Bangalore District Court
Relon Limited, Rep By Its Director vs M/S Hemanth Enterprises, Rep. By Its … on 5 March, 2025
KABC0A0009512023
IN THE COURT OF THE LXXIV ADDL. CITY CIVIL AND
SESSIONS JUDGE, MAYOHALL UNIT, BENGALURU.
(CCH-75)
Dated: This the 5th day of March, 2025.
PRESENT:
Sri.PRAKASH CHANNAPPA KURABETT, B.Sc., LL.B.,(Spl.),
74th Addl. City Civil and Sessions Judge, Bengaluru.
CRL. APPEAL No.25072/2023
APPELLANTS/
ACCUSED PERSONS: 1 Relon Limited,
No.203 & 204, 2nd Floor,
Sheriff House,
No.85, Richmond Road,
Bengaluru-560025.
The petitioner No.1 is a Company
Rep.by its Director Nos.2 to 5.
2 Praveen Nayak,
aged about 36 yrs,
3 Siddarth Bhuva,
S/o.Vinod.H.Bhuva,
aged about 43 yrs,
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CRL.A. No.25072/2023
R/at.No.21/201, Albert Court,
Albert Street, Richmond Town,
Bengaluru-560025.
4 Surendra Kumar,
aged about 42 yrs,
S/o.D.P.Narayanappa,
R/at.No.68, Vaibhav,
Banashankari, 3rd Stage,
3rd Phase, 5th Block,
Bhuvaneshwarinagar,
Bengaluru-560085.
5 Kumar Nayak,
aged about 34 yrs,
Both appellant Nos.2 & 5 are
R/at.No.137, Suprithi Residence,
3rd Floor, 3rd Main, 4th Cross,
Ramanjaneya Layout,
Chikkalasandra,
Bengaluru-560061.
(Rep.by Sri.Basavaraj.R.Bannur, Advocate)
V/S
RESPONDENT/
COMPLAINANT: M/s.Hemanth Enterprises,
No.91, Old No.55,
K.H.Road, Bengaluru-21.
Rep.by its Partner
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Shashi Kiran.
(Rep.by Sri.Balaram.M.L., Advocate)
JUDGMENT
This is an appeal filed by the appellants/accused
persons aggrieved against the judgment passed by XIV
ACMM, Bengaluru, in CC No.53525/2019 on 16.01.2023
convicting the appellants for the offence punishable u/S 138
of N.I. Act and sentencing them to pay a fine of
Rs.23,20,000/- and in default to undergo simple
imprisonment for a period of 6 months each.
2. The appellants were the accused persons and
respondent herein was the complainant before the trial court
and hereinafter they are referred to as per the ranks
assigned to them before the trial court.
3. In brief the appellants/accused persons have
stated in the memorandum of appeal that the trial court has
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convicted them in C.C. No.53525/2019 for the offence
punishable u/S 138 of N.I. Act by holding that they have
issued two undated cheques bearing No.888891 for a sum of
Rs.10 lakhs and bearing No.888890 for a sum of Rs.5 lakhs
in favour of the complainant. The said judgment has been
challenged by the accused persons on the following
grounds:-
1. That the trial court judgment is
arbitrary, capricious and without any
application of mind.
2. That the respondent did not produce any
documents to substantiating his claim
and respondent failed to prove his
sources of income to deposit a sum of
Rs.15,00,000/- to the appellants
company.
3. That at Ex.P.21 (a) the respondent
admitted that, since they have closed
the Hemanth Enterprises. He request
him to kindly issue the cheque in favour
of M.Venkataramanappa & Co., and the
trial court failed to understand the
proposition of law that the non-existent
partnership firm does not have legal
right or locus standi to file a case.
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4. That the trial court failed to observe that,
the respondent was admitted that still
stocks of appellants company is with
respondent.
5. That still the account is not settled
between the appellants and respondent
thus issuing the cheque for refundable
security amount does not arise since
there is about sum of Rs.39,58,770/- is
a due by respondent to appellants. But,
the trial court wrongly comes to the
conclusion that the appellants are have
civil remedy.
6. That Ex.P.32 shows that, the respondent
have a cheque before 14th June 2018
bey misused the cheque and presented
to his banker and filled a case against
the instant appellants and the
respondent is not whispering about
where and when the cheque was
issued.
7. That the trial court is failed to find that,
respondent failed to prove that there is a
legally recoverable debt payable by the
appellants. It is significant to note that
the alleged transaction between
appellants and respondent is not
mentioned in the complaint neither in his
examination-in-chief by waif affidavit.
8. That the respondent is not made all
directors as a party in trial court
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proceedings and trial court take an
cognisance.
Thereby on all these grounds the appellants have prayed for
setting aside the judgment dated 16.01.2023 passed by XIV
ACMM, Bengaluru.
4. After filing of this appeal, the presence of the
respondent was secured. The trial court record was called
and received.
5. Heard arguments of both the appellants and the
respondent and perused the entire materials placed on
record.
6. The counsel for appellant has filed memo along
with the following citations:-
1. (2023) 10 SCC 148 between
Rajesh Jain v/s Ajay Singh.
2. (2018) 13 SCC 663 between
N.Harihar Krishnan v/s
J.Thomas.
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CRL.A. No.25072/2023
3. (2022) 7 SCC 612 between TRL
Krosaki Refractories Limited v/s
SMS Asia Private Limited and
another.
4. (2023)8 SCC 473 between
Ashok Shewakramani and
others v/s State of Andhra
Pradesh and another.
5. (2020)15 SCC 348 between
ANSS Rajashekar v/s Augustus
Jeba Ananth.
6. (2010) 3 SCC 330 between
National Small Industries
Corporation Limited v/s
Harmeet Singh Paintal and
another.
7. (2014) 16 SCC 1 between Pooja
Ravinder Devidasani v/s State
of Maharashtra and another.
8. (2022)10 SCC 152 between
Sunita Palita and others v/s
Panchami Stone Quarry.
9. Crl.R.P. No.1414/2021 between
Francis Zavier.W. v/s
M.M.Mathew.
10. 2025 (1) Kar.L.R. 149
between Channaveera Nayak v/
s Santhosh S/o.Bhandu.
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7. The points that would arise for my consideration
are:
1. Whether the judgment passed
by the trial court is in
accordance with law and facts
of the case?
2. If, not whether the
interference of this court is
required in the impugned
judgment passed by the trial
court?
3. What order?
8. My answer on the aforesaid points are as
under:-
Point No.1: In the Affirmative,
Point No.2: In the Negative,
Point No.3: As per the final order,
for the following:-
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REASONS
9. POINT Nos.1 & 2: Both these points are
interrelated, they have been taken up for consideration
together.
10. In brief it is the case of the complainant before
the trial court that the complainant being a partnership firm
is represented by one Shashi Kiran who is duly authorized
by another partner for prosecuting and initiating such legal
actions against the accused persons. Accused No.1 is the
company represented by its Directors accused Nos.2 to 6
who have actively participated in the business and day to
day activities of the accused No.1 company. The
complainant firm had entered into Clearing and Forwarding
Agent Agreement dated 9.5.2014 with accused No.1. The
accused Nos.2 & 3 have signed the agreement and the other
accused are vicariously responsible for the functionality and
performance of the agreement by accused No.1 company
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under Article V (1) and Article VI of the agreement. The
complainant had paid a sum of Rs.1 lakh by cash as
registration fee and Rs.14 lakhs as interest free refundable
security deposit with the accused under the said agreement.
The complainant has deposited Rs.10 lakhs through cheque
bearing No.777059 dated 9.5.2014. The remaining Rs.4
lakhs was also paid through cheque bearing No.777061 and
has paid a sum of Rs.1 lakh by cash towards registration
fee.
11. Further it is the case of the complainant before the
trial court that as mandated under the above said clauses of
the agreement, the accused has to refund the registration fee
and the security deposit, totally amounting to Rs.15 lakhs on
expiration of the tenure of the agreement or on any
termination after one year from the date of agreement. The
term of the agreement expired on 9.5.2017 and the accused
are liable to pay the said sum of Rs.15 lakhs. After
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CRL.A. No.25072/2023
persistent follow up by the complainant through e-mail and
calls, the accused towards discharge of the said liability
volunteered to issue two undated cheques bearing
No.888891 for a sum of Rs.10 lakhs and bearing No.888890
for a sum of Rs.5 lakhs in favour of the complainant.
12. Further it is the case of the complainant before the
trial court that the accused have also sent e-mail
acknowledging their liability and seeking time and have
requested to notify before presentation of the cheques. The
accused went on deferring and rescheduling the dates on the
pretext of organizing the funds and ultimately it become quite
clear that the accused had no intention to repay the amount.
The complainant through his letter dated 5.2.2019 had
notified the accused that the cheques will be presented
which was met with no response from the accused. After
finding such willful defiance, the complainant had initially
presented the cheques on 16.2.2019 which were
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CRL.A. No.25072/2023
dishonoured for want of funds. The said cheques were
again presented on 13.3.2019, which were again returned
dishonoured with bank endorsement dated 13.3.2019 for the
reason ‘Funds Insufficient’. Thereby the complainant got
issued a notice to the accused persons on 27.03.2019. The
notice sent to accused No.1 had returned with postal shara
‘no such company’ and notice sent to accused No.4 returned
with postal shara ‘door locked’. The notice sent to other
accused persons were served on them. In spite of it, the
accused persons neither paid the cheques amount nor
replied to the said notice. Thereby he filed the complaint
against the accused on 09.05.2019 for the offence
punishable u/S 138 of N.I. Act.
13. The trial court records would show that after filing
of this complaint the court has taken the cognizance of the
offence and has recorded the sworn statement, registered the
case against the accused persons. Further the records
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would also show that after the presence of the accused
persons has been secured, substance of accusation has been
recorded, the accused persons have not pleaded guilt and
thereafter the trial court has recorded the evidence of the
complainant and the accused persons, on the basis of the
material on record, the trial court has convicted the accused
persons for the offence u/S 138 of N.I. Act sentencing them
to pay a fine of Rs.23,20,000/- and in default to undergo
simple imprisonment for a period of 6 months each.
14. This court being the appellate court is duty bound
to look into the entire material and the evidence on record to
come to conclusion whether interference of this court is
required in the judgment passed by the trial court and to
hold whether the judgment passed by the trial court is in
accordance with the law or on facts or not.
15. The main ground of the accused persons in
preferring this appeal is that the trial court has not
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considered the evidence on record has only relied on the
complainant’s evidence and has convicted accused persons
and it is the case of the accused persons that there was no
dischargeable liability and no cogent evidence for due of
such huge amount and alleged charges not proved and if the
Exs.P.1 & P.2 were drawn by the accused persons without
accepting liability of another in writing it would not attract
Section 138 of N.I. Act and no witness produced to prove
existing debt or liability and no supporting material evidence
were produced and failed to show his competency to pay
such an huge amount. But, the learned Magistrate to
appreciate this fact on defence side even though the
complainant has admitted the above mentioned facts during
trial. Thereby the conviction is liable to be set aside.
16. In the light of grounds urged by the accused
persons if the trial court records are perused, it would show
that the complainant has produced the documents such as
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Exs.P.1 & P.2 the two cheques in issue, bank endorsements,
copy of the notice and postal receipts, etc., at Ex.P.3 to 33.
These documents and the oral evidence of the complainant
are sufficient for the court to raise the statutory presumption
in favour of the complainant. There is nothing wrong on the
part trial court in raising the presumption in favour of the
complainant on the basis of the records and the evidence.
17. The question before the court is whether the
accused has rebutted the presumption and has shifted the
burden on the complainant to prove the case on the touch
stone of preponderance of probabilities.
18. In respect of the proof of the fact that the cheque
has been issued for discharge of legally enforceable debt,
there is a presumption of law under Sec.139 of N.I. Act, in
favour of the holder of the cheque, which reads as follows:-
‘Sec.139 – Presumption in favour of holder: it shall be
presumed, unless the contrary is proved, that the
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CRL.A. No.25072/2023holder 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.’
19. The presumption u/S 139 of N.I. Act is a
presumption of law and not the presumption of fact. The
presumption has to be raised in all the cases once the factum
of issuance of cheque and its dishonour is established. U/S
118 (2) of N.I. Act, there is a presumption in respect of
passing of consideration in favour of the complainant. The
onus of proof to rebut the presumption lies on the accused.
The accused need not rebut the presumption beyond all
reasonable doubt. But, the accused has to place sufficient
materials to convince the court that his case is more probable
when it is compared with the case of the complainant.
Accused may adduce direct evidence to prove that the note in
question was not supported by consideration or that he had
not incurred any debt or liability. He may also rely upon the
averments in the complaint, statutory notice and the
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circumstantial evidence adduced by the complainant during
the trial. Accused need not enter into the witness box to
rebut the presumption.
20. In the case on hand, the complainant has
established the factum of issuance of cheques and its
dishonour. Therefore, this court shall raise a presumption u/
S 139 of N.I. Act that the accused has issued cheque towards
discharging the legally enforceable debt. After raising initial
presumption it is for this court to consider whether the
presumption has been rebutted by bringing in cogent
materials on record with reference to the defence raised by
the accused persons that no existence of legally recoverable
debt.
21. The defence of the accused is that, as on the date
of entering into agreement at Ex.P.28; i.e., as on 9.5.2014,
Hemanth Enterprises was not in existence and therefore the
contract itself is void. No amount under the void agreement
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can be claimed by the complainant. Hemanth Enterprises is
an unregistered partnership firm and therefore has no locus
standi to file the complaint. As per e-mail dated 20.02.2018
at Ex.P.21 (a), Hemanth Enterprises has been closed and
therefore the complainant firm cannot file this complaint.
Cheque is in the name of Shashi Kiran, the complainant firm
is neither payee nor holder in due course. Hence, complaint
is not maintainable.
22. The defence of the accused persons is that, the
legal notice issued in the name of the partnership firm is not
valid. Notice issued by Hemanth Enterprises is not served
on any of the accused and therefore no reply is sent. There
is no proper authority in favour of Shashi Kiran to initiate
this proceedings. Cheques were issued to Shashi Kiran to
use it as a fund raising security and not towards any legally
enforceable liability. Hemanth Enterprises is due for
Rs.39,58,770/- and therefore there is no legally enforceable
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liability. Accused has raised loan on company stocks worth
Rs.6,58,102/-. Without returning stocks, refund of security
deposit cannot be sought.
23. The defence of the accused persons is that, since
the accounts have not been settled between the complainant
firm and accused company, the complainant has to resort for
civil remedy. Expenditure towards China visit borne by
accused company is not repaid. Agreement is entered with
Relyon Trading Pvt. Ltd., and not with accused No.1 – Relyon
Ltd. Both companies are different entities. Hence complaint
is not maintainable. There are no specific averments in the
complaint as to how all the accused are vicariously liable.
24. The learned Magistrate has exhaustively
discussed the entire contentions of the accused persons as
well as the complainant and has given well reasons
regarding the facts that the accused persons have failed to
rebut the presumption which lies in favour of the
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complainant. Merely because, the accused persons have
given evidence, it cannot be said that the burden shifts on
the complainant. The defence shall be a probable defence,
which any reasonable person can believe that such a thing
has happened or believes in the probability. The defence
taken by the accused persons is not at all a probable defence
and it cannot be believed that the person who was knowing
the worldly affairs has given the signed cheques to the
complainant without there being any liability. Hence, there
is nothing on record to say that the accused persons have
disproved the case of the complainant or raised any probable
defence to shift the burden. Hence, the probabilities in the
case of the complainant are more rather than in the defence
taken by the accused persons. The trial court has rightly
come to conclusion and has convicted the accused persons.
25. The trial court by considering the entire materials
on record has rightly come to the conclusion that the accused
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CRL.A. No.25072/2023
persons have failed to rebut the presumption, which lies in
favour of the complainant and more over recently the Hon’ble
Apex Court in Crl.Appeal at Special Leave Petition (Crl.)
No.12802/2022, dated 09.10.2023 between Rajesh Jain v/s
Ajay Singh has in detail discussed as to how the
presumption operates and once the presumption operates,
the onus rests on the accused to prove the non-existence of
debt/liability. Wherein in the said above referred case, the
accused was tried for the offence u/S 138 of N.I. Act. The
trial court had acquitted the accused by considering that the
onus of rebutting the presumption lay on the accused was
discharged by raising a probable defence and the
complainant has failed to prove his case beyond reasonable
doubt and the defence of the accused has created a doubt
regarding the truthfulness of the complainant case. Against
the order of acquittal passed by the trial court, the
complainant had preferred the appeal before the Hon’ble
High Court. Wherein the Hon’ble High Court also upheld the
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order of acquittal holding that the complainant has failed to
prove that the cheque was issued in respect of legally
enforceable debt. Wherein in the said case, it was the
defence taken by the accused that the complainant had
failed to mention the date, month and the year on which he
advanced various sum of money towards the loan to the
accused. The version of the complainant was doubtful, since
the cheque was admittedly issued in part payment of
outstanding dues and no where in the complaint or demand
notice complainant disclosed the total amount loan to the
accused. The court found that the complainant therein was
an Orthopedic Surgeon could not have advance huge amount
to an accused who was a Class-IV employee without an
agreement or acknowledgement of loan advance etc. When
the matter went up to Hon’ble Apex Court, the Hon’ble Apex
Court in detail have discussed as to when a presumption is
raised, how the accused have to rebut the said presumption
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and when the burden shifts on the complainant and at para-
56, page-33 the Hon’ble Apex Court has observed;
’56. At the stage when the courts concluded that the
signature had been admitted, the Court ought to have
inquired into either of the two questions (depending
on the method in which accused has chosen to rebut
the presumption): Has the accused led any defense
evidence to prove and conclusively establish that
there existed no debt/liability at the time of issuance
of cheque? In the absence of rebuttal evidence being
led the inquiry would entail: Has the accused proved
the nonexistence of debt/liability by a preponderance
of probabilities by referring to the ‘particular
circumstances of the case’?’
26. Further Hon’ble Apex Court has clearly held as to
when the presumption is rebutted and when the court has to
shift the burden on the complainant to prove the case and
what are all the facts, which can be considered as rebuttal
evidence. In the background of the discussion held by the
Hon’ble Apex Court, if the facts and circumstances as well as
the evidence led by the parties are perused carefully, they
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would show that the accused persons though had led the
evidence, but the evidence is not satisfactory to say that
there is a probability in his defence and to shift the burden
on the complainant to prove the transaction. I have perused
the above rulings of the advocate for the appellants. The
above rulings of the advocate for the appellants not
applicable to the present case in hand and the facts and
circumstances of above ruling are entirely different and
defences taken by the accused persons cannot be acceptable
at all. When such being the fact, I hold there is nothing on
record to interfere in the judgment passed by the trial court.
Accordingly, I hold point for consideration No.1 in
Affirmative and No.2 in Negative and proceed to pass the
following:-
ORDER
Appeal is dismissed.
The Judgment passed by the
Learned XIV ACMM, Bengaluru, in
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16.01.2023, convicting the
appellants/accused persons for
the offence punishable U/Sec.138
of N.I.Act is confirmed.
Send back Trial Court
Record (TCR) to the Trial Court
along with copy of judgment.
No order as to costs.
[Dictated to the Stenographer directly on computer, corrected
and then pronounced by me in the open court on this the 5th
day of March, 2025].
[PRAKASH CHANNAPPA KURABETT]
LXXIV Addl. City Civil & Sessions Judge,
Mayohall, Bengaluru.
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