Bangalore District Court
Arun Kumar .P vs Swathi Enterprises Rep By Bhaskar M on 12 June, 2025
KABC010104682024
IN THE COURT OF THE LXIV ADDL.CITY CIVIL &
SESSIONS JUDGE (CCH-65) AT BENGALURU.
Dated this 12th day of June, 2025
-: P R E S E N T :-
Smt. MALA N.D.,
BAL, LL.M
LXIV ADDL.CITY CIVIL & SESSIONS JUDGE,
CCH-65, BENGALURU CITY.
Crl. Appeal No.668/2024
APPELLANT:- : Arun Kumar.P,
S/o Parashuram,
Aged about 30 years,
R/at No.26, 6th Cross,
Nethaji Layout,
Chandra Layout,
Near Railway Parallel Road,
Bengaluru.
(By: Sri SRR., Advocate)
Vs.
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Crl. Appeal No.668/2024
RESPONDENT :- : Swathi Enterprises,
Rep. By its proprietor
Sri. Bhaskar.M.
Aged about 52 years,
R/at No.1/45, 4th Cross,
Manjunatha Nagara,
Magadi Road,
Bengaluru.
(By: Sri. KHP Advocate)
JUDGMENT
Appellant has filed this appeal u/s 374(3) of Code of
Criminal Procedure assailing the judgment of conviction
and order of sentence passed in C.C.No.5972/2019
dated 20/03/2024 on the file of IV Addl. Judge, Court of
Small Causes and Addl. Chief Metropolitan Magistrate,
Bengaluru (SCCH-6).
2. Rank of the parties is referred to as per their
ranks assigned before the trial court.
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Crl. Appeal No.668/2024
3. The facts of the case leading to this appeal
may be summarized as under;
The respondent herein is the complainant before
the trial court, he has filed a private complaint under
Section 200 of Cr.P.C, alleging the offence committed by
the accused punishable under Section 138 of
Negotiable Instrument Act (herein after referred as N.I.
Act). According to the complainant, accused is his
known person, he approached him with a request for
loan of Rs.3,60,000/- agreeing to repay the same within
six months, accordingly the complainant had advanced
Rs.1,90,000/- on 20/03/2018 and Rs.1,70,000/- on
30/06/2018 by way of cheque and thereby lent total
amount of Rs.3,60,000/- to the accused, he failed to pay
the loan amount even after lapse of six months despite
repeated request and demands, due to continuous
persistence of the complainant accused in the 2 nd week
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Crl. Appeal No.668/2024
of August 2019 has issued a post dated cheque bearing
No.9448818 dated 13/08/2019 drawn on SBI,
Hampinagar branch, Bengaluru for Rs.3,60,000/-, upon
its presentation with his banker, the same cheque
returned with an endorsement of ‘funds insufficient’ on
14/08/2019, therefore the complainant issued a legal
notice on 26/08/2019 through RPAD, the said notice was
returned with a false shara on 28/08/2019, as such
complainant after compliance of ingredients of Section
138 of Negotiable Instrument Act filed a private
complaint against the accused. The trial court took
cognizance and after going through the materials, found
prima facie case against accused for the offences
punishable under Section 138 of Negotiable Instrument
Act, registered criminal case and issued summons.
4. Before the trial court, accused appeared, got
enlarged on bail. The substance of accusation was
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Crl. Appeal No.668/2024
recorded, he claimed trial. The complainant got
examined himself as PW.1 and got marked in all 11
documents from Exs.P.1 to P.11 and closed her side,
accused was examined under Section 313 of Cr.P.C. In
the said statement the accused has denied all the
incriminating evidence appeared against him and
claimed to be tried, also examined himself as DW.1
along with one witness Satish as D.W.2 and got marked
Exs.D.1 and D.2 on his behalf. Trial court after hearing
arguments on both sides and on appreciation of oral and
documentary evidence, found accused committed an
offence punishable u/s 138 of Negotiable Instrument Act,
convicted and sentenced to pay a fine of Rs.3,65,000/-
(Rupees Three lakhs sixty five thousand only), in default
to undergo simple imprisonment for a period of six
months.
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5. Feeling aggrieved by the said judgment,
accused appeared before this court urging the following
grounds;
a) The impugned judgment and sentence passed by
the trial court is against to the law and all probabilities of
the case, hence liable to be set aside.
b) The trial court was misdirected by the respondent, a
such it came to the wrong conclusion that appellant is
guilty of the offences punishable under Section 138 of
Negotiable Instrument Act.
c) The trial court failed to consider that there was no
legally enforceable debt and appellant never issued any
cheque to the respondent, as such dishonour of cheque
does not attract any penalty under Section 138 of
Negotiable Instrument Act.
d) The trial court fails to appreciate the oral and
documentary evidence in proper perspective, there was
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Crl. Appeal No.668/2024
no production of any documents by the appellant to
establish that the complainant is the proprietor of Swathi
Enterprises and cheque was issued in the name of
Swathi Enterprises, as such the complainant has no
locus standi to file private complaint against accused.
e) Trial court has failed to appreciate non service of
legal notice to the accused, thereby committed grave
error by holding that the address mentioned in Ex.P.3 i.e
legal notice and address mentioned in Ex.P.7 Aadhar
card are one and the same, which amounts to deemed
service, complainant has not disclosed disputed
transaction in his IT returns, moreover as on the date of
issuance of alleged cheque the said Swathi Enterprises
was not at all in existence, hence it is contended that the
impugned judgment of conviction is based on probability
of assumption and presumptions.
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f) The trial court has not considered the specific defense
of the accused that on 30/06/2018 he had borrowed loan
of Rs.1,70,000/- from the complainant agreeing to repay
the same at the rate of 12% interest p.a., during that time
complainant had taken signed blank cheques and blank
papers along with Xerox copies of his Aadhar card and
PAN card, he was paying interest of Rs.20,400/- p.m. for
a period of one year and in the month of July 2019 he
repaid the said loan amount of Rs.1,70,000/- in cash to
the complainant with a request for return of his cheques,
however the same was not returned by saying that it was
kept in his house and later even after several requests
the said cheques were not returned and due to Covid-19
pandemic accused has not asked for return of his
cheques and documents, he learnt about lodging of the
complaint only when the police came to his house, as
such he had been to police station and the police have
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Crl. Appeal No.668/2024
not registered any complaint with a suggestion to
approach the court of law, all these defenses of the
accused has not been considered by the trial court.
g) Though there are number of discrepancies and
contrary statements in the case, the trial court without
giving any proper reasons passed the conviction order
which is opposed to law.
h) The trial court failed to notice that the respondent has
not proved the legally enforceable debt due to him by the
appellant, as such he will not come within the purview of
the provision of Section 138 of Negotiable Instrument
Act, thus the learned magistrate has not appreciated the
evidence on record in its proper perspective which
resulted in miscarriage of justice.
i) The written arguments of the accused and citations
furnished on his behalf before the trial court were not at
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all considered at the time of passing of impugned
judgment.
j) The trial court has given findings on assumption and
presumption which is not sustainable in the eye of law.
On these grounds the accused prayed to set
aside the judgment dated 20/03/2024 passed in C.C.
No.5972/2019 by IV Addl. Judge, Court of Small Causes
and Addl. Chief Metropolitan Magistrate, Bengaluru
(SCCH-6).
6. After registration of the appeal, notice was
issued. The respondent appeared through his counsel.
The trial court records have been secured.
7. Heard arguments on both sides and perused
the available materials on record.
8. The points do arise for my consideration are
as under;
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1) Whether cheque at Ex.P.1 was issued
by the accused in favour of the
complainant towards discharge of debt
or liability as alleged in the complaint?
2) Whether trial court is correct in holding
that, accused has committed offence
punishable u/s 138 of Negotiable
Instrument Act?
3) Whether there is legal infirmity in the
impugned judgment, which requires
interference of this court ?
4) What Order?
9. On re-appreciation of oral and documentary
evidence, my findings on the aforesaid points as
follows:-
Point No.1: In the Affirmative;
Point No.2: In the Affirmative;
Point No.3: In the Negative;
Point No.4: As per final order,
for the following:
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REASONS
10. POINTS No.1 & 2:- These points are
interrelated, hence they are taken up together for
common discussion in order to avoid repetition of facts
and evidence.
11. The learned counsel for the accused
canvassed that, cheque in dispute is issued in the name
of Swathi Enterprises, as such the complainant has no
locus standi to file the complaint, he was not served with
the legal notice as such there was no proper compliance
of ingredients of Section 138 of Negotiable Instrument
Act to proceed against him, when such is the case the
trial court erred in concluding that the address
mentioned in Ex.P.3 i.e. legal notice and the address
shown in Ex.P.7 Aadhar card are one and the same,
therefore the service of legal notice on the accused has
to considered as deemed service even though it was
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returned unserved and complainant has not disclosed
the alleged transaction in his IT returns, despite the
same the trial court has passed the judgment of
conviction on the basis of probability, assumption and
presumption.
12. It is further canvassed on behalf of the
appellant/accused that, on 30/06/2018 accused had
borrowed a loan of Rs.1,70,000/- from the complainant
agreeing to repay the same along with interest at the
rate of 12% p.a. and during that time complainant had
taken his signed blank cheques as well as blank papers
including Xerox copy of Aadhar and PAN card, he had
paid Rs.20,400/- towards interest for one year, thereafter
he repaid the entire loan amount in the month of July
2019, there is no evidence to the effect that the
complainant had paid Rs.3,60,000/- to the accused. The
trial court has ignored the said aspect while passing the
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Crl. Appeal No.668/2024
judgment, non disclosure of disputed transaction in IT
returns was not considered by the trial court and the
disputed cheque was issued only for the purpose of
security while taking the previous loan as mentioned
supra, as such the trial court without proper verification
of the above facts passed the impugned judgment, it
needs interference at the hands of this court of appeal.
There is no legal liability on the accused to discharge
the alleged loan transaction, the complainant failed to
discharge the burden of proving lending loan to the
accused and the cheque was issued by the accused
towards discharge of the legally recoverable debt,
judgment of the trial court is not maintainable in the eye
of law or on the facts and accused deserves acquittal.
13. In support of his arguments, the learned
counsel for the appellant has relied on the following
decisions:-
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a) (2011) 4 SCC 275 (Milind Shripad
Chandurkar Vs. Kalim M Khan and other)
b) 2022(2) AKR 641 AIR online 2022 KAR
427 (Prakash Shetty V Venkatesha Crl.
Appeal No.1237/2018 D/-8-S.138
c) (2009) 2 SCC 513 (Kumar Exports Vs.
Sharma Carpets), 2004 Crl.L.J 4107
Andhra Pradesh High Court, Crl. A.
No.1293/1998, D/-16-7-2004 (Nagisetty
Nagaiah Vs. State of A.P and another)
d) ILR 2008 KAR 4629
e) 2020 2 AIR (KAR) 540 ( In the High
Court of Karnataka Crl. Appeal
No.100296/2016), Crl. Appeal
No.1813/2017, Crl. R.P. No.1248/2017
f) ILR 2008 KAR 5175 (V. Jagannathan.J.
H.R. Halappa and others Vs. H. Devaraju)
g) Crl. Appeal No.1497/2022
(Dashrathbhai Trikambhai Patel Vs. Hitesh
Mahendrabhai Patel and another)
h) (2006) 3 SCC (Cri) 30 (M.S. Narayana
Menon @ Mani Vs. State of Kerala and
another)
i) (2013) 3 SCC 86 Vijay Vs. Laxman and
another
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j) 2022(1) KCCR 188 KAR (Udaya Shetty Vs.
Yogesh Gudigar)
Perused the afore quoted citations. The principles
laid down in the afore quoted decisions are taken note
of.
14. Similarly, the learned counsel for the
complainant canvassed that, the trial court has rightly
concluded that the cheque in question was issued
towards discharge of debt or liability, he draws the
attention of the court towards various admissions given
during the cross-examination of accused by saying that
there is absolutely no cogent and convincing evidence
to support the version of the accused to the effect that
the disputed cheque was issued as a security while
availing previous loan of Rs.1,70,000/- and there is no
liability and blank signed cheque so taken was misused
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Crl. Appeal No.668/2024
by the complainant, however accused failed to prove his
defense, though accused has taken the contention that
no legal notice has been served on him, he admitted in
his cross-examination that the address shown in the
legal notice and Aadhar card are one and the same, as
such legal notice sent to the correct address through
registered post acknowledgment acquires the status of
deemed service. It was further submitted that, as there
are no sufficient funds in the account of accused, in
order to save himself from the clutches of provisions of
Section 138 of Negotiable Instrument Act this appeal is
filed. Therefore it is submitted that the judgment of trial
court is proper both in eye of law and on facts, it does
not require any interference by this court. Accordingly it
is canvassed that the appeal deserves dismissal.
15. In support of the arguments canvassed on
behalf of the complainant/respondent, the learned
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Crl. Appeal No.668/2024
counsel has also relied on the judgment passed by the
Hon’ble High Court of Himachal Pradesh, Shimla in Crl.
Appeal No.556/2016 (Satyaveer Singh Vs. Suraj).
Perused the afore quoted citations. The principles
laid down in the afore quoted decisions are taken note
of.
16. In the back drop of rival contentions, this court
has meticulously considered the complaint averments,
documents placed by the complainant along with oral
testimony and defense evidence placed by both the
parties. Before proceedings further, it is relevant to
reassert preposition of law laid down by the Hon’ble
Apex court in connection with the cheque bounce cases.
In the latest decision reported in AIR 2010 SC 1898 in
the case of Rangappa Vs. Mohan, the Hon’ble court
pleased to held in para No.9 that;
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Crl. Appeal No.668/2024
“Ordinarily in cheque bounce cases,
what the courts have to consider is
whether the ingredients of the offence
enumerated in Sec.138 of the Act have
been met, if so, whether the accused
was able to rebut the statutory
presumption contemplated by Sec.139
of the Act”.
The Hon’ble Court observed that, the presumptions
U/s.139 of Negotiable Instrument Act is a presumption of
law, it is not a presumption of fact. This presumption has
to be raised by the court in all cases once the factum of
dishonour is established. The onus of proof to rebut this
presumption lies on the accused. The standard of rebuttal
evidence depends on the facts and circumstances of
each case. The mere explanation is not enough to rebut
this presumption of law, as reported in AIR 2001 SC
3897; Hiten P:. Dalal V/s. Bratinderanath Banerjee and
(2006) 6 SCC 39; M.S.Narayan Menon alias Mani
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Crl. Appeal No.668/2024
V/s.State of Kerala and another and ILR 2009 KAR 1633;
Kumar Exports V/s. Sharma Carpets.
17. As per the dictum of the Hon’ble Apex court, in
a case of this nature, court shall consider the compliance
of ingredients of the offence punishable U/s.138 of
Complainant has produced following documents;
1. Ex.P.1 cheque dated 03/08/2019
2. Ex.P.2 bank endorsement dated 14/08/2019
3. Copy of legal notice dated 26/08/2019
4. Postal receipt
5. Unopened registered post acknowledgment
cover
6. Bank account extracts of complainant M/s
Swathi Enterprises
7. Copy of Aadhar card of the accused
8. Ex.P.8 is the registered post acknowledgment
9. Ex.P.9 is the registration certificate of
M/s Swathi Enterprises
10. IT returns acknowledgment for the
assessment year 2022-2023
Complaint filed on 10/10/2019.
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Perusal of these documents show that,
complainant has presented the cheques within validity
period of 3 months. Cheques returned unpaid with
banker’s memo for the reason “funds insufficient”.
Within one month from the date of bank endorsements,
legal notice has been issued. After expiry of 15 days
period to comply the terms of notice, present complaint
filed within one month from the date of cause of action.
The accused has not disputed the signature present on
the disputed cheques and also admitted that, cheques in
question belong to the bank account maintained by him.
Therefore, it is claimed by the complainant that, legal
presumptions enshrined U/s.139 and 118 of Negotiable
Instrument Act could be raised in his favour, which
includes the existence of legally enforceable debt or
liability.
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18. It is worth to note that, the accused has not
disputed nor denied the issuance of the subject cheque.
Hence, initial statutory presumption attached to the
cheque as per Section 118(a) and 139 of N.I.Act has to
be raised in favour of the complainant. Section 139 of
N.I.Act reads as under;
Sec.139. 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 section138 for the
discharge, in whole or in part, of any debt
or other liability.
19. In so far as the payment of the amount by the
complainant in the context of the cheque having been
signed by the accused, the presumption for passing of
consideration would arise as provided U/s.118(a) of
N.I.Act, which reads as under;
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Sec.118. 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
accepted, indorsed, negotiated or
transferred, was accepted, indorsed,
negotiated or transferred for
consideration;
The above noted provisions are explicit to the
effect that such presumptions would remain, until the
contrary is proved. In the case on hand, it is clear that,
signature on the cheque having been admitted, a
presumption shall be raised under Section 139 of the
N.I.Act that the cheque was issued in discharge of debt
or liability. The question to be looked into is as to
whether any probable defence was raised by the
accused.
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20. The next point for consideration is whether the
accused has placed cogent material on record sufficient
to rebut the statutory presumption? In a case of this
nature, the defence of accused could be gathered from
the reply notice. Plea of defence, suggestions and
admissions in the cross-examination of P.W.1. The
contentions taken in the reply notice acquires more
credibility, as it is the first and foremost opportunity to the
accused to place his defence by explaining the
circumstances under which the disputed cheque reached
the custody of the complainant. Here in this case, one of
the main defense of the accused is that he has not been
served with the legal notice before initiation of the
proceedings under Section 138 of N.I. Act against him.
On the contrary, the complainant by relying on the
address mentioned in the legal notice and also in the
address of the accused in Aadhar card contended that
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he issued the legal notice to the correct address through
proper channel. In addition D.W.1 i.e. the accused
admits his signature in the registered post
acknowledgment which is marked at Ex.P.8, therefore
the trial court considered the service of legal notice as
deemed service though it is returned with a shara of no
such person and also incorrect address. Therefore
since accused is contending that he has not been served
with the legal notice, question of issuing reply notice
does not arise at all, thereby, the accused has forgone
this maiden opportunity to put forth his
defence/contentions.
21. As stated above it is one of the defense of the
accused before the trial court and one of the grounds
before this court of appeal that, he was not served with
legal notice. As discussed above the address mentioned
in the Ex.P.3 legal notice is tallying with the address of
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the accused mentioned in his Aadhar card which is
marked at Ex.P.7, in addition this accused has admitted
his address mentioned in Ex.P.8 which is the same
address mentioned in the legal notice at Ex.P.3. In view
of confrontation by the accused in respect of the address
mentioned in Ex.P.8 which is similar to the address
mentioned in legal notice and also in corroboration with
the address shown in the Aadhar card it can be said that
the complainant issued the legal notice to the accused
through RPAD to the correct address which acquires the
status of deemed service as per Section 27 of General
Clauses Act. In this regard observation made by the
trial court that the accused denied the issuance of legal
notice on him for the sake of defense appears to be
correct. Hence, from the available materials on record it
can be said that the complainant has issued a legal
notice to the accused and after compliance of
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procedures contemplated under Section 138 of N.I. Act,
he filed a private complaint under Section 200 of Cr.P.C,
as such defense of the accused that he was not issued
with the legal notice has no force in it.
22. Another defense of the accused before the trial
court was that the complainant has no locus standi to
file the complaint as the disputed cheque was issued in
the name of Swathi Enterprises, therefore complainant
cannot file the complaint on his individual capacity.
Though the complainant was cross-examined at length
in this regard he has deposed before the trial court he is
a proprietor of M/s Swathi Enterprises and he is in to civil
construction work under the said firm. In support of his
contention, the complainant has furnished the
registration certificate of M/s Swathi Enterprises as per
Ex.P.9 which was once again disputed by the accused
on the contention that the said registration was valid only
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till 13/12/2014 and thereby contended that at the time of
issuance of disputed cheque the said M/s Swathi
Enterprises was not at all in existence, therefore the
certificate of registration which is produced at Ex.P.9
cannot be believed. However in this connection the
complainant has produced I.T. returns for the
assessment year of 2022-2023 wherein it is clearly
mentioned that the complainant Muthu Bhaskar is the
proprietor of Swathi Enterprises. Though there are no
documents made available before the trial court as to
show that there was no renewal of said Swathi
Enterprises as on the date of alleged transaction
involved in this case and at the same time it was not the
case of the accused that Swathi Enterprises is not at all
in existence, therefore the trial court is right in holding
that the validity of registration of firm at the time of
present transaction is not within the purview of this court
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and not necessary for the purpose of this case as the
proceedings under Section 138 of N.I. Act is a summary
procedure.
23. One more defense raised by the accused is
about the financial capacity of the complainant. On
going through the evidence of P.W.1 he has deposed he
was doing civil construction work having an income of
Rs.1 lakh per month and after deducting his expenses
he would save Rs.60,000 to 70,000/- p.m., though no
supportive documents are furnished in this regard,
however, the same has not been denied by the accused
about the income and savings of this complainant in his
cross-examination.
24. It is the case of accused that, he had availed
loan of Rs.1,70,000/- from the complainant on
30/06/2018 and he repaid the same subsequently, and it
is also one of the defense of the accused that
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complainant was doing money lending business and he
was lending loan on interest and he had availed the loan
as aforesaid for interest, he paid such interest for a
period of one year. When accused himself admits that
he had availed loan from the complainant in the year
2018 for interest and the complainant is a money lender
under the name of M/s Swathi Enterprises used to lend
money to several persons, as such he filed several
cheque bounces case against one Asha Latha, Girish,
Venkatesh and Ranganath, that itself is sufficient to hold
that the complainant had financial capacity to lend loans.
In the cross-examination of P.W.1 the accused has
questioned regarding money lending business and also
related cheque bounce cases at length. Therefore as it
rightly observed by the trial court the defense regarding
financial capacity is only for the sake of defense without
any supporting cogent and material documents.
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25. Another defense is regarding legally enforceable
debt existed as on the date of issuance of cheque. As
per the version of accused he availed the loan of
Rs.1,70,000/- for interest at 12% p.a. in the year 2018
and while availing the loan he had issued signed blank
cheque and blank papers along with Xerox copies of
Aadhar and PAN card and he used to pay interest of
Rs.20,400/- p.m. for one year and thereafter in July
2019 he repaid the entire loan amount, however his
cheques were not returned by the complainant inspite of
repeated request and demand and the same was
misused by the complainant which came to his
knowledge only when the police visited his house. From
this defense it can be noticed that, accused had the
knowledge that the complainant was possessing his
cheque and it was not returned inspite of repeated
request and demand, if this version of accused is to be
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believed as genuine at the same time, question arises
why accused has not taken any legal action against
P.W.1 for not returning his cheque even after payment of
loan amount. Thus no explanation or proper reasons
were assigned in this regard and there is no attempt by
the accused at least to request the bank authorities to
stop the payment, when no such preventive measures
are taken, it cannot be said that complainant has
misused his cheque which was given as security as no
ordinary person keep quiet even after giving signed
blank cheque and paper to third persons, as such the
trial court right in rejecting the contention of the accused
that there is no legally enforceable debt.
26. On the contrary, the complainant in support
of his case has furnished signed cheque along with
endorsement which are corroborating with his case and
the bank account statement which is produced at Ex.P.6
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reveals the transfer of Rs.1,70,000/- to the accused
account through cheque No.334375 and the same has
been admitted by the accused also, as such from the
bank statement of complainant’s Swathi Enterprises i.e.
from January to March, sufficient amount has been
withdrawn by P.W.1 which corroborates his contention
that he paid Rs.1,90,000/- by way of cash to the accused
on 20/03/2018. Therefore defense of the accused that
he availed loan of Rs.1,70,000/- in the year 2018 and
repaid the same to the complainant by way of cash in the
year 2019 is without any corroborative evidence.
27. Though the accused herein has relied on the
document Ex.D.2 a copy of screen shot of whats app
message of the D.W.2’s phone (brother of accused)
which discloses that complainant has sent a message
stating that received Rs.14,100/-. This message in any
does not convey the meaning that the said amount is
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towards the payment of interest to the loan amount said
to have been availed by the accused.
28. In this scenario, this Court has appreciated
the evidence placed before the trial court to analyze the
grounds raised by the accused person. Section 106 of
the Indian Evidence Act casts burden on the person who
asserts the fact which is within his special knowledge.
The N.I.Act is special statute entitle the accused to
rebut the presumption. Except taking bare contention,
accused person has not placed iota of evidence to
show the previous transactions and repayment of the
loan amount. To put it other way, except self serving
statement, the accused has not placed any cogent and
material evidence to establish the financial transaction
with the complainant and issuance of the subject
cheque towards security to the said loan. Therefore, this
35
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court is hesitant to believe this unsupported defence of
the accused.
29. This proposition of law is laid down in the
Hon’ble Apex court relied on the decision reported in,
2001 CRI.L.J 4745 (Supreme Court), between
K.N.Beena Vs. Muniyappan, it is held that;
” Negotiable Instrument Act -S- 138, 139,
118- cheque dishonour complaint-
Burden of proving that cheque had not
been issued for any debt or liability – is
on the accused – Denial/averments in
reply by accused are not sufficient to shift
burden of proof on to the complainant-
Accused has to prove in trail by leading
cogent evidence that there was no debt
or liability – setting aside conviction on
basis of some formal evidence led by
accused – Not proper. ”
In this view of the matter, the formal evidence led
by the accused is not sufficient to prove his defense.
30. The accused has taken further defense that,
he had given signed blank cheque to the complainant
36
Crl. Appeal No.668/2024
and the same is misused to file this false complaint. The
complainant has denied this contention. No cogent
evidence is placed in support of this contention of the
accused that, disputed cheque are security cheque.
Even for the sake of arguments, if we consider the
contention of the accused that, the cheque were issued
for the security purpose is concerned, the Hon’ble courts
have laid down in the plethora of decisions that, the
cheque issued for security also attracts Section 138 of
N.I.Act. In the decision reported in 2015 (4) KCCR 2881
(SC) in a case of T.Vasanthkumar V/s.Vijayakumari
wherein the Hon’ble Apex court pleased to observe that,
“NEGOTIABLE INSTRUMENT ACT, 1881-
Section 138 and 139 – acquittal- If justified-
Accused not disputing issuance of cheque
and his signature on it- Plea that it was
issued long back as security and that loan
amount was repaid- Not supported by any
evidence- Fact that date was printed, would
not lend any evidence to case of accused –
Acquittal not proper.”
37
Crl. Appeal No.668/2024
To fortify this opinion, I would like to rely on the
decision reported in, 2006 Cri.L.J.3760, Umaswamy
Vs. K.N.Ramanath, the Hon’ble Court pleased to
observe that;
“Negotiable Instrument Act (26 of
1881). S.138- Dishonour of cheque –
cheque even if issued as a security for
payment, it is negotiable instrument
and encashable security at the hands
of payee -Merely because it is issued
as security is no ground to exonerate
the penal liability u/s.138.”
In another decision reported in, IV (2013) BC 284
(P & H), Shalini Enterprises & Anr Vs. Indiabulls
Financial Service Ltd., wherein their lordships pleased to
observe that,
“(iii) Negotiable Instrument Act, 1881–
Section 138- Dishonour of cheque-
security cheque-Is integral part of
commercial process entered into
between petitioner and respondent
38
Crl. Appeal No.668/2024
/complainant -Security cheque can
fasten liability on drawer under N.I.
Act.- Argument that security cheque is
not handed over or issued in
pursuance of any un-discharged
liability -To hold so would defeat
whole purpose of security cheque-
Security cheque is an
acknowledgment of liability on part of
drawer that cheque holder may use
security cheque as an alternate mode
of discharging his/its liability.”
The latest decision on this aspect is found in the case
of T.P.Murugan (Dead) through Lrs Vs Bojan, reported in
(2018) 8 SCC 469 wherein, the Hon’ble Apex Court has
reiterated the aspect of security and held that evidence is
required to rebut the presumption. Said observation is
reasserted the case of Shree Daneshwari Traders Vs
Sanjay Jain, reported in (2019) 16 SCC 83.
31. Similar to the cited decision, in the present
case also it is one of the defence of the accused that, the
cheque in dispute alleged to has been issued towards
39
Crl. Appeal No.668/2024
security to the complainant and he has filed this false
complaint by misusing the said cheque. However, the
accused has admitted the issuance of cheque and his
signature on the said cheque and also taken defence
that, the cheque was issued towards security but no
documents or proof given by the accused to prove his
defence. In such circumstances by applying the
principles of law laid down in the above decisions, this
defence of the accused does not holds any water.
32. Section 138 of N.I.Act is a special statute,
which provides for rising of statutory presumptions in
favour of the complainant. It is for the accused to rebut
the said presumptions through cogent and convincing
evidence. In case the accused successfully rebut the
presumptions, then only the reverse onus shifts on the
complainant to prove the transaction in question in
detail. As discussed supra, accused neither taken
40
Crl. Appeal No.668/2024
probable defence, nor established the non-existence of
legally recoverable debt. This aspect has reiterated by
the Hon’ble Supreme Court of India in the case of
P.Rasiya V/s. Abdul Nazer and another in
Crl.A.Nos.1233-1235 of 2022 dated 12.08.2022, the
Hon’ble Court pleased to observe that;
” Feeling aggrieved and dissatisfied with
the judgment and orders passed by the
Appellate Court affirming the conviction
of the accused U/s.138 of N.I.Act, the
accused preferred three different
Revision Applications before the High
Court. By the impugned common
judgment and order, the High Court has
reversed the concurrent findings
recorded by both the courts below and
has acquitted the accused on the ground
that, in the complaint, the complainant
has not specifically stated the nature of
transactions and the source of fund.
However, the High Court has failed to
note the presumption under Section 139
of the N.I.Act. As per Section 139 of
N.I.Act, 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 discharge,
41
Crl. Appeal No.668/2024in whole or in part, of any debt or other
liability. Therefore, once the initial burden
is discharged by the complainant that the
cheque was issued by the accused and
the signature and the issuance of the
cheque is not disputed by the accused, in
that case, the onus will shift upon the
accused to prove the contrary that the
cheque was not for any debt or other
liability. The presumptions under section
139 of the N.I.Act is a statutory
presumptions and thereafter, once it is
presumed that the cheque is issued in
whole or in part of any debt or other
liability which is in favour of the
complainant/ holder of the cheque, in that
case, it is for the accused to prove the
contrary. The aforesaid has not been
dealt with and considered by the High
Court. “
The principles laid down in the decision is applicable
to the case on hand.
33. In the celebrated decision of 3 Judges Bench of
Hon’ble Supreme Court of India in Rangappa‘s case and in
the latest decision of 3 Judges Bench of Hon’ble Supreme
Court of India reported in (2022) 1 Supreme Court Cases
42
Crl. Appeal No.668/2024
742 in a case of Triyambak S. Hegde V/s. Sripad , it is
clearly observed that, when drawer of the cheque admits
the signature present on the disputed cheque, complainant
is entitled to rely on the statutory presumptions, which
includes the existence of legally enforceable debt.
34. The accused has taken another contention of
non-disclosure of the present transaction in the Income
Tax Returns of the complainant clearly raises doubt about
the genuineness of the transaction. In this context, it is
relevant to quote the decision of the Hon’ble High Court of
Karnataka reported in 2017 Cr.R 530, (Kant) – C.N.Dinesha
V/s Smt. C.G.Mallika.
The Culpability of offence under section
138 of Negotiable Instrument Act will not
freeze for the reason or violation of
section 269 of IT Act and nothing
prevents operation of statutory
presumption.
43
Crl. Appeal No.668/2024
35. In another decision reported in Writ Petition
No.29144/2018 dated 29th day of August 2018, in a
case of Dr.M.Krishna Shetty V/s.Sri.H.R. Nagabhusha,
wherein Hon’ble Court pleased to observe that;
“the prosecution under Section 138 of
N.I.Act cannot be stalled for no-
compliance of Section 269 SS of the
Income Tax Act. Any cash transaction in
violation of section 269 SS of Income
Tax Act may give rise to an independent
criminal offences, but on account of
violation of the said provision, the
prosecution of the petitioner for the
alleged dishonour of cheque under
section 138 of Act does not become bad
in law.”
In view of the proposition of law laid down in the
aforesaid decisions, this court is of the considered view
that, non disclosure of the impugned transaction in the
Income Tax returns of the complainant, is not fatal to his
case.
44
Crl. Appeal No.668/2024
36. From the discussions made supra, it is crystal
clear that, complainant has placed convincing,
corroborative oral and documentary evidence to prove
the loan transaction of ₹.3,60,000/- and issuance of a
cheque for discharge of the said loan amount with
interest. Apart from that, complainant has also proved
that, on presentation, said cheque was dishonoured for
want of sufficient funds in the bank account maintained
by the accused. The service of legal notice is also
proved. The accused has not repaid the amount covered
under the cheque till this day. He has not placed
probable defence to dislodge the statutory presumptions
raised in favour of the complainant. Therefore, this court
opined that, the complainant has successfully established
the guilt of the accused punishable U/s.138 of Negotiable
Instrument Act. The learned trial Judge has considered
all these aspects in proper perspective and rightly held
45
Crl. Appeal No.668/2024
that, accused has committed the offence punishable
U/s.138 of N.I.Act. Accordingly, Points No.1 and 2 under
consideration are answered in the Affirmative.
37. POINT No.3:- The complainant has placed
cogent material to show compliance of all the ingredients of
Section 138 of Negotiable Instrument Act, which envisages
raising of statutory presumptions in favour of the
complainant. The accused is not successful in placing
acceptable contentions to rebut the presumptions. Thus,
the complainant has proved the guilt of the accused
punishable U/s.138 of Negotiable Instrument Act.
38. The trial court has assigned proper reasons in
the impugned judgment of conviction as against the
allegations made in the memorandum of appeal and
proceeded to pass conviction and imposed sentence of
fine amount. No grounds are made out in the
46
Crl. Appeal No.668/2024
memorandum of appeal to interfere with the Impugned
judgment of conviction.
39. So far as quantum of sentence is concerned,
trial court has imposed sentence of fine directing the
accused to pay fine of ₹.3,65,000/-(Three lakhs sixty five
thousand ) to the complainant for dishonour of a
cheque. Out of fine amount of ₹.3,60,000/- (Three lakhs
sixty thousand) shall be paid to the complainant by way
of compensation and ₹.5,000/-(Five thousand) shall be
paid to State exchequer. In default of payment of fine
amount, accused shall undergo simple imprisonment for
a period of six months. Fine amount imposed is within
the purview of Section 138 of N.I.Act. Accused failed to
establish the fact that, sentence imposed is exhorbitant
and excessive. There is no merit in the appeal. Order
under appeal is sustainable in law. Hence, interference
47
Crl. Appeal No.668/2024
of this court is not necessary. Accordingly, point No.3
under consideration is answered in the Negative.
40. POINT No.4:- In view of findings on the above
points No.1 to 3, this criminal appeal is devoid of merits
and the same is liable to be dismissed by confirming
impugned judgment of conviction and order of sentence.
Hence, this court proceed to pass the following:
ORDER
This Criminal Appeal U/s.374(3) of
Code of Criminal Procedure filed by the
appellant is dismissed.
Consequently, the judgment of
conviction and order of sentence dated
20/03/2024 passed in C.C.No.5972/2024 on
the file of IV Addl. Judge, Court of Small
Causes and Addl. Chief Metropolitan
Magistrate, Bengaluru (SCCH-6), is
confirmed.
48
Crl. Appeal No.668/2024
Appellant is directed to appear before
the Trial Court to deposit the fine amount or
to serve the default sentence.
Office is directed to transmit T.C.R.
along with copy of this Judgment to the trial
court, forthwith, for information.
(Dictated to the Stenographer Grade-III, transcribed by her, corrected by me and
pronounced in open court on this 12th day of June, 2025)(MALA N.D.)
LXIV ADDL.CITY CIVIL &
SESSIONS JUDGE, (CCH-65),
BENGALURU CITY.
49
Crl. Appeal No.668/2024Judgment pronounced in the
open court vide separate judgmentORDER
This Criminal Appeal
U/s.374(3) of Code of Criminal
Procedure filed by the appellant
is dismissed.
Consequently, the
judgment of conviction and order
of sentence dated 20/03/2024
passed in C.C.No.5972/2024 on
the file of IV Addl. Judge, Court
of Small Causes and Addl. Chief
Metropolitan Magistrate,
Bengaluru (SCCH-6), is
confirmed.
50
Crl. Appeal No.668/2024
Appellant is directed to
appear before the Trial Court to
deposit the fine amount or to
serve the default sentence.
Office is directed to
transmit T.C.R. along with copy of
this Judgment to the trial court,
forthwith, for information.
(MALA N.D)
LXIV ADDL.CITY CIVIL &
SESSIONS JUDGE, (CCH-65),
BENGALURU CITY.