*HON'BLE SRI JUSTICE G. BHAVANI PRASAD +Criminal Appeal No.137 of 2008 % 09/12/2011 # K. Krishna Reddy ..... APPELLANT Vs. $ K. Rajender and another .....RESPONDENTS ! COUNSEL FOR THE APPELLANT: Sri S. Niranjan Reddy ^ COUNSEL FOR 1ST RESPONDENT: Sri L.N. Bhadri Raj ^ COUNSEL FOR 2ND RESPONDENT: -- < Gist : Ø Head Note: ? CITATIONS: 1. (2001) 8 Supreme Court Cases 458 2. (2006) 6 Supreme Court Cases 39 3. (2010) 11 Supreme Court Cases 441 4. 2003 (2) ALD (Crl.) 237 (AP) 5. 2004 Criminal Law Journal 4107 6. (2006) 6 Supreme Court Cases 456 7. AIR 2008 (4) Karnataka 398 JUDGMENT: The Criminal Appeal is directed against the acquittal of the accused for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 by setting aside the conviction and sentence imposed by XIV Additional Chief Metropolitan Magistrate, Hyderabad, by the judgment dated 28-12-2006 in C.C.No.343 of 2000, by the judgment dated 08-05-2007 in Criminal Appeal No.21 of 2007 on the file of III Additional Chief Metropolitan Sessions Judge, Hyderabad. The parties are referred to herein as they are arrayed before the trial Court. The complainant filed the complaint against the accused alleging that the complainant, a construction businessman, and the accused running a printing press are friends and the accused approached the complainant on 08-09-1999 for financial assistance for four months for running the printing press and the complainant gave Rs.7,50,000/- on the same day. The accused did not repay in spite of demands but he executed a promissory note and a cheque No.075458 for Rs.7,50,000/- on 07-02-2000. When the cheque was presented through the complainant’s bank, it was returned dishonoured with an endorsement “exceeds arrangement”. A second presentation on 7-3-2000 resulted in an identical endorsement on 9- 3-2000 and the complainant issued a legal notice dated 21-03-2000 demanding the accused to pay within 15 days from the receipt of notice. There was no reply, but the accused gave a false complaint to the bank that he lost the cheque book to avoid payment of the debt. Hence, the complaint in respect of an offence punishable under Section 138 of the Negotiable Instruments Act (for short “the Act”). On the offence being taken cognizance after recording the sworn statement of the complainant, copies of documents were furnished to the accused on his entering appearance. He denied the offence when he was examined under Section 251 of the Code of Criminal Procedure and during trial, PWs.1 to 3 were examined and Exs.P.1 to P.7 were marked. The accused denied the incriminating circumstances appearing in the evidence when he was examined under Section 313 of the Code of Criminal Procedure and examined himself as DW.1 and marked Exs.D.1 to D.10 in defence. The trial Court rendered its judgment referring to the precedents cited before it and opining that once the signature on the dishonoured cheque is admitted, the presumption under Sections 118 and 139 of the Act arises placing the burden of proof on the accused to rebut the same. The accused claimed herein that he lost his handbag with a calculator, visiting card, signed blank cheque Nos.075458 to 075475 of current account No.2045 of Andhra Bank, Sanathnagar and blank signed promissory notes on 28-08-1999 while going on his motorcycle to obtain a loan from Concord Motors Auto Financier. The signatures on Ex.P.1-cheque and Ex.P.4-promissory note were thus admitted and PW.2 was noted to be litigating against the accused in O.S.No.825 of 2002 and E.P.No.148 of 2003, while there was no documentary evidence in proof of the alleged approach to the Auto Financier for a loan. The trial Court also noted that Ex.D.5-complaint from the accused to the police did not disclose the details of the promissory notes or cheques or their number, while Ex.D.7-certificate from the police had given such details without disclosing how such details were secured by the police officer. The number of promissory notes lost was not specified or known and no prudent person would have carried such a number of blank signed cheques and blank signed promissory notes to obtain a loan from a financier. Even to cover monthly instalments, post dated cheques of such a number would not have been naturally carried and the suggestion to PW.1 to the contrary by the counsel for the accused was that PW.1 obtained a blank signed cheque. Similar was the version of the accused about B. Srinivas and the trial Court, hence, concluded that the accused failed to rebut the statutory presumptions, the preponderance of broad human probabilities being against his defence. PW.3, a Junior Advocate in the office of the advocate for the complainant, was considered independent and the evidence of PWs.1 to 3 was found to have no material contradictions. The signing of a receipt by one K. Ashok Kumar as security was not stated by the accused and hence, the issuance of subject cheque towards payment of a legally enforceable debt by the accused to the complainant was considered proved. The bouncing of the cheque on the first occasion was noted to have not been followed by any written demand notice, but the second dishonour was considered to provide cause of action and the endorsement by the bank officials about the lost cheque on the first occasion was considered to have no effect. The residential particulars mentioned on the statutory notice being not claimed to be incorrect and admitted by DW.1, a presumption under Section 27 of the General Clauses Act was drawn about the service of notice is not through registered post acknowledgement due, which was returned, while the notice sent under certificate of posting was not returned. The statutory notice was not complied with within 15 days from the date of deemed service or later, and hence, the trial Court considered the offence to have been proved. When questioned about the sentence, the accused pleaded for mercy as he has to look after his widowed mother, wife and two children. While not invoking the provisions of the Probation of Offenders Act, the accused was sentenced to undergo Rigorous imprisonment for one year and pay a fine of Rs.5,000/- with a default sentence of 30 days. In appeal, the impugned judgment was rendered again referring to the factual background and considering the points about the existence of a legally enforceable debt or liability, the issuance of Ex.P.1-cheque towards the same, the correctness, legality and sustainability of the conviction and sentence and the relief to which the accused is entitled. The Appellate Court referred to the principles laid down by the Apex Court and considered whether the accused was able to rebut the statutory presumptions. The contention of the accused that he does not know the complainant and never borrowed the amount was noted and the non-production of any bank statement or other evidence by PW.1 an income tax assessee was taken adverse note of. The admission by PW.1 that the advancement of the amount did not find place in his income tax return was also noted apart from non-production of any books or statements of account. Ex.P.4-promissory note not filed along with the complaint had revenue stamp affixed on the alleged signatures of the accused. Ex.P.5 notice was noted to have alleged the promissory note to have been executed on 8-9-1999 itself contrary to the evidence of PWs.1 to 3 and the recitals of Ex.P.4 that it was executed on 7-2-2000. PW.1 claimed the same to be a mistake and Ex.P.5 also states the loan amount to have been taken on 7-2-2000 and the claim was, hence, considered improbable and suspicious. PW.2 and Exs.D.1 to D.4 were observed to be showing the absence of any cordial relationship between the accused and PW.2 and PW.3 noted to be the junior of the advocate who dealt with another criminal case involving the accused. PWs.2 and 3 were considered to be inimical towards the accused and to be interested witnesses and the preponderance of probabilities was held to be favouring the accused, who claimed to have never borrowed any amount from the complainant. DW.1 and Ex.D.7-certificate were opined to show the lodging of a complaint by the accused on 27-08-1999 about the missing of the hand bag on 25-08-1999 including the cheque book. The particulars of the cheques not being mentioned in Ex.D.5 was also noted but the particulars of the cheques stated in Ex.D.7 were opined to have been possibly obtained during investigation. The claims of DW.1 about the signed cheques and promissory notes for obtaining finance were considered probable and natural and it was noted that DW.1 claimed to have addressed Ex.D.6-letter on 14-02- 2000 and informed orally earlier the bank about the missing of cheques. The endorsement on Ex.P.1-cheque on 10-02-2000 about the loss of the cheque book supports the information by the accused to the bank even earlier to Ex.D.6. The endorsement made by red ink across Ex.P.1 cheque by Andhra Bank that “Cheque reported lost advised to take utmost precaution” referred to in Ex.P.5 notice was noted to have been subsequently changed by the complainant in the complaint and evidence. The concerned bank authorities were considered to be material witnesses to testify about the reasons for dishonour and when the dishonour was not due to insufficiency of funds and there was a valid cause in sending instructions to the bank authorities to stop payment, the accused was considered to have established that there was no existing debt or liability and he did not issue Ex.P.1-cheque in discharge of any such debt. The accused could not have known as to how Ex.P.1 came into the hands of the complainant and consequently, the conviction and sentence were set aside and the accused was acquitted. The complainant filed the present appeal contending that the presumptions under Sections 118 and 139 of the Act have to be rebutted by the accused once the signature on the cheque is admitted and there was no cogent evidence for the accused to prove his denial of the complainant’s case. The non-existence of any debt or liability has to be proved and the farfetched story of the accused about the loss of hand bag without any evidence should have been rejected, more so, when the complaint was not lodged in time and no reason was given for carrying the signed cheques. The certificate allegedly issued by the Station House Officer, Bowenpally was not proved by examining any witnesses and the letter to the bank was after six months from the date of the alleged loss of hand bag, which allegedly happened after execution of Exs.P.1 and P.4. The conclusions of the Appellate Court were criticized to be wrong and even if the memo was issued stating that the cheque was lost, the accused has to prove beyond doubt that it was not issued towards any legally enforceable debt and that there were sufficient funds in his account. Hence, the appellant desired the appellate acquittal to be reversed and the conviction and sentence imposed by the trial Court to be restored. Heard the learned counsel for both parties. The point for consideration is whether the guilt of the accused for an offence punishable under Section 138 of the Negotiable Instruments Act has been established beyond reasonable doubt and the conviction and sentence imposed by the trial Court have to be restored. The learned counsel for the parties referred to various precedents, the principles laid down by which need to be referred to in the first instance to enable examination of the facts in issue in the light of the said principles. In K.N. Beena v. Muniyappan and another[1], the Apex Court laid down that under Section 118 of the Negotiable Instruments Act, 1881, unless the contrary was proved, it is to be presumed that the negotiable instrument (including a cheque) had been made or drawn for consideration. Under Section 139, the court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. The Supreme Court, therefore, laid down that in complaints under Section 138, the court has to presume that the cheque had been issued for a debt or liability and the presumption is rebuttable with the burden of proving that a cheque had not been issued for a debt or liability on the accused as held in Hiten P. Dalal v. Bratindranath Banerjee ((2001) 6 SCC 16). The accused had to prove in the trial by leading cogent evidence that there was no debt or liability. In M.S. Narayana Menon @ Mani v. State of Kerala and another[2] also, the Supreme Court noted the presumption under Sections 118 (a) and 139 of the Negotiable Instruments Act to be rebuttable in nature and the standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by references to the circumstances upon which the accused relies. The accused was not necessarily required to disprove the prosecution case and whether in the given facts and circumstances of a case, the initial burden has been discharged by an accused would a question of fact and was a matter relating to appreciation of evidence. Referring to a Full Bench judgment of this Court in G. Vasu v. Syed Yaseen Sifuddin Quadri (AIR 1987 AP 139) wherein it was laid down that for the purpose of rebutting the initial evidential burden, the defendant can rely on direct evidence or circumstantial evidence or on presumptions of law or fact and once such convincing rebuttal evidence is adduced and accepted by the Court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the plaintiff who has also the legal burden, it was opined that like in a civil litigation even an accused need not enter into the witness box and examine other witnesses in support of his defence. Once both parties have adduced evidence, the court has to consider the same and the burden of proof loses all its importance. The accused can discharge the onus placed on him even from the materials brought on record by the complainant himself. The Apex Court also pointed out that it is well settled principle of law that where two views are possible, the Appellate Court should not interfere with the finding of acquittal recorded by the Court below. In Rangappa v. Sri Mohan[3], the Supreme Court held that if the accused is able to raise a probable defence, which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his own. In that case also, the defence of lost cheque was taken up belatedly and on facts the defence was considered not probable. In Sudhir Sabharawal v. Anil Prabhakar Nilgirwar and another[4], the learned Judge was dealing with a defence of lost cheque and held that it is for the accused to place such material before the Court in the form of oral or documentary evidence as is sufficient and adequate to neutralize the presumption provided for under Section 139 of the Negotiable Instruments Act. In Nagisetty Nagaiah v. State of A.P. and another[5] it was held that the mere basic facts of the case should inspire the invocation of the legal presumption under Section 139 and in the absence of such factual basis, the initial burden is not discharged by the complainant himself. In that case, the complainant did not file any account books or income tax return or audit report to construe that there was any legally enforceable debt and the signature and the contents of the cheque were in different inks. The factual basis to discharge the initial burden on the complainant was, hence, considered absent. Concerning the service of notice, it was held that D. Vinod Shivappa v. Nanda Belliappa[6], that the question of service of notice has to be answered by reference to the facts of each case and no rule of universal application can be laid down that in all cases where notice is not served on account of the non-availability of the addressee, the Court must presume service of notice. In a situation where the notice could not be served on the addressee for one or the other reason, it was held that if the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the court shall presume service of notice. This was held to be a matter of evidence and proof. The Apex Court also referred to Section 27 of the General Clauses Act, which principle can profitably be imported in a case where the sender had dispatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee, unless he proves that it was not really served and that he was not responsible for such non-service. The question as to whether there was deemed service of notice is essentially a question of fact to be considered in the light of the evidence on record. I n K. Narayana Nayak v. M. Shivarama Shetty[7], the statutory notice was issued both by registered post and also by certificate of posting as in the present case and it was noted that the Apex Court held that certificate of posting obtained by a sender is not comparable to a receipt for sending a communication by registered post. It was pointed out that it is easy to procure certificate of posting by affixing ante-dated seal with the connivance of postal employees. Thus, precedential law laid down about the availability of the statutory presumptions under Sections 118 and 139 of the Act in complaints under Section 138. The rebuttable presumptions can be rebutted by direct evidence or circumstantial evidence or a presumption of law or fact or even from the materials brought on record by the complainant himself and once both the parties have adduced their evidence, the burden of proof loses all its importance. The accused need not disprove the prosecution case in its entirety and the standard of proof for rebutting the statutory presumptions is that of preponderance of probabilities. For drawing the statutory presumptions, the factual basis for raising the presumptions had to be established. Deemed service of statutory notice is a question, which has to be answered by reference to the facts of each case without any rule of universal application and it is a matter of evidence and proof. The principle incorporated in Section 27 of the General Clauses Act may be imported in a case where the sender has dispatched the notice by post to the correct address written on it but certificate of posting obtained by a sender is not comparable to a receipt for sending a communication by registered post. Ultimately, where two views are possible, the appellate Court should not interfere with the finding of acquittal recorded by the Courts below. The material on record in the present case has to be tested in the light of the said principles. Ex.P.1-cheque dated 7-2-2000 was signed by the accused as the proprietor for Srini’s Print N Pack. It is not on record as to whether it was a proprietary concern or a partnership firm or any other legal entity, while the accused was prosecuted as an individual. The cheque appeared crossed in red ink noting “cheque reported lost advised to take utmost precaution” with the seal of UTI Bank Limited affixed underneath the said endorsement across the cheque. The original cheque filed along with the complaint appeared to have been taken return on 22-5-2000 from the trial Court as seen from the seal of the trial Court on the date of filing on 2-5-2000 and the return endorsement of the Chief Ministerial Officer of the Court on 22-5-2000. However, Ex.P.2-cheque return memo by the Andhra Bank to the UTI Bank Limited dated 10-02-2000 was about exceeding arrangement. Ex.P.3 is a similar return memo dated 9-3-2000. Ex.P.4-demand promissory note and receipt dated 7-2-2000 are so filled up as if the consideration of Rs.7,50,000/- was received by the accused from the complainant on that day for which one K. Kishore Kumar stood as surety in the presence of one R. Anil Kumar and the scribe. In fact, Ex.P.5-statutory notice issued by the advocate for the complainant was originally typed about the loan being taken on 7-2- 2000 under the promissory note with a surety after which the cheque-Ex.P.1 was issued which was advised to be presented on 10-02-2000. The date was corrected with ink to 8-9-1999 and the return memo was stated in Ex.P.5 to be specifically that the accused lost the cheque book. Even on presenting the cheque for collection again on 9-3-2000, the same endorsement was stated to have been made by the bank authorities. There was no reference to return as the cheque exceeds arrangements as stated in Exs.P.2 and P.3. Ex.P.5 is, thus, not consistent with Exs.P.2 to P.4 and it was specifically alleged that the accused might have intentionally created a story of loss of cheque book to avoid the payment of legally dischargeable debt with a fraudulent motive. Ex.P.6 is the certificate of posting addressed to the accused, while Ex.P.7 is the returned notice with the cover and acknowledgment form sent by registered post acknowledgement due with an endorsement on the cover I/S on 22-3-2000 and 23-3-2000, while there was another illegible endorsement dated 30-03-2000 across the address of the accused. The complainant as PW.1 claimed the loan to be on 08-09- 1999 and the promissory note, receipt and cheque to be on 7-2-2000 and he made no reference to the allegations in Ex.P.5 about the contents of the return memo on both presentations. He deposed as though the return was as per Exs.P.2 and P.3 and his claim that the accused received the legal notice under certificate of posting is not evidenced by any document. During his cross-examination he admitted not showing the loan in his income tax returns and not obtaining any receipt from the accused on 8-9-1999. He admitted the mention in Ex.P.5 about the reason of loss of cheque book stated in the return memos and has not explained the discrepancy. While he admitted not obtaining the consent of the accused in writing to present the cheque again after the first dishonour, he admitted the correction of the date of the promissory note in Ex.P.5. He denied affixing the revenue stamp over the signature in Ex.P.4 and denied filling up a blank signed cheque in Ex.P.1. His statement that he obtained Ex.P.4 in January 2000 for the amount lent on 8-9-1999 is contrary to the dates stated in Ex.P.4 and PW.2, the attestor of Ex.P.4 deposed about the execution of the promissory note written by PW.3 at the advocate’s office on 7-2-2000 signed by the accused and his brother. PW.3 deposed also about his subscribing to Ex.P.4 and the impugned judgment referred to the various admissions of PWs.2 and 3 to infer their being enimical towards the accused. Even the trial Court had no doubt that PW.2 was inimically disposed towards the accused in view of civil litigation and while the evidence of the complainant as PW.1 is necessarily tainted with interestedness, it will be a safe rule of prudence to look for satisfactory corroboration from the facts and circumstances on record for the claims of PWs.1 to 3. Even the trial Court had concluded that the first dishonour of the cheque was due to the cheque being reported lost with an advice to take utmost precaution and it may be noted that in his