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TMI Blog2018 (8) TMI 2153X X X X Extracts X X X X X X X X Extracts X X X X ..... sking of the Respondent, the Appellant invested a sum of Rs.3,00,000/- (Rupees three lakhs) only, in the said business. After a few months he requested the Respondent to return his money, the investment being devoid of profit. In response thereto, the Respondent issued a cheque for Rs.3,00,000/- (Rupees three lakhs) only, to the Appellant on 09.09.2014, drawn on the ICICI Bank, New Market Branch, Gangtok. The Appellant on the same day with the consent of the Respondent deposited the cheque for realisation at the State Bank of India, Gangtok Main Branch, which however was dishonoured by the Banker of the Respondent/Accused and returned to the Appellant's Banker with the remark -"insufficient funds", by their Memo dated 10.09.2014. The Appellant was informed of the said circumstance. On 01.10.2014, the Appellant issued a legal Notice to the Respondent through his Advocate requiring him to pay the amount of the dishonoured cheque within the statutory period of 15 (fifteen) days from the date of service of Notice. The Notice was sent to the place of business of the Respondent but was returned with the remark - "addressee out of station". Thereafter, on the Respondent having failed to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on C.C. Alavi Haji vs Palapetty Muhammed and Another (2007) 6 SCC 555. 5. The Respondent for his part would contend that the Appellant did not plead or bring on record any documentary proof to show that they had a meeting in which they had reached an agreement whereby the Respondent issued Exhibit-1. The Appellant also failed to file any books of accounts to reveal that the Respondent owed any legally enforceable debt or liability. Pleadings and cross-examination of the Appellant would clearly reveal that he had voluntarily invested his money in the share market and not with the Respondent. That, Section 138 of the NI Act makes it clear that the dishonoured cheque by itself does not give rise to a cause of action as the payment can be made on receipt of the legal notice as contemplated in Section 138(b) of the NI Act. Cause of action emanates on failure thereof to make payment within 15(fifteen) days. Further, the legislative mandate is that the Respondent ought to be given an opportunity to rectify or remedy his mistake. It was argued that based on the evidence adduced by the Appellant, it can safely be assumed that he has failed to establish his case and hence the reliefs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; (v) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. The Section provides that for a dishonoured cheque the drawer shall be liable for conviction if the demand is not met within 15(fifteen) days of the receipt of notice. If the cheque amount is paid within the above period or before the complaint is filed, the legal liability under Section 138 of the NI Act, ceases. It was argued by the Respondent that the dishonoured cheque by itself does not give rise to cause of action and the Respondent ought to be afforded an opportunity to remedy his error. Perusal of the records nowhere indicates any such effort on the part of the Respondent to have acted in compliance of this provision to prevent prosecution. Despite opportunity afforded to the Respondent during the cross-examination of the Appellant to disprove the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e presumption under Section 118(a) of the NI Act which provides that the Court shall presume a negotiable instrument to be one for consideration. If the negotiable instrument happens to be a cheque, Section 139 raises a further presumption that the holder of the cheque received the cheque in discharge in whole or in part of any debt or other liability. Section 118 of the NI Act uses the phrase "until the contrary is proved" while Section 139 of the NI Act provides "unless the contrary is proved". Section 4 of the Indian Evidence Act, 1872 which defines "may presume" and "shall presume" makes it clear that presumptions to be raised under both the aforesaid provisions are rebuttable. 12. While discussing what a rebuttable presumption is, in Kumar Exports vs Sharma Carpets (2009) 2 SCC 513, the Hon'ble Supreme Court would hold that; 19. When a presumption is rebuttable, it only points that the party on whom lies the duty of going forward with evidence on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over." 13. In Hiten P. Dalal (supra) relied on by the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving that the cheque was not received by the Bank towards the discharge of any liability. 22. Because both Sections 138 and 139 require that the court "shall presume" the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidhyanatha Iyer[AIR 1958 SC 61] 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. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused." (Ibid. at p. 65, para 14) Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court "may presume" a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t then what was the purpose of issuing Exhibit-1, the cheque to the Appellant. The moment the cheque was issued, it provides evidence of the acceptance of his liability and the presumption under Section 139 of the NI Act kicks into place. Inasmuch as the Section 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 NI Act or the discharge in whole or in part of any debt or other liability. 16. The stand taken by the Appellant in his examination under Section 313 of the Cr.P.C. was that the cheque was issued by way of security only and not for encashment. On this aspect, we may look into the meaning of "security". As per the Oxford Dictionary "security" inter alia, means "a thing deposited or hypothecated as pledge for fulfilment of undertaking or payment of loan to be forfeited in case of failure". The circumstances of the matter at hand in no way fulfil the ingredients of security as defined supra neither was an attempt made to furnish evidence on this aspect by the Respondent. I hasten to add that this Court is aware that the proof so demanded in offences under Section 138 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- by accused during the pendency of trial can amount to a evidence of conduct but for forgoing discussions that there was no consideration at all in the oral agreement, it would not be sufficient to provide the fact upon which presumption under section 139 could be raised." 18. Having perused the observations of the learned Trial Court, it may be reasoned that obviously there would be no evidence of an oral agreement by simple virtue of the fact that it was an oral agreement. Despite opportunity afforded to the Respondent, the fact of such oral agreement between the parties was not decimated during cross examination. The reasoning that the agreement is void for allegedly being devoid of consideration from the Complainant but was merely a unilateral payment from the Accused is also unclear. Although, the learned Trial Court was of the opinion that there is an existence of presumption under Section 118(a) of the NI Act which can be rebutted, he has failed to indicate how the Respondent has rebutted the presumption. The argument of the learned Trial Court that the facts pleaded by the Complainant and his evidence has no foundational facts upon which the presumptions under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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