2024 (3) TMI 399 - HC - Indian Laws

Dishonour of Cheque - acquittal of accused - evidence on record has not been properly appreciated by the learned trial court - appellant submits that the evidence produced by the respondent/accused before the trial court does not rebut the said presumption as the same is contradictory and un-reliable in nature - whether there was a compromise between the parties in pursuance whereof any payments were made by the respondent to the appellant? - HELD THAT - The facts relating to issuance of cheques and dishonour of the cheques for insufficiency of funds are not in dispute, therefore, in terms of Section 139 of the NI Act, it has to be presumed that the appellant has received the cheques in discharge of whole or part of the debt or liability. However, the said presumption is rebuttable, as is clear from the provisions contained in Section 139 of the NI Act. The Supreme Court has, in the case of RANGAPPA VERSUS SRI MOHAN 2010 (5) TMI 391 - SUPREME COURT while discussing the legal position as regards the nature of presumption that arises under Section 139 of the NI Act and the standard of proof required to rebut such presumption, observed 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. From a perusal of the afore-quoted observations of the Supreme Court, it is clear that once a presumption arises in terms of Section 139 of the NI Act on the basis of the facts proved on record, the person against whom presumption is drawn is not precluded from rebutting it and proving the contrary. It is also clear that the rebuttal does not have to be conclusively established but the person against whom the presumption has arisen, has to adduce such evidence in support of his defence that the Court may either believe the defence to exist or consider its existence to be reasonably probable. The standard of reasonability has to be that of a prudent person. Adverting to the facts of the instant case, the respondent/accused while making his statement under Section 242 of the J K Cr. P.C. has clearly stated that after issuance of the cheques in question, there was a compromise between the parties before SHO, Police Station, Chanderkote, DW-Diljit Singh as the appellant/complainant had held up his vehicle at Chanderkote. It is his defence that during the compromise an amount of Rs. 50,000/- was paid to the complainant and the balance amount was paid to him after withdrawing the same from the ATM after some days, but in spite of this, he did not return the cheques. In order to establish this defence, the respondent/accused has examined DW-Shafiq Ahmad and DW-Mohd Amin, who were working as Mates with the respondent. The statement of the then SHO, Police Station, Chanderkote, Diljit Singh has also been recorded. The defence of respondent/accused that he had paid the cheque amount to the appellant, even before the same were presented for encashment, appears to be probable. So far as the allegation regarding receipt of demand notice by respondent/accused is concerned, the same has never been put to him to seek an explanation from him at the time of recording his statement under Section 242 of J K Cr.PC. The learned Magistrate did not explain the particulars of the fact relating to service of demand notice upon him while recording his statement under Section 242 of the J K Cr. P.C., though it is an essential ingredient of offence under Section 138 of NI Act. The statement of the accused under Section 342 Cr.P.C. has not been recorded at all by the learned trial Magistrate on the ground that no such statement was required to be recorded in a summons trial case. Thus, even the evidence regarding service of demand notice has not been put to the accused for seeking his explanation. The view taken by the learned trial Magistrate that there was no requirement of recording the statement of the accused under Section 342 Cr. P.C. is not in accordance with law. Thus, even in summons trial cases a criminal court is obliged to question the accused generally on the case after the witnesses of the prosecution have been examined. It is a settled law that the incriminating circumstances, regarding which no explanation has been called from the accused, cannot be used against him while deciding veracity of the accusation against him. The evidence which has not been put to an accused has to be eschewed from consideration. Therefore, the evidence, as regards service of demand notice upon the respondent/accused having not been put to him, cannot be taken into consideration while deciding the veracity of the accusations against him. If the drawer of the cheque pays a part of whole of the sum between the period the when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque. Therefore, unless the part payment is endorsed on the cheque as per the Section 56 of the NI Act, the complaint under Section 138 of NI Act would not be maintainable once part payment is made by the accused - even if the contention of the learned counsel for the appellant that payment of Rs. 2,10,000/- by the accused to the appellant is not sufficiently proved, still then in the absence of endorsement on the cheques regarding receipt of Rs. 40,000/-, the complaint could not have proceeded. This Court is of the considered view that the accused/respondent has succeeded in probablizing his defence so as to rebut the presumption that had arisen in favour of the appellant/complainant. The view taken by the learned trial court is definitely a passible one, as such, this Court does not find any ground to interfere in the impugned judgment passed by said court - Appeal dismissed.

Summary

Issues Involved:
1. Issuance and dishonour of cheques under Section 138 of the NI Act.
2. Compromise and payment by the accused before the cheque presentation.
3. Requirement of recording the statement of the accused under Section 342 Cr. P.C. in summons trials.
4. Legal consequences of part payment before cheque maturity.

Summary:

1. Issuance and Dishonour of Cheques:
The appellant filed a complaint under Section 138 of the NI Act alleging that the respondent issued two cheques totaling Rs. 2,50,000 to liquidate an outstanding amount. These cheques were dishonoured due to insufficient funds. The appellant served a legal notice demanding payment, which the respondent failed to comply with, leading to the complaint.

2. Compromise and Payment by the Accused:
The respondent admitted issuing the cheques and acknowledged the debt but claimed a compromise was reached, and payments were made in cash in the presence of the police. The trial court found the respondent's defence credible, supported by witness testimonies and bank records showing cash withdrawals corresponding to the claimed payments.

3. Recording Statement of Accused under Section 342 Cr. P.C.:
The trial court did not record the accused's statement under Section 342 Cr. P.C., arguing it was unnecessary in a summons trial. However, the High Court held that even in summons cases, it is mandatory to record the accused's statement regarding incriminating evidence to allow for a proper defence. The trial court's failure to do so meant the evidence of the demand notice could not be used against the accused.

4. Legal Consequences of Part Payment Before Cheque Maturity:
The Supreme Court in *Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel* established that part payment before cheque maturity alters the legally enforceable debt. Without endorsement of part payment on the cheque, a complaint under Section 138 of the NI Act is not maintainable. The High Court found that even if the full payment was not proved, the part payment of Rs. 40,000 was sufficient to invalidate the complaint.

Conclusion:
The High Court upheld the trial court's acquittal of the respondent, finding no grounds to interfere with the judgment. The appeal was dismissed, and the trial court's record was ordered to be returned.