TaxTMI 
TaxTMI 
TaxTMI 
2008 (1) TMI 827
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....in-law of the said R.G. Bhat was admittedly present. He participated therein. The result of the said meeting of the Panchayat is not known but it is not in dispute that the appellant herein issued a public notice through his advocate in a local newspaper on 3.10.1996 to the following effect: My client Sh. Krishna Janardhana Bhat, Proprietor of Vinaya Enterprises, Tarihal Hubli has given authority to give notice as follows. My client appointed Shri Raghavendra Ganapati Bhat as his power of Attorney Holder on 21.8.1993 to run Vinay Enterprises as agent. He has started misusing the terms and conditions of the Power of Attorney. Hence my client cancelled the Power of Attorney on 21.8.96 by giving notice. If at all anybody deals with him on the Power of Attorney my client is not responsible in future. 5. On the premise that the respondent advanced a sum of Rs. 1,50,000/- to the appellant on 14.6.1998 and the latter on his own went to his house on 20.7.1998 to return the loan by an account payee cheque which having been dishonoured when presented; a complaint petition was filed. 6. Prior thereto, a notice was sent on 27.8.1998 which wa....
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....as argued that except the word of mouth of the complainant nothing has been brought on record to prove the offence as against the appellant. 11. Mr. S.N. Bhat, learned counsel appearing on behalf of the respondent, on the other hand, submitted that the appellant has rightly been found guilty of commission of an offence under Section 138 of the Act as bouncing of the cheque issued by him carries a mandatory presumption in terms of Section 139 read with Section 118 (a) of the Act. It was urged that it is not believable that the appellant despite referring the dispute to the Panchayat and issuing a paper publication on 3.10.1996 would not insist on taking back the cheque book from his erstwhile constituted attorney or would not inform the bank thereabout. Moreover, he having come out with a positive defence, it was for him to prove the same. 12. Before we embark upon the factual issue involved herein, we would notice the manner in which the court proceeded to determine the case. The learned Trial Judge framed the following points for its determination: (1) Whether the complainant proves the hilt that the accused to discharge earlier debt of Rs.1,50,000/-, has got issued a cheque ....
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....duced any evidence to discard the testimony of PW-1. Therefore, the presumption is to be drawn in favour of the holder of the cheque, who has received it for discharge of liability in view of the decision of the Hon'ble Supreme Court. 14. Yet again, it relied upon a decision of the Karnataka High Court in M/s. Devi Tyres v. Nawab Jan [AIR 2001 Karnataka H.C.R. 2154], wherein it was opined: There is issued (sic) that the amount is payable and no criminal court is required to embark upon any enquiry that goes behind the Act of issuance of the cheque. If the drawer contends that there were certain special reasons whereby a cheque was issued and that the cheque was not intended to be encashed or honoured, the onus of establishing this shifts squarely to the accused. 15. The complainant's case was, thus, primarily accepted for the reason that the appellant did not step into the witness box. 16. The appellate court took an identical stand. It proceeded on the premise that the statement of accused under Section 313 of the Code of Criminal Procedure regarding misuse of blank cheque by the complainant and filling up Rs. 1,50,000/- instead....
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....was a resident of village Goddalmane. Appellant is a resident of village Kekkar. As he was running an industry at Hubli, he sometimes resided in Hubli also. They were said to be friends. He asked him to give a loan of Rs. 1.5 lakhs in the first week of June, 1998 and the amount was handed over to him on 14th June, 1998. It was allegedly agreed that on the appellant's failure to repay the said loan within one month, 15% interest would be charged. No document was executed; no pronote was executed; no receipt was obtained. Appellant is said to have come to his house suo moto on 20.07.1998 and handed over the cheque which was sent to Varada Grameen Bank for collection whereupon notice had been issued. Despite the fact that he was aware that a dispute had been raised in regard to the writings in the cheque, the same was not proved. Merely, the cheque was tendered and it was marked as an exhibit. The cheque appears to have been issued as a proprietor of a business concern. Despite the fact that R.G. Bhat was his brother-in-law, he denied that he was running the said business. He also feigned his ignorance as to whether the said industry was being run by R.G. Bhat on the basis of the Po....
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....tion 118(b) and Section 139 of the Act. Section 13(1) of the Act defines negotiable instrument' to mean a promissory note, bill of exchange or cheque payable either to order or to bearer . Section 138 of the Act has three ingredients, viz.: (i) that there is a legally enforceable debt; (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. 21. The proviso appended to the said section provides for compliance of legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability. 22. The courts below, as noticed hereinbefore, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts be....
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....f led, is to be seen with a doubt [Emphasis supplied] 25. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies. 26. A statutory presumption has an evidentiary value. The question as to whether the presumption whether stood rebutted or not, must, therefore, be determined keeping in view the other evidences on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In a case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration. 27. In M.S. Narayana Menon Alias Mani v. State of Kerala and Another [(2006) 6 SCC 39], it was held that once the accused is found to discharge his initial burden, it shifts to the complainant. 28. Four cheques, according to the accu....
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....the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability. In John K. John v. Tom Varghese & Anr. [JT 2007 (13) SC 222], this Court held: The High Court was entitled to take notice of the conduct of the parties. It has been found by the High Court as of fact that the complainant did not approach the court with clean hands. His conduct was not that of a prudent man. Why no instrument was executed although a huge sum of money was allegedly paid to the respondent was a relevant question which could be posed in the matter. It was open to the High Court to draw its own conclusion therein. Not only no document had been executed, even no interest had been charged. It would be absurd to form an opinion that despite knowing that the respondent even was not in a position to discharge his burden to pay instalments in respect of the prized amount, an advance would be made to him and that too even after institution of three civil suits. The amount advanced even did not carry any interest. If in a situation of this nature, the High Court has arrived at a finding that the respondent has discharged his burden of p....
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....d as such it may not be necessary like the countries forming European countries to bring common law into land with the Convention, a balancing of the accused rights and the interest of the society is required to be taken into consideration. In India, however, subject to the statutory interdicts, the said principle forms the basis of criminal jurisprudence. For the aforementioned purpose the nature of the offence, seriousness as also gravity thereof may be taken into consideration. The courts must be on guard to see that merely on the application of presumption as contemplated under Section 139 of the Negotiable Instruments Act, the same may not lead to injustice or mistaken conviction. It is for the aforementioned reasons that we have taken into consideration the decisions operating in the field where the difficulty of proving a negative has been emphasized. It is not suggested that a negative can never be proved but there are cases where such difficulties are faced by the accused e.g. honest and reasonable mistake of fact. In a recent Article The Presumption of Innocence and Reverse Burdens : A Balancing Duty published in [2007] C.L.J. (March Part) 142 it has been stated :-  ....