2022 (9) TMI 1118 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - rebuttal of presumption - discharge of burden to prove - preponderance of probabilities - section 138 of NI Act - HELD THAT - The law is clear on the point that when the complainant discharged the initial burden to prove the transaction led to execution of the cheque, the presumption under Sections 118 and 139 of the N.I Act would come into play. No doubt, these presumptions are rebuttable and it is the duty of the accused to rebut the presumptions and the standard of proof of rebuttal is nothing but preponderance of probabilities. It has been settled in law that the accused can either adduce independent evidence or rely on the evidence tendered by the complainant to rebut the presumptions. In the case on hand, it appears that the accused did not adduce any evidence. Though during cross examination of PW1 issuance of blank cheque and subsequent filling up of the same were suggested, the said suggestions were denied by the complainant - Apart from the said suggestion, no positive evidence to rebut the presumption either adduced or available in this case. Therefore, it has to be held that the courts below rightly convicted the accused under Section 138 of the N.I Act. As per mandate of Section 357 (1)(b) of Cr.P.C, when the court imposes sentence of fine or a sentence of which fine forms a part, the court may when passing judgment, order the whole or part of the fine to be paid as compensation for any loss or injury caused by the offence, when compensation, is, in the opinion of the court, recoverable by such person in a civil court. Section 357(3) of Cr.P.C provides that when a court imposes a sentence of which fine does not form a part, the court may when passing judgment or order by way of compensation, such amount, as may be specified in the order to the person who has suffered any loss or injury by reasons of the act or accused has been so sentenced - Thus in an offence under Section 138 of the N.I Act when the court imposes imprisonment and fine, fine forms part of the sentence. In such cases, the court has to order payment of compensation from the amount of fine as provided under Section 357(1)(b) of Cr.P.C. - the sentence is modified. Appeal allowed in part.

Summary

Issues Involved:
1. Validity of the conviction and sentence under Section 138 of the Negotiable Instruments Act.
2. Scope and limitations of the High Court's revisional jurisdiction under Sections 397 and 401 of the Cr.P.C.
3. Application and rebuttal of presumptions under Sections 118 and 139 of the Negotiable Instruments Act.
4. Appropriateness of the sentence imposed and the application of Section 357 of the Cr.P.C regarding compensation.

Detailed Analysis:

1. Validity of the Conviction and Sentence under Section 138 of the Negotiable Instruments Act:
The accused was convicted for issuing a dishonored cheque of Rs. 3,50,000/-. The trial court's conviction was based on evidence including the complainant's testimony and documentary evidence (Exts.P1 to P7). The appellate court confirmed this conviction. The accused's defense that the cheque was issued as a security and later filled up by the complainant was not substantiated by any evidence. The High Court upheld the conviction, noting that the complainant had proved the initial burden, invoking presumptions under Sections 118 and 139 of the N.I Act.

2. Scope and Limitations of the High Court's Revisional Jurisdiction under Sections 397 and 401 of the Cr.P.C:
The High Court emphasized that its revisional jurisdiction is limited to correcting miscarriages of justice and cannot be equated with appellate jurisdiction. It cited precedents (State of Kerala v. Puttumana Illath Jathavedan Namboodiri and Sanjaysinh Ramrao Chavan v. Dattatray Gulabrao Phalke) to underline that re-appreciation of evidence is not permissible unless there are glaring errors or gross miscarriages of justice. The court found no such errors in the concurrent findings of the lower courts.

3. Application and Rebuttal of Presumptions under Sections 118 and 139 of the Negotiable Instruments Act:
The court reiterated the legal position that once the complainant proves the issuance of the cheque, presumptions under Sections 118 and 139 come into play, which are rebuttable by the accused. The accused must prove the rebuttal by a preponderance of probabilities, either through independent evidence or by relying on the complainant's evidence. In this case, the accused failed to rebut the presumptions effectively. The court referred to several Supreme Court decisions (Rangappa v. Mohan, Bir Singh v. Mukesh Kumar, and Kalamani Tex (M/s.) & anr. v. P.Balasubramanian) to support this view.

4. Appropriateness of the Sentence Imposed and the Application of Section 357 of the Cr.P.C Regarding Compensation:
The trial court sentenced the accused to one year of simple imprisonment and a compensation of Rs. 3,50,000/-, with an additional one-year imprisonment in default of payment. The High Court modified this sentence to a day's imprisonment till rising of the court and a fine of Rs. 3,50,000/-, with a default imprisonment of six months. The fine was to be paid as compensation to the complainant under Section 357(1)(b) of the Cr.P.C. The court granted the accused six months to pay the fine, deferring the execution of the sentence till 19.03.2023.

Conclusion:
The High Court upheld the conviction under Section 138 of the N.I Act but modified the sentence to a more lenient one, emphasizing the legal principles regarding revisional jurisdiction, presumptions under the N.I Act, and the application of Section 357 of the Cr.P.C for compensation. The accused was granted time to comply with the modified sentence, ensuring a balance between justice and leniency.