Full Judgment Text
1
2023INSC888
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO………. OF 2023
(@ Special Leave Petition (Crl.) No.12802 of 2022)
Rajesh Jain …. Appellant
Versus
Ajay Singh …. Respondent
J U D G M E N T
Aravind Kumar, J.
1. Leave Granted.
2. The respondent-accused was tried for the offence under Section
138 of the Negotiable Instruments Act, 1881 (for short ‘NI Act’). The
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Trial Court acquitted him. The High Court dismissed the appellant’s-
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complainant's appeal and upheld the order of acquittal . Challenging the
Signature Not Verified
Digitally signed by
NEETA SAPRA
Date: 2023.10.10
17:49:06 IST
Reason:
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Judgment and Order dated 17.12.2019 in Crl. Complaint No. 221 of 2017
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Criminal Appeal No.148 of 2020 was dismissed by Hon’ble High Court of Gujarat by Judgment and
Order dated 01.02.2021.
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concurrent findings passed by the Courts below, the complainant has
preferred this appeal.
Case of the Complainant
3. Mr. Ajay Singh (respondent-accused), along with his wife, is
said to have approached the appellant-complainant (Mr. Rajesh Jain) on
01.03.2014 with a request for lending him money. The meeting is said
to have been facilitated by Ms. Gita Sunar the sister-in-law of Mr. Singh
who had been working as an employee under Mr. Rajesh Jain for nearly
15 years then. Mr. Rajesh Jain, appellant appearing in-person contended
that he had lent a sum of Rs. 6 lacs on that day and has lent further sums
thereafter, in the genuine belief that Mr. Ajay Singh would honour his
promise of timely repayment and return the sum borrowed with interest,
as agreed.
4. The respondent-accused failed to repay as per the timeline
agreed. The complainant's efforts to recover his money were met with
avoidance tactics. The accused is said to have changed his cellular
telephone number without notice to the complainant, with the intent of
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evading his payment obligations. It is only in the year 2017, that the
complainant managed to trace the accused-at which point, the accused
sought for forgiveness and promised to repay the amounts borrowed
along with interest, within three months. The accused had informed the
complainant that he would source the funds to clear his outstanding
dues by selling two plots of land he owns in Nepal, by taking a personal
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loan and from the 7 Pay Commission arrears that he was to receive.
5. Yet again, the accused defaulted on his promise. He was not to
be found in his residential address. Having successfully concealed
himself for about 7 months, the complainant appears to have located
him at a new residential address. On direct confrontation, the accused
is said to have issued a post-dated cheque No.163044 (dated
19.10.2017) for a sum of Rs.6,95,204/- towards part repayment of
outstanding dues. The accused assured the complainant that the balance
dues would be repaid by issuing a second cheque in the month of
December 2017.
6. On its presentation, the cheque was returned with the
endorsement 'Funds Insufficient. The complainant issued a demand
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notice through his counsel on 26.10.2017 and called upon the accused
to make repayment of the cheque amount (Rs. 6,95,204) and other
expenses incurred within 15 days. Since the demand was not complied
with, a complaint under Section 138 NI Act was instituted on
29.11.2017, before the Court of Judicial Magistrate First Class (JMFC),
Jind.
Proceedings before the Trial Court
7. The Trial Court took cognizance of the offence, summoned the
accused and issued notice of accusation. The accused pleaded not guilty
and claimed to be tried.
8. In support of his case, the complainant had examined himself as
CW-1. Mr. Gulab Singh, a bank official at SBI, Jind branch office was
examined as CW-2 and Ms. Gita Sunar as CW3. The complainant had
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also produced the relevant documentary evidence including the cheque
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Ex.CW1/A-Cheque No.163044 dt.19.10.2017
Ex.CW1/B-Cheque return Memo dt. 01.11.2017
Ex.CWA/C- Copy of Bank passbook of complainant
Ex.CW1/D-Legal Notice dt. 26.10.2017
Ex.CW1/E-Postal Receipt dt. 28.10.2017
Ex.CW2/1-Statement of account of complainant Dr. Rajesh Jain w.e.f 01.10.2017 to 31.12.2017
Ex. CW2/2-Copy of Cheque Bonus Register
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in question, cheque return memo, copy of the bank passbook, demand
notice, postal register, statement of accounts of the complainant and
cheque returned register.
9. In his statement under Section 313 of the Code of Criminal
Procedure Code 1973, the accused admits of having borrowed money
to the extent of Rs.20 lakhs from the complainant. He admits of having
paid some interest amount and has pleaded that he could not pay the
remaining amount since complainant had started demanding higher
amount. He further admits of having received the legal notice but denies
having issued any cheque.
10. No defense evidence has been led on behalf of the accused.
11. On a consideration of evidence on record, the Trial Court
returned a finding that the accused was not guilty.
12. The Trial Court found that (i) the complainant had discharged
his initial onus of proving the essential facts underlying the offence
under Section 138 of the NI Act; (ii) the signature on the cheque [Exh.
CW1/A) was admitted by the accused and, hence, it rightly raised the
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statutory presumption under Section 139 NI Act. It, then, rightly noted
that the onus of rebutting the presumption lay on the accused and said
onus was to be discharged by raising a 'probable defence' which would
create a doubt as to the existence of a legally enforceable debt.
13. It then framed the point for determination as follows:
"The only question remaining for determination is
whether a legally valid and enforceable debt existed
qua the complainant and the cheque in question (Ex.
CWI/A) was issued in discharge of said liability/debt?"
14. The Trial Court answered the issue in the negative. It held that
the complainant had failed to prove his case beyond reasonable doubt.
It has been observed that the defence led by the accused has created a
doubt regarding the truthfulness of the complainant's case.
15. The conclusion of the Trial Court was based on the following
grounds:
(i) That the legal notice [Ex. CW1/D] dated 26.10.2017 was not
a valid legal notice since it was not signed by the complainant
or his counsel.
(ii) In the complaint, legal notice as well as the affidavit
evidence, the complainant has failed to mention the date, month
and year on which he advanced various sums of money towards
loan.
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(iii) The evidence on records indicates that the complainant is
in the business of money lending. Since he does not possess any
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valid license/registration under the Punjab Registration of
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Money Lenders Act, 1938 (Money Lenders Act), he could not
have filed a suit for recovery of money advanced as per Section
3 of the Money Lenders Act. The Bombay High Court has in
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the case of Nanda v. Nandakishor interpreted the phrase 'in
any suit' as found in Section 3, widely, to include even a
complaint under Section 138 of the NI Act. Relying on the said
decision, the Trial Court has concluded that the complaint has
been filed in respect of an unenforceable claim.
(iv) The procedure set out in Section 138 has not been properly
followed in that the legal notice has been issued prematurely,
even before the complainant had received notice of the cheque
return memo. The date reflected on the cheque return memo is
1.11.2017 and the date on which the legal notice was issued is
26.10.17. The legal notice could not have been issued until the
cheque had been dishonoured.
(v) The version of the complainant is doubtful since the cheque
was, admittedly, issued in part-payment of outstanding dues.
Nowhere in the complaint or demand notice has the
complainant disclosed the total amount loaned to the accused.
The Court found it rather surprising that the complainant, an
orthopaedic surgeon, would advance huge amounts of loan to
the accused, a Class IV employee, without any formal
agreement/acknowledgement of loan advanced.
16. The complainant was granted special leave to appeal under
Section 378 (4) CrPC before the High Court of Punjab and Haryana.
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Section 4(2) postulates no money-lender shall carry on the business of advancing loans unless he gets
himself registered under sub-section (1)
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Adaptation of Law Order 1968 – See Page 75
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(2010) SCC OnLine Bombay 54
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Proceedings before the High Court
17. On reappreciating the evidence on record, the High Court has
found no merit in the appeal and has upheld the order of acquittal passed
by the Trial Court. The High Court has reasoned that accused had
discharged his onus in rebutting the statutory presumption raised under
Section 139 NI Act. The onus, then, once again had shifted to the
complainant to prove that the cheque had been issued in respect of a
legally enforceable debt and complainant had failed in discharging the
onus to prove that cheque was issued in respect of a legally enforceable
debt.
18. The underlying basis of the findings in the High Court judgment
can be summarised thus:
18.1 The presumption under Section 139 was rebutted by putting
questions to the appellant in his cross examination and explaining the
incriminating circumstances found in the statement recorded under
Section 313 of Cr.P.C.
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18.2 The cross examination of the appellant reveals that he had given
st
loan to accused commencing from 1 March, 2014 and on several dates
thereafter. The cheque was handed over to the accused only on
19.10.2017, nearly three years thereafter. If the appellant had given loan
on various dates, he must have maintained some documents to evidence
such loans. He has remained silent as to the specific amounts loaned
after 01.03.2014 and complainant ought to have tendered in evidence
accounts, ledger, statement to prove the debt amount. The stand of the
accused was that he did borrow money from the complainant but every
month, the complainant would enhance the outstanding dues by Rs 1
lakh. Therefore, the stand of the respondent seems to be more probable
than the case of the complainant.
18.3 There is a consistent allegation in the complaint, demand notice
and the affidavit in evidence that the loan was given subject to payment
of interest on the principal amount. The complainant ought to have
mentioned the principal amount borrowed and the interest charged
thereon in order to arrive at the cheque amount of Rs.6,95,204/-. Since
the breakup of the principal amount and interest charged is
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conspicuously absent in all the three documents, the complaint is bereft
of material particulars and deserved to be dismissed at the very outset.
18.4 In so far as the Trial Court's finding that the complaint was not
maintainable since the complainant was not registered under the Money
Lenders Act, the High Court has observed that there was no necessity
of evaluating such a finding since that question would only arise if the
complainant had succeeded in proving that the cheque was issued in
respect of a legally enforceable debt.
19. We have heard Mr. Rajesh Jain, appellant appearing in-person,
and Mr. Yudhvir Dalal, learned Counsel for the respondent.
20. Mr. Rajesh Jain, appearing in-person has contended that there is
a serious flaw in the approach of the Courts below while appreciating
the evidence on record. According to him, the signature on the cheque
not being under dispute, and the presumption under Section 139 having
been drawn against the accused, there was nothing available on record
to suggest that the accused had discharged his onus of rebutting the
presumption. He drew our attention to the reasoning given in the orders
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of acquittal to contend that courts below had erroneously proceeded to
appreciate the evidence as though the onus was on the complainant to
prove that ‘the cheque was issued in discharge of a debt’ . Once the
presumption operates, the onus rests on the accused to prove the non-
existence of debt/liability and the courts could not have doubted the
complainant's case from any point of view. He finally argued that the
respondent cannot be said to have raised a 'probable defence' since the
case set up in defence was full of inconsistencies and bereft of any
evidence. He, accordingly, prays that concurrent findings be set aside,
and an order of conviction be passed against the accused.
21. Mr. Yudhvir Dalal, learned counsel has contended that this
Court, while hearing an appeal by special leave, must be extremely slow
to interfere against concurrent findings. Merely because another view
can be taken on reappreciation of the evidence, is no ground to interfere;
on the merits, he contends that the accused has discharged the burden
fastened by raising a 'probable defence' , which meets the standard of
'preponderance of probabilities. He has relied on a few judgments to
contend that the presumption can be rebutted even without leading any
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rebuttal evidence. In this regard, he submits that it is always open to the
accused to rely on the materials produced by the complainant for
disproving the existence of a legally enforceable debt or liability. He
submits that the complaint is lacking in material particulars-it fails to
state the total sum loaned, the dates on which the loans were given, the
basis on which the demand was made for a sum of Rs. 6,95,204/-. These
facts coupled with other circumstances has justifiably created a doubt
in the mind of the court as to the genuineness of the complainant's case
and therefore, courts below were justified in disbelieving the
complainant's version. On these grounds he prays for dismissal of the
appeal.
22. We have taken note of the rival submissions canvassed and have
perused the record.
Question for Consideration
23. Since the execution of the cheque is, admittedly, not under
dispute, the limited question to be considered, is (i) whether the accused
can be said to have discharged his 'evidential burden', for the courts
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below to have concluded that the presumption of law supplied by
Section 139 had been rebutted?
23.1 If the answer to this question is found in the affirmative, the next
question to be considered is (i) whether the complainant has, in the
absence of the artificial force supplied by the presumption under
Section 139, independently proved beyond reasonable doubt that the
cheque was issued in discharge of a debt/liability? The necessity of
dealing with point No. (ii) will only arise if the answer to point No. (i)
in the affirmative. Hence, we shall take up point (i) for consideration.
Applicable Legal Principles
Scope of Article 136 vis a vis Concurrent Finding of Fact
24. At the threshold, we must note that the challenge in this appeal
calls for an interference against concurrent findings by two Courts. The
scope of an appeal by special leave under Article 136 of the Constitution
of India against the concurrent findings is well settled. In Mst. Dalbir
Kaur and Ors. vs. State of Punjab (1976) 4 SCC 158 , this Court, on a
consideration of multiple authorities, has distilled the principles
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governing interference by this Court in a criminal appeal by special
leave, as follows:
(1) that this Court would not interfere with the
concurrent finding of fact based on pure appreciation
of evidence even if it were to take a different view on
the evidence.
(2) that the Court will not normally enter into a re-
appraisement or review of the evidence, unless the
assessment of the High Court is vitiated by an error of
law or procedure or is based on error of record,
misreading of evidence or is inconsistent with the
evidence, for instance, where the ocular evidence is
totally inconsistent with the medical evidence and so
on.
(3) that the Court would not enter into credibility of the
evidence with a view to substitute its own opinion for
that of the High Court
(4) that the Court would interfere where the High Court
has arrived at a finding of fact in disregard of a judicial
process, principles of natural justice or a fair hearing
or has acted in violation of a mandatory provision of
law or procedure resulting in serious prejudice or
injustice to the accused.
(5) this Court might also interfere where on the proved
facts wrong inferences of law have been drawn or
where the conclusions of the High Court are manifestly
perverse and based on no evidence: It is very difficult
to lay down a rule of universal application, but the
principles mentioned above and those adumbrated in
the authorities of this Court cited supra provide
sufficient guidelines for this Court to decide criminal
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appeals by special leave. Thus, in a criminal appeal by
special leave, this Court at the hearing examines the
evidence and the judgment of the High Court with the
limited purpose of determining whether or not the High
Court has followed the principles enunciated above.
Where the Court finds that the High Court has
committed no violation of the various principles laid
down by this Court and has made a correct approach
and has not ignored or overlooked striking features in
the evidence which demolish the prosecution case, the
findings of fact arrived at by the High Court on an
appreciation of the evidence in the circumstances of
the case would not be disturbed.
Section 138 of the NI Act - Necessary Ingredients
25. Essentially, in all trials concerning dishonour of cheque, the
courts are called upon to consider is whether the ingredients of the
offence enumerated in Section 138 of the Act have been met and if so,
whether the accused was able to rebut the statutory presumption
contemplated by Section 139 of the Act.
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26. In Gimpex Private Limited vs. Manoj Goel , this Court has
unpacked the ingredients forming the basis of the offence under Section
138 of the NI Act in the following structure:
7
(2022) 11 SCC 705
16
(1) The drawing of a cheque by person on do account
maintained by him with the banker for the payment of any
amount of money to another from that account;
(i) The cheque being drawn for the discharge in whole or in
part of any debt or other liability;
(iii) Presentation of the cheque to the bank arranged to be paid
from that account,
(iv) The return of the cheque by the drawee bank as unpaid
either because the amount of money standing to the credit of
that account is insufficient to honour the cheque or that it
exceeds the amount
(v) A notice by the payee or the holder in due course making a
demand for the payment of the amount to the drawer of the
cheque within 30 days of the receipt of information from the
bank in regard to the return of the cheque; and
(vi) The drawer of the cheque failing to make payment of the
amount of money to the payee or the holder in due course
within 15 days of the receipt of the notice.
8
27. In K. Bhaskaran v. Sankaran Vaidhyan Balan this Court
had summarised the constituent elements of the offence in fairly
similar terms by holding:
“14. The offence Under Section 138 of the Act can be
completed only with the concatenation of a number of acts.
The following are the acts which are components of the said
offence: (1) drawing of the cheque, (2) presentation of the
cheque to the bank, (3) returning the cheque unpaid by the
drawee bank, (4) giving notice in writing to the drawer of the
cheque demanding payment of the cheque amount, (3)
failure of the drawer to make payment within 15 days of the
receipt of the notice.”
8
(1999) 7 SCC 510
17
28. The five (5) acts as set out in K Bhaskaran's case (supra) are,
generally speaking, matters of record and would be available in the
form of documentary evidence as early as, at the stage of filing the
complaint and initiating prosecution. Apart from the above acts, it is
also to be proved that cheque was issued in discharge of a debt or
liability (Ingredient no. (ii) in Gimpex's case ). The burden of proving
this fact, like the other facts, would have ordinarily fallen upon the
complainant. However, through the introduction of a presumptive
device in Section 139 of the NI Act, the Parliament has sought to
overcome the general norm as stated in Section 102 of the Evidence Act
and has, thereby fixed the onus of proving the same on the accused.
Section 139, in that sense, is an example of a reverse onus clause and
requires the accused to prove the non-existence of the presumed fact,
i.e., that cheque was not issued in discharge of a debt/liability.
Burden of Proof and Presumptions: Conceptual Underpinnings
29. There are two senses in which the phrase ‘burden of proof’ is
used in the Indian Evidence Act, 1872 (Evidence Act, hereinafter). One
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is the burden of proof arising as a matter of pleading and the other is the
one which deals with the question as to who has first to prove a
particular fact. The former is called the ‘legal burden’ and it never
shifts, the latter is called the ‘evidential burden’ and it shifts from one
side to the other. [See Kundanlal v. Custodian Evacuee Property (AIR
1961 SC 1316)]
30. The legal burden is the burden of proof which remains constant
throughout a trial. It is the burden of establishing the facts and
contentions which will support a party's case. If, at the conclusion of
the trial a party has failed to establish these to the appropriate standards,
he would lose to stand. The incidence of the burden is usually clear from
the pleadings and usually, it is incumbent on the plaintiff or complainant
to prove what he pleaded or contends. On the other hand, the evidential
burden may shift from one party to another as the trial progresses
according to the balance of evidence given at any particular stage; the
burden rests upon the party who would fail if no evidence at all, or no
further evidence, as the case may be is adduced by either side (See
Halsbury's Laws of England, 4th Edition para 13). While the former,
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the legal burden arising on the pleadings is mentioned in Section 101 of
the Evidence Act, the latter, the evidential burden, is referred to in
Section 102 thereof. [ G.Vasu V. Syed Yaseen (AIR 1987 AP139)
affirmed in Bharat Barrel Vs. Amin Chand [(1999) 3 SCC 35] ]
31. Presumption, on the other hand, literally means “taking as true
9
without examination or proof” . In Kumar Exports v. Sharma Exports ,
this Court referred to presumption as "devices by use of which courts
are enabled and entitled to pronounce on an issue notwithstanding that
there is no evidence or insufficient evidence."
32. Broadly speaking, presumptions are of two kinds, presumptions
of fact and of law. Presumptions of fact are inferences logically drawn
from one fact as to the existence of other facts. Presumptions of fact are
rebuttable by evidence to the contrary. Presumptions of law may be
either irrebuttable (conclusive presumptions), so that no evidence to the
contrary may be given or rebuttable. A rebuttable presumption of law is
a legal rule to be applied by the Court in the absence of conflicting
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(2009) 2 SCC 513
20
evidence (Halsbury, 4th Edition paras 111, 112]. Among the class of
rebuttable presumptions, a further distinction can be made between
discretionary presumptions ( ‘may presume’ ) and compulsive or
compulsory presumptions ( ‘shall presume’ ). [ G. Vasu V. Syed Yaseen
(Supra) ]
33. The Evidence Act provides for presumptions, which fit within
one of three forms: 'may presume' (rebuttable presumptions of fact),
'shall presume' (rebuttable presumption of law) and conclusive
presumptions (irrebuttable presumption of law). The distinction
between 'may presume' and 'shall presume' clauses is that, as regards
the former, the Court has an option to raise the presumption or not, but
in the latter case, the Court must necessarily raise the presumption. If
in a case the Court has an option to raise the presumption and raises the
presumption, the distinction between the two categories of
presumptions ceases and the fact is presumed, unless and until it is
disproved, [ G.Vasu V. Syed Yaseen (Supra) ]
21
Section 139 NI Act-Effect of Presumption and Shifting of Onus of
Proof
34. 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 the 'presumed fact' directly
relates to one of the crucial ingredients necessary to sustain a conviction
10
under Section 138.
35. Section 139 of the NI Act, which takes the form of a ‘shall
presume’ clause is illustrative of a presumption of law. Because Section
139 requires that the Court ‘shall presume’ the fact stated therein, it is
obligatory on the Court to raise this presumption in every case where
the factual basis for the raising of the presumption had been established.
10
The rules discussed hereinbelow is common to both the presumptions under Section 139 and Section
118 and is hence, not repeated-Reference to one can be taken as reference to another
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But this does not preclude the person against whom the presumption is
drawn from rebutting it and proving the contrary as is clear from the
use of the phrase ‘unless the contrary is proved’ .
36. The Court will necessarily presume that the cheque had been
issued towards discharge of a legally enforceable debt/liability in two
circumstances. Firstly , when the drawer of the cheque admits
issuance/execution of the cheque and secondly , in the event where the
complainant proves that cheque was issued/executed in his favour by
the drawer. The circumstances set out above form the fact(s) which
bring about the activation of the presumptive clause. [Bharat Barrel
Vs. Amin Chand] [(1999) 3 SCC 35]
37. Recently, this Court has gone to the extent of holding that
presumption takes effect even in a situation where the accused contends
that 'a blank cheque leaf was voluntarily signed and handed over by him
11
to the complainant. [ Bir Singh v. Mukesh Kumar ]. Therefore, mere
admission of the drawer's signature, without admitting the execution of
11
(2019) 4 SCC 197
23
the entire contents in the cheque, is now sufficient to trigger the
presumption.
38. As soon as the complainant 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.
12
39. John Henry Wigmore 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.”
12
Rules of Evidence- The Hidden Origin of Modern Law
24
40. 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’ , similar to a defendant in a civil proceeding. [Rangappa
vs. Mohan (AIR 2010 SC 1898)]
41. In order to rebut the presumption and prove to the contrary, it is
open to the accused to raise a probable defence wherein the existence
of a legally enforceable debt or liability can be contested. The words
‘until the contrary is proved’ occurring in Section 139 do not mean that
accused must necessarily prove the negative that the instrument is not
issued in discharge of any debt/liability but the accused has the option
to ask the Court to consider the non-existence of debt/liability so
probable that a prudent man ought, under the circumstances of the case,
to act upon the supposition that debt/liability did not exist.
[Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) See also Kumar
Exports Vs. Sharma Carpets (2009) 2 SCC 513]
25
42. In other words, the accused is left with two options. The first
option-of proving that the debt/liability does not exist-is to lead defence
evidence and conclusively establish with certainty that the cheque was
not issued in discharge of a debt/liability. The second option is to prove
the non-existence of debt/liability by a preponderance of probabilities
by referring to the particular circumstances of the case. The
preponderance of probability in favour of the accused's case may be
even fifty one to forty nine and arising out of the entire circumstances
of the case, which includes: the complainant's version in the original
complaint, the case in the legal/demand notice, complainant's case at
the trial, as also the plea of the accused in the reply notice, his 313
statement or at the trial as to the circumstances under which the
promissory note/cheque was executed. All of them can raise a
preponderance of probabilities justifying a finding that there was ‘ no
debt/liability’. [Kumar Exports and Sharma Carpets, (2009) 2 SCC
513]
43. The nature of evidence required to shift the evidential burden need
not necessarily be direct evidence i.e., oral or documentary evidence or
26
admissions made by the opposite party; it may comprise circumstantial
evidence or presumption of law or fact.
44. The accused may adduce direct evidence to prove that the
instrument was not issued in discharge of a debt/liability and, if he
adduces acceptable evidence, the burden again shifts to the
complainant. At the same time, the accused may also rely upon
circumstantial evidence and, if the circumstances so relied upon are
compelling the burden may likewise shift to the complainant. It is open
for him to also rely upon presumptions of fact, for instance those
mentioned in Section 114 and other sections of the Evidence Act. The
burden of proof may shift by presumptions of law or fact. In Kundanlal's
case- (supra) when the creditor had failed to produce his account books,
this Court raised a presumption of fact under Section 114, that the
evidence, if produced would have shown the non-existence of
consideration. Though, in that case, this Court was dealing with the
presumptive clause in Section 118 NI Act, since the nature of the
presumptive clauses in Section 118 and 139 is the same, the analogy
can be extended and applied in the context of Section 139 as well.
27
45. Therefore, in fine, it can be said that once the accused adduces
evidence to the satisfaction of the Court that on a preponderance of
probabilities there exists no debt/liability in the manner pleaded in the
complaint or the demand notice or the affidavit-evidence, the burden
shifts to the complainant and the presumption 'disappears' and does not
haunt the accused any longer. The onus having now shifted to the
complainant, he will be obliged to prove the existence of a debt/liability
as a matter of fact and his failure to prove would result in dismissal of
his complaint case. Thereafter, the presumption under Section 139 does
not again come to the complainant's rescue. Once both parties have
adduced evidence, the Court has to consider the same and the burden of
proof loses all its importance. [Basalingappa vs. Mudibasappa, AIR
2019 SC 1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 441]
Our Analysis
46. It is against the backdrop of the afore-stated legal principles that
we proceed to consider if there is any interference that is called for.
Point No. (1):
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47. The accused has neither replied to the demand notice nor has led
any rebuttal evidence in support of his case. The case set up by him
needs to be drawn from the suggestions put during the cross
examination and from his reply given in the statement recorded under
Section 313 of Cr.P.C.
48. It has been suggested to the complainant that accused had not
borrowed any loan from him. It was suggested to him that no legal
notice had been issued on dishonor of cheque. It was further suggested
that the complainant has misused a blank cheque - the said cheque
having been obtained from his employee, Gita Sunar, who also happens
to be the sister-in law of the accused. It was suggested that Gita Sunar
had some financial transactions with the complainant and towards that
end, he had received a blank cheque (signed by the accused) from Gita
Sunar and misused it. It is pertinent to note that the suggestions
mentioned above were denied by the complainant.
49. In her cross examination, Gita Sunar (examined on behalf of
complainant as CW.3) has denied the suggestion that she has misused a
29
blank cheque in collusion with the complainant. She has also denied the
suggestion that a blank cheque was given to her by the brother-in law
of the accused.
50. In the statement recorded under Section 313 of Cr.P.C., the first
incriminating circumstance put to the accused was as follows:
“It has come in evidence against you that you along with
your wife, Jyoti visited the plaintiff an Orthopaedic Surgeon
on 1-3-14, and availed friendly loan from plaintiff from time
to time through sister of Jyoti namely Gita Sunar working
there, on the plea of need for family requirements, and
promised to pay up the "interest moneys as also the entire
Principal amounts, what do you have to say about this?
He responded to said suggestion/question as follows:
" I had taken some money from the plaintiff.
I have taken Rupees Twenty Lac from the plaintiff.”
51. When it was put to him that he has reneged on his promise to
pay on several occasions and sought to avoid the complainant by
changing his telephone number, the accused denies that he had changed
his number but however, admits that he could not pay the entire sum at
one go . He further admits that he did pay some interest but could not
pay the remaining sum since the complainant would increase the
30
outstanding amount every month by one lakh rupees and had been
demanding higher amount. As regards the circumstance of return of the
cheque, the legal notice and non-reply to the demand notice, he admits
of having received the demand notice. He states that he had no
knowledge about the dishonor of his cheque since his cheque book and
bank passbook were kept in his sister-in-law's house.
52. On an overall consideration of the record, we find that the case
set up by the accused is thoroughly riddled with contradictions. It is
apparent on the face of the record that there is not the slightest of
credibility perceivable in the defense set up by the accused.
53. In his 313 statements, he admits of having taken a loan of Rs 20
lakh and having repaid some interest but in the cross examination of the
complainant, a suggestion is made that the accused had no financial
dealings with the complainant. Whereas in his 313 statement, the
accused states that his cheque book and passbook is kept in his sister in
law's house, yet, in the cross examination of Gita Sunar, the accused's
sister-in-law, no suggestion is made to that effect. In fact, she has plainly
denied that any blank cheque was given to her by her brother-in-law.
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We find it highly unnatural to presume that the accused would leave his
signed cheque leaves and passbook in his sister-in law's house. Even if
he did, there is no reason(s) or motive attributed on part of his sister-in-
law, for her to collude along with the complainant. The accused has also
not explained as to why he has not set up his defense at the earliest
point, that is, at the stage of receiving the demand notice, even though
he admits having received the demand notice in his 313 statement, yet
he makes a suggestion to the complainant in his cross examination that
no legal notice had been issued. The theory of 'blank cheque' being
misused has been suggested, only to be denied by both, the complainant
and Gita Sunar-CW-3. No action has been taken by way of registering
a police complaint in order to prosecute the alleged illegal conduct of
his blank cheque having been misused by CW-3.
54. Nothing significant has been elicited in the cross-examination of
complainant to raise any suspicion in the case set up by the complainant.
Other than some minor inconsistencies, the case of the complainant has
been consistent throughout as can be noticed from a perusal of the
complainant, demand notice and affidavit evidence. In fact, the
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signature on the cheque having not been disputed, and the presumption
under Section 118 and 139 having taken effect, the complainant's case
stood satisfied every ingredient necessary for sustaining a conviction
under Section 138. The case of the defense was limited only to the issue
as to whether the cheque had been issued in discharge of a debt/liability.
The accused having miserably failed to discharge his evidential burden,
that fact will have to be taken to be proved by force of the presumption,
without requiring anything more from the complainant.
55. 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
33
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 view based on the
evidence on record and decide accordingly.
56. At the stage when the courts concluded that the signature had
been admitted, the Court ought to have inquired into either of the two
questions ( depending on the method in which accused has chosen to
rebut the presumption ): Has the accused led any defense evidence to
prove and conclusively establish that there existed no debt/liability at
the time of issuance of cheque? In the absence of rebuttal evidence
being led the inquiry would entail: Has the accused proved the
nonexistence of debt/liability by a preponderance of probabilities by
referring to the ‘particular circumstances of the case’ ?
57. The perversity in the approach of the Trial Court is noticeable
from the way it proceeded to frame a question at trial. According to the
trial Court, the question to be decided was 'whether a legally valid and
34
enforceable debt existed qua the complainant and the cheque in
question (Ex. CWI/A) was issued in discharge of said liability/debt' .
When the initial framing of the question itself being erroneous, one
cannot expect the outcome to be right. The onus instead of being fixed
on the accused has been fixed on the complainant. Lack of proper
understanding of the nature of the presumption in Section 139 and its
effect has resulted in an erroneous Order being passed.
58. Einstein had famously said:
"If I had an hour to solve a problem, I'd spend 55 minutes
thinking about the problem and 5 minutes thinking about
solutions".
Exaggerated as it may sound, he is believed to have suggested that
quality of the solution one generates is directly proportionate to one's
ability to identify the problem. A well-defined problem often contains
its own solution within it.
59. Drawing from Einstein's quote, if the issue had been properly
framed after careful thought and application of judicial mind, and the
onus correctly fixed, perhaps, the outcome at trial would have been very
35
different and this litigation might not have travelled all the way up to
this Court.
60. Coming to the finding of High Court, we find again, there has
been fundamental error in the approach with which the High Court has
proceeded to consider the evidence on record. In paragraph 6 of the
impugned order, the High Court finds that the complainant has proved
the issuance of cheque, which means that the presumption would come
into immediate effect. In paragraph 13, it rightly observes that the
burden is on the accused to rebut such presumption. In the very next
paragraph, it finds that the accused has rebutted the presumption by
putting questions to the complainant and explaining the circumstances
under section 313 Cr.P.C.
61. There is no elucidation of material circumstances/basis on which
the Court reached such conclusion. It notes the allegation made in the
complaint that the complainant had given the loan on 01.03.2014 and
on several dates thereafter. Based on this averment, the High Court
rather shockingly concludes that: "If the complainant had given loans
on various dates, he must have maintained some document qua that,
36
because it was not a one-time, loan but loan along with interest accrued
on the principal, which made the amount to Rs.6,95,204/-." Therefore,
according to the High Court, 'the burden was primarily on the
complainant to prove the debt amount'.
62. The fundamental error in the approach lies in the fact that the
High Court has questioned the want of evidence on part of the
complainant in order to support his allegation of having extended loan
to the accused, when it ought to have instead concerned itself with the
case set up by the accused and whether he had discharged his evidential
burden by proving that there existed no debt/liability at the time of
issuance of cheque.
63. In the teeth of the aforesaid analysis, we have not the slightest
of hesitation in concluding that this case calls for interference,
notwithstanding that both the courts below have concurrently held in
favour of the accused. Since we have answered point No:(i) in the
negative, the need to examine point No:(ii) does not arise.
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64. Hence, we proceed to allow the appeal by setting aside the
judgment of the High Court of Punjab and Haryana at Chandigarh
rendered in CRM-A No.148 of 2020 dated 01.02.2022 and allow the
complaint filed under Section 138 of Negotiable Instruments Act, 1881
and convict the respondent accused with fine of twice the amount of the
cheque namely Rs.13,90,408/- (Rupees thirteen lakh ninety thousand
four hundred and eight only) failing which he shall undergo simple
imprisonment for one year.
…………………….J.
(Aravind Kumar)
…………………J
(S.V.N. Bhatti)
New Delhi,
October 09, 2023