- 1 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 20TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR CRIMINAL APPEAL NO. 100389 OF 2017 BETWEEN: YALLAPPA S/O. GUNDU PATIL, AGE: 48 YEARS, OCC: BUSINESS, R/O: H.NO.580, PEERANWADI, BELAGAVI, DIST: BELAGAVI – 590 001. …APPELLANT (BY SRI SHIVARAJ S. BALLOLI, ADVOCATE) AND: PRAMOD D. CHOUGULE, AGE: 56 YEARS, OCC: BUSINESS, R/O: MAHARAJA TEMPOS BESIDE GOKUL PUROHIT SWEETS, FORT ROAD, BELAGAVI, DIST: BELAGAVI – 590 001. …RESPONDENT (BY SRI VITTHAL S. TELI, ADVOCATE) THIS CRIMINAL APPEAL IS FILED UNDER SECTION 378(4) OF CR.P.C., SEEKING TO SET ASIDE THE ORDER OF ACQUITTAL DATED 02.11.2017 PASSED IN C.C.974/2017 (OLD C.C.NO.1019/2011) ON THE FILE OF V-JMFC, BELAGAVI AND ACCORDINGLY CONVICT THE RESPONDENT FOR THE OFFENCE PUNISHABLE UNDER SECTION 138 OF NI ACT BY ALLOWING THE APPEAL TO MEET THE ENDS OF JUSTICE. THIS CRIMINAL APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR Digitally signed by MOHANKUMAR B SHELAR Location: High Court of Karnataka, Dharwad Bench, Dharwad - 2 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 ORAL JUDGMENT This appeal is filed by the complainant praying to set aside the judgement dated 02.11.2017 passed in CC No.974/2017 by the V-JMFC, Belagavi, whereunder the accused is acquitted for the offence punishable under Section 138 of N.I. Act. 2. The case of the appellant-complainant in brief is as under; The appellant-complainant is a vegetable merchant and a money lender and the accused is a businessman. The accused has availed a hand loan of ₹75,000/- from the complainant on 29.11.2006 and agreed to re-pay the same within a period of three [3] years. The accused had issued a cheque bearing No.511478, for ₹75,000/- dated 15.02.2011 in favour of the complainant for repayment of the said amount borrowed. The said cheque came to be presented by the complainant for encashment and the cheque has been returned dishonoured with an endorsement as “Funds Insufficient” under Bank memo - 3 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 dated 30.03.2011. The complainant got issued a legal notice to the accused on 28.04.2011 and it has been served on the respondent-accused. In spite of service of notice, the respondent-accused has not paid the cheque amount within 15 days. Thereafter, the complainant has filed a private complaint against the respondent-accused for the offence punishable under Section 138 of N.I Act. 3. The learned Magistrate has taken cognizance and registered CC No.974/2017 against the accused for offence punishable under Section 138 of N.I. Act. The plea has been recorded. The complainant in order establish his case, has examined himself as PW.1 and got marked four [4] documents as Ex.P.1 to P.4. The statement of accused has been recorded under Section 313 of Cr.P.C. The accused did not lead any defence evidence. The learned Magistrate after hearing the arguments on both sides formulated points for consideration and passed the impugned judgement of acquittal. The said judgement of - 4 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 acquittal has been challenged by the complainant in this present appeal. 4. Heard the learned counsel for the appellant- complainant and the learned counsel for the respondent- accused. 5. The learned counsel for the appellant would contend that cheque-Ex.P.1 has been issued for making payment of amount borrowed and it has been dishonoured for want of funds in the Account of the accused. Therefore, a presumption arise under Section 139 of N.I. Act that cheque-Ex.P.1 has been issued for payment of the debt. The said presumption is not rebutted. The respondent- accused has taken up the defence that he has issued three [3] signed cheques to the brother of the accused and out of them, one [1] cheque has been misused by the complainant has not been established. The learned Magistrate has swerved away by non-explanation of another cheque mentioned in Bank memo-Ex.P.2. The complainant is no way concerned with another cheque - 5 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 mentioned in the Bank memo-Ex.P.2 and therefore, he has shown his ignorance when it is put to him, in the cross- examination. As the presumption drawn under Section 139 of N.I. Act is not rebutted, the appellant need not to prove his capacity to lend the amount. Without considering all these aspects, the learned Magistrate has erred in passing the judgement of acquittal. With this, he prayed for setting aside the judgment of acquittal and convicting the respondent-accused for the offence punishable under Section 138 of N.I. Act. 6. Learned counsel for respondent-accused would contend that the respondent-accused has taken up a defence that he has given three [3] signed cheques to the brother of the accused and he had availed a loan from his brother and out of them, one [1] cheque has been misused by the complainant. The said aspect which is put to PW.1 in his cross-examination and PW.1 has stated that he did not know about the same. He further submits that the brother of the complainant had filed a case for - 6 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 dishonour of the cheque against the accused and in the said case, there was a settlement between the respondent-accused and brother of the complainant. He further submits that in the sworn statement which is considered as examination-in-chief, PW.1 has stated regarding the cheque bearing No.511478 dated 15.02.2011 has issued for ₹1,50,000/- the said aspect is contrary to the case of the complainant. He submits that considering all these aspects, the learned Magistrate has rightly acquitted the accused for offence punishable under Section 138 of N.I. Act. The learned counsel for the appellant in reply has stated that due to typographical mistake, amount of ₹1,50,000/- has been mentioned in para No.4 of the sworn statement [chief-examination] but in other paragraphs i.e., para Nos.6 and 7 the amount is correctly mentioned as ₹75,000/-. 7. Having heard the learned counsels, the Court has perused the impugned judgement and the trial Court records. - 7 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 8. Considering the grounds urged, the following point arise for consideration; “Whether the trial Court has erred in acquitting the respondent-accused for offence punishable under Section 138 of N.I. Act?” 9. My answer to the above point is in the affirmative for the following reasons; It is the specific case of the appellant-complainant that the respondent-accused has borrowed ₹75,000/- on 29.11.2006 to meet out his domestic needs and agreed to repay the same within a period of three [3] years and in order to repay the said amount, he has issued a cheque- Ex.P.1 bearing No.511478 dated 15.02.2011 for ₹75,000/. The said cheque-Ex.P.1 has been dishonoured for reasons “Funds Insufficient” and Bank endorsement is at Ex.P.2. As the said dishonour of cheque is for the reason of “Funds Insufficient”, it is clear that the cheque has been issued by - 8 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 respondent-accused on his Bank Account and there were no sufficient funds for honouring the cheque. As the cheque-Ex.P.1 bear the signature of respondent-accused, a presumption has to be drawn under Section 139 of N.I. Act that the cheque is issued for discharge of the debt. The said presumption is rebuttable presumption. For rebutting the said presumption the standard of proof is preponderance of probability. 10. The respondent-accused has taken up the defence that he has borrowed money from the brother of the complainant i.e., Pundalik G. Patil and he has issued three [3] signed cheques to him and out of those three [3] cheques, one [1] cheque has been misused by the complainant. In order to establish his defence, he has put some suggestions in the cross-examination of PW.1 regarding the accused borrowing money from his brother and issuing three [3] signed cheques for that PW.1 has stated that he has not aware of the same. In order to prove the said defence, the accused-respondent has not - 9 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 entered into witness box. The cross-examination of PW.1 itself will not establish the said defence. Therefore, the presumption drawn under Section 139 of N.I. Act remained unrebutted. As the presumption remained unrebutted, the appellant-complainant need not to establish the transaction of accused borrowing ₹75,000/-. The learned Magistrate has not considered regarding PW.1 giving his answers in ignorance regarding another cheque mentioned in Ex.P.2 i.e., cheque bearing No.511479 for ₹1,50,000/-. The complainant is no way concerned with another cheque mentioned in Ex.P.2-Bank endorsement. Therefore, he has rightly given his answers in his cross- examination. The learned Magistrate ought not to have placed much reliance on the aspect of another cheque mentioned in Ex.P.2 and answer of ignorance given by the complainant in his cross-examination. The cheque is dishonoured for reason “Funds Insufficient” in the Bank Account of respondent-accused. The notice is issued within a statutory period and it has been served on the respondent-accused. Inspite of service of notice, - 10 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 respondent-accused has not paid the cheque amount within fifteen [15] days. Considering all these aspects, the complainant has established all the ingredients of the offence punishable under Section 138 of N.I. Act. Therefore, respondent-accused is liable for conviction of offence punishable under Section 138 of N.I. Act. In the result the following; ORDER i) The appeal is allowed. ii) The judgement of acquittal dated 02.11.2017 passed in CC No.974/2017 by the V-JMFC, Belagavi, is set aside. iii) The respondent-accused is convicted for offence punishable under Section 138 of N.I Act and he is sentenced to pay a fine of ₹85,000/- and in default of payment of fine, to - 11 - NC: 2025:KHC-D:5120 CRL.A No. 100389 of 2017 undergo simple imprisonment for a period of two [2] months. Out of the fine amount, ₹75,000/- is ordered to be paid to the appellant-complainant as compensation. iv) The respondent-accused shall deposit the said fine amount within a period of two [2] months from today. SD/- (SHIVASHANKAR AMARANNAVAR) JUDGE PJ/CT-ASC List No.: 1 Sl No.: 42