H.M.NAGARAJU v. N.SONNE GOWDA

the Sessions Court, directing him to pay compensation in a sum of Rs.30,000/- to the complainant.

For the sake of convenience, the parties are referred to by their rank before the trial Court. - 4 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993

Complainant filed a private complaint under Section 200 Cr.P.C against the accused alleging offence punishable under Section 138 of N.I Act, contending that accused is known to him and on 05.01.2013, accused borrowed hand loan of Rs.5,00,000/- to meet his financial difficulties. He agreed to pay interest at the rate of 2% p.m. In support of the said transaction, accused executed an On Demand Promissory Note and Consideration Receipt dated 05.01.2013 and also issued a post dated

04.03.2013 cheque for Rs.5,00,000/-. He assured to pay the interest in cash as and when due. On 04.03.2013, complainant presented the cheque for encashment through his account in Pragati Gramina Bank, Hoskote. However, it was returned dishonoured with endorsement “No such account’’. Complainant got issued a legal Notice dated 20.04.2013. Though it is duly served on the accused, he has neither paid the amount due nor sent any reply and hence the complaint. - 5 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993

After due service of summons, accused appeared and contested the case by pleading not guilty.

To prove the allegations against accused, complainant has examined himself as PW-1. He has examined one witness as PW-2 and got marked Ex.P1 to 44.

During the course of his statement under Section 313 Cr.P.C, accused has denied the incriminating evidence lead by the complainant.

He has also given evidence by examining himself as DW-1, Manager of the drawer Bank as DW-2. He has relied upon Ex.D1 to 9.

Vide judgment and order dated 06.04.2016, the trial Court convicted the accused and sentenced him to fine of Rs.6,10,000/- in default to undergo imprisonment for three months. - 6 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993

Aggrieved by the same, accused filed appeal before the Sessions Court. Vide the impugned Judgment and order dated 24.04.2019, the Sessions Court allowed the appeal filed by the accused and set aside the order of the conviction imposed by the trial Court. However, it directed the accused to pay compensation in a sum of Rs.30,000/- to the complainant.

Complainant has challenged the acquittal of accused, contending that the impugned judgment and order passed by the Sessions Court are not sustainable either in law or on facts. Having regard to the fact that accused admitted that the cheque belongs to him, drawn on his account, maintained with his banker and it bears his signature, the Sessions Court has failed to draw presumption that the cheque in question was issued towards repayment of * any legally recoverable debt and in support of the same the accused has also executed On Demand Promissory Note and Consideration Receipt at Ex.P6 and 7. Despite receipt of legal notice, the accused * Inserted vide Chamber order dated 27.03.2024 - 7 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993 has not sent any reply and the same is not taken into consideration by the Sessions Court. The Sessions Court has failed to take note of the fact that accused has failed to prove his defence and thereby rebut the presumption. On the other hand, the complainant has proved his case beyond reasonable doubt. Viewed from any angle, the impugned judgment and order are not tenable and pray to all the allow the appeal, set aside the judgment and order of the Sessions Court and restore the order of the trial Court.

In support of his arguments, learned counsel for complainant has relied upon the following decision: (i) T.Vasanthkumar Vs. Vijayakumari (T.Vasanthkumar)1

On the other hand, the accused has challenged the order of the Sessions Court, directing him to pay compensation in a sum of Rs.30,000/- to the complainant, contending that when the Sessions Court has come to the conclusion that the allegations against accused are not 1 2015 Crl.LJ 2853 - 8 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993 proved, it erred in directing accused to pay compensation. It conflict with the finding given by it and that the trial Court has erred in convicting the accused. There is no justification for the said order and pray to set aside portion of the judgment and order granting compensation to the complainant.

In support of his arguments learned counsel for accused has relied upon the following decisions: (i) M/s Bridgestone India Pvt. Ltd Vs. Inderpal Singh (M/s Bridgestone India Ltd.)2 (ii) Gopal Krishna Vs. Abdul Bakai (Gopal Krishna)3

Heard elaborate arguments of both sides and perused the record.

Thus, it is the definite case of complainant that accused borrowed a sum of Rs.5,00,000/- from him and issued the subject cheque and also executed an On Demand Promissory Note and Consideration Receipt. When the cheque was presented for realization, it was 2 2015 AIR SCW 6556 3 2019 (2) KLR 284 - 9 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993 dishonoured with endorsement "No such account". After issue of legal notice and on the failure of accused to pay the amount due, complaint is filed. Though accused admit that cheque in question belongs to him, drawn on his account maintained with his banker, he has disputed of having borrowed hand loan of Rs.5,00,000/- from the accused. On the other hand, he has claimed that during 1999, he had borrowed hand loan of Rs.25,000/- from PW-2 Chikkahanumappa, who is a relative of complainant and at that time he had issued the subject cheque, Demand Promissory Note and Consideration Receipt in blank form. Though he repaid the same, the blank cheque, Demand Promissory Note and Consideration Receipt were not returned by Chikkahanumappa. He has got filed the present complaint through complainant who is his relative to make wrongful gain. He has also contended that the said account came to be closed as it was not in operation.

Having regard to the fact that the cheque in question belongs to accused, drawn on his account - 10 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993 maintained with his banker and it bears his signature, presumption under Section 139 of the N.I Act is operating in favour of the complainant, placing the initial burden on the accused to prove that the cheque was not issued towards repayment of any debt or liability and on the other hand to establish the circumstances in which the cheque has reached the hands of the complainant.

However, in John K.Abraham Vs. Simon C. Abraham & Anr (John K.Abraham)4, the Hon'ble Supreme Court held that in order to draw presumption under Sections 118 and 139 of N.I Act, the burden lies on the complainant to show that: (i) She had the requisite funds for advancing the sum of money/loan in question to accused. (ii) The issuance of cheque by accused in support of repayment of money advanced was true (iii) The accused was bound to make payment as had been agreed while issuing cheque in favour of the complainant. 4 (2014) 2 SCC 236 - 11 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993

As held by the Hon'ble Supreme Court in Tedhi Singh Vs Narayan Das Mahant (Tedhi Singh)5, where the accused has failed to send reply to the legal notice, challenging the financial capacity of the complainant, at the first instance, complainant need not prove his financial capacity. However, at the trial if the financial capacity of complainant is challenged, then it is for the complainant to prove the same.

In APS Forex vs Shakti International Fashion Linkers Pvt. Ltd (APS Forex)6, the Hon'ble Supreme Court held that when accused raises issue of financial capacity of complainant, in support of his probable defence, despite presumption operating in favour of complainant regarding legally enforceable debt under Section 139 of N.I. Act, onus shifts again on the complainant to prove his financial capacity by leading evidence, more particularly when it is a case of giving loan by cash and thereafter issue of cheque. 5 2022 SCC OnLine SC 302 6 (2020) 12 SCC 724 - 12 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993

In Vijay Vs. Laxman and Anr (Vijay)7, K.Subramani Vs. K.Damadara Naidu (K.Surbamani)8 and K.Prakashan Vs. P.K.Surenderan (K.Prakashan)9, also the Hon'ble Supreme Court held that the presumption under Section 139 of N.I. Act, is a rebuttable presumption and when accused rebut the same by preponderance of probabilities, it is for the complainant to prove his case beyond reasonable doubt including the financial capacity.

Keeping in mind the ratio in the above decisions of the Hon'ble Supreme Court and having regard to the fact that accused has challenged the financial capacity of complainant, at the outset it is necessary to examine whether the complainant has proved his financial capacity after which it would be necessary for the accused to prove his defence.

With regard to his financial capacity, the complainant has deposed that he is owning 4 acres of ORDER (i) Appeal filed by the complainant under Section 378(4) Cr.P.C. dismissed. (ii) The Criminal Revision Petition filed by the accused under Section397 r/w Section 401 of Cr.P.C. is allowed. (iii) The impugned judgment and order of the Sessions Court in so far as - 20 - CRL.A No. 1246 of 2019 C/W CRL.RP No. 703 of 2019 NC: 2024:KHC:8993 directing accused compensation in a sum of Rs.30,000/- is set aside. The remaining order is confirmed. (iv) The Registry is directed to send back the trial Court as well as Sessions Court records along with copy of this judgment forthwith. Sd/- JUDGE RR List No.: 1 Sl No.: 75