- 1 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 IN THE HIGH COURT OF KARNATAKA KALABURAGI BENCH DATED THIS THE 23RD DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MRS. JUSTICE M.G. UMA CRIMINAL APPEAL NO. 200141 OF 2023 (378(Cr.PC)/419(BNSS)) BETWEEN: REKHA SINDOL W/O RAMESH SINDHOL, AGE: 64 YEARS, OCC: HOUSEHOLD, R/O. H.NO. 9-1-91, FIRST FLOOR, NANDI COLONY, BESIDE LIC OFFICE, BIDAR-585401. …APPELLANT (BY SRI ANIL KUMAR NAVADAGI, ADVOCATE) AND: ALANKAR DIXIT S/O DALJITKUMAR DIXIT, AGED ABOUT 35 YEARS, OCC: BUSINESS, R/O. FLAT NO.12, VISHNU PRIYA APARTMENTS, SINHGAD ROAD, PUNE, MAHARASHTRA-411030. …RESPONDENT (BY SRI NANDKISHORE BOOB, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C., PRAYING TO ALLOW THE APPEAL BY SETTING ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL OF THE RESPONDENT/ACCUSED PASSED BY THE ADDL. DIST. AND SESSIONS COURT, BIDAR, IN CRL. Digitally signed by PRASHANTH N V Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 APPEAL NO.51/2020 DATED 21.12.2022 FOR THE OFFENCE UNDER SECTION 138 OF N.I. ACT AND CONFIRM THE JUDGMENT AND ORDER OF SENTENCE DATED 11.12.2020 PASSED BY THE II ADDL. CIVIL JUDGE AND JMFC-II, BIDAR, CONVICTING AND SENTENCING THE RESPONDENT HEREIN FOR THE OFFENCE UNDER SECTION 138 OF N.I. THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MRS. JUSTICE M.G. UMA ORAL JUDGMENT (PER: HON'BLE MRS JUSTICE M.G. UMA) The complainant in C.C. No.2122/2014 on the file of the learned II Additional Civil Judge and J.M.F.C., Bidar, [for short ‘Trial Court’] is impugning the judgment dated 21.12.2022 passed in Criminal Appeal No.51/2020 on the file of the learned Additional District and Sessions Judge, Bidar [for short ‘First Appellate Court’] allowing the appeal and setting aside the judgement of conviction and order of sentence dated 11.12.2020 passed by the Trial Court and acquitting the respondent/accused No.2 for the offences - 3 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 punishable under Section 138 of Negotiable Instructions Act [for short ‘N.I. Act’]. 2. The facts of the case in brief are that, the appellant herein as complainant has filed P.C. No.73/2014 against M/s. Perfect Investors Solutions, a Partnership Firm, represented by its Managing Partners Mr. Kunal and Mr. Alankar Dixit, alleging commission of the offence punishable under Section 138 of N.I. Act. 3. It is the contention of the complainant that her husband is a businessman having dealership in Asian Paints. He had purchased shares of Asian Paints in the name of the complainant about 13 years back. The son of the complainant being the General Power of Attorney Holder [for short ‘GPA Holder’] is also doing business along with his father. He was also having trade in shares. It is stated that, the complainant and her son came in contact with the accused through the Managing Partner of M/s. Perfect Investors Solutions at Pune, about 4 years back. During the year 2011, the accused firm was in need of - 4 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 money for improvement of its business. It approached the complainant through her General Power of Attorney Holder seeking hand loan of 42,00,000/-. Since, she was not having such hard cash, it was suggested by the accused that the complainant can redeem her shares in Asian Paints and pay the amount. The accused promised to repay the amount within 45 days. Accordingly, the complainant by selling the shares got a sum of Rs.41,99,000/- and paid Rs.42,00,000/- to the accused through cheque dated 01.12.2011 drawn on ING Vysya Bank, Branch Bidar. The amount was credited to the account of the accused on 02.12.2011. The accused undertook to repay the amount on or before 31.03.2012 as per its undertaking dated 09.03.2012. Inspite of that, the amount was not repaid. Finally the accused issued the cheque - Ex.P1 for Rs.32,00,000/- towards legally recoverable debt. When the cheque was presented for encashment, the same was dishonoured, as there was insufficient fund in the account of the accused. A legal - 5 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 notice was issued to the accused demanding payment of the cheque amount. On receipt of the legal notice, accused issued the reply as per Ex.P7 admitting the existence of legally enforceable debt and promising to pay the same. But inspite of that, the cheque amount was not repaid and thereby, the accused committed the offence punishable under Section 138 of N.I. Act. Accordingly, the complainant requested the Trial Court to take cognizance of the offence and to initiate legal action. 4. The Trial Court took cognizance of the offence and registered Criminal Case No.2122/2014. The accused appeared before the Trial Court, pleaded not guilty. Complainant examined her GPA Holder as PW1 and got marked Ex.P1 to P8. Accused denied all incriminating materials available on record and got examined RW1 and RW2. The Trial Court after taking into consideration all these materials on record, came to the conclusion that it is only accused No.2 is liable to be convicted and accordingly convicted and sentenced him to undergo simple - 6 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 imprisonment for a period of 01 year and to pay fine of Rs.3,000/- for the offence punishable under Section 138 of N.I. Act and also to pay compensation of Rs.6,00,000/-. Being aggrieved by the same, accused No.2 has preferred Criminal Appeal No.51/2020. The First Appellate Court on re-appreciation of the materials on record allowed the appeal and acquitted accused No.2 on the ground that, even though it is stated that the accused is the partner, the firm is not arrayed as a party, there was non- compliance of Section 141 of N.I. Act, and therefore accused is entitled for acquittal. Being aggrieved by the same, the complainant is before this Court. 5. Heard Sri Anilkumar Navadagi, learned counsel for the appellant-complainant and Sri Nandkishore Boob, learned counsel for the respondent-accused. Perused the materials available on record including the Trial Court Records. - 7 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 6. In view of the rival contentions urged by learned counsel for both the parties, the point that would arise for my consideration is: “Whether the appellant-complainant has made out a case to interfere with the impugned judgment of acquittal passed by the First Appellate Court? My answer to the above point is in the 'Affirmative' for the following: REASONS 7. It is the contention of the appellant- complainant that, the accused has availed a loan of Rs.42,00,000/-, which was credited to the account of the accused. This fact is not in dispute. Rather the accused admitted the same. It is the further contention of the complainant that, there was no repayment of the said amount. The accused issued cheque as per Ex.P1 dated 03.11.2013. This fact is also not in dispute, as the accused admitted issuance of the cheque as per is Ex.P1. - 8 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 The cheque in question admittedly dishonored as there was insufficient funds in the account of the accused. The legal notice as per Ex.P3 was issued to the Partnership Firm represented by its partners including the respondents herein. Ex.P7 is the reply notice issued by the partners of the firm admitting the contention of the complainant regarding the business carried on by them and also that the amount of Rs.32,00,000/- was due. It is stated that the accused are ready and willing to pay the balance amount. However it is contended that, Ex.P1 was a blank cheque issued in favour of the complainant as security. 8. It is settled the position of law that, even if the accused issues a blank cheque with signature, the complainant is entitled to fill in the contents to present the same for encashment. To highlight the position of law on the subject, I may refer to the decision of the Hon’ble Apex Court in Bir Singh vs. Mukesh Kumar1, wherein 1 (2019) 4 SCC 197 - 9 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 the Hon'ble Apex Court by referring to its earlier decision held in paragraph Nos.34 and 36 as under: “34. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount 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. 36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which 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.” 9. It is relevant to refer to the decision of the Hon’ble Apex Court in M/s. Kalamani Tex and Another Vs. P Balasubramanian2, wherein the three Judges Bench of the Hon'ble Apex Court discussed at length about the position of law with regard to the burden of proof for 2 (2021) 5 SCC 283 - 10 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 the offence punishable under Section 138 of N.I.Act. It referred to its earlier decision in Basalingappa Vs. Mudibasappa3, and held in paragraph Nos.14, 15, 16 and 18 as under: "14. Adverting to the case in hand, we find on a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystalized by this Court in Rohitbhai Jivanlal Patel v. State of Gujarat in the following words: "In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant 3 AIR 2019 SC 1983 - 11 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused.....” 15. Once the 2nd Appellant had admitted his signatures on the cheque and the Deed, the trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial Court fell in error when it called upon the Complainant-Respondent to explain the circumstances under which the appellants were liable to pay. Such approach of the trial Court was directly in the teeth of the established legal position - 12 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 as discussed above, and amounts to a patent error of law. 16. No doubt, and as correctly argued by senior counsel for the appellants, the presumptions raised under Section 118 and Section 139 are rebuttable in nature. As held in MS Narayana Menon v. State of Kerela, which was relied upon in Basalingappa (supra), a probable defence needs to be raised, which must meet the standard of "preponderance of probability", and not mere possibility. These principles were also affirmed in the case of Kumar Exports (supra), wherein it was further held that a bare denial of passing of consideration would not aid the case of accused. 18. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite Bir Singh v. Mukesh Kumar, where this court held that: "Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any - 13 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 cogent evidence to show that the cheque was not issued in discharge of a debt." (Emphasis supplied) 10. I may also refer to the decision of the Hon’ble Apex Court in APS Forex Services Pvt. Ltd. Vs. Shakti International Fashion Linkers and Others4, wherein it is held in paragraph No.7 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 legally 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 complain-ant has been paid. In the present case, no such evidence has been led by the 4 AIR 2020 SC 945 - 14 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 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 is-sued 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 complain-ant 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. - 15 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 11. In Ex.P7, the accused further stated that, he is ready to repay the amount of Rs.32,00,000/- without fail on 30.04.2014. Therefore, it is stated that a post dated cheque bearing No.000157 drawn on Kotak Mahindra Bank dated 30.04.2014 was sent with the reply notice. A defence was taken that in view of issuance of post dated cheque along with reply notice, no action under Section 138 could be initiated. Learned counsel for the appellant contends that even the said cheque was also dishonored. 12. Ex.P8 is the acknowledgement dated 09.03.2012 signed by both the partners of M/s. Perfect Investors Solutions, acknowledging that the amount was due and the same may be paid on 31.03.2012. Thus, it is clear that the accused is not having any defence after admitting the receipt of the amount and by undertaking to pay Rs.32,00,000/-. But the fact remains that, the cheque in question was dishonoured on 31.01.2014, legal notice was issued on 18.02.2014 and Ex.P2 – Reply Notice is dated 07.03.2014 and private complaint came to be filed - 16 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 on 02.04.2014. However, the cheque amount was not paid. 13. During the pendency of criminal case before the Trial Court, the accused is said to have paid Rs.29,00,000/- to the complainant. This fact is admitted by the complainant. Therefore, it is the contention of the respondents/accused that only a sum of Rs.3,00,000/- is due to be paid to the complainant and the accused is ready to pay the same. This submission on the part of the accused is considered in the light of the similar admissions made in reply notice 07.03.2014 and the acknowledgement - Ex.P8 dated 09.03.2012. Therefore, the accused even after admitting that there is existence of legally enforceable debt and contending that the accused is ready to repay the same, has not paid the amount fully, till date. 14. The Trial Court after taking into consideration all these materials on record and also the fact that partner No.1 had already quit the firm prior to issuance of cheque - 17 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 – Ex.P1 and the said fact was evidenced by Ex.D1, acquitted him under Section 138 of N.I. Act. Since, the respondent herein was the signatory to the cheque, he was convicted and sentenced as stated above. Being aggrieved by the same, the accused has preferred the appeal before the First Appellate Court. 15. The first Appellate Court on re-appreciation of the materials on record, formed an opinion that there is violation of Section 141 of N.I. Act, as the Partnership Firm was not arrayed as accused and therefore, the accused is entitled for acquittal. Accordingly, the appeal was allowed and the accused was acquitted. Being aggrieved by the same, the complainant is before this Court. 16. The complainant while filing the complaint, arrayed the partnership firm and its two partner as accused. However, the Partnership Firm and the first partner were acquitted by the Trial Court on the ground that the first partner has already quit the partnership - 18 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 before issuance of the cheque in question as per Ex.D1. Without taking note of these facts, the First Appellate Court proceeded to hold that, the accused is a Partnership Firm and the same is not arrayed as accused and thereby there is non-compliance of requirement under Section 141 of N.I. Act. 17. Learned counsel for the appellant places reliance on the decision of the Hon'ble Apex Court in DHANASINGH PRABHU VS. V. CHANDRASEKHAR AND ANOTHER5, to contend that, a Partnership Firm is not legal entity in the sense of a Corporation or a Company, incorporated under the Companies Act and that in case of a partnership firm, even if the offence is proved against the firm, it is not per-se liable for conviction. The liability is inevitably extended to the partners either personally or jointly or severally. The Hon'ble Apex Court considering the scope of Section 141 of N.I. Act, in the light of requirement under Section 138 of N.I. Act, categorically 5 2025 LiveLaw SC 708 - 19 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 held that, the High Court was not right in dismissing the complaint, for the reason that the partnership firm was not arrayed as accused in the complaint. Thus, the position of law is very well settled. 18. Even otherwise, as I have already stated the complainant has arrayed the partnership firm and the other partners while filing the complaint and only when the accused has taken defence by producing Ex.D1, the firm and the first partner were acquitted while convicting the respondent/accused. Under such circumstances, the First Appellate Court committed an error in acquitting the accused. The impugned judgment of the First Appellate Court is against the settled position of law and against the materials placed on record. Hence, the same is liable to be set aside. 19. Even though, it is contended by the learned counsel for the respondent-accused that a sum of Rs.29,00,000/- is already paid to the complainant and only an amount of Rs.3,00,000/- was due, which the - 20 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 respondent is ready to pay, the offence under Section 138 of N.I. Act is already committed. The conduct of the respondent in admitting his liability in the Reply Notice – Ex.P7, which is dated 07.03.2014, has not chosen to pay the same till date. Paying a portion of the cheque amount will not absolve respondent/accused from conviction as the offence in question is already committed. Therefore, I am of the opinion that respondent is liable for conviction. 20. Accordingly, I answer the above point in the ‘Affirmative’ and proceed to pass the following: ORDER (i) The criminal appeal is allowed. (ii) The judgment dated 21.12.2022 passed in Crl.A.No.51/2020 on the file of the learned Additional District and Sessions Judge, Bidar is hereby set aside. - 21 - HC-KAR NC: 2025:KHC-K:5768 CRL.A No. 200141 of 2023 (iii) The judgment of conviction and order of sentence dated 11.12.2020 passed by the Trial Court in C.C. No.2122/20214 is restored. Send back the Trial Court records along with the copy of the judgments for information and needful action. Sd/- (M.G. UMA) JUDGE SBS List No.: 1 Sl No.: 17 CT:PK