TEDHI SINGH versus NARAYAN DASS MAHANT

[2022] 4 S.C.R. 442

[2022] 4 S.C.R.

TEDHI SINGH

NARAYAN DASS MAHANT

(Criminal Appeal No. 362 of 2022)

MARCH 07, 2022

[K. M. JOSEPH AND HRISHIKESH ROY, JJ.]

Negotiable Instrument Act, 1881: s.139 – Presumption infavour of holder – Respondent filed complaint stating that appellantwas his friend and as he was in urgent need of money, he gave aCsum of Rs.7 lakhs – However, cheque given by the appellant wasdishonored – Conviction of appellant u/s.138 – Held: s.139 of theN.I. Act provides that Court shall presume that the holder of chequereceived the cheque of the nature referred to in s.138 for thedischarge, in whole or in part, of any debt or other liability –DHowever, it is open to the accused to establish that there is noconsideration received – It is in the context of this provision thatthe theory of ‘probable defence’ has grown – The accused is notexpected to discharge an unduly high standard of proof – All thatthe accused needs to establish is probable defence which is amatter to be decided on the facts of each case – U/s.138, theEcomplainant need not show in the first instance that he had thefinancial capacity – At the time, when the complainant gives hisevidence, unless case is set up in the reply notice to the statutorynotice sent that the complainant did not have the wherewithal, itcannot be expected of the complainant to initially lead evidence toFshow that he had the financial capacity – However, the accusedhas right to demonstrate that the complainant in particular casedid not have the capacity which can be done by producingindependent materials, namely, by examining his witnesses andproducing documents – It can also be established by pointing to thematerials produced by the complainant himself and crossGexamination of the witnesses of the complainant – In this case, inreply notice appellant did not set up that the complainant did nothave the financial capacity to advance the loan – Moreover, noreference was made by the appellant of the complaint of lost chequebook or signed cheque leaf – No evidence was led to establish thatHthe appellant had informed the Bank about the loss of cheque book

containing blank cheque – In totality of facts, appellant has notbeen able to establish case of interference with the finding ofcourts below that the offence under s.138 was committed by theappellant – 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 tointerfere – Art.136 of the Constitution only confers right to obtainspecial leave in rare and extraordinary cases – While exercisingpower under Art.136, the Court may not refuse to interfere in acase where three Courts have gone completely wrong – It is not tobe understood as meaning that it is clear case of even three Courtsin unison falling into palpable error and thereby causingmiscarriage of justice and yet this Court would not interfere.

Partly allowing the appeal, the Court

HELD: 1. It is true that this is case under Section 138 ofthe Negotiable Instruments Act. Section 139 of the N.I. Actprovides that Court shall presume that the holder of chequereceived the cheque of the nature referred to in Section 138 forthe discharge, in whole or in part, of any debt or other liability.This presumption, however, is expressly made subject to theposition being proved to the contrary. In other words, it is opento the accused to establish that there is no consideration received.It is in the context of this provision that the theory of ‘probabledefence’ has grown. In an earlier judgment, in fact, which hasalso been adverted to in Basalingappa, this Court notes thatSection 139 of the N.I. Act is an example of reverse onus. It isalso true that this Court has found that the accused is not expectedto discharge an unduly high standard of proof. It is accordinglythat the principle has developed that all which the accused needsto establish is probable defence. As to whether probabledefence has been established is matter to be decided on thefacts of each case on the conspectus of evidence and circumstancesthat exist. [Para 7][449-D-G]

2. The Trial Court and the First Appellate Court have notedthat in the case under Section 138 of the N. I. Act, the complainantneed not show in the first instance that he had the capacity. Theproceedings under Section 138 of the N. I. Act is not civil suit.

DEF

AAt the time, when the complainant gives his evidence, unless acase is set up in the reply notice to the statutory notice sent, thatthe complainant did not have the wherewithal, it cannot beexpected of the complainant to initially lead evidence to showthat he had the financial capacity. To that extent the Courts wereright in holding on those lines. However, the accused has theBright to demonstrate that the complainant in particular case didnot have the capacity and therefore, the case of the accused isacceptable 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 pointingCto the materials produced by the complainant himself. He canfurther, more importantly, achieve this result through the crossexamination of the witnesses of the complainant. Ultimately, itbecomes the duty of the Courts to consider carefully andappreciate the totality of the evidence and then come to aconclusion whether in the given case, the accused has shownDthat the case of the complainant is in peril for the reason that theaccused has established probable defence. [Para 9][450-B-E]

3. In the reply notice the appellant has not set up any casethat the respondent did not have the financial capacity to advancethe loan. In fact there is no reference to the loss of the chequeEbook or signed cheque leaf. No complaint was given of the lossof the cheque book or the signed cheque leaf either to the policeor 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 withthe cheque book of the appellant which had cheque signed byFthe appellant for withdrawing money, if needed in the absence ofthe appellant. He set up the version that he drove away anunowned cow. in the field. Thereafter, while sitting in the bus hesaw the cheque book was not with him. He further deposed thatsince his father was not at home he could not tell him about the

incident and got engrossed in his study and forgot the incident.GIn his statement under Section 313 Cr.PC given on 10.01.2013,appellant has taken the stand that he informed the Bank. DW5has further deposed that when the appellant received the noticehe 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 thereply notice was sent, the case is not set up about the loss ofcheque book and about the cheque relied upon by the respondentbeing one which is brought into existence using the lost signedcheque leaf. There is no evidence to establish that the appellanthad informed the Bank about the loss of the cheque bookcontaining blank cheque. In fact, in the statement under Section313 Cr.PC. appellant had stated that this cheque book containinga blank cheque was lost. Appellant has no case that the signatureon the cheque in question was not put by him. [Para 10][450-F-H; 451-A-D]

4. This Court even exercising power under Article 136 ofthe Constitution may not refuse to interfere in case where threeCourts have gone completely wrong. The jurisdiction generatedin an appeal under Article 136 is undoubtedly rare andextraordinary. Article 136 of the Constitution only confers rightto obtain special leave in rare and extraordinary cases. However,this is not to be understood as meaning that it is clear case ofeven three Courts in unison falling into palpable error and therebycausing miscarriage of justice and yet this Court would notinterfere. [Para 11][451-D-F]

5. However, in the totality of facts of this case the appellanthas not established case for interference with the finding of theCourts below that the offence under Section 138 N. I. Act standscommitted by the appellant. The amount of compensation in asum of Rs.7 Lakhs which is relatable to the cheque amount hasbeen deposited already in the Trial Court. However, appellantshould be granted relief in the form of substitution of the sentenceof imprisonment of one year with fine. An amount of Rs.5,000/-should suffice as substitution for the imprisonment. Apart fromthat, further amount of Rs.15,000/- shall be paid as compensationto the respondent. [Para 12][451-F-H]

Basalingapa vs. Mudibasappa (2019) 5 SCC 418 :[2019] 6 SCR 555 – relied on.

Case Law Reference

[2019] 6 SCR 555

relied on

Para 3

ACRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.362 of 2022.

From the Judgment and Order dated 11.09.2018 of the High Courtof Himachal Pradesh at Shimla in Criminal Revision No.129 of 2018.Ms. Sangeeta Bharti, Sushil Kumar Singh, Advs. for the Appellant.BAjay Marwah, Tapan Masta, Ayush Gupta, Advs. for theRespondent.

The Judgment of the Court was delivered by

K. M. JOSEPH, J.C

1. Leave granted.

2. The appellant calls in question the judgment of the High Courtby which it dismissed the Criminal Revision No.129 of 2018 filed underSection 397 of the Code of Criminal Procedure, 1898 (for short ‘Cr.P.C.)against the order of the Sessions Judge by which the Court in turn affirmedDthe order passed by the Chief Judicial Magistrate. The Chief JudicialMagistrate found the appellant guilty of having committed the offenceunder Section 138 of the Negotiable Instruments Act, 1881 (for short‘N.I. Act.’). The appellant stands sentenced to simple imprisonment fora period of one year. Further, the appellant is called upon to pay aEcompensation of sum of Rs.7 Lakhs.3. The complaint of the respondent was based on the allegationthat in the month of August, 2011 the appellant was in urgent need ofmoney and out of friendship he gave sum of Rs.7 Lakhs and the chequegiven by the appellant was dishonored. In the trial, following the complaintFthe appellant examined DW-1 to DW-4. They are Officers of four Banks.This was done by the appellant in an attempt at putting up what can bedescribed in the words of the learned counsel for the appellant ‘a probabledefence’. It was an attempt by the appellant to show that the version ofthe complainant that he had the financial wherewithal to advance loanof Rs.7 Lakhs was not to be accepted. This is the matter which hasGbeen agitated by Ms. Sangeeta Bharti, learned counsel for the appellant.She would, in fact, complain that in the impugned judgment, the HighCourt has observed that it is not known as to what is the purpose forwhich DW-1 to DW-4 have been examined. It is appellant’s case thatthe finding would clearly help the appellant advance the contention thatHthis is case where the High Court as also the two Courts have not

appreciated the law which is laid down in regard to the effect of a‘probable defence’. She drew our attention to the judgment of this Courtin Basalingapa Vs. Mudibasappa reported in (2019) 5 SCC 418.This Court, inter alia has held as follow:-

“25. We having noticed the ratio laid down by this Court in theabove cases on Sections 118(a) and 139, we now summarise theprinciples enumerated by this Court in following manner:

25.1. Once the execution of cheque is admitted Section 139 ofthe Act mandates presumption that the cheque was for thedischarge of any debt or other liability.

25.2. The presumption under Section 139 is rebuttablepresumption and the onus is on the accused to raise the probabledefence. The standard of proof for rebutting the presumption isthat of preponderance of probabilities.

25.3. To rebut the presumption, it is open for the accused to relyon evidence led by him or the accused can also rely on the materialssubmitted by the complainant in order to raise probable defence.Inference of preponderance of probabilities can be drawn notonly from the materials brought on record by the parties but alsoby reference to the circumstances upon which they rely.

25.5. It is not necessary for the accused to come in the witnessbox to support his defence.”

4. She would therefore, point out in the facts of this case whenthe complainant was cross-examined, he had stated that the transactiontook place on particular date, namely, 5[th] of August, 2011 and he alsodeposed as follows:-

“….. The money was demanded in first week of August on thesame date only. I had given money in August. I do not rememberthe date. Accused had demanded money from me on 5[th] August.I have my bank accounts in State Bank Kullu, ICICI Kullu, PNBKullu and Gramin Bank Kullu also. I cannot tell from where I hadwithdrawn the money. I had withdrawn Rs.2 or 2.5 lacs. The restof the money was with me, which I had given. Accused had givenme the cheque in the end of August. When he gave me the cheque,then also only both of us were there. I have not brought thestatement of account with me. It is wrong that Accused is not

Aknown to me. It is also wrong that Accused has not taken anymoney from me. It is also incorrect that I do not have the financialposition or capacity to pay such amount of money. It is alsoincorrect that Accused had not demanded any money from me. Itis also incorrect that I had not given any money to the accused. Ido not know that the accused had lost his cheque book. VolunteeredBthat the accused had himself given me the cheque. It is alsoincorrect that I had filled my name and amount in the lost chequewith accused had signed and kept for his family members towithdraw money in case of need and I had presented the saidforged cheque. I had received reply to the notice. It is incorrectCthat I have presented false case on the basis of forged cheque.”5. She would, therefore, point out that when the evidence adducedby the appellant through DW-1 to DW-4 would categorically establishthat the version of the complainant-respondent that he had withdrawn aspecific sum of Rs.2 or 2.5 Lakhs from the Bank and gave it the appellantDalong with the money he had and when this aspect is established to befalse the entire case of the complainant would collapse and what ismore important probable defence has been made out by the accused.In such circumstances, the three Courts which held in favour of thecomplainant were entirely wrong and, in fact, the High Court as alreadypointed out has not even appreciated the very purpose of examination ofEthe defence witnesses in this regard. Learned counsel for the appellantalso pointed out that this is case where contrary to the finding of theTrial Court reply notice was in fact given by the appellant as admittedby the complainant.6. Per-contra, Mr. Ajay Marwah, learned counsel for theFcomplainant-respondent would draw our attention to the version whichwas sought to be built up by the appellant through DW-5 who incidentallyhappened to be the son of the appellant. He took us through the evidenceand then made the point that the version of the appellant was that thesigned cheque in question along with the cheque book was lost while itGwas being carried by DW-5 but he requests the Court to notice thatneither DW-5 nor the appellant had made complaint of the loss of thesigned cheque to either the Bank or to the Police. He points out that aperusal of the reply notice sent by the appellant would clearly establishthat the respondent was known and friendly with the appellant. Thisagain bolstered the case of the complainant that the complainant hasH

helped the appellant in his time of need by giving the hand loan. Hefurther points out that there is no case that the signature on the chequeis not that of the appellant. In this regard, in fact, the Courts below havealso noted the fact that the appellant has not produced the evidence ofthe Official from the bank of the appellant to establish that any noticewas given to the Bank regarding the alleged loss of the signed cheque.He further drew our attention to the statements under Section 313 of theCr.P.C. given by the appellant. He would point out that neither in thereply notice nor in the statement given under Section 313 of the Cr.P.C.,it is the appellant’s case that the respondent did not have the financialcapacity to give the hand loan. He further ends by saying that theappellant does not have case regarding the capacity of the respondentto loan the amount which remained after deducting the amount referableto the withdrawal from the bank. He further would contend that theCourt may bear in mind that three Courts have held against the appellantand no case is made out for interference.

7. It is true that this is case under Section 138 of the NegotiableInstruments Act. Section 139 of the N.I. Act provides that Court shallpresume that the holder of cheque received the cheque of the naturereferred to in Section 138 for the discharge, in whole or in part, of anydebt or other liability. This presumption, however, is expressly madesubject to the position being proved to the contrary. In other words, it isopen 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 advertedto in Basalingappa (supra), this Court notes that Section 139 of theN.I. Act is an example of reverse onus [see (2010) 11 SCC 441). It isalso true that this Court has found that the accused is not expected todischarge an unduly high standard of proof. It is accordingly that theprinciple has developed that all which the accused needs to establish is aprobable defence. As to whether probable defence has been establishedis matter to be decided on the facts of each case on the conspectus ofevidence and circumstances that exist.8. It is indeed true that there is some merit in the complaint of Ms.Sangeeta Bharti, learned counsel for the appellant that in the impugnedjudgment the High Court has not appreciated the real purpose ofexamining DW-1 to DW-4. She is also correct when she drew ourattention to the accounts of the Gramin Bank i.e. Gramin Bank, Kullu to

Ashow that before the 5[th] of August, 2011 the appellant had stoppedoperating the account in the said bank and very small and ignorableamount alone was available in the said account.

9. The Trial Court and the First Appellate Court have noted that inthe case under Section 138 of the N. I. Act the complainant need notBshow in the first instance that he had the capacity. The proceedingsunder Section 138 of the N. I. Act is not civil suit. At the time, whenthe complainant gives his evidence, unless case is set up in the replynotice to the statutory notice sent, that the complainant did not have thewherewithal, it cannot be expected of the complainant to initially leadevidence to show that he had the financial capacity. To that extent theCCourts in our view were right in holding on those lines. However, theaccused has the right to demonstrate that the complainant in particularcase did not have the capacity and therefore, the case of the accused isacceptable which he can do by producing independent materials, namely,by examining his witnesses and producing documents. It is also open toDhim to establish the very same aspect by pointing to the materials producedby the complainant himself. He can further, more importantly, achievethis result through the cross examination of the witnesses of thecomplainant. Ultimately, it becomes the duty of the Courts to considercarefully and appreciate the totality of the evidence and then come to aconclusion whether in the given case, the accused has shown that theEcase of the complainant is in peril for the reason that the accused hasestablished probable defence.

10. We have gone through the nature of the evidence in this case.We also bear in mind the fact that three Courts have held in favour ofthe respondent. In this regard we bear in mind that though it is true thatFreply notice was sent by the appellant, therein he admits the case of therespondent that the parties were having cordial relationship. In thereply notice the appellant has not set up any case that the respondent didnot have the financial capacity to advance the loan. In fact even wenotice that there is no reference to the loss of the cheque book or signedGcheque leaf. No complaint was given of the loss of the cheque book orthe signed cheque leaf either to the police or to the bank. In the evidenceof 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 acheque signed by the appellant for withdrawing money, if needed in theabsence of the appellant. He set up the version that he drove away anHunowned cow. in the field. Thereafter, while sitting in the bus he saw thecheque book was not with him. He further deposed that since his fatherwas not at home he could not tell him about the incident and got engrossedin his study and forgot the incident. In his statement under Section 313Cr.PC given on 10.01.2013, appellant has taken the stand that he informedthe Bank. It is relevant to notice that DW5 has further deposed thatwhen the appellant received the notice he asked him about the chequebook 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 upabout the loss of cheque book and about the cheque relied upon by therespondent being one which is brought into existence using the lost signedcheque leaf. We have already noticed that there is no evidence to establishthat the appellant had informed the Bank about the loss of the chequebook containing blank cheque. In fact, In the statement under Section313 Cr.PC. appellant had stated that this cheque book containing blankcheque was lost. Appellant has no case that the signature on the chequein question was not put by him.

11. We must hasten here and observe that this Court evenexercising power under Article 136 of the Constitution may not refuse tointerfere in case where three Courts have gone completely wrong.The jurisdiction generated in an appeal under Article 136 is undoubtedlyrare and extraordinary. Article 136 of the Constitution only confers aright to obtain special leave in rare and extraordinary cases. However,this is not to be understood as meaning that it is clear case of eventhree Courts in unison falling into palpable error and thereby causingmiscarriage of justice and yet this Court would not interfere.

12. However, we would think that in the totality of facts of thiscase the appellant has not established case for interference with thefinding of the Courts below that the offence under Section 138 N. I. Actstands committed by the appellant. We have been told that the amountof compensation in sum of Rs.7 Lakhs which is relatable to the chequeamount has been deposited already in the Trial Court. However, wewould think that the appellant should be granted relief in the form ofsubstitution of the sentence of imprisonment of one year with fine. Anamount of Rs.5,000/- (Five thousand) commends itself to us as an amountwhich should suffice as substitution for the imprisonment. Apart fromthat, we would also direct that further amount of Rs.15,000/- shall bepaid as compensation to the respondent.

A13. Accordingly, the appeal is partly allowed. While we upholdthe conviction, we direct that sentence of imprisonment of one yearshall stand vacated. However, the appellant shall stand sentenced tofine of Rs.5,000/- which he will deposit within period of one monthfrom today in the Trial Court. In case of default, the appellant shallundergo simple imprisonment for period of one month. The appellantBshall also deposit sum of Rs.15,000/- as further compensation whichcan be withdrawn by the respondent. The deposit shall be made in theTrial Court within period of four weeks from today.

The appeal is partly allowed as above.

CPending application(s), if any, stands disposed of.

Devika Gujral

(Assisted by : Shevali Monga, LCRA)

Appeal partly allowed.