No proof of granting debt doesn’t free the defaulter in a Check Bounce Case: High court of Karnataka

IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE 23RD DAY OF DECEMBER 2020 THE HON’BLE MR.JUSTICE P.N.DESAI CRIMINAL APPEAL NO.200083 2014 MOHAN KUMAR S O SHANKAR RATHOD AGE: 34 YEARS OCC: AGRICULTURE R O: GDA COLONY IIIRD PHASE FILTERBEDS PLOT NO.44 DIST: GULBARGA BY SRI A. VIJAY KUMAR ADVOCATE) …. APPELLANT SYED MOHD ALI S O SYED SAMSHODDIN AGE: 48 YEARS OCC: BUSINESS H.NO.5 993 20 52 PLOT NO.52 OMER COLONY AZADPUR ROAD BY SRI. FAIZUDDIN K. ZARDI AND SRI. ALEEMUDDIN SIDDIQUE ADVOCATES) … RESPONDENT THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378OF THE CODE OF CRIMINAL PROCEDURE PRAYING TO CALL FOR RECORDS IN C.C.NO.2088 2012 ON THE FILE OF THE IVTH ADDL. CIVIL JUDGE AND JMFC AT GULBARGA AND BE PLEASED TO SET ASIDE THE JUDGMENT PASSED THEREIN DATED 11.03.2014 AND BE PLEASED TO ALLOW AND CONVICT THE ACCUSED IN ACCORDANCE WITH LAW AND GRANT COMPENSATION ON TO APPELLANT AS AVAILABLE IN LAW. THIS APPEAL HAVING BEEN HEARD RESERVED FOR JUDGMENT AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY THIS COURT DELIVERED THE This appeal lays challenge to the judgment of in C.C.No.2088 2012 11.03.2014 by the IV Addl. Civil Judge and JMFC Court Gulbarga. 02. The appellant was the complainant and respondent was the accused before the Trial Court. They will be referred as complainant and accused as per their respective ranks before the Trial Court convenience in this judgment. 03. The brief case of the complainant before the Trial Court was that the complainant and accused are conversant to each other. They are good friends. It is further case of the complainant that on 15.07.2011 accused approached the complainant in respect of hand loan of Rs.9 80 000 for his business needs and other necessities. In view of good relationship complainant advanced the loan on assurance of the accused that he will repay the loan within a month. But the accused did not return the amount inspite of repeated request. Then the accused issued a cheque dated 21.11.2011 bearing No.339579 of State Bank of Hyderabad Super Market Gulbarga for a sum of Rs.9 80 000 to the complainant in discharge of said debt or loan. The complainant presented the said cheque for collection to bank but it was returned dishonoured with a endorsement as "funds insufficient". On the request of accused the cheque was again presented on 07.12.2011. But again the said cheque was returned dishonored for very same reason. 04. The accused did not give proper answer to complainant in this regard hence complainant issued legal notice dated 21.12.2011 which was returned with endorsement that the notice was refused. Therefore complainant filed compliant against the accused for the offence punishable under Section 138 of Negotiable Instruments Act 1881 That the impugned judgment of the Trial Court is not sustainable and liable to be set aside. The accused has not led evidence to discharge the presumption in favour of complainant. c) The defence of the accused was not The Trial Court failed to consider the presumption under Sections 139 and 118 of "N.I. Act". No evidence is adduced to probabalise the probable. The Trial Court has not properly appreciated the decisions referred. With these main contentions the appellant has prayed to allow the appeal. 07. Heard Sri. A. Vijaykumar learned counsel for the appellant and Sri. Faizuddin K. Zardi advocate for learned counsel for the respondent. 08. The learned counsel the appellant submitted that issuance of cheque and signature on cheque is not denied by the accused. Presumption under Negotiable Instruments Act is available to complainant. The presumption is not rebutted by the accused either in the cross examination or in the defence evidence. The defence of the accused is that there was no legally enforceable debt the source of amount is not proved cheque is given as a security for chitt transaction repaid the entire amount but cheque not returned back. The learned counsel argued that no documents were produced to show that complainant was running any chitt business or chitt transaction with accused. In the cross examination of PW.1 there is a suggestion regarding purchasing of plot by complainant that itself shows the income and the capacity of the complainant to lend the loan. Misuse of cheque defence is not proved. Stop payment notice was not given. Notice was sent to the address and house number of the accused and the notice is served. The learned counsel relied upon the judgments of the Hon ble Supreme Court reported in 1) AIR 2020 SC 945 in the case of APS Forex Services Pvt. Ltd. vs. Shakti International Fashion Linkers and others 2) 2019 CRI.L.J 3227in the case of Bir Singh vs Mukesh Kumar 3) 2019 AKR 562 in the case of H. G. Nagaraja vs. H. Suresh Naika. With these main contentions he prayed to set aside the acquittal judgment and convict the accused. 09. Against learned counsel respondent accused argued that there are no additional or other documents were taken by the complainant when huge amount was alleged to have been given as a loan only on the basis of cheque. The accused was a student. Why cheque was issued to him. No source of income of complainant was produced. In fact the complainant was running a chitt business wherein there were fifty members and one has to pay Rs.1 000 each month. On the third month itself the accused got B.C. prize money of Rs.47 000 . So the cheque was issued for Rs.50 000 as a B.C. amount. The plot was sold by the complainant to the accused but the amount was not given as the possession was not handed over. The blank cheque issued by accused was misused. There was no registered sale deed about the plot. The dispute is regarding plot but not for the cheque. When the cheque amount was given to complainant is not stated. The Trial Court has properly appreciated the evidence. The accused has also examined one witness. So considering the grounds of realities and the plot selling business this blank cheque was misused. The learned counsel relied upon the decision of the Hon ble Supreme Court reported in 1) AIR 2008 SC 1325 in the case of Krishna Janardhan Bhat vs Dattatraya G. Hegde 2) 2012KCCR 2057 in the case of Veerayya vs. G. K. Madivalar 3) ILR 2008 KAR 4629 in the case of Shiva Murthy vs Amruthraj. With these main contentions the accused counsel prayed to dismiss the appeal. 10. From the above materials evidence and the points that would arise for my consideration are as under: 01. Whether the learned Trial Court has appreciated the evidence before the light of the sound principles regarding appreciation of evidence in cases arising out of Cheque Bounce" under Negotiable Instruments Act 1881 02. Whether the Judgment passed by the Trial Court in C.C.No.2088 2012 dated illegal perverse and needs interference by this Court 11. My answer to the above points is as under for the reasons given below. 12. The undisputed contentions as borne out from the records are that the issuance of cheque Ex.P.1 in question is admitted by the accused. The accused has not denied his signature on cheque nor he has disputed that the cheque does not belong to him. It is also undisputed that the cheque in question dated 15.07.2011 when presented the bank by complainant it was returned with endorsement that amount insufficient". Issuance of demand notice by the complainant to the accused is also proved as discussed by the Trial Court in Para Nos.13 14 15 and 16. The Trial Court has discussed Ex.P.4 legal notice and the evidence of DW.1 Syed Mohd. Ali. The learned Trial Judge considering Section 27 of General Clauses Act 1897 raised the presumption. Further as per Section 114 of the Evidence Act a presumption is made and it is held that the demand notice is served in accordance with law on the accused. 13. Now the grounds on which the learned Trial Court has acquitted the accused are that a) without there being any additional document or without any security such a huge amount was paid. b) Source of payment of huge amount was not proved by complainant. c) The persons in whose presence the loan was advanced is not proved. So on these grounds the learned Trial Judge come to conclusion that without proving execution of any other document as a security for the said loan handing over loan of huge amount without interest and in violation of Section 269 of Income Tax Act the contention of the complainant are not tenable. Hence he acquitted the accused. In my considered view such a finding of the Trial Court is without any legal basis and contrary to the evidence on record. It is settled principles of law that once the cheque is issued and signed by the accused and if it is returned dishonored stating that the amount in account is "insufficient" then there is a statutory presumption is in favour of the holder of the cheque that the cheque which was issued for enforcement of debt or liability is dishonored. The burden to rebut the presumption is on the accused. The accused can rebut such presumption either by cross examining the complainant and showing before the Court the evidence in cross examination probabalise the defence of the accused or the case of the complainant is not proved. Secondly the accused can also lead defence evidence to rebut the presumption. 15. The defence of the accused in this case is that there is no legally enforceable debt or liability by him as contended by the complainant. There is no source of income to the complainant to pay the amount shown in the cheque. No documents like surety bond promissory note or other security documents were taken when such huge amount was stated to have been given as a hand loan. The accused further defence is that cheque is given as a security for chitt transaction. His main contention is that he has repaid the entire cheque amount and not taken back the cheque. In the light of the case of complainant and defence of the accused the evidence in this case will have to be appreciated. PW.1 Mohan Kumar complainant in his examination in chief has reiterated the complaint averments. He has stated about the loan borrowed by the accused. He has also produced the cheque Ex.P.1 which is admittedly signed by the accused. Exs.P.2 and 3 are the Bank Endorsements showing that the said cheque was returned with endorsement as insufficient. Ex.P.4 is the demand notice. Ex.P.5 is the postal receipt. Ex.P.6 is the un served postal receipt. Ex.P.7 is the bank pass book. So all these documents clearly indicate the complainant has proved ingredients of Section 138 of N.I.Act". Though PW.1 was cross examined there is nothing in his evidence so as to rebut the presumption under Section 139 of "N.I.Act". The Trial Court has quoted the extracts of some of his deposition of PW.1 regarding he has not obtained on demand promissory note separate agreement and complainant not doing any other work except agricultural work he completed degree in the year 2013 and on that basis came to the conclusion that he has no source of income to give hand loan. This observation and finding is totally wrong and not based on any legal presumption or decisions. A suggestion is made the cross examination of PW.1 that he has purchased the plots this is not denied. He has also stated that he has sold his plots for Rs.10 50 000 and that amount was with him. The said evidence is also not denied. Even in his cross examination he has stated at Para No.9 that his father has got 35 to 40 acres of agricultural lands and he has got 10 acres of lands bearing Sy.Nos.60 and 85 and he is a agriculturist. The said evidence elicited in the cross examination by the accused. 17. Therefore the stray sentences picked up from the evidence of complainant referred by the Trial Court will not help the accused. On the other hand it help the complainant to show that he has got sufficient income to purchase the plots to give loan out of the money which he received by selling the plots. He has got agricultural lands. The Trial Court has also wrongly appreciated the evidence of Manager of the Bank PW.2 wherein he has stated that the complainant has not withdrawn the amount on 15.07.2011 then the accused case appears to be not true. Such a inference is not based on any material when it is not the case of complainant that he has withdrawn the amount from the bank and given it to the accused then the observation of Trial Court in this regard is not tenable. 18. The learned counsel for the appellant has relied upon decision of the Hon ble Supreme Court reported in 2019 CRI.L.J 3227 in the case of Bir Singh vs Mukesh Kumar wherein at Para Nos.36 37 38 39 40 and 41 it is held as under : 36. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act. 37. A meaningful reading of the provisions of the Negotiable Instruments Act including in particular Sections 20 87 and 139 makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer if the cheque is duly signed by the drawer. If the cheque is otherwise valid the penal provisions of Section 138 would be 38. If a signed blank cheque is voluntarily towards some payment the payee may fill up the amount to a payee and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. It is not the case of the respondent accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent accused that the unfilled signed cheque had been stolen. The relationship between the payee of a cheque and its drawer would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act in the absence of evidence of exercise of influence or coercion. The second question is also answered in the negative. of a 40. Even a blank cheque leaf voluntarily signed and handed over by the accused is towards some payment would attract presumption under Section 139 of the Negotiable Instruments Act in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt. 41. The complainant might have been an Income Tax practitioner conversant with knowledge of law does not make any difference to the law relating to the dishonour of a cheque. The fact that the loan may not have been advanced by a cheque or demand draft or a receipt might not have been obtained would make no difference. In this context it would perhaps not be out of context to note that the fact that the respondent accused should have given or signed blank cheque to the appellant complainant as claimed by the respondent accused shows initially there was mutual trust and faith between them." 19. The learned counsel for the appellant has also relied upon another decision of the Hon ble Supreme Court reported in AIR 2020 SC 945 in the case of APS Forex Services Pvt. Ltd. vs. Shakti International Fashion Linkers and others at Para No.7 it is held as under: 7. Coming back to the facts in the present case and considering the fact that the accused has admitted the issuance of the cheques and his signature on the cheque and that the cheque in question was issued for the second time after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable there is a presumption under Section 139 of the N.I. Act that there exists a enforceable debt or liability. Of course such presumption is rebuttable in nature. However to rebut the presumption the accused was required to lead the evidence that full amount due and payable to the complainant has been paid. In the present case no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in absence of further evidence to rebut the presumption and more particularly the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists legally enforceable debt or liability as per Section 139 of the N.I. Act. It appears that both the Learned Trial Court as well as the High Court have committed error in shifting the burden upon the complainant to prove the debt or liability without appreciating the presumption under Section 139 of N.I. Act. As observed above Section 139 of the Act is an example of reverse onus clause and therefore once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter it is for the accused to rebut such presumption by leading evidence". 20. The learned counsel also relied upon the decision of the learned Single Judge of this Court reported in 2019 AKR 562 in the case of H. G. Nagaraja vs. H. Suresh Naika at Para Nos.8 9 10 and 11 it is held as under: 8. Be that as it may. Even as could be seen from the defence taken by the accused during the course of cross examination that the complainant has no financial capacity to lend such huge amount and the said cheque was issued to one Ravindranath for security purpose and the same was misused by the complainant and filed a false complaint the said defence itself clearly goes to show that the said cheque has been issued from the account of the accused and it bears his signature and it is his specific case that the said cheque has been to one Ravindranath for the purpose of security. When accused admits the signature then under such circumstances the Court has to draw a presumption mandated under Section 139 of the N.I. Act. This proposition of law has been laid down by the Hon ble Apex Court in the case of Rangappa Vs. Sri.Mohan reported in 11 SCC 441 wherein at paragraph 16 it has been observed as under: 16. All of these circumstances led the High Court to conclude that the accused had not raised a probable defence to rebut the statutory presumption. It was held that: 6. Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant. The presumption referred to in Section 139 of the N.I. Act is a mandatory presumption and not a general presumption but the accused is entitled to rebut the said What is required to be established by the accused in order to rebut the presumption is from each case under given circumstances. But the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the Court. The defence raised by the accused was that a blank cheque was lost by him which was made use of by the complainant. Unless this barrier is crossed by the accused the other defence raised by him whether the cheque loan or towards the amount spent by the complainant need not be considered. ..." the hand Hence the High Court concluded that the alleged discrepancies on part of the complainant which had been noted by the trial court were not material since the accused had failed to raise a probable defence to rebut the presumption placed on him by Section 139 of the Act. Accordingly the High Court recorded a finding of conviction. On going the said paragraph it reveals that Section 139 of the N.I. Act mandates the Court to draw a presumption that the said cheque has been in discharge of debt or However the accused is permitted to rebut the said presumption on preponderance of probabilities to show that the complainant was not having any capacity to lend money and there was no legally recoverable debt or liability and the said cheque has been issued for the purpose of security. It is for the accused to prove his defence when once he has taken a specific contention that the said cheque has been issued to one Ravindranath for the purpose of security and the same has been misused by the complainant burden is on the accused to prove the same. 10. Even though during the course of cross examination of PW.1 it has been suggested that the said cheque has been issued as a security to Ravindranath and the same has been misused the said suggestion has been denied. Apart from that neither the accused has stepped into the witness box nor produced any document. Even he has not given any reply to the notice issued by the complainant as per Ex.P3. If really he has not availed the loan from the complainant and the complainant has misused the cheque Ex.P1 then under such circumstances immediately after receipt of the legal notice as per Ex.P3 he could have given reply stating the said fact. Keeping silent over the said notice it draw a presumption that he was not having any grievance after receipt of the said notice and even after coming to know after receipt of the legal notice the said cheque has been bounced for insufficient funds then under such circumstances at least he could have filed a complaint alleging that the cheque which has been issued as a security to one Ravindranath has been misused. The conduct of the accused also does not substantiate his case. When the presumption has been drawn under Section 139 of the N.I. Act about the recoverable debt and the said presumption has not been rebutted by cogent and acceptable evidence then under such circumstances the case of the complainant stands proved and accused is liable to be convicted under Section 138 of the N.I. Act. Without looking into the said fact the trial Court only on the basis of the contention of the accused that a huge amount has been advanced and the complainant is not having any capacity to lend such huge amount and on that count the trial Court has acquitted the accused. But as could be seen from the cross examination of PW1 in his evidence it has been elicited that per month he is getting a salary of Rs.5 000 to Rs.15 000 and he is working as a Cinema Representative and per day he is running four shows and he has taken the house on a lease by giving Rs.5 00 000 and it has also been elicited that he is having a only son and he is working in Bengaluru. All these materials even draw the attention of this Court that the complainant is having capacity to lend the said amount. 11. Be that as it may. When a presumption has been drawn under Section 139 of the N.I. Act the said presumption is that there exists legally recoverable debt or liability. Then under such circumstances the trial court until it is rebutted it ought not to have gone to the said facts and ought not to have acquitted the accused. The reasons arrived at by the Court below are not based upon any cogent and acceptable evidence and as such the same is liable to be set aside and the accused is liable to be convicted. 21. There is also a decision of the Hon ble Supreme Court reported in AIR 2019 SC 1876 Rohitbhai Jivanlal Patel vs State of Gujarat and another wherein at Para Nos.19 it is held as under: Trial Court. 19. Hereinabove we have examined in detail the findings of the Trial Court and those of the High Court and have no hesitation in concluding that the present one was clearly a case where the decision of the Trial Court suffered from perversity and fundamental error of approach and the High Court was justified in reversing the observations of the Trial Court that there was no documentary evidence to show the source of funds with the respondent to advance the loan or that the respondent did not record the transaction in the form of receipt of even kachcha notes or that there were inconsistencies in the statement of the complainant and his witness or that the witness of the complaint was more in know of fact etc. would have been relevant if the matter was to be examined with reference to the onus on the complaint to prove his case considerations and observations do not stand in conformity with the presumption existing in favour of the complainant by virtue of Sections 118 and 139 of the NI Act. Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour such a complainant. When presumption is drawn the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were consideration while examining if the accused has been able to rebut the presumption or not. The other observations as regards any variance in the statement of complainant and witness or want of knowledge about dates and other particulars of the cheques or washing away of the earlier cheques in the rains though the office of the complainant being on the 8th floor had also been of irrelevant factors for consideration of a probable defence of the appellant. Similarly the factor that the complainant alleged the loan amount to be Rs.22 50 000 and seven cheques being of Rs.3 00 000 each leading to a deficit of even worth Rs.1 50 000 determination of real questions involved in the matter. May be if the total amount of cheques exceeded the alleged amount of loan a slender doubt might have arisen but in the present matter the total amount of 7 cheques is lesser than the amount of loan. Significantly the specific amount of loan was distinctly stated by the accused appellant in the aforesaid acknowledgement dated the purpose of 22. So in the light of the above principles if the evidence of complainant is considered and in the light of defence taken by the accused then it is crystal clear that the complainant has proved his case and an offence under Section 138 of N.I.Act against the accused is made out by the complainant by legally admissible 23. The defence of the accused is considered in the light of the above referred decisions then it is crystal clear that the accused defence is neither probabale nor tenable. The accused has simply stated that the complainant was running a chitt fund business and he was member of it. He has issued a blank cheque for the prize of chit fund a sum of Rs.50 000 . The complainant has promised him to return the cheque but he did not return the cheque. Accused has further stated that he has purchased one plot from complainant for Rs.3 00 000 but he was not given possession. So for that purpose there is a dispute. This is accused defence. But no documents are produced to show that there was any chitt fund business run by the complainant. If at all the complainant has not returned the cheque why no intimation was given to the bank to stop payment. No criminal case is filed against the complainant in this regard. No action is taken for filing this complaint if at all this is a false case. So the accused in his exanimation in chief never rebuts any statutory presumption arising in favour of complainant. In the cross examination he has admitted that he has no documents to show that complainant was running a chitt fund business. He has also admitted that he has not filed any suit seeking possession of the land sold by the complainant. He has also stated that he do not know whether the plots were sold by the complainant are still in existence or not. He has clearly admitted that Ex.P.1 cheque belongs to him and Ex.P.1(a) is his signature. So his evidence will not help to the accused in any way to rebut the presumption in favour of the 24. The accused examined one S. Mohan Kumar as DW.2. The said witness also states that he is also member of Chitt B.C. Business and very strangely states in examination in chief that accused has paid entire B.C. amount. He further states that himself and accused asked complainant to return the cheque the complainant returned his cheque but he do not know whether the cheque issued by the accused was returned to him or not. So this evidence in examination in chief falsifies the defence of the accused. DW.2 has also admitted that he do not know the name and address of members of the chitt fund business. He do not know the cheque number given by him. He do not remember the date and month when he has given cheque to the complainant. He has no documents to show about payment of B.C.amount. He cannot say the date and month when the accused has given the cheque to the complainant. He has not attended any panchayat regarding cheque given by the accused in favour of the complainant. He has clearly stated he do not know anything about this case. He do not know what is amount of cheque involved in this case. So this type of evidence of DW.2 totally falsify the defence of the 25. Therefore the findings of the learned Trial Court that the complainant has failed to prove the debt and the accused has substantiated his defence by preponderance of probability is totally illegal perverse and not based on the evidence on record or the settled principles regarding appreciation of evidence. The decisions relied upon by the learned counsel for the accused reported in 2012KCCR 2057 in the case of Veerayya vs. G. K. Madivalar the decision of the Hon ble Supreme Court reported in AIR 2008 SC 1325 the case of Krishna Janardhan Bhat vs Dattatraya G. Hegde and another decision reported in ILR 2008 KAR 4629 in the case of Shiva Murthy vs Amruthraj will not help the accused in any way. In the decision of this Court referred by the accused counsel in that case the suit filed for recovery of cheque amount which was dismissed. Whether the complaint was premature or not was in question. The principles stated in the decision of Krishna Janardhan Bhat was referred by the Hon ble Supreme Court and this High Court in number of subsequent decisions. The principles stated in that decision has no application to the evidence and facts of this case. Therefore that decisions in no way help the accused. In the light of the principles stated in the above referred decisions of the Hon ble Supreme Court if the present appeal the judgment and evidence placed on record are considered then it is evident that the complainant has proved by legally admissible evidence that the accused has borrowed loan of Rs.9 80 000 and issued cheque Ex.P.1 in discharge of the said debt or liability which is legally recoverable. The accused has failed to rebut statutory presumption in favour of complainant. The Trial Court has not appreciated the principles stated by the Hon ble Supreme Court and this Court in the cases under Negotiable Instruments Act particularly cheque bounce case. The Trial Court has failed to appreciate the burden of proof and drawing presumption. Only on untenable contentions and evidence the Trial Court has acquitted the accused. Therefore the judgment of the Trial Court is illegal perverse and needs interference by this Court and liable to be set aside. 26. It is crystal clear that the accused has committed an offence punishable under Section 138 of Instruments Act and he needs to be sentenced accordingly. 27. The Section 138 of Negotiable Instruments Act 1881 provides punishment both imprisonment which may extend two years or with fine which may extend to twice the amount of cheque or with both. 28. The offences under Negotiable Instrument Act are regulatory offences intend to give sanctity to the negotiable instruments. Keeping in mind the settled principles regarding imposition of sentence in cheque bounce case in my considered view the accused needs to be imposed the fine double the cheque amount. In this case the cheque amount is Rs.9 80 000 . The case of the year 2012. Now we are in the end of the year 2020. So nearly eight years the case is pending. Therefore in my considered view the imposition of double the cheque amount as a fine is a proper sentence. Hence I answer the Points for consideration accordingly and proceed to pass the following: The Criminal Appeal filed under Section 378of Code of Criminal Procedure by the appellant complainant is allowed. The Judgment and order of acquittal passed in C.C.No.2088 2012 dated 11.03.2014 by the IV Addl. Civil Judge and JMFC Court at Gulbarga. is hereby set The accused respondent is hereby convicted for the offence punishable under Section 138 of Negotiable Instruments Act 1881. The accused respondent is sentenced to pay a fine of Rs.19 60 000 Rupees Nineteen Lakhs Sixty Thousand only) shall be paid to the appellant complainant PW.1 Mohan Kumar s o Shankar Rathod as compensation under Section 357 of the Code of Criminal Procedure 1973. The remaining amount of Rs.10 000 shall be credited to the State Account. Send back the secured records of the Trial Court Sd 

Summary: Offences under the Negotiable Instrument Act can be proved even when the source of income from the complainant is not disclosed in matters of debt repayment. This was decided by Hon’ble Justice P.N Desai of the High court of Karnataka in Mohan Kumar vs. Syed Mohd Ali [Criminal Appeal 200033 of 2014]. In this case of appeal, the appellant is the actual complainant of the case decided in Trial Court. There existed a fiduciary relationship between the appellant and the defendant. The appellant advanced a loan of about Rs.10 Lakhs to the accused, on account of good friendship. However, after multiple reminders and sending a legal notice, the accused failed to repay the debt. Therefore complaint was filed against the accused under Section 136 of the Negotiable Instruments Act, 1881. The lower courts acquitted the accused because the source of payment of the amount and presence of any person during the said payment by the appellant was not proved. The Trial court also found that it was violative of Section 269 of the Income Tax Act. In the instant case, the accused took the defense that there is no legally enforceable liability on him. He used the absence of any security documents for the transaction to validate this contention. The defense also accused the appellant of running a chit business and that the blank check issued was misused by him. The counsel for the defense, on the other hand, stated that presumption under Section 114 of the Indian Evidence Act and 139 of the Negotiable Instruments Act was available to the appellant. Further, the appellant produced documents of plot ownership thereby suggesting the capacity of the appellant to lend a loan of a huge amount to the defendant. Reliance mas also made on recent cases of Supreme Court like the AIR 2020 SC 945 APS Forex Services Pvt. Ltd., vs. Shakti International Linkers and others. The court categorically stated when there are insufficient funds then there is a statutory presumption in favour of the holder of the cheque that it is dishonoured. The burden to rebut is on the accused and not on the appellant. It further stated that an Issue of debt is no precondition to remove the presumption under section 139 of the Negotiable Instruments Act. It referred to the landmark judgment of the Supreme Court with a similar set of facts that is AIR 2012 SC 1876 Rohitbhai Jivanlal Patel vs State of Gujurat and another. Here, it was held here that “the trial court suffered from perversity and fundamental error of approach. The observations of the Trial Court that there was no documentary evidence to show the source of funds with the respondent to advance loan would have been relevant if the matter was to be examined beyond a reasonable doubt.”