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Friday, February 15, 2013

The Banking Public Financial Institutions and Negotiable Instruments (Amendment) Act, 1988 - Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. 23. In other words, provided the facts required to form the basis of a presumption of law exists, no discretion is left with the Court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary = the absence of any details of the date on which the loan was advanced as also the absence of any documentary or other evidence to show that any such loan transaction had indeed taken place between the parties is a significant circumstance. So also the fact that the cheque was presented on the day following the altercation between the parties is a circumstance that cannot be brushed away. The version of the respondent that the cheque was not returned to him and the complainant presented the same to wreak vengeance against him is a circumstance that cannot be easily rejected. Super added to all this is the testimony of DW1, Jeevan Guru according to whom the accounts were settled between the father of the complainant and the accused in his presence and upon settlement the accused had demanded return of this cheque 27Page 28 given in lieu of the advance. It was further stated by the witness that the complainant’s father had avoided to return the cheque and promised to do so on some other day. There is no reason much less a cogent one suggested to us for rejecting the deposition of this witness who has testified that after the incident of altercation between the two parties the accused has been supplying milk to the witness as he is also in the same business. Non-examination of the father of the complainant who was said to be present outside the Court hall on the date the complainant’s statement was recorded also assumes importance. It gives rise to an inference that the non-examination was a deliberate attempt of the prosecution to keep him away from the court for otherwise he would have to accept that the accused was actually supplying milk to him and that the accused was given the price of the milk in advance as per the trade practice in acknowledgement and by way of security for which amount the accused had issued a cheque in question.


Page 1
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.    261          2013
(Arising out of SLP (Crl.) 6761/2010)
VIJAY          ..Appellant
Versus
LAXMAN & ANR.       ..Respondents
J U D G M E N T
GYAN SUDHA MISRA, J.
Leave granted.
2. This appeal by special  leave which was heard at
length at the admission stage itself is directed against the
judgment  and order   dated 29.1.2010 passed by a learned
single Judge of the High Court of Madhya Pradesh  Bench at
Indore,  in  Criminal Revision No. 926/2009, whereby the
conviction and sentence of one year alongwith a fine of
1Page 2
Rupees One Lakh and Twenty Thousand imposed on the
appellant  for commission of an offence under Section 138
of The Banking Public Financial Institutions and Negotiable
Instruments (Amendment) Act, 1988 ( For short the ‘N.I. Act’
) has been set aside and the criminal revision was allowed.
The  complainant-appellant,  therefore,   has  assailed  the
judgment  and order of the High Court  which reversed the
concurrent findings of fact recorded by  the trial court and
set  aside   the  order  of  conviction  and  sentence  of  the
respondent.
3. In order to appreciate the merit of this appeal, the
essential  factual  details  as  per  the  version  of  the
complainant-appellant  is  that  the  respondent-accused
(since acquitted) had borrowed a sum of Rs.1,15,000/- from
the  complainant-appellant  for  his  personal  requirement
which was given to him as the relationship between the two
was cordial.  By way of repayment, the respondent  issued a
cheque dated 14.08.2007 bearing No.119682 amounting to
Rs.1,15,000/- drawn on  Vikramaditya Nagrik Sahkari Bank
Ltd.  Fazalapura,  Ujjain  in  favour  of  the  appellant.   The
complainant-appellant alleged that on 14.8.2007 when the
2Page 3
cheque  was  presented  to  the  bank  for  encashment  the
same  was  dishonoured  by  the  bank  on  account  of
‘insufficient funds’.  The complainant-appellant, therefore,
issued a legal notice after a few days on 17.8.2007 to the
accused-respondent  which  was  not  responded  as  the
respondent neither  replied to the notice nor paid the  said
amount.
4. It is an admitted fact that the respondent-accused
is  a  villager  who  supplied  milk  at  the  dairy  of  the
complainant’s father in the morning  and evening  and his
father  made  payment   for  the  supply  in  the  evening.
Beyond this part, the case of the respondent-accused is that
the complainant took  security  cheques from all the  milk
suppliers and used to pay the  amount  for one year in
advance for which the milk had to be supplied.  It  is on this
count that the respondent  had issued the cheque in favour
of the complainant which was merely by way of  amount
towards security which was meant to be encashed only if
milk was not supplied.  Explaining this part of the defence
story, one of the witnesses for the defence  Jeevan Guru
deposed  that  when  any  person  entered  into  contract  to
3Page 4
purchase  milk  from  any person  in  the  village,  the  dairy
owner i.e. the complainant’s side  made payment of one
year in advance and in return  the milk supplier  like the
respondent issued cheques of the said amount by way of
security.  In view of this  arrangement, the accused Laxman
started  supplying   milk  to  the  complainant’s  father.   In
course  of settlement of accounts, when accused Laxman
asked for return of his security cheque, since he had already
supplied milk for that amount to the complainant’s father
Shyam Sunder, he was directed to take back the cheque
later on.  The accused insisted for return of the security
cheque  since the account had been settled but the cheque
was not given back to the respondent as a result of which
an altercation took place  between  the respondent/accused
and the milk supplier  due to which the accused lodged a
report  at  the  police  station  on   13.8.2007,   since  the
complainant’s  father   Shyam  Sunder  also  assaulted  the
respondent-accused and abused him who had refused to
return  the cheque to the respondent-accused which had
been issued by him only by way of  security.  As a counter
blast,  the  complainant  presented  the  cheque  for
4Page 5
encashment  merely  to  settle  scores  with  the
Respondent/milk supplier.
5. The  complaint-appellant,  however,  filed  a
complaint  under  Section  138  of  the  N.I.  Act  before  the
Judicial Magistrate 1
st
 Class, Ujjain, who while conducting the
summary  trial  prescribed  under  the  Act  considered  the
material evidence on record and held the Respondent guilty
of offence  under  Section  138  of the  N.I. Act  and  hence
recorded  an order of conviction  of the respondent-accused
due  to  which  he  was  sentenced  to  undergo  rigorous
imprisonment for one year and a fine of Rs.1,20,000/- was
also imposed.  The respondent-accused feeling  aggrieved
of the order preferred an appeal before the IXth Additional
Sessions Judge, Ujjain, M.P. who also was pleased to uphold
the order of conviction and hence dismissed the appeal.
6. The  respondent-accused,  thereafter,  filed  a
criminal revision in the High Court against the concurrent
judgment and orders of the courts below but the High Court
was pleased to set aside the judgment and orders of the
courts below as it was held that the impugned order of
conviction and sentence suffered from grave miscarriage of
5Page 6
justice due to non- consideration of the defence evidence of
rebuttal which demolished the complainant’s case.
7. Assailing   the  judgment  and  order  of  reversal
passed by the High Court in  favour of the  respondentaccused acquitting  him of the offence under Section 138 of
the  Act,  learned  counsel appearing  for  the  complainantappellant submitted that the learned single Judge of the
High Court ought not to have interfered with the concurrent
findings of fact recorded by the courts below by setting
aside the judgment and order recording conviction of the
respondent  and  sentencing  him   as  already  indicated
hereinbefore.  The High Court had wrongly appreciated the
material evidence on record and held that the respondentaccused appeared to be an illiterate  person who can hardly
sign  and  took  notice  of  some  dispute  affecting  the
complainant’s case since an incident had taken  place on
13.8.2007,  while  the  alleged  cheque  was  presented  on
14.8.2007 for encashment towards discharge of the loan of
Rs.1,15,000/-.  Learned counsel also assailed the finding of
the High Court  which recorded that the cheque was issued
by way of  security of some transaction  of milk which took
6Page 7
place between the respondent-accused and father of the
complainant-appellant and thus dispelled the complainantappellant’s case.
8. Learned  counsel  representing  the  respondentaccused  however  refuted  the  complainant’s  version  and
submitted  that   the  case  lodged  by  the  complainantappellant  against  the  respondent  was clearly with an
ulterior motive to harass the respondent keeping in view the
grudge  in  mind  by  lodging  a  false  case  alleging  that
personal  loan  of  Rs.1,15,000/-  was  granted  to  the
respondent  and   the  answering  respondent  had  issued
cheque towards the repayment of said loan which could not
stand the test of scrutiny of the High Court as it noticed the
weakness in the evidence led by the complainant.
9. Having  heard  the  learned  counsels  for  the
contesting parties in the light of the evidence led by them,
we  find  substance  in  the  plea  urged  on  behalf   of  the
complainant-appellant  to the extent  that in spite of the
admitted  signature  of  the  respondent-accused  on  the
cheque, it was not available to the  respondent-accused to
deny the fact that he had not issued  the cheque  in favour
7Page 8
of the  complainant for once  the signature on the cheque is
admitted and the same had been returned on account of
insufficient funds, the offence under Section 138 of the  Act
will clearly be held to have been made out and it was not
open for the respondent-accused to urge that although the
cheque had been dishonoured, no offence under the Act is
made  out.   Reliance  placed  by  learned  counsel  for  the
complainant-appellant  on the authority of this Court  in the
matter of  K.N. Beena vs.  Muniyappan And Anr.
1
 adds
sufficient  weight to the plea of the complainant-appellant
that the burden of proving the consideration for  dishonour
of the cheque  is not on the complainant-appellant,  but the
burden of proving  that a cheque had not been issued for
discharge of a lawful debt or a liability  is on the  accused
and if he fails  to discharge  such  burden, he is liable to be
convicted  for  the  offence  under  the  Act.   Thus,  the
contention of the counsel for the appellant that it is the
respondent-accused  (since  acquitted)  who  should  have
discharged the burden that the cheque was given merely by
way  of  security,  lay  upon  the  Respondent/  accused  to
establish that the cheque was not meant to be encashed by
1
2001 (7) Scale  331
8Page 9
the complainant  since  respondent had already supplied
the milk towards the amount. But then the question remains
whether the High Court was justified in holding that   the
respondent  had succeeded in proving his case that the
cheque   was  merely  by  way of  security   deposit  which
should  not  have  been  encashed   in  the  facts  and
circumstances of the case since inaction to do so was bound
to  result   into  conviction  and  sentence  of  the
Respondent/Accused.
10. It is undoubtedly true   that  when  a cheque is
issued by a person who has signed  on the cheque and the
complainant  reasonably  discharges  the  burden  that  the
cheque had been issued towards a lawful payment, it is for
the accused  to discharge the burden under Section 118 and
139 of the N.I. Act that the cheque had not been issued
towards discharge of a legal debt but was issued by way of
security or any other reason on account of some business
transaction or was obtained unlawfully.  The purpose of  the
N.I. Act is clearly to provide a speedy remedy  to curb and to
keep check on the economic offence of duping or cheating
a person to whom a cheque is issued  towards discharge of
9Page 10
a debt and if the complainant  reasonably  discharges the
burden that the payment  was towards a lawful debt, it is
not open for the accused/signatory  of the cheque to set up
a defence that although  the cheque had been signed by
him, which had bounced, the same would not constitute an
offence.
11. However,  the  Negotiable  Instruments  Act
incorporates  two  presumptions  in  this  regard:  one
containing in Section 118 of the Act and other in Section
139 thereof.  Section 118 (a) reads as under:-
“118. Presumption as to negotiable instruments.—Until the
contrary is proved, the  following  presumptions shall  be
made—
1. of  consideration:  that  every  negotiable   instrument
was made or drawn for consideration, and that every
such instrument  when it has been accepted, indorsed,
negotiated  or  transferred,  was  accepted,  indorsed,
negotiated or transferred for consideration;”
Section 139 of the  Act reads as under:-
“139.  Presumption  in  favour  of  holder.-It  shall   be
presumed, unless the contrary is proved, that the holder  of
a cheque  received the cheque, of the  nature referred to in
10Page 11
Section 138 for the discharge, in whole or in part, of any
debt  or other liability.”
12. While  dealing  with  the  aforesaid   two
presumptions, learned Judges of this Court in the matter of
P. Venugopal vs.  Madan P. Sarathi
2
 had been pleased to
hold that under Sections 139, 118 (a) and 138 of the N.I. Act
existence of  debt or other  liabilities  has to be proved in
the first instance  by the complainant but thereafter the
burden of proving to the contrary  shifts to the accused.
Thus,  the  plea  that  the  instrument/cheque  had  been
obtained from its lawful owner  or from any person  in lawful
custody thereof  by means  of an offence  or fraud  or had
been  obtained  from  the  maker  or   acceptor  thereof  by
means of an offence or fraud  or for unlawful consideration,
the burden of disproving  that the holder is a holder in due
course  lies upon him.   Hence, this Court observed therein,
that   indisputably,  the   initial  burden  was   on  the
complainant  but the presumption raised in favour of the
holder of the cheque  must be kept confined  to the matters
2
(2009) 1 SCC 492
11Page 12
covered thereby.   Thereafter, the presumption  raised does
not extend to the extent  that the cheque was not issued for
the discharge of any debt or liability which is not required to
be  proved  by  the  complainant  as  this  is  essentially  a
question of fact and it is the defence which has to prove
that  the  cheque  was not  issued  towards discharge  of a
lawful debt.
13. Applying the ratio of the aforesaid case as also
the  case   of   K.N.  Beena vs.  Muniyappan  And  Anr.
(supra), when we examine the facts of this case, we have
noticed that although  the respondent  might have failed to
discharge  the  burden    that  the  cheque   which  the
respondent had issued was not signed by him, yet there
appears  to  be  a  glaring   loophole  in  the  case  of  the
complainant who failed to establish that the cheque  in fact
had been issued by the respondent towards repayment of
personal  loan  since  the  complaint  was  lodged  by  the
complainant without even specifying the date on which the
loan was advanced nor the complaint indicates  the date of
its lodgement  as the date  column  indicates ‘nil’ although
as per the complainant’s own story, the respondent  had
12Page 13
assured  the  complainant  that  he  will  return  the  money
within two months for which he had issued a post-dated
cheque  No.119582  dated  14.8.2007  amounting  to
Rs.1,15,000/- drawn on  Vikramaditya  Nagrik Sahkari Bank
Ltd., Ujjain.  Further case of the complainant  is that when
the cheque  was presented in the bank on 14.8.2007   for
getting  it  deposited  in  his  savings  account  No.1368  in
Vikarmaditya Nagrik Sahkari Bank Ltd. Fazalpura, Ujjain, the
said cheque was returned being  dishonoured by the bank
with a note  ‘insufficient  amount’ on 14.8.2007.   In the first
place, the respondent-accused  is alleged to have issued a
post-dated  cheque   dated  14.8.2007  but  the
complainant/appellant  has conveniently omitted to mention
the date on which  the loan was advanced   which is fatal to
the complainant’s case as  from this vital omission   it can
reasonably be inferred that the cheque  was  issued on
14.8.2007  and was meant to be encashed  at a  later date
within two months from the date of issuance which was
14.8.2007.  But it is evident that the cheque  was presented
before the bank  on the date of issuance itself  which was
14.8.2007 and on the same date i.e. 14.8.2007, a written
13Page 14
memo  was  received  by  the  complainant  indicating
insufficient   fund.   In  the  first  place  if  the  cheque  was
towards  repayment  of  the  loan  amount,  the  same  was
clearly meant to be encashed at a later date within two
months or at least a little later than the date on which the
cheque  was  issued:  If  the  cheque  was  issued  towards
repayment of loan it is beyond comprehension as to why the
cheque was presented by the  complainant  on the same
date  when  it  was  issued  and  the  complainant  was  also
lodged without specifying  on which date the amount of loan
was advanced  as also the date  on which compliant  was
lodged  as  the  date  is  conveniently  missing.   Under  the
background   that   just  one  day  prior  to  14.8.2007  i.e.
13.8.2007  an  altercation  had  taken  place   between  the
respondent-accused and the  complainant-dairy owner for
which  a  case  also  had  been  lodged  by  the  respondentaccused  against  the  complainant’s  father/dairy  owner,
missing of the date on which  loan was advanced and the
date on which  complaint was lodged, casts a serious doubt
on  the  complainant’s  plea.   It  is,  therefore,  difficult  to
appreciate as to why the cheque which even as per the case
14Page 15
of the complainant was towards repayment of loan which
was  meant  to  be  encashed  within  two  months,  was
deposited on the date of issuance itself.  The complainant
thus has miserably failed to prove his case that the cheque
was issued towards discharge of a lawful debt and it was
meant to be encashed on the same date when it was issued
specially when the complainant has failed to disclose the
date on which the alleged amount was advanced to the
Respondent/Accused. There are thus glaring inconsistencies
indicating gaping hole in the complainant’s version that the
cheque although had been issued, the same was also meant
to be encashed  instantly  on the same date when it was
issued.
14. Thus, we are of the view that although the cheque
might have been duly obtained from its lawful owner i.e. the
respondent-accused, it was used for unlawful reason as it
appears to have been submitted for encashment on a date
when it was not meant to be presented  as in that event the
respondent would have had no reason to ask for a loan from
the complainant if he had the capacity to discharge the loan
amount on the date when the cheque had been issued.  In
15Page 16
any event, it leaves the complainant’s case in the realm of
grave doubt on which the case of conviction and sentence
cannot be sustained.
15. Thus,  in  the  light  of  the  evidence  on  record
indicating grave weaknesses in the complainant’s case, we
are of the view that the  High Court has  rightly set aside the
findings recorded by the Courts below and consequently set
aside the conviction and sentence since there were glaring
inconsistencies  in  the  complainant’s  case  giving  rise  to
perverse findings resulting into unwarranted conviction and
sentence of the respondent.   In fact, the trial court as also
the first appellate court of facts seems to have missed the
important  ingredients of Sections 118 (a) and 139 of the
N.I. Act which made it incumbent on the courts below to
examine the defence evidence of  rebuttal  as to whether
the respondent/accused discharged his burden to disprove
the complainant’s case  and recorded the finding only on
the basis of the complainant’s version.  On scrutiny of the
evidence which we did  to avoid  unwarranted  conviction
and miscarriage of justice, we have found that the High
Court has rightly overruled the decision  of the courts below
16Page 17
which were under  challenge as the trial court  as also the
1
st
  Appellate  Court   misdirected  itself   by ignoring  the
defence   version  which  succeeded   in  dislodging   the
complainant’s  case on the  strength  of convincing evidence
and thus discharged the burden envisaged under Sections
118 (a) and 139 of  the N.I. Act which although speaks of
presumption in favour of  the holder of the cheque, it has
included  the provisos  by incorporating the expressions
“until the contrary is proved” and “unless the contrary  is
proved” which are the riders imposed by the Legislature
under the aforesaid  provisions of Sections 118 and 139 of
the N.I. Act as the Legislature  chooses to provide adequate
safeguards  in  the  Act  to   protect  honest  drawers  from
unnecessary  harassment  but  this  does  not  preclude  the
person against whom  presumption is drawn from  rebutting
it and proving  to the contrary.
16. Consequently, we uphold the judgment and order
of acquittal  of the respondent passed by the High Court
and hence dismissed this appeal.
         ………………………………….J.
17Page 18
(T.S. Thakur)
………………………………….J.
(Gyan Sudha Misra)
New Delhi;
February 07, 2013  
18Page 19
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.  261            OF 2013
(Arising out of S.L.P. (Crl.) No.6761 of 2010)
Vijay …Appellant
Versus
Laxman and Anr. …Respondents
J U D G M E N T
T.S. Thakur, J.
1. I  have  had  the  advantage  of  going  through  the
judgment  and  order  proposed  by  my  esteemed  colleague
Gyan  Sudha  Misra,  J.  I  entirely  agree  with  the  conclusion
drawn by Her Ladyship that the respondent has been rightly
acquitted  of  the  charge  framed  against  him  under  Section
138  of  the  Negotiable  Instruments  Act,  1881  and  that  the
present appeal ought to be dismissed. I, however, would like
to add a few words of my own in support of that conclusion.
19Page 20
2. The factual matrix in which the complaint under Section
138 of the Negotiable Instruments Act was filed against the
respondent  has been  set  out  in the  order  proposed by my
esteemed sister Misra J. It is, therefore, unnecessary for me
to state the facts over again.  All that need be mentioned is
that according to the complainant the accused had borrowed
a  sum  of  Rs.1,15,000/-  from  the  former  for  repayment
whereof  the  latter  is  said  to  have  issued  a  cheque  for  an
equal  amount  payable  on  the  Vikramaditya  Nagrik  Sahkari
Bank Ltd. Fazalapura, Ujjain. The cheque when presented to
the  bank  was  dishonoured  for  ‘insufficient  funds’.   The
accused having failed to make any payment despite statutory
notice  being  served  upon  him  was  tried  for  the  offence
punishable under the provision mentioned above.  Both the
courts below found the accused guilty and sentenced him to
undergo  imprisonment  for  a  period  of  one  year  besides
payment of Rs.1,20,000/- towards fine.
3. The case set up by the accused in defence is that he is
a  Milk  Vendor  who  supplied  milk  to  the  father  of  the
complainant  who  runs  a  dairy  farm.   The  accused  claimed
20Page 21
that  according  to  the  prevailing  practice  he  received  an
advance towards the supply of milk for a period of one year
and  furnished  security  by  way  of  a  cheque  for  a  sum  of
Rs.1,15,000/-.  When  the  annual  accounts  between  the
accused-respondent  and  the  dairy  owner-father  of  the
complainant was settled, the accused demanded the return
of  the  cheque  to  him.  The  dairy  owner,  however,  avoided
return of cheque promising to do so some other day. Since
the cheque was not returned to the accused despite demand
even  on  a  subsequent  occasion,  an  altercation  took  place
between  the  two  leading  to  the  registration  of  a  first
information report against the father of the complainant with
the jurisdictional police. On the very following day after the
said  altercation,  the  cheque  which  the  respondent  was
demanding  back  from  the  father  of  the  complainant  was
presented  for  encashment  to  the  bank  by  the  complainant
followed by a notice demanding payment of the amount and
eventually  a  complaint  under  Section  138  against  the
accused.  The case of the accused, thus, admitted the issue
and handing over of the cheque in favour of the complainant
but  denied  that  the  same  was  towards  repayment  of  any
21Page 22
loan.  The High Court has rightly accepted the version given
by  the  accused-respondent  herein.  We  say  so  for  reasons
more  than  one.   In  the  first  place  the  story  of  the
complainant  that  he  advanced  a  loan  to  the  respondentaccused  is  unsupported  by  any  material  leave  alone  any
documentary  evidence  that  any  such  loan  transaction  had
ever taken place. So much so, the complaint does not even
indicate  the  date  on  which  the  loan  was  demanded  and
advanced.  It is blissfully silent about these aspects thereby
making the  entire  story suspect.   We are  not unmindful of
the  fact  that  there  is  a  presumption  that  the  issue  of  a
cheque  is  for  consideration.  Sections  118  and  139  of  the
Negotiable Instruments Act make that abundantly clear. That
presumption is, however, rebuttable in nature.  What is most
important is that the standard of proof required for rebutting
any such presumption is not as high as that required of the
prosecution.  So  long  as  the  accused  can  make  his  version
reasonably  probable,  the  burden  of  rebutting  the
presumption would stand discharged.  Whether or not it is so
in a given case depends upon the facts and circumstances of
that  case.   It  is  trite  that  the  courts  can  take  into
22Page 23
consideration the circumstances appearing in the evidence to
determine  whether  the  presumption  should  be  held  to  be
sufficiently  rebutted.  The  legal  position  regarding  the
standard  of  proof  required  for  rebutting  a  presumption  is
fairly well settled by a long line of decisions of this Court.
4. In M.S. Narayana Menon v. State of Kerala (2006)
6  SCC  39, while  dealing  with  that  aspect  in  a  case  under
Section  138  of  the  Negotiable  Instruments  Act,  1881,  this
Court held that the presumptions under Sections 118(a) and
139  of  the  Act  are  rebuttable  and  the  standard  of  proof
required  for  such  rebuttal  is  preponderance  of  probabilities
and not proof beyond reasonable doubt. The Court observed:
“29.  In  terms  of  Section  4  of  the  Evidence  Act
whenever  it  is  provided  by  the  Act  that  the  court
shall  presume  a  fact,  it  shall  regard  such  fact  as
proved  unless  and  until  it  is  disproved.  The  words
“proved”  and  “disproved”  have  been  defined  in
Section  3  of  the  Evidence  Act  (the  interpretation
clause)...
30.  Applying  the  said  definitions  of  “proved”  or
“disproved” to the principle behind Section 118(a) of
the  Act,  the  court  shall  presume  a  negotiable
instrument  to be for  consideration  unless  and  until
after  considering  the  matter  before  it,  it  either
believes  that  the  consideration  does  not  exist  or
considers the non-existence of the consideration so
probable  that  a  prudent  man  ought,  under  the
circumstances of the particular case, to act upon the
supposition  that  the  consideration  does  not  exist.
For rebutting such presumption, what is needed is to
23Page 24
raise a probable defence. Even for the said purpose,
the evidence adduced on behalf of the complainant
could be relied upon.
xx xx xx xx
32.  The  standard  of  proof  evidently  is
preponderance  of  probabilities. Inference  of
preponderance  of  probabilities  can  be  drawn  not
only  from  the  materials  on  record  but  also  by
reference to the circumstances upon which he relies.
xx xx xx xx
41...Therefore,  the  rebuttal  does  not  have  to  be
conculsively established but such evidence must be
adduced before the court in support of the defence
that  the  court  must  either  believe  the  defence  to
exist  or  consider  its  existence  to  be  reasonably
probable, the standard of reasonability being that of
the 'prudent man'.”
5 The  decision  in  M.S.  Narayana  Menon  (supra)  was
relied upon in K. Prakashan v. P.K. Surenderan (2008) 1
SCC  258  where  this  Court  reiterated  the  legal  position  as
under:
“13.  The  Act  raises  two  presumptions;  firstly,  in
regard to the passing of consideration as contained
in  Section  118  (a)  therein  and,  secondly,  a
presumption that the holder of cheque receiving the
same  of  the  nature  referred  to  in  Section  139
discharged  in  whole  or  in  part  any  debt  or  other
liability.  Presumptions  both  under  Sections  118  (a)
and 139 are rebuttable in nature.
14. It  is  furthermore  not  in  doubt  or  dispute  that
whereas  the  standard  of  proof  so  far  as  the
prosecution is concerned is proof of guilt beyond all
reasonable  doubt;  the  one  on  the  accused  is  only
mere preponderance of probability.”
24Page 25
6. To  the  same  effect  is  the  decision  of  this  Court  in
Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008)
4 SCC 54 where this Court observed:
“32…  Standard  of  proof  on  the  part  of  an  accused
and  that  of  the  prosecution  a  criminal  case  is
different.
xx xx xx xx
34.  Furthermore,  whereas  prosecution  must  prove
the guilt of an accused beyond all reasonable doubt,
the  standard  of  proof so as to prove  a defence  on
the  part  of  an  accused  is  preponderance  of
probabilities.
xx xx xx xx
45… Statute mandates raising of presumption but it
stops  at  that.  It  does  not  say  how  presumption
drawn  should  be  held  to  have  rebutted.  Other
important  principles  of  legal  jurisprudence,  namely
presumption  of innocence as human  rights and the
doctrine of reverse burden introduced by Section139
should be delicately balanced.”
7. Presumptions  under  Sections  118(a)  and  Section  139
were  held  to  be  rebuttable  on  a  preponderance  of
probabilities  in  Bharat  Barrel  &  Drum  Manufacturing
Company v. Amin Chand Pyarelal (1999) 3 SCC 35 also
where the Court observed:
“11… Though the evidential burden is initially placed
on  the  defendant  by  virtue  of  S.118  it  can  be
rebutted  by  the  defendant  by  showing  a
25Page 26
preponderance  of  probabilities  that  such
consideration as stated in the pronote, or in the suit
notice or in  the plaint  does not exist  and once the
presumption  is  so  rebutted,  the  said  presumption
'disappears'. For the purpose of rebutting the initial
evidential  burden, the  defendant  can rely  on direct
evidence  or  circumstantial  evidence  or  on
presumptions  of  law  or  fact.  Once  such  convincing
rebuttal  evidence  is  adduced  and  accepted  by  the
Court, having regard to all the circumstances of the
case  and  the  preponderance  of  probabilities,  the
evidential burden shifts back to the plaintiff who has
also the legal burden.”
8. In Hiten P. Dalal v. Bratindranath Banerjee (2001)
6 SCC 16 this Court compared evidentiary presumptions in
favour of the prosecution with the presumption of innocence
in the following terms:
“22… Presumptions are rules of evidence and do not
conflict with the presumption of innocence, because
by the latter all that is meant is that the prosecution
is  obliged  to  prove  the  case  against  the  accused
beyond  reasonable  doubt.  The  obligation  on  the
prosecution  may  be  discharged  with  the  help  of
presumptions  of  law  or  fact  unless  the  accused
adduces evidence showing the reasonable possibility
of the non-existence of the presumed fact.
23.  In  other  words,  provided  the  facts  required  to
form  the  basis  of  a  presumption  of  law  exists,  no
discretion  is  left  with  the  Court  but  to  draw  the
statutory conclusion, but this does not preclude the
person against whom the presumption is drawn from
rebutting it and proving the contrary. …”
26Page 27
9. Decisions in  Mahtab Singh & Anr. v. State of Uttar
Pradesh (2009) 13 SCC 670, Subramaniam v. State of
Tamil  Nadu  (2009)  14  SCC  415  and Vishnu  Dutt
Sharma  v.  Daya  Sapra  (2009)  13  SCC  729,  take  the
same line of reasoning.
10. Coming then  to the  present  case,  the  absence  of any
details of the date on which the loan was advanced as also
the absence of any documentary or other evidence to show
that  any  such  loan  transaction  had  indeed  taken  place
between  the  parties  is a  significant  circumstance.   So  also
the fact that the cheque was presented on the day following
the  altercation  between  the  parties  is  a  circumstance  that
cannot be brushed away. The version of the respondent that
the  cheque  was  not  returned  to  him  and  the  complainant
presented  the  same  to  wreak  vengeance  against  him  is  a
circumstance that cannot be easily rejected.  Super added to
all this is the  testimony of DW1, Jeevan  Guru  according to
whom the  accounts were settled between  the father of the
complainant  and  the  accused  in  his  presence  and  upon
settlement the accused had demanded return of this cheque
27Page 28
given  in lieu of the  advance.   It was further  stated  by the
witness that the complainant’s father had avoided to return
the cheque and promised to do so on some other day.  There
is  no  reason  much  less  a  cogent  one  suggested  to  us  for
rejecting the deposition of this witness who has testified that
after the incident of altercation between the two parties the
accused has been supplying milk to the witness as he is also
in the same business.  Non-examination of the father of the
complainant  who was said to  be  present  outside  the  Court
hall on the  date  the  complainant’s statement  was recorded
also assumes importance. It gives rise to an inference that
the  non-examination  was  a  deliberate  attempt  of  the
prosecution to keep him away from the court for otherwise
he  would  have  to  accept  that  the  accused  was  actually
supplying  milk to  him and  that  the  accused  was given  the
price  of  the  milk  in  advance  as  per  the  trade  practice  in
acknowledgement and by way of security for which amount
the accused had issued a cheque in question.   
11. In  the  totality  of  the  above  circumstances,  the  High
Court  was  perfectly  justified  in  its  conclusion  that  the
28Page 29
prosecution  had  failed  to  make  out  a  case  against  the
accused  and  in  acquitting  him  of  the  charges.  With  these
observations  in  elucidation  of  the  conclusion  drawn  by  my
worthy  colleague,  I  agree  that  the  appeal  fails  and  be
dismissed.
………………….……….…..…J.
       (T.S. Thakur)
New Delhi
February 7, 2013            
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