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TMI Blog2024 (10) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... cquittal. It is so because once the trial court, on appreciation of the evidence on record, finds that the accused was not guilty, the presumption gets strengthened and a higher threshold is expected to rebut the same in appeal.' In the present case, the accused has not examined himself to prove that he had issued the cheque as security; rather he examined his driver Roop Lal (DW-1) and Baldev (DW-2) regarding the snatching of the vehicle. Therefore, the version of the complainant that he had issued a blank cheque as a security has not been proved on record. In the present case, the statement of account (Ex.CW1/M) shows that the amount of ₹94,135/- was due on 11.06.2008. The cheque was issued for ₹94,135/- on 18.04.2008 which means that the accused had a subsisting liability of ₹94,135/- on the date of issuance of the cheque. Even if a blank cheque was issued by the accused as a security, the complainant had sufficient authority to fill the amount and present it before the Court since the amount of ₹94,135/- was due on 18.04.2008. It was laid down by the Hon ble Supreme Court in Bir Singh v. Mukesh Kumar [ 2019 (2) TMI 547 - SUPREME COURT] , that a perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 142 of Negotiable Instruments Act (in short N.I. Act). (Parties shall here in after being referred to as in the same manner as they were arrayed before the learned Trial Court for convenience). 2.Briefly stated, the facts giving rise to the present appeal are that the complainant filed a complaint before the learned Trial Court against the accused for acting against him for the commission of an offence punishable under Section 138 of N.I. Act. It was asserted that the complainant is a non- banking Financial Company engaged in providing financial assistance to the people for the purchase of the vehicle. The accused approached the complainant and asked for financial assistance by way of a loan for the purchase of the vehicle. The complainant entered into a Loan Agreement with the accused and advanced a sum of ₹3,40,000/- for the purchase of the vehicle Mahindra Bolero. The accused was to repay ₹4,59,000/- which included ₹3,40,000/- as loan amount and ₹1,19,000/- as the financial charges. The amount was to be repaid in 60 equated monthly instalments of ₹7,650/- each. The accused was irregular in making the payment of several instalments. He viola ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt produced by the complainant was also not proved as per the Law. There was no evidence regarding the existence of legally enforceable debt. Hence, the accused was acquitted. 7.Being aggrieved from the judgment passed by the learned Trial Court, the complainant has filed the present appeal asserting that the learned Trial Court failed to properly appreciate the material placed before it. It was wrongly held that the vehicle was forcibly taken away by the complainant. The accused had admitted the issuance of the cheque and there is a presumption in favour of the complainant that the cheque was issued in discharge of the legal liability. The burden was upon the accused to rebut this presumption by providing satisfactory evidence, but the accused failed to discharge this burden. Learned Trial Court erred in acquitting the accused. His plea that a blank signed cheque was issued as a security was not proved by any evidence. Therefore, it was prayed that the present appeal be allowed and the judgment passed by the learned Trial Court be set aside. 8.I have heard Mr Deepak Gupta learned counsel for the appellant-complainant and Mr. Vivek Singh Thakur learned counsel for the respondent-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no quarrel about that. It is also beyond doubt that in the exercise of appellate powers, there is no inhibition on the High Court to reappreciate or re-visit the evidence on record. However, the power of the High Court to reappreciate the evidence is a qualified power, especially when the order under challenge is of acquittal. The first and foremost question to be asked is whether the trial court thoroughly appreciated the evidence on record and gave due consideration to all material pieces of evidence. The second point for consideration is whether the finding of the trial court is illegal or affected by an error of law or fact. If not, the third consideration is whether the view taken by the trial court is a possible view. A decision of acquittal is not meant to be reversed on a mere difference of opinion. What is required is an illegality or perversity. 27. It may be noted that the possibility of two views in a criminal case is not an extraordinary phenomenon. The two-views theory has been judicially recognised by the courts and it comes into play when the appreciation of evidence results in two equally plausible views. However, the controversy is to be resolved in favou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant decisions and summarised the approach of the appellate court while deciding an appeal from the order of acquittal. It observed thus: (SCC p. 297, para 7) 7 . It is well settled that: 7.1 .While dealing with an appeal against acquittal, the reasons which had weighed with the trial court in acquitting the accused must be dealt with, in case the appellate court is of the view that the acquittal rendered by the trial court deserves to be upturned (see Vijay Mohan Singh v. State of Karnataka [Vijay Mohan Singh v. State of Karnataka, (2019) 5 SCC 436 : (2019)2SCC(Cri)586]and Anwar Ali v. State of H.P. [Anwar Ali v. State of H.P., (2020) 10 SCC 166 : (2021) 1 SCC (Cri) 395] ). 7.2 . With an order of acquittal by the trial court, the normal presumption of innocence in a criminal matter gets reinforced (see Atley v. State of U.P. [Atley v. State of U.P., 1955 SCC Online SC 51: AIR 1955 SC 807]). 7.3 . If two views are possible from the evidence on record, the appellate court must be extremely slow in interfering with the appeal against acquittal (see Sambasivan v. State of Kerala [Sambasivan v. State of Kerala, (1998) 5 SCC 412: 1998 SCC (Cri) 1320]). 13.The present appeal must be decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after filing of the complaint. He had not produced any document showing the auction of the vehicle. 17.The statement of this witness regarding the issuance of the loan and the financial charges has not been disputed in the cross-examination. The accused also admitted in his statement recordedunderSection313ofCr.P.C. that he had taken ₹3,40,000/- as a loan and he was to repay ₹4,59,000/- which included the financial charges of ₹1,19,000/- in 60 equated monthly instalments of ₹7,650/-. He admitted that the loan was to be repaid in 60 monthly equated instalments of ₹7,650/-. Thus, the issuance of the loan amount and the liability of the accused to repay the same are not in dispute. 18.The statement of account (Ex.CW1/M) shows that the accused had defaulted in the repayment of the loan. The instalments were not being paid regularly. This corroborates the version of the complainant that the accused had defaulted in the repayment of the loan and the loan was not repaid as per the schedule. 19.The accused stated that he had issued a blank security cheque, which was misused by the complainant. This means that the issuance of the cheque was not disputed by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he obligation shifts upon the accused to discharge the presumption imposed upon him. This point of law has been crystallised by this Court in Rohit bhai Jivanlal Patel v. State of Gujarat [Rohit bhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106, para 18: (2020) 3 SCC (Civ) 800: (2020) 3 SCC (Cri) 575] in the following words: (SCC pp. 120-21, para 18) 18 . In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued for the second time after the earlier cheques were dishonoured and that even according to the accused some amount was due and payable, there is a presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability. Of course, such presumption is rebuttable in nature. However, to rebut the presumption, the accused was required to lead the evidence that the full amount due and payable to the complainant had been paid. In the present case, no such evidence has been led by the accused. The story put forward by the accused that the cheques were given by way of security is not believable in the absence of further evidence to rebut the presumption and more particularly the cheque in question was issued for the second time after the earlier cheques were dishonoured. Therefore, both the courts below have materially erred in not properly appreciating and considering the presumption in favour of the complainant that there exists legally enforceable debt or liability as per Section 139 of the NI Act. It appears that both, the learned trial court as well as the High Court, have committed an error in shifting the burden upon the complainant to prove the deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... until the contrary is proved. The learned counsel for the appellant in that regard has relied on the decision of this Court in K. Bhaskaran v. Sankaran Vaidhyan Balan [K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510: 1999 SCC (Cri) 1284] wherein it is held as hereunder: (SCC pp. 516-17, para 9) 9 . As the signature in the cheque is admitted being 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 on which the cheque bears. Section 139 of the Act enjoins 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. The trial court was not persuaded to rely on the interested testimony of DW 1 to rebut the presumption. The said finding was upheld [Sankaran Vaidhyan Balan v. K. Bhaskaran, Criminal Appeal No. 234 of 1995, order dated 23-10-1998 (Ker)] by the High Court. It is not now open to the accused to contend differently on that aspect. 15.The learned counsel for the respondent has however referred to the decision of this Court in Basalingappa v. Mudibasa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of which complaint was also filed as Ext. D-2, there was a burden on the complainant to prove his financial capacity. In the years 2010-2011, as per own case of the complainant, he made a payment of Rs 18 lakhs. During his cross- examination, when the financial capacity to pay Rs 6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts. 16 .In that light, it is contended that the very materials produced by the appellant and the answers relating to lack of knowledge of property details by PW 1 in his cross- examination would indicate that the transaction is doubtful, and no evidence is tendered to indicate that the amount was paid. In such an event, it was not necessary for the respondent to tender rebuttal evidence, but the case put forth would be sufficient to indicate that the respondent has successfully rebutted the presumption. 17 .On the position of law, the provisions referred to in Sections 118 and 139 of the NI Act as also the enunciation of law as made by this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that exist... 25.Similar is the judgment in P. Rasiya v. Abdul Nazer, 2022 SCC Online SC 1131 wherein it was observed: As per Section 139 of the N.I. Act, 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 for discharge, in whole or in part, of any debt or other liability. Therefore, once the initial burden is discharged by the Complainant that the cheque was issued by the accused and the signature and the issuance of the cheque are not disputed by the accused, in that case, the onus will shift upon the accused to prove the contrary that the cheque was not for any debt or other liability. The presumption under Section 139 of the N.I. Act is a statutory presumption and thereafter, once it is presumed that the cheque is issued in whole or in part of any debt or other liability which is in favour of the Complainant/holder of the cheque, in that case, it is for the accused to prove the contrary. 26.This position was reiterated in Rajesh Jain v. Ajay Singh, (2023) 10 SCC 148: 2023 SCC OnLine SC 1275 wherein it was observed at page 161: 33 .The NI Act provides for two presumptions: Section 118 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lainant discharges the burden to prove that the instrument, say a cheque, was issued by the accused for discharge of debt, the presumptive device under Section 139 of the Act helps shifting the burden on the accused. The effect of the presumption, in that sense, is to transfer the evidential burden on the accused of proving that the cheque was not received by the Bank towards the discharge of any liability. Until this evidential burden is discharged by the accused, the presumed fact will have to be taken to be true, without expecting the complainant to do anything further. 38 .John Henry Wigmore [John Henry Wigmore and the Rules of Evidence: The Hidden Origins of Modern Law] on Evidence states as follows: The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption disappears as a rule of law and the case is in the Jury's hands free from any rule . 39 .The standard of proof to discharge this evidential burden is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque toward security will also attract the liability for the commission of an offence punishable under Section 138 of N.I. Act. It was observed: 9 . We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539: (2014) 5 SCC (Civ) 138:(2014) 6SCC (Cri)845] with reference to the explanation to Section 138 of the Act and the expression for discharge of any debt or other liability occurring in Section 138 of the Act. We are of the view that the question whether a post-dated cheque is for discharge of debt or liability depends on the nature of the transaction. If on the date of the cheque, liability or debt exists or the amount has become legally recoverable, the section is attracted and not otherwise. 10 .Reference to the facts of the present case clearly shows that though the word security is used in Clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of instalments. The repayment becomes due under the agreement, the moment the loan is advanced, and the instalment falls due. It is und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability. While approving the views of the different High Courts noted earlier, this is the underlying principle as can be discerned from discussion of the said cases in the judgment of this Court. 31.This position was reiterated in Sripati Singh v. State of Jharkhand, 2021 SCC Online SC 1002: AIR 2021 SC 5732, and it was held that a cheque issued as security is not a wastepaper and complaint under Section 138 of the N.I. Act can be filed on its dishonour. It was observed: 17 . A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified timeframe and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsisting liability of ₹94,135/- on the date of issuance of the cheque. Even if a blank cheque was issued by the accused as a security, the complainant had sufficient authority to fill the amount and present it before the Court since the amount of ₹94,135/- was due on 18.04.2008. It was laid down by the Hon ble Supreme Court in Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197: (2019) 2 SCC (Cri) 40: (2019) 2 SCC (Civ) 309: 2019 SCC Online SC 138 , that a person is liable for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act even if the cheque is filled by some other person. It was observed: 33 . A meaningful reading of the provisions of the Negotiable Instruments Act including sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not believable. The accused had not taken any action against the persons, who had taken the vehicle from his driver. He had not even made a report to the police. He simply believed the version of his driver that the vehicle was snatched by the employees of Mahindra and Mahindra. He had not even written a letter to the Company asking the Company whether the vehicle was taken by it or not. He had taken the vehicle on loan and if the vehicle was snatched, he would have taken some steps, at least he would have sought confirmation from the Company whether the vehicle was taken by the Company or not. The fact that the accused had not taken any action immediately after the seizure of the vehicle shows that the version of the defence witnesses is not believable. 36.It was submitted that the complainant had sold the vehicle without associating the accused. Learned Trial Court held that there was no proof of the delivery of the letter (Ex.CW1/C) written by the Company as the postal receipt was not annexed to the same. This is not correct. The letter (Ex.CW1/C) is addressed to the accused and bears the impression of the Postal Department regarding the sending. Further, the burden was upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accused and unless the accused discharged the onus, any doubt on the complainant s case could not have been raised for want of evidence regarding the source of fund or non- examination of the witnesses. It was observed: - 18 . In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the trial court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing loan to the accused and want of examination of relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the trial court had been at variance with the principles of presumption in law. After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the appellant-accused. The aspect relevant for consideration had been as to whether the appellant- accused has brought on record such facts/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the court to interpret it consistent with the legislative intent and purpose to suppress the mischief and advance the remedy. As stated above, Section 138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote the efficacy of banking and of ensuring that in commercial or contractual transactions cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above brush away the cobweb varnish, and shew the transactions in their true light (Wilmot, C.J.) or (by Maxwell) to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited . Hence, when the cheque is returned by a bank with an endorsement account closed , it would amount to returning the cheque unpaid because the amount of money standing to the credit of that account is insufficient to honour the cheque as envisaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the legislative intent. While interpreting the provision, the legislative purpose and goal must be kept in mind. We cannot lose sight of the fact that in this era, financial transactions are not dependent on cash and therefore financial transactions by other modes including cheques must be attached credibility. 10 .The following observations of the Supreme Court in NEPC Micon Ltd. v. Magma Leasing Ltd., II (2006) BC 316 (SC): IV (1999) SLT 254: III (1999) CCR 4 (SC): (1999) 4 SCC 253, are apposite: 10. This Court in the case of Kanwar Singh v. Delhi Admn. While construing Section 418(i) of the Delhi Municipal Corporation Act, 1959 observed It is the duty of the Court in construing a statute to give effect to the intention of the legislature. If, therefore, giving a literal meaning to a word used by the draftsman, particularly in a penal statute, would defeat the object of the Legislature, which is to suppress mischief, the Court can depart from the dictionary meaning or even the popular meaning of the word and instead give it a meaning which will advance the remedy and suppress the mischief. 11 .Further, while interpreting the statutory provision rule dealing with penalty under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above brush away the cobweb varnish, and show the transactions in their true light (Wilmot C.J.) or (by Maxwell) to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, in an indirect or circuitous manner that which it has prohibited Hence when the cheque is returned by a Bank with an endorsement account closed . It would amount to returning the cheque unpaid because the amount of money standing to the credit of that account is insufficient to honour the cheque as envisaged in Section 138 of the Act. 13. If the interpretation as contended by the learned Counsel for the accused and the Trial Court is to be accepted, then a person who receives the cheque will have to ensure that the account is alive. If he does not, he runs the risk of losing his money and denial of benefits under Section 138 of the Act. This certainly cannot be the legislative intent. Any account holder with intent to defeat the provisions of Section 138 of the Act, may retain a cheque leaf after closing his account with the Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the same is presumed to have been served upon the accused. It was laid down by the Hon ble Supreme Court in C.C. Alavi Haji v.Palapetty Muhammed, (2007) 6 SCC 555: (2007) 3 SCC (Cri) 236:2007 SCC Online SC 772 that when the registered letter containing the notice is returned unserved with the endorsement of refused, the notice is deemed to have been served. It was observed at page 564 14 . Section 27 gives rise to a presumption that service of notice has been affected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that despite the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been affected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement refused or not available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by adopting different strategies and escape from legal consequences of Section 138 of the Act. (Emphasis supplied) . 45.Thus, the ingredients of Section 138 of the Negotiable Instrument Act were duly satisfied in the present case and the learned Trial Court erred in acquitting the accused. 46.Learned Trial Court had improperly construed the presumption under Section 139 and Section 118 of N.I. Act, which affected the whole approach of learned Trial Court, and such a judgment is liable to be interfered with even while exercising jurisdiction against an order of acquittal. It was laid down in Rajesh Jain (supra) that when the Court failed to consider the presumption under Section 139 of the Negotiable Instruments Act, its judgment could be interfered with. It was observed at page 166: 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 to the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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