1998 ALL MR (Cri) JOURNAL 45
MADRAS HIGH COURT
SRINIVASAN AND S.M. ABDUL WAHAB, JJ.
R. Sankaralingam Vs. Union Of India And Ors.
Writ Petition No. 370 of 1996
14th February, 1996
Petitioner Counsel: S.K. SUNDARAM
Negotiable Instruments Act (1881) S. 138 and 139 - Dishonour of Cheque - Raising of presumption of guilt - Provisions do not run counter to basic principles of criminal law regarding innocence of accused.
Evidence Act (1872), Ss. 4 and 101.
S. 139 does not run counter to the basic principles of criminal law that an accused must be presumed to be innocent. Under S.138 of the Act, when an action is taken against a particular person, there are certain admitted facts and circumstances which have been referred to above. On such admitted facts and circumstances the law raises a presumption that the accused is guilty. Then the burden shifts on to the accused to prove that he is not guilty by establishing that the cheque was not supported by any consideration and it was not in discharge of any debt. Thus, Section 138 and S. 139 of the Act will come into play only on the existence of certain basic facts and circumstances. In such a case, it cannot be contended that the general fundamental rule that a person is presumed to be innocent unless and until he is proved to be guilty, cannot apply. Presumptions are not unknown to law. The law can impose presumptions when certain basic facts and circumstances exist. Ss. 138 and 139 are based on such presumptions which arise on the existence of certain basic facts and circumstances. [Para 6,7]
(B) Negotiable Instruments Act (1881) S. 138 - Criminal P.C. (1973) S.243(2) - Dishonour of cheque - Proceeding under - Application by accused for summoning some documents - Rejection of application - Error committed by magistrate in particular case - Ss. 138 of 1881 Act or S. 243 of Cri. P.C. cannot be unconstitutional on that ground. (Para 8)
SRINIVASAN, J.:- This Writ Petition is for declaration that Section 138 of the Negotiable Instruments Act (hereinafter referred to as 'the Act'), is unconstitutional, being opposed to the basic structure of the Constitution of India found in the preamble thereof, guaranteeing social and economic justice. In the affidavit filed in support of the writ petition, the following averments are found : For the purpose of a civil suit in which the petitioner's wife is the plaintiff, at her request the petitioner had given seven post-dated blank cheques to the fifth respondent to enable him to lend a sum of Rs. 20,000/- to the petitioner's wife.
The cheques were not supported by any consideration. They were meant only to be security for due repayment. The petitioner also handed over copies of documents of title to the fifth respondent in respect of certain property with reference to which the petitioner's wife has filed the suit. It was specifically understood that the cheques having been handed over as security, in the event of default in payment by the petitioner's wife, they should not be used for purpose of any criminal proceedings under Section 138 of the Act. A total sum of Rs. 10,000/- had been paid by the petitioner and his wife to the fifth respondent to which he agrees to give credit. The fifth respondent filed C.C. No. 5577 of 1992 before the VIIth Metropolitan Magistrate, George Town, Madras, who is the third respondent herein. He also filed a Civil Suit O.S. No. 7972 of 1993 on the file of the IV Assistant Judge, City Civil Court, Madras, for recovery of Rs. 7,000/- covered under one of the seven cheques given to him, he has also filed two other criminal cases viz. C.C. Nos. 1793 and 1794 of 1993 on the file of the third respondent relating to two other cheques.
2. As the onus of proof relating to the cheques involved in the criminal cases would show that no consideration ever passed for the cheques is on the petitioner as per Section 139 of the Act in a case instituted under Section 138 of the Act. The petitioner filed a petition before the third respondent under Section 243(2) of the Criminal Procedure Code. The third respondent has, without considering the said petition, issued a non-bailable warrant against the petitioner. Section 138 of the Act gives the holder of a cheque a preferential and unchecked right to institute original proceedings against the drawer, even without proving actual consideration towards the cheque. On the other hand, the onus of proving passing no consideration viz, proof of a negative is placed on the unfortunate drawer of the cheque. Already in section 119 of the Act, if the drawer of a cheque admits his signature in the cheque, it is for him to prove that no consideration passed. The fifth respondent having admitted taking a promissory note from the petitioner for which he has also taken a cheque from him, the petitioner is sought to be made liable for one and the same transaction before two forums, one the Civil Court and the other the Criminal Court. At least if the petition filed by the petitioner to send for the income-tax returns and assessment orders of the fifth respondent filed before the third respondent had been taken on the file by the third respondent, the petitioner would have discharged the onus of proof as per Section 139 of the Act that no consideration ever passed under the cheques and that the fifth respondent had no capacity to lend money to the petitioner. Unfortunately, the provisions of Section 138 of the Act are designed in such a way that it gives an upper hand to the holder of a dishonoured cheque and the formality of getting endorsement of dishonour is made so easy to deny the right of the drawer to defend the action. Under the general law of accounting between a creditor and debtor though the onus of proof of discharge is also on the debtor, there is a departure in the procedure regarding discharge of the debt in a proceeding initiated under Section 138 of the Act. There is another feature which has to be considered. In a criminal case under Section 138 of the Act. The only mental satisfaction of the complainant in the event of his case being accepted is that he had successfully put the debtor in jail, which is nothing but a sinister pleasure. This is because he has to again approach the Civil Court to recover the money from the debtor. The provision in Section 138 of the Act is only a punitive measure and not a preventive one. The question is whether a creditor simply because he is holding an instrument and without proving actual consideration for the said instrument, can be allowed to initiate criminal proceedings against the drawer just for his mental satisfaction. The petitioner is, therefore, praying for a declaration that Section 138 of the Act as unconstitutional which is opposed to the basic structure of the Constitution of India found in the preamble thereof, guaranteeing social and economic justice.
3. Learned Counsel for the petitioner contended that the basic principle of criminal law is that any person accused of an offence is presumed to be innocent and until he is proved to be guilty of the offence, he cannot be punished. It is contended that the burden of proof has been shifted by Sections 138 and 139 of the Act on to the accused which is against the fundamental principle of criminal law. It is, therefore, argued that such a provision is against the basic principles of the Constitution which are guaranteed in the preamble thereof. According to learned Counsel, the shifting of the burden on to the drawer of the cheque would amount to denial of justice, social, economic and political. It is also contended that in such proceedings, the Criminal Court refuses to grant petitions under Section 243 of the Code of Criminal Procedure under which the accused seeks to summon certain documents from third parties to discharge his burden. According to learned Counsel, the same will invalidate Section 138 of the Act itself.
"138. Where any cheque drawn by person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is in sufficient 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 order provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both :
Provided that nothing contained in this section shall supply 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, make a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen 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 money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation :- For the purposes of this section. "debt or other liability means a legally enforceable debt or other liability.
139. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in S. 138 for the discharge, in whole or in part, of any debt or other liability."
For an action under S. 138 of the Act, there are certain conditions precedent, (1) a cheque issued by a person must have been presented to the bank within the period of validity and it must have been dishonoured; (2) After such dishonour, the payee or the holder shall make a demand for the payment of the amount by giving a notice in writing to the drawer of the cheque within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (3) after receipt of such notice, the drawer of such cheque fails to make payment of the amount of money to the payee of the holder. Only if the above conditions are satisfied an action can be taken under S. 138 of the Act by which the drawer of the cheque shall be deemed to have committed an offence. If such an action is taken, there is a presumption under S. 139 of the Act in favour of the holder. The presumption is to the effect that the holder of the cheque received the cheque of the nature referred to in S. 138 of the Act for the discharge, in whole or in part, of any debt or other liability.
5. We do not find any invalidity in the section as such. The section does not run counter to the basic principles of criminal law that an accused must be presumed to be innocent. Under S. 138 of the Act. When an action is taken against a particular person, there are certain admitted facts and circumstances which have been referred to above. On such admitted facts and circumstances the law raises a presumption that the accused is guilty. Then the burden shifts on to the accused to prove that he is not guilty by establishing that the cheque was not supported by any consideration and it was not in discharge of any debt. Thus, Section 136 and S. 139 of the Act will come into play only on the existence of certain basic facts and circumstances. In such a case, it cannot be contended that the general fundamental rule that a person is presumed to be innocent unless and until he is proved to be guilty, cannot apply.
6. Presumptions are not unknown to law. In the Evidence Act, there are several provisions for enabling the Court to raise presumption. In fact S.4 of the evidence Act defines the term 'may presume', 'shall presume' and 'conclusive proof. In certain cases, a statute can declare that a particular fact is conclusive proof of another fact and in those cases, the Court can regard the fact as proved when the other fact is established. In such case, the Court shall not allow evidence to be given for the purpose of disproving it. Sections 138 and 139 of the Act are only in consonance with this provision contained in Section 4 of the Evidence Act.
7. Our attention is drawn to S. 101 of the Evidence Act. Under that Section, whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. Illustration (a) to the Section refers to a person who wants the Court to give judgment that another person shall be punished for a crime which has been committed. In such cases, it is for the person who makes a complaint to prove that the other person has committed the crime. Neither the illustration nor the section will help the petitioner in this case. As pointed out already, the law can impose presumptions when certain basic facts and circumstances exist. Sections 138 and 139 of the Act are based on such presumptions which arise on the existence of certain basic facts and circumstances.
8. The second contention is without any merit. According to learned counsel, an application was filed under S. 243(2) of the Code of Criminal Procedure for summoning the income-tax returns of the fifth respondent. The Magistrate has refused to entertain the same. Just because in the particular case the Magistrate has not chosen to grant the prayer made by the petitioner, it will not invalidate either S. 138 of the Act or Section 243 of the Code of Criminal Procedure. If in the particular case, the Magistrate has committed an error in not granting the prayer of the petitioner, several remedies are available to the petitioner to challenge such an action on the part of the Magistrate. That will not be a ground to declare S. 138 of the Act as unconstitutional. In fact, Section 243 of the Code of Criminal Procedure does not exclude proceedings under S. 138 of the Act. Nor does S. 138 of the Act exclude the applicability of S. 243 of the Code of Criminal Procedure. It is open to the petitioner to take appropriate proceedings in order to set right the action of the Magistrate, if according to the petitioner, the Magistrate has acted erroneously.