SCC 99 and the decision of Co-ordination Bench of this Court in the case of B.Indramma Vs. Sri.Eshwar reported in ILR 2009 KAR 2331. On these grounds he prayed that the appellant-complainant has not made out any ground so as to interfere with the judgment of the trial Court. The judgment of the trial Court deserves to be confirmed. On these grounds he prayed to dismiss the appeal.
9. I have carefully and cautiously gone through the submissions made by the learned counsel appearing for the parties and perused the records including the original records secured in this behalf. I have also given my thoughtful consideration to the decisions quoted by the learned counsel for the respondent-accused.
10. It is the specific case of the complainant that the complainant and the accused were acquainted with each other and accused had approached the complainant for hand loan of Rs.2,50,000/- and the same was given to the accused on 20.12.2012 and accused has issued a cheque bearing No.000995 dated 20.2.2013 and the same was presented through the banker, but it was returned on 7.5.2013 with a shara ‘funds insufficient’ and thereafter a legal notice was issued on 23.5.2013.
11. It is the contention of the learned counsel for the respondent that there is no valid service of notice and the document at Ex.P6 returned with an endorsement which indicates that the cover returned unclaimed. That itself goes to show that no valid notice has been served.
12. As could be seen from the records it is not in dispute that the respondent-accused is residing in the address mentioned on the cover and even the summons issued to the accused to the said address has also been served and he has appeared before the Court below.
13. In order to show that the legal notice as contemplated under Section 138 of the Negotiable Instruments Act has been posted to the accused, he has produced Exs.P4 and P5 and the cover Ex.P6 has been returned with endorsement intimation delivered on 28.5.2013 and thereafter the last endorsement has been made on 3.6.2013.
14. As per the Postal Act amended if the intimation has been delivered to the addressee and if the said cover has not been claimed within seven days after receipt of delivery of the intimation, then under such circumstances, it is as good as they refused to receive and the same can be held that the notice has been served. In the light of the discussion held by me above, I am of the considered opinion that the contention of the learned counsel for the respondent that no notice has been served as contemplated under Section 138 of the Negotiable Instruments Act is not sustainable in law.
15. It is the contention of the learned counsel for the respondent that there is no legally recoverable debt and the said cheque has been issued as a security for chit transaction. During the course of cross-examination of PW1 it has been suggested that he is running the chit transaction. The said suggestion has been denied. It is further suggested that Ex.P1 has been obtained from accused as a security. The said suggestion has also been denied. It is further suggested that Ex.P1 has been misused and a false case has been registered. The said suggestion has also been denied. DW1 the accused was also came to be examined and during the course of cross- examination it has been elicited that he has studied up to SSLC and he is doing the business since more than 10 years and one Bharathi has also filed the complaint of cheque bounce and he has taken the amount for Kalikamba Mill and the said complaint was compromised. He has further admitted that one Machaiah has also filed the cheque bounce case in Somwarpet and he do not know the amount of the said cheque and after paying Rs.80,000/- he has compromised the said case. He has further admitted that for the purpose of Kalikamba Mill he has obtained the said amount and except that no other cheques have been issued. The said suggestion has also been admitted and when the accused has admitted the fact that Ex.P1 is pertaining to him and Ex.P1(a) is his signature and there was no amount in the account and the said chque has been bounced. He has further admitted that three sons of the complainant are working in Military.
16. It is well proposed proposition of law that when once the accused admit the signature on the cheque, then under such circumstances, Section 139 of the Negotiable Instruments Act mandates that the said presumption has to be drawn not only with regard to issuance of a cheque, but there exists a legally enforceable debt or liability. Of- course the said presumption is in the nature of rebuttable presumption and it is open to the accused to raise a defence, wherein the existence of legally enforceable debt or liability can be contested, but it has to be contested and proved with legal evidence.
17. This proposition of law has been laid down by the Hon’ble Apex Court in the case of Rangappa Vs. Sri.Mohan reported in (2010) 11 SCC 441, wherein at paragraph 16 it has been observed as under:-
16. All of these circumstances led the High Court to conclude that the accused had not raised a probable defence to rebut the statutory presumption. It was held that:
“6. Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant. The presumption referred to in Section 139 of the N.I. Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption.
What is required to be established by the accused in order to rebut the presumption is different from each case under given circumstances. But the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the Court.
The defence raised by the accused was that a blank cheque was lost by him, which was made use of by the complainant. Unless this barrier is crossed by the accused, the other defence raised by him whether the cheque was issued towards the hand loan or towards the amount spent by the complainant need not be considered ”
Hence, the High Court concluded that the alleged discrepancies on part of the complainant which had been noted by the trial court were not material since the accused had failed to raise a probable defence to rebut the presumption placed on him by Section 139 of the Act. Accordingly, the High Court recorded a finding of conviction.
18. In one more decision of the Hon’ble Apex Court in the case of Bir Singh v. Mukesh Kumar reported in (2019) 4 SCC 197, it has been observed that Section 139 of the Negotiable Instruments Act mandates that unless the contrary is proved it is to be presumed that the holder of a cheque received the cheque of the nature referred to under Section 138 of the Negotiable Instruments Act for the discharge, in whole or in part, of any debt or other liability.
19. Section 139 of the Negotiable Instruments Act is introduced as exception to the General Rule as to the burden of proof and shifts the onus on the accused to prove by cogent evidence that there was no debt or liability. Mere denial or rebuttal by the accused was not enough but it has to be proved by cogent and acceptable evidence.
Paragraphs 18, 20 and 24 of the said judgment read as under:
18. In passing the impugned judgment and order dated 21-11-2017 [Mukesh Kumar v. Bir Singh, 2017 SCC OnLine P&H 5352] , the High Court misconstrued Section 139 of the Negotiable Instruments Act, which mandates that unless the contrary is proved, it is to be presumed that the holder of a cheque received the cheque of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability. Needless to mention that the presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque.
19. xxxxxxx 20. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution 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 and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-
existence of the presumed fact as held in Hiten P. Dalal [Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 : 2001 SCC (Cri) 960] .
21. xxxxxx xxxxxx xxxxxx 22. xxxxxx xxxxxx xxxxxx 23. xxxxxx xxxxxx xxxxxx 24. In K.N. Beena v. Muniyappan [K.N. Beena v. Muniyappan, (2001) 8 SCC 458 : 2002 SCC (Cri) 14] , this Court held that in view of the provisions of Section 139 of the Negotiable Instruments Act read with Section 118 thereof, the Court had to presume that the cheque had been issued for discharging a debt or liability. The said presumption was rebuttable and could be rebutted by the accused by proving the contrary. But mere denial or rebuttal by the accused was not enough. The accused had to prove by cogent evidence that there was no debt or liability. This Court clearly held that the High Court had erroneously set aside the conviction, by proceeding on the basis that denials/averments in the reply of the accused were sufficient to shift the burden of proof on the complainant to prove that the cheque had been issued for discharge of a debt or a liability. This was an entirely erroneous approach. The accused had to prove in the trial by leading cogent evidence that there was no debt or liability.
20. Keeping in view the said ratio if the earlier decisions which have been quoted by the learned counsel for the respondent are perused, I am not having any difference of opinion with regard to the ratio laid down in the said decisions. But the said law has been laid down with reference to the facts of the case exists in those cases. Subsequently in the recent decision has come up with the ratio that mere denial is not sufficient, but cogent and acceptable evidence has to be proved in this behalf. In the light of the said ratio if the evidence is perused, DW1 has clearly admitted the fact that he has borrowed some amount from one Bharathi and one Machaiah and the said cases have been compromised and subsequently he has also admitted the fact that he has also taken some amount for Kalikamba Mill and he has issued the cheque and he has also admitted the signature on Ex.P1. It has also been brought on record that the complainant’s sons are also working in the military. Apart from that, the complainant has also produced the document at Exs.P7 to shows that she was selling milk to Koodigekoppalu Milk Producing Society and the said document has not been seriously disputed during the course of cross-examination of PW1. If really the said cheque has been taken for the purpose of security for the chit transaction, then under such circumstances, definitely after coming to know of the filing of the complaint he could have given reply and he could have also filed the relevant documents. In the absence of such material the contention taken up by the respondent- accused that the said cheque was issued as a security for chit transaction does not stand to any reason.
21. Be that as it may. If really the said cheque has been issued for security for the chit transaction and if after chit transaction if the said cheque has been given and if it has not been returned, then under such circumstances he could have taken some steps to take it back. Not taking any such steps leads to drawing up of an adverse inference.
22. When the law mandates that, when once accused admits the signature and the issuance of the cheque, presumption has to be drawn that the said cheque has been issued in discharge of a debt or liability. Though it is contended during the course of argument that the complainant is not having any capacity to pay the amount the said contention is not acceptable in view of the above said discussion.
However, it is contended that the complainant has not having any capacity to pay the said amount. But as could be seen from the records the transactions and the evidence goes to show that she was having a capacity of paying the amount. Looking from any angle, I am of the considered opinion that the Court below without properly appreciating the entire material of the case and the proposition of law has come to a wrong conclusion and has observed that the complainant had no income and capacity to pay the amount of Rs.2,50,000/- to the accused.
When the said evidence of the accused is perused with reference to above said decisions, and mere denial is not sufficient. In the absence of cogent and acceptable evidence, the Court below ought to have accepted the case of the complainant and ought to have convicted the accused.
In the light of the observations held by me above, the appellant-complainant has made out a case to allow the appeal and to set aside the judgment of the trial Court.
In the light of the discussion held by me above, the appeal is allowed and the judgment of acquittal passed by Civil Judge and JMFC, Kushalnagar, in C.C.No.2303/2013 dated 12.12.2018 is set aside and the accused is convicted for the offence punishable under Section 138 of Negotiable Instruments Act and he has been sentenced to pay a fine of Rs.3,00,000/-. If he fails to pay the said amount within two months from today, then he has to undergo imprisonment for a period of two years.
Registry is directed to send back the lower Court records.
Sd/- JUDGE *AP/-