Himachal Pradesh High Court
Uttam Ram vs Devinder Singh Hudan And Another on 17 December, 2018
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr. Appeal No.431 of 2018.
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Judgment reserved on : 12.12.2018.
Date of decision: 17th December, 2018.
Uttam Ram .....Appellant/Complainant.
Versus Devinder Singh Hudan and another ......Respondents.
Coram The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge. Whether approved for reporting?1 Yes For the Appellant : Mr. J.L. Bhardwaj and Mr. Sanjay Bhardwaj, Advocates.
For the Respondents: Mr. Vinay Kuthiala, Senior Advocate with Mr. Diwan Singh Negi, Advocate, for respondent No.1.
Mr. Sudhir Bhatnagar, Additional Advocate General with Mr. Bhupinder Thakur, Deputy Advocate General, for respondent No.2.
Tarlok Singh Chauhan, Judge The complainant is the appellant, who aggrieved by the dismissal of his complaint under Section 138 of the 1 Whether the reporters of the local papers may be allowed to see the Judgment? Yes ::: Downloaded on - 18/12/2018 22:56:55 :::HCHP 2 Negotiable Instruments Act (for short the 'Act'), has filed the instant appeal.
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2. Precisely, the case set up by the appellant is that he was an orchardist, grower and was also having his own apple forwarding agency at places Gugra, Kutwa, Dohva and surrounding areas within Tehsil Anni, District Kullu, H.P. The appellant also used to supply apple cartons, apple trays and other allied packing material to his clients on cash and credit basis. The appellant also owned commercial rope way span which connected various apple orchards with the road head so as to provide facility to the growers to carry their produce from the orchards.
3. During the apple season in the year 2011, accused-
respondent No.1 purchased apple crop of various growers in villages Kutwa, Dohva and surrounding areas in Phati Buchhair, Tehsil Anni directly from orchards and thereafter the same was carried towards road head through the rope way span of the appellant. This was pursuant to a bargain entered into between the appellant and respondent No.1 wherein it was further agreed that respondent No.1 would purchase entire packing material from the appellant and thereafter forward the entire ::: Downloaded on - 18/12/2018 22:56:55 :::HCHP 3 apple crop in the apple market through the forwarding agency of the appellant named and styled as "Uttam Ram Forwarding .
Agency, Gugra-Chowai". However, later on, the apple produce was forwarded by respondent No.1 through his personal arrangement, but the entire packing material was procured from the appellant on credit basis through an authorized agent namely Prem Chand son of Shri Kumat Ram. As per the agreement, the r appellant supplied packing material to respondent No.1 and also paid a sum of Rs.2,00,000/- to him for meeting out the expenses of labour etc. which amount was not returned to the appellant.
4. Thereafter, in the month of September, 2011, accounts were finally settled between the appellant and the above named authorized agent of respondent No.1 and in terms thereof a sum of Rs.5,38,856/- was recoverable as on 12.09.2011 for the payment of which respondent No.1 issued a cheque No.942816 dated 02.10.2011 amounting to Rs.
5,38,856/-. The appellant presented the cheque for encashment, however, the same was returned by the bank for "insufficiency of funds" in the account of respondent No.1. The appellant thereafter contacted respondent No.1 over ::: Downloaded on - 18/12/2018 22:56:55 :::HCHP 4 telephone, who assured him to make the payment within a few days, but to no avail. The appellant eventually presented the .
cheque for encashment at the Punjab National Bank, Anni, however, the same was returned unpaid for "insufficient funds" vide memo dated 11.10.2011. Thereafter, the appellant served respondent No.1 with a legal notice dated 22.10.2011 under registered cover which was sent to the official as well as home addresses of respondent No.1 and duly received by him on 27.10.2011. However, despite the receipt thereof, no payment was made, compelling the appellant to file a complaint under Section 138 of the Act.
5. The learned trial Court after recording preliminary evidence took cognizance and summoned respondent No.1.
The appellant in support of its case examined three witnesses.
Thereafter, the statement of respondent No.1 under Section 313 Cr.P.C. was recorded. Respondent No.1 examined one witness HHC Ranjeet Singh as DW-1 and closed his evidence.
6. The learned trial Magistrate after recording evidence and evaluating the same dismissed the complaint by concluding that since the cheque amount was more than the amount allegedly due on the date when the cheque was ::: Downloaded on - 18/12/2018 22:56:55 :::HCHP 5 presented, therefore, in terms of Section 138 of the Act, the cheque cannot be said to be drawn towards the discharge of .
either the whole or part of any debt or liability.
7. It is vehemently argued by Shri J.L. Bhardwaj, Advocate, for the appellant that the findings recorded by the learned Courts below are perverse and, therefore, deserve to be set aside. Whereas, Shri Vinay Kuthiala, Senior Advocate, assisted by Shri Diwan Singh Negi, Advocate, for respondent No.1, would argue that the contradictions in the evidence of the appellant were sufficient to hold that respondent No.1 has not only probabilized his defence, but proved the non-
existence of consideration through the appellant's evidence.
Therefore, in such circumstances, no exception can be taken to the judgment of acquittal passed by the learned trial Magistrate.
8. I have heard the learned counsel for the appellant and have also gone through the material placed on record.
9. In order to appreciate the rival contentions of the learned counsel for the parties, it would be necessary to examine Sections 118(a) and 139 of the Act and the same are reproduced as under:-
::: Downloaded on - 18/12/2018 22:56:55 :::HCHP 6"118. Presumptions as to negotiable instruments.-Until the contrary is proved, the following presumptions shall be made:-
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(a) of consideration- that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;1
[139. Presumption in favour of holder.- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.]"
10. Chapter XVII containing Sections 138 to 142 was introduced in the Act by Act 66 of 1988 with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. These provisions were intended to discourage people from not honouring the commitments by way of payment through cheques. It is for this reason that the Courts should lean in favour of an interpretation which serves the object of the statue.
11. In M.S. Narayana Menon alias Mani versus State of Kerala and another (2006) 6 SCC 39, the Hon'ble Supreme Court while dealing with a case under Section 138 of the Act held that the presumption under Sections 118(a) and 139 were rebuttable and the standard of proof required for such rebuttal was ::: Downloaded on - 18/12/2018 22:56:55 :::HCHP 7 "preponderance of probability" and not proof "proved beyond reasonable doubt" and it was held as under:-
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"29. In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause)....
30.Applying the said definitions of 'proved' or 'disproved' to principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
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32.The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.
41.....'23......Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or ::: Downloaded on - 18/12/2018 22:56:55 :::HCHP 8 consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man"."
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12. Similar reiteration of law can be found in K. Prakashan versus P.K. Surenderan (2008) 1 SCC 258 wherein it was observed as under:-
"13. The Act raises two presumptions; firstly, in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability. Presumptions both under Sections 118 (a) and 139 are rebuttable in nature......
14. It is furthermore not in doubt or dispute that whereas the standard of proof so far as the prosecution is concerned is proof of guilt beyond all reasonable doubt; the one on the accused is only mere preponderance of probability."
13. To the same effect is the decision of the Hon'ble Supreme Court in Krishna Janardhan Bhat versus Dattatraya G. Hegde (2008) 4 SCC 54 wherein the Hon'ble Supreme Court observed as under:-
"32.....Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
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34. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of ::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 9 proof so as to prove a defence on the part of an accused is preponderance of probabilities......
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45..... Statute mandates raising of presumption but it stops at that. It does not say how presumption drawn should be held to have rebutted. Other important principles of legal jurisprudence, namely presumption of innocence as human rights and the doctrine of reverse burden introduced by Section 139 should be delicately balanced........"
14.
Dalal versus Bratindranath
r to
Earlier to that the Hon'ble Supreme Court in Hiten P. Banerjee (2001) 6 SCC 16, compared the evidentiary presumptions in favour of the prosecution with the presumption of innocence in the following terms:-
"22.....Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact.
23. In other words, provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary......."::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 10
15. Section 139 of the Act provides for drawing a presumption in favour of the holder and the Hon'ble Supreme Court .
in Kumar Exports versus Sharma Carpets, (2009) 2 SCC 513 has considered the provisions of the Act as well as Evidence Act and observed as under:-
"14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.
15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Indian Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume"
(rebuttable), (2) "shall presume" (rebuttable) and (3) "conclusive presumptions" (irrebuttable). The term `presumption' is used to designate an inference, affirmative or disaffirmative of the existence a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".
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18. Applying the definition of the word `proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under .
Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over."
::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 1216. The Hon'ble Supreme Court thereafter held that the accused may adduce evidence to rebut the presumption, but mere .
denial regarding of existence of debt shall not serve any purpose.
17. In Rangappa versus Sri Mohan, (2010) 11 SCC 441, Hon'ble three Judge Bench of the Hon'ble Supreme Court had occasion to examine the presumption under Section 139 of the Act and it was held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability, the presumption may fail.
r It is apposite to refer to the relevant observations which read as under:-
"26. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat v.
Dattatraya G.Hegde (2008) 4 SCC 54 may not be correct.
However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.
27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative ::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 13 objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the .
rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard of proof."
18. Bearing in mind the aforesaid exposition of law, it can conveniently be held that in terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words "proved" and "disproved" have been defined in Section 3 of the Evidence Act.
19. 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 ::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 14 circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such .
presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
20. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man.
21. Now, adverting to the facts of the case, it would be noticed that respondent No.1 had raised various defences, but, the same were turned down by the learned Magistrate. However, it was only on the basis of the contradictions that too in the evidence led by the appellant himself that respondent No.1 was ordered to be acquitted.
22. As per the complaint, it was stated that 5000 empty apple cartons were sold by the complaint(appellant) to accused ::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 15 (respondent No.1) at the rate of Rs.40/- each. It was further averred that the total amount of carriage was Rs.1,50,000/- at the rate of .
Rs.30/- per box which works out to 5000 cartons which were allegedly carried from Kutwa to Gugra through rope way span of the appellant. However, in cross examination, the appellant stated that he had sold 7000-8000 cartons to respondent No.1. He further stated that he carried through his span as well as sent through his
23. to forwarding agency about 4000 apple cartons to respondent No.1.
Now, in case the testimony of CW-3 Prem Chand, who is claimed to be the 'Munshi' of respondent No.1, is adverted to, then it would be noticed that he stated that he purchased 5000- 6000 apple cartons from the appellant out of which 2600 apple cartons were carried through the span of the appellant and also forwarded to the apple market through the forwarding agency of the appellant.
24. Now, what emerges from the evidence of the appellant are three separate and distinct versions on record regarding the number of apple cartons that were carried through the span of the appellant and forwarded through his forwarding agency. The appellant in the complaint states that the number of such cartons were 5000, however, while appearing as CW-2, he states that ::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 16 number of such cartons were 4000, whereas, CW-3 states that number of such cartons were only 2600.
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25. Apart from the above, it would be noticed that the entire foundation of the complaint is receipt Ex.CW1/D, but then the same admittedly is not signed by respondent No.1 and has been signed by CW-3 Prem Chand and against that it has been written 'Munshi'.
26. Mr. Bhardwaj would claim that CW-3 'Munshi' had executed this receipt acknowledging that an Rs.5,38,856/- was due and payable by respondent No.1. However, I r amount of find that nowhere in the complaint has CW-3 been referred to as a 'Munshi' which in common parlance is understood to be a 'secretary' or an 'assistant'.
27. 'Munshi', in fact is a Persian word originally used for a contractor, writer or a secretary and later on was used in the Mughal Empire and British India for native language teachers, teachers of various subjects especially administrative principles, religious texts, science and philosophy and also secretaries and translators employed by the Europeans. 'Munshi' could also be a scribe, clerk or an accountant, but the said term was never used for an agent. Even otherwise, the agency as defined under Section 27 of the Act was required to be established and proved by the ::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 17 appellant before CW-3 could in fact be held to be the agent of respondent No.1 so as to enforce the liability upon him.
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28. Another contradiction in the case of the appellant is with regard to charges of carriage. As per the complaint, these charges were Rs.30/- per box, whereas, in cross-examination he admitted that in the year 2011 the charges of each box through span were Rs.15/- per box and at the time of his examination were Rs.20/-.
Therefore, the trial Magistrate committed no error that the amount claimed in the complaint was much higher. Not r by concluding only, there were contradictions with regard to number of cartons which were carried through the span of the appellant, even there were huge variations with respect to the the charges of carriage.
29. In Shri Vinay Parulekar versus Shri Pramod Meshram, 2008 Criminal Law Journal 2405, the learned Single Judge of the Bombay High Court held that if some material is brought on record consistent with the innocence of the accused which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal. The accused can prove the non-existence of consideration by raising a probable defence. If the accused is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus will ::: Downloaded on - 18/12/2018 22:56:56 :::HCHP 18 shift to the complainant who will be obliged to prove it as a matter of fact and upon its failure to prove will disentitle him to the grant .
of relief on the basis of negotiable instrument.
30. As repeatedly held by the Hon'ble Supreme Court the standard of proof so far as the prosecution is concerned, is proof of guilt beyond all reasonable doubt, however, the one on the accused is only mere preponderance of probability. Therefore, once the accused/respondent No.1 has probabilized his defence by showing the consideration to be improbable or doubtful, then obviously, in the given facts and circumstances, the appellant was obliged to prove the existence of consideration as a matter of fact and upon his failure to prove the same, disentitled him to the grant of relief on the basis of negotiable instrument.
31. In view of the aforesaid discussion, I find no merit in this appeal and accordingly the same is dismissed. Pending application, if any, also stands disposed of.
(Tarlok Singh Chauhan) 17 th December, 2018. Judge (krt) ::: Downloaded on - 18/12/2018 22:56:56 :::HCHP