Smt. S N Jyothi Vs M S Subramani

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NC: 2025:KHC:5849 CRL.A No. 1176 of 2013

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10^TH DAY OF FEBRUARY, 2025

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BEFORE

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THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR CRIMINAL APPEAL NO. 1176 OF 2013

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BETWEEN:

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SMT. S.N. JYOTHI W/O T.G. NAGESH AGED ABOUT 46 YEARS R/O SRI BEERESHWARA NILAYA I PARALLEL ROAD RAJENDRA NAGAR SHIVAMOGA-577 201

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…APPELLANT (BY SRI. BASAVARAJ PATEL G.K, ADVOCATE FOR SRI. RANGANATHA S. JOIS, ADVOCATE)

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AND:

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Digitally signed by HEMAVATHY GANGABYRAPPA Location: HIGH COURT OF KARNATAKA

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M.S. SUBRAMANI S/O MAHALINGAM AGED ABOUT 44 YEARS PROPRIETOR M.R. BIRIYANI HOTEL NEAR LAKSHMI THEATRE 100 FT. ROAD SHIVAMOGA CITY-577 201

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…RESPONDENT

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(BY SRI. CHIDAMBARA G.S, ADVOCATE)

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THIS CRL.A. IS FILED U/S.378(4) CR.P.C TO SET ASIDE THE IMPUGNED JUDGMENT OF ACQUITTAL ORDER DATED 18.11.2013 PASSED BY THE III ADDL. C.J. AND J.M.F.C.,

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SHIMOGA IN C.C.NO.440/2009 - ACQUITTING THE APPELLANT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I.ACT.

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THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR

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ORAL JUDGMENT

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This appeal is filed by the complainant challenging the judgment of acquittal dated 18.11.2013 passed in C.C.No.440/2009 by the III Additional Civil Judge and J.M.F.C., Shivamogga, whereunder the respondent - accused has been acquitted for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as 'N.I. Act' for brevity).

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The case of the appellant - complainant in brief, is as under:

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The appellant –complainant and respondent - accused are known to each other through husband of the appellant –complainant. Out of that acquaintance, the accused has borrowed a hand loan of Rs.8,00,000/- for his

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immediate business and domestic needs. On 02.10.2008 the accused has borrowed Rs,8,00,000/- from the appellant –complainant agreeing to repay the same within three months. The respondent –accused has issued post dated cheque for Rs.8,00,000/- and it is dated 08.01.2009

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drawn on Vijaya Bank, S.R. Road Brnach, Shivamogga. The respondent –accused did not repaid the amount within three months and therefore, the complainant presented the said cheque for encashment and the said cheque came to be dishonoured for reason “funds insufficient”. The appellant -complainant got issued legal notice on 18.02.2009 through her counsel calling upon the respondent –accused to pay the cheque amount. Inspite of service of notice the respondent –accused did not pay the cheque amount. Therefore, the complainant has filed a private complaint against the respondent - accused for offence punishable under Section 138 of the NI Act.

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Learned Magistrate has taken cognizance

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against the respondent –accused and registered case in

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C.C.No.440/2009 for offence punishable under Section 138

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of the N.I Act. The plea of respondent - accused has been recorded. The complainant in order to prove her case has examined herself as P.W.1 and got marked documents as Ex.P1 to P7. Ex.D.1 has been marked in the cross examination of P.W.1. The statement of respondent - accused came to be recorded under Section 313 of Cr.P.C. The respondent –accused has been examined himself as D.W.1 and got marked documents as Ex.D2 and D3. Learned Magistrate after hearing arguments on both sides has formulated points for consideration and passed impugned judgment of acquittal. The said judgment of acquittal has been challenged by the complainant in this appeal.

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Heard learned counsel for the appellant and learned counsel for the respondent.

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Learned counsel for the appellant would contend that the respondent –accused has admitted his signature on Ex.P1 –cheque and therefore, the

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presumption has to be drawn under Section 139 of the N.I Act that cheque is issued for discharging debt. The said presumption has not been rebutted by the respondent – accused. The respondent –accused has taken up his defence that signed cheque has been issued as security as he has taken a room on rent in the building belonging

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to the appellant –complainant and the said signed cheque has been misused. He contends that the said defence has not been established. Ex.P7 –sale deed establishes the capacity of the appellant –complainant to lend money of Rs.8,00,000/-. He further submits that merely because

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the appellant –complainant is not holding any money lending license on that ground the case of the appellant – complainant cannot be rejected. On that point he placed reliance on the decision of this Court in the case of V. Satyanarayana Vs M/s. Sandeep Enterprises¹ . On these grounds, he prays to allow the appeal and convict

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1 Reported in ILR 2004 KAR 4505

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NC: 2025:KHC:5849 CRL.A No. 1176 of 2013

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the respondent –accused for offence punishable under Section 138 of the N.I Act.

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Learned counsel for the respondent –accused would contend that in the averments of the complaint itself it is stated that post dated cheque has been issued at the time of borrowing. P.W.1 in her cross examination has admitted that she and her husband were lending money and they did not possess money lending license. There are contradictions in the averments of the complaint and in the deposition of the complainant given in criminal case which is at Ex.D.1 regarding the period of borrowing. It is further contended that the amount at the hand of the appellant –complainant was unaccounted cash and she has not filed any income tax returns. On that point he placed reliance on the decision of the Bombay High Court in the case of Sanjay Mishra Vs Ms Kanishka Kapoor @ Nikki

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And Anr² . He also placing reliance on the decision of CoOrdinate Bench of this Court in the case of B. Girish Vs S.

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2 Reported in 2009 CRI.L.J 3777

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NC: 2025:KHC:5849 CRL.A No. 1176 of 2013

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Ramaiah³ has contended that huge money of

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Rs.8,00,000/- has been lent by cash and any money to be lent above Rs.20,000/- has to be given though account payee cheque. There are no documents regarding lending huge amount to the respondent –accused. Considering the said aspect, the presumption drawn under Section 139 of N.I Act has been rebutted. On these ground he submits that learned Magistrate has rightly passed impugned judgment of acquittal and prays for dismissal of the appeal.

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Having heard learned counsels, this Court has

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perused the impugned judgment and trial Court records.

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It is specific case of the appellant –complainant that she lent Rs.8,00,000/- to the respondent –accused on 02.10.2008 and for making repayment of the said amount borrowed the respondent –accused has issued cheque – Ex.P1 dated 08.01.2009 for Rs.8,00,000/-. The respondent –accused has admitted his signature on 3 Reported in 2010 SCC OnLine Kar 54

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Cheque –Ex.P1. As signature on Ex.P1 –cheque is admitted, the presumption has to be drawn under Section 139 of N.I Act that the cheque has been issued for discharging of debt. The said presumption is rebuttable presumption. The standard of proof for rebutting the presumption is preponderance of probability.

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On reading the cross examination of P.W.1, the defence of the respondent –accused is that he had taken a room on rent in the building belonging to the appellant – complainant and her husband and as security deposit is not given, he had issued signed blank cheque as security and the same has been misused. The suggestion put in that regard has been denied by P.W.1. In order to prove the said defence the respondent –accused has not placed any evidence on record. He has not choosen to examine any of tenants in the said building. The complainant owning the said building is admitted and they giving rooms on rent is also admitted. They taking the advance as security deposit is also admitted by P.W.1. But the

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defence of the respondent –accused giving signed blank cheque as security for occupying the said building as tenant in lieu of non paying security deposit has been denied by P.W.1. Merely because there are contradictions in the averments of the complaint and evidence of P.W.1 with regard to the period of borrowing with the statement made by the complainant in C.C. No. 427/2009 which is at Ex.D.1, the said aspect will not disprove the fact of lending money by the complainant to the respondent –accused.

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The respondent –accused has contended that the appellant –accused had no capacity to lend cash of Rs.8,00,000/- to the respondent –accused. Ex.P7 is certified copy of registered sale deed dated 24.01.2008 wherein the complainant, her husband and their two children have sold their property for consideration of Rs.47,00,000/- and the said consideration has been received by cash. The said document –Ex.P7 –sale deed is not disputed by the respondent –accused. The said sale has taken place 08 months prior to the said transaction of

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hand loan. Therefore, the said aspect itself establish that the appellant –complainant has capacity of lending of Rs.8,00,000/- as on the date of borrowing by the respondent –accused. Merely because there is gap of more than 08 months between the receiving cash by the complainant and her family members and the date of lending, it cannot be said that she had no capacity to lend Rs.8,00,000/-.

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Merely because the appellant –complainant has not filed her income tax returns, it cannot be said that the said amount received by her under registered sale deed cannot be said to be unaccounted money. Considering all these aspects, the respondent –accused has failed to rebut the presumption drawn under Section 139 of the N.I Act.

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The Hon’ble Apex Court in the case of Rajesh Jain Vs Ajay Singh⁴ has observed as under

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4 Reported in AIR Online 2023 SC 807

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“55. As rightly contended by the appellant, there is a fundamental flaw in the way both the Courts below have proceeded to appreciate the evidence on record. Once the presumption under Section 139 was given effect to, the Courts ought to have proceeded on the premise that the cheque was, indeed, issued in discharge of a debt/liability. The entire focus would then necessarily have to shift on the case set up by the accused, since the activation of the presumption has the effect of shifting the evidential burden on the accused. The nature of inquiry would then be to see whether the accused has discharged his onus of rebutting the presumption. If he fails to do so, the Court can straightaway proceed to convict him, subject to satisfaction of the other ingredients of Section 138. If the Court finds that the evidential burden placed on the accused has been discharged, the complainant would be expected to prove the said fact independently, without taking aid of the presumption. The Court would then take an overall view based on the evidence on record and decide accordingly.”

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In view of the above decision of the Hon’ble Apex

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Court, if the accused has failed to discharge his onus of rebutting the presumption, the Court has to straight away

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proceed to convict him for offence punishable under Section 138 of the N.I Act subject to satisfaction of other ingredients of Section 138 of the N.I Act.

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The Hon’ble Apex Court in the case of

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Kalamani tex and Another Vs P. Balasubramanian⁵

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has held as under

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"13. Adverting to the case in hand, we find on a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystalized by this Court in Rohitbhai Jivanlal Patel v. State of Gujarat in the following words:

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"18. In the case at hand, even after purportedly drawing the presumption under

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5 Reported in (2021) 5 SCC 283

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Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing record such facts on circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant- accused."

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In the case on hand, even after purportedly

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drawing the presumption under Section 139 of the N.I Act, the trial Court proceeded to question the want of evidence on the part of the complaint as regards the source of funds for advancing loan to the accused. The approach of the trial Court is not proper and correct. Merely because the

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appellant –complainant and her husband lent money to different persons, it cannot be said that they are doing money lending business. In the case on hand there is no any averments regarding charging of any interest on the amount lent by the appellant –complainant to the respondent –accused. Without considering all these aspects in proper perspective, the learned Magistrate has erred in passing the judgment of acquittal of the respondent –accused for offence punishable under Section 138 of the N.I Act by impugned judgment.

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The said judgment of acquittal passed by the trial Court is perverse. Considering the other aspects, the appellant –complainant has satisfied all ingredients of Section 138 of N.I Act. The notice of the dishonour of cheque has been issued within statutory period. The said notice has been served on the respondent –accused. The respondent –accused has not paid cheque amount within statutory period. The appellant –complainant has filed the complaint within statutory period from the date of cause of

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action. The respondent –accused requires to be convicted for offence punishable under Section 138 of N.I Act.

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In the result, the following

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ORDER

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i) The appeal is allowed.

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ii) The impugned judgment of acquittal dated 18.11.2013 passed in C.C.No.440/2009 by the III Additional Civil Judge and J.M.F.C., – Shivamogga acquitting the respondent accused for offence punishable under Section 138 of the N.I Act is set aside.

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iii) The respondent –accused is convicted for offence punishable under Section 138 of the N.I Act and he has been sentenced to pay fine of Rs.8,10,000/- and in default of payment of said

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