SCI (23.09.2021) In Triyambak S.Hegde Vs. Sripad. [Criminal Appeal Nos. 849-850 of 2011] held that;
Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
However, the legal position relating to presumption arising under Section 118 and 139 of N.I. Act on signature being admitted has been reiterated. Hence, whether there is rebuttal or not would depend on the facts and circumstances of each case.
the gravity of complaint under N.I. Act cannot be equated with an offence under the provisions of the Indian Penal Code, 1860 or other criminal offences.
Excerpts of the order;
# 1. The appellant is before this Court assailing the common order dated 01.12.2009 in Criminal Revision Petition No.1282/2006 connected with Criminal Revision Petition No.1481/2006 passed by the High Court of Karnataka. Through the said order the learned Single Judge has allowed Criminal Revision Petition No.1282/2006 filed by the respondent herein. The Criminal Revision Petition No.1481/2006 filed by the appellant herein has been dismissed. Consequently, the conviction of the respondent, ordered by the learned Judicial Magistrate and affirmed by the learned Session Judge is set aside.
# 2. The case of the appellant is that the respondent who was known to him for the past few years approached the appellant and informed that due to his financial difficulty he intends to sell the house situate in Sirsi town. The appellant agreed to purchase the same for the negotiated total sale consideration of Rs.4,00,000/( Rupees four lakhs only). An agreement dated 06.06.1996 was executed by the respondent while receiving the advance amount of Rs.3,50,000/(Rupees three lakhs fifty thousand only). Subsequently, when the appellant made certain enquiries, he learnt that the house stood in the name of the father of the respondent and the respondent did not have the authority to sell the same. In that view, the appellant demanded the return of Rs. 3,50,000/(Rupees three lakhs fifty thousand only) which he had paid as the advance amount. The respondent instead of paying the entire amount, issued a cheque dated 17.05.1998 for the sum of Rs. 1,50,000/( Rupees one lakh fifty thousand only) being part of the amount. The appellant presented the cheque for realisation on 20.05.1998 when it came to be dishonoured with the endorsement ‘insufficient Funds’.
# 3. The appellant therefore got issued a notice informing the respondent about the cheque being dishonoured and also demanding payment of the cheque amount. The respondent, though received the notice, failed to respond to the same. In that view, the appellant filed a complaint under Section 200 of the Criminal Procedure Code (for short ‘CrPC’) on 14.07.1998 in the Court of the Judicial Magistrate, First Class (for short ‘JMFC’) at Sirsi which was registered as Criminal Case No.790/2000. Through the said complaint the appellant sought prosecution of the respondent under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘N.I. Act’). The learned JMFC after providing opportunity to both the parties convicted the respondent through the judgment dated 09.06.2005 for the offence punishable under Section 138 of the N.I. Act; sentenced the respondent to undergo simple imprisonment for six months and to pay the fine of Rs. 2,00,000/( Rupees two lakhs only). In default of payment of the fine amount, the accused was ordered to undergo simple imprisonment for a further period of three months. Out of the fine amount, Rs. 1,95,000/( Rupees one lakh ninety five thousand only) was ordered to be paid to the appellant as compensation.
# 4. The respondent herein claiming to be aggrieved by the said judgment dated 09.06.2005 passed by the JMFC, filed an appeal before the District & Sessions Judge, Uttara Kannada, Karwar in Criminal Appeal No.57/2005. The appellant herein also filed an appeal in Criminal Appeal No.65/2005 before the District and Sessions Judge seeking that the sentence imposed on the respondent by the Learned JMFC be enhanced, as the compensation of Rs. 1,95,000/( Rupees one lakh ninety five thousand only) ordered to be paid to the appellant is insufficient. The learned Sessions Judge having reexamined the matter and on reassessing the evidence dismissed both the appeals through separate judgments both dated 22.04.2006. The respondent herein, in that view, filed the Revision Petition in Criminal Revision Petition No.1282/2006 and the appellant herein filed the connected Revision Petition No.1481/2006 before the High Court. The learned Single Judge, as noted has allowed the Revision Petition filed by the respondent herein and set aside the conviction order passed by the learned JMFC, which had been confirmed by the learned Sessions Judge. It is in that background, these appeals have arisen for consideration.
# 7. In that background, the learned JMFC on taking note that the signature on the agreement dated Exhibit P6, more particularly on the cheque at Exhibit P2 being admitted, it raised presumption under Section 118 and 139 of the N.I. Act, which had not been rebutted. Therefore, the learned JMFC convicted the respondent. As noted, the learned Sessions Judge on re-appreciating the evidence had confirmed the conviction and sentence. The respondent however put forth the contention in the Revision Petition only at the time of argument, that the appellant did not pay the amount but his signature had been secured on the cheque (Exhibit P2) and the agreement (P6) under peculiar circumstances. It was contended on his behalf that he was a party to a case in the Court of the Civil Judge, Sirsi wherein he had engaged the services of an advocate by name Mr. Rama Joshi. It was his further case that Mr. Vishwanath Hegde who is the junior of Mr. Rama Joshi happens to be the relative of the appellant herein. He, thus being in a dominant position had obtained the signature.
# 8. The learned Single Judge having accepted the said contention which was raised in the Revision for the first time during arguments proceeded to hold that the appellant had not discharged the burden of proving that he had paid Rs. 3,50,000/( Rupees three lakhs fifty thousand only) to the respondent and that the cheque had been issued towards payment of a part of the same. The learned Single Judge was also of the opinion that the agreement at Exhibit P6 cannot be believed, as well.
# 11. From the facts arising in this case and the nature of the rival contentions, the record would disclose that the signature on the documents at Exhibits P6 and P2 is not disputed. Exhibit P2 is the dishonoured cheque based on which the complaint was filed. From the evidence tendered before the JMFC, it is clear that the respondent has not disputed the signature on the cheque. If that be the position, as noted by the courts below a presumption would arise under Section 139 in favour of the appellant who was the holder of the cheque. Section 139 of the N.I. Act reads as hereunder: “
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 section 138 for the discharge, in whole or in part, of any debt or other liability.”
# 12. Insofar as the payment of the amount by the appellant in the context of the cheque having been signed by the respondent, the presumption for passing of the consideration would arise as provided under Section 118(a) of N.I. Act which reads as hereunder: “
118. Presumptions as to negotiable instruments – Until the contrary is proved, the following presumptions shall be made:
(a) of consideration – that every negotiable instrument was made or 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.”
# 13. The above noted provisions are explicit to the effect that such presumption would remain, until the contrary is proved. The learned counsel for the appellant in that regard has relied on the decision of this court in K. Bhaskaran vs. Sankaran Vaidhyan Balan & Anr.(1999) 7 SCC 510 wherein it is held as hereunder: “
9. As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid presumption. The Trial Court was not persuaded to rely on the interested testimony of DW1 to rebut the presumption. The said finding was upheld by the High Court. It is not now open to the accused to contend differently on that aspect.”
# 14. The learned counsel for the respondent has however referred to the decision of this Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 wherein it is held as hereunder:
“25. We having noticed the ratio laid down by this Court in the above cases on Sections 118 (a) and 139, we now summarise the principles enumerated by this Court in following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence.
26. Applying the preposition of law as noted above, in facts of the present case, it is clear that signature on the cheque having been admitted, a presumption shall be raised under Section 139 that the cheque was issued in discharge of debt or liability. The question to be looked into is as to whether any probable defence was raised by the accused. In cross examination of PW1, when the specific question was put that cheque was issued in relation to loan of Rs.25,000 taken by the accused, PW1 said that he does not remember. PW1 in his evidence admitted that he retired in 1997 on which date he received monetary benefit of Rs.8 lakhs, which was encashed by the complainant. It was also brought in the evidence in the evidence that in the year 2010, the complainant entered into a sale agreement for which he paid an amount of Rs.4,50,000 to Balana Gouda towards sale consideration. Payment of Rs.4,50,000 being admitted in the year 2010 and further payment of loan of Rs.50,000 with regard to which Complaint No.119 of 2012 was filed by the complainant, copy of which complaint was also filed as Ext. D2, there was burden on the complainant to prove his financial capacity. In the year 2010-2011, as per own case of the complainant, he made payment of Rs.18 lakhs. During his cross examination, when financial capacity to pay Rs. 6 lakhs to the accused was questioned, there was no satisfactory reply given by the complainant. The evidence on record, thus, is a probable defence on behalf of the accused, which shifted the burden on the complainant to prove his financial capacity and other facts.”
# 16. On the position of law, the provisions referred to in Section 118 and 139 of N.I. Act as also the enunciation of law as made by this Court needs no reiteration as there is no ambiguity whatsoever. In, Basalingappa vs. Mudibasappa (supra) relied on by the learned counsel for the respondent, though on facts the ultimate conclusion therein was against raising presumption, the facts and circumstances are entirely different as the transaction between the parties as claimed in the said case is peculiar to the facts of that case where the consideration claimed to have been paid did not find favour with the Court keeping in view the various transactions and extent of amount involved. However, the legal position relating to presumption arising under Section 118 and 139 of N.I. Act on signature being admitted has been reiterated. Hence, whether there is rebuttal or not would depend on the facts and circumstances of each case.
# 18. The Learned Single Judge however while accepting the said story has referred to certain discrepancies in the agreement (Exhibit P6) relating to the details of the property and the appellant having admitted with regard to not having visited the property or having knowledge of the location of the property. Such consideration, in our opinion, was not germane and was beyond the scope of the nature of litigation. The validity of the agreement in the manner as has been examined by the learned Single Judge may have arisen if the same was raised as an issue and had arisen for consideration in a suit for specific performance of the agreement. The decision in K. Chinnaswamy Reddy vs. State of Andhra Pradesh and Anr. AIR 1962 SC 1788 relied on by the learned counsel for the respondent would not be of assistance in the present facts. Firstly, in the said decision this Court has expressed the limited power available to the High Court in Revision Petition. Even otherwise, we have disapproved the manner in which the learned Single Judge has proceeded to examine the matter on contentions which were not raised as a foundation before the Trial Court. In the instant case, the said agreement (Exhibit P6) had been relied upon only to the limited extent to indicate that there was a transaction between the parties due to which the amount to be repaid had been advanced. To that extent the document had been proved in evidence and such evidence had not been discredited in the cross examination.
# 21. . . . . .Further, as observed by this Court in Kaushalya Devi Massand vs. Roopkishore Khore (2011) 4 SCC 593, the gravity of complaint under N.I. Act cannot be equated with an offence under the provisions of the Indian Penal Code, 1860 or other criminal offences. In that view, in our opinion, in the facts and circumstances of the instant case, if an enhanced fine is imposed it would meet the ends of justice. Only in the event the respondent accused Not taking the benefit of the same to pay the fine but committing default instead, he would invite the penalty of imprisonment. Hence, appropriate modification is made to the sentence in the manner as indicated hereinbelow:
# 22. For all the aforestated reasons, the following order;
(i) The order dated 01.12.2009 passed by the High Court in Criminal Revision Petition No.1282/2006 and 1481/2006 are set aside.
(ii) The conviction ordered in C.C. No.790/2000 by the learned JMFC is restored.
(iii) The sentence to undergo simple imprisonment for six months and fine of Rs.2,00,000/(
Rupees two lakhs only) is however modified. The Respondent/Accused is instead sentenced to pay the fine of Rs. 2,50,000/(Rupees two lakhs fifty thousand only) within three months. In default of payment of fine the Respondent/Accused shall undergo simple imprisonment for six months.
(iv) From the fine amount, a sum of Rs. 2,40,000/( Rupees two lakhs forty thousand only) shall be paid to the Appellant/Complainant as compensation.
(v) The Appeals No.849850/ 2011 are accordingly allowed in part.
(vi) The pending applications, if any, stand disposed of.
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