TaxTMI 
TaxTMI 
2025 (5) TMI 796
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....issued a cheque bearing no. 2225230 dated 03.05.2007, drawn on the Citizens Co-operative Bank Ltd., Vinayak Bazar, Jammu. The appellant presented the cheque to his banker, JCC Bank, Jammu for collection, which on presentation came to be dishonoured, with the endorsement, "Funds Insufficient". Case of the appellant is that since respondent did not refund the loan amount despite due service of demand notice, dated 26.10.2007, upon him within the stipulated period of 30 days, he preferred a complaint under Section 138 of NI Act against the respondent. 4. The respondent entered appearance on 25.01.2008 and his preliminary statement under Section 242 of Code of Criminal Procedure, 1989 ("Cr.P.C." for short) came to be recorded by the trial Court on 02.02.2009, whereby though he admitted the issuance and signing of the impugned cheque as also filling up of the cheque amount, but denied his liability by contending that said cheque was issued by him in relation to some property transaction and there was no balance amount to be paid to the complainant appellant. He also denied the receipt of demand notice, pleaded not guilty and claimed to be tried, prompting the trial court to ask the c....
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....tice. However, learned trial Court dismissed the complaint preferred by the appellant, as a consequence of his failure to prove that cheque in question was issued by the respondent in discharge either whole or any part of legally enforceable debt or liability. CASE OF THE APPELLANT 9. Appellant has questioned the aforesaid conclusion and impugned judgment of the trial court primarily on the ground that since respondent has admitted the issuance and signing of the cheque, there is presumption in his favour in terms of Sections 118 and 139 of NI Act, which learned trial Court has failed to appreciate in right perspective. According to the appellant, respondent failed to disclose any fact or circumstance during the trial, upon consideration of which learned trial court could believe that consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. It is also contention of the appellant that respondent failed to prove the vague defence that there was any land deal between the parties. Appellant has taken exception to various observations made by the trial Court ....
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....law that admission of issuance and signing of a cheque by an accused, gives rise to a statutory presumption that it was drawn for consideration and the holder thereof received the same in discharge of an existing debt, the said presumption, in terms of Sections 118 and 139 of NI Act, can be rebutted by the accused by bringing on record such facts and circumstances, which may lead the court to conclude, either that the consideration and the debt did not exist or that their existence was so probable that a prudent man would act upon the plea that they did not exist. 15. Mr. Thakur, learned Senior Counsel, appearing for the appellant, is of the view that since respondent did not reply the demand notice, neither paid the cheque amount in question, nor entered the witness box, therefore, he did not deny the existence of liability and the enforceability thereof. 16. Per contra, Mr. Rahil, learned counsel for the respondent has argued that an accused is not expected to prove his defence beyond reasonable doubt, as expected from a complainant in a criminal trial and since the respondent raised a categoric plea in his statement under Section 242 Cr.P.C. that impugned cheque was issued....
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....ave been issued and duly signed by a person, the complainant reasonably succeeds to discharge the initial burden that it has been issued towards a lawful payment and once this burden is discharged, it is for the accused to prove that said cheque had not been issued towards discharge of a legal debt but was issued on account of some business transaction or for any other reason. 21. The NI Act incorporates two presumptions in this regard; one containing in Section 118 and other in section 139 thereof; which are set out hereunder for the ease of reference: "118. Presumption 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; 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 ....
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....d it is not necessary that the accused must step into the witness box to discharge the burden of proof in terms of the aforementioned provision. (Emphasis supplied) 14. It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability." 24. A similar view has been expressed by the Apex Court in Krishna Janardhan Bhat in the following words: "23. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on records. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different." 25. In view of the aforesaid exposition of law, the pristine question which begs consideration is the manner in which accused can rebut the statutory presumption. MODE OF REBUTAL 26. Hon'ble Supreme Court in M/s Kumar Exports has held that accused may, by way of direct evidence, prove that nego....
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.... letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue." 27. A similar observation has been made by the Apex Court in Basalingappa v. Mudibasappa 2019 (2) JKJ 144 [SC]. 28. What is deduced from the above is that accused need not enter the witness box to prove that a negotiable instrument was not supported by consideration and that there was no debt or liability to be discharged by him. Accused can show the "preponderance of probabilities" to rebut the statutory presumption in the following ways: a. he may adduce direct evidence; b. he may rely upon the circumstantial evidence; c. he may bring on record something which is probable; ....
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.... the date on which the loan amount of Rs. 20 lacs was advanced by him to the respondent. Learned Sr. Counsel for the appellant has relied upon Rohitbhai Jivanlal Patel to submit that impugned judgment of acquittal recorded by the trial court has proceeded on irrelevant consideration that appellant did not mention the date of advancement of loan or that same was not disclosed by him in his statement before the Court. The argument of learned Sr. Counsel is legally flawed. 32. An observation made by a Court, having regard to a particular background of facts and circumstances, cannot be applied mechanically to every case. The said observation is required to analyzed and visualized in the context of the matter and the nature of enquiry before the Court. The reliance placed by learned counsel for the appellant on Rohitbhai Jivanlal Patel is completely misplaced and distinguishable for the following reasons. 33. In the said case, the case set out by the complainant was that he had an office in Windor Plaza at Akalpuri, Vadodara. He used to visit the shop of his friend, Sh. Jagdishbhai in the same locality. The accused, also had a shop near the shop of Sh. Jagdishbhai and in due cour....
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.... He also denied that there was any dealing between him and the accused and therefore, there were his signatures, and signatures of the accused and there was no signatures of the complainant on the stamp paper. Therefore, it is evident from the facts of the aforesaid case that apart from bare denial of liability in his statement under Section 313 Cr.P.C. and the aforesaid suggestions made by the accused to Sh. Jagdishbhai, those were emphatically denied by him, the accused did not produce any evidence to rebut the presumption under Sections 118 and 139 of NI Act and to show preponderance of probabilities in his favour. It is in this background that Hon'ble Supreme Court held that approach of trial court was at variance with the principles of presumption in law. It was noticed by the Supreme Court that since accused had issued a duly signed stamp paper, in the nature of an acknowledgement, about the existence of debt and his liability to pay the same to the complainant and Sh. Jagdish Bhai signed the said acknowledgement as a witness and therefore, rest of the issues regarding the date of advancement of loan, source of funds with the complainant, receipt of transactions or inconsiste....
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....lingappa. Relevant observation, for the facility of reference, is extracted below: "26. There is one more aspect of the matter which also needs to be noticed. In the complaint filed by the complainant as well as in examination-in-chief the complainant has not mentioned as to on which date, the loan of Rs. 6 lakhs was given to the accused.............. xxx x xxx xxx xxx x xxx xxx 27. Thus, there is a contradiction in what was initially stated by the complainant in the complaint and in his examination-in-chief regarding date on which loan was given on one side and what was said in cross-examination in other side, which has not been satisfactorily explained " 39. A similar view has been taken by the Bombay High Court in Shri Vinay Parulekar in the following words: "18. Complainant's evidence further show that although he is claiming that he had paid a total sum of Rs. 8 Lacs, for which two cheques in question in the two appeals were given to him, he has not been able to state as to when the said sum was paid by him and whose money it was " (Emphasis Supplied) 40. It is evident from the afore-quoted case law that failure on the par....
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...., 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." (Underlined to lay emphasis) 45. If we approach the present case, with the aforesaid principle of law, expounded by Hon'ble Supreme Court in mind, there is no doubt that respondent/accused has succeeded to bring on record certain facts and circumstances, upon consideration of which, it may be believed that consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. The resp....
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....itted his signatures on the cheque, there was presumption under Section 139 of NI Act that impugned cheque was issued in discharge of debt or liability. The complainant, PW-1 admitted in his evidence that he retired in 1997 and received monetary benefits of Rs. 8.00 lacs which he had encashed. It was also brought in evidence that in 2010, the complainant entered into sale agreement and paid an amount of Rs. 4.50 lacs as sale consideration. He also admitted to have paid Rs. 50,000/- with respect to which, a complaint in 2012 was filed by the complainant. It was held by Hon'ble Supreme Court that there was burden on the complainant to prove his financial capacity because, during his cross examination, when financial capacity to pay Rs. 6.00 lacs to the accused was questioned, there was no satisfactory reply given by him. It was observed by the Supreme Court that the said evidence on record i.e. statement of the complainant was probable defence on behalf of the accused and it shifted the burden on the complainant to prove his financial capacity. Relevant excerpt contained in paragraph 24 reads as below: "24. Applying the preposition of law as noted above, in facts of the pres....