Cr. Appeal No.338 of 2018

3rd January, 2019.

Petitioner Counsel: Mr. SANJEEV K. SURI
Respondent Counsel: Mr. N.K. THAKUR, Sr. Adv. with Mr. KARAN VEER SINGH

Cases Cited:
M.S. Narayana Menon alias Mani Vs. State of Kerala and another, 2006(5) ALL MR 33 (S.C.)=(2006) 6 SCC 39 [Para 7]
K. Prakashan Vs. P.K. Surenderan, 2008 ALL MR (Cri) 314 (S.C.)=(2008) 1 SCC 258 [Para 8]
Krishna Janardhan Bhat Vs. Dattatraya G. Hegde, 2008 ALL MR (Cri) 1164 (S.C.)=(2008) 4 SCC 54 [Para 9]
Hiten P. Dalal Vs. Bratindranath Banerjee, 2001 ALL MR (Cri) 1497 (S.C.)=(2001) 6 SCC 16 [Para 10]
Kumar Exports Vs. Sharma Carpets, 2009 ALL MR (Cri) 239 (S.C.)=(2009) 2 SCC 513 [Para 11]
Rangappa Vs. Sri Mohan, 2010 ALL SCR 1349=(2010) 11 SCC 441 [Para 13]
Banna Reddy and others Vs. State of Karnataka and others, 2018 ALL SCR (Cri) 610=(2018) 5 SCC 790 [Para 19]
Rabindra Kumar Pal alias Dara Singh Vs. Republic of India, 2011 ALL MR (Cri) 673 (S.C.)=(2011) 2 SCC 490 [Para 19]
State of Uttar Pradesh Vs. Wasif Haider etc., 2019 ALL SCR (Cri) 181=Criminal Appeal No.1702-1706/2014, Dt.10.12.2018 (SC) [Para 20]

JUDGMENT

Tarlok Singh Chauhan, J. :- The appellant is the complainant, who aggrieved by the acquittal of the respondent in the complaint instituted by him under Section 138 of the Negotiable Instruments Act (for short the 'Act'), has filed the instant appeal.

2. Briefly stated, the case of the complainant was that the accused/respondent used to have business transaction with the complainant and taking advantage of such business transactions had purchased diesel worth Rs.4,55,000/- on credit and assured the complainant that the same shall be paid within few days. When the respondent was asked to settle the account, she handed over a cheque Ext.C-1 dated 27.12.2012 for the aforesaid amount on an account maintained by her with Punjab National Bank, which on presentation was received back dishonoured with the remarks 'funds insufficient'. The petitioner thereafter issued notice to the respondent which was duly served upon her, yet she failed to make the payment, constraining the petitioner to file a complaint under Section 138 of the Act.

3. The complainant/petitioner in support of his contention, examined two witnesses. Thereafter, the statement of the respondent under Section 313 Cr.P.C. was recorded. However, the respondent did not choose to lead any evidence and on the basis of the evidence on record, the learned trial Court proceeded to acquit the respondent/accused.

4. Aggrieved by the order of acquittal, the petitioner/complainant has filed this appeal mainly on the ground that the learned Court below while acquitting the accused has failed to take into consideration the presumption attached to the Negotiable Instrument under Sections 118(a) and 139 of the Act.

I have heard the learned counsel for the parties and have also gone through the material placed on record.

5. In order to appreciate the rival contentions of the learned counsel for the parties, it would be necessary to examine Sections 118(a) and 139 of the Act and the same are reproduced as under:-

"118. Presumptions as to negotiable instruments.-Until the contrary is proved, the following presumptions shall be made:-

(a) of consideration- that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;

1[139. Presumption in favour of holder.- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.]"

6. Chapter XVII containing Sections 138 to 142 was introduced in the Act by Act 66 of 1988 with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. These provisions were intended to discourage people from not honouring the commitments by way of payment through cheques. It is for this reason that the Courts should lean in favour of an interpretation which serves the object of the statue.

7. In M.S. Narayana Menon alias Mani versus State of Kerala and another, (2006) 6 SCC 39 : [2006(5) ALL MR 33 (S.C.)], the Hon'ble Supreme Court while dealing with a case under Section 138 of the Act held that the presumption under Sections 118(a) and 139 were rebuttable and the standard of proof required for such rebuttal was "preponderance of probability" and not proof "proved beyond reasonable doubt" and it was held as under:-

"29. In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause)....

30. Applying the said definitions of 'proved' or 'disproved' to 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 presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.

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32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.

41.....'23......Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man"."

8. Similar reiteration of law can be found in K. Prakashan versus P.K. Surenderan, (2008) 1 SCC 258 : [2008 ALL MR (Cri) 314 (S.C.)] wherein it was observed as under:-

"13. The Act raises two presumptions; firstly, in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability. Presumptions both under Sections 118 (a) and 139 are rebuttable in nature......

14. It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability."

9. To the same effect is the decision of the Hon'ble Supreme Court in Krishna Janardhan Bhat versus Dattatraya G. Hegde, (2008) 4 SCC 54 : [2008 ALL MR (Cri) 1164 (S.C.)] wherein the Hon'ble Supreme Court observed as under:-

"32.....Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.

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34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is preponderance of probabilities......

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45..... Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced........"

10. Earlier to that the Hon'ble Supreme Court in Hiten P. Dalal versus Bratindranath Banerjee, (2001) 6 SCC 16 : [2001 ALL MR (Cri) 1497 (S.C.)], compared the evidentiary presumptions in favour of the prosecution with the presumption of innocence in the following terms:-

"22.....Presumptions are rules of evidence and do not conflict with the presumption 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 non-existence of the presumed fact.

23. In other words, provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary......."

11. Section 139 of the Act provides for drawing a presumption in favour of the holder and the Hon'ble Supreme Court in Kumar Exports versus Sharma Carpets, (2009) 2 SCC 513 : [2009 ALL MR (Cri) 239 (S.C.)] has considered the provisions of the Act as well as Evidence Act and observed as under:-

"14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.

15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Indian Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume" (rebuttable), (2) "shall presume" (rebuttable) and (3) "conclusive presumptions" (irrebuttable). The term 'presumption' is used to designate an inference, affirmative or disaffirmative of the existence a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".

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18. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.

19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions 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."

12. The Hon'ble Supreme Court thereafter held that the accused may adduce evidence to rebut the presumption, but mere denial regarding of existence of debt shall not serve any purpose.

13. In Rangappa versus Shri Mohan, (2010) 11 SCC 441 : [2010 ALL SCR 1349], Hon'ble three Judge Bench of the Hon'ble Supreme Court had occasion to examine the presumption under Section 139 of the Act and it was held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail. It is apposite to refer to the relevant observations which read 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 impugned observations in Krishna Janardhan Bhat v. Dattatraya G.Hegde (2008) 4 SCC 54 may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.

27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard of proof."

14. Bearing in mind the aforesaid exposition of law, it can conveniently be held that in terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words "proved" and "disproved" have been defined in Section 3 of the Evidence Act.

15. 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 presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.

16. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man.

17. Now, adverting to the facts of the case, it would be noticed that the learned trial Court has categorically found that a cheque had been issued by the respondent which upon its presentation for encashment was dishonoured. Thereafter the issuance of notice and receipt thereof has also been held to be proved by the petitioner. Therefore, in these circumstances, can it be held that once the issuance of cheque and signatures thereupon are admitted, the respondent should have necessarily been convicted. To my mind, the question does not end here, the petitioner was prima-facie required to prove that the cheque had been issued in discharge of legal liability.

18. As per the allegations made in the complaint, the petitioner claimed himself to be the Manager of Vinay Service Station and it is in this capacity that he claimed that the cheque was handed over to him by the respondent towards the amount of diesel taken on credit. If that was so, then obviously it was Vinay Service Station, who alone could have filed the complaint and not the petitioner himself, who simply would at best be an agent or servant of the Principal. The liability of the respondent, if any, was towards Vinay Service Station and not the complainant/petitioner. The diesel if at all taken on credit was from the Vinay Service Station and not from its Manager i.e. the petitioner. Therefore, in such circumstances, the learned Magistrate committed no error in holding that the defence of the accused/respondent was highly probable and that the accused had rebutted the presumption under Section 139 of the Act and, therefore, rightly acquitted the respondent.

19. The accused/respondent has had the advantage of having been acquitted by learned Court below and the appellate Court would only interfere, where there exists perversity of fact and law. (See: Banna Reddy and others versus State of Karnataka and others, (2018) 5 SCC 790 : [2018 ALL SCR (Cri) 610]. Further, the presumption of innocence is further reinforced against the acquitted accused by having judgment in his favour. (See: Rabindra Kumar Pal alias Dara Singh versus Republic of India, (2011) 2 SCC 490 : [2011 ALL MR (Cri) 673 (S.C.)], para 94).

20. Similar reiteration of law can be found in a very recent judgment of the Hon'ble Supreme Court in Criminal Appeal No.1702-1706 of 2014 : [2019 ALL SCR (Cri) 181], titled State of Uttar Pradesh versus Wasif Haider etc., decided on 10.12.2018.

21. It cannot be said that the Court below has not correctly appreciated the evidence on record or that acquittal of the respondent has resulted into travesty of justice. No ground for interference is called for.

22. Accordingly, the present appeal is dismissed, so also the pending application(s) if any. The bail bonds, if any, furnished by the accused/respondent, are discharged.

Appeal dismissed.