Negotiable Instruments Act, 1881 – s.138 & ss.118, 139 – Respondent purchased apple crops of various growers which was carried out through ropeway to the roadhead for further transportation – Packing material was procured by the respondent through his authorised agent on credit basis from the appellant – Accounts finally settled between the appellant and the respondent’s authorised agent and Rs.5,38,856/- was found recoverable – Cheque issued – Dishonoured– Complaint filed by the appellant – Dismissed – Upheld by the High Court – On appeal, held: Dishonour of cheque carries a statutory presumption of consideration – 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 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 – In the present case, once the agent of the respondent admitted the settlement of due amount, in absence of any other evidence the Trial Court or the High Court could not dismiss the complaint only on account of discrepancies in the cartons, packing material or the rate to determine the total liability, as if the appellant was proving his debt before the Civil Court, when the written document crystalized the amount due – Respondent failed to lead any evidence to rebut the statutory presumption, a finding returned by both the Trial Court and the High Court –Therefore, it is presumed that the cheques in question were drawn for consideration and the appellant received the same in discharge of an existing debt – Respondent guilty of dishonour of cheque for an offence u/s.138 – Order passed by the High Court, set aside – Respondent to pay Rs.10,77,712/- as fine i.e. twice of the amount of cheque of Rs.5,38,856/- and litigation cost of Rs.1,00,000/- within three months – In case of failure to pay the same, the respondent to undergo imprisonment for six months – Code of Criminal Procedure, 1973 – s.313.
Allowing the appeal, the Court
HELD: 1.1 The approach of the Trial Court and that of the High Court is perverse; irrational as well as suffers from material illegality and irregularity, which cannot be sustained in complaint filed under Section 138 Negotiable Instruments Act, 1881. A negotiable instrument including a cheque carries presumption of consideration in terms of Section 118(a) and under Section 139 of the Act. 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. [Paras 18-20] [432-D, E-H; 433-A-B]
1.2 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. Once the agent of the respondent has admitted the settlement of due amount and in absence of any other evidence the Trial Court or the High Court could not dismiss the complaint only on account of discrepancies in the determination of the amount due or oral evidence in the amount due when the written document crystalizes the amount due for which the cheque was issued. [Paras 21, 27] [433-C; 439-B-C]
1.3 The accused has failed to lead any evidence to rebut the statutory presumption, a finding returned by both the Trial Court and the High Court. Both Courts not only erred in law but also committed perversity when the due amount is said to be disputed only on account of discrepancy in the cartons, packing material or the rate to determine the total liability as if the appellant was proving his debt before the Civil Court. Therefore, it is presumed that the cheques in question were drawn for consideration and the holder of the cheques i.e., the appellant received the same in discharge of an existing debt. Crossexamination on the prosecution witness is not sufficient to rebut the presumption of consideration. Mere discrepancies in the statement in respect of the cartons, trays or the packing material or the rate charged will not rebut the statutory presumption which is proved by CW3. The conclusion drawn by the Trial Court and the High Court to acquit the respondent is not only illegal but being perverse is totally unsustainable in law. Order passed by the High Court is set aside. The respondent is held guilty of dishonour of cheque for an offence under Section 138 of the Act. and shall pay Rs.10,77,712/- as fine i.e. twice of the amount of cheque of Rs.5,38,856/- and a cost of litigation of Rs.1,00,000/within three months. If the amount of fine and the costs are not paid within three months, the respondent shall undergo imprisonment for a period of six months. [Paras 28, 32-34] [439-C-E; 440-E-G; 441-A-B]
Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 : [2008] 17 SCR 572 – distinguished.
M. S. Narayana Menon v. State of Kerala (2006) 6 SCC
39 : [2006] 3 Suppl. SCR 124 – held inapplicable. Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC
16 : [2001] 3 SCR 900 ; Rangappa v. Sri Mohan (2010)
11 441 : [2010] 6 SCR 507 ; Kishan Rao v.
Shankargouda (2018) 8 SCC 165 : [2018] 5 SCR 69 ; Bir Singh v. Mukesh Kumar (2019) 4 SCC 197 : [2019]
2 SCR 24 ; Rohitbhai Jivanlal Patel v. State of Gujarat and Another AIR 2019 SC 1876; Vijay v. Laxman and another (2013) 3 SCC 86 : [2013] 4 SCR 80 ; M. S. Narayana Menon and K. Prakashan v. P. K. Surenderan (2008) 1 SCC 258 : [2007] 10 SCR 1010 ; John K. Abraham v. Simon C. Abraham (2014) 2 SCC 236 : [2013] 12 SCR 753 – 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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