SMT LATHA B M v. SRI N NAGESH

Learned Judge in the First Appellate Court after securing the records, heard the arguments of the parties in detail and on re-appreciation of the material evidence on record, dismissed the appeal of the accused by considered judgment dated 31.08.2023.

Being further aggrieved by the same, accused is before this court.

Sri Prashant U.T., learned counsel for the revision petitioner reiterating the grounds urged in the revision petition would contend that the transaction between the complainant and accused is only in a sum of Rs.1,00,000/- being borrowed - 6 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR by the accused and in that regard a cheque was issued by the accused who is working as a school teacher as security which has been misused by the complainant by filling up sum of Rs.7,00,000/- in the cheque.

Therefore, the very cheque itself is not valid in view of Section 20 of the Negotiable Instruments Act, which has not been considered by both the Courts in right perspective and wrongly convicted the accused resulting in miscarriage of justice and thus, sought for allowing the revision of petition.

In support of his contentions learned counsel for the revision petitioner has placed reliance on the judgment of the Co-ordinate Bench of this Court in the case of K. Yashoda vs. K. Venkatesh in Crl.A.No.2792/2013 and decision rendered by the Hon'ble Apex Court in the case of Basalingappa vs. Mudibasappa, reported in (2019) 5 SCC 418 and another judgment in the case of Murugan vs M.K. Karunagaran, in SLP No.7618/2023 and yet another judgment of the Hon'ble Apex Court in the case of Mandvi Cooperative Bank Limited vs Nimesh B. Thakore, reported in (2010) SCC 83 and lastly Rajaram vs Maruthachalam, reported in (2023) 16 SCC

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Per contra, Sri S. Kasinagalingam, learned counsel for the respondent supports the impugned judgments.

Having heard the arguments of both sides, this Court perused the material on record meticulously.

On such perusal of the material on record, there is no dispute that Ex.P.1 cheque belongs to accused and signature of the accused at Ex.P.1(a).

According to the accused, the transaction between the accused and complainant is Rs.1,00,000/- loan amount obtained by accused from the complainant. In that regard, Ex.P.1 came to be issued by the accused who is a school teacher.

However, with ill motive, complainant got filled the blank cheque in a sum of Rs.7,00,000/- and thus, Ex.P.1 did not carry legally recoverable debt.

To substantiate the said contention, oral evidence of D.W.1 and D.W.2 is relied upon.

Learned counsel for the revision petitioner has tried to justify the stand taken by the accused by referring to Section 20 of the Negotiable Instruments Act. For ready reference said provision of law is culled out hereunder: - 8 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR

20. Inchoate stamped instruments.-Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder.

Sri Prashanth U.T., learned counsel would contend that learned Trial Judge and learned Judge in the First Appellate Court did not consider the effect of Section 20 of the Negotiable Instruments Act insofar as appreciating the defence of the accused and proceeded to raise the presumption under Section 139 of the Negotiable Instruments Act in a mechanical manner.

In that regard, he has placed reliance on the Judgment of the Co-ordinate Bench of this Court in the case of - 9 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR K. Yashoda vs K. Venkatesh in Crl.A.No.2792/2013, dated

25.06.2014.

In the said Judgment, learned counsel drew the attention of this Court to the discussion carried out by the learned Judge in the Co-ordinate Bench in paragraph number 7 which reads as under: “7. The complaint averments are also supported by the evidence of complainant, which discloses that the accused had borrowed a hand loan of Rs.95,000/- from the complainant on 06.08.2010 for his needs and towards the loan amount the accused had issued a post- dated cheque on 29.12.2010 bearing No.599246 for a sum of Rs.95,000/- dated 30.12.2010. When the said cheque was presented for collection through her Bank, the same came to be dishonoured due to ‘Insufficiency of Funds’. After issuance of notice the accused demanding repayment of said cheque amount, as the accused has neither paid the cheque amount nor replied the said notice, thereby the complainant has filed a complaint before the Court. The said contention has been denied by accused.

Further, he has placed reliance on the judgment of Basalingappa supra to question the lending capacity of the complainant. Similar is the principle of law enunciated in the remaining decisions that have been relied on by the counsel for the petitioner.

Pertinently, all the Negotiable Instruments carry statutory presumption under Section 118 of the Negotiable Instruments Act.

The general presumptions under Section 118 of the Negotiable Instruments Act is in respect of all the Negotiable Instruments. For ready reference Section 118 of the Negotiable Instruments Act is culled out hereunder:

118. Presumptions as to negotiable instruments.— Until the contrary is proved, the following presumptions shall be made:— (a) of consideration — that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was - 13 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR accepted, indorsed, negotiated or transferred for consideration; (b) as to date — that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance — that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d)as to time of transfer —that every transfer of a negotiable instrument was made before maturity; (e) as to order of indorsements — that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon; (f) as to stamps — that a lost promissory note, bill of exchange or cheque was duly stamped; (g) that holder is a holder in due course — that the holder of a negotiable instrument is a holder in due course: Provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.

If the said presumption itself was sufficient, there was no necessity for the legislature to carve out a distinct - 14 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR statutory presumption in favour of the complainant under Section 139 of the Negotiable Instruments Act which reads as under:

139. Presumption in favour of holder.— It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.

On conjoint reading of Section 118 and Section 139 of Negotiable Instruments Act, one can safely infer that apart from the presumption that has been available to a complainant under Section 118 of the Negotiable Instruments Act in respect of all the Negotiable Instruments (cheque is also a Negotiable Instruments), the distinct presumption that is available under Section 139 of the Negotiable Investment Act is that the cheque is issued by the accused for legally recoverable debt or other liability. Of-course, both the presumptions are rebuttable in nature.

Therefore, the presumption under Section 139 of Negotiable Instruments Act is to be raised by the learned Trial Magistrate as it is a statutory presumption, when foundational - 15 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR facts are placed before the Court, which would be sufficient enough to discharge the initial burden cast on the complainant.

In the case on hand, complainant has discharged such initial burden by deposing before the Court that there was a transaction between the accused and the complainant wherein she has borrowed Rs.7,00,000/- and towards repayment, the cheque in question marked at Ex.P.1 came to be issued.

The transaction between the complainant and accused is also not in dispute inasmuch as accused has taken the contention that loan transaction was only to the tune of Rs.1,00,000/- and a blank cheque has been misused by the complainant by filling it up in a sum of Rs.7,00,000/-.

Thus, learned Trial Magistrate was justified in raising the initial presumption in favour of the complainant by resorting to Section 139 of the Negotiable Instruments Act.

The principles of law enunciated by the Hon'ble Apex Court in the case of Rangappa vs. Mohan, reported in (2010) 11 SCC 441 and Rajesh Jain vs Ajay Singh reported in (2023) 10 SCC 148 respectively would be squarely applicable in this regard. So also principles of law in Sanjabij - 16 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR Tari vs. Kishore S. Borcar and another reported in 2025 SCC OnLine SC 2069.

To rebut such a presumption available to the complainant in the case on hand, accused got herself examined as D.W.1 and one witness by name E.Maheshwara as D.W.2.

In the cross examination of D.W.1, she admits that she received the notice and signature found in Ex.P.6 is that of her signature.

Pertinently, she is a school teacher. Her husband is examined as D.W.2 is an employee in Income Tax Department.

She has specifically answered that she has not taken any action against the complainant against the alleged misuse of the cheque.

In the cross examination of D.W.2 he admits that complainant is his friend and not a friend to his wife.

He specifically admits that there was no difficulty to send a reply to the legal notice. He also specifically admits that there is no document to place on record about the borrowing of Rs.1,00,000/-. But, he has volunteered to say that on mutual trust the said amount was borrowed from the complainant. - 17 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR

These material evidence placed on record was considered in a cumulative manner by the Trial Magistrate in the light of the presumption available to the complainant under Section 139 of the Negotiable Instruments Act and has recorded a categorical finding that the material evidence in the form of oral testimony of D.W.1 and D.W.2 are nothing but husband and wife would not be sufficient enough to rebut the presumption available to the complainant.

Thus, in the absence of rebuttal evidence and when no positive action has been taken by the accused for the alleged misuse of the cheque, the defence is nothing but illusory and moonshine. Such a defence cannot be permitted to be allowed as against the strong legal presumption carved out by the legislature only in respect of a distinct offence under Section 138 of the Negotiable Instruments Act.

Thus, the defence of misuse of the cheque having been not established by placing cogent evidence on record, the conviction order passed by the learned Trial Magistrate, confirmed by the First Appellate Court needs no interference, that too in the revisional Jurisdiction. - 18 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR

Insofar as lending capacity of the complainant is concerned, though Basalingappa and other judgments, cited supra has been pressed into service by the counsel for the petitioner, in view of the authoritative principles of law laid down in the case of Rajesh Jain vs Ajay Singh in paragraphs 45 to 61 which reads as under: “Our analysis

45. It is against the backdrop of the aforestated legal principles that we proceed to consider if there is any interference that is called for. Point (1)

46. The accused has neither replied to the demand notice nor has led any rebuttal evidence in support of his case. The case set up by him needs to be drawn from the suggestions put during the cross-examination and from his reply given in the statement recorded under Section 313CrPC.

47. It has been suggested to the complainant that the accused had not borrowed any loan from him. It was suggested to him that no legal notice had been issued on dishonour of cheque. It was further suggested that the complainant has misused a blank cheque — the said cheque having been obtained from his employee, Gita Sunar, who also happens to be the sister-in-law of the accused. It was suggested that Gita Sunar had some financial transactions with the complainant and towards - 19 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR that end, he had received a blank cheque (signed by the accused) from Gita Sunar and misused it. It is pertinent to note that the suggestions mentioned above were denied by the complainant.

48. In her cross-examination, Gita Sunar (examined on behalf of the complainant as CW 3) has denied the suggestion that she has misused a blank cheque in collusion with the complainant. She has also denied the suggestion that a blank cheque was given to her by the brother-in-law of the accused.

49. In the statement recorded under Section 313CrPC, the first incriminating circumstance put to the accused was as follows: “It has come in evidence against you that you along with your wife, Jyoti visited the plaintiff an Orthopaedic Surgeon on 1-3-2014, and availed friendly loan from plaintiff from time to time through sister of Jyoti, namely, Gita Sunar working there, on the plea of need for family requirements, and promised to pay up the “interest moneys as also the entire principal amounts, what do you have to say about this?” He responded to said suggestion/question as follows: “I had taken some money from the plaintiff. I have taken Rupees twenty lakhs from the plaintiff.” (emphasis supplied)

50. When it was put to him that he has reneged on his promise to pay on several occasions and sought to avoid the complainant by changing his telephone number, the - 20 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR accused denies that he had changed his number but however, admits that he could not pay the entire sum at one go. He further admits that he did pay some interest but could not pay the remaining sum since the complainant would increase the outstanding amount every month by one lakh rupees and had been demanding higher amount. As regards the circumstance of return of the cheque, the legal notice and non-reply to the demand notice, he admits of having received the demand notice. He states that he had no knowledge about the dishonour of his cheque since his cheque book and bank passbook were kept in his sister-in-law's house.

51. On an overall consideration of the record, we find that the case set up by the accused is thoroughly riddled with contradictions. It is apparent on the face of the record that there is not the slightest of credibility perceivable in the defence set up by the accused.

52. In his Section 313CrPC statements, he admits of having taken a loan of Rs 20 lakhs and having repaid some interest but in the cross-examination of the complainant, a suggestion is made that the accused had no financial dealings with the complainant. Whereas in his Section 313CrPC statement, the accused states that his cheque book and passbook is kept in his sister-in-law's house, yet, in the cross-examination of Gita Sunar, the accused's sister-in-law, no suggestion is made to that effect. In fact, she has plainly denied that any blank cheque was given to her by her brother-in-law. We find it highly unnatural to presume that the accused would leave his signed cheque leaves and passbook in his sister-in- - 21 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR law's house. Even if he did, there is no reason(s) or motive attributed on the part of his sister-in-law, for her to collude along with the complainant. The accused has also not explained as to why he has not set up his defence at the earliest point, that is, at the stage of receiving the demand notice, even though he admits having received the demand notice in his Section 313CrPC statement, yet he makes a suggestion to the complainant in his cross- examination that no legal notice had been issued. The theory of “blank cheque” being misused has been suggested, only to be denied by both, the complainant and Gita Sunar, CW 3. No action has been taken by way of registering a police complaint in order to prosecute the alleged illegal conduct of his blank cheque having been misused by CW 3.

53. Nothing significant has been elicited in the cross- examination of the complainant to raise any suspicion in the case set up by the complainant. Other than some minor inconsistencies, the case of the complainant has been consistent throughout as can be noticed from a perusal of the complainant, demand notice and affidavit evidence. In fact, the signature on the cheque having not been disputed, and the presumption under Sections 118 and 139 having taken effect, the complainant's case stood satisfied every ingredient necessary for sustaining a conviction under Section 138. The case of the defence was limited only to the issue as to whether the cheque had been issued in discharge of a debt/liability. The accused having miserably failed to discharge his evidential burden, that fact will have to be taken to be proved by force of the - 22 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR presumption, without requiring anything more from the complainant.

54. As rightly contended by the appellant, there is a fundamental flaw in the way both the courts below have proceeded to appreciate the evidence on record. Once the presumption under Section 139 was given effect to, the courts ought to have proceeded on the premise that the cheque was, indeed, issued in discharge of a debt/liability. The entire focus would then necessarily have to shift on the case set up by the accused, since the activation of the presumption has the effect of shifting the evidential burden on the accused. The nature of inquiry would then be to see whether the accused has discharged his onus of rebutting the presumption. If he fails to do so, the court can straightaway proceed to convict him, subject to satisfaction of the other ingredients of Section 138. If the court finds that the evidential burden placed on the accused has been discharged, the complainant would be expected to prove the said fact independently, without taking aid of the presumption. The court would then take an overall view based on the evidence on record and decide accordingly.

55. At the stage when the courts concluded that the signature had been admitted, the court ought to have inquired into either of the two questions (depending on the method in which the accused has chosen to rebut the presumption) : Has the accused led any defence evidence to prove and conclusively establish that there existed no debt/liability at the time of issuance of cheque? In the absence of rebuttal evidence being led the inquiry would - 23 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR entail : Has the accused proved the non-existence of debt/liability by a preponderance of probabilities by referring to the “particular circumstances of the case”?

56. The perversity in the approach of the trial court is noticeable from the way it proceeded to frame a question at trial. According to the trial court, the question to be decided was “whether a legally valid and enforceable debt existed qua the complainant and the cheque in question (Ext. CW I/A) was issued in discharge of said liability/debt”. When the initial framing of the question itself being erroneous, one cannot expect the outcome to be right. The onus instead of being fixed on the accused has been fixed on the complainant. Lack of proper understanding of the nature of the presumption in Section 139 and its effect has resulted in an erroneous order being passed.

57. Einstein had famously said: “If I had an hour to solve a problem, I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.” Exaggerated as it may sound, he is believed to have suggested that quality of the solution one generates is directly proportionate to one's ability to identify the problem. A well-defined problem often contains its own solution within it.

58. Drawing from Einstein's quote, if the issue had been properly framed after careful thought and application of judicial mind, and the onus correctly fixed, perhaps, the outcome at trial would have been very different and this - 24 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR litigation might not have travelled all the way up to this Court.

59. Coming to the finding of the High Court, we find again, there has been fundamental error in the approach with which the High Court has proceeded to consider the evidence on record. In para 6 of the impugned order [Rajesh Jain v. Ajay Singh, 2022 SCC OnLine P&H 4244] , the High Court finds that the complainant has proved the issuance of cheque, which means that the presumption would come into immediate effect. In para 13, it rightly observes that the burden is on the accused to rebut such presumption. In the very next paragraph, it finds that the accused has rebutted the presumption by putting questions the complainant and explaining circumstances under Section 313CrPC.

60. There elucidation of material circumstances/basis on which the Court reached such conclusion. It notes the allegation made in the complaint that the complainant had given the loan on 1-3-2014 and on several dates thereafter. Based on this averment, the High Court [Rajesh Jain v. Ajay Singh, 2022 SCC OnLine P&H 4244] rather shockingly concludes that : (Rajesh Jain case [Rajesh Jain v. Ajay Singh, 2022 SCC OnLine P&H 4244] , SCC OnLine P&H para 14) “14. … If the complainant had given loans on various dates, he must have maintained some document qua that, because it was not a one-time loan but loan along with interest accrued on the principal, which made the amount to Rs 6,95,204.” - 25 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR Therefore, according to the High Court, “the burden was primarily on the complainant to prove the debt amount”.

61. The fundamental error in the approach lies in the fact that the High Court has questioned the want of evidence on the part of the complainant in order to support his allegation of having extended loan to the accused, when it ought to have instead concerned itself with the case set up by the accused and whether he had discharged his evidential burden by proving that there existed no debt/liability at the time of issuance of cheque.”

Again in the case of Sanjabij Tari supra wherein, it has been held as under: “15. In the present case, the cheque in question has admittedly been signed by respondent No. 1-accused. This court is of the view that once the execution of the cheque is admitted, the presumption under section 118 of the Negotiable Instruments Act, that the cheque in question was drawn for consideration and presumption under section 139 of the Negotiable Instruments Act, that the holder of the cheque received the said cheque in discharge of a legally enforceable debt or liability arise against the accused. It is pertinent to mention that observations to the contrary by a two- judge Bench in Krishna Janardhan Bhat v. Dattatraya G. Hegde [(2008) 141 Comp Cas 665 (SC); (2008) 4 SCC 54; (2008) 2 SCC (Cri) 166; 2008 SCC OnLine SC

106.] have been set aside by a three-judge Bench in - 26 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR Rangappa v. Sri Mohan [(2010) 11 SCC 441; (2010) 4 SCC (Civ) 477; (2011) 1 SCC (Cri) 184; 2010 SCC OnLine SC 583.]

16. This court is further of the view that by creating this presumption, the law reinforces the reliability of cheques as a mode of payment in commercial transactions.

17. Needless to mention the presumption contemplated under section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the initial onus of proving that the cheque is not in discharge of any debt or other liability is on the accused/drawer cheque (see : Bir Singh v. Mukesh Kumar [(2019) 5 Comp Cas-OL 560 (SC); (2019) 4 SCC 197; (2019) 2 SCC (Cri) 40; (2019) 2 SCC (Civ) 309; 2019 SCC OnLine SC 138.] .

18. The judgment of this court in APS Forex Services P. Ltd. v. Shakti International Fashion Linkers [(2020) 12 SCC 724; (2020) 4 SCC (Cri) 505; 2020 SCC OnLine SC

193.] relied upon by learned counsel for respondent No. 1-accused only says that the presumption under section 139 of the Negotiable Instruments Act is rebuttable and when the same is rebutted, the onus would shift back to the complainant to prove his financial capacity, more particularly, when it is a case of giving loan by cash. This judgment nowhere states, as was sought to be contended by learned counsel for respondent No. 1- - 27 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR accused, that in cases of dishonour of cheques, in lieu of cash loans, the presumption under section 139 of the Negotiable Instruments Act does not arise. Approach of some courts below to not give effect to the presumptions under sections 118 and 139 of the Negotiable Instruments Act, is contrary to mandate of Parliament

21. This court also takes judicial notice of the fact that some district courts and some High Courts are not giving effect to the presumptions incorporated in sections 118 and 139 of the Negotiable Instruments Act, and are treating the proceedings under the Negotiable Instruments Act, as another civil recovery proceedings and are directing the complainant to prove the antecedent debt or liability. This court is of the view that such an approach is not only prolonging the trial but is also contrary to the mandate of Parliament, namely, that the drawer and the bank must honour the cheque, otherwise, in cheques would be irreparably damaged. No documents and/or evidence led with regard to the financial incapacity of the appellant.

22. It is pertinent to mention that in the present case, respondent No. 1- accused has filed no documents and/or examined any independent witness or led any evidence with regard to the financial incapacity of the - 28 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR appellant- complainant to advance the question. For instance, this court in Rajaram v. Maruthachalam [(2023) 16 SCC 125] has held that the presumptions under sections 118 and 139 of the Negotiable Instruments Act, can be rebutted by the accused examining the Income-tax Officer and bank officials of the complainant/drawee. When the evidence of PW-1 is read in its entirety, it cannot be said that the appellant-complainant had no wherewithal to advance loan.

27. It is well settled that in exercise of revisional jurisdiction, the High Court does not, in the absence of perversity, upset concurrent factual findings (see : Bir Singh v. Mukesh Kumar [(2019) 4 SCC 197]). This court is of the view that it is not for the revisional court to re-analyse and re-interpret the evidence on record. As held by this court in Southern Sales and Services v. Sauermilch Design and Handels GmbH [(2008) 14 SCC 457], it is a well-established principle of law that the revisional court will not interfere, even if a wrong order is passed by a court having jurisdiction, in the absence of a jurisdictional error.”

In view of authoritative principles of law laid down by Apex Court in Rajesh Jain and Sarjabij Tari decisions relied on by accused is of no avail in accepting his defence. - 29 - NC: 2026:KHC:17901 CRL.RP No. 1293 of 2023 HC-KAR

Thus, in the background of above legal paragraph, viewed from any angle, this Court does not find any grounds whatsoever much less good grounds to interfere with the order of the learned Trial Magistrate, confirmed by the First Appellate Court.