# ROHITBHAI JIVANLAL PATEL v. STATE OF GUJARAT & ANR

- **Citation:** [2019] 5 S.C.R. 417
- **Court:** Supreme Court of India
- **Decided:** 2019-03-15
- **Case number:** Criminal Appeal No.508 of 2019
- **Bench:** Abhay Manohar Sapre, Dinesh Maheshwari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/rohitbhai-jivanlal-patel-v-state-of-gujarat-anr-33826
- **Pages:** 27

## Headnote

Negotiable Instruments Act, 1881 - ss. 118, 138 and 139 -
Presumption u/ss. 118 and 139 - 7 cheques of Rs. 3 Lakhs each,
drawn by the accused-appellant in favour of the complainantrespondent no.2 - Dishonoured - Trial Court dismissed the 7
complaints cases filed by respondent no. 2 - High Court set aside
the said orders and convicted the appellant for the offence u/s.138
- On appeal, held: Appellant could not deny his signature on the
cheques in question - Said cheques were presented to the Bank
concerned within the period of their validity and were returned
unpaid for insufficient funds or for account being closed - All the
basic ingredients of s.138 as also of ss.118 and 139 were apparent
on the face of the record - Trial Court took note of these facts and
had drawn the requisite presumption - Therefore, it was required to
be presumed that the cheques in question were drawn for
consideration and the holder of the cheques i.e., the respondent
no.2 received the same in discharge of an existing debt - Onus,
therefore, shifted on the appellant to rebut such presumption -
However, even after purportedly drawing the presumption u/s.139,
the Trial Court proceeded to question the want of evidence on the
part of the respondent no.2 as regards the source of funds for
advancing loan to the appellant and want of examination of relevant
witnesses who allegedly extended him money for advancing it to
the appellant - This approach of the Trial Court was at variance
with the principles of presumption in law - Appellant not able to
discharge his burden of bringing on record such material which
could tilt the preponderance of probabilities in his favour - Decision
of the Trial Court suffered from perversity and fundamental error
of approach - High Court justified in reversing the judgment of the
Trial Court - Punishment as regards monetary terms not interfered
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but, sentence of imprisonment modified - In each of the 7 cases, the
appellant to pay fine, double the amount of each cheque (i.e. Rs. 6
lakhs) - In case of default in payment of fine, the appellant to
undergo simple imprisonment for one year - On recovery of the
amount of fine, the respondent no. 2 be compensated to the tune of
Rs. 5.5 lakhs in each case - In the event of imprisonment for default
in payment of fine, the sentences in all the 7 cases to run concurrently.
Partly allowing the appeal, the Court
HELD: 1.1 Ordinarily, the Appellate Court will not be
upsetting the judgment of acquittal, if the view taken by Trial
Court is one of the possible views of matter and unless the
Appellate Court arrives at a clear finding that the judgment of
the Trial Court is perverse, i.e., not supported by evidence on
record or contrary to what is regarded as normal or reasonable;
or is wholly unsustainable in law. Such general restrictions are
essentially to remind the Appellate Court that an accused is
presumed to be innocent unless proved guilty beyond reasonable
doubt and a judgment of acquittal further strengthens such
presumption in favour of the accused. However, such restrictions
need to be visualised in the context of the particular matter before
the Appellate Court and the nature of inquiry therein. The same
rule with same rigour cannot be applied in a matter relating to
the offence under Section 138 of the Negotiable Instruments Act,
1881, particularly where a presumption is drawn that the holder
has received the cheque for the discharge, wholly or in part, of
any debt or liability. Of course, the accused is entitled to bring on
record the relevant material to rebut such presumption and to
show that preponderance of probabilities are in favour of his
defence but while examining if the accused has brought about a
probable defence so as to rebut the presumption, the Appellate
Court is certainly entitled to examine the evidence on record in
order to find if preponderance indeed leans in favour of the
accus

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 ROHITBHAI JIVANLAL PATEL
 v.
 STATE OF GUJARAT & ANR.
 (Criminal Appeal No.508 of 2019)
 MARCH 15, 2019
 [ABHAY MANOHAR SAPRE AND
DINESH MAHESHWARI, JJ.]
Negotiable Instruments Act, 1881 - ss. 118, 138 and 139 -
Presumption u/ss. 118 and 139 - 7 cheques of Rs. 3 Lakhs each,
drawn by the accused-appellant in favour of the complainantrespondent no.2 - Dishonoured - Trial Court dismissed the 7
complaints cases filed by respondent no. 2 - High Court set aside
the said orders and convicted the appellant for the offence u/s.138
- On appeal, held: Appellant could not deny his signature on the
cheques in question - Said cheques were presented to the Bank
concerned within the period of their validity and were returned
unpaid for insufficient funds or for account being closed - All the
basic ingredients of s.138 as also of ss.118 and 139 were apparent
on the face of the record - Trial Court took note of these facts and
had drawn the requisite presumption - Therefore, it was required to
be presumed that the cheques in question were drawn for
consideration and the holder of the cheques i.e., the respondent
no.2 received the same in discharge of an existing debt - Onus,
therefore, shifted on the appellant to rebut such presumption -
However, even after purportedly drawing the presumption u/s.139,
the Trial Court proceeded to question the want of evidence on the
part of the respondent no.2 as regards the source of funds for
advancing loan to the appellant and want of examination of relevant
witnesses who allegedly extended him money for advancing it to
the appellant - This approach of the Trial Court was at variance
with the principles of presumption in law - Appellant not able to
discharge his burden of bringing on record such material which
could tilt the preponderance of probabilities in his favour - Decision
of the Trial Court suffered from perversity and fundamental error
of approach - High Court justified in reversing the judgment of the
Trial Court - Punishment as regards monetary terms not interfered
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but, sentence of imprisonment modified - In each of the 7 cases, the
appellant to pay fine, double the amount of each cheque (i.e. Rs. 6
lakhs) - In case of default in payment of fine, the appellant to
undergo simple imprisonment for one year - On recovery of the
amount of fine, the respondent no. 2 be compensated to the tune of
Rs. 5.5 lakhs in each case - In the event of imprisonment for default
in payment of fine, the sentences in all the 7 cases to run concurrently.
Partly allowing the appeal, the Court
HELD: 1.1 Ordinarily, the Appellate Court will not be
upsetting the judgment of acquittal, if the view taken by Trial
Court is one of the possible views of matter and unless the
Appellate Court arrives at a clear finding that the judgment of
the Trial Court is perverse, i.e., not supported by evidence on
record or contrary to what is regarded as normal or reasonable;
or is wholly unsustainable in law. Such general restrictions are
essentially to remind the Appellate Court that an accused is
presumed to be innocent unless proved guilty beyond reasonable
doubt and a judgment of acquittal further strengthens such
presumption in favour of the accused. However, such restrictions
need to be visualised in the context of the particular matter before
the Appellate Court and the nature of inquiry therein. The same
rule with same rigour cannot be applied in a matter relating to
the offence under Section 138 of the Negotiable Instruments Act,
1881, particularly where a presumption is drawn that the holder
has received the cheque for the discharge, wholly or in part, of
any debt or liability. Of course, the accused is entitled to bring on
record the relevant material to rebut such presumption and to
show that preponderance of probabilities are in favour of his
defence but while examining if the accused has brought about a
probable defence so as to rebut the presumption, the Appellate
Court is certainly entitled to examine the evidence on record in
order to find if preponderance indeed leans in favour of the
accused. [Para 11.1] [432-B-F]
1.2 The appellant could not deny his signature on the
cheques in question that had been drawn in favour of the
complainant on a bank account maintained by the accused for a
sum of Rs. 3 lakhs each. The said cheques were presented to the
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Bank concerned within the period of their validity and were
returned unpaid for the reason of either the balance being
insufficient or the account being closed. All the basic ingredients
of Section 138 as also of Sections 118 and 139 NI Act are apparent
on the face of the record. The Trial Court had also consciously
taken note of these facts and had drawn the requisite presumption.
Therefore, it is required to be presumed that the cheques in
question were drawn for consideration and the holder of the
cheques i.e., the complainant received the same in discharge of
an existing debt. The onus, therefore, shifts on the appellant to
establish a probable defence so as to rebut such a presumption.
On the aspects relating to preponderance of probabilities, the
accused has to bring on record such facts and such circumstances
which may lead the Court to conclude either that the consideration
did not exist or that its non-existence was so probable that a
prudent man would, under the circumstances of the case, act upon
the plea that the consideration did not exist. Though there may
not be sufficient negative evidence which could be brought on
record by the accused to discharge his burden, yet mere denial
would not fulfil the requirements of rebuttal as envisaged under
Section 118 and 139 of the NI Act. [Paras 14, 16] [434-D-F;
435-H; 436-A-B]
1.3 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 loan to
the accused and want of examination of 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 appellant. The aspect relevant for consideration had
been as to whether the appellant has brought on record such
facts/material/circumstances which could be of a reasonably
probable defence. In order to discharge his burden, the accused
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put forward the defence that in fact, he had had the monetary
transaction with the said Shri 'J' and not with the complainant.
Apart from making certain suggestions in the cross-examination,
the appellant has not adduced any documentary evidence to satisfy
even primarily that there had been some monetary transaction of
himself with Shri 'J'. Shri 'J' was cross-examined on various
aspects as regards the particulars in the writing on the stamp
paper and the date and time of the transactions. The statement
of 'J' does not make out any case in favour of the appellant. [Paras
17, 18, 18.3 & 18.4] [437-D-H; 438-G; 439-G-H]
1.4 The appellant could not deny his signatures on the said
writing but attempted to suggest that his signatures were
available on the blank stamp paper with Shri 'J'. This suggestion
is too remote and too uncertain to be accepted. No cogent reason
is available for the appellant signing a blank stamp paper. It is
also indisputable that the cheques as mentioned therein with all
the relevant particulars like cheque numbers, name of Bank and
account number are of the same cheques which form the subject
matter of these complaint cases. The said document bears the
date 21.03.2007 and the cheques were post-dated, starting from
01.04.2008 and ending at 01.12.2008. No reason to discard this
writing from consideration. [Para 18.6] [440-E-F]
1.5 The present one was clearly a case where the decision
of the Trial Court suffered from perversity and fundamental error
of approach; and the High Court was justified in reversing the
judgment of the Trial Court. The observations of the Trial Court
that there was no documentary evidence to show the source of
funds with the respondent to advance the loan, or that the
respondent did not record the transaction in the form of receipt
of even kachcha notes, or that there were inconsistencies in the
statement of the complainant and his witness, or that the witness
of the complaint was more in know of facts etc. would have been
relevant if the matter was to be examined with reference to the
onus on the complaint to prove his case beyond reasonable doubt.
These considerations and observations do not stand in conformity
with the presumption existing in favour of the complainant by
virtue of Sections 118 and 139 of the NI Act. The result of such
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presumption is that existence of a legally enforceable debt is to
be presumed in favour of the complainant. When such a
presumption is drawn, the factors relating to the want of
documentary evidence in the form of receipts or accounts or want
of evidence as regards source of funds were not of relevant
consideration while examining if the accused has been able to
rebut the presumption or not. The other observations as regards
any variance in the statement of complainant and witness; or want
of knowledge about dates and other particulars of the cheques;
or washing away of the earlier cheques in the rains though the
office of the complainant being on the 8th floor had also been of
irrelevant factors for consideration of a probable defence of the
appellant. Similarly, the factor that the complainant alleged the
loan amount to be Rs. 22,50,000/- and seven cheques being of
Rs. 3,00,000/- each leading to a deficit of Rs. 1,50,000/-, is not
even worth consideration for the purpose of the determination of
real questions involved in the matter. Significantly, the specific
amount of loan (to the tune of Rs. 22,50,000/-) was distinctly stated
by the appellant in the aforesaid acknowledgment dated
21.03.2017. The Trial Court appears to have proceeded on a
misplaced assumption that by mere denial or mere creation of
doubt, the appellant had successfully rebutted the presumption
as envisaged by Section 139 of the NI Act. In the scheme of the
NI Act, mere creation of doubt is not sufficient. The High Court
has conscientiously and carefully taken into consideration the
views of the Trial Court and after examining the evidence on
record as a whole, found that the findings of the Trial Court are
vitiated by perversity. Hence, interference by the High Court
was inevitable; rather had to be made for just and proper decision
of the matter. [Paras 19-21] [441-D-H; 442-A-D, F]
1.6 The findings of the High Court convicting the appellant
for offence under Section 138 of the NI Act are confirmed. In the
totality of the circumstances of this case and the nature of offence
which is regulatory in nature, the punishment as regards monetary
terms calls for no interference but then, the sentence of
imprisonment deserve to be modified. The common judgment
and order dated 08.01.2018 in R/Criminal Appeal No. 1187/2017
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connected with R/Criminal Appeal Nos. 1191/2017 to 1196/2017
by the High Court of Gujarat at Ahmedabad is maintained as
regards conviction of the appellant for the offence under Section
138 of the NI Act, 1881 for dishonour of 7 cheques in the sum of
Rs. 3 lakhs each, as drawn by him in favour of the complainantrespondent No. 2; however, the sentence is modified in the
manner that in each of these 7 cases, the appellant shall pay fine
to the extent of double the amount of each cheque (i.e., a sum of
Rs. 6 lakhs in each case) within 2 months from today with the
stipulation that in case of default in payment of fine, the appellant
shall undergo simple imprisonment for a period of one year. On
recovery of the amount of fine, the complainant-respondent No.
2 shall be compensated to the tune of Rs. 5.5 lakhs in each case.
In the event of imprisonment for default in payment of fine, the
sentences in all the 7 cases shall run concurrently. [Paras 22,
23.1 and 24] [442-G; 443-A-B, D-G]
Rangappa v. Sri Mohan (2010) 11 SCC 441 : [2010] 6
SCR 507 - relied on.
Arulvelu and Anr. v. State represented by Public
Prosecutor & Anr. (2009) 10 SCC 206 : [2009] 14 SCR
1081; M.S. Narayana Menon alias Mani v. State of
Kerala and Anr. (2006) 6 SCC 39 : [2006] 3 Suppl.
SCR 124 ; Kumar Exports v. Sharma Carpets (2009) 2
SCC 519 : [2008] 17 SCR 572 - referred to.
Case Law Reference
[2009] 14 SCR 1081
 referred to
Para 8
[2006] 3 Suppl. SCR 124 referred to
Para 8
[2008] 17 SCR 572
 referred to
Para 8
[2010] 6 SCR 507
 relied on Para 15
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No.508 of 2019.
From the Judgment and Order dated 08.01.2018 of the High Court
of Gujarat in Criminal Appeal (Against Acquittal) No. 1187 of 2017 with
Criminal Appeal No. 1191 of 2017 to 1196 of 2017
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 Huzefa Ahmadi, Sr. Adv., Pradhuman Gohil, Mrs. Taruna Singh
Gohil, Himanshu Chaubey, Ms. Tanvi Bhatnagar, Advs. for the Appellant.
Abhiraj R. Trivedi, Shashank Bajpai, Ms. Shakur Sudha Shukla,
Ms. Richa Pandey, Amit Dubey, Prakash Kumar Singh, Ms. Hemantika
Wahi, Ms. Jesal Wahi, Ms. Puja Singh, Ms. Parul Luthra, Advs. for the
Respondents.
The Judgment of the Court was delivered by
DINESH MAHESHWARI, J. 1. Leave granted.
2. This appeal is directed against the common judgment and order
dated 08.01.2018 in R/Criminal Appeal No. 1187/2017 connected with
R/Criminal Appeal Nos. 1191/2017 to 1196/2017 whereby, the High Court
of Gujarat at Ahmedabad has reversed the respective judgment and
orders dated 09.06.2017 as passed by the 8th Additional Senior Civil
Judge and Additional Chief Judicial Magistrate, Vadodara in 7 criminal
cases1 pertaining to the offence under Section 138 of the Negotiable
Instruments Act, 1881 ('the NI Act') for dishonour of 7 cheques in the
sum of Rs. 3 lakhs each, as said to have been drawn by the accusedappellant in favour of the complainant-respondent No. 2. In the impugned
judgment and order dated 08.01.2018, the High Court has disapproved
the acquittal of the accused-appellant and, while holding him guilty of
the offence under Section 138 of the NI Act, has awarded him the
punishment of simple imprisonment for a period of 1 year with fine to
the extent of double the amount of cheque (i.e., a sum of Rs. 6 lakhs)
with default stipulation of further imprisonment for a period of 1 year in
each case; and, out of the amount payable as fine, the complainantrespondent No. 2 is ordered to be compensated to the tune of Rs. 5.5.
lakhs in each case.
3. Briefly put, the substance of allegations and assertions of the
complainant-respondent No. 2 in each of the 7 cases aforesaid had been
as follows: He was having his office in Windor Plaza at Alkapuri,
Vadodara and had been visiting the shop of his friend Shri Jagdishbhai in
National Plaza in the same locality; the accused-appellant, a trader of
edible spices, had his shop near the shop of Shri Jagdishbhai and in due
course of time, the accused, the complainant and the said Shri Jagdishbhai
1Nos. 44345/2009, 46499/2008, 46254/2008, 48420/2008, 40321/2008, 48631/2008
and 46503/2008 respectively.
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became good friends. The complainant alleged that after developing such
friendship, the accused demanded from him a sum of Rs. 22,50,000/- as
loan for his immediate requirement; and he (the complainant) extended
such loan to the accused for a short term by collecting money in piecemeal
from his business group. According to the complainant, upon regular
demand for re-payment, the accused gave him cheques of different dates
drawn on Corporation Bank, Alkapuri Branch, Vadodara and also gave
the acceptance for re-payment on a stamp paper. The complainant alleged
that the cheques so issued by the accused, on being presented to the
Bank for collection, were returned unpaid either for the reason that the
"opening balance was insufficient"or for the reason that the "account
was closed". While alleging that the intention of the accused had been
of breach of trust and cheating, the complainant pointed out that he got
served the notices on the accused after dishonour of the cheques but did
not receive the requisite payment. It is noticed that in some of the cases,
the accused-appellant did send his reply, denying the transaction as alleged.
4. With the allegations and assertions aforesaid, the complainantrespondent No. 2 filed the above-mentioned 7 complaint cases against
the accused-appellant in the months of June to November, 2008. In trial,
the complainant examined himself as PW-1 and the said Shri Jagdishbhai
as PW-2. The complainant also produced the relevant documentary
evidence including the cheques in question; the Bank returning memos
and intimation letters; the demand notices; the replies wherever sent by
the appellant; and the written acknowledgement on a stamp paper by
the accused. The accused was examined under Section 313 of the Code
of Criminal Procedure, 1973 where he asserted that he had no money
transaction with the complainant; and had neither issued any cheque nor
written any note for any legal debt in favour of the complainant. The
accused-appellant, however, asserted that several years in the past, he
had some transaction with the said Shri Jagdishbhai and the cheques
and blank stamp paper lying with Shri Jagdishbhai have been fraudulently
misused to unlawfully recover the money from him. The accusedappellant, however, did not lead any evidence.
5. After having heard the parties, the Trial Court formulated similar
points for determination in each of these 7 cases which could be noticed
as under2:
2The extraction is from the judgment of the Trial Court in Criminal Case No. 46499 of
2008.
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"1. Whether the complainant proves that the accused has
issued and handed over the Cheque bearing No. 763346 of
Rs. 3, 00,000/- towards legal due amount from the account
maintained by him, and upon presenting the said cheque in
bank of the complainant for encashment, the same was
returned back unpaid with endorsement of the bank "Today's
opening balance is insufficient" and thereafter the
complainant has served demand notice to the accused and
the said notice has been served to the accused even though,
the accused has not paid the cheque amount within the
stipulated Notice period and thereby the accused has
committed offence punishable under section 138 of the
Negotiable Instrument Act?
2. What order?"
6. After examining the record, the Trial Court found that the
accused had admitted his signature on the cheques and, with reference
to the decision of this Court in the case of Rangappa v. Sri Mohan :
(2010) 11 SCC 441, drew the presumption envisaged by Section 139
of NI Act.
6.1. However, after having drawn the presumption, the Trial Court
found several factors in favour of the accused and observed, inter alia,
that: (a) there was no documentary evidence to show the source of
income for advancing the loan to the accused; (b) the complainant failed
to record the transaction in the form of receipts, promissory notes or
even kaccha notes; (c) vague and uncertain statement was made by the
complainant as compared to the statement of his witness-Shri Jagdishbhai;
(d)the complainant had no knowledge about the dates and other particulars
of such cheques; (e) the witness of complainant was in know of the
facts more than the complainant; (f) the complaint allegedly extended
the loan to the tune of Rs. 22,50,000/- but the 7 cheques in these cases
were of Rs. 3,00,000/- each and there was no explanation from the
complainant as regards the remaining Rs. 1,50,000/-; and (g) the
suggestion about washing away of the earlier cheques in rains was also
doubtful when the complainant's office was on the 8th floor of Windor
Plaza.
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6.2 With reference to the aforesaid factors and circumstances,
the Trial Court concluded that the accused was successful in bringing
rebuttal evidence to the requisite level of preponderance of probabilities;
and observed that the complainant had failed to prove, beyond all
reasonable doubt, that the cheques were issued in part payment of the
loan amount of Rs. 22,50,000/-. Hence, all the 7 complaint cases were
dismissed by similar but separate judgment and orders dated 09.06.2017
while observing as under3:-
"19......All these circumstances creates doubt of the
complainant (sic) as alleged and accused has brought on
record rebuttable evidence upto to requisite level ie.
Preponderance of probabilities and as such considering
section 5,6,32 and 118 and 139 of N.I. Act complainant failed
to prove complaint beyond reasonable doubt that the cheque
has been issued for the recoverable debt/liability.
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22. Therefore as discussion made herein above the
complainant failed to prove that the disputed cheque has been
issued by the accused for the part payment of transaction of
Rs. 22,50,000/- therefore accused is entitled to get acquittal
who has brought on record the circumstances which rebut the
presumption under section 118,119, of N.I. Act... (sic)"
7. Against the aforementioned judgment and orders of acquittal,
the complainant preferred appeals before the High Court of Gujarat,
which have been considered and decided together by the impugned
common judgment and order dated 08.01.2018. The High Court observed
that the presumption under Sections 118 and 139 of the NI Act was
required to be drawn that the cheques were issued for consideration and
until contrary was proved, such presumption would hold good; that the
complainant had proved legally enforceable debt in the oral as also
documentary evidence, including the written acknowledgment by the
accused on stamp paper; and that except bare denial, nothing was brought
on record by the accused to dislodge the proof adduced by the
complainant.
3 Again, the extraction is from the judgment of the Trial Court in Criminal Case No.
46499 of 2008.
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7.1 The High Court observed that if the transaction in question
was not reflected in the accounts and income-tax returns, that would at
best hold the assesse or lender liable for action under the income-tax
laws but, if the complainant succeeds in showing the lending of amount,
the existence of legally enforceable debt cannot be denied. The High
Court also observed that the issue regarding washing away of the cheques
in rain water was of no significance when the accused had accepted his
liability in clear terms. The High Court found that the defence plea of
the accused that the money was given as hand loan by his friend Shri
Jagdishbhai got falsified by the version of the said Shri Jagdishbhai, who
was examined as a witness on behalf of the complainant. The High
Court, therefore, set aside the impugned orders and, while convicting
the accused-appellant for the offence under Section 138 of the NI Act,
sentenced him in the manner noticed hereinbefore. The High Court,
inter alia, observed and held as under:
"24. It is necessary at this stage also to refer to the emphasis
laid by the learned counsel appearing for the respondent No.2
on the source of the fund which has been lent by the appellant.
It has emerged from the detailed examination of the record,
as also detailed examination-in-chief as well as crossexamination, that the complainant runs the business. He also
maintains the books of account and he has his own factory
in the name and style of 'Ashirwad Enterprise' and
manufactures plastic. The said factory is situated at Jambusar.
Ordinarily, any prudent business person would prefer to
transact by cheque while lending money, but it is quite often
noticed that the cash transactions in the business would allow
huge sum of money as cash, which sometimes are shown in
the books of account as cash on hands or otherwise as amount
available on books. Assuming that cheque transaction of
lending of amount is absent and income-tax returns also do
not reflect such amount, that at the best would hold the
assessee or lender liable for action under the Income-tax laws.
However, otherwise, if he succeeds in showing lending of such
amount, both by oral evidence of himself and his friend, on
whom even respondent No.2 relies upon and from the writing
of the respondent No.2 given separately along with seven
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cheques signed by him, what possible reasons could weigh
with the Court to deny the existence of legally enforceable
debt in such glaring circumstances.
25. Considering the fact that the complainant maintains his
books of account, coupled with the fact that the respondent
No.2 had merely refuted on flimsy ground of his having
transacted with witness Jagdishbhai and not with the
complainant, has failed to discharge the burden which had
shifted upon him. It is to be noted that the respondent No.2
has admitted his signature on the impugned cheque. At no
point of time, the cheque has been disputed......Once this fact
is acknowledged that the signature on the cheque is that of
the respondent No. 2-accused, section 139 of the Negotiable
Instruments Act would mandate the presumption that the
cheque concerns a legally enforceable debt or liability. Of
course, this presumption is in the nature of rebuttal and onus
is on the accused thereafter to raise a probable defence.
25.1 As can be noted from the chronology of events and the
material that has been placed before this Court that the
defence raised by the accused is not at all probable. The
respondent No.2-accused states that the money was given as
a hand loan by his friend Jagdishbhai and not the appellant,
also gets falsified completely by the version of Jagdishbhai.
It appears that in case of all the seven cheques when notices
were given prior to the filing of the complaint, he has chosen
not to reply to four of the notices. Either on account of
insufficiency of the funds or because he has closed account
that the cheques could not be realized. All these circumstances
cumulatively lead this Court to conclude that the appellant
succeeded in proving the legally enforceable debt and no
probable defence for rebutting the statutory presumption is
raised by the respondent No.2.
25.2 Initial presumption as contemplated under section 139
of the Negotiable Instruments Act, when the proof of lending
of the money and acceptance of the signatures on the cheques,
shall need to be raised by the Court in favour of the appellant.
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28. .......... Reasonably, when the appellant had proved the
legally enforceable debt, not only through his own evidence,
but also through the evidence of his friend Jagdishbhai and
also other contemporaneous record, more particularly, the
document at Exhibit 24, which is a writing by which the
respondent No.2 clearly indicates and accepts his liability to
the tune of Rs. 22.50 lakh. Thus, the burden had shifted upon
the respondent No. 2. The presumption which was needed to
be drawn by the Court under section 118 of the Negotiable
Instruments Act would oblige the Court to presume that the
cheque had been issued for consideration and until contrary
is proved, such presumption would hold the ground. Except
the bare denial, nothing has been found to come on record to
dislodge the positive proof that has been adduced by the
appellant.
29. In the opinion of this Court, the entire argument that the
rainy water could not have washed away the cheques, pales
into insignificance and is not argument worth consideration,
more particularly, when the respondent-accused in no unclear
terms had accepted his liability of his having accepted the
amount of Rs. 22.50 lakh from the complainant and it also
declared the issuance of seven cheques of particular dates
towards such legally enforceable debt. If it was an
understanding between the parties qua issuance of fresh
cheques, with an ostensible reason of old cheques having
washed away, those are the non-issues. This Court cannot be
oblivious of the fact that section 138 of the Negotiable
Instruments Act has been made a penal provision not only for
the cheques to give acceptability in the transaction, but it is
the economic blood-line of the country and, therefore, the
law makers have made the special rules of evidence by
introducing sections 118 and 139 of the Negotiable
Instruments Act.
30. The trial Court has committed a serious error by not
discharging its obligation of recognizing the evidentiary value
and not appreciating the positive evidence which led to the
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reasonable proof of legally enforceable debt existing on the
side of the original complainant."
8. Assailing the judgment and order so passed by the High Court,
learned counsel for the accused-appellant has contended that the
impugned judgment is contrary to the principles laid down in the case of
Arulvelu and Anr. v. State represented by Public Prosecutor & Anr.:
(2009) 10 SCC 206, particularly when the High Court has set aside
the considered judgment and orders of the Trial Court without pointing
out any perversity therein. The learned counsel has argued, with reference
to the decisions in M.S. Narayana Menon alias Mani v. State of Kerala
and Anr: (2006) 6 SCC 39 and Kumar Exports v. Sharma Carpets:
(2009) 2 SCC 519, that the High Court has failed to appreciate the
settled principle of law that the accused is only required to show a probable
defence to be acquitted of the charges under Section 138 of the NI Act.
The learned counsel has referred to the reasons assigned by the Trial
Court to acquit the accused-appellant and has submitted that contradictory
statements have been made by the complainant and the witness; that no
clear and cogent evidence has been brought on record to prove the
source of funds for advancing any loan by the complainant; that admittedly,
the complainant did not have the amount of Rs. 22,50,000/- and the
same was arranged through his friends and relatives but he made
vacillating statement in that regard and none of such relatives or friends
was examined as witness; that the witness for the complainant had more
knowledge about the transaction than the complainant; that the
complainant appeared to have rather no knowledge regarding the
payments, funds and the period of transaction; and that there was no
explanation as to how the complainant was claiming Rs. 22,50,000/- as
the debt, when the sum total of the instalments (cheques) comes to
Rs. 21,00,000/- only. The learned counsel would also argue that
complainant has heavily relied on the stamp paper dated 21.03.2007 but
then, admittedly, the complainant had not signed on the said stamp paper;
and this document, neither notarised nor registered anywhere and only
bearing the signatures of the appellant and of the said Shri Jagdishbhai,
is not of any evidentiary value for the case of the complainant. According
to the learned counsel, the accused-appellant has established his bonafide
defence that he had a financial transaction with Shri Jagdishbhai in the
past; that he gave 7 blank cheques to Shri Jagdishbhai and signed on a
stamp paper as security against such transaction; and that such cheques
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and stamp paper were sought to be misused by the complainant. The
learned counsel has contended that in the given circumstances, the
judgment and orders of the Trial Court acquitting the accused-appellant
of the offence under Section 138 of the NI Act deserve to be restored
and the impugned judgment and order dated 08.01.2018 deserves to be
set aside. The learned counsel would also submit in the alternative that
in any case, the punishment as awarded in this case is much on the
higher side and deserves to be reduced.
9. Per contra, the learned counsel for the complainant-respondent
No. 2 has duly supported the impugned judgment and has submitted that
the accused-appellant has only put forward a vague and unsure defence
that has no basis or support and stands falsified from the material on
record. The learned counsel has submitted that not only the presumption
under Section 139 NI Act has not been dislodged, in fact, the case of the
complainant is fortified in view of the unequivocal acknowledgement
and undertaking stated by the accused-appellant on the stamp paper;
and in the given circumstances, the High Court has rightly convicted him
for the offence under Section 138 of the NI Act.
10. Having given anxious consideration to the rival submissions
and having examined the record, we are clearly of the view that as
regards conviction of the accused-appellant for the offence under Section
138 NI Act, the impugned judgment and order dated 08.01.2018 does
not call for any interference but, on the facts and in the circumstances
of this case, the punishment as awarded by the High Court deserves to
be modified.
11. According to the learned counsel for the accused-appellant,
the impugned judgment is contrary to the principles laid down by this
Court in the case of Arulvelu (supra) because the High Court has set
aside the judgment of the Trial Court without pointing out any perversity
therein. The said case of Arulvelu (supra) related to offences under
Sections 304-B and 498-A IPC. Therein, on the scope of the powers of
Appellate Court in an appeal against acquittal, this Court observed as
follows:
"36. Carefully scrutiny of all these judgments lead to the
definite conclusion that the appellate court should be very
slow in setting aside a judgment of acquittal particularly in a
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case where two views are possible. The trial court judgment
cannot be set aside because the appellate court's view is more
probable. The appellate court would not be justified in setting
aside the trial court judgment unless it arrives at a clear
finding on marshalling the entire evidence on record that the
judgment of the trial court is either perverse or wholly
unsustainable in law."
11.1 The principles aforesaid are not of much debate. In other
words, ordinarily, the Appellate Court will not be upsetting the judgment
of acquittal, if the view taken by Trial Court is one of the possible views
of matter and unless the Appellate Court arrives at a clear finding that
the judgment of the Trial Court is perverse, i.e., not supported by evidence
on record or contrary to what is regarded as normal or reasonable; or is
wholly unsustainable in law. Such general restrictions are essentially to
remind the Appellate Court that an accused is presumed to be innocent
unless proved guilty beyond reasonable doubt and a judgment of acquittal
further strengthens such presumption in favour of the accused. However,
such restrictions need to be visualised in the context of the particular
matter before the Appellate Court and the nature of inquiry therein. The
same rule with same rigour cannot be applied in a matter relating to the
offence under Section 138 of the NI Act, particularly where a presumption
is drawn that the holder has received the cheque for the discharge, wholly
or in part, of any debt or liability. Of course, the accused is entitled to
bring on record the relevant material to rebut such presumption and to
show that preponderance of probabilities are in favour of his defence
but while examining if the accused has brought about a probable defence
so as to rebut the presumption, the Appellate Court is certainly entitled
to examine the evidence on record in order to find if preponderance
indeed leans in favour of the accused.
12. For determination of the point as to whether the High Court
was justified in reversing the judgment and orders of the Trial Court and
convicting the appellant for the offence under Section 138 of the NI Act,
the basic questionsto be addressed to are two-fold:as to whether the
complainant-respondent No. 2 had established the ingredients of Sections
118 and 139 of the NI Act, so as to justify drawing of the presumption
envisaged therein; and if so, as to whether the accused-appellant had
been able to displace such presumption and to establish a probable
defence whereby, the onus would again shift to the complainant?
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13. We may usefully take note of the provisions contained in
Sections 118 and 139, being the special rules of evidence applicable to
the case as follows4:
"118. Presumption 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, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for
consideration;
(b) as to date-that every negotiable instrument bearing a date
was made or drawn on such date;
(c) as to time of acceptance--that every accepted bill of exchange was accepted within a reasonable time after its date
and before its maturity;
(d) as to time of transfer--that every transfer of a negotiable
instrument was made before its maturity;
(e) as to order of indorsements--that the indorsements appearing upon a negotiable instrument were made in the order in
which they appear thereon;
(f) as to stamps- that a lost promissory note, bill of exchange or
cheque was duly stamped;
(g) that holder is a holder in due course--that the holder of a
negotiable instrument is a holder in due course;
4The principal and charging part of Section 138 NI Act may also be extracted for ready
reference as follows:
"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 provisions 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:
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