TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1376
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....s dismissed. 2. Facts of the case, in brief, as emerge from the record, are that the accused had issued a cheque bearing No.388575, dated 15.05.2015, amounting to Rs. 5,50,000/- in favour of the complainant in order to discharge his legally enforceable liability and when the said cheque was presented in the bank, it was dishonoured with the remarks 'funds insufficient', vide memo dated 24.07.2015. Thereafter, the complainant served a legal notice dated 27.07.2015 upon the accused, demanding the payment of the cheque amount within the stipulated period, however, when no payment was made, he filed a complaint under Section 138 of the Negotiable Instruments Act (for short, 'NI Act) before the learned trial Court. 3. The learned trial Court, after having found the accused guilty, convicted him for the offence punishable under Section 138 of NI Act, vide judgment of conviction dated 15.03.2021 and sentenced him to undergo simple imprisonment for a period of six months and to pay compensation to the tune of Rs. 8,00,000/-, vide order dated 18.03.2015. Aggrieved against the aforesaid judgment of conviction and order of sentence, the accused preferred an appeal before the learned low....
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.... other liability' is answered by the third presumption available to the Bank under Section 139 of the Negotiable Instruments Act. This section 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 for the discharge, in whole or in part, of any debt or other liability". The effect of these presumptions is to place the evidential burden on the appellant of proving that the cheque was not received by the Bank towards the discharge of any liability. 22. Because both Sections 138 and 139 require that the Court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras vs. A. Vaidyanatha Iyer AIR 1958 SC 61, 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. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (ibid). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes pr....
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....lanation which "might reasonably be true and which is consistent with the innocence" of the accused. On the other hand in the case of a mandatory 8 of 36 presumption "the burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under S.114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The 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. In the matter of Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC 513, it has been held by the Hon'ble Supreme....
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....omplainant has discharged his initial burden and it is required to be presumed that the cheque in question was drawn for consideration and the complainant received the same in discharge of the existing debt. The onus, therefore, shifts upon the accused to establish probable defence so as to rebut such presumption. 11. The law is well settled that in order to rebut the statutory presumption, the accused is not expected to prove his defence beyond reasonable doubt as is expected of the prosecution in a criminal trial. The accused may adduce direct evidence to prove that the cheque in question was not supported by consideration and that there was no debt or liability to be discharged by him. On the aspects relating to preponderance of probabilities, the accused has to bring on record such facts and such circumstances which may lead this court to conclude either that the consideration did not exist or that its non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that the consideration did not exist. It is settled position of law that though there may not be sufficient negative evidence which could be brought on record by the a....
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....den. 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.' In the present case on hand, the accused merely denied the case of complainant and he has not placed sufficient materials before the court to believe his defence. Mere denial of the case of complainant is not sufficient ground to believe the defence of accused that the complainant has not lent an amount of Rs. 30 lakhs to the accused." 12. In Rohitbhai Jivanial Patel's case (supra), it has been held by the Hon'ble Supreme Court that once the accused could not deny his signatures on the cheque in question that had been drawn in favour of the complainant, therefore, it is r....
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....vance such a huge amount as mentioned in the cheque to the accused, hence, this proves that no legally enforceable liability existed in this case. However, this contention of the learned counsel for the petitioner/accused is devoid of any force. There is no requirement under law that the complainant must specifically allege in the complaint that there was a subsisting liability. In terms of Section 118(a) of N.I.Act, it will have to be presumed that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred for consideration. The accused has not made any basic foundation challenging financial capacity of complainant in lending money to accused on the first available opportunity. Accused in spite of due service of demand notice has not replied to the same nor paid the amount covered under cheque. Therefore, there was no reason for the complainant to produce required evidence to prove his financial capacity. In this context, it is useful to refer the judgment of Hon'ble Apex Court in Tedhi Singh vs. Narayan Dass Mahant, reported in (2022) 6 SCC 735 wherein it has been observed and....
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....cial capacity on the part of such complainant, it becomes obligatory on the complainant to demonstrate his financial soundness to lend the amount or to encumber an accused with debt or liability as asserted under his complaint. However, as afore-noted, in the instant case, it is noted form the material placed on record that the petitioner nowhere before the learned Trial Court, challenged the financial capacity of the complainant by issuing any reply to legal demand notice, as such the complainant was not required to prove his financial capacity. Therefore, in view of principles enunciated in this judgment, the mere defence of accused in challenging the financial capacity of complainant without making any basic foundation cannot be legally sustained. 16. The learned counsel for the petitioner lastly contended that no notice was either issued or served on the petitioner and the petitioner had no opportunity for making payment of the amount as demanded by the respondent/ complainant in the notice. He further submitted that the statutory legal notice alongwith receipt has not been proved in accordance with law as the same has not been exhibited during the course of the evidence of ....
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....rect address of the drawer of the cheque by registered post acknowledgment due. But the returned envelope was annexed to the complaint and it thus, formed a part of the complaint which showed that the notice was sent by registered post acknowledgment due to the correct address and was returned with an endorsement that the addressee was abroad. We are of the view that on facts in hand the requirements of Section 138 of the Act had been sufficiently complied with and the decision of the High Court does not call for interference." 18. In the instant case, it has been averred in the complaint that the complainant, through his counsel served legal notice dated 27.07.2025 upon the accused through registered post on his last known address, which was acknowledged by the accused, vide which he was called upon to make the payment within 15 days of receipt of the notice, but in spite of the receipt of the notice, the accused did not make the payment and even he neglected to reply to the said notice. True that the statutory notice alongwith receipt was not exhibited during statement of the complainant, but it has been annexed with the complaint, thus, it formed part of the complaint, which ....