TMI Blog2009 (2) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... on 138 means a legally enforceable debt or liability. Admittedly the amount allegedly advanced by the applicant was entirely a cash amount and that the amount was unaccounted . He admitted not only that the same was not disclosed in the Income Tax Return at the relevant time but till recording of evidence in the year 2006 it was not disclosed in the Income Tax Return. By no stretch of imagination it can be stated that liability to repay unaccounted cash amount is a legally enforceable liability within the meaning of explanation to Section 138. The alleged debt cannot be said to be a legally recoverable debt. Considering the admission of the applicant, the conclusion recorded by the ld trial Judge that the applicant has failed to establish that the cheque was issued towards discharge of a legally recoverable debt is correct. Therefore, Application is rejected. - Abhay Shreeniwas Oka, J. For Appellant: Ashok Mundargi, Sr. Cou. and Shailesh Kabtharia, Adv. For State: A.T. Jhaveri, A.P.P. JUDGMENT Abhay Shreeniwas Oka, J. 1. The submissions of the learned Senior Counsel appearing for the applicant were heard in support of this application under Sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was not disclosed in the Income Tax return, he submitted that this is no ground to hold that the presumption under Section 139 of the said Act stands rebutted. He submitted that even assuming that the amount advanced was an unaccounted money, at the most the applicant will face an action under the Income Tax Act, 1961 but this is not a ground to say that the presumption under Section 139 of the said Act stood rebutted. He submitted that as the liability to repay a sum of ₹ 15 lacs on the part of the 1st respondent was established, the learned Judge has committed an error by acquitting the 1st respondent. 5. He submitted that mere fact that the amount advanced is not disclosed in the Income Tax returns by itself cannot rebut the presumption under Section 139 of the said Act in every case. He has placed reliance on a decision of this Court dated 16th January, 2009 in Criminal Application No. 3964 of 2007 (R.R. Dubey v. Shamprakash Mishra and Ors.) 6. I have given careful consideration to the submissions. I have perused a copy of the complaint and notes of evidence. In the cross-examination, the applicant has categorically stated thus: ...The entire amount was given i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of loan in the Income Tax Return of the applicant till the year 2006 but there is a categorical admission on the part of the applicant that the amount was an unaccounted amount. 9. Before dealing with the aspect of rebuttal of presumption, it will be necessary to refer to the ingredients of Section 138 of the said Act. It will be necessary to refer to a recent decision of the Apex Court in the case of (Krishna Janardhan Bhat v. Dattatraya G. Hegde) 2008(2) Bom.C.R. 505(S.C.) : 2008 DGLS (soft) 44 : 2008 DGLS(Cri.) soft 929 : (2008)4 S.C.C. 54. The case before the Apex Court arose out of a complaint under Section 138 of the said Act. The applicant before the Apex Court was accused of an offence under Section 138 of the Act. The submission before the Apex Court was that the essential requirement of Section 138 was that there has to be a legally enforceable debt. The Apex Court referred to the provisions of Section 271-D of the Income Tax Act, 1961 which reads thus: 271-D. Penalty for failure to comply with the provisions of Section 269-SS.-(1) If a person takes or accepts any loan or deposit in contravention of the provisions of Section 269-SS, he shall be liable to pay, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, in order to attract Section 138 of the said Act, the debt has to be a legally enforceable debt as is clear from the explanation to Section 138 which provides that for the purposes of the said section the debt or other liability means a legally enforceable debt or other liability. 11. The Apex Court also reiterated well established legal position that for rebutting the presumption under Section 139 of the said Act, it is not necessary in every case for the accused to step into the witness box. The Apex Court held that the standard of proof on the part of the accused and that of prosecution in a criminal case is different. The prosecution has to prove the guilt of an accused beyond reasonable doubt, but the standard of proof so as to prove a defence is preponderance of probability . Inference of preponderance of probabilities can be drawn even by reference to circumstances. In paragraph 44 the Apex Court observed thus: The presumption of innocence is a human right See (Narendra Singh v. State of M.P.) 2004 DGLS (soft) 249 : 2004 DGLS(Cri.) soft 526 : 2004(10) S.C.C. 699 : 2004 A.I.R. (S.C.) 3249, (Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra) 2005(2) Bom.C.R.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, assuming that the presumption under Section 139 of the said Act regarding existence of debt or liability is not rebutted, in order to attract Section 138, the debt or liability has to be a legally recoverable debt or liability. As held by the Apex Court in the case of Krishna Bhat (supra) there is no presumption under Section 139 of the said Act that the debt is a legally recoverable debt. In the case of (Goa Plast (P) Ltd. v. Chico Ursula D'Souza) 2004(2) Bom.C.R. 660(S.C.) : 2004 DGLS(Cri.) soft 166 : (2004)2 S.C.C. 235, the Apex Court reiterated that a debt or liability subject-matter of Section 138 means a legally enforceable debt or liability. 13. In the present case, there is a categorical admission that the amount allegedly advanced by the applicant was entirely a cash amount and that the amount was unaccounted . He admitted not only that the same was not disclosed in the Income Tax Return at the relevant time but till recording of evidence in the year 2006 it was not disclosed in the Income Tax Return. By no stretch of imagination it can be stated that liability to repay unaccounted cash amount is a legally enforceable liability within the meaning o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general law. The Apex Court expressed that the object of Section 138 of the said Act was to ensure that commercial and mercantile activities are conducted in smooth and healthy manner. The explanation to Section 138 of the said Act clearly provides that a debt or other liability referred to in section means a legally enforceable debt or other liability. The alleged liability to repay an unaccounted cash amount admittedly not disclosed in the Income Tax Return cannot be a legally recoverable liability. If such liability is held to be a legally recoverable debt, it will render the explanation to Section 138 of the said Act nugatory. It will defeat the very object of Section 138 of the Act of ensuring that the commercial and mercantile activities are conducted in a healthy manner. The provision of Section 138 cannot be resorted to for recovery of an unaccounted amount. A cheque issued in discharge of alleged liability of repaying unaccounted cash amount cannot be said to be a cheque issued in discharge of a legally enforceable debt or liability within the meaning of explanation of Section 138 of the said Act. Such an effort to misuse the provision of Section 138 of the said Act has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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