TaxTMI 
TaxTMI 
2025 (5) TMI 393
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....estic purposes. He promised to pay the amount on or before 25.12.2015. An agreement was executed between the parties regarding the transaction. The complainant asked the accused to return the money, however, the accused issued a cheque of Rs.. 4 lacs drawn on the State Bank of India, Branch Deha Tehsil Theog. The complainant presented the cheque before his banker, the UCO Bank Branch at Kamyana. The cheque was dishonoured by the bank of the accused with an endorsement 'insufficient funds'. The complainant issued a notice to the accused asking him to pay the money within 15 days of the receipt of the notice. The accused received the notice but failed to pay the money. Hence, the complainant filed a complaint before the learned Trial Court to take action against the accused. 3. The learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, notice of accusation was put to him, to which he pleaded not guilty and claimed to be tried. 4. The complainant examined himself (CW1) to prove his case. 5. The accused, in his statement recorded under Section 313 of Cr.P.C., admitted that he had approached the complainant for seeking financial help. He ....
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....ive. Therefore, it was prayed that the present revision petition be allowed and the judgments and order passed by the learned Courts below be set aside. 9. I have heard Mr. Mohd Aamir, learned counsel for the petitioner/accused, and Mr. Lakshay Thakur, learned counsel for the respondent/complainant. 10. Mr. Mohd. Aamir, learned counsel for the petitioner/accused, submitted that the learned Courts below erred in convicting and sentencing the accused. The plea taken by the accused that the complainant had only advanced a sum of Rs.. 3,70,000/- was highly probable. The complainant had no authority to fill an amount of Rs.. 4 lacs in the security cheque issued by the accused, and the learned Courts below erred in holding that the cheque was issued in discharge of the legal liability. The statement of the defence witness was not properly appreciated. Therefore, he prayed that the present revision be allowed and the judgments and order passed by learned Courts be set aside. 11. Mr. Lakshay Thakur, learned counsel for the respondent/complainant, submitted that the learned Courts below had rightly held that the cheque carried with it a presumption of consideration and it was issue....
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....lf as to the legality and regularity 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 provis....
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....planation which is merely plausible. A fact is said to be proved when its existence is directly established or when, upon the material 10 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. 17. Similar is the judgment in Basalingappa vs. Mudibasappa 2019 (5) SCC 418 wherein it was held: "26. 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." 18. This position was reiterated in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75, wherein ....
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....que 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 presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability. Of course, such presumption is rebuttable in nature. However, to rebut the presumption, the accused was required to lead evidence that the full amount due and payable to the complainant had 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 a 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 burd....
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....rary is proved. The learned counsel for the appellant in that regard has relied on the decision of this Court in K. Bhaskaran v. Sankaran Vaidhyan Balan [K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510: 1999 SCC (Cri) 1284] wherein it is held as hereunder: (SCC pp. 516-17, para 9) "9. As the signature in the cheque is admitted 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 which the cheque bears. Section 139 of the Act enjoins 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 [Sankaran Vaidhyan Balan v. K. Bhaskaran, Criminal Appeal No. 234 of 1995, order dated 23-10-1998 (Ker)] by the High Court. It is not now open to the accused to contend differently on that aspect." 15. The learned counsel for the respondent has however referred to the decision of this Court in Basalingappa v. Mudib....
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....ent of loan of Rs 50,000 with regard to which Complaint No. 119 of 2012 was filed by the complainant, a copy of which complaint was also filed as Ext. D-2, there was a burden on the complainant to prove his financial capacity. In the years 2010-2011, as per own case of the complainant, he made a payment of Rs 18 lakhs. During his cross-examination, when the financial capacity to pay Rs 6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence 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." 16. 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. 17. On the position ....
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.... a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist..." 22. Similar is the judgment in P. Rasiya v. Abdul Nazer, 2022 SCC OnLine SC 1131, wherein it was observed: "As per Section 139 of the N.I. Act, 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 discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the cheque was issued by the 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." 23. This position was reiterated in Rajesh ....
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....0] ]. Therefore, the mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption. 37. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further. 38. John Henry Wigmore [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 (sufficien....
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....of the accused) without any security and will insist upon the security of the cheque and magalsutra at the time of advancing of Rs.. 70,000. Therefore, learned Courts below had rightly rejected the statement of Sanjeev Chauhan. 26. The accused did not step into the witness box to claim that the accused had advanced only an amount of Rs.. 3,70,000/- to him and not an amount of Rs.. 4 lacs. He relied upon his statement recorded under Section 313 of Cr. P.C. to establish this fact. It was held in Sumeti Vij v. Paramount Tech Fab Industries, (2022) 15 SCC 689: 2021 SCC OnLine SC 201 that the accused has to lead defence evidence to rebut the presumption and mere denial in his statement under Section 313 of Cr.P.C is not sufficient to rebut the presumption. It was observed at page 700: "20. That apart, when the complainant exhibited all these documents in support of his complaints and recorded the statement of three witnesses in support thereof, the appellant has recorded her statement under Section 313 of the Code but failed to record evidence to disprove or rebut the presumption in support of her defence available under Section 139 of the Act. The statement of the accused r....
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....pment Agency Ltd., (2016) 10 SCC 458: (2017) 1 SCC (Cri) 149: (2017) 1 SCC (Civ) 126: 2016 SCC OnLine SC 954 that issuing a cheque toward security will also attract the liability for the commission of an offence punishable under Section 138 of N.I. Act. It was observed: - "9. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in 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] with reference to the explanation to Section 138 of the Act and the expression "for 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. 10. 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 be....
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....Section 138 of the Act is whether the cheque represents the discharge of existing enforceable debt or liability, or whether it represents an advance payment without there being a subsisting debt or liability. While approving the views of the different High Courts noted earlier, this is the underlying principle as can be discerned from the discussion of the said cases in the judgment of this Court." 30. This position was reiterated in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine SC 1002: AIR 2021 SC 5732, and it was held that a cheque issued as security is not waste paper and a complaint under Section 138 of the N.I. Act can be filed on its dishonour. It was observed: "17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense 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....
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....nature of litigation." 31. The accused claimed that he had issued a blank signed cheque. The complainant denied this fact in his crossexamination. The statement of Sanjeev Chauhan (DW-1) is not reliable, as noticed above. It was suggested to the complainant in his cross-examination that the cheques were kept as security with Rewa Dass, but he was not examined to establish this fact. Hence, the version that a blank signed cheque was issued as security is not established. 32. In any case, it was laid down by the Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138, that a person is liable for the commission of an offence punishable under Section 138 of the N.I Act even if the cheque is filled by some other person. It was observed: "33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a lia....
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....used did not dispute this fact in his statement recorded under Section 313 of Cr.P.C. The complainant proved the memo of dishonour (Ex.CW1/C), which shows that the cheque was dishonoured with an endorsement of insufficient funds. There is a presumption under Section 146 of the NI Act regarding the correctness of the contents of the memo of dishonour. The accused did not produce any evidence to rebut the presumption; rather, he had admitted in his statement recorded 313 of Cr. P.C., that the cheque was dishonoured with an endorsement of insufficient funds. Hence, it is duly proved on record that the cheque was dishonoured due to insufficient funds. 36. The complainant stated that he issued a notice (Ex. CW1/D) to the accused asking him to pay the money. The accused stated in his statement recorded under Section 313 of Cr. P.C. that he had replied to the notice, which means that the issuance of the notice and its receipt are not in dispute. Hence, it is duly proved that the complainant had issued a notice to the accused, which was received by him. The accused admitted in his statement recorded under Section 313 of Cr. P.C. that he had not paid any money to the accused. Thus, anoth....