- 1 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 3RD DAY OF APRIL, 2025 BEFORE THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR CRIMINAL APPEAL NO.100277 OF 2016 BETWEEN: NAZAR MOHAMMED KHAN S/O. LATE MOHAMMAD RAFIQ KHAN, AGE: 58 YEARS, OCC: BUSINESS, R/O: BASAVESHWAR BADAVANE, HOSAPETE, TQ: HOSAPETE, DISTRICT: BALLARI – 583 101. …APPELLANT (BY SRI B.G.INDIA, ADVOCATE FOR SRI. K. L. PATIL, ADVOCATE) AND: S. MUSTAFA SAHEB S/O. LATE M. MEHABOOB SAHIB, AGE: MAJOR, OCC: BSNL EMPLOYEE, R/O: BLOCK NO.3, FLAT NO.B-5, BSNL QUARTERS, COLLEGE ROAD, HOSAPETE, DIST: BALLARI – 583 101. …RESPONDENT (BY SRI. SAJJID GOODWALA, ADVOCATE FOR SRI. JAGADISH PATIL, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C., PRAYING TO CALL FOR RECORDS IN C.C. NO.1303 OF 2013 ON THE FILE OF THE ADDITIONAL CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, HOSAPETE AND TO ALLOW THIS APPEAL AND TO SET-ASIDE THE JUDGMENT AND ORDER OF ACQUITTAL DATED 25/05/2016 PASSED BY THE PRINCIPAL CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, HOSAPETE, AND CONVICT THE Digitally signed by MOHANKUMAR B SHELAR Location: High Court of Karnataka, Dharwad Bench, Dharwad - 2 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 RESPONDENT / ACCUSED FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF N.I. ACT, 1881 AND IMPOSE ADEQUATE SENTENCE OF IMPRISONMENT AND FINE ON THE ACCUSED / RESPONDENT IN THE INTEREST OF JUSTICE AND EQUITY. THIS CRIMINAL APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR ORAL JUDGMENT This appeal is filed by the appellant -complainant challenging the judgment of acquittal dated 25.05.2016 passed in C.C.No.1303/2013 by the Additional Civil Judge and JMFC, Hosapete, whereunder the respondent -accused has been acquitted for offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘N.I. Act’, for short) 2. The case of the appellant –complainant’s in brief is as under: The appellant –complainant and respondent – accused are well known to each other. Out of the said acquaintance, the respondent –accused has borrowed loan of Rs.3,00,000/- (rupees Three Lakhs only) on 29.03.2011 - 3 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 for the purpose of house hold expenses and agreeing to repay the same with interest at the rate of 24% per annum and executed On Demand Promissory note infavour of the appellant –complainant. On repeated requests for repayment of loan has issued cheque bearing No.938336 dated 29.12.2012 for Rs.4,26,000/- (rupees Four Lakh Twenty Six Thousand Only) drawn at Canara Bank, Hosapet Branch, Hosapet infavour of the appellant – complainant. The appellant –complainant presented the said cheque for encashment and it came to be dishonoured for “funds insufficient” in the account of accused under memo dated 31.12.2012. The appellant – complainant got issued legal notice dated 15.01.2013 to the respondent -accused and it has been served on the respondent –accused. The respondent –accused has not paid the cheque amount and therefore, the appellant – complainant has filed a private complaint against the respondent –accused for the offence punishable under Section 138 of the N.I Act. - 4 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 3. Learned Magistrate has taken cognizance and registered C.C.No.1303/2013 against the respondent - accused for the offence punishable under Section 138 of N.I. Act. The plea of the accused has been recorded. The appellant -complainant in order to prove his case has examined himself as PW-1 and got marked documents as Ex.P-1 to P-6. The statement of accused has been recorded under Section 313 of Cr.P.C. The respondent – accused has examined himself as D.W.1 and for marked documents EX.D1 to D4. The learned Magistrate after hearing the arguments on both sides, has formulated the points for consideration and passed the impugned judgment of acquittal of the respondent –accused for offence punishable under Section 138 of the N.I Act. The said judgment of acquittal has been challenged by the appellant -complainant in this appeal. 4. Heard learned counsel for appellant and learned counsel for the respondent. - 5 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 5. Learned counsel for the appellant –complainant would contend that the respondent –accused has borrowed Rs.3,00,000/-(rupees Three Lakhs Only) and executed On Demand Promissory Note agreeing to repay the same with interest at rate of 24% per annum. On Demand Promissory Note is at Ex.P6. In order to repay the amount borrowed, the respondent –accused has issued cheque – Ex.P1 for Rs.4,26,000/- (rupees Four Lakhs Twenty Six Thousand only) and it came to be dishonoured for “funds insufficient” in the account of the respondent –accused. The respondent –accused has admitted his signature on cheque –Ex.P1 and therefore, the presumption has to be drawn under Section 139 of the N.I Act that the cheque is issued for discharge of debt. The said presumption has not been rebutted by the respondent –accused. Without considering all these aspects, learned Magistrate has erred in acquitting the respondent –accused for offence punishable under Section 138 of the N.I Act. With these, he prays to allow the appeal. - 6 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 6. Learned counsel for the respondent –accused would contend that the defence of the accused is that he has issued signed blank cheque as security when he borrowed loan of Rs.50,000/- from the appellant - complainant. The said loan amount has been entirely repaid by selling Tata Sumo. Inspite of entire repayment of loan, the said signed blank cheque issued as security has been misused by the appellant –complainant. Considering all these aspects, learned Magistrate has rightly acquitted the respondent –accused for offence punishable under Section 138 of the N.I Act. With these, he prays for dismissal of the appeal. 7. Having heard learned counsels, this Court has perused the impugned judgment and trial Court records. Considering the grounds urged, the following point arises for my consideration: “Whether the trail Court has erred in acquitting the respondent -accused - 7 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 for offence under Section 138 of N.I. Act?” My answer to the above point is in the ‘negative’ for the following reasons: It is the specific case of the appellant -complainant that he has lent Rs.3,00,000/- (rupees Three Lakhs only) to the respondent –accused and the respondent –accused has executed On Demand Promissory Note agreeing to repay the same with interest at the rate of 24% per annum. In order to repay the loan amount, the respondent –accused has issued cheque –Ex.P1 for Rs.4,26,000/- (rupees Four Lakhs Twenty Six Thousand only) which includes interest. The respondent –accused has admitted his signature on cheque –Ex.P1. As respondent –accused has admitted his signature on cheque –Ex.P1, the presumption has to be drawn under Section 139 of the N.I Act that the cheque has been issued for discharge of debt. The said presumption is rebuttable - 8 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 presumption. The standard of proof for rebutting the said presumption is preponderance of probability. 8. The respondent –accused has taken his defence that he has borrowed Rs.50,000/- from the appellant – complainant and at that time he had given Ex.P1 –signed blank cheque as security to the said loan. On perusal of the cross examination of P.W.1, he admitted that he has filled contents of cheque. P.W.1 has also admitted that he has sold the Tata Sumo belonging to the respondent – accused and received a sum of Rs.65,000/- from the said sale. The complainant has not stated the said aspect in his complaint, notice and evidence. If the appellant – complainant has received Rs.65,000/- from sale of Tata Sumo belonging to the respondent –accused and he has to adjust it towards amount due to the said loan of the respondent -accused. Considering the amount of cheque Ex.P1, the entire loan amount in sum of Rs.3,00,000/- (rupees Three Lakhs Only) + interest at the rate of 24% per annum is calculated. Apart from that Ex.D4 –receipt - 9 - NC: 2025:KHC-D:5986 CRL.A No. 100277 of 2016 issued by the appellant –complainant indicate that he use to take blank signed promissory notes from persons who borrows loan from him and inspite of repayment of loan he has not returned said promissory notes. Considering all these aspects, learned Magistrate has held that the respondent –accused has rebutted the presumption drawn under Section 139 of the N.I Act and rightly acquitted the respondent –accused for offence punishable under Section 138 of the N.I Act by well reasoned judgment. There are no grounds for setting aside the impugned judgment of acquittal of the respondent –accused for offence punishable under Section 138 of the N.I Act. In the result, the appeal is dismissed. Sd/- (SHIVASHANKAR AMARANNAVAR) JUDGE DSP/CT-ASC List No.: 1 Sl No.: 20