Case: BASALINGAPPA Vs. MUDIBASAPPA

2. The brief facts of the case for deciding the appeal are:2.1 The complainant gave a notice dated 12.03.2012 to the accused, the appellant stating dishonour of cheque dated 27.02.2012 for an amount of Rs.6,00,000/- for want of sufficient funds. Thereafter, on non-payment of the amount, a complaint dated 25.04.2012 was filed by the complainant under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as Act, 1881)2.2 Allegation in the complaint was that the accused requested the complainant to lend a hand loan to meet out urgent and family necessary for a sum of Rs.6,00,000/-. Complainant lent hand loan of Rs.6,00,000/- dated 27.02.2012 in favour of the accused. A cheque dated 27.02.2012 for Rs.6,00,000/- was given by the accused, but the same was returned by the bank with the endorsement Funds Insufficient on 01.03.20122.3 After notice dated 12.03.2012, which was served on the accused on 13.03.2012, a complaint was filed. PW1 filed his examination-in-chief and was also cross- examined on behalf of the accused. The complainant in support of the complaint filed original cheque dated 27.02.2012, original cheque return memo dated 01.03.2012, office copy of the notice dated 12.03.2012, postal receipt dated 12.03.2012, acknowledgment letter issued by the Department of Post dated 16.04.2012 and letter to Head Post Office dated 11.04.2012. The accused in support of his defence filed Ex.D1 – certified copy of plaint in O.S. No. 148 of 2011, Ex.D2- Certified copy of the private complaint No.119/2012 in CC No. 2298 of 2012 and in Ext.D3, certified copy of registered sale agreement2.4 The trial court framed following two questions:-1. Whether the complainant proves beyond all reasonable doubts that, the accused had issued a cheque bearing No.839374 dated 27-02-2012 for Rs.6,00,000/- of Pragathi Gramin Bank, Nijalingappa Colony Branch, Raichur in favour of complainant, towards discharge of legally enforceable debt or liability and the same was dishonored forFunds Insufficient and even after deemed legal notice the accused has not paid the debt covered under the above said cheque and thereby committed an offence punishable Under Section 138 of Negotiable Instruments Act?2.5 The trial court after considering the evidence and material on record held that if the accused is able to raise a probable defense which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. By judgment dated 20.02.2015, the accused was acquitted for the offence under Section 138. Complainant aggrieved by said judgment filed a Criminal Appeal under Section 378(4) of Code of Criminal Procedure. The High Court set aside the judgment of the trial court and convicted the accused for the offence under Section 138. Accused aggrieved by judgment of the High Court has come up in this appeal6. To recapitulate facts again, the cheque dated 27.02.2012 was presented for encashment by the complainant, which was returned on 01.03.2012. Signature on the cheque is not denied by the accused, due to which presumption shall be raised that cheque was issued in discharge of any debt or liability. The complainant gave his evidence to prove his case. In the examination-in-chief, he stated that a loan of Rs.6,00,000/- was a hand loan and in discharge of the same, the accused had given a cheque dated 27.02.2012. Neither in the complaint nor in examination-in-chief, complainant stated the date of giving the loan to the accused, however, in his cross-examination, he stated that in the month of November, 2011, accused availed loan of Rs.6,00,000/-. In cross-examination, he further stated that except accused, he has not lent loan to any other person. He denied having filed a suit for recovery of money against one Balana Gouda. However, he admitted that suit was filed on the basis of promissory note with interest at the rate of @18% per month. He further admitted that he has filed a criminal case under Section 138 of Negotiable Instruments Act, 1881 against one Siddesh bearing CC No.2298 of 2012. When a suggestion was given that the complainant had lent Rs.25,000/- to the accused, he said that he does not remember the accused has borrowed Rs.25,000/- from him. In his cross- examination, he has admitted that he has signed as a witness to the agreement to transfer the lease hold rights of accused in favour of one M/s. Sri Lakshmi Narasimha Industries. Further on question, whether the accused received Rs.15 lakhs from the said transaction, he showed his ignorance. Suggestion was also put that a blank cheque was issued at the time of loan availing of Rs.25,000/-. Suggestion was also put in his cross-examination that he was not having Rs.6,00,000/- on hand on the date of loan7. Now, we look into the facts alleged by the defence. In the cross-examination, although complainant denied that he has filed any case under Section 138 against any person but Ex.D2 is certified copy of the complaint filed by the complainant against Shri Siddesh under Section 138 of Act, 1881 for punishing the accused. Further the date of cheque, which was alleged to be issued by Shri Siddesh was also 27.02.2012. Ex.D3 was an agreement of sale dated 07.01.2010, by which the complainant paid Rs.4,50,000/- to Balana Gouda towards sale consideration. In document transferring the leasehold rights by the accused to one M/s. Sri Lakshmi Narasimha Industries, the complainant was a witness, who admitted his signature on the deed. In his cross-examination, accused case was that by virtue of such transfer of leasehold rights, he received Rs.15 lakhs. The trial court after marshalling the evidence made following observations in Paragraph No.17:-17. In the instant case the cheque amount involved is Rs.6,00,000/- and the complainant is an retired bus conductor and he had retired from service in the year 1997 and has received the entire retirement monetary benefits of Rs.8,00,000/- and the same was deposited in the account of the complainant and it was encashed by the complainant. It is observed that the complainant is silent as to his source of income at present. He has nowhere specified as to what is he working and his earning, to show his position to lend the amount as specified in the cheque. There is no single document to show his earning nor has the complainant executed any document for having lent such heavy amount of Rs.6,00,000/- to the accused. Further, it is the suggestion of the accused to PW-1 that, the accused by transferring his interest to lease hold to one M/s. Sri.Lakshmi Narasimha industries has received a sum of Rs.15,00,000/- and it is also admitted by PW-1 that he was the witness to the said transaction. From the above, it raises doubt on the very cheque Ex.P-1 held by the complainant and the non- production of any document by the complainant to 18 C.C.NO.2675-2012 show his earning, and the complainant has not executed any document before lending such huge amount to the accused. Such circumstance raises serious doubt on the transaction as claimed by the complainant. Honble High Court of Karnataka has clearly established that, the accused need not enter the witness box and rebut the presumptions. I am of the opinion that the whole transaction is at a doubt and the circumstance does not give rise to the lending of loan amount of Rs.6,00,000/- as claimed by the complainant. Accordingly, Points No.1 in the Negative.

Court's reasoning:
10. The complainant being holder of cheque and the signature on the cheque having not been denied by the accused, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable presumption. Before we refer to judgments of this Court considering Sections 118 and 139, it is relevant to notice the general principles pertaining to burden of proof on an accused especially in a case where some statutory presumption regarding guilt of the accused has to be drawn.14. This Court held that what is needed is to raise a probable defence, for which it is not necessary for the accused to disprove the existence of consideration by way of direct evidence and even the evidence adduced on behalf of the complainant can be relied upon.16. This Court again reiterated that whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is preponderance of probabilities.19. After referring to various other judgments of this Court, this Court in that case held that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability, which, of course, is in the nature of a rebuttable presumption.20. Elaborating further, this Court held that Section 139 of the Act is an example of a reverse onus and the test of proportionality should guide the construction and interpretation of reverse onus clauses on the defendant-accused and the defendant- accused cannot be expected to discharge an unduly high standard of proof.22. The above case was a case where this Court did not find the defence raised by the accused probable. The only defence raised was that cheque was stolen having been rejected by the trial court and no contrary opinion having been expressed by the High Court, this Court reversed the judgment of the High Court restoring the conviction. The respondent cannot take any benefit of the said judgment, which was on its own facts23. We having noticed the ratio laid down by this Court in above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner:-(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden(v) It is not necessary for the accused to come in the witness box to support his defence24. Applying the preposition of law as noted above, in facts of the present case, it is clear that signature on cheque having been admitted, a presumption shall be raised under Section 139 that cheque was issued in discharge of debt or liability. The question to be looked into is as to whether any probable defence was raised by the accused. In cross-examination of the PW1, when the specific question was put that cheque was issued in relation to loan of Rs.25,000/- taken by the accused, the PW1 said that he does not remember. PW1 in his evidence admitted that he retired in 1997 on which date he received monetary benefit of Rs. 8 lakhs, which was encashed by the complainant. It was also brought in the evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs.4,50,000/- to Balana Gouda towards sale consideration. Payment of Rs.4,50,000/- being admitted in the year 2010 and further payment of loan of Rs.50,000/- with regard to which complaint No.119 of 2012 was filed by the complainant, copy of which complaint was also filed as Ex.D2, there was burden on the complainant to prove his financial capacity. In the year 2010-2011, as per own case of the complainant, he made payment of Rs.18 lakhs. During his cross-examination, when financial capacity to pay Rs.6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts25. There was another evidence on the record, i.e., copy of plaint in O.S. No. 148 of 2011 filed by the complainant for recovery of loan of Rs. 7 lakhs given to one Balana Gouda in December, 2009. Thus, there was evidence on record to indicate that in December, 2009, he gave Rs.7 lakhs in sale agreement, in 2010, he made payment of Rs.4,50,000/- towards sale consideration and further he gave a loan of Rs.50,000/- for which complaint was filed in 2012 and further loan of Rs.6 lakhs in November, 2011. Thus, during the period from 2009 to November, 2011, amount of Rs.18 lakhs was given by the complainant to different persons including the accused, which put a heavy burden to prove the financial capacity when it was questioned on behalf of the accused, the accused being a retired employee of State Transport Corporation, who retired in 1997 and total retirement benefits, which were encashed were Rs.8 lakhs only. The High Court observed that though the complainant is retired employee, the accused did not even suggest that pension is the only means for survival of the complainant.26. There is one more aspect of the matter which also needs to be noticed. In the complaint filed by the complainant as well as in examination-in-chief the complainant has not mentioned as to on which date, the loan of Rs.6 lakhs was given to the accused. It was during cross-examination, he gave the date as November, 2011. Under Section 118(b), a presumption shall be made as to date that every negotiable instrument was made or drawn on such date. Admittedly, the cheque is dated 27.02.2012, there is not even a suggestion by the complainant that a post dated cheque was given to him in November, 2011 bearing dated 27.02.2012. Giving of a cheque on 27.02.2012, which was deposited on 01.03.2012 is not compatible with the case of the complainant when we read the complaint submitted by the complainant especially Para 1 of the complaint, which is extracted as below:-1. The accused is a very good friend of the complainant. The accused requested the Complainant a hand loan to meet out urgent and family necessary a sum of Rs.6,00,000/- (Rupees Six Lakh) and on account of long standing friendship and knowing the difficulties, which is being faced by the accused the complainant agreed to lend hand loan to meet out the financial difficulties of the accused and accordingly the Complainant lend hand loan Rs.6,00,000/- (Rupees Six Lakh) dated 27.02.2012 in favour of the Complainant stating that on its presentation it will be honored. But to the surprise of the Complainant on presentation of the same for collection through his Bank the Cheque was returned by the Bank with an endorsement Funds Insufficient on 01-03- 201227. Thus, there is a contradiction in what was initially stated by the complainant in the complaint and in his examination-in-chief regarding date on which loan was given on one side and what was said in cross-examination in other side, which has not been satisfactorily explained. The High Court was unduly influenced by the fact that the accused did not reply the notice denying the execution of cheque or legal liability. Even before the trial court, appellant- accused has not denied his signature on the cheque28. We are of the view that when evidence was led before the Court to indicate that apart from loan of Rs.6 lakhs given to the accused, within 02 years, amount of Rs.18 lakhs have been given out by the complainant and his financial capacity being questioned, it was incumbent on the complainant to have explained his financial capacity. Court cannot insist on a person to lead negative evidence. The observation of the High Court that trial courts finding that the complainant failed to prove his financial capacity of lending money is perverse cannot be supported. We fail to see that how the trial courts findings can be termed as perverse by the High Court when it was based on consideration of the evidence, which was led on behalf of the defence. This Court had occasion to consider the expression perverse in Gamini Bala Koteswara Rao and others Vs. State of Andhra Pradesh through Secretary, (2009) 10 SCC 636 ,  this Court held that although High Court can reappraise the evidence and conclusions drawn by the trial court but judgment of acquittal can be interfered with only judgment is against the weight of evidence.29. High Court without discarding the evidence, which was led by defence could not have held that finding of trial court regarding financial capacity of the complainant is perverse. We are, thus, satisfied that accused has raised a probable defence and the findings of the trial court that complainant failed to prove his financial capacity are based on evidence led by the defence. The observations of the High Court that findings of the trial court are perverse are unsustainable. We, thus, are of the view that judgment of the High Court is unsustainable.