Bhupesh Rathod. Vs. Dayashankar Prasad Chaurasia & Anr., - NI Act, S.138 Application by a Company through its MD. Even if there was initially no authority the Company can at any stage rectify that defect by sending a competent person.

Supreme Court (10.11.2021) In Bhupesh Rathod. Vs. Dayashankar Prasad Chaurasia & Anr., [Criminal Appeal No.1105 of 2021] held that; - 

• If a complaint was made in the name of the Company, it is necessary that a natural person represents such juristic person in the court and the court looks upon the natural person for all practical purposes. It is in this context that observations were made that the body corporate is a de jure complainant while the human being is a de facto complainant to represent the former in the court proceedings. 

• Thus, no Magistrate could insist that the particular person whose statement was taken on oath alone can continue to represent the Company till the end of the proceedings. Not only that, even if there was initially no authority the Company can at any stage rectify that defect by sending a competent person.

• It would be too technical a view to take to defeat the complaint merely because the body of the complaint does not elaborate upon the authorisation. The artificial person being the Company had to act through a person/official, which logically would include the Chairman or Managing Director. Only the existence of authorisation could be verified.

• In our view, one of the most material aspects is, as stated aforesaid, that the signatures on the cheques were not denied. Neither was it explained by way of an alternative story as to why the duly signed cheques were handed over to the Company. There was no plea of any fraud or misrepresentation. 

• There was no requirement of a loan agreement to be executed separately as any alternative nature of transaction was never stated.

Excerpts of the order;

# 1. Dayashankar Chaurasia, the respondent issued eight (8) cheques of Rs.20,000/- each totalling to Rs.1,60,000/- in favour of M/s. Bell Marshall Telesystems Limited (for short ‘the Company’). The cheques were drawn on HDFC Bank, Vasai (E) Branch, Mumbai. These cheques were drawn on different dates but were presented together for payment on 10.05.2006. All the cheques got dishonoured on account of “funds insufficient” as per Bank Memos issued on 12.05.2006. On the cheques being dishonoured, legal notices were issued by the beneficiary under Section 138(b) of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘NI Act’) on 26.05.2006. The demand was, however not met within fifteen (15) days of the receipt of the notice nor was any reply sent which resulted in the complaint bearing No.160/SS/07 being filed on 07.07.2006 by Mr. Bhupesh Rathod before the Special Metropolitan Magistrate, Mumbai. The complaint was accompanied by a Board Resolution of the Company dated 17.05.2006 authorising Mr. Bhupesh Rathod to initiate legal action against the  respondent on behalf of the Company. On 24.12.2007, the Company filed an affidavit through its Managing Director, i.e., Mr. Bhupesh Rathod, stating that it had authorised him through the above mentioned Board Resolution to file a complaint case against the respondent.

# 2. In view of the fact that much turns on the manner of description of the complainant, we reproduce the description of the complainant as under:

“Mr. Bhupesh M. Rathod

Managing Director of M/s. Bell

Marshall Telesystems Ltd.

Aged: 41 years, Occupation: Business

Having address at 1107, V Maker

Chamber, Nariman Point

Mumbai- 400021.”

# 3. The Board Resolution passed on 17.05.2006 is in the following terms:

• “RESOLVED THAT legal action be initiated against Dayashankar Prasad Choursiya for the dishonour of chqs issued by him and in discharge of this liabilities to the company and Mr. Bhupesh Rathod/Sashikant Ganekar is hereby authorized to appoint advocates, issues of notices through advocate, file complaint, Verifications on Oath, appoint Constituent attorney to file complaint in the court and attend all such affairs which may be needed in the process of legal actions.”

For Bell Marshal Tele Systems LTD.

Sd/-

           Dated: 17/05/2006

Director”

# 4. We reproduce the aforesaid as the competency and the manner of filing of the complaint are the primary considerations debated before us.

# 5. The case made out in the complaint is that a sum of Rs.1,60,000/- was advanced to the respondent by the Company and the cheques were issued to repay the loan. The respondent took an objection that the complaint was filed in the personal capacity of Mr. Bhupesh Rathod and not on behalf of the Company. While on the other hand it was contended by the appellant that the complaint was in the name of the Company and in the cause title of the complaint he had described himself as the Managing Director. The Company was a registered company under the Companies Act, 1956. The registration certificate, however, was not placed on record. On this aspect, it was the further submission of the respondent that it is only in the aforesaid title description that the complainant is described as the Managing Director of the Company but in the body of the complaint it is not so mentioned.

# 6. The trial court acquitted the respondent on 12.03.2009 based on adual reasoning –

• (a) there was no document except the promissory note signed by the respondent to show that the loan was being granted; and 

• (b) the Board Resolution itself was not signed by the Board of Directors (it may be stated that this was really a true copy of the Board Resolution).

# 7. The appellant preferred an appeal before the High Court. The High Court by the impugned order dated 03.08.2015 dismissed the appeal.

# 8. It may be relevant to note that the High Court traversed many paths while coming to this conclusion. In a nutshell the reasoning was: 

• (a) it could not be said that the complaint had been filed by a payee or holder in due course as mandated under Section 142(a) of the NI Act;

• (b) the payee was the Company and a perusal of the complaint did not show that the complaint was filed by the Company. It had been filed by the appellant who had described himself as the Managing Director of the Company only in the cause title of the complaint;

• (c) probably a conscious choice was made to not file the complaint in the name of the Company as it was unclear whether the Company was authorised to advance loans.

Complainant’s/Appellant’s submissions:

# 10. The appellant contended before us that it was quite apparent from the cause title of the complaint which is an integral part of the complaint, that the same had been filed on behalf of the Company. It was further contended that this was the reason that the Board Resolution authorising the Managing Director to file a complaint for dishonour of the cheques was annexed. The address given was of the Company, which was the registered office address. The affidavit filed in the cross-examination in pursuance thereto left no manner of doubt that the complaint was filed as the Managing Director of the Company.

# 11. It is the say of the appellant that there is a presumption under Section 139 and 118 of the NI Act which was not rebutted by the respondent. It was further contended that a duly signed cheque was sufficient to raise a presumption under Section 139 of the NI Act against the respondent as held in Triyambak S. Hegde v. Sripad. It was not the say of the respondent in defence that the cheque was not signed by him or was signed under any fraud or misrepresentation.

# 12. It was submitted that a very hyper technical view of the matter had been taken and it only related to the format of the filing of the complaint and not the substance. The trial court itself had accepted that the complaint was filed on behalf of the Company as otherwise it would have refused to take cognizance under Section 142(a) of the NI Act. The respondent had not even challenged the summoning order on the ground that the complaint is not filed on behalf of the Company.

# 17. We must say at the inception that the respondent not having disputed his signatures on the cheques, it was for the respondent to show in what circumstances the cheques had been issued, i.e., why was it not a cheque issued in due course. The words of Section 139 of the NI Act are quite clear that unless the contrary is proved, it shall be presumed that the holder of the cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability. The respondent has not set up a case that the nature of transaction was of the nature which fell beyond the scope of Section 138. Other than taking a technical objection, really nothing has been said on the substantive aspect.

# 18. The only eligibility criteria prescribed under Section 142(1)(a) is that the complaint must be by the payee or the holder in due course.

# 19. In the conspectus of the aforesaid principles we have to deal with the plea of the respondent that the complaint was not filed by the competent complainant as it is the case that the loan was advanced by the Company. As to what would be the governing principles in respect of a corporate entity which seeks to file the complaint, an elucidation can be found in the judgment of this Court in Associated Cement Co. Ltd. v. Keshavanand. If a complaint was made in the name of the Company, it is necessary that a natural person represents such juristic person in the court and the court looks upon the natural person for all practical purposes. It is in this context that observations were made that the body corporate is a de jure complainant while the human being is a de facto complainant to represent the former in the court proceedings. Thus, no Magistrate could insist that the particular person whose statement was taken on oath alone can continue to represent the Company till the end of the proceedings. Not only that, even if there was initially no authority the Company can at any stage rectify that defect by sending a competent person.

# 20. The aforesaid judgment was also taken note of in a subsequent judgment of this Court in M.M.TC Ltd. & Anr. v. Medchl Chemicals and Pharma (P) Ltd. & Anr..

# 21. We find that the judicial precedents cited aforesaid have been breached by the Courts below. The High Court also embarked on a discussion as to the vagueness of the identity of the complainant and its relation with the legality of a loan which may be granted by the Company, something that was not required to be gone into.

# 22. If we look at the format of the complaint which we have extracted aforesaid, it is quite apparent that the Managing Director has filed the complaint on behalf of the Company. There could be a format where the  Company’s name is described first, suing through the Managing Director but there cannot be a fundamental defect merely because the name of the Managing Director is stated first followed by the post held in the Company.

# 23. It is also relevant to note that a copy of the Board Resolution was filed along with the complaint. An affidavit had been brought on record in the trial court by the Company, affirming to the factum of authorisation in favour of the Managing Director. A Manager or a Managing Director ordinarily by the very nomenclature can be taken to be the person in-charge of the affairs Company for its day-to-day management and within the activity would certainly be calling the act of approaching the court either under civil law or criminal law for setting the trial in motion. It would be too technical a view to take to defeat the complaint merely because the body of the complaint does not elaborate upon the authorisation. The artificial person being the Company had to act through a person/official, which logically would include the Chairman or Managing Director. Only the existence of authorisation could be verified.

# 24. While we turn to the authorisation in the present case, it was a copy and, thus, does not have to be signed by the Board Members, as that would form a part of the minutes of the Board meeting and not a true copy of the authorisation. We also feel that it has been wrongly

concluded that the Managing Director was not authorised. If we peruse the authorisation in the form of a certified copy of the Resolution, it states that legal action has to be taken against the respondent for dishonour of cheques issued by him to discharge his liabilities to the Company. To this effect, Mr. Bhupesh Rathod/Sashikant Ganekar were authorised to appoint advocates, issues notices through advocate, file complaint, verifications on oath, appoint Constituent attorney to file complaint in the court and attend all such affairs which may be needed in the process of legal actions. What more could be said? 

# 25. The finding by the Courts below as to the lack of authorisation to depose also, thus, stands nullified.

# 26. The description of the complainant with its full registered office address is given at the inception itself except that the Managing Director’s name appears first as acting on behalf of the Company. The affidavit and the cross-examination in respect of the same during trial supports the finding that the complaint had been filed by the Managing Director on behalf of the Company. Thus, the format itself cannot be said to be defective though it may not be perfect. The body of the complaint need not be required to contain anything more in view of what has been set out at the inception coupled with the copy of the Board Resolution. There is no reason to otherwise annex a copy of the Board Resolution if the complaint was not being filed by the appellant on behalf of the Company.

# 27. In our view, one of the most material aspects is, as stated aforesaid, that the signatures on the cheques were not denied. Neither was it explained by way of an alternative story as to why the duly signed cheques were handed over to the Company. There was no plea of any fraud or misrepresentation. It does, thus, appear that faced with the aforesaid position, the respondent only sought to take a technical plea arising from the format of the complaint to evade his liability. There was no requirement of a loan agreement to be executed separately as any alternative nature of transaction was never stated.

 Conclusion:

# 28. We are, thus, of the view that both the impugned orders of the trial court and the High Court cannot be sustained and are required to be set aside. The finding is, thus, reached that the complaint was properly instituted and the respondent failed to disclose why he did not meet the financial liability arising to a payee, who is a holder of a cheque in due Course.

# 29. We now turn to what would be the result of the aforesaid finding. The complaint was instituted in July, 2006. Fifteen (15) years have elapsed since then. The punishment prescribed for such an offence under Section 138 of the NI Act is imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both. We are of the view that in the given scenario the respondent should be sentenced with imprisonment for a term of one year and with fine twice the amount of the cheque, i.e., Rs.3,20,000/-. However, in view of passage of time, we provide that if the respondent pays a further sum of Rs.1,60,000/- to the appellant, then the sentence would stand suspended. The needful be done by the respondent within two (2) months from today. The appellant would also be entitled to costs. 

30. The appeal accordingly stands allowed in the aforesaid terms.

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Geetika Mehra Vs. Satyam Bhola.- Presumption under Section 139 of NI Act.

Distt. Courts Dwarka New Delhi (18.11.2021) In Geetika Mehra Vs. Satyam Bhola. [Ct. Case No.28164/2018, CNR No.DLSW020313902018] held that; - 

• The first point of determination is as to whether presumption u/s.139 N.I. Act R/w Section 118 N.I. Act can be raised against the accused. In the considered opinion of this Court, such presumption can be duly raised against the accused as he has admitted his signatures on the cheque in question, and has also admitted that the particulars on the same were filled by him.

• it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused. Such a presumption is a presumption of law as distinguished from a presumption of fact which describes provisions by which the court may presume a certain state of affairs. 

• Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable probability of the nonexistence of the presumed fact.

• but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. 

• Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man."

• the accused can either prove the non-existence of consideration and debt by direct evidence, or by bringing on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man may act upon the plea that they did not exist

• The offence punishable under section 138 NI Act is premised on theory of reverse onus of proof, and the complainant was not required, as she would have been required in a civil trial of recovery perhaps, to prove a loan transaction, as she had a valid cheque in question made in her favour by the accused. 

• With the presumptions stacked against him, the first order of business required the accused to plug loopholes in the case of the complainant, and only thereafter would the requirement for the complainant to prove her case beyond reasonable doubt have arisen.

 

Excerpts of the order;

# 1. The complainant, Ms. Geetika Mehra was friends with one Lata Bhola for a number of years. The accused herein, the son of the said Lata Bhola, alongwith his mother told the complainant that they want to purchase a house bearing no.B-204, Second Floor, Front Side, Double Storey, West Patel Nagar, New Delhi-110003 but they are facing paucity of funds, and requested the complainant to advance to them a friendly loan of Rs.6,30,000/-, in December, 2017. Their shortfall of funds being met after the complainant duly advanced them the loan of Rs.6,30,000/-, the accused and his mother purchased the aforementioned property. Both of them had agreed to repay the loan of complainant within 15 days from the date on which the loan was advanced to them. However, they avoided the repayment of the loan even after the expiry of the said period of 15 days, on one pretext or another. Finally, on 10.06.2018, after a lot of persuasion, the accused issued the cheque bearing no.209162 drawn on Union Bank of India, Patel Nagar Branch, Delhi dated 10.06.2018 for a sum of Rs.6,30,000/- in favour of the complainant, towards the repayment of the amount of friendly loan (hereinafter, 'the cheque in question'). The cheque in question was issued by accused with the assurance that it shall be duly honoured upon presentation. However, to the utter shock and dismay of the complainant, the said cheque in question was  dishonoured vide cheque returning memo dated 25.06.2018 with remarks 'payment stopped by drawer'. A statutory legal demand notice dated 05.07.2018 was served upon the accused by the complainant. When the accused failed to repay the cheque amount even after expiry of the 15 days from the date of service of legal notice, the above captioned complaint was filed by the complainant seeking the summoning, trial and conviction of the accused for the offence punishable u/s.138 N.I. Act. It is the case of the complainant that instant complaint has been filed within the period of limitation as per Section 142 if the N.I. Act, and the territorial jurisdiction to try the present complaint vests with this court.

 

# 2. In her pre-summoning u/s.200 CrPC, the complainant examined herself as CW-1. CW-1 tendered her evidence affidavit Ex.CW1/1, bearing her signatures at point A & B respectively. The contents of the affidavit are a reiteration of the contents of the complaint, and are not being reproduced herein in the interest of brevity. At this stage, complainant also relied upon the following documents: -

• (i) Cheque bearing no. 209162 Ex CW-1/A

• (ii) Cheque return memo qua cheque Ex CW-1/A being Ex CW1/B

• (iii) Legal Notice Ex.CW1/C

• (iv) Speed Post Receipts Ex CW1/D

• (v) Internet generated tracking report Ex.CW1/E

• (vi) Reply qua legal notice Ex.CW1/F

Upon examination of pre-summoning evidence and after hearing the complainant on the point of summoning, cognizance of the offence punishable U/s.138 N.I. Act with respect to the cheque in question was taken against the accused, who was summoned to face trial.

 

# 3. The accused duly entered appearance to face trial. Formal notice u/s.251 CrPC was served upon the accused. By way of the said notice, substance of accusation, as contained in the complaint, against him was explained to the accused and the accused was given an opportunity to substantiate his plea of defence. At this stage, the accused pleaded not guilty, and stated that he had obtained a loan of Rs.2,50,000/- from Sanjeev Nagpal, brother of the complainant and had issued cheque in question against the said loan. The accused admitted the receipt of legal demand notice. The accused further stated that the he has no legally enforceable liability towards the complainant.

 

# 4. Thereafter, consequent to the application of the accused u/s.145(2) N.I. Act, which was allowed as unopposed by the complainant, the accused was permitted to cross-examine the complainant and the matter was fixed for C.E.

 

# 5. At the stage of C.E., the complainant examined herself as CW-1. In her examination-in-chief, the complainant adopted her pre-summoning evidence as her post-summoning evidence and also placed reliance upon documents already exhibited as Ex.CW-1/A to Ex.CW-1/F. CW-1 was cross-examined by the accused at length and thereafter, discharged as a witness.

 

# 6. No other witnesses were examined by the complainant and C.E. was closed.

 

# 12. After cross-examination of DW-3, he was discharged as witness and hearing of the case progressed to final arguments.

 

# 13. Final arguments have been heard by this court. Record, including written arguments filed by the parties, has been perused. In the written arguments (including additional written arguments), complainant has relied upon the following judgments: -

• (i) Sripati Singh Vs. The State of Jharkhand & Anr. (Crl. Appeal No.1269-1270/21) 2021 latest case law 531 SC

• (ii) APS Forex Services Pvt. Ltd. Vs. Shakti International Fashion Linkers & Ors. (Crl. Appeal No.271/2020)

• (iii) Sama Dharam & Ors. Vs. S. Narajan in Crl. O.P.(MD) No.3824/2012 of the Hon’ble Madras High Court

Ld. Counsel for the accused has placed reliance on the following judgments: -

• (i) Baslingappa Vs. Mudhibasappa (2019) 5 Supreme Court Cases 418 (Crl. Appeal No.636/2019; 09.04.2019)

• (ii) Kulvinder Singh Vs. Kafeel Ahmed 2013 II AD (Delhi) 81 (Crl. L.P. No.478/2011; 04.01.2013

Considered.

 

# 14. It would be apposite at the stage to briefly discuss law applicable to the defence of dishonour of cheques. . The legal position that emerges, from a reading of S.138 N.I. Act, is that before finding of conviction with the offence punishable under Section 138 N.I. Act can be returned against the accused, it has to be established, cumulatively-

• (i) that the cheque in question was issued by the accused in favour of the complainant for the discharge of legally enforceable liability. 

• (ii) presentation of the cheque to the bank within three months from the date on which it is drawn or within the period of its validity, whichever is earlier;

• (iii) a demand being made in writing by the payee or holder in due course by the issuance of a notice in writing to the drawer of the cheque within thirty days of the receipt of information from the bank of the return of the cheques; and

• (iv) the failure of the drawer to make payment of the amount of money to the payee or the holder in due course within fifteen days of the receipt of the notice.

 

The legal position was discussed by the Hon’ble Supreme Court of India in MSR Leathers vs. S. Palaniappan (2013) 1 SCC 177 , wherein it was held thus,

• “12. The proviso to Section 138, however, is all important and stipulates three distinct conditions precedent, which must be satisfied before the dishonour of a cheque can constitute an offence and become punishable. The first condition is that the cheque ought to have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The third condition is that the drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an offence under Section 138 can be said to have been committed by the person issuing the cheque.”

 

This court shall now examine if the four ingredients as described in the forgoing paragraph have been satisfied in this case.

 

# 15.  . . . . .Further, no evidence has been adduced on record by the accused to show that account in which the cheque was presented did not belong to the complainant. By virtue of Section 146 of NI Act, this Court is bound to presume the fact that the cheque was dishonoured for the reason mentioned in the returning memo, and this presumption has also not been dislodged by the accused. An objection which is purely technical in nature, since neither the issuance of cheque nor its dishonour ave been controverted, cannot be allowed to prevail over merits, especially as it is  evident from the record that the cheque was rightly presented by the complainant with her own banker, albeit in a joint bank account. As such, the objection taken by the accused is liable to be rejected. In the considered opinion of this court, the complainant as proved on record that the cheque in question was presented by the complainant  with her bank for encashment within the period of its validity. Accordingly, the condition no.(ii) above stands satisfied.

 

# 16. It is the case of the complainant that she had sent legal notice Ex.CW1/C to the accused, within 30 days of the receipt of knowledge of the dishonour of cheque. The accused has not disputed that the legal notice was served upon him within the statutory period of limitation. Infact, the accused has relied upon the reply to the said ice Ex.CW1/F which was sent by him to the complainant. In view thereof, condition no.(iii) above stands satisfied.

 

# 17. Throughout the trial, the accused has taken the defence that although the cheque in question bears his signatures, the same has not been issued by him to the complainant in discharge of any legally enforceable liability. The accused has axiomatically admitted that he did not pay the amount of cheque in question to the complainant even after the expiry of 15 days from the date of receipt of legal notice. Accordingly, the condition no.(iv) above also stands satisfied.

 

# 18. Now it remains to be seen if the cheque in question Ex.CW1/A was issued by the accused to the complainant in discharge of legally enforceable liability, in satisfaction of condition no.(i) above.

 

# 19. At this stage, it becomes imperative to mention Section 139 of the Negotiable Instrument Act, 1881 which carves out a presumption in favour of the drawee that the cheque was issued to him in discharge of a debt or other liability of a legally enforceable nature. Also, the said provision must be read along with Section 118 of the same enactment which spells out another presumption in favour of the drawee that every negotiable instrument was drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.

 

# 20. The first point of determination is as to whether presumption u/s.139 N.I. Act R/w Section 118 N.I. Act can be raised against the accused. In the considered opinion of this Court, such presumption can be duly raised against the accused as he has admitted his signatures on the cheque in question, and has also admitted that the particulars on the same were filled by him.

 

# 21. The offence of Section 138 NI Act being premised on the theory of reverse onus of proof, the next point of determination is whether the accused has been able to discharge the onus of proof placed upon him. The journey of trial qua a complaint under Section 138 NI Act commences, after a determination is made that the presumption as per Section 139/118 Negotiable Instruments Act, 1881, can be raised  against the accused, from the point of the accused who is required to prove that the cheque in question was not given for a consideration or for the discharge of any legally enforceable debt. In this regard, reliance can be placed on Hiten P. Dalal Vs. Bratindranath Banerjee (2001) 6 SCC 16 wherein it was held as under: -

• "22. Because both Sections 138 and 139 require that the Court `shall presume' the liability of the drawer of the cheques for the amounts for which the cheques are drawn, ..., it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption has been established. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused. Such a presumption is a presumption of law as distinguished from a presumption of fact which describes provisions by which the court may presume a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable probability of the nonexistence of the presumed fact.

• 23. In other words, provided the facts required to form the basis of a presumption of law exists, the discretion is left with the Court to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man."

 

In the backdrop of the legal position enunciated above, it is to be examined whether the accused, on a scale of preponderance of probabilities, has led evidence sufficient to discredit the case of the complainant so as to shift the onus placed upon him to the complainant. As held by the Hon’ble Supreme Court of India in Kumar Exports vs Sharma Carpets (2009)2 SCC 513, the accused can either prove the non-existence of consideration and debt by direct evidence, or by bringing on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man may act upon the plea that they did not exist. If this Court comes to the conclusion that the accused has not been able to rebut the presumptions raised against him, by failing to bring on record direct evidence or by even failing to sufficiently perforate the case of the complainant, the complainant is entitled to a decision in her favour.

 

# 22. . . . . the case of the accused that he had given the cheque in question to Sanjeev Nagpal as security towards repayment of the loan amount of Rs.6 lakhs, which amount was never actually advanced to him, appears implausible and unbelievable. At this juncture, it is instructive to also advert to the consistent stand taken by DW1/accused right from the stage when the notice under section 251 CrPC was served upon him to the effect that the particulars on the cheque in question were filled in by him. If the cheque in question had indeed been intended as a security cheque towards repayment of the loan amount which Mr Sanjeev Nagpal had promised to advance to him, the fact that the accused has offered no explanation as to why he had made out the cheque in the name of the complainant and not Mr Sanjeev Nagpal is also a strong circumstance against him. In this regard, an explanation has not even been attempted, much less  substantiated. Credibility of DW1 also becomes unreliable in view of his slippery assertion during his examination in chief that he does not know the complainant, and later in his cross examination that he knows her for long. Vaguely deposing that he does not know how the cheque in question came in possession of the complainant, after admitting that he had filled the particulars thereupon, also makes his version dubious. Bald averments and affirmations, even if on oath, do not help the case of the accused.

 

# 23. The testimony of DW 2 also does not help the case of the accused. In her examination in chief, DW2 has deposed that her son had taken a loan of Rs.6 lakhs from Sanjeev Nagpal, and Sanjeev Nagpal had told her son that the remaining loan amount would be given to him in a few days time. DW2 has not deposed that she was present at the time when the alleged loan transaction took place between her son and the said Sanjeev Nagpal, which makes her version questionable. DW2 has also not elaborated on the proposed schedule in which Sanjeev Nagpal had agreed to advance the remaining loan amount to her son, or the reason why her son had given him a cheque amounting to Rs.6,30,000/-. DW2 further deposed in her examination in chief that the cheque in question was not given by the accused to the complainant but to Sanjeev Nagpal, but much like the accused, she has also failed to offer any explanation as to why the cheque in question was made out in the name of the complainant by the accused. The testimony of DW 2, replete with such lacunae, is also unreliable

 

# 25. The accused took the stand all along that he had obtained a loan of Rs ,50,000/- from the brother of the complainant, Sanjeev Nagpal, but he was not  examined as a witness by the accused. The evaluation of the testimonies of the above witnesses as well as the aforementioned circumstance clearly establishes that the ccused has not been successful in proving his defense in the affirmative.  

 

# 26. Now this court shall examine if the accused has been able to dislodge the presumption against him under section 139 of the NI Act, by perforating the case of the complainant.

 

# 27. It has been the case of the complainant that she loaned an amount of Rs.6,30,000/- to the accused and his mother, so that they could purchase a property. It is further the case of the complainant that she was promised the repayment of the loan amount at the time when the mother of the accused would get paid her alimony amount, after the conclusion of her divorce proceedings. In his cross-examination as DW1, DW-1/accused was confronted with a document Ex DW 1/CW1A, being the document of the purchase of a property by the mother of the accused on 28 December 2017. This document has been admitted by the accused, and his mother DW2, also admitted that they have been living in the said house. The date of the purchase of the document property also coincides with the date on which the alleged loan was advanced by the complainant to the accused. DW1 has further admitted that his mother obtained a divorce in 2018. When asked if his mother received an amount of

7,25,000/- as alimony, DW1 simply replied that he does not is not in a position to either affirm or deny the said fact. Weak, inconsistent answers as these shake the credibility of DW1 as a witness., and lend credibility to the version of the complainant on the other hand.

 

# 28. In her testimony as DW-2, the mother of the accused also stated that she does not know the amount of alimony which was received by her. She accepted as correct the suggestion that she had purchased a flat bearing number B204 W. Patel Nagar in January 2018. The fact the the mother of the accused admitted that she had indeed purchased a property in January 2018 substantiates the case of the complainant. Further, the very fact that DW 2 deposed that she does not remember the date of her divorce, and also does not remember the amount of the alimony received by her is a factor to be considered against the credibility of the witness herself, being suggestive of the fact that she deliberately gave vague answers to the questions put to her in cross examination. Examination of the testimony of DW1 and DW2 leads this Court to the conclusion that their testimony in fact supports the case of the complainant, of her loaning the money to the accused and his mother so that they could purchase a house, on the assurance that her loan will be repaid when DW-2 receives the amount of her alimony in her divorce proceedings.

 

# 32. An attractive argument was raised by the accused to the effect that in the legal notice as well as in her cross-examination, the complainant has admitted that the money was in fact loaned by her to Lata Bhola and not to the accused, and she had also received assurance from the said Lata Bhola, who is the mother of the accused, that she shall be repaid the loan amount after she receives money in her divorce proceedings. It was argued that this circumstance shows that even if it is conceded that the complainant advanced the amount of Rs.6,30,000/-, the best case of the complainant would be that this amount was due to the complainant by the mother of the accused, namely Lata Bhola, and not the accused himself. It was argued that this part of the testimony of the complainant shows that there is no legal liability of the accused towards the complainant qua the cheque in question, and therefore the accused deserves to be acquitted for the offence punishable under section 138 NI Act with respect to the cheque in question. As attractive as the argument may seem, it does not find favour with this court. Bare perusal of the statutory provision of Section 138 NI Act reveals that it makes punishable the dishonour of a cheque issued by the accused in favour of the complainant for the discharge of a debt or ‘other liability’ Explanation to 138 also provides that debt or liability means legally enforceable debt or other liability. The reliance by the complainant, to counter this argument, in the additional written statements upon the judgment titled Sama Dharam (supra) seems misplaced, as the said Judgment does not have any nexus with the facts of the present case. Be that as it may, in the considered opinion of this court, the words ‘other liability’ or of wide amplitude, and can subsume within themselves the scenario such as the one in the present case where a son has issued a cheque in discharge of the liability of his mother. Reliance at this juncture can be placed upon the judgment of the Hon’ble High Court of Delhi titled Pratap Singh Yadav And Anr. vs Atal Behari 2003 CriLJ 705, 100 (2002) DLT 673, 2003 (66) DRJ 101 wherein it has been held that criminal liability can be fastened upon the person who has issued a cheque in discharge of a liability of another. This Court is further fortified in its opinion by virtue of the dictum of the Hon'ble Supreme Court of India in the case titled as I.C.D.S. Ltd. vs. Beena Shabeer [2002 (4) Crimes 75 (SC)] wherein it has been held,

• “The language, however, has been rather specific as regards the intent of the legislature. The commencement of the Section stands with the words "Where any cheque". The above noted three words are of extreme significance, in particular, by reason of the user of the word "any" the first three words suggest that in fact for whatever reason if a cheque is drawn on an account maintained by him with a banker in favour of another person for the discharge of any debt or other liability, the highlighted words if read with the first three words at the commencement of Section 138, leave no manner of doubt that for whatever reason it may be, the liability under this provision cannot be avoided in the event the same stands returned by the banker unpaid. The legislature has been careful enough to record not only discharge in whole or in part of any debt but the same includes other liability as well.”

 

In view of the legal position discussed above, even if it is conceded that the loan was advanced by the complainant only to the mother of the accused and not to the accused and his mother together, the cheque issued by the accused can still be construed to be issued in discharge of “any other liability”, and the accused cannot avoid penal consequences of the dishonour of the cheque merely because the loan amount was not advanced to him by the complainant. This argument of the accused is also accordingly repelled.

 

# 33. Finally, the argument of the accused that there was no document or loan agreement executed to evidence loan transaction is a circumstance which should be construed in favour of the accused, so as to entitle him to an acquittal is also liable to be rejected. The offence punishable under section 138 NI Act is premised on theory of reverse onus of proof, and the complainant was not required, as she would have been required in a civil trial of recovery perhaps, to prove a loan transaction, as she had a valid cheque in question made in her favour by the accused. With the presumptions stacked against him, the first order of business required the accused to plug loopholes in the case of the complainant, and only thereafter would the requirement for the complainant to prove her case beyond reasonable doubt have arisen. As it was upon the accused to dislodge the presumptions attached the the cheque in question, and as he has been unable to do so, the case of the complainant stands.

 

# 34. For the reasons mentioned in the foregoing paragraphs, this Court has reached the conclusion that the accused failed both in establishing the version that he had set forth in the affirmative, and in perforating the case of the complainant and dislodging the presumptions of Sections 139/118 NI Act stacked against him. The accused Satyam Bhola, S/o Pankaj Bhola is accordingly convicted for the offence punishable u/s 138 NI Act with respect to the cheque in question.

 

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