TMI Blog2006 (7) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly. The appeal is allowed. The Appellant is on bail. He is discharged from the bail bonds. The Second Respondent shall pay and bear the costs of the Appellant. Counsels' fee assessed at Rs. 10,000/-. - Appeal (crl.) 1012 of 1999 - - - Dated:- 4-7-2006 - SINHA, S.B. AND NAOLEKAR, P.P., JJ. JUDGMENT S.B. SINHA, J : The Second Respondent was a member of the Cochin Stock Exchange. The Appellant used to carry on transactions in shares through the Second Respondent in the said Stock Exchange. They have been on business terms for some time. A complaint petition was filed on 19.11.1992 by the Second Respondent herein against the Appellant purported to be for commission of an offence under Section 138 of the Negotiable Instruments Act (for short "the Act"), on the following allegations: The Second Respondent had been carrying on business of stock and share brokers under the name and style of "Midhu and Midhun's Co.". It is a sole proprietory concern. The Appellant also used to do transactions in shares through him in his capacity as a share broker. It has not been disputed that the Appellant had closed the account and, thus, when the cheque in question being date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a liability due to him, is supported by Ext. D2 to D9. The case of the complainant that the accused paid Rs. 5,000/- and thereafter he issued Ext. P3 cheque, is only to be accepted under this circumstance. I find that the cheque was issued by the accused for discharging a liability legally due to the complainant, point answered accordingly." A verdict of guilt against the Appellant under Section 138 of the Act on the basis of the said findings was recorded. He was sentenced to undergo rigorous imprisonment for one year. On an appeal preferred thereagainst by the Appellant herein, the said judgment of conviction and sentence was, however, set aside. The appellate court analysed the evidences on records in great details and concluded that explanation offered by the Appellant was more probable. The complainant, however, aggrieved by and dissatisfied therewith filed a criminal appeal before the High Court which has been allowed by reason of a judgment dated 24.5.1999 which is impugned herein. Submission of Mr. L. Nageswara Rao, learned senior counsel appearing on behalf of the Appellant is that the Trial Court and the High Court misconstrued and misinterpreted Section 139 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g sessions, meaning thereby, meetings of the members of the Cochin Stock Exchange must be held on the floor of the Exchange itself; entry wherefor is restricted only to its members. All transactions by the investors and speculators must be made through the members of the Exchange. Whereas the Second Respondent was a member of the Stock Exchange, the Appellant was not. They belong to different districts in the State of Kerala. Indisputably, the Appellant had been taking the services of the Second Respondent for transacting his business of purchase and sale of shares. All bargains on securities carried on for a period of 14 days is known as settlement. A statement of accounts is furnished by a broker to the investor in prescribed form being Form A together with a contract note. The contract note contains accounts of the securities purchased or sold, its quantity, rate as also the date of transaction. The same is issued so as to enable an investor to compare the entries in the contract note with those made in the statement of accounts enabling him to confirm or deny the particulars contained therein. The dispute between the parties appears to be covered by settlement Nos. 15 to 22 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A comparison of Ext. P10 series of accounts with Ext. D11 series of officially approved accounts will show that transactions worth Rs. 14,63,555/- entered in Ext. D10 series go unaccounted in Ext. D11 series. This is not a small figure to be lightly ignored. There is no dispute that the column pertaining to contract number in Ext. P10 series of accounts is left blank both in the case of purchases as well as sales of shares. The specific case of the accused is that PW1 was not giving him copies of the contract notes pertaining to the transactions by which he had purchased and sold shares on behalf of the accused. The above version of the accused is probabilised by the blank columns regarding the contract number in Ext. P10 series. If, as asserted by PW1 he had been promptly giving contract notes to the accused, then the relevant columns in Ext. P10 series for entering the contract note number would have been filled up. Moreover, except the bald statements of PW1 that he is having in his possession carbon copies of the contract notes issued to the accused, there has been absolutely no gesture on his part to produce them before court. Without comparing the statement of accounts with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd Respondent had not been able to prove that the discrepancies could be explained away as has been sought to be done by the Second Respondent when there were some other transactions which did not pertain to the Cochin Stock Exchange particularly when the Appellant had denied or disputed the same categorically stating that apart from the transactions in the Cochin Stock Exchange, the Second Respondent had never been engaged by him for purchasing or selling shares from other Stock Exchanges. The court further noticed that even a suggestion had been put on behalf of the Second Respondent to the Appellant while he was being examined as DW-5 that it was because brokerage, value of application forms and other transactions outside the Cochin Stock Exchange which are not included in D-11 series, those settlements did not tally with Exhibit P-10 series. Significantly it was held: "When PW1 himself does not have such a case either in his oral evidence or in the averments in his complaint, the explanation for the wide discrepancy between Ext. P10 series and Ext. D11 series could have been offered by the defence. The trial Magistrate could explain away the above discrepancy by o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the transactions conducted by him outside the Stock Exchange will not be found in the accounts maintained by the Cochin Stock Exchange and therefore there is difference in Ext. P10 series and Ext. D11 series." The High Court, in view of the findings of fact arrived at by the appellate court, in our opinion, committed a manifest error in reversing the said judgment. The Second Respondent evidently had not been able to explain the discrepancies in his books of accounts. If except putting a suggestion to the witness, the Second Respondent has not been able to bring on records any material to show that the parties had any transactions other than those which had been entered into through the Cochin Stock Exchange, the explanation of the accused could not have been thrown over board. The High Court has furthermore committed a manifest error of record in arriving at a finding that the Appellant himself or through his agent has acknowledged as correct the statements appearing in Exhibit P-10 series dated 16.12.1991, 20.12.1991, 28.12.1991, 10.1.1992, 24.1.1992, 7.2.1992 and 21.2.1992. Admittedly there had been no acknowledgement in respect of five statements of accounts being Exhibits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve proof"" In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause) to mean: - "Proved -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. Disproved -A fact is said to be disproved when, after considering the matters before it the Court either believes that it does not exist, or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist." Applying the said definitions of 'proved' or 'disproved' to principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence of pre-ponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies. Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another. The Second Respondent herein was a member of a Stock Exchange. The transactions in relation to the Stock Exchange are regulated by the statutes and statutory rules. If in terms of the provisions of a statute, a member of a Stock Exchange is required to maintain books of accounts in a particular manner, he would be required to do so, as non-compliance of the mandatory provisions of the Rules may entail punishment. It is not in dispute that transactions comprising purchases and sales of shares by investors is a matter of confidence. Both parties would have to rely upon one another. For the said purpose, the courts of law may also take judicial notice of the practice prevailing in such business. The learned Appellate Judge rightly did so. The definite case of the second Respondent was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. 118 do not mean that the defendant must necessarily show that the document is not supported by any form of consideration but the defendant has the option to ask the Court to consider the non-existence of consideration so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that consideration did not exist. Though the evidential burden is initially placed on the defendant by virtue of S. 118 it can be rebutted by the defendant by showing a preponderance of probabilities that such consideration as stated in the pronote, or in the suit notice or in the plaint does not exist and once the presumption is so rebutted, the said presumption 'disappears'. For the purpose of rebutting the initial evidential burden, the defendant can rely on direct evidence or circumstantial evidence or on presumptions of law or fact. Once such convincing 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 plaintiff who has also the legal burden. Thereafter, the presumption under S. 118 does not again come to the plaintiff's re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that although by reason of Sections 138 and 139 of the Act, the presumption of law as distinguished from presumption of fact is drawn, the court has no other option but to draw the same in every case where the factual basis of raising the presumption is established. Pal, J. speaking for a 3-Judge Bench, however, opined: "Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the court but 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deliberately has not produced his books of accounts. (ii) He had not been maintaining the statutory books of accounts and other registers in terms of the bye-laws of Cochin Stock Exchange. Moreover, the onus on an accused is not as heavy as that of the prosecution. It may be compared with a defendant in a civil proceeding. In Harbhajan Singh v. State of Punjab and another [AIR 1966 SC 97], this Court while considering the nature and scope of onus of proof which the accused was required to discharge in seeking the protection of exception 9 to Section 499 of the Indian Penal Code stated the law as under: "In other words, the onus on an accused person may well be compared to the onus on a party in civil proceedings, and just as in civil proceedings the court trying an issue makes its decision by adopting the test of probabilities, so must a Criminal Court hold that the plea made by the accused is proved if a preponderance of probability is established by the evidence led by him..." In V.D. Jhingan v. State of Uttar Pradesh, [AIR 1966 SC 1762], it was stated: "It is well-established that where the burden of an issue lies upon the accused, he is not required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge his initial burden. The burden thereafter shifted to the Second Respondent to prove his case. He failed to do so. The submission of the Second Respondent that the Appellant had not denied his entire responsibility and the dispute relating only to the quantum of debt cannot be accepted. We in the facts and circumstances of this case need not go into the question as to whether even if the prosecution fails to prove that a large portion of the amount claimed to be a part of debt was not owing and due to the complainant by the accused and only because he has issued a cheque for a higher amount, he would be convicted if it is held that existence of debt in respect of large part of the said amount has not been proved. The Appellant clearly said that nothing is due and the cheque was issued by way of security. The said defence has been accepted as probable. If the defence is acceptable as probable the cheque therefor cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act. We have gone through the oral evidences. The Second R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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