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2024 (9) TMI 102
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....egotiable Instruments Act (NI Act). It was asserted that the complainant is a transporter and he has a business in the name and style of Sonu Kumar Transport, Main Bazar, Rekong Peo, Tehsil Kalpa, District Kinnaur, H.P. The accused borrowed a sum of Rs.3,05,000/- from the complainant in January 2016. The complainant paid the amount through a cheque drawn on the Central Bank of India. The accused promised to return the money on or before 2.2.2016. She paid a sum of Rs.65,000/- by cash and issued a cheque for Rs.2,40,000/- drawn on Punjab National Bank for discharging her liability. The complainant presented the cheque before the bank but it was dishonoured with the remarks 'funds insufficient'. The complainant issued a notice to the accused asking her to pay the amount within 30 days from the receipt of the notice. The accused failed to pay the amount despite the receipt of the notice. Hence, the complaint was filed for taking action against the accused as per the law. 3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of accusation was put to her for the commission of an offence punishable under Section 138 of the NI Ac....
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....indra Company and also deposited Rs.12,000/- in his bank account. In this manner, the complainant had received Rs.1,18,131/- from the accused. Learned Trial Court wrongly concluded that the amount of Rs.53,131/- was received, which was already included in the sum of Rs.65,000/-. The accused had issued three cheques and two torn cheques in favour of the complainant, which makes his version highly doubtful that the accused had issued the cheques in the discharge of her legal liability. Therefore, it was prayed that the present revision be allowed and the judgments passed by learned Courts be set aside. 8. I have heard Mr. Mukesh Sharma, learned counsel for the petitioner/accused and Mr. Dalip K. Sharma, learned counsel for the respondent. 9. Mr. Mukesh Sharma, learned counsel for the petitioner-accused submitted that the receipts (Ex. D1 to D-4) show the payment of Rs.41,131. The accused had also deposited Rs.12,000/- in the account of the complainant. The complainant admitted that he had received a sum of Rs.65,000/- from the accused. The accused did not have the liability of Rs.2,40,000/- on the date of the presentation and he cannot be held liable for the commission of an of....
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....it was observed: "13. The power and jurisdiction of the Higher Court under Section 397 Cr. P.C. which vests the court with the power to call for and examine records of an inferior court is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh Chandra, (2012) 9 SCC 460 where the scope of Section 397 has been considered and succinctly explained as under: "12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error and it may not be appropriate for the court to scrutinise the orders, which upon the face of it bear a token of careful consideration and appear to be in accor....
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.... accused to the complainant in the first week of March in her presence and in presence of Krishna Kumari. The accused demanded the cheque but the complainant tore two cheques and promised to return the third. She stated in her cross-examination that she was present in the shop of the accused because she is a frequent visitor of the shop. She admitted that no document was prepared regarding the payment of money. She denied that she was making a false statement to help the accused. 17. The statement of this witness will not help the accused. Her presence was not suggested to the complainant in her cross-examination. It was suggested to the complainant that the amount was returned by the accused in the presence of Krishna Kumari. The fact that the name of Krishna was suggested and the name of this witness was not suggested shows that no money was returned in her presence; hence, her statement in the Court that money was returned in her presence is not acceptable. 18. This witness admitted that no document was prepared regarding the return of the amount. The accused had produced the receipts (Ex. D1 to D4) which shows that she is careful in preserving the documents; however, she ....
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....e 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. 22. 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 presumption shall be raised under Section 139 that the cheque was issued in discharge of debt or liability. 23. Th....
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....9, 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." 24. Similar is the judgment in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers (2020) 12 SCC 724, wherein it was observed:- "7.2. What is emerging from the material on record is that the issuance of a cheque by the accused and the signature of the accused on the said cheque are not disputed by the accused. The accused has also not disputed that there were transactions between the parties. Even as per the statement of the accused, which was recorded at the time of the framing of the charge, he has admitted that some amount was due and payable. However, it was the case on behalf of the accused that the cheque was given by way of security and the same has been misused by the complainant. However, nothing is on record that in the reply to the statutory notice it was the case on behalf of t....
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....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 favour of the complainant that there exists legally enforceable debt or liability and thereafter, it is for the accused to rebut such presumption by leading evidence." 25. Learned counsel for the complainant rightly submitted that there is a presumption under Section 139 of the Negotiable Instruments Act that the cheque was issued in the discharge of the legal liability. 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 ....
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....e 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. 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 prese....
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....imate 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 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." 26. 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 accu....
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....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 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 t....
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....Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR 2010 SC 1898]] 29. Therefore, the Court has to start with the presumption that the cheque was issued in discharge of legal liability and the burden is upon the accused to prove the contrary. 30. The accused claimed that the cheque was issued as a security. This will not help her. It was laid down by this Court in Hamid Mohammad Versus Jaimal Dass 2016 (1) Latest HLJ 456, that even if the cheque was issued towards the security, the accused will be liable. It was observed: "9. Submission of learned Advocate appearing on behalf of the revisionist that cheque in question was issued to the complainant as security and on this ground, criminal revision petition be accepted is rejected being devoid of any force for the reasons hereinafter mentioned. As per Section 138 of Negotiable Instruments Act 1881 if any cheque is issued on account of other liability, then provisions of Section 138 of Negotiable Instruments Act 1881 would be attracted. The court has perused the original cheque Ext. C-1 dated 30.10.2008 placed on record. There is no recital in cheque Ext. C-1 that cheque was iss....
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.... held therein that liability arising out of a claim for breach of contract under Section 138, which arises on account of dishonour of cheque issued was not by itself on a par with criminal liability towards discharge of acknowledged and admitted debt under a loan transaction. Dishonour of a cheque issued for discharge of later liability is clearly covered by the statute in question. Admittedly, on the date of the cheque there was a debt/liability in praesenti in terms of the loan agreement, as against Indus Airways [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539: (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] where the purchase order had been cancelled and cheque issued towards advance payment for the purchase order was dishonoured. In that case, it was found that the cheque had not been issued for discharge of liability but as advance for the purchase order which was cancelled. Keeping in mind this fine but real distinction, the said judgment cannot be applied to a case of the present nature where the cheque was for repayment of loan instalment which had fallen due though such deposit of cheques towards repayment of instalments was also described as "secur....
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....uch cheque which is issued as 'security cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner, if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be an understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque, which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on-demand promissory note' and in all circumstances, it would only be civil litigation to recover the amount, which is not the intention of the statute. When a cheque i....
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....ld not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative. 36. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt." 35. This position was reiterated in Oriental Bank of Commerce v. Prabodh Kumar Tewari, 2022 SCC OnLine SC 1089 wherein it was observed: "12. The submission which has been urged on behalf of the appellant is that even assuming, as the first respondent submits, that the details in the cheque were not filled in by the drawer, this would not make any difference to the liability of the drawer. xxxxxx 16. A drawer who signs a cheque and hands it over to the payee, is presumed to be liable unless the drawer adduces evidence to rebut the presumption that the cheque has been issued towards payment of a debt or in the discharge of....