Negotiable Instruments Act, 1881 - Sections 118 and 138 - In the
scheme of the NI Act, mere creation of doubt is not sufficient.
On perusing the order of the Trial
Court, it is noticed that the Trial Court proceeded to pass the order of
acquittal on the mere ground of 'creation of doubt'. We are of the considered
view that the Trial Court appears to have proceeded on a misplaced assumption
that by mere denial or mere creation of doubt, the appellant had successfully
rebutted the presumption as envisaged by Section 139 of the NI Act. [Para
20]
Negotiable Instruments Act, 1881 - Sections 118 and 138 - Basic
ingredients for drawing of presumption.
For determination of the point as to
whether the High Court was justified in reversing the judgment and orders of the
Trial Court and convicting the accused for the offence under Section 138 of the
NI Act, the basic questions to be addressed to are two-fold: as to whether the
complainant had established the ingredients of Sections 118 and 139 of the NI
Act, so as to justify drawing of the presumption envisaged therein; and if so,
as to whether the accused-appellant had been able to displace such presumption
and to establish a probable defence whereby, the onus would again shift to the
complainant?
So far the question of existence of
basic ingredients for drawing of presumption under Sections 118 and 139 the NI
Act is concerned, apparent is that the accused-appellant could not deny his
signature on the cheques in question that had been drawn in favour of the
complainant on a bank account maintained by the accused for a sum of Rs. 3
lakhs each. The said cheques were presented to the Bank concerned within the
period of their validity and were returned unpaid for the reason of either the
balance being insufficient or the account being closed. All the basic
ingredients of Section 138 as also of Sections 118 and 139 are apparent on the
face of the record. The Trial Court had also consciously taken note of these
facts and had drawn the requisite presumption. Therefore, it is required to be
presumed that the cheques in question were drawn for consideration and the
holder of the cheques i.e., the complainant received the same in discharge of
an existing debt. The onus, therefore, shifts on the accused-appellant to
establish a probable defence so as to rebut such a presumption. [Para 14]
Negotiable Instruments Act, 1881 - Sections 118 and 138 -
Preponderance of probabilities.
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 nonexistence 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, emphasized
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 Section 118 and 139
of the NI Act.
Negotiable Instruments Act, 1881 - Sections 118 and 138 - The
aspect relevant for consideration had been as to whether the accused has
brought on record such facts / material / circumstances which could be of a
reasonably probable defence.
In the case at hand, even after
purportedly drawing the presumption under Section 139 of the NI Act, the Trial
Court proceeded to question the want of evidence on the part of the complainant
as regards the source of funds for advancing loan to the accused and want of
examination of relevant witnesses who allegedly extended him money for
advancing it to the accused. This approach of the Trial Court had been at
variance with the principles of presumption in law. After such presumption, the
onus shifted to the accused and unless the accused had discharged the onus by
bringing on record such facts and circumstances as to show the preponderance of
probabilities tilting in his favour, any doubt on the complainant's case could
not have been raised for want of evidence regarding the source of funds for
advancing loan to the accused-appellant. The aspect relevant for consideration
had been as to whether the accused-appellant has brought on record such
facts/material/circumstances which could be of a reasonably probable defence. [Para
17]
IN THE SUPREME COURT OF
INDIA
CRIMINAL APPELLATE
JURISDICTION
(Abhay Manohar Sapre) and (Dinesh Maheshwari) JJ.
Dated: 15th
March, 2019.
CRIMINAL APPEAL NO. 508
OF 2019
(Arising out of Special
Leave Petition (Crl.) 1883 of 2018)
ROHITBHAI JIVANLAL
PATEL ….. APPELLANT(S)
VS.
STATE OF GUJARAT &
ANR. ….. RESPONDENT(S)
J U D G M E N T
Dinesh Maheshwari, J.
Leave granted.
2. This appeal is directed against the common judgment and order
dated 08.01.2018 in R/Criminal Appeal No. 1187/2017 connected with R/Criminal
Appeal Nos. 1191/2017 to 1196/2017 whereby, the High Court of Gujarat at
Ahmedabad has reversed the respective judgment and orders dated 09.06.2017 as
passed by the 8th Additional Senior Civil Judge and Additional
Chief Judicial Magistrate, Vadodara in 7 criminal cases (1 Nos.
44345/2009, 46499/2008, 46254/2008, 48420/2008, 40321/2008, 48631/2008 and
46503/2008 respectively) pertaining
to the offence under Section 138 of the Negotiable Instruments Act, 1881 ('the
NI Act') for dishonour of 7 cheques in the sum of Rs. 3 lakhs each, as said to
have been drawn by the accused-appellant in favour of the complainantrespondent
No. 2. In the impugned judgment and order dated 08.01.2018, the High Court has
disapproved the acquittal of the accused-appellant and, while holding him
guilty of the offence under Section 138 of the NI Act, has awarded him the
punishment of simple imprisonment for a period of 1 year with fine to the
extent of double the amount of cheque (i.e., a sum of Rs. 6 lakhs) with default
stipulation of further imprisonment for a period of 1 year in each case; and,
out of the amount payable as fine, the complainant-respondent No. 2 is ordered
to be compensated to the tune of Rs. 5.5. lakhs in each case.
3. Briefly put, the substance of allegations and assertions of the
complainant-respondent No. 2 in each of the 7 cases aforesaid had been as
follows: He was having his office in Windor Plaza at Alkapuri, Vadodara and had
been visiting the shop of his friend Shri Jagdishbhai in National Plaza in the
same locality; the accused-appellant, a trader of edible spices, had his shop
near the shop of Shri Jagdishbhai and in due course of time, the accused, the
complainant and the said Shri Jagdishbhai became good friends. The complainant
alleged that after developing such friendship, the accused demanded from him a
sum of Rs. 22,50,000/- as loan for his immediate requirement; and he (the
complainant) extended such loan to the accused for a short term by collecting
money in piecemeal from his business group. According to the complainant, upon
regular demand for re-payment, the accused gave him cheques of different dates
drawn on Corporation Bank, Alkapuri Branch, Vadodara and also gave the
acceptance for re-payment on a stamp paper. The complainant alleged that the
cheques so issued by the accused, on being presented to the Bank for
collection, were returned unpaideither for the reason that the "opening balance
was insufficient" or
for the reason that the "account was closed". While alleging that the intention of the accused had
been of breach of trust and cheating, the complainant pointed out that he got
served the notices on the accused after dishonour of the cheques but did not
receive the requisite payment. It is noticed that in some of the cases, the
accused-appellant did send his reply, denying the transaction as alleged.
4. With the allegations and assertions aforesaid, the
complainantrespondent No. 2 filed the above-mentioned 7 complaint cases against
the accused-appellant in the months of June to November, 2008. In trial, the
complainant examined himself as PW-1 and the said Shri Jagdishbhai as PW- 2.
The complainant also produced the relevant documentary evidence including the
cheques in question; the Bank returning memos and intimation letters; the
demand notices; the replies wherever sent by the appellant; and the written
acknowledgement on a stamp paper by the accused. The accused was examined under
Section 313 of the Code of Criminal Procedure, 1973 where he asserted that he
had no money transaction with the complainant; and had neither issued any
cheque nor written any note for any legal debt in favour of the complainant.
The accused-appellant, however, asserted that several years in the past, he had
some transaction with the said Shri Jagdishbhai and the cheques and blank stamp
paper lying with Shri Jagdishbhai have been fraudulently misused to unlawfully
recover the money from him. The accused-appellant, however, did not lead any
evidence.
5. After having heard the parties, the Trial Court formulated
similar points for determination in each of these 7 cases which could be
noticed as under2:
"1. Whether the complainant proves that the accused has issued
and handed over the Cheque bearing No. 763346 of Rs. 3, 00,000/- towards legal
due amount from the account maintained by him, and upon presenting the said
cheque in bank of the complainant for encashment, the same was returned back
unpaid with endorsement of the bank "Today's opening balance is
insufficient" and thereafter the complainant has served demand notice to
the accused and the said notice has been served to the accused even though, the
accused has not paid the cheque amount within the stipulated Notice period and
thereby the accused has committed offence punishable under section 138 of the
Negotiable Instrument Act?
2. What order?"
6. After examining the record, the Trial Court found that the
accused had admitted his signature on the cheques and, with reference to the
decision of this Court in the case of Rangappa v. Sri Mohan : (2010) 11 SCC 441, drew the presumption envisaged by Section 139 of
NI Act.
6.1. However, after having drawn the presumption, the Trial
Court found several factors in favour of the accused and observed, inter alia, that: (a) there was no documentary evidence to
show the source of income for advancing the loan to the accused; (b) the
complainant failed to record the transaction in the form of receipts,
promissory notes or even kaccha notes; (c) vague and uncertain statement was
made by the complainant as compared to the statement of his witness-Shri
Jagdishbhai; (d) the complainant had no knowledge about the dates and other
particulars of such 2 The extraction is from the judgment of the Trial
Court in Criminal Case No. 46499 of 2008.cheques; (e) the witness of complainant was in know of the facts
more than the complainant; (f) the complaint allegedly extended the loan to the
tune of Rs. 22,50,000/- but the 7 cheques in these cases were of Rs. 3,00,000/-
each and there was no explanation from the complainant as regards the remaining
Rs. 1,50,000/-; and (g) the suggestion about washing away of the earlier
cheques in rains was also doubtful when the complainant's office was on the 8th floor of Windor Plaza
6.2 With reference to the aforesaid factors and circumstances,
the Trial Court concluded that the accused was successful in bringing rebuttal
evidence to the requisite level of preponderance of probabilities; and observed
that the complainant had failed to prove, beyond all reasonable doubt, that the
cheques were issued in part payment of the loan amount of Rs. 22,50,000/-.
Hence, all the 7 complaint cases were dismissed by similar but separate
judgment and orders dated 09.06.2017 while observing as under3:-
3 .
Again, the extraction is from the judgment of the Trial Court in Criminal Case
No. 46499 of 2008.
"19……All these circumstances creates doubt of the complainant (sic) as alleged and accused has brought on record rebuttable evidence
upto to requisite level ie. Preponderance of probabilities and as such
considering section 5,6,32 and 118 and 139 of N.I. Act complainant failed to
prove complaint beyond reasonable doubt that the cheque has been issued for the
recoverable debt/liability.
*** *** *** ***
22. Therefore as discussion made herein above the complainant
failed to prove that the disputed cheque has been issued by the accused for the
part payment of transaction of Rs. 22,50,000/- therefore accused is entitled to
get acquittal who has brought on record the circumstances which rebut the
presumption under section 118,119, of N.I. Act… (sic)"
7. Against the aforementioned judgment and orders of acquittal,
the complainant preferred appeals before the High Court of Gujarat, which have
been considered and decided together by the impugned common judgment and order
dated 08.01.2018. The High Court observed that the presumption under Sections
118 and 139 of the NI Act was required to be drawn that the cheques were issued
for consideration and until contrary was proved, such presumption would hold
good; that the complainant had proved legally enforceable debt in the oral as
also documentary evidence, including the written acknowledgment by the accused
on stamp paper; and that except bare denial, nothing was brought on record by
the accused to dislodge the proof adduced by the complainant.
7.1 The High Court observed that if the transaction in question
was not reflected in the accounts and income-tax returns, that would at best
hold the assesse or lender liable for action under the income-tax laws but, if
the complainant succeeds in showing the lending of amount, the existence of
legally enforceable debt cannot be denied. The High Court also observed that
the issue regarding washing away of the cheques in rain water was of no
significance when the accused had accepted his liability in clear terms. The
High Court found that the defence plea of the accused that the money was given
as hand loan by his friend Shri Jagdishbhai got falsified by the version of the
said Shri Jagdishbhai, who was examined as a witness on behalf of
thecomplainant. The High Court, therefore, set aside the impugned orders and,
while convicting the accused-appellant for the offence under Section 138 of the
NI Act, sentenced him in the manner noticed hereinbefore. The High Court, inter alia, observed and held as under:
“24. It is necessary at this stage also to refer to the emphasis
laid by the learned counsel appearing for the respondent No.2 on the source of
the fund which has been lent by the appellant. It has emerged from the detailed
examination of the record, as also detailed examination-in-chief as well as
cross-examination, that the complainant runs the business. He also maintains
the books of account and he has his own factory in the name and style of
‘Ashirwad Enterprise’ and manufactures plastic. The said factory is situated at
Jambusar. Ordinarily, any prudent business person would prefer to transact by
cheque while lending money, but it is quite often noticed that the cash
transactions in the business would allow huge sum of money as cash, which
sometimes are shown in the books of account as cash on hands or otherwise as
amount available on books. Assuming that cheque transaction of lending of
amount is absent and income-tax returns also do not reflect such amount, that
at the best would hold the assessee or lender liable for action under the
Income-tax laws. However, otherwise, if he succeeds in showing lending of such
amount, both by oral evidence of himself and his friend, on whom even
respondent No.2 relies upon and from the writing of the respondent No.2 given
separately along with seven cheques signed by him, what possible reasons could
weigh with the Court to deny the existence of legally enforceable debt in such
glaring circumstances.
25. Considering the
fact that the complainant maintains his books of account, coupled with the fact
that the respondent No.2 had merely refuted on flimsy ground of his having
transacted with witness Jagdishbhai and not with the complainant, has failed to
discharge the burden which had shifted upon him. It is to be noted that the
respondent No.2 has admitted his signature on the impugned cheque. At no point
of time, the cheque has been disputed……Once this fact is acknowledged that the
signature on the cheque is that of the respondent No. 2-accused, section 139 of
the Negotiable Instruments Act would mandate the presumption that the cheque
concerns a legally enforceable debt or liability. Ofcourse, this presumption is
in the nature of rebuttal and onus is on the accused thereafter to raise a
probable defence.
25.1 As can be noted from the chronology of events and the
material that has been placed before this Court that the defence raised by the
accused is not at all probable. The respondent No.2-accused states that the
money was given as a hand loan by his friend Jagdishbhai and not the appellant,
also gets falsified completely by the version of Jagdishbhai. It appears that
in case of all the seven cheques when notices were given prior to the filing of
the complaint, he has chosen not to reply to four of the notices. Either on
account of insufficiency of the funds or because he has closed account that the
cheques could not be realized. All these circumstances cumulatively lead this
Court to conclude that the appellant succeeded in proving the legally
enforceable debt and no probable defence for rebutting the statutory
presumption is raised by the respondent No.2.
25.2 Initial presumption as contemplated under section 139 of
the Negotiable Instruments Act, when the proof of lending of the money and
acceptance of the signatures on the cheques, shall need to be raised by the
Court in favour of the appellant.
*** *** ***
28. ………. Reasonably, when the appellant had proved the legally
enforceable debt, not only through his own evidence, but also through the
evidence of his friend Jagdishbhai and also other contemporaneous record, more
particularly, the document at Exhibit 24, which is a writing by which the
respondent No.2 clearly indicates and accepts his liability to the tune of Rs.
22.50 lakh. Thus, the burden had shifted upon the respondent No. 2. The
presumption which was needed to be drawn by the Court under section 118 of the
Negotiable Instruments Act would oblige the Court to presume that the cheque
had been issued for consideration and until contrary is proved, such
presumption would hold the ground. Except the bare denial, nothing has been
found to come on record to dislodge the positive proof that has been adduced by
the appellant.
29. In the opinion of
this Court, the entire argument that the rainy water could not have washed away
the cheques, pales into insignificance and is not argument worth consideration,
more particularly, when the respondent-accused in no unclear terms had accepted
his liability of his having accepted the amount of Rs. 22.50 lakh from the
complainant and it also declared the issuance of seven cheques of particular
dates towards such legally enforceable debt. If it was anunderstanding between
the parties qua issuance of fresh cheques, with an ostensible reason of old
cheques having washed away, those are the non-issues. This Court cannot be
oblivious of the fact that section 138 of the Negotiable Instruments Act has
been made a penal provision not only for the cheques to give acceptability in
the transaction, but it is the economic blood-line of the country and,
therefore, the law makers have made the special rules of evidence by
introducing sections 118 and 139 of the Negotiable Instruments Act.
30. The trial Court
has committed a serious error by not discharging its obligation of recognizing
the evidentiary value and not appreciating the positive evidence which led to
the reasonable proof of legally enforceable debt existing on the side of the
original complainant."
8. Assailing the judgment and order so passed by the High Court,
learned counsel for the accused-appellant has contended that the impugned
judgment is contrary to the principles laid down in the case of Arulvelu and Anr.
v. State represented by Public Prosecutor & Anr.: (2009) 10 SCC 206, particularly when the High Court has set aside the considered
judgment and orders of the Trial Court without pointing out any perversity
therein. The learned counsel has argued, with reference to the decisions in M.S. Narayana
Menon alias Mani v. State of Kerala and Anr: (2006) 6 SCC 39 and Kumar Exports v. Sharma Carpets: (2009) 2 SCC 519, that the High Court has failed to appreciate the settled
principle of law that the accused is only required to show a probable defence
to be acquitted of the charges under Section 138 of the NI Act. The learned
counsel has referred to the reasons assigned by the Trial Court to acquit the
accused-appellant and has submitted that contradictory statements have been
made by the complainant and the witness; that no clear and cogent evidence has
been brought on record toprove the source of funds for advancing any loan by
the complainant; that admittedly, the complainant did not have the amount of
Rs. 22,50,000/- and the same was arranged through his friends and relatives but
he made vacillating statement in that regard and none of such relatives or
friends was examined as witness; that the witness for the complainant had more
knowledge about the transaction than the complainant; that the complainant
appeared to have rather no knowledge regarding the payments, funds and the
period of transaction; and that there was no explanation as to how the
complainant was claiming Rs. 22,50,000/- as the debt, when the sum total of the
instalments (cheques) comes to Rs. 21,00,000/- only. The learned counsel would
also argue that complainant has heavily relied on the stamp paper dated
21.03.2007 but then, admittedly, the complainant had not signed on the said
stamp paper; and this document, neither notarised nor registered anywhere and
only bearing the signatures of the appellant and of the said Shri Jagdishbhai,
is not of any evidentiary value for the case of the complainant. According to
the learned counsel, the accused-appellant has established his bonafide defence
that he had a financial transaction with Shri Jagdishbhai in the past; that he
gave 7 blank cheques to Shri Jagdishbhai and signed on a stamp paper as
security against such transaction; and that such cheques and stamp paper were
sought to be misused by the complainant. The learned counsel has contended that
in the given circumstances, the judgment and orders of the Trial Court
acquitting the accused-appellant of the offence under Section 138 of the NI Act
deserve to be restored and the impugned judgmentand order dated 08.01.2018
deserves to be set aside. The learned counsel would also submit in the
alternative that in any case, the punishment as awarded in this case is much on
the higher side and deserves to be reduced.
9. Per contra, the
learned counsel for the complainant-respondent No. 2 has duly supported the
impugned judgment and has submitted that the accused-appellant has only put
forward a vague and unsure defence that has no basis or support and stands
falsified from the material on record. The learned counsel has submitted that
not only the presumption under Section 139 NI Act has not been dislodged, in
fact, the case of the complainant is fortified in view of the unequivocal
acknowledgement and undertaking stated by the accused-appellant on the stamp
paper; and in the given circumstances, the High Court has rightly convicted him
for the offence under Section 138 of the NI Act.
10. Having given anxious consideration to the rival submissions and
having examined the record, we are clearly of the view that as regards
conviction of the accused-appellant for the offence under Section 138 NI Act,
the impugned judgment and order dated 08.01.2018 does not call for any
interference but, on the facts and in the circumstances of this case, the
punishment as awarded by the High Court deserves to be modified.
11. According to the learned counsel for the accused-appellant, the
impugned judgment is contrary to the principles laid down by this Court in the
case of Arulvelu
(supra) because the High
Court has set aside the judgment ofthe Trial Court without pointing out any
perversity therein. The said case of Arulvelu (supra)
related to offences under Sections 304-B and 498-A IPC. Therein, on the scope
of the powers of Appellate Court in an appeal against acquittal, this Court
observed as follows:
"36. Carefully scrutiny of all these judgments lead to the
definite conclusion that the appellate court should be very slow in setting
aside a judgment of acquittal particularly in a case where two views are
possible. The trial court judgment cannot be set aside because the appellate
court's view is more probable. The appellate court would not be justified in
setting aside the trial court judgment unless it arrives at a clear finding on
marshalling the entire evidence on record that the judgment of the trial court
is either perverse or wholly unsustainable in law."
11.1 The principles aforesaid are not of much debate. In other
words, ordinarily, the Appellate Court will not be upsetting the judgment of
acquittal, if the view taken by Trial Court is one of the possible views of
matter and unless the Appellate Court arrives at a clear finding that the
judgment of the Trial Court is perverse, i.e., not supported by evidence on
record or contrary to what is regarded as normal or reasonable; or is wholly
unsustainable in law. Such general restrictions are essentially to remind the
Appellate Court that an accused is presumed to be innocent unless proved guilty
beyond reasonable doubt and a judgment of acquittal further strengthens such
presumption in favour of the accused. However, such restrictions need to be
visualised in the context of the particular matter before the Appellate Court
and the nature of inquiry therein. The same rule with same rigour cannot be
applied in a matter relating to the offence under Section 138 of the NI Act,
particularly where a presumption is drawn that the holder has received the
cheque for thedischarge, wholly or in part, of any debt or liability. Of
course, the accused is entitled to bring on record the relevant material to
rebut such presumption and to show that preponderance of probabilities are in
favour of his defence but while examining if the accused has brought about a
probable defence so as to rebut the presumption, the Appellate Court is
certainly entitled to examine the evidence on record in order to find if
preponderance indeed leans in favour of the accused.
12. For determination of the point as to whether the High Court was
justified in reversing the judgment and orders of the Trial Court and
convicting the appellant for the offence under Section 138 of the NI Act, the
basic questions to be addressed to are two-fold: as to whether the
complainant-respondent No. 2 had established the ingredients of Sections 118
and 139 of the NI Act, so as to justify drawing of the presumption envisaged
therein; and if so, as to whether the accused-appellant had been able to
displace such presumption and to establish a probable defence whereby, the onus
would again shift to the complainant?
13. We may usefully take note of the provisions contained in
Sections 118 and 139, being the special rules of evidence applicable to the
case as follows4:
4 The principal and charging part of Section 138 NI Act may also
be extracted for ready reference as follows:
"138 Dishonour of cheque for insufficiency, etc., of funds in the
account.
---- Where any cheque drawn by a person on an account maintained
by him with a banker for payment of any amount of money to another person from
out of that account for the discharge, in whole or in part, of any 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 provisions of this Act ,be
punished with imprisonment for [a term which may be extended to two years], or
with fine which may extend to twice the amount of the cheque, or with both: ***
*** ***"
"118. Presumption as to negotiable instruments.----- Until the
contrary is proved, the following presumptions shall be made:--
(a) of consideration-----that every negotiable instrument was made or drawn for
consideration, and that every such instrument, when it has been accepted,
indorsed, negotiated or transferred, was accepted, indorsed, negotiated or
transferred for consideration;
(b) as to date---that every negotiable instrument bearing a date was made or
drawn on such date;
(c) as to time of acceptance-----that every
accepted bill of exchange was accepted within a reasonable time after its date
and before its maturity;
(d) as to time of transfer----that every transfer of a negotiable
instrument was made before its maturity;
(e) as to order of indorsements----that the
indorsements appearing upon a negotiable instrument were made in the order in
which they appear thereon;
(f) as to stamps--- that a lost promissory note, bill of exchange or cheque was
duly stamped;
(g) that holder is a holder in due course----that the holder
of a negotiable instrument is a holder in due course; Provided that, where the
instrument has been obtained from its lawful owner, or from any person in
lawful custody thereof, by means of an offence or fraud, or has been obtained
from the maker or acceptor thereof by means of an offence of fraud, or for
unlawful consideration, the burden of proving that the holder is a holder in
due course lies upon him."
"139. Presumption in favour of holder ---- It shall be
presumed, unless the contrary is proved, that the holder is a cheque received
the cheque of the nature referred to in section 138 for the discharge, in whole
or in part, if any debt or other liability."
14. So far the question of existence of basic ingredients for
drawing of presumption under Sections 118 and 139 the NI Act is concerned,
apparent it is that the accused-appellant could not deny his signature on the
cheques in question that had been drawn in favour of the complainant on a bank
account maintained by the accused for a sum of Rs. 3 lakhs each. The said
cheques were presented to the Bank concerned within the period of their
validity and were returned unpaid for the reason of either the balance being
insufficient or the account being closed. All the basic ingredients of Section
138 as also of Sections 118 and 139 are apparent on the face of the record. The
Trial Court had also consciously taken note of these facts and had drawn the
requisite presumption. Therefore, it is required to be presumed that the
cheques in question were drawn for consideration and the holder of the cheques
i.e., the complainant received the same in discharge of an existing debt. The
onus, therefore, shifts on the accused-appellant to establish a probable defence
so as to rebut such a presumption.
15. In Rangappa v. Sri Mohan : (2010) 11 SCC 441, this Court has reiterated and summarised the
principles relating to presumptions under Sections 118 and 139 of the NI Act
and rebuttal thereof in the following:-
"26. In the light of these extracts, we are in agreement
with the respondent claimant that the presumption mandated by Section 139 of
the Act does indeed include the existence of a legally enforceable debt or
liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct.
However, this does not in any way cast doubt on the correctness of the decision
in that case since it is based on the specific facts and circumstances therein.
As noted in the citations, this is of course in the nature of a rebuttal
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 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.
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."
16. 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
nonexistence 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, emphasized 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 Section 118 and 139 of the NIAct. This court stated the
principles in the case of Kumar Exports (supra) as follows:
"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 supported by consideration
and that there was no debt or liability to be discharged by him. However, the
court need not insist in every case that the accused should disprove the
nonexistence 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 mentioned in Section 114 of the Evidence Act to rebut the presumptions
arising under Sections 118 and 139.
21. The accused has
also an option to prove the non-existence of consideration and debt or
liability either by letting in evidence or in some clear and exceptional cases,
from the case set out by the complainant, that is, the averments in the
complaint, the case set out in the statutory notice and evidence adduced by the
complainant during the trial. Once such rebuttal evidence is adduced and
accepted by the court, having regard to all the circumstances of the case and
the preponderance ofprobabilities, the evidential burden shifts back to the
complainant and, therefore, the presumptions under Sections 118 and 139 of the
Act will not again come to the complainant's rescue."
17. In the case at hand, even after purportedly drawing the
presumption under Section 139 of the NI Act, the Trial Court proceeded to
question the want of evidence on the part of the complainant as regards the
source of funds for advancing loan to the accused and want of examination of
relevant witnesses who allegedly extended him money for advancing it to the
accused. This approach of the Trial Court had been at variance with the
principles of presumption in law. After such presumption, the onus shifted to the
accused and unless the accused had discharged the onus by bringing on record
such facts and circumstances as to show the preponderance of probabilities
tilting in his favour, any doubt on the complainant's case could not have been
raised for want of evidence regarding the source of funds for advancing loan to
the accused-appellant. The aspect relevant for consideration had been as to
whether the accused-appellant has brought on record such
facts/material/circumstances which could be of a reasonably probable defence.
18. In order to discharge his burden, the accused put forward the
defence that in fact, he had had the monetary transaction with the said Shri
Jagdishbhai and not with the complainant. In view of such a plea of the
accused-appellant, the question for consideration is as to whether the
accused-appellant has shown a reasonable probability of existence of any
transaction with Shri Jagdishbhai? In this regard, significant it is to notice
thatapart from making certain suggestions in the cross-examination, the
accusedappellant has not adduced any documentary evidence to satisfy even
primarily that there had been some monetary transaction of himself with Shri
Jagdishbhai. Of course, one of the allegations of the appellant is that the
said stamp paper was given to Shri Jagdishbhai and another factor relied upon
is that Shri Jagdishbhai had signed on the stamp paper in question and not the
complainant.
18.1 We have examined the statement of Shri Jagdishbhai as also
the said writing on stamp papers and are unable to find any substance in the
suggestions made on behalf of the accused-appellant.
18.2 The said witness Shri Jagdishbhai, while pointing out his
acquaintance and friendship with the appellant as also with the respondent,
asserted in his examination-in-chief, inter alia,
as under:
"Accused when he comes to our shop where the complainant in
the matter Shashimohan also be present that in both the complainant and accused
being our friends, were made acquaintance with each other. The accused had necessity
of money in his business, in my presence, had demanded Rs.22,50,000/- (Rupees
twenty two lacs fifty thousandly) on temporary basis. And thereafter, the
complainant from his family members by taking in piecemeal had given to the
accused in my presence. Thereafter, on demanding the money by the complainant,
the accused had given seven (7) cheques to the complainant in our presence but
such cheques being washed out in rainy water and on informing me by the
complainant I had informed to the accused. Thereafter, Rohitbhai had given
other seven (7) cheques to the complainant in my presence and the deed was
executed on Rs. 100/- stamp paper in there is my signature."
18.3 This witness was cross-examined on various aspects as
regards the particulars in the writing on the stamp paper and the date and time
of the transactions. In regard to the defence as put in the cross-examination,
the witness stated as under:
"I have got shop in National Plaza but in rain no water
logging has taken place. It is not true that there had been no financial
dealings between me and the accused today. It is not true that I had given
rupees ten lacs to the accused Rohitbhai on temporary basis. It is not true
that for the amount given to the accused, I had taken seven blank duly cheques
also blank stamp paper without signature. It is not true that there was quarrel
between me and the accused in the matter of payment of interest. It is not true
that even after the payment of Rs. ten lacs and the huge amount of the interest
in the matter of interest quarrel was made. It is not true that due to the
reason of quarrel with the accused, in the cheques of the accused lying with me
by making obstinate writing has filed the false complaint through Shashimohan
Goyanka. It is not true that no financial dealings have taken place between the
complainant and the accused. therefore I also the complainant both at the time
of evidence the accused at what place, on what date at what time, the amount
taken has not been able to make clearly. (sic) It is not true that the blank stamp paper duly signed were lying
in which obstinate writing has been made therefore the same has not been
registered through sub registrar. It is not true that the dealings have been
made between me and accused therefore there is my signature and the signature
of the accused and the complainant has not signed. It is not true that any
types of dealings between the accused and the complainant having not been done
in my presence therefore in my statement no clarification has been given. It is
not true that the accused in my presence as mentioned in the complaint any
cheque has not been given. It is not true that I in collusion with the
complainant to usurp the false amount the false complaint has been filed
through Shashimohan Goyanka. It is not true that in support of the complaint of
Shashimohan Goyanka is giving false statement."
18.4 The statement of Shri Jagdishbhai does not make out any
case in favour of the accused-appellant. It is difficult to say that by merely
putting thesuggestion about the alleged dealing to Shri Jagdishbhai, the
accusedappellant has been able to discharge his burden of bringing on record
such material which could tilt the preponderance of probabilities in his
favour.
18.5 The acknowledgement on the stamp paper as executed by the
appellant on 21.03.2007 had been marked with different exhibit numbers in these
7 cases. In Complaint Case No. 46499 of 2008, the same is marked as Ex. 54 and
reads as under :
"Today the executor I Rohit Patel Ranchhodray Masala is a partner.
Due to the financial difficulties having been arised, I have taken
Rs.22,500,000/- (Rupees twenty two thousand fifty thousand only- sic) from my
group which are to be paid to Shashimohan Goyanka.
With reference to that today I have given seven (7) cheques of
Corporation Bank, Alkapuri Branch bearing No. 763346 to 762252 amounting to Rs.
22,50,000/- (Rupees twenty two lacs fifty thousand only) Dates : (1) 01/4/08,
(2) 01/05/08 (3) 01/07/08, (4) 01/08/08 (5) 01/10/08 (6) 01/11/08 (7) 01/12/08
the account of which is 40007.
Earliest these cheques were given but due to rainy water logging
the said cheques having been washed out (7) cheques have again been given which
is acceptable to me."
18.6 The fact of the matter remains that the appellant could not
deny his signatures on the said writing but attempted to suggest that his
signatures were available on the blank stamp paper with Shri Jagdishbhai. This
suggestion is too remote and too uncertain to be accepted. No cogent reason is
available for the appellant signing a blank stamp paper. It is also
indisputable that the cheques as mentioned therein with all the relevant
particulars like cheque numbers, name of Bank and account number are ofthe same
cheques which form the subject matter of these complaint cases. The said
document bears the date 21.03.2007 and the cheques were postdated, starting
from 01.04.2008 and ending at 01.12.2008. There appears absolutely no reason to
discard this writing from consideration.
18.7 One of the factors highlighted on behalf of the appellant
is that the said writing does not bear the signature of the complainant but and
instead, it bears the signatures of said Shri Jagdishbhai. We find nothing
unusual or objectionable if the said writing does not bear the signatures of the
complainant. The said writing is not in the nature of any bi partite agreement to be signed by the parties thereto. It
had been a writing in the nature of acknowledgement by the accused-appellant
about existence of a debt; about his liability to repay the same to the
complainant; about his having issued seven post-dated cheques; about the
particulars of such cheques; and about the fact that the cheques given earlier
had washed away in the rain water logging. Obviously, this writing, to be worth
its evidentially value, had to bear the signatures of the accused, which it
does. It is not unusual to have a witness to such a document so as to add to
its authenticity; and, in the given status and relationship of the parties,
Shri Jagdishbhai would have been the best witness for the purpose. His
signatures on this document, therefore, occur as being the witness thereto.
This document cannot be ruled out of consideration and existing this writing,
the preponderance of probabilities lean heavily against the accused-appellant.
19. Hereinabove, we have examined in detail the findings of the
Trial Court and those of the High Court and have no hesitation in concluding
that the present one was clearly a case where the decision of the Trial Court
suffered from perversity and fundamental error of approach; and the High Court
was justified in reversing the judgment of the Trial Court. The observations of
the Trial Court that there was no documentary evidence to show the source of
funds with the respondent to advance the loan, or that the respondent did not
record the transaction in the form of receipt of even kachcha notes, or that
there were inconsistencies in the statement of the complainant and his witness,
or that the witness of the complaint was more in know of facts etc. would have
been relevant if the matter was to be examined with reference to the onus on
the complaint to prove his case beyond reasonable doubt. These considerations
and observations do not stand in conformity with the presumption existing in
favour of the complainant by virtue of Sections 118 and 139 of the NI Act.
Needless to reiterate that the result of such presumption is that existence of
a 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 other observations
as regards any variance in the statement of complainant and witness; or want of
knowledge about dates and other particulars of the cheques; or washing away of
the earlier cheques in therains though the office of the complainant being on
the 8th floor had also been of irrelevant factors for
consideration of a probable defence of the appellant. Similarly, the factor
that the complainant alleged the loan amount to be Rs. 22,50,000/- and seven
cheques being of Rs. 3,00,000/- each leading to a deficit of Rs. 1,50,000/-, is
not even worth consideration for the purpose of the determination of real
questions involved in the matter. May be, if the total amount of cheques
exceeded the alleged amount of loan, a slender doubt might have arisen, but, in
the present matter, the total amount of 7 cheques is lesser than the amount of
loan. Significantly, the specific amount of loan (to the tune of Rs.
22,50,000/-) was distinctly stated by the accused-appellant in the aforesaid
acknowledgment dated 21.03.2017.
20. On perusing the order of the Trial Court, it is noticed that the
Trial Court proceeded to pass the order of acquittal on the mere ground of
'creation of doubt'. We are of the considered view that the Trial Court appears
to have proceeded on a misplaced assumption that by mere denial or mere
creation of doubt, the appellant had successfully rebutted the presumption as
envisaged by Section 139 of the NI Act. In the scheme of the NI Act, mere
creation of doubt is not sufficient.
21. The result of discussion in the foregoing paragraphs is that the
major considerations on which the Trial Court chose to proceed clearly show its
fundamental error of approach where, even after drawing the presumption, it had
proceeded as if the complainant was to prove his case beyond reasonable doubt.
Such being the fundamental flaw on the part of the TrialCourt, the High Court
cannot be said to have acted illegally or having exceeded its jurisdiction in
reversing the judgment of acquittal. As noticed hereinabove, in the present
matter, the High Court has conscientiously and carefully taken into
consideration the views of the Trial Court and after examining the evidence on
record as a whole, found that the findings of the Trial Court are vitiated by
perversity. Hence, interference by the High Court was inevitable; rather had to
be made for just and proper decision of the matter.
22. For what has been discussed hereinabove, the findings of the
High Court convicting the accused-appellant for offence under Section 138 of
the NI Act deserves to be, and are, confirmed.
23. Coming to the question of punishment for the offence aforesaid,
as noticed, the High Court has awarded the punishment of simple imprisonment
for a period of one year together with fine to the extent of double the amount
of cheque (i.e., a sum of Rs. 6 lakhs) with default stipulation of further
imprisonment for a period of one year in each case; and, out of the amount
payable as fine, the complainant-respondent No. 2 is ordered to be compensated
to the tune of Rs. 5.5 lakhs in each case. In the totality of the circumstances
of this case and looking to the nature of offence which is regulatory in
nature, while we find that the punishment as regards monetary terms calls for
no interference but then, the sentence of imprisonment deserve to be modified.
23.1 In the singular and peculiar circumstances of this case,
where the matters relating to 7 cheques issued by the appellant in favour of
respondent No. 2 for a sum of Rs. 3 lakhs each are being considered together;
and the appellant is being penalised with double the amount of cheques in each
case i.e., in all a sum of Rs. 42,00,000/-, in our view, the appellant deserves
to be extended another chance to mend himself by making payment of fine, of
course, with the stipulation that in case of default in payment of the amount
of fine, he would undergo simple imprisonment for a period of one year.
24. Therefore, this appeal is partly allowed in the following terms:
The common judgment and order dated 08.01.2018 in R/Criminal Appeal No.
1187/2017 connected with R/Criminal Appeal Nos. 1191/2017 to 1196/2017 by the
High Court of Gujarat at Ahmedabad is maintained as regards conviction of the
accused-appellant for the offence under Section 138 of the Negotiable
Instruments Act, 1881 for dishonour of 7 cheques in the sum of Rs. 3 lakhs
each, as drawn by him in favour of the complainant-respondent No. 2; however,
the sentence is modified in the manner that in each of these 7 cases, the
accused-appellant shall pay fine to the extent of double the amount of each
cheque (i.e., a sum of Rs. 6 lakhs in each case) within 2 months from today
with the stipulation that in case of default in payment of fine, the
accused-appellant shall undergo simple imprisonment for a period of one year.
On recovery of the amount of fine, the complainant-respondent No. 2 shall be
compensated to the tune of Rs. 5.5 lakhs in each case. In the event
ofimprisonment for default in payment of fine, the sentences in all the 7 cases
shall run concurrently.
25. The Trial Court shall take steps for enforcement of this
judgment forthwith.