under Section 138 of the Negotiable Instruments Act In the present case, the accused has not disputed her signature on Ex.P-1, the cheque. But according to her, the blank cheque was issued in favour of Ushodaya Finance Company in which complainant's son is a partner and the complainant misused the same for filing the complaint and she further pleaded that she has not borrowed any amount from the complainant and he has no capacity to lend the amount. PW.1 in the beginning of the chief examination has stated that the accused borrowed the amount on 26.10.1998 and subsequently has stated six months prior to 26.10.1998 and in cross-examination he has deposed that he does not remember as to why he agreed to lend money and actually when he lent the money to the accused and his evidence is inconsistent with regard to date on which the amount was lent to the accused. The complainant as PW.1 has stated that he retired from service in the month of April, 1995 and according to him after one year he has received the retirement benefits and from the date of his retirement till he lent the money to the accused, he kept the money with him in the hands. According to him the amount was lent to the accused in the month of April or October, 1998 and there is a gap of nearly two years in lending the amount to the accused and according to the complainant he kept the said amount in his house for all these two years. The trial Court has rightly disbelieved said version of keeping such a huge amount without investing the same in his house. PW.1 further deposed that the accused has executed a bond on her own hand- writing after receiving the said amount of Rs.1,90,000/- and in the cross- examination he has deposed that the said bond was returned by the complainant one week or ten days prior to the issuing Ex.P-1 cheque. The trial Court has rightly disbelieved that version as no prudent man would return the bond executed by the borrower without obtaining the cheque in lieu of said bond and more particularly when there is a dispute with regard to the property between the accused and her daughter as per paper publication made in Vaartha newspaper. According to PW.3 P.Dharma Reddy, he has gone to the house of the accused along with the complainant and in his presence the accused has issued the said cheque to the complainant but he could not state about the location of the house or identity of the house of the accused. The accused has got marked Ex.D-2 a letter written by her to the bank requesting stop payment of the disputed cheque stating that she has issued two blank cheques bearing No.384351 (marked as Ex.P-1) and No.132958 to Ushodaya Finance Company and she had no liability to the said firm and in the event of presentation of the said cheque for encashment, the payment may be stopped. Admittedly, the said letter was addressed to the State Bank of Hyderabad on 08.10.1998 and the same was acknowledged by the said bank. The said letter was addressed by the accused to the said bank much prior to the date of issuing the cheque Ex.P-1. PW.1 admitted that he himself scribed the contents of Ex.P-1 cheque. Admittedly, the accused was working as a teacher as on that date and if really she has issued a cheque for Rs.1,90,000/- she would have written the blanks in the said cheque with her own hand writing. Thus, the complainant has scribed the same in his hand- writing supports the contention of the accused that she issued two blank cheques in favour of Ushodaya Finance Company. The above circumstances create a doubt with regard to lending of the money by PW.1 to the accused and the accused issued the cheque in favour of the complainant. Thus, the accused by relying upon the evidence produced by the complainant could able to rebut the presumption available under Section 139 of the N.I. Act by preponderance of possibilities. Thus, the trial Court has rightly held that the complainant has failed to establish the offence under Section 138 of the N.I. Act and rightly dismissed the complaint basing on the material available on record. In the result, the Criminal Appeal is dismissed.


HON'BLE SRI JUSTICE P.DURGA PRASAD      

CRIMINAL APPEAL NO. 439 OF 2005    

17-08-2012

R.Indrasena Reddy,

M.Prabhavathi and another.

Counsel for the Appellant: Sri P.Nageshwara Rao, Advocate.

Counsel for the Respondent No.1:        Sri V.Ramachander Goud, Advocate

Counsel for the Respondent No.2:        Public Prosecutor

< Gist:

> Head Note:

 ? Cases referred:
1. (2009) 1 SCC 492
2. (1999) 7 SCC 510
3. (2001) 8 SCC 458
4. (2006) 6 SCC 39
5. (2009) 2 SCC 513
6. (2010) 11 SCC 441

JUDGMENT:

        This appeal is directed against the acquittal of the accused in C.C.No.274
of 1999 by the I Additional Judicial I Class Magistrate, Warangal on 10.09.2004.

        The appellant herein is the complainant and he has filed the complaint for
the offence under Section 138 of the Negotiable Instruments Act (for short "the
N.I. Act") against the respondent No.1 herein.

According to the complainant, he retired as Superintendent of Central Excise and
after retirement he received Rs.3,00,000/- towards retirement benefits.  The
accused was working as teacher in Government Aided Andhra Balika High School and
she is a colleague of the complainant's wife.  The accused approached the
complainant through his wife and obtained a hand loan of Rs.1,90,000/-  for
settlement of the debts of the son of the accused, which he incurred in the
Frontier Computers Software Technology with a promise to repay the same within
six months but in spite of several demands, the accused began dodging and it was
very difficult to locate the accused at her residence and the complainant and
his relative P.Dharma Reddy could locate her and on 26.10.1998 the accused in
the presence of said Dharma Reddy gave a cheque bearing No.384351 drawn on State
Bank of Hyderabad, Warangal Main Branch.  The said cheque was deposited in the
complainant's account but the same was returned on 02.11.1998 with an
endorsement of insufficient funds and party reported to stop operations in the
account.  Thereafter, complainant contacted the accused on 19.11.1998 and the
accused promised to instruct the bank and she will make efforts to deposit
sufficient funds to clear the said cheque.  So the complainant re-deposited the
said cheque on 20.11.1998, again the said cheque was returned with the same
endorsement.  The accused with an intention to defraud complainant, was scheming
to get her house bearing No.16-10-1338, situated at Shivanagar, Warangal
conveyed in the name of her unmarried daughter and subsequently the complainant
came to know that a lawyer's notice was appeared in Vaartha newspaper on
12.10.1998 with regard to transfer of said property in the name of her daughter.
Immediately on 25.11.1998 a lawyer notice was sent to an advocate Chamanti
Prabhakar Rao, which was served on him on 25.11.1998.  Along with the said
notice, a copy of the lawyer's notice dt.25.11.1998 addressed to the accused was
sent to the said advocate with a request to inform the same to the accused.
Thereafter the accused got issued a reply notice on 09.12.1998 to the counsel of
the complainant.  Hence, the accused has committed the offence punishable under
Section 138 of the N.I. Act.

The accused denied the allegations when she was examined under Section 251 of
Cr.P.C.  During the course of trial, the complainant himself examined as PW.1
and examined the Deputy Manager of SBH, Warangal Main Branch as PW.2 and one    
P.Dharma Reddy as PW.3 and got marked Exs.P-1 to P-7 on his behalf.  No oral
evidence was adduced on behalf of the accused.  During the course of examination
under Section 313 of Cr.P.C., the accused marked Exs.D-1 and D-2 on his behalf.

The Magistrate by taking into consideration said oral and documentary evidence
and by relying upon various decisions of the Apex Court and this Court, held
that the complainant failed to establish that the accused issued Ex.P-1 cheque
towards legally enforceable debt or liability due to the complainant and thereby
found the accused not guilty and acquitted her.

Aggrieved by the said acquittal, the complainant therein has filed the present
appeal.

The counsel appearing for the appellant has pleaded that the accused has not
disputed her signature on the said cheque Ex.P-1 and when once the cheque was
issued the presumption under Section 139 of the N.I. Act is available to the
complainant and the burden is on the accused to disprove that the said cheque
was not issued in discharge of any liability or legally enforceable debt and as
the complainant has not examined herself nor produced any evidence to rebut the
same the trial Court committed an error in dismissing the complaint and
acquitting the accused.

The counsel appearing for the respondent No.1, on the other hand, pleaded that
the presumption available under Section 139 of the N.I. Act is a rebuttable
presumption and it can be established by the evidence available on record and
there is no need to examine the accused to establish the defence and the trial
Court has rightly come to the conclusion that initial burden is on the accused
to prove that the said cheque was issued in discharge of legally enforceable
debt and the trial Court has rightly dismissed the complaint and acquitted the
accused.

The trial Court by relying upon the decisions of this Court in A.Bhoosanrao v.
Purushothamdas Pantani and another [1997(1) ALD (Crl.) 794 (AP)] and G.B.Lingam
v. Vitta Murali Krishna Murthy [1998(1) ALD (Crl.) 940 (AP)], held that the
initial burden is on the accused to prove the said cheque, which was issued in
discharge of legally enforceable debt and then the burden shifts on the accused
to disprove the same and as the complainant failed to discharge the initial
burden, come to the conclusion that the complainant has failed to prove that the
said cheque was issued for the legally enforceable debt.

In P.Venugopal v. Madan P.Sarathi1, the Apex Court held that "the facts and
circumstances of a debt or other liability has to be proved in the first
instance by the complainant and in discharge of the said debt or liability the
accused issued the cheuqes and the burden shifts on the accused and in the said
case as the appellant could not discharge the burden, the appeal was dismissed."

In the present case, the complainant examined himself as PW.1 and stated that
the accused borrowed the amount of Rs.1,90,000/- from him, on demand she has
issued the cheque Ex.P-1 for discharging of the said debt.  PW.3 also stated
that the accused issued the cheque in favour of the complainant.  From the
evidence of PW.2, it is evident that the said cheque was dishonoured when
presented by the complainant for collection. Thus, prima facie the complainant
could establish that the said cheque was issued in discharge of legally
enforceable debt and the presumption under Section 139 of N.I. Act is available
to the complainant.  Now the burden shifts on the accused to disprove the same.
The complainant's counsel contends that the accused could rebut the said
presumption either by examining himself or producing any evidence on his behalf
and thus, the lower Court erred in acquitting the accused.

In K.Bhaskaran v. Sankaran Vaidhyan Balan2, the Apex Court held that "as the
signature in the cheque is admitted to be that of the accused, the presumption
envisaged in Section 118 of the Act can legally be inferred that the cheque was
made or drawn for consideration on the date which the cheque bears.  Section 139
of the Act enjoins on the Court to presume that the holder of the cheque
received it for the discharge of any debt or liability.  The burden was on the
accused to rebut the aforesaid presumption."

In K.N.Beena v. Muniyappan3, the Apex Court held that "in view of the provisions
contained in Sections 118 and 139, the Court has to presume that the cheque had
been issued for discharging a debt or liability.  However, the said presumption
could be rebutted by the accused by proving the contrary.  Mere denial or
rebuttal by accused in the reply to the legal notice sent by the complainant is
not enough.  The accused had to prove by cogent evidence that there was no debt
or liability."

In M.S.Narayana Menon v. State of Kerala4, the Apex Court held that "the initial
burden of proof is on accused to rebut the said presumptions by raising a
probable defence.  If he discharges the said burden, the onus thereafter shifts
on to the complainant to prove his case.  Whether the initial burden has been
discharged by the accused is a question of fact.  The accused need not disprove
the prosecution case in its entirety.  He can discharge its burden on the basis
of preponderance of probabilities through direct or circumstantial evidence.
For the said purpose, he can also rely upon evidence adduced by the
complainant."

In Kumar Exports v. Sharma Carpets5, the Apex Court held that "the accused in a
trial under Section 138 of the Act has two options.  He can either show that
consideration and debt did not exist or that under the particular circumstances
of the case the non-existence of consideration and debt is so probable that a
prudent man ought to suppose that no consideration and debt existed.  To rebut
the statutory presumptions an accused is not expected to prove his defence
beyond reasonable doubt as is expected of the complainant in a criminal trial."

In Rangappa v. Sri Mohan6, the Apex Court held 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.  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."

In view of the above said decisions, the presumption, which is available under
Section 139 of the N.I. Act can be rebutted by producing necessary evidence or
he can also rely upon the evidence produced by the complainant and the material
available on record without examining himself.  The burden can be discharged by
the accused on the basis of preponderance of possibilities.

In the present case, the accused has not disputed her signature on Ex.P-1, the
cheque.  But according to her, the blank cheque was issued in favour of Ushodaya
Finance Company in which complainant's son is a partner and the complainant 
misused the same for filing the complaint and she further pleaded that she has
not borrowed any amount from the complainant and he has no capacity to lend the
amount. 

PW.1 in the beginning of the chief examination has stated that the accused
borrowed the amount on 26.10.1998 and subsequently has stated six months prior 
to 26.10.1998 and in cross-examination he has deposed that he does not remember  
as to why he agreed to lend money and actually when he lent the money to the
accused and his evidence is inconsistent with regard to date on which the amount
was lent to the accused.  The complainant as PW.1 has stated that he retired
from service in the month of April, 1995 and according to him after one year he
has received the retirement benefits and from the date of his retirement till he
lent the money to the accused, he kept the money with him in the hands.
According to him the amount was lent to the accused in the month of April or
October, 1998 and there is a gap of nearly two years in lending the amount to
the accused and according to the complainant he kept the said amount in his
house for all these two years.  The trial Court has rightly disbelieved said
version of keeping such a huge amount without investing the same in his house.
PW.1 further deposed that the accused has executed a bond on her own hand-  
writing after receiving the said amount of Rs.1,90,000/- and in the cross-
examination he has deposed that the said bond was returned by the complainant 
one week or ten days prior to the issuing Ex.P-1 cheque.  The trial Court has
rightly disbelieved that version as no prudent man would return the bond
executed by the borrower without obtaining the cheque in lieu of said bond and
more particularly when there is a dispute with regard to the property between
the accused and her daughter as per paper publication made in Vaartha newspaper. 
According to PW.3 P.Dharma Reddy, he has gone to the house of the accused along   
with the complainant and in his presence the accused has issued the said cheque
to the complainant but he could not state about the location of the house or
identity of the house of the accused.  The accused has got marked Ex.D-2 a
letter written by her to the bank requesting stop payment of the disputed cheque
stating that she has issued two blank cheques bearing No.384351 (marked as 
Ex.P-1) and No.132958 to Ushodaya Finance Company and she had no liability to  
the said firm and in the event of presentation of the said cheque for
encashment, the payment may be stopped.  Admittedly, the said letter was 
addressed to the State Bank of Hyderabad on 08.10.1998 and the same was   
acknowledged by the said bank.  The said letter was addressed by the accused to
the said bank much prior to the date of issuing the cheque Ex.P-1. PW.1 admitted
that he himself scribed the contents of Ex.P-1 cheque.  Admittedly, the accused
was working as a teacher as on that date and if really she has issued a cheque
for Rs.1,90,000/- she would have written the blanks in the said cheque with her
own hand writing.  Thus, the complainant has scribed the same in his hand-
writing supports the contention of the accused that she issued two blank cheques
in favour of Ushodaya Finance Company.  The above circumstances create a doubt  
with regard to lending of the money by PW.1 to the accused and the accused 
issued the cheque in favour of the complainant.  Thus, the accused by relying
upon the evidence produced by the complainant could able to rebut the
presumption available under Section 139 of the N.I. Act by preponderance of
possibilities.  Thus, the trial Court has rightly held that the complainant has
failed to establish the offence under Section 138 of the N.I. Act and rightly
dismissed the complaint basing on the material available on record.

In the result, the Criminal Appeal is dismissed.
_______________________  
JUSTICE P. DURGA PRASAD    
Date: 17-08-2012

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