2023 (10) TMI 418 - SC - Indian Laws

Dishonour of Cheque - existence of a legally enforceable debt - discharge of initial onus of proving the essential facts underlying the offence under Section 138 of the NI Act - signature on the cheque was admitted by the accused - rebuttal of statutory presumption under Section 139 NI Act - Whether the accused can be said to have discharged his 'evidential burden', for the courts below to have concluded that the presumption of law supplied by Section 139 had been rebutted? HELD THAT - The presumption under Section 139 was rebutted by putting questions to the appellant in his cross examination and explaining the incriminating circumstances found in the statement recorded under Section 313 of Cr.P.C. Section 139 of the NI Act, which takes the form of a shall presume clause is illustrative of a presumption of law. Because Section 139 requires that the Court shall presume the fact stated therein, 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. But this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary as is clear from the use of the phrase unless the contrary is proved - As soon as the complainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further. In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable debt or liability can be contested. The words until the contrary is proved occurring in Section 139 do not mean that accused must necessarily prove the negative that the instrument is not issued in discharge of any debt/liability but the accused has the option to ask the Court to consider the non-existence of debt/liability so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist - The nature of evidence required to shift the evidential burden need not necessarily be direct evidence i.e., oral or documentary evidence or admissions made by the opposite party; it may comprise circumstantial evidence or presumption of law or fact. There is a fundamental flaw in the way both the Courts below have proceeded to appreciate the evidence on record. Once the presumption under Section 139 was given effect to, the Courts ought to have proceeded on the premise that the cheque was, indeed, issued in discharge of a debt/liability. The entire focus would then necessarily have to shift on the case set up by the accused, since the activation of the presumption has the effect of shifting the evidential burden on the accused. The nature of inquiry would then be to see whether the accused has discharged his onus of rebutting the presumption. If he fails to do so, the Court can straightaway proceed to convict him, subject to satisfaction of the other ingredients of Section 138. If the Court finds that the evidential burden placed on the accused has been discharged, the complainant would be expected to prove the said fact independently, without taking aid of the presumption. The Court would then take an overall view based on the evidence on record and decide accordingly. The fundamental error in the approach lies in the fact that the High Court has questioned the want of evidence on part of the complainant in order to support his allegation of having extended loan to the accused, when it ought to have instead concerned itself with the case set up by the accused and whether he had discharged his evidential burden by proving that there existed no debt/liability at the time of issuance of cheque. There are no slightest of hesitation in concluding that this case calls for interference, notwithstanding that both the courts below have concurrently held in favour of the accused - the judgment of the High Court of Punjab and Haryana at Chandigarh set aside - appeal allowed.

Summary

Issues Involved:
1. Validity of the acquittal of the respondent-accused under Section 138 of the Negotiable Instruments Act, 1881.
2. Whether the accused rebutted the statutory presumption under Section 139 of the NI Act.
3. Whether the complainant proved the issuance of the cheque in discharge of a legally enforceable debt.

Summary:

1. Validity of the Acquittal:
The respondent-accused was acquitted by the Trial Court and the High Court upheld the acquittal. The complainant challenged these concurrent findings.

2. Case of the Complainant:
The complainant alleged that the respondent-accused borrowed money and issued a cheque for Rs.6,95,204/- which was dishonored due to insufficient funds. The complainant issued a demand notice, which was not complied with, leading to the filing of a complaint under Section 138 NI Act.

3. Proceedings Before the Trial Court:
The Trial Court found that:
- The complainant discharged the initial onus of proving the essential facts.
- The accused admitted the signature on the cheque, raising the statutory presumption under Section 139 NI Act.
- The onus of rebutting the presumption lay on the accused, which he failed to discharge.
- The complainant failed to prove his case beyond reasonable doubt due to several inconsistencies and procedural lapses.

4. Proceedings Before the High Court:
The High Court upheld the Trial Court's findings, reasoning that:
- The accused rebutted the presumption under Section 139 NI Act by questioning the complainant's evidence.
- The complainant failed to provide specific details of the loan transactions.
- The complaint lacked material particulars, making it unsustainable.

5. Supreme Court's Analysis:
The Supreme Court noted:
- The accused's defense was inconsistent and lacked credibility.
- The accused admitted to borrowing money but claimed the complainant demanded higher amounts.
- The accused failed to provide any rebuttal evidence or a plausible defense.
- The courts below erred in shifting the onus back to the complainant after the presumption under Section 139 NI Act was raised.
- The complainant's case was consistent, and the presumption under Section 139 NI Act was not effectively rebutted by the accused.

6. Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment and convicting the respondent-accused under Section 138 NI Act. The accused was fined twice the cheque amount, failing which he would undergo simple imprisonment for one year.