Susanta Saha vs State And Another

Subrata Talukdar, J

This Revisional Application, erroneously filed as an appeal (CRA 014 of 2018) and then renumbered as the present CRR 019 of 2019, challenges the judgement delivered on the 24th of August, 2018 in Criminal Appeal No.3 of 2017 affirming the judgment of conviction passed by the learned Trial Court convicting the Revisionist/the appellant/the accused (now simply called as R) under Section 138 of the Negotiable Instruments Act, 1881 (for short The NI Act).

Although, modifying the sentence of the learned Trial Court, being the Court of the learned Chief Judicial Magistrate (CJM) at Mayabunder, which had convicted R by judgment dated the 30th of June, 2015 in CR No.08 of 2013 (TR 434/2015) to a term of two years simple imprisonment (SI) and to pay a fine of Rs.4.00 lakhs (twice the amount of the cheque dishonoured), the learned Appellate Court found that since the transaction in issue took place on the 27th of April, 2011, considering the efflux of time the quantum of fine is found to be just and fair. However, the learned Appellate Court reduced the SI from two years to one year.

Mr.Chakraborty, learned counsel for R, raises before this Court two basic points.

First, that inspite of evidence, pleadings and arguments, both the learned Trial Court and the learned Appellate Court failed to perceive that from the record of the Bank (Exhibit 7 in the Trial), it is evident that out of the sum of Rs.2.00 lakhs allegedly transacted between the parties, the sum of Rs.1 lakh drawn from the Bank and purportedly given to R by the complainant/opposite party in this Revision (for short C hereinafter) on the 27th of April, 2011, no such amount was transacted by C with the Bank on the 27th of April, 2011. To the contrary, Exhibit 7, which show the Pass Book entries of C during the relevant period, point to the fact that the amounts of Rs.1.00 lakh each were withdrawn on the 30th of April, 2011, not on the 27th of April, 2011 or immediately prior thereto.

Mr.Chakbraborty therefore submits that if the amount of Rs.2.00 lakhs is shown to be withdrawn by C on the 30th of April, 2011, both the Courts forgot to notice that C could not have advanced R financial accommodation contingent upon withdrawal from the Bank on the 27th of April, 2011.

Second, Mr.Chakraborty submits that the evidence of DW.2, one Samir Mazumder, would show that far from being a witness to the transaction between C and R of the amount of Rs.2.00 lakhs, DW.2 states that he received Rs.1.00 lakh from C on the 27th of April, 2011 and thereafter kept the money with himself without handing over the money to R since there were pending transactions between C and DW.2.

Accordingly, Mr.Chakraborty submits that C has not been at all able to satisfactorily prove that the said amount of Rs.2.00 lakhs actually reached R. It could not be conclusively proved either that the said amount reached R on the 27th of April, 2011 as per C's complaint. Learned counsel points out that both the learned Trial Court and the learned Appellate Court ought to have noticed that the rebuttable presumption under Section 139 of The NI Act had strongly arisen in favour of R. The consequential inference, although not stressed by R in arguments, is that the cheque in issue could not be said to have been handed over by R to C for encashment in discharge of a statutorily recognised debt/liability/obligation.

Mr.Chakraborty submits that in reply to the notice of C under Section 138 of The NI Act, R had pointed out that it was C, not R, who had sought financial accommodation from the other person. R had taken the point, controverting the equivalent version taken by C, that C approached R for financial accommodation and R handed over an undated cheque without mentioning the name of the payee. According to R, C was requested not to encash the cheque until he receives R's consent. It is submitted that in addition to the amount of Rs.2.00 lakhs, an amount of Rs.30,000/- was given by R to C. R has also claimed return of the said amount of Rs.30,000/-along with the cheque in his reply to C's demand notice. R had threatened legal action against C in reply to the notice of C under The NI Act.

C, upon compliance of the formalities of notice under The NI Act, instituted the complaint in issue in the year 2013.

The trial followed and both the learned Trial Court as well as the learned Appellate Court found in favour of C, convicting R.

For the benefit of this discussion the fundamentals of a rebuttable presumption under Section 139 of The NI Act as well as the connected issue of and as to whether the cheque or negotiable instrument in question was issued in discharge of a debt and/or liability came up for consideration before the Hon'ble Apex Court in (2009) 2 SCC page 513 of which Paragraphs 12 to 21 read as follows:-

"12. In order to determine the question whether offence punishable under Section 138 of the Act is made out against the appellant, it will be necessary to examine the scope and ambit of presumptions to be raised as envisaged by the provisions of Sections 118 and 139 of the Act. In a suit to enforce a simple contract, the plaintiff has to aver in his pleading that it was made for good consideration and must substantiate it by evidence. But to this rule, the negotiable instruments are an exception.

In a significant departure from the general rule applicable to contracts, Section 118 of the Act provides certain presumptions to be raised. This section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade. Section 118 of the Act provides presumptions to be raised until the contrary is proved (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of indorsements, (vi) as to appropriate stamp, and (vii) as to holder being a holder in due course.

Section 139 of the Act provides that 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.

Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume" (rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference, affirmative or disaffirmative of the existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".

Section 4 of the Evidence Act inter alia defines the words "may presume" and "shall presume" as follows:

"4. 'May presume'.-Whenever it is provided by this Act that the court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it:

'Shall presume'.-Whenever it is directed by this Act that the court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved:

* * *"

In the former case, the court has an option to raise the presumption or not, but in the latter case, the court must necessarily raise the presumption. If in a case the court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved.

Section 118 of the Act, inter alia, directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of whole or part of any debt or liability.

Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.

The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.

The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring 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 would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act.

The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue."

In (2009) 2 SCC page 513 (supra) the Hon'ble Apex Court found in favour of the accused on the ground that the complainant could not controvert the evidence of the official witness of the Sales Tax Department that during the relevant financial year any transaction connected to sale of woollen carpets could be shown by the complainant. Therefore, in the light of the official sales tax record, the Hon'ble Apex Court found the defence of the accused probable that the cheque in issue, although not denied, was not issued in discharge of a statutory debt or liability of the accused qua the complainant.

A Larger Bench in (2010) 11 SCC 441 discussed a similar issue after considering a catena of cases. The following paragraphs demonstrate the conclusion of the Hon'ble Larger Bench:

"26. In light of these extracts, we are in agreement with the respondent claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, 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, there can be no doubt that there is an initial presumption which favours the complainant.

Section 139 of the Act 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 dishonour of cheques, the rebuttable presumption under Section 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 or proof.

In the absence of compelling justifications, 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 under Section 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. As clarified in the citations, 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.

Coming back to the facts in the present case, we are in agreement with the High Court's view that the accused did not raise a probable defence. As noted earlier, the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the "stop payment" instructions to his Bank. Furthermore, the instructions to "stop payment" had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant's version. Apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability.

The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, insofar as it was not clear whether the accused had asked for a hand loan to meet the construction-related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction expenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant.

In conclusion, we find no reason to interfere with the final order of the High Court, dated 26-10-2005, which recorded a finding of conviction against the appellant. The present appeal is disposed of accordingly."

On a respectful consideration of both the above decisions this Court finds that all R has done to show by way of a rebuttable presumption is to turn the complaint of C on its head. The complaint has simply been reversed by R with expected ingenuity to try to show that it is C and not R who is the accused.

Unlike in (2009) 2 SCC page 513 there is no official corroborative independent evidence to support R's version in the present case. Exhibit 7 does not wipe out the flow of the complaint that the events complained of took place in April 2011. PW-3, one Sanjiv Mondal and a witness to the transaction between C and R, admits in his evidence that the transaction took place in the last part of April, (2011).

Even DW.2, the said Samir Mazumder, admits to his version of transaction with C again on and between the 27th of April, 2011 and the 30th of April, 2011. Therefore, the argument of R connected to Exhibit 7 as recorded above, can be at best described as an inconsistency of date without obliterating the basis of the complaint that the transaction took place during the period which was the last part of April, 2011 inclusive of the two dates relied upon respectively by C and R, i.e. the 27th of April, 2011 and the 30th of April, 2011.

Next, noticing the evidence of DW.2, the said Samir Mazumder, originally named by C as his witness, even if accepted at face value, would raise the question as to what on earth required R to issue a cheque of Rs.2.00 lakhs in favour of C when R claims that no money reached him from C and, at least Rs.1.00 lakh did not reach him from C.

The details of the cheque in issue connected to the amount and the signature of R are not disputed.

A belated point is taken by way of an afterthought that the name of the payee and the date were not mentioned on the cheque in issue. It does not appear that in his evidence and examination under Section 313 Cr.P.C, R relied on the above two aspects. In any view of the matter the story spun by R treats the cheque in issue to be valid in all respects. The basis of the rebuttable presumption tried to be created by R against C is not the cheque but the basis of the cheque. The attempt is to fit the shoe into the other foot.

There is no evidence on record either disclosing that R wanted the cheque returned by C. There is also no evidence that R carried his threat of legal action against C any further than his reply to the notice of demand. Not even a simple police diary is recorded by R against C alleging that the latter is trying unjustly to enrich himself at the expense of R.

In the backdrop of the above discussion, this Court holds that the so-called rebuttable presumption attempted to be created by R is itself an improbable story which no prudent man can believe. It is hard to believe that C, being in requirement of financial accommodation, agreed to a piece of paper in the form of a cheque in April 2011 which could be encashed only in 2013. By all stretch of imagination the financial need (emphasis supplied) of C, accepting R's version to be true, could not have been satisfied in April, 2011 with only a piece of paper which could not be immediately converted into liquid money.

On the other hand, the complaint is probable and the presumption under Sections 138 and 139 of The NI Act supports C that against Rs.2.00 lakhs advanced by C to R, the cheque came into his hands with his name as the payee and the specific amount endorsed under R's signature for Rs.2.00 lakhs.

For the foregoing reasons, CRR No.019 of 2019 stands dismissed.

The order of the Learned Appellate Court stands confirmed.

Let this judgment be communicated by the Registry forthwith to the learned Chief Judicial Magistrate, Mayabunder for executing the sentence.

Lower Court Records, if called for, be sent to the Learned Trial Court at once.

Registry to take steps.