Sri Krishnamurthy Vs Sri Srinivasa Reddy

SRI.SRINIVASA REDDY S/O KRISHNAREDDY AGED ABOUT 40 YEARS R/AT MAHADI YELLAPPA HOUSE DOMMASANDRA VILLAGE ANEKAL TALUK BANGALORE RURAL DIST – 562 016 …RESPONDENT

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(BY SRI.M.D.BASAVANNA, ADV.)

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THIS CRL.A. IS FILED UNDER SECTION 378(4) CR.P.C., PRAYING TO SET ASIDE THE ORDER DATED 13.11.2012 PASSED BY THE XXL ADDL. SMALL CAUSES JUDGE AND XIX ACMM BANGALORE IN C.C.NO.20587/2007 – ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I.ACT.

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THIS APPEAL HAVING BEEN HEARD AND RESERVED ON 25.06.2025 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THE COURT DELIVERED THE FOLLOWING:

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CORAM: HON'BLE MR JUSTICE S RACHAIAH

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CAV JUDGMENT

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(PER: HON'BLE MR. JUSTICE S RACHAIAH)

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The appellant being the complainant before the Trial Court, preferred this appeal, being aggrieved by the judgment of acquittal dated 13.11.2012 in CC.No.20587/2007 on the file of XXI Additional Small Causes Judge and XIX Additional Chief Metropolitan Magistrate, Bengaluru, wherein, the Trial Court recorded the acquittal for the offences punishable under Section 138 of Negotiable Instruments Act, 1881 (for short ‘NI Act’).

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The ranks of the parties will be considered as per the rank of the Trial Court, henceforth for convenience.

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Factual matrix of the case:

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It is the case of the complainant that, the accused had approached him and requested him to advance a sum of Rs.5,00,000/- as a hand loan on 15.01.2006 for the purpose of purchasing a goods vehicle and also he had promised that he would repay the amount within one year. In the month of October-2006, the complainant requested the accused to repay

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the said loan amount of Rs.5,00,000/-. Therefore, the accused

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stated to have issued a cheque for a sum of Rs.5,00,000/- with assurance that the amount will be honoured, if it is presented. When the cheque was presented for encashment, the same came to be returned with an endorsement as “Funds Insufficient”. The complainant issued a legal notice dated 24.01.2007. Inspite of having received the said notice, the accused did not return nor reply to the said legal notice. Therefore, the complainant filed a complaint before the Jurisdictional-Police.

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To prove the case, the complainant examined himself as P.W.1 and got examined another witness as PW.2 and got marked 9 documents as Ex.P1 to P9. On the other hand, the accused examined himself as D.W.1 and got marked 29 documents as Ex.D1 to D29.

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Heard, Sri.V.Anand, learned counsel for the appellant and Sri.M.D.Basavanna, learned counsel for the respondent.

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It is the submission of the learned counsel for the appellant that the Trial Court did not raise the presumption as

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it requires to be raised. Consequently, the impugned judgment is passed, which is required to be set aside.

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It is further submitted that the defence of the accused ought not to have been considered without insisting the documentary evidence. It is a settled principle of law that mere denial is not sufficient to rebut the presumption. The Trial Court acted upon the denial of the accused and recorded the acquittal, which is not proper and therefore, the same is liable to be set aside.

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Per Contra, the learned counsel for the respondent stated that the Trial Court has rightly appreciated the documents produced by the accused. The accused has not only rebutted the presumption on the basis of oral evidence, but also, by producing documentary evidence as well. Therefore, the findings of the Trial Court in recording the acquittal is proper. Hence, interference with the said findings may not be necessary. Making such submissions, the learned counsel for the respondent prays to dismiss the appeal.

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Having heard the learned counsel for the respective

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parties and also perused the findings of the Trial Court, it is

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appropriate at this stage to refer the findings of D.W.1. The accused in his evidence has stated that, on 15.11.2004, he stated to have borrowed a sum of Rs.20,000/- and issued two cheques as security. He admitted Exs.P.1 and P.2 cheques and he further stated that he had repaid the amount of Rs.20,000/- to the complainant. Again, he stated that, on 20.11.2014, the complainant stated to had given a sum of Rs.30,000/- as hand loan. For the purpose of security, he had issued three cheques and he identified Ex.P.3 to P.5. On 03.08.2010, he stated to have entered into an agreement as per Ex.P.17. However, he denied the transaction as stated in the said agreement. Further, he admitted the signature found on Ex.P.1 to P.5 and also admitted that he had a bank account in his name. A suggestion was made to him that the accused had purchased property at Kannigiri Village at Andhra Pradesh for a sum of Rs.35,00,000/-. He received Rs.20,00,000/- as a hand loan from the complainant by adding the said amount, he purchased the said property for a sum of Rs.35,00,000/-, he denied the said suggestions. However, he admitted the contentions of Ex.P.17. Now, it is relevant to refer the contents of Ex.P.17 for the purpose of considering its relevancy. The said

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document appears to be an agreement of sale. The said agreement was held between Krishna Murthy and Neriga Krishnappa Manjunatha. The said document would indicate that Krishna Murthy, who is the appellant/complainant in this case had entered into an agreement of sale with the said Neriga Krishnappa Manjunatha for a sum of Rs.70,00,000/-. As per the said agreement, the complainant in this case had advanced a sum of Rs.33,00,000/- to the vendor. The said Krishnappa Manjunatha is none other than the accused in this case. The complainant submitted that the accused had agreed to sell the property in question to the complainant. However, in order to commit fraud, the accused had sold the property to some other person. Therefore, the complainant demanded to return the advance amount along with interest and damages. Therefore, the accused had issued five cheques as stated in the averments of the complaint.

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It is further contended that the accused in order to repay the amount as stated in Ex.P.17, he stated to have issued cheques to the complainant, which are marked as Exs.P.1 to P.5. Though, the contention of the accused appears to be appropriate, the said contention cannot be accepted for

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the reason that it is a mere denial. Therefore, it cannot be accepted. However, the Trial Court, considering the defence of the accused that he had received a sum of Rs.50,000/- as hand loan and he had issued a cheque as security for the said amount, which appears to be not proper and the said findings is erroneous

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It is a settled principle of law that when the execution of cheque is admitted, the court has to arise the presumption in favor of the complainant that the said cheque was received for the legally enforceable debt or liability.

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In the present case, except denial of the transaction, the accused has not rebutted the presumption by producing cogent evidence. In this context, it is relevant to refer the judgment of Hon’ble Supreme Court in the case of BIR SINGH v. MUKESH KUMAR¹ , paragraph Nos.18 to 24 read thus:

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“18. In passing the impugned judgment and order dated 21-11-2017, the High Court misconstrued Section 139 of the Negotiable Instruments Act, which mandates that unless the contrary is proved, it is to be presumed that the holder of a cheque

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1 (2019) 4 SCC 197

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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. Needless to mention that the presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque.

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19. In Hiten P. Dalal v. Bratindranath Banerjee, this Court held that both Sections 138 and 139 require that the court shall presume the liability of the drawer of the cheques for the amounts for which the cheques are drawn. Following the judgment of this Court in State of Madras v. A. Vaidyanatha Iyer, this Court held that it was obligatory on the court to raise this presumption.

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20. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the nonexistence of the presumed fact as held in Hiten P. Dalal.

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21. Presumption of innocence is undoubtedly a human right as contended on behalf of the respondent-accused, relying on

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the judgments of this Court in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and Rajesh Ranjan Yadav v. CBI. However the guilt may be established by recourse to presumptions in law and presumptions in facts, as observed above.

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22. In Laxmi Dyechem v. State of Gujarat, this Court reiterated that in view of Section 139, it has to be presumed that a cheque was issued in discharge of a debt or other liability but the presumption could be rebutted by adducing evidence. The burden of proof was however on the person who wanted to rebut the presumption. This Court held “however, this presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of a post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act”.

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23. In Kumar Exports v. Sharma Carpets, this Court reiterated that there is a presumption that every negotiable instrument duly executed, is for discharge of a debt or liability, but the presumption is rebuttable by proving the contrary. In the facts and circumstances of the case it was found that the cheque in question was towards advance for purchase of carpets, which were in fact not sold by the payee of the cheque to the drawer, as proved from the deposition of an official of the Sales Tax Department, who stated that the payee had admitted that he had not sold the carpets.

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24. In K.N. Beena v. Muniyappan, this Court held that in view of the provisions of Section 139 of the Negotiable Instruments Act read with Section 118 thereof, the Court had to presume that the cheque had been issued for discharging a debt or liability. The

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said presumption was rebuttable and could be rebutted by the accused by proving the contrary. But mere denial or rebuttal by the accused was not enough. The accused had to prove by cogent evidence that there was no debt or liability. This Court clearly held that the High Court had erroneously set aside the conviction, by proceeding on the basis that denialsaverments in the reply of the accused were sufficient to shift the burden of proof on the complainant to prove that the cheque had been issued for discharge of a debt or a liability. This was an entirely erroneous approach. The accused had to prove in the trial by leading cogent evidence that there was no debt or liability.”

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On careful reading of the above said judgment of

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the Hon’ble Supreme Court, it makes clear that mere denial of the transaction is not sufficient to hold that the accused had rebutted the presumption. Therefore, in my considered view, the Trial Court has committed error in analyzing the process of law under the NI Act. Accordingly, the judgment of acquittal is liable to be set aside.

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Hence, I proceed to pass the following:

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ORDER

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i. The appeal is allowed.

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ii. The judgment and order dated 13.11.2012 passed in CC.No.20587/2007 by the XXI Additional Small

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Causes Judge and XIX Additional Chief Metropolitan Magistrate, Bengaluru.

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iii. The accused/respondent is convicted for the offences punishable under Section 138 of NI Act.

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iv. The accused is sentenced to pay a fine of Rs.7,00,000/-. In default of payment of fine, he shall undergo simple imprisonment for one and half-a year.

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v. In case, if the said amount is deposited, the Trial Court is at liberty to release the amount of Rs.90,000/- in favor of the complainant on proper identification as compensation as is required under Section 357 A of Cr.P.C/BNSS, 2023.

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vi. The Registry is directed to send the order of this Court along with documents to the Trial Court for further proceedings.

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Sd/(S RACHAIAH) JUDGE

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NM

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List No.: 1 Sl No.: 58

Sri Krishnamurthy v. Sri Srinivasa Reddy

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Sri Krishnamurthy v. Sri Srinivasa Reddy

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