Rajesh Jain vs Ajay Singh

2023INSC888 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO………. OF 2023 (@ Special Leave Petition (Crl.) No.12802 of 2022)

Rajesh Jain …. Appellant

Versus

Ajay Singh …. Respondent JUDGMENT

Aravind Kumar, J.

1. Leave Granted.

2. The respondent-accused was tried for the offence under Section

138 of the Negotiable Instruments Act, 1881 (for short ‘NI Act’). The

Trial Court acquitted1 him. The High Court dismissed the appellant’s-

complainant's appeal and upheld the order of acquittal2. Challenging the Signature Not Verified Digitally signed by NEETA SAPRA Date: 2023.10.10 17:49:06 IST Reason: 1 Judgment and Order dated 17.12.2019 in Crl. Complaint No. 221 of 2017 2 Criminal Appeal No.148 of 2020 was dismissed by Hon’ble High Court of Gujarat by Judgment and Order dated 01.02.2021.

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concurrent findings passed by the Courts below, the complainant has

preferred this appeal.

Case of the Complainant

3. Mr. Ajay Singh (respondent-accused), along with his wife, is

said to have approached the appellant-complainant (Mr. Rajesh Jain) on

01.03.2014 with a request for lending him money. The meeting is said

to have been facilitated by Ms. Gita Sunar the sister-in-law of Mr. Singh

who had been working as an employee under Mr. Rajesh Jain for nearly

15 years then. Mr. Rajesh Jain, appellant appearing in-person contended

that he had lent a sum of Rs. 6 lacs on that day and has lent further sums

thereafter, in the genuine belief that Mr. Ajay Singh would honour his

promise of timely repayment and return the sum borrowed with interest,

as agreed.

4. The respondent-accused failed to repay as per the timeline

agreed. The complainant's efforts to recover his money were met with

avoidance tactics. The accused is said to have changed his cellular

telephone number without notice to the complainant, with the intent of 3

evading his payment obligations. It is only in the year 2017, that the

complainant managed to trace the accused-at which point, the accused

sought for forgiveness and promised to repay the amounts borrowed

along with interest, within three months. The accused had informed the

complainant that he would source the funds to clear his outstanding

dues by selling two plots of land he owns in Nepal, by taking a personal

loan and from the 7th Pay Commission arrears that he was to receive.

5. Yet again, the accused defaulted on his promise. He was not to

be found in his residential address. Having successfully concealed

himself for about 7 months, the complainant appears to have located

him at a new residential address. On direct confrontation, the accused

is said to have issued a post-dated cheque No.163044 (dated

19.10.2017) for a sum of Rs.6,95,204/- towards part repayment of

outstanding dues. The accused assured the complainant that the balance

dues would be repaid by issuing a second cheque in the month of

December 2017.

6. On its presentation, the cheque was returned with the

endorsement 'Funds Insufficient. The complainant issued a demand 4

notice through his counsel on 26.10.2017 and called upon the accused

to make repayment of the cheque amount (Rs. 6,95,204) and other

expenses incurred within 15 days. Since the demand was not complied

with, a complaint under Section 138 NI Act was instituted on

29.11.2017, before the Court of Judicial Magistrate First Class (JMFC),

Jind.

Proceedings before the Trial Court

7. The Trial Court took cognizance of the offence, summoned the

accused and issued notice of accusation. The accused pleaded not guilty

and claimed to be tried.

8. In support of his case, the complainant had examined himself as

CW-1. Mr. Gulab Singh, a bank official at SBI, Jind branch office was

examined as CW-2 and Ms. Gita Sunar as CW3. The complainant had

also produced the relevant documentary evidence3 including the cheque

3 Ex.CW1/A-Cheque No.163044 dt.19.10.2017 Ex.CW1/B-Cheque return Memo dt. 01.11.2017 Ex.CWA/C- Copy of Bank passbook of complainant Ex.CW1/D-Legal Notice dt. 26.10.2017 Ex.CW1/E-Postal Receipt dt. 28.10.2017 Ex.CW2/1-Statement of account of complainant Dr. Rajesh Jain w.e.f 01.10.2017 to 31.12.2017 Ex. CW2/2-Copy of Cheque Bonus Register 5

in question, cheque return memo, copy of the bank passbook, demand

notice, postal register, statement of accounts of the complainant and

cheque returned register.

9. In his statement under Section 313 of the Code of Criminal

Procedure Code 1973, the accused admits of having borrowed money

to the extent of Rs.20 lakhs from the complainant. He admits of having

paid some interest amount and has pleaded that he could not pay the

remaining amount since complainant had started demanding higher

amount. He further admits of having received the legal notice but denies

having issued any cheque.

10. No defense evidence has been led on behalf of the accused.

11. On a consideration of evidence on record, the Trial Court

returned a finding that the accused was not guilty.

12. The Trial Court found that (i) the complainant had discharged

his initial onus of proving the essential facts underlying the offence

under Section 138 of the NI Act; (ii) the signature on the cheque [Exh.

CW1/A) was admitted by the accused and, hence, it rightly raised the 6

statutory presumption under Section 139 NI Act. It, then, rightly noted

that the onus of rebutting the presumption lay on the accused and said

onus was to be discharged by raising a 'probable defence' which would

create a doubt as to the existence of a legally enforceable debt.

13. It then framed the point for determination as follows:

"The only question remaining for determination is whether a legally valid and enforceable debt existed qua the complainant and the cheque in question (Ex. CWI/A) was issued in discharge of said liability/debt?"

14. The Trial Court answered the issue in the negative. It held that

the complainant had failed to prove his case beyond reasonable doubt.

It has been observed that the defence led by the accused has created a

doubt regarding the truthfulness of the complainant's case.

15. The conclusion of the Trial Court was based on the following

grounds:

(i) That the legal notice [Ex. CW1/D] dated 26.10.2017 was not a valid legal notice since it was not signed by the complainant or his counsel.

(ii) In the complaint, legal notice as well as the affidavit evidence, the complainant has failed to mention the date, month and year on which he advanced various sums of money towards loan.

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(iii) The evidence on records indicates that the complainant is in the business of money lending. Since he does not possess any valid license/registration4 under the Punjab Registration of Money Lenders Act, 19385 (Money Lenders Act), he could not have filed a suit for recovery of money advanced as per Section 3 of the Money Lenders Act. The Bombay High Court has in the case of Nanda v. Nandakishor6 interpreted the phrase 'in any suit' as found in Section 3, widely, to include even a complaint under Section 138 of the NI Act. Relying on the said decision, the Trial Court has concluded that the complaint has been filed in respect of an unenforceable claim.

(iv) The procedure set out in Section 138 has not been properly followed in that the legal notice has been issued prematurely, even before the complainant had received notice of the cheque return memo. The date reflected on the cheque return memo is 1.11.2017 and the date on which the legal notice was issued is 26.10.17. The legal notice could not have been issued until the cheque had been dishonoured.

(v) The version of the complainant is doubtful since the cheque was, admittedly, issued in part-payment of outstanding dues. Nowhere in the complaint or demand notice has the complainant disclosed the total amount loaned to the accused. The Court found it rather surprising that the complainant, an orthopaedic surgeon, would advance huge amounts of loan to the accused, a Class IV employee, without any formal agreement/acknowledgement of loan advanced.

16. The complainant was granted special leave to appeal under

Section 378 (4) CrPC before the High Court of Punjab and Haryana.

4 Section 4(2) postulates no money-lender shall carry on the business of advancing loans unless he gets himself registered under sub-section (1) 5 Adaptation of Law Order 1968 – See Page 75 6 (2010) SCC OnLine Bombay 54 8

Proceedings before the High Court

17. On reappreciating the evidence on record, the High Court has

found no merit in the appeal and has upheld the order of acquittal passed

by the Trial Court. The High Court has reasoned that accused had

discharged his onus in rebutting the statutory presumption raised under

Section 139 NI Act. The onus, then, once again had shifted to the

complainant to prove that the cheque had been issued in respect of a

legally enforceable debt and complainant had failed in discharging the

onus to prove that cheque was issued in respect of a legally enforceable

debt.

18. The underlying basis of the findings in the High Court judgment

can be summarised thus:

18.1 The presumption under Section 139 was rebutted by putting

questions to the appellant in his cross examination and explaining the

incriminating circumstances found in the statement recorded under

Section 313 of Cr.P.C.

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18.2 The cross examination of the appellant reveals that he had given

loan to accused commencing from 1st March, 2014 and on several dates

thereafter. The cheque was handed over to the accused only on

19.10.2017, nearly three years thereafter. If the appellant had given loan

on various dates, he must have maintained some documents to evidence

such loans. He has remained silent as to the specific amounts loaned

after 01.03.2014 and complainant ought to have tendered in evidence

accounts, ledger, statement to prove the debt amount. The stand of the

accused was that he did borrow money from the complainant but every

month, the complainant would enhance the outstanding dues by Rs 1

lakh. Therefore, the stand of the respondent seems to be more probable

than the case of the complainant.

18.3 There is a consistent allegation in the complaint, demand notice

and the affidavit in evidence that the loan was given subject to payment

of interest on the principal amount. The complainant ought to have

mentioned the principal amount borrowed and the interest charged

thereon in order to arrive at the cheque amount of Rs.6,95,204/-. Since

the breakup of the principal amount and interest charged is 10

conspicuously absent in all the three documents, the complaint is bereft

of material particulars and deserved to be dismissed at the very outset.

18.4 In so far as the Trial Court's finding that the complaint was not

maintainable since the complainant was not registered under the Money

Lenders Act, the High Court has observed that there was no necessity

of evaluating such a finding since that question would only arise if the

complainant had succeeded in proving that the cheque was issued in

respect of a legally enforceable debt.

19. We have heard Mr. Rajesh Jain, appellant appearing in-person,

and Mr. Yudhvir Dalal, learned Counsel for the respondent.

20. Mr. Rajesh Jain, appearing in-person has contended that there is

a serious flaw in the approach of the Courts below while appreciating

the evidence on record. According to him, the signature on the cheque

not being under dispute, and the presumption under Section 139 having

been drawn against the accused, there was nothing available on record

to suggest that the accused had discharged his onus of rebutting the

presumption. He drew our attention to the reasoning given in the orders 11

of acquittal to contend that courts below had erroneously proceeded to

appreciate the evidence as though the onus was on the complainant to

prove that ‘the cheque was issued in discharge of a debt’. Once the

presumption operates, the onus rests on the accused to prove the non-

existence of debt/liability and the courts could not have doubted the

complainant's case from any point of view. He finally argued that the

respondent cannot be said to have raised a 'probable defence' since the

case set up in defence was full of inconsistencies and bereft of any

evidence. He, accordingly, prays that concurrent findings be set aside,

and an order of conviction be passed against the accused.

21. Mr. Yudhvir Dalal, learned counsel has contended that this

Court, while hearing an appeal by special leave, must be extremely slow

to interfere against concurrent findings. Merely because another view

can be taken on reappreciation of the evidence, is no ground to interfere;

on the merits, he contends that the accused has discharged the burden

fastened by raising a 'probable defence', which meets the standard of

'preponderance of probabilities. He has relied on a few judgments to

contend that the presumption can be rebutted even without leading any 12

rebuttal evidence. In this regard, he submits that it is always open to the

accused to rely on the materials produced by the complainant for

disproving the existence of a legally enforceable debt or liability. He

submits that the complaint is lacking in material particulars-it fails to

state the total sum loaned, the dates on which the loans were given, the

basis on which the demand was made for a sum of Rs. 6,95,204/-. These

facts coupled with other circumstances has justifiably created a doubt

in the mind of the court as to the genuineness of the complainant's case

and therefore, courts below were justified in disbelieving the

complainant's version. On these grounds he prays for dismissal of the

appeal.

22. We have taken note of the rival submissions canvassed and have

perused the record.

Question for Consideration

23. Since the execution of the cheque is, admittedly, not under

dispute, the limited question to be considered, is (i) whether the accused

can be said to have discharged his 'evidential burden', for the courts 13

below to have concluded that the presumption of law supplied by

Section 139 had been rebutted?

23.1 If the answer to this question is found in the affirmative, the next question to be considered is (i) whether the complainant has, in the absence of the artificial force supplied by the presumption under Section 139, independently proved beyond reasonable doubt that the cheque was issued in discharge of a debt/liability? The necessity of dealing with point No. (ii) will only arise if the answer to point No. (i) in the affirmative. Hence, we shall take up point (i) for consideration.

Applicable Legal Principles

Scope of Article 136 vis a vis Concurrent Finding of Fact

24. At the threshold, we must note that the challenge in this appeal

calls for an interference against concurrent findings by two Courts. The

scope of an appeal by special leave under Article 136 of the Constitution

of India against the concurrent findings is well settled. In Mst. Dalbir

Kaur and Ors. vs. State of Punjab (1976) 4 SCC 158, this Court, on a

consideration of multiple authorities, has distilled the principles 14

governing interference by this Court in a criminal appeal by special

leave, as follows:

(1) that this Court would not interfere with the concurrent finding of fact based on pure appreciation of evidence even if it were to take a different view on the evidence.

(2) that the Court will not normally enter into a re-

appraisement or review of the evidence, unless the assessment of the High Court is vitiated by an error of law or procedure or is based on error of record, misreading of evidence or is inconsistent with the evidence, for instance, where the ocular evidence is totally inconsistent with the medical evidence and so on.

(3) that the Court would not enter into credibility of the evidence with a view to substitute its own opinion for that of the High Court

(4) that the Court would interfere where the High Court has arrived at a finding of fact in disregard of a judicial process, principles of natural justice or a fair hearing or has acted in violation of a mandatory provision of law or procedure resulting in serious prejudice or injustice to the accused.

(5) this Court might also interfere where on the proved facts wrong inferences of law have been drawn or where the conclusions of the High Court are manifestly perverse and based on no evidence: It is very difficult to lay down a rule of universal application, but the principles mentioned above and those adumbrated in the authorities of this Court cited supra provide sufficient guidelines for this Court to decide criminal 15

appeals by special leave. Thus, in a criminal appeal by special leave, this Court at the hearing examines the evidence and the judgment of the High Court with the limited purpose of determining whether or not the High Court has followed the principles enunciated above. Where the Court finds that the High Court has committed no violation of the various principles laid down by this Court and has made a correct approach and has not ignored or overlooked striking features in the evidence which demolish the prosecution case, the findings of fact arrived at by the High Court on an appreciation of the evidence in the circumstances of the case would not be disturbed.

Section 138 of the NI Act - Necessary Ingredients

25. Essentially, in all trials concerning dishonour of cheque, the

courts are called upon to consider is whether the ingredients of the

offence enumerated in Section 138 of the Act have been met and if so,

whether the accused was able to rebut the statutory presumption

contemplated by Section 139 of the Act.

26. In Gimpex Private Limited vs. Manoj Goel7, this Court has

unpacked the ingredients forming the basis of the offence under Section

138 of the NI Act in the following structure:

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(2022) 11 SCC 705 16

(1) The drawing of a cheque by person on do account maintained by him with the banker for the payment of any amount of money to another from that account;

(i) The cheque being drawn for the discharge in whole or in part of any debt or other liability;

(iii) Presentation of the cheque to the bank arranged to be paid from that account,

(iv) The return of the cheque by the drawee bank as unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount

(v) A notice by the payee or the holder in due course making a demand for the payment of the amount to the drawer of the cheque within 30 days of the receipt of information from the bank in regard to the return of the cheque; and

(vi) The drawer of the cheque failing to make payment of the amount of money to the payee or the holder in due course within 15 days of the receipt of the notice.

27. In K. Bhaskaran v. Sankaran Vaidhyan Balan8 this Court

had summarised the constituent elements of the offence in fairly

similar terms by holding:

“14. The offence Under Section 138 of the Act can be completed only with the concatenation of a number of acts. The following are the acts which are components of the said offence: (1) drawing of the cheque, (2) presentation of the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (3) failure of the drawer to make payment within 15 days of the receipt of the notice.”

8 (1999) 7 SCC 510 17

28. The five (5) acts as set out in K Bhaskaran's case (supra) are,

generally speaking, matters of record and would be available in the

form of documentary evidence as early as, at the stage of filing the

complaint and initiating prosecution. Apart from the above acts, it is

also to be proved that cheque was issued in discharge of a debt or

liability (Ingredient no. (ii) in Gimpex's case). The burden of proving

this fact, like the other facts, would have ordinarily fallen upon the

complainant. However, through the introduction of a presumptive

device in Section 139 of the NI Act, the Parliament has sought to

overcome the general norm as stated in Section 102 of the Evidence Act

and has, thereby fixed the onus of proving the same on the accused.

Section 139, in that sense, is an example of a reverse onus clause and

requires the accused to prove the non-existence of the presumed fact,

i.e., that cheque was not issued in discharge of a debt/liability.

Burden of Proof and Presumptions: Conceptual Underpinnings

29. There are two senses in which the phrase ‘burden of proof ’ is

used in the Indian Evidence Act, 1872 (Evidence Act, hereinafter). One 18

is the burden of proof arising as a matter of pleading and the other is the

one which deals with the question as to who has first to prove a

particular fact. The former is called the ‘legal burden’ and it never

shifts, the latter is called the ‘evidential burden’ and it shifts from one

side to the other. [See Kundanlal v. Custodian Evacuee Property (AIR

1961 SC 1316)]

30. The legal burden is the burden of proof which remains constant

throughout a trial. It is the burden of establishing the facts and

contentions which will support a party's case. If, at the conclusion of

the trial a party has failed to establish these to the appropriate standards,

he would lose to stand. The incidence of the burden is usually clear from

the pleadings and usually, it is incumbent on the plaintiff or complainant

to prove what he pleaded or contends. On the other hand, the evidential

burden may shift from one party to another as the trial progresses

according to the balance of evidence given at any particular stage; the

burden rests upon the party who would fail if no evidence at all, or no

further evidence, as the case may be is adduced by either side (See

Halsbury's Laws of England, 4th Edition para 13). While the former, 19

the legal burden arising on the pleadings is mentioned in Section 101 of

the Evidence Act, the latter, the evidential burden, is referred to in

Section 102 thereof. [G.Vasu V. Syed Yaseen (AIR 1987 AP139)

affirmed in Bharat Barrel Vs. Amin Chand [(1999) 3 SCC 35] ]

31. Presumption, on the other hand, literally means “taking as true

without examination or proof”. In Kumar Exports v. Sharma Exports9,

this Court referred to presumption as "devices by use of which courts

are enabled and entitled to pronounce on an issue notwithstanding that

there is no evidence or insufficient evidence."

32. Broadly speaking, presumptions are of two kinds, presumptions

of fact and of law. Presumptions of fact are inferences logically drawn

from one fact as to the existence of other facts. Presumptions of fact are

rebuttable by evidence to the contrary. Presumptions of law may be

either irrebuttable (conclusive presumptions), so that no evidence to the

contrary may be given or rebuttable. A rebuttable presumption of law is

a legal rule to be applied by the Court in the absence of conflicting

9 (2009) 2 SCC 513 20

evidence (Halsbury, 4th Edition paras 111, 112]. Among the class of

rebuttable presumptions, a further distinction can be made between

discretionary presumptions (‘may presume’) and compulsive or

compulsory presumptions (‘shall presume’). [G. Vasu V. Syed Yaseen

(Supra)]

33. The Evidence Act provides for presumptions, which fit within

one of three forms: 'may presume' (rebuttable presumptions of fact),

'shall presume' (rebuttable presumption of law) and conclusive

presumptions (irrebuttable presumption of law). The distinction

between 'may presume' and 'shall presume' clauses is that, as regards

the former, the Court has an option to raise the presumption or not, but

in the latter case, the Court must necessarily raise the presumption. If

in a case the Court has an option to raise the presumption and raises the

presumption, the distinction between the two categories of

presumptions ceases and the fact is presumed, unless and until it is

disproved, [G.Vasu V. Syed Yaseen (Supra)] 21 Section 139 NI Act-Effect of Presumption and Shifting of Onus of Proof

34. The NI Act provides for two presumptions: Section 118 and

Section 139. Section 118 of the Act inter alia directs that it shall be

presumed, until the contrary is proved, that every negotiable instrument

was made or drawn for consideration. Section 139 of the Act stipulates

that 'unless the contrary is proved, it shall be presumed, that the holder

of the cheque received the cheque, for the discharge of, whole or part

of any debt or liability'. It will be seen that the 'presumed fact' directly

relates to one of the crucial ingredients necessary to sustain a conviction

under Section 138.10

35. Section 139 of the NI Act, which takes the form of a ‘shall

presume’ clause is illustrative of a presumption of law. Because Section

139 requires that the Court ‘shall presume’ the fact stated therein, it is

obligatory on the Court to raise this presumption in every case where

the factual basis for the raising of the presumption had been established.

10 The rules discussed hereinbelow is common to both the presumptions under Section 139 and Section 118 and is hence, not repeated-Reference to one can be taken as reference to another 22

But this does not preclude the person against whom the presumption is

drawn from rebutting it and proving the contrary as is clear from the

use of the phrase ‘unless the contrary is proved’.

36. The Court will necessarily presume that the cheque had been

issued towards discharge of a legally enforceable debt/liability in two

circumstances. Firstly, when the drawer of the cheque admits

issuance/execution of the cheque and secondly, in the event where the

complainant proves that cheque was issued/executed in his favour by

the drawer. The circumstances set out above form the fact(s) which

bring about the activation of the presumptive clause. [Bharat Barrel

Vs. Amin Chand] [(1999) 3 SCC 35]

37. Recently, this Court has gone to the extent of holding that

presumption takes effect even in a situation where the accused contends

that 'a blank cheque leaf was voluntarily signed and handed over by him

to the complainant. [Bir Singh v. Mukesh Kumar11]. Therefore, mere

admission of the drawer's signature, without admitting the execution of

11 (2019) 4 SCC 197 23

the entire contents in the cheque, is now sufficient to trigger the

presumption.

38. As soon as the complainant discharges the burden to prove that

the instrument, say a cheque, was issued by the accused for discharge

of debt, the presumptive device under Section 139 of the Act helps

shifting the burden on the accused. The effect of the presumption, in

that sense, is to transfer the evidential burden on the accused of proving

that the cheque was not received by the Bank towards the discharge of

any liability. Until this evidential burden is discharged by the accused,

the presumed fact will have to be taken to be true, without expecting

the complainant to do anything further.

39. John Henry Wigmore12 on Evidence states as follows:

“The peculiar effect of the presumption of law is merely to invoke a rule of law compelling the Jury to reach the conclusion in the absence of evidence to the contrary from the opponent but if the opponent does offer evidence to the contrary (sufficient to satisfy the Judge's requirement of some evidence), the presumption 'disappears as a rule of law and the case is in the Jury's hands free from any rule.”

12 Rules of Evidence- The Hidden Origin of Modern Law 24

40. The standard of proof to discharge this evidential burden is not

as heavy as that usually seen in situations where the prosecution is

required to prove the guilt of an accused. The accused is not expected

to prove the non-existence of the presumed fact beyond reasonable

doubt. The accused must meet the standard of ‘preponderance of

probabilities’, similar to a defendant in a civil proceeding. [Rangappa

vs. Mohan (AIR 2010 SC 1898)]

41. In order to rebut the presumption and prove to the contrary, it is

open to the accused to raise a probable defence wherein the existence

of a legally enforceable debt or liability can be contested. The words

‘until the contrary is proved’ occurring in Section 139 do not mean that

accused must necessarily prove the negative that the instrument is not

issued in discharge of any debt/liability but the accused has the option

to ask the Court to consider the non-existence of debt/liability so

probable that a prudent man ought, under the circumstances of the case,

to act upon the supposition that debt/liability did not exist.

[Basalingappa Vs. Mudibasappa (AIR 2019 SC 1983) See also Kumar

Exports Vs. Sharma Carpets (2009) 2 SCC 513] 25

42. In other words, the accused is left with two options. The first

option-of proving that the debt/liability does not exist-is to lead defence

evidence and conclusively establish with certainty that the cheque was

not issued in discharge of a debt/liability. The second option is to prove

the non-existence of debt/liability by a preponderance of probabilities

by referring to the particular circumstances of the case. The

preponderance of probability in favour of the accused's case may be

even fifty one to forty nine and arising out of the entire circumstances

of the case, which includes: the complainant's version in the original

complaint, the case in the legal/demand notice, complainant's case at

the trial, as also the plea of the accused in the reply notice, his 313

statement or at the trial as to the circumstances under which the

promissory note/cheque was executed. All of them can raise a

preponderance of probabilities justifying a finding that there was ‘no

debt/liability’. [Kumar Exports and Sharma Carpets, (2009) 2 SCC

513]

43. The nature of evidence required to shift the evidential burden need

not necessarily be direct evidence i.e., oral or documentary evidence or 26

admissions made by the opposite party; it may comprise circumstantial

evidence or presumption of law or fact.

44. The accused may adduce direct evidence to prove that the

instrument was not issued in discharge of a debt/liability and, if he

adduces acceptable evidence, the burden again shifts to the

complainant. At the same time, the accused may also rely upon

circumstantial evidence and, if the circumstances so relied upon are

compelling the burden may likewise shift to the complainant. It is open

for him to also rely upon presumptions of fact, for instance those

mentioned in Section 114 and other sections of the Evidence Act. The

burden of proof may shift by presumptions of law or fact. In Kundanlal's

case- (supra) when the creditor had failed to produce his account books,

this Court raised a presumption of fact under Section 114, that the

evidence, if produced would have shown the non-existence of

consideration. Though, in that case, this Court was dealing with the

presumptive clause in Section 118 NI Act, since the nature of the

presumptive clauses in Section 118 and 139 is the same, the analogy

can be extended and applied in the context of Section 139 as well. 27

45. Therefore, in fine, it can be said that once the accused adduces

evidence to the satisfaction of the Court that on a preponderance of

probabilities there exists no debt/liability in the manner pleaded in the

complaint or the demand notice or the affidavit-evidence, the burden

shifts to the complainant and the presumption 'disappears' and does not

haunt the accused any longer. The onus having now shifted to the

complainant, he will be obliged to prove the existence of a debt/liability

as a matter of fact and his failure to prove would result in dismissal of

his complaint case. Thereafter, the presumption under Section 139 does

not again come to the complainant's rescue. Once both parties have

adduced evidence, the Court has to consider the same and the burden of

proof loses all its importance. [Basalingappa vs. Mudibasappa, AIR

2019 SC 1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 441]

Our Analysis

46. It is against the backdrop of the afore-stated legal principles that

we proceed to consider if there is any interference that is called for.

Point No. (1):

28

47. The accused has neither replied to the demand notice nor has led

any rebuttal evidence in support of his case. The case set up by him

needs to be drawn from the suggestions put during the cross

examination and from his reply given in the statement recorded under

Section 313 of Cr.P.C.

48. It has been suggested to the complainant that accused had not

borrowed any loan from him. It was suggested to him that no legal

notice had been issued on dishonor of cheque. It was further suggested

that the complainant has misused a blank cheque - the said cheque

having been obtained from his employee, Gita Sunar, who also happens

to be the sister-in law of the accused. It was suggested that Gita Sunar

had some financial transactions with the complainant and towards that

end, he had received a blank cheque (signed by the accused) from Gita

Sunar and misused it. It is pertinent to note that the suggestions

mentioned above were denied by the complainant.

49. In her cross examination, Gita Sunar (examined on behalf of

complainant as CW.3) has denied the suggestion that she has misused a 29

blank cheque in collusion with the complainant. She has also denied the

suggestion that a blank cheque was given to her by the brother-in law

of the accused.

50. In the statement recorded under Section 313 of Cr.P.C., the first

incriminating circumstance put to the accused was as follows:

“It has come in evidence against you that you along with your wife, Jyoti visited the plaintiff an Orthopaedic Surgeon on 1-3-14, and availed friendly loan from plaintiff from time to time through sister of Jyoti namely Gita Sunar working there, on the plea of need for family requirements, and promised to pay up the "interest moneys as also the entire Principal amounts, what do you have to say about this?

He responded to said suggestion/question as follows:

"I had taken some money from the plaintiff. I have taken Rupees Twenty Lac from the plaintiff.”

51. When it was put to him that he has reneged on his promise to

pay on several occasions and sought to avoid the complainant by

changing his telephone number, the accused denies that he had changed

his number but however, admits that he could not pay the entire sum at

one go. He further admits that he did pay some interest but could not

pay the remaining sum since the complainant would increase the 30

outstanding amount every month by one lakh rupees and had been

demanding higher amount. As regards the circumstance of return of the

cheque, the legal notice and non-reply to the demand notice, he admits

of having received the demand notice. He states that he had no

knowledge about the dishonor of his cheque since his cheque book and

bank passbook were kept in his sister-in-law's house.

52. On an overall consideration of the record, we find that the case

set up by the accused is thoroughly riddled with contradictions. It is

apparent on the face of the record that there is not the slightest of

credibility perceivable in the defense set up by the accused.

53. In his 313 statements, he admits of having taken a loan of Rs 20

lakh and having repaid some interest but in the cross examination of the

complainant, a suggestion is made that the accused had no financial

dealings with the complainant. Whereas in his 313 statement, the

accused states that his cheque book and passbook is kept in his sister in

law's house, yet, in the cross examination of Gita Sunar, the accused's

sister-in-law, no suggestion is made to that effect. In fact, she has plainly

denied that any blank cheque was given to her by her brother-in-law. 31

We find it highly unnatural to presume that the accused would leave his

signed cheque leaves and passbook in his sister-in law's house. Even if

he did, there is no reason(s) or motive attributed on part of his sister-in-

law, for her to collude along with the complainant. The accused has also

not explained as to why he has not set up his defense at the earliest

point, that is, at the stage of receiving the demand notice, even though

he admits having received the demand notice in his 313 statement, yet

he makes a suggestion to the complainant in his cross examination that

no legal notice had been issued. The theory of 'blank cheque' being

misused has been suggested, only to be denied by both, the complainant

and Gita Sunar-CW-3. No action has been taken by way of registering

a police complaint in order to prosecute the alleged illegal conduct of

his blank cheque having been misused by CW-3.

54. Nothing significant has been elicited in the cross-examination of

complainant to raise any suspicion in the case set up by the complainant.

Other than some minor inconsistencies, the case of the complainant has

been consistent throughout as can be noticed from a perusal of the

complainant, demand notice and affidavit evidence. In fact, the 32

signature on the cheque having not been disputed, and the presumption

under Section 118 and 139 having taken effect, the complainant's case

stood satisfied every ingredient necessary for sustaining a conviction

under Section 138. The case of the defense was limited only to the issue

as to whether the cheque had been issued in discharge of a debt/liability.

The accused having miserably failed to discharge his evidential burden,

that fact will have to be taken to be proved by force of the presumption,

without requiring anything more from the complainant.

55. As rightly contended by the appellant, there is a fundamental

flaw in the way both the Courts below have proceeded to appreciate the

evidence on record. Once the presumption under Section 139 was given

effect to, the Courts ought to have proceeded on the premise that the

cheque was, indeed, issued in discharge of a debt/liability. The entire

focus would then necessarily have to shift on the case set up by the

accused, since the activation of the presumption has the effect of

shifting the evidential burden on the accused. The nature of inquiry

would then be to see whether the accused has discharged his onus of

rebutting the presumption. If he fails to do so, the Court can 33

straightaway proceed to convict him, subject to satisfaction of the other

ingredients of Section 138. If the Court finds that the evidential burden

placed on the accused has been discharged, the complainant would be

expected to prove the said fact independently, without taking aid of the

presumption. The Court would then take an overall view based on the

evidence on record and decide accordingly.

56. At the stage when the courts concluded that the signature had

been admitted, the Court ought to have inquired into either of the two

questions (depending on the method in which accused has chosen to

rebut the presumption): Has the accused led any defense evidence to

prove and conclusively establish that there existed no debt/liability at

the time of issuance of cheque? In the absence of rebuttal evidence

being led the inquiry would entail: Has the accused proved the

nonexistence of debt/liability by a preponderance of probabilities by

referring to the ‘particular circumstances of the case’?

57. The perversity in the approach of the Trial Court is noticeable

from the way it proceeded to frame a question at trial. According to the

trial Court, the question to be decided was 'whether a legally valid and 34

enforceable debt existed qua the complainant and the cheque in

question (Ex. CWI/A) was issued in discharge of said liability/debt'.

When the initial framing of the question itself being erroneous, one

cannot expect the outcome to be right. The onus instead of being fixed

on the accused has been fixed on the complainant. Lack of proper

understanding of the nature of the presumption in Section 139 and its

effect has resulted in an erroneous Order being passed.

58. Einstein had famously said:

"If I had an hour to solve a problem, I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions".

Exaggerated as it may sound, he is believed to have suggested that

quality of the solution one generates is directly proportionate to one's

ability to identify the problem. A well-defined problem often contains

its own solution within it.

59. Drawing from Einstein's quote, if the issue had been properly

framed after careful thought and application of judicial mind, and the

onus correctly fixed, perhaps, the outcome at trial would have been very 35

different and this litigation might not have travelled all the way up to

this Court.

60. Coming to the finding of High Court, we find again, there has

been fundamental error in the approach with which the High Court has

proceeded to consider the evidence on record. In paragraph 6 of the

impugned order, the High Court finds that the complainant has proved

the issuance of cheque, which means that the presumption would come

into immediate effect. In paragraph 13, it rightly observes that the

burden is on the accused to rebut such presumption. In the very next

paragraph, it finds that the accused has rebutted the presumption by

putting questions to the complainant and explaining the circumstances

under section 313 Cr.P.C.

61. There is no elucidation of material circumstances/basis on which

the Court reached such conclusion. It notes the allegation made in the

complaint that the complainant had given the loan on 01.03.2014 and

on several dates thereafter. Based on this averment, the High Court

rather shockingly concludes that: "If the complainant had given loans

on various dates, he must have maintained some document qua that, 36

because it was not a one-time, loan but loan along with interest accrued

on the principal, which made the amount to Rs.6,95,204/-." Therefore,

according to the High Court, 'the burden was primarily on the

complainant to prove the debt amount'.

62. The fundamental error in the approach lies in the fact that the

High Court has questioned the want of evidence on part of the

complainant in order to support his allegation of having extended loan

to the accused, when it ought to have instead concerned itself with the

case set up by the accused and whether he had discharged his evidential

burden by proving that there existed no debt/liability at the time of

issuance of cheque.

63. In the teeth of the aforesaid analysis, we have not the slightest

of hesitation in concluding that this case calls for interference,

notwithstanding that both the courts below have concurrently held in

favour of the accused. Since we have answered point No:(i) in the

negative, the need to examine point No:(ii) does not arise. 37

64. Hence, we proceed to allow the appeal by setting aside the

judgment of the High Court of Punjab and Haryana at Chandigarh

rendered in CRM-A No.148 of 2020 dated 01.02.2022 and allow the

complaint filed under Section 138 of Negotiable Instruments Act, 1881

and convict the respondent accused with fine of twice the amount of the

cheque namely Rs.13,90,408/- (Rupees thirteen lakh ninety thousand

four hundred and eight only) failing which he shall undergo simple

imprisonment for one year.

…………………….J. (Aravind Kumar)

…………………J (S.V.N. Bhatti)

New Delhi, October 09, 2023