2021 (2) TMI 505 - SC - Indian Laws

Supreme Court upholds conviction in cheque bounce case after trial court ignored statutory presumptions under Sections 118 and 139

M/s. Kalamani Tex & Anr Versus P. Balasubramanian

The SC dismissed an appeal challenging a HC's reversal of a trial court's acquittal in a cheque dishonor case. The trial court had acquitted the accused ... Dishonor of Cheque - Jurisdiction - Presumption under Sections 118 and 139 - preponderance of probability - whether the High Court erred in reversing the findings of the trial Court in exercise of its powers under Section 378 of CrPC? HELD THAT:- It is true that the High Court would not reverse an order of acquittal merely on formation of an opinion different than that of the trial Court. It is also trite in law that the High Court ought to have compelling reasons to tinker with an order of acquittal and no such interference would be warranted when there were to be two possible conclusions. The powers of this Court under Article 136 of the Constitution also do not encompass the reappreciation of entirety of record merely on the premise that the High Court has convicted the appellants for the first time in exercise of its appellate jurisdiction. This Court in RAM JAG AND OTHERS VERSUS THE STATE OF U.P. [1973 (12) TMI 90 - SUPREME COURT], RAVEEN KUMAR VERSUS STATE OF HIMACHAL PRADESH [2020 (10) TMI 1103 - SUPREME COURT], evolved its own limitations on the exercise of powers under Article 136 of the Constitution and has reiterated that while entertaining an appeal by way of special leave, there shall not ordinarily be an attempt to re-appreciate the evidence on record unless the decision(s) under challenge are shown to have committed a manifest error of law or procedure or the conclusion reached is ex-facie perverse. On a plain reading of its judgment that the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these ‘reverse onus’ clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him - Once the 2nd Appellant had admitted his signatures on the cheque and the Deed, the trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial Court fell in error when it called upon the Complainant Respondent to explain the circumstances under which the appellants were liable to pay. Such approach of the trial Court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law. The defence raised by the appellants does not inspire confidence or meet the standard of ‘preponderance of probability’. In the absence of any other relevant material, it appears to us that the High Court did not err in discarding the appellants’ defence and upholding the onus imposed upon them in terms of Section 118 and Section 139 of the NIA. Compensation raised on behalf of the respondent - HELD THAT:- Chapter XVII of the NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for dishonour of cheque as well as civil liability for realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the Courts should uniformly levy fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. The record indicates that neither did the respondent ask for compensation before the High Court nor has he chosen to challenge the High Court’s judgment. Since, he has accepted the High Court’s verdict, his claim for compensation stands impliedly overturned. The respondent, in any case, is entitled to receive the cheque amount of ₹ 11.20 lakhs which the appellant has already deposited with the Registry of this Court. The present appeal is liable to be dismissed. Issues Involved:1. Legally enforceable liability under Section 138 of the Negotiable Instruments Act, 1881 (NIA).2. Reversal of acquittal by the High Court.3. Presumption under Sections 118 and 139 of the NIA.4. Compensation to the respondent.Detailed Analysis:1. Legally enforceable liability under Section 138 of the NIA:The appellants challenged their conviction under Section 138 of the NIA, arguing there was no legally enforceable liability on the date of the cheque issuance. They contended that the blank cheques and signed blank stamp papers were misused by the respondent to forge the Deed of Undertaking dated 07.11.2000. The trial court initially acquitted the appellants, finding that the respondent failed to establish a legally enforceable liability. However, the High Court reversed this decision, emphasizing that the appellant had admitted his signatures on the cheque and the Deed of Undertaking, thus acknowledging their liability.2. Reversal of acquittal by the High Court:The High Court reversed the trial court’s acquittal, convicting the appellants under Section 138 of the NIA. The High Court noted that the appellant had admitted his signatures, which should have led to a presumption of a legally enforceable debt. The Supreme Court upheld the High Court’s decision, stating that the trial court had committed a patent error of law by not appreciating the statutory presumption under Sections 118 and 139 of the NIA.3. Presumption under Sections 118 and 139 of the NIA:The Supreme Court emphasized the statutory presumption under Sections 118 and 139 of the NIA, which mandates that once the signatures on the cheque are established, the burden shifts to the accused to rebut the presumption of a legally enforceable debt. The Court cited various precedents, including Rohitbhai Jivanlal Patel v. State of Gujarat, to elucidate that the trial court erred in questioning the complainant’s evidence instead of focusing on whether the appellants had discharged their burden of proof. The Court held that the appellants’ defense did not meet the standard of “preponderance of probability” and failed to rebut the presumption.4. Compensation to the respondent:The respondent sought compensation for the financial loss and adverse impact on his business. The Supreme Court noted that the object of Chapter XVII of the NIA is both punitive and compensatory. However, since the respondent did not seek compensation before the High Court and accepted its judgment, the claim for compensation was impliedly overturned. The Court directed that the respondent is entitled to the cheque amount of Rs. 11.20 lakhs, which the appellants had already deposited with the Registry.Conclusion:The Supreme Court dismissed the appeal, upholding the High Court’s conviction of the appellants under Section 138 of the NIA. However, considering the appellants had already deposited the cheque amount, the Court took a lenient view and modified the High Court’s judgment, exempting Appellant No.2 from undergoing the awarded sentence. The Registry was directed to transfer the deposited amount to the respondent within two weeks.