Delhi District Court
M/S Baboo Ram Hari Chand vs Radhey Shyam Gupta Cc No. 1151/10 1 on 19 April, 2011
IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI
19.04.2011
JUDGMENT
a. Serial No. of the case
1151/10
b. Date of the commission of the offence
13.03.2004
c. Name of the complainant
M/s Baboo Ram Hari Chand
d. Name of accused person and his parentage and residence
Radhey shyam Gupta, S/o Ram Kishan Dass Gupta, R/o 2902, Shankar Street, Bazar SitaRam, Delhi.
e. Offence complained of or proved Dishonor of cheque for insufficient funds punishable u/s-138 NI Act.
f. Plea of the accused and his examination (if any) Not guilty. No loan was availed of. Cheque issued to the complainant firm as security in respect of business dealings. Goods were not supplied. No liability.
g. Final Order
Held not guilty. Acquitted.
h. Date of such order
19.04.2011
i. Brief reasons:
"Just as there is evidence on behalf the prosecution so there may be evidence on behalf of the prisoner which may cause a doubt as to his guilt. In either case, he is entitled to the benefit of the doubt. But while the prosecution must prove the guilt of the prisoner, there is no such burden laid on the prisoner to prove his innocence and it is sufficient for him to raise a doubt as to his guilt; he is not bound to satisfy the jury of his innocence. . . Throughout the web of the English criminal law one golden thread is always to be seen, that it is the duty of the prosecution to prove the prisoner's guilt subject to what I have already said as to the defence of insanity and Subject also to any stationary M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 1 exception. If, at the end of and on the whole of the case, there reasonable doubt created by the evidence given by either the prosecution or the prisoner, as to whether the prisoner killed the deceased with a malicious intention, the prosecution has not made out the case and the prisoner is entitled to an acquittal. No matter what the charge or where the trial, the principle that the prosecution must prove the guilt of the prisoner is part of the common law of England and no attempt to whittle it down can be entertained."
------Viscount Sankey, L. C. in Woolmington versus Director of Public Prosecution: 1935 AC 462 Complainant's case:
The complainant, a partnership firm, had advanced a loan to the accused. Though, the accused had repaid the principal loan but failed to pay the interest amounting to Rs. 1,00,941/- despite several demands. However, ultimately, the accused in discharge of the part liability towards the said interest issued the instant cheque for Rs. 50,000/-(Ex.CW1/1) which was dishonoured for "insufficient funds" via memo Ex. CW1/2 & Ex. CW1/3.
After such dishonour, Prahlad Rai Jain (one of the partners as Ex. Cw1/10) informed the accused about the said dishonour but the accused failed to repay the amount.
Thereuopon, Prahlad Rai Jain served a legal demand notice (Ex. CW1/4) upon the accused via Registered post(Ex. CW1/5, AD card Ex. CW1/7) & UPC (Ex. CW1/6). A false and frivolous reply (Ex. CW1/8) was received from the accused.
Hence, the present case.
Stand of accused:
2. Accused had never taken any loan from the complainant. Accused had given the cheque to Subhash Chand (head of complainant business) in respect of a business deal i.e. towards the purchase of 20 bags of Gum of 50 Kg each.
However, since the deal was not materially finalized and the consignment was not supplied, the accused issued stop payment instructions to his bank. There was no liability towards the complainant and therefore the cheque in the hand of the complainant was without consideration.
Discussion on factual & legal position:
3. In the examination under section 313 Cr. P. C, accused has taken a defence that he had not taken any loan from the complainant. He further claimed that the cheque was given to Subash Chand, head of complainant business for a deal, however, when the said deal was not materialized and goods were not supplied, he issued stop payment instructions.
M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 2
4. I am satisfied that dishonour due to stop payment instructions is also covered under Section-138 NI Act.
The issued has already been settled by the Hon'ble Supreme Court.
Hon'ble Supreme Court in M.M.T.C. Ltd. and Anr. v. Medchl Chemicals & Pharma (P) Ltd., (2002) 1 SCC 234 has held that:
"... The authority shows that even when the cheque is dishonoured by reason of stop payment instruction, by virtue of Section 139 the Court has to presume that the cheque was received by the holder for the discharge in whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the 'stop payment' instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. ..."
Hon'ble Supreme Court in Goa Plast (Pvt.) Ltd. v. Chico Ursula D'Souza, (2003) 3 SCC 232 has observed that:
"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 their commitments by way of payment through cheques. The court should lean in favour of an interpretation which serves the object of the statute. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque. In view of Section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 3 payment of a post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138. A contrary view would render S. 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of one's own wrong. ..."
The above view has been confirmed by a three judges bench of the Hon'ble Supre Court in Rangappa vs S. Mohan, (2010) 11 SCC 441.
(In the instant case, accused has not tried to establish any fact that he was having sufficient funds in his account and the stop payment instructions were issued for other reasons. In such circumstances, it has to be held that the instant dishonour falls under Section-138 NI Act).
5. Receiving of legal demand notice has also been accepted. Even accused had replied to the legal demand notice. Therefore in this respect also there is no dispute.
6. The next issue is the question of liability which is the centre stage of the present controversy.
7. Complainant is primarily relying upon the mandatory presumptions of law. He has not led any other evidence or filed any other documents in support of his claim. Mandatory presumptions of law arising under section-118 & 139 NI Act may be summarized as under:
Section-118 of Negotiable Instruments Act reads 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;"
Section-139 of Negotiable Instruments Act reads as under:
"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."
7.1. No doubt, the mandatory presumptions of law may arise in favour of the complainant. However, the inference of M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 4 presumptions can always be rebutted.
7.2. Accused has tried to rebut the mandatory presumptions in respect of the consideration, liability and the existence of the liability.
8. Some extract from the cross examination of the complainant may beneficially be reproduced as under:
"There are no business dealings or transactions between the parties."
"The entire loan was advanced to accused by way of cheques."
"Except the statement of account Ex. CW1/9, I have no other document in my possession in respect of the loan transaction."
"Accused had repaid the entire principle loan amount ie Rs.11.5 lacs."
"The rate of interest was 12% pa. There is no writing in respect of rate of interest."
8.1. However, complainant denied all the negative suggestions given by the accused. Accused has led evidence to justify his suggestions.
8.2. Complainant has not detailed anything about the alleged loan in the legal demand notice, complaint or his affidavit. For the first time in his cross-examination, the complainant came up with the fact that the loan was advanced in March-April 2000. However, the duration of the loan is still a mystery.
8.3. Some clue may however be gathered from the legal demand notice. It claims an interest of Rs. 100941/- as on 31.03.2002. However, it is not clear how this amount was arrived at? If the accused was regularly paying the principal amount, such payment should have been described by the complainant so that amount of interest could be justified. If the interest was to be paid on the whole amount, than 12% interest for two years would be much more than the interest claimed by the complainant. Both ways there is no justification for arriving at such an amount of interest.
Even further, the cheque was alleged to have been issued in the year 2004 (complainant has not claimed that cheque was a post dated one. Therefore, it has to be believed that cheque was issued in the year 2004). Meaning thereby that at that point of time, interest was certainly much more than what was in the year 2004. But the complainant has not taken any note of this point. (complainant is certainly within his right to choose any action against the person in respect of dealing and he can not be compelled to take action against all such causes). However, this omission in the present circumstances, may certainly become relevant coupled with the above discussed fact situation.
(At this stage, it may be noted that in a normal course all the discussion could not have been necessary since issuance of M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 5 cheque was not disputed by the accused. However, since accused has stated that cheque was issued for security and not against any interest amount and complainant has only relied upon the presumptions of law despite the fact that complainant is not an individual person but is registered partnership firm which certainly would be maintaining records of its business, property etc, this discussion is necessary).
In M/s.Collage Culture & Ors.vs Apparel Export Promotion Council & Anr decided on 11.10.2007, Hon'ble High Court of Delhi after taking into consideration a judgment of Hon'ble Supreme Court has held that:
"24. It would be relevant to note that the statute does not refer to the debt being payable, meaning thereby, a post dated cheque for a debt due but payment postponed at a future date would attract Section 138 of the Negotiable Instruments Act 1881. But the cheque issued not for an existing due, but issued by way of a security, would not attract Section 138 of the Negotiable Instruments Act 1881, for it has not been issued for a debt which has come into in existence.
25. Looking to the precedent, I find that in the decision reported as 2006 (6) SCC 39 M.S.Narayana Menon @Mani vs. State of Kerala & Anr., it was observed as under:-
"52. ........................... If the defence is acceptable as probable the cheque therefor cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act."
26. Under the circumstances, the petition must succeed."
8.4. Complainant in his cross-examination has stated that there was no business dealings between the parties. However, in the legal demand notice, it has been mentioned:
"That you have the business dealing with my aforesaid client w.e.f. 28.3.2000 as cash debtor......."
(Clearly business dealings were there between the parties.) At this stage, Ex. CW1/9 becomes material. This is a party ledger of accused in respect of Complainant firm. Complainant has relied upon this document. He has clearly stated that he is having no other document in respect of the loan transaction. Accused has also admitted his signature on this document.
This document is showing a credit amount in favour of complainant firm as 11,50,900/- as on 22.04.2000.
M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 6 Thereafter this account was regularly debited. On 16.02.2001, the credit balance was Rs. 1,50,900/-.
If we have to assume that this was showing a loan transaction, we would certainly believe that on 16.02.2001 accused was to pay a sum of Rs. 1,50,900/- to the complainant. But interestingly, there is nothing which shows that any interest was also added in the figure which was initially credited.
Let us see the things from another angle. Complainant in his cross-examination has stated that the loan amount of Rs. 11.5 lacs was paid during March and April 2000. However, this document is another credit amount of Rs. 1,00,041/- on 31.03.2001. What is this amount? This amount might be the interest amount. But this leads to another problem. According to this document, the total credit amount as on 31.03.2001 was Rs. 2,50,941/-. What happened thereafter is still a mystery.
Even after assuming everything in favour of the complainant, we do not have any answer as to how the figure of interest was arrived at by the complainant?
The contradiction in respect of the statement of business dealings (appearing in legal notice and complaint), party ledger account showing debit and credit balance which is a normal course of business dealings confusion in respect of interest amount are clearly indicating an inference that the whole matter was in respect of business dealings between the parties and not in respect of any loan transaction.
8.5. Non- production of any document in respect of the transaction relating to the valuables of a firm which a registered firm has to maintain should also go against the complainant.
8.6. At this stage, defence of the accused may be considered. It has been contended that cheque was issued for security in respect of future business dealings which however was not materialized. Accused has taken this stand not only in his affidavit but also in his reply sent to the legal demand notice of the complainant. This was the consistent stand taken by the accused. However, complainant has not made any serious attempt to discredit the stand of accused though the accused was thoroughly cross-examined.
In such circumstances, story of the accused can not be brushed aside at the threshold.
(At this stage, it may also be mentioned that the documents filed by the accused are copies and no permission to lead secondary evidence was obtained, therefore, the same has not been read in evidence).
8.7. The explanation given by the accused may not be true, but it has no serious impact on the defence because from the evidence and circumstances available on record (accused is very much with in his right in relying upon the circumstances brought and material placed on record by the complainant. See the discussion on legal position herein after), he successfully improbabalized the statement regarding pre-existing debt. I mean to say, the loan transaction between the accused and the complainant itself is rendered improbable in view of the attending circumstances brought on record.
M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 7 Legal Position:
9. To what extent a mere reliance upon the presumptions of law can help the complainant is the question involved in the present case.
9.1. Hon'ble Supreme Court in K. Prakashan vs P.K. Surenderan decided on 10 October, 2007 has also dealt with the aspect of friendly loan and scope of presumptions of law. The facts of the case were:
"3. Respondent herein allegedly, on diverse dates, advanced a sum of Rs. 3,16,000/- to the appellant who issued a cheque for the said amount on 18.12.1995. The said cheque was dishonoured on the ground of insufficient fund. Allegedly, when the matter was brought to the notice of the appellant, he undertook to remit the amount on or before 30.01.1996. The cheque was again presented but the same was not encashed on the ground payment stopped by the drawer.
5. The complainant in support of its case led evidence to show that he had advanced various sums on the following terms:
On 31-1-94 a sum of Rs. One lakh; on 8-6-94, Rs. 86,000/-; on 12-6-94, Rs. 28,000/-; on 23-4-95, Rs. 50,000/- on 18-6-95, Rs. 40,000/- and on 7-8-95, Rs. 12,000/-.
6. Defence of the appellant, on the other hand, was that he had issued blank cheques for the purpose of purchase of spare parts, tyres, etc. in connection with the business of transport services run in the name of his brother. The blank cheques used to be returned by the sellers of spare parts, etc. when the amounts were paid. According to the appellant, the complainant lifted the impugned cheque book put in the bag and kept in his shop. Appellant in support of his case examined the Bank Manager of the Bank concerned. "
Hon'ble High Court having reversed the judgment of acquittal, accused approached the Hon'ble Supreme Court. Hon'ble Supreme Court has observed therein that:
"14. The learned Trial Judge had passed a detailed judgment upon analysing the evidences brought on record by the parties in their entirety. The criminal court while appreciating the evidence brought on record may have to weigh the entire pros and cons of the matter which would include the circumstances which have been brought on record by the parties. The complainant has been found to be not a man of means. He had allegedly advanced a sum of Rs. 1 lakh on 13.01.1994. He although had himself been taking advances either from his father or brother or M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 8 third parties, without making any attempt to realize the amount, is said to have advanced sums of Rs. 86,000/- on 8.06.1994. Likewise he continued to advance diverse sums of Rs. 28,000/-, Rs. 50,000/-, Rs. 40,000/- and Rs. 12,000/- on subsequent dates. It is not a case where the appellant paid any amount to the respondent towards repayment of loan. He even did not charge any interest. He had also not proved that there had been any commercial or business transactions between himself and the appellant. Whey the appellant required so much amount and why he alone had been making payments of such large sums of money to the appellant has not been disclosed. According to him, he had been maintaining a diary. A contemporaneous document which was in existence as per the admission of the complainant, therefore, was required to be brought on records. He failed to do so. He also did not examine his father and brothers to show that they were men of means and in fact advanced a huge sum to him only for the purpose of grant of loan by him to the appellant. The learned Trial Court not only recorded the inconsistent stand taken by the complainant in regard to the persons from whom he had allegedly borrowed the amount, it took into consideration the deposit of the cheques in the bank commenting: Ext. D1 the counterfoil of the cheque book issued to the accused from that bank, was proved through him. It contains the counterfoils of the cheques 782451 to 782460. Ext. D2 is the pass book issued to the accused from that bank. SW1 is the Branch Manager of Syndicate Bank,Koyilandy. He would say that in Ext. P4 ledger extract, cheque No. 782460 reached the bank for collection on 30.12.93. The net transaction in that account was in the year 1996. Cheque No. 782451 reached the bank on 8.1.96. Ext. D1 shows that is the first cheque in that book. 782460 is the lost cheque in that book. If the lost cheque i.e. 782460 reached the bank for collection on 30.12.93 in normal and reasonable course the first cheque i.e. 782451 might have been issued even prior to that date. Case of the complainant is that Ext. P1 cheque was given to him by the accused on 5.10.95 and the cheque was dated 18.12.95. Ext. P4, D1 and D2 substantiate the case of the accused that the allegation of the complainant that Ext. P1 cheque was given to him on 18.12.95 is not genuine."
Hon'ble Supreme Court. Hon'ble Supreme Court has observed therein that:
"15. The High Court, as noticed herein before, on the other hand, laid great emphasis on the burden of proof on the accused in terms of Section 139 of the Act.
16. The question came up for consideration before a Bench of this Court in M.S. Narayana Menon (supra) wherein it was held:
M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 9 "38. If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a fortiori even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court."
A presumption is a legal or factual assumption drawn from the existence of certain facts. It was furthermore opined that if the accused had been able to discharge his initial burden, thereafter it shifted to the second respondent in that case.
The said legal principle has been reiterated by this Court in Kamala S. v. Vidhyadharan M.J. and Another [(2007) 5 SCC 264] wherein it was held:
"The Act contains provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case."
The nature and extent of such presumption came up for consideration before this Court in M.S. Narayana Menon Alias Mani V. State of Kerala and Anr. [(2006) 6 SCC 39] wherein it was held :
"30. 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 dos 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. "
This Court clearly laid down the law that standard of proof in discharge M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 10 of the burden in terms of Section 139 of the Act being of preponderance of a probability, the inference therefor can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon. Categorically stating that the burden of proof on accused is not as high as that of the prosecution, it was held;
"33. Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another. "
..........
18. Ms. Srivastava has relied upon a decision of this Court in Goaplast (P) Ltd. v. Chico Ursula DSouza and Another [(2003) 3 SCC 232] wherein this Court opined:
"The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operation and to ensure credibility in business transactions through banks persuades us to take a view that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of ones own wrong. If we hold otherwise, by giving instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under Section 138. Once a cheque is issued by a drawer, a presumption under Section 139 must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of the cheque in due course. This was the view taken by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 11 2 . On same facts is the decision of this Court in Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar. The decision in Modi case overruled an earlier decision of this Court in Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. which had taken a contrary view. We are in respectful agreement with the view taken in Modi case. The said view is in consonance with the object of the legislation. On the faith of payment by way of a post-dated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date. "
19. No exception to the aforementioned legal principle can be taken. What, however, did not fall for consideration in the aforementioned case was as to how the said burden can be discharged.
20. It is now trite that if two views are possible, the appellant court shall not reverse a judgment of acquittal only because another view is possible to be taken. The appellate courts jurisdiction to interfere is limited. [See M.S. Narayana Menon (supra) and Mahadeo Laxman Sarane & Anr. v. State of Maharashtra, 2007 (7) SCALE 137] The High Court furthermore has not met the reasons of the learned Trial Judge. It proceeded on the premise that the appellant had not been able to discharge his burden of proof in terms of Section 139 of the Act without posing unto itself a further question as to how the said burden of proof can be discharged. It furthermore did not take into consideration the legal principle that the standard of proof upon a prosecution and upon an accused is different. "
Nature and extent of rebuttal
10. Hon'ble Supreme Court in Kamala S vs Vidyadharan M.J. & Anr Appeal (crl.) 233 of 2007, decided on 20.02.2007 "15. The Act contains provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case.
M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 12
16. The nature and extent of such presumption came up for consideration before this Court in M.S. Narayana Menon Alias Mani V. State of Kerala and Anr. [(2006) 6 SCC 39] wherein it was held :
"30. 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 dos 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."
17. This Court clearly laid down the law that standard of proof in discharge of the burden in terms of Section 139 of the Act being of preponderance of a probability, the inference therefor can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon. Categorically stating that the burden of proof on accused is not as high as that of the prosecution, it was held;
"33. Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another."
It was further observed that ;
" 38. If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a "fortiori" even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court.
39. A presumption is a legal or factual assumption drawn from the existence of certain facts."
M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 13 10.1. Hon'ble Supreme Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde 2008 AIR SCW 738 has observed that:
"30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.
31. The courts below, as noticed herein before, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.
32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different.
... ....
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 the accused is 'preponderance of probabilities'. 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 he relies. ......
45. We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This however, shall not mean that the courts shall put a blind eye to the ground realities. Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have been rebutted. Other important M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 14 principles of legal jurisprudence, namely, presumption of innocence as a human right and the doctrine of reverse burden introduced by Section139 should be delicately balanced. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same."
It may be pertinent to mention here that a three judges bench of the Hon'ble Supreme Court in Rangappa Vs. S. Mohan decided on 07.05.2010 has considered the dictum of Krishna Janardhan Bhat (supra) and overruled the view so far as existence of liability is concerned, however, has not dissented with other parameters observed and laid down in the said case. It has been observed therein that:
"14. 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 (supra) 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. "
10.2. In the facts and circumstances of the present case, if we make a fine balance between the two propositions, it can be safely held that accused has successfully probabilised his defence by showing that the non-existence of debt or liability and consideration is probable.
10.3. I am of the opinion that an accused has a right to rebut the presumption by placing reliance upon the circumstances brought and material placed by the complainant. Hon'ble Supreme Court in Rangappa Vs. S. Mohan (2010) 11 SCC 441 has further held that:
"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 or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 15 materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
11. In the light of the above discussion, I am of the opinion that accused has created a reasonable doubt in respect of existence of liability and issuance of cheques for consideration. The complainant has not tried to establish the factum of loan by any other means and has chosen to rely only upon the mandatory presumptions of law. The prosecution has to fail in the circumstances discussed above.
12. I accordingly return a finding of not guilty against the accused person.
13. Accused is hereby acquitted from the charges in the present complaint case.
14. A copy of this order be placed on the official website of the District Court.
(Rakesh Kumar Singh) MM(NI Act)-01, Central/19.04.2011 M/s Baboo Ram Hari Chand Vs Radhey shyam Gupta CC No. 1151/10 16