TaxTMI 
TaxTMI 
2018 (3) TMI 1968
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.... preferred Criminal Case No.1373 of 2002 on 10.12.2002. It is the case of the complainant that he belongs to village Parbatpura, situated at Taluka Mansa, District Gandhinagar, whereas the respondent No.2 is the resident of village Jamda, District Taluka Kalol, District Gandhinagar. Since both the villages are at a distance of about two kilometers, the complainant shared fairly good acquaintance and relationship with the respondent-original accused. Brother-in-law of the complainant and the respondent No.2, worked as agents under one Development Officer Shri Kachrabhai Patel in L.I.C. Office; that is how the complainant had met the respondent No.2 and they had developed notable social relationship which had led to their entering into the said transaction. 3. It is the case of the prosecution as revealed in the complaint that the respondent had taken the complainant into confidence by impressing upon him that he had a big name in the office of L.I.C. He also had a side businesses of real estate and land; a process house in the name of S.B. Fabric. Under the pretext that he needed to initiate a business in partnership, he had shown the need of Rs.36 lakh. While promising partnersh....
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.... 9. The respondent No.2 also moved an application for discharge below Exh.3 taking the defense that on the date of issuance of the cheque, the account of the respondent whether was operating or not, deserves to be established firstly. The request for discharge was made on 13.4.2004, which was rejected by the Court on 13.4.2004 itself. His case was numbered subsequently as Criminal Case No.590 of 2004, since the cases above the sum of Rs.10 lakh were to be tried by the Court other than the Court which was conducting the matter. Subsequently, when the Special Court was constituted to try the case under the N.I. Act, it was numbered being Criminal Case No.1829 of 2010 and once again thereafter, it was transferred to the Court No.2 and numbered as Criminal Case No.521 of 2011 on 28.4.2011. It was thereafter transferred to the Court conducting matters under the N.I. Act specially, being Court No.28, and the criminal case number remained the same i.e Criminal Case No.521 of 2017. 10. After allowing the parties to adduce oral evidence as well as documentary evidence, the further statement of the accused on the evidence adduced came to be recorded where the defense raised in his furth....
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....lso has strenuously and forcefully submitted that the punishment of two years has been prescribed by way of an amendment under section 138 of the N.I. Act with effect from 6.2.2003 and hence, it cannot be made applicable as this case has been registered in December, 2002 and substantive provision under the criminal prosecution cannot be made retrospectively effective. He has taken this Court through various depositions and other evidences to urge that the Appellate Court has rightly quashed and set aside the judgment and order of the trial Court by giving detailed judgment on each point. There will not be any requirement of the interference at the end of this Court. It is further his case that the appellant has failed to prove as to how he could give loan of huge amount i.e. Rs.36 lakh to the present respondent. 15. He has also sought to rely upon the following judgments in his support : 1. T. Vasanthakumar Versus Vijaykumari reported in (2015) 8 SCC 378; 2. Sabitha Ramamurthy Versus R.B.S. Channabasavaradhya reported in Laws (SC) 2006-9-26 decided on September 13, 2006; 3. Amarnath Baijnath Gupta Versus Mohini Organics Pvt. Ltd. reported in Laws (BOM)....
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.... of evidence, to arrive at, that also is not the ground to interfere by the Appellate Court. :: Legally enforceable debt, whether proved (Issue No.2):: 19. So far as the question of proving legally enforceable debt by the complainant is concerned, the law has been laid down by the three Judges Bench of the Hon'ble Apex Court in case of Rangappa Versus Sri Mohan, reported in (2010) 11 SCC 441, wherein it is held that presumption mandated by Section 139 of the Act include the existence of legally enforceable debt or liability and this being a rebuttal presumption, of course, such presumption can be rebutted by the accused by raising the defence and on contesting liability. 20. It, of course, is in the nature of a rebuttable 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, what can be undoubtedly said is that there is an initial presumption that favours the complainant and Section 139 is an example of a reverse onus clause, which has been included in furtherance of the legitimate objection of improving the credibility of the negotiable instruments. To that extent the Ap....
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....to raise the defence at an earlier stage. All of these circumstances led the High Court to conclude that the accused had not raised a probable defence to rebut the statutory presumption. It was held that: "6. Once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant. The presumption referred to in Section 139 of the N.I. Act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption. What is required to be established by the accused in order to rebut the presumption is different from each case under given circumstances. But the fact remains that a mere plausible explanation is not expected from the accused and it must be more than a plausible explanation by way of rebuttal evidence. In other words, the defence raised by way of rebuttal evidence must be probable and capable of being accepted by the Court. The defence raised by the accused was that a blank cheque was lost by him, which was made use of by the compl....
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....a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation. For the purposes of this section, `debt or other liability' means a legally enforceable debt or other liability. 139. Presumption in favour of holder. -- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt, or other liability. 9. Ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in Section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 13 9 of the Act. With respect to the facts of the present case, it m....
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....ccused 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. Counsel appearing for the appellantaccused has relied on a decision given by a division bench of this Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54, the operative observations from which are reproduced below (S.B. Sinha, J. at Paras. 2932, 34 and 45): "29. Section 138 of the Act has three ingredients viz.: (i) that there is a legally enforceable debt (ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and (iii) that the cheque so issued had been returned due to insufficiency of funds. 30. The proviso appended to the said s....
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....at that. It does not say how presumption drawn should be held to have been rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as a human right 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." (emphasis supplied) 11. With respect to the decision cited above, counsel appearing for the respondent-claimant has submitted that the observations to the effect that the `existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act' and that `it merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability' [See Para. 30 in Krishna Janardhan Bhat (supra)] are in conflict with the statutory provisions as well as an established line of precedents of this Court. It will thus be necessary to examine some of the extracts cited by the respondentclaimant. For instance, in Hiten P. Dalal v. Bratindranath....
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.... promissory note was made for consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the nonexistence of consideration by bringing on record such facts and circumstances which would lead the Court to believe the nonexistence of the consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal. ..." This decision then proceeded to cite an extract from the earlier decision in Bharat Barrel & Drum Manufacturing Company v. Ami n Chand Pyarelal, (1993) 3 SCC 35 (Para. 12): "Upon consideration of various judgments as noted here-in-above, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbably or doubtful or the same was illegal, the onus would shift ....
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....count there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. ..." (emphasis supplied) 14. In 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 (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable 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, ....
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....ed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellantaccused was not able to contest the existence of a legally enforceable debt or liability. The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the constructionrelated expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the constructionexpenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the co....
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....he drawer in discharge of any debt or liability to its holder. Undoubtedly, the presumption available under Section 139 of the NI Act can be rebutted by the accused by adducing evidence and once the initial burden is discharged of proving the legally enforceable debt, it would be upon the accused to discharge that burden that there exists no debt or liability upon him. 25. In 'T. VASANTHAKUMAR VS. VIJAYAKUMARI', (2015) 8 SCC 378, the Apex Court was considering the issue of the dishonour of the cheque and while discussing the presumption under Section 139 of the NI Act, it noticed that the Court below had convicted the defendant for dishonour of cheque of Rs.5 lakh given as consideration of a land given to him by the complainant. The High Court had acquitted the defendant on the ground that the appellantoriginal complainant had not proved legally enforceable debt or liability. The Apex Court held that the High Court was misplaced in not considering the presumption in favour of the complainant as provided under Section139 of the Act, the burden had shifted on the accused, which she failed to discharge. The signature of the cheque had been accepted by the accused-respondent. The Ap....
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.... which favours the respondent complainant." Therefore, in the present case since the cheque as well as the signature has been accepted by the accused respondent, the presumption under Section 139 would operate. Thus, the burden was on the accused to disprove the cheque or the existence of any legally recoverable debt or liability. To this effect, the accused has come up with a story that the cheque was given to the complainant long back in 1999 as a security to a loan; the loan was repaid but the complainant did not return the security cheque. According to the accused, it was that very cheque used by the complainant to implicate the accused. However, it may be noted that the cheque was dishonoured because the payment was stopped and not for any other reason. This implies that the accused had knowledge of the cheque being presented to the bank, or else how would the accused have instructed her banker to stop the payment. Thus, the story brought out by the accused is unworthy of credit, apart from being unsupported by any evidence." 26. The ratio laid down in case of Vijay Vs. Laxman and Another, (2013) 3 SCC 86, at this juncture would be necessary to reproduce, where the Apex Cou....
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....the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability." 11. While dealing with the aforesaid two presumptions, learned Judges of this Court in the matter of P. Venugopal vs. Madan P. Sarathi[2] had been pleased to hold that under Sections 139, 118 (a) and 138 of the N.I. Act existence of debt or other liabilities has to be proved in the first instance by the complainant but thereafter the burden of proving to the contrary shifts to the accused. Thus, the plea that the instrument/cheque had been obtained from its lawful owner or from any person in lawful custody thereof by means of an offence or fraud or had been obtained from the maker or acceptor thereof by means of an offence or fraud or for unlawful consideration, the burden of disproving that the holder is a holder in due course lies upon him. Hence, this Court observed therein, that indisputably, the initial burden was on the complainant but the presumption raised in favour of the holder of the cheque must be kept confined to the matters covered thereby. Thereafter, the presumption raised does not extend to the extent that the cheque was not issued ....
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....east a little later than the date on which the cheque was issued: If the cheque was issued towards repayment of loan it is beyond comprehension as to why the cheque was presented by the complainant on the same date when it was issued and the complainant was also lodged without specifying on which date the amount of loan was advanced as also the date on which compliant was lodged as the date is conveniently missing. Under the background that just one day prior to 14.8.2007 i.e. 13.8.2007 an altercation had taken place between the respondentaccused and the complainantdairy owner for which a case also had been lodged by the respondentaccused against the complainants father/dairy owner, missing of the date on which loan was advanced and the date on which complaint was lodged, casts a serious doubt on the complainants plea. It is, therefore, difficult to appreciate as to why the cheque which even as per the case of the complainant was towards repayment of loan which was meant to be encashed within two months, was deposited on the date of issuance itself." 27. In wake of settled position of law as to how to appreciate the duly signed cheque in the hands of holder in due course or a dr....
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....the same was to be operated by his sons. 31. The complainant himself was carrying on the business of Iron and Steel in the name and style of Ramkrishna Hardware and Sales, which was an independent business and which had a turn over of about Rs.40 lakh. The profit in the business was to the tune of about 10%. He maintained his books of accounts. He and the respondent No.2 used to meet on a regular basis and that is how this sum of Rs.36 lakh had been given to respondent No.2 on a promise on the part of the respondent No.2 to make the appellant a partner. He had advanced amount in the month of December, 2001. Since, the demand of the respondent No.2 was of cash, accordingly, it was managed. It is the case of the complainant that it was under the pretext of carrying out the partnership that he had asked for advanced sum of Rs.36 lakh. He, of course, was unable to give exact dates of advancement of money, but according to him, periodically such amount had been given and a promissory note was issued by the respondent. 32. The source of amount of Rs.36 lakh has been questioned seriously by the learned advocate for the respondent, and a consistent reply of the complainant was that t....
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.... Dahyabhai, President of Mansha 2) Patel Amrutbhai Narayandas, President of Charada and 3) Patel Jayantibhai Mafatlal i.e. present appellant, president of Parvatpura. Calculating Rs.1100/per sq.yard and for 50% of the land i.e. 7139 sq.yards, the value of the land had been fixed at Rs.78,52,900/. The amount of Rs.25lakh was due to Patel Baldevbhai Dahyabhai, Rs.22lakh to Amrutbhai Narandas and the amount of Rs.31,52,900/to Jayantibhai i.e. to the present appellant. As has been agreed to by the respondent, this was given in writing towards the outstanding dues of these persons. 34.3 The outstanding dues, of course, is Rs.36lakh, however, parcel of land was valued at Rs.31,52,900/since the complainant also had agreed to take lesser value than the actual amount due. 34.4 The stamp paper has been purchased by his paternal cousin namely Mr. Bharatbhai Kachrabhai Patel, three to four days prior to the execution of the said writing dated 12.2.2002, the community leader had also met, since, there was no power of attorney executed pursuant to the amount lent to the respondent, which according to the complainant had been given by 23.12.2001, by way of his bonafide gesture, he had agree....
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....l and Sessions Court by way of Criminal Revision Application No.311 of 2013. 35.5 After hearing both the sides, the City Sessions Court on referring to Section 255 of the Criminal Procedure Code held that the said provision makes it clear that the learned Magistrate on its own or on an application, may issue summons to any witness directing him to produce any document. However, it was the third party which was seeking permission to submit affidavits, and under which provision they were seeking the same, was unclear. The Court rejected the said application upholding the order passed by the learned Magistrate. And, aggrieved appellant approached this Court by way of Special Criminal Application No.3894 of 2013. 35.6 This Court (Coram : Honourable Mr. Justice G.R. Udhwani, J.) notices that such an application (Exh.66) was made after recording the statement of accused under Section 313 of the Criminal Procedure Code. It was also noted that the respondent No.2 had alleged of kidnapping and of his signatures having been obtained on an agreement for sale of his properties forcefully and he also alleged that the cheque was stolen from the office of his brother. The Court held that....
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....espondent is facing various litigations, since, he had borrowed the amounts from many persons. The application given to the police by the North Gujarat Association through Shri.Jayantilal Mafatlal Patel is forming the part of the record of the trial Court. Exhibit-59 speaks of the respondent having manipulated from various persons and also defrauded them by alluring them to park their money in S.B. Fabrics, which, according to him, is the biggest private limited company with the promise of doubling their money, if invested, within three years. 37. It is this manipulation, which generated trust and the investment of crores of rupees had been obtained by him. A list is also produced consisting names of about 33 persons with amount, varying from Rs.1lakh to Rs.4.46crore. A request is made to the Police Officer to investigate into this economic offence. A copy of this also had been sent to the LIC, Branch Manager and the respondent, therefore, had addressed a communication to the presentRespondent, where, he was required to submits his explanation and on 04.07.2017, he had stated that he had no partnership nor any share in or directorship in the said S.B.Fabrics and if, any one has ....
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....i Shivam Soc. Shahibaug Ahmedabad Uncle's Son 25/11/02 A'bad (Rural) 028519 CBI Tilak Road 29/10/02 Rs.2,00,000 Acquitted 6 Bhikha Vithal Patel 11 C Punit Park Shahibaug Ahmedabad Friend 25.11.02 A'bad (Rural) 574143 SBI Girdhar nagar 31/10/02 Rs.61,00,000 Settled and withdrawn 7 Joita jividas Patel At & Post Ridrol Mansa, Gandhinagar Relative 24/1/03 Mansa Court 574144 SBI Girdhar nagar 23/11/02 Rs.11,00,000 Convicted and revision pending 8 Ambalal Shivram Patel Post Shabdalpura,Mansa, Gandhinagar Uncle (Mama) 27/1/02 Mansa Court 574146 SBI Girdhar nagar 27/11/02 Rs.10,00,000 Convicted and revision pending 9 Sankalchand S Patel Parbatpura, Mansa, Gandhinagar Cousin Brother 9/12/02 Mansa Court 028518 CBI Tilak Road 31/10/02 Rs.7,00,000 Convicted and revision pending 10 Ranchod Motidas Patel At & Post Parbatpura, ansa, Gandhinagar Cousin Brother 16/12/02 Mansa Court 115663 Navnir man Bank Megha ninagar 08/11/02 Rs.10,00,000 Settled and withdrawn 11 Teja Baba Rabari Chandumana Patan Friend 20/12/02 Patan Court 222332 CBI ....
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....tive Bank for financing benami business of his sons in the name of S.B. Fabrics." The affidavit further shows that "The petitioner had obtained the loan of Rs.10 lakh on the basis of the original documents of his bungalow. The petitioner had also sold off his bungalow by creating duplicate documents of the original documents without obtaining release of the mortgage from the Cooperative Bank of Ahmedabad. When the Cooperative Bank of Ahmedabad came to know through its officers about the aforesaid fraud committed by the petitioner with the Bank, the officers of the Bank had filed an FIR being I-C.R. No.17 of 2003 for the offence under Section 400, 420, 465, 467 etc. of the Indian Penal Code against the petitioner and other accused at Karjan Police Station." 37.3 These details were held to be sufficient by the Court not to interfere in exercise of inherent powers conferred upon this Court under Section 482 of the Code. Hence, such petition was not entertained. These are some of the circumstances, which had been presented before the trial Court by the appellant, herein, to indicate the overall conduct and the antecedents of the respondent. Undoubtedly, on the main issue, as to whet....
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....ing as Development Officer in LIC. The Court, since, did not find any complaint having been made by the respondent in that regard and as in the case of the complainant, he had stated that all the details have been filled in by the respondent No.2, in his presence, in the cheque, the Court deemed it fit not to refer the cheque to the handwriting expert. It, however, permitted someone familiar, from the office of LIC to be examined. Since, some of the documents produced at Annexures A, B, and C were denied by the complainant. He has an application tendered by the complainant to the LIC Branch and hence, the officer concerned was permitted. 41. It is, thus, very clear that all the documents were made on the part of the respondent to bring home his defence of the cheque having been stolen and the signature not being that of his. 42. It would be to also refer to the notice, which has been issued by the complainant, after the cheque had been dishonored. There is no reply by the respondent to the said notice. 43. It is since mandatory for any party to issue notice as provided under the provisions of the NI Act, before he prosecutes a person for dishonor of the cheque, a notice ha....
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.... trusted him and handed over the huge sum. It is a matter of record that on the failure of the respondentaccused to even honour the obligation by getting the land cleared from the Bank, where, it was mortgaged, he had chosen to issue a cheque for Rs.36 lakh. This was done in the month of October/November, when the entire transaction failed and the same when was presented to the Bank, it resulted into dishonor of the cheque. The overall circumstances, which thus emerged on record, and which the complainant succeeded in proving from the oral as well as documentary evidence lead to the conclusion of existing of legally enforceable debt. Number of complainants have been filed against the respondent-accused and which also resulted into his conviction in some of the matters. Although, these are additional factors and grounds they also are substantiating the say of the complainant. This Court holds firmly that the trial Court committed no error in believing that the complainant succeeded in discharging the burden that there exists a legally enforceable debt or liability, and thereafter, the legal presumption was required to be dislodged or rebutted by the accused-respondent, which he mise....
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....d to in Section 138 for discharge of debt or liability. 46.5 Section 3 when read with Section 4 of the Evidence Act, it can be said that Whenever it is directed by the Court that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved. Section 3 defines the expression 'disproved' that a fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its nonexistence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist. Word 'proved' under the very section stipulates the converse that '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 supposition that it exists. 47. Apt it would be to reproduce the relevant findings and observations of the Apex Court in the case Hiten P. Dalal v. Bratindranath Banerjee, reported in (2001) 6 SCC 16, which have been quoted and considere....