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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 ..... ted 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 Rs.3,40,000/- for the purchase of the vehicle Mahindra Bolero. The accused was to repay Rs.4,59,000/- which included Rs.3,40,000/- as loan amount and Rs.1,19,000/- as the financial charges. The amount was to be repaid in 60 equated monthly instalments of Rs.7,650/- each. The accused was irregular in making the payment of several instalments. He violated the terms and conditions of the hire purchase agreement and defaulted in regular payment of the instalments. The accused surrendered the vehicle to the complainant on 22.02.2007 and the complainant disposed of the vehicle on 21.03.2007 as per the prescribed procedure. The complainant had to suffer a huge loss after adjusting the sale consideration. The accused issued a cheque for Rs.94,135/- on 18th April 2008 drawn on Kangra Central Co-operative Bank to discharge his liability. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-accused. 9.Mr Deepak Gupta learned counsel for the appellant-complainant submitted that a cheque carries with it a presumption of consideration. The accused was required to rebut the same. Learned Trial Court failed to notice this presumption and acquitted the accused merely on the ground that the vehicle was seized by the complainant. The version of the complainant that the accused had surrendered the vehicle was more probable than the version of the accused that the vehicle was snatched by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 favour of the accused. For, the very existence of an equally plausible view in favour of the innocence of the accused is a reasonable doubt in the case of the prosecution. Moreover, it reinforces the presumption of innocence. Therefore, when two views are possible, following the one in favour of the innocence of the accused is the safest course of action. Furthermore, it is also settled that if the view of the trial court, in a case of acquittal, is a plausible view, it is not open for the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 decided as per the parameters laid down by the Hon'ble Supreme Court. 14.Vivek Guleria (CW-1) stated in his examination-in- chief that the accused had taken a loan from the complainant to purchase the Mahindra Bolero Camper. The amount of Rs.3,40,000/- was advanced, which included the financial charges of Rs.1,19,000/-. The amount was to be repaid in sixty equated monthly instalments of Rs.7,650/-. The accused failed to repay the amount as per the schedule; hence a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.7,650/-. He admitted that the loan was to be repaid in 60 monthly equated instalments of Rs.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. It was laid down by this Court in Naresh Verma vs. Narinder Chauhan 2020(1) Shim. L.C. 398 that where the accused had not disputed his signatures on the cheque, the Court must presume that it was issued in discharge of legal liability and the burden would shift upon the accused to rebut the presumption. It was observed: - "8. Once signatures on the cheque are not disputed, the plea regarding the cheque having not been issued towards discharge of lawful liability, rightly came to be rejected by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 14. Once the 2nd appellant had admitted his signatures on the cheque and the deed, the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial court fell in error when it called upon the respondent complainant to explain the circumstances under which the appellants were liable to pay. Such approach of the trial court was directly in the teeth of the established legal position as discussed above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 debt or liability, without appreciating the presumption under Section 139 of the NI Act. As observed above, Section 139 of the Act is an example of reverse onus clause and therefore, once the issuance of the cheque has been admitted and even the signature on the cheque has been admitted, there is always a presumption in favour of the complainant that there exists legally enforceable debt or liability and thereafter, it is for the accused to rebut such presumption by leading evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Mudibasappa [Basalingappa v. Mudibasap pa, (2019) 5 SCC 418: (2019) 2 SCC (Cri) 571] wherein it is held as hereunder: (SCC pp. 432-33, paras 25-26) "25. We having noticed the ratio laid down by this Court in the above cases on Sections 118(a) and 139, we now summarise the principles enumerated by this Court in the following manner: 25.1. Once the execution of the cheque is admitted Section 139 of the Act mandates a presumption that the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence 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 Court need no reiteration as there is no ambiguity whatsoever. In, Basalingappav. Mudibasappa [Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : (2019) 2 SCC (Cri) 571] relied on by the learned counsel for the respondent, though on facts the ultimate conclusion therein was against raising presumption, the facts and circumstances are entirely different as the transaction between the parties as claimed in the said case is peculi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that "unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability". It will be seen that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as heavy as that usually seen in situations where the prosecution is required to prove the guilt of an accused. The accused is not expected to prove the non- existence of the presumed fact beyond reasonable doubt. The accused must meet the standard of "preponderance of probabilities", like a defendant in a civil proceeding. [Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11 SCC 441: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 undisputed that the loan was duly disbursed on 28-2-2002 which was prior to the date of the cheques. Once the loan was disbursed and instalments have fallen due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138 of the Act. The cheques undoubtedly represent the outstanding liability. 11.The judgment in Indus Airways [Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 parties to defer the payment of the amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow. 18. When a cheque is issued and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Section 138 would be attracted. 34.If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. 35.It is not the case of the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 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 the accused to show that he did not owe the liability of Rs.94,135/- on the date of issuance of the cheque since the cheque carried with it a presumption of consideration. It was rightly submitted on behalf of the complainant that no evidence was led to establish this fact. The complainant had examined a witness and had proved the statement of account on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion 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/material/circumstances which could be of a reasonably probable defence." 39.Therefore, the complaint could not have been dismissed on the ground that the presumption did not extend to the existence of legally enforceable debt or liability. 40.The complainant stated that the cheque was dishonoured with an endorsement "account closed". This is duly corroborated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislative 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 in Section 138 of the Act. 41.This Court also took the same view in Bal Krishan Sharma v. Tek Ram, 2006 SCC Online HP 105: (2007) 1 BC 138:(2006) 44 AIC 491: (2006) 4 All LJ (NOC 678) 13: 2006 Cri LJ 1993 :(2006) 55 ACC (Sum 84) 29: (2006) 3 CCR 311: (2006) 2 ALD (Cri) (NOC 65) 8 and observed: "9. The provisions contained in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 the Drugs and Cosmetics Act,1940 and the rules in the case of Swantraj v. State of Maharashtra, this Court held that every legislation is a social document and judicial construction seeks to decipher the statutory mission, language permitting, taking the one from the rule in Heydon's case of suppressing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to defraud any honest payee. Should such a dishonest account holder be permitted to escape the proceedings under Section 138 of the Act? 14.Learned Counsel for the accused would contend that the observations in NEPC Micon Limited were that if a cheque is dishonoured on the ground that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in the house" or "house locked" or "shop closed" or "addressee not in the station", due service must be presumed. (Vide Jagdish Singh v. Natthu Singh [(1992) 1SCC 647: AIR1992 SC 1604]; State of M.P. v. Hiralal [(1996) 7 SCC 523] and V. Raja Kumari v. P. Subbarama Naidu [(200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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