Anil B Katti, J
1. Appellant/complainant feeling aggrieved by judgment of Trial Court on the file of IV Additional I Civil Judge and JMFC, Mysore, in C.C.NO.1701/2011 dated 09.12.2013 preferred this appeal.
2. Parties to the appeal are referred with their ranks as assigned in the Trial Court for the sake of convenience.
3. Heard the arguments of both sides.
4. After hearing arguments of both sides and on perusal of Trial Court records, the following points arise for consideration:
1) Whether the impugned judgment under appeal passed by Trial Court for the offence punishable under Section 138 of N.I.Act is perverse, capricious and legally not sustainable?
2) Whether interference of this Court is required?
5. On careful perusal of oral and documentary evidence placed on record, it would go to show that daughter of complainant R Monisha is studying in St.Josephs School, Jayalakshmipuram, Mysore and the mother of accused Smt. Mary is the teacher in the same school where daughter of complainant is studying. Accused being daughter of Smt. Mary, teacher, developed acquaintance with complainant and thereby as both accused and complainant were known to each other. On 15.12.2009, accused borrowed loan of Rs.2,00,000/- from the complainant for her legal necessities i.e. for admission of her children to St.Josephs Public School, CBSC I standard at Vijayanagar, Mysore, agreeing to pay the loan with interest at 18% p.a. and return the amount within 6 months from the date of borrowing. Accused has also executed “On demand promissory note and consideration receipt” in favour of complainant dated 15.12.2009. Accused did not pay the interest as agreed. On 1.6.2010 after re-opening of the school, complainant approached the accused and demanded to pay the entire principal amount of Rs.2,00,000/- and upto date interest. Accused instead of paying the entire amount, has paid only Rs.10,000/- cash and for balance amount of Rs.1,90,000/-issued post dated cheque bearing No.343025 dated 20.11.2010 drawn on South Indian Bank, St. Josephs School Branch, Jayalakshmipuram, Mysore. Complainant presented the said cheque through his banker, State Bank of Mysore, Gokulam Branch, Mysore on 20.11.2010 Ex.P.3 and the same was dishonoured vide Bank endorsement dated 23.11.2010 Ex.P.2 as “insufficient fund”. Complainant issued demand notice dated 06.12.2010 Ex.P.4 through “RPAD” and also through “Under certificate of Posting”. The RPAD receipt is produced at Ex.P.5 and “UCP” receipt at Ex.P.6. Demand notice sent through RPAD is duly served to the accused on 09.12.2010 vide acknowledgement card Ex.P.7. On demand promissory note and consideration receipt contained in the same page are produced at Exs.P.8 and P.9. Accused in spite of due service of demand notice has neither replied to the demand notice nor paid the amount covered under the cheque. Therefore, complainant has filed the complainant on 19.01.2011. If the above referred documents are perused and appreciated with the oral testimony of PW.1, then it would go to show that the complainant has complied with the necessary legal requirements in terms of Section 138(a) to (c) of Negotiable Instruments, Act, 1881 (hereinafter for brevity referred to as “N.I.Act”). Complainant within one month from the date of accrual of cause of action, has filed complaint on 19.01.2011 in terms of Section 142(1)(b) of N.I.Act. When the complainant has produced requisite evidence to prove that Ex.P.1 cheque was issued by accused for lawful discharge of debt and the same was dishonoured for want of sufficient funds in the account of accused so also complied the legal requirements, then statutory presumption in terms of Section 118 and 139 of the N.I. Act will have to be drawn in favour of the complainant.
6. In this context of the matter, it is useful to refer the judgment of Hon'ble Apex Court in APS Forex Services Pvt. Ltd. Vs. Shakti International Fashion Linkers and others reported in AIR 2020 SC 945, wherein it has been observed and held that once the issuance of cheque with signature on cheque is admitted, there is always a presumption in favour of complainant that there exist legally enforceable debt or liability. Plea by accused that cheque was given by way of security and same has been misused by complainant is not tenable.
It also profitable to refer another judgment of Hon'ble Apex Court in P. Rasiya vs. Abdul Nazer and another reported in 2022 SCC OnLine SC 1131, wherein it has been observed and held that:-
" Once the initial burden is discharged by the complainant that the cheque was issued by the accused and signature of accused on the cheque is not disputed, then in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for discharge of any debt or other liability. The presumption under Section 139 of N.I. Act is statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the complainant/holder of the cheque, in that case it is for the accused to prove the contrary."
In view of the principles enunciated in the aforementioned two judgments of Hon'ble Apex Court, it is evident that when once issuance of cheque with signature of accused on the account maintained by him is admitted or proved then statutory presumption in terms of Section 118 and 139 of N.I. Act will have to be drawn.
7. It is now up to the accused to place rebuttal evidence to displace the statutory presumption available in favour of the complainant. In this context of the matter, learned counsel for the appellant/complainant has relied on the judgment of Hon'ble Apex Court in Tedhi Singh Vs.Narayan Dass Mahant reported in (2022) 6 SCC 435 wherein it has been observed and held in paragraph 9 of the judgment as under :
“9. xxxx The proceedings under Section 138 of the N.I. Act is not a civil suit. At the time, when the complaint gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent the Courts in our view were right in holding on those lines.”
In view of the principles enunciated in this judgment, the complainant was not expected to initially lead evidence that he had the financial capacity. The defence of accused in challenging the financial capacity was not known to the complainant and as such, the complainant was not expected to give evidence of his financial capacity when he led his evidence. However, in the very same paragraph, the Hon'ble Apex Court has further held as under :
“However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross examination of the witnesses of the complainant. Ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.
The Hon’ble Apex Court has held that though accused has not replied to the demand notice, the accused has the right to challenge the financial capacity during the cross-examination of PW.1 and the witnesses relied by the complainant. Therefore, it is open for the accused to challenge the financial capacity of complainant in giving loan amount covered under Ex.P.1.
8. In the present case accused in spite of due service of demand notice Ex.P.4 vide acknowledgement card Ex.P.7 has not chosen to reply to the demand notice and thus has failed to avail the first available opportunity to put forth her defence to the claim of complainant that Ex.P.1 cheque was issued for lawful discharge of debt. Accused during the cross-examination of PW.1 also has not made out any specific defence as to how complainant came in possession of cheque Ex.P.1 duly signed by accused on the account maintained by her in South Indian Bank. The tenor of cross-examination only goes to show that accused has challenged the financial capacity of the complainant in giving hand loan of Rs.2,00,000/- to the accused.
9. It is the specific evidence of complainant PW.1 that on 15.12.2009, accused availed loan of Rs.2,00,000/- for getting admission of her children to St. Joseph Public School, CBSC I standard at Mysore by executing on demand promissory note and consideration receipt dated 15.12.2009 vide Exs.P.8 and P.9. The complaint averments and the evidence of PW.1 to the effect that the daughter of complainant R.Monisha is studying in St.Josephs school and the mother of accused is working as a teacher in said school. Accused through her mother was known to the complainant and she approached him for loan of Rs.2,00,000/- for getting admission of her children to the very same school St. Joseph Public School, CBSC I standard at Vijayanagar, Mysore. The said fact has not been denied by the accused during the cross-examination of PW.1. In the entire cross-examination of PW.1, accused has not denied execution of on demand promissory note and consideration receipt Exs.P.8 and P.9.
10. It is the contention of accused in the cross-examination of PW.1. that the writings in cheque Ex.P.1 is not that of accused and the same also differs with the signature of accused, since the ink used in writing the other particulars of cheque Ex.P.1 and the ink of signature are different. The learned counsel for the appellant relied on the judgment of Hon’ble Apex court in Bir Singh vs.Mukesh Kumar reported in (2019) 4 SCC 197 wherein it has been observed and held as under :
“A meaningful reading of the provision of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability.
The fact that the cheque might be post-dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Act. Further, it is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted. 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.”
In view of the principles enunciated in this decision, even if the contention of accused is to be accepted that writing particulars of cheque Ex.P.1 is not that of her, then also accused cannot escape from the penal action in terms of Section 138 of the N.I. Act.
11. Learned counsel for the appellant also placed reliance on the judgment of the Hon’ble Apex Court in Rangappa Vs. Mohan reported in AIR 2010 SC 1898 wherein it has been observed and held as under :
“xxxx The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was to probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist.”
(Emphasis supplied)
In view of the principles enunciated in this judgment of Hon’ble Apex Court and also in terms of the Section 118(a) of the N.I. Act, the passing of consideration has to be presumed in favour of the holder in due course, unless the contrary is proved by accused. In the present case, accused other than the bare denial of passing of consideration has not brought any material evidence on record to discredit the evidence of PW.1 and the issuance of cheque Ex.P.1 for lawful discharge of debt. Therefore, passing of consideration under Ex.P.1 in terms of Section 118(a) of N.I. Act will have to be presumed.
12. Accused has challenged the financial capacity of the complainant to pay the loan amount of Rs.2,00,000/- as pleaded in the complaint. In support of such contention, reliance is placed on the judgment of the Hon'ble Apex Court in K.Subramani Vs. K.Damodaranaidu reported in (2015) 1 SCC 99 wherein it has been observed and held that :
“Ss.138, 118 and 139- Dishonour of cheque-Legally recoverable debt not proved as complaint could not prove source of income from which alleged loan was made to appellant- accused-Presumption in favour of holder of cheque, hence, held, stood rebutted.”
The Hon’ble Apex Court having so observed has restored the judgment of acquittal passed by the Trial Court.
13. Complainant claims that he is doing business and has got source of income. The said fact stated in examination-in-chief has not been challenged by the accused in cross-examination of PW.1. It is not disputed that daughter of complainant R Monisha is studying in the very same St.Joseph’s School, Jayalakshmipuram, Mysore and in which school itself, the accused wanted to get her children admitted and for that purpose, she availed the loan of Rs.2,00,000/-. It means that accused admits that complainant must have spent the same amount for getting admitted his daughter R Monisha in the very same school. It is not necessary for the complainant to place documents that he possessed that much of amount when the loan was given. Looking to the evidence on record, it would go to show that complainant is capable of generating amount of Rs.2,00,000/- for giving loan to the accused.
14. Learned counsel for the complainant has invited attention of this Court to the memo filed by accused herself dated 20.04.2013 after appearance in this case. The memo dated 20.4.2013 is taken on record and the same is evidenced in the proceedings recorded in the order sheet on 20.04.2013, whereunder accused had undertaken to make part payment on the next date. This filing of memo with the signature of accused has never been challenged by the accused during trial before the Court. Therefore, the accused now cannot go back and say that she has not received any amount recovered under cheque Ex.P.1 and the same was not issued for lawful discharge of debt. Therefore, the evidence of accused as DW.1 cannot be accepted as sufficient rebuttal evidence to displace the statutory presumption available in favour of complainant in terms of Section 118 and 139 of the N.I. Act.
15. The Trial Court without properly appreciating the above referred evidence on record mechanically believed the evidence of DW.1 and the suggestion put to PW.1 which has been denied by the witness as rebuttal evidence to displace the statutory presumption available in favour of complainant. When the accused has failed to probabalise her defence by virtue of evidence placed on record, then statutory presumption in favour of complainant in terms of Section 118 and 139 of N.I. Act continues to operate. Therefore, the Trial Court was not justified in acquitting the accused for the offence under Section 138 of N.I. Act which has been duly proved by the complainant out of the material evidence placed on record.
16. Now remains the question of imposition of sentence. The Court while imposing sentence will have to keep in mind the nature of offence committed by accused, material evidence placed on record, circumstances under which loan was availed by accused and the other attending circumstances leading to the issuance of cheque Ex.P.1 for lawful discharge of debt. If the said things are kept in mind and the evidence on record is appreciated with regard to the facts and circumstances of the case, then if the accused is sentenced to pay a fine of Rs.2,00,000/-and in default of payment of fine to undergo S.I. for 3 months is ordered, will meet the ends of justice. Consequently, proceed to pass the following :
ORDER
The appeal filed by the appellant/complainant is hereby allowed.
The judgment of the Trial Court on the file of IV Additional I Civil Judge and JMFC, Mysore, in C.C.NO.1701/2011 dated 09.12.2013 is hereby set aside.
Accused is convicted for the offence under Section 138 of N.I. Act and sentenced to pay a fine of Rs.2,00,000/- and in default of payment of fine to undergo S.I. for 3 months.
In exercise of power under Section 357 of Cr.P.C. out of the fine amount of Rs.2,00,000/-, Rs.1,95,000/- is ordered to be paid to the complainant as compensation and remaining Rs.5,000/- is ordered to be defrayed as prosecution expenses.
Registry to send back the records to Trial Court with a copy of this order.
