Himachal Pradesh High Court
Anil Verma vs Harish Kumar on 29 April, 2019
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Cr. Appeal No.453 of 2018
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Decided on: 29.4.2019
Anil Verma .....Appellant/Complainant
Versus
Harish Kumar ......Respondent/Accused
Coram r to
The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting?1 No
For the Appellant: Mr. Rajesh Mandhotra, Advocate.
For the Respondent: Mr. Sushant Veer Singh Thakur,
Advocate.
Tarlok Singh Chauhan, Judge (Oral)
The appellant is the complainant and aggrieved by the judgment of acquittal passed by the learned Sessions Judge, Hamirpur on 28.4.2018 in Criminal Appeal No. 37 of 2016, has filed the instant appeal.
2. Notably, the only ground for settingaside the conviction and sentence as imposed by the learned trial Court in a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (for 1 Whether the reporters of the local papers may be allowed to see the Judgment? Yes ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 2 short 'Act') and ordering the acquittal of the respondent/accused, is contained in para10, the relevant portion whereof reads as under:
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"10...... Existence of legally recoverable debt is not a matter of presumption under Section 139 and thus the complainant has failed to establish that he had given the money to the tune of Rs.3,40,000/ to the accused/ appellant and the appellant was under liability to discharge any debt or any other liability. Since there is no pleading in the complaint as well as in the evidence that the complainant has sought the recovery of his exchequer amount along with interest and litigation expenses and he does not want any conviction of the accused."
3. Apparently, the learned Sessions Judge has not at all considered and borne 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 ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 3 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."
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4. 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 r of an interpretation which serves the object of the statue.
5. 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)....
::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 430.Applying the said definitions of 'proved' or 'disproved' to principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless .
and until after considering the matter before it, it either believes that the consideration does not exist or considers the non existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
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32.The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.
41.....'23......Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man"."
6. 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 ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 5 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."
7.
Court in
r to
To the same effect is the decision of the Hon'ble Supreme 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........"
::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 68. 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......."
9. 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: ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 7 "14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for .
the discharge, in whole or in part, of any debt or other liability.
15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Indian Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume" (rebuttable), (2) "shall presume"
(rebuttable) and (3) "conclusive presumptions" (irrebuttable). The term `presumption' is used to designate an inference, affirmative or disaffirmative of the existence a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".
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18. Applying the definition of the word `proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 8 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque .
was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over."
10. 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.
11. In Rangappa vs. Sri Mohan, (2010) 11 SCC 441, Hon'ble three Judge Bench of the Hon'ble Supreme Court had occasion to examine the presumption under Section 139 of the Act and it was held that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 9 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 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 ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 10 accused/defendant cannot be expected to discharge an unduly high standard of proof."
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12. 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..
13. 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.
14. 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 ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 11 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.
15. 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.
16. Bearing in mind the aforesaid exposition of law, it is clearly evident that the learned Sessions Judge 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 ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 12 able to discharge the burden that it was issued for any other purpose like security of loan.
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17. 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 non existence of consideration and debt by leading direct evidence because the existence of negative 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 ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 13 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 non existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.
18. In view of the presumptions attached by virtue of Sections 118 and 139 of the Act, the appellate 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 Sessions Judge 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.
19. 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 judgment of acquittal passed by ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP 14 learned Sessions Judge, Hamirpur and direct it to rehear the matter bearing in mind the provisions, more particularly, those contained in .
Sections 118 and 139 of the Act.
20. Accordingly, I find merit in this appeal and the judgment passed by learned Sessions Judge, Hamirpur on 28.4.2018 in Criminal Appeal No. 37 of 2016 is setaside and the learned Sessions Judge, Hamirpur is directed to decide the same afresh in accordance with law and bearing in mind the observations made hereinabove.
21. The parties through their counsel(s) are directed to appear before the learned Sessions Judge, Hamirpur, on 20.5.2019.
22. The appeal is disposed of in the aforesaid terms, so also the pending application(s), if any.
(Tarlok Singh Chauhan) 29 th April, 2019. Judge (GR) ::: Downloaded on - 30/04/2019 21:58:37 :::HCHP