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IN THE HIGH COURT OF KARNATAKA
S Rachaiah, J.
M/S. Khushboo`s Restaurant – Appellant
Versus
Mr. Suhail Khan – Respondent
Criminal Revision Petition No. 524 of 2016
Decided On : 29-09-2023
N.I. Act - Negotiable Instruments Act, Section 138 - Sections 118, 139 - The court discussed the presumption of liability under Section 139 of the N.I. Act, which mandates that once the execution of a cheque is admitted, there is a presumption that it was issued for the discharge of a debt. The court emphasized that this presumption is rebuttable and the burden lies on the accused to provide a probable defense. The court found that the complainant failed to establish a legally enforceable debt, leading to the reversal of the conviction.
Fact of the Case:
The petitioners, a company and its partners, were convicted under Section 138 of the N.I. Act for issuing cheques that bounced due to insufficient funds after borrowing Rs.10,00,000 from the respondent. The petitioners contended that they did not receive the loan amount despite issuing cheques and promissory notes.
Finding of the Court:
The court found that the trial and appellate courts failed to consider the evidence and the defense raised by the petitioners, particularly regarding the non-receipt of the loan amount and the implications of the presumption under Section 139 of the N.I. Act.
Issues: 1) Are the concurrent findings of conviction sustainable? 2) Have the petitioners established grounds for interference with the conviction?
Ratio Decidendi: The court held that the presumption of liability under Section 139 was not rebutted by the complainant, as they failed to prove the existence of a legally enforceable debt. The court emphasized the need for the complainant to establish their case beyond reasonable doubt, which they did not.
Final Decision: The Criminal Revision Petition was allowed, and the judgments of conviction and sentence were set aside.
ORDER
1. This Criminal Revision Petition is filed by the petitioners, being aggrieved by the judgment of conviction and order of sentence dated 18.04.2015 in C.C.No.13171/2012 on the file of the learned XXI Additional Chief Metropolitan Magistrate, Bangalore, and its confirmation judgment and order dated 19.03.2016 in Crl.A.No.715/2015 on the file of the learned LXVI Additional City Civil and Sessions Judge, Bangalore City (CCH-67), seeking to set aside the concurrent findings recorded by the Courts below, wherein the petitioners / accused are convicted for the offence punishable under Section 138 of the Negotiable Instruments Act (for short 'N.I. Act').
2. The petitioners are the accused before the Trial Court and appellants before the Appellate Court.
Brief facts of the case are as under:
3. It is the case of the complainant that, petitioner No.1 is the Company, petitioner Nos. 2 and 3 are the Partners. The petitioner Nos.2 and 3 being the Partners, stated to have approached the respondent to borrow a loan of Rs.10,00,000/-and assured the respondent that, they would repay the said amount within one month with 1% interest per month. It is further stated that petitioner Nos.2 and 3 have executed two On-demand Promissory Notes and issued two post-dated cheques for the said transaction. The respondent as per the instructions of petitioner Nos.2 and 3 presented the said cheques for encashment on 17.03.2012, those cheques were returned as 'funds insufficient'. A complaint came to be lodged before the jurisdictional Magistrate.
4. To prove the case of the complainant, the complainant examined, in all, 4 witnesses as PWs.1 to 4 and got marked 12 documents as Exhibits P1 to P12. On the other hand, the accused have not led any evidence nor marked any documents on their behalf. The Trial Court after appreciating the oral and documentary evidence on record, convicted the petitioners for the offence stated supra. Being aggrieved by the same, the petitioners preferred an appeal before the Appellate Court, the Appellate Court confirmed the judgment of conviction rendered by the Trial Court. Being aggrieved by the same, the petitioners have preferred this revision petition seeking to set aside the concurrent findings.
5. Heard Shri Ramesh P.Kulkarni, learned counsel for the petitioners, and Ms. Geeta R.Shindhe, learned counsel appearing on behalf of Shri Rajendra Desai, learned counsel for the respondent.
6. It is the submission of learned counsel for the petitioners that the judgment of conviction and order of sentence passed by the Trial Court and its confirmation order passed by the Appellate Court require to be set aside as the concurrent findings are perverse, illegal and opposed to facts and law.
7. It is the contention of learned counsel for the petitioners that petitioner No.3 is not a Partner to petitioner No.1 - Company and the cheques issued on behalf of the said Company would not fasten the liability. It is further contended that after execution of On-demand Promissory Notes and cheques to the respondent anticipating that the respondent would pay the amount, the respondent did not lend the amount as agreed upon by him. Therefore, the Trial Court and the Appellate Court failed to take note of the above-said fact and convicted the petitioners for the offence punishable under Section 138 of the N.I. Act, which appears to be erroneous and liable to be set aside. Making such submissions, the learned counsel for the petitioners prays to allow the petition.
8. Per contra, learned counsel for the respondent, justified the concurrent findings and submitted that it is admitted by the petitioner Nos.2 and 3 that they are the Partners of petitioner No.1 - Company and they have approached the respondent for financial assistance. The respondent after having paid the amount of Rs.10,00,000/- has obtained two On-demand Promissory Notes and two cheques.
9. It is further submitted that the Courts below after appreciating the oral and documentary evidence o
The presumption of liability under Section 139 of the N.I. Act is rebuttable, and the burden lies on the complainant to prove the existence of a legally enforceable debt beyond reasonable doubt.
The presumption under Sec. 139 of the Negotiable Instruments Act is rebuttable, and the burden of proof lies on the complainant to establish the existence of a legally enforceable debt.
The presumption of a legally enforceable debt under Sections 138 and 139 of the N.I. Act is strong and requires evidence to the contrary by the accused, which was not provided.
The main legal point established is the significance of the presumption under Sec. 139 of the N.I. Act and the accused's burden to raise a probable defence to rebut the presumption.
Under S. 139 of the Negotiable Instruments Act, once the execution of a cheque is established, a rebuttable presumption of a legally enforceable debt arises, and mere suggestions by the accused witho....
The burden to prove financial capability lies on the complainant when the accused raises a probable defense, not requiring proof beyond reasonable doubt.
The main legal point established in the judgment is the presumption under Section-139 of the N.I. Act and the burden of proof on the accused to rebut the presumption.
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