ICD vs. Beena Shabir and Anrs.: 2002(6) SCC 426 wherein the Supreme
Court has held that the security cheques also would fall within the
purview of the Section 138 of the NI Act and a person could not escape
his liability. As such, when there is existence of debt on the date of
presentation of the cheque and the security cheques issued are
dishonoured, the accused would be liable under Section 138 of the NI
Act.
39. In Collage Culture and Ors. vs. Apparel Export Promotion
Council: 2007 (99) DRJ 251, a distinction has been drawn between two
kinds of cheques namely one issued in discharge in presenti but payable
in future and the other issued in respect of a debt which comes into
existence on the occurrence of a contingent event, and is not in existence
on the date of issue of a cheque. The latter cheque, being by way of
security cheque, will not be covered under Section 138 of NI Act. In the
aforesaid decision, definition of the word ‘due’ has been given as
‘outstanding on the relevant date’. The Court, therefore, held that the
debt has to be in existence as a crystallized demand akin to liquidated
damages and not a demand which may or may not come into existence.
However, in Suresh Chand Goyal vs. Amit Singhal (Crl.A. 601/2015
decided on 14.05.2015) the concept of security cheques were discussed.
It was held in the aforesaid case:
“28. There is no magic in the word “security cheque”, such
that, the moment the accused claims that the dishonoured
cheque (in respect whereof a complaint under Section 138 of
the Act is preferred) was given as a “security cheque”, the
Magistrate would acquit the accused. The expression “security
cheque” is not a statutorily defined expression in the NI Act.
The NI Act does not per se carve out an exception in respect of
a „security cheque‟ to say that a complaint in respect of such a
cheque would not be maintainable. There can be myriad
situations in which the cheque issued by the accused may be
called as security cheque, or may have been issued by way of a
security, i.e. to provide an assurance or comfort to the drawee,
that in case of failure of the primary consideration on the due
date, or on the happening (or not happening) of a contingency,
the security may be enforced. While in some situations, the
dishonor of such a cheque may attract the penal provisions
contained in Section 138 of the Act, in others it may not.”
40. Relying on the aforesaid dicta, a bench of this Court in Credential
Leasing & Credits Ltd. vs. Shruti Investments and Anrs.: 2015 (151) DRJ
147 held as under:
“30. Thus, I am of the considered view that there is no merit in
the legal submission of the respondent accused that only on
account of the fact that the cheque in question was issued as
security in respect of a contingent liability, the complaint
under Section 138 of the NI Act would not be maintainable. At
the same time, I may add that it would need examination on a
case to case basis as to whether, on the date of presentation of
the dishonoured cheque the ascertained and crystallized debt
or other liability did not exist. The onus to raise a probable
defence would lie on the accused, as the law raises a
presumption in favour of the holder of the cheque that the
dishonoured cheque was issued in respect of a debt or other
liability.”
IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 15.09.2015
CRL.REV.P. 188/2015
WILSON MATHEW
versus
THE STATE NCT OF DELHI & ANR.
CORAM:
HON'BLE MR. JUSTICE ASHUTOSH KUMAR
1. Wilson Mathew stood convicted under Section 138 of the
Negotiable Instruments Act, 1881 (for short ‘NI Act’) by judgment dated
02.06.2014 passed by the learned Metropolitan Magistrate (South)-01, NI
Act, South Courts, New Delhi, in CC No.958/1. By order dated
24.06.2014 passed by the Trial Court, the petitioner was sentenced to 4
months Simple Imprisonment and was directed to pay a compensation of
Rs.3,08,100/-; Rs.2,05,400/-; Rs. 2,56,750/-; Rs.1,54,050/- respectively
against the cheques in question along with interest of 9% p.a. within one
month to the complainant (respondent no.2). It was stipulated that in
default, the petitioner would further suffer sentence of Simple
Imprisonment of 3 months.
2. There were four connected cases bearing CC No.958/1, 959/1,
960/1 and 961/1 under the same name and title namely Sanjeev Kumar
vs. Wilson Mathew. In each of the cases, similar sentence of
imprisonment has been awarded but with a direction that all the sentences
shall run concurrently.
3. The petitioner preferred four appeals namely Criminal Appeal
Nos.82/2014, 83/2014, 84/2014 and 85/2014 before the learned
Additional Sessions Judge-03, Patiala House Courts, New Delhi, all of
which were disposed of by a common order dated 29.01.2015.
4. In the aforesaid appeals, the conviction of the petitioner was
sustained but the sentence was modified and instead of sentence of four
months Simple Imprisonment, the petitioner was directed to pay the
compensation amount (Rs.3,08,100/-; Rs. 2,05,400/-; Rs.2,56,750/- and
Rs. 1,54,050/-) in each of the complaint case respectively against 11
cheques along with interest of 11% p.a. within two months, to the
complainant, and in default of payment of compensation, the petitioner
was directed to suffer imprisonment for 3 months.
5. The petitioner has challenged the aforementioned judgments and
orders of both the courts below.
6. It has been submitted on behalf of the revisionist/petitioner that
both the judgments are not based on proper appreciation of evidence on
record. Despite the categorical admission of the complainant that the
cheques were accepted by him for security purposes and that they were
received by him in the year 2007 at the time of handing over of money to
the petitioner, the petitioner has been convicted. It has further been
argued that if the cheques had been issued towards repayment of loan, it
should have been dated for the year 2008-09 and not January 2011; for
the loan was only for two years. The courts below, it has been argued,
did not take into account the fact that a composition agreement was
arrived at between the parties in the Trial Court in which there was an
admission of the respondent of having received Rs.8.80 lacs. from the
petitioner. Both the courts did not take into account this aspect of
composition on the slender ground that neither the composition
agreement was brought on record nor any witness was examined in that
regard. The further case of the petitioner is that the exorbitant rate of
interest (24% p.a.) on which the complainant (respondent no.2) obtained
loan for the purposes of re-lending to the petitioner does not seem to be
probable and which ground is further buttressed by the fact that the
amount of loan is neither reflected in the ITR of the complainant nor of
the two persons namely CW-2 and CW-3 from whom the complainant
(respondent no.2) obtained money. It has lastly been argued that the
petitioner has already paid Rs.8.80 lacs. to the respondent no.2 against
the loan amount of Rs.8 lacs.
7. Rebutting such arguments, learned counsel for the respondent
submitted that the grounds taken in the present petition by the petitioner
were neither raised before the Trial Court nor before the Appellate Court
and that in revisional jurisdiction, the courts do not normally interfere
with the concurrent findings of conviction.
8. It is argued that a cheque issued even by way of security would be
covered under Section 138 of the NI Act. The onus to raise the probable
defence lies only with the accused as the law casts a presumption in
favour of the holder of the cheque that the dishonoured cheque was
issued in respect of the debt or other liability. The aforesaid onus obliges
the accused to raise a defence either by finding holes in the case of the
prosecution or by leading defence evidence which can lead the court to
believe that there is a probable defence of the accused against the claim
of the complainant with regard to the existence of legally enforceable
debt or other liability. Even though, the said onus does not impose as
stringent an obligation on the accused, as it does on the complainant who
is to prove his case beyond all reasonable doubts but raising no defence at
all would definitely not absolve the accused and it would not be in his
mouth to say that the presumption under Section 139 of the NI Act has
been rebutted.
9. In order to appreciate the contention of the parties, it is necessary
to examine the complaint of the respondent.
10. Four complaints were filed by the respondent no.2 stating interalia
that in the year 2006-07, the respondent was in employment of the
petitioner when there was a demand of money by the petitioner for the
purposes of expanding his business. The petitioner wanted the
complainant to arrange for Rs.10 lacs. in all.
11. That finding himself incapable of giving such huge amount as
loan, the complainant agreed to introduce the accused to other persons
who could lend money to him. The aforesaid persons who were
introduced to the petitioner, agreed to lend money to the complainant
who could in turn give the same to the petitioner. The petitioner was
ready and desirous of taking loan and therefore agreed to return such
loan, if given, with interest as agreed upon by the friends of the
complainant who had given money to the complainant. Believing such
assurance of the petitioner, the complainant borrowed an amount of Rs.7
lacs. from his friends on interest @ of 24% p.a. The aforesaid money
was given to the accused in successive installments i.e. Rs.3 lacs. in the
first instance and Rs.2 lacs. each in second and third instances, but all
during the period 2006-07. There was again a demand of the petitioner
of a further loan of Rs.4 lacs.. However, against such a demand, Rs.3
lacs. was paid by the complainant from his own funds and resources in
the year 2007. The accused agreed to pay interest @ 24% p.a. on the
amount which was last paid by the complainant from his own resources.
The entire loan amount was given to the accused for a period of 2 years
and the accused had promised to pay the same within fixed time along
with stipulated interest.
12. On failure of the petitioner to repay the loan amount along with
interest, a legal notice dated 13.12.2010 was served upon him.
Responding to such notice, it is alleged, and in discharge of admitted
legal liability, the accused petitioner issued two cheques in favour of the
complainant for a sum of Rs.3 lacs. with an assurance that the said
cheques would be honoured/encashed on its presentation. On presentation
of such cheques, they were returned unpaid with the remark of ‘funds
insufficient’. A legal notice under Section 138 of the NI Act dated
17.01.2011 was dispatched to the accused and he was asked to make
payment of dishonoured cheques within a period of 15 days from the date
of the receipt of the notice. No money was paid despite such notice.
Hence, the complaint.
13. During trial, the complainant examined himself as CW-1 and
offered Satbir Singh, his cousin and Tej Raj, his associate, as CW-2 &
CW-3 respectively before the Trial Court.
14. The complainant (respondent no.2) in his cross examination has
stated that he is a property dealer and earns from the rental income of his
property as well. In the year 2006, he worked in Capital Network Pvt. Ltd
as supervisor and was paid a salary of Rs. 8,000/- pm. He is an Income
Tax assessee. However, he has stated that he does not remember the date
and month when he gave money to the accused. He only remembered of
having given Rs. 10 lacs. in all to the accused, spaced over a period of
one year. No receipt was admittedly taken by the complainant from the
petitioner.
15. The complainant has admitted in his cross examination that he took
cheques from the accused for the security purpose and that the cheques
were received by him in the year 2007, at the time of handing over
money to the accused. However, the particulars in the cheques were filled
up in the handwriting of the accused. Contradictory statements, thus,
were made by the complainant during his cross-examination. In the first
part of the cross-examination, the complainant has stated that it is wrong
to suggest that he gave Rs. 10 lacs. to the accused. In the later part of the
cross-examination, the complainant has admitted of the accused having
taken an amount of Rs. 8 lacs. from him but denied the suggestion that
for such Rs. 8 lacs., he was paid and he received Rs. 8.80 lacs. from the
accused.
16. Satbir Singh, a cousin of the complainant, has testified to the fact
that complaintaint told him that the accused was in need of money. He
arranged for Rs. 3 lacs., which money was paid to the accused in the
month of November-December, 2007. He has admitted of not having
shown such loan in his income tax return, even though he had a business
of transport.
17. Tej Raj, CW-3, a property dealer and friend of the complainant
also admits of having given Rs. 3 lacs., to the complainant with an
assurance from him that the money would be returned within 6 months.
The aforesaid CW-3 has deposed that he disclosed about loan of Rs. 1
lac, in his ITR of 2007 and not of Rs. 3 lacs.
18. The statement of the accused was recorded on 15.04.2014 wherein
in response to question no. 5, he has admitted of having availed a total
loan of Rs. 8 lacs., and has stated that he returned Rs. 8.80 lacs. to the
complainant.
19. The Trial Court, on going through the documents placed on record,
took note of the fact that a legal notice for repayment of loan was sent by
the complainant to the accused on 13.12.2010, and the same was not
denied by the accused. As per that notice, the accused was asked to pay a
loan amount of Rs. 10 lacs. within a period of 7 days. The cheques in
question, as has been noted by the Trial Court, is dated 2011. The Trial
Court, therefore, came to the opinion that such issuance of cheque was
only pursuant to the notice dated 13.12.2010, which notice was not
denied by the accused and therefore, the cheques were issued indischarge
of a legally enforceable debt. The Trial Court, further took
notice of the fact that neither of the parties had placed on record any loan
agreement or receipt. It was the admission of the accused that he had
taken a loan from the complainant. The difference between the assertions
made in the complaint and the admission of the accused was only with
respect to the quantum of loan. The assertion of the complainant is Rs.10
lacs. whereas the admission of the accused is of Rs.8 lacs. The Trial
Court, therefore, believing the statement of the complainant and his two
witnesses convicted the petitioner by holding that the accused could not
rebut the presumption under Section 118/139 of the NI Act and sentenced
him as aforesaid.
20. Let it be noted that the Trial Court recorded the arguments of the
parties and while recording so, a reference was made to the
composition/settlement between the parties but the parties disputed their
liabilities.
21. For the same reasons, as recorded by the Trial Court, the Appellate
Court sustained the conviction of the petitioner but modified the sentence
by directing the petitioner to pay a fine amount on an enhanced rate of
interest, i.e. @ 11% p.a. within a period of 2 months and in default of
payment of compensation, the petitioner was directed to undergo SI for a
period of 3 months.
22. What is clearly noticed by this Court is that the complainant/CW-1
had made contradictory statements during his cross examination at two
places. At one place, he has denied the suggestion that he gave Rs.10
lacs. to the accused and at the other place, he has admitted that the
accused had taken a sum of Rs.8 lacs. from him. The other anomaly in
the statement of the complainant is that he has admitted the fact that he
took cheques in question from the accused for security purposes at the
time of handing over the money to the accused.
23. If loan was taken by the accused, according to the complainant for
a period of 2 years, the cheques, even if taken as security, would not have
been dated of the year 2011. A bare reading of the complaint makes it
clear that the loan of Rs.10 lacs., as alleged by the complainant, was
taken for a period of 2 years wherein it was assured by the accused that
he principal amount plus interest would be returned in that period. In that
event, it raises a suspicion as to why the cheques which were accepted by
the accused in the year 2007 only, were signed and dated for 2011.
24. The Trial Court gave a different logic for believing such cheques
to have been given in discharge of a legally enforceable debt. The notice
which was given to the accused on 13.02.2010, was not specifically
denied. The Trial Court, therefore, believed that the aforesaid cheques
were only pursuant to the notice and therefore there was a presumption
under Section 139 of the NI Act of the complainant being a holder in due
course. What the Trial Court forgot and missed to notice is the specific
statement of the complainant in his cross examination that he has
accepted the cheques as security and those cheques were handed over to
him in the year 2007. Thus, the reasoning given by the Trial Court for
believing the assertions of the complainant is not correct. The petitioner
accused, in order to buttress his contention, has drawn the attention of the
court to the orders dated 12.05.2011 and 27.09.2011 passed by the
learned Metropolitan Magistrate in complaint cases No.958/1, 959/1,
960/1 and 962/1.
25. The ordersheets of the respective dates, referred above, of the
Court of the learned Metropolitan Magistrate is reproduced below.
“CC No.958/1, 959/1, 960/1 and 961/1
12.05.2011
Present: Sh.Amit Kumar, Ld. Counsel for the complainant with
complainant in person.
Accused in person.
A settlement has been arrived at between the parties in
four complaint cases CC No. 958/1, 959/1, 960/1, 961/1,
961/1, in the following terms
i.that the accused shall be paying a sum of Rs. ten lacs. to the
complainant towards the settlement.
ii.that the accused shall be paying the said amount within two
years.
iii.that out of this sum of Rs. ten lacs., Rs. Sixty thousands has
already been paid by the accused and admitted by the
complainant.
iv.that the accused shall be paying a sum of Rs. Four lacs. by
way of interest to the complainant by the end of 2014.
Statement of the complainant and the accused as to the
composition has been recorded separately.
In view of the composition arrived at between the parties,
put up for consideration at the lok adalat on 09.07.2011.
Ahlmad is directed to sent the complete file to the DLSA
today itself.
CC No.958/1, 959/1, 960/1 and 961/1
27.09.2011
Present: Complainant in person.
Accused in person.
A composition was arrived at between the parties in the
court on 12.05.2011 wherein the accused agreed to pay a sum
of Rs. 14,00,000/- to the complainant.
It is submitted by the complainant that he has received a
sum of Rs.8,80,000/- from the composition amount of Rs.
14,00,000/- and Rs.5,20,000/- still remains to be paid.
It is submitted by the accused he is not in a position to
honour the composition.
It is submitted by the accused that he has no means to
engage a counsel.
Accused is directed to appear before DLSA at Room No.
507.
It is 12:00 Noon
Present: Complainant in person.
Accused in person after seeking guidance from the DLSA.
Now to come up on 28.11.2011 for F/P.”
26. From the perusal of the aforesaid ordersheets, it would appear that
an attempt was made at composition of the offences but the accused was
not in a position to honor the commitment. However, the Trial Court has
recorded the statement of the complainant that he has received a sum of
Rs.8.80 lacs. by the accused. The aforesaid ordersheets were recorded
prior to the cross examination of the complainant on 02.11.2012.
27. The Appellate Court has rejected such statement of the
complainant that he has received Rs.8.80 lacs. from the accused on the
ground that the settlement agreement was not brought on record and no
witness was examined in that regard.
28. What appears to be disconcerting and doubtful to this Court is that
the complainant arranged for such money for his employer at a very high
rate of interest. The money which was arranged by the complainant from
his friend has also not been referred to in their respective ITR of the year
2007.
29. The above noted facts in conjunction with the specific statement
made in para 5 of the complaint lodged by the respondent that the
accused agreed to pay interest @ 24% p.a. on the said amount of Rs.3
lacs. which was given as last of the installment through the complainant’s
own funds and resources, makes the entire case of the prosecution
doubtful. Admittedly, the complainant had arranged for Rs.7 lacs. from
his friend and relatives at a very high rate of interest. The complainant
would not have been made payments of interest to his lenders on his own.
The prosecution version therefore fails at the seams.
30. For the offences under Section 138 of the NI Act to be brought
home, what is required is:
I. That there should be a legally enforceable debt;
II. That the cheque is drawn up from the account of bank for
discharge in whole or in part of any debt or other liability which
pre-supposes the legally enforceable debt; and
III. That the cheques so issued had been returned due to insufficiency
of funds.
31. The proviso appended to Section 138 of the Act provides for
compliance of legal requirements before the complaint petition could be
acted upon by a Court of Law.
32. 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 any
debt or other liability."
33. Section 139 of the Act merely raises a presumption in favour of the
holder of a cheque that the same has been issued for discharge of any
debt or other liability. The existence of a legally recoverable debt is not
presumed under Section 139 of the Act.
34. In Krishna Janardhan Bhat vs. Dattatreya Hegde: (2008) 4 SCC 54,
the law with respect to the burden of proof while dealing with the
presumptions under Section 139 of the Negotiable Instruments Act, has
been succinctly adumbrated. The relevant portion of the said judgment is
being reproduced herein below:CRL.Rev.P.188/2015 Page 15 of 25
"32. An accused for discharging the burden of proof placed
upon him under a statute need not examine himself. He may
discharge his burden on the basis of the materials already
brought on record. An accused has a constitutional right to
maintain silence. Standard of proof on the part of an
accused and that of the prosecution in a criminal case is
different.
33. In Bharat Barrel & Drum Mfg. Co. v. Amin Chand
Payrelal [(1999) 3 SCC 35] interpreting Section 118(a) of
the Act, this Court opined: (SCC pp. 50-51, para 12)
“12. Upon consideration of various judgments
as noted hereinabove, the position of law which
emerges is that once execution of the
promissory note is admitted, the presumption
under Section 118(a) would arise that it is
supported by a consideration. Such a
presumption is rebuttable. The defendant can
prove the non-existence of a consideration by
raising a probable defence. If the defendant is
proved to have discharged the initial onus of
proof showing that the existence of
consideration was improbable or doubtful or
the same was illegal, the onus would shift to the
plaintiff who will be obliged to prove it as a
matter of fact and upon its failure to prove
would disentitle him to the grant of relief on the
basis of the negotiable instrument. The burden
upon the defendant of proving the non-existence
of the consideration can be either direct or by
bringing on record the preponderance of
probabilities by reference to the circumstances
upon which he relies. In such an event, the
plaintiff is entitled under law to rely upon all
the evidence led in the case including that of
the plaintiff as well. In case, where the
defendant fails to discharge the initial onus of
proof by showing the non-existence of the
consideration, the plaintiff would invariably be
held entitled to the benefit of presumption
arising under Section 118(a) in his favour. The
court may not insist upon the defendant to
disprove the existence of consideration by
leading direct evidence as the existence of
negative evidence is neither possible nor
contemplated and even if led, is to be seen with
a doubt.”
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”. Inference of
preponderance of probabilities can be drawn not only from
the materials brought on record by the parties but also by
reference to the circumstances upon which he relies.
35. A statutory presumption has an evidentiary value. The
question as to whether the presumption stood rebutted or
not, must, therefore, be determined keeping in view the other
evidence on record. For the said purpose, stepping into the
witness box by the appellant is not imperative. In a case of
this nature, where the chances of false implication cannot be
ruled out, the background fact and the conduct of the parties
together with their legal requirements are required to be
taken into consideration.
36. In M.S. Narayana Menon v. State of Kerala [(2006) 6
SCC 39 : (2006) 3 SCC (Cri) 30] it was held that once the
accused is found to discharge his initial burden, it shifts to
the complainant.
37. Four cheques, according to the accused, appear to have
been drawn on the same day. The counterfoil of the
chequebook, according to the appellant, was in the
handwriting of R.G. Bhat wherein it was shown that apart
from other payments, a sum of Rs 1500 was withdrawn on a
self-drawn cheque. The courts below proceeded to hold that
the defence raised by the appellant has not been proved,
which, in our opinion, is not correct. He did not know that
the said cheque had not been encashed. He replied to the
notice thinking that one of the cheques has been misused.
There is nothing on record to show that he knew that one of
the cheques was still with R.G. Bhat.
38. Disputes and differences between him and R.G. Bhat
stood established by admission of the respondent himself.
Similar industry was being run by R.G. Bhat although he
was acting as the constituted attorney of the appellant.
According to the appellant, R.G. Bhat had cheated him. The
counterfoil showed that not more than Rs 20,000 had ever
been withdrawn from that Bank at a time. The courts were
required to draw an inference as to the probability of the
complainant's advancing a sum of Rs 1.5 lacs. on mere
asking and that too without keeping any documentary proof.
Even there was no witness. The purported story that the
appellant would himself come forward to return the amount
by a cheque knowing fully well that he did not have any
sufficient funds is difficult to believe.
39. In K. Prakashan v. P.K. Surenderan [(2008) 1 SCC 258
: (2008) 1 SCC (Cri) 200 : (2007) 12 Scale 96] this Court
following M.S. Narayana Menon [(1999) 3 SCC 35] opined:
(K. Prakashan case [(2006) 6 SCC 39 : (2006) 3 SCC (Cri)
30] , SCC p. 263, paras 13-14)
“13[12]. 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 CRL.Rev.P.188/2015 Page 18 of 25
or in part any debt or other liability.
Presumptions both under Sections 118(a) and
139 are rebuttable in nature. Having regard to
the definition of terms „proved‟ and „disproved‟
as contained in Section 3 of the Evidence Act as
also the nature of the said burden upon the
prosecution vis-à-vis an accused it is not
necessary that the accused must step into the
witness box to discharge the burden of proof in
terms of the aforementioned provision.
14[13]. 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.”
40. In John K. John v. Tom Varghese [(2007) 12 SCC 714 :
JT (2007) 13 SC 222] this Court held: (SCC p. 717, para
11)
“11[10]. … The High Court was entitled to
take notice of the conduct of the parties. It has
been found by the High Court as of fact that the
complainant did not approach the Court with
clean hands. His conduct was not that of a
prudent man. Why no instrument was executed
although a huge sum of money was allegedly
paid to the respondent was a relevant question
which could be posed in the matter. It was open
to the High Court to draw its own conclusion
therein. Not only had no document been
executed, even no interest had been charged. It
would be absurd to form an opinion that despite
knowing that the respondent was not even in a
position to discharge his burden to pay
instalments in respect of the prized amount, an
advance would be made to him and that too
even after institution of three civil suits. The
amount advanced even did not carry any
interest. If in a situation of this nature, the High
Court has arrived at a finding that the
respondent has discharged his burden of proof
cast on him under Section 139 of the Act, no
exception thereto can be taken.”
41. Mr Bhat relied upon a decision of this Court in Hiten P.
Dalal v.Bratindranath Banerjee [(2001) 6 SCC 16 : 2001
SCC (Cri) 960] wherein this Court held: (SCC pp. 24-25,
paras 22-23)
“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 non-existence of the presumed
fact.
23. In other words, provided the facts required
to form the basis of a presumption of law exist,
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. A fact is said to be proved
when, „after considering the matters before it,
the court either believes it to exist, or considers
its existence so probable that a prudent man
ought, under the circumstances of the
particular case, to act upon the supposition that
it exists‟.
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‟.”
(See also K.N. Beena v. Muniyappan [(2001) 8 SCC 458:
2002 SCC (Cri) 14] .)
42. We assume that the law laid down therein is correct. The
views we have taken are not inconsistent therewith."
35. After espousing the law in this regard, the Supreme Court also took
note of certain other aspects namely, presumption of innocence being a
human right and the requirement of a cautious approach in determining
the compatibility between the concepts of reverse burden and
presumption of innocence. The above noted elucidation is as follows:
"44. The presumption of innocence is a human right.
(See Narendra Singh v. State of M.P. [(2004) 10 SCC 699 :
2004 SCC (Cri) 1893], Ranjitsing Brahmajeetsing
Sharma v. State of Maharashtra [(2005) 5 SCC 294 : 2005
SCC (Cri) 1057] and Rajesh Ranjan Yadav v. CBI [(2007) 1
SCC 70: (2007) 1 SCC (Cri) 254]) Article 6(2) of the
European Convention on Human Rights provides:
“Everyone charged with a criminal offence shall be
presumed innocent until proved guilty according to law.”
Although India is not bound by the aforementioned
Convention and as such it may not be necessary like the
countries forming European countries to bring common law
into land with the Convention, a balancing of the accused's
rights and the interest of the society is required to be taken
into consideration. In India, however, subject to the
statutory interdicts, the said principle forms the basis of
criminal jurisprudence. For the aforementioned purpose the
nature of the offence, seriousness as also gravity thereof
may be taken into consideration. The courts must be on
guard to see that merely on the application of presumption
as contemplated under Section 139 of the Negotiable
Instruments Act, the same may not lead to injustice or
mistaken conviction. It is for the aforementioned reasons
that we have taken into consideration the decisions
operating in the field where the difficulty of proving a
negative has been emphasised. It is not suggested that a
negative can never be proved but there are cases where such
difficulties are faced by the accused e.g. honest and
reasonable mistake of fact. In a recent article The
Presumption of Innocence and Reverse Burdens: A
Balancing Duty published in 2007 CLJ (March Part) 142 it
has been stated:
“In determining whether a reverse burden is
compatible with the presumption of innocence
regard should also be had to the pragmatics of
proof. How difficult would it be for the
prosecution to prove guilt without the reverse
burden? How easily could an innocent
defendant discharge the reverse burden? But
courts will not allow these pragmatic
considerations to override the legitimate rights
of the defendant. Pragmatism will have greater
sway where the reverse burden would not pose
the risk of great injustice—where the offence is
not too serious or the reverse burden only
concerns a matter incidental to guilt. And
greater weight will be given to prosecutorial
efficiency in the regulatory environment.”
45. We are not oblivious of the fact that the said provision
has been inserted to regulate the growing business, trade,
commerce and industrial activities of the country and the
strict liability to promote greater vigilance in financial
matters and to safeguard the faith of the creditor in the
drawer of the cheque which is essential to the economic life
of a developing country like India. This, however, shall not
mean that the courts shall put a blind eye to the ground
realities. 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. Such balancing
acts, indisputably would largely depend upon the factual
matrix of each case, the materials brought on record and
having regard to legal principles governing the same."
36. Section 271(d) of the Income Tax Act, 1961, specifically provides
that if a person takes or accepts any loan or deposits in any contravention
of the provision of Section 269-SS, he shall be liable to pay, by way of
penalty, a sum equal to the amount of loan or deposit so taken or
accepted.
37. It is difficult to believe the assertions of the complainant since the
entire amount of Rs.10 lacs. has been paid in cash to the accused. That
apart, in the source, through which Rs.7 lacs. of money was garnered by
the complainant namely his relative and his associate, there is no
reference in their ITR of such loan having been advanced. CW-2 has
even gone to the extent of saying that an amount of only Rs.1 lac was
shown as loan in his ITR of the year 2007.
38. Learned counsel for the complainant referred to the decision of
ICD vs. Beena Shabir and Anrs.: 2002(6) SCC 426 wherein the Supreme
Court has held that the security cheques also would fall within the
purview of the Section 138 of the NI Act and a person could not escape
his liability. As such, when there is existence of debt on the date of
presentation of the cheque and the security cheques issued are
dishonoured, the accused would be liable under Section 138 of the NI
Act.
39. In Collage Culture and Ors. vs. Apparel Export Promotion
Council: 2007 (99) DRJ 251, a distinction has been drawn between two
kinds of cheques namely one issued in discharge in presenti but payable
in future and the other issued in respect of a debt which comes into
existence on the occurrence of a contingent event, and is not in existence
on the date of issue of a cheque. The latter cheque, being by way of
security cheque, will not be covered under Section 138 of NI Act. In the
aforesaid decision, definition of the word ‘due’ has been given as
‘outstanding on the relevant date’. The Court, therefore, held that the
debt has to be in existence as a crystallized demand akin to liquidated
damages and not a demand which may or may not come into existence.
However, in Suresh Chand Goyal vs. Amit Singhal (Crl.A. 601/2015
decided on 14.05.2015) the concept of security cheques were discussed.
It was held in the aforesaid case:
“28. There is no magic in the word “security cheque”, such
that, the moment the accused claims that the dishonoured
cheque (in respect whereof a complaint under Section 138 of
the Act is preferred) was given as a “security cheque”, the
Magistrate would acquit the accused. The expression “security
cheque” is not a statutorily defined expression in the NI Act.
The NI Act does not per se carve out an exception in respect of
a „security cheque‟ to say that a complaint in respect of such a
cheque would not be maintainable. There can be myriad
situations in which the cheque issued by the accused may be
called as security cheque, or may have been issued by way of a
security, i.e. to provide an assurance or comfort to the drawee,
that in case of failure of the primary consideration on the due
date, or on the happening (or not happening) of a contingency,
the security may be enforced. While in some situations, the
dishonor of such a cheque may attract the penal provisions
contained in Section 138 of the Act, in others it may not.”
40. Relying on the aforesaid dicta, a bench of this Court in Credential
Leasing & Credits Ltd. vs. Shruti Investments and Anrs.: 2015 (151) DRJ
147 held as under:
“30. Thus, I am of the considered view that there is no merit in
the legal submission of the respondent accused that only on
account of the fact that the cheque in question was issued as
security in respect of a contingent liability, the complaint
under Section 138 of the NI Act would not be maintainable. At
the same time, I may add that it would need examination on a
case to case basis as to whether, on the date of presentation of
the dishonoured cheque the ascertained and crystallized debt
or other liability did not exist. The onus to raise a probable
defence would lie on the accused, as the law raises a
presumption in favour of the holder of the cheque that the
dishonoured cheque was issued in respect of a debt or other
liability.”
41. The claim of the complainant does not falter on the issue of
acceptance of security cheques; rather the complainant has not been able
to make out a case that the security cheques were issued in discharge of a
legally enforceable debt. Security cheques per se would not get out of
the ambit of Section 138 of the NI Act, but in the facts of the present
case, viz. the circumstance in which the security cheque is said to have
been issued by the accused and accepted by the complainant and the
admission of the complainant about his having accepted Rs.8 lacs. from
the accused and his denial of having paid Rs.10 lacs. to the accused
(referred to the cross examination of CW-1), the case of the complainant
appears to be highly doubtful.
42. Thus both the judgment and orders cannot be sustained in the eyes
of law and are hereby quashed.
43. The Revision Petition is allowed.
1. In view of the petition having been allowed, this application has
become infructuous.
2. This application is disposed of accordingly.
ASHUTOSH KUMAR, J
SEPTEMBER 15, 2015
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