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Judgment
By this appeal, the appellant (original complainant) has challenged judgment and order dated 19.06.2015 passed by the Court of Judicial Magistrate
First Class, Nagpur (trial Court) in Summary Criminal Case no.12999 of 2013, whereby the respondent (original accused) has been acquitted by the
trial Court for offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
The case of the appellant was that he was a super stockist of Pharmaceutical and Cosmetic items of various companies and that the respondent
used to purchase certain items from it and that they had regular transactions. It was claimed by the appellant that the respondent had issued a cheque
of Rs.49,444/- dated 16.01.2013 in favour of the appellant in respect of purchase of certain items. It was further the case of the appellant that when
the said cheque was deposited, it was dishonoured. Therefore, the appellant was constrained to issue notice to the respondent for making good the
payment for the value of the said cheque, but the respondent failed to respond to the said notice. Consequently, the appellant filed complaint before the
trial Court against the respondent for an offence punishable under Section 138 of the said Act.
In order to support its case, the appellant placed on record bills dated 05.09.2011, 14.09.2011 and 09.05.2011 (Exhs. 19, 20 and 21) pertaining to
items purchased by the respondent. The amounts stated in the said bills came to a total of Rs.49,444/-, which was the amount for which the cheque
dated 16.01.2013 (Exh.22) had been issued by the respondent. The appellant also placed on record copy of the notice issued to the respondent and the
cheque in question. Apart from this, a legally authorised person representing the appellant entered into the witness box and deposed in support of the
complaint.
The respondent, neither sent any reply to the notice sent by the appellant nor did he file any submissions or reply in response to the complaint filed
by the appellant before the trial Court. The respondent also did not enter the witness box in support of his defence. He simply relied upon the material
placed on record by the appellant and cross-examination of the witness who had appeared in support of the complaint before the trial Court.
The trial Court considered the evidence and material on record and it found that although the respondent had not adduced any direct evidence, the
material that came on record in cross-examination of the appellant was sufficient to support the defence of the respondent. The trial Court found that
although the appellant had specifically claimed in the complaint that the cheque in question was issued by the respondent for cosmetic items, the bills at
Exhs. 19, 20 and 21 demonstrated that the items purchased by the respondent were not cosmetic and that they were electrical items like hair
straightners. The trial Court further found that the appellant had failed to place on record documents pertaining to payment of octroi on the items sold,
which also indicated that the defence of the respondent was probable. On this basis, the trial Court found that although presumption may have arisen
against the respondent, he had been able to rebut the same on preponderance of probabilities. Accordingly, the trial Court acquitted the respondent by
the impugned judgment and order.
Mr. M.R. Joharapurkar, learned counsel appearing on behalf of the appellant, submitted that in the present case the respondent had failed to place
on record any direct evidence in support of his defence, although it was stated in his statement recorded under Section 313 of the Code of Criminal
Procedure that the cheque in question had been issued by way of security. It was further submitted that a perusal of the crossexamination of the
witness of the appellant would show that the material that came on record supported the case of the appellant and not the defence of the respondent.
It was submitted that the presumption under Sections 118 and 139 of the aforesaid Act operated against the respondent and that he had failed to bring
on record any material to rebut the same. It was submitted that, in this situation, the trial Court could not have acquitted the respondent.
Mr. Shashikant Borkar, appointed advocate for respondent, submitted that the respondent was only required to demonstrate on the basis of the
material on record that his defence was probable. It was submitted that the law did not require the respondent to produce direct evidence or even to
enter the witness box to prove his defence in order to rebut the presumption under the provisions of the said Act. It was submitted that when the
appellant itself had come with a case that the consideration for which the cheque was issued pertained to sale of cosmetic items, bills showing electric
items sold to the respondent negated the case of the appellant. It was submitted that the presumption stood rebutted in the present case and the
appellant had failed to prove its case before the Court. It was submitted that when the view taken by the trial Court was a possible view, no
interference in appeal was warranted.
The learned counsel for both the parties relied on number of judgments pertaining to the effect of presumption under Sections 118 and 139 of the
aforesaid Act and the manner in which such a presumption could be rebutted.
A perusal of Sections 118 and 139 of the aforesaid Act shows that when signature on a cheque is not disputed, it is to be presumed that the same
was issued for consideration and for discharge of legal debt or liability. The presumption is certainly rebuttable on the touchstone of preponderance of
probabilities. It is also clear that for rebutting the presumption, the accused need not necessarily adduce direct evidence and that he can do so even on
the basis of the material brought on record by the complainant and by discrediting evidence of the witnesses appearing for the complainant. In this
regard, the observations of the Hon'ble Supreme Court in the case of Rangappa .vs. Sri Mohan- (2010) 11 Supreme Court Cases 441 are relevant
which reads as follows:-
“27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving
the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the
rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the
offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a
civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality
should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high
standard or proof.
28. 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.â€
In the case of Kumar Exports .vs. Sharma Carpets â€" (2009) 2 Supreme Court Cases 513, the Hon'ble Supreme Court has held as follows:-
“20. 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 non-existence 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 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. 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.â€
The impugned judgment and order passed by the Trial Court needs to be examined in the light of the proposition of law laid down by the Hon'ble
Supreme Court in the judgments quoted above. The trial Court has held in favour of the respondent on the basis, firstly, that while it was the case of
the appellant that it had sold cosmetic items to the respondent for which the cheque in question was issued, a perusal of the bills pertaining to sale of
items at Exhs. 19, 20 and 21 demonstrated that the items were not cosmetic items, but they were electrical items. Secondly, the trial Court has held
that the appellant failed to place on record documents to show that octroi had been paid in respect of the aforesaid items sold to the respondent and
that, therefore, an adverse inference was to be drawn against the appellant. On this basis, the trial Court has held that the presumption that did arise in
the facts of the present case, stood rebutted and that the appellant had failed to prove its case beyond reasonable doubt.
A perusal of the complaint filed by the appellant and the evidence of the witness who appeared in support of the complaint shows that there were
regular transactions between the appellant and the respondent. It was stated in the complaint that the appellant was a super stockist of pharmaceutical
and cosmetic items and that the respondent used to purchase items from it. It has come in the evidence of the witness that there was endorsement on
the bills in question at Exhs. 19, 20 and 21 indicating that the said items were indeed delivered to the respondent and further that they were delivered
by hand. The aforesaid material on record read with the cheque in question Exh.22 demonstrates that the amounts mentioned in the bills at Exhs. 19,
20 and 21 came to a total of Rs.49,444/-, which was the exact amount for which the cheque in question was issued.
In this situation, the appellant was clearly able to establish existence of transactions between it and the respondent and further that the cheque in
question was indeed issued in respect of purchase of items reflected in the bills at Exhs. 19, 20 and 21. There was no dispute about the fact that the
signature on the cheque was that of the respondent. Therefore, the presumption under Sections 118 and 139 of the aforesaid Act operated in full force
against the respondent. It has also come on record that the respondent neither sent any reply to the notice issued by the appellant on dischonour of the
cheque, nor did he file any submissions or reply to the complaint filed by the appellant. The respondent also did not enter into the witness box to
adduce any direct evidence to dispute the case sought to be made out by the appellant before the trial Court. In this backdrop, the approach of the trial
Court was clearly erroneous when it held that the respondent had been able to rebut the presumption that arose against him because it was brought on
record that while the appellant stated in its complaint that the appellant used to sell cosmetic items to the respondent, the bills in question at Exhs. 19,
20 and 21 pertained to electrical items. This was nothing but hairsplitting and an approach which completely ignored the existence of the material on
record showing transactions between the appellant and the respondent. In the crossexamination of the witness who appeared in support of the
complaint, there was no material to show that the case of the appellant was discredited in any manner. The emphasis of the trial Court on the proof of
payment of octroi not being brought on record by the appellant, was also wholly misplaced because even as per the few documents brought on record
by the respondent, proof of payment of octroi would necessarily have been in the custody of the respondent. Therefore, the trial Court erred in
drawing an adverse inference against the appellant on the ground that proof of payment of octroi was not brought on record.
Therefore, the respondent could not rely upon the material on record, particularly the cross-examination of the witness of the appellant, to claim
that he had rebutted the presumption on preponderance of probabilities. The defence of the respondent indicated in his statement under Section 313 of
the Cr.P.C. to the effect that the cheque was issued by way of security, was not supported by any material on record. As noted above, the respondent
failed to enter the witness box or adduce any direct evidence in support of such a defence.
Therefore, it is clear that the appellant was able to prove its case beyond reasonable doubt against the respondent and that the trial Court
committed an error in acquitting the respondent. Accordingly, the appeal is allowed, the impugned judgment and order passed by the trial Court is set
aside and the respondent is convicted for offfence punishable under Section 138 of the aforesaid Act. The respondent shall pay compensation to the
appellant of Rs.98,888/- (double the cheque amount) under Section 357 (3) of the Cr.P.C., within a period of three months from today, failing which he
shall undergo simple imprisonment for a period of six months.
Mr. Shashikant Borkar, Advocate readily agreed to argue this appeal on behalf of the respondent at the request of this Court. He has very
graciously stated that he is ready to waive fees in the matter. The Court places on record its appreciation for the assistance rendered by Mr. Borkar in
the final hearing of this appeal.