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Judgment
This appeal under Section 378(4) of the Code of Criminal Procedure, 1973 has been filed by the appellant - Vilas Kumar Jain (hereinafter referred to as the 'complainant') assailing the judgment and order of acquittal dated 10.06.2015 passed in Criminal Appeal No.101/2015 by learned First Additional Sessions Judge, Ashta, District Sehore (M.P.) whereby the lower appellate Court allowing the appeal has set aside the judgment of conviction and order of sentence dated 03.03.2015 passed by the learned Judicial Magistrate First class, Ashta, District Sehore, in Criminal Case No.583/2011 whereby the respondent- Rajaram (hereinafter referred to as the 'accused') had been convicted under Section 138 of the Negotiable Instruments Act (for short the 'N.I. Act') and sentenced to undergo R.I. for six months and fine of Rs.3,63,500/-, in default of payment of fine, further imprisonment of one month.
The brief facts of the prosecution case are that due to prior acquaintance with the accused, the complainant advanced a load of Rs.2,50,000/- to the accused on 10.03.2010, to meet the latter's personal requirements. In return, the accused issued a signed cheque bearing No.738921 dated 07.04.2010 drawn on the Punjab National Bank, Ashta Branch. When the complainant deposited the said cheque for clearance, it was dishonored on 15.04.2010, accompanied by a memo citing "insufficient funds." Consequently, the complainant sent a legal notice to the accused via both Registered Post and UPC (Under Certificate of Posting) through his counsel demanding repayment of the amount within a period of 15 days. Although the accused duly received the said notice on 30.04.2010, as he failed to make the requisite payment. Thereupon, a complain case filed before the trial Court.
The learned trial Court, upon appreciation of the oral and documentary evidence on record, rejected the defence set up by the respondent/accused and convicted him for the offence under Section 138 of the N.I. Act. The accused was sentenced to undergo R.I. for six months and to pay a fine of Rs.3,67,000/-, with a further sentence of one month’s R.I. in default of payment of fine.
Being aggrieved and dissatisfied with the aforesaid judgment of conviction recorded by the learned trial Court, the respondent/accused preferred an appeal before the lower appellate Court. The learned lower appellate Court while allowing the appeal set aside the judgment of conviction and order of sentence passed by the learned trial Court/JMFC and eventually acquitted the respondent/accused of the offence under Section 138 of the N.I. Act. Hence, the present appeal has been filed by the complainant on various grounds.
Learned counsel appearing on behalf of the appellant/complainant has pointed out that the learned trial Court/JMFC has rightly convicted the accused after considering the entire merits of the case but the learned lower appellate Court on erroneous findings acquitted the accused on the ground that the complainant failed to prove his financial capacity to lend Rs.2.5 lakhs to the accused so also the ground that the defence witnesses stated that the accused has taken only Rs.28,000/- from the complainant and in return, he has given a cheque with his signature to the complainant. The accused has repaid Rs.25,000/- to the complainant but the cheque was not returned by him to the accused. Therefore, assuming the cheque as a security, the order of acquittal has been passed but that is erroneous. The presumption under Sections 118 and 139 of the N.I. Act, are available there and that has not been rebutted by adducing the evidence on behalf of the accused. It is also submitted that the financial capacity of the complainant is also established and no challenge is there against the complainant. Thus, it is prayed that while allowing the appeal, the impugned judgment of acquittal passed by the learned lower appellate Court be set aside and the judgment of conviction and order of sentence passed by the learned trial Court/JMFC be restored.
Per contra, learned counsel appearing on behalf of the accused has vehemently opposed the prayer on the ground that the learned lower appellate Court after considering the entire evidence on record has rightly concluded that the financial capacity to lend Rs.2.5 lakhs to the accused of the complainant has not been proved and the observation as regards the cheque was given as a security is also based on evidence and that cannot be interfered with. The observation of the learned lower appellate Court is based on proper appreciation of evidence on record and does not warrant any interference. Accordingly, prayer has been made for dismissal of the appeal.
Heard learned counsel for the parties and perused the record meticulously.
The appellant herein is the complainant who has filed the complaint before the learned trial Court under Section 138 of the N.I. Act. The learned trial Court has convicted the respondent/accused under the aforesaid Section and order of punishment and sentence has been passed, but the learned appellate Court on an appeal filed on behalf of the respondent/accused has acquitted him on the ground that the accused succeeded in rebutting the presumption arises in favour of the complainant under Sections 118 and 139 of the N.I. Act. The complainant failed to prove that the cheque Ex.P/1 has been given in discharge of legally enforceable debt or advance.
The Hon'ble Apex Court in case of Gimpex (P) Ltd. v. Manoj Goel: (2022) 11 SCC 705, has discussed the essential ingredients required to establish the commission of an offence under Section 138 of the N.I. Act and observed as under:-
"12.As regards, the essential ingredients required to establish the commission of an offence under Section 138 of the NI Act, the Hon‟ble Supreme Court, in the case of Gimpex (P) Ltd. v. Manoj Goel: (2022) 11 SCC 705, has lucidly enumerated the same in the following terms:
"26.The ingredients of the offence under Section 138 are:
26.1.The drawing of a cheque by person on an account" maintained by him with the banker for the payment of any amount of money to another from that account;
26.2.The cheque being drawn for the discharge in whole or in part of any debt or other liability;
26.3.Presentation of the cheque to the bank;
26.4.The return of the cheque by the drawee bank as unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account;
26.5.A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank in regard to the return of the cheque; and
26.6.The drawer of the cheque failing to make payment of the amount of money to the payee or the holder in due course within 15 days of the receipt of the notice."
It is trite law that to constitute an offence under Section 138 of the N.I. Act, the cheque in question must have been issued in discharge of a legally enforceable debt or liability. However, Section 139 of the N.I. Act provides that once the drawer admits his signature on the cheque, a statutory presumption arises that the cheque was issued for the discharge, in whole or in part, of a debt or other liability. Section 118 of the N.I. Act further lays down a presumption that every negotiable instrument, when held by a holder in due course, has been made or drawn for consideration. In addition, Section 20 of the N.I. Act stipulates that when a person signs and delivers a stamped but otherwise incomplete negotiable instrument, he thereby authorizes the holder to complete it for any amount not exceeding the value covered by the stamp. The scope and effect of these presumptions have been comprehensively explained by the Hon‟ble Supreme Court in Bir Singh v. Mukesh Kumar: (2019) 4 SCC 197, wherein it was observed:
"33.A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted.
34.If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."
Recently in the case of Sanjabij Tari Vs. Kishore S. Borcar & another, in Criminal Appeal No.1755 of 2010 , the Hon'ble Apex Court in para 15 to 18 has held as under :
"15.In the present case, the cheque in question has admittedly been signed by the Respondent No.1-Accused . This Court is of the view that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque received the said cheque in discharge of a legally enforceable debt or liability arises against the accused. It is pertinent to mention that observations to the contrary by a two Judges Bench in Krishna Janardhan Bhat vs. Dattatraya G. Hegde, (2008) 4 SCC 54 have been set aside by a three Judges Bench in Rangappa (supra).
16.This Court is further of the view that by creating this presumption, the law reinforces the reliability of cheques as a mode of payment in commercial transactions.
17.Needless to mention that the presumption contemplated under Section 139 of the NI Act, is a rebuttable presumption. However, the initial onus of proving that the cheque is not in discharge of any debt or other liability is on the accused/drawer of the cheque [See: Bir Singh vs. Mukesh Kumar, (2019) 4 SCC 197].
18.The judgment of this Court in APS Forex Services Private Limited (supra) relied upon by learned counsel for the Respondent No.1-Accused only says that presumption under Section 139 of the NI Act is rebuttable and when the same is rebutted, the onus would shift back to the complainant to prove his financial capacity, more particularly, when it is a case of giving loan by cash. This judgment nowhere states, as was sought to be contended by learned counsel for the Respondent No.1-Accused, that in cases of dishonour of cheques, in lieu of cash loans, the presumption under Section 139 of the NI Act does not arise."
The Hon'ble Apex Court in Sanjabij Tari (supra) in para 22 and 23 has held as under:
"22.It is pertinent to mention that in the present case, the Respondent No.1-Accused has filed no documents and/or examined any independent witness or led any evidence with regard to the financial incapacity of the AppellantComplainant to advance the loans in question. For instance, this Court in Rajaram S/o Sriramulu Naidu (Since Deceased) Through LRs. vs. Maruthachalam (Since Deceased) Through LRs., (2023) 16 SCC 125 has held that presumptions under Sections 118 and 139 of the NI Act can be rebutted by the accused examining the Income Tax Officer and bank officials of the complainant/drawee. WHEN THE EVIDENCE OF PW-1 IS READ IN ITS ENTIRETY, IT CANNOT BE SAID THAT THE APPELLANT-COMPLAINANT HAD NO WHEREWITHAL TO ADVANCE LOAN
23.Most certainly, the accused can rely upon the evidence adduced by the complainant to rebut the presumption with regard to the existence of a legally enforceable debt or liability, yet in the present case, when the evidence of Appellant-Complainant (PW-1) is read in its entirety, like it should be, it cannot be said that the Appellant-Complainant had no wherewithal to advance any loan to the Respondent No.1-Accused."
In view of the law laid down in the aforesaid cases, this Court is to be examined whether the accused succeeded in rebutting the presumption arising in favour of the complainant under Section 118 and 139 of the N.I. Act.
It is pertinent to mention here that the accused, in his examination under Section 313 of the Cr.P.C., in response to Question No. 4, has categorically admitted that the cheque Ex.P/1 bears his signature. Therefore, the presumption undoubtedly arises in favour of the complainant in respect of the due execution of the cheque by the accused in favour of the complainant. When we travel through the statement of the complainant as well as the statement of the witness, namely, Jagdish (DW-1), it is revealed that the complainant Vilas Kumar Jain (PW-1) has supported his version as stated in the complaint and he remained unshaken in his cross-examination. He stated that accused/Rajaram has taken Rs.2.5 lakhs due to his personal need. He denied the suggestion given by the defence that the accused has given the cheque to his brother and Vishwash Jain but again stated that the cheque has been given to him by the accused. He also denied the suggestion given by the defence that the cheque was of Rs.28,000/- which has been given to Vishwas Jain in the year 2007. He further deposed that Rs.2.5 lakhs was with him in cash and that amount has been given to the accused as advance. He also denied the suggestion given by the accused that the cheque does not bear the signature of the accused.
Jagdish (DW-1) has stated that the accused Rajaram has obtained Rs.28,000/- from Vishwash Jain and given a signed cheque in his favour and out of which Rs.25,000/- has been returned by the accused but Vishwash Jain did not return the cheque to the accused. The learned lower appellate Court believed the statement of this witness but the defence witness does not seem to be reliable inasmuch as this witness could not reveal the date, time and place of the transaction as stated by him. He also did not know the cheque number which was allegedly given by the accused to Vishwash Jain and he in his cross-examination has given no details about the present transaction based on Ex.P/1. In these circumstances, the statement of defence witness does not inspire confidence of the Court in it. He does not seem to be reliable and believable. Resultantly, it does not rebut the presumption arises in favour of the complainant under Section 118 and 139 of the N.I. Act. It also not revealed from the testimony of Jagdish (DW-1) that the cheque has been given as security and no transaction as alleged by the complainant has not taken place. Nor such defence has been taken in accused's statement under Section 313 of CrPC by the accused. The evidence on record does not reflect that the cheque in question has been given as security.
As far as the service of notice Ex.P/4 upon the accused, postal receipt Ex.P/5, acknowledgment receipt Ex.P/6, VPC receipt Ex.P/7 are concerned, all these documents bear the address of the accused as village post Dupadiya, Tahsil Ashta. The accused nowhere has stated that this is not his address rather he himself has given this address in his examination under Section 313 of Cr.P.C. Hence, it is established that the notice Ex.P/4 has been given on the correct address which has ultimately been served on him by the department of Post India by Ex.P/6. The accused has not given challenge to factum of service of notice on his correct address. The defence witness also not deposes in this respect before the learned trial Court and the accused himself has not given his statement in this regard. Hence, the notice Ex.P/4 is duly served on the accused but the accused has not given the answer to the notice. When statutory notice is not replied it has to be presumed that the cheque was issued towards the discharge of liability as held by the Hon'ble Apex Court in case of Sanjabij Tari (supra) in paragraphs-29, 30 and 31, which is as follows:
"29.Furthermore, the fact that the accused has failed to reply to the statutory notice under Section 138 of the NI Act leads to an inference that there is merit in the AppellantComplainant’s version. This Court in Tedhi Singh vs. Narayan Dass Mahant, (2022) 6 SCC 735 has held that the accused has the initial burden to set up the defence in his reply to the demand notice that the complainant did not have the financial capacity to advance the loan. The relevant portion of the said judgment is reproduced hereinbelow:-
“10.… The proceedings under Section 138 of the NI Act is not a civil suit. At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent, the courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross-examination of the witnesses of the complainant. Ultimately, it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.” (emphasis supplied)
30.This Court in MMTC Ltd. and Another vs. Medchl Chemicals & Pharma (P) Ltd. and Another, (2002) 1 SCC 234 has specifically held that when a statutory notice is not replied, it has to be presumed that the cheque was issued towards the discharge of liability.
31.Also, after receipt of the legal notice, wherein the Appellant-Complainant alleged that the Respondent No.1- Accused’s cheque had bounced, no complaint or legal proceeding was initiated by the Respondent No.1-Accused alleging that the cheque was not to be encashed. Consequently, the defence of financial incapacity of Appellant-Complainant advanced by the Respondent No.1- Accused is an afterthought."
In view of the aforesaid discussion, the complainant succeeded in proving his case. The observation of the learned lower appellate Court that the accused succeeded in rebutting the presumption arises in favour of the complainant under Sections 118 and 139 of the N.I. Act is erroneous, faulty and not based on the proper appreciation of the evidence and law. Since the presumption did not rebut then it was not incumbent on the complainant to establish his sources of having Rs.2.5 lakhs in cash with him and to establish his financial capacity to lend Rs.2.5 lakhs to the accused.
In sum and substance, the impugned judgment of acquittal of the learned lower appellate Court dated 10.06.2015 being erroneous and faulty is hereby set aside and the judgment of conviction and order of sentence passed by the learned trial Court dated 03.03.2015 being a reasons one is restored and upheld. The learned trial Court is directed to take the accused/respondent in custody and send him to jail as per the order of sentence passed by it.
Let a copy of this order along with the record be sent to the trial Court for necessary compliance.
Accordingly, the appeal stands allowed and disposed of.