2001 (10) TMI 1060 - SC - Indian Laws

Supreme Court: Accused bears burden of proving consideration in dishonored cheque cases.

KN. Beena Versus Muniyappan

The Supreme Court held that in cases under section 138 of the Negotiable Instruments Act, the burden of proving consideration for a dishonored cheque lies ... Conviction orders - Held that:- The High Court appears to have proceeded on the basis that the denials/averments in his reply dated 21-5-1993, were sufficient to shift the burden of proof onto the appellant complainant to prove that the cheque was issued for a debt or liability. This is an entirely erroneous approach. The High Court erroneously set aside that conviction. Thus the impugned judgment is set aside. The conviction and sentence as awarded by the Magistrate by his order dated 21-3-1994, stand. The first respondent is granted one month’s time to pay the fine. In default thereof he shall suffer simple imprisonment for three months. The fine if realised, ₹ 60,000 therefrom shall be paid to the complainant as compensation. Issues:- Interpretation of sections 118 and 139 of the Negotiable Instruments Act in cases under section 138- Burden of proof regarding consideration for a dishonored cheque- Evaluation of evidence and burden of proof on the accused in proving the absence of debt or liabilityAnalysis:The judgment by the Supreme Court involved a case where the appellant filed a complaint under section 138 of the Negotiable Instruments Act due to the dishonor of a cheque issued by the first respondent. The trial court convicted the first respondent, but the High Court acquitted based on the lack of proof of the cheque being issued for a debt or liability. The Supreme Court highlighted that the burden of proving consideration for a dishonored cheque lies on the accused, as per sections 118 and 139 of the Act. These sections presume that a negotiable instrument is made for consideration and that a cheque is issued for a debt or liability unless proven otherwise. The court emphasized that in complaints under section 138, the presumption is that the cheque was issued for a debt or liability, which is rebuttable by the accused.The Supreme Court criticized the High Court's approach of shifting the burden of proof onto the complainant to prove the debt or liability associated with the dishonored cheque. It was noted that the first respondent failed to provide substantial evidence to prove the absence of debt or liability. The court clarified that the burden of proving the absence of debt or liability rests on the accused, and in this case, the first respondent did not discharge that burden. Therefore, the conviction by the Magistrate was upheld, and the High Court's decision to acquit the first respondent was deemed erroneous.Consequently, the Supreme Court set aside the High Court's judgment, reinstated the conviction and sentence by the Magistrate, and granted the first respondent one month to pay the fine. Failure to pay the fine would result in three months of simple imprisonment, with the fine to be paid to the complainant as compensation. The appeals were disposed of with no order as to costs, concluding the legal proceedings in the case.