2001 JTR(SC) 1471
2001 4 AICLR 701 ; 2001 AIR(SC) 2895 ; 2001 AIR(SCW) 4344 ; 2001 2 ALD(Cri)(SC) 824 ; 2002 1 AllCJ 635 ; 2001 43 AllCriC 1125 ; 2002 1 AWC 110 ; 2002 1 BankJ 13 ; 2001 3 BBCJ(SC) 234 ; 2006 4 BC 287 ; 2002 1 BLJR 193 ; 2002 1 BomCR(SC) 342 ; 2001 3 CivCC 621 ; 2002 1 CivLJ 1 ; 2001 107 CompCas 459 ; 2002 1 CompLJ 55 ; 2001 CrLJ 4745 ; 2001 4 CTC 382 ; 2001 DCR 47 ; 2002 1 EastCrC(SC) 65 ; 2002 1 ICC 836 ; 2002 1 ISJ(Banking) 250 ; 2001 2 JCC 305 ; 2002 1 JCR(SC) 83 ; 2001 9 JT 228 ; 2002 1 KLJ 13 ; 2001 3 KLT 950 ; 2002 1 PLR(SC) 221 ; 2001 4 RCR(Cri) 545 ; 2002 1 RLW(Raj) 173 ; 2001 7 Scale 331 ; 2001 8 SCC 458 ; 2002 SCC(Cri) 14 ; 2002 37 SCL 583 ; 2001 SCR 374 ; 2002 1 WLC 105 ; 2001 KHC 832 ; 2001 7 Supreme 810
2001(7) Supreme 810
SUPREME COURT OF INDIA
(From Madras High Court)
K.T. Thomas & S.N. Variava, JJ.
K.N. Beena -Appellant
versus
Muniyappan & Anr. -Respondents
Criminal Appeal No. 1066 of 2001
(Arising out of SLP (Crl.) No. 969 of 2001)
Decided on 18-10-2001
Counsel for the Parties :
For the Appellant : V. Prabhakar and M.K.D. Namboodiri, Advocates.
For the Respondents : V.J. Francis, P.I. Jose, A. Radhakrishnan and Jenis Francis, Advocates.
For the Respondent No. 2 : Ms. Shwata Garg and Mrs. Revathy Raghavan, Advocates.
IMPORTANT POINT
The 1st respondent not having discharged the burden of proving that the cheque was not issued for a debt or liability as required under Section 139 of Negotiable Instruments Act, 1881, the conviction on awarded by the Magistrate under Section 138 was correct High Court erroneously and set aside that conviction.
Act
Referred
:EVIDENCE ACT : S.103, S.4, S.101, S.3, S.114(iii)(c)
NEGOTIABLE INSTRUMENTS ACT : S.118(a), S.138, S.139
(A) The Negotiable Instruments Act, Sections 118 and 139, operate in tandem to establish a regime of presumptions governing the enforceability of cheques in proceedings under Section 138. Section 118 creates a conclusive presumption that a Negotiable Instrument was made or drawn for consideration, placing the initial evidential burden on the instruments holder. Section 138 specifically presumes that the holder received the cheque for the discharge, in whole or in part, of a debt or liability, thereby framing the complainants cause of action. These provisions shift the evidentiary landscape such that the accused bears the burden of rebutting the presumption of consideration and debt, a principle affirmed by Section 101 on the burden of proof and Section 114(iii)(c) on relevant facts. The Evidence Act, Sections 4 (relevancy of admissions), 3 (definition of 'proceeding'), 101 (burden of proof as relevant fact), and 103 (burden of proof as to particular matters) provide the procedural and substantive framework for evaluating the burden allocation and the sufficiency of evidence. The High Courts reliance on the respondents mere denials was legally untenable in the face of the complainants statutory primafacie case, a point clarified in the ratio of Hiten P. Dalal v. Bratindranath Banerjee.
(B) The core legal principle is that in a Section 138 prosecution, the law imposes a presumption that the cheque was issued for the discharge of a debt or liability. This presumption is rebuttable, and the burden to prove the absence of any debt or liability rests squarely on the accused. The complainant is not required to prove consideration, and the accuseds unsupported denials do not discharge their evidential burden.
Facts of the case:
A cheque dated 6th April, 1993 for Rs. 63,720 was issued by the first respondent and dishonored for insufficient funds. The appellant issued a legal notice, and the respondent filed a reply denying liability but did not offer evidence of the absence of debt or liability. The trial Magistrate convicted the respondent, a conviction upheld on appeal before the Sessions Judge. The High Court subsequently acquitted the respondent, holding that the appellant failed to prove the cheque was issued for a debt or liability.
Findings of Court:
The High Court erred in placing the burden of proving the absence of consideration on the complainant. The law mandates the opposite allocation; the accused must prove the cheque was not for a debt or liability. The respondent failed to discharge this burden, rendering the acquittal unsustainable.
Issues:
Whether the burden of proving that a cheque was not issued for a debt or liability lies with the complainant or the accused in a proceeding under Section 138 of the Negotiable Instruments Act.
Ratio Decidendi:
The presumption under Section 139 of the Negotiable Instruments Act that a cheque is issued for the discharge of a debt is rebuttable, but the burden of disproving the existence of a debt or liability rests on the accused. The complainant discharging their burden of proving the issuance of the cheque is sufficient to invoke this presumption, and the accuseds unsupported denials are insufficient to rebut it.
Result:
The appeal is allowed, the conviction and sentence of the trial Magistrate are restored, one months time is granted to pay the fine, and in default, simple imprisonment for three months is prescribed.
(A) The Negotiable Instruments Act, Sections 118 and 139, operate in tandem to establish a regime of presumptions governing the enforceability of cheques in proceedings under Section 138. Section 118 creates a conclusive presumption that a Negotiable Instrument was made or drawn for consideration, placing the initial evidential burden on the instruments holder. Section 138 specifically presumes that the holder received the cheque for the discharge, in whole or in part, of a debt or liability, thereby framing the complainants cause of action. These provisions shift the evidentiary landscape such that the accused bears the burden of rebutting the presumption of consideration and debt, a principle affirmed by Section 101 on the burden of proof and Section 114(iii)(c) on relevant facts. The Evidence Act, Sections 4 (relevancy of admissions), 3 (definition of 'proceeding'), 101 (burden of proof as relevant fact), and 103 (burden of proof as to particular matters) provide the procedural and substantive framework for evaluating the burden allocation and the sufficiency of evidence. The High Courts reliance on the respondents mere denials was legally untenable in the face of the complainants statutory primafacie case, a point clarified in the ratio of Hiten P. Dalal v. Bratindranath Banerjee.
(B) The core legal principle is that in a Section 138 prosecution, the law imposes a presumption that the cheque was issued for the discharge of a debt or liability. This presumption is rebuttable, and the burden to prove the absence of any debt or liability rests squarely on the accused. The complainant is not required to prove consideration, and the accuseds unsupported denials do not discharge their evidential burden.
Facts of the case:
A cheque dated 6th April, 1993 for Rs. 63,720 was issued by the first respondent and dishonored for insufficient funds. The appellant issued a legal notice, and the respondent filed a reply denying liability but did not offer evidence of the absence of debt or liability. The trial Magistrate convicted the respondent, a conviction upheld on appeal before the Sessions Judge. The High Court subsequently acquitted the respondent, holding that the appellant failed to prove the cheque was issued for a debt or liability.
Findings of Court:
The High Court erred in placing the burden of proving the absence of consideration on the complainant. The law mandates the opposite allocation; the accused must prove the cheque was not for a debt or liability. The respondent failed to discharge this burden, rendering the acquittal unsustainable.
Issues:
Whether the burden of proving that a cheque was not issued for a debt or liability lies with the complainant or the accused in a proceeding under Section 138 of the Negotiable Instruments Act.
Ratio Decidendi:
The presumption under Section 139 of the Negotiable Instruments Act that a cheque is issued for the discharge of a debt is rebuttable, but the burden of disproving the existence of a debt or liability rests on the accused. The complainant discharging their burden of proving the issuance of the cheque is sufficient to invoke this presumption, and the accuseds unsupported denials are insufficient to rebut it.
Result:
The appeal is allowed, the conviction and sentence of the trial Magistrate are restored, one months time is granted to pay the fine, and in default, simple imprisonment for three months is prescribed.
Presumption - This case was relied upon for the proposition that in complaints under Section 138, the court must presume that the cheque was issued for a debt or liability.
JUDGMENT
S.N. Variava, J.-Leave granted.
2. Heard parties.
3. Briefly stated the facts are as follows :
The Appellant filed a complaint under Section 138 of the Negotiable Instruments Act as the cheque dated 6th April, 1993 in a sum of Rs. 63720/-, issued by 1st First Respondent in favour of the Appellant on Central Bank, had been dishonored with the remarks "Insufficient Funds". The Appellant had issued a legal notice dated 28th April, 1993. Receipt of the said notice is admitted. A reply dated 21st May, 1993 was sent by the 1st Repondent. However no payment no payment was made.
4. After trial the Judicial Magistrate-II, Kumbakonam, convicted the 1st First Respondent under Section 138 and directed payment of a fine of Rs. 65000/=. In default the 1st Respondent was to suffer aimple imprisonment for one year. The 1st Respondent challenged the conviction and sentence by filing Criminal Appeal No. 32 of 1995. The same came to be dismissed by the Sessions Judge on 28th August, 1995.
5. The 1st Respondent then preferred Criminal Revision No. 883 of 1995 before the High Court of Madras. A learned Single Judge, by the impugned Order dated 20th July, 2000, set aside the conviction and acquitted the 1st Respondent. The learned Judge acquitted the 1st Respondent on the ground that the Appellant had not proved that the cheque dated 6th April, 1993 had been issued for any debt or liability.
6. In our view the impugned judgment cannot be sustained at all. The Judgment erroneously proceeds on the basis that the burden of proving consideration for a dishonored cheque is on the complainant. It appears that the learned Judge had lost sight of Sections 118 and 139 of the Negotiable Instruments Act. Under Section 118, unless the contrary was proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under Section 139 the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus in complainants under Section 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebutable. However the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This Court in the case of Hiten P. Dalal v. Bratindranath Banerjee reported in (2001) 6 SCC 16 has also taken an identical view.
7. In this case admittedly the 1st Respondent has led no evidence except some formal evidence. The High Court appears to have proceeded on the basis that the denials/averments in his reply dated 21st May, 1993 were sufficient to shift the burden of proof onto the Appellant/Complainant to prove that the cheque was issued for a debt or liability. This is an entirely erroneously approach. The 1st Respondent had to prove in the trial, by leading cogent evidence, that there was no debt or hability. The 1st Respondent not having led any evidence could not said to have discharged the burden cast on him. The 1st Respondent not having discharged the burden of proving that the cheque was not issued for a debt or liability, the conviction as awarded by the Magistrate was correct. The High Court erroneoulsy set aside that conviction.
8. In this view of the matter the impugned judgment is set aside. The conviction and sentence as awarded by the Magistrate by his order dated 21st March 1994, stand. The 1st Respondent is granted one months time to pay the fine. In default thereof he shall suffer simple imprisonment for three months. The fine if realized, Rs. 60,000/- therefrom shall be paid to the complainant as compensation.
9. The Appeals stands disposed of accordingly. There will be no Order as to costs.
(N.K.R.) Appeal allowed.
**************