TMI Blog2024 (12) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... e presumption that are available under Sections 118 and 139 of the Act. The Hon ble Supreme Court has also adverted to the level of evidence required to prove a case under the provisions of the Act. It has been the case of the revisionist that he was under no obligation to issue a cheque, but, one of his workers, Mohd. Nazim, had taken loan from the private respondent and as security thereof, he had given a cheque of Rs. 50,000/- - The revisionist has been examined as DW1 and Mohd. Nazim has been examined as DW2. As DW1, Abdul Qadir, the revisionist, has stated that Mohd. Nazim had taken loan of Rs. 50,000/- at 5% rate of interest from the private respondent, and in lieu thereof, he had given two security cheques. According to DW1, Abdul Qadir, the revisionist, Mohd. Nazim, had returned the amount of loan, but he could not repay the interest. DW2, Mohd. Nazim, has also stated so. Rate of interest - HELD THAT:- The revisionist himself has stated that the loan was given at the rate of 5% interest. This has been so stated by DW2, Mohd. Nazim, in Para 3 of his statement, but in Para 10, he speaks of 10% rate of interest. It is true that no specific date has been disclosed by the privat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainital. By it, the judgment and order dated 02.08.2023, passed in the case, has been affirmed. 2. At the time of admission of the revision, the original record has been summoned. 3. Heard learned counsel for the parties and perused the record. 4. The case is based on a complaint filed by the private respondent under Section 138 of the Act. According to it, the revisionist had taken Rs. 2,50,000/- as loan, from the private respondent in the month of October, 2019, for his family needs. In return thereof, the revisionist gave a cheque dated 20.07.2021 of Rs. 2,50,000/- to the private respondent, with the assurance that when presented, the private respondent shall get payment of it. The cheque was presented in the bank, but it was dishonoured. A notice was given to the revisionist. The revisionist refused to receive the notice. Thereafter, the complaint was filed. After enquiry, by the order dated 16.10.2021, passed in the case, the revisionist was summoned to answer accusation under Section 138 of the Act. In evidence, the private respondent was examined as PW1. In fact, prior to it, the accusation was read over to the revisionist. According to the revisionist, he did not issue any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Rs. 2,50,000/-, as loan. 7. In support of his contention, learned counsel for the revisionist has placed reliance on the principles of law, as laid down in the cases of M.S. Narayan Menon @ Mani Vs. State of Kerala and Another, (2006) 6 SCC 39, John K. John Vs. Tom Varghese and Another, (2007) 12 SCC 714, Krishna Janardan Bhat Vs. Dattatraya G. Hegde, (2008) 4 SCC 54, Rangappa Vs. Sri Mohan (2010) 11 SCC 441, Vijay Vs. Laxman and Another, (2013) 3 SCC 86, Indus Airways Private Limited Vs. Magnum Aviation Private Limited (2014) 12 SCC 539, K. Subramani Vs. K. Damodara Naidu, (2015) 1 SCC 99, Basalingappa Vs. Mudibasappa, (2019) 5 SCC 418, Rajaram through LRs. Vs. Maruthachalam through LRs, 2023 SCC OnLine SC 48, Dattatraya Vs. Sharanappa, (2024) 8 SCC 573, and Tedhi Singh Vs. Narayan Dass Mahant, (2022) 6 SCC 735. 8. In the case of Narayan Menon (supra), the Hon ble Supreme Court, inter alia, observed as follows:- 32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies. 9. In the case of John K. John (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty, a sum equal to the amount of the loan or deposit so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 35. A statutory presumption has an evidentiary value. The question as to whether the presumption stood rebutted or not, must, therefore, be determined keeping in view the other evidence on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In a case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration. 11. In the case of Rangappa (supra) , the Hon ble Supreme Court, inter alia, observed as follows:- 26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat, (2008) 4 SCC 54, may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scope of Section 138 of the NI Act by holding that the purpose of enacting Section 138 of the NI Act would stand defeated if after placing orders and giving advance payments, the instructions for stop payments are issued and orders are cancelled. In what we have discussed above, if a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order was placed is not supplied by the supplier, in our considered view, the cheque cannot be said to have been drawn for an existing debt or liability. 14. In the case of K. Subramani (supra), the Hon ble Supreme Court, inter alia, observed as follows:- 9. In the present case the complainant and the accused were working as Lecturers in a government college at the relevant time and the alleged loan of Rs 14 lakhs is claimed to have been paid by cash and it is disputed. Both of them were governed by the Government Servants' Conduct Rules which prescribes the mode of lending and borrowing. There is nothing on record to show that the prescribed mode was followed. The sourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect evidence and even the evidence adduced on behalf of the complainant can be relied upon........................................................... ............................................................................ 16. In the case of Rajaram (supra), the Hon ble Supreme Court, inter alia, observed as follows:- 29. In the present case, the accused appellant had examined Mr. Sarsaiyyn, Income Tax Officer, Ward No. 18, Circle (II)(5), who produced certified copies of the Income Tax Returns of the complainant for the financial year 1995-1996, 1996-1997, 1997- 1998 and 1998-1999. The certified copies of the Income Tax Returns established that the complainant had not declared that he had lent Rs. 3 lakh to the accused. It further established that the agricultural income also was not declared in the Income Tax Returns. 30. The learned Trial Court further found that from the income which was shown in the Income Tax Return, which was duly exhibited, it was clear that the complainant(s) did not have financial capacity to lend money as alleged. 34. After analyzing all these pieces of evidence, the learned Trial Court found that the Income Tax Returns of the complainant did not dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the weight of evidence. 20. In the case of Amit Kapoor Vs. Ramesh Chander and Another, (2012) 9 SCC 460 , the Hon ble Supreme Court observed as follows:- 12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well- founded error and it may not be appropriate for the court to scrutinise the orders, which upon the face of it bears a token of careful consideration and appear to be in accordance with law. If one looks into the various judgments of this Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes, but are merely indicative. Each case would have to be determined on its own merits. 13. Another well-ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also a presumption that the holder of a cheque receives the cheque in whole or part of any debt or other liabilities. Section 139 of the Act reads as follows:- 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. 23. Undoubtedly, these presumptions are rebuttable and the law on this point is well settled that for rebutting the presumption, an accused is not required to lead any evidence. He can even, from the evidence of the complainant infer and make a case out that presumption has been rebutted. An accused is not required to rebut a presumption by the standard of a proof beyond reasonable doubt, but preponderance of probabilities or a probable defence is enough to rebut such presumptions. Each case is to be decided on the basis of the facts and circumstances of the particular case. There cannot be any straight jacket formulae to that extent. 24. In the case of Rohitbhai Jivanlal Patel Vs. State of Gujarat and Another, (2019) 18 SCC 106 , the Hon ble Supreme Court has discussed the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... robable defence. 20. ........................................................................ ........................................................................ ........................................................................ ..................The observations of the trial court that there was no documentary evidence to show the source of funds with the respondent to advance the loan, or that the respondent did not record the transaction in the form of receipt of even kachcha notes, or that there were inconsistencies in the statement of the complainant and his witness, or that the witness of the complaint was more in the know of facts, etc. would have been relevant if the matter was to be examined with reference to the onus on the complaint to prove his case beyond reasonable doubt. These considerations and observations do not stand in conformity with the presumption existing in favour of the complainant by virtue of Sections 118 and 139 of the NI Act. Needless to reiterate that the result of such presumption is that existence of a legally enforceable debt is to be presumed in favour of the complainant. When such a presumption is drawn, the factors relating to the wan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant complainant, it may reasonably be presumed that the cheque was filled in by the appellant complainant being the payee in the presence of the respondent-accused being the drawer, at his request and/or with his acquiescence. The subsequent filling in of an unfilled signed cheque is not an alteration. There was no change in the amount of the cheque, its date or the name of the payee. The High Court ought not to have acquitted the respondent- accused of the charge under Section 138 of the Negotiable Instruments Act. 26. In the case of Uttam Ram Vs. Devinder Singh Hudan and Another, (2019) 10 SCC 287 , the Hon ble Supreme Court observed that in a trial under the Act, the complainant is not required to prove his claim on the basis of evidence, as is required in a money recovery suit. In Paras 20 and 21, the Hon ble Supreme Court observed as follows:- 20. The trial court and the High Court proceeded as if, the appellant is to prove a debt before civil court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the recovery of the amount due. A dishonour of cheque carries a statutory presumption of consideration. The h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mohd. Nazim, in Para 3 of his statement, but in Para 10, he speaks of 10% rate of interest. It is true that no specific date has been disclosed by the private respondent. But then, it is not disputed that the cheque was given by the revisionist to the private respondent. What is in dispute is as to why the cheque was given? According to the private respondent, loan was advanced to the revisionist and in repayment of the loan amount, cheque was given, whereas, as stated, according to the revisionist, loan was taken by Mohd. Nazim, an employee of him, and as a security, he had given the cheques. 31. There is no absolute principle that in each case, the income tax payee has to show the amount of loan in the income tax returns. It is true that the provisions of income tax requires that any transaction beyond Rs. 20,000/- should be by way of Negotiable Instruments. But if such transactions are made, they do not get invalidated for these reasons alone. 32. It is also settled position of law that in such cases, a person is not required to prove his case with regard to source of income or payment of money, as is required in the claim for money recovery. Signature on the cheques, in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly a sentence of fine upon the defaulting drawer of the cheque. There is for that purpose considerable discretion vested in the court concerned which can and ought to be exercised in appropriate cases for good and valid reasons. Suffice it to say that the High Court was competent on a plain reading of Section 138 to impose a sentence of fine only upon the appellant. Inasmuch as the High Court did so, it committed no jurisdictional error 36. Learned counsel for the revisionist would submit that the revisionist had surrendered to custody on 14.10.2024. It is a case based on loan transaction between the parties. Loan of Rs. 2,50,000/- was involved, as per the case. The total amount of Rs.3,00,000/-, as fine, has been imposed on the revisionist. 37. Having considered, this Court is of the view that the interest of justice would be better served, if the revisionist is sentenced to the period of custody, which he has already undergone in the instant case. 38. The conviction of the revisionist under Sections 138 of the Act, as recorded in the case and upheld in the appeal is confirmed. 39. The revisionist is sentenced to the period of custody, which he has already undergone in the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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