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TMI Blog2024 (8) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Sumeti Vij v. Paramount Tech Fab Industries [ 2021 (3) TMI 383 - SUPREME COURT] observed that statement under Section 313 CrPC is not substantive evidence of defence by accused, and hence, same is insufficient for the purpose of rebuttal of presumption under Section 139 NI Act. Much like the present case, in Sumeti Vij accused had not replied to legal notices sent, nor had made any payments thereafter. Furthermore, while accused gave a statement under Section 313 CrPC, defence evidence was not led therein even though accused pleaded not guilty and claimed trial. Presumption under Section 139 read with Section 118 of the NI Act is essentially based on pure common sense. Instead of having the accused prove to the contrary, the accused is acquitted, as in this case, without having led any defence evidence and purely relying upon the inconsistencies in the affirmative proof provided by the complainant. The law and its application, is therefore turned on its head. This Court is of the view that there was a fundamental error in the approach taken by the Trial Court whereby it went on to dissect the case put up by the appellant, instead of first examining whether the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges against respondent no. 1 to which, he pleaded not guilty and claimed trial. 6. Trial proceeded with appellant as CW1 and he was cross-examined. Statement of respondent no. 1 was recorded under Section 313, Code of Criminal Procedure, 1973 [ CrPC ] wherein he admitted to the signatures on the cheque in question, however, denied that he had given the cheque to anyone or filling the particulars in it. He also denied receipt of the legal demand notice, denied knowing the appellant/complainant and stated that he had no liability towards the latter. Lastly, he stated that he did not wish to lead any defence evidence. Post final arguments, impugned judgement was rendered acquitting respondents. Submissions of Appellant 7. Counsel for appellant submitted that Trial Court did not consider the fact that once respondent no. 1/accused admitted his signature on the cheque, presumption lies against the accused i.e. accused would have the burden of proof to rebut the presumption. It was stressed that respondents refused to lead defence evidence and were unable to prove his statement under Section 313 CrPC, that the cheque was not given to the appellant or was not known to the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that Trial Court erred in their analysis and conclusion. Respondent/accused having admitted the signature on the cheque, the presumption under Sections 118(a) and 139, NI Act had come into effect. For reference, aforesaid provisions are extracted as under: 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; ... 139. Presumption in favour of holder It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section138 for the discharge, in whole or in part, of any debt or other liability. 12. The Apex Court in Basalingappa v. Mudibasappa (2019) 5 SCC 418 concisely summed up legal principles related to presumption under Section 139 NI Act and rebuttal thereof; relevant portions of this decision are extracted as under: 25. We having noticed the ratio laid down by this Court in the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingh, (2023) 10 SCC 148 , while discussing the correct approach in dealing with presumption under Section 139 observed as under; relevant extracts are reproduced hereunder: 54. As rightly contended by the appellant, 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 vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den by proving that there existed no debt/liability at the time of issuance of cheque. (emphasis supplied) 15.2 Aforesaid decision was affirmed in a recent judgement of the Supreme Court in Triyambak S. Hegde v. Sripad (2022) 1 SCC 742. The Court, in Triyambak (supra), also relied upon the decision in Basalingappa (supra) and stated, on facts of the case, as under: 21. Further, though the respondent had put forth the contention that a relative of the appellant was the junior of his advocate and he has used his dominant position to secure the signature on the cheque, there is absolutely no explanation whatsoever to indicate the reason for which such necessity arose for him to secure the signatures of the respondent, if there was no transaction whatsoever between the parties. That apart, the said story even to be examined was put forth for the first time before the High Court. As is evident from the records, the notice issued by the appellant intimating the dishonourment of the cheque and demanding payment, though received by the respondent has not been replied. In such situation, the first opportunity available to put forth such contention if true was not availed. Even in the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued, or after the presentation to its banker, or when the same were dishonoured, or after the legal notices were served informing the appellant that both the cheques on being presented to its banker were returned with a note that it could not be honoured because of insufficient funds . 20. That apart, when the complainant exhibited all these documents in support of his complaints and recorded the statement of three witnesses in support thereof, the appellant has recorded her statement under Section 313 of the Code, but failed to record evidence to disprove or rebut the presumption in support of her defence available under Section 139 of the Act. The statement of the accused recorded under Section 313 of the Code is not a substantive evidence of defence, but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case of the accused. Therefore, there is no evidence to rebut the presumption that the cheques were issued for consideration. 21. The judgment on which the learned counsel for the appellant has placed reliance i.e. K. Prakashan v. P.K. Surenderan [K. Prakashan v. P.K. Surenderan, (2008) 1 SCC 258 : (2008) 1 SCC (Civ) 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists. 19. The use of the phrase until the contrary is proved in Section 118 of the Act and use of the words unless the contrary is proved in Section 139 of the Act read with definitions of may presume and shall presume as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his statement under Section 313 CrPC, made various denials, however, admitted to the signature on the cheques to be his own signatures. There is no doubt, as has been held by various Courts in India including this Court and the Supreme Court, that when the signature on the cheque in question is admitted, presumption under Section 139 shall arise. Same is succinctly encapsulated by the Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 ; relevant portion is extracted as under: 9. As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption... (emphasis supplied) 15.6 This brings us to yet another flaw in the impugned judgement i.e. conclusion that respondent/accused successfully rebutted the presumption under Section 139 only on the basis of his statement under Section 313 CrPC, having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Thus, respondent no. 1 having not led defence evidence, his statement under Section 313 CrPC cannot be read as evidence for the purpose of rebutting presumption raised under Section 139 NI Act. In this light, merely pleading not guilty would not suffice to rebut this presumption either. 17. We often find that acquittals in Section 138 NI Act proceedings place the burden of proving the existence of the debt on the complainant, which is diametrically opposite to the presumption placed on the accused under Section 139 NI Act. The accused often gets away with an acquittal, despite having tendered and even admitting to the cheque, merely because the complainant is unable to produce documents to support the existence of the debt (usually in the form of a friendly loan provided in cash, which does not have any document trail). It would be unwise for the court to not acknowledge that friendly cash loans are provided by parties, sometimes based on small savings of the lender. In these circumstances rather than focussing on the question as to why the accused gave the cheque in the first place (which he or she admits), the complainant is left unhinged for inability to provide any documenta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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