TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 187
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....1st Class, Jamshedpur vide judgement of conviction and order of sentence dated 18.06.2019 and had been sentenced to undergo S. I. for a period of three (3) months and had further directed to pay a sum of Rs. 2,50,000/- (Rupees Two Lac Fifty Thousand Only) by way of compensation to the complainant-petitioner under Section 357 (3) of the Cr. P. C. 2. The complainant's case, in brief, is that the complainant and the accused and her husband were known to each other since long and the accused along with her husband had taken friendly loan of Rs. 2, 30,000/- from the complainant for the purpose of treatment of her daughter-in-law and also promised to return the same within one year. It is also alleged that when the accused failed to repay the debt amount within stipulated time, the complainant started demanding his money and after several request being made by the complainant, the accused had issued one cheque no. 858433 dated 25.1.2015 worth Rs. 2,30,000/- in favour of the complainant with an assurance that the same will be encashed on its presentation before the court. The complainant presented the said cheque to his Bank for encashment but the same was returned unpaid showing the rea....
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....nds in his favour. It is submitted that a legal duty is cast upon the opposite party no. 2 to discharge her debt for the loan taken by her and thus, the learned Appellate Court below has committed illegality by acquitting the opposite party no. 2. It is submitted that the learned Trial Court i.e. learned Judicial Magistrate, 1st Class, Jamshedpur has rightly convicted the opposite party no. 2 for the offence under Section 138 of the N.I. Act and has sentenced to undergo S. I. for a period of three (3) months and has further directed to pay a sum of Rs. 2,50,000/- (Rupees Two Lac Fifty Thousand Only) by way of compensation to the complainant-petitioner under Section 357 (3) of the Cr. P. C. Thus, the impugned judgment dated 26.03.2021 passed in Criminal Appeal No. 178 of 2019 by the learned Additional Sessions Judge-II, Jamshedpur may be set aside and the Criminal Revision Application may be allowed by directing the opposite party no. 2 to undergo S. I. for a period of three (3) months and to pay compensation of Rs. 2,50,000/- (Rupees Two Lac Fifty Thousand Only) to the petitioner. 5. On the other hand, learned counsel for the State has opposed the prayer and has submitted that the....
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....s. 2,30,000/- in cash to the opposite party no. 2 on 15.12.2013. It is also stated that the said amount was not returned for a long period and on request, the opposite party no. 2 had issued a cheque no. 858433 dated 25.01.2015 for a sum of Rs. 2,30,000/- in the name of petitioner, which was presented before the Bank on 09.02.2015, but the said cheque was dishonoured and it was returned vide Memo dated 10.02.2015. It transpires that the learned Court below has taken cognizance against the opposite party no. 2 under Section 138 of the N. I. Act on 16.05.2015. It transpires that the instances of acquisition was explained by the opposite party no. 2 under Section 138 of the N. I. Act on 05.10.2016 and to which she pleaded not guilty and claimed to be tried. 9. It transpires that the complainant-petitioner, Raju Thakur got examined himself as C.W.-1 to prove its case. 10. It transpires that the following documents have been marked exhibit on behalf of the complainant-petitioner, which are as follows:- (i) Exhibit-1 is Cheque having no. 858433 dated 25.01.2015 of Rs. 2,30,000/-. (ii) Exhibit-2 is Cheque return memo dated 10.02.2015, (iii) Exhibit-3 is Legal Notice dated 18.02.20....
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.... oath and substances of such examination shall be reduced to writing in light of the provisions of Section 200 of the Cr. P. C. 16. It transpires from the evidence of C.W.-1, Raju Thakur i.e. the petitioner himself that he has tried to support his case by stating that he had handed over Rs. 2,30,000/- in cash to the opposite party no. 2 on 15.12.2013 as a friendly loan for treatment of her daughter in-law Mrs. Kanchan Singh and on payment of money the opposite party no. 2 had issued cheque no. 858433 dated 25.01.2015 for a sum of Rs. 2,30,000/- in the name of petitioner, which was dishonoured on 09.02.2015 and returned vide cheque return memo dated 10.02.2015 and thereafter he has sent legal notice on 18.02.2015 vide Ext.-3 and had sent registered post and acknowledgement had been marked as Exhibit-4 & 4/1 respectively. 17. However, during cross-examination, he admitted that he himself for instituting the case on Manorama Devi i.e. the opposite party no. 2 and on Priya Sharma and also on Nutan Devi. He further admitted during cross-examination that Nutan Devi had also instituted G. R. Case No. 1927 of 2017 against him, which is pending in the Court of Sri Arvind Kachhap, Judicial....
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....ken only Rs. 20,000/- from the complainant and for which the complainant had obtained a blank cheque with her signature in lieu of the same and the cheque was misused by the complainant by instituting the false case against her. She has further stated that she has returned the said Rs. 20,000/- with interest to the complainant-petitioner and the complainant has assured her to return the said cheque, but it was not returned to her. She has also stated that the complainant- petitioner had instituted several cases under the provisions of N. I. Act against the ladies namely Nutan Devi, Priya Sharma, Savita Devi and Vanmali Tudu and other ladies. During her cross-examination, she has stated that her husband is a Telco Employee and she is home maker. However, she has admitted for taking loan of Rs. 20,000/- from the complainant -Raju Thakur and in lieu of the same, she had handed over the cheque with her signature and she had denied her signature on the acknowledge card i.e. Ext. -4 and 4/1. She also stated that notice was not served upon her. She also stated that she has returned Rs. 30,000/- to the petitioner, but she has got no documentary proof. She has further stated that Nutan Dev....
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.... case upon the complainant-Raju Thakur and she is witness in that case. 22. Thus, from scrutinizing the evidence of D.W.-2, Indu Devi, it is evident that she has fully supported the case of DW-1, Manorama Devi and has stated that the petitioner used to take blank cheque from the ladies/woman of her muhulla in lieu of small loan to the extent of Rs. 20,000/- and for which, he used to charge interest @ Rs. 1,500/- weekly and even a Card was prepared by him. Thus, D.W.-2, Indu Devi has fully supported the case of D.W.-1, Manorama Devi. 23. D.W.-3 is Priya Sharma and she also stated the same fact as stated by D.W.-1, Manorama Devi and D.W.-2, Indu Devi and as such, the same is not being repeated here. However, she has stated that opposite party no. 2, Manorama Devi had taken only Rs. 20,000/- from the petitioner-complainant and which was returned with interest by her. She stated that the petitioner-complainant had instituted several cases against women of her muhulla under Section 138 of the N.I. Act. During her cross-examination, she further stated that there was transaction of Rs. 20,000/- only during her presence and even opposite party no. 2, Manorama Devi had returned @ Rs. 1,5....
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....pires from the own evidence of CW-1 i.e. the complainant during his cross-examination that he has given loan to Nutan Devi, Priya Sharma, Manorama Devi, Indu Devi and Vanmali Tudu. He has further instituted a case upon Manorama Devi i.e. the opposite party no. 2 and Nutan Devi i.e. D.W.-4 and Priya Sharma i.e. the D.W.-3 and he has further instituted a case against one Bindu Jha. 29. It is evident that the opposite party no. 2 is a lady and may not have understood the consequences of handing over a blank cheque while taking loan of Rs. 20,000/-, but it is also his own statement of the complainant-petitioner that he had given friendly loan of Rs. 2,30,000/- to the opposite party no. 2, Rs. 3,80,000/- to Priya Sharma and Rs. 7,00,000/-friendly loan to other ladies. Thus, the financial capacity of the petitioner has to be seen. 30. The petitioner has not filed any Income Tax Return showing advancement of sum of Rs. 2,30,000/- loan amount to the opposite party no. 2 or even Rs. 3,80,000/- to Priya Sharma and also loan advanced to Nutan Devi and some other ladies. 31. Presumption under Section 138 of the N. I. Act is rebuttable in nature and even if blank cheque has been given by the....
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....erative. In a case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration. Para-29:- Disputes and differences between him and R.G. Bhat stood established by admission of the respondent himself. Similar industry was being run by R.G. Bhat although he was acting as the constituted attorney of the appellant. According to the appellant, R.G. Bhat had cheated him. The counterfoil showed that not more than Rs. 20,000/- had ever been withdrawn from that bank at a time. The courts were required to draw an inference as to the probability of the complainants advancing a sum of Rs. 1.5 lakhs on mere asking and that too without keeping any documentary proof. Even there was no witness. The purported story that the appellant would himself come forward to return the amount by a cheque knowing fully well that he did not have any sufficient funds is difficult to believe." 34. It has been held by the Hon'ble Supreme court that presumption under Section 139 of the N.I. Act is a rebuttable presumption and onus is on the accused to raise the proba....
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....o promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely, presumption of innocence as human rights 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 added) The Apex Court held that presumption of innocence forms part of human rights and therefore the doctrine of reverse burden introduced by section 139 has to be delicately balanced. Para-12:- Now turning back to the facts of the present case, assuming that the presumption under section 139 of the said Act regarding existence of debt or liability is not rebutted, in order to attrac....
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....ation of section 138 of the said Act. Such an effort to misuse the provision of section 138 of the said Act has to be discouraged." 36. It has been held by the Hon'ble Supreme Court in the case of John K. Abraham v. Simon C. Abraham, reported in 2014 (1) East C.C. 366 : (2014) 2 SCC 236, at Para 8, 9 and 12 as under:- "Para 8:- Keeping the above factors in mind, when we examine the judgment impugned in this appeal, we find that the High Court committed a serious illegality in reversing the judgment of the learned Chief Judicial Magistrate. While reversing the judgment of the trial court, what weighed with the learned Judge of the High Court was that in the Section 313 CrPC questioning, it was not the case of the appellant that a blank signed cheque was handed over to his son and that even in the cross-examination it was not suggested to PW 1 that a blank cheque was issued. The High Court was also persuaded by the fact that the appellant failed to send any reply to the lawyer's notice, issued by the respondent. Based on the above conclusions, the High Court held that the presumption under Sections 118 and 139 of the Negotiable Instruments Act could be easily drawn and that th....
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.... income tax returns. I do not think that every person who gives friendly loans does in all cases show such loans in their income tax returns more so if they are payable on demand after short time. The learned acquitting J.M.F.C. entirely lost sight of the several presumptions which the law has enacted in favour of the complainant." (Emphasis Supplied) ii) Mr. Krishna P. Morajkar vs. Mr. Joe Ferrao, 2013 CRIJ (NOC) 572 Bombay (Decided on 19.07.2013), wherein the Court observed: "The underlined observations do not disclose as to where can one find a prohibition on recovering amounts not disclosed in income tax returns. With utmost humility, I have to state that I have not come across any provision of Income Tax Act, which makes an amount not shown in the income tax returns unrecoverable. The entire scheme of the Income Tax Act is for ensuring that all amounts are accounted for. If some amounts are not accounted for, the person would be visited with the penalty or at times even prosecution under the Income Tax Act, but it does not mean that the borrower can refuse to pay the amount which he has borrowed simply, because there is some infraction of the provisions of the Income Ta....
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....ions drawn by the learned MM on facts is palpably wrong, and it is also based on an erroneous view of the law." 38. It has been held in the case of Basalingappa vs. Mudibasappa reported in (2019) 5 SCC 418 at paragraph nos. 13, 14, 16, 17, 22, 25, 25.05, 28 and 29 as follows:- "Para-13:- This Court in Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal [Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal, (1999) 3 SCC 35] had occasion to consider Section 118(a) of the Act. This Court held 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 and defendant can prove the non-existence of a consideration by raising a probable defence. In para 12, the following has been laid down: (SCC pp. 50-51) "12. Upon consideration of various judgments as noted hereinabove, 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....
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....d Gupta [Union of India v. Pramod Gupta, (2005) 12 SCC 1], in the following terms: (SCC pp. 30-31, para 52) '52. ... It is true that the legislature used two different phraseologies "shall be presumed" and "may be presumed" in Section 42 of the Punjab Land Revenue Act and furthermore although provided for the mode and manner of rebuttal of such presumption as regards the right to mines and minerals said to be vested in the Government vis-à-vis the absence thereof in relation to the lands presumed to be retained by the landowners but the same would not mean that the words "shall presume" would be conclusive. The meaning of the expressions "may presume" and "shall presume" have been explained in Section 4 of the Evidence Act, 1872, from a perusal whereof it would be evident that whenever it is directed that the court shall presume a fact it shall regard such fact as proved unless disproved. In terms of the said provision, thus, the expression "shall presume" cannot be held to be synonymous with "conclusive proof"." Para-16:- This Court in M.S. Narayana Menon case [M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39 : (2006) 3 SCC (Cri) 30] held that what is needed is t....
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....le by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected to discharge an unduly high standard of proof. 28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own." Para-25:- We ....
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....t denied his signature on the cheque." 39. It has been held by Hon'ble the Supreme Court in the case of Rajaram Through L.Rs. Versus Maruthachalam (Since Deceased) Through L.Rs. reported in 2023 SCC OnLine SC 48 of Para No. 26, 27, 28, 29, 30, 39 & 41 as under:- "Para 26:- This Court in the case of Baslingappa v. Mudibasappa (supra) has summarized the principles on Sections 118(a) and 139 of the N.I. Act. It will be relevant to reproduce the same. Para 27:- It can thus be seen that this Court has held that once the execution of cheque is admitted, Section 139 of the N.I. Act mandates a presumption that the cheque was for the discharge of any debt or other liability. It has however been held that 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 preponderance of probabilities. It has further been held that 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. It has been held that inference of preponder....
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....e, the case of the complainant that he had given a loan to the accused from his agricultural income was found to be unbelievable by the learned Trial Court. The learned Trial Court found that it was highly doubtful as to whether the complainant had lent an amount of Rs. 3 lakh to the accused. The learned Trial Court also found that the complaint had failed to produce the promissory note alleged to have been executed by the accused on 25th October 1998. After taking into consideration the defence witnesses and the attending circumstances, the learned Trial Court found that the defence was a possible defence and as such, the accused was entitled to benefit of doubt. The standard of proof for rebutting the presumption is that of preponderance of probabilities. Applying this principle, the learned Trial Court had found that the accused had rebutted the presumption on the basis of the evidence of the defence witnesses and attending circumstances." 41. It has been held by the Hon'ble Supreme Court and the Jharkhand High Court on various occasions that payment of friendly loan without giving any specific date or dates to the accused petitioner in absence of any witness led to suspicious ....