- 1 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF JANUARY, 2025 BEFORE THE HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR CRIMINAL APPEAL No. 1085 OF 2014 BETWEEN: SRI RAGHAVENDERA ENTERPRISES REPRESENTED BY ITS PROPRIETOR K R LOKESH RAO, MAJOR S/O RANOJI RAO No.10, 4TH MAIN SREEKATESHWARANAGAR MAHALAKSHMI LAYOUT BANGALORE – 560 096. …APPELLANT (BY SRI ABDULLA T I, ADVOCATE) AND: H. NAGARAJ S/O H MALLAPPA MAJOR, No.7 SHANKARANAGAR MAINROAD SREEKANTESHWARNAGAR NANDINI LAYOUT NEAR MAHALAKSHMI LAYOUT BANGALORE – 560 096. …RESPONDENT (BY SRI R ASHOKAN, ADVOCATE FOR SRI S PRAKASH SHETTY, ADVOCATE) THIS CRL.A. IS FILED UNDER SECTION 378(4) Cr.P.C PRAYING TO SET ASIDE THE ORDER DATED:28.10.14 PASSED BY THE XXVII ADDL.C.M.M., BANGALORE IN C.C.No.11656/13 - Digitally signed by LAKSHMINARAYANA MURTHY RAJASHRI Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT AND ETC., THIS APPEAL COMING ON FOR HEARING THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE SHIVASHANKAR AMARANNAVAR ORAL JUDGMENT 1. This appeal is filed by the complainant challenging the judgment of acquittal dated 28.10.2014 passed in C.C. No.11656/2013 by the XXVII Additional Chief Metropolitan Magistrate, Bengaluru, whereunder the respondent - accused has been acquitted for offence under Section 138 of Negotiable Instruments Act (hereinafter for the sake of brevity referred to as the `N.I. Act’). 2. Case of the complainant in brief is, that the appellant was carrying on rice business under the name and style of M/s. Raghavendra Enterprises at Mahalakshmi Layout, Bengaluru. The accused was running a hotel under the name and style of Sri. Guru Coffee Kendra in the same locality. The accused used to purchase rice from the complainant for his hotel and due to that business transaction, they came to be acquainted with each other. - 3 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 During April 2012 the respondent - accused approached the complainant seeking financial help of Rs.8.00 lakhs as hand loan for his hotel business. On 15.05.2012 the complainant paid Rs.8.00 lakhs to the respondent - accused and he promised to repay the same within 3 – 4 months. During December 2012, the respondent – accused, in order to repay the amount borrowed, had issued cheque bearing No. 415445 dated 03.12.2012 for Rs.8.00 lakhs drawn on Syndicate Bank Shankarnagar Branch, Bengaluru. The complainant presented the said cheque for encashment. Said cheque came to be returned with endorsement `funds insufficient’. The complainant got issued legal notice. Inspite of service of legal notice, the respondent - accused has not paid the cheque amount. Therefore, the complainant has filed private complaint against the respondent - accused under Section 138 of the N.I. Act. Learned Magistrate has taken cognizance and registered C.C. No. 11656/2013 against the respondent - accused for offence under Section 138 of N.I. Act. Plea of the respondent - accused was recorded. The complainant, - 4 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 in order to prove his case, has examined himself as P.W.1 and got marked Ex.P.1 to Ex.P.8. Statement of the respondent - accused has been recorded under Section 313 of Cr.P.C. The respondent - accused did not lead any defence evidence. Learned Magistrate, after hearing arguments on both sides, formulated points for consideration and passed the impugned judgment of acquittal. Said judgment of acquittal has been challenged by the complainant in this appeal. 3. Heard learned counsel for appellant – complainant and respondent - accused. 4. Learned counsel for appellant – complainant would contend that the respondent - accused has admitted his signature on Ex.P.1 – cheque and therefore, a presumption under Section 139 of N.I. Act requires to be drawn that cheque has been issued for making payment of legally enforceable debt. The respondent - accused has taken up the defence that for business transaction he had issued signed cheque as security. Said aspect has not been established since it has been denied by the - 5 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 complainant in his cross-examination. The respondent - accused has failed to rebut the presumption under Section 139 of the N.I. Act. Without considering these aspects learned Magistrate has erred in acquitting the respondent - accused. With this he prayed for allowing the appeal and convicting the respondent - accused for offence under Section 138 of N.I. Act. 5. Learned counsel for respondent would contend that the defence of the respondent - accused has been put to P.W.1 in his cross-examination. Defence of the respondent - accused is that he has given signed cheque to the complainant as a security for purchase of rice from his shop. The appellant - complainant has not produced any material to show the financial capacity to lend huge amount of Rs.8.00 lakhs. P.W.1 in his cross-examination has admitted that he is having documents to show that he had Rs.8.00 lakhs at the time of lending the amount, but, he has not produced any document in that regard. Presumption drawn under Section 139 of the N.I. Act has been rebutted by the respondent - accused. He submits - 6 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 that the standard of proof for rebuttal of presumption is preponderance of probabilities and on that point he placed reliance on the decision of the Hon’ble Apex Court in the case of Sri Dattatraya Vs. Sharanappa reported in 2024 INCS 586. He further submits that if two views are possible then the Court would not ordinarily interfere or reverse the findings of the trial Court on acquittal. On that point also he placed reliance on the above said judgment of the Hon’ble Apex Court. He further submits that on perusal of the bank return memo, Ex.P.3, it is seen that the date of return is 12.06.2012 and cheque is dated 03.12.2012 and cheque can not be presented prior to the date of the cheque. He submits that considering all these aspects learned Magistrate has rightly acquitted the respondent - accused. With this he prayed for dismissal of the appeal. 6. Having heard the learned counsel for the appellant and the learned counsel for the respondent, this Court has perused the impugned judgment and trial Court records. - 7 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 7. Considering the grounds urged the following point arises for consideration in this appeal: “Whether the learned Magistrate has erred in acquitting the respondent - accused for offence under Section 138 of the N.I. Act?” 8. My answer to the above point is in the affirmative for the following reasons: It is the case of the complainant that he lent Rs.8.00 lakhs as hand loan on 15.05.2012 to the respondent - accused for his hotel business and in order to repay the same the respondent - accused had issued Ex.P.1 – cheque during December, 2012. The respondent - accused has admitted his signature on Ex.P.1 – cheque. As the respondent - accused has admitted his signature on Ex.P.1 – cheque, presumption under Section 139 of the N.I. Act that cheque has been issued for making legally enforceable debt has to be drawn. Said presumption drawn under Section 139 of N.I. Act is a rebuttable presumption. Considering the judgment of the Hon’ble Apex Court referred to supra by the learned counsel for - 8 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 the respondent, standard of proof of rebuttal of the said presumption is preponderance of probabilities. 9. The respondent - accused has cross-examined the complainant who has been examined as P.W.1. The respondent - accused has not led any evidence. On perusal of the cross-examination of P.W.1 the respondent - accused has admitted that the appellant – complainant was doing rice business and he was his customer and they were acquainted to each other. It is the defence of respondent - accused that he has issued signed cheque as security for rice purchased by him from the complainant. Said suggestion of respondent - accused that cheque has been issued as a security for purchase of rice has been denied by the complainant in his cross-examination. Considering the cross-examination of P.W.1 said defence of the respondent - accused that Ex.P.1 – cheque has been issued as security for his business transaction has not been established. The respondent - accused has not entered witness box and not led any oral or documentary evidence to establish his defence. The defence of the - 9 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 respondent - accused only remained as a contention which is un-established. 10. If the respondent - accused has rebutted the presumption then the onus shifts on the appellant – complainant to establish his financial capacity to lend Rs.8.00 lakhs to the respondent - accused. The respondent - accused who has been served with notice – Ex.P.3 demanding payment of cheque amount did not choose to give any reply to the said notice. The respondent - accused has not raised his defence at the initial stage when he was served with statutory notice. The complainant need not show his financial capacity unless the accused sets up a case questioning the complainant’s capacity in reply to statutory notice. Same has been held by the Hon’ble Apex Court in the case of Tedhi Singh Vs. Narayan Dass Mahant reported in 2022 (2) SCC 735. 11. Learned counsel for respondent would contend that the cheque is dated 03.12.2012 and date of return of the cheque as per Ex.P.2 is 12.06.2012 and it is prior to the date of cheque. Ex.P.2 is the return memo issued by - 10 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 the Canara Bank pertaining to the cheque Ex.P.1. In Ex.P.2 – return memo date is mentioned as 12.06.2012. In the said return memo also cheque date is mentioned as 12.05.2012. Cheque – Ex.P.1 is dated 03.12.2012. Considering the said aspect it cannot be said that return date is 12.06.2012 as cheque is dated 03.12.2012 and return date has to be considered as 06.12.2012. Considering the said aspects the contention of learned counsel for respondent accused holds no water. 12. The cheque – Ex.P.1 issued by respondent - accused has been dishonoured for the reason `funds insufficient’. Notice has been issued within time. Said notice has been served on the respondent - accused on 14.12.2012. The respondent - accused did not repay the cheque amount and the complaint came to be filed on 19.01.2013. Said complaint is filed within one month from the date of cause of action. Considering all these aspects the complainant has established that respondent - accused has committed an offence punishable under Section 138 of N.I. Act. Considering the material on record - 11 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 it cannot be said that two views are possible. The evidence on record will establish only the case of the complainant that the respondent - accused has committed offence under Section 138 of the N.I. Act. Without considering all these aspects learned Magistrate has committed an error in passing the impugned judgment of acquittal. The complainant has established that the respondent - accused has committed offence under Section 138 of N.I. Act. Therefore, impugned judgment of acquittal requires to be set aside and the respondent - accused requires to be convicted for offence under Section 138 of N.I. Act. 13. In the result, the following; O R D E R i. The appeal is allowed. ii. The impugned judgment of acquittal dated 28.10.2014 passed in C.C. No.11656/2013 by the XXVII Additional Chief Metropolitan Magistrate, Bengaluru, is set aside. iii. The respondent - accused is convicted for offence under Section 138 of the N.I. Act and sentenced - 12 - NC: 2025:KHC:4447 CRL.A No. 1085 of 2014 to pay fine of Rs.8,10,000/- (Eight lakh ten thousand) and in default of payment of fine, to undergo simple imprisonment for a period of six months. iv. Out of the fine amount a sum of Rs.8,00,00/- (Eight lakhs) is ordered to be paid as compensation to the appellant – complainant. v. The respondent - accused shall deposit the fine amount within two months from this day. Sd/- (SHIVASHANKAR AMARANNAVAR) JUDGE LRS List No.: 1 Sl No.: 63