Bombay High Court
Gaurav Omprakash Jaju vs Shri Shakti Fabrics on 3 March, 2010
Equivalent citations: AIR 2010 (NOC) 611 (BOM.)(NAGPUR BENCH), 2010 CRI. L. J. (NOC) 673 (BOM.)(NAGPUR BENCH) 2010 (2) AIR BOM R 680, 2010 (2) AIR BOM R 680
Author: A.P.Bhangale
Bench: A.P.Bhangale
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT NAGPUR, NAGPUR.
CRIMINAL APPEAL NO: 268 /2009
Gaurav Omprakash Jaju
Aged about 27 years, occu: Business
R/o Gandhibagh, Nagpur. ... APPELLANT
v e r s u s
Shri Shakti Fabrics,
Proprietor K Satyendran
Aged amjor, occu: Business
R/o Bindra Streeth
1st floor, Eorde - 638 001 (TN) ... ...RESPONDENT
.......................................................................................................................
Mr Manoj Sarda, APP for appellant
Mr J M Gandhi, Adv. For Respondent
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CORAM: A.P.BHANGALE, J.
DATED: 3rd March, 2010
JUDGMENT :
1 This appeal is directed against the judgment and order dated 27.2.2009 rendered by the Special Court, Nagpur, under Section 138 of the Negotiable Instruments Act ( in short "the N.I. Act") in Criminal Case No.9182 of 2007, whereby the complaint of the appellant has been dismissed and respondent/accused has been acquitted of offence punishable under section 138 of the NI Act.
2 Appellant-Gaurav Jaju averred in the complaint that he had ::: Downloaded on - 09/06/2013 15:40:08 ::: 2 lent an amount of Rs. 70,000/- to the accused on the recommendation of his brother Subhash on 5.12.200 which amount, was agreed to be returned by accused within a month free of interest. Cheque bearing No.114388 dated 5.1.2007 for Rs 70,000/- drawn upon Punjab National Bank was issued by accused in favour of the appellant for the purpose of repayment.
On the request of accused, the complainant did not present the cheque for encashment on 5.1.2007 or immediately thereafter. He, however, presented the cheque in May, 2007 which was dishonoured with remarks "funds insufficient" and returned to his bankers unpaid. Complainant served demand notice in writing upon respondent by RPAD. Although served, the demand made in the legal notice was not complied with. Therefore, appellant /complainant filed Complaint under section 138 of the N.I. Act against the accused.
3 Defence of the accused as is revealed from his statement recorded under section 313 of Cr.P.C., is that Subhash, brother of complainant, might have stolen cheque in question from his Shop as he was not in his shop for about 2/3 months on account of illness of his daughter and that cheque must have been misused by complainant. Accused claimed that he does not know complainant-Gaurav and since Shop of Subhash (complainant's brother ) is adjacent to his shop, he has cordial relations with Subhash. It was further claimed that false case has been instituted against him.
4 Before the Special Court, complainant examined himself as PW 1, Madan Bhake, an employee of his banker (PW 2) and Subhash, his ::: Downloaded on - 09/06/2013 15:40:08 ::: 3 cousin brother as PW 3 while accused examined himself.
5 Learned Special Court dismissed the Complaint and acquitted the accused mainly on the following grounds :-
(I) Transaction appears to be suspicious. Even though complainant claimed that transaction in question was disclosed in Income-tax return, he did not file copy thereof on record;
(ii) Complainant had no acquaintance with accused and would not lend an amount of Rs. 70,000/- to
(iii) an unknown person;
Complainant has failed to establish that there was legally enforceable debt against the accused and even though there exists presumption in favour of complainant, accused has satisfactorily rebutted the same.
6. A trickster -drawer who may have no intention to pay the amount, may find out ways and means to deliberately avoid payment. However, truth has a tendency to surface. It did appear to have surfaced in the course of cross-examination of the complainant on behalf of the accused. In an answer to the question regarding contents of Exh.25 statement of the complainant appears to have been invited in terms "particulars written in Cheque Exh.25 are in the handwriting of the accused." The fact of dishonour of cheque is also proved by cogent evidence of PW 2 Madan D Bhake, Bank Manager of Nagpur Nagrik Sahakari Bank. While hand-loan transaction is proved by evidence of PW 3 Subhash Jaju that Gaurav had ::: Downloaded on - 09/06/2013 15:40:08 ::: 4 advanced hand loan of Rs. 70,000/- to the accused. According to the accused, he had lodged complaint as to alleged loss/theft of cheque.
Nothing prevented drawer-accused to produce copy of complaint if it was lodged with the police regarding missing cheque. The defense, therefore, is apparently appear an evasive attempt to dodge the complainant and deprive him of the payment due upon the cheque. The complainant has benefit of statutory presumptions under sections 118 and 139 of the N.I. Act to start with and establish the issuance of cheque; dishonour thereof and the evasion of payment on the part of the accused despite demand notice in writing from the complainant. The defence by the accused that the cheque in question might have been stolen by brother of the complainant appears an afterthought. It is dislodged by the complainant by leading evidence of his brother and the Bank Manager to bring on record sufficient evidence beyond reasonable doubt to impute penal liability under section 138 of the N. I. Act upon the accused. The learned trial Magistrate suspected the claim in Complaint unreasonably merely because of non-production of Income -tax return or account. The complainant is admittedly a businessman and a income Tax payer. Non-filing of tax return or evidence of it's at payment cannot help the case of the accused while we consider such defence in the light of Evidence led at the trial. One cannot jump to the conclusion that complainant cannot recover amount of hand loan; merely for the reason that the complainant did not file income tax return. Absence of or non-production of such evidence was not sufficient to rebut statutory ::: Downloaded on - 09/06/2013 15:40:08 ::: 5 presumption that the cheque was issued for consideration by the accused.
The complainant in the present case, is businessman having business concern M/s Kabra Sales & Marketing at Gandhibag, Nagpur. He stated in his affidavit that his brother Subhash and the accused have very close friendly and business relations. Subhash had assured that the accused who needed cash, would repay the money within a month hence ready cash was given interest free on 5.12.2006, in lieu of which, cheque in question came to be issued for Rs. 70,000/-. Since the accused had expressed his inability to pay the cheque amount on due date and requested the complainant through his brother to wait for presentment of cheque, the cheque was presented for encashment in May 2007 ( but within validity period of six months). The fact that it returned dishonoured for non-payment with remarks "insufficient fund" is not disputed. Regarding the second contention that the complainant had no acquaintance with the accused and he would not lend Rs. 70,000/- to unknown person is also negatived by the evidence on record. PW-3 Subhash Jaju was examined, whose evidence indicate about neighbourly business relations of six years with the accused and the fact that the complainant Gaurav had visited Erode in order to collect commission. At that time, the accused was in need of money and demanded hand-loan from Gaurav who had advanced it to the accused. The suggestions in defence that Subhash had misused the cheque through his brother Gaurav is flatly denied. The bare denial of the transaction alleging misuse of cheque cannot help the drawer of the cheque to ::: Downloaded on - 09/06/2013 15:40:08 ::: 6 escape penal liability under section 138 of the N.I. Act, based upon dishonoured and deliberately unpaid cheque. A dishonest trickster drawer is bound to find out ways and means to avoid payment. The trial Court is required to be on guard to insist upon satisfactory rebuttal evidence which could satisfy test of a prudent person. The evidence must be sufficient and satisfactory enough to uproot the prosecution version on preponderance of probabilities. If according to the accused, he had lodged a report to police about alleged misplacement of the cheque in question, nobody prevented him from producing documentary evidence in the nature of FIR ( copy thereof ) or leading evidence of Station House Officer of the Police Station concerned in order to dislodge statutory presumptions in favour of the complainant. One cannot avoid penal liability under section 138 of the N. I. Act, merely on the basis of bare denial. An attempt to put forward flimsy and baseless version by an dishonest and trickster drawer shall be discouraged as general rule is to enforce the contract which may be oral or in writing for consideration. The object of punishing dishonest drawers of cheque is to ensure easy negotiability of negotiable instrument and to facilitate trading. The statutory presumptions u/s 118 and 139 of the Act enjoins upon the Court to raise presumptions until contrary is proved. The accused is required to rebut statutory presumptions by leading satisfactory evidence that the cheque was not issued for consideration nor in discharge of any debt or liability. Only when proof is adduced to satisfy the test "preponderance of probabilities" of prudent man to believe the accused, ::: Downloaded on - 09/06/2013 15:40:08 ::: 7 then only the burden may shift back to the complainant to adduce proof by convincing evidence of legal and enforceable debt to disprove the probabilities. This statutory presumption has to remain operative as prima facie case for complainant payee /holder in due course. The evidence to the contrary has to be led by the accused to the effect that the cheque was not issued for consideration/debt/ liability. Looking to the settled legal position the defence could not have been accepted as satisfactory and probable in the present case for to dislodge statutory presumption that the cheque in question was issued for discharge of debt or liability. It was for the accused to prove to the contrary that there was no any legally recoverable debt or liability once the accused had drawn a cheque for certain sum of money payable to the holder of holder in due course of the negotiable instrument, he cannot be allowed to resort to sharp practices for dishonest evasion of payment in a trading area. The legislative intention to introduce penal liability under section 138 of the N.I. Act is to enable a victim of an illegal acts-payee or holder in due course to recover amount due upon the dishonoured and deliberately unpaid cheque. Unscrupulous elements interested only to avoid payment by playing foul tricks with reference to negotiable instrument issued by them for consideration cannot be encouraged, as they are required to be punished according to law. Learned trial Magistrate had ignored all these aspects which resulted in miscarriage of justice. The trial Court ought not to have adopted interpretation in the present case on the ground of suspicion, surmises or conjectures. The ::: Downloaded on - 09/06/2013 15:40:08 ::: 8 trial Court trying a criminal case u/s 138 of the N.I. Act must properly evaluate the evidence bearing in mind the statutory presumptions in respect of dishonoured cheques prima facie issued for discharge of debt or liability.
The Court caanot be justified to raise baseless and unreasonable inference for insignificant and flimsy reasons. Such doubt or suspicion as to complainant's case may ultimately help dishonest drawer who was all along interested to avoid payment by depriving an honest payee. The trial Court has to be on guard as it can not overlook probative value of documentary evidence placed before the Court to establish necessary ingredients of offence punishable under section 138 of the N.I. Act i.e. that the cheque issued was presented within validity period of six months for encashment, it returned dishonoured due to fault of drawer; remained unpaid despite demand notice in writing served upon the accused for which complaint was filed within time.
7 In a criminal trial, one has to start with the presumption of innocence in favour of the accused which is also regarded as human right because no one can be convicted and punished merely on the ground of suspicion, however, strong it may be. The prosecution is required to prove offence beyond reasonable doubt. In special prosecutions based upon dishonoured cheque, negotiable instrument - also the complainant is required to aver and prove the offence punishable under section 138 of the N. I. Act; but the complainant is aided by the statutory presumptions which are self contained under sections 118 and section 139 of the Act. The complainant ::: Downloaded on - 09/06/2013 15:40:08 ::: 9 is required to prove that the cheque was drawn by the accused upon his account in the Bank for a certain sum of money on a certain date which returned dishonoured for non-payment on account of reason i.e. insufficient funds etc., and the accused has failed to pay the said amount, despite service of demand notice in writing upon him, within stipulated period. Once the primary facts as above, are averred and proved by the complainant in such case as required by the penal provision in section 138 of the Act, the statutory presumptions arising are required to be rebutted by "proof" on preponderance of probabilities. Such evidence may be by production of documents to disprove the complainant's version or by citing material elicited from the cross-examination of the complainant and his witnesses, if any. The accused may not enter in the witness box if he can dislodge the statutory presumptions otherwise.
8 Under Section 139 of the N I Act, burden lies upon the drawer of the cheque to rule out the existence of the debtor-creditor relationship. The use of the phrase "until the contrary is proved" in Section 118 of the N I Act and further use of the words " unless the contrary is proved" in Section 139 of the 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 ::: Downloaded on - 09/06/2013 15:40:08 ::: 10 reasonably tending to show that the real fact is not as presumed, the purpose of the rebutting presumption is served. But, 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, apparently would not serve the purpose of the accused to seek dismissal of the complaint -something which is probable has to be brought satisfactorily on record for getting the burden of proof shifted back to the complainant. If the complainant has misused the cheque or fabricated, the accused as any prudent person 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. In Hitel P Dalal vs. Bratindranath Banerjee: (2001) 6 SCC 16, 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 Vaidyan Balan and another: (1997) 7 SCC 510, 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 ::: Downloaded on - 09/06/2013 15:40:08 ::: 11 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
"presmuption" the defense evidence must be such
which the Court can believe the defense to exist or
consider it's existence as reasonably 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."
9. Section 138 of the N. I. Act aims at punishing unscrupulous drawers of cheques who though purport to discharge their liability by issuing cheque, have no real intention to pay. This Court must on guard to prevent miscarriage of justice. The 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 evidence to establish the reasonable possibility of the non-existence of the ::: Downloaded on - 09/06/2013 15:40:08 ::: 12 presumed fact.
10. In order to rebut the presumption available in favour of the complainant, accused examined himself. He stated on oath that he did not know accused and he was surprised when he received notice from the complainant. He stated that complainant obtained the cheque illegally through his brother Subhash. He claimed that Subhash, brother of the complainant, must have stolen blank cheque from his shop and misplaced the same and complainant filled in the contents. In cross-
examination he stated that he had lodged police report after he realised on receipt of notice that the cheque was misplaced.
11. From the oral evidence of accused as also his statement recorded under section 313 Cr.P.C. and reply- notice dated 26.6.2007, it is revealed by accused that he was having cordial, friendly and close relations with Subhash, cousin brother of the complainant, who had shop adjacent to the shop of accused. In the next breath, accused however, claims that it is Subhash who may have stolen blank cheque to be misused by the accused.
He does not say that his relations with said Subhash had spoiled at any time and in order to settle score, Subhash might have stolen cheque from his shop. Moreover, he has not filed copy of police complaint alleged to have been lodged by him after he realised on receipt of legal notice from complainant that his cheque was stolen and Subhash through complainant, was trying to misuse it. In his statement under section 313 Cr.P.C, he ::: Downloaded on - 09/06/2013 15:40:08 ::: 13 states that he was not present in his shop for 2/3 months on account of illness of the daughter. However, reply notice dated 26.6.2007 is silent and there is no mention in the reply notice that when accused was away from his shop for 2/3 months on account of illness of his daughter, Subhash might have stolen the cheque to be misused through complainant. Moreover, it cannot be assimilated that a shop-keeper would remain absent continously for a period of 2/3 months from his Shop even assuming that he wanted to attend to an ailing member of his family. Besides this, inaction on the part of accused to furnish on record copy of police report would draw adverse inference against accused so as to say that he did not make any police complaint after receipt of legal notice from the complainant.
12 On careful scrutiny of evidence led in the case, the complainant denied the suggestion that his brother had obtained the blank signed cheques from the accused. Suggestion was also denied that the two cheques were given as security. According to the accused, brother of the complainant had obtained two blank cheques from the accused as security. I find the requirements of Sec. 138 of the N.I. Act have sufficiently been 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. I find the respondent/accused guilty of offence punishable under section 138 of the N. I. Act and convict him thereunder.
13 On the question of sentence, it is not necessary to insist upon ::: Downloaded on - 09/06/2013 15:40:08 ::: 14 incarceration of the accused having regard to nature of the offence. The accused is sentenced to undergo imprisonment till rising of the Court and to pay compensation in the sum of Rs.70,000/- . The amount covered by the cheque in question plus Rs.10,000/-as cost for prosecuting the accused, payable under section 357 (3) of the 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 three months. The accused shall appear before the learned Judicial Magistrate First Class (Special Court u/s 138 of the N I Act) Nagpur and his surety to produce him on 23rd March,2010 at 11.00 a.m. and the learned Magistrate shall execute sentence, as directed. Compensation if not paid, shall be recovered as fine.
Appeal allowed accordingly.
JUDGE sahare ::: Downloaded on - 09/06/2013 15:40:08 :::