W.B.T. Prakash vs Elangovan

R.S. Ramanathan, J.—The complainant in C.C. No. 4009 of 2003 on the file of VII Metropolitan Magistrate, George Town, Chennai, is the appellant. The appellant filed the above complaint under section 138 of the Negotiable Instruments Act and that complaint was dismissed and the respondent/accused was acquitted and aggrieved by the same, this Appeal is filed.

The case of the complainant is that due to business transaction between the appellant and the accused, the accused gave a Cheque bearing No. 146279 dated 14.3.2003 for a sum of Rs. 1,50,000/- towards the discharge of the loan payable by him and that cheque was presented on 8.4.2003 for collection and the same was returned on 9.4.2003 stating that there was no sufficient funds in the account of the respondent/accused. Therefore, a statutory notice dated 14.4.2003 was issued by the appellant. The respondent/accused sent a reply dated 20.4.2003 stating that the cheque was given as a security and his brother and himself were doing business and the cheque must have been given by his brother. It is further stated in the reply notice that the appellant owed more than Rs. 3,00,000/- to the brother of the accused and therefore, there was no necessity for the accused to issue any cheque.

During trial, the complainant examined himself as PW. 1 and marked the cheque, return memo, a copy of the advocate notice, reply notice sent by the respondent/accused and acknowledgment card as Exs. P. 1 to P. 5 and the respondent examined himself as DW. 1 and did not mark any document.

On appreciation of the oral and documentary evidence, the learned trial Judge held that the appellant/complainant failed to prove that the respondent/accused had issued cheque towards the legally enforceable debit and admittedly, there was no business transaction between the appellant and the respondent. In the complaint, it was stated the cheque was issued by the respondent towards the discharge of the loan payable by him in due course of business transaction and the respondent also stated in the reply notice that he had no subsisting liability to the appellant and the appellant failed to state the nature of business transaction between him and the respondent and the respondent''s brother and the circumstances under which the cheque was issued by the respondent and therefore, the appellant failed to prove legally enforceable debt payable by the respondent and dismissed the complaint.

Mr. V. Raghavachari, learned counsel for the appellant submitted that once the cheque was admittedly issued by the respondent, the complainant is entitled to raise a presumption under section 139 of the N.I. Act and the Court is also bound to presume that the cheque was issued towards the legally enforceable liability and only after the respondent rebutted the presumption by making a probable defence, the burden shifts to the complainant to prove the legally enforceable debt and in this case, no attempt was made by the respondent to substantiate the same. He therefore submitted that once the cheque was given as a security, the accused impliedly admitted that he owed some amount to the complainant. Otherwise, there was no need for giving the cheque as a security. Therefore, the accused is under obligation to disclose the purpose for which the cheque was given as a security and admittedly, the accused did not state the purpose for which the cheque was given as a security. He further submitted that the other stand of the accused that his brother might have misused the cheque signed by the accused cannot also be accepted for two reasons. He submitted that in reply notice, it was not alleged that the complainant owed more than Rs. 3,00,000/- to the brother of the accused and steps were being taken to recover the amount. When the complainant owed more than Rs. 3,00,000/- to the brother of the accused, there was no necessity for the brother of the accused to give cheque of the accused to the complainant and no attempt was made by the accused to examine his brother in support of his contention. Further, it was not alleged that there was enmity between the accused and his brother and due to that enmity his brother must have given the cheque signed by the accused to the complainant. He therefore submitted that the accused failed to substantiate his defence made out in the reply notice and therefore, having admitted issuance of cheque and failed to rebut the presumption, the court below ought to have held that the cheque was issued towards the legally enforceable liability and ought to have convicted the respondent/accused. He relied upon the followings judgments in support of his contention:-

Anil Sachar and Another Vs. Shree Nath Spinners P. Ltd. and Others etc., (2011) 3 BC 508 : (2011) 3 CompLJ 654 : (2011) 8 JT 586 : (2011) 3 RCR(Criminal) 698 : (2011) 7 SCALE 730

Rangappa Vs. Sri Mohan, AIR 2010 SC 1898 : (2010) 2 BC 693 : (2010) CriLJ 2871 : (2010) 5 JT 259 : (2010) 5 SCALE 340 : (2010) 11 SCC 441 : (2011) 1 SCC(Cri) 184 : (2010) 100 SCL 389 : (2010) AIRSCW 2946 : (2010) AIRSCW 6043 : (2011) AIRSCW 404 : (2010) 4 Supreme 169 : (2010) 5 Supreme 206

Alsa Constructions and Housing Limited and Another Vs. M. Mal Reddy, (1999) CriLJ 2743

K.N. Beena Vs. Muniyappan and Another, (2001) 8 AD 566 : AIR 2001 SC 2895 : (2006) 4 BC 287 : (2001) 107 CompCas 459 : (2002) 1 CompLJ 55 : (2001) CriLJ 4745 : (2001) 9 JT 228 : (2001) 8 SCC 458 : (2001) AIRSCW 4344 : (2001) 7 Supreme 810

Hiten P. Dalal Vs. Bratindranath Banerjee, AIR 2001 SC 3897 : (2001) 2 BC 773 : (2001) 106 CompCas 574 : (2001) 3 CompLJ 313 : (2001) CriLJ 4647 : (2001) 3 Crimes 220 : (2001) 5 JT 386 : (2001) 4 SCALE 275 : (2001) 6 SCC 16 : (2001) 3 SCR 900 : (2001) 2 UJ 1384 : (2001) AIRSCW 3861 : (2001) 5 Supreme 49

On the other hand, Mr. K.M. Balaji, learned counsel appearing for the respondent submitted that the trial Court rightly appreciated the case of the appellant and held that the appellant failed to prove that there was legally enforceable liability and towards that liability, the cheque was issued by the accused. He submitted that in the complaint it has been clearly stated that the complainant and the accused were carrying on export business and out of the business transaction, the accused issued the cheque for Rs. 1,50,000/- as part payment towards the amount due to the complainant. In the statutory notice, Ex. P. 3 also, it was stated that out of business transaction with the complainant, the accused issued a cheque for Rs. 1,50,000/- as part payment towards the amount due to the complainant. But, in the evidence, PW. 1 - appellant admitted that he was employed in an export company and he used to borrow money from the accused and the accused also used to borrow money from him and there was no business transaction between him and the accused and he wrongly mentioned in the complaint that he was doing business. He therefore submitted that when there was no business transaction between the complainant and the accused, the case of the complainant that the cheque was issued towards the part payment payable by the accused to the complainant towards business transaction proved to be false and therefore, the case projected by the complainant that the cheque was issued towards the liability payable by the accused was proved to be false by the evidence of PW. 1 and therefore, the Court rightly held that the complainant failed to prove that there was no legally enforceable liability payable by the accused and dismissed the complaint. He also relied upon the following judgments in support of his contention:-

John K. Abraham Vs. Simon C. Abraham and Another, (2014) 1 BC 3 : (2014) 1 CCR 90 : (2014) 118 CLA 4 : (2014) CriLJ 2304 : (2014) 1 Crimes 66 : (2014) 1 JCC(NI) 31 : (2013) 15 JT 412 : (2014) 173 PLR 787 : (2014) 1 RCR(Civil) 314 : (2014) 1 RCR(Criminal) 267 : (2013) 14 SCALE 589 : (2014) 2 SCC 236 : (2014) 3 SCJ 739

Goa Plast (P) Ltd. Vs. Chico Ursula D''Souza, AIR 2004 SC 408 : (2004) 1 BC 246 : (2003) 117 CompCas 781 : (2004) 2 CompLJ 11 : (2004) CriLJ 664 : (2003) 4 CTC 628 : (2003) 9 JT 451 : (2003) 9 SCALE 791 : (2004) 2 SCC 235 : (2004) 49 SCL 235 : (2003) 5 SCR 835 Supp : (2004) 1 UJ 525

M.S. Narayana Menon @ Mani Vs. State of Kerala and Another, AIR 2006 SC 3366 : (2006) 3 BC 433 : (2006) 132 CompCas 450 : (2006) 6 CompLJ 39 : (2006) CriLJ 4607 : (2006) 3 CTC 730 : (2006) 6 JT 72 : (2006) 6 SCALE 393 : (2006) 6 SCC 39 : (2006) 3 SCR 124 Supp : (2006) AIRSCW 4652 : (2006) 5 Supreme 547

Goa Plast Pvt. Ltd. Vs. Shri Chico Ursula D''souza, (1996) CriLJ 2344

On the basis of the submission of the learned counsel appearing for the parties, the following points arise for consideration in this Appeal:-

(i) whether the impugned cheque was issued towards the legally enforceable liability as stated by the complainant/appellant?

(ii) whether the complainant/appellant is entitled to raise a presumption under section 139 of the N.I. Act?

(iii) whether the respondent rebutted the presumption in the manner known to law?

In the judgment reported in Hiten P. Dalal Vs. Bratindranath Banerjee, AIR 2001 SC 3897 : (2001) 2 BC 773 : (2001) 106 CompCas 574 : (2001) 3 CompLJ 313 : (2001) CriLJ 4647 : (2001) 3 Crimes 220 : (2001) 5 JT 386 : (2001) 4 SCALE 275 : (2001) 6 SCC 16 : (2001) 3 SCR 900 : (2001) 2 UJ 1384 : (2001) AIRSCW 3861 : (2001) 5 Supreme 49 , it has been held as follows:-

The appellant''s submission that the cheques were not drawn for the ''discharge in whole or in part of any debt or other liability'' is answered by the third presumption available to the Bank under Section 139 of the Negotiable Instruments Act. This section 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". The effect of these presumptions is to place the evidential burden on the appellant of proving that the cheque was not received by the Bank towards the discharge of any liability.

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, as noted in The State of Madras Vs. A. Vaidyanatha Iyer, AIR 1958 SC 61 : (1958) CriLJ 232 : (1958) 2 LLJ 653 : (1958) 1 SCR 580 , it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had 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" (ibid). 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 possibility of the non-existence of the presumed fact.

In other words, provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but 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''.

Judicial statements have differed as to the quantum of rebutting evidence required. In Kundan Lal Rallaram Vs. Custodian, Evacuee Property, Bombay, AIR 1961 SC 1316 , this Court held that the presumption of law under Section 118 of Negotiable Instruments Act could be rebutted, in certain circumstances, by a presumption of fact raised under Section 114 of the Evidence Act. The decision must be limited to the facts of that case. The more authoritative view has been laid down in the subsequent decision of the Constitution Bench in Dhanvantrai Balwantrai Desai Vs. State of Maharashtra, AIR 1964 SC 575 : (1964) CriLJ 437 : (1963) 2 LLJ 415 : (1963) 1 SCR 485 Supp , where this Court reiterated the principle enunciated in State of Madras vs. Vaidyanath Iyer (Supra) and clarified that the distinction between the two kinds of presumption lay not only in the mandate to the Court, but also in the nature of evidence required to rebut the two. In the case of a discretionary presumption the presumption if drawn may be rebutted by an explanation which "might reasonably be 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......"

It is further held that for rebutting the presumption by the accused, the accused must lead some evidence in support of his defence and the Court must either believe the defence to to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man. It is also held that mere denial or rebuttal by the accused in the reply notice is not enough to rebut the presumption and the accused ought to prove the case by cogent evidence that there was no debt or liability as per the judgment reported in K.N. Beena Vs. Muniyappan and Another, (2001) 8 AD 566 : AIR 2001 SC 2895 : (2006) 4 BC 287 : (2001) 107 CompCas 459 : (2002) 1 CompLJ 55 : (2001) CriLJ 4745 : (2001) 9 JT 228 : (2001) 8 SCC 458 : (2001) AIRSCW 4344 : (2001) 7 Supreme 810 . It is also held in the judgment reported in Rangappa Vs. Sri Mohan, AIR 2010 SC 1898 : (2010) 2 BC 693 : (2010) CriLJ 2871 : (2010) 5 JT 259 : (2010) 5 SCALE 340 : (2010) 11 SCC 441 : (2011) 1 SCC(Cri) 184 : (2010) 100 SCL 389 : (2010) AIRSCW 2946 : (2010) AIRSCW 6043 : (2011) AIRSCW 404 : (2010) 4 Supreme 169 : (2010) 5 Supreme 206 that when the accused is able to raise a probable defence which creates doubt about the existence of legally enforceable debt or liability, the prosecution can fail.

Under Sections 118 and 139 of the N.I. Act, a presumption can be drawn when the instrument was issued that it was towards consideration. Therefore, when the issuance of cheque is admitted, the presumption can be drawn in favour of the payee that the drawer issued a cheque for valid consideration and thereafter, the drawer has to rebut the presumption by proving that there was no consideration for issuance of cheque and while proving that there was no consideration for the issuance of cheque the drawer has to make out a probable defence and in such circumstances, the probabilities will be taken into consideration. Having regard to the facts of the case, the Court can say that the burden once again shifts on to the payee. However, the position will be different when the drawer admits the liability to the payee, admits issuance of cheques and also pleads that the loan amount has been discharged.

According to me, when the drawer takes up the plea that the amount due under the cheques was discharged, he has to prove the same as fact and he cannot rely upon probabilities. He has to plead and prove that the amount was discharged and for that purpose, he cannot rely upon the probabilities as he is not rebutting the presumption regarding consideration but giving evidence towards the discharge and it has to be proved as a fact.

It is true that the complainant has stated in the complaint that due to business transactions and to discharge the amount payable by the accused, the accused issued the cheque. In evidence, he also admitted that there was no business transaction between the parties. From that, it cannot be presumed that the cheque was not issued towards the legally enforceable debt or liability. According to me, having regard to the defence taken by the accused, as stated supra, once the cheque was admittedly issued by the accused, the Court is bound to raise a presumption that it was given towards the legally enforceable debt or liability and when the accused raises the probable defence and rebutted the presumption, the complainant has to prove that the cheque was issued towards the legally enforceable liability. In other words, without drawing presumption in favour of the complainant, the court cannot hold that the complainant failed to prove the legally enforceable liability payable by the accused without considering whether the accused made probable defence to rebut the presumption. In this case, as rightly submitted by the learned counsel for the appellant, the issuance of cheque was admitted by the respondent/accused and he had taken two stand in the reply notice that - (i) the cheque was given as security and (ii) the complainant owed Rs. 3,00,000/- to his brother and in evidence, he also admitted that the cheque must have been given by his brother. If the cheque was given as security, the accused is bound to explain the purpose for which the cheque was given as security. In other words, one can presume that the accused owed some money to the complainant and towards the repayment of that amount, the cheque was given as security. It is also stated that the complainant owed Rs. 3,00,000/- to his brother. In that case, there was no necessity for the accused to give the cheque as security and the cheque could not have been given by the brother of the accused to the complainant. Therefore, the accused miserably failed to rebut the presumption. On the other hand, he also failed to prove the defence taken by him to the reply notice.

The other defence taken by the accused was that in the cheque, the name of the payee was written in ink and other body of the body of the cheque was written in another ink and that would also create some suspicion. In this connection, it is pertinent to refer to the following judgment. The High Court of Delhi reported in Ravi Chopra Vs. State and Another, (2008) 3 BC 136 : (2008) 102 DRJ 147 relied upon a judgment of a Division Bench of Kerala High Court in Lillykutty v. Lawrence [ 2003 (2) DCR 610] wherein it is held as follows:-

"21. In the instant case, signature is admitted. According to the drawer of the cheque, amount and the name has been written not by the drawer but by somebody else or by the payee and tried to get it encashed. We are of the view, by putting the amount and the name there is no material alteration on the cheque under Section 87 of the Negotiable Instruments Act. In fact there is no alteration but only adding the amount and the date. There is no rule in banking business that payee''s name as well as the amount should be written by drawer himself. In the instant case Bank has never found that the cheque was tampered with or forged or there is material alteration or that the handwriting by which the payee''s name and the amount was written was differed. The Bank was willing to honour the cheques if sufficient funds were there in the account of the drawer even if the payee''s name and the amount was written by somebody else other than the holder of the account or the drawer of the cheque. The mere fact that the payee''s name and the amount shown are not in the handwriting of the drawer does not invalidate the cheque. No law provides in the case of cheques the entire body has to be written by the drawer only. What is material is the signature of the drawer and not the body of the instrument. Therefore when the drawer has issued the cheque whether the entire body was written by the drawer written beyond the instructions of the drawer, whether the amount is due or not, those and such matters are defenses which drawer has to raise and prove it. Therefore the mere fact that the payee''s name and the amount shown in the cheque are in different handwriting is not a reason for not honouring the cheque by the Bank. Banks would normally see whether the instrument is that of the drawer and the cheque has been signed by the drawer himself. The burden is therefore entirely on the drawer of the cheque to establish that the date, amount and the payee''s name are written by somebody else without the knowledge and consent of the drawer. In the instant case, the drawer of the cheque has not discharged and burden. Apart from the interested testimony of the drawer, no independent evidence was adduced to discharge the burden."

According to me, when the cheque was admittedly issued by the accused, the difference in ink cannot be considered as a material one. Therefore, when the accused failed to rebut the presumption by raising a probable defence, there is no need for the appellant/complainant to prove legally enforceable debt and the Court is bound to draw presumption under section 139 of the N.I. Act. This aspect was not properly appreciated by the trial court. As a matter of fact, the trial court held that the accused failed to rebut the presumption. However, the trial Court dismissed the complaint stating that the appellant failed to prove the legally enforceable liability. I therefore hold that the appellant is entitled to presumption available to him under section 139 of the N.I. Act and the accused is bound to rebut the presumption by making out a probable defence and in this case, the defence raised by the accused that the cheque was issued as a security was not proved by him and that would also support the case of the complainant. Having regard to the judgment referred to above, the trial Court ought to have convicted the respondent.

In the result, the judgment of the trial Court dated 1.8.2005 made in C.C. No. 4009 of 2003 is liable to set aside and accordingly, it is set aside and the Appeal is allowed.

The Appeal is directed to be listed for questioning the accused on 27.03.2015 and the accused is directed to be present in the Court on that date.