TaxTMI 
TaxTMI 
2024 (10) TMI 1121
X X X X Extracts X X X X
X X X X Extracts X X X X
....omplainant is an agriculturist by profession. He has friendly relations with the accused. The accused needed money and requested the complainant for a friendly loan of Rs. 76,000/-. The complainant paid the amount by the bank transfer of Rs.37,000/- on 15.02.2018, Rs.29,000/- on 03.04.2018, and Rs.10,000/- on 05.04.2018. The accused returned an amount of Rs.4,500/- to the complainant on 15.06.2018. The accused issued a cheque in the sum of Rs. 70,000/- to the complainant drawn on UCO Bank, Sangarh. The complainant presented the cheque in his account for realization. However, the cheque was dishonoured with the endorsement of insufficient funds. The complainant issued a notice to the accused asking him to pay the amount but the accused failed to pay the amount despite the receipt of the valid notice of demand. Hence, the complaint was filed against the accused for taking action against him as per the law. 3. Learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act, to which the accused pleaded not guilty and claimed to be tried. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inant had misused the blank security cheque issued by the complainant. The accused had returned Rs.50,000/- on 29.03.2018, Rs.5,000/- on 11.06.2018, Rs.4500/- on 15.06.2018 and Rs.3,000/- on 19.09.2018 by depositing the amount in the complainant's account. The defence taken by the accused was duly established on record. The cheque could not have been presented before the bank without endorsing the part payment made by the accused. Learned Courts below failed to appreciate this fact. Hence, it was prayed that the present revision be allowed and the judgments and oder passed by the learned Courts below be set aside. 8. I have heard Ms. Sangeeta Vasudeva, learned counsel for the petitioner/accused and Mr. Ashok Kumar Tyagi, learned counsel for the respondent/complainant. 9. Ms Sangeeta Vasudeva, learned counsel for the petitioner/accused submitted that the accused had made the payment of the various amounts to the complainant. The complainant had failed to endorse the amount in the cheque and he could not have presented the cheque of the whole amount. She relied upon the judgment of the Hon'ble Supreme Court in Dashrathbhai Trikambhai Patel versus Hitesh Mahendrabhai Patel &....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 accordance with the law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding re....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... complainant on 29.03.2018. Hence, the deposit of Rs. 50,000/- on 29.03.2018 cannot be connected to the loan taken by the accused from the complainant. The accused would have only deposited Rs.37,000/- on 29.03.2018 towards the present loan because this was the amount due on that day and not an amount of Rs.50,000/-. Therefore, learned Courts below had rightly held that these transactions cannot be referred to the present loan. 17. The cheque was issued on 18.02.2019 for an amount of Rs.70,000/- and the accused has not disputed the issuance of the cheque in his statement recorded under Section 313 of CrPC. No payment was made after the issuance of the cheque and the judgment of Dashrathbhai Trikambhai Patel (Supra) does not apply to the present case. 18. The accused has not disputed the taking of the loan, the issuance of the cheque and his signatures on the cheque. 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was given by way of security. Be that as it may, however, it is required to be noted that earlier the accused issued cheques which came to be dishonoured on the ground of "insufficient funds" and thereafter a fresh consolidated cheque of Rs.9,55,574 was given which has been returned unpaid on the ground of "STOP PAYMENT". Therefore, the cheque in question was issued for the second time. Therefore, once the accused has admitted the issuance of a cheque which bears his signature, there is a presumption that there exists a legally enforceable debt or liability under Section 139 of the NI Act. However, such a presumption is rebuttable in nature and the accused is required to lead the evidence to rebut such presumption. The accused was required to lead evidence that the entire amount due and payable to the complainant was paid. 9. Coming back to the facts in the present case and considering the fact that the accused has admitted the issuance of the cheques and his signature on the cheque and that the cheque in question was issued for the second time after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable, there is a pres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....who was the holder of the cheque. Section 139 of the NI Act reads as hereunder: "139. Presumption in favour of holder. -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 for the discharge, in whole or in part, of any debt or other liability." 13. Insofar as the payment of the amount by the appellant in the context of the cheque having been signed by the respondent, the presumption for passing of the consideration would arise as provided under Section 118(a) of the NI Act which reads as hereunder: "118. Presumptions as to negotiable instruments. -Until the contrary is proved, the following presumptions shall be made: (a) of consideration: that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration." 14. The above-noted provisions are explicit to the effect that such presumption would remain until the contrary is proved. The learned counsel for the appellant in that regard has r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 preposition of law as noted above, in 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. The question to be looked into is as to whether any probable defence was raised by the accused. In cross-examination of PW 1, when the specific question was put that a cheque was issued in relation to a loan of Rs 25,000 taken by the accused, PW 1 said that he does not remember. PW 1 in his evidence admitted that he retired in 1997 on which date he received a monetary benefit of Rs 8 lakhs, which was encashed by the complainant. It was also brought in evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs 4,50,000 to Balana Gouda towards sale consideration. Payment of Rs 4,50,000 being admitted in the year 2010 and further payment of loan of Rs 50,000 with regard to which Complaint No. 119 of 2012 was filed b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 139 of the NI 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 context of this provision that the theory of "probable defence" has grown. In an earlier judgment, in fact, which has also been adverted to in Basalingappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571], this Court notes that Section 139 of the NI Act is an example of reverse onus (see Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184]). It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rson 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 about the activation of the presumptive clause. [Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal [Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal, (1999) 3 SCC 35]] 36. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar [Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Civ) 309: (2019) 2 SCC (Cri) 40]]. Therefore, the mere admission of the drawer's signature, without admitting the e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... shows that the cheque was dishonoured due to insufficient funds. There is a presumption under Section 146 of the NI Act regarding the correctness of the memo of dishonour. No evidence was led by the accused to rebut the presumption. Thus, the learned Courts below had rightly held that the cheque was dishonoured due to insufficient funds. 28. The complainant stated that he had issued a notice to the accused. The notice (Ext. P-4/PW-1) shows that it was issued at the address that was furnished by the accused while recording his statement under Section 313 Cr.P.C. and the Notice of Accusation. Thus, it was sent to the correct address and is deemed to have been served because of the presumption contained in Section 27 of the General Clauses Act. No evidence was led by the accused to rebut the presumption. Therefore, it was duly proved that the accused had failed to pay the amount despite the receipt of a valid notice of demand. 29. The accused failed to pay the amount even within 15 days of the receipt of the summons from the Court. 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2 SCC (Civ) 309: 2019 SCC OnLine SC 138 that the penal provisions of Section 138 is a deterrent in nature. It was observed at page 203: "6. 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 callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same." 32. Thus, the sentence of imprisonment for six months cannot be said to be excessive. 33. The accused had issued a cheque of Rs. 70,000/- on 18.02.2019. Learned Trial Court imposed the sentence on 14.10.2022 after the lapse of more than three years. The complainant had to incur the legal expenses and he had to engage a counsel for that. He also suffered a loss of interest and was entitled to be compensated for the same. It was laid down by the Hon'ble Supreme Court in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) ....