High Court of Karnataka dismissed an appeal against acquittal in a Section 138 NI Act case. The Court held the accused rebutted the presumption due to lack of documentary evidence proving the underlying transaction, confirming the trial court's finding of no privity of contract.
Appeal dismissed; judgment of acquittal confirmed; bail bonds cancelled.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF JULY, 2024
BEFORE
THE HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR
CRIMINAL APPEAL NO. 62 OF 2012
BETWEEN:
D. ACHUTHA KAMATH S/O D. YASHWANTH KAMATH AGED 55 YEARS PROPRIETOR M/S M.G.M. TRADERS APMC YARD, SHIVAMOGA.
…APPELLANT
(BY SRI. P.N. HARISH, ADVOCATE)
AND:
Digitally signed by SHAKAMBARI Location: HIGH COURT OF KARNATAKA
RAJESHWARI P.M W/O MARULARADHYA MAJOR PROP:T.S. SWAMY ARECANUT COMPANY R/O 1ST CROSS, RAVINDRANAGAR SHIVAMOGA.
…RESPONDENT
(BY SRI P.B. UMESH ADVOCATE FOR SRI R.B. DESHPANDE, ADVOCATE)
THIS CRL.A IS FILED U/S.378(4) OF CR.P.C, PRAYING TO SET ASIDE THE IMPUGNED JUDGMENT OF ACQUITTAL OF RESPONDENT DATED 15.11.2011 PASSED IN C.C.NO.1392/2009 BY THE III - ADDL. CIVIL JUDGE AND JMFC, SHIVAMOGGA - ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S. 138 OF N.I.ACT.
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THIS CRIMINAL APPEAL HAVING BEEN RESERVED FOR JUDGMENT COMING ON FOR PRONOUNCEMENT OF THIS DAY, RAMACHANDRA D. HUDDAR J., DELIVERED/PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE RAMACHANDRA D. HUDDAR)
Appellant/Complainant being aggrieved and dissatisfied of acquittal of Respondent/Accused in Criminal Case No. 1392/2009 dated 15.11.2011 by the III Addl. Civil Judge And J.M.F.C., Shivamogga, has preferred this appeal.
Case of the Complainant before the trial Court:
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complainant. To repay the said amount, accused issued a cheque bearing No.128706 dated 30.09.2003 drawn on State Bank of Mysore, A.P.M.C. Yard, Shivamogga. Complainant stated that, along with cheque of Rs.4,00,000/-, another cheque was also endorsed to the complainant for Rs.5,00,000/- in order to return the advanced money paid by the complainant towards supply of Arecanut. That means the accused has issued two cheques in favour of the complainant. But when the cheque was presented for encashment, it was dishonoured with endorsement as the accused has reported that the " Cheque is lost ".
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He has maintained the account in the name of accused and it is running account.
Cognizance of the trial Court:
under Section 313 of Cr.PC, accused was examined herself as DW.1 and closed her evidence.
Case of the Accused before the trial Court:
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cheques on 30.09.2003. Therefore, she is not liable to pay the amount of Rs.4,00,000/-.
Findings of trial Court:
arguments and on assessment of the evidence placed on record by the complainant and accused, held that, according to Section 139 of the NI Act, if a cheque is made out to the complaint, it will be assumed that the cheque was made out to the holder in order to discharge liabilities. The concept mentioned earlier was applied in this instance. But the accused has raised probable defence and rebutted the presumption drawn in favour of the complainant that she has not purchased Arecanut worth Rs.4,00,000/from the complainant. In fact, the complainant was unable to present evidence that the accused had bought Arecanuts from his mandi for an amount of Rs. 4,00,000/-. Accused has demonstrated that she has lost the cheque book. Furthermore, the complainant has not demonstrated that, he has sent out a
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demand notice on the Ex.P1 cheque. After taking into account all of these factors, the trial Court concluded that, the complainant had not provided sufficient evidence to establish that, the accused had committed the offence covered by Section 138 of the NI Act and acquitted her from the charges brought against her.
Proceedings before this Court:
i) Submissions on behalf of the Appellant:
the said cheque, it will be encashed. As the respondent was the regular customer, believing the words of the respondent, he presented the said cheque for encashment
through his Banker. But, it was returned with an
endorsement by his banker stating that, `Cheque is lost'.
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documentary and prays to allow the appeal and set aside the impugned judgment.
ii) Submissions on behalf of the Respondent:
this fact, she submitted a petition to her banker informing about the losing of the cheque book belonging to her. Accordingly, the bank acted upon the said petition and when the said cheque was presented by the complainant, rightly the banker has issued an endorsement. To that
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effect accused has lead evidence. To disprove the defence of the accused, no effective cross-examination is directed by the complainant. Hence, according to him, the learned trial Court has considered all the factual and legal aspects and rightly dismissed the complaint and acquitted the accused. He supported the reasons assigned by the trial Court.
" Whether the trial Court has committed legal and factual error in acquitting the accused by observing that, the accused has rebutted the presumption available under the NI Act?"
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complainant i.e. Shivamogga Arecanut Mandi Merchants Co-operative Bank Ltd., APMC Yard, Shivamogga. But, the said cheque was dishonoured as per the memo dated 6.10.2003 by reporting that, cheque is lost as per the instructions of the accused. Thereafter, he issued a statutory notice on 22.10.2003 and called upon the accused to pay the cheque amount both under certificate of posting and RPAD which were duly served on the accused. But, accused did not pay the cheque amount. Therefore, within the stipulated time, the complainant filed the private complaint on 25.11.2003. Thus, with regard to the mandatory provisions of filing a complaint alleging the offence under Section 138 of the NI Act are complied by the complainant.
attributed against the accused, the heavy burden lies on the complainant to prove the ingredients of the offence as mandated under the provisions of NI Act. No doubt, the presumption is very much available under Section 118 and
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139 of the NI Act, but, it is a rebuttable presumption.
Sections 118 and 139 of the NI Act read as under:
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;
(b) as to date:— that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance:— that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer:— that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of endorsements:— that the endorsements appearing upon a negotiable instrument were made in the order in which they appear then on;
(f) as to stamp:— that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course:— that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has
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been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
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.
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from the banker. According to him, except Ex.P1, no cheque was given to the accused.
evidence is placed on record by the complainant. He admits that, he is also having a running account and he accepts the cheque by way of a security. But, he denies that he has accepted the said cheque because of the security.
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lost the cheque book with instruction not to honour any of the cheques. So the defence of the accused is corroborated by the evidence of PW.2 examined by the complainant.
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with regard to losing of cheque book. She informed the banker but, has not filed any police complaint. She admits that Ex.P(1)(a) is her signature. Though lengthy crossexamination is directed to her, but, throughout her crossexamination, she is consistent about losing of the cheque and informing the Bank.
cheque amount is Rs.4,00,000/- and Arecanut worth Rs.4,00,000/- sold by him by his MGM Traders, as spoken to by him, there must have been some entries in the books of account maintained in his business. But, he has
not produced even a scrap of paper to that effect to buttress his plea of maintaining the said account with regard to the entries of transactions. The said entries in the books of account or the receipt for having sold the arecanut worth Rs.4,00,000/-, at least an office copy could have been the best evidence to prove the transaction of
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sale of Arecanut by the complainant to the accused. In the absence of such suitable and apt evidence, it can never be stated that, the complainant is able to prove the transaction between himself and accused with regard to sale of Arecanut by him.
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an accused has to rebut the presumption under Section
139, the standard of proof for doing so is that of “preponderance of probabilities”. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail.
the complainant is not proved in accordance with law. There was no privity of contract of sale of Arecanut by the complainant with the accused and in the absence of such an acceptable evidence, it can very well be stated that, the
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accused has rebutted the presumption available under Section 139 of NI Act.
the trial Court which is impugned in this appeal. Accordingly, the point raised supra is answered against the complainant-appellant.
Resultantly, I pass the following:
ORDER
(i) Appeal is dismissed . The impugned judgment of acquittal passed by III Addl.Civil Judge, Shivamogga dated
NC: 2024:KHC:29531 CRL.A No. 62 of 2012
15.11.2011 in CC No.1392/2009, is hereby confirmed.
(iii) Send back the trial Court records along
with copy of this judgment forthwith.
Sd/(RAMACHANDRA D. HUDDAR) JUDGE
SK List No.: 1 Sl No.: 1
2 issues framed by the court
Whether the trial Court committed legal or factual error in acquitting the accused who rebutted the presumption under Section 139 of the NI Act.
Whether the complainant proved the existence of a legally enforceable debt or liability to sustain the presumption under Section 139.
Colour shows how this judgement treated each authority
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