Dalip Singh Negi vs Ankit Gupta on 20 May, 2019

[Cites 20, Cited by 0]

Himachal Pradesh High Court

Dalip Singh Negi vs Ankit Gupta on 20 May, 2019

Bench: Tarlok Singh Chauhan

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

                                 Cr. Appeal No. 486 of 2018




                                                                          .
                                 Decided on: 20.05.2019





Dalip Singh Negi                                      .....Appellant/Complainant





                              Versus

Ankit Gupta                                            ......Respondent/Accused





Coram

The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting?1 No.


For the Appellant:                    Mr. B. C. Negi, Sr. Advocate with Mr. Nitin
                                      Thakur, Advocate.

For the Respondent:                   Mr. Ramakant Sharma, Sr. Advocate with


                                      Ms. Devyani Sharma, Advocate.

Tarlok Singh Chauhan, Judge (Oral)

The appellant is the complainant, who aggrieved by the order of acquittal passed by the learned Additional Chief Judicial Magistrate, Paonta Sahib, District Sirmaur on 23.08.2018 in a complaint under Section 138 of the Negotiable Instruments Act (for short the 'Act'), has filed the instant appeal.

2. Taking into consideration the nature of the order I propose to pass, it is not necessary to delve into the facts in detail save and except that the appellant filed a complaint against the respondent/accused on the allegations that respondent/accused and his father were having business at 1 Whether the reporters of the local papers may be allowed to see the Judgment? Yes ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 2 Saharanpur and having cordial relationship. In the year, 2011, the father of the accused was ill and as such he sought help of Rs. 50,000/ in January, .

2011, for the first time which was paid to him. Thereafter repeatedly the complainant lent accused an amount of Rs.4,00,000/ from April, 2011 to November, 2011 @ Rs.50,000/ per month. However his father died and complainant did not approach him to refund the amount for one year and it was on 04.04.2013 that in order to discharge his liability respondent/accused issued a cheque for Rs.4,50,000/, which on presentation came to be dishonoured vide memo dated 10.05.2013 with endorsement"Account Closed". Legal notice was issued on 17.05.2013, however, despite receipt thereof, the respondent/accused did not pay the cheque amount, constraining the complainant to file the complaint under Section 138 of the Act.

3 On the basis of preliminary evidence led by the complainant, the respondent/accused was summoned and claimed trial by pleading not guilty.

4. The complainant examined himself as CW1, post official as CW2 and a bank official as CW3 and tendered certain documents in his evidence. Thereafter, the statement of the respondent/accused under Section 313 Cr.P.C. was recorded in which he stated that a false case has been made against him and examined himself as DW1 in defence and thereafter closed his evidence.

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5. As observed above, the learned trial Magistrate dismissed the complaint and acquitted the respondent/accused of the charge under .

Section 138 of the Act, constraining the complainant to file the instant appeal.

6. It is vehemently argued by Mr. B. C. Negi, learned Senior Counsel duly assisted by Mr. Nitin Thakur, Advocate, for the appellant, that the findings recorded by the learned trial Magistrate are perverse and, therefore, deserve to be setaside. Whereas, on the other hand, Mr. Ramakant Sharma, learned Senior Counsel duly assisted by Ms. Devyani Sharma, Advocate, for the respondent/accused would contend that the order of acquittal as passed by the learned Court below is based on correct appreciation of the complaint as also the oral and documentary evidence led on the record and, therefore, the order warrants no interference by this Court.

7. I have heard the learned counsel for the parties and have also gone through the record of the case carefully.

8. A perusal of the impugned order would reveal that the learned trial Magistrate after referring to the oral and documentary evidence on record in para10 has observed as under:

"10. Thus after going through the above arguments and discussion of evidence in detail, it is discernible that the complainant has shown himself to be extremely benevolent in so far as he did not ask for return of his Rs.50,000/ but despite he being a salaried person kept on extending help to accused for the next eight months @ Rs.50,000/ p.m. Besides he did not ask for return of the amount thereafter for one ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 4 full year. There had been some alleged interaction with accused prior to 1994 and it was in the year 2011 that the amount in question was allegedly advanced. The complainant has claimed no other income .

except that of salary and there are no details as to any other proximity between the parties. It is not clarified as to why the money was advanced only through cash especially when it was being extended continuously. Thus, the conduct of complainant raises several question marks. Though his version that amount had been handed over in presence of a Scrap Dealer Shamsher Ali has been questioned by accused but he has not been examined though he is stated to be on good terms with complainant and is alive. On the other hand, the accused's version is that he had only borrowed Rs.50,000/ from complainant and had returned the amount. On return of the same when he asked for the blank cheque, being kept by complainant as a security, it was not returned by asserting that it was not to be found.

9. Likewise, similar observations are found in para11 of the order and the same read as under:

"11.Accordingly neither lending of the aforesaid huge amount in cash has been proved from an independent angle nor it is clear as to how and in what manner the amount was so lent, as required in the peculiar facts and circumstances of the case. After weighing the respective statements of the two contesting parties the fact of a teacher lending Rs.50,000/ p.m. to accused for nine continuous months, without it being returned in any manner, does not appeal to the senses, whereas the version of accused that his blank cheque lying with complainant has been misused appears to be a probable one. Thus it cannot be said beyond reasonable doubt that there had been a legally enforceable liability in discharge of which cheque Ext.C2 could have bee issued and as such the findings of this Court on point No. 1 is in the negative and against the complainant.

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10. Apparently, the learned trial Magistrate has not at all kept in mind the presumptions as to Negotiable Instrument as envisaged under .

Sections 118(a) and 139 of the Act, which 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;

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."

11. Chapter XVII containing Sections 138 to 142 was introduced in the Act by Act No. 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.

12. In M.S. Narayana Menon alias Mani vs. 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 ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 6 for such rebuttal was "preponderance of probability" and not proof "proved beyond reasonable doubt" and it was held as under: .

"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 nonexistence 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.

* * *

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 consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man"."

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13. Similar reiteration of law can be found in K. Prakashan vs. 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."

14. To the same effect is the decision of the Hon'ble Supreme Court in Krishna Janardhan Bhat vs. 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.

* * *

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 an accused is preponderance of probabilities......

* * *

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........"

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15. Earlier to that the Hon'ble Supreme Court in Hiten P. Dalal vs. Bratindranath 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 nonexistence 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......."

16. Section 139 of the Act provides for drawing a presumption in favour of the holder and the Hon'ble Supreme Court in Kumar Exports vs. 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 ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 9 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".

* * *

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 ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 10 "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."

17. The Hon'ble Supreme Court thereafter held that the accused may adduce evidence to rebut the presumption, but mere denial regarding existence of debt shall not serve any purpose.

18. In Rangappa vs. Sri Mohan, (2010) 11 SCC 441, Hon'ble three Judges 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. 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 respondentclaimant 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 ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 11 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 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."

19. In T.P. Murugan vs. Bojan (2018) 8 SCC 469, the Hon'ble Supreme Court has held that once a cheque has been signed and issued in favour of holder of cheque, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability, but at the same time, it was also held that this presumption is rebuttable one and the issuer of cheque can rebut that presumption by adducing credible evidence that the cheque was issued for some other purpose like security for loan etc.

20. Similar reiteration of law can be found in a very recent judgment of the Hon'ble Supreme Court in Basalingappa vs. Mudibasappa, 2019 (2) Civil Court Cases 518.

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21. 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.

22. 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 nonexistence 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.

23. 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 ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 13 defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man.

24. Bearing in mind the aforesaid exposition of law, it is clearly evident that the learned trial Magistrate has failed to take into consideration the fact that once a cheque has been signed and issued in favour of the holder, there is a statutory presumption that it is issued in discharge of legally enforceable debt or liability. This presumption, of course, is rebuttable one if the issuer of the cheque is able to discharge the burden that it was issued for any other purpose like security of loan.

25. Section 139 of the Act is a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case, the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 14 evidence is neither possible nor contemplated. However, at the same time, it is clear that bare denial of the passing of the consideration and existence of .

debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record by the accused in order to get the burden of proof shifted on the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their nonexistence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.

26. In view of the presumptions attached by virtue of Sections 118 and 139 of the Act, the Court was required to draw a presumption that the cheque was issued for consideration and until the consideration was proved, some presumption would hold good. Therefore, in the given circumstances, the learned trial Magistrate has clearly fallen in error, in not being aware of the presumption attached to Negotiable Instruments Act by virtue of Sections 118 and 139 of the Act and has, therefore, erred in placing the initial onus on the complainant rather than placing the same on the accused/ respondent.

27. In this view of the matter, this Court need not express any opinion on the merits of the case or the same may prejudice any of the parties. Therefore, in the given circumstances, this Court has no other option but to setaside the order of acquittal passed by learned trial ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP 15 Magistrate and direct it to rehear the matter bearing in mind the provisions, more particularly, those contained in Sections 118 and 139 of .

the Act.

28. Accordingly, I find merit in this appeal and the order passed by learned trial Magistrate on 23.08.2018 in Criminal Case No. 216/1 of 2013 is setaside and the trial Court is directed to decide the same afresh in accordance with law and bearing in mind the observations made hereinabove.

29. The parties through their counsel(s) are directed to appear before the learned trial Magistrate on 10.06.2019.

30. The appeal is disposed of in the aforesaid terms, so also the pending application(s), if any.

(Tarlok Singh Chauhan) 20 May, 2019.

th Judge (sanjeev) ::: Downloaded on - 22/05/2019 21:56:54 :::HCHP

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