If such a relevant evidence is withheld by the plaintiff, Section 114. Evidence Act enables the Court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff.

 In the case of Kundan Lal Rallaram v. Custodian, Evacuee Property Bombay MANU/SC/0422/1961 : AIR 1961 SC 1316 the Hon'ble Supreme Court dealt with a case under Negotiable Instruments Act. 1881. The Hon'ble Supreme Court opined as under:

Section 118 lays down a special rule of Evidence applicable to negotiable instruments. The presumption is one of law and thereunder a Court shall presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect it throws the burden of proof of failure of consideration on the maker of the note or the endorser, as the case may be. The phrase "burden of proof" has two meanings: One, the burden of proof as a matter of law and pleading and the other the burden of establishing a case; the former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e., oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact. A plaintiff who says that he had sold certain goods to the defendant and that a promissory note was executed as consideration for the goods and that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration should produce the said account books. If such a relevant evidence is withheld by the plaintiff, Section 114. Evidence Act enables the Court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. This presumption if raised by a court, can under certain circumstances rebut the presumption of law raised under Section 118 of the Negotiable Instruments Act.

13. Thus, if the material or the relevant evidence is withheld by a party, then the presumption raised against the opposite party stands rebutted. Similar view has also been expressed in the case of Kumar Exports (supra). In the present case, the books of accounts were material and relevant evidence. Yet, they were withheld from the perusal of the trial Court. Thereafter, the presumption drawn against Subhash stands rebutted. Since the presumption under Section 139 of the Act is rebuttable one since Subhash has been able to rebutt the presumption, the learned Judge was certainly justified in acquitting the accused respondent.

Equivalent Citation: 2012(3)Crimes346

IN THE HIGH COURT OF RAJASTHAN

S.B. Crl. Leave to Appeal No. 8 of 2009

Decided On: 16.02.2012

Appellants: M/s Kanahiyalal Ghamandi Lal
Vs.
Respondent: Subhash

Hon'ble Judges/Coram:
R.S. Chauhan, J.

1. The appellant, M/s Kanahiya Lal Ghamandi Lal is aggrieved by the judgment dated 29.10.2007 passed by Additional Sessions Judge No. 1, Sri Ganganagar whereby the learned Judge has quashed and set aside the judgment dated 28.3.2005 passed by Additional Chief Judicial Magistrate. Sri Ganganagar. Vide judgment dated 28.3.2005, the learned Magistrate had convicted the respondent, Subhash, for offence under Section 138 of the NI Act (the Act for short) and had sentenced him to one year of simple imprisonment and had imposed a fine of Rs. 2,45.000 and further directed that the fine amount shall be paid as compensation to the complainant firm. However, vide judgment dated 29.10.2007, the judgment dated 28.3.2005 has been quashed and set aside; and the respondent accused. Subhash has been acquitted. Briefly, the facts of the case are that according to the complainant firm, Subhash had opened an account with the firm for selling of agricultural products for this purpose, there were monetary transactions between the firm and Subhash. Moreover Subhash had requested the firm to give loans to his father, Kasi Ram, which he would repay. Thus, according to the firm, accused respondent, and his father had taken loans from the firm. As on 30.9.2002, the loan amount was Rs. 1,98,700. The loan amount was entered in the account books (bahi). Moreover, according to the complainant between 4.10.2002 and 9.11.2002, the accused/respondent had taken further loan of Rs. 7,785. Thus, he owed a total of Rs. 2,06,485. The complainant further claimed that on 29.11.2003, the accused/respondent had sought a loan of Rs. 50,000. Thus, the accused respondent owed a grand total amount of Rs. 2,56,485. In order to repay this loan, the accused respondent issued two cheques in favour of the firm namely; cheque No. 0402982 dated 10.12.2003 for an amount of two lacs rupees, and another cheque, bearing cheque No. 402979 dated 18.12.2003 for an amount of fifty thousand rupees. But when these cheques were presented for encashment, they were dishonoured by the bank on the ground of insufficient fund. Therefore, the firm sent a legal notice to the accused respondent. However, despite the service of notice, the accused respondent did not repay the loan amount. Hence, the complaint under Section 138 of the Act.

2. In order to buttress its case, the firm examined the proprietor of the firm, Krishan Sachdeva (PW 1), as a witness and submitted seven documents. In defence, the accused respondent examined two witnesses including himself. After going through the oral and documentary evidence vide judgment dated 28.3.2005, the learned Magistrate convicted and sentenced the accused respondent as mentioned above.

3. Since the accused/respondent was aggrieved by the judgment dated 28.3.2005, he filed an appeal before the learned Judge. Vide judgment dated 29.10.2007, the learned Judge acquitted the accused/respondent, and quashed and set aside the judgment dated 28.3.2005. Hence, this criminal leave to appeal before this Court.

4. Mr. M.K. Garg, the learned counsel for the appellant, has vehemently raised the following contentions before this Court; firstly, in his cross-examination accused respondent has admitted that the cheques were, indeed signed by him. Once this admission is made, the presumptions under Sections 118 and 139 of the Act and should have been raised by the learned Appellate Court. Therefore, it was not for the complainant to establish the fact that there was outstanding loan amount due from the accused/respondent. Secondly, neither in his testimony, nor in his statement recorded under Section 313 Cr.P.C., he has denied the fact that he owed money to the firm. Therefore, there was no reason for the firm to establish the fact that accused/respondent had to repay the total amount of Rs. 2,56,485 to the firm. Hence, the learned judge has erred in acquitting the accused/respondent.

5. Mr. D.L. Rawla, the learned counsel for the accused/respondent, has raised the following arguments before this Court: firstly, the respondent had denied the fact that he owed any money to the firm both in his testimony and in his statement under Section 313 Cr.P.C. secondly, the learned Judge had raised the presumption under Section 139 of the Act against the respondent. However, the said presumption is not an absolute one. It is a rebuttable one. Through cogent evidence the respondent had rebutted the said presumption. Therefore, the learned Judge was justified in acquitting the respondent for the offence under Section 138 of the Act. Thus, the learned counsel has supported the impugned judgment.

6. Heard the learned counsel for the parties, and perused the impugned judgment dated 29.10.2007.

7. Section 118 of the Negotiable Instruments Act reads as under:

118. Presumptions as to negotiable instruments--Until the contrary is proved, the following presumptions shall be made:

(a) consideration--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred, for consideration:

(b) as to date--that every negotiable instrument bearing a date was made or drawn on such date;

(c) as to time of acceptance--that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;

(d) as to time of transfer--that every transfer of a negotiable instrument was made before its maturity;

(e) as to order of endorsement--that the endorsement appearing upon a negotiable instrument were made in the order in which they appear thereon;

(f) as to stamps--that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that holder is a holder in due course--that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.

Section 139 of the Act reads as under:

139. Presumption in favour of holder--It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of ant debt or other liability.

8. In the case of Kumar Exports v. Sharma Carpets MANU/SC/8414/2008 : (2009) 2 SCC 513 the Hon'ble Supreme Court has elaborately dealt with the concept of presumption, in general, and with presumption raised under Sections 118 and 139 of the Act, in particular. It would, indeed, be beneficial to reproduce the relevant excerpts from the said case:

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 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 presumption" (irrebuttable). The term (sic) to designate an inference, affirmative or disaffirmative (sic) of the existence of 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.

Section 4 of the Evidence Act inter alia defines the words "may presumed" and

"shall presume" as follows:

4. May presume--Whenever it is provided by this Act that the court may presume a fact it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it:

'Shall presume'--Whenever it is directed by this Act that the court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved:

In the former case, the court has an option to raise the presumption or not, but in the latter case, the court must necessarily raise the presumption. If in a case the court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved.

In order to determine the question whether offence punishable under Section 138 of the Act is made out against the appellant, it will be necessary to examine the scope and ambit of presumptions to be raised as envisaged by the provisions of Sections 118 and 139 of the Act, In a suit to enforce a simple contract, the plaintiff has to aver in his pleading that it was made for good consideration and must substantiate it by evidence. But to this rule, the negotiable instruments are an exception.

In a significant departure from the general rule applicable to contracts, Section 118 of the Act provides certain presumptions to be raised. This section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade. Section 118 of the Act provides, presumptions to be raised until the contrary is proved (i), as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of endorsements, (vi) as to appropriate stamp, and (vii) as to holder being a holder in due course.

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.

Section 118 of the Act, inter alia, directs that it shall be presumed; until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of whole or part of any debt or liability.

Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections118 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.

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.

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 non-existence 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 evidence is neither possible nor contemplated. 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 for getting the burden of proof shifted to 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. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.

The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and, the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue.

9. Therefore, the moot question before this Court is whether the accused respondent; Subhash has been able to rebutt the presumption drawn against him under Section 139 of the Act or not?

10. Subhash (DW 1) in his examination-in-chief has clearly stated that there was no outstanding amount due from him or his father. In fact, he had explained the circumstances under which the firm had the possession of signed cheque given by him. According to him, he wanted to open a bank account for which he needed an introducer. Therefore, he had taken Krishan Sachdeva's son to the bank. Krishan Sachdeva's son had identified him in the bank. Subhash further claimed that Krishan Sachdeva had kept the passbook and the cheque book signed by him by saying that the cheque book is being kept by way of surety. He further claimed that although the cheques have been signed by him, but the amount and the dates have not been filled by him. This fact was clear as the ink used for signing the cheque and the ink used for entering the date and the amount were two different inks. Therefore, according to him, the blank cheques given to him were subsequently filled by Krishan Sachdeva. Therefore, the complainant had misused the cheques.

11. Moreover, Krishan Sachdeva (PW 1) has claimed that Subhash and his father had taken loans from the firm. Moreover, whenever the accused and his father used to borrow money, the loan amount was entered in the books of accounts (Bahi); the same were duly countersigned by the accused and his father. Although Krishan Sachdeva (PW 1) has claimed that loan was taken, and, the same could be proved from the book of accounts, yet he has not produced any of the books of accounts to establish the factum of loan. A distinction has to be made between a fact being alleged and the proof of that fact. The proof of a fact may require the production of certain documentary evidence. It was not sufficient for Krishan Sachdeva to merely claim that the loan amounts were due. He was further required to substantiate his oral evidence by producing the relevant books of accounts. But he has singularly filed to do so. Therefore, the learned Judge was certainly justified in invoking an adverse presumption under Section 114 of the Evidence Act against the appellant.

12. In the case of Kundan Lal Rallaram v. Custodian, Evacuee Property Bombay MANU/SC/0422/1961 : AIR 1961 SC 1316 the Hon'ble Supreme Court dealt with a case under Negotiable Instruments Act. 1881. The Hon'ble Supreme Court opined as under:

Section 118 lays down a special rule of Evidence applicable to negotiable instruments. The presumption is one of law and thereunder a Court shall presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect it throws the burden of proof of failure of consideration on the maker of the note or the endorser, as the case may be. The phrase "burden of proof" has two meanings: One, the burden of proof as a matter of law and pleading and the other the burden of establishing a case; the former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e., oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact. A plaintiff who says that he had sold certain goods to the defendant and that a promissory note was executed as consideration for the goods and that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration should produce the said account books. If such a relevant evidence is withheld by the plaintiff, Section 114. Evidence Act enables the Court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. This presumption if raised by a court, can under certain circumstances rebut the presumption of law raised under Section 118 of the Negotiable Instruments Act.

13. Thus, if the material or the relevant evidence is withheld by a party, then the presumption raised against the opposite party stands rebutted. Similar view has also been expressed in the case of Kumar Exports (supra). In the present case, the books of accounts were material and relevant evidence. Yet, they were withheld from the perusal of the trial Court. Thereafter, the presumption drawn against Subhash stands rebutted. Since the presumption under Section 139 of the Act is rebuttable one since Subhash has been able to rebutt the presumption, the learned Judge was certainly justified in acquitting the accused respondent. Since the learned Judge has given legal and cogent reasons for acquitting the accused respondent, this Court does not find any illegality or perversity in the impugned judgment. The Criminal Leave to Appeal is, thus, devoid of any merit; it is hereby dismissed.

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