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2016 (8) TMI 1098 - DELHI HIGH COURT

2016 (8) TMI 1098 - DELHI HIGH COURT - TMI - Eligibility of benefit of the presumption under Section 118 of the NI Act - Held that:- Both parties have failed to establish the respective fact asserted. The respondent failed to prove having paid US$ 1,13,829.78 to appellant No.2 and the appellants failed to prove that the cheques were issued as security for payment yet to be received. Therefore, the learned Single Judge has rightly held that circumstances enwombing the facts asserted would be rele .....

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at since he promised investment had not been made the cheques which were offered as security should be returned. This would be the normal conduct of any person who had issued the cheques in the circumstances pleaded by the appellants. The appellants have failed to render any satisfactory explanation for not having so written to the respondent. - We conclude by holding that the respondent would be entitled to the benefit of the presumption in his favour raised under Section 118 of the NI Act, .....

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V.K. Teng, Advocate PRADEEP NANDRAJOG, J. 1. Rana Inderjit Singh, the respondent sued the appellant No.1 : Kembiotic Laboratory and its three partners : appellants No.2 to 4 as partners thereof on the plea that in the year 2001 appellants No.2 to 4 offered to him to collaborate with their business on 50% shareholding basis and desired him to advance to them loan in sum of ₹ 53.5 lacs and therefore in Hong Kong he gave US$ 1,13,829.78 to appellant No.2, who promised that on returning to Ind .....

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, details whereof are as under:- Sl.No. Cheque No Date Amount Drawn on 1. 055916 20.12.2002 3,50,000/- State Bank of Bikaner and Jaipur, Kirti Nagar, New Delhi. 2. 035841 25.01.2003 5,00,000/- State Bank of Mysore, Punjabi Bagh, New Delhi 3. 035842 25.02.2003 5,00,000/-Do- 4. 035843 25.04.2003 5,00,000/-Do- 5. 035844 25.05.2003 5,00,000/-Do- 6. 035845 15.07.2003 5,00,000/-Do- 7. 035846 25.08.2003 5,00,000/-Do- 8. 035847 25.09.2003 5,00,000/-Do- 9. 035848 25.11.2003 5,00,000/-Do- 10. 035849 25.10 .....

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nt were returned dishonoured. 3. In the joint written statement filed by the appellants they denied any amount received by appellant No.2 from Rana Inderjit Singh but admitted that the cheques were issued. In para 6 of the preliminary objections it was denied that there was any discussion for Rana Inderjit Singh to do business with them on 50% shareholding basis. However, in paragraph 11 of the preliminary submissions, explaining the circumstances under which the cheques were issued it was plead .....

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did not go through and as per the original oral agreement the money had to be treated as a loan, the appellants pleaded that the cheques were issued as security for Rana Inderjit Singh to invest ₹ 53.5 lacs but he did not do so. 5. At the trial Rana Inderjit Singh failed to establish that he gave US$ 1,13,829.78 to appellant No.2. At the same time the appellants failed to establish that the cheques were issued by way of security for an investment yet to be made by Rana Inderjit Singh. Ret .....

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ndants to the plaintiff and the same were in possession of the plaintiff. Section 114 illustration (i) of the Indian Evidence Act, 1872 provides that when the original instrument comes back into the hands of the issuer of the same, then it is presumed that the obligation under the cheques would be discharged, however, once the original instruments being the cheques continue to remain with the obligee, viz the plaintiff and in whose favour the cheques were issued, a presumption arises that the am .....

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tiff has proved that the amount of ₹ 53.50 lacs was paid to the defendants, inasmuch as, cheques were given in the year 2002 but till the due dates of the cheques from December, 2002 to January, 2004, no letter or any notice was ever written by the defendants to the plaintiff that in this entire period and for this long period plaintiff is illegally holding on to the subject cheques and the subject cheques should be returned by the plaintiff to the defendants because as per the defendants .....

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the defendants plaintiff did not give any amount to the defendants under the subject cheques which were given as security. Defendants have failed to discharge the onus upon them of issue No.3 that the plaintiff fraudulently withheld the cheques and as is the case of the defendants as per the written statement. In view of the above, issue Nos.2 and 3 are held in favour of the plaintiff and against the defendants and therefore defendants are held liable to pay the amount of ₹ 53.50 lacs. 6. .....

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ment yet to be received, the appellants argued that a negative fact could not be proved by the appellants. 7. No serious attempt was made to question the reasoning by the learned Single Judge, who has reasoned that the cheques were issued as per the appellants in October, 2002; and the dates of the month of December, 2002, January, February, April, May, July, August, September, October and November, 2003 and January, 2004 was a crucial aspect coupled with the fact that till the year 2004 no lett .....

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eration the presumption under Section 118 operates. Thus, notwithstanding the rejection of the case put forward by the holder of a cheque, if the case put forward by the drawer also fails the question would arise as to what happens to the presumption. 9. Let us take a practical view of the matter. A plaintiff sues on a promissory note and pleads a cash consideration, which the plaintiff fails to prove. The defendant, having admitted execution of the promissory note pleads that it was without con .....

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ical difficulty would have to be found in the Indian Evidence Act, 1872 and in particular Sections 101 to 104 thereof. 10. Section 3 deals with proved, disproved and not proved. Burden of proof is used in two senses. Firstly, with reference to the matter arising out of the pleading, the burden casts; and secondly as to who has to first prove a particular fact. The former is known as legal burden and it never shifts. The latter is the evidentiary burden and it shifts from one side to the other as .....

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ct as to the existence of another fact. The expression may presume is defined as per Section 4 of the Evidence Act to mean that a Court may presume a fact with regards such facts as are proved unless and until it is disproved. Section 4 of the Evidence Act would therefore guide that if a fact is to be presumed, the presumption remains until the contrary is proved. 12. Now, what would be the evidence to conclude that the contrary is proved so that the presumption is rebutted. 13. Suffice it to st .....

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1 Heera Chand Vs. Jeevraj the Full Bench of the Rajasthan High Court guided that in the assessment of a preponderance of probability the entire circumstances of a particular case had to be considered and the evidence of the parties could not be considered in separate water tight compartments. In Kundan Lal s case, explaining the methods by which a defendant could rebut the presumption raised by Section 118 of the NI Act, 1881, the Supreme Court held that the evidence required to shift the burden .....

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