Negotiable Instrument Act, 1881: s.139 – Presumption in favour of holder – Respondent filed complaint stating that appellant was his friend and as he was in urgent need of money, he gave a sum of Rs.7 lakhs – However, cheque given by the appellant was dishonored – Conviction of appellant u/s.138 – Held: s.139 of the N.I. Act provides that Court shall presume that the holder of a cheque received the cheque of the nature referred to in s.138 for the discharge, in whole or in part, of any debt or other liability – However, it is open to the accused to establish that there is no consideration received – It is in the context of this provision that the theory of ‘probable defence’ has grown – The accused is not expected to discharge an unduly high standard of proof – All that the accused needs to establish is a probable defence which is a matter to be decided on the facts of each case – U/s.138, the complainant need not show in the first instance that he had the financial capacity – At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity – However, the accused has a right to demonstrate that the complainant in a particular case did not have the capacity which can be done by producing independent materials, namely, by examining his witnesses and producing documents – It can also be established by pointing to the materials produced by the complainant himself and cross examination of the witnesses of the complainant – In this case, in reply notice appellant did not set up that the complainant did not have the financial capacity to advance the loan – Moreover, no reference was made by the appellant of the complaint of lost cheque book or signed cheque leaf – No evidence was led to establish that the appellant had informed the Bank about the loss of cheque book containing blank cheque – In totality of facts, appellant has not been able to establish a case of interference with the finding of courts below that the offence under s.138 was committed by the appellant – Thus, conviction u/s.138 N.I Act upheld – However, sentence of one year imprisonment substituted with fine.
Constitution of India: Art.136 – Power of Supreme Court to interfere – Art.136 of the Constitution only confers a right to obtain special leave in rare and extraordinary cases – While exercising power under Art.136, the Court may not refuse to interfere in a case where three Courts have gone completely wrong – It is not to be understood as meaning that it is a clear case of even three Courts in unison falling into palpable error and thereby causing miscarriage of justice and yet this Court would not interfere.
Partly allowing the appeal, the Court
HELD: 1. It is true that this is a case under Section 138 of the Negotiable Instruments Act. Section 139 of the N.I. Act provides that Court shall presume 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. This presumption, however, is expressly made subject to the position being proved to the contrary. In other words, it is open to the accused to establish that there is no consideration received. It is in the context of this provision that the theory of ‘probable defence’ has grown. In an earlier judgment, in fact, which has also been adverted to in Basalingappa, this Court notes that Section 139 of the N.I. Act is an example of reverse onus. It is also true that this Court has found that the accused is not expected to discharge an unduly high standard of proof. It is accordingly that the principle has developed that all which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist. [Para 7][449-D-G]
2. The Trial Court and the First Appellate Court have noted that in the case under Section 138 of the N. I. Act, the complainant need not show in the first instance that he had the capacity. The proceedings under Section 138 of the N. I. Act is not a civil suit. At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent the Courts were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross examination of the witnesses of the complainant. Ultimately, it becomes the duty of the Courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence. [Para 9][450-B-E]
3. In the reply notice the appellant has not set up any case that the respondent did not have the financial capacity to advance the loan. In fact there is no reference to the loss of the cheque book or signed cheque leaf. No complaint was given of the loss of the cheque book or the signed cheque leaf either to the police or to the bank. In the evidence of DW5, the son of the appellant, the version given is that on 5.10.2011, PW5 had left home with the cheque book of the appellant which had a cheque signed by the appellant for withdrawing money, if needed in the absence of the appellant. He set up the version that he drove away an unowned cow. in the field. Thereafter, while sitting in the bus he saw the cheque book was not with him. He further deposed that since his father was not at home he could not tell him about the incident and got engrossed in his study and forgot the incident. In his statement under Section 313 Cr.PC given on 10.01.2013, appellant has taken the stand that he informed the Bank. DW5 has further deposed that when the appellant received the notice he asked him about the cheque book and then he told him about the incident of the loss of cheque book. Still, at the time when the reply notice was sent, the case is not set up about the loss of cheque book and about the cheque relied upon by the respondent being one which is brought into existence using the lost signed cheque leaf. There is no evidence to establish that the appellant had informed the Bank about the loss of the cheque book containing blank cheque. In fact, in the statement under Section
313 Cr.PC. appellant had stated that this cheque book containing a blank cheque was lost. Appellant has no case that the signature on the cheque in question was not put by him. [Para 10][450-FH; 451-A-D]
4. This Court even exercising power under Article 136 of the Constitution may not refuse to interfere in a case where three Courts have gone completely wrong. The jurisdiction generated in an appeal under Article 136 is undoubtedly rare and extraordinary. Article 136 of the Constitution only confers a right to obtain special leave in rare and extraordinary cases. However, this is not to be understood as meaning that it is a clear case of even three Courts in unison falling into palpable error and thereby causing miscarriage of justice and yet this Court would not interfere. [Para 11][451-D-F]
5. However, in the totality of facts of this case the appellant has not established a case for interference with the finding of the Courts below that the offence under Section 138 N. I. Act stands committed by the appellant. The amount of compensation in a sum of Rs.7 Lakhs which is relatable to the cheque amount has been deposited already in the Trial Court. However, appellant should be granted relief in the form of substitution of the sentence of imprisonment of one year with a fine. An amount of Rs.5,000/should suffice as substitution for the imprisonment. Apart from that, a further amount of Rs.15,000/- shall be paid as compensation to the respondent. [Para 12][451-F-H]
Basalingapa vs. Mudibasappa (2019) 5 SCC 418 : [2019] 6 SCR 555 – 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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