High Court of Punjab and HaryanaCRR/4916/2015dismissed

Hakam Singh v. Mander Singh

2024-02-26Mr. Justice Deepak Gupta12 pages

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Section 139 and Section 118 clause (a) & (b) of the Negotiable of Instruments Act read as under:- "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."

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, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;

(b) as to date. - that every negotiable instrument bearing a date was made or drawn on such date;"

In Rangappa vs. Sri Mohan, 2010 (3) Criminal Court Cases 022 (S.C.), a three judge bench of the Hon'ble Supreme Court held that Section 139 of the NI Act includes the presumption regarding the existence of a legally enforceable debt or liability and that the holder of a cheque is also presumed to have received the same in discharge of such debt or liability. It was clarified in the aforesaid decision that the presumption of the existence of a legally enforceable debt or liability is, of course, rebuttable and it is open to the accused to raise a defence, wherein the existence of a legally enforceable debt or liability can be contested. Without doubt, the initial presumption is in favour of the complainant.

Hon'ble Supreme Court further held in above case that Section 139 of the NI Act is stated to be an example of a reverse onus clause, which is in tune with the legislative intent of improving the credibility of negotiable instruments. Section 138 of the NI Act provides for speedy remedy in a criminal forum, in relation to dishonour of cheques. Nonetheless, the Hon'ble Supreme Court cautions that the offence under Section 138 of the NI Act is at best a regulatory offence and legally falls in the arena of a civil wrong and therefore, the test of proportionality ought to guide the interpretation of the reverse onus clause.

accused to raise probable defence for creating doubt about the existence of a legally enforceable debt or liability for thwarting the prosecution. The standard of proof for doing so would necessarily be on the basis of "preponderance of probabilities" and not "beyond shadow of any doubt." 10.

It is in the light of the aforesaid legal position that it is required to be seen that whether accused has been able to probabilise his defence. Here itself, it may be noted that the accused is not required to prove his defence on the standard of proof 'beyond reasonable doubt' and rather, he is simply required to probabilise his defence. The presumption under Section 139 of the Act can be rebutted even by evidence led by the complainant; and it is not required for the defence to lead evidence to rebut presumption, as has been held by the Hon'ble Supreme Court in Shiv Kumar Vs. Ram Avtar Aggarwal, 2020(2) RCR (Crl.) 147.

11.

In order to rebut the presumption available to complainant under Section 139 of the NI Act, accused can either appear in the witness box though it is not mandatory; or he can elicit circumstances favourable to him during the cross-examination of complainant; or put forth his defence in his statement under Section 313 Cr.P.C. supported by evidence. Here itself, it may be noted that statement of accused under Section 313 Cr.P.C is not a substantive piece of evidence. If accused put forth his defence in said statement, he must support it with evidence. Reliance can be placed on Sumeti Vij Vs. M/s Paramount Tech Fab Industries, 2021(2) CCC 348 (SC).

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# In Uttam Ram Vs. Devinder Singh Hudan 2019(4) CCC 596 (SC), it has been held by Hon'ble Supreme Court that in case of dishonour of cheque, debt is not to be proved as in a civil suit. In the case before Hon'ble Supreme Court, defence was taken by the accused that cheque book was lost and that cheque was not issued in discharge of any debt or liability. Accused had not appeared as a witness. The complaint was dismissed. Hon'ble Supreme Court set aside the order of dismissal of complaint and acquittal of accused by holding the same to be illegal and unsustainable. Hon'ble Supreme Court held as under :- "20. The Trial Court and the High Court proceeded as if, the appellant is to prove a debt before civil court wherein, the plaintiff is required to prove his claim on the basis of evidence to be laid in support of his claim for the

recovery of the amount due. A dishonour of cheque carries a statutory presumption of consideration. The holder of cheque in due course is required to prove that the cheque was issued by the accused and that when the same presented, it was not honoured. Since there is a statutory presumption of consideration, the burden is on the accused to rebut the presumption that the cheque was issued not for any debt or other liability.

21. There is the mandate of presumption of consideration in terms of the provisions of the Act. The onus shifts to the accused on proof of issuance of cheque to rebut the presumption that the cheque was issued not for discharge of any debt or liability in terms of Section 138 of the Act." 15.

Similarly, in Rohitbhai Jivanlal Patel v. State of Gujarat & another (2019) 18 SCC 106, it was held by the Hon'ble Supreme Court that : "In the case at hand, even after purportedly drawing the presumption under Section 139 of the NI Act, the Trial Court proceeded to question the want of evidence on the part of the complainant as regards the source of funds for advancing the loan to the accused and want of examination of the relevant witnesses who allegedly extended him money for advancing it to the accused. This approach of the Trial Court had been at variance with the principles of presumption in law.

After such presumption, the onus shifted to the accused and unless the accused had discharged the onus by bringing on record such facts and circumstances as to show the preponderance of probabilities tilting in his favour, any doubt on the complainant's case could not have been raised for want of evidence regarding the source of funds for advancing loan to the accused-appellant. The aspect relevant for consideration had been as to whether the accused-appellant has brought on record such facts/material/circumstances which could be of a reasonably probable defence."

16.

It is clear from the legal position as above that complainant is not obliged to prove the loan or the financial capacity. Once the presumption under Section 139 of the NI Act is available to the complainant, entire burden shifts upon the accused to rebut that presumption, which in the present case accused - petitioner has utterly failed.

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Non-mentioning of the loan amount in the Income Tax Returns may attract penal provision of Income Tax Act but cannot be a reason to discard the case of the complainant. In this regard, reliance may be placed on Ganga Prashad vs. Lalit Kumar, 2008(3) RCR (Criminal) 159, wherein it was held by this High Court that the payment of loan could not be disbelieved on the ground that complainant did not reflect the amount in his income tax return. 18.

In C.N.Dinesha Vs. Smt. C.G.Mallika, 2017 Cr.R 530, it was held by Karnataka High Court that the Culpability of offence under section138 of Negotiable Instrument Act will not freeze for the reason of violation of section 269 of IT Act and nothing prevents operation of statutory presumption. Further, in a decision rendered in Writ Petition No.29144/2018 titled Dr. M. Krishna Shetty Vs. Sri. H.R.Nagabhushan, on 29th day of August 2018, Karnataka High Court has held that the prosecution under Section 138 of N.I.Act cannot be stalled for non-compliance of Section 269 SS of the Income Tax Act. Any cash transaction in violation of section 269 SS of Income Tax Act may give rise to an independent criminal offence, but on account of violation of the said provision, the prosecution of the petitioner for the alleged dishonour of cheque under Section 138 of Act does not become bad in law.

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