2021 (3) TMI 383 - SC - Indian Laws

Dishonor of Cheque - acquittal of the accused - appellant accused claimed innocence and pleaded false implication in the case however, did not lead any evidence in defence - HELD THAT - In the instant case, the appellant has only recorded her statement under Section 313 of the Code, and has not adduced any evidence to rebut the presumption that the cheques were issued for consideration. Once the facts came on record remained unrebutted and supported with the evidence on record with no substantive evidence of defence of the appellant to explain the incriminating circumstances appearing in the complaint against her, no error has been committed by the High Court in the impugned judgment, and the appellant has been rightly convicted for the offence punishable under Section 138 of the Act and needs no interference of this Court. The object of introducing Section 138 and other provisions of Chapter XVII in the Act appears to be to enhance the acceptability of cheques in the settlement of liabilities. The drawer of the cheque be held liable to prosecution on dishonour of cheque with safeguards provided to prevent harassment of honest drawers. Section 138 primarily relates to a civil wrong and the amendment made in the year 2000 specifically made it compoundable. The burden of proof was on the accused in view of presumption under Section 139 of the Act and the standard of proof was of preponderance of probabilities - There is a mandate of presumption of consideration in terms of the provisions of the Act and the onus shifts to the accused on proof of issuance of cheque to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of Section 138 of the Act. It is well settled that the proceedings under Section 138 of the Act are quasi criminal in nature, and the principles which apply to acquittal in other criminal cases are not applicable in the cases instituted under the Act. There was no response by the appellant at any stage either when the cheques were issued, or after the presentation to its banker, or when the same were dishonoured, or after the legal notices were served informing the appellant that both the cheques on being presented to its banker were returned with a note that it could not be honoured because of insufficient funds - That apart, when the complainant exhibited all these documents in support of his complaints and recorded the statement of three witnesses in support thereof, the appellant has recorded her statement under Section 313 of the Code, but failed to record evidence to disprove or rebut the presumption in support of her defence available under Section 139 of the Act. The statement of the accused recorded under Section 313 of the Code is not a substantive evidence of defence, but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case of the accused. Therefore, there is no evidence to rebut the presumption that the cheques were issued for consideration. The High Court has not committed any error in recording the finding of guilt of the appellant and convicting her for an offence being committed under Section 138 of the Act under its impugned judgment, which in our considered view, needs no further interference. Consequently, the appeals are without any substance, and are accordingly dismissed.

Issues Involved:
1. Legality of the High Court's reversal of the trial court's acquittal under Section 138 of the Negotiable Instruments Act, 1881.
2. Burden of proof and presumption under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881.
3. Standard of proof required to rebut the presumption under Section 139 of the Negotiable Instruments Act, 1881.
4. Appropriateness of the High Court's reappraisal of evidence and subsequent conviction.

Issue-wise Detailed Analysis:

1. Legality of the High Court's reversal of the trial court's acquittal under Section 138 of the Negotiable Instruments Act, 1881:
The appellant was initially acquitted by the trial court on the grounds that the complainant failed to establish that the goods were delivered to the appellant, which would justify the issuance of the cheques. The trial court found that without the complainant discharging this burden, the onus could not shift to the appellant to disprove or rebut the presumption under Section 139 of the Act. However, the High Court reversed this acquittal, holding that the complainant had indeed discharged the primary burden by proving that the cheques were issued in lieu of the material supplied, supported by documentary evidence. The High Court concluded that it was then the appellant's responsibility to rebut the presumption, which she failed to do.

2. Burden of proof and presumption under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881:
Section 118(a) presumes that every negotiable instrument was made or drawn for consideration, and Section 139 presumes that the holder of a cheque received it for the discharge of any debt or other liability. The High Court noted that the complainant had placed sufficient documentary evidence on record to substantiate the claim that the cheques were issued for the discharge of a liability, thus shifting the burden to the appellant to rebut this presumption.

3. Standard of proof required to rebut the presumption under Section 139 of the Negotiable Instruments Act, 1881:
The Supreme Court reiterated that the standard of proof for rebutting the presumption under Section 139 is "preponderance of probabilities," not "beyond reasonable doubt." The appellant's mere denial or failure to provide evidence in defense was insufficient to rebut the presumption. The Court cited precedents, including Rangappa vs. Sri Mohan (2010) and Rohitbhai Jivanlal Patel vs. State of Gujarat (2019), emphasizing that the accused must bring forth facts and circumstances that would lead a prudent person to conclude the non-existence of consideration or liability.

4. Appropriateness of the High Court's reappraisal of evidence and subsequent conviction:
The Supreme Court found that the High Court correctly reappraised the evidence, noting the complainant's documentary evidence and the appellant's failure to rebut the presumption. The Court held that the High Court did not err in convicting the appellant under Section 138 of the Act, as the appellant did not provide any substantive evidence to counter the presumption of liability. The Court also dismissed the appellant's reliance on previous judgments, finding them inapplicable to the present case.

Conclusion:
The Supreme Court upheld the High Court's judgment, affirming the appellant's conviction under Section 138 of the Negotiable Instruments Act. The Court emphasized the statutory presumption of consideration and the appellant's failure to rebut this presumption. Consequently, the appeals were dismissed, and the appellant was directed to either pay the fine or serve the sentence as per the High Court's judgment.

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