TMI Blog2020 (4) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... uly served, fulfilling the requirement of giving Notice, contrary to the finding of the learned trial Court. Legally enforceable debt or not - HELD THAT:- In view of the contents in Exhibit 1 there is a clear admission by the Respondent of his liability to repay the amounts mentioned in the document. There is no escaping the fact that it was a legally enforceable liability. The issuance of three post dated Cheques by the Respondent further endorses this circumstance. The argument of learned Counsel for the Respondent that the Appellant is a Government servant hence the source from where he afforded ₹ 42,00,000/- only, has not been indicated was never raised in the evidence of the Respondent and for the first time finds place only in Appeal. Rebuttal of presumption - HELD THAT:- The presumption under Section 139 of the N.I. Act is an extension of the presumption of Section 118(a) of the Act. If the negotiable instrument happens to be a Cheque, Section 139 raises a further presumption that the holder of the Cheque received the Cheque in discharge in whole or in part of any debt or other liability. Section 118 of the N.I. Act uses the phrase until the contrary is proved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ints, leading to the Appeals may briefly be adverted to. The Appellant required finances for his son s incomplete hotel project at Gangtok, Sikkim. The Respondent in the month of March, 2013 offered to assist him to obtain loan of Rupees five crores for the said purpose from Syndicate Finance Private Limited, Mumbai. The condition for obtaining such loan was an advance payment of 2% of the capital applied for, as processing fees. The Appellant agreed to the said proposal and thereafter made over a sum of ₹ 12,70,000/- (Rupees twelve lakhs and seventy thousand) only, to the Respondent in March, 2013 in two tranches of ₹ 10,00,000/- (Rupees ten lakhs) only, and ₹ 2,70,000/- (Rupees two lakhs and seventy thousand) only, for the aforementioned purpose. Later, on doubts emerging about the credentials of the Finance Company, the Appellant instructed the Respondent not to deposit the said amounts with the Company. The Respondent however informed him that the deposit was already made, nevertheless, the amount would be refunded by the month of July, 2013. In August, 2013 in order to obtain loan for the same purpose from ICCI, Kolkata a sum of ₹ 30,00,000/- (Rupees th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emo dated 07.04.2015 with the remarks Account closed (Criminal Appeal No.34 of 2018 arising out of P.C. Case No.31 of 2015). (c) Legal Notice on 16.03.2015, (received by Dharni Sharma, brother of the Respondent), informing the Respondent that the Cheque bearing No.002217 drawn on AXIS Bank, Gangtok Branch, dated 15.02.2015 amounting to ₹ 11,00,000/- (Rupees eleven lakhs) only, issued by the Respondent had been deposited by the Appellant in the Central Bank of India, Gangtok Branch with due notice to the Respondent. The Cheque was dishonoured vide its return memo dated 17.02.2015 with the remarks Funds insufficient (Criminal Appeal No.35 of 2018 arising out of P.C. Case No.30 of 2015). Hence, the prayers in the Appeals. 4. After the Complaints were lodged under Section 138 of the N.I. Act before the learned trial Court in the three Private Complaints supra, cognizance was taken and substance of accusation for the offence under Section 138 of the N.I. Act in each of the Complaints was explained to the Respondent to which he pleaded not guilty. The Appellant examined himself and four other witnesses. The Respondent was examined under Section 313 Cr.P.C. and was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to execute Exhibit 1. The learned trial Court next ventured into discussing the merits of Exhibit 1, the contents of which stood admitted by the Respondent, therefore, the conclusion of the learned trial Court that the contents cannot be relied for speaking of the actual facts is untenable. The learned trial Court also raised doubts about the place where Exhibit 1 was signed viz. the Chambers of the Advocate and further opined that the Appellant had failed to prove that the Cheques had been dishonoured, whereas the documents relied on by the Appellant marked Exhibit 4 in all the Complaints, clearly indicate the rejection of the Cheques. The Respondent did not deny issuance of the Cheques. (c) That, the learned trial Court reached a finding that the presumption against the Respondent was duly rebutted by him as required under Section 139 of the N.I. Act, when in fact none existed. On this count, reliance was placed on Uttam Ram v. Devinder Singh Hudan and Another (2019) 10 SCC 287 and Purna Kumar Gurung v. Ankit Sarda MANU/SI/0060/2018. Hence, the impugned Judgments of the learned trial Court deserve to be set aside. 6.(a) Repudiating the arguments of learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard the rival submissions put forth by Learned Counsel at length and given due and anxious consideration to the same. I have also carefully perused the records of the case including the evidence, impugned Judgments and the citations made at the Bar. 8. The questions germane to the decision of the Appeals are; (i) Whether the learned trial Court was in error in concluding that the Appellant failed to prove the ingredients of giving notice as required under Section 138 of the N.I. Act? (ii) Whether the Appellant failed to establish beyond a reasonable doubt that the Respondent had to discharge a debt or a legal liability? (iii) Whether the Respondent was able to rebut the presumption in terms of Section 139 of the N.I. Act? 9. In the first instance it would be relevant to notice the ingredients that make out an offence under Section 138 of the N.I. Act which are as follows; (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 perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statutory Notice by leaving their homes for sometime, and thereby evade prosecution. In this thread, we may usefully refer to the Judgment in K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr. (1999) 7 SCC 510 wherein it was held as follows; 20. If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that the court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure. 21. In Maxwell's Interpretation of Statutes, the learned author has emphasised that provisions relating to giving of notice often receive liberal interpretation The words in Clause (b) of the proviso to Section 138 of the Act show that the payee has the statutory obligation to make a demand by giving notice. The thrust in the clause is on the need to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices issued in the instant matters. The Legal Notice in each Complaint has been marked as Exhibit 5, the Postal Receipt as Exhibit 6 and the Acknowledgment Card as Exhibit 7 respectively. In P.C. Case No.14 of 2015 and P.C. Case No.31 of 2015 the Notices allegedly were received by Dharni Sharma, while in P.C. Case No.30 of 2015 the Notice allegedly was received by Pashupathi Sharma. The Respondent has not disputed that Dharni Sharma is his younger brother and Pashupathi Sharma is his father or that they were residents of Linkey. While carefully walking through the evidence of the Respondent he asserts that he was not residing in Linkey, Pakyong, East Sikkim from 2012-13 and that his father resides there. That, he is now residing in Gangtok due to his business and thereby had no knowledge of the alleged Legal Notices sent by the Advocate of the Appellant. He also denied the signatures of his brother and father on the Acknowledgment Cards, Exhibit 7. However a bare perusal of Exhibit 1, the Agreement, admittedly executed between the Respondent and the Appellant on 07.11.2014, reveals the address of the Respondent as Linkey, P.O. P.S. Pakyong, East Sikkim. The circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent towards the Appellant existed as no Money Receipts were tendered in evidence to establish transactions between the Appellant and the Respondent. That although the Appellant deposed during cross-examination that money was taken by him from one Lalit Agarwal, Prem Chand Sharma and Sheetal Pradhan, he failed to examine them as witnesses. That, it was unbelievable that the Appellant would hand over money for obtaining loan without considering its mode of repayment and all other allied consequential terms of liabilities or conditions. The learned trial Court was impressed by the evidence of the Respondent that Exhibit 1 was prepared by him under coercion. 15. The contents of Exhibit 1 are explicit acceptance of liability by the Respondent. Although the learned trial Court was of the opinion that coercion was evident on account of absence of independent witnesses from the side of the Respondent, to the contrary it is in the Respondent s evidence that one Durga Prasad Sharma his guardian was present with him. No proof whatsoever to establish coercion has been furnished. Why he did not make Durga Prasad Sharma sign on the document is not relevant for the present purposes, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Bombay High Court in Sanjay Mishra (supra) relied on by the Respondent is overruled by the ratio of the Hon ble Supreme Court in Rohitbhai Jivanlal Patel v. State of Gujarat and Others MANU/SC/0393/2019 wherein it was inter alia held as follows; 17. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-Appellant. The aspect relevant for consideration had been as to whether the accused-Appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration; It emerges from a reading of the said provisions that the presumption under Section 139 of the N.I. Act is an extension of the presumption of Section 118(a) of the Act. If the negotiable instrument happens to be a Cheque, Section 139 raises a further presumption that the holder of the Cheque received the Cheque in discharge in whole or in part of any debt or other liability. Section 118 of the N.I. Act uses the phrase until the contrary is proved, Section 139 of the N.I. Act provides unless the contrary is proved. Section 4 of the Evidence Act which defines may presume and shall presume makes it clear that presumptions to be raised under the aforestated provisions are rebuttable. In Hiten P. Dalal v. Bratindranath Banerjee 2001 SCC (Cri) 960 while discussing rebuttable presumption, the Hon ble Supreme Court held as follows; 20. That the four cheques were executed by the appellant in favour of Standard Chartered Bank (hereinafter referred to as the Bank ) has not been denied nor was it in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption 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 nonexistence of the presumed fact. 19. In Kamala S. v. Vidhyadharan M.J. and Another(2007) 5 SCC 264 , it was held as follows; 16. The nature and extent of such presumption came up for consideration before this Court in M.S. Narayana Menon Alias Mani v. State of Kerala and Anr. [(2006) 6 SCC 39] wherein it was held: 30. Applying the said definitions of proved or disproved to the 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 exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the learned trial Court can be stated to be perverse. The word perverse has to be understood in law as defined to mean against the weight of evidence. From the discussions that have ensued above I am of the considered opinion that the findings arrived at by the learned trial Court are perverse and erroneous. 23. Consequently, the Appeals are allowed. 24. The impugned Judgments are set aside. 25. The Respondent is convicted of the offence under Section 138 of the N.I. Act in each of the afore detailed Complaints. 26. He is sentenced to undergo Simple Imprisonment of three months each, under Section 138 of the N.I. Act in each of the Complaints. The Sentences shall run concurrently. 27. The Hon ble Supreme Court in Meters and Instruments (P) Ltd. v. Kanchan Mehta (2018) 1 SCC 560 inter alia held that; 18.4...apart from the sentence of imprisonment, the court has jurisdiction under Section 357(3) CrPC to award suitable compensation with default sentence under Section 64 IPC and with further powers of recovery under Section 431 CrPC. On the anvil of the said Judgment it is hereby ordered that the Respondent shall also pay a total compensation amountin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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