2022 (11) TMI 1082 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption - preponderance of probabilities - contention raised by the accused before the trial court was that the company was under liquidation and therefore the criminal prosecution would not attract - section 138 of NI Act - HELD THAT - The power of revision available to this Court is not wide enough to appreciate or re-appreciate the evidence to have a contra finding. It is the settled law that power of revision available to this Court under Section 401 of Cr.P.C. r/w. Section 397 is not wide and exhaustive to re-appreciate the evidence to have a contra finding - In decision of SANJAYSINH RAMRAO CHAVAN VERSUS DATTATRAY GULABRAO PHALKE AND OTHERS 2015 (1) TMI 1332 - SUPREME COURT the Apex Court held that the High Court in exercise of revisional jurisdiction shall not interfere with the order of the Magistrate unless it is perverse or wholly unreasonable or there is non-consideration of any relevant material the order cannot be set aside merely on the ground that another view is possible. The trial court as well as the appellate court found that the complainant discharged his initial burden in proving the transaction led to execution of Ext. P1 cheque and thereby twin statutory presumptions embodied under Sections 118 and 139 of the NI Act would go in favour of the complainant. Law regarding presumptions is also settled as well - the law is clear on the point that when the complainant discharges the initial burden to prove the transaction led to execution of the cheque the presumption under Sections 118 and 139 of the N.I. Act would come into play. No doubt these presumptions are rebuttable and it is the duty of the accused to rebut the presumptions and the standard of proof of rebuttal is nothing but preponderance of probabilities. Thus it has to be held that conviction as well as the sentence imposed by the trial court as well as the appellate court do not require any interference and therefore this revision must fail - this revision petition fails and it is accordingly dismissed.

Summary

Issues Involved:
1. Validity of the criminal prosecution under Section 138 of the Negotiable Instruments Act despite the liquidation of the company.
2. Applicability of statutory presumptions under Sections 118 and 139 of the NI Act.
3. Scope of the High Court's revisional jurisdiction under Sections 397 and 401 of Cr.P.C.

Detailed Analysis:

1. Validity of the Criminal Prosecution under Section 138 of the NI Act Despite Liquidation:
The complainant alleged that a cheque for Rs. 75,000/- issued by the accused in favor of the complainant was dishonored. The trial court convicted the accused under Section 138 of the NI Act, and this conviction was upheld by the appellate court. The accused contended that since the company was under liquidation, criminal prosecution was not applicable. However, the trial court and the appellate court relied on the precedent set in Poly K. Ayyampalli v. Pradeep Kumar, which clarified that criminal proceedings under Section 138 of the NI Act are not in relation to the assets of the company and thus are not affected by the liquidation proceedings under Section 446 of the Companies Act. This contention was reiterated and rejected by the High Court, affirming that liquidation does not impact the prosecution under Section 138 of the NI Act.

2. Applicability of Statutory Presumptions under Sections 118 and 139 of the NI Act:
The trial court found that the complainant had discharged the initial burden of proving the transaction that led to the issuance of the cheque. Consequently, the statutory presumptions under Sections 118 and 139 of the NI Act, which favor the complainant, came into play. The High Court referenced several Supreme Court decisions, including Rangappa v. Sri Mohan and Bir Singh v. Mukesh Kumar, which established that these presumptions include the existence of a legally enforceable debt or liability. The accused has the burden to rebut these presumptions by raising a probable defense. In this case, the accused failed to provide sufficient evidence to rebut the presumptions, thus supporting the conviction.

3. Scope of the High Court's Revisional Jurisdiction under Sections 397 and 401 of Cr.P.C.:
The High Court emphasized the limited scope of its revisional jurisdiction, which is primarily supervisory and not equivalent to appellate jurisdiction. Citing precedents such as State of Kerala v. Puttumana Illath Jathavedan Namboodiri and Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao Phalke, the High Court noted that it should not re-appreciate evidence unless there is a glaring feature indicating a gross miscarriage of justice. The High Court found no such feature in this case and concluded that the concurrent findings of the trial court and the appellate court were based on a correct appreciation of evidence.

Conclusion:
The High Court dismissed the revision petition, affirming the conviction and sentence imposed by the trial court and upheld by the appellate court. The accused was given one month to pay the compensation or undergo the default sentence, with specific directions for compliance by the trial court.