Jammu & Kashmir High Court
The Present Appeal Is Directed Against ... vs . on 7 March, 2024
Author: Sanjay Dhar
Bench: Sanjay Dhar
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT JAMMU
Reserved on: 29.02.2024
Pronounced on 07.03.2024
CrlA (AS) No. 35/2021
Qasim Ali Bhutto, age 65 years,
Proprietor of Firm Bhutto Plastic
House S/o Late Sh. Nazar Hussain,
R/o Village Chanderkote, Tehsil
and District Ramban.
Through: Ms. Rozina Afzal, Advocate
Vs.
Abdul Aziz, S/o Sh. Maqbool Hussain,
R/o Village Dandote, Tehsil Budhal
District Rajouri.
Through: Mr. Sumir Pandita, Advocate &
Mr. Imran Ahmed Rather, Advocate
CORAM: HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE
JUDGMENT
01. The present appeal is directed against judgment dated 27.09.2018 passed by the learned Judicial Magistrate 1st Class (Special Mobile Magistrate [Electricity]), Batote (hereinafter to be referred as "the trial Court"), whereby the respondent has been acquitted of offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter to be referred as "the NI Act").
02. It appears that the appellant/complainant had filed a complaint under Section 138 of the NI Act against the respondent/accused alleging therein that the accused had issued two cheques dated 10.03.2016 for an amount of Rs. 2,00,000/- and Rs.50,000/- in favour of the appellant/complainant in order to liquidate the outstanding amount, which the respondent/accused owed to the 2 CrlA (AS) No. 35/2021 appellant/complainant. It was pleaded by the complainant that the accused had purchased building material from him and in order to liquidate the part payment on account of cost of the building material, the respondent had issued the aforesaid cheques in favour of the appellant/complainant. It seems that when these cheques were presented for encashment by the appellant/complainant with his banker, the same were returned unpaid on account of insufficiency of funds vide memo dated 31.05.2016. The appellant/complainant is stated to have served a legal notice dated 06.06.02016 upon the respondent/accused asking him to make the payment of the cheque amount to him, but the accused/respondent failed to do so, which ultimately resulted in filing of the complaint before the learned trial court.
03. Vide order dated 05.05.2016, the learned trial court issue the process against the respondent and on 05.10.2016, upon appearance of the accused, his plea under Section 242 of J&K Cr.P.C. was recorded. In his statement recorded under Section 242 of J&K Cr. P.C., the respondent/accused, while admitting issuance of the cheques as also his liability to the tune of Rs. 2,88,000/-, submitted that he had asked the complainant/appellant to wait for 5/7 days but the complainant/appellant held up his vehicle, whereafter he paid an amount of Rs. 50,000/- to him in presence of SHO, Chanderkote, DW-Diljit Singh. He also stated that a further amount of Rs. 2.00 lacs was paid by him to the complainant/appellant after withdrawing the same through ATM. According to the accused, the SHO had assured him that the complainant would return the cheques, but instead of doing so, he filed a complaint against him.
3CrlA (AS) No. 35/2021
04. The complainant besides examining himself as a witness also examined PW-Mohd Yaqoob, Assistant Manager JK Bank Batote and PW- Gourav Verma, Post Master in support of his case. The learned trial court did not record the statement of the accused under Section 342 of J&K Cr.P.C. In this regard, it was observed by the trial court that there is no requirement of recording such statement. However, the accused/respondent, examined three witnesses, namely, DW-Safiq Ahmad, Mond Amin and SHO Diljit Singh in defence.
05. The learned trial court upon appreciation of the evidence on record came to the conclusion that the cheques, which are subject matter of the complaint, have been issued by the respondent/accused in favour of the appellant/complainant in discharge of his liability towards him. It was also concluded by the learned trial court that these cheques were dishonoured by the Banker on account of insufficiency of funds in the account of the accused/respondent. The trial court further recorded a finding that notice of demand was served upon the respondent/accused. However, on the basis of the evidence produced by accused in defence, the learned trial court, came to the conclusion that the accused has been able to probabilize his defence that he has entered into a compromise with the complainant after issuance of the cheques and in pursuance of the said compromise, he had paid the amount in cash to the appellant in presence of the Police. Accordingly, the accused/respondent has been acquitted and the complaint has been dismissed.
06. The appellant/complainant has challenged the impugned judgment passed by the learned trial court on the grounds that the evidence on record 4 CrlA (AS) No. 35/2021 has not been properly appreciated by the learned trial court. It has been contended that once the complainant had established that the accused had issued the cheques in his favour, the same were dishonoured on account of insufficiency of funds and notice of demand was served upon the accused, a presumption under Sections 118 and 139 of the NI Act regarding existence of a legally enforceable liability arises in favour of the complainant. According to the appellant, the evidence produced by the respondent/accused before the trial court does not rebut the said presumption as the same is contradictory and un-reliable in nature.
07. I have heard learned counsel for the parties and perused the grounds of challenge, the impugned judgment and the record of the trial court.
08. There is no dispute to the fact that the cheques, which are subject matter of complaint filed by the appellant against the respondent, had been issued by the respondent in favour of the appellant. It is also an admitted case of the parties that the respondent used to purchase the building material from the appellant and in this regard a commercial transaction was going on between them. It is also not in dispute that the respondent had issued the cheques in question in favour of the appellant to discharge his liability towards him. The dishonour of the cheques on account of insufficiency of funds is also an admitted fact. The only question that remains to be determined is as to whether there was a compromise between the parties in pursuance whereof any payments were made by the respondent to the appellant.
5CrlA (AS) No. 35/2021
09. Before referring to the evidence produced by the accused/respondent before the trial court so as to determine whether or not the accused has been able to prove his defence that he had paid the cheque amount or any portion of it to the appellant, it would be apt to notice the law as regards the manner in which an accused in a compliant under Section 138 of the NI Act is expected to discharge his burden to prove his defence. As already noted, the facts relating to issuance of cheques and dishonour of the cheques for insufficiency of funds are not in dispute, therefore, in terms of Section 139 of the NI Act, it has to be presumed that the appellant has received the cheques in discharge of whole or part of the debt or liability. However, the said presumption is rebuttable, as is clear from the provisions contained in Section 139 of the NI Act.
10. The Supreme Court has, in the case of Rangappa vs. Sri Mohan, AIR 2010 SC 1898 while discussing the legal position as regards the nature of presumption that arises under Section 139 of the NI Act and the standard of proof required to rebut such presumption, observed as under:
"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. 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. Section 6 CrlA (AS) No. 35/2021 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 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.
11. From a perusal of the afore-quoted observations of the Supreme Court, it is clear that once a presumption arises in terms of Section 139 of the NI Act on the basis of the facts proved on record, the person against whom presumption is drawn is not precluded from rebutting it and proving the contrary. It is also clear that the rebuttal does not have to be conclusively established but the person against whom the presumption has arisen, has to 7 CrlA (AS) No. 35/2021 adduce such evidence in support of his defence that the Court may either believe the defence to exist or consider its existence to be reasonably probable. The standard of reasonability has to be that of a prudent person.
12. Adverting to the facts of the instant case, as has already been noted, the respondent/accused while making his statement under Section 242 of the J&K Cr. P.C. has clearly stated that after issuance of the cheques in question, there was a compromise between the parties before SHO, Police Station, Chanderkote, DW-Diljit Singh as the appellant/complainant had held up his vehicle at Chanderkote. It is his defence that during the compromise an amount of Rs. 50,000/- was paid to the complainant and the balance amount was paid to him after withdrawing the same from the ATM after some days, but in spite of this, he did not return the cheques. In order to establish this defence, the respondent/accused has examined DW-Shafiq Ahmad and DW- Mohd Amin, who were working as Mates with the respondent. The statement of the then SHO, Police Station, Chanderkote, Diljit Singh has also been recorded.
13. Both DWs Shafiq Ahmad and Mohd Amin have stated that the accused owed around a sum of Rs.12 lacs from the complainant, out of which the accused had paid an amount of Rs. 9 lacs to him, leaving a balance of Rs. 2,88,000/-, regarding which he had issued two cheques for an amount of Rs. 2,50,000/-, that became subject matter of the complaint. Both these witnesses have stated that the vehicle belonging to the respondent/accused was detained by the appellant/complainant near his shop and it was not allowed to proceed, which prompted them to approach the Police Station. 8 CrlA (AS) No. 35/2021 According to these witnesses, SHO, Daljit Singh asked them to enter into a compromise with the appellant and make payment to him. The witnesses have stated that they paid an amount of Rs. 40,000/- to the appellant in the Police Station, whereafter the vehicle was allowed to proceed. They have also stated that thereafter they withdrew an amount of Rs. 2,10,000/- by operating the ATM card of accused on several occasions over a period of 5/6 days and they paid the said amount to the appellant/complainant.
14. The aforesaid statement of both the above named defence witnesses is corroborated in material particulars by the statement of DW-Daljit Singh, the then SHO, Chanderkote. He has clearly stated that he had intervened in the matter. Although, he has stated that amount of Rs. 40,000/- was not paid in his presence, yet he has gone on to state that the appellant/complainant conveyed to him that the Mates have paid an amount of Rs. 40,000/- to him. He has further stated that after a few days, he was conveyed by the Mates that they have paid an amount of Rs. 2.00 lacs to the appellant but he is not retuning the cheques. He has stated that the appellant came to the Police Station and when he enquired from him about this and asked him as why despite receiving the payment, he is not returning the cheques, the appellant responded by stating that he has to recover bank interest from the accused.
15. The defence witnesses have also placed on record the statement of account pertaining to the accused, which clearly depicts withdrawal of the amount in the range of Rs. 10,000/- to 20,000/- during the period from 11th May to 17th May, 2016. According to the defence witnesses, they have paid an amount of Rs. 2.50 lacs to the appellant after withdrawing the same through 9 CrlA (AS) No. 35/2021 ATM from the account of the accused, out of which Rs. 40,000/- was paid to the appellant on 11th May, 2016 and rest of the amount was paid upto 17th May 2016. These withdrawals, as are depicted in the statement of account of the accused, correspond to the statement made by the defence witnesses, DW- Shafiq Ahmad and DW-Mohd Amin, thereby lending credence to their statements in this regard. Thus, the defence of respondent/accused that he had paid the cheque amount to the appellant, even before the same were presented for encashment, appears to be probable.
16. Learned counsel for the appellant has vehemently argued that if the accused would have discharged his liability then he would have certainly responded to the demand notice served upon him by the appellant and the fact that he did not do so, shows that his defence is an afterthought. The argument of the learned counsel for the appellant appears to be attractive but in the facts and circumstances of the instant case discussed hereinafter, the same deserves to be rejected.
17. So far as the allegation regarding receipt of demand notice by respondent/accused is concerned, the same has never been put to him to seek an explanation from him at the time of recording his statement under Section 242 of J&K Cr.PC. The learned Magistrate did not explain the particulars of the fact relating to service of demand notice upon him while recording his statement under Section 242 of the J&K Cr. P.C., though it is an essential ingredient of offence under Section 138 of NI Act. The statement of the accused under Section 342 Cr.P.C. has not been recorded at all by the learned trial Magistrate on the ground that no such statement was required to be 10 CrlA (AS) No. 35/2021 recorded in a summons trial case. Thus, even the evidence regarding service of demand notice has not been put to the accused for seeking his explanation.
18. It needs to be determined as to whether or not the learned Magistrate was legally justified in his approach of not recording the statement of the accused under Section 342 Cr. P.C. In this regard, we need to notice the procedure prescribed under the Code of Criminal procedure for trial of summons cases. Chapter-XX of the J&K Code of Criminal Procedure, which is applicable to the instant case, provides the procedure of the trial of summons cases by a Magistrate. Section 242 of the Cr.P.C, which falls in the aforesaid Chapter, mandates a Magistrate to state the particulars of the offence to the accused and he has to be asked if he has any cause to show why he should not be convicted. As per Section 243 of the Cr. P.C., if the accused admits that he has committed the offence, his admission has to be recorded, whereafter he has to be convicted. Section 243-A Cr.P.C relates to conviction, on the plea of guilty in absence of an accused in petty cases. As per Section 244 Cr.P.C, when no admission is made by the accused, the Magistrate has to hear the complainant, take all such evidence as may be produced in support of the prosecution, hear the accused and take all such evidence as he produces in his defence. Section 245 Cr. P.C provides that if the Magistrate upon taking the evidence as referred in Section 244 Cr. P.C, finds that the accused is not guilty, he shall record an order of acquittal.
19. From the foregoing analysis of the provisions contained in Chapter- XX of the J&K Code of Criminal Procedure, it is clear that a Magistrate while trying a summons case has to follow the following stages: 11 CrlA (AS) No. 35/2021
(i) The particulars of the offences of which a person is accused have to be explained to him and he has to be asked to show cause as to why he should not be convicted.
(ii) If the accused admits the offence, his admission has to be recorded, which shall be followed by his conviction.
(iii) If no admission is made by the accused, the complainant has to be heard.
(iv) All evidence that is produced in support of the prosecution has to be taken down.
(v) The accused has to be heard.
(vi) All the evidence that may be produced by the accused in defence
has to be recorded.
(vii) Accused has to be examined, if the Magistrate thinks fit to do so.
(viii) The Magistrate has to give his findings.
20. It may be argued that in the procedure prescribed for trial of the summons cases, it is no where provided that the statement of the accused is to be recorded after completion of the prosecution evidence. In this regard, it has to be borne in mind that after completion of the prosecution evidence, though it is not explicitly provided in Section 244 Cr. P.C. that statement of the accused is to be recorded, but it is clearly stated therein that the accused has to be heard. It has been provided in the aforesaid provisions that the Magistrate has to hear the accused after the evidence in support of the prosecution case is completed. It certainly connotes that the accused has to be asked as to what he has to say in his defence to the charge which has been brought against him as 12 CrlA (AS) No. 35/2021 also the evidence which has been led in support of the said charge, which in other words means that the explanation of the accused has to be recorded by the Magistrate even in a summons trial case.
21. I am supported in my aforesaid view by the judgment of a Division Bench of the Bombay High Court in case of Emperor v. Gulabjan, (1920) 45 Bom. 672. The High Court of Bombay has, while considering the aforesaid aspect of the matter in the light of the provisions contained in Section 342 Cr.P.C of the old Code, observed as under:
"It has been contended that none of the sections prescribing the procedure to be followed in summons cases contain the words " before he is called on for his defence" whereas in the sections prescribing the procedure to be followed in the trial of warrant and Sessions cases those words are used, and therefore, it was not intended that it should be obligatory on the Court to question the accused in summons cases, as section 244 only required that the accused should be heard.
I doubt whether that is a sound argument, as every accused person has a right to be called on for his defence, and when section 244 lays down that the Magistrate shall hear the accused, it certainly means that he should ask the accused what he has to say in his own defence against the charge which has been brought against him, and in explanation of the evidence which has been led to support the charge. It does not seem to me that there is very much difference between hearing the accused and questioning him generally to enable him to explain the circumstances appearing in the evidence against him; and if it had not been for the provisions of section 364, it would be perfectly correct if the Magistrate, in trying a summons case, in which he has not to take down the evidence, simply recorded the fact that the accused had been questioned under section 342"13 CrlA (AS) No. 35/2021
22. Thus, from the aforesaid analysis of law on the subject, it is clear that even in a summons case, it is mandatory for a Magistrate or a Court to put the incriminating circumstances appearing in the prosecution evidence to the accused and record his statement under Section 342 of the Cr. P.C.
23. A contrary view has been taken by the High Court of Addhra Pradesh in the case, titled, K. Vidyanand vs. Erramma and ors., AIR 1962 AP 394. In the said judgment, a Single Judge of the Addhra Pradesh High Court has taken the view that the procedure prescribed under Chapter-XX of the old code does not contemplate recording of statement of the accused after prosecution evidence, as such, it is not mandatory to record such statement of the accused in a summons trial case. I respectfully beg to differ with the view expressed by the High Court of Andhra Pradesh because in the aforesaid judgment the learned Judge has interpreted the provisions contained in Section 244 of the old Code without assigning any meaning to the requirement of hearing of the accused after the completion of prosecution evidence. The hearing of the accused, as already stated, would include seeking his explanation with regard to evidence adduced by the prosecution against him.
24. There is yet another reason to differ from the view taken by the learned Single Judge of the Andhra Pradesh High Court. Chapter XXIV of the Code, which relates to "General Provisions as to Inquiries and Trials" is applicable to all types of trials. The summons trial cases cannot be excluded from its preview. Section 342 Cr. P.C. which falls in the said Chapter is, therefore, equally applicable to summons trial cases. If the view of Andhra 14 CrlA (AS) No. 35/2021 Pradesh High Court is accepted then no provision of Chapter XXIV of the old Code can be made applicable to summons trial cases and this would include provisions relating to tender of pardon (Section 337 & Section 338), right of an accused to be defended by a pleader (Section 340), procedure where accused does not understand proceedings (Section 341), right of accused to be a witness for defence (Section 342-A), power of adjournment of proceedings (Section 344), compounding of offences (Section 345) and other matters to which provisions of sections 346 to 352 pertain. This would lead to many anomalies which could never have been the intention of the legislature.
25. For all the aforesaid reasons, the view taken by the learned trial Magistrate that there was no requirement of recording the statement of the accused under Section 342 Cr. P.C. is not in accordance with law. Thus, even in summons trial cases a criminal court is obliged to question the accused generally on the case after the witnesses of the prosecution have been examined.
26. It is a settled law that the incriminating circumstances, regarding which no explanation has been called from the accused, cannot be used against him while deciding veracity of the accusation against him. The evidence which has not been put to an accused has to be eschewed from consideration. Therefore, the evidence, as regards service of demand notice upon the respondent/accused having not been put to him, cannot be taken into consideration while deciding the veracity of the accusations against him. Had this incriminating circumstance been put to the accused/respondent, he may have come up with a suitable response to the same but because it has not been 15 CrlA (AS) No. 35/2021 put to him either at the time of recording his statement under Section 242 Cr. P.C or at a later stage, the said circumstance cannot be used against him. No adverse inference can, therefore, be raised against the respondent/accused for not having responded to the demand notice.
27. Another argument that has been raised by the learned counsel for the appellant is that there is no cogent evidence on record, at least, to the extent of payment of an amount of Rs. 2,10,000/-to the appellant by the accused as this part of transaction has not taken place in the Police Station. It has been urged that it cannot be stated that the respondent had discharged his full liability in respect of the cheque amount to the extent of Rs. 2,50,000/-.
28. Even if the aforesaid contention of the learned counsel for the appellant is accepted still then there is enough material on record to show that the appellant has received Rs. 40,000/- from the accused through his wage mates and it is only upon payment of the said amount that the complainant/appellant allowed his vehicle to proceed. The question arises whether upon part payment in respect of the cheque amount made by an accused to the complainant, the proceedings under Section 138 of the NI Act would survive. This issue came up for discussion before the Supreme Court in the case of Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel and Anr, 2022 liveLaw (SC) 830 and the Supreme Court after discussing its earlier pronouncements on the issue, summarized its findings as under:
"30. In view of the discussion above, we summarise our findings below:16 CrlA (AS) No. 35/2021
(i) For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation;
(ii) If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque;
(iii) When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act.
The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted;
(iv) The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the „legally enforceable debt‟ on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds; and
(v) The notice demanding the payment of the „said amount of money‟ has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offence under Section 138, the validity of the form of the notice need not be decided."
29. From the aforesaid analysis of law on the subject, it is clear that if the drawer of the cheque pays a part of whole of the sum between the period the when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque. Therefore, unless the part payment is endorsed on 17 CrlA (AS) No. 35/2021 the cheque as per the Section 56 of the NI Act, the complaint under Section 138 of NI Act would not be maintainable once part payment is made by the accused.
30. In view of the aforesaid legal position, even if the contention of the learned counsel for the appellant that payment of Rs. 2,10,000/- by the accused to the appellant is not sufficiently proved, still then in the absence of endorsement on the cheques regarding receipt of Rs. 40,000/-, the complaint could not have proceeded.
31. In view of the foregoing discussion, this Court is of the considered view that the accused/respondent has succeeded in probablizing his defence so as to rebut the presumption that had arisen in favour of the appellant/complainant. The view taken by the learned trial court is definitely a passible one, as such, this Court does not find any ground to interfere in the impugned judgment passed by said court. The appeal lacks merit and is dismissed accordingly.
32. The record of the trial court be returned.
(SANJAY DHAR) JUDGE Jammu 07.03.2024 Karam Chand/Secy.
Whether the order is speaking: Yes
Whether the order is reportable: Yes