Himachal Pradesh High Court
Reserved On: 12.08.2024 vs Mehar Chand on 16 October, 2024
2024:HHC:9803 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Revision No. 610 of 2023 Reserved on: 12.08.2024 Date of Decision: 16.10.2024.
Devinder Singh ...Petitioner
Versus
Mehar Chand ...Respondent
Coram
Hon'ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting?1 No For the Petitioner : Mr. G.R. Palsra, Advocate. For the Respondent : Mr. Rajiv Rai, Advocate. Rakesh Kainthla, Judge The present revision is directed against the judgment dated 04.10.2023, passed by learned Sessions Judge, Mandi, H.P. (learned Appellate Court), vide which the judgment dated 31.10.2022 and order dated 26.12.2022, passed by learned Judicial Magistrate First Class, Chachiot at Gohar, District Mandi, H.P. (learned Trial Court) were upheld. (Parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience).
1Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2
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2. Briefly stated, the facts giving rise to the present revision are that the complainant filed a complaint before the learned Trial Court against the accused for committing an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). It was asserted that the accused approached the complainant in September 2006 for lending ₹5,00,000/- for business purposes. The complainant paid ₹5,00,000/- in cash to the accused on 08.09.2006. The accused assured to return the amount within two years. The complainant demanded the borrowed amount from the accused and the accused issued two cheques amounting to ₹2,50,000/- each in the discharge of his legal liability. The complainant presented the cheques before his Bank for realization from where these were sent to the Bank of the accused. The Bank of the accused refused to honour the cheques on the grounds of 'insufficient funds'. The complainant served a legal notice upon the accused asking him to pay the amount but the accused failed to pay the amount despite the receipt of legal notice of demand; hence, the complaint was filed against the accused for taking action as per the law.
3. Learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, a notice of 3 2024:HHC:9803 accusation was put to him for the commission of an offence punishable under Section 138 of the NI Act. The accused pleaded not guilty and claimed to be tried.
4. The complainant examined Shiv Dutt (CW1), Heera Lal (CW2) and himself (CW3) to prove his case.
5. The accused in his statement recorded under Section 313 of Cr.P.C. denied the complainant's case in its entirety. He stated that witnesses were interested and they deposed falsely against him. He had handed over the cheques to Ghanshyam and not the complainant. He examined Ghanshyam (DW1), Bodh Raj (DW2), himself (DW2A) and Chetan Sharma (DW3).
6. Learned Trial Court held that the issuance of the cheques was not disputed. The plea of the accused that he had issued the cheques to Ghanshyam was not proved on the balance of probability. The accused had failed to rebut the presumption of consideration attached to the cheques. The cheques were dishonoured with an endorsement of 'insufficient funds'. The notice was sent to the correct address and is deemed to have been served. The accused failed to pay the amount despite the receipt of a valid notice of demand; hence, the accused was convicted of 4 2024:HHC:9803 the commission of an offence punishable under Section 138 of the NI Act and he was sentenced to undergo simple imprisonment for one year and pay a compensation of ₹9,00,000/-.
7. Being aggrieved from the judgment and order passed by the learned Trial Court, the accused preferred an appeal, which was decided by learned Sessions Judge, Mandi (learned Appellate Court). The learned Appellate Court concurred with the findings recorded by the learned Trial Court that the issuance of the cheque was not disputed and a presumption of consideration applied to the present case. The burden was upon the accused to rebut this presumption. His evidence that he had handed over the cheques to Ghanshyam, who delivered the cheques to the complainant was not believable. The evidence of the accused was insufficient to rebut the presumption of consideration attached to the cheques. The cheques were dishonoured with an endorsement of 'insufficient funds'. The notice was sent to the correct address. The accused failed to pay the amount despite the receipt of the notice; hence, he was rightly convicted and sentenced by the learned Trial Court.
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8. Being aggrieved from the judgments and order passed by the learned Courts below, the accused has filed the present revision asserting that the learned Courts below failed to properly appreciate the material on record. The judgments and order are against the law and facts. There were various discrepancies in the evidence of the complainant. The presumption under Section 139 of the NI Act was rebutted by the accused by examining Ghanshyam (DW1), himself (DW2) and Jatin Sharma (DW3). Their statements were wrongly discarded by the learned Courts below. The evidence of the complainant regarding the charging of interest was contradictory. The accused had denied his signatures on the cheques and the complainant had failed to prove the signatures of the accused. Learned Courts below assumed without any evidence that cheques bear the signatures of the accused. The complainant had failed to prove that he had advanced the loan to the accused and the essential ingredients of Section 138 of the NI Act were not satisfied. It was prayed that the judgments and order passed by learned Courts below be set aside.
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9. I have heard Mr. G.R. Palsra, learned counsel for the petitioner/accused and Mr. Rajiv Rai, learned counsel for the respondent/complainant.
10. Mr. G.R. Palsra, learned counsel for the petitioner/accused submitted that the learned Courts below erred in convicting and sentencing the accused. The evidence on record was sufficient to prove the existence of legally enforceable debt or liability. The evidence of the defence witnesses duly proved that the cheques were handed over to Ghanshyam, who had handed them over to the complainant. The complainant misused the cheques and the accused cannot be held liable in these circumstances. The notice was not proved to have been delivered and the learned Courts below had wrongly assumed the service of the notice. He prayed that the present petition be allowed and the judgments and order passed by learned Courts below be set aside.
11. Mr. Rajiv Rai, learned counsel for the respondent/complainant supported the judgments and order passed by learned Courts below and submitted that no interference is required with them.
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12. I have given considerable thought to the submissions made at the bar and have gone through the records carefully.
13. It was laid down by the Hon'ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204:
(2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that the revisional court is not an appellate jurisdiction and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed on page 207: -
"10. Before adverting to the merits of the contentions, at the outset, it is apt to mention that there are concurrent findings of conviction arrived at by two courts after a detailed appreciation of the material and evidence brought on record. The High Court in criminal revision against conviction is not supposed to exercise the jurisdiction like to the appellate court and the scope of interference in revision is extremely narrow. Section 397 of the Criminal Procedure Code (in short "CrPC") vests jurisdiction to satisfy itself or himself as to the correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior court. The object of the provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error which is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings.8
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14. This position was reiterated in State of Gujarat v. Dilipsinh Kishorsinh Rao, 2023 SCC OnLine SC 1294 wherein it was observed:
"13. The power and jurisdiction of the Higher Court under Section 397 Cr. P.C. which vests the court with the power to call for and examine records of an inferior court is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh Chandra, (2012) 9 SCC 460 where the scope of Section 397 has been considered and succinctly explained as under:
"12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error and it may not be appropriate for the court to scrutinise the orders, which upon the face of it bear a token of careful consideration and appear to be in accordance with the law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes but are merely indicative. Each case would have to be determined on its own merits.
13. Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt 9 2024:HHC:9803 restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex-facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in the exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much- advanced stage in the proceedings under the CrPC."
15. The present revision has to be decided as per the parameters laid down by the Hon'ble Supreme Court.
16. Accused Devinder Singh (DW2A) stated that he had handed over the blank cheques to Ghanshyam because he had taken ₹50,000/- -60,000/- from him. Ghanshyam presented the cheques before the Bank. He received a notice from the Court and found that Mehar Chand had filed a complaint before the learned Trial Court against him. He had no transaction regarding the cheque with the complainant. He inquired from Ghanshyam and he replied that he had handed over the cheques mistakenly to Mehar Chand. He (Ghanshyam) promised to return the cheques after getting them back from the complainant. Ghanshyam also assured to depose in favour of the accused in the Court. The complainant has filed a wrong complaint against him. He stated in his cross-examination that he had not talked to Ghanshyam 10 2024:HHC:9803 and had handed over the cheques to him. He had taken the money from Ghanshyam in the year 2009 but he did not remember the date. He received the notice from the Court in the year 2011. He went to Ghanshyam and demanded cheques from him. He was not aware that the complainant had served a notice upon him before filing the present complaint. He denied that he had handed over the cheques to the complainant and that he was making a false statement.
17. Ghanshyam (DW1) stated that Mehar Chand belongs to his village. He had some transactions with Mehar Chand and he had taken the money from Mehar Chand 2-3 years before the date of deposition. He had taken the blank cheques of Devinder. He handed over those three cheques to the complainant as a guarantee. The cheques were blank and nothing was written on them. He had to pay ₹1,20,000/- which was not returned by him. Subsequently, the accused asked him about the cheques and he said that he had handed over the cheques to the complainant as a guarantee. He had also executed an affidavit to this effect. He stated in his cross-examination that he had handed over the blank cheques to the complainant in the presence of Bodh Raj in the year 2012. No document was prepared regarding the loan 11 2024:HHC:9803 transaction. He had taken ₹1,20,000/- from the complainant. He had maintained an account with the Bank and he had also taken a chequebook. He could not find his chequebook; therefore, he handed over the cheques of the accused to the complainant.
18. Bodh Raj (DW2) stated that three years before the date of deposition, he had gone to the house of Devinder. Ghanshyam demanded three cheques and Devinder handed over three cheques to him. The cheques were blank. He stated in his cross- examination that the accused was his cousin. No document was prepared regarding the cheque. The cheques did not bear any signatures of the accused. He denied that he was making a false statement.
19. The evidence led by the accused is not satisfactory. As per the version of the accused, he had taken a loan from Ghanshyam and had handed over the blank cheques to Ghanshyam as a security. He has nowhere stated that the cheques were signed by the accused. Blank cheques do not constitute any security as these cannot be used for any purpose whatsoever; hence, the very version of the accused that he had handed over the blank cheques to witness Ghanshyam is not believable. 12
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20. Ghanshyam stated that he had borrowed money from the complainant and handed over those cheques to the complainant. These cheques were blank. Again, the blank cheques do not constitute any security and there was no justification for the complainant to receive the blank cheques. Further, Ghanshyam stated that he had opened an account in the bank and a chequebook was issued to him. Therefore, he had no justification to hand over the cheques given to him by the accused and not to give his cheques. Moreover, Ghanshyam was rich enough to loan the money to the accused and still, he needed to borrow the money from the complainant. It is not even shown that Ghanshyam had demanded the loan given by him to the accused before taking the loan from the complainant. Thus, Ghanshyam is shown to be a person, who is giving money on loan after borrowing money from others. Such conduct is not normal and not believable.
21. The cheques are dated 16.04.2011 and 02.05.2011. Ghanshyam (DW1) stated in his cross-examination that he had taken the cheques in the presence of Bodh Raj in the year 2012, which falsifies his version because the cheques were issued in the year 2011 and not in the year 2012. The cheques were even 13 2024:HHC:9803 dishonoured on 09.05.2011 as per memos (Ext. CW1/B, Ext. CW1/C and Ext. CW1/E). Therefore, the version of Ghanshyam that he had taken the cheques in the year 2012 in the presence of Bodh Raj which were handed over by him to the complainant cannot be relied upon and was rightly discarded by the learned Courts below.
22. Chetan Sharma (DW3) only deposed about the affidavit executed by Ghanshyam. Since the statement of Ghanshyam is not satisfactory as noticed above, hence the statement of Chetan Sharma will not help the accused.
23. The complainant reiterated the contents of the complaint in his proof affidavit. He stated in his cross- examination that he was not dealing in the loaning of money. He was not an income tax payee. No document was prepared regarding the handing over of ₹5,00,000/-. ₹ 5,00,000/- was given on loan for two years. The interest was to be paid. He demanded the money in the year 2008. The cheques were delivered to him in the year 2011. He admitted that he had nothing with him from 2008 till 2011. The cheques were handed over to him in his home. The cheques were presented on the 14 2024:HHC:9803 same day. Accused and Ghanshyam used to visit his home but he had not entered into any transaction with Ghanshyam. He denied that cheques were handed over to him by Ghanshyam. He denied that the accused had handed over the cheque as security to Ghanshyam, who handed them over to him. The accused had not put his signature on the cheques in his presence. He denied that he had misused the cheques handed over to him as security.
24. There is nothing in his cross-examination to show that he was making a false statement. He categorically stated that the accused had handed over the cheques to him and denied that Ghanshyam had handed over the cheques to him. A denied suggestion does not amount to any proof and the learned Courts below had rightly relied upon his testimony.
25. It was submitted that the complainant admitted that he did not file any income tax return, therefore, there is no sufficient proof of the financial capacity of the complainant. It was laid down by the Hon'ble Supreme Court in Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735: (2022) 2 SCC (Cri) 726 :
(2022) 3 SCC (Civ) 442: 2022 SCC OnLine SC 302 that the complainant is not to lead the evidence of his financial capacity 15 2024:HHC:9803 unless it is disputed in reply to the statutory notice. It was observed at page 740:
10. The trial court and the first appellate court have noted that in the case under Section 138 of the NI Act, the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the NI Act is not a civil suit. At the time, when the complainant gives his evidence unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent, the courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross-examination of the witnesses of the complainant.
Ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.
26. This position was reiterated in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 wherein it was held at page 289:
16
2024:HHC:9803 "13. Adverting to the case in hand, we find on a plain reading of its judgment that the trial court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of NIA. The statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these "reverse onus"
clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystallised by this Court in Rohitbhai Jivanlal Patel v. State of Gujarat [Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106, para 18: (2020) 3 SCC (Civ) 800 : (2020) 3 SCC (Cri) 575] in the following words : (SCC pp. 120-21, para 18) "18. In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-
accused."
14. Once the 2nd appellant had admitted his signatures on the cheque and the deed, the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial court fell in error when it called upon the respondent complainant to explain the 17 2024:HHC:9803 circumstances under which the appellants were liable to pay. Such approach of the trial court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law."
27. Similar is the judgment in APS Forex Services (P) Ltd. v. Shakti International Fashion Linkers (2020) 12 SCC 724, wherein it was observed: -
7.2. What is emerging from the material on record is that the issuance of a cheque by the accused and the signature of the accused on the said cheque are not disputed by the accused. The accused has also not disputed that there were transactions between the parties. Even as per the statement of the accused, which was recorded at the time of the framing of the charge, he has admitted that some amount was due and payable. However, it was the case on behalf of the accused that the cheque was given by way of security and the same has been misused by the complainant. However, nothing is on record that in the reply to the statutory notice it was the case on behalf of the accused that the cheque was given by way of security. Be that as it may, however, it is required to be noted that earlier the accused issued cheques which came to be dishonoured on the ground of "insufficient funds" and thereafter a fresh consolidated cheque of ₹9,55,574 was given which has been returned unpaid on the ground of "STOP PAYMENT". Therefore, the cheque in question was issued for the second time. Therefore, once the accused has admitted the issuance of a cheque which bears his signature, there is a presumption that there exists a legally enforceable debt or liability under Section 139 of the NI Act. However, such a presumption is rebuttable in nature and the accused is required to lead the evidence to rebut such presumption. The accused was required to lead evidence that the entire amount due and payable to the complainant was paid.18
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9. Coming back to the facts in the present case and considering the fact that the accused has admitted the issuance of the cheques and his signature on the cheque and that the cheque in question was issued for the second time after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable, there is a presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability. Of course, such presumption is rebuttable in nature. However, to rebut the presumption, the accused was required to lead the evidence that the full amount due and payable to the complainant had been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption and more particularly the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists legally enforceable debt or liability as per Section 139 of the NI Act. It appears that both, the learned trial court as well as the High Court, have committed an error in shifting the burden upon the complainant to prove the debt or liability, without appreciating the presumption under Section 139 of the NI Act. As observed above, Section 139 of the Act is an example of reverse onus clause and therefore, once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter, it is for the accused to rebut such presumption by leading evidence.
28. Learned Courts below had rightly held that there is a presumption under section 139 of the N.I. Act that the cheque was issued in the discharge of the legal liability. This presumption 19 2024:HHC:9803 was explained by the Hon'ble Supreme Court in Triyambak S. Hegde v. Sripad, (2022) 1 SCC 742: (2022) 1 SCC (Civ) 512: 2021 SCC OnLine SC 788 as under at page 747:
"12. From the facts arising in this case and the nature of the rival contentions, the record would disclose that the signature on the documents at Exts. P-6 and P-2 are not disputed. Ext. P-2 is the dishonoured cheque based on which the complaint was filed. From the evidence tendered before the JMFC, it is clear that the respondent has not disputed the signature on the cheque. If that be the position, as noted by the courts below a presumption would arise under Section 139 in favour of the appellant who was the holder of the cheque. Section 139 of the NI Act reads as hereunder:
"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."
13. Insofar as the payment of the amount by the appellant in the context of the cheque having been signed by the respondent, the presumption for passing of the consideration would arise as provided under Section 118(a) of the NI Act which reads as hereunder:
"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, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration."20
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14. The above-noted provisions are explicit to the effect that such presumption would remain until the contrary is proved. The learned counsel for the appellant in that regard has relied on the decision of this Court in K. Bhaskaran v. Sankaran Vaidhyan Balan [K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510:
1999 SCC (Cri) 1284] wherein it is held as hereunder: (SCC pp. 516-17, para 9) "9. 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 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption. The trial court was not persuaded to rely on the interested testimony of DW 1 to rebut the presumption. The said finding was upheld [Sankaran Vaidhyan Balan v. K. Bhaskaran, Criminal Appeal No. 234 of 1995, order dated 23-10-
1998 (Ker)] by the High Court. It is not now open to the accused to contend differently on that aspect."
15. The learned counsel for the respondent has however referred to the decision of this Court in Basalingappa v. Mudibasappa [Basalingappa v. Mudibasa ppa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is held as hereunder: (SCC pp. 432-33, paras 25-26) "25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of the cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.21
2024:HHC:9803 25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come into the witness box to support his defence.
26. Applying the preposition of law as noted above, in facts of the present case, it is clear that the signature on the cheque having been admitted, a presumption shall be raised under Section 139 that the cheque was issued in discharge of debt or liability. The question to be looked into is as to whether any probable defence was raised by the accused. In cross-examination of PW 1, when the specific question was put that a cheque was issued in relation to a loan of Rs 25,000 taken by the accused, PW 1 said that he does not remember. PW 1 in his evidence admitted that he retired in 1997 on which date he received a monetary benefit of Rs 8 lakhs, which was encashed by the complainant. It was also brought in evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs 4,50,000 to Balana Gouda towards sale consideration. Payment of Rs 4,50,000 22 2024:HHC:9803 being admitted in the year 2010 and further payment of loan of Rs 50,000 with regard to which Complaint No. 119 of 2012 was filed by the complainant, copy of which complaint was also filed as Ext. D-2, there was a burden on the complainant to prove his financial capacity. In the years 2010-2011, as per own case of the complainant, he made a payment of Rs 18 lakhs. During his cross-examination, when the financial capacity to pay Rs 6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts."
16. In that light, it is contended that the very materials produced by the appellant and the answers relating to lack of knowledge of property details by PW 1 in his cross- examination would indicate that the transaction is doubtful and no evidence is tendered to indicate that the amount was paid. In such an event, it was not necessary for the respondent to tender rebuttal evidence but the case put forth would be sufficient to indicate that the respondent has successfully rebutted the presumption.
17. On the position of law, the provisions referred to in Sections 118 and 139 of the NI Act as also the enunciation of law as made by this Court need no reiteration as there is no ambiguity whatsoever. In, Basalingappav. Mudibasappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571] relied on by the learned counsel for the respondent, though on facts the ultimate conclusion therein was against raising presumption, the facts and circumstances are entirely different as the transaction between the parties as claimed in the said case is peculiar to the facts of that case where the consideration claimed to have been paid did not find favour with the Court keeping in view the various transactions and extent of amount involved. However, the legal position relating to the presumption arising under Sections 118 and 139 of the NI 23 2024:HHC:9803 Act on signature being admitted has been reiterated. Hence, whether there is a rebuttal or not would depend on the facts and circumstances of each case."
29. This position was reiterated in Tedhi Singh v. Narayan Dass Mahant, (2022) 6 SCC 735: (2022) 2 SCC (Cri) 726 : (2022) 3 SCC (Civ) 442: 2022 SCC OnLine SC 302 wherein it was held at page 739:
"8. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the NI Act provides that the court shall presume 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. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of "probable defence" has grown. In an earlier judgment, in fact, which has also been adverted to in Basalingappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571], this Court notes that Section 139 of the NI Act is an example of reverse onus (see Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184]). It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist..."
30. Similar is the judgment in P. Rasiya v. Abdul Nazer, 2022 SCC OnLine SC 1131 wherein it was observed: 24
2024:HHC:9803 "As per Section 139 of the N.I. Act, 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 discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the cheque was issued by the accused and the signature and the issuance of the cheque are not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary."
31. This position was reiterated in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275 wherein it was observed at page 161:
33. The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that "unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability". It will be seen that the "presumed fact" directly relates to one of the crucial ingredients necessary to sustain a conviction under Section 138. [The rules discussed hereinbelow are common to both the presumptions under Section 139 and Section 118 and are hence, not repeated--reference to one can be taken as reference to another]
34. Section 139 of the NI Act, which takes the form of a "shall presume" clause is illustrative of a presumption of 25 2024:HHC:9803 law. Because Section 139 requires that the Court "shall presume" the fact stated therein, it is obligatory for the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase "unless the contrary is proved".
35. The Court will necessarily presume that the cheque had been issued towards the discharge of a legally enforceable debt/liability in two circumstances. Firstly, when the drawer of the cheque admits issuance/execution of the cheque and secondly, in the event where the complainant proves that the cheque was issued/executed in his favour by the drawer. The circumstances set out above form the fact(s) which bring about the activation of the presumptive clause. [Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal [Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal, (1999) 3 SCC 35]]
36. Recently, this Court has gone to the extent of holding that presumption takes effect even in a situation where the accused contends that a blank cheque leaf was voluntarily signed and handed over by him to the complainant. [Bir Singh v. Mukesh Kumar [Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Civ) 309: (2019) 2 SCC (Cri) 40] ].
Therefore, the mere admission of the drawer's signature, without admitting the execution of the entire contents in the cheque, is now sufficient to trigger the presumption.
37. As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact 26 2024:HHC:9803 will have to be taken to be true, without expecting the complainant to do anything further.
38. John Henry Wigmore [John Henry Wigmore and the Rules of Evidence: The Hidden Origins of Modern Law] on Evidence states as follows:
"The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule'."
39. The standard of proof to discharge this evidential burden is not as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of "preponderance of probabilities", similar to a defendant in a civil proceeding. [Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: (2010) 4 SCC (Civ) 477: (2011) 1 SCC (Cri) 184: AIR 2010 SC 1898]]
32. Therefore, the Court has to start with the presumption that the cheques were issued in discharge of legal liability and the burden is upon the accused to prove the contrary.
33. The evidence led by the accused in the present case is not satisfactory as noticed above. Therefore, learned Courts below had rightly held that the accused had failed to rebut the presumption of consideration attached to the cheques. 27
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34. Heera Lal (CW2) stated that the cheques were received in the Bank for realization from the PNB Branch. The accused did not have sufficient money in his account and the cheques were dishonoured due to 'insufficient funds'. The dishonour memos were issued. The accused had ₹1,268/- in his account on the date of dishonour. He stated in his cross-examination that he had not brought any record to show that the account belonged to Devinder. He had also not brought the record of specimen signatures of the accused. He had verified the signatures. No entry was made regarding the receipt of the cheques. Only two cheques were dishonored on 09.05.2011 and he had entered those cheques. The dispatch register was maintained separately and he had brought the record to the Court. The memo of dishonour bore his signatures. He denied that he was making a false statement.
35. He was not cross-examined regarding his testimony that the accused did not have sufficient funds to honour the cheques and that the accused had ₹1,268/- on 09.05.2011, the date of dishonour. Thus, this part of his testimony is deemed to be accepted as correct. It was laid down by the Hon'ble Supreme Court in State of Uttar Pradesh Versus Nahar Singh 1998 (3) SCC 561 that where the testimony of a witness is not challenged in the 28 2024:HHC:9803 cross-examination, the same cannot be challenged during the arguments. This position was reiterated in Arvind Singh v. State of Maharashtra, (2021) 11 SCC 1: (2022) 1 SCC (Cri) 208: 2020 SCC On- Line SC 4 and it was held at page 34:
"58. A witness is required to be cross-examined in a criminal trial to test his veracity; to discover who he is and what his position in life is, or to shake his credit, by injuring his character, although the answer to such questions may directly or indirectly incriminate him or may directly or indirectly expose him to a penalty or forfeiture (Section 146 of the Evidence Act). A witness is required to be cross-examined to bring forth inconsistencies, and discrepancies, and to prove the untruthfulness of the witness. A-1 set up a case of his arrest on 1-9-2014 from 18: 50 hrs, therefore, it was required for him to cross-examine the truthfulness of the prosecution witnesses with regard to that particular aspect. The argument that the accused was shown to be arrested around 19: 00 hrs is an incorrect reading of the arrest form (Ext. 17). In Column 8, it has been specifically mentioned that the accused was taken into custody on 2- 9-2014 at 14: 30 hrs at Wanjri Layout, Police Station, Kalamna. The time i.e. 17: 10 hrs mentioned in Column 2, appears to be when A-1 was brought to Police Station, Lakadganj. As per the IO, A-1 was called for interrogation as the suspicion was on an employee of Dr Chandak since the kidnapper was wearing a red colour t-shirt which was given by Dr Chandak to his employees. A-1 travelled from the stage of suspect to an accused only on 2-9-2014. Since no cross-examination was conducted on any of the prosecution witnesses about the place and manner of the arrest, such an argument that the accused was arrested on 1-9-2014 at 18: 50 hrs is not tenable.
59. The House of Lords in a judgment reported as Browne v. Dunn [Browne v. Dunn, (1893) 6 R 67 (HL)] 29 2024:HHC:9803 considered the principles of appreciation of evidence. Lord Chancellor Herschell, held that it is absolutely essential to the proper conduct of a cause, where it is intended to suggest that a witness if not speaking the truth on a particular point, direct his attention to the fact by some questions put in cross-examination showing that imputation is intended to be made, and not to take his evidence and pass it by as a matter altogether unchallenged. It was held as under:
"Now, my Lords, I cannot help saying that it seems to me to be absolutely essential to the proper conduct of a cause, where it is intended to suggest that a witness is not speaking the truth on a particular point, to direct his attention to the fact by some questions put in cross- examination showing that that imputation is intended to be made, and not to take his evidence and pass it by as a matter altogether unchallenged, and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been put to him, the circumstances which it is suggested indicate that the story he tells ought not to be believed, to argue that he is a witness unworthy of credit. My Lords, I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses. Sometimes reflections have been made upon excessive cross-examination of witnesses, and it has been complained of as undue, but it seems to me that cross-examination of a witness which errs in the direction of excess may be far more fair to him than to leave him without cross-examination, and afterwards, to suggest that he is not a witness of truth, I mean upon a point on which it is not otherwise perfectly clear that he has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling."30
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60. Lord Halsbury, in a separate but concurring opinion, held as under:
"My Lords, with regard to the manner in which the evidence was given in this case, I cannot too heartily express my concurrence with the Lord Chancellor as to the mode in which a trial should be conducted. To my mind, nothing would be more absolutely unjust than not to cross-examine witnesses upon evidence which they have given, so as to give them notice, and to give them an opportunity of explanation, and an opportunity very often to defend their own character, and, not having given them such an opportunity, to ask the jury afterwards to disbelieve what they have said, although not one question has been directed either to their credit or to the accuracy of the facts they have deposed to."
61. This Court in a judgment reported as State of U.P. v. Nahar Singh [State of U.P. v. Nahar Singh, (1998) 3 SCC 561: 1998 SCC (Cri) 850], quoted from Browne [Browne v. Dunn, (1893) 6 R 67 (HL)] to hold that in the absence of cross-examination on the explanation of delay, the evidence of PW 1 remained unchallenged and ought to have been believed by the High Court. Section 146 of the Evidence Act confers a valuable right of cross-examining the witness tendered in evidence by the opposite party. This Court held as under: (Nahar Singh case [State of U.P. v. Nahar Singh, (1998) 3 SCC 561:
1998 SCC (Cri) 850], SCC pp. 566-67, para 13) "13. It may be noted here that part of the statement of PW 1 was not cross-examined by the accused. In the absence of cross-examination on the explanation of the delay, the evidence of PW 1 remained unchallenged and ought to have been believed by the High Court. Section 138 of the Evidence Act confers a valuable right of cross-examining the witness tendered in evidence by the opposite party. The scope of that provision is enlarged by Section 146 of the Evidence Act by allowing a witness to be questioned:31
2024:HHC:9803 (1) to test his veracity, (2) to discover who he is and what is his position in life, or (3) to shake his credit by injuring his character, although the answer to such questions might tend directly or indirectly to incriminate him or might expose or tend directly or indirectly to expose him to a penalty or forfeiture."
62. This Court in a judgment reported as Muddasani Venkata Narsaiah v. Muddasani Sarojana [Muddasani Venkata Narsaiah v. Muddasani Sarojana, (2016) 12 SCC 288:
(2017) 1 SCC (Civ) 268] laid down that the party is obliged to put his case in cross-examination of witnesses of opposite party. The rule of putting one's version in cross-
examination is one of essential justice and not merely a technical one. It was held as under : (SCC pp. 294-95, paras 15-16) "15. Moreover, there was no effective cross- examination made on the plaintiff's witnesses with respect to the factum of execution of the sale deed, PW 1 and PW 2 have not been cross-examined as to the factum of execution of the sale deed. The cross- examination is a matter of substance not of procedure one is required to put one's own version in the cross- examination of the opponent. The effect of non-cross- examination is that the statement of the witness has not been disputed. The effect of not cross-examining the witnesses has been considered by this Court in Bhoju Mandal v. Debnath Bhagat [Bhoju Mandal v. Debnath Bhagat, AIR 1963 SC 1906]. This Court repelled a submission on the ground that the same was not put either to the witnesses or suggested before the courts below. A party is required to put his version to the witness. If no such questions are put the Court would presume that the witness account has been accepted as held in Chuni Lal Dwarka Nath v. Hartford Fire Insurance Co. Ltd. [Chuni Lal Dwarka 32 2024:HHC:9803 Nath v. Hartford Fire Insurance Co. Ltd., 1957 SCC OnLine P&H 177: AIR 1958 P&H 440]
16. In Maroti Bansi Teli v. Radhabai [Maroti Bansi Teli v. Radhabai, 1943 SCC OnLine MP 128: AIR 1945 Nag 60], it has been laid down that the matters sworn to by one party in the pleadings not challenged either in pleadings or cross-examination by other party must be accepted as fully established. The High Court of Calcutta in A.E.G. Carapiet v. A.Y. Derderian [A.E.G. Carapiet v. A.Y. Derderian, 1960 SCC OnLine Cal 44: AIR 1961 Cal 359] has laid down that the party is obliged to put his case in cross-examination of witnesses of the opposite party. The rule of putting one's version in cross-examination is one of essential justice and not merely a technical one. A Division Bench of the Nagpur High Court in Kuwarlal Amritlal v. Rekhlal Koduram [Kuwarlal Amritlal v. Rekhlal Koduram, 1949 SCC OnLine MP 35: AIR 1950 Nag 83] has laid down that when attestation is not specifically challenged and witness is not cross-examined regarding details of attestation, it is sufficient for him to say that the document was attested. If the other side wants to challenge that statement, it is their duty, quite apart from raising it in the pleadings, to cross-examine the witness along those lines. A Division Bench of the Patna High Court in Karnidan Sarda v. Sailaja Kanta Mitra [Karnidan Sarda v. Sailaja Kanta Mitra, 1940 SCC OnLine Pat 288: AIR 1940 Pat 683] has laid down that it cannot be too strongly emphasised that the system of administration of justice allows of cross-examination of opposite party's witnesses for the purpose of testing their evidence, and it must be assumed that when the witnesses were not tested in that way, their evidence is to be ordinarily accepted. In the aforesaid circumstances, the High Court has gravely erred in law in reversing the findings of the first appellate court as to the factum of execution of the sale deed in favour of the plaintiff."
33
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36. There is a presumption regarding the memo of dishonour and the accused did not say anything to rebut this presumption. Therefore, learned Courts below had rightly held that it was duly proved on record that the cheques were dishonoured due to insufficient funds.
37. The complainant stated that he had issued a notice (Ext. CW1/F) to the accused. The postal receipt (Ext. CW1/G) has also been placed on record. The notice has been issued on the address, which was furnished by the accused in his statement recorded under Section 313 of Cr.P.C. The notice of accusation and the affidavits annexed to various applications filed by him before the learned Trial Court, thus, the notice was sent to the correct address and is deemed to be served. The accused did not deny specifically in his examination that he had received the notice. There is a presumption regarding the delivery of a letter sent to the correct address and there is insufficient evidence to rebut this presumption. Thus, the learned Courts below had rightly held that the notice was served upon the accused.
38. In any case, it was laid down in C.C. Allavi Haji vs. Pala Pelly Mohd. 2007(6) SCC 555 that the person who claims that he 34 2024:HHC:9803 had not received the notice has to pay the amount within 15 days from the date of the receipt of the summons from the Court and in case of failure to do so, he cannot take the advantage of the fact that notice was not received by him. It was observed:
"It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of the complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the giving of notice in the context of Clause (b) of the proviso was the same as the receipt of notice a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act." (Emphasis supplied)
39. The accused has not paid any money to the complainant, and it was duly proved that the accused had failed to pay the money despite the receipt of the notice. 35
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40. Thus, it was duly proved that the cheques were issued in discharge of the legal liability, they were dishonoured due to insufficient funds and the accused failed to make the payment despite the receipt of a valid notice of demand; hence, the complainant had succeeded in proving his case beyond the reasonable doubt.
41. The learned Trial Court had sentenced the accused to undergo simple imprisonment for one year. The legislature had introduced the offence of dishonour of cheques to instil confidence in the public about the transactions carried with the cheque. It was laid down by the Hon'ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40:
(2019) 2 SCC (Civ) 309: 2019 SCC OnLine SC 138 that the penal provision of section 138 is a deterrent in nature. It was observed at page 203:
"6. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility into negotiable instruments including cheques and to encourage and promote the use of negotiable instruments including cheques in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same."36
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42. In view of this, imprisonment for one year cannot be said to be excessive.
43. The learned Trial Court had directed the accused to pay a compensation of ₹9,00,000/- Keeping in view the fact that the case was pending since 04.07.2011, the complainant lost interest on the amount and he had to pay the litigation expenses for filing the complaint, he was entitled to be compensated for the same. It was laid down by the Hon'ble Supreme Court in Kalamani Tex v. P. Balasubramanian, (2021) 5 SCC 283: (2021) 3 SCC (Civ) 25: (2021) 2 SCC (Cri) 555: 2021 SCC OnLine SC 75 that the Courts should uniformly levy a fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. It was observed at page 291: -
19. As regards the claim of compensation raised on behalf of the respondent, we are conscious of the settled principles that the object of Chapter XVII of NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for the dishonour of a cheque as well as civil liability for the realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the courts should uniformly levy fines up to twice the cheque amount along with simple interest @ 9% p.a. [R. Vijayan v. Baby, (2012) 1 SCC 260, para 20: (2012) 1 SCC (Civ) 79: (2012) 1 SCC (Cri) 520]"37
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44. Therefore, the amount of ₹ 9,00,000/- is not excessive.
45. No other point was urged.
46. Thus, the learned Courts below had rightly held that the accused had issued cheques in discharge of the legal liability which were dishonoured due to insufficient funds and the accused failed to pay the amount despite the receipt of a valid notice of demand. There is no infirmity in the judgments and the order passed by learned Courts below and no interference is required with them.
47. Consequently, the present petition fails and the same is dismissed. Records of the learned Courts below be sent back forthwith.
(Rakesh Kainthla) Judge 16th October, 2024 (saurav pathania) Digitally signed by KARAN SINGH GULERIA Date: 2024.10.16 16:19:04 IST