TaxTMI 
TaxTMI 
2024 (1) TMI 666
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....tive Bank Branch at Rajgarh. The accused approached the complainant in September 2011 and demanded Rs. 2,00,000/- from the complainant for one year. The complainant advanced the loan. The accused issued a post dated cheque No. 713405 (Ext. CW2/A) for a sum of Rs.2,00,000/- drawn on HP State Cooperative Bank Habban Branch for discharging his legal liability. The complainant presented the cheque for collection before his bank namely HP State Cooperative Bank, Rajgarh. The cheque was sent to the bank of the accused. However, the bank of the accused dishonoured the cheque with the endorsement 'insufficient balance'. Memo (Ext. CW2/B) was issued by the bank of the accused. The cheque and the memo were returned to the complainant by the bank of the complainant with the memo (Ext. CW/1C). The complainant issued a legal notice (Ext. CW3/B), which was sent through registered post. Postal Receipt (Ext. CW3/C) was obtained. The accused failed to repay the amount despite the receipt of the notice. Hence, the complaint was filed before the Court. 3. Learned Trial Court found sufficient reasons for summoning the accused. When the accused appeared, a notice of accusation was put to him for the....
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....sed has filed the present revision asserting that the learned Courts below erred in misreading and misappreciating the evidence led on record. The complainant had failed to produce any written document showing that Rs.2,00,000/- was advanced to the accused. No witness was examined to establish this fact. No document was filed to prove the financial capacity to lend the amount. The complainant stated in his cross-examination that his wife was present at the time of advancing of the loan, she was not examined. The complainant did not have the financial capacity to lend such a huge amount. The testimony of Ashok Kumar was believable and the learned Courts below erred in rejecting his testimony. The complainant did not produce any document to show his financial capacity. The accused had specifically stated in his statement recorded under Section 313 of Cr.P.C. that the cheque was issued to Ashok Kumar, who had handed it over to the complainant. Therefore, it was prayed that the present revision be allowed and the judgments and order passed by learned Courts below be set aside. 9. I have heard Mr. Anirudh Sharma, learned counsel for the petitioner and Mr. Prajjwal Gupta, learned coun....
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....ta v. State of Assam [Manju Ram Kalita v. State of Assam, (2009) 13 SCC 330 : (2010) 1 SCC (Cri) 1015], while dealing with the scope of reappreciation of evidence by higher Court in criminal revision, observed in paras 9, 10 and 11 of the judgment as under : (SCC pp. 333-34) "9. So far as Issue 1 is concerned i.e. as to whether the appellant got married to Smt Ranju Sarma, is a pure question of fact. All three courts below have given concurrent findings regarding the factum of marriage and its validity. It has been held to be a valid marriage. It is a settled legal proposition that if the courts below have recorded the finding of fact, the question of re - appreciation of evidence by the third court does not arise unless it is found to be totally perverse. The higher court does not sit as a regular court of appeal. Its function is to ensure that law is being properly administered. Such a court cannot embark upon the fruitless task of determining the issues by reappreciating the evidence. 10. This Court would not ordinarily interfere with the concurrent findings on pure questions of fact and review the evidence again unless there are exceptional circumstances justi....
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....the loan. He had filed two complaints, which were withdrawn by him after they were compromised. He could not say that the body of the cheque and signatures were in different inks. He denied that Ashok Kumar had returned the money and he had not returned the cheques to Ashok Kumar. He volunteered to say that he had no business transactions with Ashok. He denied that he was making a false statement. 16. The cross-examination of this witness shows that the accused did not dispute the fact that the cheque was handed over to him. It was suggested to him that a blank signed cheque was handed over as security by Ashok Kumar to him. The accused also stated that fact in his statement recorded under Section 313 of Cr.P.C. 17. The accused examined Ashok Kumar (DW1). He stated that Babu Ram does not do any business. He had a transaction with complainant Babu Ram as he had borrowed Rs.50,000/- from him in 2011. The accused demanded his cheque and the cheque of a guarantor. He had a cheque bearing no. 713405 of the accused, which was handed over by him to the complainant. The Court recorded that cheque No. 713405 and HP Cooperative Bank were written by the witness on his palm. He had retur....
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....urts below were justified in rejecting the same. 19. The accused had not disputed his signatures on the cheque. Learned Courts below had rightly pointed out that once the signatures are admitted, a presumption under Section 139 of Cr.P.C. would arise that the cheque was issued in discharge of legal liability. It was laid down by this Court in Naresh Verma vs. Narinder Chauhan 2020(1) Shim. L.C. 398, that where the accused had not disputed his signatures on the cheque, the Court has to presume that it was issued in discharge of legal liability and the burden would shift upon the accused to rebut the presumption. It was observed:- "8. Once signatures on the cheque are not disputed, the plea with regard to the cheque having not been issued towards discharge of lawful liability, rightly came to be rejected by learned Courts below. Reliance is placed upon Hiten P. Dalal v. Bartender NathBannerji, 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 s....
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....s to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused....." 15. Once the 2nd Appellant had admitted his signatures on the cheque and the Deed, the trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial Court fell in error when it called upon the Complainant-Respondent to explain the circumstances under which the appellants were liable to pay. Such an approach of the trial Court was directly in the teeth of the established legal position as discussed above and amounts to a patent error of law. 16. No doubt, and as correctly argued by senior counsel for the appellants, the presumptions raised under 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....
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....ebut the presumption, the accused was required to lead the evidence that the full amount due and payable to the complainant has been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption and more particularly the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists legally enforceable debt or liability as per Section 139 of the NI Act. It appears that both, the learned trial court as well as the High Court, have committed an error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under Section 139 of the NI Act. As observed above, Section 139 of the Act is an example of reverse onus clause and therefore, once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in f....
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....dmitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date on which the cheque bears. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption. The Trial Court was not persuaded to rely on the interested testimony of DW-1 to rebut the presumption. The said finding was upheld by the High Court. It is not now open to the accused to contend differently on that aspect." 14. The learned counsel for the respondent has however referred to the decision of this Court in Basalingappa vs. Mudibasappa, 2019 (5) SCC 418 wherein it is held as hereunder: - "25. We having noticed the ratio laid down by this Court in the above cases on Sections 118 (a) and 139, we now summarise the principles enumerated by this Court in the following manner: 25.1. Once the execution of the cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. ....
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....on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts." 15. In that light, it is contended that the very materials produced by the appellant and the answers relating to lack of knowledge of property details by PW-1 in his cross-examination would indicate that the transaction is doubtful and no evidence is tendered to indicate that the amount was paid. In such an event, it was not necessary for the respondent to tender rebuttal evidence but the case put forth would be sufficient to indicate that the respondent has successfully rebutted the presumption. 16. On the position of law, the provisions referred to in Sections 118 and 139 of N.I. Act as also the enunciation of law as made by this Court needs no reiteration as there is no ambiguity whatsoever. In, Basalingappa vs. Mudibasappa (supra) relied on by the learned counsel for the respondent, though on facts the ultimate conclusion therein was against raising presumption, the facts and circumstances are entirely different as the transaction between the parties as claimed in the said case is peculiar to the facts o....
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.... any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary." 26. This position was reiterated in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275 wherein it was observed at page 161: 33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that "unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability". It will be seen that the "presumed fact" directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138. [The rules discussed hereinbelow are common to both the presumptions under Section 139 and Section 118 and are....
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....igmore [John Henry Wigmore and the Rules of Evidence: The Hidden Origins of Modern Law] on Evidence states as follows: "The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule'." 39. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the nonexistence of the presumed fact beyond reasonable doubt. The accused must meet the standard of "preponderance of probabilities", similar to a defendant in a civil proceeding. [Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441 : (2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184 : AIR 2010 SC 1898] ] 27. Therefore, the Court has to start with the presumption that the cheque was issued in discharge of leg....
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....e accused and the signature and the issuance of the cheque are not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary. The aforesaid has not been dealt with and considered by the High Court." 31. Therefore, in view of the binding precedents of the Hon'ble Supreme Court, the complainant is not required to prove the existence of legally enforceable debt or liability as this is a matter of presumption. Rather, the accused is required to disprove the existence of legally enforceable debt or liability. 32. It was suggested to the complainant that the cheque was written in different inks, which he denied for want of knowledge. No expert was examined to establish this fact. Hence, this fact has not been proved. 33. In any case, it was laid down by the Hon'ble Supreme Court in....
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....n this context, it would, perhaps, not be out of context to note that the fact that the respondent-accused should have given or signed a blank cheque to the appellant complainant, as claimed by the respondent-accused, shows that initially there was mutual trust and faith between them. 42. In the absence of any finding that the cheque in question was not signed by the respondent-accused or not voluntarily made over to the payee and in the absence of any evidence with regard to the circumstances in which a blank signed cheque had been given to the appellantcomplainant, it may reasonably be presumed that the cheque was filled in by the appellant-complainant being the payee in the presence of the respondent-accused being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alteration. There was no change in the amount of the cheque, its date or the name of the payee. The High Court ought not to have acquitted the respondent-accused of the charge under Section 138 of the Negotiable Instruments Act." 34. This position was reiterated in Oriental Bank of Commerce vs. Prabodh Kumar Tewari 2022 0 Supreme (SC) 83....
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....3 with reference to the explanation to Section 138 of the Act and the expression "for the discharge of any debt or other liability" occurring in Section 138 of the Act. We are of the view that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise. 11. Reference to the facts of the present case clearly shows that though the word "security" is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of instalments. The repayment becomes due under the agreement, the moment the loan is advanced and the instalment falls due. It is undisputed that the loan was duly disbursed on 28th February 2002 which was prior to the date of the cheques. Once the loan was disbursed and instalments have fallen due on the date of the cheque as per the agreement, the dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability. 12. Judgment in Indus Airways (sup....
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....se is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of the amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow. 17. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as 'security cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheq....
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....mplainant stated that he had issued a notice (Ext. CW3/B) to the accused asking him to pay the amount within 15 days of the receipt of the notice. He has brought on record the postal receipt (Ext. CW3/C) which mentions the same address of the accused as was mentioned in the complaint, charge and the statement of the accused under Section 313 Cr.P.C. Therefore, the notice was sent to the correct address. It was laid down by the Hon'ble Supreme Court in Ajeet Seeds Ltd. Versus K. Gopala Krishnaiah 2014 AIR(SCW) 4321 that Section 27 of the General Clauses Act raises a presumption regarding the delivery of a letter sent to a correct address. It was observed : 10. It is thus clear that Section 114 of the Evidence Act enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. Section 27 of the GC Act gives rise to a presumption that the service of notice has been effected when it is sent to the correct address by registered post. It is not necessary to aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed....
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....failed to pay the money despite the receipt of the notice. 42. Thus, it was duly proved that the cheque was issued in discharge of the legal liability which was dishonoured due to insufficient funds and the accused failed to make the payment despite the receipt of a valid notice of demand; hence, the complainant had succeeded in proving its case beyond the reasonable doubt. 43. Learned Trial Court had sentenced the accused to undergo simple imprisonment for one month and to pay a fine of Rs.2,35,000/-. The legislature had introduced the offence of dishonour of cheques to instil confidence in the public about the transactions carried with the cheque. It was laid down by the Hon'ble Supreme Court in Bir Singh vs. Mukesh Kumar 2019 (4) SCC 197 that the penal provision of Section 138 is a deterrent in nature. It was observed: "9. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility into negotiable instruments including cheques and to encourage and promote the use of negotiable instruments including cheques in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to the ca....