In Re: Bee Pee Jay Finance Limited

Toufique Uddin, J.—This appeal arose out of judgment and order dated 28.6.2011 passed by the learned Metropolitan Magistrate, 10th Court, Calcutta in No. case No. C-408 of 2003 thereby finding the accused Opposite Party not guilty of charge for commission of offence punishable u/s 138 of the Negotiable Instruments Act, 1881 and acquitting him of the instant case. In the background of this appeal the fact in a nutshell is that the complainant is one of the leading finance companies in W. Ben. for financing taxis and two-wheelers. The accused is one of the partners of M/s. Andul Auto Centre. He entered into a business with the complainant and incurred a liability thereof for which he issued three cheques worth Rs. 1,50,000/- each. Those cheques have been subsequently dishonoured. The demand notice was issued to the accused but in vain.

The accused appeared. He was examined u/s 251 of the Code of Criminal Procedure. Substance of accusation was read over and explained to him. He pleaded not guilty and claimed to be tried.

The prosecution examined a solitary witness while the defence side examined none. However, the accused was examined u/s 313 of the Code of Criminal Procedure. The defence case was denial of offence with a plea of innocence.

On consideration of materials on record the learned Trial Court acquitted the accused person by the impugned judgment.

Now, the point for consideration is if the findings of the learned Court below suffer from any material irregularity and calls for any interference or not.

Section 138 of the Negotiable Instruments Act, 1881 reads as follows:

S. 138 - Dishonour of cheque for insufficiency etc. of funds in the account.--Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this Section shall apply unless-

(a) The cheque has 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,

(b) The payee or the holder in due course of the cheque, as the case may be, makes 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; and

(c) The drawer of such cheque fails to make the 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.

Explanation.--For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability.

Needless to mention that none appeared on behalf of the State of W. Ben. i.e. Opposite Party No. 1 here whereas the private opposite party contested.

It was argued inter alia by the learned counsel for the petitioner as follows:

i) The learned Magistrate completely misconstrued the provisions of section 138 of the said Act.

ii) The order of acquittal is based on assumptions and presumptions.

iii) The learned Magistrate failed to consider the purport of presumptions u/s 139 of the said Act.

iv) The learned Magistrate relied on the forwarding report dated 25.12.12 of the I.O. in section E Case No. 305 dated 22.12.02 wherein the factum of the withdrawal of the complaint by the petitioner company was stated. However, the learned counsel failed to appreciate that the I.O. had not been examined as witness on behalf of the prosecution or the defence and as such the statement of such Police Officer cannot be treated to be sacrosanct.

v) The learned Magistrate failed to appreciate that withdrawal of the complaint by the petitioner company did not immediately relieve to the conclusion that the Opposite Party No. 2 had paid his legal dues and liabilities of the petitioner company.

vi) Entering into memorandum of understanding did not lead to the presumption of all the legal debts and liabilities of the Opposite Party No. 2 against the petitioner company.

The learned Magistrate was not justified to come to a finding that the cheque dishonour of which has given rise to case No. C-408 of 2003 was not issued in dispute of legal debt or liability.

It was argued further by the learned counsel for the appellant that this is a fit case where the accused ought to have been convicted because the accused issued the cheques in satisfaction of legally enforceable debt and liability.

The learned counsel for the Opposite Party No. 2 argued strenuously that although there is a presumption against the issuance of cheque as regards the existence of liability of debt, yet the presumption is rebuttable and the other side has been successful in rebutting the presumption by the theory of "preponderance of probability". Hence, the learned Trial Court has rightly acquitted the accused persons.

Admittedly, the cheque Nos. 768422, 768423 and 768424 of Rs. 1.50 lacs each dt. 19.3.2003 were presented to the said bank of accused by the complainant through the Karur Vaishya Bank, Ram Sevak Road Br., Calcutta for encashment but those were dishonoured on the ground "not arranged for". The demand notice dated 22.3.2003 was served on 27.3.2003 but no payment has been done.

Section 139 of the N.I. Act has a close connection with section 138 of the said Act. Section 139 reads as follows:

S. 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.

To appreciate the case, some relevant pieces of evidence are required to be taken into consideration.

Regarding the service of notice and identity of the PW 1, the discussion done by the learned Trial Court settles the matter once for all in favour of the complainant although, much ado was created by the accused therein. The service of notice also appears to be satisfactory. Now, the question is whether the three cheques Ext. 2-series issued are against the discharge of liability or payment towards a debt.

In a criminal case, the prosecution is to prove the case beyond all reasonable doubts. Whereas in a case u/s 138 of the said Act the standard of proof to rebut the presumption taken out by the defence is not as strict as that of the prosecution. The accused is permitted to bank upon the materials on record furnished by the complainant to rebut the presumption as available u/s 138 of the said Act on the basis of circumstances available in terms of section 139 of the said Act. PW 1 stated that they had business transaction with one T.K. Pal, the proprietor of M/s. Andul Auto Centre and as such the accused person issued three cheques to discharge his liability in personal capacity to the extent of Rs. 150000/- each on 19.3.2003. What kind of business transaction they had has not been elaborated. Rather, the cross-examination of PW 1 shows that it is not mentioned in the complaint as regards what specific transactions the accused incurred liabilities. Further, he stated that he has no more documents to prove accused''s liability. Also, it appears from the evidence that the PW 1 has not produced any document in Court to prove that the accused owed Rs. 4.50 lacs to the complainant.

Needless to mention, that in place of the former Attorney Sri Surojit Sensharma, PW 1 has stepped in. It was suggested to the PW 1 with reference to some documents marked Ext. B collectively filed by the accused person that previously the Director of the complainant company one Mr. Harshabardhan Jhunjhunwala filed a cheating case against the accused being Jorasanko P.S. case No. 305 dated 22.11.2002 and in that case, the accused was arrested and thereafter he paid off the complainant company all dues and then Mr. Jhunjhunwala filed a petition stating that he had no objection against the discharge of the accused persons and accordingly, the accused was discharged therein. The chief contention of the accused was that whatever liability was there, he had paid in cash and in kind by transfer of land vide Ext. B-series. That cheating case was section E case No. 305 dated 22.11.2002 filed against the present accused and one Partha Das both being partners of M/s. Andul Auto Centre. An application was made by the complainant company on 24.10.2002 to the Deputy Commissioner of Police with the allegation that the accused persons had cheated the complainant company of appox. Rs. 10,31,330/- by inducing it to deliver 200 motorcycles amongst which several had been in the name of fictitious persons in respect of whom the accused had manufactured and forged the documents. On investigation, the I.O. stated that the accused and the other have already paid up a substantial portion of cash and rest in kind and further it transpires therefrom that the case as well the disputes has totally been settled between the de facto complainant and the accused persons outside the Court. Final report was submitted by Police with remark "mistake of fact" and that was accepted by the Court.

Now, again the petitioner has come up with a prayer that the petitioner is entitled to get Rs. 4.5 lacs from the accused and in discharge of that liability the accused has issued the three cheques in question. There is no clear cut evidence in respect of what kind of business or transaction the complainant is entitled to get Rs. 4.5 lacs from the Opposite Party No. 2. The complainant wanted to take out another story by stating that the company filed another case against the accused in the year 2003 being No. 409 for present liability. The complainant company in this regard raised the plea of some money receipts etc. and they took a chance to get those money receipts proved u/s 311 of the Code of Criminal Procedure in the Learned Court below but that was rejected and against such rejection the company did not move higher forum. So, the complainant''s claim so far as Rs. 4.5 lacs is concerned against the accused does not appear to have been established. PW 1 could not show clear documents to prove accused''s liability. Also it transpires that the date of MOU as stated in Ext. 4 is 11.12.2002 whereas a glance over Ext. B shows that the accused had remained in Police custody from 4.12.2002 to 17.12.2002. Then how MOU can be executed in respect of present claim during that period has also not been clear. The accused readily denied the signatures in the money receipts as claimed by the complainant. No attempt was taken for a comparison of his signatures.

It was contended by the learned counsel for the appellant that the accused in his personal capacity was required to pay such amount. Why and how the personal capacity of the accused is related here has not been cleared by the complainant.

In 313 Examination at Q. No. 4 the accused was asked that he issued three cheques amounting to Rs. 1.5 lacs each on 19.3.2003 being Sl. Nos. 768422, 768423 and 768424 in discharge of his liability and in reply thereto he stated that he has not issued those cheques and the handwritings and signatures thereon was not of his. At the same time, in this regard, the complainant did not take any steps to verify the signatures appearing on the cheques by any expert to show that those cheques were actually signed by the present accused persons. This is one of the aspects.

In Q. No. 5 the accused was asked that when the complainant presented the cheque for encashment those were dishonoured for insufficiency of fund. In reply, the accused stated that the complainant had made him sign on some cheques at the time of commencement of the business of auto and it kept them in its custody.

Presumption after issuance of cheques, it is true is that there is a liability. But practically speaking the evidence from the side of the complainant appears to be insufficient. Mere issuance of cheque by the accused only does not ipso facto proves that there is a debt or liability of the accused to the complainant. It creates only a presumption which is rebuttable. In support of the case of the complainant, the learned counsel cited before me a decision reported in Rangappa Vs. Sri Mohan, ] wherein the Hon''ble Apex Court held that the presumption mandated by section 139 includes a presumption that there exists a legally enforceable debt or liability. This is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. Section 139 is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonor of cheques, the rebuttable presumption u/s 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant-accused cannot be expected discharge an unduly high standard of proof.

The reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption u/s 139, the standard of proof for doing so is that of "preponderance of probabilities". Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.

The fact and circumstances of that case appears to be distinguishable for following reasons that i) there was a question of ''lost cheque theory'' and ii) here Opposite Party No. 2 raised a probable defence that there was no existence of a legally enforceable debt or liability.

On the other hand, the learned counsel for the Opposite Party No. 2 placed before me some decisions as reported in State of U.P. and Others Vs. Roshan Singh (Dead) by LRs. and Others, wherein the following principles were laid down which are as under:

A. Negotiable Instruments Act, 1881 - Section 139 - Presumption under - Scope of - Held, Section 139 merely raises a presumption in favour of holder of cheque that the said cheque has been issued for discharge of any debt or other liability - Existence of legally recoverable debt is not a matter of presumption u/s 139.

B. Negotiable Instruments Act, 1881 - Sections 138 and 139 - Dishonour of cheque - Presumption against accused - Rebuttal of - Mode of - Necessary considerations by Court - Stepping into the witness box by the accused, held, not imperative for said rebuttal - Question whether the presumption stood rebutted or not must be determined keeping in view the other evidence on record - Where chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration - Courts must be on guard to see that merely on the application of presumption as contemplated u/s 139, the same may not lead to injustice or mistaken conviction - Other principles of legal jurisprudence, namely, presumption of innocence as a human right and the doctrine of reverse burden introduced by section 139 should be delicately balanced - Such balancing acts would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same - Complaint filed under NI Act alleging that the complainant advanced a sum of Rs. 1.5 lakhs to the appellant and the latter on his own went to the house of the complainant to return the loan by an account payee cheque which got dishonoured when presented - Plea of appellant that his power-of-attorney holder (with whom appellant was having differences) mis-utilised his signed blank cheques through his relative, the complainant - Raising presumption u/s 139, NI Act, complainant''s case primarily accepted for the reason that the appellant did not step into the witness box - Trial Court not drawing any inference as to the probability of the complainant advancing a sum of Rs. 1.5 lakhs on mere presence of any witness - Purported story that the appellant would himself come forward to return the amount by a cheque knowing fully well that he did not have any sufficient funds was difficult to believe - Further, complainant did not say that he had friendship with appellant - No indication as to any business transactions between them - Complainant failed to produce any books of accounts or any other proof to show that he got so much money from Bank - Courts below failed to notice that ordinarily in terms of Section 269-SS, Income Tax Act, any advance taken by way of loan of more than Rs. 20,000 had to be made by an account payee cheque only - Considering the peculiar facts and circumstances of the case, held, courts below approached the matter on wrong application of the legal principles to the fact situation of the case - Hence, conviction and sentence set aside - Criminal trial - Evidence Act, 1872 sections 101, 103, 4 and 3.

An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. The Courts below committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts is not correct. Presumption of innocence of accused is a human right.

Also, the other decisions were cited by the learned counsel for the respondent viz. K. Prakashan Vs. P.K. Surenderan, Kamala S. Vs. Vidyadharan M.J. and Another, and John K. John Vs. Tom Varghese and Another, Principles of such decisions squarely apply to the case in hand.

Total consideration of the matter suggests that the accused-Opposite Party No. 2 has been able to create a preponderance of probability. Reliance may be placed on the decision reported in Bharat Barrel and Drum Manufacturing Company Vs. Amin Chand Payrelal, wherein it was held that if the defence is seen to have discharged the onus of proof showing that the existence of consideration was improbable or doubtful or even illegal, onus would shift to the complainant. The complainant failed to establish that as a private capacity the respondent is bound to pay Rs. 4.5 lacs in satisfaction of a legal enforcement debt or liability in a separate transaction. Rather, the respondent has showed that he alongwith his partner paid off the entire dues which has been admitted by the complainant. Moreover, there is no iota of evidence to come to the conclusion that Rs. 4.5 lacs is related with a separate transaction by and between the complainant and the accused.

This being the position, I am of the view that the findings of the learned Court below needs no interference.

Accordingly, there is no merit in this appeal and the same stands dismissed.

Let a copy of the judgment and the LCR be sent down to the learned Court below immediately. Urgent Photostat certified copies, if applied for, be supplied according to rules.