Ramappa S. vs Venkataraman

K.N. Phaneendra, J.—The appeal is preferred against the Judgment of acquittal passed by the Principal Civil Judge (Jr. Dvn.) and J.M.F.C., Bhatkal in C.C. No. 1093/2003 dated 18th March 2009 for the offence punishable u/s 138 of Negotiable Instruments Act.

Though the respondent served with the notice issued by this Court he remained absent and not represented.

The learned Counsel for the appellant argued before this Court and contended that the Trial Court has not properly appreciated the materials on record and erroneously held that the presumption u/s 139 of the Negotiable Instruments Act is rebutted by the accused and thereby acquitted the accused. The learned Counsel strenuously contended that the accused has not replied the legal notice issued by the complainant u/s 138 of N.I. Act nor led any defence evidence in order to prove the defence taken up by him. But the Trial Court has wrongly recorded the finding that the defence taken up by the accused is reasonable and plausible, therefore, he is entitled to be acquitted The learned Counsel also contended that in this particular case the presumption u/s 139 of N.I. Act is a mandatory presumption and the same has to be rebutted by means of convincing and cogent evidence by the accused. Therefore, he contended that the judgment of the Trial Court is liable to be set aside and the accused is liable to be convicted for the offence punishable u/s 138 of N.I. Act.

Before adverting to the factual matrix of this case, it is just and necessary to bear in mind two decisions of the Hon''ble Supreme Court between Govindaraju @ Govinda Vs. State by Sriramapuram P.S. and Another, the Hon''ble Supreme Court has laid down certain principles i.e. to say:

It is a settled legal proposition that in exceptional circumstances, the appellate Court, for compelling reasons, should not hesitate to reverse a judgment of acquittal passed by the Court below, if the findings so recorded by the Court below are found to be perverse, i.e. if the conclusions arrived at by the Court below are contrary to the evidence on record, or if the Court''s entire approach with respect to dealing with the evidence is found to be patently illegal, leading to the miscarriage of justice, or if its judgment is unreasonable and is based on an erroneous understanding of the law and of the facts of the case. While doing so, the appellate Court must bear in mind the presumption of innocence in favour of the accused, and also that an acquittal by the Coun below bolsters such presumption of innocence.

In another decision reported in Govindaraju @ Govinda Vs. State by Sriramapuram P.S. and Another, the Hon''ble Supreme Court held that:

Innocence of accused-Presumption: a person is presumed to be innocent till proved guilty and once held to be not guilty of a criminal charge, he enjoys the benefits of such presumption which could be interfered with by the Courts only for compelling reasons and not merely because another view was possible on appreciation of evidence. The element of perversity should be traceable in the findings recorded by the Court, either of law or of appreciation of evidence. The Legislature in its wisdom, unlike an appeal by an accused in the case of conviction, introduced the concept of leave to appeal in terms of Section 378 Cr.P.C. This is an indication that appeal from acquittal is placed at a somewhat different footing than a normal appeal.

Now, in the above said background, the Court has to appreciate the materials on record and find out whether the judgment of the Trial Court is perverse, illegal or capricious and the Trial Court has committed any serious error in appreciating the materials on record and in acquitting the accused.

The factual background of the case are that, the complainant one Mr. Ramappa (appellant) filed a complaint u/s 200 of Cr.P.C. against the accused (respondent herein) for the offence punishable u/s 138 of N.I. Act. The brief case of the complainant is that, on 02.08.2002 the accused borrowed a hand loan of Rs. 20,000/- and for repayment of the said amount he has issued a cheque. No. 514935 of Kanara District Central Co-Operative Bank Ltd., Bhatkal dated 24.10.2002. On presentation of the said cheque on 28.10.2002 the same was returned with an endorsement that "funds insufficient". A notice was also issued u/s 138 of N.I. Act on 01.11.2002. Though the said notice was served on the accused on 07.11.2002 he did not replied or complied the said notice. Therefore, a complaint was filed before the Trial Court on 29.11.2002.

So far the legal requirement as contemplated u/s 138 of N.I. Act is concerned is not at all questioned by the accused before the Trial Court. The Trial Court in fact has framed two points after appearance of the accused and after recording his plea which are as follows:

Whether the complainant beyond all reasonable doubt proves that the accused has issued cheque in dispute for the discharge of legal debt?

Whether the complainant beyond all reasonable doubt proves that he has complied the provisions of Sec. 138(a) to 138(c) of the Negotiable Instruments Act?

So far as point No. 2 is concerned, the learned Magistrate answered in the Affirmative in favour of the complainant. Therefore, there is no need for this Court to again go into those aspects.

So far as the first point is concerned, the Court has to see whether the Trial Court has properly applying the legal provisions and also appreciated the evidence on record. It is needless to say that, in view of Section 139 of N.I. Act, the complainant is entitled for the initial presumption if the issuance of the cheque has not been denied by the accused and that the onus shall be on to the accused to prove his defence by means of preponderance of possibilities. The accused need not enter into the witness box in order to prove the defence taken up by him. However, the accused has to place sufficient materials to show that the mandatory presumption u/s 139 is successfully rebutted and the defence taken up by him is true and probable and has got capacity to preponder over the case of the complainant so as to put back the complainant to prove his case beyond all reasonable doubt.

In this background, on perusal of the judgment of the Trial Court, it is clear that the accused has not at all denied the issuance of the cheque but he has taken up the contention that the said cheque was issued to Sagar Finance for having taken loan from the said Sagar Finance and complainant is the Partner of the said Sagar Finance. But the said blank cheque was misused by the complainant putting the amount on the cheque and also presented the said cheque and lodged a false complaint against the accused. The Trial Court in fact, appreciated this particular fact held that the complainant though in his evidence admitted that the loan of Rs. 20,000/- was given in presence of his friends, none of the friends have been examined by the complainant to prove that the said amount was given to the accused. He has also admitted that he was a Partner of the Sagar Finance and he has been prosecuting the cheque bounce cases on behalf of the said Finance company before the Courts. Therefore, there are chances of he misusing the cheque of the accused. Therefore, the defence raised on behalf of the accused is probabilised and the same is sufficient to rebut the presumption.

The presumption raised in the case is not a presumption u/s 114 of N.I. Act which only gives a discretion to the Court that the Court may presume the existence of certain facts, but u/s 139 of N.I. Act it is a mandatory presumption which reads as follows:

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.

In a pronouncement of the Hon''ble Supreme Court between Rangappa Vs. Sri Mohan, has said 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. However, herein, there can be no doubt that there is an initial presumption which favours the respondent complainant. Section 139 is an example of 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 dishonour 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 to 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 possibilities". 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.

Now, the question arises whether mere denied by the accused is sufficient to rebut the presumption raised u/s 139 of N.I. Act. Though the defence of the accused has not been communicated to the complainant by way of any reply notice to the notice issued by the complainant u/s 138(b) of the N.I. Act. But such defence taken later has to be looked into by the Court in a proper perspective.

How the accused has to prove his defence is the question before several Courts including the Supreme Court. The Supreme Court in the above said cited case itself has narrated that if the accused is able to raise the probable defence which creates a doubt about the existence of legally enforceable debt or liability the prosecution can fail. But this defence of the accused also to be probabilised by means of placing sufficient materials before the Court to satisfy the Court that the presumption is successfully rebutted.

In this regard, it is worth to note here a decision of the Apex Court between Hiten P. Dalal Vs. Bratindranath Banerjee, wherein at paragraph 11 the Apex Court has in fact narrated how the presumption can be rebutted and what is the responsibility of the accused. The relevant portion reads as follows:

In the case of discretionary presumption if drawn may be rebutted by an explanation which "might reasonable by true and which is consistent with the innocence" of the accused. On the other hand in the case of a mandatory presumption "the burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under S. 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words ''unless the contrary is proved'' which occur in this provision make it clear that the presumption has to be rebutted by ''proof and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof the presumption created by the provision cannot be said to be rebutted.

Though the accused need not prove his defence beyond reasonable doubt and he need not enter into witness box to prove his case, nevertheless, he can prove the case on the other materials on record i.e. the admissions, circumstances establishing the case during the course of evidence of the complainant himself. Though in this particular case, the accused has not been examined himself, nevertheless, he has cross-examined the complainant. In the course of cross-examination of the complainant it is suggested that the accused had taken loan from Sagar Finance a sum of Rs. 10,000/- and issued some blank cheques as security towards the said loan transaction and it is out of those cheques the complainant has misused the disputed cheque. It is also suggested that the complainant has brought the case in his personal name because if the case is filed on behalf of the Finance Company the true facts would come out. It is suggested that the accused has never issued any cheque and therefore, the complainant cannot say the names of his friends in whose presence the said amount of Rs. 20,000/- was given to the accused. Except these suggestions nothing is there to prove the said defence before the Court. The said suggestions made to the complainant have been denied. Therefore, mere suggestions by the accused at any stretch of imagination can take the place of proof. Something more is required to establish that the accused has transacted with Sagar Finance and issued the said cheques in favour of Sagar Finance and the complainant being Partner of the said Finance has misused the said cheque in order to lay a false claim against the accused. Though the accused need not enter into witness box but defence of taking of the loan from Sagar Finance, issuing of the cheques in favour of Sagar Finance should be established before the Court by means of some convincing and cogent materials in order to satisfy the Court. Otherwise it will remain as mere suggestions of the accused without proof. This particular aspect, in my opinion has not properly appreciated by the Trial Court, which led to recording of an improper and erroneous acquittal judgment. On the basis of the materials on record, in my opinion, no Court can say that the presumption raised u/s 139 of N.I. Act has been successfully rebutted the accused. Therefore, the view taken by the accused is not based on any evidence on record. Therefore, the same is liable to be set aside.

Accordingly, I proceed to pass the following:

ORDER

The Judgment passed by the Trial Court in acquitting the accused is hereby set aside. Consequently, the accused/respondent herein is convicted for the offence punishable u/s 138 of Negotiable Instruments Act.

The cheque amount of Rs. 20,000/- which was advanced on 02.08.2002 already more than 12 years have been elapsed, therefore, I feel it just and necessary to impose double the amount of the cheque as fine to the accused. Hence, the accused is sentenced to pay a fine of Rs. 40,000/- and in default to undergo simple imprisonment for a period of six months.

Out of the fine amount of Rs. 40,000/- an amount of Rs. 35,000/- is awarded as compensation in favour of the complainant.

The Trial Court has to take action against the accused in order to see that the accused complies with the sentence passed by this Court.

Accordingly, the appeal is disposed of. The Office is hereby directed to send a copy of this order to the Trial Court along with the records.