TaxTMI 
TaxTMI 
2023 (12) TMI 947
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....otiable Instruments Act, 1881 and Section 420 of IPC. It was asserted that the father of the complainant is suffering from paralysis. He sold his vehicle i.e. Tata Sumo bearing registration no. HP-20A-4196 to Surinder Singh for consideration of Rs. 2,10,000/- in April, 2005. Surinder Singh paid a sum of Rs. 70,000/- in cash and got his vehicle financed for Rs. 1,40,000/- with M/s Chadha Associates through its Proprietor Suddhir Nischal, the present accused. The accused paid a sum of Rs. 1,10,000/- through cheque. He also issued a cheque for Rs.46,000/- (Rupees 40,000/- Principal + Rupees 6000/- interest) bearing Cheque No. 352713, dated 20.8.2005 of Oriental Bank of Commerce, Una in favour of the complainant. The complainant deposited the cheque for collection with his banker. However, the cheque was dishonoured vide memo dated 05.09.2005 with an endorsement "Insufficient Funds". The complainant served a legal notice dated 15.09.2005, upon the accused, which was received by him on 16.09.2005. The notice was issued to the accused to make the payment within 15 days from the date of its receipt. However, the accused failed to pay the amount. Hence, the complaint was filed to take acti....
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....sideration attached to the cheque. The learned Trial Court had erred in holding that the version of the complainant became doubtful due to the statement of his father. Therefore, it was prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside. 8. I have heard Mr. N.K. Thakur, learned Senior Counsel assisted by Mr Karan Veer Singh, Advocate for the appellant/complainant and Mr T.S.Chauhan, learned counsel for the respondent/accused. 9. Mr. N. K. Thakur, learned Senior Counsel for the appellant/complainant submitted that the accused had admitted the issuance of the cheque;therefore, a presumption of consideration applied to the present case. The learned Trial Court erred in ignoring this presumption. The accused did not provideany evidence to rebut the presumption. The version of the complainant was duly corroborated by Surinder Singh, who proved that the accused had financed the vehicle;therefore, he prayed that the present appeal be allowed and judgment passed by the learned Trial Court be set aside. 10. Mr T.S.Chauhan, learned Counsel for the respondent/accused supported the judgment passed by the learned Trial Court. He su....
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..... The expressions "erroneous", "wrong" and "possible" are defined in the Oxford English Dictionary in the following terms: "erroneous.- wrong; incorrect. wrong.-(1) not correct or true, mistaken. (2) unjust, dishonest, or immoral. possible.-(1) capable of existing, happening, or being achieved. (2) that may exist or happen, but that is not certain or probable." 34. It will be necessary for us to emphasize that a possible view denotes an opinion, which can exist or be formed irrespective of the correctness or otherwise of such an opinion. A view taken by a court lower in the hierarchical structure may be termed as erroneous or wrong by a superior court upon a mere disagreement. But such a conclusion of the higher court would not take the view rendered by the subordinate court outside the arena of a possible view. The correctness or otherwise of any conclusion reached by a court has to be tested on the basis of what the superior judicial authority perceives to be the correct conclusion. A possible view, on the other hand, denotes a conclusion, which can reasonably be arrived at regardless of the fact where it is agreed upon or not....
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....4 PC 227, it has been held by the Privy Council as under: But in exercising the power conferred by the Code and before reaching its conclusions upon fact, the High Court should and will always give proper weight and consideration to such matters as: 1) The views/opinion of the trial judge as to the credibility of the witnesses; 2) The presumption of innocence in favour of the accused; 3) The right of the accused to the benefit of any doubt; and 4) The slowness of an appellate court in disturbing a finding of fact arrived at by a judge who had the advantage of seeing the witnesses. 19. This Court has time and again reiterated the powers of the Appellate Court while dealing with the appeal against an order of acquittal and laid down the general principles in the matter of Chandrappa v. State of Karnataka (2007) 4 SCC 415 to the following effect: "42. From the above decisions, in our considered view, the following general principles regarding the powers of the Appellate Court while dealing with an appeal against an order of acquittal emerge: (1) An Appellate court has full power to review, reappreciate and reconsi....
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.... Hiten P. Dalal v. Bartender Nath Bannerji, 2001 (6) SCC 16, wherein it has been held as under: "The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted......" 9. S.139 of the Act provides that it shall be presumed unless the contrary is proved, that the holder of a cheque received the cheque of nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. 16. Similar is the judgment in Basalingappa vs. Mudibasappa 2019 (5) SCC 418, wherein it was held: 24. Applying the proposition of law as noted above, in the facts of the present case, it is clear that the signature on the cheque having been admitted, a presumpt....
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....Section 118 and Section 139 are rebuttable in nature. As held in MS Narayana Menon v. State of Kerela (2006) 6 SCC 39, 32, which was relied upon in Basalingappa (supra), a probable defence needs to be raised, which must meet the standard of "preponderance of probability", and not a mere possibility. These principles were also affirmed in the case of Kumar Exports (supra), wherein it was further held that bare denial of passing of consideration would not aid the case of the accused." 18. This presumption was explained by the Hon'ble Supreme Court in Triyambak S. Hegde Versus Sripad 2022 (1) SCC 742 as under: 11. From the facts arising in this case and the nature of the rival contentions, the record would disclose that the signature on the documents at Exhibits P-6 and P-2 is not disputed. Exhibit P-2 is the dishonoured cheque based on which the complaint was filed. From the evidence tendered before the JMFC, it is clear that the respondent has not disputed the signature on the cheque. If that be the position, as noted by the courts below a presumption would arise under Section 139 in favour of the appellant who was the holder of the cheque. Section 139 of the N.I. Act re....
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....admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of the preponderance of probabilities. 25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. 25.5. It is not necessary for the accused to come into the witness box to support his defence. 26. Applying the proposition of law as noted above, in the facts of the present case, it is clear that the signature on the cheque having been admit....
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.... circumstances are entirely different as the transaction between the parties as claimed in the said case is peculiar to the facts of that case where the consideration claimed to have been paid did not find favour with the Court keeping in view the various transactions and extent of the amount involved. However, the legal position relating to presumption arising under Sections 118 and 139 of N.I. Act on a signature being admitted has been reiterated. Hence, whether there is a rebuttal or not would depend on the facts and circumstances of each case. 19. This position was reiterated in Tedhi Singh vs. Narayan Dass Mahant 2022 (6) SCC 735, wherein it was held : 7. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the N.I. Act provides that the Court shall presume 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. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the ....
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.... conviction under Section 138. [The rules discussed hereinbelow are common to both the presumptions under Section 139 and Section 118 and are hence, not repeated-reference to one can be taken as reference to another] 34. Section 139 of the NI Act, which takes the form of a "shall presume" clause is illustrative of a presumption of law. Because Section 139 requires that the Court "shall presume" the fact stated therein, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase "unless the contrary is proved". 35. The Court will necessarily presume that the cheque had been issued towards the discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that the cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring a....
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....477 : (2011) 1 SCC (Cri) 184 : AIR 2010 SC 1898] ] 40. In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words "until the contrary is proved" occurring in Section 139 do not mean that the accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist. [Basalingappa v. Mudibasappa [Basalingappa v. Mudibasappa , (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571 : AIR 2019 SC 1983] ; see also Kumar Exports v. Sharma Carpets [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513 : (2009) 1 SCC (Civ) 629 : (2009) 1 SCC (Cri) 823] ] 41. In other words, the accused is left with two options. The first option-of proving that the debt/liability does not exist-is to lead defence evidence and conclusively establish with certainty that the cheque was not issued ....
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....existence of legally and forcible debt or legal liability was not proved. It was not necessary for the accused to examine any evidence to rebut the presumption.There can be no dispute with the proposition that the accused can rely upon the crossexamination of the complainant and his witnesses to rebut the presumption attached to the cheque. However, in the present case, the learned Trial Court had not held that the crossexamination of witnesses was sufficient to rebut the presumption but the learned Trial Court held that the version of the complainant was not reliable due to the discrepancy in the amount mentioned by the complainant's father and the complainant. It is necessary to refer to the testimonies of the witnesses to determine whether the accused had succeeded in rebutting the presumption attached to the cheque and the learned Trial Court had rightly recorded that the discrepancy in the amount was sufficient to rebut the presumption. 25. Desh Raj (CW-4) stated that he had sold the Tata Sumo to Surinder Singh, who paid himRs.70,000/- in cash. He (Surinder Singh) got the vehicle financed from Chadha Finance Company. It paid Rs.1,00,000/- and issued a cheque for the remaini....
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.... suggestion put by the accused, arrived at the conclusion that the presence of the accused was admitted. We quote with profit the following observations made by this Court in paragraphs 15, 16 and 17 as under: "15. The witness further stated that during the assault, the assailant accused him of giving information to the army about the United Liberation Front of Assam (ULFA). He further stated that on the third night, he was carried away blindfolded on a bicycle to a different place and when his eyes were unfolded, he could see his younger brother-KumudKakati (P.W.-2) and his wife Smt. PremaKakati (P.W.-3). The place was Duliapather, which is about 6-7 km. away from his village Sakrahi. The witness identified the appellant- Tarun Bora and stated that it is he who took him in an ambassador car from the residence of Nandeswar Bora on the date of the incident. 16. In cross-examination the witness stated as under: "Accused-Tarun Bora did not blind my eyes nor he assaulted me." 17. This part of the cross-examination is suggestive of the presence of accusedTarun Bora in the whole episode. This will clearly suggest the presence of the accused-Tarun Bora as admitt....
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....fence counsel would definitely be binding on his client, except the concession on the point of law. As a legal proposition, we cannot agree with the submission canvassed on behalf of the appellants that an answer by a witness to a suggestion made by the defence counsel in the cross-examination does not deserve any value or utility if it incriminates the accused in any manner." 28. Thus, the suggestion given to a witness can be considered while appreciating the complainant's evidence. 29. The learned Trial Court ignored this suggestion and the further suggestion that he had got the amount and the accused had demanded the cheque from the complainant, clearly, showing that the accused had liability and he had issued the cheque to discharge the liability. 30. Surinder Singh (CW-5) stated that he had purchased a vehicle bearing registration no.HP20A-4196 from Desh Raj. He made a payment of Rs. 70,000/- to Desh Raj in cash and got the vehicle financed from Chadha Finance Company, which was being managed by the accused. The remaining amount was to be paid by the accused to the complainant. The accused issued a cheque. The amount was never received by the complainant. He stated in....
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....s cross-examination that the cheque was presented before the Oriental Bank of Commerce. He did not have any account in the Oriental Bank of Commerce. He volunteered to say that the cheque was sent from Kangra Bank for its encashment. He admitted that he had sold the vehicle to Surinder Singh. He admitted that he had nothing to do with the accused and Surinder Singh had to pay Rs..46,000/-. He admitted that the Company had not financed the whole of the amount. His father executed the documents in the Court. He denied that Surinder Singh had made the payment of the whole amount. He denied that the accused demanded the cheque from him. He admitted that payment was to be made by Suridner Singh after getting the vehicle financed. 34. The learned Trial Court had relied upon the statement of the complainant to hold that Surinder Singh was to make the payment and the accused is not liable to make the payment. This is not acceptable. It is apparent from the evidence that the accused had financed the vehicle, which means that he had agreed to pay the amount to Surinder Singh or at his instance to the seller. 35. It was laid down by Kerala High Court in A.K. Bhaskaran vs. K.G. Sheeba an....
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....lities of the case have indicated that the issue of Ext. P1 cheque was in discharge of her husband's liability to P.W. 1." 36. Therefore, even if the cheque is issued by a person in discharge of other person'sliability, the same will attract Section 138 of the N.I.Act. In the present case the accused had issued the cheque in discharge of the liability of Surinder Singh and the learned Trial Court erred in ignoring this position. 37. It was submitted that no agreement was executed between the parties and the whole transaction is suspect. This submission ignores the presumption under Section 139 of the Negotiable Instruments Act. It was laid down by the Hon'ble Supreme Court in Uttam Ram Versus Devinder Singh Hudan and another (2019) 10 SCC 287 that the complainant is not to prove the debt as in a Civil Court in view of the presumption but only to prove that the cheque was issued by the accused. It was observed : "20. The Trial Court and the High Court proceeded as if, the appellant is to prove a debt before a civil court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount ....
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....y as a matter altogether unchallenged, and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been put to him, the circumstances which it is suggested indicate that the story he tells ought not to be believed, to argue that he is a witness unworthy of credit. My Lords, I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case but is essential to fair play and fair dealing with witnesses. Sometimes reflections have been made upon excessive cross-examination of witnesses, and it has been complained of as undue, but it seems to me that crossexamination of a witness which errs in the direction of excess may be far more fair to him than to leave him without cross-examination, and afterwards, to suggest that he is not a witness of truth, I mean upon a point on which it is not otherwise perfectly clear that he has had full notice beforehand that there is an intention to impeach the credibility of the story which h....
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....ersion in cross-examination is one of essential justice and not merely a technical one. It was held as under: "15. Moreover, there was no effective crossexamination made on the plaintiff's witnesses with respect to the factum of execution of the sale deed, PW 1 and PW 2 have not been cross-examined as to the factum of execution of the sale deed. The crossexamination is a matter of substance not of procedure one is required to put one's version in the crossexamination of the opponent. The effect of non-crossexamination is that the statement of the witness has not been disputed. The effect of not cross-examining the witnesses has been considered by this Court in Bhoju Mandal v. Debnath Bhagat [Bhoju Mandal v. Debnath Bhagat, 1963 AIR(SC) 1906]. This Court repelled a submission on the ground that the same was not put either to the witnesses or suggested before the courts below. A party is required to put his version to the witness. If no such questions are put the Court would presume that the witness account has been accepted as held in Chuni Lal Dwarka Nath v. Hartford Fire Insurance Co. Ltd. 1958 AIR(P&H) 440. 16. In Maroti Bansi Teli v. Radhabai [Maroti Ba....
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....The complainant stated that he issued the legal notice (Ext. C-3) asking the accused to make the payment within 15 days. Postal receipts (C-4 and C-5) and acknowledgement (C-6) corroborates his testimony. The acknowledgement shows that the registered cover was returned after delivery; therefore, it is duly proved that legal notice was duly served. 44. It was laid down in C.C. Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555 that the person who claims that he had not received the notice has to pay the amount within 15 days from the date of the receipt of the summons from the Court and in case of failure to do so, he cannot take the advantage of the fact that notice was not received by him. It was observed: "It is also to be borne in mind that the requirement of giving notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment wit....
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.... accused since the activation of the presumption has the effect of shifting the evidential burden on the accused. The nature of inquiry would then be to see whether the accused has discharged his onus of rebutting the presumption. If he fails to do so, the court can straightaway proceed to convict him, subject to the satisfaction of the other ingredients of Section 138. If the court finds that the evidential burden placed on the accused has been discharged, the complainant would be expected to prove the said fact independently, without taking the aid of the presumption. The court would then take an overall view based on the evidence on record and decide accordingly. 55. At the stage when the courts concluded that the signature had been admitted, the court ought to have inquired into either of the two questions (depending on the method in which the accused has chosen to rebut the presumption): Has the accused led any defence evidence to prove and conclusively establish that there existed no debt/liability at the time of issuance of cheque? In the absence of rebuttal evidence being led the inquiry would entail: Has the accused proved the non-existence of debt/liability by a ....