2024 (12) TMI 833 - HC - Indian Laws

Conviction under Section 138 upheld as accused fails to rebut presumption with preponderance of probabilities

The HC upheld the conviction under Section 138 of the Negotiable Instruments Act, confirming that presumptions under Sections 118 and 139 can be rebutted ... Dishonor of Cheque - rebuttal of presumptions u/s 118 and 139 of the Negotiable Instruments Act - preponderance of probabilities - Conviction under Section 138 of the Act - HELD THAT:- Undoubtedly, the presumptions are rebuttable and the law on this point is well settled that for rebutting the presumption, an accused is not required to lead any evidence. He can even, from the evidence of the complainant infer and make a case out that presumption has been rebutted. An accused is not required to rebut a presumption by the standard of a proof beyond reasonable doubt, but preponderance of probabilities or a probable defence is enough to rebut such presumptions. Each case is to be decided on the basis of the facts and circumstances of the particular case. There cannot be any straight jacket formulae to that extent. In the case of Rohitbhai Jivanlal Patel Vs. State of Gujarat and Another [2019 (3) TMI 769 - SUPREME COURT], the Hon’ble Supreme Court has discussed the presumption that are available under Sections 118 and 139 of the Act. The Hon’ble Supreme Court has also adverted to the level of evidence required to prove a case under the provisions of the Act. It has been the case of the revisionist that he was under no obligation to issue a cheque, but, one of his workers, Mohd. Nazim, had taken loan from the private respondent and as security thereof, he had given a cheque of Rs. 50,000/- - The revisionist has been examined as DW1 and Mohd. Nazim has been examined as DW2. As DW1, Abdul Qadir, the revisionist, has stated that Mohd. Nazim had taken loan of Rs. 50,000/- at 5% rate of interest from the private respondent, and in lieu thereof, he had given two security cheques. According to DW1, Abdul Qadir, the revisionist, Mohd. Nazim, had returned the amount of loan, but he could not repay the interest. DW2, Mohd. Nazim, has also stated so. Rate of interest - HELD THAT:- The revisionist himself has stated that the loan was given at the rate of 5% interest. This has been so stated by DW2, Mohd. Nazim, in Para 3 of his statement, but in Para 10, he speaks of 10% rate of interest. It is true that no specific date has been disclosed by the private respondent. But then, it is not disputed that the cheque was given by the revisionist to the private respondent. What is in dispute is as to why the cheque was given? According to the private respondent, loan was advanced to the revisionist and in repayment of the loan amount, cheque was given, whereas, as stated, according to the revisionist, loan was taken by Mohd. Nazim, an employee of him, and as a security, he had given the cheques. The findings are based on admissible evidence. It is not the case that any admissible evidence has been ignored. It cannot also be said that the finding is not based on legally admissible evidence. Therefore, the impugned judgments and orders are in accordance with law. They do not require any interference, so far as the conviction of the revisionist under Section 138 of the Act is concerned. To that extent, there is no merit in the revision and it deserves to be dismissed. This Court is of the view that the interest of justice would be better served, if the revisionist is sentenced to the period of custody, which he has already undergone in the instant case - the conviction of the revisionist under Sections 138 of the Act, as recorded in the case and upheld in the appeal is confirmed - the revisionist is sentenced to the period of custody, which he has already undergone in the instant case. The amount of fine and other directions with regard to payment of compensation given by the trial court and confirmed in appeal shall remain unaltered. The revision is partly allowed. Issues Involved:1. Conviction under Section 138 of the Negotiable Instruments Act, 1881.2. Presumption under Sections 118 and 139 of the Negotiable Instruments Act.3. Rebuttal of presumption and burden of proof.4. Validity of the loan transaction and evidence requirements.5. Sentencing and appropriateness of punishment.Issue-wise Detailed Analysis:1. Conviction under Section 138 of the Negotiable Instruments Act, 1881:The revisionist was convicted under Section 138 of the Negotiable Instruments Act, 1881, for issuing a cheque that was dishonoured. The trial court found that the revisionist had issued a cheque for Rs. 2,50,000/- to the private respondent, which was dishonoured upon presentation. The conviction was upheld by the appellate court. The revisionist challenged this conviction, arguing that the cheque was not issued for any debt or liability of his own but as a security for a loan taken by his worker.2. Presumption under Sections 118 and 139 of the Negotiable Instruments Act:The court discussed the statutory presumptions under Sections 118 and 139 of the Act, which presume that a cheque was issued for consideration and for the discharge of a debt or liability unless proven otherwise. The court emphasized that these presumptions are rebuttable and that the accused can rebut them by establishing a probable defense.3. Rebuttal of Presumption and Burden of Proof:The revisionist argued that the presumption under Section 139 was rebuttable and that he did not need to prove his defense beyond a reasonable doubt. The defense claimed that the cheque was given as security for a loan taken by a worker, not for a personal debt. The court noted that the accused could rely on the complainant's evidence to rebut the presumption and that the standard of proof for rebuttal is preponderance of probabilities.4. Validity of the Loan Transaction and Evidence Requirements:The revisionist contended that the loan transaction was not valid as the private respondent did not specify the date of the loan or the interest rate, and no documentary evidence was provided. The court observed that while the private respondent was not required to show the loan in income tax returns, the transaction's validity was not invalidated by the lack of documentation alone. The court found that the trial court had adequately addressed these issues and the findings were based on admissible evidence.5. Sentencing and Appropriateness of Punishment:The revisionist argued that the sentence of one-year imprisonment and a fine of Rs. 3,00,000/- was excessive. The court acknowledged that the dishonour of a cheque is a regulatory offence and considered the revisionist's time already spent in custody. The court modified the sentence to the period of custody already undergone, maintaining the fine and compensation as ordered by the trial court and confirmed on appeal.Conclusion:The court confirmed the conviction under Section 138 of the Negotiable Instruments Act but modified the sentence to the period already served in custody, considering the regulatory nature of the offence and the circumstances of the case. The revision was partly allowed, and the revisionist was ordered to be released if not wanted in any other case.