TMI Blog2010 (5) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... l order of the High Court which recorded a finding of conviction against the appellant. - CRL. APPEAL NO. 1020 OF 2010 - - - Dated:- 7-5-2010 - K.G. BALAKRISHNAN, P. SATHASIVAM AND J.M. PANCHAL, JJ. JUDGMENT K.G. Balakrishnan, CJ. - Leave granted. 2. In the present case, the trial court had acquitted the appellant-accused in a case related to the dishonour of a cheque under section 138 of the Negotiable Instruments Act, 1881 (Hereinafter Act ). This finding of acquittal had been made by the Addl. JMFC at Ranebennur, Karnataka in Criminal Case No. 993/2001, by way of a judgment dated 30-5-2005. On appeal by the respondent-complainant, the High Court had reversed the trial court s decision and recorded a finding of conviction while directing that the appellant-accused should pay a fine of Rs. 75,000, failing which he would have to undergo three months simple imprisonment (S.I.). Aggrieved by this final order passed by the High Court of Karnataka (in Criminal Appeal No. 1367/2005), dated 26-10-2005, the appellant-accused has approached this Court by way of a petition seeking special leave to appeal. The legal question before us pertains to the proper interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used s case was that there was no legally enforceable debt or liability between the parties since he had not asked for a hand loan as alleged by the complainant. 6. The trial judge found in favour of the accused by taking note of some discrepancies in the complainant s version. As per the trial judge, in the course of the cross-examination the complainant was not certain as to when the accused had actually issued the cheque. It was noted that while the complaint stated that the cheque had been issued in December 2000, at a later point it was conceded that the cheque had been handed over when the accused had met the complainant to obtain the work completion certificate for his house in March 2001. Later, it was stated that the cheque had been with the complainant about 15-20 days prior to the presentation of the same for encashment, which would place the date of handing over of the cheque in January 2001. Furthermore, the trial judge noted that in the complaint it had been submitted that the complainant had paid Rs. 45,000 in cash as a hand loan to the accused, whereas during the cross-examination it appeared that the complainant had spent this amount during the construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt s version wherein the accused had given instructions for stopping payment in respect of the same cheque, albeit one which was dated 8-2-2001. The High Court also noted that if the accused had indeed lost a blank cheque bearing his signature, the question of his mentioning the date of the cheque as 20-7-1999 could not arise. At a later point in the order, it has been noted that the instructions sent by the accused to his bank for stopping payment on the cheque do not mention that the same had been lost. However, the correspondence does refer to the cheque being dated 20-7-1999. Furthermore, during the cross-examination of the complainant, it was suggested on behalf of the accused that the complainant had the custody of the cheque since 1998. This suggestion indicates that the accused was aware of the fact that the complainant had the cheque, thereby weakening his claim of having lost a blank cheque. Furthermore, a perusal of the record shows that the accused had bela-tedly taken up the defence of having lost a blank cheque at the time of his examination during trial. Prior to the filing of the complaint, the accused had not even replied to the notice sent by the complainant since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , negotiated or transferred for consideration; ** ** ** 138. Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both : Provided that nothing contained in this section shall apply unless : ( a )the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; ( b )the payee or the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. In view of section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of a post-dated cheque, a party should not be allowed to get away from the penal provision of section 138. A contrary view would render section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one s own wrong. . . ." 10. It has been contended on behalf of the appellant-accused that the presumption mandated by section 139 of the Act does not extend to the existence of a legally enforceable debt or liability and that the same stood rebutted in this case, keeping in mind the discrepancies in the complainant s version. It was reasoned that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of the prosecution in a criminal case is different. ** ** ** 34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of the accused is preponderance of probabilities . Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies." Specifically in relation to the nature of the presumption contemplated by section 139 of the Act, it was observed : "45. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the Courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discretion is left with the Court to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man." 12. The respondent-claimant has also referred to the decision in Mallavarapu Kasivisweswara Rao v. Thadikonda Ramulu Firm 2008 (8) SCALE 80, wherein it was observed : "Under section 118( a ) of the Negotiable Instruments Act, the Court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in this regard li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances upon consideration of which the Court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist." Interestingly, the very same extract has also been approvingly cited in Krishna Janardhan Bhat s case ( supra ). 13. With regard to the facts in the present case, we can also refer to the following observations in M.M.T.C. Ltd. v. Medchl Chemicals Pharma (P.) Ltd. [2002] 39 SCL 270 (SC) (Para 19) : ". . . The authority shows that even when the cheque is dishonoured by reason of stop payment instruction, by virtue of section 139 the Court has to presume that the cheque was received by the holder for the discharge in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can, thus, show that the stop payment instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 15. Coming back to the facts in the present case, we are in agreement with the High Court s view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the stop payment instructions to his bank. Furthermore, the instructions to stop payment had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under section 138 of the Act leads to the inference that there was merit in the complainant s version. Apart from not raising a probable defence, the appellant-accused was not able to co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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