TaxTMI 
TaxTMI 
2021 (8) TMI 1174
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....nd convicted the petitioner for offence under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as the Act of 1881) and directed the learned trial court to pass an order of sentence after giving an opportunity of hearing to both the sides. 5. The matter was taken up by this Court on 26.11.2020 and the learned counsel appearing on behalf of the opposite party no.2 had submitted that pursuant to the appellate order, the petitioner did not appear before the learned trial court and therefore the matter is still pending for passing an order of sentence against the petitioner. Arguments on behalf of the Petitioner 6. Learned Amicus appearing on behalf of the petitioner has submitted that in the judgements passed by both the courts below no finding has been recorded with regards to service of statutory notice regarding bouncing of cheque upon the petitioner, although finding has been recorded with regards to dispatch of legal notice through registered cover. She submits that the petitioner had denied service of notice regarding bouncing of the cheque. She submits that it was for the prosecution to prove service of statutory notice which is a condition prece....
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....ase and the impugned judgement, it would be proper to deal with the legal position with regards to the scope of power of the appellate court dealing with appeal against acquittal; presumption under Section 139 of the aforesaid Act of 1881 in connection with issuance and bouncing of the cheque and statutory time line in connection with filing of case for offence under Section 138 of the aforesaid Act of 1881. 9. The Hon'ble Supreme Court in the case of Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106 in para 12 considered the scope of the powers of the appellate court in an appeal against acquittal, and referred to an earlier judgement reported in (2009) 10 SCC 206 (Arulvelu versus State), wherein it has been held as under - "36. Careful scrutiny of all these judgments leads to the definite conclusion that the appellate court should be very slow in setting aside a judgment of acquittal particularly in a case where two views are possible. The trial court judgment cannot be set aside because the appellate court's view is more probable. The appellate court would not be justified in setting aside the trial court judgment unless it arrives at a clear finding on....
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....a versus Sri Mohan) and reported in (2009) 2 SCC 513 (Kumar Exports versus Sharma Carpets) and considered the legal position as to manner in which the presumption in connection with cheque under Section 138 of the aforesaid Act of 1881 is to be rebutted on the principles of "preponderance of probabilities" and the manner in which the burden may again shift back to the complainant. Para 16 and 17 of the aforesaid judgement of Rohitbhai Jivanlal Patel (supra) are quoted hereinbelow for ready reference: - 16. In Rangappa v. Sri Mohan, 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 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 cita....
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.... 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 Sections 118 and 139 of the NI Act. This Court stated the principles in Kumar Exports 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 may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplat....
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....vidence to rebut such a presumption and the accused has to lead evidence that the entire amount due and payable to the complainant was paid. In para 6.1 of the aforesaid judgment, the Hon'ble Supreme Court referred to earlier judgment reported in (2001) 8 SCC 458 (K.N. Beena Vs. Muniyappan) wherein it was observed and held that under Section 118 of Negotiable Instrument Act, unless the contrary is proved, it is to be presumed that negotiable instrument has been made or drawn for consideration. It was further observed that under Section 139, the Court has to presume, unless contrary is proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Such presumption is rebuttable and the burden to prove is on the accused. The Hon'ble Supreme Court in the aforesaid judgment also quoted para 27 of the judgment passed in the case of K.N. Beena (Supra) wherein it was held as follows: "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....
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....six or seven months. The amount was borrowed by the petitioner for treatment of his wife. Till 1st February, 2010 - The petitioner received altogether Rs. 4,14,966/-. 01.02.2010 - Petitioner issued a cheque amounting to Rs. 4,14,966/- in favour of the complainant- Exhibit-1 20.03.2010- The petitioner promised that as soon as his loan will be sanctioned, he would return the amount and the complainant may not be required to produce the cheque before the bank. 31.03.2010 -The petitioner did not pay the loan amount to the complainant till 30.03.2010 and ultimately the complainant produced the cheque on 31.03.2010 before the bank which was dishonoured due to "insufficient fund"- Exhibit-2. 07.04.2010- Cheque return memo was issued on 07.04.2010- Exhibit-3. 31.08.2010- The complainant informed the petitioner and the petitioner assured him to wait till 31.08.2010. 15.09.2010 - Again, the petitioner told him to wait till 15.09.2010. 18.09.2010 - The complainant presented the cheque Exhibit - 2/A 21.09.2010- The Cheque return memo was issued on 21.09.2010 regarding dishonour of cheque- Exhibit-3/A. 27.....
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.... and during his cross examination, he deposed that his wife has been suffering from illness for 3 years and he took loan from the complainant amounting to Rs. 4,14,699/- for treatment of his wife. He gave account payee cheque to the complainant amounting to Rs. 4,14,699/- but he did not receive any legal notice. The petitioner also deposed that he obtained bail from the court after receiving notice of the court. The accused had stated before the court as witness that he had already returned loan amount to the complainant. He also deposed that there is another firm namely Dhupeswar Enterprises in which the complainant was the partner and now, he was the proprietor of this firm. Point no. (a) whether the complainant had established the ingredients of Sections 118 and 139 of the NI Act so as to justify drawing of the presumption envisaged therein? 21. This Court also finds that the petitioner had taken a specific plea that he did not receive any legal notice and he obtained bail from the court after receiving notice from the court. 22. Admittedly, the legal notice in connection with the cheque was sent to the petitioner on 27.09.2010 by registered post wi....
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....sonable period. It was held that if the presumption of notice within the reasonable period is raised, the deemed service at best can be taken to be 30 days from the date of its issuance and the accused was required to make payment in terms of the said notice within 15 days thereafter and the complaint petition therefore could have been filed after expiry of 15 days given to the accused for payment of money after receipt of notice. 27. This Court finds that the petitioner, before the learned court below, had taken a specific plea that the legal notice was never served upon him, and there is no evidence on record to show that the notice was received by the petitioner. In that view of the matter, the presumption regarding the service of notice dated 27.09.2010 sent through registered cover could be 30 days from the date of issuance of notice i.e., on or about 27.10.2010 and from there 15 days waiting period is prescribed for the petitioner to make payment of the cheque amount i.e by 11.11.2010 and only thereafter the cause of action for filing the case could have arisen in the instant case. However, the present case has been filed on 04.11.2010. 28. In the judgment passed by the....
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....ing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice." 32. We are in agreement with the above analysis. 33. In K.R. Indira, a two-Judge Bench of this Court observed that the offence under Section 138 of the NI Act could be completed if all the above components are satisfied. 34. Insofar as the present reference is concerned, the debate broadly centres around clause (c) of the proviso to Section 138 of the NI Act. The requirement of clause (c) of the proviso is that the drawer of the cheque must have failed to make the payment of the cheque amount to the payee within 15 days of the receipt of the notice. Clause (c) of the proviso offers a total period of 15 days to the drawer from the date of receipt of the notice to make payment of the cheque amount on its dishonour. 35. Can an offence under Section 138 of the NI Act be said to have been committed when the period pr....
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....o manner of doubt that no offence can be said to have been committed unless and until the period of 15 days, as prescribed under clause (c) of the proviso to Section 138, has, in fact, elapsed. Therefore, a court is barred in law from taking cognizance of such complaint. It is not open to the court to take cognizance of such a complaint merely because on the date of consideration or taking cognizance thereof a period of 15 days from the date on which the notice has been served on the drawer/accused has elapsed. We have no doubt that all the five essential features of Section 138 of the NI Act, as noted in the judgment of this Court in Kusum Ingots & Alloys Ltd. and which we have approved, must be satisfied for a complaint to be filed under Section 138. If the period prescribed in clause (c) of the proviso to Section 138 has not expired, there is no commission of an offence nor accrual of cause of action for filing of complaint under Section 138 of the NI Act. 37. We, therefore, do not approve the view taken by this Court in Narsingh Das Tapadia and so also the judgments of various High Courts following Narsingh Das Tapadia that if the complaint under Section 138 is filed b....
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....'ble Supreme Court reported in (2014) 10 SCC 713 (Yogendra Pratap Singh -versus- Savitri Pandey and another) read with the judgement reported in (2008) 13 SCC 689 (Subodh S. Salaskar vs. Jayprakash M. Sah and Another), the complaint file in the present case was pre-mature as the cause of action for filing the complaint case under Section 138 of the aforesaid Act of 1881 had not crystalised on 4.11.2010 and accordingly, the complaint itself was not maintainable. 32. Consequently, the condition precedent for filing the case under Section 138 of the Negotiable Instruments Act, 1881, having not been satisfied, the complaint itself was not maintainable on the day it was filed and accordingly, the petitioners could not have been convicted under the said Section. The question of any presumption regarding existing debt under Section 139 of the Negotiable Instruments Act, 1881 did not arise as the complaint itself was not maintainable. Accordingly, the conviction of the petitioner under Section 138 of the aforesaid Act of 1881 by the learned appellate court cannot be sustained in the eyes of law. 33. The point no.(a) is decided in favour of the accused petitioner and against the compl....
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....rned trial court also held that it was for the prosecution to prove its case beyond reasonable doubt and as reasonable doubt was created, the prosecution was held to have failed in discharging the burden. The learned trial court neither referred to Section 139 of the aforesaid Act of 1881 nor considered the effect of legal presumption under Section 139 nor examined the discharge of burden of proof on the principles of "preponderance of probabilities" as crystalised by the Hon'ble Supreme Court in Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106 and also in Cr. Appeal No.271 of 2020 with analogous case (APS Forex Services Pvt. Ltd. Vs. Shakti International Fashion Liners and Ors.) decided on 14.02.2020. 38. The appellate court, after considering the materials on record, was of the view that the defence failed to establish the genuineness of Exhibit-A and held that all the requirements to establish a case under Section 138 of Negotiable Instruments Act were fulfilled by the complainant. The learned appellate court also recorded that the learned trial court failed to appreciate that the materials which were brought on record by the complainant were sufficient to esta....
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....obable defence is put on record from the side of the accused, the onus shifts upon the complainant to prove the fact regarding existing debt. 42. In the instant case, the Exhibit- A is dated 06.09.2010 which is certainly after first instance of bouncing of cheque and prior to presentation of cheque second time, upon which legal notice was issued and case was filed. 43. This Court has scrutinised the materials on record as the Exhibit A was relied upon by the learned trial court but disbelieved by the learned appellate court. Upon perusal of the records, this Court finds that there is no material on record, either in the evidence in chief of the complainant or evidence in chief of the accused or even in their cross examination, that the blank signed pages were signed and handed over by the complainant to the accused - petitioner in connection with the partnership firm and that the same has been misused by the accused- petitioner to create a document of receipt of the cheque amount i.e Exhibit-A. In the cross examination of the complainant, she had denied receipt of the cheque amount and denied issuance of any money receipt but had not mentioned regarding any signed blank page ....