Negotiable Instruments Act, 1881: ss. 118 and 139 – Presumption as to negotiable instruments – Presumption in favour of holder – Held: Once the signature of an accused on the cheque/negotiable instrument are established, then the ‘reverse onus’ clauses become operative – In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him – Presumptions raised u/ss. 118, 139 are rebuttable in nature – A probable defence needs to be raised, which must meet the standard of “preponderance of probability”, and not mere possibility – On facts, trial court overlooked the provisions and failed to appreciate the statutory presumption drawn u/ss. 118 and 139, and dismissed the complaint u/s. 138 of the NI Act – Once the appellant-accused admitted his signatures on the cheque and the Deed, the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt – Trial court erred in calling upon the complainant to explain the circumstances under which the appellants were liable to pay – Since it is admitted that there has been business relationship between the parties, the defence raised by the appellants does not meet the standard of ‘preponderance of probability’ – Thus, the High Court right in discarding the appellants’ defence and upholding the onus imposed upon them in terms of ss.
118 and 139 – High Court justified in setting aside the findings of the trial court in exercise of its power u/s. 378 CrPC. Compensation: Claim of, in cases pertaining to dishonor of cheque – On facts, the respondent neither sought for compensation before the High Court nor did he challenged the High Court’s judgment – Held: Since the respondent has accepted the High Court’s verdict, his claim for compensation stands impliedly overturned.
Sentence/sentencing: Reduction/modification of sentence – Commission of offence u/s. 138 of the NI Act – In appeal before the Supreme Court, appellants-accused deposited the cheque amount with the Registry of this Court – In view of dismissal of appeal, appellant No.2 liable to undergo the sentence of simple imprisonment as awarded by the High Court – However, since the appellant no 2 volunteered and thereafter deposited the cheque amount with the Registry of this Court, a lenient view is taken – Appellant No.2 not required to undergo the awarded sentence – Negotiable Instruments Act, 1881.
Dismissing the appeal, the Court
HELD: 1.1 The trial court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of Negotiable Instruments Act, 1881. The Statute mandates that once the signature(s) of an accused on the cheque/negotiable instrument are established, then these ‘reverse onus’ clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. [Para 14][676-B-D]
Rohitbhai Jivanlal Patel v. State of Gujarat (2019) 18 SCC 106– Referred to
1.2 Once the 2nd Appellant had admitted his signatures on the cheque and the Deed, the trial court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial court fell in error when it called upon the complainant-respondent to explain the circumstances under which the appellants were liable to pay. Such approach of the trial court was directly in the teeth of the established legal position and amounts to a patent error of law. [Para 15][676-F-H]
1.3 The presumptions raised under Section 118 and Section
139 are rebuttable in nature. A probable defence needs to be raised, which must meet the standard of “preponderance of probability”, and not mere possibility. A bare denial of passing of consideration would not aid the case of the accused. [Para 16][677-A-B]
1.4 The appellants have banked upon the evidence of DW1 to dispute the existence of any recoverable debt. However, his deposition merely highlights that the respondent had an over extended credit facility with the bank and his failure to update his account led to debt recovery proceedings. Such evidence does not disprove the appellants’ liability and has a little bearing on the merits of the respondent’s complaint. Similarly, the appellants’ mere bald denial regarding genuineness of the Deed of Undertaking dated 07.11.2000, despite admitting the signatures of Appellant No. 2 thereupon, does not cast any doubt on the genuineness of the said document. [Para 17][677-C-D]
1.5 Even if the arguments raised by the appellants are taken at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. Considering the fact that there has been an admitted business relationship between the parties, the defence raised by the appellants does not inspire confidence or meet the standard of ‘preponderance of probability’. In the absence of any other relevant material, it appears that the High Court did not err in discarding the appellants’ defence and upholding the onus imposed upon them in terms of Section 118 and Section 139 of the NIA. [Para 18-19][677-D-H] Basalingappa v. Mudibasapp (2019) 5 SCC 418 : [2019] 6 SCR 555; Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 : [2008] 17 SCR 572; MS Narayana Menon v. State of Kerela (2006) 6 SCC 39 : [2006] 3 Suppl. SCR 124; Bir Singh v. Mukesh Kumar (2019) 4 SCC 197 : [2019] 2 SCR 24 – referred to
1.6 The object of Chapter XVII of the NIA is not only punitive but also compensatory and restitutive. The provisions of NIA envision a single window for criminal liability for dishonour of cheque as well as civil liability for realisation of the cheque amount. It is also well settled that there needs to be a consistent approach towards awarding compensation and unless there exist special circumstances, the Courts should uniformly levy fine up to twice the cheque amount along with simple interest at the rate of 9% per annum. The respondent, nevertheless, cannot take advantage of the above cited principles so as to seek compensation. The record indicates that neither did the respondent ask for compensation before the High Court nor has he chosen to challenge the High Court’s judgment. Since, he has accepted the High Court’s verdict, his claim for compensation stands impliedly overturned. The respondent, in any case, is entitled to receive the cheque amount of Rs.11.20 lakhs which the appellant has already deposited with the Registry of this Court. As regards award of sentence by the High Court, given the peculiar facts and circumstances of the case, namely, that the appellants volunteered and thereafter have deposited the cheque amount with the Registry of this Court in the year 2018, a lenient view is taken. The impugned judgment of the High Court is modified, and it is directed that Appellant No.2 would not be required to undergo the awarded sentence. [Para 20-22] [678-A-F]
Ram Jag v. State of UP (1974) 4 SCC 201 : [1974] 3 SCR 9; Rohtas v. State of Haryana (2019) 10 SCC 554; Raveen Kumar v. State of Himachal Pradesh 2020 SCC Online SC 869; Murugesan v. State Through Inspector of Police (2012) 10 SCC 383 : [2012] 13 SCR 1; Reena Hazarika v. State of Assam (2019) 13 SCC 289 : [2018]
13 SCR 1108; CK Dasegowda and Others v. State of Karnatak (2014) 13 SCC 119 : [2014] 8 SCR 295; State of UP v. Banne (2009) 4 SCC 271; Ghurey Lal v. State of U.P. (2008) 10 SCC 450 : [2008] 11 SCR 499; R. Vijian v. Baby (2012) 1 SCC 260 : [2011] 14SCR 712 – referred to
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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