Allowed

Sri Jaggesh S v. M N K Movies

Karnataka HC22 Nov 2024CRL.A/936/2023

Case brief

AI extract

What is this about?

In this criminal appeal against an acquittal under Section 138 of the Negotiable Instruments Act, the High Court allowed the appeal. It held that the Trial Court erred in ignoring the statutory presumption of service of notice and the legally enforceable debt arising from an agreement admitted by the accused consequent to the cheque issuance.

What did the court decide?

The Criminal Appeal was allowed; the impugned judgment of acquittal was set aside; the accused was convicted and sentenced to pay a fine of Rs.1,25,00,000/-.

Sri Jaggesh S Vs M N K Movies — Cheque Dishonour | Karnataka HC (2024)

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1 - NC: 2024:KHC:47686 CRL.A No. 936 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 22^ND DAY OF NOVEMBER, 2024

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BEFORE

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THE HON'BLE MRS JUSTICE M G UMA

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CRIMINAL APPEAL NO. 936 OF 2023 (A)

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BETWEEN:

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SRI JAGGESH .S. S/O LATE SHIVALINGAPA, AGED ABOUT 59 YEARS, RESIDING AT NO.106/32 12^TH CROSS, 10^TH MAIN, MALLESHWARAM, BANGALORE - 560 003

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…APPELLANT

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Digitally signed by SWAPNA V Location: high court of karnataka

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(BY SRI. PRABHULING K. NAVADAGI, SR. ADVOCATE FOR SMT. SANJEEVINI P. NAVADGI, ADVOCATE)

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AND:

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M.N.K. MOVIES, REPRESENTED BY ITS PROPRIETOR, SRI. M.N. KUMAR, S/O NANJAPPA, NO.6, GROUND FLOOR, 5^TH MAIN, 4^TH CROSS, GANDHINAGAR, BANGALORE - 560 009 (BY SRI. RAJESH .A., ADVOCATE)

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…RESPONDENT (BY SRI. RAJESH .A., ADVOCATE) THIS CRL.A IS FILED U/S 378 CR.PC PRAYING TO 1. SET ASIDE THE JUDGMENT DATED 07.11.2022 PASSED IN C.C.NO.4245/2020 ON THE FILE OF THE ADDITIONAL CHIEF METROPOLITAN MAGISTRATE, BENGALURU CITY (SCCH-6). 2. PASS A JUDGMENT CONVICTING THE RESPONDENT FOR THE OFFENCE P/U/S 138 OF N.I. ACT AS PRAYED FOR IN C.C.NO.4245/2020 ON

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Retyped and Replaced vide chamber order dated 16.01.2025

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THE FILE OF THE IV ADDITIONAL, SMALL CAUSE JUDGE AND ACMM, BENGALURU CITY (SCCH-6).

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THIS CRL.A, COMING ON FOR FURTHER ARGUMENTS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MRS JUSTICE M G UMA

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ORAL JUDGMENT

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The appellant being the complainant in CC No.4245 of 2020 on the file of the learned Additional Chief Metropolitan Magistrate, Bengaluru City (SCCH - 6), is impugning the judgment dated 07.11.2022 acquitting the accused for the offence punishable under Section 138 of the Negotiable Instruments Act (for short 'the NI Act').

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For the sake of convenience, the parties shall be referred to as per their rank and status before the Trial Court.

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Brief facts of the case are that, the complainant has filed the private complaint in PCR No.2024 of 2020 against the accused before the Trial Court alleging commission of the offence under Section 138 of NI Act. It is the contention of the complainant that he was knowing the accused very well, since several years. The complainant is a film star in Kannada film industry and the accused was having a production office. He

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approached the complainant during May 2018 and expressed his willingness to produce a film with the actor Sudeep in the lead role. Therefore, he requested the complainant to invest Rs.1,00,00,000/-. The accused assured the complainant that he will assign the entire distribution rights of the said film in respect of the revenue districts of Mysuru, Mandya, Coorg and Hassan. Agreeing for the same, the complainant entered into the agreement with the accused on 28.05.2018 and thereafter, he had handed over a sum of Rs.25,00,000/- to the accused in cash. Further, on 29.05.2018 the complainant had transferred a sum of Rs.75,00,000/- through RTGS to the bank account of the accused. The accused has acknowledged the receipt of the amount.

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It is contended that the accused has failed to start production of the film and after repeated demands, the accused issued post dated cheque bearing No.974481 dated 07.03.2020 for Rs.1,00,00,000/- on 02.03.2020, towards repayment of the amount received by him. When the cheque was presented for encashment, the same was dishonoured as funds insufficient. The complainant issued legal notice calling upon the accused to repay the cheque amount. In spite of service of notice, the

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accused has not repaid the cheque amount and thereby, committed the offence punishable under Section 138 of NI Act. Accordingly, he requested the Trial Court to take cognizance of the offence and to initiate legal action.

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The Trial Court took cognizance of the offence and registered CC No.4245 of 2020. The accused has appeared before the Trial Court and pleaded not guilty. The complainant examined himself as PW1 and got marked Exs.P1 to P5. The accused denied all the incriminating materials available on record in his statement under Section 313 of Cr.P.C., examined himself as DW1 and got marked Exs.D1 to D6 in support of his defence. The Trial Court after taking into consideration all these materials on record, came to the conclusion that lending of the amount is not proved and service of notice on the accused is also not proved. Therefore, the accused is acquitted. Being aggrieved by the same, the complainant is before this Court.

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Heard Sri. Prabhuling K. Navadagi, learned Senior Advocate for Smt. Sanjeevini P Navadagi, learned counsel for the appellant and Sri. Rajesh A, learned counsel for the

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respondent. Perused the materials including the Trial Court records.

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Learned senior advocate for the complainant

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contended that an amount of Rs.25,00,000/- in cash and Rs.75,00,000/- through RTGS was paid to the accused and an agreement was entered into between the parties. Since the accused has not produced the film as undertaken, he issued the cheque - Ex.P1 on 02.03.2020 by mentioning the date as 07.03.2020 and promised to arrange for necessary funds in his account for honouring the cheque. But when the cheque was presented for encashment, the same was dishonoured as there was insufficient funds.

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The legal notice issued to the accused as per Ex.P3

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was returned unserved as addressee left. Learned senior advocate contended that the address mentioned in the legal notice - Ex.P3 is the address mentioned in the agreement between the parties and also in the complaint filed before the Trial Court. Ex.D5 is the letter addressed by the accused to the Manager of IDBI Bank which is dated 20.07.2022. Even in this letter, the address of the accused is same as mentioned in

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Ex.P3. DW1 has not given any details regarding shifting of his residence from the said address. Under such circumstances, the presumption under Section 27 of General Clauses Act, would operate. The burden is on the accused to rebut the presumption regarding service of notice. Even though the accused is examined as DW1, he has not rebutted the said presumption. The Trial Court committed an error in placing the burden to prove service of notice on the complainant, which is erroneous in law.

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Learned senior advocate placed reliance on the decision of the Hon'ble Apex Court in K Bhaskaran Vs Sankaran Vaidhyan Balan and Another¹ , in support of his contention that there is presumption in favour of sender of the notice when the same is sent to the correct address of the accused. The accused has never given any other address where he was residing. Under such circumstances, the contention taken by the complainant before the Trial Court should have been accepted and the accused should have been convicted.

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Learned senior advocate contended that the accused admits the agreement that was entered into between 1 (1999) 7 SCC 510

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the complainant and himself. The copy of the agreement is produced by the accused himself as Ex.D3. But however, the accused is pleading discharge which is never proved by him. Issuance of the cheque as per Ex.P1 was never disputed by the accused. Once the accused admits issuance of the cheque with his signature, the presumption under Section 139 of NI Act would arise and the burden shifts on the accused to rebut the legal presumption. But the Trial Court committed an error in placing the burden on the complainant to prove lending of the amount, which is perverse and illegal. Hence, he prays for setting aside the impugned judgment of acquittal passed by the Trial Court, in the interest of justice.

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Per contra, learned counsel for the respondent opposing the appeal submitted that the accused has admitted the receipt of only Rs.75,00,000/- but not Rs.1,00,00,000/- as contended by the complainant. The accused admits issuance of cheque with his signature, but it was blank cheque issued as security. The same was misused by the complainant. The accused has adduced his evidence as DW1 and produced Exs.D1 to D6. He has cross examined PW1 at length, by which he has rebutted the presumption under Section 139 of NI Act.

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Learned counsel for the respondent contended that

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PW1 even though initially denied earlier transactions with the accused, categorically admitted Ex.D1, according to which, Rs.1,80,000/- was paid by the complainant on 21.05.2019. The cheque was presented on 07.03.2020. Therefore, the accused has taken a specific defence that there was no legally enforceable debt to an extent of Rs.1 crore with the complainant to present cheque Ex.P.1.

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Learned counsel submitted that even though Ex.D3

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is the agreement dated 28.05.2018, stating that accused had approached the complainant for a sum of Rs. 1 crore towards production, of which, only Rs.75 lakhs was received by the accused and not Rs.1 crore as contended by the complainant. The accused is still in the process of producing the film and hence agreement Ex.D3 is not yet cancelled. Under such circumstances, there is no question of repaying loan availed i.e., Rs.75 lakhs to the complainant. Learned counsel submitted that legal notice issued by the complainant was admittedly returned as addressee left and therefore, it was returned to the sender as per endorsement found in Ex.P5. Under such circumstances, service of notice on the accused cannot be presumed. The

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accused has also produced Ex.D6 the letter written by the land lord dated 19.07.2022 to the effect that the accused had vacated the premises on 31.12.2019. Under such circumstances, it cannot be stated that the notice in question was deliberately evaded by accused. Even the presumption under Section 27 of General Clauses Act, 1897 will not come to the rescue of the complainant.

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Learned counsel contended that the cheque Ex.P.1 was given to the complainant but it was the blank cheque, with the signature of the accused, issued as security when there was an earlier transaction between the complainant and the accused. Even though the loan earlier obtained was already repaid, the cheque in question was not returned and the same was misused. Learned counsel for the respondent refers to Ex.D2 the bank statement pertaining to the complainant to contend that Rs.90,00,000/- was obtained by the accused and the same was repaid as per Ex.D2. The cheque in question was given as security for the loan of Rs.90,00,000/- which was already discharged as per Ex.D2. Therefore, misuse of the cheque by the complainant is evident.

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Learned counsel placed reliance on Ex.D5 - the

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letter addressed by the accused to the Manager of IDBI Bank requesting the details regarding the cheque in question and endorsement by the bank manager is found on the document to state that the cheque book series with Nos. 974461 to 974510 was issued by the bank to the accused on 19.04.2017. Therefore, it is contended by the learned counsel for the accused that the cheque in question was issued by the accused to the complainant on 19.04.2017, when the agreement Ex.D3 was not at all in existence.

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Learned counsel contended that, Ex.D3 agreement is dated 28.05.2018. The recital in the agreement discloses that

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the accused had approached the complainant for a sum of Rs.1 crore towards production of a picture with certain percentage of interest. The terms of agreement do not suggest that the said 1 crore was paid on the said date to the accused. ExD4 is the bank statement pertaining to the complainant. As per this statement, it was only on 29.05.2018 ie., on the next date of entering to the agreement as per ex.D3, Rs.75 lakhs was transferred to the accused. So admittedly, as on the date of

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agreement Ex.D3 on 28.05.2018 nothing has been paid to the accused.

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He further stated that the accused denies receipt of Rs.25,00,000/- which according to the complainant, paid in cash. Withdrawal of such huge amount of Rs.25,00,000/- is not evidenced from the account statement of complainant - Ex.D4. The complainant has to clarify as to when that cash of Rs.25,00,000/- was paid and what was the source of the same.

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Learned counsel also contended that, PW1 contends that there were no earlier transaction between him and the accused. But subsequently, during cross examination, he admits Ex.D2 - the account statement of the complainant. According to which, a sum of Rs.90,00,000/- was paid by the accused to the complainant. This fact is admitted by PW1. Ex.D2 is the ledger account of the accused pertaining to complainant for the period from 01.04.2017 to 31.03.2018. PW1 during cross examination does not deny borrowal of Rs.90,00,000/- by the accused during 2017 but states that the said transaction is all together different

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and the same is already closed. Under these circumstances, the accused has taken the defence that Ex.P1 blank cheque with his

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signature was given as security when the loan of Rs.90,00,000/was lent by the complainant and the same was not returned to the accused.

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Learned counsel for the accused placed reliance on Ex.D4 - bank statement pertaining to the complainant to contend that the amount of Rs.25,00,000/- which is said to have been paid by the complainant to the accused in cash is not probalized by the bank details of the complainant. When the complainant has not probalized lending of Rs.1 crore as agreed under Ex.D3, and when the accused is successful in taking a probable defence, accused is entitled for acquittal. The Trial Court on proper appreciation of the materials on record came to the conclusion to acquit the accused. The judgment do not call for interference by this Court. Hence, prays for dismissal of the appeal.

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In view of the rival contentions urged by learned counsels for both the parties, the point that would arise for my consideration is:

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"Whether the impugned judgment of acquittal passed by the Trial Court suffers from perversity or illegality and calls for interference by this Court?"

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My answer to the above point is in the 'Affirmative' for the following:

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R E A S O N S

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It is the specific contention of the complainant that, the accused had borrowed a sum of Rs.1 crore from the complainant for the purpose of producing a film. An agreement was entered into between the two on 28.05.2018. The complainant had paid Rs.25,00,000/in cash and Rs.75,00,000/- was transferred through RTGS. Thus the accused had received Rs.1 crore under the agreement referred to above. It is stated that the accused had not produced the film as undertaken and when the complainant insisted for repaying the amount, he issued the cheque bearing No.974481 dated 07.03.2020 for Rs.1,00,00,000/- on 02.03.2020. When the cheque was presented for encashment, the same was dishonoured as funds insufficient. Even though the legal notice was sent to the proper address, the same was returned unserved as addressee left. It is stated that the accused had deliberately not received the notice, nor paid the cheque amount and thereby, committed the offence punishable under Section 138 of NI Act.

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To prove this contention the complainant examined himself as PW-1. During cross-examination, it is suggested to the witness that there was an earlier transaction where the accused borrowed Rs.90,00,000/- from the complainant and the said amount is already repaid. This fact is admitted by the complainant. It is suggested to the witness that a blank cheque was issued by the accused as security during 2017, but the same was denied by PW-1. It is pertinent to note that the accused himself has produced copy of the agreement dated 28.05.2018 and got it marked as Ex.D-3. The contents of the agreement is not in dispute.

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My attention was drawn by the learned Senior Advocate for the complainant, to the evidence on record where the accused had categorically admitted entering into the agreement dated 28.05.2018, agreeing for the terms and had signed the document. He also admits that as per Ex.D3, he had received Rs.1,00,00,000/-. After admitting about entering into the agreement and receipt of the amount, the accused had taken a defence that he had received only Rs.75,00,000/- which was transferred through RTGS, but had not received the remaining Rs.25,00,000/-. This contention of the accused is

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contrary to the terms of agreement - Ex.D3, which is an admitted document.

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Learned counsel for the respondent contended that, the legal notice was never served on the accused, but it was returned as the accused left the address. The legal notice - Ex.P3 is dated 19.03.2020. The postal receipt is produced and returned envelop is also produced to evidence that the same is returned as the addressee left. The address of the accused mentioned in the notice is the address shown in the agreement EX.D3. It is pertinent to note that the accused had produced Ex.D5 - a letter addressed by the accused to the Manager, IDBI Bank, Gandhinagara, Bengaluru on 20.07.2022 in the letterhead of the accused. Strangely the address of the accused even on 20.07.2022 is the same address as mentioned in the agreement - Ex.D3 and the legal notice, which is dated 19.03.2020. There is no reasonable explanation by the accused as to how he continued to show his address in Ex.D5 as the same address as shown in the legal notice, if he had already vacated the premises.

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The accused placed reliance on Ex.D6, one more

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letter said to have been issued by the owner of the premises in question dated 19.07.2022, wherein it is stated that the accused M.N. Kumar - the tenant in the ground floor has already vacated the premises on 31.12.2019. But strangely in Ex.D6, there is no reference to the premises which was in occupation of the accused. The address mentioned in the legal notice Ex.P3 and the address mentioned in Ex.D5 were never referred to in Ex.D6 to state that the accused was in possession of the premises mentioned in Ex.P3 and Ex.D5 had vacated the premises. Under such circumstances, the contention taken by the accused that he had left the address and the notice was not served on him cannot be accepted.

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Section 27 of the General Clauses Act, 1897, raises presumption in favour of service of notice when the same is sent by registered post to the correct address of the addressee. It is the settled proposition of law that when the address of the addressee as shown in the legal notice is shown to be correct as on the date of sending the notice and it is duly dispatched for delivery as per Section 27 of the General Clauses Act, 1897, the service is presumed to be complete. It is also pertinent to note

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that the address which is mentioned in the legal notice Ex.P3, in the letter Ex.D5 is again shown as the address of the respondent-accused while filing the private complaint. Admittedly, the accused appeared before the Trial Court after service of summons on him in the same address. Under such circumstances, I find considerable force in the contention taken by the complainant that the accused deliberately avoided service of notice.

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Learned Senior Advocate for the appellant placed reliance on the decision of the Co-ordinate Bench of this Court in Fakirappa v/s Shiddalingappa & Anr² , where the Coordinate Bench placed reliance on the decision of Hon'ble Apex Court in State of Madhya Pradesh v/s Hiralal and Others³ to hold that even in respect of endorsements like, 'not available in the house', 'house locked', 'shop closed', notice must be deemed to have been served on the addressee, if the same is addressed to the correct address and dispatched through post.

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Learned counsel also placed reliance on the decision

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of the Hon'ble Apex Court in K Bhaskaran v/s Sankaran

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2 ILR 2022 KAR 181

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3 1996(1) SC 69

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Vaidhyan Balan & Anr⁴ where the Hon'ble Apex Court held in

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paragraph No.24 as under:

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"24. No doubt Section 138 of the Act does not require that the notice should be given only by “post”. Nonetheless the principle incorporated in Section 27 (quoted above) can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-service. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strategy of subterfuge by successfully avoiding the notice."

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In view of the above, the position of law on service of legal notice on the addressee is well settled. The accused except denying service of notice has not rebutted the legal presumption.

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Learned counsel placed reliance on the decision of the Co-ordinate Bench of this Court in Uday Shetty v/s Yogesh Gudigar⁵ wherein it is specifically held that if the address shown in the notice is that of the addressee which is found to be correct and if it is established that postal article was

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4 (1999) 7 SCC 510

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5 2022 (1) KCCR 188

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having the correct and complete address of the addressee by paying requisite postage and duly dispatched for delivery, then presumption of Section 27 of General Clauses Act, 1897 could be drawn. However, on facts of the case, the Court held that the complainant who had taken a contention that the notice was sent through certificate of posting had not proved dispatching of notice. The facts of the present case as discussed above discloses that even though the accused contends that he had already left the address and therefore, he was not served with the notice is falsified by Ex.D5 - the letter addressed by the accused himself much after the legal notice Ex.P3, which bears the same address. Moreover, even the complaint refers to the address of the accused as shown in the legal notice and the accused is served with the summons.

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It is not in dispute that the accused had not repaid

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the cheque amount after dishonour of the cheque in question. The only defence taken by the accused is that he had received only Rs.75,00,000/-and that the cheque - Ex.P1 was issued by him as security during 2017 when he had borrowed Rs.90,00,000/- which is already repaid. If at all the earlier loan is already repaid, there is absolutely no reason for the accused

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for not demanding and receiving back the blank cheque issued as security. Admittedly, the accused has not initiated any action against the complainant for withholding the blank cheque with him, which was issued as security.

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Learned counsel also placed reliance on the decision of the Hon'ble Apex Court in Bir Singh v/s Mukesh Kumar⁶ where the Hon'ble Apex Court held in paragraph Nos.34 and 36 as under:

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" 34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence.

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35.xxxx

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36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

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When the accused admits issuance of the cheque as

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per Ex.P1 with his signature, the initial burden on the

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6 (2019) 4 SCC 197

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complainant gets discharged. The burden shifts on the accused to rebut the legal presumption under Sections 118 and 139 of NI Act. The accused has no reasonable explanation about his defence even after producing Ex.D3 - the agreement, which is an admitted document.

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Learned counsel for the respondent contended that PW-1 had admitted receipt of Rs.1,80,000/- from the accused towards part payment and therefore, the complainant failed to establish existence of legally enforceable debt. On going through the evidence of PW-1 it is clear that the witness has stated that the said amount was paid towards the earlier transaction and not with regard to the present one. Interestingly, the accused who admits receipt of Rs.75,00,000/- also admits that he had not repaid even the said amount as he is still in the process of making of the cinema but strangely contends that he has paid Rs.1,80,000/-. There is no explanation as to why the accused had paid that amount when he contends that Ex.D3 - the agreement is still in force and the accused is still in the process of making the cinema as undertaken. Therefore, it is clear that the accused has taken inconsistent defence and thus, it cannot be held that he has probabalized his defence.

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Learned Senior Advocate for the appellant placed reliance on the decision of the Hon'ble Apex Court in Shree Daneshwari Traders v/s Sanjay Jain and Another⁷ wherein the Hon'ble Apex Court reiterated the position of law with regard to the presumption under Section 139 of NI Act and held in paragraph Nos. 17, 18 and 19 as under:

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"17. Under Section 138 of the Negotiable Instruments Act, once the cheque is issued by the drawer, a presumption under Section 139 of the Negotiable Instruments Act in favour of the holder would be attracted. Section 139 creates a statutory presumption that a cheque received in the nature referred to under Section 138 of the Negotiable Instruments Act is for the discharge in whole or in part of any debt or other liability. The initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt.

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18. It is for the accused to adduce evidence of such facts and circumstances to rebut the presumption that such debt does not exist or that the cheques are not supported by consideration.

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19. Considering the scope of the presumption to be raised under Section 139 of the Act and the nature of evidence to be adduced by the accused to rebut the presumption, in Kumar Exports v. Sharma Carpets the

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7 (2019) 16 SCC 83

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Supreme Court in paras 14-15 and paras 18-20 held as under :

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“14. 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.

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15. 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, 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 disaffirmative 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’.

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***

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18. Applying the definition of the word “proved” in Section 3 of the 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 end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration

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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.

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19. 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 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.

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20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. 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-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

¶128

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probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.”"

¶130

Learned counsel for the respondent has placed reliance on the decision of the Hon'ble Apex Court in Dashrathbhai Trikambai Patel v/s Hitesh Mahendrabhai Patel and Anr⁸ , wherein the Hon'ble Apex Court has referred to its earlier decision in M/s Electronics Trade and Technology Development Corporation Ltd⁹ and extracted paragraph No.16 of the said judgment which reads as under:

¶131

"16. The judgments of this Court on post-dated cheques when read with the purpose of Section 138 indicate that an offence under the provision arises if the cheque represents a legally enforceable debt on the date of maturity. The offence under Section 138 is tipped by the dishonour of the cheque when it is sought to be encashed. Though a post-dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable

¶132

8 AIR 2022 Supreme Court 4961

¶133

9 AIR 1996 SC 2339

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debt at the time of encashment. If there has been a material chance in the circumstances, such that the sum in the cheque does not represent a legally enforceable debt at the time of maturity or encashment, then the offence under Section 138 is not made."

¶136

The facts and circumstances, in the present case do not help the accused to place reliance on this decision to rebut the presumption under Section 139 of NI Act. Even though a defence is taken that he availed loan of only Rs.75 lakhs, the same is not probabalized.

¶137

Learned counsel placed reliance on the decision of Co-ordinate Bench of this Court in M/s Paxal Surgicals, Bengaluru v/s Ashok Kumar¹⁰ . Referring to paragraph No.8 of the decision it is contended that the complainant has failed to prove the existence of legally enforceable debt. But when the accused categorically admits the agreement Ex.D3 and the contents of the same, the accused cannot turn around and contend that he has not received the consideration amount as mentioned in Ex.D3 or that he had issued the cheque only as security not intended to be towards discharge of legally enforceable debt or liability under Ex.D3. Under such

¶138

10 2022 (3) KCCR 2029

¶139

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circumstances, I am of the opinion that the complainant is successful in proving the existence of legally enforceable debt and compliance of all the requirements under Section 138 of NI Act. The accused who has taken the defence has not probablized the same and hence, he is liable for conviction.

¶141

I have gone through the impugned judgment of acquittal passed by the Trial Court. The Trial Court proceeded to hold that there is no evidence on record to show that the legal notice is served on the accused. It is held that the complainant has not examined the postal officials to prove service of notice and that non-examination of postal officials is fatal to the case of the complainant. In view of the legal presumption Section 27 of General Clauses Act, the observations made by the Trial Court is perverse and illegal. Further, the Trial Court proceeded to observe that in the absence of proving the lending of the loan to the accused, the presumption under Section 139 of NI Act, cannot be raised in favour of the complainant. The Trial Court ignored the fact that Ex.D3 is the agreement produced by the accused himself, where there is reference to lending of Rs.1,00,00,000/-. Moreover it is the settled proposition of law that the presumption under Section 139 of NI Act includes

¶142

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existence of legally enforceable debt or liability and the burden is on the accused to rebut the same. Under such circumstances, the impugned judgment is prima facie perverse and illegal. Hence, the same calls for interference by this Court. Accordingly, I answer the above point in affirmative.

¶144

REGARDING SENTENCE

¶145

Heard learned Senior Advocate for the appellant and learned counsel for the respondent on imposition of sentence.

¶146

The appellant contended that maximum sentence may be imposed on the respondent. But learned counsel for the respondent prays for showing maximum leniency in favour of the accused.

¶147

Considering the facts and circumstances of the case as discussed above and also in view of the fact that the Trial Court initially acquitted the accused, I am of the opinion that it is not a case for imposing maximum sentence or substantive sentence for the accused. Reasonable and proportionate fine may be imposed on the respondent - accused which will meet the ends of justice. Accordingly, I proceed to pass the following:

¶148

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ORDER

¶150

(i) The Criminal Appeal is allowed.

¶151

(ii) The judgment dated 07.11.2022 passed in CC No. 4245/2020, on the file of the learned Additional Chief Metropolitan Magistrate, Bengaluru city (SCCH-6), is hereby set aside.

¶152

(iii) Consequently, the accused is convicted for the offence punishable under Section 138 of NI Act and is sentenced to pay fine of Rs.1,25,00,000/- within eight (8) weeks, from today. In default to pay fine, the accused shall undergo simple imprisonment for a period of one year.

¶153

Out of the fine amount, an amount of Rs.1,24,00,000/is ordered to be paid as compensation to the complainant.

¶154

Send back TCR along with copy of this judgment for information and necessary action i.e., to issue conviction warrant.

¶155

Sd/(M G UMA) JUDGE

¶156

BGN/BH/SPV List No.: 2 Sl No.: 53

Sri Jaggesh S v. M N K Movies

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Sri Jaggesh S v. M N K Movies

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