Delhi District Court
Vikash Jain vs Mahinder Kumar on 23 March, 2011
IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI
CC No. 974/10
Vikash Jain vs Mahinder Kumar
23.03.2011
JUDGMENT u/s-264 Cr.PC.
Complainant's case:
The complainant was having friendly relation with accused and had given a friendly loan of Rs.6,00,000/- during
the period between 12.04.2007 to 24.04.2007 to accused on the assurance of repayment of the same within a year. The
accused in due discharge of the said liability, issued cheque bearing No.288218 of Rs.6,00,000/- dated 24.04.2008
drawn on Standard Chartered Bank against the loan amount. The said cheque was accepted by the complainant. When the
complainant presented the said with his banker Citizen Cooperative Bank Pahar Ganj, Delhi for encashment, the same was
dishonoured and the banker returned it vide memo dated 02.06.2009 for the reason "withdrawal not permitted".
Immediately, on receipt of dishonour of cheque, the complainant went to accused and asked for repayment of loan amount
but the accused refused to pay the loan amount since he became dishonest. Thereafter, the complainant got served a legal
demand notice dated 06.06.2008 demanding loan amount through his counsel upon the accused. Registered envelope was
received with a remark refused. Despite the legal demand notice, the accused did not make the payment of loan amount.
Hence the present complaint.
1.1. Complainant has led his evidence by way of affidavit. However, has not supported the existence of liability by
any other means and has relied only upon the mandatory presumptions of law.
Stand of accused:
2. That the accused has not taken any friendly loan from the complainant. He was not having any friendly
relationship with the complainant (complainant is an old age person and the accused is of young age). The legal demand
notice was not served. In November 2006, cheque book (four cheques were signed including the present cheque) of the
accused was lost. On 09.11.2006 accused has informed his banker in respect of lost of cheque book and requested to stop
the payment in respect of the entire cheque book.
The complainant in his statement under section 161 Cr. P. C in respect of FIR No.229/07 has stated that he had
not invested any amount in chit funds with the accused and his father or any one else. The complainant has also filed a
false affidavit where under he claimed that Raj Kumar, his wife Neena and his son Mahender Kumar were liable to pay
Rs.1,71,590/- to the complainant in respect of the investment made in the chit funds (there was no mention about the loan
of Rs.6 lacs).
Vikash Jain vs Mahinder Kumar 1
2.1 As per the version of the accused, the story runs as under:-
The complainant and one Kishan used to run their shops near the shop of accused and they used to come to the
shop of the accused. Kishan had borrowed a sum of Rs.1 lac from accused and his parents. However, when the money was
demanded on the expiry of period, Kishan refused to pay the money and threatened the accused on the ground that he was
having some cheques of the accused and he would misuse the same against the accused by implicating him in false cases
(in the incident is of 09.11.2006). In this respect, the mother of accused had made a written complaint dated 09.11.2006 to
the Commissioner of Police which is Ex. DW2/3 and also to DCP and SHO which are Ex. DW2/2 & Ex. DW2/1
respectively.
The complainant misbehaved with the sister of the accused and a report was lodged in the police station, the copy
of which is marked as Mark-A. Accused and his family were attacked by the complainant and his associated on
07.11.2009. MLC in this respect is Ex. DW1/3. Father of the complainant sent the complaint to the police authorities
which is marked as Mark B, C & D.
The complainant in connivance with Kishan had misused the cheque and implicated the accused falsely.
2.2 Accused has examined his mother Neena as DW-2 for placing on record the complaints made to the police
authorities. She was not cross examined. Accused has examined himself as DW-1 and was cross examined.
3. I am satisfied that defence taken by the accused as to non receipt of legal demand notice can not succeed.
Accused had not controverted the correctness of his address appearing on legal demand notice, postal receipts and
returned envelope. Legal demand notice has to be treated as served. There is sufficient material on the record to draw the
presumption under Section-27 General Clauses Act and the same has to go in the favour of the complainant. In this respect
it will be apt to quote Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC
555:
"17. 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 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
Vikash Jain vs Mahinder Kumar 2
would defeat the very object of the legislation. As observed in Bhaskarans 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."
4. However, existence of liability and issuance of cheque in discharge of liability have been seriously disputed.
Scope of reasons of dishonour has also to be considered.
Discussion on factual and legal position:
5. Complainant is primarily relying upon the mandatory presumptions of law. He has not led any other evidence or
filed any other document 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;"
Presumptions are:
i. Cheque was drawn for consideration;
ii. Cheque was transferred for consideration;
iii. Cheque was accepted 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."
Presumptions are:
i. Holder of the cheque has lawfully received the cheque, meaning thereby that the
holder was in lawful possession of the cheque;
ii. The cheque was given in discharge of any debt or liability;
Vikash Jain vs Mahinder Kumar 3
iii. Legally enforceable debt or liability was in existence at the time of issuance of
the cheque; (contrary view has been overruled by the three judges bench of
Hon'ble Supreme Court in Rangappa vs S. Mohan decided on 07.05.2010).
iv. The cheque was of the nature as described in section-138;
v. The cheque was drawn by the person who was maintaining the account
pertaining to the cheque;
vi. Amount of money mentioned in the cheque was intended to be given;
5.1. No doubt, the mandatory presumptions of law may arise in favour of the complainant as discussed above.
However, the inference of presumptions are left to the discretion of the Court. In this respect Hon'ble Supreme Court in
Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 has observed that:
"23. In other words, provided the facts required to form the basis of a presumption
of law exists, the discretion is left with the Court 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. A fact is said to be proved when, after
considering the matters before it, the Court either believes it to exist, or considers
its existence so probable that a prudent man ought, under the circumstances of the
particular case, to act upon the supposition that it exists. 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."
5.2. Accused has tried to rebut the mandatory presumptions in respect of the consideration, liability and the existence
of the liability.
Discussion on Factual position:
5.3. The cheque in the present case was stated to be received in lieu of a friendly loan of Rs. 6,00,000/- advance in the
month of April 2007 (12-24 April 2007).
The loan was allegedly to be repaid with in one year.
The cheque dated 24.04.2008 was allegedly issued in due discharge of the said liability. Complainant has not
claimed that the said cheque was post dated cheque. Even otherwise, the liability was to become due only in the moth of
April 2008 as one year period was to expire on 24.04.2008. It can therefore be inferred that the cheque was issued on
24.04.2008.
Vikash Jain vs Mahinder Kumar 4
There is no loan agreement. No other supporting documents except the cheque in question.
No one has seen the advancement of loan.
Complainant has not tried to establish the factum of friendly relationship with the accused.
Complainant has not even disclosed any details about the reasons for which the accused requested the friendly
loan for a huge sum of money.
Complainant has not even disclosed the reasons for which he had advanced the alleged friendly loan for a huge
amount.
Complainant has not disclosed the date, time and place when he allegedly approached the accused demanding the
payment after the dishonour of the cheque, whereas he has alleged in his affidavit that he had approached the accused
immediately after the dishonour.
Complainant has never tried to establish the source of his income.
(No doubt, complainant initially is not required to support his story by leading other evidence or to examine any
other person or to produce other documentary evidence. He can well rely upon presumptions of law on the basis of the
cheque. However, if he faces a situation where foundational circumstances do not require the inference of presumptions,
he has to establish the existence of liability and consideration and fact of issuance of cheque in discharge of such
consideration by leading cogent evidence. And if he does not do so, he will be at his own risk).
5.4. On the other hand, accused has claimed that his cheque book was lost and instructions were issued to the bank.
Dishonour of cheque is also due to reasons "withdrawal not permitted".
An FIR was registered against the accused, his father and mother, wherein the complainant in his statement under
section-161 recorded in the said FIR i.e. FIR No.-229/07 had made prejudicial statement against the father of the accused.
(certified copies of the record case FIR No-229/07 pending in the Court of MM, Delhi has been filed by the accused. The
certified copy of statement is Ex. DW1/1. This statement though made under Section-161 Cr.PC can be read in evidence in
the present case since the bar of Section-162 Cr.PC is not attracted for the trial of the present case).
In the said statement, the complainant further stated that he had not invested any amount in chit funds with the
accused and his father or any one else.
However, in contrast to this, the complainant by his affidavit filed in the same FIR has claimed to have made an
investment in the chit funds run by Raj Kumar, father of the accused, wife of Raj Kumar and the accused (In the
absence of Raj Kumar, accused and neena were allegedly taking money from the complainant). Complainant also claimed
Vikash Jain vs Mahinder Kumar 5
to have an outstanding of Rs. 1,71,590/-. (Interestingly, complainant has not mentioned any some of Rs. 6,00,000/- given
to the accused as a friendly loan). Certified copy of the affidavit is Ex. DW1/2.
In the said affidavit, complainant also stated, "...but Raj Kumar left away on 15.02.2007 his son Mahender
Kumar promised that his father Raj Kumar will come back we will give your money back."
(It is pertinent to mention here that the complainant claimed to have advanced the friendly loan in the month of
April 2007. It does not stand to reason that a person who has allegedly been defrauded by someone for Rs. 1,71,590/- will
advance a friendly loan the son of ''that someone''. Even the loan was not advanced against any security/mortgage or by
any agreement but was advanced in vein. How will a prudent man justifies his approval to the conduct of the
complainant?)
(It is further pertinent to mention that the cheque appears to have been issued in the month of April 2008, as
discussed in Para-5.3. At that point of time, FIR against the accused and his family members was in existence and the
statement of the complainant u/s-161 Cr.PC was also there. In such circumstances, the version of the complainant that
accused issued a cheque and that the complainant had approached the accused after the dishonour of the cheque, also do
not inspire confidence).
Accused was cross examined at length. The statement of the complainant made u/s-161 Cr.PC in the FIR
No.-229/07 and the affidavit filed therein have never been disputed by the complainant.
Mother of the accused has placed on record certain complaint made to the police authorities in respect of the
incident occurred on 09.11.2006. Complaint made to the SHO, PS- Hauz Kazi is placed on record in original duly stamped
and received by the police authorities. Complaint is EX. DW2/1. Complainant has never try to dispute the genuineness of
this document. If this document is to be believed, this further fortifies the version of the accused (as stated in the
examination-in chief of the accused) that the said Kishan extended a threat to the accused to implicate him in a false case.
(It is pertinent to mention that complainant has never questioned the accused or given any suggestion disputing
the factum of incident dated 09.11.2006. This incident occurred much prior to the advancement of friendly loan.
Complainant has never led any evidence disputing the version of the accused in respect of the incident).
5.5. In the facts and circumstances discussed at Para-5.3 & 5.4, version of the accused is preferable to the version of
the complainant.
Legal Position:
6. To what extent a mere reliance upon the presumptions of law can help the complainant is the question involved in
the present case.
6.1. Hon'ble High Court of Bombay in Peter Mascarenhas Vs. Monsabre Ashley Oswald Dias, CCC X-2010(4) 234
Vikash Jain vs Mahinder Kumar 6
has dealt with the above aspect in great detail. This was also a case of friendly loan of Rs. 12 lakhs which the complainant
had lent to the accused after collecting the same from several other persons. Complainant had examined the persons from
who he collected the amount. There was also an agreement executed by the accused person. However, after a detailed
factual and legal discussion, Hon'ble High Court has acquitted the accused primarily on the ground that complainant has
failed to discharge his onus to establish accumulation of money. It has been observed therein that:
"In juxtaposition though the Complainant was faced with the aforesaid material which
has come through the cross examination of Cw.2, Cw.3 and Cw.4, the Complainant did
not choose to lead any further evidence to discharge the burden of proving the
existence of the liability when the burden again shifted to him. Applying the principles
that the Complainant has to prove the offence beyond reasonable doubt but the
Accused has to only probabilise his defence, in my view, the test has been satisfied by
the Accused then the Complainant. The Complainant as can be seen has not led any
further cogent evidence to prove the factum of the lending of the money to the
Accused and thereby has not discharged the burden which had shifted to him on
account of the evidence which has come in cross examination of the Complainant and
his witnesses."
6.2. In the present case, complainant has not examined any other person, has not shown any documentary proof in
respect of loan. The instant case is even weaker than the case before the Hon'ble High Court of Bombay.
6.3. 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
Vikash Jain vs Mahinder Kumar 7
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:
"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:
"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.
Vikash Jain vs Mahinder Kumar 8
[(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
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 Vikash Jain vs Mahinder Kumar 9 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 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 Vikash Jain vs Mahinder Kumar 10 (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
7. 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.
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 Vikash Jain vs Mahinder Kumar 11 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."
7.1. 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.Vikash Jain vs Mahinder Kumar 12
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 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. "Vikash Jain vs Mahinder Kumar 13
7.2. 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 decided on 07.05.2010 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 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."
8. Another issue in respect of the scope of section-138 NI Act vis a vis reasons for dishonour of the cheque has to be considered. The instant cheque has been dishounoured due to reason "withdrawal not permitted". The question is whether this reason can be treated as included under Section-138 or not?
8.1. Section-138 NI Act reads as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account. - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both:Vikash Jain vs Mahinder Kumar 14
Provided that nothing contained in this section shall apply unless-
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation. - For the purposes of this section, 'debt or other liability' means a legally enforceable debt or other liability. "
8.2. The section provides for only two contingencies when a dishonour of cheque can be brought under the scope of section-138 NI Act. No doubt, a drawer of the cheque can not escape liability by issuing stop payment instruction to the bank or by issuing a notice to the complainant for not presenting the cheque. Judgment of Hon'ble Supreme Court Goaplast (P) Ltd. (supra) is clear in this respect.
8.3. However, if the facts and circumstances do require a inference that the stoppage of payment was due to reasons of lost/missing cheque, a person who was maintain the account (to which cheque in question pertains), can not be prosecuted. And the question as to whether there was sufficient funds in the account to honour the cheque would become immaterial. If it is accepted that every drawer has to establish the factum of sufficiency of funds to sift the burden of proof, it would result in an absurdity. A person who has lost his cheque can not do anything more than to make a complaint to the police authorities and to issue a stop payment instruction to the bank irrespective of the fact of sufficiency or insufficiency of funds (pertinently, he can not be aware of the amount to be filled in by the holder of the cheque who found/stolen the cheque. In such circumstances, any such cheque presented would become the source of litigation under Section-138 NI Act).
8.4. As observed by the Hon'ble Supreme Court in Krishna Janardhan Bhat(supra), presumption of innocence as a human right and the doctrine of reverse burden introduced by Section139 should be delicately balanced.
8.5. In the facts and circumstances of the present case, if we make a fine balance between the two proposition, it can be safely held that accused has successfully probabilised his defence by showing that the non-existence of debt or liability Vikash Jain vs Mahinder Kumar 15 and consideration is probable.
9. I am of the opinion that the above attending circumstances are sufficient to displace the burden of proof which is somewhat lighter on accused. The law regarding the degree of proof required from the accused to prove his defence is well settled. The accused is required only to prove by preponderance of probabilities that the defence bears ring of truth. The accused is not required to prove his defence beyond reasonable realm of doubt as is required to be done by the prosecution. Accused has created a reasonable doubt in respect of existence of liability and issuance of cheque and consideration. Complainant failed to discharge the sifted burden. 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.
10. I accordingly return a finding of not guilty against the accused person.
11. Accused Mahinder Kumar is hereby acquitted from the charges in the present complaint case.
12. A copy of this order be placed on the official website of the District Court.
(Rakesh Kumar Singh) MM(NI Act)-01, Central/23.03.2011 Vikash Jain vs Mahinder Kumar 16 IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL: ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI CC No. 974/10 Vikash Jain vs Mahinder Kumar 23.03.2011 Present: Both the parties.
Vide separate jdugment, accused Mahinder Kumar is acquitted from the charges in the present complaint case.
Bail Bond and surety bond already on record to continue for the purposes of Section-437-A Cr.PC.
File be consigned to Record Room.
(Rakesh Kumar Singh) MM(NI Act)-01, Central/23.03.2011 Vikash Jain vs Mahinder Kumar 17 IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI Record u/s- 263 Cr.PC.
a. The serial No. of the case
974/10
b. The date of the commission of the offence
02.06.2008
c. The date of the report or complaint
08.07.2008
d. The name of the complainant (if any)
Vikash Jain
e. The name, parentage and residence of the accused
Mahinder Kumar, S/o Sh. Raj Kumar, R/o-2152 Gali Sudama, Bazar Sita Ram, Delhi.
f. The offence complained of or the offence (if any) proved Dishonor of cheque due to reason 'withdrawal not permitted'.
g. Plea of the accused and his examination (if any) Not guilty. No legal demand notice. No loan was availed of. Cheque not issued to the complainant. Cheque misused. No liability.
h. The finding
Held not guilty.
i. The sentence or other final order
Acquitted.
j. The date on which proceedings terminated
23.03.2011
Vikash Jain vs Mahinder Kumar 18