Calcutta High Court (Appellete Side)

Sri Sandip Mukherjee vs Vivek Agarwal on 8 February, 2023

                     IN THE HIGH COURT AT CALCUTTA

                     (Criminal Revisional Jurisdiction)

                             APPELLATE SIDE



Present:

The Hon'ble Justice Shampa Dutt (Paul)



                             CRR 435 of 2020

                           Sri Sandip Mukherjee

                                    Vs

                              Vivek Agarwal




For the Petitioner                 : Mr. Samiran Mondal,
                                     Mr. Avhinanda Dan.




For the Opposite Party             : Mr. Sanjoy Bose,
                                     Mr. Priyankar Basu Mullick.




Heard on                           : 16.01.2023

Judgment on                        : 08.02.2023
                                    2


Shampa Dutt (Paul), J.:



       The present revisional application has been preferred by the

Petitioner/Convict against an order dated 29.08.2019 passed by the

Learned Additional District and Sessions Judge, 1st Fast Track Court,

Bichar Bhavan, Calcutta, in Criminal Appeal No. 07/2017, affirming

partly the order dated 19.11.2016 passed by the Learned Metropolitan

Magistrate 12th Court, Calcutta in Complaint Case no. 4042 of 2009.


       The petitioner's case is that there was a previous acquaintance

between the present petitioner and the opposite party herein based on

which both the parties entered into a memorandum of understanding

(MOU) dated 31.10.2008 wherein it is stated that the opposite party

herein paid a sum of Rs. 8,50,000/- to the petitioner on conditions

mentioned therein. There was a computer center of the appellant in the

name of "Mira System Pvt. Company" and one of the conditions for

providing the said accommodation loan was that the appellant would

close his computer center by 01.04.2009 along with payment of the said

accommodation loan with 24% interest before 28.02.2009.


       It is further alleged that the appellant issued a cheque of Rs.

8,50,000/- dated 31.10.2009 to opposite party but on presentation it

was dishonored. Thereafter necessary legal formalities were initiated by

the opposite party, who filed a complaint under Section 138 of
                                          3


Negotiable Instruments Act, before the Learned Metropolitan Magistrate,

12th Court at Calcutta, on 12.12.2009 whereby the Learned Trial Judge

was pleased to hold the petitioner guilty and was further pleased to

sentence the petitioner to undergo simple imprisonment for six months

and directed the petitioner to pay a sum of Rs. 12,50,000/- to the

opposite party.


       Being      aggrieved   of   the       impugned   order,   the   petitioner

approached the Court of District and Sessions Judge at Calcutta, and

filed Criminal Appeal No. 07 of 2017 and the same was adjudicated by

the Learned Additional District and Sessions Judge, 1st Fast Track

Court at Calcutta wherein the Learned Judge was pleased to modify the

said judgment passed by the Learned Trial Judge and set aside the

substantive part of simple imprisonment for six months, keeping

unchanged the other portion of conviction to pay compensation.


       Mr. Samiran Mondal, learned counsel for the petitioner has

submitted that there was no document submitted on behalf of the

opposite party therein to depict the fact that any such liability was

owed by the petitioner against the complainant at any point of

time nor any such accommodation being sought for. As such no

business, income tax return showing accommodation loan to the

petitioner nor any money lenders certificate was produced by the
                                      4


opposite party during the trial. Hence the opposite party failed to

substantiate his case.


       However, the Learned Additional Sessions Judge, Calcutta

without verifying the records or the status of complainant to grant such

a sum to the petitioner was further pleased by his order dated

29.08.2019 to partly affirm the order of conviction against the

petitioner herein.


       That even after the repeated denial by the petitioner against the

signatures made in the issued demand notice by the opposite party, the

court in lieu of testifying the said signatures on the document, held it to

be that of the petitioner without initiating process to verify the same.


       The Learned Judge, however, adjudicating against the petitioner,

in the absence of any documents of the postal authorities, showing

service of demand notice upon the petitioner, has caused grave injustice

to the petitioner.


       The Learned Trial Judge erroneously adjudicated the matter

solely based on mere fact that plausible explanation by way of rebuttal

evidence must be given irrespective of the fact that the evidences

produced     by the prosecution. As such any production of further

evidences by the petitioner was not possible since no such transaction

took place as is made out between the parties established at any point

to time.
                                        5


       The impugned orders are otherwise bad in law and as such the

same are liable to be set aside.


       The learned Trial Judge failed to understand the motive of the

complainant to falsely implicate your petitioner so as to squeeze money

through illegal demands.


       Mr. Sanjoy Bose, learned counsel for the opposite party has

submitted that Magistrate rightly passed the order of conviction and the

Learned Sessions Judge was generous enough to set aside the sentence

of imprisonment of the petitioner and has only directed to pay the

cheque amount along with the compensation.


       The Cheque amount has been paid but the compensation

amount of Rupees 4 Lakhs which is extremely reasonable is still

due in respect of the loan given to the petitioner in the year 2009.


       Heard both sides in full. Perused the materials on record

Considered. It is the contention of the Petitioner/Accused that the

opposite party could not prove before the court that the petitioner had

any liability to discharge. As such the judgments are not in accordance

with law and liable to be set aside.


       Section 138 of Negotiable instruments Act lays down:-


            "138. Dishonour of cheque for insufficiency,
            etc., of funds in the account.-Where any
            cheque drawn by a person on an account
                          6


maintained by him with a banker for payment of
any amount of money to another person from out
of that account for the discharge, in whole or in
part, of any debt or other liability, is returned by
the bank unpaid, either because of 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 by an agreement made with that
bank, such person shall be deemed to have
committed an offence and shall, without
prejudice to any other provision of this Act, be
punished with imprisonment for a term which
may extend to [two] years, or with fine which
may extend to twice the amount of the cheque,
or with both:
Provided that nothing contained in this section
shall apply unless-



  (a) The cheque has been presented to the
      bank within a period of six months from
      the date on which it is drawn or within the
      period of its validity, whichever is earlier;



  (b) The payee or the holder in due course of
      the cheque, as the case may be, makes a
      demand for the payment of the said
      amount of money by giving a notice in
      writing, to the drawer of the cheque,
      [within thirty days] of the receipt of
      information by him from the bank
      regarding the return of the cheque as
      unpaid; and



  (c) The drawer of such cheque fails to make
      the payment of the said amount of money
      to the payee or as the case may be, to the
      holder in due course of the cheque within
      fifteen days of the receipt of the said
      notice."
                                       7




       On going through the judgements of the learned Magistrate and

the learned Session Judge, it is before this court that there is sufficient

evidence to show that the cheque was duly issued and after completion

of all formalities the proceedings under section 138 NI act was initiated.


       The learned Magistrate on considering the evidence before the

court and materials on record, convicted the petitioner/accused.


       The session Judge after considering the materials on record,

modified the judgment and order of the Magistrate and set aside the

substantive     part   of   imprisonment    keeping    the   order   to   pay

compensation intact.


       The said findings of the learned Sessions Judge is in accordance

with law and has been modified in the interest of justice. Section 139

N.I Act which goes like this:-


       Section 139 of Negotiable instruments Act lays down:-


              "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.

              Nature and Scope.-- This Section raises
              presumption of law that cheque duly drawn was
              in discharge of debt or liability. However,
              presumption is rebuttable and onus lies on
              drawer to rebut it by adducing cogent evidence
                                   8


          to the contrary. This presumption is not in
          conflict with human right of presumption of
          innocence of accused which prosecution is
          required to dislodge by proving its case against
          accused beyond reasonable doubt, Bir Singh vs.
          Mukesh Kumar, (2019) 18 SCC 106.

          Burden of rebuttal of presumption.-- The
          presumption mandated by Section 139 does
          indeed include the existence of a legally
          enforceable debt or liability. Bare denial of the
          passing of the consideration and existence of
          debt, is not enough to rebut the presumption. 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. Rather,
          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 consideration did not exist, 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. 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
          Section 118 and 139 of the NI Act, Uttam Ram v.
          Devinder Singh Hudan, (2019) 10 SCC 287."


     In Bir Singh vs. Mukesh Kumar (Criminal Appeals Nos. 230-

231 of 2019 the Supreme Court on 06.02.2019, held:-
                          9


"21. In passing the impugned judgment and
order dated 21-11- 2017, the High Court mis-
construed Section 139 of Negotiable Instruments
Act, which mandates that unless the contrary is
proved, it is to be presumed 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. Needless to
mention that the presumption contemplated
under Section 139 of the Negotiable Instruments
Act, is a rebuttable presumption. However, the
onus of proving that the cheque was not in
discharge of any debt or other liability is on the
accused drawer of the cheque.
22. In Hiten P. Dalal vs. Bratindranath
Banerjee3, this Court held that both Section
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. Following the judgment of this Court
in State of Madras vs. Vaidyanatha Iyer4, this
Court held 2 (2008) 14 SCC 457 3 (2001) 6 SCC
16 4 AIR 1958 SC 61 that it was obligatory on
the Court to raise this presumption.
23. Section 139 introduces an exception to the
general rule as to the burden of proof and shifts
the onus on the accused. The presumption
under Section 139 of the Negotiable Instruments
Act is a presumption of law, as distinguished
from presumption of facts. Presumptions are
rules of evidence and do not conflict with the
presumption of innocence, which requires the
prosecution 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 and
presumptions of fact unless the accused adduces
evidence showing the reasonable possibility of
the non- existence of the presumed fact as held
in Hiten P. Dalal (supra).
24. Presumption of innocence is undoubtedly a
human right as contended on behalf of the
respondent-accused, relying on the judgments of

this Court in Ranjitsing Brahmajeetsing Sharma

vs. State of Maharashtra and Anr5 and Rajesh Ranjan Yada @ Pappu Yadav vs. CBI through its Director 6. However the guilt may be established by recourse to presumptions in law and presumptions in facts, as observed above.

25. In Laxmi Dyechem vs. State of Gujarat & Ors. 7, this Court reiterated that in view of Section 139, it has to be presumed that a cheque was issued in discharge of a debt or other liability but the 5 (2005) 5 SCC 294 6 (2007) 1 SCC 70 7 (2012) 13 SCC 375 presumption could be rebutted by adducing evidence. The burden of proof was however on the person who wanted to rebut the presumption. This Court held "however, this presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of a post dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act".

26. In Kumar Exports vs. Sharma Carpets8, this Court reiterated that there is a presumption that every negotiable instrument duly executed, is for discharge of a debt or liability, but the presumption is rebuttable by proving the contrary. In the facts and circumstances of the case it was found that the cheque in question was towards advance for purchase of carpets, which were in fact not sold by the payee of the cheque to the drawer, as proved from the deposition of an official of the Sales Tax Department, who stated that the payee had admitted that he had not sold the carpets.

27. In K.N. Beena vs. Muniyappan and Another 9, this Court held that in view of the provisions of Section 139 of the Negotiable Instruments Act read with Section 118 thereof, the Court had to presume that the cheque had been issued for discharging a debt or liability. The said presumption was rebuttable and could be rebutted by the accused by proving the 8 (2009) 2 SCC 513 9(2001) 8 SCC 458 contrary. But mere denial or rebuttal by the accused was

not enough. The accused had to prove by cogent evidence that there was no debt or liability. This Court clearly held that the High Court had erroneously set aside the conviction, by proceeding on the basis that denials/averments in the reply of the accused were sufficient to shift the burden of proof on the complainant to prove that the cheque had been issued for discharge of a debt or a liability. This was an entirely erroneous approach. The accused had to prove in the trial by leading cogent evidence that there was no debt or liability.

28. In R. Vijayan vs. Baby and Another 10 this Court observed that the object of Chapter XVII of the Negotiable Instruments Act is both punitive as also compensatory and restitutive. It provides a single forum and single proceeding for enforcement of criminal liability by reason of dishonour of cheque and for enforcement of the civil liability for realization of the cheque amount, thereby obviating the need for the creditor to move two different fora for relief. This Court expressed its anguish that some Magistrates went by the traditional view, that the criminal proceedings were for imposing punishment and did not exercise discretion to direct payment of compensation, causing considerable difficulty to the complainant, as invariably the limitation for filing civil cases would expire by the time the criminal case was decided. 10 (2012) 1 SCC 260

29. In R. Vijayan vs. Baby and another (supra) this Court observed that unless there were special circumstances, in all cases of conviction, the Court should uniformly exercise the power to levy fine up to twice the cheque amount and keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss, direct payment of such amount as compensation. This Court rightly observed that uniformity and consistency in deciding similar cases by different courts not only increases the credibility of the cheque as a Negotiable Instrument but also the credibility of the Courts of Justice.

30. The judgment of this Court in Raj Kumar Khurana vs. State of (NCT of Delhi) & Anr.11 was rendered in the particular facts of the case where the drawer of the cheque had reported to the police and the bank that two unfilled cheques signed by him had been stolen.

31. The proposition as re-enunciated in John K John vs. Tom Varghese & Anr.12 cited on behalf of the respondent-accused that if two views are possible, this Court, in exercise of its jurisdiction under Article 136 of the Constitution would ordinarily not interfere with a judgment of acquittal, is well settled.

32. In the aforesaid case this Court affirmed an acquittal under Section 138 of the Negotiable Instrument Act, in the 11 (2009) 6 SCC 72 12 (2007) 12 SCC 714 peculiar facts and circumstances of the case where several civil suits between the parties were pending.

33. In Krishna Janardhan Bhat vs. Dattatraya G. Hegde 13, cited on behalf of the respondent- accused, this Court reaffirmed that Section 139 of the Act raises a presumption that a cheque duly drawn was towards a debt or liability. However, keeping in view the peculiar facts and circumstances of the case, this Court was of the opinion that the courts below had approached the case from a wholly different angle by wrong application of legal principles.

34. It is well settled that a judgment is a precedent for the issue of law which is raised and decided. It is the ratio decidendi of the case which operates as a binding precedent. As observed by this Court in State of Punjab & Ors. vs. Surinder Kumar & Ors. 14, what is binding on all courts is what the Supreme Court says under Article 141 of the Constitution, which is declaration of the law and not what it does under Article 142 to do complete justice.

35. Furthermore, to quote V. Sudhish Pai from his book "Constitutional Supremacy - A Revisit":- "Judgments and observations in judgments are not to be read as Euclid's theorems or as

provisions of statute. Judicial utterances/pronouncements are in the setting of the facts of a particular case. To interpret words and provisions of a statute it may become necessary for judges to embark upon lengthy discussions, but such discussion is meant to explain not define, Judges interpret statutes, their words are 13 (2008) 4 SCC 54 14 (1992) 1 SCC 489 not to be interpreted as statutes. Thus, precedents are not to be read as statutes."

36. The proposition of law which emerges from the judgments referred to above is that the onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act.

37. 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.

38. 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.

39. It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of

the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. The second question is also answered in the negative.

40. Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

The supreme court in Criminal Appeal No. of 2022 @ SLP

(Crl.) No(S) 5241 of 2016, Jain P. Jose versus Santosh & Anr., on

10th November, 2022 while considering the presumptions under

section 118 N.I Act and 139 N.I Act, held:-

"In the aforesaid factual background, we do not think that the High Court was right in holding that the onus was not on the respondent to show that the debt was neither due nor payable. Sections 118 and 139 of the N.I. Act, read:

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

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

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

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

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

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

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

(g) that holder is a holder in due course --that the holder of a negotiable instrument is a holder in due course:

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

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.

Referring the Sections of the N.I. Act, a three Judges Bench of this Court in "T.

Vasanthakumar Vs. Vijaykumari" (2015) 8 SCC 378, has held:

"9. Therefore, in the present case since the cheque as well as the signature has been accepted by the accused-respondent, the presumption under Section 139 would operate. Thus the burden was on the accused to disprove the cheque or the existence of any legally recoverable debt or liability. To this effect, the

accused has come up with a story that the cheque was given to the complainant long back in 1999 as a security to a loan; the loan was repaid but the complainant did not, return the security cheque. According to the accused, it was that very cheque used by the complainant to implicate the accused. However, it may be noted that the cheque was dishonoured because the payment was stopped and not for any other reason. This implies that the accused had knowledge of the cheque being presented to the bank, or else how would the accused have instructed her banker to stop the payment. Thus, the story brought out by the accused is unworthy of credit, apart from being unsupported by any evidence.

This decision, refers to an earlier judgment of this Court in "Rangappa vs. Sri Mohan" (2010) 11 SCC 441, which elucidating on the presumption under Section 139 of the N.I. Act, observes that this includes a presumption that there exists a legally enforceable debt or liability. However, the presumption under Section 139 of the N.I. Act is rebuttable and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested.

A recent decision of a three Judges Bench of this Court in "Kalamani Tex and Another vs. P. Balasubramanian" (2021) 5 SCC 283, examines the scope and ambit of the presumption under Sections 118 and 139 of the N.I. Act, to hold:

"14. Once the 2nd appellant had admitted his signatures on the cheque and the deed, the trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial Court fell in error when it called upon the respondent complainant to explain the circumstances under which the appellants were liable to pay. Such approach of the trial Court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law.

xx xx xx

17. Even if we take the arguments raised by theappellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite "Bir Singh v. Mukesh Kumar", where this court held that:

"Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

18. Considering the fact that there has been anadmitted business relationship between the parties, we are of the opinion that the defence raised by the appellants does not inspire confidence or meet the standard of 'preponderance of probability'. In the absence of any other relevant material, it appears to us that the High Court did not err in discarding the appellants' defence and upholding the onus imposed upon them in terms of Section 118 and Section 139 of the Negotiable Instruments Act."

Sec 138 N.I Act provides for punishment of imprisonment for a

term which may be extended to two years or with fine which may

extend to twice the amounts of the cheque or with both.

The cheque dated 31.10.2009 amount was for an amount

Rupees 8,50,000/- and the compensation imposed is RS 12,50,000/-.

Fourteen long years have passed.

The learned Sessions Judge has also set aside the substantive

sentence of imprisonment. In spite of the said circumstances the

petitioner has still not paid the balance amount of Rs. 4 lakhs

(compensation).

Accordingly the judgment/order dated 29.08.2019 passed by the

Learned Additional District and Sessions Judge, 1st Fast Track Court,