Negotiable Instruments Act, 1881: ss.138, 139 – Dishonour of cheque – Insufficiency of funds – Complaint under s.138 – Case of complainant-appellant was that the respondent-accused used to purchase rice bags from the appellant sometimes on credit and sometimes on cash and that the cheques issued by the respondent were subject matter of the complaints and pertained to the credit purchases made by the respondent for which no payment was made – On the other hand, case of the respondent was that he always used to make credit purchase and leave blank cheques with the appellant and thereafter, he used to make payment for which the appellant used to issue receipts to the respondent; however, the appellant did not return the blank cheques left by the respondent with the appellant though the respondent made the payments and those cheques were misused by the appellant-complainant – Acquittal by trial court and High Court on the ground that appellant failed to prove that respondent owed him debt and the cheques were issued for the discharge of the said debt – Held: It is quite unbelievable that in a business/mercantile transaction, the respondent even after making payment towards the purchase of rice bags, did not insist for return of the cheques and did not take any steps to get them back and continued with the business transaction even though the appellant did not return the cheques after payment of the money – Courts below referred to the three cheques and observed that the date of issuance of the three cheques suggested that the cheques were already with appellant and they were utilised by appellant thereafter and, therefore, in view of inconsistency, the presumption available under s.139 was not available to the appellant – The courts below did not keep in view that the appellant had no control over the manner of issuance of cheques by the respondent and how it was issued – Merely because, later cheque was said to have been issued by the respondent at an earlier date, it cannot be held that the appellant had used the blank cheques issued by the respondent – The courts below disbelieved the evidence of appellant on the ground that there were no averments in the complaint that the commodities were sold for cash and that the rice bags were sold on credit and the cheques were issued for the goods sold on credit – It was for the respondent to adduce evidence to prove that the cheques were not supported by consideration and that there was no debt or liability to be discharged by him – The receipts relied upon by the respondent did not create doubt about the purchases made on credit and the existence of a legally enforceable debt for which the cheques were issued – The courts below erred in saying that by the receipts, the respondent has rebutted the statutory presumption raised under s.139 – The oral and the documentary evidence adduced by the appellant were sufficient to prove that it was a legally enforceable debt and that the cheques were issued to discharge the legally enforceable debt – The impugned judgment of the High Court is not sustainable and is set aside – Respondent is convicted under s.138 in both the complaints.
Negotiable Instruments Act, 1881: ss.138, 139 – Presumption in favour of holder – Held: Under s.138, once the cheque is issued by the drawer, a presumption under s.139 in favour of the holder would be attracted – s.139 creates a statutory presumption that a cheque received in the nature referred to under s.138 is for the discharge in whole or in part of any debt or other liability – The initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt – It is for the accused to adduce evidence of such facts and circumstances to rebut the presumption that such debt does not exist or that the cheques are not supported by consideration – In the instant case, by examining himself as PW-1, the complainant has discharged the initial burden cast upon him that the cheques were issued for the rice bags purchased on credit – With the examination of PW-1, the statutory presumption under s.139 of the Act arises that the cheques were issued by the respondent-accused for the discharge of any debt or other liability in whole or in part.
Allowing the appeals, the Court
HELD : 1. As seen from the receipts-Ex 16/C and Ex.-22/C, though the amount said to have been credited to the account of the respondent, the receipt contain the expression “cheques are subject to realisation”. DW-2, father of respondent-accused, in his evidence, stated that the respondent used to leave blank cheques with him in order to carry out the business transaction. DW-2 stated that they used to purchase rice bags from the complainant and leave the cheques with the complainant. Admittedly, the cheques were in the handwriting of DW-2. In his evidence, DW-2 stated that though the amount pertaining to the purchase of rice was already paid, the complainant did not return the cheques in spite of having received the amount pertaining to the purchase of rice. It is quite unbelievable that in a business/mercantile transaction, the accused even after making payment towards the purchase of rice bags, did not insist for the return of the cheques. [Paras 13, 14] [379-C; 380-A-C]
2.1 The trial court in its judgment referred to the three cheques and observed that the three cheques bearing Nos.2463, dated 18.08.2003; 2480 dated 25.08.2003 and 2497 dated 08.08.2003 go to suggest that the later cheque bearing No.2497 was given much more earlier to 18.08.2003 or 25.08.2003 which seemed inconsistent and it would not have been in the normal course of business. The trial court held that the date of issuance of the three cheques suggested that the cheques were already with the complainant and they were utilised by the complainant thereafter. On this aspect, PW-1 was cross-examined as to why cheque bearing No.2497 was issued on 08.08.2003 while it ought to have been issued after 25.08.2003 to which PW-1 stated that he did not know about the same. After referring to the above three cheques, the trial court held that in view of inconsistency, the presumption available under Section 139 of the Negotiable Instruments Act was not available to the complainant which was affirmed by the High Court. The courts below did not keep in view that the appellant has no control over the manner of issuance of cheques by the respondent and how it was issued. Merely because, later cheque No.2497 was said to have been issued by the respondent at an earlier date i.e. 08.08.2003, it cannot be held that the complainant had used the blank cheques issued by the respondent. [Para 15] [380-D-G]
2.2 Section 139 creates a statutory presumption that a cheque received in the nature referred to under Section 138 of the Negotiable Instruments Act is for the discharge in whole or in part of any debt or other liability. The initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt. It is for the accused to adduce evidence of such facts and circumstances to rebut the presumption that such debt does not exist or that the cheques are not supported by consideration. In the instant case, by examining himself as PW-1, the complainant has discharged the initial burden cast upon him that the cheques were issued for the rice bags purchased on credit. With the examination of PW-1, the statutory presumption under Section 139 of the Act arises that the cheques were issued by the respondent-accused for the discharge of any debt or other liability in whole or in part. Though the complaint contains no specific averments that the cheques were issued for the purchase made on credit, in his evidence, PW-1 clearly stated that the cheques were issued for the commodities purchased on credit. The courts below erred in brushing aside the evidence of PW-1 on the ground that there were no averments in the complaint as to the purchases made by cash and purchase. [Paras 16-18] [381-A-C; 383-D-G]
3. It was for the respondent-accused to adduce evidence to prove that the cheques were not supported by consideration and that there was no debt or liability to be discharged by him. The receipts-Ex.-22/C (colly) relied upon by the respondentaccused did not create doubt about the purchases made on credit and the existence of a legally enforceable debt for which the cheques were issued. The courts below erred in saying that by the receipts-Ex.22/C (colly), the respondent-accused rebutted the statutory presumption raised under Section 139 of the Negotiable Instruments Act. The oral and the documentary evidence adduced by the complainant were sufficient to prove that it was a legally enforceable debt and that the cheques were issued to discharge the legally enforceable debt. The impugned judgment of the High Court cannot be sustained and is liable to be set aside. The respondent-accused is convicted under Section
138 of the Negotiable Instruments Act in both the complaints; however, considering that the cheque transaction was of the year 2003, at this distant point of time, it is not found appropriate to impose any sentence of imprisonment on the accused. [Paras 19-20] [383-H; 384-A-D]
Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 : [2008] 17 SCR 572 – relied on.
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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