TaxTMI 
TaxTMI 
2018 (7) TMI 2229
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....r an alleged offence of dishonour of cheque under Section 138 of the said Act and whether the respondent had rebutted such presumption when he failed to file reply to the complaint of the appellant and he did not adduce any direct evidence in order to support his defence. It needs to be examined whether the trial Court in such circumstances was justified in acquitting the respondent in the present case. 4. The facts in the present case are in a narrow compass. The appellant (original complainant) and the respondent (original accused) are related to each other having cordial relations. It was the case of the appellant that the respondent had approached him for a hand loan of Rs. 2 lakhs and that the appellant had given him cash amount of Rs. 2 lakhs. According to the appellant, in order to repay the said loan, the respondent had issued two cheques, but when they were presented for encashment, they were returned by the Bank with the remarks "funds insufficient". 5. The appellant issued notice to the respondent in respect of the dishonour of the cheques, but the respondent failed to respond to the same and, therefore, the appellant was constrained to file complaint under the pro....
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....r discharge of legal debt or liability, once the signature on the cheque was admitted, the appellant (complainant) was still required to prove foundational facts of his case. It was further submitted that when the appellant failed to prove such foundational facts regarding hand loan advanced to the respondent, the presumption under the said Act would not be triggered. It was further submitted that even if presumption was to operate against the respondent, he was entitled to rebut the same on the basis of material brought on record by way of cross-examination of the appellant. It was submitted that in order to rebut the presumption, it was not necessary for the respondent to enter the witness box and that he could very well rebut the presumption by discrediting the appellant in cross-examination. Both parties placed reliance on various judgments pertaining to the said question. 10. Before referring to the evidence and material on record in the present case, in order to examine whether the appellant was justified in contending that presumption operated against the respondent, which remained unrebutted, it would be necessary to refer to few precedents which would help in answering ....
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....the defendant fails to discharge the initial onus of proof by showing the nonexistence 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." This Court, therefore, clearly opined that it is not necessary for the defendant to disprove the existence of consideration by way of direct evidence. 32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies. 33. Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another." 12. In the case of Kumar Exports vs. Sharma Carpets - (2009) 2 Supreme Court C....
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.... is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue. 13. Thereafter, a three Judge Bench of the Hon'ble Supreme Court in the case of Rangappa vs. Sri Mohan - (2010) 11 Supreme Court Cases 441, in the context of Section 139 of the said Act, has 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 remedy in relation to the dishonour of cheques, 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 describ....
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...., either by adducing direct evidence in support of his stand or by discrediting the complainant in cross-examination to demonstrate that his defence was probable. On the accused demonstrating the real facts of the matter either by direct evidence or by showing that the evidence and material placed on record by the complainant himself was not believable and that it stood discredited, the presumption would cease to operate against the accused. 16. David Kaiser way back in the year 1955 in an article titled "Presumptions of Law and Fact" published in Marquette Law Review quoted majority opinion of the Missouri Court in the case of Machowik vs. Kansas City-196 Mo. 550 (1906), which reads as follows:- "Presumptions are the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts". 17. As per the law laid down by the Hon'ble Supreme Court the presumption under Sections 118 and 139 of the said Act is rebuttable. The accused can throw the sunshine of actual facts and rebut the presumption that may arise. This can be done either by adducing direct evidence or on the basis of material placed on record by the complainant, including discred....
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.... there was no entry in his accounts about having given loan of Rs. 2,00,000/- to the respondent. The appellant admitted that he had invested certain amounts in stocks and shares with one Anand Rathi, Stocks and Broker and that he had received certain amounts from the said Anand Rathi. There was a suggestion given to the appellant that the respondent had given the said cheques towards security till the time accounts with the said Anand Rathi were settled, but he denied the same. The appellant also denied the suggestion that he was doing transactions with Anand Rathi through the respondent. 22. A perusal of the aforesaid statements made in cross-examination by the appellant shows that he has completely failed to prove the foundational fact of having advanced loan to the respondent. Therefore, his claim that the cheques in question were issued by the respondent for repayment of the loan could not be accepted. The failure on the part of the appellant to produce his account statement and absence of entry in accounts maintained by him regarding loan advanced to the respondent, does show that there was no material to support the basic facts on which the entire case of the appellant was....