TaxTMI 
TaxTMI 
2024 (8) TMI 704
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....ell his property bearing No. A-240, Madanpur Khadar, New Delhi, for Rs.25 lacs and demanded a sum of Rs.25 lacs as loan in addition. On 27.11.2009, Respondent sold his property for a consideration of Rs.25 lacs and executed documents in favour of the Petitioner and also handed over physical possession of the property. 3. Respondent obtained a loan of Rs.25 lacs on the same day and executed a promissory note and agreement in favour of the Petitioner and in discharge of the legal debt/liability also issued 7 post-dated cheques, with an assurance that the amount shall be repaid after 6 months and in case it was not paid, Petitioner shall be at liberty to deposit the cheques in his account. Details of the cheques are as follows:- "(i) 005126 dated 30.6.2010 for Rs. 4,00,000/- (ii) 005127 dated 04.7.2010 for Rs. 4,00,000/- (iii) 005128 dated 10.07.2010 for Rs. 4,00,000/- (iv) 005129 dated 14.07.2010 for Rs. 4,00,000/- (v) 005130 dated 20.07.2010 for Rs. 4,00,000/- (vi) 005131 dated 23.07.2010 for Rs. 4,00,000/- (vii) 005132 dated 26.07.2010 for Rs. 1,00,000/- all drawn on Axis Bank Ltd., Greater Noida, UP" 4. The chequ....
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....itten statement filed by complainant herein along with wife and children of accused in CS NO: 383/2010." Ex.DW2/2 8. After the evidence was concluded, learned MM heard arguments on 02.05.2016 and vide the impugned judgment dated 23.08.2016, acquitted the Respondent of offence punishable under Section 138 of NI Act. 9. Learned counsel for the Petitioner argues that the impugned judgment is manifestly erroneous and contrary to the law on the subject. Learned Trial Court failed to appreciate that Petitioner through several documents such as his complaint, dishonoured cheques, return memos and legal demand notice raised and established the dual presumptions under Section 139 of the NI Act which provides that 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 of the NI Act for the discharge, in whole or in part, of any debt or other liability. Trial Court overlooked that Respondent admitted in his statement under Section 313 Cr.P.C. that he had signed the promissory note and the agreement as also that he had issued the cheques in question. Receipt of legal notice dated 09.08.2010 was also....
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....e of an enforceable debt/liability and hence, there was no reason to acquit the Respondent. Reliance was placed on the judgment of this Court in V.S. Yadav v. Reena, 2010 SCC OnLine Del 3294. For the proposition that admission of signature on the cheque is sufficient to prove that the cheque in question was in discharge of legal liability, learned counsel relied on another judgment of this Court in Jaipal Singh Rana v. Swaraj Pal Singh & Anr., 2008 SCC OnLine Del 253. 13. Learned counsel for the Respondent urges that the Trial Court has rightly acquitted the Respondent. It is submitted that Respondent had taken a loan of Rs.25 lacs from the Petitioner for 6 months and executed a promissory note and an agreement as well as issued 7 signed blank cheques and documents pertaining to transfer of the property bearing No. A-240, Madanpur Khadar, New Delhi as security in respect of the loan. It was agreed that on repayment of loan in cash, Petitioner would return the cheques and property documents. However, even before the expiry of 6 months, Respondent returned the entire amount to the Petitioner in February, 2010, through his mother. At the time of return of money, Petitioner returned....
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.... the Trial Court acquitting the accused and relevant passages from the said judgment are as under:- "69. The following principles emerge from the cases above: 1. The appellate court may review the evidence in appeals against acquittal under Sections 378 and 386 of the Criminal Procedure Code, 1973. Its power of reviewing evidence is wide and the appellate court can re appreciate the entire evidence on record. It can review the Trial Court's conclusion with respect to both facts and law. 2. The accused is presumed innocent until proven guilty. The accused possessed this presumption when he was before the trial Court. The trial Court's acquittal bolsters the presumption that he is innocent. 3. Due or proper weight and consideration must be given to the Trial Court's decision. This is especially true when a witness' credibility is at issue. It is not enough for the High Court to take a different view of the evidence. There must also be substantial and compelling reasons for holding that the trial court was wrong. 70. In light of the above, the High Court and other appellate courts should follow the well-settled principles crysta....
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....e evidence itself which can dislodge the findings itself. This principle has further been elucidated in Sambhaji Hindurao Deshmukh v. State of Maharashtra, (2008) 11 SCC 186 : (2009) 2 SCC (Cri) 464, SCC para 13, wherein this Court observed that : (SCC pp. 190-91) "13. ... The High Court will interfere in appeals against acquittals, only where the Trial Court makes wrong assumptions of material facts or fails to appreciate the evidence properly. If two views are reasonably possible from the evidence on record, one favouring the accused and one against the accused, the High Court is not expected to reverse the acquittal merely because it would have taken the view against the accused had it tried the case. The very fact that two views are possible makes it clear that the prosecution has not proved the guilt of the accused beyond reasonable doubt and consequently the accused is entitled to benefit of doubt...." 11. It is not in dispute that the presumption of innocence is further reinforced, reaffirmed and strengthened against the acquitted accused by the judgment in his favour. (Vide Dara Singh v. Union of India, (2011) 2 SCC 490: (2011) 1 SCC (Cri) 706 (SCC in para....
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....ry strong circumstances', 'distorted conclusions', 'glaring mistakes', etc. are not intended to curtail extensive powers of an appellate Court in an appeal against acquittal. Such phraseologies are more in the nature of 'flourishes of language' to emphasize the reluctance of an appellate Court to interfere with acquittal than to curtail the power of the Court to review the evidence and to come to its own conclusion. (4) An appellate Court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial Court. (5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial Court." 7. The Supreme Court in a subsequent judgment in Arulvelu v. Sta....
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....riod of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque, 3[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 of other liability means a legally enforceable debt or other liability." 23. It is a settled law that in matters relating to dishonour of cheques, Courts have to consider whether the ingredients of Section 138 of NI Act are made out and if so, whether the accused is able to rebut the statutory presumption under Section 139 of NI Act. In Gimpex Private Limited v. Manoj Goel, (2022) 11 SCC 705, the Supreme Court has delineated the ingredients which form the basis of an offence under Section 138 of NI Act as follows: "(i) ....
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.... to one of the crucial ingredients necessary to sustain a conviction under Section 138. 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 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 cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal. 36. Recently, this Court h....
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....o 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; see also Kumar Exports v. Sharma Carpets]. 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 in discharge of a debt/liability. The second option is to prove the non-existence of debt/liability by a preponderance of probabilities by referring to the particular circumstances of the case. The preponderance of probability in favour of the accused's case may be even fifty-one to forty-nine and arising out of the entire circumstances of the case, which includes : the complainant's version in the original complaint, the case in the legal/demand notice, complainant's case at the trial, as also the plea of the accused in the reply notice, his Section 313CrPC statement or at the trial as to the circumstances under which the promissory note/cheque was executed. All of them can raise a pre....
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....n that obtains is that Respondent admitted execution of promissory note Ex. CW1/B and agreement Ex. CW1/C as well as his signatures on 7 cheques in question Ex. CW1/E and Ex. CW1/H-1 to Ex. CW1/H-6. It is also established through cheque return memos dated 12.07.2010 and 06.08.2010, Ex. CW1/F and by Ex. CW1/I-1 to Ex. CW1/I-6, that on presentation with the bank, all 7 cheques were returned unpaid with remarks "Funds Insufficient". The legal notice demanding the allegedly unpaid amount was dispatched to the accused within statutory period of 30 days is also established by the copy of the legal notice dated 09.08.2010, Ex. CW1/J and original postal receipts, AD Card and UPC, Ex. CW1/K, Ex. CW1/L and Ex. CW1/M. Albeit Respondent had disputed the receipt of the legal notice but the Trial Court has rendered a finding that the same was received by the Respondent and nothing has been shown to this Court to controvert this finding. In light of these admissions, the only question that the Trial Court posed to itself for examination was whether Respondent had any legally enforceable debt or liability to pay the allegedly due amount under the cheques in question to the Petitioner. 27. Havin....
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....ases is that a person arraigned as an accused is presumed to be innocent unless that presumption is rebutted by the prosecution by production of evidence as may show him to be guilty of the offence with which he is charged. The burden of proving the guilt of the accused is upon the prosecution and unless it relieves itself of that burden, the courts cannot record a finding of the guilt of the accused. There are certain cases in which statutory presumptions arise regarding the guilt of the accused, but the burden even in those cases is upon the prosecution to prove the existence of facts which have to be present before the presumption can be drawn. Once those facts are shown by the prosecution to exist, the court can raise the statutory presumption and it would, in such an event, be for the accused to rebut the presumption. The onus even in such cases upon the accused is not as heavy as is normally upon the prosecution to prove the guilt of the accused. If some material is brought on the record consistent with the innocence of the accused which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal." 30. In Rangappa ....
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....auses and the defendant-accused cannot be expected to discharge an unduly high standard or 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." 31. In light of these principles, it needs to be examined whether Respondent has succeeded in rebutting the presumption under Section 139 of NI Act. Respondent set up a defence that he had taken a loan of Rs.25 lacs from the Petitioner for 6 months and executed promissory note and agreement as also issued 7 signed blank cheques and documents pertaini....
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....in cash through his mother, Petitioner while denying the receipt of the money in his cross-examination, admitted that the documents executed between the parties and attested by notary public on 27.11.2009 remained with him and the transfer documents of the property were handed over to his subsequent purchaser. A specific suggestion was put to the Petitioner that he had fraudulently handed over coloured photocopies to Respondent's mother but no explanation was offered by the Petitioner as to how coloured photocopies reached the Respondent. Silence of the Petitioner on this aspect supports the defence of the Respondent that these were handed over by the Petitioner to Respondent's mother in the garb of returning the original documents. 34. Significantly, Trial Court notices that allegedly both payment for purchase of property as well as advancement of loan were done in cash on 27.11.2009, meaning thereby Petitioner had advanced Rs. 50 lacs in cash to the Respondent on the same date. In his cross-examination, when questioned about his financial capacity, Petitioner claimed that he had an annual income of approximately Rs.23.10 to Rs.25.10 lacs, in addition to funds after selling one....
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....al Court acquitted the Respondent observing thus:- "23. In the instant case, the alleged sale and loan transactions were unaccounted as complainant had transacted huge sum of Rs. 50 lacs and failed to reflect it in his Income Tax Return which raised doubt on the version of the complainant regarding seperate sale and loan transactions. 24. In the background of the circumstances discussed herein above more specifically, the execution of agreements Ex. CW1/D-8 reflecting the execution of documents regarding transfer/sale of said property as security for loan of Rs.25 lacs, availability of color photocopy of documents executed on 27.11.2009 in the possession of the accused, without complainant having any explanation regarding the manner and occasion of accused availing the same, doubts over availability of funds to the extent of Rs.50 lacs with the complainant, failure of complainant to show the alleged two separate transaction of purchase of property and loan, raise doubts over the complainant version and defence of the accused appears to be probable. Consequently, presumption u/s 139 of the act stands rebutted. 25. Once presumption u/s 139 N.I. Act is rebut....