- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF APRIL, 2026 BEFORE THE HON'BLE MR. JUSTICE M.G.S. KAMAL CRIMINAL APPEAL NO. 859 OF 2014 (A) BETWEEN: MR. K. HONNAPPA HEGDE AGED ABOUT 61 YEARS, S/O BABU HEGDE, R/AT PATTEDAMOOLE MANE, NELYADI VILLAGE AND POST, PUTTUR TALUK, D.K.DISTRICT-574 229. …APPELLANT (BY SRI.P.P. HEGDE SENIOR COUNSEL FOR SMT. SAKSHA BHAGWAN, ADVOCATE) AND: MR NITHYANANDA SHETTY AGED ABOUT 45 YEARS, S/O RAMANNA SHETTY, R/AT SRI RAMA NILAYA, KAJEKKAD HOUSE, NELYADI VILLAGE AND POST, PUTTUR TALUK D.K.DIST-574 229. …RESPONDENT (BY SRI. PRATEEK KANAVI, ADVOCATE FOR SRI. SUYOG HERELE E., ADVOCATE FOR RESPONDENT) THIS CRIMINAL APPEAL IS FILED U/S 378(4) OF CR PC PRAYING TO PRAYING TO SET ASIDE THE ORDER DATED:09.09.2014 PASSED BY THE VI ADDL. DIST. AND S.J., MANGALORE C/C IN CRL.A.NO.347/2008 - ACQUITTING THE RESPONDENT/ACCUSED FOR THE OFFENCE P/U/S 138 OF N.I. Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA - 2 - ACT. AND CONFIRM THE JUDGMENT OF CONVICTION DATED:01.09.2008 PASSED BY THE ADDL.C.J. (SR.DN.) AND JMFC, PUTTUR IN C.C.NO.1410/2004. THIS CRIMINAL APPEAL HAVING BEEN HEARD AND RESERVED ON 23.04.2026 FOR JUDGMENT COMING ON FOR PRONOUNCEMENT THIS DAY, THIS COURT DELIVERED THE FOLLOWING: CORAM: HON'BLE MR. JUSTICE M.G.S. KAMAL CAV JUDGMENT This appeal is by the complainant being aggrieved by the judgment and order dated 09.09.2014 passed in Criminal Appeal No.347/2008 on the file of VI Additional District and Sessions Judge, D. K., Mangaluru, (first appellate Court) by which the first appellate Court while allowing the appeal filed by the accused-respondent under Section 374(3)(a) Cr.P.C, set aside the judgment and order dated 01.09.2008 passed in CC No.1410/2004 on the file of Additional Civil Judge, Senior Division and JMFC, Puttur, D.K., (trial Court) and consequently acquitted the accused-respondent for the offence punishable under Section 138 of the Negotiable Instruments Act. 2. A complaint under Section 200 Cr.P.C came to be filed by the complainant alleging that the accused-respondent - 3 - had borrowed a sum of Rs.2,00,000/- from the complainant- appellant and in repayment of the same he had issued a cheque dated 17.02.2004 drawn on South Canara District Central Co-operative Bank Ltd., Nellyadi Village, Puttur Taluk. That upon the presentation of said cheque, the same was returned with an endorsement as "insufficient funds". That the complainant-appellant had caused issue of legal notice demanding payment of cheque amount which was duly served on accused on 26.02.2004. Accused neither paid nor replied to the said notice. Therefore the complaint seeking to take cognizance of the offence punishable under Section 138 of the Negotiable Instruments Act. 3. Complainant-appellant examined himself as PW1 and marked 6 documents marked as Ex.P1 to P6. Statement of the accused was recorded under 313 Cr.P.C denying the incriminating evidence against him. 4. The accused-respondent had set up a defence that the complainant did not have capacity to lend the money of Rs.2,00,000/- and as such no consideration was passed on for the purpose of issuance of the cheque for discharge of the - 4 - liability. The accused-respondent had also filed an application under Section 91 of Cr.P.C seeking production of certain documents evidencing the financial capacity of the complainant-appellant to pay the money. The said application came to be dismissed on 23.04.2008 holding that it was the duty of the complainant-appellant to produce the document. However even after dismissal of said application, the documents were not produced. 5. Trial Court drawing presumption provided under Section 139 of the Negotiable Instruments Act held that the cheque in question was issued by the accused-respondent towards discharge of liability accordingly convicted him for the offence punishable under Section 138 of Negotiable Instruments Act and sentenced him to pay a fine of Rs.2,50,000/-. 6. Being aggrieved, accused preferred an appeal in Criminal Appeal No.347/2008, the first appellate Court framed the following points for its consideration: "1. Whether the appellant has made out sufficient grounds to set aside the Judgment and sentence passed by the Addl. Civil Judge (Sr.Dn) and JMFC, Mangalore, in CC No.1410/2004, dated 01.09.2008? - 5 - 2. What order?" 7. On re-appreciation of evidence, the first appellate Court answered the said point in the affirmative and consequently allowed the appeal as noted above. Aggrieved by the same, the present appeal. 8. Sri.P.P.Hegde, learned Senior counsel appearing for the complainant-appellant submitted: 8.1 That the first appellate Court ought not to have interfered with the Judgment and order of conviction passed by the trial Court inasmuch as the accused had admitted issuance of cheque thereby statutory presumption provided under Section 139 was required to be drawn as rightly done by the trial Court convicting the accused-respondent for the offence punishable under Section 138 of the Negotiable Instruments Act. 8.2 That the accused had neither denied nor set up any plausible defence rebutting the statutory presumption which was available for the complainant. 8.3 That the accused had not issued reply to the statutory notice setting forth his probable defence thereby he had forfeited his right of defence. - 6 - 8.4 That mere denial of issuance of cheque towards discharge of liability is insufficient without setting up true and cogent defence supported by acceptable material evidence. 8.5 That the accused himself has suggested complainant witness of he issuing the cheque and later retracted by suggesting the same was stolen by the complainant. Both the suggestions have not been proved by the accused. 8.6 The complainant was not required to prove his financial capacity to lend the loan as the accused had not rebutted the statutory presumption. 8.7 He relied upon the following judgments in support of his case: 1. SANJABIJ TARI Vs. KISHORE S BORCAR AND ANOTHER reported in (2025) SCC ONLINE SC 2069. 2. ASHOK SINGH Vs STATE OF UTTARPRADESH AND ANOTHER reported in 2025 LIVE LAW (SC) 383. 3. RAJESH JAIN Vs. AJAY SINGH reported in (2023) 10 SCC 148 4.JAIN P JOSE Vs SANTHOSH & ANOTHER 2022 LIVELAW (SC) 979. 5. BIR SINGH VS MUKESH KUMAR reported in (2019) 4 SCC 197. 6.P RASIYA VS ABDUL NAZEER AND ANOTHER reported in 2022 SCC ONLINE 1131. - 7 - 7. MMTC LTD and another VS MEDCHL CHEMICALS AND PHARMA (P) LTD., AND ANOTHER reported in (2002)1 SCC 234 8. K N BEENA VS MUNIYAPPA AND ANOTHER reported in (2001) 8 SCC 458 9. HITHEN P DALAL VS. BRATINDRANATH BANERJEE reported in (2001) 6 SCC 16 9. In response, learned counsel for the accused- respondent submitted: 9.1 That the complainant has not mentioned the date of borrowal of the loan either in the notice or in the complaint and not even in the sworn statement. 9.2 That only during the cross examination complainant had mentioned the month and the year of alleged lending of the loan. That since the complainant had failed to prove the date on which he had lent the money, the statutory presumption provided under Section 139 cannot be drawn. 9.3 That the accused had filed an application under Section 91 of Cr.P.C seeking direction to the complainant to produce the documents showing his financial ability. The said application came to be rejected on the premise that it is the responsibility of the complainant to prove his financial ability. However despite dismissal of the said application the complainant has not produced the said documents. - 8 - 9.4 That during the cross examination it has been elicited that the complainant had no source of income enabling him to pay Rs.2,00,000/-. Therefore the accused has discharged the burden. 9.5 He relied upon the following judgment: 1. BASALINGAPPA Vs. MUDIBASAPPA reported in (2019) 5 SCC418. 10. Heard and perused the records. 11. Points that arise for consideration are: "(i) Whether the complainant has proved the cheque was issued by the accused towards discharge of legally recoverable debt? (ii) Whether in the fact circumstances of the case even in the absence of complainant showing the date of lending the money, presumption provided under Section 139 of the Negotiable Instruments Act can be drawn merely because the accused had issued a cheque?" 12. Settled principles of law with regard to provisions of Sections 118(a) and 139 of the Negotiable Instruments Act as held by Apex Court in the catena of judgments has been summarized in the case of Basalingappa Vs Mudibasappa reported in (2019) 5 SCC 418 wherein at paragraph 25 to 25.5 has held as under: - 9 - 25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in following manner: 25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. 25.5. It is not necessary for the accused to come in the witness box to support his defence." 13. The Judgments referred to by the learned Senior counsel for the complainant-appellant in addition to the aforesaid settled principles also lay down the following: (a) That the accused has the initial burden to set up the defence in his reply to the demand notice that the complainant did not have financial capacity to advance the loan (Sanjabij Tari supra - paragraph 29, Ashok Singh supra paragraph 22) - 10 - (b) That when the drawer of the cheque admits issuance/execution of cheque and the event of complainant proving that the cheque was issued/executed in his favour, the Court will necessarily presume the cheque had been issued towards discharge of legally enforceable debt and until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true. In other words the accused will have to prove debt/liability did not exist by leading defence evidence conclusively establishing with certainty and non - existence of a debt shall be established by preponderance of probabilities (Rajesh Jain supra - paragraphs 35, 37 and 41). (c) 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 debt (Bir Singh supra - paragraph 36). (d) That the obligation on the prosecution may be discharged with the help of presumption of laws or facts unless the accused adduces evidence showing the reasonable possibility of non-existence of presumed fact. That it must be further shown that explanation is true one and the rebuttal shall be by - 11 - proof and not by bare explanation (Hiten P Dalal supra- paragraph 22, 24). 14. There cannot be any dispute with regard to the aforesaid principles of law. In the instant case, the distinguishing factors are: (a) Non-mentioning of the date of lending of loan by the complainant either in his notice, or in the complaint or in the sworn statement. (b) Financial capability of the complainant to lend the loan. (c) Filling up of the cheque- admittedly cheque has been filled up by some lady. 15. As regards non-mentioning of the date of lending of loan appropriate to refer the averments made in the complaint which read as under: "accused borrowed a sum of Rs.2,00,000/- from the complainant for his needs and towards repayment of the same when demanded the accused drew a cheque dated 17.02.2004 for Rs.2,00,000/- (Rupees Two Lakhs Only) bearing No.0490269 drawn on South Canara District Central Co- operative Bank Limited, Nellpady Village, Post Puttur in favour of the complainant with an assurance that the said cheque would be duly honoured when presented for encashment." 16. Similar is the contents of the notice at Ex.P4, affidavit filed in lieu of the examination-in-chief as well as - 12 - sworn statement where the date of lending of the loan is not mentioned. 17. As regards the defence set up by the accused regarding he not filling up the cheque, and the complainant lacking financial capability to lend the loan, appropriate to refer the cross examination of complainant recorded on 08.01.2008, 31.03.2008, 02.05.2008. Relevant portions are extracted hereunder: In the cross examination recorded on 08.01.2008 complainant has stated as under: "I have paid the amount to the accused, out of income derived by me from agricultural and I have not paid from the bank. I have not shown the cheque amount in the income tax returns. I have got documents to show I have got Rs.2,00,000/- with me. I can produce the document before the Court. I have got bill for having supplied arecanut to one Christian Agency. I have supplied said arecanut in the month of August, 2003. Approximately 20 quintals of arecanut i.e., old arecanut…… I have paid the amount in the shop to the accused….I was alone while advancing the amount to the accused. I have not taken any security from the accused. Even also not received cheque on the very day from the accused. I do not have any documents to show that I have advanced the loan to the accused." In the cross examination recorded on 31.03.2008, complainant has deposed as under: "I have paid the amount in the Month of August, 2003. I do remember the exact date. I have got document to show that I have advance the amount to the accused. Accused issued me a cheque on 17.2.2004. in my shop. I was alone present - 13 - at the cheque was issued by the accused. Accused had brought filled cheque and given to me. There was no talks that the accused was must issue the cheque for repayment of the loan amount. I have not given instructions to fill the contents in the cheque. He had not issued any account payee cheque. The bearer of the cheque can encash the amount if it is a bearer cheque. Normally, if the amount is used the cross cheque will issued. I have not demanded any interest from the accused. Accused issued me a cheque on 9.30 to 10.00 a.m. At the same day I have presented the cheque to the bank. I will verify my account whenever I have issued the cheque to the 3rd person. I have demanded the amount when the accused 1 week prior to the issuance of the cheque and that was my last demand. I have instructed, the accused to pay the amount in cash only, I can produce the documents before the court for having sold the areca and also for having submitted the income tax returns." In the cross examination recorded on 02.05.2008 complainant has deposed as under: "There is the document to show that I have presented the cheque on 17.2.2004. The bank of the accused and also my bank are both situated in Nellyady. Accused has just signed on the cheque in question, in my presence. Accused has put his signature on the front and backside of the cheque. I do not know why the accused put his signature also on the backside of the cheque in question. It is false to suggests that accused never issued me cheque on 17.2.2004. And also it is false to suggests that he has never put his signature on the cheque in question. Accused knows reading and writing. I have never demanded the accused to fill the contents in the cheque with his own handwriting. I know the accused even prior to last 10 years. Accused earlier was doing the finance business in front of my building. Accused was stopped the finance from last 2 to 3 years. At the time of issuance of cheque the accused was doing his finance at Nellyadi. I have not enquired with the - 14 - accused why you need the huge amount. There are other financiers also there in the Nellyady. The some of the financiers are also doing the chit fund business. I have got 3 acres of areca garden. And also I grow cashew and I also I got the house on the same land. 2 acres of land I have got I grow areca. There will be 10 to 15 quintals of areca out of 2 acres of land. It is false to suggests that I have no capacity to lend the amount to the tune of Rs.2,00,000/- and there was no necessity for the accused for avail loan from me. It is false to suggests that because of non-possession of the documents I have not produce the documents before the Court. There is difference in handwriting found on the cheque in question. One lady who has filled the contents in the cheque in question. It is false to suggests that accused never issued me the cheque. It is false to suggests that I used to visit the office of the accused in connection with the chit fund business. It is false to suggests that I have stolen the cheque from the office of the accused during my visit: It is false to suggests that since the cheque is not account payee because the accused has not issued to me I have stolen the said cheque. It is false to suggests that therefore the handwriting found on the cheque is not in the handwriting of accused. It is false to suggests that accused being literate there was no occasion for the accused to get filled the contents in the cheque to other person or some other lady. It is also false to suggests that accused never availed the loan from me nor issued the cheque in question. It is also false to suggests that the accused issued me a cheque on the very day I have presented the cheque to the bank. It is false to suggests that I have filed the false complaint against the accused". 18. The perusal of the aforesaid complaint averments indicate that the complainant has not stated as to the date on which he has lent the loan. Even in the cross examination he has not given date except stating "in the month of August 2003." The Apex Court in the case of Vijay Vs Laxman and - 15 - anr reported in (2013) 3 SCC 86, in a case involving identical fact situation of the matter, at paragraphs 12, 13, 14 and 27 has held as under: 12. Applying the ratio of the aforesaid case as also the case of K.N. Beena v. Muniyappan [(2001) 8 SCC 458 : 2002 SCC (Cri) 14 : (2001) 7 Scale 331] , when we examine the facts of this case, we have noticed that although the respondent might have failed to discharge the burden that the cheque which the respondent had issued was not signed by him, yet there appears to be a glaring loophole in the case of the complainant who failed to establish that the cheque in fact had been issued by the respondent towards repayment of personal loan since the complaint was lodged by the complainant without even specifying the date on which the loan was advanced nor the complaint indicates the date of its lodgement as the date column indicates “nil” although as per the complainant's own story, the respondent had assured the complainant that he will return the money within two months for which he had issued a post-dated Cheque No. 119582 dated 14-8-2007 amounting to Rs 1,15,000 drawn on Vikramaditya Nagrik Sahkari Bank Ltd., Ujjain. Further case of the complainant is that when the cheque was presented in the Bank on 14-8-2007 for getting it deposited in his Savings Account No. 1368 in Vikramaditya Nagrik Sahkari Bank Ltd., Fazalpura, Ujjain, the said cheque was returned being dishonoured by the Bank with a note “insufficient amount” on 14-8-2007. In the first place, the respondent-accused is alleged to have issued a post-dated cheque dated 14-8-2007 but the appellant complainant has conveniently omitted to mention the date on which the loan was advanced which is fatal to the complainant's case as from this vital omission it can reasonably be inferred that the cheque was issued on 14-8-2007 and was meant to be encashed at a later date within two months from the date of issuance which was 14-8-2007. But it is evident that the cheque was presented before the Bank on the date of issuance itself which was 14-8- 2007 and on the same date i.e. 14-8-2007, a written memo was received by the complainant indicating insufficient fund. In the first place if the cheque was towards repayment of the loan amount, the same was clearly meant to be encashed at a later date within two months or at least a little later than the date on which the cheque was issued; if the cheque was issued towards repayment of loan it is beyond comprehension as to why the cheque was presented by the complainant on the same date when it was issued and the complaint was also lodged without specifying on which date the amount of loan was advanced as also the date on which complaint was lodged as the date is - 16 - conveniently missing. Under the background that just one day prior to 14-8-2007 i.e. 13-8-2007 an altercation had taken place between the respondent-accused and the complainant dairy owner for which a case also had been lodged by the respondent-accused against the complainant's father/dairy owner, missing of the date on which loan was advanced and the date on which complaint was lodged, casts a serious doubt on the complainant's plea. It is, therefore, difficult to appreciate as to why the cheque which even as per the case of the complainant was towards repayment of loan which was meant to be encashed within two months, was deposited on the date of issuance itself. 13. The complainant has thus miserably failed to prove his case that the cheque was issued towards discharge of a lawful debt and it was meant to be encashed on the same date when it was issued specially when the complainant has failed to disclose the date on which the alleged amount was advanced to the respondent-accused. There are thus glaring inconsistencies indicating gaping hole in the complainant's version that the cheque although had been issued, the same was also meant to be encashed instantly on the same date when it was issued. 14. Thus, we are of the view that although the cheque might have been duly obtained from its lawful owner i.e. the respondent-accused, it was used for unlawful reason as it appears to have been submitted for encashment on a date when it was not meant to be presented as in that event the respondent would have had no reason to ask for a loan from the complainant if he had the capacity to discharge the loan amount on the date when the cheque had been issued. In any event, it leaves the complainant's case in the realm of grave doubt on which the case of conviction and sentence cannot be sustained. 27. Coming then to the present case, the absence of any details of the date on which the loan was advanced as also the absence of any documentary or other evidence to show that any such loan transaction had indeed taken place between the parties is a significant circumstance. So also the fact that the cheque was presented on the day following the altercation between the parties is a circumstance that cannot be brushed away. The version of the respondent that the cheque was not returned to him and the complainant presented the same to wreak vengeance against him is a circumstance that cannot be easily rejected. Superadded to all this is the testimony of DW 1, Jeevan Guru according to whom the accounts were settled between the father of the complainant and the accused in his presence and upon settlement the accused had demanded return of his cheque given in lieu of the advance. It was further stated by the witness that the complainant's father had avoided - 17 - to return the cheque and promised to do so on some other day. There is no reason much less a cogent one suggested to us for rejecting the deposition of this witness who has testified that after the incident of altercation between the two parties the accused has been supplying milk to the witness as he is also in the same business. The non-examination of the father of the complainant who was said to be present outside the court hall on the date the complainant's statement was recorded also assumes importance. It gives rise to an inference that the non- examination was a deliberate attempt of the prosecution to keep him away from the court for otherwise he would have to accept that the accused was actually supplying milk to him and that the accused was given the price of the milk in advance as per the trade practice in acknowledgment and by way of security for which amount the accused had issued a cheque in question." 19. Similarly in the case of Basalingappa Vs Mudibasappa supra at paragraphs 28 and 29 the Apex Court has held as under: 28. There is one more aspect of the matter which also needs to be noticed. In the complaint filed by the complainant as well as in examination-in-chief the complainant has not mentioned as to on which date, the loan of Rs 6 lakhs was given to the accused. It was during cross-examination, he gave the date as November 2011. Under Section 118(b), a presumption shall be made as to date that every negotiable instrument was made or drawn on such date. Admittedly, the cheque is dated 27-2- 2012, there is not even a suggestion by the complainant that a post-dated cheque was given to him in November 2011 bearing the date 27-2-2012. Giving of a cheque on 27-2-2012, which was deposited on 1-3-2012 is not compatible with the case of the complainant when we read the complaint submitted by the complainant especially para 1 of the complaint, which is extracted as below: “1. The accused is a very good friend of the complainant. The accused requested the complainant a hand loan to meet out urgent and family necessary a sum of Rs 6,00,000 (Rupees Six lakhs) and on account of long standing friendship and knowing the difficulties, which is being faced by the accused the complainant agreed to lent hand loan to meet out the financial - 18 - difficulties of the accused and accordingly the complainant lent hand loan Rs 6,00,000 (Rupees Six lakhs) dated 27-2-2012 in favour of the complainant stating that on its presentation it will be honoured. But to the surprise of the complainant on presentation of the same for collection through his bank the cheque was returned by the bank with an endorsement “Funds Insufficient” on 1-3-2012.” 29. Thus, there is a contradiction in what was initially stated by the complainant in the complaint and in his examination-in- chief regarding date on which loan was given on one side and what was said in cross-examination in other side, which has not been satisfactorily explained. The High Court was unduly influenced by the fact that the accused did not reply to the notice denying the execution of cheque or legal liability. Even before the trial court, appellant-accused has not denied his signature on the cheque." 20. The non mentioning of the date of lending the loan even as held by the Apex Court is a serious circumstance creating plausible defence to be held in favour of the accused, therefore the presumption provided under Section 139 of the Negotiable Instruments Act under the fact circumstances of the matter cannot be drawn in favour of the complainant- appellant. The accused-respondent has raised preponderance of probabilities in his favour from the evidence brought on record by the complainant. 21. In the instant case records reveal that the accused- respondent had also filed an application under Section 91 of Cr.P.C seeking production of certain documents evidencing the financial capacity of the complainant-appellant to pay the money. The said application came to be dismissed on - 19 - 23.04.2008 holding that it was the duty of the complainant- appellant to produce the document. However even after dismissal of said application, the documents were not produced. That apart even in the deposition, the complainant-appellant had deposed that he would produce the documents to evidence his financial capacity which he has failed to do. For the aforesaid reasons and analysis, the following: ORDER Appeal is dismissed. Sd/- (M.G.S. KAMAL) JUDGE SBN List No.: 1 Sl No.: 16