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TMI Blog2024 (8) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... d was subsequently dishonoured owing to insufficient funds. The failure to honour the concerned cheque is per se deemed as a commission of an offence under Section 138 of the NI Act 1881. The NI Act 1881 enlists three essential conditions that ought to be fulfilled before the said provision of law can be invoked. Firstly, the cheque ought to have been presented within the period of its validity. Secondly, a demand of payment ought to have been made by the presenter of the cheque to the issuer, and lastly, the drawer ought to have had failed to pay the amount within a period of 15 days of the receipt of the demand. These principles and pre-requisites stand well established through Judgment of this Court in SADANANDAN BHADRAN VERSUS MADHAVAN SUNIL KUMAR [ 1998 (8) TMI 541 - SUPREME COURT] . There is an explicit limitation of 30 days, beginning from period when the cause of action arose, prescribed by the statute vide Section 142(b) of the NI Act 1881 to initiate proceedings under Section 138 of the NI Act 1881. Since a presumption only enables the holder to show a prima facie case, it can only survive before a court of law subject to contrary not having been proved to the effect that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed INR 2,00,000/- (Rupees Two Lakhs only) from the Appellant on account of family necessities and accommodation. Against the said loan the Respondent issued a cheque bearing No. 015639 which was drawn on the Bank of India, as a guarantee against repayment. He was to repay the said loan amount within a period of six months thereof. An agreement to this effect was also signed between the parties. 4. However, since the Respondent failed to repay the loan despite repeated requests, the Appellant presented the concerned cheque for encashment on 22.10.2013, but nevertheless, as per the Bank Memo dated 24.10.2013, the cheque was dishonoured on account of insufficient funds . 5. Aggrieved from the said dishonour of cheque, a Demand Notice dated 31.10.2013 was sent by the Appellant to the Respondent, whereby, the Counsel on behalf of the Appellant alleged that the Respondent had intentionally cheated him and had not made any efforts to discharge his liability. Accordingly, the Respondent was said to have committed offences punishable under Section 138 of the NI Act 1881 and Section 420 of the Indian Penal Code, 1860 (hereinafter referred to as IPC 1860 ). 6. Thereupon, the Respondent moved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Karnataka in Criminal Appeal No. 200139 of 2019, which went on to observe that, admittedly, there was a contradiction in the statement of the Appellant as to when the cheque was issued in his favour. Furthermore, as was laid down in the decision of this Court in Rangappa v. Sri Mohan (2010) 11 SCC 441 , the presumption under Section 139 of the NI Act 1881 is a rebuttable one. The contention of the Respondent as to the financial capacity of the Appellant to grant a loan in his favour was to be discharged by him, and being unable to do so, it shall be presumed that a loan transaction had not taken place. Accordingly, the findings of the Trial Court were affirmed in the impugned Judgment dated 03.03.2023. 10. The Appellant has thereupon moved this Court in challenge to the said impugned judgment on the grounds that as the signature on the concerned cheque was admitted by the Respondent, the Appellant was able to successfully raise a presumption under Section 139 of the NI Act 1881 and as per the submissions of the Respondent, he had failed to rebut the said presumption. He also put forth that the reliance on the decision in Rangappa (supra) by the High Court was misplaced, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation. For the purposes of this section, debt of other liability means a legally enforceable debt or other liability. 13. This Court in ICDS Ltd. v. Beena Shabeer and Another (2002) 6 SCC 426 , has held that proceedings under Section 138 of the NI Act 1881 can be initiated even if the cheque was originally issued as security and was subsequently dishonoured owing to insufficient funds. The failure to honour the concerned cheque is per se deemed as a commission of an offence under Section 138 of the NI Act 1881. 14. The NI Act 1881 enlists three essential conditions that ought to be fulfilled before the said provision of law can be invoked. Firstly, the cheque ought to have been presented within the period of its validity. Secondly, a demand of payment ought to have been made by the presenter of the cheque to the issuer, and lastly, the drawer ought to have had failed to pay the amount within a period of 15 days of the receipt of the demand. These principles and pre-requisites stand well esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption that the holder of cheque had received the concerned issued cheque towards discharging of the liability of the drawer, either in whole or in part. Therefore, at this juncture, it is ideal to make a reference to Section 118 of the NI Act 1881, which is reproduced as: 118. Presumptions as to negotiable instruments Until the contrary is proved, the following presumptions shall be made: (a) of consideration: that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration; (b) as to date: that every negotiable instrument bearing a date was made or drawn on such date; (c) as to time of acceptance: that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity; (d) as to time of transfer: that every transfer of a negotiable instrument was made before its maturity; (e) as to order of indorsements: that the indorsements appearing upon a negotiable instrument were made in the order in which they appear then on; (f) as to stamp: that a lost promissory note, bill o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said presumption. Furthermore, the effect of such presumption is that, upon filing of the complaint along with relevant documents, thereby prima facie establishing the case against the drawer, the onus of proof shifts on the drawer or accused to adduce cogent material and evidence for rebutting the said presumption, and as established in Laxmi Dyechem v. State of Gujarat and Others (2012) 13 SCC 375 , based on preponderance of probabilities. 20. While describing the offence envisaged under Section 138 of the NI Act 1881 as a regulatory offence for largely being in the nature of a civil wrong with its impact confined to private parties within commercial transactions, the 3-Judge Bench in the decision of Rangappa (supra) highlighted Section 139 of the NI Act 1881 to be an example of a reverse onus clause. This is done so, as the Court expounds, in the light of Parliament s intent, which can be culled out from the peculiar placing of act of dishonour of cheque in a statute having criminal overtones. The underlying object of such deliberate placement is to inject and enhance credibility of negotiable instruments. Additionally, the reverse onus clause serves as an indispensable device ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinent to make a reference to a decision of 3-Judge Bench in Bir Singh v. Mukesh Kumar (2019) 4 SCC 197 , which went on to hold that if a signature on a blank cheque stands admitted to having been inscribed voluntarily, it is sufficient to trigger a presumption under Section 139 of the NI Act 1881, even if there is no admission to the effect of execution of entire contents in the cheque. 23. It is therefore apposite to make a reference to the provision of Section 140 of the NI Act 1881, which ruminates mens rea to be immaterial while dealing with proceedings under Section 138 of the NI Act 1881. The said legislative wisdom of the Parliament which is imbibed in the bare text of the provision is reproduced as below: 140. Defence which may not be allowed in any prosecution under section 138 It shall not be a defence in a prosecution for an offence under section 138 that the drawer had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that section. 24. Through this legal fiction adopted by the legislature vide Amendment Act of 1988 to the NI Act 1881 it has barred the drawer of a cheque, which was dishonoured, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant claimed the cheque to have been issued at the time of advancing of the loan as a security, however, as per his statement during the cross - examination it was revealed that the same was presented when an alleged demand for repayment of alleged loan amount was raised before the Respondent, after a period of six months of advancement. Furthermore, there was no financial capacity or acknowledgement in his Income Tax Returns by the Appellant to the effect of having advanced a loan to the Respondent. Even further the Appellant has not been able to showcase as to when the said loan was advanced in favour of the Respondent nor has he been able to explain as to how a cheque issued by the Respondent allegedly in favour of Mr Mallikarjun landed in the hands of the instant holder, that is, the Appellant. 28. Admittedly, the Appellant was able to establish that the signature on the cheque in question was of the Respondent and in regard to the decision of this Court in Bir Singh (supra), a presumption is to ideally arise. However, in the above referred context of the factual matrix, the inability of the Appellant to put forth the details of the loan advanced, and his contradictory state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iberty enshrined in Article 21 of the Constitution of India 1950, unless perversity is blatantly forthcoming and there are compelling reasons. iii) Where two views are possible, then this Court would not ordinarily interfere and reverse the concurrent findings of acquittal. However, where the situation is such that the only conclusion which could be arrived at from a comprehensive appraisal of evidence, shows that there has been a grave miscarriage of justice, then, notwithstanding such concurrent view, this Court would not restrict itself to adopt an oppugnant view. [ Vide State of Uttar Pradesh v. Dan Singh (1997) 3 SCC 747 ] iv) To adjudge whether the concurrent findings of acquittal are perverse it is to be seen whether there has been failure of justice. This Court in Babu v. State of Kerala (2010) 9 SCC 189 clarified the ambit of the term perversity as if the findings have been arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant/admissible material. The finding may also be said to be perverse if it is against the weight of evidence , or if the finding so outrageously defies logic as to suffer from the vice of irrationality. v) In si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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