Mohammad Murtuza Mohammad Yusuf v. Gulam Nabi Abdul Rehman

Judgment.

1. Heard learned counsel for the parties. Admit. Taken up for final disposal forthwith by consent of parties.

2. By this appeal, the appellant (original complainant) challenges judgment and order dated 25.9.2009 passed in Summary Criminal Case No. 7227 of 2007 by learned Judicial Magistrate, First Class, Court No. 2, Akola whereby respondent (accused) was acquitted of offence punishable under Section 138 of the Negotiable Instruments Act on the ground that the complainant failed to prove that the cheque no. 338343 dated 11.9.2007 drawn on the Akola Urban Cooperative Bank Limited, Akola was issued for discharge of legally enforceable debt or liability.

3. It is not in dispute that the said cheque had returned dishonoured for funds insufficient and notice demanding payment was also served, but the accused did not pay the amount demanded by notice.

4. Facts, briefly are :

The complainant contended that he had good cordial relations with the accused and the accused had demanded Rs. 45000/- which complainant paid in lieu thereof the accused had issued the cheque in question with promise and assurance that it would be honoured which returned dishonoured for non-payment due to “funds insufficient” and remained unpaid despite demand notice dated 20.9.2007 in writing served upon the respondent/accused on 25.9.2007 The accused failed to pay within stipulated period. Hence, complaint was filed on 3.11.2007

5. The accused denied the charge (exhibit 23) on the defence that the complainant had misused the cheque which was taken from the accused by brother of the complainant as help for his election in the year 2006.

6. Learned Advocate for the appellant submitted with reference to evidence that the accused is known to the complainant since childhood and had cordial relations and the cheque in question was given by him to the complainant as hand loan was advanced in the sum of Rs. 45,000/- only from the complainant. Admittedly, the complainant had money in the Bank and he had expressed his readiness and willingness to produce his bank pass-book from both the bank accounts, but the complainant was not asked to produce the bank pass-books in the trial Court. There was suggestion in the cross-examination as the case of the defence was put up that the cheque in question along with one more cheque were given as security to the brother of the complainant. Learned Advocate for appellant therefore submitted that assuming for the sake of argument that the cheque in question was given as security (for repayment), it was not given as piece of paper to be retained by brother of the complainant, but it was enforceable when the accused had failed to repay the sum of Rs. 45,000/- taken as hand-loan. Hence, after written notice of demand was served and the accused failed to repay the loan, the complainant was entitled to enforce the security in the form of cheque by insisting upon payment on that basis. Learned counsel relied upon statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act and ruling in Balaji Agencies Pvt. Ltd. v. Vilas Bagi & Anr. and anr reported in 2000 Cri.L.J 4250 (Bom) to substantiate claim of the complainant to argue that the accused was liable to be convicted as under Section 138 of the Act any cheque drawn by a person on an account maintained by him with bank for payment of any amount of money to another person for the discharge, in whole or in part of any debt or liability, is returned by the bank unpaid, is made enforceable. Learned Advocate for the appellant further argued that in view of statutory presumption in favour of the complainant under Section 118 of the Negotiable Instruments Act, until contrary is proved, it must have been presumed by the learned trial Magistrate that the cheque was drawn for consideration and it was negotiated for consideration and the complainant was entitled to enforce the cheque as holder in due course as under Section 139 of the Act, it shall be presumed, unless contrary is proved that the holder of a cheque received the cheque for the discharge of any debt or liability. Thus, learned Advocate for the appellant argued that the complainant legally entitled to recover the amount payable under cheque as repayment of hand-loan in the sum of Rs. 45,000/-. According to learned Advocate, the accused had failed to rebut the statutory presumptions available to the complainant in this case. He criticised the decision of acquittal by the trial Court as unreasonable and prayed for to allow the appeal.

7. On the other hand, learned Advocate for the respondent submitted that the accused entered in the defence to depose that he had issued two blank cheques drawn on the Akola Urban Cooperative Bank Limited, Akola and cheque bearing no. 338343 was misused by the complainant to lodge complaint by filling in the blanks as to date, amount and name of payee. Learned Advocate made reference to ruling in Krishna Janardan Bhat v. Dattatraya G. Hegde reported in 2008 All MR (Cri) 1164 (SC) to argue that existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It was for the complainant to prove the existence of legally enforceable debt or liability. He further argued that presumption of innocence is human right and the trial Court did take a reasonable view of the facts to dismiss the complaint and acquit the accused.

8. Learned Advocate for the respondent submitted with reference to ruling in Sanjay Mishra v. Kanishka Kapoor reported in 2009 (4) Mh.L.J 155 that remedy to recover unaccounted cash which is not shown in income-tax return as it is not legally enforceable debt or liability. It appears that this Court had cautioned in the same ruling that merely because amount advanced is not shown in Income-tax Return, in every case, one cannot jump to the conclusion that the presumption under Section 139 of the Act stands rebutted. In that case, it was huge amount of Rs. 15 lacs which was advanced in the year 2004 and there was categorical admission on the part of the complainant that the amount was not shown in Income-tax Return and it was “unaccounted money” which could not have been legally enforceable debt. Another ruling in Anjana Balkrishna v. Chaya Baban reported in 2009 (1) DCR 420 (Bom) is referred in which the complainant alleged that she had borrowed Rs. 400,000/- from Bank repayable by monthly instalments advanced interest for loan of Rs. 3,20,000/- to the accused. There was no evidence about income of the complainant. In the facts, it was held that no prudent person would borrow huge amount repayable by instalments so as to help a friend. View taken by the Magistrate was found reasonable and possible.

9. In the present case, complainant has averred and deposed that he is businessman and had very good relations with the accused who had approached with request of hand loan of Rs. 45,000/- which was paid. Against that existing liability the accused issued cheque no. 338343 dated 11.9.2007 for Rs. 45,000/- drawn on the Akola Urban Cooperative Bank Limited, Akola with promise that it would be duly honoured. The said cheque when presented had returned dishonoured and with remarks “funds insufficient” and despite demand notice dated 20.9.2007 served on accused, remained unpaid. The complainant during his cross-examination by the defence stated that he had two Bank accounts as also business as “Sajid General Stores” which was not registered under the Shops & Establishments Act. No question was put about whether the sum was “unaccounted” as in the ruling of Sanjay Mishra (supra). The defence did not call upon the complainant to produce his Bank pass-books although he had expressed readiness to produce the pass-books. In fact, the complainant admitted that he is not income-tax payer. Thus, there was no question as to whether the money advanced was accounted in the income-tax return when the complainant was not not an assesses. Suggestion put to complainant in the course of cross-examination indicate that it is case of the defence that two cheques were taken by brother of the complainant. If that be so, it must be presumed under Section 118 of the Act that the complainant had received it as holder in due course for consideration. The accused has contended that the cheque in question was given as security to meet the election expenses. Had it been so, the accused would have immediately replied to the demand notice in writing accordingly and would have protested and complained to the police about alleged misuse of cheque taken by brother of the complainant. Learned trial Magistrate appears to have ignored these aspects of the case before forming concluding opinion as to acquittal of the accused which, of course, resulted in miscarriage of justice. In these days, it is not unusual even for a petty businessman to possess a sum of Rs. 45,000/- or so.

10. In a criminal trial one has to start with the presumption of innocence in favour of the accused which is also regarded as human right because no one can be convicted and punished merely on the ground of suspicion however strong it may be. The prosecution is required to prove offence beyond reasonable doubt. In special prosecutions based upon dishonoured cheque offence punishable under Section 138 of the Negotiable Instruments Act, however, the complainant is aided by the statutory presumptions which are self-contained under Sections 118 and 139 of the Act. The complainant is required to prove that the cheque was drawn by the accused upon his account in the Bank for a certain sum of money on a certain date which returned dishonoured for non-payment on account of reason i.e Insufficient funds etc. and the accused has failed to pay the said amount despite service of demand notice in writing upon him, within stipulated period. Once the primary facts as above are averred and proved by the complainant in such case as required by the penal provision in Section 138 of the Act, the statutory presumptions arising are required to be rebutted by the accused by adducing satisfactory evidence which is to be tested on preponderance of probabilities. Such evidence may be by production of documents to disprove the complainant's version or by citing material elicited from the cross-examination of the complainant and his witnesses if any. The accused may not enter in the witness box if he can dislodge the statutory presumptions otherwise.

11. It is no doubt true that under Section 139 of the Act, under the above-said circumstances, the Court has to raise a presumption that the holder of the cheque received the cheque for the discharge of any debt or liability, but it is a rebuttable one. The accused can establish that the debt or liability was not legally enforceable for to uproot the prosecution. Under Section 139 of the Act burden lies on the drawer of the cheque to rule out the existence of the debtor-creditor relationship. The use of the phrase “until contrary is proved” in Section 118 of the Act and further use of the words “unless the contrary is proved” in Section 118 of the Act read with definition of “may presume” and “shall presume” as given in Section 4 of the Evidence Act, make it clear that presumption to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over. But it is settled law that to rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt, as is expected of the complainant in a criminal trial to prove offence. The accused may adduce evidence to prove that there was no debt or liability to be discharged by him. At the same time, it has to be borne in mind that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused to seek dismissal of the complaint. Something which is probable has to be brought on record for getting the burden of proof shifted back to the complainant. If case of the complainant is false then the accused as any reasonable ordinary prudent person is bound to react sharply by replying to the demand notice received by the accused. Keeping deliberate silence by the accused while demand notice in writing is served upon the accused is itself a strong circumstance in favour of the complainant. The accused did not stop payment of the cheque through his Bank nor reported alleged misuse of the cheque to the police. In Gorantla Venkateswara Rao v. Kolla Veera Raghava and anr reported in 2006 Cri.L.J 1, the Andhra Pradesh High Court held that the failure of the accused to give reply to the legal notice issued by the complainant is one of the strong circumstance to draw an inference that the accused borrowed the amount from the complainant and the cheque was issued towards payment of the legally enforceable debt. If the complainant has misused the cheque or fabricated it, the accused is bound to immediately protest and threaten the complainant with legal action and would not wait until the conclusion of the trial without taking any action against the complainant. Adverse inference is, therefore, required to be taken against the accused for not replying the notice. In Hiten P. Dalal v. Bratindranath Banerjee. reported in (2001) 6 SCC 16, the three-Judge Bench of the Apex Court that Sections 138 and 139 of the Act require that the Court “shall presume” the liability of the drawer of the cheque for the amount for which cheque is drawn and in K. Bhaskaran v. Sankaran Vaidhyan Balan and anr reported in (1997) 7 SCC 510, Honourable Supreme Court observed thus :

“As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 enjoins the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was upon the accused to rebut that presumption. The defence evidence must be such which the court can believe the defence to exist or consider its existence as reasonably probable, the standard of reasonability being that of the prudent person. To discharge onus it may not be essential for the accused to enter in the witnesses box to depose as he can rebut the presumption by cross examining the complainant and his witnesses if any to prove defence upon preponderance of probabilities. Thus, onus as expected to be discharged by the accused was not discharged in this case. Once it is held that the accused had failed to rebut the statutory presumptions it ought to be concluded that the presumption itself was tantamount to proof of the case of the complainant.”

12. Looking into the submissions at the bar in the light of relevant legal provisions, it seems that trial Court did notice the fact that cheque in question issued was signed by the drawer (accused) drawn on the Akola Urban Cooperative Bank Limited, Main Branch, Akola and that there is presumption in favour of the complainant in view of Section 139 of the Negotiable Instruments Act. However, it appears that learned trial Magistrate has misled himself by the alleged handwriting by complainant's brother Mustafa on the cheque. The logic of the trial Court that it did not find evidence to believe the financial soundness of the complainant to lend huge amount of Rs. 45,000/- and therefore it did not feel that the amount may have been lent to the accused appears strange, because first of all, sum of Rs. 45,000/- is not such a huge amount which a person running business, though small maybe, may not have at his disposal. Be that as it may, presumptions statutorily available to the complainant were not rebutted by the accused by adducing satisfactory evidence to the contrary. Section 138 of the Act aims at punishing unscrupulous drawers of cheques who though purport to discharge their liability by issuing cheque, have no real intention to pay. Trickster drawer may find out way and means to defeat the honest payee by avoiding payment. The court must be on guard to prevent miscarriage of justice. Learned trial Magistrate ought to have noticed that the obligation on the part of of the complainant stood discharged with the help of statutory presumptions of law unless the accused adduced evidence to establish the reasonable possibility of the nonexistence of the presumed fact.

13. On careful scrutiny of evidence led in the case, the complainant denied the suggestion that his brother had obtained the blank signed cheques from the accused. Suggestion was also denied that the two cheques were given as security. According to the accused, brother of the complainant had obtained two blank cheques from the accused as security. I find the requirements of Section 138 of the Act have sufficiently been proved in order to reverse the impugned judgment and order of acquittal passed in favour of the accused. The acquittal order appears unreasonable, contrary to the record in the facts and circumstances of the case. I find the respondent/accused guilty of offence punishable under Section 138 of the Negotiable Instruments Act and convict him thereunder.

14. On the question of sentence, it is not necessary to insist upon incarceration of the accused having regard to nature of offence. The accused is sentenced to undergo imprisonment till rising of the Court and to pay compensation in the sum of Rs. 45,000/-, the amount covered by cheque in question plus Rs. 10.000/- as cost for prosecuting the accused payable under Section 357 (3) Cr.P.C to the complainant, within two months from the date of this judgment. In default of payment of compensation, the accused shall undergo simple imprisonment for three months. The accused shall appear before the learned Judicial Magistrate, First Class (Special Court under Section 138 of the Act) at Akola and his surety to produce him on 2.3.2010 Compensation, if not paid, shall be recovered as fine.

A.P BHANGALE, J

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