2010 ALL MR (Cri) 1441
IN THE HIGH COURT OF JUDICATURE AT BOMBAY(NAGPUR BENCH)

A.P. BHANGALE, J.

Nitin S/O. Bapurao Mankar Vs. Shri Vyankatesh Housing Agency & Anr.

Criminal Appeal No.555 of 2009

10th March, 2010

Petitioner Counsel: Mr. C. S. KAPTAN
Respondent Counsel: Mr. C. F. BHAGWANI,Mr. C. S. ADGOKAR

(A) Negotiable Instruments Act (1881) Ss.118, 138, 139 - Dishonour of cheque - Statutory presumptions under Ss.118 and 139 - Can be rebutted by accused - Accused need not enter in witness box to disprove case of complainant, but he can by cross-examination or by bringing documentary evidence disprove case of complainant - Burden of proof upon accused is not to prove fact beyond reasonable doubt but to establish it upon preponderance of probability to satisfy test of prudent person that evidence of the complainant is improbable. AIR 1972 SC 608 and 2001 ALL MR (Cri) 1497 - Ref. to. (Para 8)

(B) Negotiable Instruments Act (1881) Ss.118, 138, 139 - Dishonour of cheque - Statutory presumptions against accused under Ss.118 and 139 - Presumption are rebuttable - Under S.139, burden lies on drawer of cheque to rule out existence of debtor-creditor relationship - To rebut statutory presumptions, accused is not expected to prove his defence beyond reasonable doubt, as is expected of complainant in a criminal trial to prove offence.

In a criminal trial one has to start with presumption of innocence in favour of the accused, which is human right. In criminal trial, the complainant is required to prove the offence beyond reasonable doubts. However, in trial under section 138 of the N.I. Act, the complainant is aided by statutory presumptions. Under Section 139 of the N.I. Act, under the abovesaid circumstances, the Court has to raise statutory presumption that the holder of the cheque received the cheque for the discharge of any debt or liability; but it is a rebuttable one. The accused can establish that the debt or liability was not legally enforceable for to uproot the prosecution. Under Section 139 of the Act, burden lies on the drawer of the cheque to rule out the existence of the debtor-creditor relationship. The use of the phrase "until contrary is proved" in Sec.118 of the N.I. Act and further use of the words "unless the contrary is proved" in Section 118 of the N.I. Act read with definition of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, make it clear that presumption to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over. It is settled law that to rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt, as is expected of the complainant in a criminal trial to prove offence. The accused may adduce evidence to prove that there was no debt or liability to be discharged by him. At the same time,it has to be borne in mind that bare denial of the passing of the consideration and existence of debt/liability, apparently would not serve the purpose of the accused to seek dismissal of the complaint. Something which is probable has to be brought on record satisfactorily for getting the burden of proof shifted back to the complainant. If case of the complainant is false then the accused as any reasonable ordinary prudent person is bound to react sharply by replying notice to the accused. Demand notice in writing is served upon the accused is itself a strong circumstance in favour of the complainant. The fact that the accused did not stop payment of the cheque through his Bank nor reported alleged misuse of the cheque to the police may has to go against him. 2001 ALL MR (Cri) 1497 and 2006 ALL MR (Cri) JOURNAL 54 - Ref. to. [Para 9,10]

(C) Negotiable Instruments Act (1881) S.138 - Dishonour of cheque - S.138 aims at punishing unscrupulous drawers of cheques who though purport to discharge their liability by issuing cheque, have no real intention to pay - Trickster drawer may find out ways and means to defeat honest payee by avoiding payment - Magistrate must be on guard to prevent miscarriage of justice. (Para 11)

(D) Negotiable Instruments Act (1881) S.138 - Sentence - Dishonour of cheque - Complaint under S.138 - Conviction of accused - Cheque amount Rs.1,55,000/- - It would not be just and proper to insist upon incarceration of accused in jail - Held, accused shall suffer simple imprisonment until rising of Court and pay compensation in the sum of Rs.1,55,000/- the amount covered by cheque in question plus Rs.10,000/- as cost for prosecuting the accused, payable under S.357(3) of Cr.P.C.. Criminal P.C. (1973), S.357(3). (Para 13)

Cases Cited:
Hiten P. Dalal Vs. Bratindranath, 2001 ALL MR (Cri) 1497 (S.C.)=(2001)6 SCC 16 [Para 8,10]
P. R. Purushottam Vs. S. Perumal, AIR 1972 SC 608 [Para 8]
Gorantla Venkateswara Rao Vs. Kolla Veera Raghava, 2006 ALL MR (Cri) JOURNAL 54=2006 Cri.L.J. 1 [Para 10]
K. Bhaskaran Vs. Sankaran Vidyan Balan, 1999(4) ALL MR 452 (S.C.)=(1999)7 SCC 510 [Para 10]


JUDGMENT

JUDGMENT :- Heard. Admit. The appeal is taken up for final disposal forthwith, by consent of respective Counsel.

2. By means of this appeal, the appellant/(original complainant) challenge judgment and order dated 06th April, 2009 passed in Summary Criminal Case No.6892 /2008 by learned 23rd Judicial Magistrate, First Class, Court No.23, Nagpur (Spl. Court under Section 138 of the Negotiable Instruments Act) {in short, "the N.I. Act"), whereby respondent no.1-accused was acquitted of the offence punishable under section 138 of the N.I. Act, on the ground that the complainant failed to prove that the cheque bearing No.103443 dated 29.02.2008 drawn for the sum of Rs.1,55,000/- on the District Central Co-operative Bank Limited, Hudkeshwar Branch, Nagpur was issued for discharge of legally enforceable debt or liability.

3. It is not in dispute that the said cheque had returned dishonoured for "funds insufficient". The notice demanding payment was served, but the accused did not pay the amount demanded by the notice.

4. Facts in brief are : The accused-Mangesh Govindrao Supare is the Proprietor of Shri Vyankatesh Housing Agency. The accused owned layout in Khasra No.19: P.H. No.36 situated at Mouza Dhamna, Tah. & Dist. Nagpur. The land was demarcated into plots in the year 2006. There was an agreement to sell entered on 7.8.2006 between the accused and complainant, in respect of Plot No.30 admeasuring 1648 sq. ft.. in consideration of Rs.1,64,800/-. At the time of agreement, earnest money in the sum of Rs.41,000/- was paid by the complainant and rest of the consideration was payable by monthly installments of Rs.4,000/- for months and Rs.23,000/- was payable at the time of execution of sale deed. A sum of Rs.65,000/- was paid towards monthly installments, when the accused expressed inability to execute sale-deed and proposed the complainant to accept the amount of compensation instead of @ Rs.150/- per sq. ft. and agreed to refund Rs.1,55,000/-. The complainant accepted the proposal. Hence the accused issued cheque No.103443, dated 29.2.2008 in the sum of Rs.1,55,000/- drawn upon District Central Co-operative Bank Limited, Gandhi Sagar Branch, Nagpur in favour of the complainant.

5. The cheque was presented for encashment on 28.3.2008 by complainant through ICICI Bank, Nagpur Branch. It returned dishonoured on 28.3.2008 with remarks "funds insufficient".

6. Demand notice in writing dated 7.4.2009 was sent to the accused calling upon him to pay the amount within 15 days. Though notice was duly received on 24.4.2008, the accused failed to pay within stipulated period from the receipt of notice. Thus complaint was instituted for offence punishable under section 138 of the N.I. Act.

7. The charge (Exh.15) was explained to the accused to which he pleaded not guilty and claimed trial. The complainant had tendered affidavit and deposed in support of the complaint. The complainant was cross-examined at length. The defence suggested that the cheque in question was forcibly obtained from the accused by father of the complainant and other two persons Shri. Madavi and Rokde. Had it been so, the accused would have immediately protested or complained in writing. The accused in his statement u/s.313, Cr.P.C. denied the prosecution case as false.

8. Learned Advocate for complainant/appellant submitted in support of the appeal that the cheque dated 29.2.2008 bearing No.103443 (Exh.24) was drawn upon Nagpur District Central Co-operative Bank Ltd. Nagpur-18, in favour of the complainant for a sum of Rs.1,55,000/- which returned dishonoured on 28.3.2009 with remarks "funds insufficient". Notice (O.C. Exh.26) dated 7.4.2008 was sent to the accused demanding Rs.1,55,000/- within 15 days, which the accused received on 19.4.2009 (Exh.28) but failed to pay the amount. The agreement to sell is also produced at Exh.29. The receipt Exhs. 30 to 34 were relied upon which the accused had passed for certain installments paid by the complainant. It is submitted with reference to ruling in Hiten P. Dalal Vs. Bratindranath : 2001 ALL MR (Cri) 1497 that the complainant is aided by statutory presumptions u/ss.118 and 139 of the N.I. Act unless the accused adduces evidence to rebut statutory presumption. Learned Advocate for the complainant/appellant submitted that the agreement to sell the Plot No.30 admeasuring 1648 sq.ft. (153.10 sq. meters) was very much in evidence in Para Nos.2 and 3 of affidavit. It is also averred and proved as to how the for inability of accused to sell the plot, cheque in question was issued for Rs.1,55,000/- as refund of earnest money plus compensation in view of settlement between the accused and the complainant. The fact that the cheque in question was presented for payment and returned dishonoured as also the demand made through the cheque amount by notice in writing sent and failure of the accused to pay the amount within 30 days from the receipt of notice, are all facts established in evidence led by the complainant. It is thus submitted that the learned trial Magistrate adopted approach which was perverse and contrary to record. According to the learned Advocate for the complainant it was not necessary to call attesting witnesses to prove execution of agreement to sell in writing (vide Section 68 of the Indian Evidence Act), because an agreement to sell is not compulsorily registrable nor it require attestation. It may be oral. Hence Exh.29 was duly proved by evidence of complainant and was also marked as Exhibit as there was no any objection from the accused. Thus, learned Magistrate ought to have read the contents of Exh.29 in evidence, once it was admitted in evidence in view of P. R. Purushottam Vs. S. Perumal : AIR 1972 SC 608. Furthermore, the cheque in question was issued by the accused under his signature and it was not disputed. It is no doubt true that the accused need not enter in witness box to disprove the case of the complainant, but he can by cross-examination or by bringing documentary evidence disprove the case of the complainant. The burden of proof upon accused is not to prove fact beyond reasonable doubt but to establish it upon preponderance of probability to satisfy the test of prudent person that evidence of the complainant is improbable.

9. The complainant cannot be disabled from legally enforcing debt or liability which arose from transaction of an agreement to sell plot, which for failure to perform could not lead to execution of sale deed. The trial Magistrate is required to start with presumption u/s.139 of the N.I. Act that unless contrary is established by the accused, the holder of the cheque received it for discharging any debt or liability and under section 118 of the N.I. Act, it must be presumed that the cheque was issued or drawn for consideration and was negotiated for consideration. It is no doubt true that in a criminal trial one has to start with presumption of innocence in favour of the accused, which is human right. In criminal trial, the complainant is required to prove the offence beyond reasonable doubts.

10. However, in trial under section 138 of the N.I. Act, the complainant is aided by statutory presumptions. Under Section 139 of the N.I. Act, under the abovesaid circumstances, the Court has to raise statutory presumption that the holder of the cheque received the cheque for the discharge of any debt or liability; but it is a rebuttable one. The accused can establish that the debt or liability was not legally enforceable for to uproot the prosecution. Under Section 139 of the Act, burden lies on the drawer of the cheque to rule out the existence of the debtor-creditor relationship. The use of the phrase "until contrary is proved" in Sec.118 of the N.I. Act and further use of the words "unless the contrary is proved" in Section 118 of the N.I. Act read with definition of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, make it clear that presumption to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over. It is settled law that to rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt, as is expected of the complainant in a criminal trial to prove offence. The accused may adduce evidence to prove that there was no debt or liability to be discharged by him. At the same time,it has to be borne in mind that bare denial of the passing of the consideration and existence of debt/liability, apparently would not serve the purpose of the accused to seek dismissal of the complaint. Something which is probable has to be brought on record satisfactorily for getting the burden of proof shifted back to the complainant. If case of the complainant is false then the accused as any reasonable ordinary prudent person is bound to react sharply by replying notice to the accused. Demand notice in writing is served upon the accused is itself a strong circumstance in favour of the complainant. The fact that the accused did not stop payment of the cheque through his Bank nor reported alleged misuse of the cheque to the police may has to go against him. In Gorantla Venkateswara Rao Vs. Kolla Veera Raghava & another reported in 2006 Cri.L.J. 1 : [2006 ALL MR (Cri) JOURNAL 54], the Andhra Pradesh High Court held that the failure of the accused to give reply to the legal notice issued from the complainant is one of the strong circumstance to draw an inference that the accused had borrowed the amount from the complainant and the cheque was issued towards payment of the legally enforceable debt. If the complainant has misused the cheque or fabricated it, the accused is bound to immediately protest and threaten the complainant with legal action and would not wait until the conclusion of the trial without taking any action against the complainant. Adverse inference is, therefore, required to be taken against the accused for not replying to the notice. In Hiten P. Dalal Vs. Bratindranath Banerjee reported in (2001)6 SCC 16 : [2001 ALL MR (Cri) 1497], the three-Judge Bench of the Apex Court held that sections 138 and 139 of the Act require that the Court "shall presume" the liability of the drawer of the cheque for the amount for which cheque is drawn and in K. Bhaskaran Vs. Sankaran Vidyan Balan and another reported in (1999)7 SCC 510 : [1999 ALL MR (Cri) 1845 (S.C.) : 1999(4) ALL MR 452 (S.C.)], the Hon'ble Supreme Court observed thus :

"As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 enjoins the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was upon the accused to rebut that presumption. The defence evidence must be such which the Court can believe the defence to exist or consider its existence as reasonable probable, the standard of reasonability being that of the prudent person. To discharge onus, it may not be essential for the accused to enter in the witness box to depose as he can rebut the presumption by cross-examining the complainant and his witnesses, if any, to prove defence upon preponderance of probabilities. Thus, onus as expected to be discharged by the accused was not discharged in this case. Once it is held that the accused had failed to rebut the statutory presumptions, it ought to be concluded that the presumption itself was tantamount to proof of the case of the complainant."

11. Looking into the submissions at the Bar in the light of the relevant legal provisions, it seems that the trial Court did notice the fact that cheque in question issued was signed by the drawer (accused) drawn on the Nagpur District Central Co-operative Bank Ltd., Hudkeshwar Branch and that there is presumption in favour of the complainant in view of Section 139 of the N.I. Act. However, it appears that the learned trial Magistrate has misled herself. The logic of the trial Court that the accused has denied the agreement to sell (Exh.29) and his signature and, therefore, it is not proved, appears strange, particularly when presumption statutorily available to the complainant were not rebutted by the accused by adducing satisfactory evidence to the contrary. It must be borne in mind that Section 138 of the Act aims at punishing unscrupulous drawers of cheques who though purport to discharge their liability by issuing cheque, have no real intention to pay. Trickster drawer may find out ways and means to defeat the honest payee by avoiding payment. The trial Magistrate must be on guard to prevent miscarriage of justice. Learned trial Magistrate ought to have noticed that the obligation on the part of the complainant stood discharged with the help of statutory presumptions of law unless the accused adduced satisfactory evidence to establish the reasonable possibility of the non-existence of the presumed fact.

12. I find the requirements of Section 138 of the Act were sufficiently proved in order to reverse the impugned judgment and order of acquittal passed in favour of the accused. The acquittal order appears unreasonable, contrary to the record in the facts and circumstances of the case and is set aside. I must hold that the respondent no.1/accused is guilty of offence punishable under section 138 of the N.I. Act and convict him thereunder. Since the Appellate Court has full power to review, reappreciate and reconsider the evidence upon which order of acquittal was founded, interference with acquittal is necessary to prevent miscarriage of justice.

13. However, on the question of sentence, it is not necessary to insist upon incarceration of the accused having regard to nature of offence. The accused is sentenced to undergo imprisonment till rising of the Court and to pay compensation in the sum of Rs.1,55,000/-, the amount covered by cheque in question plus Rs.10,000/- as cost for prosecuting the accused payable under section 357(3), Cr.P.C. to the complainant, within two months from the date of this judgment. In default of payment of compensation, the accused shall undergo simple imprisonment for six months. The accused shall appear before the learned Judicial Magistrate, First Class, 23rd (Special Court under section1 38 of the Act) at Nagpur and his surety shall produce him in trial Court within one month. The trial Court to execute the order. If compensation is not paid, it shall be recovered as fine. Appeal is allowed accordingly.

Appeal allowed.