The presumption under Section 139 of the Negotiable Instruments Act can be rebutted by the accused by showing that the cheque was issued for a different purpose, such as security for a loan.

This appeal is filed by appellant –complainant challenging the judgment of acquittal dated 12.01.2024 passed in C.C. No.599/2016 by the JMFC-II, Shivamogga acquitting the respondent –accused for offence punishable under Section 138 of Negotiable Instruments Act (herein after referred as ‘N.I Act’ for brevity).

2. Heard learned counsel for the appellant – complainant and learned counsel for the respondent - accused.

3. Brief facts of the case is that The complainant and respondent –accused are well known to each other. Accused was running readymade cloth shop.

The respondent –accused requested to complainant for loan of Rs.16,50,000/- as he has to move to Bombay immediately and told that he will repay during August-2014. Believing the words of the respondent –accused complainant paid Rs.16,50,000/- in cash to the accused. The further case of the complainant is that the accused issued the cheque for a sum of - 3 - NC: 2024:KHC:19053 CRL.A No. 571 of 2024 Rs.16,50,000/- and the same was presented for encashment and it came to be dishonoured for the reason ‘Refer to Drawer’. The same was intimated to the accused who requested the complainant to represent again. The said cheque was represented for encashment and it was returned with shara 'Account Closed'. The complainant issued demand notice and it was returned with shara ‘no such addressee’.

Appellant –complainant initiated proceedings against the respondent –accused for offence punishable under Section 138 of N.I.Act. The appellant - complainant has examined himself as P.W.1 and got marked Ex.P1 to P8. The respondent got marked Ex.D1 to D32 in the cross-examination of P.W.1. Learned Magistrate hearing arguments and appreciating evidence on record acquitted the respondent –accused for offence punishable under Section 138 of N.I. Act by impugned judgment.

3. Learned counsel for the appellant -complainant would contends that there was earlier transaction of lending money in a sum of Rs.5,00,000/- +Rs.5,00,000 + - 4 - NC: 2024:KHC:19053 CRL.A No. 571 of 2024 Rs.3,50,000/-. Believing the respondent –accused had business necessity, appellant –complainant has lent an amount of Rs.16,50,000/- by cash. The issuance of cheque Ex.P1 is admitted. Therefore, the presumption under Section 139 of N.I Act it to be drawn. The respondent –accused has not rebutted the said presumption. With this, he prayed to allow the appeal.

4. Having heard learned counsel for the appellant -complainant, this Court has perused the impugned judgment and trial Court records.

5. As per the case of the complainant he has lent an amount of Rs.16,50,000/- by cash to the respondent – accused during February-2013. EX.P7 and P8 Bank Statements will indicate that appellant –complainant has given Rs.5,00,000/- through cheque to respondent – accused on 06.02.2013, Rs.5,00,000/- on 16.05.2014 and Rs.3,50,000/- on 16.05.2014. The said amounts are pertaining to another case which is pending before this Court in Crl.A.No.569/2024. The issuance of EX.P1 cheque is not disputed. Therefore, the presumption under - 5 - NC: 2024:KHC:19053 CRL.A No. 571 of 2024 Section 139 is to be drawn. The defence of respondent – accused is that cheque EX.P1 has been issued as security to the loan amount borrowed totally sum of Rs.13,50,000/- which he received through cheques from the appellant –complainant. To prove presumption he has produced documents that he has repaid the loan amount borrowed from the appellant –complainant which are at EX.D7 to 22. The learned Magistrate has held that appellant –complainant has not proved his capacity to lend an amount Rs.16,50,000/- by cash during February-2013. The bank account statements EX.P7 and 8 will establish that the appellant –complainant has not drawn any amount of Rs.16,50,000/- from the bank. The appellant – complainant has not produced documents to show that he has cash of Rs.16,50,000/- during February-2013.

Appellant –complainant has failed to prove his financial capacity to lend am