* Author
[2024] 4 S.C.R. 255 : 2024 INSC 288
M/S Rajco Steel Enterprises
v.
Kavita Saraff and Another
(Petition for Special Leave to Appeal (Criminal) No. 5583 of 2022)
09 April 2024
[Aniruddha Bose* and Sanjay Kumar, JJ.]
Issue for Consideration
Issue arose as to whether the cheques were issued in discharge
of a debt and if so, whether the respondent no.1 was able to
rebut the presumption in terms of s. 118/139 of the Negotiable
Instrument Act, 1881.
Headnotes
Negotiable Instrument Act, 1881 – ss. 118/139 – Dishonour of
cheque – Sum involved therein, if advanced in discharge of a
legally enforceable debt – Raising of presumption u/s. 139 –
Complaint by partnership firm alleging dishonour of cheques
issued by the respondent no. 1 on the ground of insufficiency
of funds – Case of partnership firm that it had granted financial
assistance to the respondent no.1 and the said cheques
were issued in discharge of her liability – Respondent no.1’s
case that money was advanced to the respondent no.1 for
undertaking stock market related transactions through her
account – Trial court convicted the respondent no. 1 u/s.
138 since she failed to rebut the presumption – However, the
first appellate court acquitted the respondent no. 1 holding
that she rebutted the presumption – High Court upheld the
same – Interference with:
Held: Not called for – As regards the sum involved in the cheques
advanced in discharge of a legally enforceable debt or not, the
complainant failed to show if any sum was advanced towards
financial assistance – High Court found that the debt/liability, in
discharge of which, according to the complainant, the cheques
were issued, did not reflect in the complainant’s balance-sheet
– Other partners of the firm did not depose as prosecution
witnesses to establish that the cheque-amounts were advanced
to the respondent no. 1 as financial assistance – Respondent
256 [2024] 4 S.C.R.
Digital Supreme Court Reports
no. 1 has put up a plausible defence as regards the reason for
which the complainant’s funds had come to her account – Both
the appellate fora, on going through the evidence did not find
existence of any “enforceable debt or other liability” – Thus, it
cannot be held that the findings of the High Court and the first
appellate court were perverse, or based on no evidence. [Paras
11, 12]
Case Law Cited
Oriental Bank of Commerce v. Prabodh Kumar Tewari
[2022] 7 SCR 72 : 2022 INSC 832; Kalamani Tex
and Another v. P. Balasubramanian [2021] 1 SCR
668 : (2021) 5 SCC 283; Shree Daneshwari Traders
v. Sanjay Jain and Another [2019] 11 SCR 370 :
(2019) 16 SCC 83; Uttam Ram v. Devinder Singh
Hudan and Another [2019] 13 SCR 425 : (2019) 10
SCC 287; Rahul Sudhakar Anantwar v. Shivkumar
Kanhiyalal Shrivastav (2019) 10 SCC 203; Kishan
Rao v. Shankargouda [2018] 5 SCR 69 : (2018) 8
SCC 165; D.K. Chandel v Wockhardt Limited (2020)
13 SCC 471; Rohitbhai Jivanlal Patel v. State of
Gujarat and Another [2019] 5 SCR 417 : (2019) 18
SCC 106; Basalingappa v. Mudibasappa [2019] 6
SCR 555 : (2019) 5 SCC 418; K. Subramani v. K.
Damodara Naidu [2014] 11 SCR 169 : (2015) 1 SCC
99; Reverend Mother Marykutty v. Reni C. Kottaram
and Another [2012] 9 SCR 530 : (2013) 1 SCC 327;
Krishna Janardhan Bhat v. Dattatraya G. Hegde [2008]
1 SCR 605 : (2008) 4 SCC 54; John K. Abraham v.
Simon C. Abraham and Another [2013] 12 SCR 753 :
(2014) 2 SCC 236; Narendra Pratap Narain Singh v.
State of U.P. [1991] 2 SCR 88 : (1991) 2 SCC 623
– referred to.
List of Acts
Negotiable Instrument Act, 1881; Code of Criminal Procedure, 1973.
List of Keywords
Dishonour of cheque; Discharge of legally enforceable debt; Rebut
the presumption; Raising of presumption; Insufficiency of funds;
Enforceable debt or other liability.
[2024] 4 S.C.R. 257
M/S Rajco Steel Enterprises v. Kavita Saraff and Another
Case Arising From
CRIMINAL APPELLATE JURISDICTION: Petition For Special Leave
To Appeal (Criminal) No.5583 of 2022
From the Judgment and Order dated 06.12.2021 of the High Court
at Calcutta in CRA No.424 of 2017
With
Special Leave Petition (Criminal) Nos. 5996, 5781 And 6046 of 2022
Appearances for Parties
Raju Ramchandran, Mrs. Aparajita Singh, Sr. Advs., Amit Kumar
Singh, Avnish Pandey, Advs. for the Petitioner.
S. Nagamuthu, Sr. Adv., Mohit D. Ram, Ms. Monisha Handa, Rajul
Shrivastav, Anubhav Sharma, Bhagirath N. Patel, Ms. Mantika
Haryani, Ms. Muskan Surana, Ms. Astha Sharma, Advs. for the
Respondents.
Judgment / Order of the Supreme Court
Judgment
Aniruddha Bose, J.
The common petitioner in these four petitions for special leave
to appeal is a partnership firm dealing in iron and steel products.
The petitioner has assailed a common judgment of the High Court
of Judicature at Calcutta, by which the petitioner’s appeal against
acquittal of the first respondent in respect of offences under Section
138 of the Negotiable Instrument Act, 1881 (“1881 Act”) has been
dismissed. The petitioner, through its partner, Ramesh Kumar Gupta,
had lodged four complaint cases under the aforesaid provision,
after four cheques, alleged to have been issued by the accused/
respondent no.1, were dishonoured on the ground of insufficiency
of funds. The petitioner claims that these cheques were issued
between 07.11.2008 and 24.11.2008, drawn on the Axis Bank
Limited, Burra Bazar in Kolkata. The relevant particulars regarding
these four cheques, as per the petitioner’s case, are reproduced
in the following table:-
258 [2024] 4 S.C.R.
Digital Supreme Court Reports
Cheque
No.
Cheque
Date
Amount Date on which cheque
was presented
for encashment &
was returned as
dishonoured
Notice
Date
713378 07.11.2008 2 Crore 04.05.2009 19.05.2009
713380 12.11.2008 2 Crore 04.05.2009 19.05.2009
713382 17.11.2008 2 Crore 04.05.2009 19.05.2009
713384 24.11.2008 1.75 Crore 04.05.2009 19.05.2009
2. Four independent complaint cases were lodged in the Court of the
Metropolitan Magistrate, Kolkata by the petitioner and were registered
as CC Nos.34905, 34906, 34907 and 34908 of 2009 respectively.
The petitioner contended before the Trial Court that it had granted
financial assistance to the accused/respondent no.1 and the said
cheques were issued by the accused/respondent no.1 in discharge
of her liability towards the petitioner. The petitioner/complainant had
issued a statutory demand notice dated 04.05.2009, which was duly
served upon the accused/respondent no. 1 on 20.05.2009, but the
accused neither complied with the requisition as contained therein,
nor gave any reply thereto. To further substantiate its case, the
petitioner/complainant also relied upon the testimony of its partner,
Ramesh Kumar Gupta.
3. The accused/respondent no.1 had taken the defence that the
petitioner had not provided any financial assistance, but money was
advanced to the accused/respondent no.1 for undertaking stock
market related transactions through her account. She deposed as
a defence witness and her specific stand in her examination-inchief was that the complainant wanted to trade in the futures and
options segment of the stock market and since the complainant
did not want his family members to know about it, he had chosen
to speculate through her account. Though the complainant was a
partnership firm, by referring to the complainant using the pronoun
“he” or “him”, she alluded to Ramesh Kumar Gupta only, with whom,
the arrangements were given effect to. According to her, in this
process, many cheques were exchanged to settle profit and loss and
on good faith, according to her, the complainant also used to keep
certain blank cheques signed by her which were to be deposited as
and when the complainant had profit. It also transpired in course of
[2024] 4 S.C.R. 259
M/S Rajco Steel Enterprises v. Kavita Saraff and Another
hearing before the Trial Court that there was an investigation by the
Central Bureau of Investigation (“CBI”), in relation to which respondent
no.1 had been chargesheeted and in a search and seizure action,
some cheque-books of the respondent no.1 were also seized. As
an explanation to her non-reply to the petitioner’s demand notice,
the respondent no.1 had submitted that she was expecting a child
during that period and the child was born on 27.05.2009.
4. The defence case, in essence, was that the cheques, the dishonour
of which is the subject of this proceeding, were neither issued nor
handed over to the complainant, but these were illegally procured
by the complainant/petitioner from the custody of the investigating
agency i.e., CBI and were subsequently presented for encashment
intentionally. The main case of the accused/respondent thus, was
that there was no debt as such because the cheques were never
issued in the first place. The Trial Court, by its judgment dated
29.06.2016 found that the impugned cheques were not part of the
cheque book seized by CBI and these were issued in discharge
of a legally enforceable debt. The accused/respondent no.1 came
to be convicted by the Trial Court for commission of offence under
Section 138 of the 1881 Act. The Trial Court found that she had
failed to rebut the presumption contained in Section 118 read with
Section 139 of the 1881 Act.
5. The First Appellate Court set aside this finding and acquitted the
accused/respondent no.1. It found that the complainant/petitioner had
failed to produce any document showing any loan transaction. In the
opinion of the First Appellate Court, there was no proof of any loan
transaction and the complainant/petitioner had also failed to prove
handing over the cheques to it by the accused/respondent no.1. The
First Appellate Court also took note of the fact that the signature of
the accused/respondent and the figures showing the amount in the
respective cheques were in different inks and held that the accused/
respondent no.1 had successfully rebutted the presumption of guilt
contained in aforesaid Sections of the 1881 Act.
6. The petitioner’s appeal before the High Court against the judgment
of acquittal was also dismissed. The High Court found that no valid
documentary evidence could be produced by the complainant and
the prosecution, for substantiating the existence of any enforceable
debt or other liability on the part of the accused. The High Court,
260 [2024] 4 S.C.R.
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on applying the principle of balance of probabilities, found that a
plausible case had been made out by the defence, as regards nonexistence of any legally enforceable debt or liability. The High Court
observed in the judgment impugned herein that the balance-sheet
and the accounts statement of the accused reflected a sorry state of
affairs for the finances and thus, it concluded that the accused, within
the prudence of a normal person, could not have undertaken such
transactions for the petitioner/complainant without any consideration
whatsoever.
7. On behalf of the complainant/petitioner, Mr. Raju Ramchandran,
learned Senior Counsel appeared and argued before us that all the
ingredients of Section 138 of the 1881 Act stood satisfied because
signature of the accused, as also the receipt of money by the accused/
respondent no.1 in her bank account remained undisputed. Further
submission of Mr. Ramchandran was that once the aforesaid factors
were established, the complainant was not required to prove its debt,
in the manner it is required to be proved in a civil suit and that in a
situation of this nature, the burden of proof shifted to the respondent/
accused. It was for the accused to show the preponderance of
probabilities that the cheque was not issued in discharge of a valid
debt and mere denial of existence of debt would not be sufficient to
rebut the presumption of guilt cast upon the accused. The authorities
relied on for these propositions were:-
i. Oriental Bank of Commerce -vs- Prabodh Kumar Tewari
[2022 INSC 832]
ii. Kalamani Tex and Another -vs- P. Balasubramanian [(2021)
5 SCC 283]
iii. Shree Daneshwari Traders -vs- Sanjay Jain and Another
[(2019) 16 SCC 83]
iv. Uttam Ram -vs- Devinder Singh Hudan and Another [(2019)
10 SCC 287]
v. Rahul Sudhakar Anantwar -vs- Shivkumar Kanhiyalal
Shrivastav [(2019) 10 SCC 203]
vi. Kishan Rao -vs- Shankargouda [(2018) 8 SCC 165].
8. Mr. Ramchandran has taken us through the judgment of conviction
by the Trial Court and submitted that the issue regarding the said
[2024] 4 S.C.R. 261
M/S Rajco Steel Enterprises v. Kavita Saraff and Another
cheques being procured from the custody of CBI, had not been dealt
with extensively by the Appellate Courts and according to the crossexamination of the accused/respondent no.1, she had encashed
several cheques falling within the sub-series of the cheque-book
seized by the CBI. In view of this, the part of defence of the accused/
respondent no.1 had failed. Referring to the judgment in the case
of D.K. Chandel -vs- Wockhardt Limited [(2020) 13 SCC 471], he
has further submitted that once the main ingredients of the offence
are established, production of the books of accounts is not strictly
necessary in a proceeding under the 1881 Act relating to dishonour
of cheques. He has cited the case of Rohitbhai Jivanlal Patel -vsState of Gujarat and Another [(2019) 18 SCC 106] to contend that
factors relating to source of funds and other documentary evidence for
advancing money are not relevant for consideration on the question
of rebuttal of presumption by the accused.
9. Mr. S. Nagamuthu, learned Senior Counsel, appearing on behalf of
the accused/respondent no.1, defended the judgment of the First
Appellate Court, as also of the High Court. His submission was that
the complainant/petitioner did not fulfil the requirement of being “a
holder in due course”, as no evidence was produced by the petitioner
to show that the said cheques were issued in discharge of a legally
enforceable debt and hence, he could not be a person who had,
for due consideration, become the possessor of the cheques. He
referred to the depositions made before the Trial Court, in support
of his submission that the presumption under Section 139 read with
Section 118 of the 1881 Act was not applicable in the case of the
complainant/petitioner because such presumption stood effectively
rebutted. He relied on the judgment of this Court in the cases:-
(i) Basalingappa -vs- Mudibasappa [(2019) 5 SCC 418],
(ii) K. Subramani -vs- K. Damodara Naidu [(2015) 1 SCC 99],
(iii) Reverend Mother Marykutty -vs- Reni C. Kottaram and
Another [(2013) 1 SCC 327] and
(iv) Krishna Janardhan Bhat v. Dattatraya G. Hegde [(2008) 4
SCC 54].
10. He further argued that, in order to invoke the presumption under the
aforesaid two provisions of 1881 Act, the jurisdictional facts had to be
established by complainant/petitioner and any lacuna in the evidence
262 [2024] 4 S.C.R.
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of the complainant would strike at the root of the complaint of this
nature. He relied on the judgment in the case of John K. Abraham
-vs- Simon C. Abraham and Another [(2014) 2 SCC 236].
11. We are dealing with a case where the First Appellate Court exercising
its jurisdiction under Section 374(3) of Code of Criminal Procedure,
1973, ongoing through the analysis of evidence, acquitted the
accused/respondent no.1. The acquittal was further upheld by the
High Court in an appeal against acquittal under Section 378 of the
1973 Code. The whole question involved in this proceeding is as
to whether the cheques were issued in discharge of a debt and if
it was so, then whether the accused/respondent no.1 was able to
rebut the presumption in terms of Section 118 read with Section 139
of the 1881 Act. In the light of the judgment of this Court in the case
of Narendra Pratap Narain Singh -vs- State of U.P. [(1991) 2 SCC
623] the jurisdiction of this Court under Article 136 of the Constitution
of India to interfere with concurrent findings of fact is not in question,
when such findings are based on no evidence or are perverse. The
question, we have to address thus, is as to whether the findings of
the First Appellate Court and the High Court are on no evidence or
perverse. Both these Courts have examined the evidence threadbare
and in the opinion of these two fora, go against the complainant/
petitioner. On the question as to whether the sum involved in the
cheques was advanced in discharge of a legally enforceable debt
or not, the petitioner has failed to show if any sum was advanced
towards financial assistance. The High Court found that the debt/
liability, in discharge of which, according to the petitioner, the cheques
were issued, did not reflect in the petitioner’s balance-sheet. The
other partners of the firm did not depose as prosecution witnesses
to establish that the cheque-amounts were advanced to the accused
as financial assistance. The respondent no.1/accused has put up a
plausible defence as regards the reason for which the petitioner’s
funds had come to her account. Both the appellate fora, on going
through the evidence did not find existence of any “enforceable debt
or other liability”. This strikes at the root of the petitioner’s case.
12. As the impugned decision is primarily based on considering the
evidences produced by the respective parties, we do not consider
it necessary to individually deal with the ratio of the respective
decisions relied on by the learned senior counsel representing the
parties. The principles emerging from these authorities have been
[2024] 4 S.C.R. 263
M/S Rajco Steel Enterprises v. Kavita Saraff and Another
applied in the judgment of the High Court. In this judgment also,
we have taken into consideration the positions of law reflected in
these authorities. We are of the opinion that there is no perversity in
the finding of the High Court, and prior to that, in the finding of the
First Appellate Court, that went against the complainant/petitioner.
It cannot be held that these findings were perverse, or based on no
evidence. No point of law is involved in this set of cases, that would
warrant our interference. We accordingly dismiss these petitions.
13. Pending application(s), if any, shall stand disposed of.
14. There shall be no order as to costs.
Headnotes prepared by: Nidhi Jain Result of the case:
Petitions dismissed.
