CRLA/1263/2009 of L.Narayana Vs V.Shanmukha Chary on 30 December 2014

JUDGMENT:

The complainant is the appellant and the accused is therespondent. This appeal is maintained by the complainant against theJudgment, dated 21.01.2009, passed by the II Additional MetropolitanSessions Judge, Hyderabad, in Criminal Appeal No.206 of 2008,reversing the conviction judgment in C.C. No.305 of 2003, dated27.01.2008, passed by the VI Additional Chief Metropolitan Magistrate,Hyderabad.

02. The case of the complainant in nutshell is that in the privatecomplaint case for the offence under Section 138 of NegotiableInstrument Act, 1881 (for short, ‘the Act’), that was taken cognizanceafter recording the sworn statement of the complainant by the trialcourt, securing the presence of accused and supplying copies ofdocuments, after examination under Section 251 of the Code ofCriminal Procedure, 1973 (for short, Cr.P.C.), the accused pleaded notguilty and put the parties to trial, also with reference to the evidence ofthe complainant as P.W.1 based on Exs.P.1 to P.11 and from thecross-examination of the complainant – P.W.1 by accused inconfronting with Ex.D.1, the version of the complainant was that theaccused is known to him, a friend of him introduced the accused for thepast 15 years prior to the filing of complainant and out of thatacquaintance when the accused approached the complainant for theneed of money from no money immediately available withcomplainant, he has taken to one Mr. G. Prabhu, who got fundsobtained voluntary retirement of service from V.S.T. and causearranged Rs.2,00,000/- through Prabhu to the accused covered by pro-note - Ex.D.1, dated 20.07.2000, and accused also deposited the titledeeds of the property of the wife of the accused towards security andthe complainant stood as guarantor to the said lending to accusedarranged by him and the rate of interest was Rs.2.50ps. per month and the accused paid only two instalments to the said Prabhu and latercommitted default of payment of Rs.5,000/- payable every month and itis the complainant, who stood as guarantor to the said Prabhu onbehalf of the accused, paid 28 instalments @ Rs.5,000/- per month upto December, 2002, in total he paid Rs.1,40,000/- and for discharge ofthe same, the accused issued Ex.P.1 – pro-note, dated 21.12.2002, infavour of the complainant and when demanded the said amount, laterthe accused issued Ex.P.2 – cheque bearing No.954833 forRs.1,00,000/- on 28.01.2003 and Ex.P.3 – cheque bearing No.954832for Rs.90,750/- on 13.02.2003, and that when the same werepresented, returned dishonoured twice vide Exs.P.4 to P.7 - chequepresentation and return memos respectively last one dated 17.03.2003and therefrom issued Ex.P.8 – legal notice covered by Ex.P.9 – postalreceipt, dated 29.03.2003 and also under Ex.P.10 certificate of postingof even date that was received and acknowledged registered letter byaccused under Ex.P.11 and neither paid nor replied and from thecause of action accrued maintained the complaint that the accused isliable for punishment according to law.

03. The defence of the accused in cross-examination of P.W.1was that he never borrowed any amount from the said Prabhu throughthe complainant much less Rs.2,00,000/- allegedly on 20.07.2000 bykeeping the letter as guarantor and not paid the so called monthlyinstalments or he executed Ex.P.1 – pro-note in favour of thecomplainant much less issued Exs.P.2 and P.3 - cheques for itsliquidation and the complainant was doing private chit business andarranging bank loans and other loans to the required persons in needof money and he obtained three pro-notes and five blank cheques andExs.P.1 to P.3 are one of those, by its misuse by complainant, thecomplainant filed the private complaint and there is no legallyenforceable debt or other liability under the cheques and it is a falseclaim laid by complainant.

The trial court disbelieved the said defence of accused and

The trial court disbelieved the said defence of accused and convicted him and the first appellate court revered the same. It isimpugning the first appellate court’s reversal of the trial court’sconviction judgment by acquitting the accused, the complainantmaintained the present criminal appeal with contentions in the groundsof appeal that the first appellate court went wrong in reversing the trialcourt’s conviction judgment under wrong assumptions and even thereis no evidence from the accused and no grounds to ignore theevidence on record placed reliance by complainant as P.W.1 withreference to the documents and by giving credence to the hair splittingcontentions, the first appellate court in saying the appellant stood asguarantor to Prabhu that is not reflected from perusal of Ex.D.1, pro-note executed by the accused is unsustainable and thereby sought forsetting aside the acquittal judgment and to convict the accused.

04. Heard learned counsel for the appellant – complainant whoreiterated the same by placing reliance upon the propositions of law insupport of the said appeal contentions.

05. Whereas, it is the contention of learned counsel for therespondent – accused in the present appeal that the first appellatecourt having vast experience with men and matters when rightly re-appreciated and reversed the trial court’s judgment including byfollowing settled propositions of law against the double presumption,one general innocence of accused and the other concerned byacquittal judgment, for this Court while sitting in appeal against the firstappellate court’s acquittal judgment reversing the trial court’sjudgment, there is nothing to interfere. Hence, he seeks to dismiss theappeal.

06. Perused the material on record.

07. The parties will hereinafter be referred to as arrayed beforethe trial court for the sake of convenience.

08. Now the points that arise for consideration are,

i)Whether the lower appellate court’s acquittal judgmentreversing the trial court’s conviction judgment isunsustainable and requires interference by this Courtreversing the trial court’s conviction judgment isunsustainable and requires interference by this Court while sitting again in appeal and if so with whatobservation and conclusions?

ii)To what result?

Point No.i:

08. Before coming to discuss the factual matrix further, it is just torefer to the legal propositions covering aspects like on the scope ofSections 138, 139 and 118 of the Act, availability of presumptions, dutyof the accused to rebut and extent of proof required etc. The provisionsincorporated in Chapter XVII of the Act make a civil transaction to bean offence by fiction of law and with certain (rebuttable) presumptionsthat shall be drawn. Sections.138 to 142 are incorporated in the Act asChapter XVII by the Banking Public Financial Institutions andNegotiable instruments Laws (Amendment) Act,1981 (66 of 1988)which came into force with effect from 01-04-1989 and the Act wasfurther amended by Act,2002 (55 of 2002) which came into force witheffect from 06-02-2003 incorporating new sections 143 to 147 in thisChapter XVII and further some of the existing provisions not only of theChapter XVII but also of other Chapters amended to overcome thedefects and drawbacks in dealing with the matters relating todishonour of cheques.

9. The object and intention of these penal provisions of theChapter XVII of the Act (Sections 138 – 147), in particular, Sections138 & 139 of the Act (besides civil remedy), are to prevent issuing ofcheques in playful manner or with dishonest intention or with no mindto honour or without sufficient funds in the account maintained by thedrawer in Bank and induce the Payee/Holder or Holder in due courseto act upon it. The remedy available in a Civil Court is a long drawnmatter and an unscrupulous drawer normally takes various pleas todefeat the genuine claim of the payee. Since a cheque that isdishonoured may cause uncountable loss, injury or inconvenience tothe Payee due to the latter’s unexpected disappointment, theseprovisions incorporated are in order to provide a speedy remedy to avoid inconvenience and injury to the Payeeand further to encouragethe culture of use of cheques and enhancing credibility of theinstruments as a trustworthy substitute for cash payment and toinculcate faith in the efficacy of Banking operations - GOA PLAST

(PRIVATE) LIMITED v. CHICO URSULA D’SOUZA[[1]].

10. To fulfil the objective, the Legislature while amending the Acthas made the following procedure:

10-a. In the opening words of the Section 138 of the Act it isstated: "Where any cheque drawn by a person on an accountmaintained by him with a banker for payment of any amount of moneyto another person from out of that account for the discharge, in wholeor in part, of any debt or other liability, is returned by the bank unpaid,---------, such person shall be deemed to have committed an offence andshall, without prejudice to any other provision of this Act (SeeSec.143), be punished ----.

Provided, nothing contained in this section shall apply unless,- (a), (b); and (c) Explanation------ (supra).

"(i) Under Section 138 of the Act a deeming offence is created by fiction of law.

(ii) An explanation is provided to Section 138 to define the words "debt or other liability" to mean a legally enforceable debt or other liability."

(iii) In Section 139, a presumption is ingrained that the holder of the cheque received it in discharge ofdebt or other liability.

(iv) Disallowing a defence in Section 140 that drawer has no reason to believe that cheque would be dishonoured.

(v) As per Section 146(new section) the production of the Bank’s slip or Memo with official mark denoting that the cheque has been dishonoured is prima facie evidence for the Court to presume the fact of dishonour of such cheque unless such fact is disproved by the accused.

11. Further the provision for issuing notice within thirty daysunder section 138 of the Act after dishonour is to afford an opportunityto the Drawer of the cheque to rectify his mistakes or negligence or inaction and to pay the amount within fifteen days of receipt of notice,failing which the drawer is liable for prosecution and penalconsequences.

12. Reasonability of cause for non-payment is not at all adeciding factor. Mensrea is irrelevant. It is a strict liability incorporatedin public interest. Availability of alternative remedy is no bar to theprosecution.

13. In the words-where any cheque, the word any suggests thatfor whatever reason if a cheque is drawn on an account maintained byhim with a Banker in favour of another person for the discharge of anydebt or other liability, the liability cannot be avoided in the event of thecheque stands returned by the Banker unpaid.

14. The Apex Court in NARAYAN MENON v. STATE OF

KERALA[[2]]held that once the complainant shown that the chequewas drawn by the accused on the account maintained by him with abanker for payment of any amount in favour of the complainant fromout of that account for its discharge and the same when presentedreturned by the Bank unpaid for insufficiency of funds or exceedsarrangement, such person shall be deemed to have been committedan offence under Section 138 of the Act. What Section 139 of the Actspeaks the presumption against the accused to rebut is the holder of acheque received the cheque of the nature referred in Section 138 ofthe Act for discharge of debt. For rebutting such presumption, what isneeded is to raise a probable defence. Even for the said purpose, theevidence adduced on behalf of the complainant could be relied uponand accused need not enter into the witness box and examine otherwitnesses in support of his defence. Accused need not disprove theprosecution case in its entirety. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adducedbefore the Court in support of the defence that the Court must eitherbelieve the defence to exist or consider its existence to be reasonablyprobable, the standard of reasonability being that of the "prudent man".

15. The presumption that further applied among clauses (a) to (g)of Section 118 of the Act also, like the presumption under Section 139of the Act, as per Section 4 of the Evidence Act, is a rebuttablepresumption for which the burden is on the accused, however, to rebutthe presumption if a case is made out by accused either by pointingout from the case of the complainant including very documents andcross-examination or by examining any person and need not bealways by coming to witness box vide decision in KUMAR EXPORTS

PVT. LIMITED V. SHARMA CARPETS[[3]].

16. Further, as per the expression of the Apex Court in RANGAPPA vs. MOHAN[[4]](3-Judges Bench) paragraphs 9 to 15referring to Goa Plast’s case (supra), KRISHNA JANARDHAN BHAT

v. DATTATRAYA G. HEGDE[[5]]by distinguishing at paragraph 14saying the observation in KRISHNA JANARDHAN BHAT (supra) ofthe presumption mandated by Section 139 of the Act does not indeedinclude the existence of a legally enforceable debt or liability is notcorrect, though in other respects correctness of the decision does notin any way cause doubted; by also referring to HITEN P. DALAL v.

BRATINDRANATH BANERJEE[[6]]holding at paragraphs 22 and 23therein of the obligation on the part of the Court to raise thepresumption under sections 138, 139 and 118 of the Act, in every casewhere the factual basis for raising the presumption has beenestablished since introduces an exception to the general Rule as tothe burden of proof in criminal cases and shifts the onus on to theaccused, as a presumption of law distinguished from a presumption offact as part of Rules of evidence and no way in conflict with presumption of innocence and the proof by prosecution against theaccused beyond reasonable doubt, but for saying to rebut the accusedcan discharge the burden showing reasonable probability of non-existence of the presumption of fact and to that proposition, the earlierexpression in BHARAT BARREL & DRUM MANUFACTURING

COMPANY v. AMIN CHAND PYARELAL[[7]]paragraph 12 showingthe burden on the accused is to bring on record by preponderance ofprobability either direct evidence or by referring to circumstances uponwhich he relies, rather than bare denial of the passing of theconsideration; apparently that does not appear to be of any defence, toget the benefit in discharge of the onus against, also held referring theM.M.T.C. LIMITED AND ANOTHER v. MEDCHL CHEMICALS &

PHARMA (P) LIMITED[[8]]that where the accused able to showjustification of stop payment letter even from funds are there, but noexistence of debt or liability at the time of presentation of cheque forencashment to say no offence under Section 138 of the N.I. Act madeout in discharge of the burden. It was concluded referring to the above,including of MALLAVARAPU KASIVISWESWARA RAO v.

THADIKONDA RAMULU FIRM & OTHERS[[9]]paragraphs 14 and 15that the initial presumption lays in favour of the complainant andSection 139 of the Act is an example of a reverse onus clause, whichhas been included in furtherance of the legitimate objection ofimproving the credibility of the negotiable instruments. While Section138 of the Act specifies a strong criminal remedy in relation to thedishonour of cheques, the rebuttable presumption under Section 139of the Act is a device to prevent undue delay in the course of litigation.

17. Bouncing of a cheque is largely in the nature of a civil wrongwhose impact is usually confined to the private parties involved incommercial transactions and the test of proportionality should guidethe construction and interpretation of reverse onus clause and theaccused cannot be expected to discharge an unduly high standard or proof and in the absence of compelling justifications, reverse onusclauses usually impose an evidentiary burden and not a persuasiveburden to discharge by preponderance of probabilities by raisingcreation of doubt about the existence of a legally enforceable debt orliability to fail the prosecution and for that the accused can rely on thematerial submitted by the complainant also in order to raise such adefence and he may not need to adduce any evidence of his own.

18. It was also observed by the Apex Court in paragraph 15 thatthe accused appeared to be aware of the fact that the cheque was withthe complainant, furthermore the very fact that the accused has failedto reply to the statutory notice under Section 138 of the Act leads to theinference that there was merit in the complainant’s version. It was alsoheld by this court way back in CHAPALA HANUMAIAH VS. KAVURI

VENKATESWARLU[[10]]that having received and acknowledged thestatutory legal notice after dishonour of cheque, non-giving of reply tosaid legal notice, improbablises the defence version, as any prudentperson under the said circumstances should have, but for no defenceto reply.

19. From the above legal propositions of law, coming to thefurther facts and findings of the trial court as well as of the lowerappellate court in reversing the trial court’s conviction judgment that asper the trial court, the notice admittedly served on the accused, but hedid not give reply as one of the circumstances against the accused anddid not choose to come to witness box. The complainant dischargedhis initial burden in saying under Ex.P.1 for the amounts due to him,the accused executed pro-note and for discharge of the debt, the sameaccused issued Exs.P.2 and P.3 – cheques, for its dishonour, thecomplainant issued Ex.P.8 – legal notice demanding for payment,neither paid nor replied and one of the versions of the accused that inthe year 1999 for obtaining loan, the said cheques and pro-notes inblank were issued by him and again to say for arranging chit amount

and in connection to the chit transaction, allegedly obtained and failedto return and foisted the false case and when such is the case, nothingprevented him to examine persons, who were present at the time ofissuing such cheques or to prove such transactions and thesuggestion to P.W.1 in the cross-examination by the accused that hehanded over number of cheques to P.W.1 that can safely be concludedthat Exs.P.2 and P.3 – cheques issued in favour of P.W.1, though it isin dispute saying empty cheques issued and not supported byconsideration or there is no legally enforceable debt. Once there is apresumption, it is for the accused to rebut the same under Section 139of the Act and in this regard it is the specific case of the complainantsupra, even notice issued there is no reply and accused havingadmitted his signatures on the pro-note and cheques, did not adduceevidence even to rebut the presumption under Section 118 of the Actand if at all the said version of the accused that in the year 1999 heissued blank pro-notes and blank cheques to the complainant, it ismeaningless to keep quiet without issuing notice, demanding to return,or giving police complaint and to suggest of issuing any notice, he didnot produce any proof and thereby the complainant could prove guilt ofthe accused.

20. Whereas, the first appellate court observed in reversing thesaid conclusion and finding of the trial court that the plea of accused isone of total denial about execution of pro-note and issuance ofcheques for the so-called debt in saying as security towards prizemoney in the private chit has given blank cheques and blank pro-notesto complainant and taking advantage of the same, false case is foistedand when once drawer admits that cheque in question is with hissignature drawn on account maintained by him in Bank, thepresumption under Section 118(A) of the Act can be drawn for passingof consideration and also the presumption under Section 139 of theAct that the cheque issued for discharge of the debt or other liability. However, the Apex Court in Krishna Janardhan Bhatt (supra) referring to other expressions held that existence of legally enforceable debt isnot a matter of presumption under Section 139 of the Act. As such,though there is no dispute on Ex.P.1 – pro-note and Exs.P.2 and P.3 -cheques bear signature of the accused and they were rooted from theaccount of the accused opened with State Bank of India, MarketBranch, Secunderabad, they were presented, returned with anendorsement dishonoured and the complainant issued statutory noticeunder Ex.P.8, he received acknowledgment under Ex.P.11, but theaccused did not give reply to the same and not even in dispute; so faras existence of legally enforceable debt or other liability under Section139 of the Act, it has to be proved by the complainant that there is nopresumption about the same as held in Krishna Janardhan Bhatt(supra) and further it is the case of complainant that the accusedborrowed Rs.2,00,000/- from Prabhu on 20.07.2000 and executed pro-note repay with interest at Rs.2.50ps., later paid two instalments andfailed to pay, from which the complainant paid remaining 28instalments each @ Rs.5,000/- per month and for the same, in the month of December,2002 Ex.P.1 – pro-note was executed by accused and later forpayment of the same, Exs.P.2 and P.3 – cheques were issued.

21. Whereas, the defence of the accused is that, in the year,1999 in a private chit transaction with the complainant and forarranging bank loans, finance business, the complainant obtainedthree blank pro-notes and five blank cheques and taking advantage ofthe same, he foisted the false case. Ex.D-1 is the pro-note, dated20.7.2000, under which the accused borrowed Rs.2.00 lakhs from thesaid Prabhu and in that transaction to say that the complainant stoodas guarantor. It is not revealing so as he is the only one of attestors tothe pro-note but not guarantor and the surety bond appended to thepro-note is kept blank with no signature of the complainant as aguarantor. To believe such version and accepting self servingtestimony of P.W.1 of he paid 28 instalments, total Rs.1,40,000/- to the said Prabhu under Ex.P.1, there is no record filed in showing thesame. Ex.P-1 – pro-note executed by the accused and later Exs.P.2and P.3 - cheques issued and the said Prabhu also filed C.C. No.521of 2003, which is the subject matter of Criminal Appeal No.208 of 2006basing on original of Ex.P.1 and the alleged cheques issued byaccused, the non examination of material witness leads an adverseinference to the case of complainant and the trial court withoutappreciating the same proceeded on the basis of mere admission ofsignatures on Ex.P.1 - pro-note and Exs.P.2 and P.3 –cheques, indrawing presumption under section 139 of the Act, from the legalproposition though cannot be drawn, hence, the conviction Judgmentheld unsustainable.

22. From the above background, now the above issues fall forconsideration before this Court to decide in the present appeal. Theaccused did not come to witness box. It is the accused to P.W.1confronted with Ex.P.1 – pro-note by placing reliance upon the originalpro-note - Ex.D.1 and admitted signatures on Ex.P.1 – pro-note andEx.P.2 and P.3 - cheques in question and even for the statutory noticeunder Ex.P.8 the accused did not give reply much less made anypayment, if at all truth of any such versions in his defence set up in thecross-examination of P.W.1. Though the non giving reply is one of thecircumstances to draw an inference against the case of the accusedand observed, it enhances the credibility of the case of thecomplainant, at para 15 in Rangappa (supra) and also in otherexpressions of this Court in ChapalaHanumaiah (supra).

23. In fact, the principle laid down in Krishna Janardhan Bhatt(supra) of no presumption under Section 139 of the Act can be drawnthat has to be independently proved by the complainant was held notgood law, though in . In other respects, the finding of the Apex Court inKrishna Janardhan Bhatt (supra) holds good as per the expression ofthe Apex Court in Rangappa (supra) in saying the presumption underSection 139 of the Act also applicable. Now coming to Ex.D.1 – pro-

note as well as receipt, no doubt underneath the pro-note the printedcolumn regarding the surety endorsement with signature, the saidprinted pro-note is confronted to P.W.1 by accused. It is important tonote that but for accused is a party to the pro-note, he could notproduce. In fact, it is a certified photo copy obtained from the Court ofChief Judge, City Civil Court, Copyist Establishment in CopyApplication No.7842 of 2006, dated 06.06.2006. There are noparticulars as in which the same was exhibited. In fact, a perusal ofEx.D.1 – pro-note that was marked as Ex.P.1 in the suit maintained bythe said G.Prabhu shows that in favour of said G.Prabhu on20.07.2006, this accused V.Shanmukha Chary, s/o. Rajaiah, the sameaddress showing as Upparbasthi executed promissory note andborrowed Rs.2.00 lakhs to repay with interest Rs.2.50ps. per month ondemand. The complainant, L.Narayana, who is the P.W.1 herein is theattestor to the said pro-note, from P.W.1 cross-examination also it isclear. In fact it is important to note that, the accused did not dispute hissignature of V.Shanmukha Chary in the pro-note – Ex.D.1. The pro-note contains endorsement with another signature of the accusedherein as executant of the amount received by him and passed thereceipt. Though the complainant – P.W.1 stated that he stood as aguarantor and guarantee endorsement on pro-note not there with hissignature and P.W.1 stood as attestor to pro-note, that does not makemuch difference to appreciate the evidence much less for the lowerappellate court to make mountains out of molehills as if that is aglarifying inconsistency to totally belie the case of the complainant. Infact, it is important to note that the lower appellate court should have toconsider that from the very filing of pro-note - Ex.D.1 executed by theaccused in favour of the said Prabhu for Rs.2.00 lakhs to repay withinterest @ Rs.2.50 ps. on 20.7.2000 that substantiates part of the caseof the complainant. P.W.1 stood as attestor though not guarantor sincewhat the complainant stated was the accused when approached, hewas taken him to the said G.Prabhu and arranged loan by standing as

guarantor and accused failed to pay but for two instalments, theinterest of Rs.5,000/- per month to said Prabhu, for the sin of hisundertaking, he paid 28 instalments, i.e. an amount of totalRs.1,40,000/-, for which the accused executed Ex.P.1 – pro-note that isthe sum and substance and the very substratum of the case andevidence of the complainant as P.W.1, with reference to Ex.P.1substantiates Ex.D.1 placed reliance upon by accused not evendisputing signature as executant of pro-note in favour of Prabhu, noteven disputing about borrowing with interest that is to confront toP.W.1 only giving technical importance in saying that the complainantstood as attestor and not as guarantor that belies from the version ofthe complainant to so observed by lower appellate court. It is quiteuntenable, as that is not the way of appreciation of evidence that toowhile sitting in appeal to reverse the finding of the trial court. In fact,when that substitutes the case of the complainant and thecomplainant’s version that he arranged the loan through the saidPrabhu for Rs.2,00,000/- to repay with interest, for non payment excepttwo instalments, the complainant repaid the said debt, thereby theaccused executed pro-note in favour of the complainant and accusednot even disputed the signature on Ex.P.1 – pro-note and there is theevidence of the complainant. There is nothing to belie as it is not thecase of the complainant that he paid lumpsum amount, but for it is for28 monthly instalments @ Rs.5,000/- per month, the accused executedEx.P.1 – pro-note in favour of the complainant for Rs.1,40,000/- only. The complainant’s version is that he paid 28 instalments, thereby theaccused executed Ex.P.1-pro-note. When such is the case, there is noneed to examine the said Prabhu by the complainant, as accusedhimself filed pro-note and Ex.D.1 and P.W.1 was confronted with themand P.W.1 substantiates in that relation. Ex.P.1 - pro-note was dated21.12.2002, it is for Rs.1,40,000/- to repay with interest @ Rs.2.50 ps.. According to the complainant, the accused issued Exs.P.2 - cheque forRs.1,00,000/- on 28.01.2003 and Ex.P.3 – cheque for Rs.90,750/-

including with interest on 13.02.2003. The only thing to beappreciated is, whether and in what circumstances the accused issuedthe so-called blank pro-notes and blank cheques to the complainantand what is his defence how far he could substantiate. In this regard,there are different versions of the accused. In his defence in the cross-examination of P.W.1, one version is in connection with chittransaction and the other is complainant was arranging loans anddoing chit and finance business and promised to arrange loan and inthat connection he obtained three blank pro-notes and five blankcheques. Would it be believed even for arguments sake? Further tobelieve the conduct of any prudent person to keep quite without givingany legal notice or raising any dispute for not arranging loan and evento give any police complaint or atleast private complaint. Even inP.W.1 cross-examination it is not even suggested a date, month or ayear of issuing the notice demanding to return three blank pro-notesand five blank cheques. He did not file any proof. If at all he causeissued, atleast an office copy of the said notice is to be filed. Therefore, that also belies giving of the so-called notice now even anattempt to propound in the cross-examination of P.W.1. Further he didnot choose even to come to witness box. There is nothing by evenpreponderance of probability to serve the defence, to give credence tothe said suggestion, as complainant virtually denied issuance of suchnotice. Importantly, there is no reply notice issued by the accused forEx.P.8 – legal notice given by the complainant. Admittedly hereceived the same and acknowledgment is under Ex.P.11. A nongiving of reply as held in Rangappa (supra) and ChapalaHanumaiah(supra), the only inference of no truth in the evidence, but for truth inthe case of the complainant, the accused should have given replywithout keeping mum, having received the notice and that enhancescredibility to the case of the complainant that was also the rightconclusion by the trial court and that was not even belied by the lowerappellate court in disturbing that finding or to reverse the finding.

Further, when the pro-note and the cheques contain the signatures ofthe accused and there is no reply to the legal notice and his version isthat in the year, 1999 for the alleged promise to arrange loans he hasgiven three blank pro-notes and five blank cheques. It is not only notto be believed but also not the prudent conduct without demanding forits return or without legal notice or without raising dispute, or withoutfiling any police case or private complaint, to give any credence, thatalso enhances the complainant’s version. From this, there arepresumptions under Section 118 of the Act for the pro-note – Ex.P.1 aswell as Exs.P.2 and P.3 – cheques, which are negotiable instrumentsof the pro-note and cheques were duly admitted with the signature ofthe accused, executed by the accused in favour of the complainant forthe amounts thereunder. Once Ex.P.1 – pro-note is executed for theamount of Rs.1,40,000/- to repay in 28 instalments each for Rs.5,000/-due under Ex.P.1 – pro-note amount due by the accused to Prabhu forhis non payment of interest stated paid for which executed, it is for thelegally enforceable debt. It is therefrom the evidence of thecomplainant that is the consideration of Section 118 of the Actpresumption for Ex.P.1 – pro-note applies and in part discharge of thesaid pro-note debt; Ex.P.2 – cheque issued and again for theremaining due Ex.P.3 – cheque issued by the accused to thecomplainant. As per the complainant that is also stated in Ex.P.8 –notice, having received acknowledgment under Ex.P.11 did not evenchoose to deny much less dispute by the accused, that alsosubstantiates the version of the complainant that the accused issuedtwo cheques for discharge of the said legal enforceable debt, besidesdrawing of presumption under Section 118 and 139 of the Act as laiddown in Rangappa (supra) to say that the burden on the accusedunder reverse onus clause to rebut, which he could not, as discussedsupra. Thus, the lower appellate court was wrong in acquitting theaccused by reversing the conviction judgment of the trial court. Accordingly, point No.i is answered.

Point No.ii:

24. In the result, the appeal is allowed, by setting aside thelower appellate court’s acquittal judgment and finding the accusedguilty and the sentence of one year imprisonment and fine ofRs.5,000/- with default sentence of one month is modified to asentence till raising of the day with right of set-off and to pay fine ofRs.2,10,000/-, out of which an amount of Rs.1,90,000/-shall be paid tothe complainant towards compensation and the remaining amount ofRs.20,000/- has to be paid towards fine to the State; from what washeld by the Apex Court in SOMNATH SARKA VS. UTPAL BASUMALLICK[[11]]that the Act not contemplated grant of compensation butenvisages imposition of fine not exceeding twice the amount ofdishonoured cheque and out of said fine amount, the complainant becompensated under Section 357 Cr.P.C. and that ‘unlike for otherforms of crime, the punishment here (insofar as the complainant isconcerned) is not a means of seeking retribution, but is more a meansto ensure payment of money. The complainant’s interest lies primarilyin recovering the money rather than seeing the drawer of the cheque injail. The threat of jail is only a mode to ensure recovery. As against theaccused who is willing to undergo a jail term, there is little available asremedy for the holder of the cheque.”

25. It is made clear that the fine of Rs.5,000/- imposed by the trialcourt, if paid by the accused that can be given deduction out of fineamount of Rs.20,000/-. It is hereby directed the learned Magistrate tosecure the presence of accused on warrant to undergo the sentence inthe open Court and also to cause recover the fine amount underSection 431 read with Section 421 of Cr.P.C. by issuing warrantlevying the fine with default sentence of three months SimpleImprisonment as per Sections 65 to 68 read with 53(6) I.P.C. It isfurther made clear that if any suit filed pursuant to Ex.P.1 – pro-notewithout relating to Exs.P.2 and P.3 cheques covered any recoverythereunder can be given deduction and any recovery herein can be claimed deduction in that civil suit.

_______________________________

Dr. B. SIVA SANKARA RAO, J

30[th] December, 2014bv

[1]AIR 2003 SC 2035

[2](2006) 3 SCC 30[3](2009) 2 SCC 513

[4]AIR 2010 SC 1898

[5]AIR 2008 SC 1325[6]AIR 2001 SC 3897[7]AIR 1999 SC 1008

[8]AIR 2002 SC 182

[9]AIR 2008 SC 2898[10]1971(1) An.W.R.65

[11](2014 (1) ALT Crl.145