TMI Blog2015 (1) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Accused claimed that he was a member of Chit Fund Company and the cheque in question was given to Chit Fund Company as a security. In order to substantiate this plea, DW1 Rajesh Kumar, employee of Sevarath Chit Fund Pvt. Ltd. was examined and this witness denied that any cheque or payment was received by the Chit Fund from the accused. Since the witness did not support the case of accused, he was cross-examined by the counsel for the accused and in cross-examination, the witness categorically deposed that the company did not take any cheque amounting to ₹ 3 lacs from the accused. He also deposed that cheque Ex.CW1/1 was never taken from the accused - the defence of issuing of the blank signed cheque to the Chit Fund taken by the accused falls to the ground. 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 dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation - the accused ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the accused, for repayment of his debt liability, issued one cheque bearing No.717470 dated 22nd August, 2008 for ₹ 3 lacs drawn on Indian Bank, New Delhi but on presentation, the cheque was returned unpaid with remarks fund insufficient . Thereafter, a legal notice dated 16th March, 2009 was issued by the complainant demanding the money but on failure of the accused to pay the amount, the complaint was filed. CC No. 1954/1/2009 was filed against the accused Shobha Saxena on the allegations that cheque bearing No.538942 dated 7.1.2009 amounting to ₹ 3,00,000/- drawn on Indian Overseas Bank, New Delhi was issued towards discharge of debt liability which on presentation was dishonoured on 24.4.2009 with remarks funds insufficient‟. Legal demand notice dated 6.5.2009 was issued by the complainant demanding the amount. On failure to pay the amount, the complaint was filed. After being satisfied that prima facie case against the accused u/s 138 NI Act was made out, cognizance was taken and accused were summoned. Notice under Section 251 Cr.P.C. was framed against them to which they pleaded not guilty and claimed trial. 2. The complainant examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Trial Court fell in error in not appreciating Section 139 of the Act in a proper perspective as this Section shifts the burden of proof on the accused in respect of cheque bouncing cases. Once the cheque relates to the account of the accused and they accept and admit their signatures on the cheque, then initial presumption as contemplated under Section 139 of the Act has to be raised in favour of the complainant. The presumption referred to in Section 139 of the Act is mandatory presumption although the accused is entitled to rebut the said presumption. The defence raised by the accused was that they had given a blank signed cheque to a Chit Fund Committee, however, in order to rebut the presumption, accused examined DW1 Rajesh from the Chit Fund Company. Although no opportunity to cross- examine this witness was given to the complainant, however, since this witness did not favour the accused, as such, the complainant did not stress on not affording any opportunity to cross-examine the witness. This witness denied that cheque Ex.CW1/1 was given by the accused to the Chit Fund. As such, accused failed to rebut the presumption. Moreover, in cross-examination, the complainant gave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provisions of this Act, be punished with 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 be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes a demand for payment of the cheque amount by giving a notice in writing to the drawer of the cheque within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and drawer of such cheque fails to make the payment of the amount within 15 days of the receipt of the said notice. Section 139 refers to presumption that unless the contrary is proved, the holder received the cheque of the nature referred to under Section 238 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 cognizance of an offence under the section except upon a complaint in writing made by the payee or, as the case may be, the holder of the cheque and that such complaint is made within one month of the date on which the cause of action arose under Clause (c) of proviso to Section 138 of the Act. 9. In Kusum Ingots Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ath Banerjee, AIR 2001 SC 3897, where it was held that:- The Appellant's submission that the cheques were not drawn for the 'discharge in whole or in part of any debt or other liability' is answered by the third presumption available to the Bank under 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. 22. Because both Sections 138 and 139 require that the Court shall presume the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidvanatha Iyer, 1958 Cri. LJ 232, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. It introduces an exception to the general rule as to the burden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Court, but also in the nature of evidence required to rebut the two. In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which might reasonably be true and which is consistent with the innocence of the accused. On the other hand in the case of a mandatory presumption the burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words 'unless the contrary is 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 when 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ex.CW1/1 was never taken from the accused. 11. Under the circumstances, the defence of issuing of the blank signed cheque to the Chit Fund taken by the accused falls to the ground. 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 dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. Reverse onus clauses usually impose an evidentiary burden. 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. 12. As discussed above, the accused has failed to raise a probable defence which may create doubts about the existence of a legally enforceable debt or liability. However, relying upon Pine Product Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he complaint, after the dishonour of the cheque, statutory notice was served upon the accused persons calling upon them to pay the cheque amount. Service of this legal notice has been denied by the accused in their Statement u/s 313 Cr.P.C. However, under Illustration (b) of Section 114 of the Evidence Act and Section 27 of the General Clauses Act, 1897, service shall be deemed to be effected by properly addressing, preparing and posting by registered post, a letter containing the document and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. Although this presumption is rebuttable but mere denial to receive the notice is not sufficient to rebut the presumption. It is for the accused to show that common course of business was interrupted by some supervening circumstances. It is not the case of the accused that the notice was not sent on a correct address or some supervening circumstances existed which prevented ordinary course of business in delivering the notice to the addressee. Moreover, even no suggestion was given to the complainant that legal notice was not served upon the accused. Under the ..... 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