A.Krishna Reddy v. P.V.R.S.Mani Kumar

in question, there is any subsisting liability on the part of therespondent-accused.10. Learned counsel for the appellant-complainant would contendthat the handing over of the cheques in question, has been admittedby the respondent-accused and hence, the presumption of facts, underSections 118(a) and 139 of the N.I. Act and Sections 3 and 4 of theIndian Evidence Act, be drawn from the existence of certain facts andthe presumption drawn in respect of one fact may be used for thepurpose of drawing presumption under another fact. The firstappellate Court has not considered this aspect in proper perspective. 11. Learned counsel for the appellant-complainant furthercontended that the respondent-accused borrowed Rs.6,60,000/- on30.6.1994 and executed a promissory note Ex.C-1 and on 5.5.1997, therespondent-accused paid only Rs.10/- and made an endorsement on theback of Ex.C-1. Since he was not in a position to discharge the loanamount due on promissory note Ex.C-1, the respondent-accused earlierissued two cheques, one dated 30.9.1997 for Rs.6,60,000/- and theother dated 31.10.1997 for Rs.5,80,000/- by calculating interestupto 30.10.1997. 12. Learned counsel for the appellant-complainant, focussed hisargument on the basis of Ex.P-3 letter addressed by the respondent-accused to the appellant-complainant, dated 27.9.1997, in his ownhandwriting in Telugu and the English translation copy of the same isEx.P-4. The other letter Ex.P-5 (Telugu) and Ex.P-6 (Englishtranslation), dated 29.10.1997 also was in his own handwriting andalong with Ex.P-5 letter, the respondent-accused sent cheque to theappellant-complainant, for Rs.49,600/- for interest. 13. Learned counsel for the appellant-complainant submitted thatalong with the two cheques in question which were marked as Exs.P-7and P-8, the respondent-accused sent a letter Ex.P-9 to theappellant-complainant on 15.12.1997. Since the other two chequesearlier issued by the respondent-accused, which were presented forencashment, returned dishonoured and since even the present twocheques Exs.P-7 and P-8 also returned dishonoured, the appellant-complainant issued notice Ex.P-13, through his counsel and the replywas received from the respondent-accused through his counsel, underEx.P-14 and the rejoinder/notice was issued by the appellant-complainant, through his counsel, under Ex.P-15. 14. Learned counsel for the appellant-complainant furthercontended that even though the trial Court has come to the correctconclusion, the first appellate Court has committed error in allowingthe appeal. After the earlier order of the Supreme Court, D.Ws.2 and3 were examined and Exs.D-4 to D-60 were marked on the side of therespondent-accused. Learned counsel for the appellant-complainantfurther submitted that Ex.P-13 notice issued on behalf of the https://hcservices.ecourts.gov.in/hcservices/ appellant-complaint, to the respondent-accused, is valid under law.As per Exs.P-3 to 6 and Ex.P-9, issuance of cheques in question, wasadmitted. So, the loan received also had been proved and hence, onthe date of issuance, the cheques Exs.P-7 and P-8, were given onlyfor discharge of the loan obtained by the respondent-accused on30.6.1994 under Ex.C-1 promissory note.15. Learned counsel for the appellant-complainant relied uponthe decisions of the Supreme Court reported in AIR 2000 SC 828 = 2000(2) SCC 380 (Suman Sethi Vs. Ajay K.Churiwal) and 2001 AIR SCW 2352(2) = 2001 (10) SCC 763 (United Credit Ltd., Calcutta Vs. Agro SalesIndia and others) and submitted that the first appellate Court hasallowed the appeal on the ground that in the notice Ex.P-13, theappellant-complainant claimed further interest along with the chequeamounts and so, it is not notice coming under Section 138 of the N.I.Act and acquitted the respondent-accused. Hence, he relied upon thesaid decisions and argued that Ex.P-13 notice is valid under law andso, the cause of action for filing the private complaint has arisenon Ex.P-13 and that factum has been considered by the trial Court.Learned counsel for the appellant-complaint also relied upon thedecision of the Supreme Court reported in AIR 1999 SC 3762 = 1999 (7)SCC 510 (K.Bhaskaran Vs. Sankaran Vaidhyan Balan) and a decision ofthis Court reported in 1999 (I) CTC 6 (Balaji Seafoods Exports(India) Ltd. Vs. Mac Industries Ltd.), in support of his contentions.He prayed for allowing the Criminal Appeal and setting aside thejudgment of acquittal passed by the first appellate Court. 16. Learned counsel for the respondent-accused would submit thatthe respondent never borrowed any money. P.W.1 Krishna Reddy, theappellant-complainant, D.W.1 Narayana Gupta, D.W.2 Raghunatha Reddyand Manikumar, the respondent-accused, were close friends, that thecheques were misused and in the private complaint, the appellant-complainant has not mentioned the date and other details ofpromissory note and the same were also not mentioned in Ex.P-13notice and Ex.P-15 rejoinder. Even though Ex.C-1 is of the year 1994,it was given only in the year 1997. Ex.P-9 which is the letter statedto have written by the accused to the complainant, is concocted andnot true and genuine document. For non-production of income taxreturns/documents, adverse inference ought to have been drawn againstthe appellant-complainant and the documents produced by theappellant-complainant before the Court will reflect that thosedocuments are concocted for the purpose of the case. Learned counselfor the respondent-accused relied upon the decision of the SupremeCourt reported in 2006 (3) CTC 730 (SC) = 2006 (6) SCC 39(M.S.Narayana Menon @ Mani Vs. State of Kerala) and submitted thatthe respondent-accused is not called upon to prove the negative. Healso relied upon the decisions of the Supreme Court reported in 2008(4) SCC 54 (Krishna Janardhan Bhat Vs. Dattatraya G.Hedge) and 2003(4) CTC 252 (SC) = 2003 (8) SCC 300 (K.R.Indira Vs. Dr.G.Adinarayana)and submitted that the notice of demand in Ex.P-13 is bad in law. https://hcservices.ecourts.gov.in/hcservices/ Learned counsel for the respondent-accused prayed for dismissal ofthe Criminal Appeal.17. The point to be decided is as to whether Ex.P-13 notice isvalid under law and whether it gives any cause of action forpreferring the complaint. 18. Exs.P-7 and P-8 cheques and the signatures in those cheques,are admitted by the respondent/accused. When those cheques werepresented for encashment, they were returned by the Bank as per theletters of the Bank in Exs.P-10, 11 and 12 and then only, theappellant-complainant issued notice under Ex.P-13 on 6.4.1998 andcomplaint has been filed within time.19. Learned counsel for the appellant-complainant relied uponthe decision of the Supreme Court reported in AIR 2000 SC 828 = 2000(2) SCC 380 (Suman Sethi Vs. Ajay K.Churiwal), in which, the SupremeCourt held in paragraphs 8 and 10, as follows:"8. It is well settled principle of law that thenotice has to be read as a whole. In the notice, demand hasto be made for the "said amount" i.e. cheque amount. If nosuch demand is made the notice no doubt would fall short ofits legal requirement. Where, in addition to "said amount"there is also a claim by way of interest, cost, etc.whether the notice is bad would depend on the language ofthe notice. If in a notice while giving up break-up of theclaim the cheque amount, interest, damages, etc. areseparately specified, other such claims for interest, cost,etc. would be superfluous and these additional claims wouldbe severable and will not invalidate the notice. If,however, in the notice an omnibus demand is made withoutspecifying what was due under the dishonoured cheque,notice might well fail to meet the legal requirement andmay be regarded as bad.""10. In Section 138 Legislature clearly stated thatfor the dishonoured cheque the drawer shall be liable forconviction if the demand is not made within 15 days of thereceipt of notice but this is without prejudice to anyother provision of the Act. If the cheque amount is paidwithin the above period or before the complaint is filedthe legal liability under Section 138 will cease and forrecovery of other demands as compensation, costs, interest,etc., a civil proceeding will lie. Therefore, if in anotice any other sum is indicated in addition to the "saidamount" the notice cannot be faulted, as stated above."20. While perusing Ex.P-13, it is stated in paragraph 3 thereinthat the first cheque issued for Rs.6,60,000/- represented the https://hcservices.ecourts.gov.in/hcservices/ principal amount and the second cheque issued for Rs.7,25,920/-represented the interest. In paragraph 6 in Ex.P-13, the complainantclaimed that, "The above two Cheques were in substitution of the twoCheques dt.30.9.1997 (Nos.746780 & 746779) for Rs.6,60,000/- and forRs.5,80,000/- respectively, which you could not honour.", whereas inparagraph 11, the appellant-complainant claimed the entire payment atRs.13,85,920/- by stating that, " .... ... my client hereby givesyou fifteen days from now, under Sec.138 of the NegotiableInstruments Act, to effect the entire payment of Rs.13,85,920/- (Rs.Thirteen lakh eighty-five thousand nine hundred and twenty), togetherwith further interest upto the date of actual payment by Banker'sCheque or Demand Draft.". In such circumstances, the total amountvaries from the present two cheques issued and the earlier twocheques issued and in support of this contention, learned counsel forthe respondent-accused would rely upon the decision of the SupremeCourt reported in 2003 (4) CTC 252 (SC) = 2003 (8) SCC 300(K.R.Indira Vs. Dr.G.Adinarayana), in which, the Supreme Court reliedon the decision reported in AIR 2000 SC 828 = 2000 (2) SCC 380 (citedsupra) and observed as follows:"11. Strong reliance was placed by the learned counselfor the appellants on Suman Sethi case (Suman Sethi Vs. AjayK.Churiwal and another) (2000 (2) SCC 380) to contend thatif the indication in the notice of other amounts than thatcovered by the cheque issued, does not as held by this Courtinvalidate the notice, there is no reason as to why aconsolidated notice for two complainants cannot be issued.The extreme plea as is sought to be raised in this casebased upon Suman Sethi's case (Suman Sethi Vs. AjayK.Churiwal and another) (2000 (2) SCC 380) is clearlyuntenable. Though no formal notice is prescribed in theprovision, the statutory provision indicates in unmistakableterms as to what should be clearly indicated in the noticeand what manner of demand it should make. In Suman Sethi'scase (Suman Sethi Vs. Ajay K.Churiwal and another) (2000 (2)SCC 380) on considering the contents of the notice, it wasobserved that there was specific demand in respect of theamount covered by the cheque and the fact that certainadditional demands incidental to it, in the form of expensesincurred for clearance and notice charges were also made,did not vitiate the notice. In a given case if theconsolidated notice is found to provide sufficientinformation envisaged by the statutory provision and therewas a specific demand for the payment of the sum covered bythe cheque dishonoured, mere fact that it was a consolidatednotice, and/or that further demands in addition to thestatutorily envisaged demand were also found to have beenmade may not invalidate the same. This position could not bedisputed by the learned counsel for the respondent. However,according to the respondent, the notice in question is not https://hcservices.ecourts.gov.in/hcservices/ separable in that way and that there was no specific demandmade for payment of the amount covered by the cheque. Wehave perused the contents of the notice. Significantly, notonly the cheque amounts were different from the alleged loanamounts but the demand was made not of the cheque amountsbut only the loan amount as though it is a demand for theloan amount and not the demand for payment of the chequeamount, nor could it be said that it was a demand forpayment of the cheque amount and in addition thereto madefurther demands as well. What is necessary is making of ademand for the amount covered by the bounced cheque which isconspicuously absent in the notice issued in this case. Thenotice in question is imperfect in this case not because ithad any further or additional claims as well but it did notspecifically contain any demand for the payment of thecheque amount, the non-compliance with such a demand onlybeing the incriminating circumstance which exposes thedrawer for being proceeded against under Section 138 of theAct. That being the position, the ultimate conclusionarrived at by the trial court and the High Court does notcall for interference in these appeals, though for differentreasons indicated by us. The appeals are, accordinglydismissed."21. Learned counsel for the appellant-complainant also reliedupon the decision of the Supreme Court reported in 2001 AIR SCW 2352(2) = 2001 (10) SCC 763 (United Credit Ltd., Calcutta Vs. Agro SalesIndia and others), in which, while referring to the decision reportedin AIR 2000 SC 828 = 2000 (2) SCC 380 (Suman Sethi Vs. AjayK.Churiwal), the Supreme Court observed as follows:"Leave granted.2. The complainant is the appellant before us. Acomplaint having been filed under Section 138 of theNegotiable Instruments Act, the Magistrate dismissed thecomplaint holding the notice itself to be invalid as thenotice contained not only the amount covered by the chequebut also some other amount towards interest and costs. Thecomplainant moved the High Court by filing a revisionpetition and the High Court having dismissed the same, thecomplainant is before us.3. The question of our consideration, therefore, iswhether the impugned notice can be held to be invalid merelybecause the notice contained some amount towards interestand cost separately after indicating the amount covered bythe cheque which stood bounced. This question has alreadybeen answered by this Court in the case of Suman Sethi v.Ajay Churiwal (2000 (1) SCALE 385 : 2000 AIR SCW 383). https://hcservices.ecourts.gov.in/hcservices/

4. Mr.Ganguli, learned senior counsel appearing for theaccused contended that the aforesaid judgment requiresreconsideration in view of the strict compliance of theprovisions of Section 138 of the Negotiable Instruments Act.5. Having examined the notice that was given in thepresent case and the provisions of the Act as well as thelaw laid down by this Court, we see no force in theaforesaid contention and, therefore, in our view theMagistrate was wholly in error to hold that the noticeitself is invalid. We, therefore, set aside the impugnedorder of the High Court and that of the Magistrate anddirect the Magistrate to conclude the proceedings inaccordance with law, as expeditiously as possible.6. This appeal stands allowed accordingly." 22. From the above decisions, it is clear that the decision ofthe Supreme Court reported in AIR 2000 SC 828 = 2000 (2) SCC 380(Suman Sethi Vs. Ajay K.Churiwal), was relied upon by the SupremeCourt in both the later judgments reported in 2001 AIR SCW 2352(2) =2001 (10) SCC 763 (United Credit Ltd., Calcutta Vs. Agro Sales Indiaand others) and also in 2003 (4) CTC 252 = 2003 (8) SCC 300(K.R.Indira Vs. Dr.G.Adinarayana). 23. As extracted above the observations of the Supreme Court, inthe decision reported in 2003 (4) CTC 252 = 2003 (8) SCC 300 (citedsupra), the Supreme Court held that, " .. .. Though no formal noticeis prescribed in the provision, the statutory provision indicates inunmistakable terms as to what should be clearly indicated in thenotice and what manner of demand it should make. .... ..... In agiven case, if consolidated notice is found to provide sufficientinformation envisaged by the statutory provision and there was aspecific demand for the payment of the sum covered by the chequedishonoured, mere fact that it was a consolidated notice, and/orthat further demands in addition to the statutorily envisaged demandwas also found to have been made may not invalidate the same. ...."It was further held in the said decision by the Supreme Court, that," ... .... Significantly, not only the cheque amounts were differentfrom the alleged loan amounts but the demand was made not of thecheque amounts but only the loan amount as though it is a demand forthe loan amount and not the demand for payment of the cheque amount;nor could it be said that it was a demand for payment of the chequeamount and in addition thereto made further demands as well. What isnecessary is making of a demand for the amount covered by the bouncedcheque which is conspicuously absent in the notice issued in thiscase. The notice in question is imperfect in this case not becauseit had any further or additional claims as well but it did notspecifically contain any demand for the payment of the chequeamount, the non-compliance with such a demand only being the https://hcservices.ecourts.gov.in/hcservices/ incriminating circumstance which expose the drawer for beingproceeded against under Section 138 of the Act. ...."24. While considering the above decisions of the Supreme Court,along with Ex.P-13 notice, in the earlier paragraphs of Ex.P-13, thedates and the amounts of the cheques, have been given and in thesubsequent paragraph, time has been specified and there is a specificwording for claim of amount and the prosecution for non-compliance,has been clearly mentioned. In paragraph 13 of Ex.P-13 notice, it isstated as follows:"13. Take Notice therefore, that unless you discharge theentire debt of Rs.13,85,920/- (Rs. Thirteen lakh eighty-fivethousand nine hundred and twenty) by sending a Banker's Chequeor Demand Draft to my client, together with further interesttill the date of actual payment, within FIFTEEN DAYS from now.Prosecution will be straightaway launched against you, bothunder Sec.138 of Negotiable Instruments Act and Sec.420 ofIndian Penal Code."25. Hence, I am of the view that while considering the contentsof Ex.P-13, that notice is valid under Section 138 of the N.I. Act. 26. Next question to be decided is as to whether at the time ofissuance of Exs.P-7 and P-8, there is any existing or subsistinglegal liability.27. Learned counsel for the appellant-complainant would submitthat the documents Exs.P-3 to 6 and P-9 have clearly proved thatExs.P-7 ad P-8 were given only for discharge of the loan obtained bythe respondent-accused under Ex.C-1 promissory note. Ex.P-3 is theTelegu version, dated 27.9.1997, which was written and signed by therespondent-accused in his own handwriting, in favour of theappellant-complainant, and the English translation of Ex.P-3, ismarked as Ex.P-4. Ex.P-4 it is stated by the respondent-accused, asfollows: "I gave you two Cheques towards your loan. (1) 30.9.97 Cheque No.746780 for Rs.6,60,000/-. (2) 31.10.97 Cheque No.746779 for Rs.5,80,000/-.Money has not reached me as expected. The moneys that Imust get will reach on 10.11.97. Therefore, kindly presentthe above two Cheques in Bank on 11.11.97." 28. Next letter is Ex.P-5 (Telugu version), dated 29.10.1997,written by the respondent-accused to the appellant-complainant and https://hcservices.ecourts.gov.in/hcservices/ the English translation of the same is marked as Ex.P-6, in which itis stated as follows:"I spoke with you in detail over the phone on 25.10.97.Afterwards, since the present money market has deteriorated,and because of Deepavali festival, the money that I must getmay be delayed by two or three weeks, and I may not get on10.11.97 as I had originally expected. Therefore, as I toldyou already, I am sending you interest of Rs.49,600/- upto31.12.97 (from 1.11.97 to 31.12.97), calculating at 24%, byCheque No.746783 dt.31.12.97 on Syndicate Bank.Therefore, the three Cheques listed below which I hadgiven you, be presented in Bank on 31.12.97:-(1) Syndicate Bank, Cheque 746780 for Rs.6,60,000/-dt.30.9.97,(2) Syndicate Bank, Cheque No.746779 for Rs.5,80,000/-dt.31.10.97,(3) Syndicate Bank, Cheque No.746783 for Rs.49,600/-dt.31.12.97.Kindly do not deposit in Bank before that date.Whatever may happen, I will take back the above-mentioned three Cheques after paying the entire amount toyou in the meantime by Pay Order.I desiringly expect you to wholeheartedly co-operatewith me, understanding the present circumstances.Yours, Sd. Mani Kumar Enclosed: Syndicate Bank ChequeNo.746783 for Rs.49,600/-dt.31.12.97."29. The issuance of the cheques has been accepted by therespondent-accused. Furthermore, the letters Ex.P-3 (Telugu) andEx.P-5 (Telugu) have also been accepted by the respondent-accused.Learned counsel for the respondent-accused submits that thosedocuments have been written by the respondent-accused only on theinstructions of the complainant's counsel Mr.Raghunatha Reddy, whowas also the counsel for the respondent-accused during the relevant https://hcservices.ecourts.gov.in/hcservices/ period of time. Since the appellant-complainant was facing theproblem in Income Tax Department, to help the complainant and tofacilitate the complainant to escape from the clutches of the IncomeTax Department, those cheques were issued and the letter has beengiven only on the instructions of the counsel Mr.Raghunatha Reddy. Atthis juncture, it is appropriate to consider the argument advanced bylearned counsel for the respondent-accused that the document has beenissued to help the appellant-complainant by facilitating him toescape from the clutches of the Income Tax Department. Except theipse-dixit of D.W.3, i.e. the respondent-accused, no other evidenceis available. It is pertinent to note that Raghunatha Reddy wasexamined as D.W.2. When he was in the witness box, in his evidence,no suggestion was posed to him in respect of Exs.P-3 and P-5 and P-9that those letters have been given by the respondent-accused, only onhis instructions and advise. But a suggestion was posed to him thathe filed the case against the Income Tax Official on behalf ofKrishna Reddy, the appellant-complainant. A suggestion was also posedto D.W.2 that he approached the accused and asked for signing in theblank promissory note and other blank papers to save Mr.KrishnaReddy, the complainant from the Income Tax Department problem, andthe said suggestion was denied by D.W.2. While perusing Exs.P-3 and5, it is seen that they were written by the respondent-accused in hisown handwriting in Telugu to the appellant-complainant. D.W.2Raghunatha Reddy denied the suggestion in his evidence that heobtained signed blank promissory note, cheques and other signed blankpapers to save the complainant from Income Tax problem. 30. In such circumstances, it is painful to accept that Exs.P-3,5 and 9 are given on the instructions of Raghunatha Reddy tofacilitate the appellant-complainant to escape from the clutches ofthe Income Tax Department.31. Learned counsel for the respondent-accused would submit thatEx.P-9 is only a typed matter and it was not in the respondent's(accused) own handwriting and after obtaining the signature from therespondent-accused, Ex.P-9 has been concocted for the purpose of thecase. While perusing Ex.P-9, it is to be noted that it is dated15.12.1997 and the signature and the date of the respondent-accusedwere there. Furthermore, in Ex.P-9, the two cheque numbers and theamount of Rs.7,25,920/-, have been written by the respondent-accusedand he also attested for the said writings on the same. Noexplanation has been offered by D.W.3, the respondent-accused. In theabove circumstances, it is painful to accept the argument advanced bythe learned counsel for the respondent-accused that Ex.P-9 wasconcocted in the blank paper, in which Raghunatha Reddy obtainedsignature of the respondent-accused. So, the argument advanced bylearned counsel for the respondent that Exs.P-3, 5 and 9 areconcocted for the purpose of the case, does not merit acceptance. https://hcservices.ecourts.gov.in/hcservices/

32. Learned counsel for the respondent-accused would mainlyfocus upon the document Exs.D-1 to D-60 filed on the side of therespondent-accused. They are discussed hereunder:Exs.D-1 and D-2 are the promissory notes. Learned counsel forthe respondent-accused would submit that both the appellant and therespondent have obtained loan from one Narayana Gupta, who wasexamined as D.W.1, before the Court and they are joint borrowers. Toprove the same, he has filed Exs.D-1 and D-2, both dated 8.12.1993.Even though P.W.1 has stated that he is one of the persons, whoattested the same, he is not the joint borrower, but while perusingExs.D-1 and D-2 promissory notes in favour of SathyajyothiInvestments and Divyajyothi Financiers respectively, it shows thatboth the appellant and the respondent herein are joint borrowers andboth of them have signed on the stamps, that their names have beenincorporated in the printed promissory notes and both the loanamounts have been discharged by issuance of cheques, dated 16.9.1995in respect of Rs.3,00,000/- and Rs.3,50,000/- respectively. Ex.D-3 isalso dated 8.12.1993 and it is for Rs.3,50,000/-. This is also jointborrowing from one Anandajyothi Investments, which was alsodischarged on issuance of cheque on 16.9.1995. Thus, it is clear thatExs.D-1 to D-3 are dated 8.12.1993, for Rs.3,00,000/-, Rs.3,50,000/-and Rs.3,50,000/- respectively, which have been jointly borrowed byboth the appellant and the respondent from Sathyajyothi Investments,Divyajyothi Financiers and Anandajyothi Investments, respectively,and the loan amounts have been discharged by way of issuance ofrespective cheques, dated 16.9.1995 and that the endorsements couldbe found on the back of the respective Exs.D-1 to D-3. Before remand,those documents Exs.D-1 to D-3 were marked. So, it is clearly provedthat the appellant and the respondent were friends before issuance ofthe present cheques and they were having joint borrowings withfinancial institutions. It is pertinent to note that to prove Exs.D-1to D-3, D.W.1 Narayana Gupta, who was one of the partners of the firmSathyajyothi Investments, has been examined.After the earlier remand order of the Supreme Court, therespondent-accused filed the documents Exs.D-4 to D-60 and all thosedocuments have been marked through D.W.3, the respondent-accused. The documents Exs.D-4 to D-7 show that either the respondent orhis family members have borrowed money from Amruthajyothi FinanceCorporation, Jyothi Financiers and Viswajyothi Financier and JyothiFinanciers respectively, for Rs.1 lakh, Rs.20 lakhs, Rs.10 lakhs andRs.5 lakhs respectively. Those amounts also have been dischargedsubsequently. Those documents are not relevant for the purpose of thecase to decide as to whether on the date of issuance of Exs.P-7 andP-8 cheques, the respondent-accused was having any subsisting orexisting liability to repay by way of issuance of cheque. Thosedocuments Exs.D-4 to D-7 have proved that the respondent's (accused) https://hcservices.ecourts.gov.in/hcservices/ family members and himself, borrowed money and were indebted then andthere. Ex.D-8 dated 24.6.1994, has been written by D.W.2 RaghunathaReddy, giving the details of the documents furnished to JyothiFinanciers, when the wife of the respondent-accused obtained loanfrom Jyothi Financiers.Exs.D-9 to 13, are written by D.W.2 Ragunatha Reddy, which showthat Raghunatha Reddy was acting for and on behalf of the respondent-accused, in the year 1994. Ex.D-14 is a letter alleged to have been given by KalyanaChakravarthy, the son of the respondent-accused in favour of AnandaJyothi Investments, for depositing the original sale deeds witnessedby Raghunatha Reddy and the respondent herein. Likewise, the document Ex.D-15 dated 1.8.1996, is also a letteralleged to have been given by the respondent's son, KalyanaChakravarthy in favour of one Mahendra Enterprises, for depositingthe original sale deeds and the witnesses were the respondent andRagunatha Reddy. The son of the respondent-accused borrowed Rs.12 lakhs underEx.D-16 promissory note from Anandajyothi Investments on 15.7.1996,in which D.W.2 Raghunatha Reddy was the attestor/witness and therespondent was a co-signatory and the loan was discharged and theamounts have been paid through various Banker's Cheques, dated25.8.2004 and 26.8.2004. Likewise, as per Ex.D-17 promissory note, the respondent's sonKalyana Chakravarthy borrowed Rs.20 lakhs from AnandajyothiInvestments on 12.7.1996, witnessed/attested by Raghunatha Reddy andthe respondent was a co-signatory and the loan was discharged and theamounts have been paid through various Banker's Cheques, dated25.8.2004 and 26.8.2004. Ex.D-18 promissory note, dated 14.10.1996 shows that KalyanaChakravarthy; his father, the respondent-accused and the AdvocateRaghunatha Reddy, borrowed Rs.10 lakhs from Anandajyothi Investments,discharged on 25/26.8.2004 by Banker's Cheques. As per Ex.D-19 promissory note, the respondent and his son,borrowed Rs.10 lakhs from Mahendra Enterprise on 11.10.1996 and inthat, D.W.2, the respondent's Advocate Raghunatha Reddy signed on thestamps, but his name does not find place in the recitals ofpromissory note. The loan was discharged on 25/26.8.2004 by way ofissuance of Banker's Cheques. https://hcservices.ecourts.gov.in/hcservices/ Ex.D-20 promissory note is dated 2.8.1996, in which therespondent and his son along with Raghunatha Reddy, borrowed Rs.10lakhs, from Mahendra Enterprise, which was discharged on25/26.8.2004.Ex.D-21 relates to particulars of loan availed by therespondent's son Kalyana Chakravarthy and Raghunatha Reddy and as on31.3.1997, the balance was Rs.20 lakhs. Ex.D-22 is dated 1.8.1996 and it was written by Raghunatha Reddywith regard to the documents furnished when the loan was obtained bythe son of the accused. Ex.D-23 is dated 8.12.1993, being the letter from the accused toAnandajyothi Investments, to show that the respondent herein borrowedmoney from Anandajyothi Investments and at that time, he depositedthe original document and that was witnessed by Raghunatha Reddy. Ex.D-24 is also dated 8.12.1993, being the letter from theaccused to Divyajyothi Financiers, when he deposited the sale deedsand that letter has been witnessed by Raghunatha Reddy. Ex.D-25 is also dated 8.12.1993, given by the respondent-accusedto Sathyajyothi Investments, for depositing the sale deeds foravailing of the loan and that letter has been witnessed by RaghunathaReddy. All these documents have been filed to show that RaghunathaReddy, who was the counsel appearing for the appellant-complainantwhen the complaint was filed before the trial Court, was also thecounsel for the respondent-accused for a long time and he has beentaking part in all the financial transactions of the respondent-accused. The respondent-accused also marked document Ex.D-26 series ofcheques, issued by the respondent-accused, in favour of DivyajyothiFinanciers, Anandajyothi Investments and Sathyajyothi Investments,for discharge of loan obtained under Exs.D-1 to D-3. The receipts given by the said three financial institutions tothe respondent-accused, are marked as Ex.D-27 series. Ex.D-28 is the transactions in writings by Raghunatha Reddy andon the top, it was mentioned as "A.Krishna Reddy" (the appellant-complainant).Ex.D-29 letter has been issued to the appellant-complainant-Krishna Reddy, Chairman, Standing Committee (for Accounts and Audit),Chennai City Municipal Corporation, Chennai-3, by the respondent-accused. The private complaint in the present case, which was https://hcservices.ecourts.gov.in/hcservices/ presented by the complainant to the Court in C.C.No.3316 of 1998, isdated 4.5.1998 and Ex.D-29 is dated 13.12.2004, i.e. when the matterwas before the Supreme Court.Ex.D-30 is a Telegram to the appellant/complainant issued bythe respondent/accused and it is the replica of Ex.D-29. Ex.D-31 is another letter written by the respondent-accused on21.11.2004 to the appellant-complainant and sought for someparticulars whether the appellant-complainant received fromRaghunatha Reddy, Rs.1,09,750/- on 15.5.1994 and Rs.1,25,000/- on21.5.1994, totalling to Rs.2,34,750/-.Ex.D-32 is the telegram to P.W.1, the appellant-complainant andD.W.1 Narayana Gupta, requesting as to whether P.W.1, the complainantand D.W.1, had sent the intimation to the Presidency Club andCosmopolitan Club, with regard to the conviction of the respondent-accused in the criminal case. Ex.D-33 is the postal return cover with endorsement, "party outof station and further address not known". Exs.D-34 to 37 are alsothe postal return covers. Ex.D-38 is the copy of the plaint presented by the appellantherein in suit in C.S.No.804 of 1992 on the file of this Court,against one H.V.Krishnamurthy, who was serving as AssistantCommissioner of Income Tax, and the suit was filed claimingRs.2,20,000/- as damages. The appellant-complainant also obtained a decree in E.P.No.116of 1992 in C.S.No.804 of 1992 and D.W.2 Raghunatha Reddy, the thencounsel for the appellant-claimant, has given a requisition in Ex.D-39 to the Assistant Registrar (O.S), of this Court, for issuance ofwarrant of attachment of defendant's movables, as per the order dated27.11.1992 in the said E.P. The said requisition/Ex.D-39 is dated30.11.1992.The defendant in the said suit in C.S.No.804 of 1992, namelyKrishnamurthy, Assistant Commissioner of Income Tax of City Circle-III, Madras-6, has filed O.S.A.No.290 of 1992 before this Courtagainst the appellant-complainant-Krishna Reddy and the Judge'ssummons therein was marked as Ex.D-40 and the copy of thejudgment/decree in O.S.A.No.290 of 1992 were marked as Ex.D-41. Ex.D-42 is the notes of calculation for payments made in respectof the promissory note, for the principal amount of Rs.6,60,000/-. Ex.D-43 is the Advocate's notice dated 31.7.1999 issued by theAdvocate R.S.Ranganadham, who has issued the said notice on behalf ofthe respondent-accused to Raghunatha Reddy, Advocate (D.W.2). https://hcservices.ecourts.gov.in/hcservices/ Ex.D-44 is the certified copy of Form A of Register of Firms ofJyothi Financiers, which shows that Narayana Gupta D.W.1 was one ofthe partners in the firm and the appellant-Krishna Reddy, thecomplainant, was also one of the partners. Ex.D-45 is the letter addressed by the Presidency Club toM/s.Aristo Paints Ltd., informing about the letter dated 26.12.2002from the appellant, who enclosed a copy of the judgment inCrl.A.No.294 of 2000, whereby, the respondent-accused was convictedand in Ex.D-45, the Honorary Secretary of the Presidency Clubrequested for recalling the nomination of the accused, who was usingthe Club.In Ex.D-45, there is also a show cause notice for initiation ofdisciplinary proceedings, issued by the Cosmopolitan Club to therespondent-accused regarding his conviction on 13.12.2002 by thisCourt.The Bar Council of Tamil Nadu, through its DisciplinaryCommittee, has issued notice of hearing to D.W.2 Raghunatha Reddy andthe copy of the same is marked as Ex.D-46. The proceedings of the Disciplinary Committee of the Bar Councilof India, is marked as Ex.D-47.Affidavit of undertaking given by D.W.2 Raghunatha Reddy isEx.D-48 and in that, he has undertaken to withdraw the vakalatnamaand appearance in Crl.A.Nos.218 and 219 of 1999 pending on the fileof the First Additional Sessions Court, Madras and in Crl.A.No.294 of2000 pending before this Court. In pursuance of the same, order hasbeen passed by the Supreme Court in the Special Leave Petitions inS.L.P.(Crl).Nos.712 and 713 of 2001, on 12.10.2001, and the S.L.Ps.were disposed of as infructuous, without entering into the merits ofrival contentions. Ex.D-49 is letter dated 11.11.2001, sent by the respondent-accused to D.W.2 Raghunatha Reddy.Exs.D-50 to D-52, D-54, D-55 and D-58, are the copies of thecause lists of this Court of various dates, to show that RaghunathaReddy was appearing against the respondent-accused. Ex.D-53 is the telegram issued by the respondent-accused toD.W.2 Raghunatha Reddy, D.W.1 Narayana Gupta and the appellant-complainant-Krishna Reddy and the certified true copy of the same isdated 18.3.2003.Ex.D-56 is another letter written by the respondent-accused toone Nanda Kumar, Advocate's Clerk. https://hcservices.ecourts.gov.in/hcservices/ Ex.D-57 is the affidavit/petition of the respondent-accused,filed before IX Assistant Judge, City Civil Court, Madras, inE.A.No....of 2003 in E.P.No.1951 of 2001 in O.S.No.154 of 1999 on thefile of the Additional Senior Civil Judge, Tirupati, for reopeningthe case filed against Raghunatha Reddy. Ex.D-59 is the Advocate's notice dated 10.11.1997, issued byRaghunatha Reddy (D.W.2) on behalf of Mahendra Enterprises, toKalyana Chakravarthy, son of the respondent-accused, with a copymarked to the respondent-accused, stating that the cheques issued byKalyana Chakravarthy in favour of Mahendra Enterprises, weredishonoured by the Bank. Ex.D-60 is another Advocate's notice issued by Raghunatha Reddyon behalf of Anandajyothi Investments, dated 10.11.1997, to KalayanaChakravarthy, son of the respondent-accused, with a copy marked tothe respondent-accused, stating that the cheques issued in favour ofAnandajyothi Investments, were dishonoured by the Bank. 33. Even though the respondent-accused has filed the above said60 documents, of which Ex.D-44 proved that the appellant-complainantwas a partner in Jyothi Financiers, along with D.W.1 Narayana Gupta.Exs.D-1 to D-3 show that the appellant-complainant is the jointborrower along with the respondent-accused from the respectivefinancial institutions. Even though the appellant-complainant deniedthat he was not co-borrower, but while perusing thosedocuments/Promissory Notes, it is seen that the appellant-complainantalso signed on the stamps of the promissory notes, and so, he was theco-borrower. The other documents have proved that the respondent-accused and his family members borrowed money from various financialinstitutions and repaid the same and D.W.2 Raghunatha Reddy alonearranged for the same to them and on his instructions only, theydeposited the title deeds and some of the documents were written byRaghunatha Reddy. It is also seen from those documents thatRaghunatha Reddy also borrowed some amount along with the respondent-accused herein and his son Kalyana Chakravarthy. The respondent-accused also filed some documents to show that the said RaghunathaReddy is acting against his interest and he appeared against therespondent-accused and suit proceedings and the cause lists of thisCourt have also been marked. 34. The above 60 documents are irrelevant to decide as towhether, on the date of issuance of the cheques Exs.P-7 and P-8,there existed any existing/subsisting legal liability. 35. At this juncture, learned counsel for the respondent-accusedculled out portion of the evidence of D.W.3 (respondent-accused) andargued that all the loan arrangements have been made only throughD.W.2 Raghunatha Reddy, who also wrote documents Exs.D-8 to 15. InSeptember, 1995, first week, D.W.2 accused, obtained loan for Rs.2 https://hcservices.ecourts.gov.in/hcservices/ crores, from Indian Overseas Bank, Triplicane Branch and as per theadvise of Raghunatha Reddy, D.W.3 discharged the loan amount of Rs.35lakhs and further he advised D.W.3 to discharge the loan amount ofRs.10 lakhs, which was jointly borrowed by D.W.3 (respondent-accused)and Krishna Reddy (appellant-complainant) and on 16.9.1995, D.W.2Raghunatha Reddy promised D.W.3 that he would get Rs.10 lakhs fromKrishna Reddy. 36. It is pertinent to note that the respondent-accused has notfiled any document to show that he has borrowed Rs.2 crores fromIndian Overseas Bank in the year 1995, whereas the documents filed byhim under Exs.D-16 to D-21 would show that he discharged the amountsonly on 25.8.2004 and 26.8.2004. Furthermore, Exs.D-1 to D-3promissory notes, are dated 8.12.1993 and those promissory notes havebeen discharged on 16.9.1995 through I.O.B./Bank of India Chequesfor Rs.3 lakhs, Rs.3,50,000/- and Rs.3,50,000/- respectively. Thetotal sum borrowed is Rs.10 lakhs. 37. It is pertinent to note that as per Ex.D-44 Form A of theRegister of Firms, the name of the firm is Jyothi Financiers and theappellant-complainant and D.W.1 Narayana Gupta, were partners ofJothi Financiers and as per Ex.D-44, the said Jyothi Financiers hadbeen registered on 4.2.1980 in Serial Number of the Firm: 114 of 1980.38. At this juncture, it is appropriate to consider the evidenceof D.W.1 Narayana Gupta, who in his chief examination, has statedthat he made endorsement/signature on the back of Ex.D-1 and he alsosigned on Exs.D-2 and D-3, and so, it is painful to accept that theappellant-complainant has borrowed money along with the respondent-accused and that amount is borrowed only for the benefit of theappellant-complainant, is unacceptable. 39. When P.W.1, the appellant-complainant, was in the witnessbox, the relevant documents Exs.P-3 and P-5, the translation copiesof the same being Exs.P-4 and P-6 respectively and also Ex.P-9, weremarked. In cross examination, a bald suggestion was posed to him thatas per the direction of the counsel, P.W.1, the complainant and therespondent-accused have written, which was denied by him. The furthersuggestion that they were under the compulsion to write a letter tothe accused, was also denied. P.W.1 further stated in his crossexamination that in Ex.P-9 letter, the respondent-accused Manikumarsigned and the further suggestion that Ex.P-9 letter had beenprepared by his counsel, has been denied by P.W.1. P.W.1 has statedin his cross examination as follows:@ //// M$h; vjphp ehDk; vd; tf;fPYk; brhy;ypago vGjpdhh;vd;why; rhpay;y/ vjphpf;F eh';fs; Twpago fojk; vGjp ju ntz;oamtrpak; Vw;gl;lJ vd;why; rhpay;y/ th/rh/M/9 ,e;j fojk; kzpf;Fkhh;ifbaGj;J nghl;L je;jhh;/ ,e;j fojk; vd; tf;fPy; jahh; bra;jhh;vd;why; rhpay;y /////@ https://hcservices.ecourts.gov.in/hcservices/

40. So, there is no specific cross examination of P.W.1 inrespect of Exs.P-3 to P-5. Subsequently, he was recalled on 16.8.2007and examined on the direction of the Supreme Court and at that timealso, in respect of Exs.P-3 and P-5, no suggestion was posed to himand at that time, during cross examination, he has stated that Ex.P-9has been directly given by the accused himself and P.W.1 denied thesuggestion that Ex.P-9 has been given by his counsel Raghunatha Reddyand then he filled up the same. He stated in his cross examination asfollows:@ ////// thjp rh/M/9 fojk; vjphp mDg;gpaJ/ mJ ahuhy;jahhpf;fg;gl;lJ vd;W vdf;F bjhpahJ/ vjphpjhd; neuoahf me;jfojj;ij bfhLj;jhh;/ thjp rh/M/9 foj Mtzk; uFehjd bul;ovd;gth; vd;dplk; bfhLj;j btw;W fhfpj Mtzj;jpy; ehdhf vGjpf;bfhz;lJ vd;W brhd;dhy; rhpay;y/ mjdhy;jhd; me;j fojj;jpy;ilg;gp'; rp';fps; iyd; Mft[k; lg[s; iyd; !;ngrhft[k; fhzg;gLfpwJvd;W brhd;dhy; rhpay;y/ ////@ 41. So, considering the evidence of P.W.1 (appellant-complainant), it is clearly proved, as observed earlier, that inEx.P-9, the respondent-accused has filled up the cheque Nos. and theamount, and he attested and signed for the same in Ex.P-9 letter. Insuch circumstances, the argument advanced by the learned counsel forthe respondent-accused that Ex.P-9 has been concocted in the signedblank paper by the appellant-complainant, does not merit acceptance.42. Learned counsel for the respondent-accused relied upon thedecision of the Supreme Court reported in 2006 (3) CTC 730 = 2006 (6)SCC 39 (M.S.Narayana Menon @ Mani Vs. State of Kerala), wherein, theSupreme Court held as follows:"30. Applying the said definitions of "proved" or"disproved" to the principle behind Section 118(a) of theAct, the court shall presume a negotiable instrument to befor consideration unless and until after considering thematter before it, it either believes that the considerationdoes not exist or considers the non-existence of theconsideration so probable that a prudent man ought, underthe circumstances of the particular case, to act upon thesupposition that the consideration does not exist. Forrebutting such presumption, what is needed is to raise aprobable defence. Even for the said purpose, the evidenceadduced on behalf of the complainant could be relied upon. 31. A Division Bench of this Court in Bharat Barrel &Drum Mfg. Co. v. Amin Chand Payrelal, 1999 (1) CTC 497 :1999 (3) SCC 35, albeit in a civil case laid down the law inthe following terms: (SCC pp.50-51, para 12) https://hcservices.ecourts.gov.in/hcservices/ "12. Upon consideration of various judgments asnoted hereinabove, the position of law which emergesis that once execution of the promissory note isadmitted, the presumption under Section 118(a) wouldarise that it is supported by a consideration. Such apresumption is rebuttable. The defendant can provethe non-existence of a consideration by raising aprobable defence. If the defendant is proved to havedischarged the initial onus of proof showing that theexistence of consideration was improbable or doubtfulor the same was illegal, the onus would shift to theplaintiff who will be obliged to prove it as a matterof fact and upon its failure to prove woulddisentitle him to the grant of relief on the basis ofthe negotiable instrument. The burden upon thedefendant of proving the non-existence of theconsideration can be either direct or by bringing onrecord the preponderance of probabilities byreference to the circumstances upon which he relies.In such an event, the plaintiff is entitled under lawto rely upon all the evidence led in the caseincluding that of the plaintiff as well. In case,where the defendant fails to discharge the initialonus of proof by showing the non-existence of theconsideration, the plaintiff would invariably be heldentitled to the benefit of presumption arising underSection 118(a) in his favour. The Court may notinsist upon the defendant to disprove the existenceof consideration by leading direct evidence as theexistence of negative evidence is neither possiblenor contemplated and even if led, is to be seen witha doubt."This Court, therefore, clearly opined that it is notnecessary for the defendant to disprove the existence ofconsideration by way of direct evidence.32. The standard of proof evidently is preponderanceof probabilities. Inference of preponderance ofprobabilities can be drawn not only from the materials onrecord but also by reference to the circumstances uponwhich he relies.33. Presumption drawn under a statute has only anevidentiary value. Presumptions are raised in terms of theEvidence Act. Presumption drawn in respect of one fact maybe an evidence even for the purpose of drawing presumptionunder another. ........ https://hcservices.ecourts.gov.in/hcservices/

36. It was for the appellant only to discharge theinitial onus of proof. He was not necessarily required todisprove the prosecution case. Whether in the given factsand circumstances of a case, the initial burden has beendischarged by an accused would be a question of fact. Itwas a matter relating to appreciation of evidence. TheHigh Court in its impugned judgment did not point out anyerror on the part of the appellate court in that behalf. 37. What would be the effect of a presumption and thenature thereof fell for consideration before a Full Benchof the Andhra Pradesh High Court in G.Vasu v. Syed YaseenSifuddin Quadri, AIR 1987 A.P. 139. In an instructivejudgment, Rao, J. (as His Lordship then was) speaking forthe Full Bench noticed various provisions of the EvidenceAct as also a large number of case-laws and authorities inopining: (AIR p.147, para 30) "30. From the aforesaid authorities, we hold thatonce the defendant adduces evidence to the satisfactionof the Court that on a preponderance of probabilitiesthere is no consideration in the manner pleaded in theplaint or suit notice or the plaintiff's evidence, theburden shifts to the plaintiff and the presumption'disappears' and does not haunt the defendant anylonger."It was further held: (AIR pp.148-49, para 32)"32. For the aforesaid reasons, we are of the viewthat where, in a suit on a promissory note, the case ofthe defendant as to the circumstances under which thepromissory note was executed is not accepted, it isopen to the defendant to prove that the case set up bythe plaintiff on the basis of the recitals in thepromissory note, or the case set up in suit notice orin the plaint is not true and rebut the presumptionunder Section 118 by showing a preponderance ofprobabilities in his favour and against the plaintiff.He need not lead evidence on all conceivable modes ofconsideration for establishing that the promissory noteis not supported by any consideration whatsoever. Thewords 'until the contrary is proved' in Section 118 donot mean that the defendant must necessarily show thatthe document is not supported by any form ofconsideration but the defendant has the option to askthe court to consider the non-existence ofconsideration so probable that a prudent man ought,under the circumstances of the case, to act upon thesupposition that consideration did not exist. Though https://hcservices.ecourts.gov.in/hcservices/ the evidential burden is initially placed on thedefendant by virtue of Section 118 it can be rebuttedby the defendant by showing a preponderance ofprobabilities that such consideration as stated in thepronote, or in the suit notice or in the plaint doesnot exist and once the presumption is so rebutted, thesaid presumption 'disappears'. For the purpose ofrebutting the initial evidential burden, the defendantcan rely on direct evidence or circumstantial evidenceor on presumptions of law or fact. Once such convincingrebuttal evidence is adduced and accepted by the Court,having regard to all the circumstances of the case andthe preponderance of probabilities, the evidentialburden shifts back to the plaintiff who has also thelegal burden. Thereafter, the presumption under Section118 does not again come to the plaintiff's rescue. Onceboth parties have adduced evidence, the court has toconsider the same and the burden of proof loses all itsimportance."38. If for the purpose of a civil litigation, thedefendant may not adduce any evidence to discharge theinitial burden placed on him, a "fortiori" even an accusedneed not enter into the witness box and examine otherwitnesses in support of his defence. He, it will bearrepetition to state, need not disprove the prosecution casein its entirety as has been held by the High Court.39. A presumption is a legal or factual assumptiondrawn from the existence of certain facts..... ....41. In Hiten P.Dalal v. Bratindranath Banerjee, 2001(3) CTC 243 : 2001 (6) SCC 16, a three-Judge Bench of thisCourt held that although by reason of Sections 138 and 139of the Act, the presumption of law as distinguished frompresumption of fact is drawn, the Court has no other optionbut to draw the same in every case where the factual basisof raising the presumption is established. Pal, J. speakingfor a three-Judge Bench, however, opined: (SCC pp.24-25,paras 22-23)"22. .... Presumptions are rules of evidence and donot conflict with the presumption of innocence, becauseby the latter, all that is meant is that the prosecutionis obliged to prove the case against the accused beyondreasonable doubt. The obligation on the prosecution maybe discharged with the help of presumptions of law orfact unless the accused adduces evidence showing the https://hcservices.ecourts.gov.in/hcservices/ reasonable possibility of the non-existence of thepresumed fact.23. In other words, provided the facts required toform the basis of a presumption of law exist, nodiscretion is left with the court but to draw thestatutory conclusion, but this does not preclude theperson against whom the presumption is drawn fromrebutting it and proving the contrary. A fact is said tobe proved when,"after considering the matters before it, theCourt either believes it to exist, orconsiders its existence so probable that aprudent man ought, under the circumstances ofthe particular case, to act upon thesupposition that it exists".Therefore, the rebuttal does not have to beconclusively established but such evidence must beadduced before the Court in support of the defencethat the Court must either believe the defence toexist or consider its existence to be reasonablyprobable, the standard of reasonability being thatof the "prudent man"." 42. The court, however, in the fact situation obtainingtherein, was not required to go into the question as towhether an accused can discharge the onus placed on him evenfrom the materials brought on record by the complainanthimself. Evidently in law he is entitled to do so.43. In Goaplast (P) Ltd. v. Chico Ursula D’Souza, 2003(1) CTC 752 : 2003 (3) SCC 232, upon which reliance wasplaced by the learned counsel, this Court held that thepresumption arising under Section 139 of the Act can berebutted by adducing evidence and the burden of proof is onthe person who wants to rebut the presumption. The questionwhich arose for consideration therein was as to whetherclosure of accounts or stoppage of payment is sufficientdefence to escape from the penal liability under Section 138of the Act. The answer to the question was rendered in thenegative. Such a question does not arise in the instantcase.44. In Kundan Lal Rallaram v. Custodian, EvacueeProperty, Bombay, AIR 1961 SC 1316, Subba Rao, J., as thelearned Chief Justice then was, held that while consideringthe question as to whether burden of proof in terms ofSection 118 had been discharged or not, relevant evidence https://hcservices.ecourts.gov.in/hcservices/ cannot be permitted to be withheld. If a relevant evidenceis withheld, the court may draw a presumption to the effectthat if the same was produced, it might have goneunfavourable to the plaintiff. Such a presumption was itselfheld to be sufficient to rebut the presumption arising underSection 118 of the Act stating: (AIR p.1319, para5)"Briefly stated, the burden of proof may beshifted by presumptions of law or fact, andpresumptions of law or presumptions of fact may berebutted not only by direct or circumstantial evidencebut also by presumptions of law or fact. We are notconcerned here with irrebuttable presumptions of law.".... ....45. ....Moreover, the onus on an accused is not as heavy asthat of the prosecution. It may be compared with a defendantin a civil proceeding..... ....51. The submission of the second respondent that theappellant had not denied his entire responsibility and thedispute relating only to the quantum of debt cannot beaccepted.52. We, in the facts and circumstances of this case,need not go into the question as to whether even if theprosecution fails to prove that a large portion of theamount claimed to be a part of the debt was not owing anddue to the complainant by the accused and only because hehas issued a cheque for a higher amount, he would beconvicted if it is held that existence of debt in respect oflarge part of the said amount has not been proved. Theappellant clearly said that nothing is due and the chequewas issued by way of security. The said defence has beenaccepted as probable. If the defence is acceptable asprobable the cheque therefor cannot be held to have beenissued in discharge of the debt as, for example, if a chequeis issued for security or for any other purpose the samewould not come within the purview of Section 138 of the Act. https://hcservices.ecourts.gov.in/hcservices/

53. We have gone through the oral evidence. The secondrespondent has even failed to prove that the appellant hadpaid to him a sum of Rs.5000 by cash.54. In any event the High Court entertained an appealtreating to be an appeal against acquittal, it was in factexercising the revisional jurisdiction. Even whileexercising an appellate power against a judgment ofacquittal, the High Court should have borne in mind thewell-settled principles of law that where two views arepossible, the appellate court should not interfere with thefinding of acquittal recorded by the court below...... " 43. Relying on the said decision, learned counsel for therespondent-accused argued that the appellant-complainant has notfiled any document to show that he paid to the respondent-accused theloan amount of Rs.6,60,000/- under Ex.C-1 promissory note, and so,adverse inference be drawn. In Ex.C-1, the respondent-accused signedand written his name in block letters in brackets after his sign andhe has given a wrong date and that has been corrected and attested byhim. On 5.5.1997, the respondent-accused paid Rs.10/- and he signedon the back of Ex.C-1 promissory note. Ex.P-3 (in Telugu) is dated27.9.1997 (English translation of the same is Ex.P-5) and therespondent-accused calculated the interest also and he has given acheque for Rs.5,80,000/- along with another cheque for the principalamount of Rs.6,60,000/-. It is in his own handwriting and the datealso has been mentioned by him. It shows the genuineness of thedocument Ex.P-3. Ex.P-5 (in Telugu) is dated 29.10.1997 (Englishtranslation of the same is Ex.P-6) and it is in his own handwritingand for the period from 1.11.1997 to 31.12.1997, he calculated 24%interest and issued cheque No.746783, dated 31.12.1997, forRs.49,600/-. The said cheque for Rs.49,600/- was issued after onemonth. It also shows the Cheque No. as 746783, with date 31.12.1997,which shows the genuineness of the document Ex.P-5. 44. As already stated, both Exs.P-3 and P-5 are true andgenuine. On 15.12.1997, as seen from Ex.P-9 letter issued by theaccused to the complainant, the accused has taken back the twocheques already given in Nos.746780 and 746779 issued forRs.6,60,000/- and Rs.5,80,000/- respectively, and gave the presentpost-dated cheques (Exs.P-7 and P-8), both dated 31.3.1998 forRs.6,60,000/- and Rs.7,25,920/- by calculating interest upto31.3.1998. Ex.P-9 is also genuine. This shows that the respondentherein (accused) has issued the cheques Exs.P-7 and P-8, for repayingthe loan obtained on 30.6.1994 through Ex.C-1 promissory note. Ex.P-9 has been issued only by the respondent-accused and is found to begenuine, as discussed by this Court in the earlier paragraphs. Hehimself in his own handwriting, filled up the cheque Nos. and theinterest amount and the accused attested the same. In such https://hcservices.ecourts.gov.in/hcservices/ circumstances, I am of the view that on the date of issuance of thecheques Exs.P-7 and P-8, there is existing/subsisting legalliability. So, the argument advanced by learned counsel for therespondent-accused that on the date of issuance of Exs.P-7 and P-8,there is no subsisting liability and it was only given to facilitatethe appellant-complainant to escape from the clutches of Income TaxDepartment, does not merit acceptance.45. Furthermore, as per Section 118 of the N.I. Act, the"presumption" as to every negotiable instrument bearing the date,shall be made or drawn on such date and in a suit for dishonour, theCourt shall, on proof of protest, presume the fact of dishonour,unless disproved under Section 119 of the N.I. Act. Under Section 139of the N.I. Act, the presumption is in favour of the holder of theinstrument, unless the contrary is proved and the presumption is thatthe holder of the cheque received the cheque, of the nature, for thedischarge, in whole or part of any debt or other liability. When oncethe signature in the cheques in question are admitted by therespondent-accused, then the presumption under Sections 118 and 139of the N.I. Act will follow. The drawing of the cheque from the Bankaccount in discharge of any debt or other liability, which proposedthe legally enforceable debt, is not "presumption" under Section 139of the N.I. Act. Irrespective of the fact as to whether the allegedtransaction is stated in the complaint or not, if the complainantseeks to draw the "presumption" under Section 139 of the N.I. Act, heis bound to establish the basis for drawing the presumption. Thefundamental basis for drawing such presumption is the Court'ssatisfaction that the person in whose favour the presumption isdrawn, is the holder of the cheque. If such fact is not established,the Court shall not draw such presumption in favour of thecomplainant.46. In the present case, as already discussed in the earlierparagraphs of this judgment, the appellant-complainant has provedthat Ex.C-1 promissory note is true and genuine document and todischarge the loan obtained in Ex.C-1 promissory note, therespondent-accused earlier issued the two cheques as seen from Ex.P-3and Ex.P-5 and he also gave another cheque for Rs.49,600/- as seenfrom Ex.P-5 and subsequently, under Ex.P-9, he has taken back allthe earlier cheques issued and then issued the present cheques Exs.P-7 and P-8, which are in dispute. So, the appellant-complainant hasproved that the cheques in question have been given for thesubsisting and existing legal liability on the date of issuance ofthe cheques, i.e. issued on 15.12.1997, but post-dated 31.3.1998.47. The phrase "shall presume" is defined in Section 4 of theIndian Evidence Act and it implies that the Court treats the fact asproved, unless and until it is disproved. So, Section 139 of the N.I.Act empowers the Court dealing with the complaint under Section 138of the N.I. Act to presume the holder of the cheque, received the https://hcservices.ecourts.gov.in/hcservices/ cheque of the nature, referred to Section 138 of the N.I. Act, fordischarge. It is obligatory on the Court to raise the presumption inevery case where the factual basis for the raising of the presumptionhas been established. It introduces an exception to the rule as tothe burden of proof in criminal cases and shifts the onus to theaccused. Such presumption is "presumption of law" as distinguishedfrom the presumption of fact, which describes the provision by whichthe Court may presume certain state of affairs. 48. At this juncture, it is appropriate to consider the decisionrelied upon by the learned counsel for the respondent reported in2006 (3) C.T.C. 730 = 2006 (6) SCC 39 (M.S.Narayana Menon @ Mani Vs.State of Kerala), wherein, as quoted earlier in this judgment, theSupreme Court held as follows:"30. Applying the said definitions of "proved" or"disproved" to the principle behind Section 118(a) of theAct, the court shall presume a negotiable instrument to befor consideration unless and until after considering thematter before it, it either believes that the considerationdoes not exist or considers the non-existence of theconsideration so probable that a prudent man ought, underthe circumstances of the particular case, to act upon thesupposition that the consideration does not exist. Forrebutting such presumption, what is needed is to raise aprobable defence. Even for the said purpose, the evidenceadduced on behalf of the complainant could be relied upon." 49. Learned counsel for the respondent-accused would cull outsome portion of the citation referred to above and submit that non-filing of the income tax returns is fatal and he further submits thatthe onus on the accused is not as heavy as that of the prosecutionand it may be compared with the defence in the civil proceedings. Theabove citation is not applicable to the facts of the present case. 50. Learned counsel for the respondent-accused also relied uponthe decision of the Supreme Court reported in 2008 (4) SCC 54(Krishna Janardhan Bhat Vs. Dattatraya G.Hegde), in which it was heldas follows:"41. Mr Bhat relied upon a decision of this Court inHiten P. Dalal v. Bratindranath Banerjee (2001 (6) SCC 16 :2001 SCC (Cri) 960) wherein this Court held: (SCC pp.24-25,paras,22-23)"22. .... Presumptions are rules of evidence anddo not conflict with the presumption of innocence,because by the latter, all that is meant is that theprosecution is obliged to prove the case against theaccused beyond reasonable doubt. The obligation on the https://hcservices.ecourts.gov.in/hcservices/ prosecution may be discharged with the help ofpresumptions of law or fact unless the accused adducesevidence showing the reasonable possibility of the non-existence of the presumed fact. 23. In other words, provided the facts required toform the basis of a presumption of law exist, nodiscretion is left with the court but to draw thestatutory conclusion, but this does not preclude theperson against whom the presumption is drawn fromrebutting it and proving the contrary. A fact is saidto be proved when, 'after considering the matters before it, thecourt either believes it to exist, or considersits existence so probable that a prudent manought, under the circumstances of the particularcase, to act upon the supposition that itexists'. Therefore, the rebuttal does not have to beconclusively established but such evidence must beadduced before the court in support of the defence thatthe court must either believe the defence to exist orconsider its existence to be reasonably probable, thestandard of reasonability being that of the 'prudentman'."(See also K.N. Beena v. Muniyappan (2001 (8) SCC 458 : 2002SCC (Cri) 14)...... .....44. The presumption of innocence is a human right.(See Narendra Singh v. State of M.P. (2004 (10) SCC 699 :2004 SCC (Cri) 1893), Ranjitsing Brahmajeetsing Sharma v.State of Maharashtra (2005 (5) SCC 294 : 2005 SCC (Cri)1057) and Rajesh Ranjan Yadav v. CBI (2007 (1) SCC 70 :2007 (1) SCC (Cri) 254). Article 6(2) of the EuropeanConvention on Human Rights provides: "Everyone charged witha criminal offence shall be presumed innocent until provedguilty according to law." Although India is not bound bythe aforementioned Convention and as such it may not benecessary like the countries forming European countries tobring common law into land with the Convention, a balancingof the accused’s rights and the interest of the society isrequired to be taken into consideration. In India, however,subject to the statutory interdicts, the said principleforms the basis of criminal jurisprudence. For theaforementioned purpose the nature of the offence, https://hcservices.ecourts.gov.in/hcservices/ seriousness as also gravity thereof may be taken intoconsideration. The courts must be on guard to see thatmerely on the application of presumption as contemplatedunder Section 139 of the Negotiable Instruments Act, thesame may not lead to injustice or mistaken conviction. Itis for the aforementioned reasons that we have taken intoconsideration the decisions operating in the field wherethe difficulty of proving a negative has been emphasised.It is not suggested that a negative can never be proved butthere are cases where such difficulties are faced by theaccused e.g. honest and reasonable mistake of fact. In arecent article "The Presumption of Innocence and ReverseBurdens: A Balancing Duty" published in 2007 CLJ (MarchPart) 142 it has been stated:"In determining whether a reverse burden iscompatible with the presumption of innocence regardshould also be had to the pragmatics of proof. Howdifficult would it be for the prosecution to proveguilt without the reverse burden? How easily could aninnocent defendant discharge the reverse burden? Butcourts will not allow these pragmatic considerations tooverride the legitimate rights of the defendant.Pragmatism will have greater sway where the reverseburden would not pose the risk of great injustice---where the offence is not too serious or the reverseburden only concerns a matter incidental to guilt. Andgreater weight will be given to prosecutorialefficiency in the regulatory environment." 45. We are not oblivious of the fact that the saidprovision has been inserted to regulate the growingbusiness, trade, commerce and industrial activities of thecountry and the strict liability to promote greatervigilance in financial matters and to safeguard the faith ofthe creditor in the drawer of the cheque which is essentialto the economic life of a developing country like India.This, however, shall not mean that the courts shall put ablind eye to the ground realities. Statute mandates raisingof presumption but it stops at that. It does not say howpresumption drawn should be held to have rebutted. Otherimportant principles of legal jurisprudence, namely,presumption of innocence as human rights and the doctrine ofreverse burden introduced by Section 139 should bedelicately balanced. Such balancing acts, indisputably wouldlargely depend upon the factual matrix of each case, thematerials brought on record and having regard to legalprinciples governing the same.... " https://hcservices.ecourts.gov.in/hcservices/

51. Relying on the said decision, learned counsel for therespondent-accused further submitted that the presumption ofinnocence is a human right and everyone charged with a criminaloffence shall be presumed innocent, until proved guilty according tolaw. The Court must be on guard to see that merely on the applicationof presumption as contemplated under Section 139 of the N.I. Act, thesame may not lead to injustice or mistaken conviction. The statutemandates raising of presumption, but it stops at that. It does notsay how presumption drawn should be held to have rebutted. Anotherimportant principle of legal jurisprudence is that presumption ofinnocence as human rights and the doctrine of reverse burden,introduced by Section 139 of the N.I. Act, should be delicatelybalanced. 52. There is no quarrel over the said proposition. But in thepresent case, while considering Exs.P-3, 5 and 9 and Ex.C-1promissory note, this Court is of the opinion that Exs.P-7 and P-8cheques, post-dated 31.3.1998, but issued, on 15.12.1997, were issuedonly for the discharge of the loan borrowed by the respondent-accusedfrom the appellant-complainant, under Ex.C-1 promissory note.53. The theory that the cheques Exs.P-7 and P-8 have been issuedto the appellant-complainant to facilitate him to escape from theclutches of the Income Tax Department, does not merit acceptance.54. Further, one more point to be noticed is that as soon as thenotice has been issued by the appellant-complainant under Ex.P-13, inreply, Ex.P-14 has been given by the respondent-accused. In Ex.P-14,the respondent-accused has stated that, " ... The cheques underconsideration are given as additional security for payment ofInterest periodically and they do not satisfy the requirements ofSec.138 of the Negotiable Instruments Act or Sec.420 of the I.P.C."55. At this juncture, learned counsel for the respondent-accusedwould rely upon the decision of this Court reported in 1999 (I) CTC 6(Balaji Seafoods Exports (India) Ltd. Vs. Mac Industries Ltd.),wherein it was held that, " ... an undated cheque having been givenonly as security, the provision of Section 138 of the NegotiableInstruments Act are not at all attracted and hence, the complaintagainst the accused under Section 138 of the Negotiable InstrumentsAct cannot be maintained at all."56. But here, in this case, as noted in previous paragraphs,Ex.C-1 promissory note, is true and genuine and the issuance ofExs.P-7 and P-8 cheques have been proved by way of documents Exs.P-3,P-5 and P-9, which were written by the accused himself and in suchcircumstances, there is no evidence to show that Exs.P-7 and P-8cheques were given for the security purpose. Per contra, the defenceof the respondent-accused is that Exs.P-7 and P-8 cheques were given https://hcservices.ecourts.gov.in/hcservices/ only to help the appellant-complainant to facilitate him to escapefrom the Income Tax problem. So, the said decision is not applicable.57. Moreover, in Ex.P-14 notice issued on behalf of therespondent-accused, it is stated that, " ... Besides the author ofthe undertaking which has been extracted in the Notice under reply isyour goodself and my Client had to sign the same under the undueinfluence exerted by you.". In Ex.P-13 notice which has been issuedon behalf of the appellant-complainant, it is stated that, "1. on15.12.1997 you issued two post-dated cheques .."and therein, thecheque numbers, dates and the amounts have been mentioned and inEx.P-13 notice issued by the appellant-complainant, it is also statedthat first cheque represented the principal amount and the secondcheque represented the interest thereon as reckoned upto 31.3.1998and in paragraph 6 of Ex.P-13, it is stated that, "6. The above twocheques were in substitution of the two cheques dt. 30.9.1997(Nos.746780 & 746779) for Rs.6,60,000/- and for Rs.5,80,000/-respectively, which you could not honour.". In Ex.P-13, theaverments in Exs.P-3, 5 and 9 have been extracted. In the abovecircumstances, there is no denial of those letters and undertakings.In such circumstances, I am of the view that Exs.P-7 and P-8 chequeswere issued for existing and subsisting legal liability on the dateof issuance of those cheques.58. Learned counsel for the appellant-complainant relied uponthe decision of the Supreme Court reported in AIR 1999 SC 3762 = 1999(7) SCC 510 (K.Bhaskaran Vs. Sankaran Vaidhyan Balan), wherein, theSupreme Court held as follows:"30. It is true, if a judicial magistrate of firstclass were to order compensation to be paid to thecomplainant from out of the fine realised the complainantwill be the loser when the cheque amount exceeded the saidlimit. In such a case a complainant would get only themaximum amount of Rupees five thousand.31. However, the Magistrate in such cases can alleviatethe grievance of the complainant by making resort to Section357(3) of the Code. It is well to remember that this Courthas emphasised the need for making liberal use of thatprovision, (Hari Kishan v. Sukhbir Singh, AIR 1988 SC 2127 :1989 Cri.L.J. 116). No limit is mentioned in the sub-sectionand therefore, a Magistrate can award any sum ascompensation. Of course while fixing the quantum of suchcompensation the Magistrate has to consider what would bethe reasonable amount of compensation payable to thecomplainant. Thus, even if the trial was before a Court of aMagistrate of the First Class in respect of a cheque whichcovers an amount exceeding Rs.5,000/- the Court has powerto award compensation to be paid to the complainant." https://hcservices.ecourts.gov.in/hcservices/

59. Relying on the said decision, learned counsel for theappellant-complainant submitted that the appellant-complainant isentitled to compensation under Section 357(3) Cr.P.C. There is noquarrel over the proposition laid down in the said decision and theappellant-complainant is entitled to compensation in respect of theamount due to him.60. For the reasons stated above:(a) The Criminal Appeal filed by the appellant-complainant, isallowed.(b) The judgment of acquittal passed by first appellate Court isset aside.(c) The conviction passed by the trial Court on the respondent-accused for the offence under Section 138 of the N.I. Act, isconfirmed.(d) The sentence awarded by the trial Court is reduced from oneyear simple imprisonment to three months' simple imprisonment.(e) The fine amount of Rs.1,000/- awarded by the trial Court isconfirmed. (f) Besides that, the respondent-accused is directed to payRs.13,85,920/- (Rupees thirteen lakhs eighty five thousand ninehundred and twenty only) as compensation, to the appellant-complainant.(g) Crl.M.Ps. are closed.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarcsTo1. The III Additional Sessions Judge, Chennai.2. -do- Through The Principal Sessions Judge, Chennai.3. The VII Metropolitan Magistrate, George Town, Chennai. https://hcservices.ecourts.gov.in/hcservices/

4. -do- Through The Chief Metropolitan Magistrate, Chennai.+ 3 c.cs. to Mr. A.N. Thambidurai, Advocate. S.R.No.15704.+ 1 c.c. to Mr. C. Rajan, Advocate. S.R.No.15796.Crl.A.No.294 of 2000KSJ (CO)GSK 15.03.2010.