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Shri Raj Kumar Versus Shri Shamsher Singh

2017 (8) TMI 453 - HIMACHAL PRADESH HIGH COURT

Dishonoring of cheque - offence under Section 138 of the Negotiable Instruments Act - whether the cheque was issued for towards discharge of debt or other liability as envisaged under Section 138 of the Act? - Held that:- There was no dispute with regard to the compromise Ex.CW2/X or the issuance of the post dated cheques in favour of the respondent. These facts not only proved by the respondent and his witnesses but even admitted by the witnesses examined by the petitioner. It is further proved .....

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titioner through DW3 Anil Gupta that respondent was not in a position to execute the sale deed and therefore he got the payment stopped is also not borne out or rather is contrary to the record and again deserves to be rejected for the aforesaid reasons. - The findings record by the learned Courts below appears to have been based upon the correct appreciation of the pleadings and evidence and otherwise are in tune with law and therefore, warrants no interference. No merit in this revision pe .....

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e Negotiable Instruments Act, 1881, (for short the Act ), on the grounds that the petitioner/accused had issued cheque No. RTQ 034402, dated 31.12.1999, amounting to ₹ 53,200/- , which the petitioner/accused had to pay to him in order to discharge of his liability. The cheque was dishonoured by the bank with the remarks insufficient funds . The respondent thereafter issued legal notice on 5.1.2000 to the petitioner/accused calling upon him to make the payment within 15 days from the receip .....

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e petitioner. The petitioner/accused in his defence examined three witnesses and closed his evidence. 4. The learned trial Court after evaluating the evidence and hearing the parties, convicted and sentenced the accused/petitioner to undergo rigorous imprisonment for three months and imposed a fine of ₹ 30,000/- out of which ₹ 20,000/- was directed to be paid to the complainant/respondent as compensation and in default of payment of fine, the accused was directed to further undergo s .....

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uments Act and at best would amount to a civil dispute. 6. On the other hand, Shri N.S. Chandel, Advocate, would support the findings rendered by the learned Courts below that the petitioner/accused had issued the cheques which are negotiable instruments and once the same was dishonoured, the petitioner was liable to be prosecuted and punished as per the provisions of the Act. I have heard learned counsel for the parties and have carefully and meticulously gone through the records of the case. 7 .....

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has been a flagrant miscarriage of justice. 9. In State of Orissa vs. Nakula Sahu, AIR 1979, SC 663, the Hon ble Supreme Court after placing reliance upon a large number of its earlier judgments including Akalu Aheer vs. Ramdeo Ram, AIR 1973, SC 2145, held that the power, being discretionary, has to be exercised judiciously and not arbitrarily or lightly. The Court held that judicial discretion, as has often been said, means a discretion which is informed by tradition methodolised by analogy and .....

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Court in the following terms: It is only in glaring cases of injustice resulting from some violation of fundamental principles of law by the trial court, that the High Court is empowered to set aside the order of the acquittal and direct a re-trial of the acquitted accused. From the very nature of this power it should be exercised sparingly and with great care and caution. The mere circumstance that a finding of fact recorded by the trial court may in the opinion of the High Court be wrong, will .....

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onal Courts not to lightly exercise the revisional jurisdiction at the behest of a private complainant. 13. In State of Karnataka vs. Appu Balu, AIR 1993, SC 1126 = II (1992) CCR 458 (SC), the Hon ble Supreme Court held that in exercise of the revisional powers, it is not permissible for the Court to re-appreciate the evidence. 14. In Ramu alias Ram Kumar and others vs. Jagannath AIR 1994 SC 26 the Hon ble Supreme Court held as under: It is well settled that the revisional jurisdiction conferred .....

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1981 SC 1415 and held that revisional power can be exercised only when there exists a manifest illegality in the order or there is a grave miscarriage of justice . 16. In State of Kerala vs. Puttumana Illath Jathavedan Namboodiri (1999) 2 SCC 452, the Hon ble Supreme Court held as under: In Its revisional jurisdiction, the High Court can call for and examine the record of any proceedings for the purpose of satisfying itself as to the correctness, legality or propriety of any finding, sentence o .....

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s well as the Sessions Judge in appeal, unless any glaring feature is brought to the notice of the High Court which would otherwise tentamount to gross miscarriage of justice 17. In State of A.P. vs. Rajagopala Rao (2000) 10 SCC 338, the Hon ble Supreme Court held as under:- The High Court in exercise of its revisional power has upset the concurrent findings of the Courts below without in any way considering the evidence on the record and without indicating as to in what manner the courts below .....

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instruments.- Until the contrary is proved, the following presumptions shall be made:- (a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. S.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 banke .....

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r provisions of this Act, be punished with the imprisonment for [a term which may be extended 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 holder in due course of the cheque, as the case may .....

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is section, debt or other liability means a legally enforceable debt or other liability. S.139. Presumption in favour of holder - 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. 19. Section 138 of the Act was incorporated with a specific object of enacting a special provision to impose a strict liability so far as the negotiable ins .....

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object of making a special provision by incorporating a strict liability so far as the cheque, a negotiable instrument, is concerned. The law relating to negotiable instruments is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, including a cheque, the trade .....

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onferring such privileges to the mercantile instruments contemplated under it and provide special penalties and procedure in case the obligations under the instruments are not discharged. The laws relating to the Act are, therefore, required to be interpreted in the light of the objects intended to be achieved by it despite there being deviations from the general law and the procedure provided for the redressal of the grievances to the litigants. Efforts to defeat the objectives of law by resort .....

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ding to the credit of that person being insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account, such person, subject to the other conditions, shall be deemed to have committed an offence under the Section and be punished for a term which may extend to one year or with fine which may extend to twice the amount of cheque or with both. To make the dishonor of the cheque as an offence, the aggrieved party is required to present the cheque to the bank wi .....

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id notice. Section 139 refers to presumption that unless the contrary is proved, the holder received the cheque of the nature referred to under Section 138 for the discharge in whole or in part or of any debt or other liability. Section 140 restricts the defence in any prosecution under Section 138 of the Act and Section 141 refers to such offence committed by the companies. Section 142 provides that, notwithstanding anything contained in the code of Criminal Procedure, no court shall take cogni .....

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eading of the provisions of Section 138 of the NI Act it is clear that the ingredients which are to be satisfied for making out a case under the provision are:- (i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability; (ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within th .....

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ys of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. 23. In Hiten P. Dalal v. Bratindranath Banerjee, AIR 2001 SC 3897, the Hon ble Supreme Court observed that Sections 138 and 139 of the Act introduced exceptions to the general law as to the burden of proof in crimin .....

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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. 21. Because both Sections 138 .....

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presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the Court may presume a certain state of affairs. 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 t .....

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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 . Section 3: Evidence Act. 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 probably, the standard of reasonability being that of the prud .....

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equent decision of the constitution Bench in Dhanvantrai Balwantrai Desai v. State of Maharashtra, AIR 1964 SC 575, where this Court reiterated the principles enunciated in State of Madras v. Vaidyanath Iyer (supra) and clarified that the distinction between the two kinds of presumption lay not only the mandate to the Court, but also in the nature of evidence required to rebut the two. In the case of discretionary presumption if drawn may be rebutted by an explanation which might reasonable by t .....

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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 where 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 .....

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e accused had to prove in trial, by leading cogent evidence that there was no debt or liability. It is apt to reproduce para 7, which reads thus:- 7. In this case admittedly the 1st respondent has led no evidence except some formal evidence. The High Court appears to have proceeded on the basis that the denials/averments in his reply dated 21.5.1993 were sufficient to shift the burden of proof on to the appellant complainant to prove that the cheque was issued for a debt or liability. This is an .....

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han, AIR 2010 SC 1898, the Hon ble Supreme Court held that existence of legally enforceable debt or liability as a matter of presumption under Section 139, it is apt to reproduce para 14 of the judgment, which reads thus:- 14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan .....

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complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonor of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be bet .....

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evidentiary burden and not a persuasive burden. 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 th .....

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em and its operations, giving credibility to negotiable instruments in business transactions and to create an atmosphere of faith and reliance by discouraging people from dishonouring their commitments which are implicit when they pay their dues through cheques. The provision was intended to punish those unscrupulous persons who issued cheques for discharging their liabilities without really intending to honour the promise that goes with the drawing up of such a negotiable instrument. It was int .....

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retation of statues is to adopt an interpretation which promotes and advances the object sought to be achieved by the legislation, in preference to an interpretation which defeats such object. 27. Reverting to the case in hand, it is rightly observed by the learned Courts below that there was no dispute regarding issuance of cheque by the petitioner/accused. It was dishonoured on account of insufficient funds and legal notice was served upon the petitioner/accused. Therefore, the only question l .....

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ed and others v. Magnum Aviation Private Limited and another (2014) 12 SCC 539. 2. Omniplast Private Limited v. Standard Chartered Bank and others (2015) SCC 693. 3. Jitendra Vora v. Bhavana Y. Shah and another, (2015) 16 SCC 744. 29. In Indus Airways Private Limited and others v. Magnum Aviation Private Limited and another (2014) 12 SCC 539, the Hon ble Supreme Court held that existence of legally enforceable debt or other liability is an essential condition for constitution of offence under Se .....

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thus:- 9. The Explanation appended to Section 138 explains the meaning of the expression debt or other liability for the purpose of Section 138. This expression means a legally enforceable debt or other liability. Section 138 treats dishonoured cheque as an offence, if the cheque has been issued in discharge of any debt or other liability. The Explanation leaves no manner of doubt that to attract an offence under Section 138, there should be a legally enforceable debt or other liability subsist .....

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cannot be held to have been drawn for an existing debt or liability. The payment by cheque in the nature of advance payment indicates that at the time of drawal of cheque, there was no existing liability. 15. The above reasoning of the Delhi High Court is clearly flawed inasmuch as it failed to keep in mind the fine distinction between civil liability and criminal liability under Section 138 of the NI Act. If at the time of entering into a contract, it is one of the conditions of the contract th .....

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advance payment at the time of signing such contract has to be considered as subsisting liability and dishonor of such cheque amounts to an offence under Section 138 of the NI Act. The Delhi High Court has travelled beyond the scope of Section 138 of the NI Act by holding that the purpose of enacting Section 138 of the NI Act would stand defeated if after placing orders and giving advance payments, the instructions for stop payments are issued and orders are cancelled. In what we have discussed .....

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SCC 693, suffice it to say that the said case was decided on its peculiar facts and therefore of no assistance to the petitioner. 31. Learned counsel for the petitioner/accused would thereafter argue that complaint was bad for no-joinder of necessary party inasmuch as Smt. Prabhi Devi and Parkash Chand, who were specifically named in the agreement have not been arrayed as party and would place strong reliance upon the judgment of Hon ble Supreme Court Jitendra Vora v. Bhavana Y. Shah and another .....

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capacity. It was also found therein that the first firm had never taken on the liability of the second firm and thus the complaint was held to be not maintainable for mis-joinder of parties. However, this is not the fact situation obtaining in the instant case, therefore, the aforesaid judgment is not at all applicable to the facts of the present case. 32. At this stage, it would be necessary to reiterate that the learned Courts below have concurrently come to the findings that the petitioner h .....

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99 Ex.CW1/A of ₹ 53,200/-, which was presented for payment to the bank concerned however the same was returned through memo Ext. CW1/B dated 4.1.2000 with endorsement insufficient funds . Thereafter respondent issued notice under Section 138 of the Act but despite notice respondent did not pay the amount within the statutory period. 33. In support of the complaint, respondent had examined PW1 G.P. Pandey, Manager, Punjab National Bank, Solan, who stated that the cheque was dishonoured due .....

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ted 4.7.1999 Ex.CW2/X wherein the petitioner had agreed to pay ₹ 98,000/- to the complainant/respondent regarding which cheques worth ₹ 53,200/- and ₹ 44,800/-, respectively were issued in his presence and in the presence of one Haminder Thakur to the respondent. Notably he is one of the signatory to the agreement. 36. In rebuttal petitioner/accused examined DW1 Om Parkash Panwar from Punjab National Bank who have produced the record of cheque return register is Ex.CW1/C and st .....

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Anil Gupta, Parkash Chand, Haminder and A.S. Minhas were also present when compromise Ex.CW2/X was written. He further stated that the petitioner had issued post dated cheques in favour of the respondent, but subsequently he was told that land regarding which payment was to be made was already in the name of Parkash Chand, therefore, he had got the payment stopped. In cross-examination, he stated that he was told by the accused that at the time of encashment of cheque worth ₹ 53,200/- ther .....

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excess land he had issued post dated cheques in favour of the respondent, but subsequently he was told by the petitioner that the respondent could not execute the Registry, therefore, he got the payment stopped. In his crossexamination, this witness stated that he was working as Senior Manager in the bank and even DW2 Dalip Thakur was working in the same bank. He admitted that the compromise was admitted by both the parties and thereafter was signed by the parties as well the witnesses and it wa .....

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