JITHENDRA KUMAR N M AND T GURURAJ, 2024 (KAR) 243
FACTS: Jitendra Kumar NM filed a complaint alleging that the accused, who were relatives and well-acquainted with him, borrowed Rs. 5 Lakhs from him in October 2013 for family needs and to purchase a site, promising repayment within 4 to 6 months. The complainant provided the loan in cash, but the accused failed to repay it as agreed. In response to persistent demands for repayment, the accused issued a cheque dated November 1, 2014, for Rs. 5 Lakhs, dated November 15, 2014. However, the cheque bounced due to insufficient funds, leading to the filing of a complaint against the accused under the relevant Act. The trial court acquitted the accused after evaluating the evidence, prompting this appeal.
ISSUE: Whether the presumption under Section 139 of the Negotiable Instruments Act (N.I. Act) applies in favor of the complainant or the respondent when the accused admits in their reply notice to having taken a loan.
OBSERVATION: Allowing the appeal, the court held that "The approach taken by the learned Magistrate in this matter is arbitrary and erroneous, necessitating this Court's intervention." The bench emphasized that the cheque, which bears the accused's signature, indisputably belongs to him. Therefore, under Section 139 of the N.I. Act, the initial presumption that the cheque was issued for a legally enforceable debt favors the complainant. Additionally, under Section 118 of the N.I. Act, there is a presumption that the transaction was for consideration, and it is incumbent upon the accused to rebut this presumption. The court further stated, "When the accused admitted in their reply notice to having availed the loan and acknowledged that the cheque belongs to them and bears their signature, there can be no dispute regarding the transaction by the accused." Consequently, the court convicted the accused under Section 138 of the N.I. Act and sentenced them to pay a fine of Rs. 6.00 Lakhs, with default imprisonment of six months. Out of the fine, Rs. 5,50,000 is to be paid as compensation to the complainant, and Rs. 50,000 is to be remitted to the State for incurred expenses.
