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IN THE HIGH COURT OF KARNATAKA
Anil B.Katti, J.
Jeelani Fathima Eshan Consultancy – Appellant
Versus
Vani N. Shetty – Respondent
Criminal Revision Petition No. 1225 of 2016
Decided On : 06-11-2023
NEGOTIABLE INSTRUMENTS ACT - CHEQUE DISHONOUR - Sections 118, 139, 138 of N.I. Act - The court discussed the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, which establish that once the issuance and signature on a cheque are admitted, there is a presumption in favor of the complainant regarding the existence of a legally enforceable debt. The court emphasized that the burden of proof shifts to the accused to disprove this presumption. The court also referenced several Supreme Court judgments that clarified the evidentiary burdens and the nature of rebuttal evidence required from the accused. Ultimately, the court found that the accused failed to provide sufficient evidence to counter the presumption of debt, leading to the conclusion that the cheque was issued for a lawful discharge of debt.
Fact of the Case:
The accused approached the complainant for a hand loan of Rs. 10,00,000 to meet urgent domestic needs. The complainant provided the loan, and the accused issued a cheque for the same amount, which was later dishonoured due to 'Account Closed'. The complainant issued a demand notice, which was served, but the accused did not repay the amount, leading to the filing of a complaint under Section 138 of the N.I. Act.
Finding of the Court:
The court found that the complainant had complied with the legal requirements under Sections 138(a) to (c) of the N.I. Act. The court held that the statutory presumption under Sections 118 and 139 applied, and the accused failed to provide adequate rebuttal evidence to disprove the existence of a debt.
Issues: Whether the judgment of the lower courts was perverse and whether the accused provided sufficient evidence to rebut the statutory presumption of debt under the N.I. Act.
Ratio Decidendi: The court reiterated that once the issuance and signature on a cheque are admitted, a statutory presumption arises in favor of the complainant regarding the existence of a debt. The burden then shifts to the accused to provide evidence to the contrary, which must be done on the standard of preponderance of probabilities.
Final Decision: The revision petition was dismissed, affirming the lower courts' judgments that the accused committed an offence under Section 138 of the N.I. Act and upholding the sentence imposed.
JUDGMENT
1. Revision Petitioner/accused feeling aggrieved by the judgment of First Appellate Court on the file of LXV Additional City Civil and Sessions Judge (CCH-66), Bengaluru in Crl.A.No.1106/2015, dtd. 26/8/2016, confirming the judgment of Trial Court on the file of XII Addl. Chief Metropolitan Magistrate, Bengaluru in C.C.No.2586/2014, dtd. 1/8/2015 preferred this Revision Petition.
2. Parties to the Revision Petition 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 both the sides and on perusal of Trial Court Records with judgment of both the Courts below the following points arise for consideration:
5. On careful perusal of the oral an documentary evidence placed on record, it would go to show that complainant and accused are friends and known to each other. In the month of June 2015 accused approached the complainant for hand loan of Rs.10, 00, 000.00 to meet her urgent domestic necessities. The complainant has given hand loan of Rs.10, 00, 000.00 and accused has agreed to repay the same within six months by mobilizing the funds. The accused in order to discharge the said debt has issued cheque drawn on Axis Bank Ltd. from the account maintained by her dtd. 23/3/2013 for Rs.10, 00, 000.00 Ex.P.1. The complainant presented the said cheque through her banker ING Vysa Bank Ltd. The said cheque was dishonoured with the endorsement "Account Closed" vide Bank endorsement Ex.P.2. Complainant issued demand notice dtd. 17/4/2013 through RPAD Ex.P.3 and the receipt is produced at Ex.P.4. The demand notice is duly served to accused vide acknowledgement card Ex.P.5. The accused has replied to the said notice Ex.P.6, complainant also relied on promissory note under Ex.P.9 and consideration receipt Ex.P.10.
6. If the above referred sequence with reference to the date pleaded in the complaint are perused and appreciated with the oral evidence of PW.1, then it would go to show that the cheque issued by accused Ex.P.1 on its presentation for collection was dishonoured vide bank endorsement "Account Closed" . The demand notice issued by the complainant is duly served to the accused and the accused has replied the same Ex.P.6. Accused has not paid the amount covered under the cheque Ex.P.1 as called for in the demand notice Ex.P.3. Therefore, the complainant has filed the complaint on 27/5/2013. The complainant has complied necessary legal requirements in terms of Sec. 138 (a) to (c) of Negotiable Instruments Act, 1881 (hereinafter for brevity referred to as "N.I.Act"). Therefore, statutory presumption available in terms of Ss. 118 and 139 of N.I.Act willl have to be drawn.
7. In this context of the matter, it is useful to refer the judgment of Hon'blel 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 and 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 view of security and same has been misused by complainant is not tenable.
8. 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:-
The statutory presumption under Sections 118 and 139 of the Negotiable Instruments Act places the burden on the accused to rebut the presumption of a legally enforceable debt once the issuance and si....
The statutory presumptions under Sections 118 and 139 of the N.I. Act favor the complainant once the issuance of the cheque is established, placing the burden on the accused to provide credible evide....
The burden of proof on the complainant, the presumption in favor of the complainant under sections 118 and 139 of the N.I. Act, and the accused's obligation to rebut such presumption are crucial lega....
The presumption of cheque issuance for a legally enforceable debt under Section 138 of the N.I. Act was not rebutted by the accused, leading to conviction.
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