TaxTMI 
TaxTMI 
2023 (1) TMI 503
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.... they were arrayed before the trial Court for the sake of convenience. 5. In nutshell, the complaint was filed before the learned Magistrate at Canacona against the accused which was registered as Criminal Case No.29/NI/2014. It was the complaint under Section 138 of the N.I. Act. In short, it is the case of the complainant that he knows the accused and both of them are distant relatives. The accused borrowed a sum of Rs.2,00,000/- from the complainant for his personal needs. Towards repayment of such borrowed amount, the accused issued two cheques in favour of the complainant dated 04/06/2014 amounting to Rs.1,00,000/- each, drawn on Corporation Bank, Loliem branch Canacona. The complainant presented both cheques for encashment on 15/07/2014. However, the cheques were returned with the endorsement "Account closed". This memorandum was received by the complainant on 15/07/2014. A legal notice dated 16/07/2014 was addressed to the accused through the registered post demanding the amount of Rs.2,00,000/- within 15 days failing which action would be initiated under Section 138 of the N.I.Act. Though the accused received the notice on 18/07/2014, failed to comply with it. The ac....
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.... accused admitted receipt of loan of Rs.2,00,000/- which was without charging any interest and that too parties are related to each other, the question of invoking the provision of The Money Lenders Act is clearly misplaced. The provisions of The Goa Money-Lenders Act, 2001 are not at all attracted in the present case and the complainant has been unnecessarily and without any evidence been branded as a money lender though he tried to help the accused being a relative. He would submit that findings of the learned trial Court have been disturbed by the First Appellate Court on totally different grounds and without any such material on record. He would submit that before the Appellate Court, a totally new defence was raised and accepted without material on record to that effect. According to him, such findings of the First Appellate Court are not only perverse but incorrect so as to disprove legal presumption arising in favour of the complainant. He invited the attention of this Court to the documents and the admissions on the part of the accused himself which confirm the case of the complainant on the aspect of grant of loan. The defence raised by the accused or so called repayment o....
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....nt. 16. Shri Lobo then would submit that reply from the complainant to the letter dated 09/07/2014 is dated 16/07/2014 and before that date, both the cheques were returned unpaid. However, this fact has not been disclosed in the said reply dated 16/07/2014. Similarly, the legal notice issued by the Advocate for the complainant is also dated 16/07/2014, however, there is no reference in the reply filed by the complainant dated 16/07/2014 about issuance of such legal notice through his Advocate. Thus, the complainant suppressed many facts and circumstances and, therefore, his conduct assumed importance in deciding the matter. 17. Mr. Lobo then submitted that the cross-examination of the complainant clearly goes to show that he is in the habit of lending money to various persons and, therefore, an inference could be drawn that the complainant is indulging with money lending activities. According to him, such an aspect which the accused has brought on record needs to be considered on the touchstone of preponderance of probabilities and when there is material to show that the complainant advanced loan to different persons, the probability of money lending activity cannot be ruled out.....
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....orceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat [(2008) 4 SCC 54 : (2008) 2 SCC (Cri) 166] 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 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 che....
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....ead the Court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasised that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged under Sections 118 and 139 of the NI Act. This Court stated the principles in Kumar Exports [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513] "20. 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. The accused may adduce direct evidence to prove that the note in question was not supp....
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....ecord evidence to disprove or rebut the presumption in support of her defence available under Section 139 of the Act. The statement of the accused recorded under Section 313 of the Code is not a substantive evidence of defence, but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case of the accused. Therefore, there is no evidence to rebut the presumption that the cheques were issued for consideration." 23. In the case of Basalingappa(supra) the Apex Court discussed in detail drawing of presumption under Sections 118, 138 and 139 of the N.I. Act and how such presumption could be rebutted, what could be the standard of proof? It was held that while the prosecution must establish its case beyond a reasonable doubt, the accused to prove a defence must only meet the standard of preponderance of probabilities. 24. In the case of Dr. Srishti Ashutosh Prabhu Dessai v/s. Mr. Dadamiyan M. Bagewadi@ Imran Mohammad Umar Bagewadi (Criminal Appeal No.23 of 2015) decided on 03/10/2022, considered the presumption and observed in para 20 that the presumption under Section 139 of N.I. Act is a presumption of law as distinguished from a pr....
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.... the N.I. Act cannot be claimed to have been rebutted. The probability must be shown to convince the Court. Suggestions are only considered to be an attempt while cross-examining the witness to elicit facts. However, once a suggestion put to the witness is denied the onus remains as it is on such a party to prove it otherwise. In other case, if a suggestion is admitted by the witness, there is no need for producing further proof. Thus, it could be said that giving suggestions is only by way of an attempt to try and get admission from the witness and nothing more. 28. The learned Counsel Shri Lobo though vehemently tried to claim that the conduct of the complainant needs to be looked into but failed to satisfy this Court about the so called defence raised by the accused regarding repayment of the entire loan. The accused failed to step into the witness box. Thus, only on the contentions of few suggestion which in fact were denied by the complainant, no inference could be drawn even on the basis of probability in favour of the accused. 29. The second aspect which the learned Counsel Shri Lobo tried to demonstrate is in respect of the complainant indulging in money lending activitie....
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....the Government; (iv) a loan advanced to a Government servant from a fund, established for the welfare or assistance of Government servants, and which is sanctioned by the Government; (v) a loan advanced by a Co-operative Society; (vi) an advance made to a subscriber to, or a depositor, in a provident fund, from the amount standing to his credit in the fund in accordance with the rules of the fund; (vii) a loan to or by an insurance company as defined in the Insurance Act, 1938 (Central Act 4 of 1938); (viii) a loan advanced to, or by a bank; (ix) a loan to, or by, or deposit with, anybody (being a body not falling under any of the other provisions of this clause), incorporated by any law for the time being in force in the State of Goa; (x) an advance of any sum exceeding rupees three thousand made on the basis of a Negotiable Instrument as defined in the Negotiable Instruments Act, 1881 (Central Act 26 of 1881), other than a promissory note; (xi) an advance of any sum exceeding rupees three thousand made on the basis of a hundi (written in English or any other Indian language); (xii) an advance made bonafide by any person carrying on any business, not having for ....
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....rest, it clearly shows that the said person is not having any intention to carry out money lending business. First of all the purpose of the Act of 2001 is for the regulation and control of transaction of money lending in the State of Goa. 38. If it is considered that the complainant advanced loan without charging any interest from the borrower, such transaction cannot be brought within the definition of loan as found in Section 2(k) of the Money-Lenders Act. Similarly, in the present matter the accused issued cheque towards repayment of the said advance i.e. only principal amount and, therefore, provisions of Section 2 (k)(x) of the Money-Lenders Act 2001 stands attracted. 39. The complainant specifically deposed that he advanced an amount of Rs.2,00,000/- to the accused who agreed to return it within a period of two months. Thus, it is clear from the cross-examination that such advance was made in the month of March, 2014 and it is accepted from the accused to refund it within the agreed time period. However, both the cheques are dated 04/06/2014. This also shows that the accused issued cheques in discharge of the loan which he admittedly received from the complainant. Bo....
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....hers. He did not charge a single pie towards interest in refund of such advances. 44. In the case of Romaldina Barreto E Carneeiro (supra), it has been brought on record that a promissory note was executed by her in favour of the complainant, which brings such a case under exception of the definition of loan in Section 2(k) as quoted earlier. 45. In the case of Sulekhabai (supra), after considering the definition in the Money Lenders Act, 2001, observed that the expression "activity" as held that a solitary instance of giving a loan does not make a person "Money Lender". Taking clue from the said observation and considering it further on the basis of definition clause itself, even if there are multiple instances of advances, it cannot be labelled as money lending activities unless the conditions as found in Section 2(k) are fulfilled and the case is not covered under the exceptions. 46. In the case of Girdhari Parmanand Motiani (supra), two complaints were filed by Girdhari under Section 138 of the N.I. Act claiming that he advanced loan to respondent/Vinayak who issued cheque towards the repayment, however, both the cheques were dishonoured. The learned Magistrate acquitted the....
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....verse. The provisions in terms as understood in law is considered in Gamini Bala Koteswara Rao and others v/s. State of Andhra Pradesh through Secretary (2009) 10 SCC 636 and the same has also been relied upon in Basalingappa (supra). There is no much dispute about the settled proposition of law in dealing with an appeal challenging acquittal. However, when the order of the trial Court or the First Appellate Court as the case may be is found to be perverse and without considering the provisions of the Money Lenders Act in proper manner and thereby branding any one as money-lender, the High Court will be fully justified in interfering with such findings. 50. First of all paragraph 26 of the judgment of the First Appellate Court show points for determination. The first point reads thus: 1. Whether it was proved that the cheques were issued towards a legally enforceable debt? 51. At this stage, once again it is necessary to remind the Court/ Judges that framing of points in a criminal matter is not an empty formality and points for determination needs to be framed in order to answer the disputed questions effectively. 52. This Court in the case of Tanveer Khatib (supra), observed ....
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....ven before the First Appellate Court. Paragraph 10 of the impugned judgment shows the arguments advanced on behalf of the accused thereby categorically state that in his reply to the demand notice he stated that he repaid the entire amount along with interest by making payment on monthly basis. Thus, it is clear from the record of the trial Court as well as arguments advanced before the First Appellate Court that the accused never disputed about issuing signed cheques in favour of the complainant. Though it was his defence that he handed over such blank signed cheque as a security. It is now well settled that even a cheque duly signed by the accused for the purpose of security of any loan, attracts the provisions of Section 138 of the N.I. Act. It is also well settled that blank signed cheque issued by the accused is presumed to have been handed over to the complainant with a understanding or the condition that blank portions on the cheque would be filled up before presenting it. Hence, now in the present matter there is absolutely no dispute about the issuance of cheque by the accused in favour of the complainant. Similarly, it is proved by the complainant that he presented the c....
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....ns and that too without charging any interest, it cannot be presumed that such activity is covered under the Money Lenders Act and, therefore, recovery of it is barred. While deciding point No.2 of the impugned judgment, the learned First Appellate Court has given undue importance to certain aspects which are not found recorded in the complaint, legal notice and the affidavit of the complainant. Similarly, much importance is given to the letter addressed by the accused dated 09/07/2014 thereby demanding both the cheques. It needs to be kept in mind that simply mentioning in a letter that the accused has repaid the entire amount without disclosing the details and without leading any evidence to that effect cannot be construed as rebuttal of the presumption. The said letter dated 09/07/2014 is so cryptic and reads thus : "Sub: Request to return cheques given as security. I, Rajendra A. Varik, hereby request you to return the cheques bearing Nos.031631 and 031632 drawn on Corporation Bank, Loliem Branch of Rs.1,00,000/- each issued to you as security as the loan amount has been fully repaid to you. Huge interest has been collected by you besides overpayment has collected as repaym....