Dr Kailash Madanlal Charkha vs Sayyad Khwaja Sayyad Noor And ...
2018 Latest Caselaw 1164 Bom

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          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                    NAGPUR BENCH, NAGPUR

                      CRIMINAL APPEAL NO.66 OF 2006

 Dr. Kailash s/o. Madanlal Charkha,
 aged about 42 years,
 Occupation :- Medical practioner,
 r/o. Guruwar Bazar, Washim
 Police Station, Tahsil District Washim                              ...APPELLANT

          ...V E R S U S...

 1        Sayyad Khwaja s/o. Sayyad Noor,
          aged about 46 yars,
          Occupaton : Business,
          R/o. Inamdarpura, Washim
          Police Station, 
          Tahsil & District Washim

 2        State of Maharashtra,
          through the Police Station Officer,
          Washim, P.S. Washim, 
          Tahsil District Washim                                      ...RESPONDENT
 -------------------------------------------------------------------------------------------
 Mr. C.A. Joshi, counsel for appellant. 
 Mr. S.R. Deshpande, counsel for respondent 1.
 -----------------------------------------------------------------------------------------
                                            CORAM:           ROHIT B. DEO, J. 

  DATE OF RESERVING THE JUDGMENT     
                                             
                                             : 19.12.2017
  DATE OF PRONOUNCING THE JUDGMENT        
                                             : 31.01.2018

 JUDGMENT

The appellant, who is the original complainant in

Summary Criminal Case 160 of 2004 is challenging the judgment

and order dated 22.2.2005 rendered by the Judicial Magistrate

First Class, Washim by and under which, the respondent 1 -

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accused is acquitted of offence punishable under section 138 of

the Negotiable Instruments Act, 1881 ("Act" for short).

2 Heard Shri C.A. Joshi, the learned counsel for

appellant and Shri S.R. Deshpande, the learned counsel for

respondent 1.

3 The short submission of Shri C.A. Joshi, the learned

counsel for the complainant is that the learned Magistrate failed to

appreciate that the accused could not rebut the statutory

presumption under section 118(a) and 139 of the Act. The

defence, that the accused entered into an oral agreement to

purchase plot from the complainant and a blank cheque was given

towards payment of the earnest amount which was not returned

despite the frustration of the agreement, is not probabilized even

on the touchstone of preponderance of probabilities, is the

submission.

Per contra, Shri S.R. Deshpande, the learned counsel for the

accused would submit that the evidence on record would suggest

that the financial capacity of the complainant to extend handloan

of Rs. 2 lacs to the accused and the factum of the complainant

having extended such loan, is rendered suspect in view of the

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material elicited in the cross-examination of the complainant. The

limited burden to rebut the presumption is to render the existence

of defence probable on the touchstone of preponderance of

probabilities, is the submission. The learned Counsel Shri S.R.

Deshpande, would submit that the father of the accused has

stepped into the witness box to substantiate the defence that the

complainant misused the blank cheque despite the frustration of

the oral agreement to sell the plot to the accused.

4 The gist of the complaint (Exh. 1) is that in view of

cordial relationship, the complainant extended a handloan of Rs. 2

lacs to the accused on 16.2.2004. Towards refund of the

handloan, the accused issued cheque 0942443 dated 12.3.2004

drawn on the Akola Janta Commercial Cooperative Bank Limited

for Rs 2 lacs. The cheque was presented for encashment on

12.3.2004 and was dishonoured due to insufficient funds in the

account of the accused. The statutory notice was issued, the

notice was duly received by the accused who chose not to reply

thereto.

5 CW 1 is the complainant Dr. Kailash Charkha. The

examination in chief is consistent with the averments in the

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complaint.

In the cross-examination, it is extracted that the

complainant is a medical practitioner and income tax payee. The

complainant states in the cross-examination that he withdrew the

amount from the account of his father in law, which account he

was authorized to operate and handed over the same to the

accused in the presence of the father of the accused. It is brought

on record that the complainant owns plots at Washim. The

suggestion that the cheque of Rs. 2 lacs was received as

consideration for sale of the plot, is denied. CW 1 states that

when the accused handed over the cheque, the contents were

filled in. He denies the suggestion that a signed cheque, the rest

of the contents of which were blank, was handed over by the

accused on 10.3.2004 and that the figure of Rs. 2 lacs is filled in

by the complainant, in the presence of the accused. He denies the

suggestion that the transaction of sale was to be completed on

12.3.2004 and the cheque was to be encashed only thereafter.

The suggestion that the complainant did not produce the

documents of the plot and that a dispute arose between the

complainant and the accused on the issue of consideration, is

denied.

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 6                In   the   written   statement   submitted   by   the   accused

under section 313 of the Code of Criminal Procedure, 1973, it is

contended that the complainant did not extend loan to the

accused. The complainant agreed to sell his plot to the accused

and one cheque towards earnest amount was handed over to the

complainant. The agreement could not fructify since the plot was

mortgaged. The complainant retained and misused the cheque.

7 The accused did not step into the witness box.

However, the father of the accused Shri. Sayyad Noor was

examined as DW 1. DW 1 states that the complainant was

desirous of selling his plot situated near the Akola Octroi post.

The accused entered into an oral agreement to purchase the said

plot from the complainant. The plot admeasured 2500 square feet

in area and the consideration agreed was Rs.2,50,000/-. The

accused issued one cheque for Rs. 2 lac towards earnest. The

complainant had filled in the name and figure in the cheque

amount. An agreement was arrived at that the balance

consideration will be paid after two days and the sale deed will be

executed. The complainant had agreed to produce the documents

prior to the sale deed, which he failed to produce. The

complainant conveyed that there was an encumbrance on the plot

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and the sale deed did not materialize.

In the cross-examination, DW 1 admits that he did not know

details of the plot. It is admitted that there is no documentary

evidence of the transaction except the cheque. He further admits

that he did not verify any document pertaining to the plot. The

witness volunteers that the transaction was between the

complainant and the accused and the witness was later on

informed of the transaction by his son - accused. DW 1 admits

that when the cheque was issued amount of Rs 2 lac was not

available in the bank account of the accused. The accused and the

DW 1 reside separately, is the admission. DW 1 states that 2 or 3

days after the cheque was given, he and the accused came to know

that the plot was encumbered as a security for bank loan. It is

elicited from the witness that although he became aware of the

dishonour of cheque 5 or 6 months prior to the recording of the

evidence, he did not make any inquiry from the complainant. The

witness is not aware whether the accused met the complainant in

connection with the dishonour of cheque.

8 The learned counsel for the complainant relies on a

judgment of a learned Single Judge of this Court in Gaurav

Omprakash Jaju vs Shri Shakti Fabrics, 2010(6)Mh. L.J.59 and

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in particular on paragraphs 6 to 9 of the said judgment, which

read thus:

"6. A trickster -drawer who may have no intention to pay the amount, may find out ways and means to deliberately avoid payment. However, truth has a tendency to surface. It did appear to have surfaced in the course of cross-examination of the complainant on behalf of the accused. In an answer to the question regarding contents of Exh.25 statement of the complainant appears to have been invited in terms "particulars written in Cheque Exh.25 are in the handwriting of the accused." The fact of dishonour of cheque is also proved by cogent evidence of PW 2 Madan D Bhake, Bank Manager of Nagpur Nagrik Sahakari Bank. While hand-loan transaction is proved by evidence of PW 3 Subhash Jaju that Gaurav had advanced hand loan of Rs. 70,000/- to the accused. According to the accused, he had lodged complaint as to alleged loss/theft of cheque. Nothing prevented drawer-accused to produce copy of complaint if it was lodged with the police regarding missing cheque. The defense, therefore, is apparently appear an evasive attempt to dodge the complainant and deprive him of the payment due upon the cheque. The complainant has benefit of statutory presumptions under sections 118 and 139 of the N.I. Act to start with and establish the issuance of cheque; dishonour thereof and the evasion of payment on the part of the accused despite demand notice in writing from the complainant. The defence by the accused that the cheque in question might have been stolen by brother of the complainant appears an afterthought. It is dislodged by the complainant by leading evidence of his brother and the Bank Manager to bring on record sufficient evidence beyond reasonable doubt to impute penal liability under section 138 of the N. I. Act upon the accused. The learned trial Magistrate suspected the claim in Complaint unreasonably merely because of non-production of Income -tax return or account. The complainant is admittedly a businessman and a income Tax payer. Non-filing of tax return or evidence of it's at payment cannot help the case of the accused while we consider such defence in the light of Evidence led at the trial. One cannot jump to the conclusion that complainant cannot recover amount of hand loan; merely for the reason that the complainant did not file income tax return. Absence of or non- production of such evidence was not sufficient to rebut statutory presumption that the cheque was issued for consideration by the accused. The complainant in the present case, is businessman having business concern M/s Kabra Sales & Marketing at Gandhibag, Nagpur. He stated in his affidavit that his brother Subhash and the accused have very close friendly and business

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relations. Subhash had assured that the accused who needed cash, would repay the money within a month hence ready cash was given interest free on 5.12.2006, in lieu of which, cheque in question came to be issued for Rs. 70,000/-. Since the accused had expressed his inability to pay the cheque amount on due date and requested the complainant through his brother to wait for presentment of cheque, the cheque was presented for encashment in May 2007 ( but within validity period of six months). The fact that it returned dishonoured for non-payment with remarks "insufficient fund" is not disputed. Regarding the second contention that the complainant had no acquaintance with the accused and he would not lend Rs. 70,000/- to unknown person is also negatived by the evidence on record. PW-3 Subhash Jaju was examined, whose evidence indicate about neighbourly business relations of six years with the accused and the fact that the complainant Gaurav had visited Erode in order to collect commission. At that time, the accused was in need of money and demanded hand-loan from Gaurav who had advanced it to the accused. The suggestions in defence that Subhash had misused the cheque through his brother Gaurav is flatly denied. The bare denial of the transaction alleging misuse of cheque cannot help the drawer of the cheque to escape penal liability under section 138 of the N.I. Act, based upon dishonoured and deliberately unpaid cheque. A dishonest trickster drawer is bound to find out ways and means to avoid payment. The trial Court is required to be on guard to insist upon satisfactory rebuttal evidence which could satisfy test of a prudent person. The evidence must be sufficient and satisfactory enough to uproot the prosecution version on preponderance of probabilities. If according to the accused, he had lodged a report to police about alleged misplacement of the cheque in question, nobody prevented him from producing documentary evidence in the nature of FIR ( copy thereof ) or leading evidence of Station House Officer of the Police Station concerned in order to dislodge statutory presumptions in favour of the complainant. One cannot avoid penal liability under section 138 of the N. I. Act, merely on the basis of bare denial. An attempt to put forward flimsy and baseless version by an dishonest and trickster drawer shall be discouraged as general rule is to enforce the contract which may be oral or in writing for consideration. The object of punishing dishonest drawers of cheque is to ensure easy negotiability of negotiable instrument and to facilitate trading. The statutory presumptions u/s 118 and 139 of the Act enjoins upon the Court to raise presumptions until contrary is proved. The accused is required to rebut statutory presumptions by leading satisfactory evidence that the cheque was not issued for consideration nor in discharge of any debt or liability. Only when proof is adduced to satisfy the test "preponderance of probabilities" of prudent man to believe the

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accused, then only the burden may shift back to the complainant to adduce proof by convincing evidence of legal and enforceable debt to disprove the probabilities. This statutory presumption has to remain operative as prima facie case for complainant payee /holder in due course. The evidence to the contrary has to be led by the accused to the effect that the cheque was not issued for consideration/debt/ liability. Looking to the settled legal position the defence could not have been accepted as satisfactory and probable in the present case for to dislodge statutory presumption that the cheque in question was issued for discharge of debt or liability. It was for the accused to prove to the contrary that there was no any legally recoverable debt or liability once the accused had drawn a cheque for certain sum of money payable to the holder of holder in due course of the negotiable instrument, he cannot be allowed to resort to sharp practices for dishonest evasion of payment in a trading area. The legislative intention to introduce penal liability under section 138 of the N.I. Act is to enable a victim of an illegal acts-payee or holder in due course to recover amount due upon the dishonoured and deliberately unpaid cheque. Unscrupulous elements interested only to avoid payment by playing foul tricks with reference to negotiable instrument issued by them for consideration cannot be encouraged, as they are required to be punished according to law. Learned trial Magistrate had ignored all these aspects which resulted in miscarriage of justice. The trial Court ought not to have adopted interpretation in the present case on the ground of suspicion, surmises or conjectures. The trial Court trying a criminal case u/s 138 of the N.I. Act must properly evaluate the evidence bearing in mind the statutory presumptions in respect of dishonoured cheques prima facie issued for discharge of debt or liability. The Court caanot be justified to raise baseless and unreasonable inference for insignificant and flimsy reasons. Such doubt or suspicion as to complainant's case may ultimately help dishonest drawer who was all along interested to avoid payment by depriving an honest payee. The trial Court has to be on guard as it can not overlook probative value of documentary evidence placed before the Court to establish necessary ingredients of offence punishable under section 138 of the N.I. Act i.e. that the cheque issued was presented within validity period of six months for encashment, it returned dishonoured due to fault of drawer; remained unpaid despite demand notice in writing served upon the accused for which complaint was filed within time".

"7 In a criminal trial, one has to start with the presumption of innocence in favour of the accused which is also regarded as human right because no one can be convicted and punished merely on the ground of suspicion, however, strong it may be. The prosecution is

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required to prove offence beyond reasonable doubt. In special prosecutions based upon dishonoured cheque, negotiable instrument - also the complainant is required to aver and prove the offence punishable under section 138 of the N.I. Act; but the complainant is aided by the statutory presumptions which are self contained under sections 118 and section 139 of the Act. The complainant is required to prove that the cheque was drawn by the accused upon his account in the Bank for a certain sum of money on a certain date which returned dishonoured for non-payment on account of reason i.e. insufficient funds etc., and the accused has failed to pay the said amount, despite service of demand notice in writing upon him, within stipulated period. Once the primary facts as above, are averred and proved by the complainant in such case as required by the penal provision in section 138 of the Act, the statutory presumptions arising are required to be rebutted by "proof" on preponderance of probabilities. Such evidence may be by production of documents to disprove the complainant's version or by citing material elicited from the cross-examination of the complainant and his witnesses, if any. The accused may not enter in the witness box if he can dislodge the statutory presumptions otherwise".

"8 Under Section 139 of the N I Act, burden lies upon the drawer of the cheque to rule out the existence of the debtor-creditor relationship. The use of the phrase "until the contrary is proved" in Section 118 of the N I Act and further use of the words " unless the contrary is proved" in Section 139 of the Act read with definition of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, make it clear that presumption 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 rebutting presumption is served. But, it is settled law that 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 to prove offence. The accused may adduce evidence to prove that there was no debt or liability to be discharged by him. At the same time, it has to be borne in mind that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused to seek dismissal of the complaint -something which is probable has to be brought satisfactorily on record for getting the burden of proof shifted back to the complainant. If the complainant has misused the cheque or fabricated, the accused as any prudent person is bound to

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immediately protest and threaten the complainant with legal action and would not wait until the conclusion of the trial without taking any action against the complainant. In Hitel P Dalal vs. Bratindranath Banerjee: (2001) 6 SCC 16, the three Judge Bench of the Apex Court held that sections 138 and 139 of the Act require that the Court "shall presume" the liability of the drawer of the cheque for the amount for which cheque is drawn and in K Bhaskaran vs. Sankaran Vaidyan Balan and another, 2000(1)Mh.L.J.(SC) 193, (1997) 7 SCC 510, the Hon'ble Supreme Court observed thus:

"As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 enjoins the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was upon the accused to rebut that "presumption" the defense evidence must be such which the Court can believe the defense to exist or consider it's existence as reasonably probable, the standard of reasonability being that of the prudent person. To discharge onus it may not be essential for the accused to enter in the witness box to depose as he can rebut the presumption by cross-examining the complainant and his witnesses if any to prove defence upon preponderance of probabilities. Thus, onus as expected to be discharged by the accused, was not discharged in this case. Once it is held that the accused had failed to rebut the statutory presumptions it ought to be concluded that the presumption itself was tantamount to proof of the case of the complainant."

"9. Section 138 of the N. I. Act aims at punishing unscrupulous drawers of cheques who though purport to discharge their liability by issuing cheque, have no real intention to pay. This Court must on guard to prevent miscarriage of justice. The learned trial Magistrate ought to have noticed that the obligation on the part of the complainant stood discharged with the help of statutory presumptions of law unless the accused adduced evidence to establish the reasonable possibility of the non-existence of the presumed fact".

Reliance is also placed on another judgment rendered by the

learned Single Judge of this Court in Lalji s/o. Bansanarayan Choubey

Vs. Jiyalal Chavan and another, 2009(2) Mh. L.J.565 and in

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particular on paragraphs 10 and 11 of the said judgment, which read

thus:

"10. Clinching question in this case is whether the presumption under section 139 of the Negotiable Instruments Act is rebutted by the respondent No. 1. The learned Judicial Magistrate did not consider the effect of legal presumption available under section 139 of the Negotiable Instruments Act in its proper perspective. The Apex Court in "Hiten P. Dalal vs. Bratindranath Banerjee" 2001 SCC (Cri) 960, has held that mere plausible explanation given by the accused is not enough. The accused has to necessarily prove in the trial, by leading cogent evidence, that there was no debt or liability. The burden of proof is on the accused to rebut the legal presumption enumerated under section 139 and 118 of the Negotiable Instruments Act. Once it is established that the cheque was issued by the accused, then the burden shifts on him to prove that it was not issued in order to discharge any existing legal liability for repayment of the debt. The standard of proof required for the purpose of rebuttal of such presumption is not, however, heavy. The accused is required to strengthen his defence by showing existence of probabilities of the defence being truth bearing. The standard of proof in such a case would be that of a standard comparable to civil cases and would lie between the range of probability and possibility. Needless to say, the defence is not required to prove the defence being true upto the hilt".

"11. Having considered the above mentioned legal position, I shall now examine whether the respondent No. 1 has discharged his burden of rebuttal in the present case. As stated before, there is no documentary evidence to show that the appellant owned any plot in Jaibhavaninagar locality, Garkheda, Aurangabad. There is also no iota of evidence on record to show that oral agreement was settled in presence of Mukundlal Vishwakarma, who is the friend of the respondent No. 1. The reply notice (Exh-35) shows that the respondent No. 1 learnt that the appellant was not owner of six (6) plots which were agreed to be alienated. However, he was owner of the two (2) plots which he had already transferred in favour of one Shri Tufane. The identity of said Shri Tufane is rendered into obscurity. No attempt was made to examine said Shri Tufane. I mean to say, it was incumbent on the respondent No. 1 (accused) to probabalize the defence that the appellant was, in fact, dealing in plotting business and had several such transactions with other customers. In any case, there was no difficulty in filing a copy of registered sale-deed in respect of the plot which was sold to Shri

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Tufane by the appellant. No such effort was made by the respondent No.1. Nor it is suggested during cross-examination of PW Lalji that he had alienated those two (2) plots to one Shri Tufane and thereby had cheated the respondent No. 1 in respect of the transaction of sale in respect of the two (2) plots".

The learned counsel for the accused Shri S.R. Deshpande relies

on the judgment of a learned Single Judge of this Court in Rosa Maria

Fernandes vs. Nauso N. Kepkar, 2010(4)Mh. L.J. 611 and another

judgment of a learned Single Judge in Sanjay Mishra vs. Kanishka

Kapoor @ Nikki and another, 2009(4)Mh.L.J. 155

9 In Rangappa vs. Sri Mohan reported in (2010) 11

SCC 441, the Hon'ble Apex Court, while holding that since the

signature on the cheque is not disputed, the statutory presumption

under Section 139 of the Act is activated, which the accused could

not rebut since the defence of lost cheque was not probable,

observed thus :

"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

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construction and interpretation of reverse onus causes and the defendant-accused 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."

10 The Three Judges Bench judgment of the Hon'ble

Apex Court in Hiten P. Dalal v. Bratindranath Banerjee reported

in (2001) 6 SCC 16 considers the scope and ambit of Section 139

of the Act thus :

"22. Because both Sections 138 and 139 require that the court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras vs. A. Vaidyanatha Iyer, it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (Ibid. at p.65, para 14). Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by

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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 exists, no discretion is left with the court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. 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'.

24. Judicial statements have differed as to the quantum of rebutting evidence required. In Kundan Lal Rallaram v. Custodian, Evacuee Property, this Court held that the presumption of law under Section 118 of Negotiable Instruments Act could be rebutted, in certain circumstances, by a presumption of fact raised under Section 114 of the Evidence Act. The decision must be limited to the facts of that case. The more authoritative view has been laid down in the subsequent decision of the Constitution Bench in Dhanvantrai Balwantrai Desai vs State of Maharashtra AIR where this Court reiterated the principle enunciated in State of Madras vs Vaidyanath Iyer and clarified that the distinction between the two kinds of presumption lay not only in the mandate to the Court, but also in the nature of evidence required to rebut the two. In the case of a

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discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be true and which is consistent with the innocence" of the accused. On the other hand in the case of a mandatory presumption "the burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under Section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words 'unless the contrary is proved' which occur in this provision make it clear that the presumption has to be rebutted by 'proof' and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted. (AIR p.580, para 12)"

[See also V.D. Jhingan vs. State of Uttar Pradesh; Sailendranath Bose vs. The State of Bihar and Ram Krishna Bedu Rane vs. State of Maharashtra.]"

11 The nature of the initial burden of proof on the

accused to rebut the statutory presumption under Section 139 is

explained by the Hon'ble Apex Court in M.S. Narayana Menon

Alias Mani v. State of Kerala and another reported in (2006) 6

SCC 39 thus :

"29. In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until

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it is disproved. The words 'proved' and 'disproved' have been defined in Section 3 of the Evidence Act (the interpretation clause) to mean:

" 'Proved' - 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.

'Disproved' - A fact is said to be disproved when, after considering the matters before it the Court either believes that it does not exist, or considers its non- existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist."

30. Applying the said definitions of 'proved' or 'disproved' to principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.

31. A Division Bench of this Court in Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal albeit in a civil case laid down the law in the following terms:

"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

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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.5"

This Court, therefore, clearly opined that it is not necessary for the defendant to disprove the existence of consideration by way of direct evidence.

32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.

38. If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a 'fortiori' even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court.

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45. Two adverse inferences in the instant case are liable to be drawn against the Second Respondent:

(i) He deliberately has not produced his books of accounts.

(ii) He had not been maintaining the statutory books of accounts and other registers in terms of the bye- laws of Cochin Stock Exchange.

Moreover, the onus on an accused is not as heavy as that of the prosecution. It may be compared with a defendant in a civil proceeding."

12 The pivotal issue is whether the accused has brought

on record material which would persuade this Court to believe the

defence to exist or consider its existence to be reasonably

probable, the standard of reasonability being that of the prudent

man. If the conscious of this Court is satisfied that the accused has

discharged the initial onus of proof by demonstrating that the

existence of consideration was improbable or doubtful, it is

axiomatic that the onus would shift to the complainant to prove

the existence of legally enforcible debt or liability, as a matter of

fact. In such a scenario, the accused would have rebutted the

statutory presumption under section 118(a) and 139 of the Act

and the burden of proving the existence of legally enforceable debt

or liability would shift on the complainant.

13 The accused chose not to respond to the statutory

notice. The signature on the cheque is not denied. The statutory

20 apeal66of06

presumption under section 139 of the Act stands activated. The

defence is that the accused agreed to purchase a plot from the

complainant and as earnest handed over the disputed cheque

which though signed was otherwise blank. The accused did not

step into the witness box. DW 1 Shri Sayyad Noor, the father of

the accused admits in the cross-examination that he is deposing on

the basis of information received from the accused. It is true that

the accused was not obligated to enter into the witness box to

rebut the presumption and could have relied on the material

elicited in the cross-examination of the complainant or on the

material produced by the complainant. However, since a specific

defence is taken that the accused entered into an oral agreement

to purchase a plot from the complainant and the transaction did

not materialize since the plot was encumbered, the accused not

stepping into the witness box and instead examining the father

who concededly has no personal knowledge of the transaction, is

inexplicable. No evidence is adduced to show that the

complainant intended to sell a plot or that the accused entered

into an oral agreement to purchase a particular plot. The defence

is that the documents were not produced, and the transaction did

not materialize since the plot was encumbered, is not probabilized

even on the touchstone of probabilities. A prudent person, who

21 apeal66of06

enters into an oral agreement to purchase a plot for Rs. 2,50,000/-

is not likely to issue a cheque, much less a cheque which is only

signed and is blank otherwise, in favour of the seller without

perusing the documents. The issuance of a cheque which is only

signed leaving the complainant with the freedom to fill in the

contents is per say improbable. In the case at hand, the only

suggestion given to the complainant is that he owns plots at

Washim. No suggestion is given to the complainant that the

accused and the complainant entered into an oral agreement to

purchase a particular plot. The area of the plot and the

consideration of Rs. 2,50,000/- is not put to the complainant and

is testified to only in the evidence of DW 1.

14 It is the case of the complainant that the loan was

extended for a short duration of a month. The admission that the

complainant did not maintain accounts of the transaction and the

inference drawn by the learned Magistrate that the transaction

was not reflected in the income tax returns, in the factual matrix,

is not sufficient to render the existence of legally enforceable debt

or liability doubtful. I have already observed, that since the

statutory rebuttal which concededly is activated, is not rebutted by

the accused by evidence showing that the existence of defence is

22 apeal66of06

probable, the evidence must be appreciated on the anvil of the

statutory presumption in favour of the complainant that the

cheque was issued towards discharge of an existing debt or

liability which is legally enforceable. Having done so, I am not

persuaded to agree with the reasoning of the learned Magistrate.

In my view, the judgment and order impugned suffers from an

error of law in appreciating the import and implication of the

statutory presumption under section 139 of the Act.

Ordinarily, this Court is slow to interfere in a judgment of

acquittal. However, since in my view, the acquittal is vitiated by a

serious error of law, inference in appeal is justified.

(i) The judgment and order impugned is set aside.

(ii) The accused is convicted for offence punishable under section 138 of Negotiable Instruments Act and is sentenced to suffer simple imprisonment for three months and to pay compensation of Rs. 2,00,000/- (Rs. Two Lacs) to the complainant under section 357(3) of the Code of Criminal Procedure. In default of payment of compensation, the accused shall undergo simple imprisonment for three months.

(iii) The appeal is allowed.

JUDGE

RS Belkhede, PA