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2019 (12) TMI 386

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....he accused asked for a friendly loan in the month of March 2014 appertaining to Rs. 25 Lacs and further, assured that the aforesaid amount will be returned back within one month putting reliance upon his assurance, he paid the amount. In the month of 2014, the accused repaid Rs. 1, 24,000/- out of Rs. 25 Lacs, whereupon remaining amount of Rs. 23, 76,000/- stood due and for that, undertook that the aforesaid amount would be repaid in shortest span of time but did not keep his words, whereupon, the complainant exerted pressure for repayment. Lastly, on 18.06.2014, accused called him at his residence and handed over cheque bearing no. 204735 of Canara Bank which the complainant deposited in his account standing in Axis Bank and as reported, the cheque could not be honoured on account of insufficient fund. Thereafter, the complainant served a registered Advocate notice on 08.07.2014 but, even after receipt thereof, accused failed to make payment of the due amount. Thereafter, the complainant had approached the police wherefrom registration of case was declined as a result of which a Complaint Case has been filed. 4. As is evident, after filing of the  aforesaid complaint, an inq....

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....e happens to be perversity in ordinary course of nature, the judgment of acquittal should not be interfered with because of the fact that by having such finding, the basic principle of criminal jurisprudence that accused is considered to be innocent unless convicted, is found further strengthened. It has also been submitted that even if the facts of the case probabilizes the contrary conclusion to whatever has been recorded by the learned lower court, the finding so recorded in favour of accused is to be honoured, accepted. That being so, in ordinary course of nature, the finding should not be interfered with. 9. Now coming to the facts of the case, it has been submitted that in accordance with Section 139 of the NI Act, legal fiction having been against the accused, is rebuttable one and, from the cross-examination as well as from the cheque itself, it is evident that save and except signature of the accused, other formalities are in different pen hand-writing and that is suggestive of some other kind of activities than whatsoever been alleged and so, the presence of aforesaid pretentious, abstract would defease the version, that being so, the learned lower court rightly observed....

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.... every Accused person gets strengthened when such an Accused is acquitted by the trial court and the High Court should not lightly interfere with the decision of the trial court which has recorded the evidence and observed the demean our of witnesses. This Court in the case of Chandrappa and Ors. v. State of Karnataka : (2007) 4 SCC 415, laid down the following principles: 42. From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge: (1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded. (2) The Code of Criminal Procedure,1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law. (3) Various expressions, such as, "substantial and compelling reasons", "good and sufficient grounds", "very strong circumstances", "distorted conclusions", "glaring mistakes", etc. are not intended to curtail extensive powers of an appellate court in an app....

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....on on the question whether the approach of the trial Court in dealing with the evidence was patently illegal or the conclusions arrived at by it were wholly untenable. Confirming the order passed by the High Court convicting the Accused on reversal of the acquittal passed by the learned trial Court, after satisfy that the order of acquittal passed by the learned trial Court was perverse and suffer from infirmities, this Court declined to interfere with the order of conviction passed by the High Court. While confirming the order of conviction passed by the High Court, this Court observed in paragraph 8 as under: 8. We have perused the judgment under appeal to ascertain whether the High Court has conformed to the aforementioned principles. We find that the High Court has not strictly proceeded in the manner laid down by this Court in Doshi case : (1996) 9 SCC 225 viz. first recording its conclusion on the question whether the approach of the trial court in dealing with the evidence was patently illegal or the conclusions arrived at by it were wholly untenable, which alone will justify interference in an order of acquittal though the High Court has rendered a well-considered judgmen....

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....by the trial court as manifestly erroneous and therefore it was the duty of the High Court to interfere with an order of acquittal passed by the learned Sessions Judge. 11.3 In the case of Atley (supra), in paragraph 5, this Court observed and held as under: "5. It has been argued by the learned Counsel for the Appellant that the judgment of the trial court being one of acquittal, the High Court should not have set it aside on mere appreciation of the evidence led on behalf of the prosecution unless it came to the conclusion that the judgment of the trial Judge was perverse. In Our opinion, it is not correct to say that unless the appellate court in an appeal Under Section 417, Code of Criminal Procedure came to the conclusion that the judgment of acquittal under appeal was perverse it could not set aside that order. It has been laid down by this Court that it is open to the High Court on an appeal against an order of acquittal to review the entire evidence and to come to its own conclusion, of course, keeping in view the well established Rule that the presumption of innocence of the Accused is not weakened but strengthened by the judgment of acquittal passed by the trial cou....

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.... the order of acquittal solely on the ground on re-appreciation of the entire evidence that two views are possible." 16. It has been settled at rest that mere dishonour of cheque could not raise a cause of action unless the payee makes a demand in writing to the drawer for payment and the drawer fails as observed by the Apex Court in Rajneesh Aggarwal v. Amit J. Bhalla reported in 2001 (1) PLJR 177 SC. 17. In likewise manner, it has also been conclusively held that service of notice of demand is a condition precedent for filing a complaint as observed by the Apex Court in Central Bank of India & Anr v. M/s Saxons Farms & Ors reported in 2000 (1) PLJR 17 (SC). So far legal requirement attracting Section 138 and further the obligation of the accused, more particularly, during course of discharging its obligation in terms of Section 139 of the Act coupled with sanctity of the cheque (Negotiable Instrument) having so issued, in the background of conflicting judgment, Krishna Janardan Bhat v. Dattatraya G. Hegde: (2008) 4 SCC 54 relied upon by learned counsel for the respondent no. 2., the matter has come up before three judges Bench in connection with Rangappa v. Mohan reported in 20....

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....y enforceable debt or other liability. 139. Presumption in favour of holder.- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt, or other liability. 9. Ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 of the Act. With respect to the facts of the present case, it must be clarified that contrary to the trial court's finding, Section 138 of the Act can indeed be attracted when a cheque is dishonoured on account of 'stop payment' instructions sent by the accused to his bank in respect of a post-dated cheque, irrespective of insufficiency of funds in the account. This position was clarified by this Court in Goa Plast (Pvt.) Ltd. v. Chico Ursula D'Souza : (2003) 3 SCC 232, wherein it was held: "Chapter XVII containing Sections 138 to 142 was introduced in the Act by Act 66 of 1988 with the object of inculcating fai....

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....this Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde : (2008) 4 SCC 54, the operative observations from which are reproduced below (S.B. Sinha, J. at Paras. 29-32, 34 and 45): 29. Section 138 of the Act has three ingredients viz.: (i) that there is a legally enforceable debt (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. 30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability. 31. The courts below, as noticed herein before, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The cour....

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....erable debt is not a matter of presumption under Section 139 of the Act' and that 'it merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability' [See Para. 30 in Krishna Janardhan Bhat (supra)] are in conflict with the statutory provisions as well as an established line of precedents of this Court. It will thus be necessary to examine some of the extracts cited by the respondent-claimant. For instance, in Hiten P. Dalal v. Bratindranath Banerjee : (2001) 6 SCC 16, it was held (Ruma Pal, J. at Paras. 2223): "22. Because both Sections 138 and 139 require that the Court 'shall presume' the liability of the drawer of the cheques for the amounts for which the cheques are drawn,..., it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused (...). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the cour....

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....ition of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbably or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held e....

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....observations in Krishna Janardhan Bhat (supra) 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. 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 cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parti....

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.... debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice. to any other provision of this Act, be punished with imprisonment for a term which may extend to two year, or with fine which may extend to twice the amount of the cheque, or with both 12. The proviso to Section 138, however, is all important and stipulates three distinct conditions precedent, which must be satisfied before the dishonour of a cheque can constitute an offence and become punishable. The first condition is that the cheque ought to have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque,....

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....ndan Bhadran's case (supra) the correctness whereof we are examining, recognized that the holder or the payee of the cheque has the right to present the same any number of times for encashment during the period of six months or during the period of its validity, whichever is earlier. 16. Presentation of the cheque and dishonour thereof within the period of its validity or a period of six months is just one of the three requirements that constitutes 'cause of action' within the meaning of Sections 138 and 142(b) of the Act, an expression that is more commonly used in civil law than in penal statutes. For a dishonour to culminate into the commission of an offence of which a court may take cognizance, there are two other requirements, namely, (a) service of a notice upon the drawer of the cheque to make payment of the amount covered by the cheque and (b) failure of the drawer to make any such payment within the stipulated period of 15 days of the receipt of such a notice. It is only when the said two conditions are superadded to the dishonour of the cheque that the holder/payee of the cheque acquires the right to institute proceedings for prosecution under Section 138 of....

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....ging their liabilities without really intending to honour the promise that goes with the drawing up of such a negotiable instrument. It was intended to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case the cheque was dishonoured and to safeguard and prevent harassment of honest drawers. (See Mosaraf Hossain Khan v. Bhagheeratha Engg. Ltd. : (2006) 3 SCC 658, C.C. Alavi Haji v. Palapetty Muhammed & Anr. : (2007) 6 SCC 555 and Damodar S. Prabhu v.Sayed Babulal H. : (2010) 5 SCC 663). Having said that, we must add that one of the salutary principles of interpretation of statutes is  to adopt an interpretation which promotes and advances the object sought to be achieved by the legislation, in preference to an interpretation which defeats such object. this Court has in a long line of decisions recognized purposive interpretation as a sound principle for the Courts to adopt while interpreting statutory provisions. We may only refer to the decisions of this Court in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar : AIR 1963 SC 1207), where this Court observed: "8. ... It is a recognised rule of interpr....

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.... respond to the purpose for which it was made and also take cognizance of the current capabilities of technology and life-style of the community. It is well settled that the purpose of law provides a good guide to the interpretation of the meaning of the Act. We agree with the views of Justice Krishna Iyer in Busching Schmitz Private Ltd's case (supra) that legislative futility is to be ruled out so long as interpretative possibility permits". 20. In Basalingappa v. Mudibasappa reported in 2019 (3) PLJR 86 (SC), it has been held as follows:- "8. We having noticed the facts of the case and the evidence on the record, we need to note the legal principles regarding nature of presumptions to be drawn Under Section 139 of the Act and the manner in which it can be rebutted by an Accused. We need to look into the relevant judgments of this Court, where these aspects have been considered and elaborated. Chapter XIII of the Act, 1881 contains a heading "Special Rules of Evidence". Section 118 provides for presumptions as to negotiable instruments. Section 118 is as follows: 118. Presumptions as to negotiable instruments. --Until the contrary is proved, the following presumptions sh....

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....to rebut the presumption. The onus even in such cases upon the Accused is not as heavy as is normally upon the prosecution to prove the guilt of the Accused. If some material is brought on the record consistent with the innocence of the Accused which may reasonably be true, even though it is not positively proved to be true, the Accused would be entitled to acquittal. 11. This Court in Bharat Barrel & Drum Manufacturing Co. v. Amin Chand Pyarelal, : (1999) 3 SCC 35 had occasion to consider Section 118(a) of the Act. This Court held that once execution of the promissory note is admitted, the presumption Under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable and Defendant can prove the non-existence of a consideration by raising a probable defence. In paragraph No. 12 following has been laid down: 12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption Under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The Defendant can prove the nonexistence of a consider....

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.... 12 SCC 1, in the following terms: (SCC pp. 30-31, para 52) It is true that the legislature used two different phraseologies 'shall be presumed' and 'may be presumed' in Section 42 of the Punjab Land Revenue Act and furthermore although provided for the mode and manner of rebuttal of such presumption as regards the right to mines and minerals said to be vested in the Government vis-a-vis the absence thereof in relation to the lands presumed to be retained by the landowners but the same would not mean that the words 'shall presume' would be conclusive. The meaning of the expressions 'may presume' and 'shall presume' have been explained in Section 4 of the Evidence Act, 1872, from a perusal whereof it would be evident that whenever it is directed that the court shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression 'shall presume' cannot be held to be synonymous with 'conclusive proof'. 13. It was noted that the expression "shall presume" cannot be held to be synonymous with conclusive proof. Referring to definition of words "proved" and "disproved" Und....

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....ble doubt, the standard of proof so as to prove a defence on the part of an Accused is "preponderance of probabilities". Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies. 17. In Kumar Exports v. Sharma Carpets, : (2009) 2 SCC 513, this Court again examined as to when complainant discharges the burden to prove that instrument was executed and when the burden shall be shifted. In paragraph Nos. 18 to 20, following has been laid down: 18. Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial Under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the Accused, the Rules of presumptions Under Sections 118 and 139 of the Act help ....

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.... of the trial court convicting the Accused. In the above case, the Accused had admitted signatures on the cheque. This Court held that where the fact of signature on the cheque is acknowledged, a presumption has to be raised that the cheque pertained to a legally enforceable debt or liability, however, this presumption is of a rebuttal nature and the onus is then on the Accused to raise a probable defence. In Paragraph No. 13, following has been laid down: 13. The High Court in its order noted that in the course of the trial proceedings, the Accused had admitted that the signature on the impugned cheque (No. 0886322 dated 8-2-2001) was indeed his own. Once this fact has been acknowledged, Section 139 of the Act mandates a presumption that the cheque pertained to a legally enforceable debt or liability. This presumption is of a rebuttal nature and the onus is then on the Accused to raise a probable defence. With regard to the present facts, the High Court found that the defence raised by the Accused was not probable. 19. After referring to various other judgments of this Court, this Court in that case held that the presumption mandated by Section 139 of the Act does indeed inclu....

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..... 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. 21. We may now notice judgment relied by the learned Counsel for the complainant, i.e., judgment of this Court in Kishan Rao v. Shankargouda, : (2018) 8 SCC 165. This Court in the above case has examined Section 139 of the Act. In the above case, the only defence which was taken by the Accused was that cheque was stolen by the Appellant. The said defence was rejected by the trial court. In paragraph Nos. 21 to 23, following was laid down: 21. In the present case, the trial court as well as the appellate court having found that cheque contained the signatures of the Accused and it was gi....

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.... a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the Defendant-Accused cannot be expected to discharge an unduly high standard of proof. 23. No evidence was led by the Accused. The defence taken in the reply to the notice that cheque was stolen having been rejected by the two courts below, we do not see any basis for the High Court coming to the conclusion that the Accused has been successful in creating doubt in the mind of the Court with regard to the existence of the debt or liability. How the presumption Under Section 139 can be rebutted on the evidence of PW 1, himself has not been explained by the High Court. 22. The above case was a case where this Court did not find the defence raised by the Accused probable. The only defence raised was that cheque was stolen having been rejected by the trial court and no contrary opinion having been expressed by the High Court, this Court reversed the judgment of the High Court restoring the conviction. The Respondent ....

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....ports v. Sharma Carpets : (2009) 2 SCC 513, the Supreme Court in paras (14-15) and paras (1820) held as under: 14. Section 139 of the Act provides that itshall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. 15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume" (rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference, affirmative or dis-affirmative of the existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without exa....

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....e Accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the Accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the Accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the Accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The Accused may also rely upon presumptions of fact, for instance, those me....

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....ption raised Under Section 139 of the Act. The defence of the Respondent that though he made payment for the commodities/rice bags, the blank cheques were not returned by the Appellant-complainant is quite unbelievable and unacceptable. The impugned judgment of the High Court cannot be sustained and is liable to be set aside. The Respondent-Accused is convicted Under Section 138 of the Negotiable Instruments Act in both the complaints; however, considering that the cheque transaction was of the year 2003, at this distant point of time, we do not deem it appropriate to impose any sentence of imprisonment on the Accused. 20. In the result, the impugned judgment ofthe High Court in Criminal Appeal Nos. 53 and 54 of 2006 is set aside and these appeals are allowed. The Respondent-Accused is convicted Under Section 138 of Negotiable Instruments Act and a fine of Rs. 2,97,150/- (Rs. 53,171/- + Rs. 1,93,979/- + compensation of Rs. 50,000/-) is imposed on the Respondent in default of which, the Respondent shall undergo imprisonment for six months. The fine amount of Rs. 2,97,150/- is to be deposited before the trial court within twelve weeks from today, failing which the Respondent shall ....

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.... he has stated that there was no document relating to aforesaid transaction. Cash payment was made. In para-7, he has stated that no other case has been instituted for realization of the amount. In para-9, he has stated that Advocate notice was sent on 08.07.2014 but neither any reply was received by him nor payment was made, on account of failure of payment, the case has been filed. In para-13, he has stated that he is not remembering the Cheque no.. Cheque was given on 18.06.2014 and on the same day, it was deposited in the bank for encashment. He has received the slip from the bank that on account of insufficient fund, the cheque has not been encashed. In para-15, he has stated that accused has brought the cheque duly signed since before. He had not signed the cheque at his house. In para-17, he has stated that the Advocate notice was sent after the cheque got dishonoured. In para-18, he has stated that he had informed the incident of cheque bounce through Advocate notice. The most surprising feature is the suggestion given to the PW-3 at para28, "it is not a fact that no such kind of occurrence had ever taken place rather on account of old enmity, this false case has been insti....