Bangalore District Court
Bharath Credit Co-Operative Society … vs Yeshwanth. A on 3 March, 2025
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CC No.12297/2022
KABC030321502022
IN THE COURT OF THE XXVI ADDL. CHIEF JUDICIAL
MAGISTRATE, AT: BENGALURU
Present : Smt. NIRMALA .S.,
B.A.L., LL.M.,
XXVI Addl., Chief Judicial
Magistrate, Bengaluru.
DATED THIS THE 3rd DAY OF MARCH 2025
JUDGMENT U/S 355 OF Cr.P.C.1973
1. Serial number : C.C. No.12297/2022
2. Name of the : Bharath Credit Co-
complainant Operative Society Limited,
having its office at
No.748/18, 8th Main Road,
Near Panchamuki Ganesha
Temple, Mahalakshmi
Layout, Bengaluru-560 086.
Rep. by its
Authorised Secretary
(By Sri B.S.J. Advocates)
3. Name of the accused : Yeshwanth A.
S/o amarnath R.
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Aged about 32 years
R/at No.34, 5th Cross Road,
6th Block, Rajajinagar,
Bengaluru-560 010.
(By Sri.N.R.Adv.)
4. The offence : Section 138 of the N.I. Act
complained of or
proved
5. Plea of the accused : Pleaded not guilty
6. Final order : Accused is convicted
7. Date of order : 03-03-2025
******
JUDGMENT
This complaint is filed by the complainant i.e.,
Bharath Credit Co-Operative Society Limited against the
accused for the offence punishable U/s.138 of Negotiable
Instruments Act.
2. The brief facts of complainant case is that, the
accused and his wife Smt. Neha approached the
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complainant on 22-07-2017 for a Mortgage Loan of
Rs.35,00,000/-. The said loan was sanctioned on 08-10-2017
with a condition that the accused shall pay the monthly
installment regularly. As a security to the loan borrowed
the accused mortgaged the property bearing New
Municipal No.10/1, property No.7/31/10/1, 5th Cross,
K.B.Temple Street, Rajajinagar 6th Block, Old PID No.22-
43-10/1, New PID No.108-W0193-37, BBMP Ward No.22,
presently within the limits of BBMP Ward No.108,
Bangalore . Subsequent to obtaining loan the accused has
not paid regular installment and defaulted in paying the
monthly installments. Upon numerous requests the
accused issued a cheque bearing No.832125 dated
25-10-2019 for a sum of Rs.14,50,000/- drawn on Canara
Bank, Magadi Road Branch, Bengaluru, towards part
payment of the loan amount. Further it is stated that
when the complainant has presented the aforesaid cheque
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for encashment through its banker, it was dishonoured as
‘Funds Insufficient’ on 28-10-2019. Further even though
the complainant brought the same fact to the knowledge of
the accused through the legal notice dated 07-11-2019 by
RPAD and it was returned unserved. Therefore the
complainant aggrieved by the acts of the accused filed this
complaint for dishonour of the cheque issued by the accused
towards the discharge of legally recoverable debt. As such
is the case failure on the part of the accused to repay the
cheque amount the complainant has approached the court
for the reliefs claimed in the complaint.
3. After filing this complaint, this court took cognizance
of the offence and registered the criminal case against the
accused and summons was issued to him. In response to
summons, he appeared before the court through his counsel
and he was enlarged on bail. Thereafter plea was recorded
and accused pleaded not guilty.
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4. The complainant has represented by its0 Secretary,
the complainant by name K.N. Puttaswamy and he has
been examined as PW1 and he has produced 20 documents
as per Ex-P1 to 20.
5. On perusal of entire case file and evidence available
on record the following points would arise for my
consideration are:
1) Whether the complainant proves
that, the accused to due discharge of
legally recoverable debt or other liability
had issued the alleged cheque bearing
No.8321125 dated 25-10-2019 for
Rs.14,50,000/- drawn on Canara Bank,
Magadi Road Branch, Bengaluru?
2) Whether the complainant proves that,
on presentation of said cheque, same
was returned unpaid as “Funds
Insufficient” and despite of giving legal
notice, he failed to pay the cheque
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amount, thereby he committed an
offence punishable under section 138 of
NI Act ?
3) What order?
6. Heard on both sides and I have also perused the
entire materials available on record.
7. My findings on the above points are as under:
Point No.1 : In the Affirmative,
Point No.2 : In the Affirmative,
Point No.3 : As per the final order for the
following:-
REASONS
POINTS NO.1 and 2 :
Both points 1 and 2 are taken up together for common
discussion to avoid repetition of facts.
8. It is the case of the complainant that, the accused
and his wife Smt. Neha approached the complainant on
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22-07-2017 for a Mortgage Loan of Rs.35,00,000/-. The said
loan was sanctioned on 08-10-2017 with a condition that
the accused shall pay the monthly installment regularly.
As a security to the loan borrowed the accused mortgaged
the property bearing New Municipal No.10/1, property
No.7/31/10/1, 5th Cross, K.B.Temple Street, Rajajinagar 6th
Block, Old PID No.22-43-10/1, New PID No.108-W0193-37,
BBMP Ward No.22, presently within the limits of BBMP
Ward No.108, Bangalore . Subsequent to obtaining loan the
accused has not paid regular installment and defaulted in
paying the monthly installments. Upon numerous requests
the accused issued a cheque bearing No.832125 dated
25-10-2019 for a sum of Rs.14,50,000/- drawn on Canara
Bank, Magadi Road Branch, Bengaluru, towards part
payment. Further it is stated that when the complainant
has presented the aforesaid cheque for encashment through
its banker, it was dishonoured as ‘Funds Insufficient’ on
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28-10-2019. Further even though the complainant issued
the legal notice on 07-11-2019 by intimating the dishonour
of the cheque to the accused, the same was returned
unserved.. Therefore, the accused having committed the
offence punishable U/s.138 of N.I. Act. Hence, the
complainant has come before the court with this complaint.
9. To prove the contentions of the complainant the
Secretary of the complainant by name K.N. Puttaswamy
has been examined as PW1. PW-1 has filed his
examination-in-chief by way of affidavit which is replica of
complaint averments. Further PW-1 has produced alleged
Ex-P2 cheque which was issued by the accused towards
part payment of Rs.14,50,000/-. On presentation of the said
cheque same has been returned as per the Ex.P-3 return
memo as “Funds Insufficient”. Further as per Ex-P4 the
complainant issued legal notice on 07-11-2019 through
RPAD to the accused, the same was returned unserved, it
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can be seen from Ex-P5 and Ex.P-6. The complainant has
also produced other document such as authorisation letter
which is got marked as Ex.P-1.
10. Before going to the merits of this case first of all
I would like to glance over the law pertaining to the instant
case. Admittedly the present case filed under section 138 of
Negotiable Instruments Act to bring home guilt against the
accused, the complainant must prove the following
ingredients of Section 138 of Negotiable Instruments Act.
i) That, there is a legally enforceable debt.
ii) That the cheque was drawn from
account of bank for discharge in
whole or in part of any debt or other
liability which presuppose a legally
enforceable debt;
iii) Cheque so issued had been
returned due to insufficiency of
funds.
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11. In a proceeding under section 138 of NI Act, the first
and foremost ingredient is that, the alleged cheque must be
drawn on account maintained by the accused and signature
on alleged cheque belongs to him. Admittedly the alleged
cheque belongs to the accused but the accused denies the
signature in the cheque.
12. On perusal of Ex-P2 cheque and bankers memo Ex-P3
it is clear that, on presentation of said cheque it was
returned as “Drawer’s signature differs”. The complainant
has issued legal notice through RPAD as required under
section 138 (b) & (c) of NI Act to the address of the
accused, but the said notice returned unserved, it is very
clearly appears on perusal of the Ex.P-5 and 6 postal
receipt and postal cover. Here one point has to be observed
that with regard to the service of the notice to the accused
is concerned on perusal of the legal notice Ex.P6 the
address mentioned is Sri. Yeshwanth R/at No.34, 5 th Cross
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Road, 6th Block, Rajajinagar, Bengaluru 560010. Further, I
have perused the complaint in the cause title the address of
the accused is as same as mentioned in legal notice.
Further I have perused the Ex.P10 i.e., the Bharavase
Pathra in which the address of the accused is same that of
stated in the legal notice and also the cause title of the
complaint. Therefore, it can be said that the notice
contemplated U/s.138B of N.I. Act is issued to the accused
to the correct address last known by the complainant as per
sec.27 of the General clauses. Hence, it is said that the
complainant has complied the provision U/s 138b of N.I.
Act.
13. Further, with regard to the cheque, accused in his
cross-examination he very clearly admits the cheque
belongs to his account but he denies the signature in the
cheque.
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14. Here at this point it has to be considered that it is the
defence of the accused that accused has no right to execute
any mortgage deed and accused denied the cheque and also
denied the signature in the cheque. Further, accused denies
execution of any document by him to the complainant.
Further accused takes the defence that accused is not liable
but the wife of the accused is liable.
15. With this regard firstly we have to consider that
whether there is a legally enforceable debt and that the
cheque was drawn from the account of accused for
discharge in whole or in part of any debt or other liability
which presuppose a legally enforceable debt. With this
regard it is very pertinent to state about the content of the
complaint that the accused and his wife Smt. Neha
approached the bank for mortgage loan of Rs.35,00,000/-
and same was sanctioned on 08-09-2017 and the accused
has mortgaged the property as per the Mortgage Deed and
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CC No.12297/2022
also he has executed the on demand promissory note along
with other documents. But, later on the accused has not
repaid the loan amount but when the complainant bank
have demanded for the repayment for that the accused has
issued cheque bearing No.832125 dt:25-10-2019 for the
amount of Rs.14,50,000/- but on presentation of the same
before the bank the same was returned as “Drawer’s
signature differs”. Even though notice has been issued to
the accused but accused has not repaid the loan amount.
Hence the complainant has come up with this case.
16. Here in support of the contentions of the complainant
K.N. Puttaswamy has been examined as PW.1 and marked
Ex.P1 to Ex.P20. Ex.P1 is the Board Resolution, Ex.P2 is
the cheque bearing No.832125 dt:25-10-2019 Ex.P3 is the
Endorsement dt:28-10-2019, Ex.P4 is the Legal Notice
dt:07-11-2019, Ex.P5 is the Postal Receipt, Ex.P6 is the
Returned RPAD Cover, Ex.P7 is the Ledger Extract, Ex.P8
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is the Loan application, Ex.P9 is the On demand
promissory note, Ex.P10 is the Undertaking letter, Ex.P11
is the Mortgage Deed, Ex.P12 is the Notice, Ex.P13 is the
Bank Proceedings and Ex.P14 is the Bylaw of the
complainant, Ex.P15 is the Register certificate of the
complainant, Ex.P16 is the Resolution of the complainant,
Ex.P17 is the Undertaking Letter, Ex.P18 is the
Genealogical tree, Ex.P19 is the accused income statement,
Ex.P20 is the Khatha Certificate. On perusal of the these
documents i.e the Board Resolution and Authorisation
letter it is very clear that the complainant has got the
authority to represent the complainant and prosecute this
case. Here with regard to the legally recoverable debt is
concerned accused admits the existence of loan availed by
his wife. Further the complainant has also on producing
the documents such as Ex.P8 the loan application, Ex.P9
on demand promissory note and also Ex.P11 mortgage deed
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established that on presentation of the application for
sanction of loan complainant bank has sanctioned the loan
in the name of wife of the accused and has got executed
bond and promissory note. And also executed the Ex.P11
i.e., the mortgage deed. By this it is very clear that loan has
been sanctioned in the name of wife of accused. Further the
accused has also admitted in the cross-examination that
the accused’s wife Smt. Neha has applied for the loan in the
complainant bank. Further it has to be seen on perusal of
the Ex.P11 it can be seen that it is a mortgage deed
executed by the Neha in favour of the complainant. For that
the accused is the witness. Further on perusal of the
Ex.P10 i.e., the undertaking letter dt:06-09-2017 it is very
clear that the accused has given an undertaking that he
will be the surety for the loan of his wife Smt. Neha.
Further accused has issued the Income details to the
complainant bank. Further, in the cross-examination of
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DW1 he also admits that given the genealogical tree copy to
the complainant. Further he also admits that the Khata of
the mortgaged property is of 13-03-2017. By this it is very
clear that the accused know about the existence of the loan
in the name of his wife Neha and he also know about the
execution of the mortgage deed and he also given an
undertaking that he will stand as surety for the loan taken
by his wife and also provided the income details. On the
other hand in the evidence of DW1 he has deposed that he
has not taken any loan from the complainant he don’t have
any right to mortgage the property and he has not signed
any promissory note but in the cross-examination DW1
very clearly admits that in the Ex.P11 the photo and the
signature is of the accused and further he admits the photo
but he denies the signature but he deposed that he do not
remember that in the Sub Register Office, the Ex.P11 has
been executed by himself and his wife. Further he admits
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that in the Ex.P11 the photo of his wife and he do not
remember the signature of his wife. Further submits that
in the Khata certificate dated 13-03-2017 i.e., he
mortgaged property stands in the name of this accused.
Here the accused even though denies his signature in the
Ex.P3, 10 and 11. But on perusal of the Ex.P-11 it is the
registered document registered before the Sub Registrar
and the accused admitting the photo but denies the
signature in Ex.P11 i.e. Ex.P11(a) can not be accepted
because in the column of this photo his signature exists.
17. Further here one point has to be observed that in the
cross-examination of the PW1 he deposed that accused’s
wife is an house wife and she is not working but she has
obtained the loan from the complainant for the amount of
Rs.35,00,000/-. And she has mortgaged the property. Here
one point has to be observed that the mortgaged property
was in the name of the accused for which it has been
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derived to the accused through the will deed executed by
his grand mother and in view of the same, as per Ex.P20
the property has been transferred in the name of his wife
as per admission of the accused in the as per the
depositions of the PW1 that the accused has executed the
gift deed in favour of the wife of the accused as such the
property has been transferred in the name of Smt. Neha.
Further at the time of applying for the loan both accused
and his wife have approached the bank and also the
accused has given an undertaking for repayment of the
loan. As such is the case on the basis of undertaking given
by the accused as per Ex.P10, even though the accused’s
wife Smt. Neha is a housewife who has not got her own
earning and has no capacity to repay the loan amount the
complainant has sanctioned the loan. Further it has to be
seen that if the accused has no any interest and is not
connected with the loan amount why the accused has given
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his property details, genealogical tree and also the
undertaking letter to the complainant society.
18. Further it has to be seen that accused contends that,
the wife of the accused has obtained the loan but he is
nowhere related for that. With this regard I perused the
cross-examination of DW-1 in that he deposed that the wife
of the accused is a housewife and with some reasons they
are living separately and he has not produced any
documents to show that they are living separately and also
deposed that there is no any legal proceedings between
them. Further it is also deposed by the accused that the
complainant has misused the cheque and filed this false
complaint but the accused also deposed that he has not
filed any complaint before any police station or the court.
19. On perusal of this evidence adduced by the DW.1 it
appears that even though the accused and his wife is said
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to be living separately but the accused has not proved the
same by relevant documents. Further even though the
accused states that the complainant has misused the
cheque but he has not taken any legal action against the
complainant. By this it is very clearly established that
even though the accused denies that he has no any
relationship with the loan but has failed to prove the same.
20. On the other hand it is the complainant who have
already furnished the sufficient document in its support
Ex.P-10, 11 and Ex. P-13 that for the loan of the Smt. Neha
i.e., the wife of the accused, this accused has undertaken
to repay the same.
21. Further here one point has to be observed that in the
cross-examination of DW-1 he has deposed that he do not
know how his cheque has been to the custody of the
complainant. For that even the complainant advocate has
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suggested whether his wife has given the cheque of
accused to the complainant for that the accused has stated
he does not know. Further if that is the case if the accused
has not given the cheque to the complainant the accused
should have taken any legal action against the complainant
for the alleged misusing of the cheque or he should have
proved before the court under what circumstances the
cheque might have reached the complainant. But in this
case the accused has failed to prove the same.
22. Here, after perusal of the documents on record and
the evidence on record it very clearly appears that the
complainant has proved that the cheque is belonging to the
account of the wife of accused, and they appeared before the
complainant and had applied for the loan as per the
Ex.P-8 and Ex.P-9. On Demand Pronote was executed by
the Neha and for that the accused is the witness and also
the accused as per Ex.P-10 has given the undertaking.
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Further the accused is the witness for the Ex.P-11 i.e.,
Mortgage Deed and also as per Ex.P-13 accused signature
is also present. Further Ex.P-12 the endorsement is made
by the accused praying time to sell the property and repay
the loan and signature of the accused is present at the back
side of the Ex.P-12 and on perusal of Ex.P-18 and Ex.P-19
and 20 it very clearly appears that the accused has given
these documents to the complainant and it is also admitted
by the cross-examination it very clearly established by the
complainant that the accused very well know about the
borrowing of the loan and this accused has undertaken to
repay the loan. Further at the time when the accused and
his wife has defaulted in repayment of loan, this accused
has issued the cheque belonging to his bank account.
23. Further in support of the contentions taken by the
complainant, the complainant has filed citations
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(i). In Crl. RV.P.No.540/2017 before T. Siddamma Vs K.S.
Chandresh, it is held by Hon’ble High Court of Karnataka
that;-
“the accused has to give explanation under what
circumstances cheque has been to the custody of
the complainant. The theory of misplacing the
cheque that to along with four cheques is not
substantiated in her evidence. The evidence of the
complainant has to be rebutted placing probable
evidence before the court. When there is no
probable evidence before the court, the question of
accepting the theory of accused does not arise”.
(ii). In the 2020 (3) Civil CC (SC) R. Manimahalai Vs
Banumathi.
(iii). In Crl.Apl.No.210/2014 between Anil V. Raikar Vs
Abdul Munaf before the Hon’ble High Court of Karnataka.
Citation No.2 and 3 is not applicable to the facts and
circumstances of the case.
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CC No.12297/2022
(iv). In Crl.Apl.No.1871-1909/2012 in Lakshmi Dyechem
Vs State of Gujrath and another. It is held by the Hon’ble
Supreme court that
the expression “amount of money—- is insufficient”
appearing in Sec.138 of N.I.Act 1881 is a genus
and dishonour for reason such “as account closed”.
Payment stopped, referred to the drawer are only
specious of the that genus. Just as dishonour of
the cheque on the ground that account has been
closed is the dishonour falling in the first
contingency referred to in Sec.138 so also dishnour
on the ground that the signature do not match or
that the image is not found, which too implies that
the specimen signature do not match the
signatures on the cheque which constitute a
dishonour within the meaning of Sec.138 of the
Act.
(v). Further in the W.P.No.108994/2015 Hiremane
Kallappa Melage Vs Lokamanya Multipurpose Co-
Operative Society Ltd. The facts and circumstances of this
case is not applicable to the case of the complainant.
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24. On the other hand it is the citation furnished by the
accused as per
(i). Crl.Apl.No.1012/1999 in M.S. Narayana Menan Vs State
of Kerala, it is held by the Supreme Court of India that
“In terms of Section 4 of the Evidence Act
whenever it is provided by the Act that the Court
shall presume a fact, it shall regard such fact as
proved unless and until it is disproved. The
words ‘proved’ and ‘disproved’ have been
defined in Section 3 of the Evidence Act (the
interpretation clause) to mean: –
“Proved A fact is said to be proved when, after
considering the matters before it, the Court
either believes it to exist, or considers its
existence so probable that a prudent man ought,
under the circumstances of the particular case,
to act upon the supposition that it exists.
Disproved A fact is said to be disproved when,
after considering the matters before it the Court
either believes that it does not exist, or considers
its non-existence so probable that a prudent man
ought, under the circumstances of the particular
case, to act upon the supposition that it does not
exist.”
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Applying the said definitions of ‘proved’ or
‘disproved’ to principle behind Section 118(a) of
the Act, the Court shall presume a negotiable
instrument to be for consideration unless and
until after considering the matter before it, it
either believes that the consideration does not
exist or considers the non-existence of the
consideration so probable that a prudent man
ought, under the circumstances of the particular
case, to act upon the supposition that the
consideration does not exist. For rebutting such
presumption, what is needed is to raise a
probable defence. Even for the said purpose, the
evidence adduced on behalf of the complainant
could be relied upon.
A Division Bench of this Court in Bharat Barrel
& Drum Manufacturing Company v. Amin
Chand Payrelal [(1999) 3 SCC 35] albeit in a
civil case laid down the law in the following
terms:
“Upon consideration of various judgments as
noted hereinabove, the position of law which
emerges is that once execution of the promissory
note is admitted, the presumption under Section
118(a) would arise that it is supported by a
consideration. Such a presumption is rebuttable.
The defendant can prove the non-existence of a
consideration by raising a probable defence. If
27
CC No.12297/2022the defendant is proved to have discharged the
initial onus of proof showing that the existence
of consideration was improbable or doubtful or
the same was illegal, the onus would shift to the
plaintiff who will be obliged to prove it as a
matter of fact and upon its failure to prove
would disentitle him to the grant of relief on the
basis of the negotiable instrument. The burden
upon the defendant of proving the non- existence
of the consideration can be either direct or by
bringing on record the preponderance of
probabilities by reference to the circumstances
upon which he relies. In such an event, the
plaintiff is entitled under law to rely upon all
the evidence led in the case including that of the
plaintiff as well. In case, where the defendant
fails to discharge the initial onus of proof by
showing the non-existence of the consideration,
the plaintiff would invariably be held entitled to
the benefit of presumption arising under Section
118(a) in his favour. The court may not insist
upon the defendant to disprove the existence of
consideration by leading direct evidence as the
existence of negative evidence is neither possible
nor contemplated and even if led, is to be seen
with a doubt”.
” The words ‘until the contrary is proved’ in
S. 118 do not mean that the defendant must
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supported by any form of consideration but the
defendant has the option to ask the Court to
consider the non-existence of consideration so
probable that a prudent man ought, under the
circumstances of the case, to act upon the
supposition that consideration did not exist.
Though the evidential burden is initially placed
on the defendant by virtue of S. 118 it can be
rebutted by the defendant by showing a
preponderance of probabilities that such
consideration as stated in the pronote, or in the
suit notice or in the plaint does not exist and
once the presumption is so rebutted, the said
presumption ‘disappears’. For the purpose of
rebutting the initial evidential burden, the
defendant can rely on direct evidence or
circumstantial evidence or on presumptions of
law or fact. Once such convincing rebuttal
evidence is adduced and accepted by the Court,
having regard to all the circumstances of the
case and the preponderance of probabilities, the
evidential burden shifts back to the plaintiff who
has also the legal burden. Thereafter, the
presumption under S. 118 does not again come
to the plaintiff’s rescue. Once both parties have
adduced evidence, the Court has to consider the
same and the burden of proof loses all its
importance.”
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“We in the facts and circumstances of this case
need not go into the question as to whether even
if the prosecution fails to prove that a large
portion of the amount claimed to be a part of
debt was not owing and due to the complainant
by the accused and only because he has issued a
cheque for a higher amount, he would be
convicted if it is held that existence of debt in
respect of large part of the said amount has not
been proved. The Appellant clearly said that
nothing is due and the cheque was issued by way
of security. The said defence has been accepted
as probable. If the defence is acceptable as
probable the cheque therefor cannot be held to
have been issued in discharge of the debt as, for
example, if a cheque is issued for security or for
any other purpose the same would not come
within the purview of Section 138 of the Act”.
“We have gone through the oral evidences. The
Second Respondent has even failed to prove that
the Appellant had paid to him a sum of Rs.
5000/- by cash”.
25. In Crl.Apl.No.2045/2008 M/s. Kumar Exports Vs M/s.
Sharma Carpets, it is held by the Hon’ble Supreme Court of
India that;
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“Section 118 of the Act inter alia directs that it
shall be presumed, until the contrary is proved,
that every negotiable instrument was made or
drawn for consideration. Section 139 of the Act
stipulates that unless the contrary is proved, it
shall be presumed, that the holder of the cheque
received the cheque, for the discharge of, whole or
part of any debt or liability. 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.
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11. 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. 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
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should disprove the non-existence of consideration
and debt by leading direct evidence because the
existence of negative evidence is neither possible
nor contemplated. At the same time, it is clear that
bare denial of the passing of the consideration and
existence of debt, apparently would not serve the
purpose of the accused. Something which is
probable has to be brought on record for getting
the burden of proof shifted to the complainant. To
disprove the presumptions, the accused should
bring on record such facts and circumstances,
upon consideration of which, the court may either
believe that the consideration and debt did not
exist or their non-existence was so probable that a
prudent man would under the circumstances of
the case, act upon the plea that they did not exist.
Apart from adducing direct evidence to prove that
the note in question was not supported by
consideration or that he had not incurred any debt
or liability, the accused may also rely upon
circumstantial evidence and if the circumstances
so relied upon are compelling, the burden may
likewise shift again on to the complainant. The
accused may also rely upon presumptions of fact,
for instance, those mentioned in Section 114 of the
Evidence Act to rebut the presumptions arising
under Sections 118 and 139 of the Act. The
accused has also an option to prove the non-
existence of consideration and debt or liability
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CC No.12297/2022
either by letting in evidence or in some clear and
exceptional cases, from the case set out by the
complainant, that is, the averments in the
complaint, the case set out in the statutory notice
and evidence adduced by the complainant during
the trial. Once such rebuttal evidence is adduced
and accepted by the court, having regard to all the
circumstances of the case and the preponderance
of probabilities, the evidential burden shifts back
to the complainant and, thereafter, the
presumptions under Sections 118 and 139 of the
Act will not again come to the complainant’s
rescue”.
26. In Crl.R.C.No.1163/2016 P. Selvaraj Vs K.
Subramaniam, it is held by the Hon’ble High Court of
Judicature at Madras that;
“The learned counsel for the revision
petitioner/accused would contend that there is
no dispute with regard to the fact that Exs.P1 &
P2/cheque leaves herein are the cheque leaves
supplied by the bank to the revision petitioner
herein/accused in respect of his account
maintained with banker. While so, the
signature found in Exs.P1 & P2/cheques were
not admitted by the accused and he has not
borrowed any amount as alleged by the
34
CC No.12297/2022respondent herein/complainant and the cheque
leaves were not issued by the accused to the
complainant and no consideration was passed
from the respondent herein/complainant to the
accused with respect to the case cheque leaves”.
27. In Crl.Appeal.No.636/2019 Basalingappa Vs
Mudibasappa, it is held by the Hon’ble Supreme Court of
India that;
“14. This Court held that what is needed is to raise a
probable defence, for which it is not necessary for the
accused to disprove the existence of consideration by
way of direct evidence and even the evidence adduced
on behalf of the complainant can be relied upon.
Dealing with standard of proof, following was
observed in paragraph No.32:-
“32. The standard of proof evidently is
preponderance of probabilities. Inference of
preponderance of probabilities can be
drawn not only from the materials on
record but also by reference to the
circumstances upon which he relies ” .
15. In Krishna Janardhan Bhat Vs. Dattatraya G.
Hegde, (2008) 4 SCC 54, this Court held that an
accused for discharging the burden of proof placed
upon him under a statute need not examine himself.
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CC No.12297/2022
He may discharge his burden on the basis of the
materials already brought on record. Following was
laid down in Paragraph No.32:-
“32. An accused for discharging the burden
of proof placed upon him under a statute
need not examine himself. He may discharge
his burden on the basis of the materials
already brought on record. An accused has a
constitutional right to maintain silence.
Standard of proof on the part of an accused
and that of the prosecution in a criminal
case is different.”
16. This Court again reiterated that whereas
prosecution must prove the guilt of an accused
beyond all reasonable doubt, the standard of proof
so as to prove a defence on the part of an accused is
“preponderance of probabilities”. In paragraph
No.34, following was laid down:-
“34. Furthermore, whereas prosecution must
prove the guilt of an accused beyond all
reasonable doubt, the standard of proof so
as to prove a defence on the part of an
accused is “preponderance of probabilities”.
Inference of preponderance of probabilities
can be drawn not only from the materials
brought on record by the parties but also by
reference to the circumstances upon which he
relies.”
36
CC No.12297/2022
On perusal of the facts of this case and documents on
record and also evidence recorded by this court and also
the citations filed in this case, on total perusal of the same
it is very clearly appears to the knowledge of this court that
the wife of the accused has applied for the loan before the
complainant society for sanction of loan of Rs.35,00,000/- on
22-07-2017 and executed the documents in favour of the
complainant i.e., the Ex.P-8 i.e., the loan application and
also executed Ex.P-9 i.e., On Demand Pronote. Further the
wife of the accused has executed the Mortgage Deed in
favour of the complainant party for which the accused is
also a witness. On perusal of the Ex.P10 i.e., undertaking
letter which was issued by accused in favour of the
complainant society. Further the Ex.P-2 is the cheque
issued by the accused for amount of Rs.14,50,000/-. Here it
is also very clear that even though the accused denies the
signature in the Ex.P-11 i.e., Mortgage Deed, Ex.P-10
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CC No.12297/2022
undertaking letter and also Ex.P-2 cheque but here one
thing has to be observed that even though the accused
submits that he does not know anything about the loan
transactions of his wife and also he does not know what is
the loan amount and he does not know how the cheque has
reached the complainant society, but the contentions taken
by the accused cannot be believed by this court because in
the Ex.P-11 i.e., the Mortgage Deed executed by the wife of
the accused, this accused is a witness. Further the accused
wife Smt. Neha is a house wife, she has no capacity to
repay the loan amount and being a house wife there is no
need for the Smt. Neha to obtain the loan of Rs.35,00,000/-
even though she is no capacity to repay the same. As such
the accused being the husband of the Smt. Neha very well
know about the obtaining of the loan by Smt. Neha from
the complainant and at the time of execution of the
Mortgage Deed he being a witness to the same and further
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CC No.12297/2022
he has given a undertaking letter as per Ex.P-10 and also
furnished documents with regard to his income details as
per Ex.P-19. As such the accused having taken
responsibility of the loan of the Smt. Neha as per Ex.P-10
he has admitted that he will stand as a surety. Therefore
he has issued the cheque as per Ex.P-2 for repayment of the
loan amount. From the documents it is very clear. As such
whatever the contentions and the defences taken by the
accused holds no water.
28. It is true that, once the cheque relates to the accused
and his signature on the said cheque is proved an initial
presumption as contemplated U/s.139 of Negotiable
Instruments Act has to be raised by the court in favour of
the complainant. Sec.139 of the Negotiable Instrument Act
contemplates that it shall be presumed unless contrary is
proved that the holder of the cheque received the cheque of
39
CC No.12297/2022
the nature referred to in the Sec.138 for the discharge of
the whole or in part any debt or liability. The presumption
referred to U/s.138 of Negotiable Instruments Act is
mandatory presumption and in general presumption.
29. Here as already stated above the complainant
Bharath Credit Co-Operative Society Limited is
represented through its Secretary by name K.N.
Puttaswamy. In order to prove the same the complainant
has produced the authorisation letter authorising the P.W.1
to prosecute the case. The Ex.P-1-authorisation letter
which is clearly established that the present complainant is
having an authority to represent the instant case on behalf
of the complainant Society. Further to avail the
presumption the complainant has been examined himself
as PW-1 and marked exhibits Ex.P-1 to 18. Ex.P-1 is the
authorisation letter for the PW-1 to prosecute the case.
Ex.P-2 is the cheque bearing No.832125 dated 25-10-2019.
40
CC No.12297/2022
Ex.P-3 is the endorsement dated 28-10-2019 as the same is
issued as a return memo for ‘Funds Insufficient’. Further
as per the memo mentioned the complainant has issued
the legal notice to the accused dated 07-11-2019 and the
same was returned unserved. On perusal of the these
documents it very clearly appears the wife of accused in
this case has availed the loan of Rs.35,00,000/- and the
cheque was issued for the amount of Rs.14,50,000/- by the
accused but when the same was presented before the bank
for encashment but the same has been returned with the
endorsement ‘Funds Insufficient’ as such even though the
legal notice is issued, the accused has not repaid the same.
30. However, in the case on hand, the accused has
failed to rebut the evidence of PW1. As such I am of the
opinion that, the accused has issued Ex.P2 cheque for
discharge of legally recoverable debt incurred by his wife.
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CC No.12297/2022
Therefore the presumption has to be raised in favour of the
complainant as contemplated under section 139 of N.I. Act.
31. Thus, it is clear that, the complainant has complied all
the essential ingredients of Section 138 of NI Act to punish
the accused for the alleged offence.
32. I have also relied upon a judgment of our Hon’ble
Apex Court reported in (2018) 8 Supreme Court Cases
469 in the matter of T.P. Murugan (Dead) through
Legal Representatives vs. Bhojan wherein their
lordships have held that,
‘mere raising a doubt sans cogent
evidence, with respect to the
circumstances, presumption under
section 139 of NI Act cannot be
discharged ‘
So on going through the above judgments of our Hon’ble
Supreme Court, when the accused admitted issuance of
cheque and her signature on cheque there is always a
42
CC No.12297/2022
presumption in favour of complainant that there exist
legally enforceable debt or liability when no material
evidence lead by accused to rebut the presumption. Even
also cleared from the above ratio that once there is no
rebuttal evidence, accept oral defence, presumption cannot
be held to be rebutted. In the case on hand, the accused
has not produced relevant and cogent evidence to rebut the
case of the complainant.
33. Therefore the materials placed by the complainant
corroborates with each other with respect to the
involvement of legally recoverable debt. So these all
documents are clearly established that, the alleged cheque
amount is legally recoverable debt. So in the absence of
disproof of complainant case, I have no hesitation to believe
the case of the complainant i.e., it has proved their case as
per the standard of proof by producing relevant and cogent
evidence. Even the entire materials indicates to the court
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CC No.12297/2022
that, complainant has filed the complaint in a proper
manner i.e., within the stipulated time under section 138 of
Negotiable Instruments Act and further there is no
endeavors on behalf of the accused to disprove the case of
the complainant by producing relevant and cogent evidence.
Accordingly I am of the considered opinion that the accused
is liable to be convicted for the offence punishable under
section 138 of Negotiable Instruments Act and I answered
these points No.1 and 2 in the affirmative.
POINT No.3
34. In view of the findings on points No.1 and 2 to
compensate the holder in due course the accused who has
issued cheque without having sufficient funds in her
account has to be punished suitably. Therefore considering
the facts and circumstances, the accused is liable to pay the
cheque amount with a reasonable interest thereon as
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CC No.12297/2022
compensation and expenses to complainant. Hence, I
proceed to pass the following:-
ORDER
Acting U/s.255(2) of Cr.P.C., the accused is
convicted for the offence punishable U/s.138 of
Negotiable Instruments Act and sentenced to
pay a fine Rs.22,04,166/- (Rupees Twenty
Two Lakhs four thousand one hundred
and sixty six only)
In default of payment of fine amount he
shall under go simple imprisonment for 03
(three ) months.
Further, acting U/s.357(1) of Cr.P.C. a sum
of Rs.21,99,166/- (Rupees Twenty One
Lakhs ninety nine thousand one hundred
and sixty six only) is order to be paid to
45
CC No.12297/2022complainant as compensation and remaining
amount of Rs.5,000/- (Rupees Five
thousand only) shall go to the state.
It is made it clear that in view of section
421 of Cr.P.C. the liability of accused to pay the
compensation will not be absolved even if he
under go default sentence.
The bail bond executed by the accused and
surety stand canceled.
Supply free copy of judgment to the
accused.
(Typed directly on computer to my dictation by the
stenographer in the chamber, corrected and then pronounced by
me in the open court on this the 3rd day of March 2025)
Digitally signed by NIRMALA
NIRMALA Date: 2025.03.07 12:01:44
+0530
(Smt. NIRMALA .S.)
XXVI ACJM, Bengaluru.
ANNEXURE
Witnesses examined for the Complainant:
PW.1 : K.N. Puttaswamy.
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CC No.12297/2022
Witness examined for the accused:
DW.1 : Yeshwanth.
List of Documents marked for the Complainant:
Ex. P-1 Authorisation letter
Ex. P-2 Cheque
Ex. P-2(a) Signature of the accused.
Ex. P-3 Bank Endorsement
Ex. P-4 Copy of legal notice
Ex. P-5 Postal receipt
Ex. P-6 Postal cover
Ex. P-7 Certificate U/s.65B.
Ex. P-8 Loan application
Ex. P-9 On Demand Pro-note
Ex. P-10 Assurance letter
Ex.P-11 Mortgage Deed
Ex.P-12 Notice
Ex.P-13 Proceedings of the society
Ex.P-14 Bye-law
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CC No.12297/2022
Ex.P-15 Registration Certificate
Ex.P-16 Resolution
Ex.P-17 Loan repayment assurance letter
Ex.P-18 Genealogical Tree
ExP-19 Income details of accused
Ex.P-20 Katha Certificate.
List of Documents marked for the accused:
Ex.D-1 Will
(Smt. NIRMALA .S.)
XXVI ACJM, Bengaluru.