2020 (10) TMI 312 - HC - Indian Laws

Dishonor of Cheque - Offences punishable u/s 138 of NI Act - rebuttal of resumption - Sections 118 and 139 of the Act - HELD THAT - Section 118 of the Act provides certain presumptions to be raised laying down some special rules of evidence relating to presumptions. The presumption, therefore, is a matter of principle to infuse credibility to negotiable instruments including cheques and to encourage and promote the use of negotiable instruments in financial transactions. 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. That apart, 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 of the Act for the discharge, in whole or in part, of any debt or other liability. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. Needless to say that as and when the complainant discharges the burden to prove that the cheque was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act are very much available to the complainant and the burden shifts on the accused. However, this presumption is rebuttable. Under the circumstances, it is the duty of the accused before the court by adducing evidence to show that the cheque was not supported by consideration and that there was no debt or liability to be discharged as alleged. It is necessary on the part of the accused to set up a probable defence for getting the burden of proof shifted to the complainant. Once such rebuttable evidence is adduced and accepted by the court, the burden shifts back to the complainant. Having regard to the materials on record, this Court is of the view that the accused failed to adduce evidence to rebut the presumption or a probable case to shift the burden to the complainant. On going through the impugned judgment, this Court is of the view that the appellate court correctly applied the presumption under Section 139 of the Act. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. That apart, the accused has no case that unfilled cheque had been lost irrecoverably or stolen. The accused failed to prove in the trial by leading cogent evidence that there was no debt or liability. Even a blank cheque leaf voluntarily signed and handed over by the accused, which is to some payment, would attract the presumption under Section 139 of the NI Act in the absence of cogent evidence to show that the cheque was not issued in discharge of a debt. PW1 adduced evidence to show that he had advanced the amount and the cheque was given to him in repayment of the same. On analyzing the entire evidence in detail, the trial court as well as the appellate court entered a finding that the offence under Section 138 of the NI Act is proved beyond doubt. No interference is warranted in revision. The sentence imposed by the trial court as confirmed by the appellate court stand modified as follows; i.The revision petitioner/accused is sentenced to pay a fine of ₹ 75,000/- and in default of payment of fine to undergo simple imprisonment for three months. ii. In view of the Covid-19 pandemic, the revision petitioner/accused is given six months time to deposit the amount before the trial court. Thus, the fine amount shall be deposited in the trial court within six months time from this date, failing which the accused shall undergo simple imprisonment for three months. iii. In case, the fine amount is deposited as ordered, the same shall be released to the 1st respondent/complainant as compensation in accordance with law - Revision petition allowed.

Summary

Issues:
1. Conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881.
2. Application of presumptions under Sections 118 and 139 of the Act.
3. Burden of proof on the accused to rebut the presumptions.
4. Revision against concurrent conviction and sentence.
5. Modification of sentence from imprisonment to fine.

Analysis:

1. The judgment pertains to a revision petition challenging the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881. The accused issued a cheque for a certain amount which was dishonored, leading to legal proceedings initiated by the complainant. The trial court and the appellate court upheld the conviction, which was the subject of challenge in the revision petition.

2. The judgment delves into the application of presumptions under Sections 118 and 139 of the Act. Section 118 provides for presumptions related to negotiable instruments, while Section 139 creates a presumption that a cheque is issued for the discharge of a debt unless proven otherwise. The burden of proof shifts to the accused once the complainant establishes the execution of the cheque, necessitating the accused to present evidence to rebut the presumptions.

3. The accused failed to provide sufficient evidence to counter the presumptions under Sections 118 and 139. The judgment emphasizes that the accused must establish a probable defense to shift the burden of proof back to the complainant. In this case, the court found that the accused did not present compelling evidence to refute the presumption that the cheque was issued for a debt, leading to the confirmation of conviction.

4. Regarding the revision against concurrent conviction and sentence, the High Court refrained from interfering with the factual findings of the lower courts unless there was perversity. The judgment highlighted that the appellate court correctly applied the presumption under Section 139, and the accused's failure to prove lack of consideration or debt led to the dismissal of the revision petition.

5. Lastly, the judgment addresses the modification of the sentence from imprisonment to a fine. Considering the circumstances, the court modified the sentence to payment of a fine with a provision for imprisonment in default of payment. The accused was granted time to deposit the fine amount, with the understanding that it would be released to the complainant as compensation in accordance with the law, ultimately allowing the revision petition in part.

This detailed analysis of the judgment provides insights into the legal principles applied, the burden of proof on the accused, and the court's decision regarding the conviction, sentence, and modification thereof.