S.138 NI Act: “No prudent person will keep quite without issuing reply to legal notice, if he is not liable to pay”

The Court of Sessions Judge in Bangalore was dealing with an appeal arising out of the Judgment of Conviction passed by the Addl. Chief Metropolitan Magistrate, Bengaluru.

The complainant intended to purchase a property owned by the accused and a sum of ₹11,00,000/- was advanced by the complainant and later complainant came to know that some facts about the litigation pending against the property were suppressed by the accused and accordingly he has requested for refund of the amount. The accused had issued cheque. The same was not encashed by the complainant, since the accused was not able to arrange fund. Later the accused acknowledged liability and issued fresh cheque for a sum of Rs.11,00,000/- and also assured about the encashment.

The accused again failed to arrange funds. On demand he paid a sum of ₹1,00,000/- to the complainant on in February 2010 and assured to pay a sum of ₹3,00,000/- by April 2010 and remaining amount within the end of August 2010. It was further agreed by the accused and complainant that if the accused failed to comply the installment, a sum of ₹1,00,000/- paid by the accused adjusted against interest. The accused has failed to adhere to his assurance and ultimately, the cheque issued by the complainant was presented and it returned unpaid with an endorsement insufficient funds. Later a legal notice was issued, which are also duly served on accused, but no reply was given by the accused. Accordingly, a complaint was filed before the jurisdictional Magistrate.

The accused was secured before the court and he was enlarged on bail. For substance of accusation, the accused claimed trial. The Magistrate has convicted accused and imposed fine of ₹11,05,000/-, of which ₹5,000/- towards fine and remaining amount towards compensation payable to the complainant. Magistrate has also passed default sentence to undergo simple imprisonment for one year.

Aggrieved by the said Judgment of conviction accused filed the appeal in District Court.


Appellant’s case:
The appellant/accused submitted that the conviction order passed by the Magistrate is contrary to law and is without appreciation of materials on record and without considering the facts and circumstances of the case. The accused has stated that, the trial court ought to have held that, there is an admission by the complainant that some amount is already paid and remaining liability is only to the extent of ₹3,00,000/-. The accused has only admitted such signatures which were obtained when it was blank. Hence, adverse inference cannot be drawn. There is no legally recoverable debt.

Court’s observations:
The Court relied upon the decision in Rohitbhai Jivanlal Patel v. State of Gujarat, 2019 Latest Caselaw 289 SC, in which the Supreme Court had held that,
“On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead 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.

“…the result of such presumption is that existence of legally enforceable debt is to be presumed in favour of the complainant when such a presumption is drawn, the factors relating to the want of documentary evidence in the form of receipts or accounts or want of evidence as regards source of funds were not of relevant consideration while examining if the accused has been able to rebut the presumption or not.”

The Court noted that the accused had not issued any reply to the legal notice.

The Court stated that having regard to all these facts, the grounds of appeal urged before the court do not inspire confidence.

The Court observed that “No prudent person will keep quite without issuing reply to the legal notice, if he is not liable to pay such amount. At the earliest point of time, accused has not taken any such contention which now taken before this court. On-going through cross-examination of PW-1 nothing is elicited from him so as to disbelieve the case of the complainant and to accept the contention of accused. The accused has clearly admitted during the course of cross-examination that, he has taken back the earlier cheque and issued a new cheque. It clearly shows that, complainant’s version has strength in it. The cross-examination of DW-1 disclose that, accused is a B.Sc., graduate and he is very well aware about the consequence of issuing cheque and its return. Viewed from any angle, there is absolutely nothing available before this court to disbelieve the claims and contentions of the complainant in any manner.”

The Court held:
The Court held that the Order passed by the trial court requires no interference, since the grounds of appeal urged before this Court are merit-less.

Thus, the appeal failed and was dismissed with costs. Order passed by the trial court in was confirmed.

Bench: Judge K. Narayana Prasad
Case Title: Prasanna Kumar J.H v. Ranga Rao Y.N.
Case Details: Crl. A. No.774/2015

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