Vinod Chaudhary vs Tara Chand & Another
2023 Latest Caselaw 10479 HP

IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA Cr. Revision No. 59 of 2018

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                                                              Reserved on:             15.06.2023





                                    Decided on: 28.07.2023

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Vinod Chaudhary ...Petitioner

Versus Tara Chand & another

...Respondents _____________________________________________________ Coram r Hon'ble Mr. Justice Sushil Kukreja, Judge

Whether approved for reporting? Yes.

_____________________________________________________ For the petitioner: Mr. Anshul Attri, Advocate.

For the respondents: Mr. Jagan Nath, Advocate, for respondent No.1.

Mr. R.P. Singh, Deputy Advocates General, for respondent No.2/ State.

Sushil Kukreja, Judge

The present revision petition has been preferred by the

petitioner-accused (hereinafter referred to as 'the accused') under

Sections 397 read with Section 401 of the Code of Criminal

Procedure (Cr.P.C.) against the judgment dated 30.11.2017,

passed by the learned Additional Sessions Judge-I, Mandi, District

Mandi, H.P., in Criminal Appeal No 09 of 2014, whereby the appeal

Whether reporters of Local Papers may be allowed to see the judgment?

filed by the accused against the judgment of conviction dated

28.02.2014 and order of sentence dated 04.03.2014, passed by

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the learned Special Judicial Magistrate, Mandi, H.P., in Complaint

No. 319-III/2013(07), titled Tara Chand vs. Vinod Chaudhary, were

upheld and the appeal filed by the accused was dismissed.

2. The brief facts, as emerge from the record, are that the

accused and the complainant-Tara Chand were known to each

other as the accused was share-broker of the complainant. During

the month of February, 2007, the accused borrowed a sum of

Rs.4,36,000/- from the complainant and in lieu thereof, he issued a

cheque bearing No.0382987, dated 21.02.2007, amounting to

Rs.4,36,000/- in favour of the complainant and when the said

cheque was presented in the bank, it was dishonoured and

returned back to the complainant on 01.03.2007 with remark

'payment was stopped by the drawer'. Thereafter, the complainant

served a legal notice dated 07.03.2007 upon the accused,

demanding the payment of the cheque amount within the

stipulated period, however, when no payment was made, he filed a

complaint under Section 138 of the Negotiable Instruments Act (for

short, 'NI Act) before the learned trial Court. The learned trial

Court, after having found the accused guilty, convicted him for the

offence punishable under Section 138 of NI Act, vide judgment of

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conviction dated 28.02.2014 and sentenced him to undergo simple

imprisonment for a period of one year and to pay compensation to

the extent of cheque amount, i.e., 4,36,000/- vide order of

sentence dated 04.03.2014. Aggrieved against the aforesaid

judgment of conviction and order of sentence, the accused

preferred an appeal before the learned lower Appellate Court,

which was dismissed, vide judgment dated 30.11.2017. Being

aggrieved and dissatisfied with the impugned judgment dated

30.11.2017, the petitioner-accused preferred the instant revision

petition.

3. Learned counsel for the petitioner-accused contended

that both the Courts below have completely failed to appreciate the

evidence on record as no legally admissible evidence has been

adduced by the respondent No.1-complainant to prove the legal

consideration which is mandatorily required under Section 138 of

NI Act.

4. On the other hand, learned counsel for the respondent

No.1-complainant supported the judgment of both the Courts

below and contended that the learned Courts below have rightly

convicted and sentenced the accused on the basis of proper

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appreciation of evidence.

5. I have heard learned counsel for the petitioner-accused

as well as learned counsel for the respondent No.1-complainant

and learned Deputy Advocate General and also gone through the

record carefully.

6. Before adverting to the merits of the case, it would be

apposite to have a look into the legal position. It is a settled

proposition of law that presumption under Section 139 of NI Act is

a presumption of law, as distinguished from a presumption of fact,

such a presumption is a rebuttable presumption and the drawer of

the cheque may dispel the same. The rebuttal does not have to be

conclusively established, but such evidence must be adduced 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 a 'prudent

man'. The aforesaid position in law stands settled in the judgment

of the Hon'ble Supreme Court in the matter of Hiten P. Dalal Vs.

Bratindranath Banerjee, (2001) 6 SCC 16. While dealing with the

aspect of presumption in terms of Section 139 of NI Act, the

Hon'ble Supreme Court observed as under:-

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"21.The appellant's submission that the cheques were not drawn for the 'discharge in whole or in part of any debt or other liability' is answered by the third

presumption available to the Bank under Section 139 of the Negotiable Instruments Act. This section provides that "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". The effect of these presumptions is to place the evidential burden on the appellant of proving that the cheque was not received by the Bank towards the discharge of any liability.

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 AIR 1958 SC 61, 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). 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 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 7 of 36 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

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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 vs Custodian, Evacuee Property, Bombay AIR 1961 SC 1316, this Court held that the presumption of law under

Section 118of 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 1964 SC 575, where this Court reiterated the principle enunciated in State of Madras vs Vaidyanath Iyer (Supra) 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 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 8 of 36

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 S.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......"

7. In the matter of Kumar Exports Vs. Sharma Carpets,

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(2009) 2 SCC 513, it has been held by the Hon'ble Supreme Court

that Section 118 of the N.I. Act inter alia directs that it shall be

presumed, until the contrary is proved, that every negotiable

instrument was made or drawn for consideration. The relevant

portion of the aforesaid judgment is reproduced as under:-

"13. In a significant departure from the general rule applicable to contracts, Section 118 of the Act provides certain presumptions to be raised. This Section lays down

some special rules of evidence relating to presumptions.

The reason for these presumptions is that, negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle

to facilitate negotiability as well as trade. Section 118 of the Act provides presumptions to be raised until the contrary is proved (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance,(iv) as to time of

transfer, (v) as to order of indorsements,(vi) as to appropriate stamp and (vii) as to holder being a holder in

due course.

14. Section 139 of the Act provides that 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.

19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions 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 presumption is over."

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8. In the instant case, perusal of the record reveals that

complainant Tara Chand, while appearing in the witness box as

CW-2, categorically deposed that the accused was known to him

being a share broker and he used to invest money in the shares

through the accused. He further deposed that in the month of

February, 2007, the accused borrowed a sum of Rs.4,36,000/-

from him and in order to discharge his liability, the accused issued

a cheque Ext.CW1/A amounting to Rs.4,36,000/-, which on

presentation was dishonoured, vide memo Ext. CW1/E. He further

stated that thereafter he issued a legal notice to the accused,

however, despite that the accused had failed to return the amount,

therefore, he filed the present complaint. In support of his case, the

complainant also examined one Prakash Chand, dealing

hand/Clerk of Bank of Baroda as CW-1, who deposed that the

cheque in question was received in the bank for collection, but

there was only Rs.4,496/- in the account of the accused and the

accused had requested the bank that if any cheque was received

for encashment, the same may not be encashed, as such, cheque

Ext.CW1/A was dishonoured as per the instructions of the accused

to stop payment.

9. From the perusal of the entire evidence of the

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complainant, it has become clear that the cheque Ext. CW1/A was

dishonoured by the banker of the accused due to 'payment

stopped by drawer' vide memo. Ext.CW1/E. It is also settled that

"stop payment" will not preclude inaction under Section 138 of NI

Act as the case will still fall under Section 138 of NI Act if the

accused had instructed the bank to stop payment. In the light of

the evidence on record, the complainant has discharged his initial

burden and it is required to be presumed that the cheque in

question was drawn for consideration and the complainant

received the same in discharge of the existing debt. The onus,

therefore, shifts upon the accused to establish probable defence

so as to rebut such presumption.

10. The law is well settled that in order to rebut the

statutory presumption, the accused is not expected to prove his

defence beyond reasonable doubt as is expected of the

prosecution in a criminal trial. The accused may adduce direct

evidence to prove that the cheque in question was not supported

by consideration and that there was no debt or liability to be

discharged by him. On the aspects relating to preponderance of

probabilities, the accused has to bring on record such facts and

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such circumstances which may lead this court to conclude either

that the consideration did not exist or that its non-existence was so

probable that a prudent man would under the circumstances of the

case, act upon the plea that the consideration did not exist. It is

settled position of law that though there may not be sufficient

negative evidence which could be brought on record by the

accused to discharge his burden, yet mere denial would not fulfill

the requirements of the rebuttal as envisaged under Sections 118

and 139 of the N.I. Act. Reference can also be made to the

judgment of the Hon'ble Supreme Court in Rangappa Vs. Sri

Mohan (2010) 11 SCC 441, wherein it has been observed 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. The relevant paras of the aforesaid judgment are

reproduced as under:-

''26. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the

decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption

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and it is open to the accused to raise a defence wherein

the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant.

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 14 of 36 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.' In the present case on hand, the accused merely denied the case of complainant and he has not placed sufficient materials before the court to believe his defence. Mere denial of the case of complainant is not sufficient ground to believe the defence of accused that the complainant has not lent an amount of Rs.30 lakhs to the accused."

11. In Rohitbhai Jivanial Patel's case (supra), it has been

held by the Hon'ble Supreme Court that once the accused could

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not deny his signatures on the cheque in question that had been

drawn in favour of the complainant, therefore, it is required to be

presumed that the cheque in question was drawn for consideration

and the holder of the cheque i.e. the complainant received the

same in discharge of an existing debt. The relevant portion of the

aforesaid judgment reads as under:-

"15. So far the question of existence of basic ingredients for drawing of presumption under Sections 118 and 139 of the NI Act is concerned, apparent it is that the appellant-accused could not deny his signatures on the cheques in question that had been drawn in favour of the

complainant on a bank account maintained by the accused for a sum of Rs.3 lakhs each. The said cheques were presented to the bank concerned within the period of their validity and were returned unpaid for the reason of

either the balance being insufficient or the account being closed. All the basic ingredients of Section 138 as also of

Sections 118 and 139 are apparent on the fact of the record. The trial court had also consciously taken note of these facts and had drawn the requisite presumption. Therefore, it is required to be presumed that the cheques

in question were drawn for consideration and the holder of the cheques i.e. the complainant received the same in discharge of an existing debt. The onus, therefore, shifts on the appellant-accused to establish a probable defence so as to rebut such a presumption."

12. In his statement recorded under Section 313, Cr.P.C.,

the accused had specifically stated that he had already made the

entire payment to the complainant and the cheque in question was

issued to the complainant as a security. Since the accused had

admitted his signatures on the cheque in question, therefore, it is

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required to be presumed that the cheque in question was drawn for

a consideration and the holder of the cheque, i.e. the complainant

received the same in discharge of an existing debt. Now, the onus

shifts upon the accused to establish a probable defence so as to

rebut such a presumption. However, the accused has failed to

rebut such a presumption. The accused did not produce any

cogent and convincing evidence before this Court to believe that

he has not issued the cheque in question in favour of the

complainant for discharge of legally recoverable debt.

13. In support of his case, the accused himself appeared in

the witness box as DW-1/7 and stated that the complainant was

known to him since February, 2006, as he used to make him

payments for purchasing shares through cheques. He further

stated that cheque Ex.CW1/A was issued to the complainant as

security which was duly filled-in by him except the date on the

cheque and the complainant had lent him the cheque amount in

cash in December, 2006 which he had borrowed for his personal

work and on the repeated demand by the complainant, he issued

cheque, Ex.CW.1/A, amounting to Rs.4,36,000/- on 05.01.2007.

He further deposed that he had deposited a sum of Rs.93,000/- in

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the bank account of the complainant through cheque on

16.01.2007 and Rs.30,000/- on 18.01.2007 through cheque. He

also deposed that on 16.01.2007, he deposited Rs.77,000/- in the

bank account of the complainant and Rs.2,36,000/- on 29.01.2007

through cheque and thereafter when the complainant visited his

office in the presence of one Ranvir Singh, he assured him that he

will return the cheque within 2-3 days but he had not returned the

cheque although he had received the cheque amount. In support

of his case, the accused also examined one Ranvir Singh as DW-

2, who stated that in the month of January, 2007 when he was

present in the office of the accused and was discussing regarding

share market, the accused asked the complainant as to whether

he had received the entire payment, to which the complainant

replied that he had received the entire payment. The accused then

asked the complainant to return his cheque, but he replied that he

will return the cheque within 2-3 days. DW-3 Sunita Sharma,

Special Assistant, State Bank of India, Sundernagar, brought the

record pertaining to account No.10999866398 of the

complainant and deposed that as per record, from 01.01.2006 till

date, no payment was made from the said account to Mahalaxmi

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Securities. DW-4 P.C. Dhiman, Computer Operator, Bank of

Baroda, deposed that as per the record, on 03.01.2007, vide

cheques No. 382984 and 382985, sums of Rs.2,50,000/- and

Rs.2,00,000/- have been paid from the account of Mahalaxmi

Securities to the account of the complainant. DW-5 Senior

Manager, Punjab National Bank deposed that as per record, on

13.11.2006, a sum of Rs.1,00,000/- was paid to the complainant

through cheque No.370347, on 15.11.2006, a sum of

Rs.1,50,000/- was paid to the complainant through cheque

no.370348 and on 08.12.2006, a sum of Rs.1,00,000/- was paid to

the complainant through cheque No.370361. DW-6 Sh. Madan

Lal Sharma, Clerk from State Bank of Patiala, Sundernagar

Branch, deposed that no payment had been received in the

account of the Mahalaxmi Securities from the account of the

complainant through cheque. The accused also examined one

Kishori Lal, Clerk from Punjab National Bank, Branch Moti Bazar

Mandi as DW-8, who also stated that as per the record, the

complainant opened the account in their bank on 08.12.2006.

14. From the perusal of the evidence led by the accused,

the defence taken by the accused does not seem to be probable

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that the cheque in question was given by him as security. DW-4 &

DW-5 have brought the record pertaining to the payment made to

the complainant, but in cross-examination, both of them had

feigned ignorance that in what context and for what purpose the

amount was deposited in the account of the complainant. The

accused himself admitted in his statement that he had borrowed

money from the complainant, which was received by him in cash

and the cheque was given by him as security. He further stated

that he had returned the amount to the complainant by depositing

the amount on different dates in the account of the complainant.

However, he could not depose as to whether the said amount was

deposited against the borrowed amount or deposited in some

other context. He had failed to explain that once he had returned

the amount in the month of January, 2007, then why he had issued

the cheque, Ext. CW1/A on 21.02.2007 in favour of the

complainant. The accused had also stated in cross-examination

that a sum of Rs.8,50,000/- had been deposited in the account of

the complainant by him but he had failed to explain as to why he

had paid him Rs.8,50,000/- when he had to pay only Rs.4,36,000/-

as cheque amount to the complainant. It is the burden on the

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accused to prove his defence by producing sufficient material

before the court. If really, he has paid the entire cheque amount to

the complainant, definitely, he would have taken legal action

against the complainant for not returning the cheque in question,

but there is no legal action taken by the accused against the

complainant. Though, the accused had tried to raise presumption

that the cheque was given as security and had returned the

amount to the complainant, however, he had failed to place on

record any cogent and satisfactory evidence to rebut the said

presumption.

15. On overall appraisal of the material available on record,

it is the considered opinion of this Court that the accused has failed

to discharge his burden to rebut the statutory presumption as well

as the facts and circumstances placed on record by the

complainant whereby the complainant has proved the guilt of the

accused that the accused is liable to pay the amount covered

under the cheque. There is no substance in the probable defence

of the accused, whereas the complainant has discharged his

burden and proved the guilt of the accused. All the basic

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ingredients of Section 138 as well as Sections 118 and 139 of NI

Act are apparent in the facts and circumstances of the present

case. Since the accused has failed to rebut the statutory

presumption drawn against him, it can safely be held that the

cheque Ext. CW/1A was issued by the accused and received by

the complainant in discharge of an existing debt, as such, the

accused has committed an offence punishable under Section 138

of NI Act.

16. Consequently, the present revision petition is dismissed

and the impugned judgment dated 30.11.2017, passed by the

learned Additional Sessions Judge-I, Mandi, District Mandi, H.P., in

Criminal Appeal No 09 of 2014, affirming the judgment of

conviction dated 28.02.2014 and order of sentence dated

04.03.2014, passed by learned Special Judicial Magistrate, Mandi,

H.P., in Complaint No.319-III/2013(07), titled Tara Chand vs. Vinod

Chaudhary, is upheld.

Pending miscellaneous application(s), if any, shall also

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stand disposed of.

                                              ( Sushil Kukreja )
                                                    Judge
    July 28, 2023
         (VH)




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