Himachal Pradesh High Court
Ram Chand vs Rafee Mohammad on 28 December, 2018
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Appeal No.167 of 2018
.
Date of decision: 28th December, 2018.
Ram Chand .....Appellant/Complainant
Versus
Rafee Mohammad ......Respondent
Coram
r to
The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting?1 No
For the Appellant: Mr. Umesh Kanwar, Advocate.
For the Respondent: Mr. Maan Singh, Advocate.
Tarlok Singh Chauhan, Judge (oral)
The complainant is the appellant, who aggrieved by the dismissal of his complaint under Section 138 of the Negotiable Instruments Act (for short the 'Act'), has filed the instant appeal.
2. Briefly stated the facts of the case are that the appellant was running the business in the name and style of Ankit Hire Purchase Pvt. Ltd., at Ghurmarwin, District Bilaspur, of which, the petitioner was Managing Director at one point of time. It was alleged 1 Whether the reporters of the local papers may be allowed to see the Judgment? Yes ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 2 that the appellant and respondent were well known to each other and were having good terms. On 12.12.2012, the respondent visited the .
business premises of the appellant and requested for a sum of Rs.5,00,000/ for his personal requirement. The appellant withdrew the amount from his account in Dadhol Agriculture Cooperative Society, Padyalg and gave the amount to the respondent, who in lieu thereof issued two cheques bearing number 654832 dated 19.12.2012 amounting to Rs.3,00,000/ and another cheque dated 27.12.2012 amounting to Rs.2,00,000/, which on presentation by the appellant were returned back unpaid with the remarks "insufficient funds".
Thereafter, the appellant issued a legal notice to the respondent, yet the payment was not made constraining him to file complaint under Section 138 of the Act.
3 In support of his complaint, the appellant examined three witnesses, but the learned trial court after recording the evidence and evaluating the same dismissed the complaint vide judgment dated 1.3.2018 on the ground that the appellant had failed to prove his case beyond shadow of doubt.
4 It is vehemently argued by Mr. Umesh Kanwar, learned counsel for the appellant, that the learned trial court has failed to take into consideration the presumption attached to the negotiable ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 3 instrument as per Sections 118(a) and 139 of the Act and thereby reached at a wrong conclusion, whereas on the other hand, Mr. Maan .
Singh, learned counsel for the respondent, would argue that no exception can be taken to the findings recorded by the learned trial court, more particularly, when the appellant has failed to prove his case.
5 I have heard the learned counsel for the parties and have also gone through the record of the case carefully.
6 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: "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."
7 Chapter XVII containing Sections 138 to 142 was introduced in the Act by Act 66 of 1988 with the object of inculcating ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 4 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.
8 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 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 non existence of the consideration so probable that a prudent man ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 5 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 consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man"."
9 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......
::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 614. 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."
10 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.
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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......
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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........"
11 Earlier to that the Hon'ble Supreme Court in Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16, compared ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 7 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......."
12 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.
::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 815. 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 ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 9 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.
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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."
13 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.
14 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: ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 10 "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 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."
::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 1115 In a very recent judgment 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..
16 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.
17 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 ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 12 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.
18 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.
19 Now, adverting to the facts of the case, if cheque, Ext. C1 is perused, it would be noticed that the same has been issued by a partner of Indian Education Centre and not by the respondent in his name. Moreover, the cheque is in the name of Ramchand and not in the name of Ankit Hire Purchase Pvt. Ltd. The appellant has failed to show that he is the sole proprietor of the firm and has not even pleaded that he is the payee or the holder in due course of the cheque.
::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 1320 It is more than settled that it is only the holder in due course of a negotiable instrument, who is entitled to file the complaint .
under Section 138 of the Act. (Refer: Milind Shripad Chandurkar Vs. Kalim Khan (2011) 4 SCC 275, National Small Industries Corporation Ltd. Vs. State (2009) 1 SCC 407 and Punjab & Sindh Bank Vs. Vinkar Sahkari Bank Ltd. (2001) 7 SCC 721) 21 As observed above, the cheque in question Ext.C1 has been issued by a partner of Indian Education Centre and not by the respondent in his name and the appellant has failed to mention in the complaint or proved in evidence that Indian Education Centre had any connection with him or his establishment or for that matter, even with the respondent. This assumes significance and importance when the specific case of the appellant is that the entire exercise of lending money was done for and on behalf of Ankit Hire Purchase Pvt. Ltd., which allegedly was a company, yet no records of the same were produced.
22 As a matter of fact, the appellant has filed the complaint as Managing Director of the company, but there is no proof qua the same. Even otherwise, having failed to establish the connection between the company of which he claims himself to be the Managing Director with that of Indian Education Centre, whose partner has ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP 14 issued cheque, Ext.C1 and further having failed to establish connection of the respondent with Indian Education Centre, the .
learned trial court had no other option, but to have dismissed the complaint and acquitted the respondent.
23 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) 28 December, 2018.
th Judge (pankaj) ::: Downloaded on - 01/01/2019 20:02:09 :::HCHP