TaxTMI 
TaxTMI 
2021 (2) TMI 962
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....f Rs. 21.00 lakh without interest, to fulfill the needs in doing his business. In order to discharge his liability, the accused issued a cheque bearing No.651025 dated 19.08.2010 for Rs. 21,00,000/- drawn on Karnataka Bank Ltd. Supermarket, Gulbarga. The cheque was presented to the complainant's banker, but it was dishonoured and returned with an endorsement that 'payment stopped by the drawer'. Then legal notice was issued by the complainant demanding payment of cheque amount. The accused neither replied to notice nor repaid the amount. Hence, complaint came to be filed for the offence punishable under Section 138 of the N.I.Act. b) The accused appeared. After recording of the plea of the accused, the complainant got examined himself as PW.1 and got marked five documents as Ex.P1 to Ex.P5. Thereafter, the statement of the accused as required under Section 313 of Cr.P.C. was recorded. Accused denied the incriminating circumstance appearing against him in the evidence of prosecution witness. Then accused himself got examined as DW.1 in support of his defence. After hearing the arguments, the trial Court acquitted accused. 4. Aggrieved by the same, this appeal....
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....on of the accused that the proprietorship is different and accused is different. 9. The learned counsel further argued that in view of principles stated by Hon'ble Supreme Court on the point that the source of income of complainant, it is held that the said defence is not a material one and the presumption arising under Section 139 of the N.I.Act is not rebutted by such defence evidence. The purpose of enacting the said N.I.Act is to be looked into to appreciate the evidence. 10. In support of his arguments, the learned counsel relied on the decision of Hon'ble Supreme Court in case of ICDS LTD vs. Beena Shabeer and Another reported in (2002) 6 SCC 426, wherein at para 10 to 13 it is held as under: "10. The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt ....
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....eds and is thus allowed. The order of the learned Single Judge stands quashed and the proceeding in ST No.141/1999 on the file of the Additional Chief Judicial Magistrate's Court, Thiruvananthapuram stands restored and so is the complaint under Section 138 of the Act. No costs." The learned counsel also relied on a decision of the Hon'ble Supreme Court in case of Bir Singh vs. Mukesh Kumar reported in AIR 2019 SC 2446 wherein at para 16, 36, 37 and 38 it is held as under: "16. The short question before us is whether the High Court was right in reversing the concurrent factual findings of the Trial Court and of the Appellate court in exercise of its revisional jurisdiction. The questions of law which rise in this appeal are, (i) whether a revisional Court can, in exercise of its discretionary jurisdiction, interfere with an order of conviction in the absence of any jurisdictional error or error of law and (ii) whether the payee of a cheque is disentitled to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, of a cheque duly drawn, having been issued in discharge of a debt or other liability, only because he is in a fiduciary relat....
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....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 mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it is based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttal presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. 27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques....
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....obable 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 probability of existence of any transaction with Shri Jagdishbhai? In this regard, significant it is to notice that apart from making certain suggestions in the cross-examination, the accused- appellant has not adduced any documentary evidence to satisfy even primarily that there had been some monetary transaction of himself with Shri Jagdishbhai. Of course, one of the allegations of the appellant is that the said stamp paper was given to Shri Jagdishbhai and another factor relied upon is that Shri Jagdishbhai had signed on the stamp paper in question and not the complainant. 19. Hereinabove, we have examined in detail the findings of the Trial Court and those of the High Court and have no hesitation in concluding that the present one was clearly a case where the decision of the Trial Court suffered from perversity and fundamen....
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.... vs. Devinder Singh Hudan and another reported in (2019) 10 SCC 287, wherein at para 25 it is held as under: "25. In other judgment reported as Rohitbhai Jivanlal Patel v. State of Gujarat and Another this Court held as under : (SCC paras, 15, 17 & 22) "15. So far the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 of the NI Act is concerned, apparent it is that the appellant-accused could not deny his signature on the cheques in question 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 complainan....
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....on by cross-examination of PW.1 and also by leading his defence evidence. The amount of cheque involved in this case is to the tune of Rs. 21.00 lakh. No on demand promissory note is obtained, nor any interest is charged on such huge loan amount. No person will give such huge amount without any interest or without taking any other security documents only as Cheque. The learned counsel further argued that the complainant has stated that, in the presence of two persons he had handed over the cheque money to accused. But those two persons before whom the accused is stated to have received the loan amount were not examined. In the cross- examination, the complainant-PW1 clearly admitted that he has got six blank cheques belonging to accused with him. In fact cheque in question was issued along with other cheques as a security for the loan barrowed by the relative of the accused which is admitted by the complainant. The loan amount of his relative was only Rs. 4.00 lakh. But why eight blank cheques were taken as stated by complainant is not forthcoming. The complainant has not produced any Bank account to show that he was having any amount in his account at any time; Issuance of such hu....
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....the partners. It makes it clear that the said cheque has been issued by the firm. Then under such circumstances, the contention taken up by the learned counsel for the respondent-complainant is not having any force the same is liable to be rejected. I have carefully gone through the judgments of both the Courts. The Courts below without looking into the said legal aspect have erroneously come to a different conclusion on the basis of the documents produced. It is the contention that the said documents have been concocted and created. Admittedly as per the case of complainant itself the cheque has been issued in the year 2008 and it contains the name of the firm then under such circumstances, it cannot be held that the accused has concocted the said documents to over come the liability. 39. In that light as mandated under Section 141 of the NI Act, without making the firm as a party to the proceedings the vicarious liability cannot be fixed on the petitioners- accused. This aspect has not been properly considered by the Court below and have been swayed away by the contention of the complainant. Keeping in view the anatomy of the above said provision of law and analyzing the....
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....heque." The learned counsel relied on decision of the Hon'ble Supreme Court in case of Krishna Janardhan Bhat vs. Dattatraya G. Hegde reported in AIR 2008 SC 1325 at para 13, 33, 34 and 35 wherein the Hon'ble Supreme Court has considered the ground realities and same is confirmed with some modification in case of Rangappa vs. Mohan reported in AIR 2010 SC 1898, it is held as under:- "13. It again referred to a decision of this Court in K. Bhaskaran v. Sankaran Vaidhyan Balan and Others [AIR 1999 SC 3762] and made almost a similar observation holding that as the complainant has discharged his initial burden, the onus shifted on the accused to produce rebuttal evidence against the presumption laid down in favour of the complainant stating: Here, the accused has not produced 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. 33. But, we may at the same time notice the development of law in this area in some jurisdictions. The presumption of innocence is a human right. ....
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.... the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same. 35. Keeping in view the peculiar facts and circumstances of this case, we are of the opinion that the courts below approached the case from a wholly wrong angle, viz., wrong application of the legal principles in the fact situ....
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....e accused argued that complainant has failed to discharge initial burden on him. On the other hand the cross- examination of PW.1 and evidence of accused clearly rebut the presumption if any. The learned counsel supports the judgment of trial court and prays to dismiss appeal. 16. I have given my anxious and careful consideration to the decisions relied by both the sides and also contentions taken by both the sides and perused the evidence. 17. The undisputed contention are that a) Ex.P1-cheque is signed by the accused; b) the said cheque was returned with an endorsement stating that the "payment stopped" by the drawer; c) PW.1- Md.Imtiyaz Ahmed Khan, complainant stated that he has got other six cheques belonging to accused with him which according to him given to him while loan was given to accused; d) Suit filed by the complainant for recovery of loan based on Ex.P1 - cheque in O.S.No.1/2012 came to be dismissed. Against that the complainant has filed RFA No.6066/2013, which is pending before the High Court. e) It is also evident that either in the complaint or in his evidence the complainant has not stated that the date when he has advanced the said hand loan. Simply it is....
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.... has also admitted that he has not taken any other documents or on demand promissory note or receipts as a security from the accused for advancing the such huge amount as loan without interest. 20. Complainant-PW.1 has further admitted in his cross-examination that he know one Sagir Ahmed Anwar who is the accused sister's son. Complainant- PW.1 has expressed his ignorance about the said Sagir Ahmed looking after the business of accused at Gulbarga. Complainant has admitted that accused was running business as Zaag transport. PW.1 has also admitted that in the year 2007 the said Sagir Ahmed had taken Rs. 5.00 lakh loan from him. But he has denied a suggestion that the said Sagir Ahmed has given a blank cheque signed by the accused as a security for the said loan amount. PW.1 has also admitted that the said Sagir Ahmed has repaid the said loan amount. PW.1 has admitted that his wife's name is "Haseena Begum" and as per his instructions the accused has paid amount of Rs. 1,20,000/- through cheque drawn in the name of his wife on 09.03.2008. Again on 09.04.2008 accused has paid Rs. 1,92,000/- through cheque bearing No.650645 in favour of his wife. But he has denied suggestio....
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....accused? All these unanswered questions creates doubt about the complainant case and makes the defence of accused probable. 22. Therefore, on perusing the oral evidence of PW.1 with reference to his written complaint and his evidence in examination-in-chief, it is evident that nowhere he has stated the date when he has given loan amount. Only for the first time in the cross-examination he states on 18.08.2009 he has given loan amount in cash and he himself went to the house of the accused and paid that amount which is not a natural course of conduct of a person in such situation. The two witnesses Mohd.Mukthar and Mohd.Rafi who were stated to be present at the time of giving loan amount, were not examined. Admittedly, the said amount was not withdrawn from any Bank or from his account. PW.1 states that the amount was received by him in respect of the plot sold by him at Solapur. But no records were produced in this regard. Complainant- PW.1 simply states that as himself and accused were doing business, he know accused. There is no separate close relationship or friendship between them. Complainant-PW.1 also admits about giving of Rs. 5.00 lakh loan to one Sagir Ahmed, who is son....
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....ith the accused. No documents were produced to establish his financial capacity to advance such huge amount, though it may not be relevant in all cases. The complainant has stated that he has got other six cheques belonging to accused with him, that aspect assumes importance as to why he has kept still six cheques belonging to accused. Why the accused gave money through cheque on different dates to the wife of the complainant. All these circumstances, which are not explained creates doubt about genuiness of the contents of the complaint. PW.1 also admits that sister's son of accused was barrowing of loan amount and he has repaid the said amount. But PW.1 denies that he has misused the cheque given as security for the said loan, though the loan amount was already repaid. It is not that both the appellant and accused were very close friends or relatives or very much acquainted each other. Both are business men. Then how complainant could have advanced such huge amount without any interest to the person who is not acquainted with him is also one of the circumstance goes against the complainant's case. 26. The Hon'ble Supreme Court in the case of K.Subramani vs. K.Damoda....
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....mplainant's counsel before trial Court an application under Section 311 of Cr.P.C. came to be filed by the complainant stating that the accused is proprietor of ADAL Audio & Visual, the cheque is also bearing seal of the same. But however in the cause title it does not depict or disclose this. Complainant has contended that it is due to oversight. Therefore, he has sought permission of court to lead evidence to that effect and prayed that he be permitted to rectify that mistake. But the said application came to be rejected by trial Court by order dated 08.11.2012 stating that the complainant cannot be allowed to take 'U' turn to contend that the cheque in question drawn by the accused for and on behalf of ADAL Audio & Visual and he cannot now change his contention nor it is his case all along. The trial Court held that at this belated stage, just fill up the lacuna such contention or rectification of such mistake cannot be permitted, when the arguments are already advanced by the complainant. Neither in his complaint nor in his statutory demand notice the complainant has stated anything about the cheuqe being issued by accused on behalf of said proprietorship of the ADA....
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....rowed loan in August 2009, what was the necessity for accused to give that cheque in the year 2010? According to complainant the accused had barrowed loan of Rs. 20.00 lakh from the Bank in the month of September 2010. But no records were produced. The complainant has not stated that after the cheque was returned dishonoured, whether he enquired the accused in this regard and demanded accused to return the amount nor he has mentioned the reason for dishonour of the cheque. Complainant has stated that accused has committed offence under the N.I.Act, which appears to have been inserted and written subsequently after the legal notice is typed, then by handwriting in ink same is inserted without there being any signature or initial of any person for adding such sentences in ink at para-3 of Ex.P.3-Notice. When the other entire matter was typed, why and when that sentence was added in ink is not forthcoming. It is stated that the amount was not paid with interest @ 12%. So it appears Ex.P3 demand notice is not in accordance with the mandatory requirement of the notice under Section 138 of the N.I.Act, This is also is one of the factor in favour of the accused and against the complainant....
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.... did not return the cheque. When accused enquired Sagir Ahmed in this regard the said Sagir Ahamed told him that he had given it to complainant, but complainant did not return the said cheque. Therefore, accused gave intimation to Bank stating that if such cheque is presented "payment should be stopped". Accused has further deposed that the complaint allegations are all false. He is not at all liable to pay amount. 36. The cross examination of accused by complainant side indicates that most of the cross- examination evidence is regarding denial of case of complainant. The case of defence is not denied by complainant in cross examination. Therefore, it amounts admission on the part of complainant. In the cross-examination accused has stated that he do not know complainant, and he is not having acquaintance with complainant. His evidence that Sagir Ahmed has made transaction with complainant is also not denied by complainant side. Accused evidence that he had given said cheque to Sagir Ahmed is not denied. Accused evidence that as complainant did not return the cheque to Sagir Ahmed which was given as security, so gave intimation to the Bank to "stop payment", as he is not liable ....
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....is wife, but why he paid such amount is not forthcoming. But accused has given explanation in his evidence that in respect of amount barrowed by his nephew the said cheque signed by him were given to complainant's wife, for which no explanation is forthcoming from complainant's side. The complainant himself admits in his cross examination that Ex.P1 - Cheque was received by him only as a security for the loan barrowed. Therefore, presumption that the cheque was issued for legally recoverable debt or liability or there is any existence of legally recoverable debt or liability stood rebutted by bringing on record, evidence in this regard by cross examination of complainant and also by defence evidence of accused. 39. Therefore, in view of above said discussion and peculiar facts and circumstances of the case, which clearly indicates that the preponderance of probabilities is tilting in favour of the accused. The accused has also brought on record such facts, material and circumstances in the cross-examination of PW.1 which could be reasonably said as accused proved a probable defence. Therefore, the burden to rebut the evidence of complainant and presumption in favour of c....
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....e complainant in this case. The appellant also relied upon decision of the Hon'ble Supreme Court in Uttam Ram's case (referred supra). Again the Hon'ble Supreme Court reiterated the principles regarding presumption arising under Section 139 of the Act by referring its earlier decision in Kumar's case (supra). In those cases the accused has not lead any evidence to rebut the presumption and cross-examination prosecution is not sufficient to rebut the presumption. But here the evidence, both in examination-in-chief and cross examination of complainant coupled with rebuttal evidence adduced by the accused clearly indicates that the presumption of consideration has been rebutted by the respondent- accused even on the basis of the evidence laid by the complainant alone. Apart from it the complainant has not denied defence evidence which is probable defence of accused. The accused has lead legally admissible defence evidence to rebut presumption if any in favour of complainant. 42. In view of the principles stated in the above referred decisions if the facts and evidence in this case are considered, in my considered view the trial Court is justified in acquitting the a....