TMI Blog2018 (1) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant is the complainant whose complaint under Section 138 of the Negotiable Instrument Act (for short NI Act ) has been dismissed primarily on the following grounds:- ( i) Section 139 of the NI Act does not lay down any presumption with regard to existence of the legally enforceable debt and presumption is merely in favour of the holder of the cheque and the complainant has to establish the existence of legally enforceable debt against the accused. ( ii) The friends from whom the complainant allegedly borrowed Rs. 50,000/- each and thereafter advanced to the accused not examined. ( iii) Advancement of loan in violation of Section 269 SS of the Income Tax Act (for short IT Act ), therefore, not recoverable. ( iv) Loan not shown in Income Tax Return furnished by the complainant, entitled the accused for acquittal. Ground No. 1 3. The interpretation given under Section 139 of the NI Act by the learned trial Magistrate is based upon the view expressed by two Hon ble Judges Bench of Hon ble Supreme Court in Krishna Janardhan Bhat vs. Dattatraya G. Hegde, 2008 (4) SCC 54 . However, the learned Magistrate has failed to take note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct. 32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and 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. 21. Specifically in relation to the nature of the presumption conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption 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 the accused adduces evidence showing the reasonable probability of the nonexistence of the presumed fact. 23. In other words, provided the facts required to form the basis of a presumption of law exists, the 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 eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such 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 (supra). 25. With regard to the facts in the present case, we can also refer to the following observations in M.M.T.C. Ltd. and Anr. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. 28. In the absence of compelling justifications, reverse onus clauses usually impose an 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 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. Ground No. 2 4. Drawing of adverse inference on the ground of withholding the best evidence is not an ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by giving false entries in his accounts, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records later to suit the plea of the taxpayer. The main objection of Section 269-SS was to curb this menace. 9. In light of the aforesaid observations it cannot but be said that Section 269-SS only provides for the mode of acceptance payment or repayment in certain cases so as to counteract evasion of tax. However, Section 269-SS does not declare all transactions of loan by cash in excess of ₹ 20,000/- as invalid, illegal or null and void as the main object of introducing the provision was to curb and unearth black money. 10. It would further be noticed that the learned trial Magistrate has acquitted the accused on the ground that the loan has not been shown in the Income Tax Return furnished by the complainant and while recording such finding has placed reliance upon the judgment of the Hon ble Delhi High Court in Vipul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cheque amount in this case is only ₹ 1,50,000/- and as per the case set up by the petitioner/complainant only a sum of ₹ 50,000/- has advanced by him to the accused out of his own pocket whereas remaining ₹ 1,00,000/- has been borrowed in equal amounts of ₹ 50,000/- each from his friends Raju and Stephen Dean. Therefore, the facts of the instant case being entirely different from the Vipul Kumar Gupta s case supra. In this background, the reliance placed by the learned trial Magistrate on the judgment of Hon ble Delhi High Court was grossly misplaced. 12. From the aforesaid discussion, it is clearly established that learned trial Magistrate has not correctly applied the law and, therefore, the order of acquittal as passed, cannot withstand judicial scrutiny and deserves to be set aside. Ordered accordingly. 13. However, even while setting aside the order of the acquittal passed by the learned Magistrate, it needs to be clarified that this Court has not gone into the relative merits of the case and has only stated the legal position. This exercise has been deliberately avoided, lest it causes any prejudice to the parties. 14. In view of this, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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