KISHAN RAO versus SHANKARGOUDA

KISHAN RAO

SHANKARGOUDA

(Criminal Appeal No. 803 of 2018)

JULY 02, 2018.

[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]

Negotiable Instruments Act, 1881 – s. 139 – Presumption infavour of holder – Rebuttal of – Dishonour of cheque due toinsufficiency of funds – Conviction by the trial court – High Courtset aside the conviction holding that the accused was able to raisea doubt regarding existence of debt or liability of the accused – Onappeal, held: High Court erred in setting aside the order ofconviction in exercise of revisional jurisdiction – No sufficientground was mentioned – There was no valid basis for the HighCourt to hold that the accused has been successful in creating doubtin the mind of the Court with regard to the existence of the debt orliability – Trial court as well as the appellate court found that chequecontained the signatures of the accused and it was given to theappellant to present in the Bank – Presumption u/s. 139 was rightlyraised which was not rebutted by the accused – No evidence wasled by the accused – Accused even did not come in the witness boxto support his case – Further, the defence taken in the reply to thenotice that cheque was stolen was rejected by the courts below –Thus, the judgment of the High Court set aside and that of trialcourt as affirmed by appellate court restored.

Allowing the appeal, the Court

HELD: 1.1 The High Court gave its reasons for settingaside the order of conviction, it observed that though perceptionof person differs from one another with regard to the acceptanceof evidence on record but in its perception and consideration,the accused has been successful in creating doubt in the mind ofthe Court with regard to the existence of the debt or liability.The High Court has not returned any finding that order ofconviction based on evidence on record suffers from anyperversity or based on no material or there is other valid ground

CDE

Afor exercise of revisional jurisdiction. There is no valid basis forthe High Court to hold that the accused has been successful increating doubt in the mind of the Court with regard to theexistence of the debt or liability. The appellant has proved theissuance of cheque which contained signatures of the accusedand on presentation of the cheque, the cheque was returned withBendorsement “insufficient funds”. Bank official was produced asone of the witnesses who proved that the cheque was not returnedon the ground that it did not contain signatures of the accusedrather it was returned due to insufficient funds. The judgment ofHigh Court is liable to be set aside on this ground alone. [ParasC14, 15][75-D-E; 76-D-F]

1.2 Section 139 of the Negotiable Instruments Act, 1881provides for drawing the presumption in favour of holder. In theinstant case, the trial court as well as the appellate court havingfound that cheque contained the signatures of the accused and itDwas given to the appellant to present in the Bank. Thepresumption under Section 139 was rightly raised which was notrebutted by the accused. The accused had not led any evidenceto rebut the said presumption. The accused even did not come inthe witness box to support his case. In the reply to the noticewhich was given by the appellant the accused took the defenceEthat the cheque was stolen by the appellant. The said defencewas rejected by the trial court after considering the evidence onrecord with regard to which no contrary view has also beenexpressed by the High Court. [Paras 17, 20][76-G; 79-A-C]

1.3 No evidence was led by the accused. The defence takenFin the reply to the notice that cheque was stolen having beenrejected by the two courts below, there is no basis for the HighCourt coming to the conclusion that the accused has beensuccessful in creating doubt in the mind of the Court with regardto the existence of the debt or liability. How the presumptionGunder Section 139 can be rebutted on the evidence of PW.1,himself has not been explained by the High court. [Para 22][80-C-D]

1.4 The High Court committed error in setting aside theorder of conviction in exercise of revisional jurisdiction. NoHsufficient ground was mentioned by the High Court in its judgment

to enable it to exercise its revisional jurisdiction for setting asidethe conviction. The judgment of the High Court is set aside andthe judgment of trial court as affirmed by the appellate court isrestored. [Paras 23, 24][80-E-F]

State of Kerala v. Puttumana Illath JathavedanNamboodiri [1999] 1 SCR 575 : (1999) 2 SCC 452;Sanjaysin Ramrao Chavan v. Dattatray GulabraoPhalke and others [2015] 1 SCR 130 : (2015) 3 SCC123; Kumar Exports v. Sharma Carpets [2008]17 SCR 572 : (2009) 2 SCC 513; Rangappa v. SriMohan [2010] 6 SCR 507 : 2010 (11) SCC 441 –referred to.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.803 of 2018.

From the Judgment and Order dated 18.03.2016 of the High Courtof Karnataka Kalaburagi Bench in CRP No. 2605 of 2010.

Preetam Shah, Ms. Rosy Sharma and M. A. Krishna Moorthy,Advs. for the Appellant.

The Judgment of the Court was delivered by

ASHOK BHUSHAN, J. 1. This appeal has been filed againstthe judgment and order of the High Court dated 18.03.2016 by whichjudgment, Criminal Revision Petition filed by the respondent-accusedwas allowed by setting aside the order of conviction and sentencerecorded against the accused under Section 138 of the NegotiableInstruments Act, 1881 (hereinafter referred to as “Act 1881”). The partiesshall be hereinafter referred to as described in the Magistrate’s Court.

2. Brief facts of case are:

The appellant(complainant) and the respondent (accused) wereknown to each other and had good relations. Accused approached the

Acomplainant for loan of Rs.2,00,000/- for the purpose of his businessexpenses and promised to repay the same within one month. On25.12.2005, complainant had paid sum of Rs.2,00,000/- as loan. Forrepayment of the loan accused issued post dated cheque dated 25.01.2006in the name of complainant for the amount of Rs.2,00,000/-. The chequewas presented for collection at Bank of Maharashtra Branch at GulbargaBwhich could not be encashed due to insufficient funds. At the request ofthe accused the cheque was again represented on 01.03.2006 forcollection which was returned on 02.03.2006 by the Bank with theendorsement “insufficient funds”.

3. notice was issued by the complainant demanding payment ofCRs.2,00,000/- which was received by the accused on 14.03.2006 to whichreply was sent on 31.03.2006. complaint was filed by the appellantalleging the offence under Section 138 of the Act, 1881. Cognizancewas taken by the Magistrate. Accused stated not guilty of the offence,hence, trial proceeded. In order to prove the guilt, the complainant himself

Dexamined as PW.1 and examined two other witnesses PW.2 and Pw.3.He filed documentary evidence Exhs.P1 and P6, statement of the accusedwas recorded under Section 313 Cr.P.C. Thereafter, the case proceededfor defence evidence. Accused neither examined himself nor producedany evidence either oral or documentary. In the reply to the notice whichwas sent by the complainant, it was alleged that the said cheque wasEstolen by the complainant. The complainant was cross-examined by thedefence. In the cross-examination defence denied accused’s signatureson the cheque. The trial court rejected the defence of the accused thatcheque was stolen by the complainant. The trial court drew presumptionunder Section 139 of the Act, 1881 against the accused. Accused failedFto rebut the presumption by leading any evidence on his behalf. Theoffence having been found proved, the trial court convicted the accusedunder Section 138 of the Act, 1881 and sentenced him to pay fine ofRs.2,50,000/- and simple imprisonment for six months.

4. The appeal was filed by the accused against the said judgment.GThe Appellate Court considered the submissions of the parties anddismissed the appeal by affirming the order of conviction.

5. Criminal Revision was filed by the accused in the High Court.The High Court by the impugned judgment has allowed the revision bysetting aside the conviction order. The High Court held that the accusedHhas been successful in creating doubt in the mind of the Court with

regard to the existence of the debt or liability. Complainant aggrieved bythe judgment of the High Court has come in this appeal.

6. Learned counsel for the appellant submits that the offence havingbeen proved before the trial court by leading evidence, the convictionwas recorded by the trial court after appreciating both oral anddocumentary evidence led by the appellant which order was also affirmedby the Appellate Court. There was no jurisdiction in the High court to re-appreciate the evidence on record and come to the conclusion thataccused has been able to raise doubt regarding existence of the debtor liability of the accused. He submits that the High court in exercise ofjurisdiction under Section 379/401 Cr.P.C. can interfere with the orderof the conviction only when the findings recorded by the courts below

are perverse and there was no evidence to prove the offence againstthe accused. It is submitted that in exercise of the revisional jurisdictionthe High Court cannot substitute its own opinion after re-appreciation ofevidence.

7. It is submitted that the presumption under Section 139 wasrightly drawn against the accused and accused failed to rebut the saidpresumption by leading evidence. There was no ground for setting asidethe conviction order.

8. Although, the respondent was served but no one appeared atthe time of hearing.

9. We have considered the submissions of the appellant andperused the records.

10. The trial court after considering the evidence on record hasreturned the finding that the cheque was issued by the accused whichcontained his signatures. Although, the complainant led oral as well asdocumentary evidence to prove his case, no evidence was led by theaccused to rebut the presumption regarding existence of debt or liabilityof the accused.

11. This Court has time and again examined the scope of Section397/401 Cr.P.C. and the ground for exercising the revisional jurisdictionby the High Court. In State of Kerala vs. Puttumana Illath JathavedanNamboodiri, 1999 (2) SCC 452, while considering the scope of therevisional jurisdiction of the High Court this Court has laid down thefollowing:

A“5......In its revisional jurisdiction, the High Court can callfor and examine the record of any proceedings for the purposeof satisfying itself as to the correctness, legality or proprietyof any finding, sentence or order. In other words, thejurisdiction is one of supervisory jurisdiction exercised bythe High Court for correcting miscarriage of justice. But theBsaid revisional power cannot be equated with the power ofan appellate court nor can it be treated even as secondappellate jurisdiction. Ordinarily, therefore, it would not beappropriate for the High Court to reappreciate the evidenceand come to its own conclusion on the same when the evidenceChas already been appreciated by the Magistrate as well asthe Sessions Judge in appeal, unless any glaring feature isbrought to the notice of the High Court which would otherwisetantamount to gross miscarriage of justice. On scrutinizingthe impugned judgment of the High Court from the aforesaidstandpoint, we have no hesitation to come to the conclusionDthat the High Court exceeded its jurisdiction in interferingwith the conviction of the respondent by reappreciating theoral evidence.....”12. Another judgment which has also been referred to and reliedby the High Court is the judgment of this Court in Sanjaysinh RamraoEChavan vs. Dattatray Gulabrao Phalke and others, 2015 (3) SCC123. This Court held that the High Court in exercise of revisionaljurisdiction shall not interfere with the order of the Magistrate unless it isperverse or wholly unreasonable or there is non-consideration of anyrelevant material, the order cannot be set aside merely on the groundFthat another view is possible. Following has been laid down inparagraph 14:

“14.....Unless the order passed by the Magistrate is perverseor the view taken by the court is wholly unreasonable or thereis non-consideration of any relevant material or there isGpalpable misreading of records, the Revisional Court is notjustified in setting aside the order, merely because anotherview is possible. The Revisional Court is not meant to act asan appellate court. The whole purpose of the revisionaljurisdiction is to preserve the power in the court to do justicein accordance with the principles of criminal jurisprudence.H

The revisional power of the court under Sections 397 to 401CrPC is not to be equated with that of an appeal. Unless thefinding of the court, whose decision is sought to be revised,is shown to be perverse or untenable in law or is grosslyerroneous or glaringly unreasonable or where the decisionis based on no material or where the material facts are whollyignored or where the judicial discretion is exercised arbitrarilyor capriciously, the courts may not interfere with decision inexercise of their revisional jurisdiction.”

13. In the above case also conviction of the accused was recorded,the High Court set aside the order of conviction by substituting its ownview. This Court set aside the High Court’s order holding that the HighCourt exceeded its jurisdiction in substituting its views and that too withoutany legal basis.

14. Now, we proceed to examine order of the High Court in thelight of the law as laid down in the above mentioned cases. The HighCourt itself in paragraph 40 has given its reasons for setting aside theorder of conviction, it has observed that though perception of persondiffers from one another with regard to the acceptance of evidence onrecord but in its perception and consideration, the accused has beensuccessful in creating doubt in the mind of the Court with regard to theexistence of the debt or liability. It is relevant to notice what has beensaid in paragraph 40 of the judgment which is to the following effect:

“40. In view of the above said “facts and circumstances,though perception of person differs from one another withregard to the acceptance of evidence on record but in myperception and consideration, the accused has been successfulin creating doubt in the mind of the Court with regard to theexistence of the debt or liability particularly with reference tothe alleged transaction dated 25.12.2005 as alleged by thecomplainant. Hence, in my opinion the High Court has fullpower to interfere with such judgment of the Trial Court assubject matter exactly falls within the parameters of Section397 of the Code and also guidelines of the Apex Court asnoted in the above said decisions. Therefore, I am of theconsidered opinion the Trial Court and the First AppellateCourt have committed serious error in merely proceeding onthe basis of the presumption under Section 139 of the Act

and also on the basis that, the accused has not proved hisdefence with reference to the loss of cheque etc. Hence, Ianswered the point in the affirmative and proceeded to passthe following:

ORDER

The revision petition is hereby allowed. Consequently, thejudgment and sentence passed by the III-Addl. Civil Judge(Jr.Dn.) & JMFC, Kalaburagi in C.C.No.1362/2006 which isaffirmed by Fast Track Court – 1 at Kalaburagi in Cr.A.No.46/2009 are hereby set aside. Consequently, the accused isCacquitted of the charges levelled against him under Section138 of N.I.Act. If any fine amount is deposited by the accused/petitioner, the same is ordered to be refunded to him....”

15. The High Court has not returned any finding that order ofconviction based on evidence on record suffers from any perversity orDbased on no material or there is other valid ground for exercise of revisionaljurisdiction. There is no valid basis for the High Court to hold that theaccused has been successful in creating doubt in the mind of the Courtwith regard to the existence of the debt or liability. The appellant hasproved the issuance of cheque which contained signatures of the accusedand on presentation of the cheque, the cheque was returned withEendorsement “insufficient funds”. Bank official was produced as one ofthe witnesses who proved that the cheque was not returned on the groundthat it did not contain signatures of the accused rather it was returneddue to insufficient funds. We are of the view that the judgment of HighCourt is liable to be set aside on this ground alone.

16. Even though judgment of the High Court is liable to be setaside on the ground that High Court exceeded its revisional jurisdiction,to satisfy ourselves with the merits of the case, we proceeded to examineas to whether there was any doubt with regard to the existence of thedebt or liability of the accused.

17. Section 139 of the Act, 1881 provides for drawing thepresumption in favour of holder. Section 139 is to the following effect:

“139.Presumption in favour of holder.- It shall be presumed,unless the contrary is proved, that the holder of chequereceived the cheque of the nature referred to in section 138

for the discharge, in whole or in part, of any debt or otherliability.”

18. This Court in Kumar Exports vs. Sharma Carpets, 2009(2) SCC 513, had considered the provisions of Negotiable InstrumentsAct as well Evidence Act. Referring to Section 139, this Court laid downfollowing in paragraphs 14, 15, 18 and 19:

“14. Section 139 of the Act provides that it shall be presumed,unless the contrary is proved, that the holder of chequereceived the cheque of the nature referred to in Section 138for the discharge, in whole or in part, of any debt or otherliability.

15. Presumptions are devices by use of which the courts areenabled and entitled to pronounce on an issue notwithstandingthat there is no evidence or insufficient evidence. Under theEvidence Act all presumptions must come under one or theother class of the three classes mentioned in the Act, namely,(1) “may presume” (rebuttable), (2) “shall presume”(rebuttable), and (3) “conclusive presumptions” (irrebuttable).The term “presumption” is used to designate an inference,affirmative or disaffirmative of the existence of fact,conveniently called the “presumed fact” drawn by judicialtribunal, by process of probable reasoning from some matterof fact, either judicially noticed or admitted or establishedby legal evidence to the satisfaction of the tribunal.Presumption literally means “taking as true withoutexamination or proof”.18. Applying the definition of the word “proved” in Section 3of the Evidence Act to the provisions of Sections 118 and 139of the Act, it becomes evident that in trial under Section138 of the Act presumption will have to be made that everynegotiable instrument was made or drawn for considerationand that it was executed for discharge of debt or liabilityonce the execution of negotiable instrument is either provedor admitted. As soon as the complainant discharges the burdento prove that the instrument, say note, was executed by theaccused, the rules of presumptions under Sections 118 and139 of the Act help him shift the burden on the accused. The

presumptions will live, exist and survive and shall end onlywhen the contrary is proved by the accused, that is, the chequewas not issued for consideration and in discharge of any debtor liability. presumption is not in itself evidence, but onlymakes prima facie case for party for whose benefit itexists.

19. The use of the phrase “until the contrary is proved” inSection 118 of the Act and use of the words “unless thecontrary is proved” in Section 139 of the Act read withdefinitions of “may presume” and “shall presume” as givenin Section 4 of the Evidence Act, makes it at once clear thatpresumptions to be raised under both the provisions arerebuttable. When presumption is rebuttable, it only pointsout that the party on whom lies the duty of going forwardwith evidence, on the fact presumed and when that party hasproduced evidence fairly and reasonably tending to show thatthe real fact is not as presumed, the purpose of the presumption

is over.”

19. This Court held that the accused may adduce evidence torebut the presumption, but mere denial regarding existence of debt shallnot serve any purpose. Following was held in paragraph 20:

“20....The accused may adduce direct evidence to prove thatthe note in question was not supported by consideration andthat there was no debt or liability to be discharged by him.However, the court need not insist in every case that theaccused should disprove the non-existence of considerationand debt by leading direct evidence because the existence ofnegative evidence is neither possible nor contemplated. Atthe same time, it is clear that bare denial of the passing of theconsideration and existence of debt, apparently would notserve the purpose of the accused. Something which is probablehas to be brought on record for getting the burden of proofshifted to the complainant. To disprove the presumptions, theaccused should bring on record such facts and circumstances,upon consideration of which, the court may either believethat the consideration and debt did not exist or their non-existence was so probable that prudent man would underthe circumstances of the case, act upon the plea that they did

not exist...”

20. In the present case, the trial court as well as the AppellateCourt having found that cheque contained the signatures of the accusedand it was given to the appellant to present in the Bank of the presumptionunder Section 139 was rightly raised which was not rebutted by theaccused. The accused had not led any evidence to rebut the aforesaidpresumption. The accused even did not come in the witness box tosupport his case. In the reply to the notice which was given by theappellant the accused took the defence that the cheque was stolen bythe appellant. The said defence was rejected by the trial court afterconsidering the evidence on record with regard to which no contraryview has also been expressed by the High Court.

21. Another judgment which needs to be looked into is Rangappavs. Sri Mohan, 2010 (11) SCC 441. three Judge Bench of this Courthad occasion to examine the presumption under Section 139 of the Act,1881. This Court in the aforesaid case has held that in the event theaccused is able to raise probable defence which creates doubt withregard to the existence of debt or liability, the presumption may fail.Following was laid down in paragraphs 26 and 27:

“26. In light of these extracts, we are in agreement with therespondent claimant that the presumption mandated by Section139 of the Act does indeed include the existence of legallyenforceable debt or liability. To that extent, the impugnedobservations in Krishna Janardhan Bhat[, ](2008) 4 SCC 54,may not be correct. However, this does not in any way castdoubt on the correctness of the decision in that case since itwas based on the specific facts and circumstances therein. Asnoted in the citations, this is of course in the nature of arebuttable presumption and it is open to the accused to raisea defence wherein the existence of legally enforceable debtor liability can be contested. However, there can be no doubtthat there is an initial presumption which favours thecomplainant.

27. Section 139 of the Act is an example of reverse onusclause that has been included in furtherance of the legislativeobjective of improving the credibility of negotiableinstruments. While Section 138 of the Act specifies strong

Acriminal remedy in relation to the dishonour of cheques, therebuttable presumption under Section 139 is device toprevent undue delay in the course of litigation. However, itmust be remembered that the offence made punishable bySection 138 can be better described as regulatory offencesince the bouncing of cheque is largely in the nature of aBcivil wrong whose impact is usually confined to the privateparties involved in commercial transactions. In such ascenario, the test of proportionality should guide theconstruction and interpretation of reverse onus clauses andthe defendant-accused cannot be expected to discharge anCunduly high standard or proof.”

22. No evidence was led by the accused. The defence taken inthe reply to the notice that cheque was stolen having been rejected bythe two courts below, we do not see any basis for the High court comingto the conclusion that the accused has been successful in creating doubtDin the mind of the Court with regard to the existence of the debt orliability. How the presumption under Section 139 can be rebutted on theevidence of PW.1, himself has not been explained by the High court.

23. In view of the aforesaid discussion, we are of the view thatthe High Court committed error in setting aside the order of convictionEin exercise of revisional jurisdiction. No sufficient ground has beenmentioned by the High Court in its judgment to enable it to exercise itsrevisional jurisdiction for setting aside the conviction.

24. In the result, the appeal is allowed, judgment of the High Courtis set aside and judgment of trial court as affirmed by the AppellateCourt is restored.F

Nidhi Jain

Appeal allowed.