- 1 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S RACHAIAH CRIMINAL APPEAL NO. 1839 OF 2016 (A) BETWEEN: SRI SIDDESHWAR RAO S/O SUBRAMANYA RAO, AGED ABOUT 52 YEARS, R/AT NO.736/468 S. A. RAVINDARNAGAR, INDUSTRIAL AREA, DAVANAGERE-577002. …APPELLANT (BY SRI CHETAN B, ADVOCATE FOR SRI. SURESH M. R., ADVOCATE) AND: SRI N. SATHYANARAYANA, AGED ABOUT 45 YEARS, S. D. C. LIBRARIAN, BAPUJI DENTAL COLLEGE AND HOSPITAL MCC ‘B’ BLOCK, DAVANAGERE-577002 …RESPONDENT (BY SRI MARUTHY G. B., ADVOCATE) THIS CRL.A. IS FILED U/S 378(4) CR.P.C PRAYING TO SET ASIDE THE ORDER DATED 24.09.2016 PASSED IN C.C.NO.911/2015 BY THE HON’BLE JUDICIAL MAGISTRATE FIRST CLASS, 3RD COURT, DAVANAGERE AND CONVICT THE RESPONDENT UNDER THE PROVISIONS OF SECTION 138 OF N.I. ACT AFTER CALLING FOR THE RECORDS FROM THE SAID COURT AND PASS SUCH OTHER ORDER/S IN THE FACTS AND CIRCUMSTANCES OF THE ABOVE CASE. THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED ON 13.02.2025 COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THROUGH VIDEO CONFERENCING, THIS DAY, THE COURT DELIVERED THE FOLLOWING: CORAM: HON'BLE MR JUSTICE S RACHAIAH Digitally signed by RENUKA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 CAV JUDGMENT 1. This appeal is filed by the appellant / complainant being aggrieved by the judgment and order of acquittal dated 24.09.2016 in C.C.No.911/2015 on the file of the Judicial Magistrate First Class, 3rd Court, Davanagere, wherein the Trial Court acquitted the accused/respondent for the offence punishable under Section 138 of the Negotiable Instruments Act (for short ‘N.I. Act’). 2. The ranks of the parties in the Trial Court henceforth will be considered accordingly for convenience. Brief facts of the case: 3. The case of the complainant is that the accused had borrowed a sum of Rs.2,50,000/- from the complainant on 17.06.2013 for his family necessities and also agreed to repay the said amount within a short time along with interest at the rate of 2% per month. The accused had issued a post-dated cheque by mentioning the date as 09.10.2014. When the said cheque was presented for encashment, it came to be dishonoured as “Funds Insufficient” and thereafter, he issued a notice to the - 3 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 accused through RPAD demanding for payment of the cheque amount. However, the accused has neither replied to the said notice nor paid the cheque amount. Therefore, the complainant filed a complaint before the Magistrate. 4. To prove the case, the complainant examined himself as PW.1 and got marked five documents as Exs.P1 to P5. The Trial Court after appreciating the oral and documentary evidence on record, recorded the acquittal. Hence, the complainant has filed this appeal. 5. Heard Sri Chetan B, learned counsel for Sri Suresh M.R., learned counsel for the appellant and Sri Maruthy G.B., learned counsel for the respondent. 6. It is the submission of learned counsel for the appellant that the findings recorded by the Trial Court in acquitting the accused are erroneous, perverse and illegal and the same requires to be set aside. 7. It is the submission of the learned counsel for the appellant / complainant that the Trial Court dismissed the complaint on the ground that the cheque was post-dated - 4 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 cheque, however, the complainant did not disclose that it was a post-dated cheque. Therefore, the ambiguity in respect of issuance of the cheque has not been cleared. In addition to the said ground, the Trial Court elaborately discussed about the financial capacity of the complainant, which is not supposed to be discussed at the initial stage. 8. It is further submitted that the Trial Court after having raised two points i.e., one is post-dated cheque and another one is financial capacity of the complainant and opined that the complainant has not proved the case, hence, dismissed the complaint. The findings of the Trial Court is contrary to the settled principle of law. Therefore, the said findings has to be set aside. Making such submission, the learned counsel for the appellant prays to allow the appeal. 9. Per contra, the learned counsel for the respondent / accused justified the impugned judgment and order of acquittal passed by the Trial Court and he further submitted that the said cheque was issued to the complainant for the purpose of security for the loan of - 5 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 which Nagaraj s/o. Hanumanthappa had borrowed from the complainant. 10. It is further submitted that in spite of clearing the loan, the complainant has failed to return the cheque, therefore, the liability on the cheque would not arise. The Trial Court has rightly appreciated the evidence and dismissed the complaint, which is appropriate and is not required to interfere with the said findings. As such, he prays to dismiss the appeal. 11. Having heard the learned counsel for the respective parties and also perused the findings of the Trial Court in recording the acquittal, it could be gathered that the Trial Court after analyzing the evidence on record, opined that the complainant had failed to establish his case by leading cogent and convincing evidence. It is further held that the issuance of the cheque for the legally enforceable debt or liability has not been proved by the complainant and the issuance of the notice to the proper address has also not been proved. Therefore, the Trial Court opined that it was a case for acquittal. - 6 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 12. For re-appreciating the evidence of all the witnesses, it is necessary to have a re-look upon the evidence of all the witnesses and also the documents as it is an appeal filed by the complainant against the judgment of acquittal. 13. It is the case of the complainant that he had lent an amount of Rs.2,50,000/- to the accused on 17.06.2013 and a post-dated cheque, mentioning the date as 09.10.2014, was issued to the complainant. When it was presented for encashment, the said cheque came to be dishonoured saying that sufficient amount was not there in the account. 14. Before adverting to the merit of the case, it is necessary to have a cursory look upon the proposition of law laid down by the Hon'ble Supreme Court in the case BIR SINGH v. MUKESH KUMAR1, paragraph Nos.18 to 24 read thus: “18. In passing the impugned judgment and order dated 21-11-2017, the High Court misconstrued Section 139 of the Negotiable Instruments Act, which mandates that unless the contrary is proved, it is to be presumed 1 (2019) 4 SCC 197 - 7 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 that the holder of a cheque received the cheque of the nature referred to in Section 138, for the discharge, in whole or in part, of any debt or other liability. Needless to mention that the presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque. 19. In Hiten P. Dalal v. Bratindranath Banerjee, this Court held that both Sections 138 and 139 require that the court shall presume the liability of the drawer of the cheques for the amounts for which the cheques are drawn. Following the judgment of this Court in State of Madras v. A. Vaidyanatha Iyer, this Court held that it was obligatory on the court to raise this presumption. 20. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of - 8 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact as held in Hiten P. Dalal. 21. Presumption of innocence is undoubtedly a human right as contended on behalf of the respondent-accused, relying on the judgments of this Court in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and Rajesh Ranjan Yadav v. CBI. However the guilt may be established by recourse to presumptions in law and presumptions in facts, as observed above. 22. In Laxmi Dyechem v. State of Gujarat, this Court reiterated that in view of Section 139, it has to be presumed that a cheque was issued in discharge of a debt or other liability but the presumption could be rebutted by adducing evidence. The burden of proof was however on the person who wanted to rebut the presumption. This Court held “however, this presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of a post- dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act”. 23. In Kumar Exports v. Sharma, this Court reiterated that there is a presumption that every negotiable instrument duly executed, is for discharge of a debt or liability, but the - 9 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 presumption is rebuttable by proving the contrary. In the facts and circumstances of the case it was found that the cheque in question was towards advance for purchase of carpets, which were in fact not sold by the payee of the cheque to the drawer, as proved from the deposition of an official of the Sales Tax Department, who stated that the payee had admitted that he had not sold the carpets. 24. In K.N. Beena v. Muniyappan, this Court held that in view of the provisions of Section 139 of the Negotiable Instruments Act read with Section 118 thereof, the Court had to presume that the cheque had been issued for discharging a debt or liability. The said presumption was rebuttable and could be rebutted by the accused by proving the contrary. But mere denial or rebuttal by the accused was not enough. The accused had to prove by cogent evidence that there was no debt or liability. This Court clearly held that the High Court had erroneously set aside the conviction, by proceeding on the basis that denials/averments in the reply of the accused were sufficient to shift the burden of proof on the complainant to prove that the cheque had been issued for discharge of a debt or a liability. This was an entirely erroneous approach. The accused had to prove in the trial by leading cogent evidence that there was no debt or liability.” - 10 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 15. On careful reading of the above said judgment of the Hon'ble Supreme Court, it makes it clear that, initially, the accused has to rebut the presumption. Once he has rebutted the presumption, then the burden would be shifted to the complainant to prove his financial capacity and also he has to establish that he had paid the amount as stated in the cheque. 16. In the present case, the accused has not examined any witnesses nor marked any documents. However, in cross-examination of PW.1, he stated that he had not received any amount from the complainant. Mere denial of the transaction is not sufficient to rebut the presumption. 17. Be that as it may, the accused in the cross-examination has stated that he had not received the notice etc., hence, he did not issue reply notice to the notice issued by the complainant. Notwithstanding that he had not issued reply notice, the fact remains that, he had an opportunity to establish his case by leading cogent evidence to rebut the presumption. - 11 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 18. On careful reading of the cross-examination of PW.1 and the defence set up by the accused to rebut the presumption, in my considered view, is not sufficient to rebut the presumption for the reason that the denial of the said transaction itself cannot be helpful to the accused. Except denial, the accused has not produced any documents nor examined any witnesses to prove that there was no transaction between himself and the complainant and the said cheque was issued not for any debt or liability. Such being the fact, the Trial Court grossly committed error in arriving at a conclusion that, initially, the complainant has to prove the case and dismissed the complaint, which is required to be set aside. 19. In the light of the observations made above, I proceed to pass the following:- ORDER (i) The Criminal Appeal is allowed. (ii) The judgment and order of acquittal dated 24.09.2016 passed in C.C. No.911/2015 on - 12 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 the file of the Judicial Magistrate First Class, 3rd Court, Davanagere, is set aside. (iii) The respondent / accused is convicted for the offence under Section 138 of N.I. Act and he is sentenced to pay a fine of Rs.4,10,000/- (Rupees Four Lakhs Ten Thousand only), in default, he shall undergo simple imprisonment for one year. (iv) On depositing the fine amount, the Trial Court is directed to release the amount of Rs.4,00,000/- (Rupees Four Lakhs only) in favour of the complainant/appellant, on proper identification, and the balance of Rs.10,000/- (Rupees Ten Thousand only) shall be adjusted to the exchequer of the State. (v) The Registry is directed to send the records along with the copy of the judgment to the Trial Court forthwith for the purpose of compliance of this order. - 13 - NC: 2025:KHC:12837 CRL.A No. 1839 of 2016 (vi) The Trial Court is directed to secure the presence of the accused for execution of sentence imposed by this Court in accordance with law. Sd/- (S RACHAIAH) JUDGE BSS List No.: 19 Sl No.: 2