SRI A S SRINIVASA S/O LATE SURAPPA AGED ABOUT 63 YEARS, R/AT NO.147/15, 1^ST MAIN, 3^RD CROSS, VENKATESHWARA LAYOUT, S G PALYA, DHARMARAM COLLEGE POST BENGALURU - 560 029

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……APPELLANT

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(BY SRI. H S PRASHANTH, ADVOCATE)

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AND:

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SRI SURESH S/O SRI MUNI NARASIMHA NO.19, 2^ND MAIN ROAD, TAVAREKERE MAIN ROAD, DHARMARAM COLLEGE POST, BENGALURU - 560 029

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ALSO AT SRI SURESH, PROPRIETOR M/S MEENAKSHI, HARDWARE REDDY BUILDING, TAVAREKERE MAIN ROAD, DHARMARAM COLLEGE POST BENGALURU - 560 029

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…….RESPONDENT

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(BY SRI. J.K.LOKESHA, ADVOCATE)

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THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C PRAYING TO SET ASIDE THE JUDGMENT DATED 19.01.2018 IN C.C.NO.3188/2015 PASSED BY THE XIII ADDITIONAL CHIEF METROPOLITAN MAGISTRATE,

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BENGALURU AND CONSEQUENTLY CONVICT THE ACCUSED FOR THE OFFENCES PUNISHABLE UNDER SECTION 138 OF NEGOTIABLE INSTRUMENTS ACT, IN THE INTEREST OF JUSTICE AND EQUITY.

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THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 12.02.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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J U D G M E N T & ORDER ON I.A.NO.1/2024

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Being aggrieved by dismissal of complaint filed by him for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 ('for short N.I. Act'), complainant has filed this appeal under Section 378 (4) of Cr.P.C.

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For the sake of convenience, parties are referred to by their rank before the trial Court.

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It is the case of the complainant that he and accused are good friends since past 10 years i.e since 2004. There are certain financial transactions between complainant and accused as accused used to borrow

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hand loan from the complainant. Similarly, during

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December 2012, accused sought financial assistance in a sum of Rs.15 lakhs as he was constructing a house and that he was also required finance for his business. Accused promise to repay the same within two years. Accordingly, complainant paid hand loan in a sum of Rs.15 lakhs to the accused out of matured LIC bonds and also utilising the lease amount paid by the tenants. When accused fail to repay the amount as per promise and when demanded by the complainant, accused issued cheque dated 05.12.2014. However, when the cheque was presented for encashment, it was returned with an endorsement "Refer to Drawer". In this regard, complainant got issued legal notice to the accused. Though it is duly served, accused has neither paid the amount due not sent any reply and hence, the complaint.

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After service of summons accused appeared

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before the trial Court and contested the case by pleading not guilty.

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In order to prove the allegations against

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accused, complainant got himself examined as PW-1 and got marked Ex.P1 to 8.

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During the course of his statement under Section 313 Cr.P.C, the accused has denied the incriminating evidence led by the complainant.

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The accused has not led any defence

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evidence.

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Vide the impugned judgment and order the trial Court has acquitted the accused on the ground that complainant has failed to prove his financial capacity.

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Aggrieved by the same complainant has filed this appeal, contending that the trial Court has failed to appreciate the facts and circumstances of the case. It has failed to apply the basic principles governing the provisions of Section 138 of N.I. Act. It has failed to rebut the presumption under Section 139 of N.I Act. When accused admit that cheque belongs to him, drawn on his account maintained with his banker and it bears

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his signature, presumption under Section 139 of N.I Act is attracted, placing the burden on accused to rebut the presumption. Though complainant has proved his financial capacity, the trial Court has failed to appreciate the same. The trial Court has also not appreciated the fact that accused has not sent reply to the legal notice. The accused has not disputed the fact that he has handed over property documents and blank stamp paper as security for the loan and this fact is also not appreciated by the trial Court. Viewed from any angle the impugned judgment and order are not sustainable and pray to allow the appeal, convict the accused and sentence him in accordance with law.

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On the other hand, learned counsel for accused has supported the judgment and order and submits that earlier accused had few financial transactions with complainant and at that time he had taken signature of accused to a blank cheque and blank stamp paper and misusing the same he has filed the complaint. Since the complainant has failed to prove his

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financial capacity, the trial Court has rightly dismissed the complaint and pray to dismiss the appeal also.

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The complainant has filed I.A.No.1/2024

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under Section 391 Cr.P.C to permit him to produce the following additional documents:

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The original Sale Deed dated 02.03.2006.

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The original signed blank stamp paper worth Rs.100/-

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In the affidavit appended to the application,

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the complainant has stated that at the time of borrowing hand loan of Rs.15 lakhs, accused had handed over original sale deed pertaining to site and has also given a blank signed stamp paper and on that basis, the complainant has lent hand loan of Rs.15 lakhs. Production of these documents is necessary to appreciate the case of the complainant and pray to allow the application.

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Heard arguments of both sides and perused the record.

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Accused admit the fact that cheque in question belongs to him drawn on his account maintained with his banker and it bears his signature. But he has denied that he borrowed hand loan of Rs.15 lakhs and issued the cheque in question. On the other hand, he has claimed that earlier he had borrowed hand loan from the complainant and at that time he had taken a signed blank cheque and blank signed stamp paper on earlier occasion and utilising the said cheque, he has filed this complaint making false claim. Accused has disputed the service of legal notice as per Ex.P6 and 7 acknowledgements. However, he does not dispute the address to which they were sent. Admittedly, the accused has not sent the reply to the legal notice.

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Having regard to the fact that the cheque in question belongs to accused, drawn on the account maintained with his banker and it bears his signature, presumption under Section 139 of the N.I Act is operating in favour of the complainant, placing the initial burden on the accused to prove that the cheque was not

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issued towards repayment of any debt or liability and on the other hand to establish the circumstances in which the cheque has reached the hands of the complainant. Though the accused has not sent reply to the legal notice, disputing the financial capacity of complainant to lend him hand loan of Rs.15 lakhs, during the trial he has challenged his financial capacity.

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Therefore, as held by the Hon'ble Supreme Court in Tedhi Singh Vs Narayan Das Mahant ( Tedhi Singh )¹ , where the accused has failed to send reply to the legal notice, challenging the financial capacity of the complainant, at the first instance, complainant need not prove his financial capacity. However, at the trial if the financial capacity of complainant is challenged, then it is for the complainant to prove the same.

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In APS Forex vs Shakti International Fashion Linkers Pvt. Ltd ( APS Forex )² , the Hon'ble Supreme Court held that when accused raises issue of financial capacity of complainant, in support of his probable

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1 2022 SCC OnLine SC 302

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2 (2020) 12 SCC 724

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defence, despite presumption operating in favour of complainant regarding legally enforceable debt under Section 139 of N.I. Act, onus shifts again on the complainant to prove his financial capacity by leading evidence, more particularly when it is a case of giving loan by cash and thereafter issue of cheque.

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In Vijay Vs. Laxman and Anr ( Vijay )³ , K.Subramani Vs. K.Damadara Naidu ( K.Surbamani )⁴ and K.Prakashan Vs. P.K.Surenderan ( K.Prakashan )⁵ , also the Hon'ble Supreme Court held that the presumption under Section 139 of N.I. Act, is a rebuttable presumption and when accused rebut the same by preponderance of probabilities, it is for the complainant to prove his case beyond reasonable doubt including the financial capacity.

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In John K.Abraham Vs. Simon C. Abraham & Anr ( John K.Abraham )⁶ , the Hon'ble Supreme Court held that in order to draw presumption under Sections

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3 (2013) 3 SCC 86

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4 (2015) 1 SCC 99

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5 (2008) 1 SCC 258

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6 (2014) 2 SCC 236

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118 and 139 of N.I Act, the burden lies on the complainant to show that:

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(i) She had the requisite funds for advancing the sum of money/loan in question to accused.

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(ii) The issuance of cheque by accused in support of repayment of money advanced was true and

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(iii) The accused was bound to make payment as had been agreed while issuing cheque in favour of the complainant.

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Keeping in mind the ratio in the above decisions, it is necessary to examine whether the complainant has proved his financial capacity to lend Rs.15 lakhs to the accused during December 2012, only after which the burden would shift on the accused to prove his defence. So far as his financial capacity is concerned, in the complaint, the complainant has stated that at the relevant point of time LIC bonds had matured

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and utilising part of the amount from it and also remaining amount from the lease of property, he has paid the hand loan to the accused.

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During the course of evidence the complainant has stated that in addition to the matured LIC bonds and lease amount, he has also taken certain sum from his wife and she had shown it in her income tax returns. During his cross-examination, complainant has deposed that he is running looms at Suddaguntepalya and having income of Rs.30,000/- to Rs.35,000/- p.m. He has also claimed that he is getting rent of about Rs.2,50,000/p.a. Though he has claimed that he is ready to produce documents to prove his income, the complainant has not produced even a piece of paper to establish the said fact. Though he has stated that he do not remember the exact amount received from his wife, he has claimed that the same is reflected in the income tax returns. Though he has claimed that he has filed the income tax returns and he is ready to produce the same, admittedly, no such documents are forthcoming.

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It is the specific case of the complainant that at the relevant point of time accused was constructing a house and for want of funds, the construction was

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stopped and the hand loan in question was taken to finish the construction as well as for business of the accused. At least the complainant could have produced documents to show that at the relevant point of time accused was carrying out construction and for the said purpose, he had taken the loan. It could have supported his case to certain extent. However, the complainant has miserably failed to prove that at the relevant point of time he had financial capacity to lend Rs.15 lakhs to the accused. Consequently, the burden has not shifted on the accused to rebut the presumption. Taking into consideration the oral and documentary evidence placed on record, the trial Court has come to correct conclusion that the allegations against accused are not proved.

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So far as application filed by the complainant seeking permission to produce additional documents is concerned, during the course of his cross-examination, when questioned whether except the subject cheque, any other document was taken in support of the alleged loan granted to the accused, the complainant has stated that

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accused and his father have given a signed blank stamp paper and sale deed of site. Now through this application, complainant intends to produce the same. The accused has taken up as specific defence that earlier he had taken hand loan from the complainant and at that time he had taken blank cheque and blank stamp paper and utilising the blank cheque he has filed the complaint.

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The testimony of complainant that accused had handed over a signed blank stamp paper and original document of the site containing the signatures of accused and his father is not disputed by the accused. Such being the case there is no need for the complainant to prove the same by producing the documents now sought to be produced through I.A.No.1/2024. Even the production of these documents would not improve the case of the complainant as he has failed to prove his financial capacity. In the result, both appeal as well as I.A.No.1/2024 are liable to be dismissed and accordingly the following:

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ORDER

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