Bangalore District Court
S.N. Rajashekar Raju vs K.S. Arun Kumar on 20 January, 2025
KABC030070032021
Presented on : 30-01-2021
Registered on : 30-01-2021
Decided on : 20-01-2025
Duration : 3 years, 11 months, 21 days
IN THE COURT OF XX ADDL.CHIEF JUDICIAL
MAGISTRATE AT BENGALURU CITY
PRESENT: SRI. SHRISHAIL BHIMASHEN BAGADI,
B.Com.,L.L.B.,
XX ADDL. C.J.M., Bengaluru.
Dated this the 20th day of January 2025
C.C.No. 2011/ 2021
Complainant : Sri.S.N. Rajashekar Raju,
Aged about 49 years,
S/o. Late S M Narasaraju,
R/at No.406,
"Padmashree Apartment"
21st Main, 17th Cross,
Muniswamy Raju Road,
5th Phase, J P Nagar,
Bengaluru - 560 078
{ By A N Krishna - Advocate }
Vs.
2 C.C. 2011 / 2021
Sri. K S Arun Kumar,
Accused : Aged about 54 years,
S/o. K T Srinivasa Gowda,
No.921, "Sree Krupa",
38th Cross, 22nd Main Road,
4th T Block, Jayanagar,
Bengaluru - 560 041
{ By Sri.S.N.Rajashekar Raju
- Advocate }
Offence complained : U/S. 138 of N.I. Act.,
Plea of accused : Pleaded not guilty.
Final Order : Accused is guilty
Date of Order : 20.01.2025
3 C.C. 2011 / 2021
JUDGMENT
The complainant has filed this complaint under
Section 200 of the Code of Criminal Procedure against the
accused, alleging that the accused has committed an
offense punishable under Section 138 of the Negotiable
Instruments Act.
02. The brief facts of the Complainant’s case are as
under;
The complainant and the accused are well-known to
each other, and they are close friends. The accused is a
licensed class-I KPWD contractor, he used to take contract
work from BBMP and the government. Whenever the
accused had a shortage of funds to complete the contract,
he would take financial assistance from the complainant.
The accused, to complete his contract work, approached
the complainant for the financial assistance of Rs.
26,25,000, considering the financial stringency of the
accused, the complainant paid the amount on various
4 C.C. 2011 / 2021
dates through account transfer and cash, which is
mentioned hereunder.
Sl.NO. DATE AMOUNT (RS) MODE OF
PAYMENT
1 07.08.2015 5,85,000/- RTGS
2 14.06.2018 9,00,000/- BY WAY OF CASH
3 27.09.2018 3,50,000/- BY WAY OF CASH
4 09.10.2018 3,00,000/- BY WAY OF CASH
5 11.10.2018 2,25,000/- BY WAY OF CASH
6 13.10.2018 2,65,000/- BY WAY OF CASH
TOTAL 26,25,000/-
The complainant has paid the amount with an
assurance from the accused that he will repay the said
amount within one year together with interest at 1.5% p.m.
the accused executed receipt/loan agreement dated
13.10.2018 for the acknowledgment of debt. As per the
terms of the hand loan agreement, the accused has not
paid the amount within the stipulated period of one year,
and also he has become a chronic defaulter in payment of
interest as agreed by him. After repeated demands and
personal approaches, the accused has issued four cheques
which are mentioned hereunder.
5 C.C. 2011 / 2021
Sl.NO. CHEQUE NO. DATE AMOUNT (RS)
1 341075 06.05.2020 9,00,000/-
2 341076 06.05.2020 10,00,000/-
3 341085 11.05.2020 3,25,000/-
4 341086 11.05.2020 4,00,000/-
TOTAL 26,25,000/-
The accused promised that all the cheques would be
honoured on their presentation, as per the promise and
personal assurances made by the accused, the
complainant presented all the cheques for collection
through his banker, i.e., Kotak Mahindra Bank, JP Nagar,
5th Phase Branch, Bangalore, but the cheques referred to
at Sl. No. 1 and 2 came to be dishonoured due to
“insufficient funds” as per the bank endorsement dated
08.05.2020. Likewise, the cheques referred to at Sl. No. 3
came to be dishonoured with an endorsement “Funds
insufficient” as per bank endorsement dated 13.05.2020,
and cheque referred to at Sl. No. 4 came to be dishonoured
with an endorsement “Funds insufficient” as per bank
endorsement dated 15.05.2020. Thereafter the
6 C.C. 2011 / 2021
complainant had issued a legal notice dated 02.06.2020,
which was duly served to the accused on 03.06.2020.
Despite the service of notice, the accused failed to pay the
cheque amount. Therefore, the accused has committed an
offence punishable under Section 138 of the Negotiable
Instruments Act.
03. The complainant, to prove his case, examined
himself as PW.1 and got marked documents as per Ex.P.1
to P.15. Based on complaint averments, sworn statement,
and documents, the court took cognizance of the offence
under Section 138 of the Negotiable Instruments Act and
also registered the criminal case and issued summons to
the accused. On receipt of the summons, the accused
appeared before the court through his counsel and was
enlarged on bail. The copies of the complaint and
documents attached to the complaint were supplied to the
accused. The substance of the accusation was read over
and explained to him; he did not plead guilty and claimed
to be tried. In compliance with section 145(1) of the
7 C.C. 2011 / 2021
Negotiable Instruments Act, the sworn statement affidavit
of the complainant was treated as chief examination, the
complainant had also examined the attesting witnesses of
the loan agreement as PW2 and 3. The learned counsel for
the accused fully cross-examined the PW1 to 3. After the
completion of the complainant side evidence, the
incriminating circumstances that appeared in the
complainant side evidence were read over and explained to
him in the language known to him. The accused has denied
the entire evidence of the complainant, and to prove his
defense, the accused examined himself as Dw. 1 and got
the marked document as per Ex. D. 1 and D2 on his
behalf. The learned counsel for the complainant has fully
cross-examined the DW1.
04. On perusal of the complaint averments and
documents produced along with complaint, the following
points that arise for my consideration;
8 C.C. 2011 / 2021
POINTS FOR CONSIDERATION
1. Whether the accused has
successfully rebutted the
presumption as available u/s 139 of
NI Act that he had not issued the
cheques to pay the legally
enforceable debt?
2. Whether the complainant has
complied with the mandatory
requirements of section 138 of NI Act
3. What Order or sentence ?
05. The learned counsel for the complainant and
accused have canvased their oral arguments and also
submitted their written arguments.
06. The learned counsel for the complainant has
relied upon the following judgments in support of his
arguments.
1 AIR 2023 Supreme Court 5108
(Rajesh Jain V/s. Ajay Singh)
2 2022(3) AKR 381 and AIR online 2022 KAR 2570
Between (M S Sathya Narayana V/s. Lingaraje
Urs)
3 Criminal Appeal No.2000/2022 (A) (Reported)
9 C.C. 2011 / 2021
(R.Pramod V/s. Gangadharaiah)
4 Criminal Appeal Nos.1233-1235 / 2022
(P. Rasiya V/s. Abdul Nazeer and Another.)
5 Judgment passed in CC No. 1544/2021 dated
16.10.2024 (S N Rajashekar Raju V/s. M R
Girish)
07. The learned counsel for the accused has relied
upon the following judgments in support of his arguments.
1 CDJ 2024 SC 665
2 AIR 2023 SC 471
3 (2019) 5 Supreme Court Cases 418
4 2020 (3) KCCR 2373
5 (2008) 4 Supreme Court Cases 54
6 (2013)3 Supreme Court Cases 86
7 Criminal Revision 688/2019
8 2000 CrlJ 257
08. Upon hearing arguments and on perusal of oral
and documentary evidence made available by the
Complainant and accused and on going through the
decisions relied upon by the learned counsel for
complainant and accused my answers to the above points
are as under.
10 C.C. 2011 / 2021
Point No.1: In the Negative
Point No.2: In the Affirmative
Point No.3: As per final order
for the following;
REASONS
POINT No.1 and 2:
09. These points are interconnected with each other,
hence to avoid repetition facts and appreciation of
evidence, both points are taken together for common
discussion.
The brief facts of the complainant case are that, the
complainant and accused are well known to each other,
and they are close friends. The accused is a class I KPWD
contractor, and he used to take contracts from BBMP and
the government. Whenever the accused needed funds to
complete the projects, he used to take financial assistance
from the complainant. Based on their previous financial
transactions and timely repayment made by the accused,
11 C.C. 2011 / 2021
the complainant lent a sum of Rs. 26,25,000 to the
accused on various dates by way of RTGS and also by way
of cash. To acknowledge the loan, the accused had
executed a receipt cum loan agreement dated 13.10.2018,
and to discharge the said loan, the accused had issued 4
cheques on various dates. All the cheques came to be
dishonoured with an endorsement of “Funds insufficient.”
The legal notice sent to the accused was duly served to
him. Despite that, the accused failed to pay the cheque
amount nor issued a reply notice.
10. The complainant to prove his case entered the
witness box and was examined as PW1 and also examined
attesting witness of the loan agreement as PW2 and 3 and
got marked documents as per Ex. P1 to P15.
11. Complainant lent a sum of Rs.26,25,000/- on
various dates, out of which, he paid a sum of
Rs.5,85,000/- on 07.08.2015 though RTGS to the account
of the accused, remaining amount paid in cash, the
12 C.C. 2011 / 2021
accused has admitted the amount paid to him by
complainant through account transfer, but he refused cash
payments.
12. The accused has executed the loan agreement in
the presence of witnesses, he admits his signature except
the contents of the document, but he has not examined
any of the independent witnesses to disprove the contents
of documents as per section 91 of the Indian Evidence Act,
mere denial of the contents of document is not sufficient.
13. The accused has admitted his signature appeared
on the cheque and issuance of cheque, but he took up
contention that those cheques have been issued as a
security for availing of loan, but he did not take any legal
action against the complainant.
14. The legal notice issued to the accused was duly
served to him but he did not issue a reply notice, mere
13 C.C. 2011 / 2021
mentioning wrong date on the notice is not a ground to
keep quite without issuing a reply notice.
15. The accused has questioned the financial
capacity, but himself admitted the amount of loan
borrowed from the complainant.
16. The PW.1 in his cross examination has stated
that he has been doing real estate business since 25 years,
and his yearly income would be around 15 to 20 lakh,
though he has not produced any document to show that he
is doing real estate business, the PW.1 further stated in his
cross examination that, first time he lent a sum of
Rs.5,85,000/- to the accused through RTGS, at that time
he did not take any document from the accused, the reason
for not taking document is because of his close friendship,
he further deposed in his cross examination that, the
accused again took financial assistance of Rs.9 lakh on
14.06.2018 but he does not have any document to show
that, he had given that much amount to the accused, again
14 C.C. 2011 / 2021
he gave a sum of Rs.3.5 lakh on 27.09.2018, a sum of Rs.3
lakh on 09.10.2018, a sum of Rs.2.25 lakh on 11.10.2018,
but he does not have documents to show that, he had paid
above stated amount to the accused by way of cash, and he
has not shown the payment of loan in the income tax
returns for the year 2018-19, and he further deposed that,
there is no entry in Ex.P.12 Bank statement regarding
payment of money to the accused by way of cash except the
money that was sent through RTGS. He further stated that,
he did not withdraw the amount of Rs.9 lakh from his bank
account for that reason there is no reference in the bank
passbook, further stated that, there is no reference of cash
withdrawals in the bank account statement to show that
he had sufficient money in his bank account to pay the
loan to the accused, he further deposed that, he has not
produced any document to show that, from 14.06.2018 to
13.10.2018 he had a sum of Rs.20,40,000/- in his bank
account, the witness further deposed that, he lent money
to one Mr.Girish through RTGS and to recover the amount
he has filed a recovery suit.
15 C.C. 2011 / 2021
17. The PW.2 and PW.3 are the attesting witness of
the loan agreement, they deposed that, they were present
at the time execution of the hand loan agreement, they
knew the complainant from past 15 years, they do not have
any other information except the information as
mentioned in the loan agreement.
18. The accused in his cross examination deposed
that, he is the class-1 contractor, and he has been doing
the contractor business from last 17-18 years, he knows
Girish, both of them are doing contractor business jointly,
the complainant filed a cheque bounce against the Girish
under CC No.1544/2021 in CCH Court Bengaluru, he is
the KPWD Class-1 contractor, and he always putting his
signature on the document by knowing its contents, some
time he casually put his signature without knowing the
contents of the document, and he perused documents
produced by the complainant and the addresses mentioned
in the document are his correct address, and all postal
letters sent to him would serve to the address mentioned in
16 C.C. 2011 / 2021
the legal notice, and the notice sent by the complainant
was reached to him, and he knows the contents of the legal
notice, but he did not give any reply to the legal notice. The
accused further admitted that, he has not operating the
bank account in respect of Ex.D.1 and D.2, he did not
know on which date he had opened the bank account in
respect of Ex.D.1 and D.2, and he did not know who had
written the word cancelled on the cheques, and he did not
ask the complainant to return Ex.D.1 and D.2, he further
deposed that, without mentioning the dates on the
cheques would not become time barred or stale cheques,
and he did not know who had written the name of
complainant on the cheques. The accused further deposed
that, he did not make any effort to repay the loan amount
of Rs.5,85,000/- to the complainant, further deposed that,
whenever the cheques pertaining his account presented to
the bank, he will receive the message from the bank to his
mobile, accordingly he had received the message in respect
of presentation of Ex.P.1 to the bank, thereafter he did not
take any steps to submit an application to the bank for
17 C.C. 2011 / 2021
stopping payment of other cheques. The accused has not
denied his signature appeared on Ex.P1 to P.4/cheques,
and also not denied his signature appeared on
Ex.P.11/postal acknowledgment regarding receipt of legal
notice, the accused has also not denied the signature
appeared on Ex.P.13/ Receipt / Loan Agreement, the
accused is well educated person, so he purchased the
stamp to execute hand loan agreement in favor of the
complainant, wherein it is clearly mentioned that, he had
borrowed a sum of Rs.26,25,000/- from the complainant, if
the said document is bogus and created, he could have
certainly taken appropriate legal action against the
complainant, but he did not take any action, under such
circumstances it is to be presumed that, the said document
was executed by the accused by admitting his liability
regarding borrowing of loan from the complainant. When
the accused himself admitting his signature on the loan
agreement, then he cannot question the financial capacity
of the complainant, further the accused has not issued a
reply notice to the legal notice sent by the complainant,
18 C.C. 2011 / 2021
that means he admits that, he had issued the cheques to
the complainant to pay the legally enforceable debt and the
complainant had financial capacity to lend money to him.
19. The learned counsel for the accused has fully
cross examined the PW.1 to PW.3, but nothing worth has
been elicited from their mouth.
20. The accused has not issued any reply to the
legal notice issued by the complainant.
21. On perusal of Ex.P.1 to 4, they discloses that the
accused had executed the cheques to pay the legally
enforceable debt of Rs.26,25,000/- and he put his
signatures on the cheque as per Ex.P.1(a) to 4(a). Ex.P.5 to
8 are the bank endorsements, wherein it is mentioned that
the cheques issued by the accused came to be dishonoured
due to insufficient funds. Ex.P.9 is the legal notice issued
by the complainant to the accused calling upon him to pay
the cheque amount, Ex.P.10 is the postal receipt, Ex.P11 is
19 C.C. 2011 / 2021
the postal acknowledgment, Ex.P12 is the Copy of account
statement, Ex.P13 is the Loan agreement dated
13.10.2018, Ex.P13(a) is the signature of the accused.
Therefore on perusal of oral and documentary evidence, it
is clear that the accused had issued the cheque to the
complainant to pay the legally enforceable debt. Once the
issuance of cheque and signature appeared on the cheque
admitted by the accused, then the onus shifts upon the
accused to prove that he had not issued the cheque in
favour of the complainant to pay the legally enforceable
debt, the accused failed to rebut the presumption available
under section 139 of the Negotiable Instruments Act. In
this regard I have relied upon the decision of the Hon’ble
Supreme Court of India reported in in 2023 SCC Online
SC 1275 between Rajesh Jain Vs Ajay Singh, in this case
the Hon’ble Supreme Court of India has held that, the legal
burden is the burden of proof which remains constant
throughout a trial. On the other hand, the evidential
burden may shift from one party to another as the trial
progresses, according to the balance of evidence given at
20 C.C. 2011 / 2021
any particular stage. In all trials concerning dishonour of
cheque, the court are called upon to consider whether the
ingredients of the offence enumerated in section 138 of the
Act have been met and if so, whether the accused was able
to rebut the statutory presumption contemplated by
section 139 of the Act, further, it said that section 139 is a
reverse onus clause and requires the accused to prove the
non-existence of the presumed fact, I,e that cheque was not
issued in discharge of a debt/ liability. Further held that,
the NI Act provides for two presumptions, one under
section 118 of the Act, which directs that it shall be
presumed, until the contrary is proved, that every
negotiable instrument was made or drawn for
consideration. Further, under section 139, which 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. The
‘presumed fact’ directly relates to one of the crucial
ingredients necessary to sustain a conviction under section
138 of the NI Act. Further held that, section 139 of the NI
21 C.C. 2011 / 2021
Act, which takes the form of a ‘shall presume’ clause is
illustrative of a presumption of law. It is obligatory for the
court to raise this presumption has been established. But
this does not preclude the person against whom the
presumption has been established. But this does not
preclude the person against whom the presumption is
drawn from rebutting it and proving the contrary, as is
clear from the use of the phrase ‘ unless the contrary is
proved’, after taking note of Bir Singh Vs Mukesh Kumar
(2019)4 SCC 197, wherein it was held that presumption
takes effect even in a situation where the accused contends
that ‘ a blank cheque leaf was voluntarily signed and
handed over by him to the complainant, without admitting
the execution of the entire contents in the cheque, is not
sufficient to trigger the presumption. Further held that, as
soon as the complainant discharges the burden to prove
that, the instrument was issued by the accused for
discharge of debt, the presumptive device under section
139 of the Act, that helps to shift the burden on the
accused of proving that the cheque was not received by the
22 C.C. 2011 / 2021
bank towards the discharge of any liability. Until this
evidential burden is discharged by the accused, the
presumed fact will have to be taken to be true, without
expecting the complainant to do anything further. In the
case of Basalingappa Vs Mudibasappa (2019) 5 SCC 418
held that, to rebut the presumption and prove to the
contrary, it is open to the accused to raise a probable
defence, wherein the existence of a liability enforceable
debt or liability can be contested. The words ‘ until the
contrary is proved’ occurring in Section 139 do not mean
that accused must necessarily prove the negative that the
instrument is not issued in discharge of any debt/liability,
but the accused has two options. The first option is to
prove that the debt/liability does not exist and conclusively
establish the cheque was not issued in discharge of a
debt / liability. The second option is to prove the non
existence of debt / liability by a preponderance of
probabilities by referring to the circumstances of the case.
The nature of evidence required to shift the evidential
burden need not necessarily be direct I,e oral or
23 C.C. 2011 / 2021
documentary evidence or admissions made by the opposite
party ; it may comprise circumstantial evidence or
presumption of law or fact.
22. The Hon’ble High Court of Karnataka in the case
of (M S Sathya Narayana V/s. Lingaraje Urs) reported in
AIR online 2022 KAR 2570 has held that,
” Non-filing of the document for having
paid income tax will not take away the
case of the complainant and the
petitioner/accused has to explain how
the subject matter of cheque had gone
to the hands of the said complainant
and what made him to give the said
cheque. No reply was given when the
notice was issued to the accused and he
would have given the reply, if no such
transaction was taken place between
the accused and the complainant.”
24 C.C. 2011 / 2021
23. The learned counsel for the accused has relied
upon the decision with regard to financial capacity of the
complainant, but no steps has been taken by the accused
to disprove the contents of Ex.P.13/Loan Agreement, the
bank statement is not the prima-facie document to prove
financial capacity, the accused has to issue reply notice to
the legal notice sent by the complainant and he ought to
have raise a specific defense in his reply notice that, the
complainant had no financial capacity to pay the loan, in
this regard I have relied upon the judgment of the Hon’ble
Supreme Court of India reported in 2022(6)SCC 735
between Tedhi Sing versus Narayan Mahanth, in this case
the Hon’ble Supreme Court of India has held that,
” The presumption under Section 139 of
the act that the holder of the cheque
received the cheque of the nature
referred in Section 139 for the discharge
in whole or in part of debt or liability,
however, is expressively made subject to
the possession being proved to the
25 C.C. 2011 / 2021
contrary, in other words, it is open to
the accused to establish reverse onus
the accused is not expected to discharge
as an unduly high standard of proof,
accordingly that the principle has
developed that which the accused needs
to establish is probable defense as to
whether the probable defense has been
established is the matter to be decided
by the facts every case on the
conspectus evidence and circumstantial
evidence. The pursuance under Section
138 of N.I.Act is not of a civil suit and at
the time when the complainant is gives
his evidence unless the case is setup in
reply notice to the statutory notice sent
that the complainant did not have
financial capacity it cannot be expected
of the complainant to initially lead
evidence to show that he had financial
26 C.C. 2011 / 2021
capacity to that extent the Court in our
opinion were right to holding that those
lines however the accused has to the
right to demonstrate that the
complainant in a particular case did not
have capacity and therefore the case of
the accused is acceptable which he can
do by producing independent materials
namely examining case witnesses
producing documents it is also upon to
him to establish a very same aspect by
pointing out to the material produced by
the complainant himself he can further
more importantly achieve this result
through cross examination of the
witnesses of the complainant ultimately
it becomes duty of the Court to consider
carefully and appreciate of the evidence
and then come to the conclusion that
whether in a given case the accused has
27 C.C. 2011 / 2021
shown that the case of the complainant
is in peril for the reasons that the
accused has establish the probable
defense, and held that if the accused fail
to give reply notice then it is to be
presumed that she admits the case of
complainant and he did not establish
the financial capacity if the accused in
reply notice took up the contention that
the complainant had not financial
capacity then it is possible for the
complainant to produce sustainable
document or evidence to prove the
financial capacity therefore the
decisions relied upon by the learned
counsel for accused is not applicable to
the case on hand because in this case
the accused has fail to give reply notice
and he has not disclose his defense by
issuing reply notice under such
28 C.C. 2011 / 2021
circumstances it is not expected to the
complainant to prove the financial
capacity before the Court.”
24. The complainant has proved before the court
that, the accused had issued to the cheques to pay the
legally enforceable debt, then the burden is on the accused
to prove that he had not issued the cheque to pay the
legally enforceable debt. The accused has admitted the
issuance of cheques and signature appeared on the cheque
and also admitted his signature appeared on the loan
agreement, then the accused has to made out probable
defense that he had not issued the cheques to pay the
legally recoverable debt, if he fails to prove his defense the
court has to presume that, the accused had issued the
cheques to pay the legally recoverable debt, in this regard I
have relied upon the judgment of the Hon’ble Supreme
Court of India reported in 2022 SCC Online SC 1131
between P.Rasiya Vs Abdul Nazir, in this case, the Hon’ble
Supreme Court of India has held that,
29 C.C. 2011 / 2021
The presumption of under Section
139 of N.I.Act itself be presumed that
unless the contrary is proved that the
holder of a cheque received the
cheque of the nature referred under
Section 138 in discharge in any
whole or part of the debt or other
liability therefore once the initial
burden is discharged to the
complainant that the cheque was
issued by the accuse and the
signature and issuance of the cheque
is not disputed by the accused in
that case onus will shift upon the
accused to prove the contrary that
the cheque was not issued for any
debt of other liability the
presumption under Section 139 of
the act is a statutory presumption
and thereafter once it is presumed
30 C.C. 2011 / 2021
that the cheque is issued in whole or
any part of the debt or other liability
which is in favour of complainant or
holder of the cheque, in that case, it
is for the accused to prove the
contrary.
25. The Hon’ble Supreme Court of India in the case of
KISHAN RAO v. SHANKARGOUDA reported in 2018 (8)
SCC 165 has held that
Section 139 of the 1881 Act provides
for drawing the presumption in favour
of holder. Section 139 is to the
following effect:
“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 Section 138 for
the discharge, in whole or in part, of
any debt or other liability.
31 C.C. 2011 / 2021
26. The Hon’ble Supreme Court of India in Kumar
Exports v. Sharma Carpets, had considered the provisions
of the Negotiable Instruments Act as well the Evidence Act.
“Section 139 of the Act provides
that it shall be presumed, unless
the contrary is proved, that the
holder of a cheque received the
cheque of the nature referred to in
Section 138 for the discharge, in
whole or in part, of any debt or
other liability.
Presumptions are devices by use of
which the courts are enabled and
entitled to pronounce on an issue
notwithstanding that there is no
evidence or insufficient evidence.
Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, 32 C.C. 2011 / 2021 namely, (1) "may presume"(rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference,
affirmative or dis-affirmative of the
existence of a fact, conveniently
called the “presumed fact” drawn
by a judicial tribunal, by a process
of probable reasoning from some
matter of fact, either judicially
noticed or admitted or established
by legal evidence to the satisfaction
of the tribunal. Presumption
literally means “taking as true
without examination or proof”.
Applying the definition of the
word “proved” in Section 3 of the
33 C.C. 2011 / 2021
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
34 C.C. 2011 / 2021
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.
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
35 C.C. 2011 / 2021
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 Hon’ble Supreme Court of India further held that the
accused may adduce evidence to rebut the presumption,
but mere denial regarding existence of debt shall not serve
any purpose. Following was held in paragraph 20 (Kumar
Exports v. Sharma Carpets):
“20….The accused may adduce
direct evidence to prove that the
note in question was not supported
by consideration and that there was
no debt or liability to be discharged
by him. However, the court need
not insist in every case that the
accused should disprove the non-
36 C.C. 2011 / 2021
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…”
Therefore the trial court as
well as the Appellate Court having
found that cheque contained the
37 C.C. 2011 / 2021
signatures of the accused and it
was given to the appellant to
present in the Bank of the
presumption under Section 139 was
rightly raised which was not
rebutted by the accused. The
accused had not led any evidence to
rebut the aforesaid presumption.
The accused even did not come in
the witness box to support his case.
In the reply to the notice which was
given by the appellant the accused
took the defense that the cheque
was stolen by the appellant. The
said defense was rejected by the
trial court after considering the
evidence on record with regard to
which no contrary view has also
been expressed by the High Court.
27. Another judgment which needs to be looked into
is Rangappa vs. Sri Mohan, 2010 (11) SCC 441. A three
Judge Bench of Hon’ble Supreme Court had occasion to
examine the presumption under Section 139 of the Act,
1881. This Court in the aforesaid case has held that in the
38 C.C. 2011 / 2021
event the accused is able to raise a probable defence which
creates doubt with regard to the existence of a debt or
liability, the presumption may fail. Following was laid down
in paragraphs 26 and 27:
“26. In light of these extracts, we are
in agreement with the respondent
claimant that the presumption
mandated by Section 139 of the Act
does indeed include the existence of
a legally enforceable debt or liability.
To that extent, the impugned
observations in Krishna Janardhan
Bhat, (2008) 4 SCC 54, may not be
correct. However, this does not in
any way cast doubt on the
correctness of the decision in that
case since it was based on the
specific facts and circumstances
therein. As noted in the citations,
this is of course in the nature of a
rebuttable presumption and it is
open to the accused to raise a
defence wherein the existence of a
legally enforceable debt or liability
39 C.C. 2011 / 2021can be contested. However, there
can be no doubt that there is an
initial presumption which favours
the complainant.
27. Section 139 of the Act is an
example of a reverse onus clause
that has been included in
furtherance of the legislative
objective of improving the credibility
of negotiable instruments. While
Section 138 of the Act specifies a
strong criminal remedy in relation to
the dishonour of cheques, the
rebuttable presumption under
Section 139 is a device to prevent
undue delay in the course of
litigation. However, it must be
remembered that the offence made
punishable by Section 138 can be
better described as a regulatory
offence since the bouncing of a
cheque is largely in the nature of a
civil wrong whose impact is usually
confined to the private parties
involved in commercial transactions.
In such a scenario, the test of
40 C.C. 2011 / 2021proportionality should guide the
construction and interpretation of
reverse onus clauses and the
defendant-accused cannot be
expected to discharge an unduly
high standard or proof.”
stated supra, it makes it clear that
to rebut the presumption under
Section 139 of the N.I. Act, mere
denial regarding the existence of
debt shall not be serve any purpose.
However, the accused has to raise
probable defense which require to
create a doubt with regard to the
existence of debt or liability.
28. Therefore, keeping in mind the ratio laid down in the
above-mentioned decision, it is clear that the complainant
has proved the initial burden as contemplated under
Section 139 of the Negotiable Instruments Act regarding
the issuance of a cheque by the accused to discharge
legally recoverable debt and also proved the statutory
presumption as provided under Section 118(a) of the
41 C.C. 2011 / 2021
Negotiable Instruments Act that he is the holder in due
course of the cheque issued by the accused to discharge
legally recoverable debt. On perusal of complaint
averments, it is disclosed that the accused has borrowed
the loan of Rs. 26,25,000 from the complainant by
executing a loan agreement as per Ex.P.13, and he
undertook to pay the amount with interest; accordingly, he
had executed the cheques for the sum of Rs. 26,25,000/-,
and the said cheque came to be dishonoured due to
insufficient funds. The legal notice issued to the accused
was duly served to him; despite that, he had not issued a
reply notice nor taken any legal action against the accused
regarding the misuse of cheques; therefore, the accused
failed to rebut the presumption available under section 139
and section 118 of the Negotiable Instruments Act. Hence
the accused is liable to be convicted for the offence
punishable under section 138 of the Negotiable
Instruments Act. The decision relied upon by the learned
counsel for the accused is covered in the recent judgment
of the Hon’ble Supreme Court of India reported in AIR 2023
42 C.C. 2011 / 2021
Supreme Court 5108 (Rajesh Jain V/s. Ajay Singh); hence,
with due respect, the decisions relied upon by the learned
counsel for the accused do not apply to the facts and
circumstances of this case. The complainant has claimed
interest, and instead of granting interest if the court grants
additional compensation along with the cheque amount, it
would be a justifiable and reasonable compensation
amount; hence the accused is liable to pay additional
compensation of Rs. 1,00,000/- in addition to the cheque
amount. The accused failed to rebut the presumption
under section 139 of the Negotiable Instrument Act; hence
it is a fit case to convict the accused., accordingly I answer
point no.1 in the negative and point no.2 answered in the
affirmative.
POINT NO.3:
29. In view of the above findings, this court proceed
to pass the following;
43 C.C. 2011 / 2021
ORDER
Acting under Section 255(2) of code
of criminal procedure, the accused is
hereby convicted for the offense
punishable under Section 138 of
Negotiable Instruments Act.
As per section 357(1)(b) of code of
criminal procedure, the accused persons
shall pay a fine of Rs.27,50,000/-
(Rupees twenty seven lakhs fifty Thousand only) out of that Rs.27,45,000/- (Rupees twenty seven
lakh forty five thousand only)payable to
the Complainant as compensation plus
litigation expenses and of Rs.5,000/-
(Rupees Five Thousand only) is remitted
to the state of government, in default of
payment of fine the accused shall under
44 C.C. 2011 / 2021
go simple imprisonment for a period of 6
months.
The bail bond and surety bonds
executed by the accused stands canceled.
The office is directed to supply free
copy of the judgment to the accused.
{Dictated to the stenographer, transcribed and computerized by her, revised corrected
and then pronounced in the open court on this 18th day of January 2025}.
(SHRISHAIL BHIMASHEN BAGADI)
XX A.C.J.M., Bengaluru.
ANNEXURE
List of witnesses examined on behalf of complainant:
P.W.1 S N Rajashekar Raju P.W.2 K Ramesh P.W.3 B R Lokesh
List of documents produced on behalf of complainant:
Ex.P.1 to 4 Cheque
Ex.P. 1(a) to 4(a) Signature of the accused
Ex.P.5 to 8 Bankers Return Memo
45 C.C. 2011 / 2021
Ex.P.9 Copy of the legal notice
Ex.P.10 Postal receipt
Ex.P.11 Postal acknowledgment
Ex.P.12 Kotak Mahindra Bank
Account statement
Ex. P.13 Loan agreement dated
13.10.2018
Ex. P.13(a) Signature of the accused.
Ex.P.14 Memorandum of deposit of
title deeds
Ex.P.15 Sale Certificate
List of witnesses examined on behalf of accused:
D.W.1 K S Arun Kumar
List of documents produced on behalf of accused:
Ex.D1 & D2 Cheques
XX A.C.J.M.,
Bengaluru.
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