TMI Blog2022 (11) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... ssarily to be drawn once it is found that the cheque is issued by the drawer. The words unless contrary is proved comes into play only during trial and not at the stage of pre-trial proceedings - when a complaint is lodged under Section 138 of Negotiable Instruments Act and complainant/holder of the cheque produces the material before the Court that such cheque was drawn/signed by the accused, presented within its validity and dishonoured for the reasons stated in the memo issued by the bank and that in spite of issuing notice to the accused, he failed to pay the amount mentioned in the cheque, the Court is bound to draw presumption under Section 139 of Negotiable Instruments Act in favour of the complainant. Only then the accused is required to prove contrary in order to rebut such presumption. The reasoning of the learned trial Court are totally tangent to the presumptive value of section 139 of Negotiable Instruments Act - The so-called defence raised by the accused during cross-examination of the complainant and her witness, specifically in absence of any reply to the legal notice, cannot be considered as probable defence and certainly not a defence showing preponderance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulted in dismissal of the complaint and acquitting respondent no.1. 7. Learned counsel Shri Pavithran appearing for the appellant submitted that once it is established that cheque bears signature of respondent no.1 and on presentation, it was returned unpaid, presumption under Section 139 of Negotiable Instruments Act is required to be drawn. He submitted that legal notice was issued to respondent no.1 which he received but failed to reply and, therefore, at first instance he failed to show any plausible reason or defence in his favour so as to rebut presumption. He then submitted that on receipt of summons from the Magistrate, the respondent no.1 appeared and on explaining substance of accusation, he only denied the said substance but failed to take any specific defence. He then submitted that during cross-examination of complainant and her witness, there are no denials to the averments made in the affidavits and in fact such cross-examination further strengthened the presumption under Section 139 of Negotiable Instruments Act. He further submitted that respondent no.1 failed to examine himself though he desired to do so while answering statement recorded under Section 313 of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel Shri Teles appearing for respondent no.1 then submitted that it is not necessary for the accused to examine himself in defence to rebut presumption under Section 139 of Negotiable Instruments Act as onus on him is by showing preponderance of probability which he can show or demonstrate from the evidence of the complainant and their witnesses. If the accused succeeds in showing inconsistencies or improbabilities in the cased of the complainant from the evidence and cross-examination of the complainant and their witnesses, the Court has to consider such presumption as rebutted. 11. Learned counsel Shri Teles then submitted that cross-examination of PW1 and PW2 alongwith the documents clearly show that such presumption stands rebutted and the learned trial Court has rightly accepted it in favour of respondent no.1. 12. Learned counsel Shri Teles placed reliance on the following decisions: (i) Geeta Devi v/s. State of U.P and Others (2022) SCC OnLine SC 57. (ii) Kumar Exports v/s. Sharma Carpets (2009) 2 SCC 513. 13. Admittedly, present matter is an appeal challenging acquittal and therefore parameters laid down by the apex Court for deciding appeal chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt observed in paragraph 11 that the High Court is justified in invoking powers under Section 378 of Cr.P.C. If the trial Court, had inter alia, committed a patent error of law or grave miscarriage of justice or had arrived at perverse findings of fact. 18. Section 138 of Negotiable Instruments Act introduced in Chapter XVII by Act 66 of 1998 w.e.f. 01.04.1989 is basically to give more strength to the bank transaction by using Negotiable Instruments. Object and purpose of introducing said Chapter has been discussed by the Supreme Court in many decisions and it is well settled now that the object is to streamline and to give more sanctity to the transaction through the negotiable instruments. The purpose of Section 138 of Negotiable Instruments Act is twofold. Firstly, it shows that even if on any count the negotiable instrument is not honoured by the bank, notice is mandatory to be given to the drawer of the cheque by the payee or the holder about reasons of dishonouring of the cheque and alongwith it, calling upon such drawer by way of demand for payment of the amount of money mentioned in the cheque. 19. The purpose of issuing such notice in writing demanding the amount men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial and not at the stage of pre-trial proceedings. The reference to the word proved has to be read with the definition of such word as found in the Evidence Act as follows: 'Proved .-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, when a complaint is lodged under Section 138 of Negotiable Instruments Act and complainant/holder of the cheque produces the material before the Court that such cheque was drawn/signed by the accused, presented within its validity and dishonoured for the reasons stated in the memo issued by the bank and that in spite of issuing notice to the accused, he failed to pay the amount mentioned in the cheque, the Court is bound to draw presumption under Section 139 of Negotiable Instruments Act in favour of the complainant. Only then the accused is required to prove contrary in order to rebut such presumption. 21. In the present matter, admittedly, complainant issued legal notice which is produced at Exhibit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.' '21. The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mani Tex (supra), the Supreme Court (3 Judges Bench) observed in paragraph 15 as under:- '15. No doubt, and as correctly argued by the Senior Counsel for the appellants, the presumptions raised under Section 118 and Section 139 are rebuttable in nature. As held in M .S. Narayana Menon v. State of Kerala [M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39, para 32, which was relied upon in Basalingappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418, a probable defence needs to be raised, which must meet the standard of preponderance of probability , and not mere possibility. These principles were also affirmed in Kumar Exports [Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513, wherein it was further held that a bare denial of passing of consideration would not aid the case of the accused. 26. In the case of Rangappa (supra) (3 Judge Bench) the Supreme Court observed in paragraphs 26, 27, 28 and 29 as under:- '26. 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 impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the stop payment instructions to his Bank. Furthermore, the instructions to stop payment had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability.' 27. The observations of the Supreme Court as quoted above and more particularly in the case of Rangappa (supra) wherein it has been observed in paragraph 29 that, the very fact that accused failed to reply to the stipulated notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version, comes to the aid of the complainant in the present matter since no reply was sent by the accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the presumptive value of section 139 of Negotiable Instruments Act. There is no observation in the entire judgment that the complainant is entitled to draw such presumption though a decision in the case of Rangappa (supra) is cited. Instead of putting the onus on accused to discharge the burden, the learned trial Court directly assessed the defence and jumped to the conclusion that the complainant failed to prove that her late husband advanced loan of Rs. 7,00,000/- to the accused. By doing so, the learned trial Court completely ignored settled proposition of law as laid down in the decisions referred above. The so-called defence raised by the accused during cross-examination of the complainant and her witness, specifically in absence of any reply to the legal notice, cannot be considered as probable defence and certainly not a defence showing preponderance of probability in favour of the accused so as to rebut statutory presumption. Therefore, such findings of the trial Court which clearly come within the category of committing patent error of law and causing grave miscarriage of justice as also arriving at perverse finding of fact, as held in the case of Kalamani Tex (supra) i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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