Anss Rajashekar vs Augustus Jeba Ananth

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO(S).95-96 OF 2019 (Arising out of Special Leave Petition(Crl.) No(s). 3737-3738 of 2016)

ANSS RAJASHEKAR APPELLANT(s)

VERSUS

AUGUSTUS JEBA ANANTH RESPONDENT(s)

J U D G M E N T

DR.DHANANJAYA Y. CHANDRACHUD,J.

Leave granted.

These appeals arise from the judgment and order of a

learned Single Judge of the High Court of Karnataka dated

14 November 2014, reversing the judgment of the Lower

Appellate Court acquitting the appellant of an offence

under Section 138 of the Negotiable Instruments Act, 1881

('the Act').

The case of the respondent-complainant is that on 09 Signature Not Verified

March 2005, the appellant issued a cheque in the sum of Digitally signed by ASHWANI KUMAR Date: 2019.01.25 15:12:48 IST Reason:

Rs.5 lakhs in his favour, towards discharge of a

liability of Rs.15 lakhs, in repayment of an amount which 2

was borrowed in the month of February, 2004. According

to the complainant, the amount was repayable within six

months. When the complainant presented the cheque on 23

March 2005, it was returned by the bank for insufficiency

of funds. The complainant presented the cheque again for

realisation on 14 July, 2005 but it was returned with the

same result. A notice of demand was issued by the

complainant on 10 August, 2005. In response, the

appellant-accused denied that there was a legally

enforceable debt. In his reply, the appellant stated

thus:

"4. My client and his wife and your client and his wife had purchased separate house sites in Survey No. 96/3 at Hoaramvuagrahara Village, Krishnarajapuram Hobli, Bangalore on 31.01.2001. All these sites situate adjacent to each other. Your client enticed my client and my client’s wife to give power in his favour so that he could pursue the matter of getting housing loan from financial institutions at Bangalore. However your client prepared the power deed incorporating the clauses for sale also. When my client questioned about the inclusion of clauses for sale, your client had stated that it had inadvertently typed and the purpose of power deed is only for obtaining loan and so it need not be registered.

5. Besides this power deed your client also obtained from my client the original 3

document being Document No. 10470/2001 and Khatha, Tax Receipts, Approved plan and also 4 blank cheques of U.T.I. Bank Ltd, Tuticorin including the cheque mentioned in your notice and Vysya Bank, Bangalore Cheque Book containing 10 leaves.

6. Your client obtained these cheques stating that the financial institutions will insist for the cheque leaves when the loan is sanctioned as to use these cheques for monthly repayment of loan amount. Your client has now misused the one such cheque as if it was issued by my client on 09.03.2005. Subsequently my client and his wife canceled the power deed and also requested your client to return the cheques and documents. However, your client is very particular to grab house sites along with half way constructed building for him and his father. An attempt was also made earlier in this regard. Your client's father colluding with your client sent a notice dated 09.05.05 containing false allegations to my client to execute the sale deed of said house site situate at the above mentioned survey number in favour of him. Since the attempt frizzled out, now the son, your client is trying in a different way, illegally using the mentioned cheque to harass my client to part with the said house site."

As the above reply indicates, the defence of the

appellant was that the appellant and his wife and the

complainant and his wife had purchased adjacent house

sites. The complainant was alleged to have persuaded the

appellant to execute a power of attorney in his favour 4

for the purpose of obtaining a housing loan from the

financial institutions in Bangalore. According to the

appellant as many as four blank cheques of U.T.I Bank

Ltd. and a Vysya Bank cheque Book containing ten leaves

were obtained by the complainant from the appellant. One

of the cheques which were handed over by the appellant to

the respondent-complainant was alleged to have been

misused.

The complainant lodged a complaint before the

Additional Chief Metropolitan Magistrate at Bangalore

being CC No. 26999 of 2006 under Section 138 of the Act

on 9 September 2005.

The Trial court by a judgment dated 31 January 2009

acquitted the appellant. The complainant - respondent

filed Criminal Appeal No. 285 of 2009 before the High

Court. By its judgment dated 29 October 2010 the High

Court allowed the appeal and remitted the matter to the

Trial court, having regard to the judgment of this Court

in “Rangappa Versus Sri Mohan”1. On remand, the Trial

court by a judgment dated 5 March 2011 convicted the

appellant and sentenced him to undergo imprisonment of

one year and to pay a fine of Rs.7 lakhs out of which an 1 (2010) 11 SCC 441 5

amount of Rs.6.75 lakhs was directed to be paid to the

respondent by way of compensation. The appellant

instituted Criminal Appeal No. 245 of 2011 before the

Additional Sessions Jude, Bangalore. By a judgment dated

05 March, 2012, the First Appellate Court reversed the

conviction and sentence recorded by the Trial court. The

respondent thereupon filed a Criminal Appeal before the

High Court, being Criminal Appeal No. 861 of 2012. The

High Court reversed the judgment of acquittal, recording

that while the notice of the appeal was served upon the

appellant, he had remained absent. While recording the

conviction under Section 138 of the Act, the High Court

modified the sentence to the effect that the appellant

shall pay a fine of Rs.5 lakhs which would be paid as

compensation to the respondent and, in default, he shall

suffer imprisonment for a period of three months. The

conviction recorded by the Trial court was maintained but

the amount of fine was reduced, as noted above.

On 29 April 2016, notice was issued on the question

of limitation, there being a delay of 410 days in filing

the special leave petition as well as on the petition.

Having considered the cause shown by the appellant for 6

condoning the delay we deem it appropriate to condone the

delay. We do not find from the record of this case that

there was any deliberate act of neglect on the part of

the appellant in pursuing his remedies.

Assailing the judgment of the High Court, learned

counsel appearing on behalf of the appellant has

addressed the submissions on two aspects. First, it is

submitted that there is an absence of a legally

enforceable debt. Hence, it is urged that the conviction

which has been recorded by the High Court is

unsustainable. Secondly, it is urged that the appellant

discharged the burden which is cast by the provisions of

Section 139 and established a defence on a preponderance

of probabilities as required by the judgment of this

Court in Rangappa (supra). The learned counsel has

extensively relied upon the judgment of acquittal by the

Additional Sessions Judge dated 5 March, 2012, adopting

the appreciation of evidence in that judgment as the

submissions of the appellant in support of the present

appeal. Learned counsel submitted that the High Court

should have been circumspect in overturning the judgment

of acquittal. No reasons have been disclosed in the 7

impugned judgment upon assessment of evidence, much less

reasons for coming to the conclusion that the acquittal

by the first appellate court was either perverse or would

lead to a miscarriage of justice.

On the other hand, learned counsel appearing on

behalf of the complainant-respondent has submitted,

placing reliance on the judgment in Rangappa (supra),

that the appellant failed to discharge the burden which

cast upon him and that the presumption under Section 139

of the Act applies to the facts of the present case.

Adverting to the material on the record it is urged that

the fact that the cheque was signed by the accused and

was drawn on the bank where he has an account is not in

dispute. It is urged that the defence was correctly

appreciated by the Trial court while recording a

conviction under Section 138 and the High Court in

restoring that conviction has not fallen into error.

Section 139 of the Act mandates that it shall be

presumed, unless the contrary is proved, that the holder

of a cheque received it, in discharge, in whole or in

part, of a debt, or liability. The expression "unless the

contrary is proved" indicates that the presumption under 8 Section 139 of the Act is rebuttable. Terming this as an

example of a “reverse onus clause” the three Judge Bench

of this Court in Rangappa (supra) held that in

determining whether the presumption has been rebutted,

the test of proportionality must guide the determination.

The standard of proof for rebuttal of the presumption

under Section 139 of the Act is guided by a preponderance

of probabilities. This Court held thus:

“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.“ (emphasis supplied)

In the present case, it is necessary now to consider

whether the presumption under Section 139 stands rebutted

by the accused-appellant. The defence of the appellant is 9

that he has not borrowed the amount of Rs. 15 lakhs from

the complainant as alleged nor had he issued the cheque

(Exhibit P-1) in discharge of a legally enforceable debt.

Specifically, the defence of the accused is that no

payment was made by the complainant to him, in discharge

of which the cheques have been issued. His defence was

that the cheque was issued to the complainant on an

assurance of a loan which would be obtained from a

financial institution. This, as we have noted, was also

the defence in reply to the notice of demand issued by

the complainant.

It is in this background, it would be necessary to

advert to the material which was relied upon by the first

appellate court to acquit the accused-appellant. During

the course of his cross-examination, PW-1 admitted that a

General Power of Attorney was executed by the appellant

in his favour. Admittedly the appellant and the

respondent are related and there was some civil

litigation between the father of the complainant and the

appellant. The complainant admitted that, as a matter of

fact, he himself received an amount of Rs.10 lakhs from

the appellant under a loan transaction but stated that he 10

had repaid that amount to the appellant. PW-1 stated that

the appellant had requested him for a loan of Rs.15 lakhs

in February 2004. The defence of the appellant being that

no amount was actually paid by the complainant to him,

the evidence of PW-1 in regard to the payment of the loan

assumes significance. According to PW-1, the loan of

Rs.15 lakhs was paid into the hands of a representative

of the appellant at his request. The appellant failed to

indicate even the name of the representative to whom the

alleged amount of Rs.15 lakhs is stated to have been paid

over in cash. The entire amount, significantly, is

alleged to have been paid over without obtaining a

receipt or document evidencing the payment of the amount.

In the notice of demand that was issued by the

complainant to the appellant after the cheque had been

returned for want of funds, the complainant stated that

the appellant had sought a 'financial accommodation' of

Rs.15 Lakhs and paid a sum of Rs.20,000 (corrected

thereafter in a corrigendum). The first appellate court

noted in the course of its judgment that while conducting

the cross-examination of the accused, the complainant had

stated that the accused had demanded a loan of Rs.15

lakhs, but at that time the complainant had only paid an 11

amount of Rs.5 Lakhs as a loan for which the accused

issued Exhibit P1. This suggestion was specifically

denied by the accused. In this context, the first

appellate court observed that whether the complainant had

furnished a hand loan of Rs.15 lakhs to the accused as

stated in the complaint or whether the complainant had

paid Rs.20 lakhs as mentioned in the legal notice dated

10 August 2004 or whether he had paid an amount of Rs.5

lakhs as suggested during the course of cross-examination

was a matter of serious doubt. If the complainant had

paid Rs.15 lakhs to the accused, the suggestion during

the course of cross-examination of having paid an amount

of Rs.5 lakhs casts serious doubt on the existence of a

debt in the first place.

Besides what has been set out above, an important

facet in the matter was that the complainant failed to

establish the source of funds which he is alleged to have

utilized for the disbursal of the loan of Rs.15 lakhs to

the appellant. During the course of his cross-examination

the complainant deposed that earlier, the appellant had

furnished two cheques, one of ICICI Bank for Rs.5 lakhs

and another of Canara Bank for Rs.10 lakhs which he had 12

presented. The complainant admitted that he had not

mentioned anything about the accused having issued these

two cheques in his complaint. Nothing was stated by the

complainant in regard to the fate of the earlier two

cheques which were allegedly issued by the appellant. The

non-disclosure of the facts pertaining to the earlier two

cheques, and the steps, if any, taken for recovery was

again a material consideration which indicated that there

was a doubt in regard to the transaction.

On a totality of the facts and circumstances and

based on the evidence on the record, the first appellate

court held that the presumption under Section 139 of the

Act stood rebutted and that the defence stood

probabalised. From the judgment of the High Court, the

significant aspect of the case which stands out is that

there has been no appreciation of the evidence or even a

reference to the reasons furnished by the first appellate

court. The High Court adverted to the judgment of this

Court in Rangappa (supra). Having adverted to that

decision, the High Court reversed the order of acquittal

by holding that a mere denial of the transactions or an

omnibus denial of the entire transaction could not be 13

considered as a tenable defence. The judgment of the High

Court is unsatisfactory and does not contain any

reference to the evidence whatsoever. There was

absolutely no valid basis to displace the findings of

fact which were arrived at by the first appellate court,

while acquitting the accused.

For the reasons indicated above, we are of the view

that having regard to the law laid down by the three

Judge Bench in Rangappa (supra) the appellant duly

rebutted the presumption under Section 139 of the Act.

His defence that there was an absence of a legally

enforceable debt was rendered probable on the basis of

the material on record. Consequently, the order of

acquittal passed by the first appellate court was

justified.

In the circumstances, we allow these appeals and set

aside the impugned judgment of the High Court convicting

the appellant under Section 138 of the Act. We,

accordingly, restore the order of acquittal passed by the

first appellate court.

14

.... ..........................J. [DR.DHANANJAYA Y. CHANDRACHUD]

.... ........................J. [M.R. SHAH] NEW DELHI;

JANUARY 18, 2019.

15

ITEM NO.39 COURT NO.11 SECTION II-C

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (Crl.) No(s). 3737-3738/2016

(Arising out of impugned final judgment and order dated 14-11-2014 in CRLAP No. 861/2012 21-01-2016 in IA No. 1/2015 21-01-2016 in CRLAP No. 861/2012 passed by the High Court Of Karnataka At Bengaluru)

ANSS RAJASHEKAR Petitioner(s)

VERSUS

AUGUSTUS JEBA ANANTH Respondent(s)

Date : 18-01-2019 These petitions were called on for hearing today.

CORAM : HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MR. JUSTICE M.R. SHAH

For Petitioner(s) Mr. Jay Kishor Singh, AOR

For Respondent(s) Mr. Abhay Kumar, AOR Mr. Saurabh Mishra, Adv.

Mr. Vineet Kumar Singh, Adv.

Mr. Himanshu Pal Singh, Adv.

UPON hearing the counsel the Court made the following O R D E R

Leave granted.

(ASHWANI THAKUR) (SAROJ KUMARI GAUR) 16

COURT MASTER (SH) BRANCH OFFICER 17

ITEM NO.39 COURT NO.11 SECTION II-C

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (Crl.) No(s). 3737-3738/2016

(Arising out of impugned final judgment and order dated 14-11-2014 in CRLAP No. 861/2012 21-01-2016 in IA No. 1/2015 21-01-2016 in CRLAP No. 861/2012 passed by the High Court Of Karnataka At Bengaluru)

ANSS RAJASHEKAR Petitioner(s)

VERSUS AUGUSTUS JEBA ANANTH Respondent(s)

Date : 18-01-2019 These petitions were called on for hearing today.

CORAM : HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MR. JUSTICE M.R. SHAH

For Petitioner(s) Mr. Jay Kishor Singh, AOR

For Respondent(s) Mr. Abhay Kumar, AOR Mr. Saurabh Mishra, Adv.

Mr. Vineet Kumar Singh, Adv.

Mr. Himanshu Pal Singh, Adv.

UPON hearing the counsel the Court made the following O R D E R

Leave granted.

The appeals are allowed in terms of the signed reportable judgment.

Pending application(s), if any, stands disposed of accordingly.

(ASHWANI THAKUR) (SAROJ KUMARI GAUR) COURT MASTER (SH) BRANCH OFFICER

(Signed reportable judgment is placed on the file)