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Sri. C.N. Dinesha vs Smt. C.G. Mallika on 6 April, 2017

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 6TH DAY OF APRIL 2017

BEFORE

THE HON’BLE MRS.JUSTICE RATHNAKALA

CRIMINAL REVISION PETITION NO.536/2014

BETWEEN:

SRI C.N.DINESHA
S/O NANJUNDAPPA
AGED ABOUT 36 YEARS
ELECTRICAL CASSETTE CENTER
RENUKAMBA ROAD
CHANNARAYAPATNA TOWN – 573 116. …PETITIONER

(BY SRI VENKATESH R.BHAGAT, ADV.)

AND:

SMT.C.G.MALLIKA
W/O GANGADHARA POOJARI
AGED ABOUT 39 YEARS
GAYATHRI EXTENSION
THOTADAMANE
CHANNARAYAPATNA TOWN – 573 116. …RESPONDENT

(BY SMT.R.RADHA, ADV.)

THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 R/W 401 OF CR.P.C., PRAYING TO SET ASIDE THE
JUDGMENT AND ORDER DATED 11.7.2014 PASSED BY THE
PRESIDING OFFICER, FAST TRACK COURT, CHANNARAYAPATNA
IN CRL.A. NO.50/2013 AND SET ASIDE THE CONVICTION AND
SENTENCE IN JUDGMENT DATED 8.3.2013 PASSED BY THE
PRINCIPAL CIVIL JUDGE AND JMFC, CHANNARAYAPATNA IN
C.C.NO.696/2006, CONVICTING THE PETITIONER FOR THE
OFFENCE P/U/S 138 OF N.I.ACT AND ORDERING TO UNDERGO
IMPRISONMENT FOR THE PERIOD OF ONE YEAR AND ALSO
DIRECTING HIM TO PAY FINE OF RS.5,000/- AND ALSO
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DIRECTING TO APAY A SUM OF RS.4,00,000/-AS
COMPENSATION TO THE COMPLAINANT AND THE PETITIONER
MAY BE SET AT LIBERTY.

THIS CRIMINAL REVISION PETITION HAVING BEEN
RESERVED ON 30/03/2017 AND COMING ON FOR
PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE
THE FOLLOWING:

ORDER

This revision petition is filed aggrieved by the

judgment of conviction and sentence returned by the trial

court thereby sentencing the revision petitioner/accused

to undergo simple imprisonment for one year and pay a

fine of Rs.5,000/- with default clause in respect of the

offence under Section 138 of the Negotiable Instruments

Act, 1881 (for brevity ‘the Act’) and further, directing him

to pay compensation of Rs.4,00,000/- to the

complainant.

2. The appeal preferred against the said judgment

was dismissed.

3. As the facts unfurl, the complainant issued a

demand notice to the accused alleging that, during
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January 2006, he requested for a financial assistance of

Rs.3,50,000/- and assured to return the amount within

three months; he issued a post-dated cheque dated

16.6.2006 bearing cheque No.003675 drawn on

Corporation Bank, Channarayapatna Branch for a sum

of Rs.3,50,000/-. The complainant presented the cheque

for encashment on 16.6.2006, but it was dishonoured

with the endorsement “insufficient fund”. Despite service

of notice through RPAD, the accused did not repay the

loan amount.

4. On presentation of the complaint, the learned

Trial Court registered the criminal case, accused was

procured and he pleaded not guilty. The complainant

examined herself as PW-1 and marked 7 documents as

Exs.P1 to P7. The statement of the accused under

Section 313 of Cr.P.C. was recorded and he denied the

incriminating evidence appearing against him in the

statements of complainant’s witnesses. Defence evidence
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was let in through the evidence of DWs-1 to 3 and three

documents were marked as Exs.D1 to D3. After giving

audience to both, learned Trial Judge convicted the

accused.

5. Sri.Venkatesh R.Bhagat, learned Counsel

appearing for the petitioner/accused assailing the

judgment of Courts below submits, the amount involved

in the cheque transaction was Rs.3,50,000/-, which is

quite a heavy amount to be passed on without a

documentary proof. The courts below overlooked the

dent in the case of the complainant that she failed to

establish her capacity to pay Rs.3,50,000/- as loan to the

accused, that too, without obtaining any documents from

him. For a naked eye, it is visible that number ‘3’ was

inserted subsequently in the box of the cheque before the

numbers ‘50,000’ to make it Rs.3,50,000/-. The cheque

having been tampered by the complainant, the courts

should not have overlooked this aspect of the matter.

The sentence imposed was excessive though the guilt of
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the accused was not proved. In view of Section 269SS of

the Income Tax Act (‘the I.T.Act’ for brevity), the loan

transaction above Rs.20,000/- is to be made by way of

cheque only, in the light of the judgment of the Apex

Court in the matter of Krishna Janardhan Bhat -vs-

Dattatraya G.Hegde reported in AIR 2008 SC 1325.

Hence loan transaction by way of cash in this case is

vitiated. The accused not only has rebutted the case of

the complainant but also was able to dislodge the initial

presumption arising under Sections 118 and 139 of the

Act. The accused in his reply to the legal notice issued

on 23.6.2006 had asserted that, he had issued a cheque

for Rs.50,000/- only and said cheque was tampered by

the complainant; he had called upon the complainant to

get another cheque from him for getting replacement of

the altered cheque.

Learned Counsel continues, the courts below failed

to consider above aspects of the matter and convicted

him solely on the ground that he has taken contradictory
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stands at different stages; but being an accused, he is

entitled to take such stands and is not liable to prove his

defence beyond reasonable doubt. Standard of proof to

prove defence on the part of accused is on preponderance

of probability. In the above circumstance, judgment of

Courts below is erroneous and illegal.

6. In reply, Smt.Radha, learned Counsel for

respondent/complainant seeks to sustain the judgment

of Courts below thus:

The petitioner by raising contradictory defence

failed to tilt the presumption arising under Sections 118

and 139 of the Act in favour of the complainant. To

establish her financial capacity to lend Rs.3,50,000/-,

the complainant had produced Ex.P7/registered sale

deed dated 5.5.2005 under which she along with her

husband had sold the property for a sum of

Rs.5,75,000/- and had received the sale consideration in

cash. The cheque was not dishonoured on the ground of

not tallying but on the ground of insufficient funds. The
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accused did not make any attempt to subject the cheque

for scientific examination. Much against his stand in his

reply notice to the effect that he is not the

owner/Proprietor/partner of the shop, during the trial,

he took a defence that the complainant had matrimonial

dispute with her husband and insisted him to marry her,

which was refused by him and the complainant used to

sit in his shop during lunch hours alone and at that

time, she has stolen the cheque, etc. During the

examination-in-chief, he stated that the complainant

threatened him during 2005 of dragging him to the

criminal case by using the cheque signed by him, if he

does not agree to marry her. That confirms his

knowledge about possibility of criminal prosecution on

the basis of cheque, in the year 2005 itself. Till issuing

legal notice during 2006, no step was taken by him in

respect of his stolen cheque. Another fold of his defence

was, he along with others had formed an Association for

chit business and in that connection, he had issued
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cheque to DW-2 and DW-2 returned the cheque after the

transaction was closed and the same was stolen by the

complainant. But these facts were introduced during the

trial stage, which were not at all there in his reply notice.

The courts below on elaborate discussion of his defence

have not found merit in his case and rightly convicted

him and dismissed his appeal. No case to attract the

revisional jurisdiction of this Court is made out by the

petitioner. Hence, the revision is liable to be dismissed.

7. In the light of above rival submissions, the lower

court records and the judgment impugned are perused.

8. Strong stress is placed on the following points:

(1) The complainant did not establish her financial
capacity to lend Rs.3,50,000/- as loan to the
accused;

(2) It is highly improbable that such a big sum is
lent without collateral security or documentary
proof; moreover, any cash transaction beyond
Rs.20,000/- is punishable under Section 271D
of the I.T.Act;

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(3) For a naked eye itself, the cheque in question is
tampered;

(4) Being an accused, he need not establish his
case beyond doubt. The statutory
presumptions arising under Sections 119 and
139 of the Act since rebuttal, his case should
have been believed as reasonably probable.

9. To commence from the premise of admitted facts,

the parties were known to each other. If the case of the

accused is to be accepted, though the complainant was a

married lady, he had intimate relationship with her. On

his own showing in the year 2005 itself, cheque bearing

his signature was in the possession of the complainant

and she had indicated to implicate him in a criminal case

by using the said cheque. Even in his reply notice to the

demand notice issued by the complainant, he alleged

that cheque issued by him for a sum of Rs.50,000/- is

tampered. Despite the same, he did not take any action

against the complainant in respect of the said cheque.

The complainant had produced the certified copy of the

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sale deed/Ex.P7 wherein she along with her husband

and on behalf of their minor children had sold a

immovable property for consideration of Rs.5,75,000/-

vide registered sale deed dated 5.5.2005. The alleged

loan transaction since is of January 2006 being in close

proximity in time to the date of sale of her property, the

complainant had successfully established her financial

capacity to lend Rs.3,50,000/-. No acceptable evidence

was brought on record to the effect that the sale amount

did not reach the complainant. Thus, financial capacity

of the complainant was accepted by the courts below.

10. The defence that parties were in intimate

relationship with each other coincides with the case of

complainant that without getting documentation, the

amount was lent to the accused. Of course, for a naked

eye, the first number ‘3’ appears to have been written

with different pen pressure and ink. But at the same

time, it is to be noted that author of the cheque while

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writing the figures in the box, why would he leave exact

space, so that at a later stage, someone can implant

figure ‘3’ before ‘50,000’. Having admitted the fact that

the cheque bears his signature and issued from his

account, the complainant never made attempt to seek

scientific evidence to disprove the case of the

complainant. It was the case of the complainant that the

entire cheque is in the handwriting of the accused. It

was never the case of the complainant that the accused

wrote the cheque in her presence. Thus, the probability

of the complainant tampering the cheque does not find a

base.

11. Coming to the contention that since the alleged

loan transaction was not by way of cash, it is violative of

Section 269SS punishable under Section 271D of the

I.T.Act – said statutory provisions read thus:

“269SS. Mode of taking or
accepting certain loans and deposits:- No
person shall, after the 30th day of June, 1984,
take or accept from any other person

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(hereafter in this section referred to as the
depositor), any loan or deposit otherwise than
by an account payee cheque or account payee
bank draft [or use of electronic clearing
system through a bank account] if, –

(a) the amount of such loan or deposit
or the aggregate amount of such
loan and deposit; or

(b) on the date of taking or accepting
such loan or deposit, any loan or
deposit taken or accepted earlier by
such person from the depositor is
remaining unpaid (whether
repayment has fallen due or not),
the amount or the aggregate amount
remaining unpaid; or

(c) the amount or the aggregate amount
referred to in clause (a) together
with the amount or the aggregate
amount referred to in clause (b), is
[twenty] thousand rupees or more.

Provided . . . . . .”

“271D. Penalty for failure to comply with
the provisions of Section 269-SS.- (1) If a
person takes or accepts any loan or deposit in
contravention of the provisions of section 269-
SS, he shall be liable to pay, by way of
penalty, a sum equal to the amount of the loan
or deposit so taken or accepted.

(2) Any penalty impossible under sub-section
(1) shall be imposed by the Joint
Commissioner.”

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12. It is clear from the above that the loanee, who

receives loan amount by way of cash above Rs.20,000/-

is liable to be penalized. There is no corresponding

provision under the N.I.Act, which would vitiate the entire

loan transaction for dealing with cash amount above

Rs.20,000/-. The culpability of offence under Section

138 of the Act will not freeze for the reason of violation of

Section 269SS of the I.T.Act and nothing prevents the

operation of the statutory presumption under Sections

118 and 139 of the Act. The accused in his attempt to

dislodge the initial presumption arising out of the

evidence of complainant produced the order sheet

pertaining to the proceedings under Section 13-B of the

Hindu Marriage Act filed by the complainant and her

husband and also the copy of the joint petition filed

therein. The petition for divorce by mutual consent was

filed on 30.5.2005 and it was disposed of on 12.9.2006,

since the complainant was not willing for divorce by

mutual consent. A cheque said to have been issued by

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the accused in respect of a chit transaction allegedly

along with that of the cheque in question in this case was

also placed by him. But this piece of evidence fail to

choke the presumption flowing in favour of holder of the

cheque after initial burden was discharged by the

complainant by her evidence. The eventuality was,

statutory presumption under Section 118(a) of the Act

that cheque was issued towards consideration received

and next presumption under Section 139 of the Act that

there existed a legally enforceable debt came into play.

13. In Krishna Janardhan Bhat’s case (supra) at

para-34 it was observed thus:

“34. We are not oblivious of the fact that the
said provision has been inserted to regulate
the growing business, trade, commerce and
industrial activities of the country and the strict
liability to promote greater vigilance in financial
matters and to safeguard the faith of the
creditor in the drawer of the cheque which is
essential to the economic life of a developing
country like India. This, however, shall not
mean that the courts shall put a blind eye to
the ground realities. Statute mandates raising
of presumption but it stops at that. It does not

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say how presumption drawn should be held to
have rebutted. Other important principles of
legal jurisprudence, namely presumption of
innocence as human rights and the doctrine of
reverse burden introduced by Section 139
should be delicately balanced. Such balancing
acts, indisputably would largely depend upon
the factual matrix of each case, the materials
brought on record and having regard to legal
principles governing the same.”

Even balancing those two aspects i.e., innocence of the

accused on one side and the statutory presumptions

arising under Sections 139 and 119 of the Act on the

other side, the needle still tills towards statutory

presumption in this case. In the case (supra) in the

earlier paragraphs of discussion, it was held to the effect

that existence of legally recoverable debt is not a matter

of presumption under Section 139 of the Act, it merely

raises a presumption in favour of a holder of the cheque

that the same has been issued for discharge of any debt

or liability. The said proposition was overruled by a later

judgment in the case of Rangappa -vs- Sri Mohan

reported in (2010) 11 SCC 441. It was held that above

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principle in Krishna Janardhan Bhat (supra) is in

conflict with the statutory provisions as well as

established line of precedents of the Apex Court. After

examining several line of precedents at paras-26 to 28, it

was observed thus:

“26. In light of these extracts, we are in
agreement with the respondent claimant that
the presumption mandated by Section 139 of
the Act does indeed include the existence of a
legally enforceable debt or liability. To that
extent, the impugned observations in Krishna
Janardhan Bhat may not be correct. However,
this does not in any way cast doubt on the
correctness of the decision in that case since it
was based on the specific facts and
circumstances therein. As noted in the
citations, this is of course in the nature of a
rebuttable presumption and it is open to the
accused to raise a defence wherein the
existence of a legally enforceable debt or
liability can be contested. However, there can
be no doubt that there is an initial presumption
which favours the complainant.

27. Section 139 of the Act is an example
of a reverse onus clause that has been
included in furtherance of the legislative
objective of improving the credibility of
negotiable instruments. While Section 138 of
the Act specifies a strong criminal remedy in
relation to the dishonour of cheques, the
rebuttable presumption under Section 139 is a

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device to prevent undue delay in the course of
litigation. However, it must be remembered
that the offence made punishable by Section
138 can be better described as a regulatory
offence since the bouncing of a cheque is
largely in the nature of a civil wrong whose
impact is usually confined to the private parties
involved in commercial transactions. In such a
scenario, the test of proportionality should
guide the construction and interpretation of
reverse onus clauses and the defendant-
accused cannot be expected to discharge an
unduly high standard or proof.

28. In the absence of compelling
justifications, reverse onus clauses usually
impose an evidentiary burden and not a
persuasive burden. Keeping this in view, it is a
settled position that when an accused has to
rebut the presumption under Section 139, the
standard of proof for doing so is that of
“preponderance of probabilities”. Therefore, if
the accused is able to raise a probable defence
which creates doubts about the existence of a
legally enforceable debt or liability, the
prosecution can fail. As clarified in the
citations, the accused can rely on the materials
submitted by the complainant in order to raise
such a defence and it is conceivable that in
some cases the accused may not need to
adduce evidence of his/her own”.

14. In the light of the above firm position of law on

facts, it stands clear that the accused failed to dislodge

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the statutory presumption under Section 118(a) of the

Act that he had issued the cheque for consideration;

further, the presumption under Section 139 of the Act

that the cheque was issued towards discharge of legally

recoverable debt could not be shaken. The courts below

have rightly found him guilty of the offence under Section

138 of the Act and the grounds urged in the revision

petition lacks merits.

The revision petition is rejected.

Sd/-

JUDGE

KNM/-

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