TaxTMI 
TaxTMI 
2019 (3) TMI 769
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....rawn by the accused-appellant in favour of the complainantrespondent No. 2. In the impugned judgment and order dated 08.01.2018, the High Court has disapproved the acquittal of the accused-appellant and, while holding him guilty of the offence under Section 138 of the NI Act, has awarded him the punishment of simple imprisonment for a period of 1 year with fine to the extent of double the amount of cheque (i.e., a sum of Rs. 6 lakhs) with default stipulation of further imprisonment for a period of 1 year in each case; and, out of the amount payable as fine, the complainant-respondent No. 2 is ordered to be compensated to the tune of Rs. 5.5. lakhs in each case. 3. Briefly put, the substance of allegations and assertions of the complainant-respondent No. 2 in each of the 7 cases aforesaid had been as follows: He was having his office in Windor Plaza at Alkapuri, Vadodara and had been visiting the shop of his friend Shri Jagdishbhai in National Plaza in the same locality; the accused-appellant, a trader of edible spices, had his shop near the shop of Shri Jagdishbhai and in due course of time, the accused, the complainant and the said Shri Jagdishbhai became good friends. The comp....
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....ch could be noticed as under ^The extraction is from the judgment of the Trial Court in Criminal Case No. 46499 of 2008. : "1. Whether the complainant proves that the accused has issued and handed over the Cheque bearing No. 763346 of Rs. 3, 00,000/- towards legal due amount from the account maintained by him, and upon presenting the said cheque in bank of the complainant for encashment, the same was returned back unpaid with endorsement of the bank "Today's opening balance is insufficient" and thereafter the complainant has served demand notice to the accused and the said notice has been served to the accused even though, the accused has not paid the cheque amount within the stipulated Notice period and thereby the accused has committed offence punishable under section 138 of the Negotiable Instrument Act? 2. What order?" 6. After examining the record, the Trial Court found that the accused had admitted his signature on the cheques and, with reference to the decision of this Court in the case of Rangappa v. Sri Mohan : (2010) 11 SCC 441, drew the presumption envisaged by Section 139 of NI Act. 6.1. However, after having drawn the presumption, the Trial Court ....
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.... 7. Against the aforementioned judgment and orders of acquittal, the complainant preferred appeals before the High Court of Gujarat, which have been considered and decided together by the impugned common judgment and order dated 08.01.2018. The High Court observed that the presumption under Sections 118 and 139 of the NI Act was required to be drawn that the cheques were issued for consideration and until contrary was proved, such presumption would hold good; that the complainant had proved legally enforceable debt in the oral as also documentary evidence, including the written acknowledgment by the accused on stamp paper; and that except bare denial, nothing was brought on record by the accused to dislodge the proof adduced by the complainant. 7.1 The High Court observed that if the transaction in question was not reflected in the accounts and income-tax returns, that would at best hold the assesse or lender liable for action under the income-tax laws but, if the complainant succeeds in showing the lending of amount, the existence of legally enforceable debt cannot be denied. The High Court also observed that the issue regarding washing away of the cheques in rain water was of....
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....ent No.2 has admitted his signature on the impugned cheque. At no point of time, the cheque has been disputed......Once this fact is acknowledged that the signature on the cheque is that of the respondent No. 2-accused, section 139 of the Negotiable Instruments Act would mandate the presumption that the cheque concerns a legally enforceable debt or liability. Of course, this presumption is in the nature of rebuttal and onus is on the accused thereafter to raise a probable defence. 25.1 As can be noted from the chronology of events and the material that has been placed before this Court that the defence raised by the accused is not at all probable. The respondent No.2-accused states that the money was given as a hand loan by his friend Jagdishbhai and not the appellant, also gets falsified completely by the version of Jagdishbhai. It appears that in case of all the seven cheques when notices were given prior to the filing of the complaint, he has chosen not to reply to four of the notices. Either on account of insufficiency of the funds or because he has closed account that the cheques could not be realized. All these circumstances cumulatively lead this Court to conclude t....
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....tion of recognizing the evidentiary value and not appreciating the positive evidence which led to the reasonable proof of legally enforceable debt existing on the side of the original complainant." 8. Assailing the judgment and order so passed by the High Court, learned counsel for the accused-appellant has contended that the impugned judgment is contrary to the principles laid down in the case of Arulvelu and Anr. v. State represented by Public Prosecutor & Anr.: (2009) 10 SCC 206, particularly when the High Court has set aside the considered judgment and orders of the Trial Court without pointing out any perversity therein. The learned counsel has argued, with reference to the decisions in M.S. Narayana Menon alias Mani v. State of Kerala and Anr: (2006) 6 SCC 39 and Kumar Exports v. Sharma Carpets: (2009) 2 SCC 519, that the High Court has failed to appreciate the settled principle of law that the accused is only required to show a probable defence to be acquitted of the charges under Section 138 of the NI Act. The learned counsel has referred to the reasons assigned by the Trial Court to acquit the accused-appellant and has submitted that contradictory statements have been m....
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....ection 139 NI Act has not been dislodged, in fact, the case of the complainant is fortified in view of the unequivocal acknowledgement and undertaking stated by the accused-appellant on the stamp paper; and in the given circumstances, the High Court has rightly convicted him for the offence under Section 138 of the NI Act. 10. Having given anxious consideration to the rival submissions and having examined the record, we are clearly of the view that as regards conviction of the accused-appellant for the offence under Section 138 NI Act, the impugned judgment and order dated 08.01.2018 does not call for any interference but, on the facts and in the circumstances of this case, the punishment as awarded by the High Court deserves to be modified. 11. According to the learned counsel for the accused-appellant, the impugned judgment is contrary to the principles laid down by this Court in the case of Arulvelu (supra) because the High Court has set aside the judgment of the Trial Court without pointing out any perversity therein. The said case of Arulvelu (supra) related to offences under Sections 304-B and 498-A IPC. Therein, on the scope of the powers of Appellate Court in an appea....
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....138 of the NI Act, the basic questions to be addressed to are two-fold: as to whether the complainant-respondent No. 2 had established the ingredients of Sections 118 and 139 of the NI Act, so as to justify drawing of the presumption envisaged therein; and if so, as to whether the accused-appellant had been able to displace such presumption and to establish a probable defence whereby, the onus would again shift to the complainant? 13. We may usefully take note of the provisions contained in Sections 118 and 139, being the special rules of evidence applicable to the case as follows: The principal and charging part of Section 138 NI Act may also be extracted for ready reference as follows: "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 arrange....
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....ion that had been drawn in favour of the complainant on a bank account maintained by the accused for a sum of Rs. 3 lakhs each. The said cheques were presented to the Bank concerned within the period of their validity and were returned unpaid for the reason of either the balance being insufficient or the account being closed. All the basic ingredients of Section 138 as also of Sections 118 and 139 are apparent on the face of the record. The Trial Court had also consciously taken note of these facts and had drawn the requisite presumption. Therefore, it is required to be presumed that the cheques in question were drawn for consideration and the holder of the cheques i.e., the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the accused-appellant to establish a probable defence so as to rebut such a presumption. 15. In Rangappa v. Sri Mohan : (2010) 11 SCC 441, this Court has reiterated and summarised the principles relating to presumptions under Sections 118 and 139 of the NI Act and rebuttal thereof in the following:- "26. In the light of these extracts, we are in agreement with the respondent claimant that the presumption m....
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....ities, the accused has to bring on record such facts and such circumstances which may lead the Court to conclude either that the consideration did not exist or that its nonexistence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that the consideration did not exist. This Court has, time and again, emphasized that though there may not be sufficient negative evidence which could be brought on record by the accused to discharge his burden, yet mere denial would not fulfil the requirements of rebuttal as envisaged under Section 118 and 139 of the NI Act. This court stated the principles in the case of Kumar Exports (supra) as follows: "20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused ma....
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....he complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant. The aspect relevant for consideration had been as to whether the accused-appellant has brought on record such facts/material/circumstances which could be of a reasonably probable defence. 18. In order to discharge his burden, the accused put forward the defence that in fact, he had had the monetary transaction with the said Shri Jagdishbhai and not with the complainant. In view of such a plea of the accused-appellant, the question for consideration is as to whether the accused-appellant has shown a reasonable probabi....
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.... It is not true that for the amount given to the accused, I had taken seven blank duly cheques also blank stamp paper without signature. It is not true that there was quarrel between me and the accused in the matter of payment of interest. It is not true that even after the payment of Rs. ten lacs and the huge amount of the interest in the matter of interest quarrel was made. It is not true that due to the reason of quarrel with the accused, in the cheques of the accused lying with me by making obstinate writing has filed the false complaint through Shashimohan Goyanka. It is not true that no financial dealings have taken place between the complainant and the accused. therefore I also the complainant both at the time of evidence the accused at what place, on what date at what time, the amount taken has not been able to make clearly. (sic) It is not true that the blank stamp paper duly signed were lying in which obstinate writing has been made therefore the same has not been registered through sub registrar. It is not true that the dealings have been made between me and accused therefore there is my signature and the signature of the accused and the complainant has not signed. It is....
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.... and account number are of the same cheques which form the subject matter of these complaint cases. The said document bears the date 21.03.2007 and the cheques were postdated, starting from 01.04.2008 and ending at 01.12.2008. There appears absolutely no reason to discard this writing from consideration. 18.7 One of the factors highlighted on behalf of the appellant is that the said writing does not bear the signature of the complainant but and instead, it bears the signatures of said Shri Jagdishbhai. We find nothing unusual or objectionable if the said writing does not bear the signatures of the complainant. The said writing is not in the nature of any bi partite agreement to be signed by the parties thereto. It had been a writing in the nature of acknowledgement by the accused-appellant about existence of a debt; about his liability to repay the same to the complainant; about his having issued seven post-dated cheques; about the particulars of such cheques; and about the fact that the cheques given earlier had washed away in the rain water logging. Obviously, this writing, to be worth its evidentially value, had to bear the signatures of the accused, which it does. It is not ....
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....be Rs. 22,50,000/- and seven cheques being of Rs. 3,00,000/- each leading to a deficit of Rs. 1,50,000/-, is not even worth consideration for the purpose of the determination of real questions involved in the matter. May be, if the total amount of cheques exceeded the alleged amount of loan, a slender doubt might have arisen, but, in the present matter, the total amount of 7 cheques is lesser than the amount of loan. Significantly, the specific amount of loan (to the tune of Rs. 22,50,000/-) was distinctly stated by the accused-appellant in the aforesaid acknowledgment dated 21.03.2017. 20. On perusing the order of the Trial Court, it is noticed that the Trial Court proceeded to pass the order of acquittal on the mere ground of 'creation of doubt'. We are of the considered view that the Trial Court appears to have proceeded on a misplaced assumption that by mere denial or mere creation of doubt, the appellant had successfully rebutted the presumption as envisaged by Section 139 of the NI Act. In the scheme of the NI Act, mere creation of doubt is not sufficient. 21. The result of discussion in the foregoing paragraphs is that the major considerations on which the Tria....