IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF DECEMBER, 2019 BEFORE THE HON' BLE MR.JUSTICE R.DEVDAS CRIMINAL APPEAL NO.524 OF 2016 BETWEEN SRI.K.M.IQBAL SAIT SON OF KHASIM SAIT, AGED ABOUT 73 YEARS, NO.374, 12TH CROSS, PILLANNA GARDEN, 3RD STAGE, A.C.POST, BANGALORE-45 PRESENT ADDRESS:
R/AT 403, 4TH FLOOR, SANIA ORCHID APARTMENTS, NO. 5, B.M. KRISHNAPPA LAYOUT, 2ND CROSS SHAMPURA, ARABIC COLLEGE POST, BANGALORE 560045 (BY SRI JANARDHANA G, ADVOCATE) AND 1 . M/S MEDISCOPE HOSPITAL PVT.LTD NO. 11, PILLANNA GARDEN, 3RD STAGE, BANGALORE 560045.
BY ITS MANAGING DIRECTOR, DR. MOHSIN PASHA, 2 . DR. MOHSIN PASHA SON OF LATE M. HAI MANAGING DIRECTOR OF M/S MEDISCOPE HOSPITAL PVT.LTD, NO. 11, PILLANNA GARDEN 3RD STAGE, BANGALORE 560045.
RESIDING AT :
J.P. APARTMENT NO. 405, NO. 7/2, HARRIS ROAD, ...APPELLANT BENSON TOWN, BANGALROE 560046 …RESPONDENTS (BY SRI A S KULKARNI, ADVOCATE FOR R1 & R2) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF THE CR.P.C PRAYING TO SET ASIDE THE JUDGMENT DATED 02.09.2014 PASSED BY THE XIV ACMM, BANGALORE IN C.C.NO.26207/2012 ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I. ACT.
THIS APPEAL COMING ON FOR HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT R.DEVDAS J., (ORAL):
This criminal appeal is filed under Section 378A of Cr.P.C. assailing the judgment dated 02.09.2014 in C.C.No.26207/2012, whereby the XIV Addl. CMM, Bengaluru acquitted the respondent/accused for the offence punishable under Section 138 of the Negotiable Instruments Act.
2. Sri Janardhana.G, learned counsel appearing for the appellant submits that the appellant/complainant and the 2nd respondent Dr.Mohsin Pasha, who is the Managing Director of the 1st respondent - Mediscope Hospital Pvt. Ltd., were known to each other. The complainant was earlier working in Amanath Co-operative Bank Ltd., while the respondent No.2 had transaction in the Bank and thus they were acquainted with each other. It is the case of the complainant that the respondent had sought for financial assistance from the complainant and the complainant had over a period of three years assisted the respondent/accused financially. To support the said contention, the complainant had placed before the Trial Court a Memorandum of Understanding which is marked as Ex.P7. It is stated in the Memorandum of Understanding dated 11.11.2011 that the complainant had in fact paid the respondent on various dates and the outstanding as on the date of the Memorandum of Understanding was a sum of Rs.34,50,000/- payable by the respondent/accused to the complainant. In that regard, it is stated in the Memorandum of Understanding that to clear a sum of Rs.24,50,000/- out of the amount due, two cheques bearing Nos.594541 & 594542 both dated 30.11.2011 each for a sum of Rs.12,25,000/- drawn on Amanath Co-operative Bank Ltd., Tannery Road branch, Bengaluru, were handed over to the complainant Sri K.M.Iqbal Sait and Smt. Zahira Iqbal, the wife of the complainant.
3. Learned counsel for the appellant submits that it is evident from the Memorandum of Understanding that on 11.11.2011 when the memorandum of Understanding was entered into between the parties, two cheques for Rs.12,25,000/- each, totally Rs.24,50,000/- was drawn by the respondent in favour of the appellant and is wife. It is also clear that another sum of Rs.10,00,000/- was remaining unpaid. It is submitted that the respondent, in this regard issued two more cheques, one for Rs.1,00,000/- and the other for Rs.4,00,000/-. A cheque bearing No.594050 dated 11.11.2011 for a sum of Rs.1,00,000/- drawn on Amanath Co-operative Bank Ltd., Tannery Road Branch, Bengaluru was also issued by the respondent to the appellant herein. When the said cheque was presented for encashment, same was returned with a bank endorsement “Insufficient Funds in the Account”. A legal notice dated 09.12.2011 was issued through RPAD and the same was served on the respondent/accused. It is stated that the respondent neither replied nor paid the cheque amount and therefore a private complaint under Section 200 of Cr.P.C. was instituted by the appellant.
4. Learned counsel submits that the appellant/complainant entered the witness box as PW1 and got marked 13 documents as Ex.P1 to P13. The learned counsel submits that the Memorandum of Understanding dated 11.11.2011 was got marked in the other private complaint i.e., in C.C.No.26749/2012 which was marked as Ex.P7. Learned counsel submits that the pass book and statement of accounts maintained by the appellant in his bank was also produced and marked as Ex.P7 to P10 and Ex.P12, to substantiate the contention of the appellant that he had sources to advance the money to the respondent. Moreover it is submitted that when once the Memorandum of Understanding was produced before the Court and it was admitted by the respondent that the Memorandum of Understanding was indeed entered into between the parties, the question of the financial capacity of the appellant/complainant could not have been raised either by the respondent/accused or doubted by the Trial Court.
5. Learned counsel while taking the Court through the impugned judgment would submit that inspite of the appellant producing all the required evidence and in the light of the fact that the respondent did not step into the witness box, so as to rebut the legal presumption available in favour of the complainant both under Section 118 and as well as Section 139 of the Negotiable Instruments Act, the Trial Court, strangely concludes that no sufficient material was placed by the complainant before the Court to prove the fact that he had the financial capacity to pay a sum of Rs.34,50,000/- to the respondent. The learned counsel hasten to add that the issue for consideration before the Trial Court was whether the respondent/accused had issued a cheque for a sum of Rs.1,00,000/-. Therefore, the trial court could not have firstly gone into the question as to whether the appellant had the capacity to pay a sum of Rs.34,50,000/- to the respondent/accused. Secondly, in the light of the admission of the respondent and there being no material to rebut the fact that the Memorandum of Understanding has been entered into between the parties; there being no denial of the signature of the respondent on the cheque; there being no denial that the cheque belonged to the respondent, therefore the legal presumption that was available to the complainant under Section 118 and 139 of the Negotiable Instruments Act was required to be given in favour of the complainant. On the other hand, the Trial Court erred in coming to a conclusion that it was for the complainant to prove by placing cogent evidence on record that he had the financial capacity to pay the respondent and unless and until such evidence was placed on record, the Court could not proceed to convict the respondent/accused.
6. The learned counsel submits that though the respondent/accused did not enter into the witness box, the Trial Court further erred in upholding the contention of the respondent/accused that the complainant had filed a false case by misusing the signed cheques and papers and as such accused is not liable to pay any amount to the complainant. The Trial Court further erred in coming to a conclusion that the complainant was not able to substantiate as to by what denomination the loan amount was paid to the respondent/accused. It is submitted that the Trial Court was carried away by the contention of the respondent/accused that the complainant admitted that he used to take cheques as security for the loan amount. Most importantly, it was submitted that the Trial Court noticed that in the Memorandum of Understanding dated 11.11.2011 there was mention of only two cheques for a sum of Rs.12,25,000/- each and there was no mention of the cheque in question and therefore even if it was to be admitted that the parties had entered into Memorandum of Understanding, the Memorandum of Understanding did not disclose the fact that a cheque bearing No.594050 for a sum of Rs.1,00,000/- was issued by the respondent to the complainant. Lastly, the learned counsel for the appellant submits that in a separate complaint which was later registered as C.C.No.26208/2011 and C.C.No.26205/2011 the respondent herein was convicted for the offences under Section 138 of the Negotiable Instruments Act and convicted and directed to pay compensation/fine of Rs.19,60,000/- in lieu of the cheque amount of Rs.12,25,000/- each.
The learned counsel has also furnished a copy of the judgment passed by the Additional Sessions Judge, FTC-III Mayohall, Bengaluru in Crl. A.No.25151/2014 and Crl. A.No.25150/2014, wherein the appeal preferred by the respondent was dismissed.
7. Heard the learned counsel for the appellant. Perused the appeal memorandum and lower court records.
8. On going through the impugned judgment, it is clear that the Trial Court was of the opinion that it is for the complainant to have placed all material on record to substantiate his contention that he had the financial capacity to pay the respondent/accused a sum of Rs.34,50,000/- and that the cheque in question was issued by the respondent to clear a part of the said loan. As rightly contended by the learned counsel for the appellant, the initial burden which lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt is the admitted cheque and what follows is the presumption that should have been drawn by the trial court in view of the statutory presumption created by Section 139 of the Negotiable Instruments Act. In this regard, it is noticeable that the Apex Court in the case of M/s. Shree Daneshwari Traders/vs./ Sanjay Jain and another reported in AIR 2019 SC 4003 has held that once the cheque is issued by the drawer, a presumption under Section 139 of the Negotiable Instruments Act in favour of the holder would be attracted. It is for the accused to adduce evidence of such facts and circumstance to rebut the presumption that such debt does not exist or that the cheques are not supported by consideration. Considering the scope of the presumption to be raised under Section 139 of the Act and the nature of evidence to be adduced by the accused to rebut the presumption, the Apex Court noticed another decision in the case of Kumar Exports /vs./ Sharma Carpets reported in (2009) 2 SCC 513, wherein the Hon’ble Supreme Court in paragraphs 14, 15 and 18 to 20 held as under:
“14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) “may presume” (rebuttable), (2) “shall presume” (rebuttable), and (3) “conclusive presumptions” (irrebuttable). The term “presumption” is used to designate an inference, affirmative or disaffirmative of the existence of a fact, conveniently called the “presumed fact” drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means “taking as true without examination or proof”.
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18. Applying the definition of the word “proved” in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
19. The use of the phrase “until the contrary is proved” in Section 118 of the Act and use of the words “unless the contrary is proved” in Section 139 of the Act read with definitions of “may presume” and “shall presume” as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.
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 nonexistence 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.”
(emphasis supplied) 9. In Shree Daneshwari Traders, the Apex Court noticed that by examining himself as PW-1, the complainant has discharged the initial burden cast upon him that the cheques were issued for the rice bags purchased on credit. It was held that with the examination of PW-1, the statutory presumption under Section 139 of the Act arises that the cheques were issued by the respondent-accused for the discharge of any debt or other liability in whole or in part. It was observed that the courts below disbelieved the evidence of the complainant that there are no averments in the complaint that the commodities were sold for cash and rice bags were sold on credit and the cheques were issued for the goods sold on credit. It was noticed that though the complaint contains no specific averments that the cheques were issued for the purchase made on credit, in his evidence, PW-1 clearly stated that the cheques were issued for the commodities purchased on credit. Therefore, it was held that the courts below erred in brushing aside the evidence of PW-1 on the ground that there were no averments in the complaint as to the purchases made by cash and purchase. It was also held that the courts below also erred in not raising the statutory presumption under Section 139 of the Act that the complainant received the cheques to discharge the debt or other liability in whole or in part.
10. In Uttam Ram /vs./ Devinder Singh Hudan reported in (2019) 10 SCC 287, the Apex Court has held that the Trial Court and the High Court proceeded as if, the appellant is to prove a debt before the civil court, wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. It was held that a dishonour of cheque carries a statutory presumption of consideration. The holder of cheque in due course is required to prove that the cheque was issued by the accused and that when the same was presented, it was not honoured. Since there is a statutory presumption of consideration, the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability.
11. In the light of the above, when this Court has gone through the impugned judgment it finds that the Trial Court, as observed by the Apex Court in the case of Uttam Ram has dealt with the matter as if the Court was dealing with a civil matter where the plaintiff was expected to prove his claim on the basis of the evidence to be laid in support of his claim for the recovery of the amount due. The Trial Court has failed to raise the statutory presumption provided to the complainant under Section 139 of the Negotiable Instruments Act. When the complainant has placed before the court the Memorandum of Understanding drawn between the parties wherein it has been admitted by the complainant that he had indeed received a sum of Rs.34,50,000/- from the complainant herein and it was also evidenced from the Memorandum of Understanding that two cheques were issued on 11.11.2011 to clear a portion of debt i.e., to the tune of Rs.24,50,000/-, it was also clear that another sum of Rs.10,00,000/- remained unpaid by the respondent/accused. Therefore, when it is the contention of the complainant that two more cheques were issued by the respondent/accused to clear the remaining part of the debt, one for Rs.1,00,000/- and another for a sum of Rs.4,00,000/-, then the Trial Court should have drawn the statutory presumption in favour of the complainant. On the other hand, the Trial Court has failed to draw the legal presumption and proceeded to hold that sufficient material was not placed by the complainant to prove his case.
12.For the reasons stated above, this Court is of the considered opinion that the appeal is required to be allowed and is accordingly allowed. The respondent/accused is hereby sentenced to pay a sum of Rs.1,05,000/- as fine. Out of which a sum of Rs.5,000/- shall be defrayed towards the expenses of the State. The rest of the fine amount shall be payable to the appellant/complainant. On failure of payment of fine amount, the respondent /accused shall undergo simple imprisonment for a period of six months.
Ordered accordingly.
Sd/- JUDGE KLY/