2022 (3) TMI 797 - SC - Indian Laws

Accused fails to rebut statutory presumption for dishonored cheque under Section 138, conviction upheld with modified sentence

The SC upheld conviction under Section 138 of the Negotiable Instruments Act while modifying the sentence. The accused failed to establish a probable ... Section 138 of the Negotiable Instruments Act - Section 139 of the Negotiable Instruments Act - probable defence - reverse onus - scope of interference under Article 136 - substitution of sentenceSection 139 of the Negotiable Instruments Act - probable defence - reverse onus - Whether the accused successfully rebutted the presumption under Section 139 by establishing a probable defence - HELD THAT: - The Court summarised the law that Section 139 creates a rebuttable presumption that a cheque was issued for discharge of liability and that the accused need only raise a probable defence on the preponderance of probabilities. Applying those principles to the conspectus of evidence, the Court noted that the appellant did not set up in the reply to the statutory notice the case that the complainant lacked wherewithal, no complaint was made to bank or police about loss of cheque leaf contemporaneously, and the appellant did not contend that the signature was not his. Although the defence led bank officers as witnesses to challenge aspects of the complainant's version, the Court found that the totality of evidence did not show that the case of the complainant was in peril; the appellant failed to establish the asserted defence on the requisite preponderance. Consequently the presumption under Section 139 remained unrebutted and the finding of guilt under Section 138 sustained. [Paras 7, 9, 10]The accused did not rebut the presumption under Section 139 and a probable defence was not established; the conviction under Section 138 is upheld.Section 138 of the Negotiable Instruments Act - substitution of sentence - scope of interference under Article 136 - Whether the conviction and sentence should be interfered with and whether imprisonment should be substituted with fine and compensation - HELD THAT: - The Court observed that interference under Article 136 is extraordinary and must be exercised sparingly; while three courts had earlier convicted the appellant, the Supreme Court examined the matter on merits and found no ground to overturn the conviction. However, in exercise of appellate discretion the Court directed modification of the sentence: the sentence of one year simple imprisonment was vacated and substituted with a monetary sentence. The Court directed the appellant to pay a fine (depositable in the trial court within one month, default attracting one month simple imprisonment) and further directed payment of additional compensation to the complainant to be deposited within four weeks, noting that the cheque amount's compensation had already been deposited in the trial court. [Paras 11, 12, 13]Conviction under Section 138 is upheld; imprisonment of one year is set aside and substituted with a fine and an order for additional compensation as directed.Final Conclusion: Appeal partly allowed: conviction under Section 138 of the Negotiable Instruments Act is affirmed; the sentence of one year imprisonment is vacated and substituted with a fine (to be paid within one month, default one month imprisonment) and an additional sum as compensation to the respondent to be deposited within four weeks. Issues Involved:1. Validity of the High Court's dismissal of the Criminal Revision.2. Interpretation and application of Section 138 of the Negotiable Instruments Act, 1881.3. Evaluation of the appellant's probable defense.4. Examination of the financial capacity of the complainant.5. Admissibility and relevance of evidence provided by defense witnesses.6. Determination of appropriate sentencing.Issue-wise Detailed Analysis:1. Validity of the High Court's Dismissal of the Criminal Revision:The appellant challenged the High Court's judgment dismissing Criminal Revision No. 129 of 2018, which affirmed the Sessions Judge's and Chief Judicial Magistrate's orders finding the appellant guilty under Section 138 of the Negotiable Instruments Act, 1881. The appellant was sentenced to one year of simple imprisonment and ordered to pay Rs. 7 Lakhs in compensation.2. Interpretation and Application of Section 138 of the Negotiable Instruments Act, 1881:Section 138 mandates that once the execution of a cheque is admitted, there is a presumption that the cheque was for the discharge of any debt or liability. This presumption is rebuttable, and the onus is on the accused to raise a probable defense. The standard of proof for rebutting the presumption is the preponderance of probabilities, as per the judgment in Basalingapa Vs. Mudibasappa.3. Evaluation of the Appellant's Probable Defense:The appellant attempted to establish a probable defense by examining DW-1 to DW-4, officers from four banks, to challenge the complainant's financial capacity to lend Rs. 7 Lakhs. The High Court, however, did not appreciate the purpose of examining these witnesses. The appellant argued that the complainant's inability to recall specific withdrawal details undermined his credibility.4. Examination of the Financial Capacity of the Complainant:The complainant claimed to have withdrawn Rs. 2-2.5 Lakhs from his bank accounts and provided the remaining amount from his funds. The appellant contended that the complainant's financial capacity was not proven, and the High Court failed to consider this aspect adequately. The trial court and appellate court noted that the complainant need not initially prove financial capacity unless challenged in the reply notice.5. Admissibility and Relevance of Evidence Provided by Defense Witnesses:The appellant's defense included evidence from DW-5, the appellant's son, who claimed the signed cheque was lost. However, no complaint about the lost cheque was made to the bank or police. The courts found that the appellant did not establish a probable defense, as there was no evidence of informing the bank about the lost cheque, and the appellant admitted to signing the cheque.6. Determination of Appropriate Sentencing:While upholding the conviction, the Supreme Court substituted the one-year imprisonment sentence with a fine of Rs. 5,000, to be deposited within one month. Additionally, the appellant was directed to pay Rs. 15,000 as further compensation to the respondent. Failure to deposit the fine would result in one month of simple imprisonment.Conclusion:The appeal was partly allowed, upholding the conviction but modifying the sentence. The appellant was ordered to pay a fine and additional compensation, with the sentence of imprisonment vacated. The judgment emphasized the importance of considering the totality of evidence and the accused's right to establish a probable defense.