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TaxTMI 
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TaxTMI 
2018 (9) TMI 1076
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....s. Respondent financer bank paid Rs.2,50,000/- and a cheque of Rs.25,000/- was paid by Oberoi motors. Out of Rs.6,65,000/-, the appellant received Rs.2,75,000/-, thus the respondent was liable to pay Rs.3,90,000/- to the appellant. Further, the respondent had also purchased goods for Rs.5,400/- by using his credit card. In July, 2008, when the respondent was in Haridwar, the appellant through one Sunil paid Rs.2,000/- to the wife of the respondent as per his telephonic request. The appellant also paid an interest amount of Rs.5,000/- to Pappu on behalf of the respondent in July, 2008 and Rs.3,750/- for repair of tyres of his vehicle at Dehradun on behalf of the respondent. 3. In August, 2008 the account was settled between the respondent and the appellant which included an amount of Rs.84,000/- towards interest from 1st April, 2008 to 15th December, 2008 against the principal amount, in discharge of total liability of Rs.4,90,150/- to the appellant, the respondent issued a post dated cheque bearing No. 054813 dated 15th December, 2008 for a sum of Rs.4,90,000/- drawn on Induslnd Bank Ltd., Punjabi Bagh, New Delhi in favour of the appellant. Upon presentation, the cheque was dishon....
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....atures on the receipt dated 31st October, 2007 (Ex. DW3/A). During cross-examination, he stated that the first payment of Rs.75,000/- for making of body was made by the appellant on 31st October, 2007. Respondent who was examined as DW-4 stated that he used to keep some of his blank cheques at his house and Rakesh, employee of appellant, used to collect the cheques from his house at the instance of the appellant. The said cheques were only signed by him and rest of the contents used to be filled by the appellant. He used to remain at Dehradun to look after the operation of buses and the appellant used to handle his financial transactions. 8. Learned Counsel for the appellant submits that the learned Trial Court failed to consider that the appellant had led evidence to show the liability for an amount of Rs.4,90,000/- towards the respondent accused and thus the cheque No.054813 dated 15th December, 2008 issued for a sum of Rs.4,90,000/- was in discharge of the cumulative liability. In his cross-examination the respondent admitted that he used to keep blank signed cheques in his home and the employee of the appellant namely Rakesh used to collect the said cheques from his home at th....
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....ws: "17. In the course of the proceedings before this Court, the contentions related to the proper interpretation of Sections 118(a), 138 and 139 of the Act. Before addressing them, it would be useful to quote the language of the relevant provisions: "118. Presumptions as to negotiable instruments.-Until the contrary is proved, the following presumptions shall be made: (a) of consideration: that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration; *** 138. Dishonour of cheque for insufficiency, etc., of funds in the account.-Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such p....
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....tions and giving credibility to negotiable instruments in business transactions. The said provisions were intended to discourage people from not honouring their commitments by way of payment through cheques. The court should lean in favour of an interpretation which serves the object of the statute. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. In view of Section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view woul....
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....n accused is 'preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies." (emphasis supplied) 19. It has been contended on behalf of the appellant-accused that the presumption mandated by Section 139 of the Act does not extend to the existence of a legally enforceable debt or liability and that the same stood rebutted in this case, keeping in mind the discrepancies in the complainant's version. It was reasoned that it is open to the accused to rely on the materials produced by the complainant for disproving the existence of a legally enforceable debt or liability. It has been contended that since the complainant did not conclusively show whether a debt was owed to him in respect of a hand loan or in relation to expenditure incurred during the construction of the accused's house, the existence of a legally enforceable debt or liability had not been shown, thereby creating a probable defence for the accused. 21. Specifically in relation to the nature of the presumption contemplated by Section 139 of the Act, it was obs....
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....fts the onus on to the accused.' ... Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court 'may presume' a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. 23. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, 'after considering the matters before it, the court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the suppositi....
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.... under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its nonexistence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist." (emphasis supplied) Interestingly, the very same extrac....
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.... the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard or proof. 28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted....
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....de entire payment of Rs.6,15,000/- for body making of 5 buses of the accused @ Rs.1,23,000/- per bus. However, it emerges clearly from the above testimonies that the body making charges were in fact Rs.1,22,000/- per bus and secondly that complete payment in respect of all the buses was yet to be made to both the body makers. Complainant himself stated that no separate account was maintained for making of 5 buses of the accused. The receipt Ex. DW3/X, which was a hand written record maintained by the complainant, is also based on the cost of one body making Rs.1,22,000/- only. It records payments made to Asif (meaning thereby DW3 Ashraf) of Rs.3,66,000/- (for 3 buses) and a similar payment for similar number of buses to Moin (same as DW2). However, in fact, body of 5 buses was made by DW2 and of 6 buses by DW3 as deposed by them. There is nothing on record even to faintly suggest that the entire payment as shown as per the above receipt Ex. DW3/X was meant for buses belonging to the accused only. Rather, complainant himself stated in his testimony that no separate record was kept for body making of each of the buses. Further, the above statement was acknowledged only by DW3 Asif an....