Negotiable Instruments Act, 1881: ss. 139 and 138 – Presumption in favour of holder – Manner of rebuttal of statutory presumption – Held: Presumption mandated by s. 139 includes existence of legally enforceable debt or liability – It is in nature of rebuttable presumption – Accused can raise a defence wherein existence of legally enforceable debt or liability can be contested – However, initial presumption favours the complainant – Reverse onus clause is included and the same is guided by the test of proportionality – Accused cannot be expected to discharge an unduly high standard of proof – Standard of proof for rebutting presumption is of `preponderance of probabilities’ – If accused is able to raise a probable defence which creates doubts about the existence of legally enforceable debt or liability, prosecution can fail – On facts, dishonour of cheque on account of `stop payment’ instructions sent by accused – Complaint u/s. 138 – Acquittal by trial court in view of discrepancies in the complainant’s version – Conviction by High Court since accused did not raise a probable defence to rebut the statutory presumption, does not call for interference – Complaint disclosed prima facie existence of a legally enforceable debt or liability – Accused failed to reply to the statutory notice u/s.138. s. 138 – Applicability of – Held: s. 138 is applicable when cheque is dishonoured on account of `stop payment’ instructions sent by accused to his bank in respect of post-dated cheque, irrespective of insufficiency of funds. The appellant engaged the services of the respondent-engineer for supervising the construction of his house. The appellant requested the respondent for a hand loan to meet the construction expenses. In view of the acquaintance, the respondent paid the same by way of cash. The appellant issued a cheque for repayment of the said amount. The respondent presented the cheque for encashment. The bank issued a return memo stating that the payment had been stopped by the drawer. Thereafter, the appellant did not honour the cheque within the statutorily prescribed period and also did not reply to the notice u/s. 138 of the Negotiable Instruments Act, 1881. The respondent filed a complaint against the appellant for offence punishable u/s.138 of the Act. The trial court acquitted the appellant u/s.138 in view of some discrepancies in the complainant’s version. The High Court holding that the appellant did not raise a probable defence to rebut the statutory presumption, convicted the appellant for commission of offence u/s. 138 of the Act and directed to pay fine of Rs. 75,000/-. Hence the present appeal. Disposing of the appeal, the Court HELD: 1. Ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in s.138 of the Negotiable Instruments Act, 1881 have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by s.139 of the Act. With respect to the facts of the instant case, it must be clarified that contrary to the trial court’s finding, s.138 of the Act can indeed be attracted when a cheque is dishonoured on account of `stop payment’ instructions sent by the accused to his bank in respect of a post- dated cheque, irrespective of insufficiency of funds in the account. [Para 9] [518-D-F] Goa Plast (Pvt.) Ltd. v. Chico Ursula D’Souza (2003) 3 SCC 232, referred to. 2.1. The presumption mandated by s.139 of the Act does indeed include the existence of a legally enforceable debt or liability. This is in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While s.138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption u/s. 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by s.138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. When an accused has to rebut the presumption under s.139, the standard of proof for doing so is that of `preponderance of probabilities’. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. [Para 14] [525-G; 526-A-G] 2.2. The High Court’s view that the accused did not raise a probable defence is accepted. The defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the `stop payment’ instructions to his bank. The instructions to `stop payment’ had not even mentioned that the cheque had been lost. A perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. Furthermore, the very fact that the accused had failed to reply to the statutory notice u/s.138 of the Act leads to the inference that there was merit in the complainant’s version. Apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability. The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant’s version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction-related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction-expenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant. Thus, there is no reason to interfere with the final order of the High Court which recorded a finding of conviction against the appellant. [Paras 15 and 16] [526-H; 257-A-G] Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008) 4 SCC 54; Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16; Mallavarapu Kasivisweswara Rao v. Thadikonda Ramulu Firm and Ors. 2008 (8) SCALE 680; Bharat Barrel & Drum Manufacturing Company v. Amin Chand Pyarelal (1993) 3 SCC 35; M.M.T.C. Ltd. and Anr. v. Medchl Chemicals & Pharma (P) Ltd. (2002) 1 SCC 234, referred to. Case Law Reference: 2003 (3) SCC 232 Referred to. Para 9 (2008) 4 SCC 54 Referred to. Para 10 (2001) 6 SCC 16 Referred to. Para 11 2008 (8) SCALE 680 Referred to. Para 12 1993 (3) SCC 35 Referred to. Para 12 (2002) 1 SCC 234 Referred to. Para 13 CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 1020 of 2010. From the Judgment & Order dated 26.10.2005 of the High Court of Karnataka, Bangalore in Criminal Appeal No. 1367 of 2005. Girish Ananthamurthy, P.P. Singh for the Appellant. Basava Prabhu S. Patil, B. Subrahmanya Prasad, V.N. Raghupathy for the Respondent.

 REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 1020 OF 2010
[Arising out of SLP (Crl.) No. 407 of 2006]

Rangappa … Appellant

Versus

Sri Mohan … Respondent

JUDGMENT

K.G. Balakrishnan, C.J.I.

1. Leave granted.

2. In the present case, the trial court had acquitted the

appellant-accused in a case related to the dishonour of a

cheque under Section 138 of the Negotiable Instruments Act,

1881 [Hereinafter `Act']. This finding of acquittal had been

made by the Addl. JMFC at Ranebennur, Karnataka in

Criminal Case No. 993/2001, by way of a judgment dated

30-5-2005. On appeal by the respondent-complainant, the

High Court had reversed the trial court’s decision and

1
recorded a finding of conviction while directing that the

appellant-accused should pay a fine of Rs. 75,000, failing

which he would have to undergo three months simple

imprisonment (S.I.). Aggrieved by this final order passed by the

High Court of Karnataka [in Criminal Appeal No. 1367/2005]

dated 26-10-2005, the appellant-accused has approached this

Court by way of a petition seeking special leave to appeal. The

legal question before us pertains to the proper interpretation of

Section 139 of the Act which shifts the burden of proof on to

the accused in respect of cheque bouncing cases. More

specifically, we have been asked to clarify the manner in which

this statutory presumption can be rebutted.

3. Before addressing the legal question, it would be apt to

survey the facts leading up to the present litigation.

Admittedly, both the appellant-accused and the respondent-

claimant are residents of Ranebennur, Karnataka. The

appellant-accused is a mechanic who had engaged the services

of the respondent-complainant who is a Civil Engineer, for the

purpose of supervising the construction of his house in
2
Ranebennur. The said construction was completed on 20-10-

1998 and this indicates that the parties were well acquainted

with each other.

4. As per the respondent-complainant, the chain of facts

unfolded in the following manner. In October 1998, the

accused had requested him for a hand loan of Rs. 45,000 in

order to meet the construction expenses. In view of their

acquaintance, the complainant had paid Rs. 45,000 by way of

cash. On receiving this amount, the appellant-accused had

initially assured repayment by October 1999 but on the failure

to do so, he sought more time till December 2000. The

accused had then issued a cheque bearing No. 0886322,

post-dated for 8-2-2001 for Rs. 45,000 drawn on Syndicate

Bank, Kudremukh Branch. Consequently, on 8-2-2001, the

complainant had presented this cheque through Karnataka

Bank, Ranebennur for encashment. However, on 16-2-2001

the said Bank issued a return memo stating that the `Payment

has been stopped by the drawer’ and this memo was handed

over to the complainant on 21-2-2001. The complainant had
3
then issued notice to the accused in this regard on 26-2-2001.

On receiving the same, the accused failed to honour the

cheque within the statutorily prescribed period and also did

not reply to the notice sent in the manner contemplated under

Section 138 of the Act. Following these developments, the

complainant had filed a complaint (under Section 200 of the

Code of Criminal Procedure) against the accused for the

offence punishable under Section 138 of the Act.

5. The appellant-accused had raised the defence that the

cheque in question was a blank cheque bearing his signature

which had been lost and that it had come into the hands of

the complainant who had then tried to misuse it. The

accused’s case was that there was no legally enforceable debt

or liability between the parties since he had not asked for a

hand loan as alleged by the complainant.

6. The trial judge found in favour of the accused by taking

note of some discrepancies in the complainant’s version. As

per the trial judge, in the course of the cross-examination the
4
complainant was not certain as to when the accused had

actually issued the cheque. It was noted that while the

complaint stated that the cheque had been issued in

December 2000, at a later point it was conceded that the

cheque had been handed over when the accused had met the

complainant to obtain the work completion certificate for his

house in March 2001. Later, it was stated that the cheque had

been with the complainant about 15-20 days prior to the

presentation of the same for encashment, which would place

the date of handing over of the cheque in January 2001.

Furthermore, the trial judge noted that in the complaint it had

been submitted that the complainant had paid Rs. 45,000 in

cash as a hand loan to the accused, whereas during the

cross-examination it appeared that the complainant had spent

this amount during the construction of the accused’s house

from time to time and that the complainant had realised the

extent of the liability after auditing the costs on completion of

the construction. Apart from these discrepancies on part of the

complainant, the trial judge also noted that the accused used

to pay the complainant a monthly salary in lieu of his services
5
as a building supervisor apart from periodically handing over

money which was used for the construction of the house. In

light of these regular payments, the trial judge found it

unlikely that the complainant would have spent his own

money on the construction work. With regard to these

observations, the trial judge held that there was no material to

substantiate that the accused had issued the cheque in

relation to a legally enforceable debt. It was observed that the

accused’s failure to reply to the notice sent by the complainant

did not attract the presumption under Section 139 of the Act

since the complainant had failed to prove that he had given a

hand loan to the accused and that the accused had issued a

cheque as alleged. Furthermore, the trial judge erroneously

decided that the offence made punishable by Section 138 of

the Act had not been committed in this case since the alleged

dishonour of cheque was not on account of insufficiency of

funds since the accused had instructed his bank to stop

payment. Accordingly, the trial judge had recorded a finding of

acquittal.

6
7. However, on appeal against acquittal, the High Court

reversed the findings and convicted the appellant-accused.

The High Court in its order noted that in the course of the trial

proceedings, the accused had admitted that the signature on

the impugned cheque (No. 886322, dated 8-2-2001) was

indeed his own. Once this fact has been acknowledged,

Section 139 of the Act mandates a presumption that the

cheque pertained to a legally enforceable debt or liability. This

presumption is of a rebuttal nature and the onus is then on

the accused to raise a probable defence. With regard to the

present facts, the High Court found that the defence raised by

the accused was not probable. In respect of the accused’s

stand that he had lost a blank cheque bearing his signature,

the High Court noted that in the instructions sent by the

accused to his Bank for stopping payment, there is a reference

to cheque No. 0886322, dated 20-7-1999. This is in conflict

with the complainant’s version wherein the accused had given

instructions for stopping payment in respect of the same

cheque, albeit one which was dated 8-2-2001. The High Court

also noted that if the accused had indeed lost a blank cheque
7
bearing his signature, the question of his mentioning the date

of the cheque as 20-7-1999 could not arise. At a later point in

the order, it has been noted that the instructions sent by the

accused to his bank for stopping payment on the cheque do

not mention that the same had been lost. However, the

correspondence does refer to the cheque being dated

20-7-1999. Furthermore, during the cross-examination of the

complainant, it was suggested on behalf of the accused that

the complainant had the custody of the cheque since 1998.

This suggestion indicates that the accused was aware of the

fact that the complainant had the cheque, thereby weakening

his claim of having lost a blank cheque. Furthermore, a

perusal of the record shows that the accused had belatedly

taken up the defence of having lost a blank cheque at the time

of his examination during trial. Prior to the filing of the

complaint, the accused had not even replied to the notice sent

by the complainant since that would have afforded an

opportunity to raise the defence at an earlier stage. All of these

circumstances led the High Court to conclude that the

8
accused had not raised a probable defence to rebut the

statutory presumption. It was held that:

`6. Once the cheque relates to the account of the accused
and he accepts and admits the signatures on the said
cheque, then initial presumption as contemplated under
Section 139 of the Negotiable Instruments Act has to be
raised by the Court in favour of the complainant. The
presumption referred to in Section 139 of the N.I. Act is a
mandatory presumption and not a general presumption,
but the accused is entitled to rebut the said
presumption. What is required to be established by the
accused in order to rebut the presumption is different
from each case under given circumstances. But the fact
remains that a mere plausible explanation is not
expected from the accused and it must be more than a
plausible explanation by way of rebuttal evidence. In
other words, the defence raised by way of rebuttal
evidence must be probable and capable of being accepted
by the Court. The defence raised by the accused was that
a blank cheque was lost by him, which was made use of
by the complainant. Unless this barrier is crossed by the
accused, the other defence raised by him whether the
cheque was issued towards the hand loan or towards the
amount spent by the complainant need not be
considered. …’

Hence, the High Court concluded that the alleged

discrepancies on part of the complainant which had been

noted by the trial court were not material since the accused

9
had failed to raise a probable defence to rebut the

presumption placed on him by Section 139 of the Act.

Accordingly, the High Court recorded a finding of conviction.

8. In the course of the proceedings before this Court, the

contentions related to the proper interpretation of Sections

118(a), 138 and 139 of the Act. Before addressing them, it

would be useful to quote the language of the relevant

provisions:

118. Presumptions as to negotiable instruments. -
Until the contrary is proved, the following presumptions
shall be made:
(a) of consideration: that every negotiable instrument was
made or drawn for consideration, and that every such
instrument when it has been accepted, endorsed,
negotiated or transferred, was accepted, endorsed,
negotiated or transferred for consideration;
…

138. Dishonour of cheque for insufficiency, etc., of
funds in the account. – Where any cheque drawn by a
person on an account maintained by him with a banker
for payment of any amount of money to another person
from out of that account for the discharge, in whole or in
part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money
standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount
10
arranged to be paid from that account by an agreement
made with that bank, such person shall be deemed to
have committed an offence and shall, without prejudice
to any other provision of this Act, be punished with
imprisonment for a term which may extend to two years,
or with fine which may extend to twice the amount of the
cheque, or with both:

Provided that nothing contained in this section shall
apply unless-
(a) the cheque has been presented to the bank within a
period of six months from the date on which it is drawn
or within the period of its validity, whichever is earlier.
(b)the payee or the holder in due course of the cheque, as
the case may be, makes a demand for the payment of the
said amount of money by giving a notice, in writing, to
the drawer of the cheque, within thirty days of the receipt
of information by him from the bank regarding the return
of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of
the said amount of money to the payee or, as the case
may be, to the holder in due course of the cheque, within
fifteen days of the receipt of the said notice.

Explanation. – For the purposes of this section, `debt or
other liability’ means a legally enforceable debt or other
liability.

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
Section 138 for the discharge, in whole or in part, of any
debt, or other liability.
9. Ordinarily in cheque bouncing cases, what the courts have

to consider is whether the ingredients of the offence

11
enumerated in Section 138 of the Act have been met and if so,

whether the accused was able to rebut the statutory

presumption contemplated by Section 139 of the Act. With

respect to the facts of the present case, it must be clarified

that contrary to the trial court’s finding, Section 138 of the Act

can indeed be attracted when a cheque is dishonoured on

account of `stop payment’ instructions sent by the accused to

his bank in respect of a post-dated cheque, irrespective of

insufficiency of funds in the account. This position was

clarified by this Court in Goa Plast (Pvt.) Ltd. v. Chico Ursula

D’Souza, (2003) 3 SCC 232, wherein it was held:
“Chapter XVII containing Sections 138 to 142 was
introduced in the Act by Act 66 of 1988 with the object of
inculcating faith in the efficacy of banking operations and
giving credibility to negotiable instruments in business
transactions. These provisions were intended to
discourage people from not honouring their commitments
by way of payment through cheques. The court should
lean in favour of an interpretation which serves the object
of the statute. A post-dated cheque will lose its credibility
and acceptability if its payment can be stopped routinely.
The purpose of a post-dated cheque is to provide some
accommodation to the drawer of the cheque. Therefore, it
is all the more necessary that the drawer of the cheque
should not be allowed to abuse the accommodation given
to him by a creditor by way of acceptance of a post-dated
cheque. In view of Section 139, it has to be presumed
12
that a cheque is issued in discharge of any debt or other
liability. The presumption can be rebutted by adducing
evidence and the burden of proof is on the person who
wants to rebut the presumption. This presumption
coupled with the object of Chapter XVII of the Act leads
to the conclusion that by countermanding payment of a
post-dated cheque, a party should not be allowed to get
away from the penal provision of Section 138. A contrary
view would render S. 138 a dead letter and will provide a
handle to persons trying to avoid payment under legal
obligations undertaken by them through their own acts
which in other words can be said to be taking advantage
of one’s own wrong. …”
10. It has been contended on behalf of the appellant-accused

that the presumption mandated by Section 139 of the Act does

not extend to the existence of a legally enforceable debt or

liability and that the same stood rebutted in this case, keeping

in mind the discrepancies in the complainant’s version. It was

reasoned that it is open to the accused to rely on the materials

produced by the complainant for disproving the existence of a

legally enforceable debt or liability. It has been contended that

since the complainant did not conclusively show whether a

debt was owed to him in respect of a hand loan or in relation

to expenditure incurred during the construction of the

accused’s house, the existence of a legally enforceable debt or

13
liability had not been shown, thereby creating a probable

defence for the accused. Counsel appearing for the appellant-

accused has relied on a decision given by a division bench of

this Court in Krishna Janardhan Bhat v. Dattatraya G.

Hegde, (2008) 4 SCC 54, the operative observations from

which are reproduced below (S.B. Sinha, J. at Paras. 29-32,

34 and 45):

“29. Section 138 of the Act has three ingredients viz.:
(i) that there is a legally enforceable debt
(ii) that the cheque was drawn from the account
of bank for discharge in whole or in part of any
debt or other liability which presupposes a
legally enforceable debt; and
(iii) that the cheque so issued had been returned
due to insufficiency of funds.

30. The proviso appended to the said section provides for
compliance with legal requirements before a complaint
petition can be acted upon by a court of law. Section 139
of the Act merely raises a presumption in regard to the
second aspect of the matter. Existence of legally
recoverable debt is not a matter of presumption under
Section 139 of the Act. It merely raises a presumption in
favour of a holder of the cheque that the same has been
issued for discharge of any debt or other liability.

31. The courts below, as noticed hereinbefore, proceeded
on the basis that Section 139 raises a presumption in
regard to existence of a debt also. The courts below, in
our opinion, committed a serious error in proceeding on
the basis that for proving the defence the accused is
required to step into the witness box and unless he does
14
so he would not be discharging his burden. Such an
approach on the part of the courts, we feel, is not correct.

32. An accused for discharging the burden of proof
placed upon him under a statute need not examine
himself. He may discharge his burden on the basis of the
materials already brought on record. An accused has a
constitutional right to maintain silence. Standard of proof
on the part of the accused and that of the prosecution in
a criminal case is different.
…
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
the accused is `preponderance of probabilities’. Inference
of preponderance of probabilities can be drawn not only
from the materials brought on record by the parties but
also by reference to the circumstances upon which he
relies.”
(emphasis supplied)

Specifically in relation to the nature of the presumption

contemplated by Section 139 of the Act, it was observed;
“45. We are not oblivious of the fact that the said
provision has been inserted to regulate the growing
business, trade, commerce and industrial activities of the
country and the strict liability to promote greater
vigilance in financial matters and to safeguard the faith
of the creditor in the drawer of the cheque which is
essential to the economic life of a developing country like
India. This however, shall not mean that the courts shall
put a blind eye to the ground realities. Statute mandates
raising of presumption but it stops at that. It does not
say how presumption drawn should be held to have been
15
rebutted. Other important principles of legal
jurisprudence, namely, presumption of innocence as a
human right and the doctrine of reverse burden
introduced by Section 139 should be delicately balanced.
Such balancing acts, indisputably would largely depend
upon the factual matrix of each case, the materials
brought on record and having regard to legal principles
governing the same.”
(emphasis supplied)

11. With respect to the decision cited above, counsel appearing

for the respondent-claimant has submitted that the

observations to the effect that the `existence of legally

recoverable debt is not a matter of presumption under Section

139 of the Act’ and that `it merely raises a presumption in

favour of a holder of the cheque that the same has been issued

for discharge of any debt or other liability’ [See Para. 30 in

Krishna Janardhan Bhat (supra)] are in conflict with the

statutory provisions as well as an established line of

precedents of this Court. It will thus be necessary to examine

some of the extracts cited by the respondent-claimant. For

instance, in Hiten P. Dalal v. Bratindranath Banerjee, (2001)

6 SCC 16, it was held (Ruma Pal, J. at Paras. 22-23):

16
“22. Because both Sections 138 and 139 require that the
Court `shall presume’ the liability of the drawer of the
cheques for the amounts for which the cheques are
drawn, …, it is obligatory on the Court to raise this
presumption in every case where the factual basis for the
raising of the presumption has been established. It
introduces an exception to the general rule as to the
burden of proof in criminal cases and shifts the onus on
to the accused (…). Such a presumption is a presumption
of law, as distinguished from a presumption of fact which
describes provisions by which the court may presume a
certain state of affairs. 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 probability 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, the discretion is
left with the Court 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. A fact is said to be proved when, after
considering the matters before it, the Court either
believes it to exist, or considers its existence so probable
that a prudent man ought, under the circumstances of
the particular case, to act upon the supposition that it
exists. Therefore, the rebuttal does not have to be
conclusively 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.”
(emphasis supplied)

AN ACCUSED CAN BE EXAMINED EVEN IN JUDICIAL CUSTODY BY POLICE- YES.10. The investigating officer has got statutory power to examine any person by issuing summons or an order in writing to examine them. Under Section 161 Cr.P.C., the investigating officer can examine any person who is acquainted with the facts of the case. In view of the fact that the investigating officer cannot issue summons in the present case, as the respondents 2 and 3 are in judicial custody by orders passed by the competent Court, necessarily the investigating officers have to seek permission of the concerned Court which remanded the respondents 2 and 3 to judicial custody.

THE HON’BLE SRI JUSTICE K.C. BHANU

CRIMINAL PETITION No. 2219 of 2012

ORDER:

This criminal petition is filed under Section 482 of Criminal Procedure Code, 1973, challenging the order dated 22.02.2012 of the learned Special Judge for CBI Cases, Hyderabad, in Memo S.R.No.532 of 2012 in R.C.No.19(A) of 2011-CBI-HYD, whereunder and whereby the memo filed by the petitioner-Central Bureau of Investigation (CBI), for examination of respondents 2 and 3 herein for the purpose of investigation relating to R.C.No.19(A)/2011-CBI-HYD was closed with an observation that no order can be passed according permission to the CBI to examine Mr.V.D.Raja Gopal and Smt.Y. Sree Lakshmi, for the purpose of investigation.

2.       A memo was filed by the CBI stating that, on the basis of the orders of this Court in W.P.Nos. 794 and 6604 of 2011 dated 10.08.2011, a case in R.C.No.19(A)/2011-CBI-HYD was registered under Section 120B r/w Sections 420, 409 and 477A IPC and Sections 13(2) r/w 13(1)(c) and (d) of the Prevention of Corruption Act, 1988 against Sri Y.S. Jagan Mohan Reddy and 73 others, and investigation is in progress in the said case.  It is submitted that, during the course of investigation, several documents relating to the case were collected from the Department of Mines and Geology, and on scrutiny, it revealed that they have been processed by Sri V.D. Raja Gopal, the then Director of Mines and Geology and Smt. Y. Sree Lakshmi, the then Secretary, Industries and Commerce Department, Govt. of A.P., who are presently lodged in Central Prison, Chenchalguda and Womens Prison, Chenchalguda, respectively, in R.C.No.17(A)/2009-CBI-HYD (M/s Obulapuram Mining Case).  It is further submitted that necessary permission may kindly be accorded to the investigating officers, Sri Mohd. Jaffer, Sri B Ramdas and Sri N. Raghavendra Kumar, Inspectors, CBI, Hyderabad, for examination of said Sri V.D. Raja Gopal and Smt. Y. Sree Lakshmi, in the jail premises, in connection with the present case.

3.       In the said memo, the 2^nd respondent-Sri V.D. Raja Gopal filed an objection stating that he is in judicial custody in C.C.No.1 of 2012 on the file of Special Judge for CBI Cases, Hyderabad, which arises out of R.C.No.17(A)/2009-CBI- HYD, and that he is not in judicial custody in R.C.No.19(A)/2011-CBI-HYD, as such no orders can be passed on the present memo touching his custodial detention in C.C.No.1 of 2012 and that no reasons were mentioned requiring the necessity for his examination in R.C.No.19(A)/2011-CBI-Hyd, and that the purpose or reasons for the intended examination was not mentioned in the memo.  It is submitted that the nature of examination of the person who is in custody of this Court is not mentioned and the same is necessary in as much as the proposed examination should be as contemplated under Cr.P.C, and further the investigating agency has not mentioned the steps taken by it for the examination of the person who is in custody for which the present request is being made, and that the statute or the rules do not contemplate any memo for seeking directions or reliefs, and as such no orders can be passed on the memo filed by the investigating agency, and that the request of the investigating agency is untenable and not permissible under the law.

4.       The 3^rd respondent herein filed counter in the said memo stating that she is not in judicial custody in R.C.No.19(A)/2011-CBI-HYD, and that she was questioned in detail by the CBI in R.C.No.17(A)/2009-CBI-HYD, on several occasions, with regard to the files she dealt while she was Secretary, Mines, and that she gave all the information within her knowledge and that she does not have any more information to divulge to CBI.  It was also stated in the counter that the said memo was filed by the CBI with an oblique motive to harass her and the files regarding which she was proposed to be questioned, have not been disclosed to her.

5.       Learned designated Court closed the said memo by order dated 22.02.2012 observing that the very documents speak of its own as to their nature and the person who processed it, hence there is no need for examining the respondents 2 and 3 herein for those documents and no orders can be passed by the Court on a memo and there is no provision in law under Cr.P.C. as to the examination of witnesses by the CBI.  Challenging the same, the present petition is filed.

6.       Learned Standing Counsel appearing for the CBI contended that the respondents 2 and 3 are in judicial custody in pursuance of the orders passed by the competent Court in connection with C.C.No.1 of 2012 on the file of Special Judge for CBI Cases, and that they cannot be examined without the permission of the Court because they were under judicial custody under the orders of the Court; that their examination is necessary in respect of the facts knowing to the witnesses in respect of crime in R.C.No.19(A) of 2011-CBI, Hyd, and hence he prays to set aside the impugned order and accord permission to them to examine the respondents 2 and 3.

7.       Learned counsel for the 2^nd respondent contended that no reasons are assigned for examination of 2^nd respondent and therefore, the trial Court rightly dismissed the same.

8.       On the other hand, learned Senior Counsel appearing for the 3^rd respondent contended that the present application is filed only to harass and persecute the 3^rd respondent with an oblique motive and there is no purpose of examining her because the Government Orders would themselves speak about the existing nature of things, and that the 3^rd respondent cannot be interrogated, and that there is no provision under Cr.P.C. to permit the CBI officials to examine a person who is in the judicial custody, and that even the documents allegedly seized by the CBI did not relate to personal documents of 3^rd respondent and hence, it is nothing but to extract answers so as to implicate her in this case and hence, he prays to dismiss the petition.

9.       It is not in dispute before this Court that the respondents 2 and 3 are A3 and A4 in C.C.No.1 of 2012 on the file of the Special Judge for CBI Cases, Hyderabad.  It is also not in dispute that, in pursuance of the remand orders extended from time to time in the said case, the respondents 2 and 3 are in judicial custody.  The 2^nd respondent is lodged in Central Prison, Chenchalguda, and the 3^rd respondent is lodged in Womens’ Prison, Chanchalguda.  A memo was filed by CBI to examine these two persons in connection with R.C.No.19(A)/2011/CBI-Hyd, registered for the offences punishable under Sections 120B, 420, 409 and 477A IPC and Section 13(2) read with 13(1)(c) and (d) of the Prevention of Corruption Act, 1988, which was closed by the Special Judge for CBI Cases, Hyderabad.

10.     The investigating officer has got statutory power to examine any person by issuing summons or an order in writing to examine them.  Under Section 161 Cr.P.C., the investigating officer can examine any person who is acquainted with the facts of the case.  In view of the fact that the investigating officer cannot issue summons in the present case, as the respondents 2 and 3 are in judicial custody by orders passed by the competent Court, necessarily the investigating officers have to seek permission of the concerned Court which remanded the respondents 2 and 3 to judicial custody.

Sub-Section (1) of Section 161 Cr.P.C. contemplates:

“Any police officer making an investigation under this Chapter, or any police officer not below such rank as the State Government may, by general or special order, prescribe in this behalf, acting on the requisition of such officer, may examine orally any person supposed to be acquainted with the facts and circumstances of the case.”

Sub-section (2) of Section 161 Cr.P.C., makes it clear that:

“Such person shall be bound to answer truly all questions relating to such case put to him by such officer, other than questions the answers to which would have a tendency to expose him to a criminal charge or to a penalty or forfeiture.”

          11.     One of the main components of investigation is examination of witnesses.  Investigation means search for material and facts in order to find out whether or not an offence has been committed.  It is confined to proceedings taken by the police.  In other words, it is ascertainment of facts, sifting of material and search for relevant data.

          12.     There cannot be any dispute that investigation includes going to the spot, examining the witnesses including the accused, observing the scene of occurrence, preparation of mediators report.  This has been stated by the Supreme Court in the decision in H.N. RISHBUD AND ANOTHER v. STATE OF DELHI[1], wherein it was held that:

“Thus, under the Code investigation consists generally of the following steps: (1) Proceeding to the spot, (2) Ascertainment of the facts and circumstances of the case, (3) Discovery and arrest of the suspected offender, (4) Collection of evidence relating to the commission of the offence which may consist of (a) the examination of various persons (including the accused) and the reduction of their statements into writing, if the officer thinks fit, (b) the search of places or seizure of things considered necessary for the investigation and to be produced at the trial, and (5) Formation of the opinion as to whether on the material collected there is a case to place the accused before a Magistrate for trial and if so taking the necessary steps for the same by the filing of a charge-sheet under Section 173.”

         

13.     Therefore, from the above decision, it is clear that an investigating officer has power to examine any witness, and so also an investigating officer is given the power to require before himself, the attendance of any person appearing to be acquainted with the facts and circumstances of a case.

          14.     In the present case, the powers under Section 160 Cr.P.C., cannot be exercised by the investigating officers, for the reason that the persons whom they want to examine, are in judicial custody.  Therefore, in order to examine a person who is in judicial custody, the investigating officer has to necessarily take permission of the concerned Court, which remanded that person into judicial custody.  Perhaps, that is the reason why the CBI sought to accord permission to the investigating officers Sri Mohd. Jaffer, Sri B Ramdas and Sri N. Raghavendra Kumar, Inspectors, CBI, Hyderabad, for examining the respondents 2 and 3.

15.     For examining the witnesses, the investigating officer need not disclose the purpose of examination of witnesses.  If the investigating officer comes to the conclusion that the witnesses are acquainted with the facts of the case, then it is his statutory duty to examine such witnesses who are acquainted with the facts of the case.  Even assuming for a moment that the memo filed by the CBI does not disclose reasons, it cannot be a ground to reject examining the witness because at that stage the investigating officer may not be in a position to show what are the facts which are exclusively in the knowledge of the witnesses.  Coming to the second aspect that there is no provision in law for passing any orders on the said memo, which is one of the reasons for the trial Court to close the memo, no doubt, there is no provision under Cr.P.C. that when a person is in judicial custody, he can be examined by an investigating officer in relation to another cognizable offence, but at the same time, when the Court of Special Judge for CBI Cases has got power to remand the accused persons, it can be an implied power to permit the investigating officers to examine the persons who are acquainted with the facts of the case.  Therefore, the Court of Special Judge for CBI Cases, ought not to have rejected the memo, and ought to have given permission to the investigating officers to examine the witnesses.

          16.     Admittedly, the respondents 2 and 3 viz., Sri V.D. Raja Gopal and Smt. Y. Sree Lakshmi, were not figured as accused in the present case as on today.  Therefore, it is the statutory duty of the investigating officer to examine those persons in connection with crime in R.C.No.19(A)/2011/CBI-HYD, and therefore the impugned order is liable to be set aside.

          17.     Accordingly, the impugned order is set aside, and the investigating officers viz., Sri Mohd. Jaffer, Sri B Ramdas and Sri N. Raghavendra Kumar, Inspectors, CBI, Hyderabad, are hereby given permission to examine the respondents 2 and 3.  The Jail Superintendent, Central Prison, Chanchelguda, and Womens Prison, Chanchelguda, is directed to allow the aforesaid investigating officers to examine the respondents 2 and 3.

          18.     With regard to the request of the learned Senior Counsel for the 3^rd respondent, for the presence of an advocate at the time of examination of respondents 2 and 3, admittedly, respondents 2 and 3 are not shown as an accused, and therefore the necessary corollary or inference that can be drawn is that the investigating officer can examine them as witnesses.  Furthermore, both the respondents 2 and 3 are well educated persons and held highly responsible posts for several years.  There is no provision under Cr.P.C., or a constitutional right under Constitution of India or an authority decision is brought to the notice of this Court so as to give permission to an advocate to be present at the time of examination of persons who are not the accused.  As witnesses, the respondents 2 and 3 have got right to remain silent with regard to aspects which may tend to incriminate against them, and the investigating officers shall not put such questions, which answers will have tendency to expose them to a criminal charge.

          19.     With the above observations, the criminal petition is allowed.

____________________

JUSTICE K.C. BHANU

16^th March, 2012

KSM

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[1] 1955 S.C. 196

WHEN TO GRANT BAIL - “For these reason, therefore, we are satisfied that the proceedings starting with Section 238 of the Code including any discharge or framing of charges under Section 239 or 240 amount to trial.” 11. The trial deemed to have been commenced upon a police report instituted by the police in a warrant case after framing of charges. Therefore, after filing of the police report under Section 170 Cr.P.C. and before commencement of trial, the interregnum period can safely be called as inquiry. In such a case, Section 309 Cr.P.C. empowers the Court during enquiry to remand the accused for a term not exceeding 15 days. Simply because, the Investigating Agency has not filed any sanction orders from the competent authority, that does not mean, the accused is entitled for bail automatically or as a matter of right. This aspect of the case has been completely overlooked by the trial Court. It is surprising to note that without there being any bail application and without hearing the counsel for CBI, bail was granted. In the facts and circumstances of the case, the learned Judge ought to have considered the case for grant of bail on merits. Therefore, the order under challenge is a perverse one and the same is liable to be set aside. 12. Accordingly, the Criminal Petition is allowed setting aside the docket order, dated 16-03-2012 on the file of Special Judge for CBI Cases, Hyderabad. The respondent herein (A1) is directed to surrender before the concerned Court forthwith, failing which, the petitioner (CBI) is at liberty to arrest and produce him before the concerned CBI Court.

*THE HON’BLE SRI JUSTICE K.C.BHANU

+CRIMINAL PETITON No. 2890 OF 2012.

%27-03-2012

# The State represented by the Dy.

Superintendent of Police, SPE, CBI

Hyderabad.

                     …Petitioner-Complainant                                                                                                                        

                                                           

Vs.

$ B.P.Acharya

   ….Respondent-A1

!Counsel for the Petitioner: Mr. P.Kesava Rao, Spl.S.C. for CBI

                                                

^Counsel for the Respondent : Mr.V.Surender Rao

                             

                              

<Gist :

>Head Note:

? Cases referred:

1.(1978) 1 SCC 118

2. AIR 1980 SC 962

THE HON’BLE SRI JUSTICE K.C.BHANU

CRIMINAL PETITION NO.2890 OF 2012

ORDER:

        This petition is filed by Deputy Superintendent of Police, SPE, CBI, Hyderabad, under Section 439 (2) r/w 482 Cr.P.C. to call for the records relating to the docket order, dated
16-03-2012 passed in RC.18 (A)/2011-C.C.06 of 2012 on the file of the learned Special Judge for CBI Cases at Hyderabad and quash the same.

          2. The respondent (A1) is the accused for the offences punishable under Sections  120-B r/w 420 , 409, 420 and 477-A IPC and 13 (2) r/w 13 (1)(c) and (d) of Prevention of Corruption Act, 1988.  The docket order, dated 16-03-2012 reads that the case was taken on file on 09-03-2012, that no sanction was obtained for A1 and A11, that on 09-03-2012, the learned Deputy Legal Advisor  submitted that filing of charge sheet without sanction orders is not proper, that the matter is posted to today i.e., on 16-03-2012 for further hearing and also for getting sanction orders from the Government and that the sanction orders passed against A1 and A11 are available. The charge sheet was filed against A1 to A6 and A9 to A14.  It was mentioned in the charge sheet that the investigation against A7 and A8 i.e., N.Sunil Reddy and G.Vijaya Raghav is still pending and supplementary charge sheet will be filed against them. A1, A11 and A12 are public servants.  A12 is a retired public servant. No sanction is required for A12. So far, no sanction order of A1 and A11 obtained and filed in the Court. As per Section 19 of P.C. Act, 1988, no Court should take cognizance of an offence punishable under Sections 7, 10, 11, 13 and 15 of P.C. Act, 1988 alleged to have been committed by a public servant. As such no cognizance of the offences alleged to have been committed by A1 and A11 can be taken.  The charge sheet is taken on file for the offences under Sections 120-B r/w 420, 409 and 477-A IPC against A2 to A8, A9 and A14, for the offences under Sections 120-B r/w 420 and 409 IPC against A1, for the offences under Sections 120-B IPC and 13 (2) r/w 13 (1)(d) and 15 of P.C. Act, 1988 against A12 and for the offences under Sections 120-B r/w 420, 109 and 409 IPC against A13. Since the offences alleged against A1 are not being taken cognizance for want of sanction under Section 19 of P.C. Act, 1988, he (A1) shall be released on bail on his executing a bond for Rs.25,000/- with two sureties for like sum each to the satisfaction of this Court.  A1 should not leaveHyderabad without the permission of this Court.  A1 should surrender his pass port if any otherwise he should submit the same through an affidavit that he has no passport.

3.  There cannot be any dispute that the Court will have no inherent power of remand of an accused to any custody unless the power is conferred by law.

4. The Court has to apply its mind for granting or refusing the bail to the accused with regard to facts of the case and the Court has to take note of certain aspects for grant or refusal of bail  in view of decision reported inGURUCHARAN SINGH AND OTHERS  V STATE (DELHI ADMINISTRATION) [1], wherein it was held thus:

“ Section 439 (1), Cr. P. C. of the new Code, on the other hand, confers special powers on the High Court or the Court of Session in respect of bail. Unlike under S. 437 (1) there is no ban imposed under S. 439 (1), Cr. P. C. against granting of bail by the High Court or the Court of session to persons accused of an offence punishable with death or imprisonment for life. It is, however, legitimate to suppose that the High Court or the Court of Session will be approached by an accused only after he has failed before the Magistrate and after the investigation has progressed throwing light on the evidence and circumstances implicating the accused. Even so the High Court or the Court of session will have to exercise its judicial discretion in considering the question of granting of bail under S. 439 (1), Cr. P.C. of the new Code. The overriding considerations in granting bail to which we adverted to earlier and which are common both in the case of S. 437 (1) and S. 439 (1) Cr. P. C. of the new code are the nature and gravity of the circumstances in which the offence is committed; the position and the status of the accused with reference to the victim and the witnesses; the likelihood, of the accused fleeing from justice; of repeating the offence, of jeopardising his own life being faced with a grim prospect of possible conviction in the case; of tampering with witnesses; the history of the case as well as of its investigation and other relevant grounds which, in view of so many variable factors, cannot be exhaustively set out.”

        5. No doubt, granting of bail is discretionary order and that discretion has to be exercised judiciously and it should not be arbitrary and capricious and is governed by well established principles. If the discretion is exercised in an arbitrary or unjudicial manner, remedy by way of resort to higher Courts is always open to the aggrieved party. The order must contain  though not elaborate but brief reasons for grant of bail.  Any order without any reasons can be said to be a perverse order.  As seen from the order, no reason was assigned for granting bail to the respondent herein (A1).  Simply because, cognizance was not taken for want of sanction by the competent authority, that does not mean the accused is entitled for bail automatically.

6. Mr. C.Padmanabha Reddy, learned senior counsel appearing for the respondent herein (A1) contended that under Section 309 (2) Cr.P.C., after cognizance is taken, the Court gets power to remand the accused person, that as cognizance has not been taken, the accused cannot be remanded to judicial custody and hence the order of the trial Court is correct, legal and proper.

7. For this purpose, it is necessary to refer to sub-section (2) of Section 309 Cr.P.C., which reads thus:

“309 Power to postpone or adjourn proceedings:

(1)   …

(2)   If the Court, after taking cognizance of an offence, or commencement of trial, finds it necessary or advisable to postpone the commencement of , or adjourn, any inqauiry or trial, it may, from time to time, for reasons to be recorded, postpone or adjourn the same on such terms as it thinks fit, for such time as it considers reasonable, and may by a warrant remand the accused if in custody”

8. The above provision consists of two parts. First part empowers the Court after taking cognizance of an offence or commencement of trial, finds it necessary or advisable to postpone the commencement. The second part provides grant of adjournment any inquiry or trial from time to time after recording reasons. Sub-section (2) also gives discretion to the Court to remand the accused if he is custody.  The power of a Court to remand the accused to custody could be exercised either under Section 167 or 309 Cr.P.C. Once the charge sheet is filed, period of remand under Section 167 Cr.P.C. comes to an end.  If further custody is necessary, it can be done only under Section 309 Cr.P.C.

9.  In this case, the petitioner herein (CBI) filed charge sheet on 01-02-2012 without obtaining any necessary sanction from the competent authority as required under Section 197 Cr.P.C. as well as Section 19 (1) of P.C. Act, 1988.  According to counsel for CBI, proposals to prosecute the accused  have been sent and they are awaiting. That does not mean, the accused cannot be remanded in view of the fact that petitioner has not obtained any sanction order. Investigation commences after receipt of information of a cognizable offence starting from Section 154 Cr.P.C. and culminates into filing of a report under Section 170 Cr.P.C. Similarly after filing of charge sheet, the inquiry commences.  Inquiry is defined under Section 2 (g) of Cr.P.C., which means every inquiry, other than a trial conducted under the Code by a Magistrate or Court. After filing of police report, the proceedings till trial commences would be an inquiry.  In other words every inquiry before trial to ascertain whether any offence has been committed  and any one should be put on trial. The word ‘trial’ has not been defined under  Cr.P.C..  Therefore, it is necessary to look into the authoritative pronouncement of Apex Court as to the starting point of commencement of trial.  On this aspect, it is pertinent to refer to a decision in  V.C.SHUKLA V STATE THROUGH CBI [2], wherein it was held thus:

“For these reason, therefore, we are satisfied that the proceedings starting with Section 238 of the Code including any discharge or framing of charges under Section 239 or 240 amount to trial.”

        10. Trial is a judicial proceeding before the Court, which ends in conviction or acquittal.  All other proceedings are inquiries and they have various endings according to circumstances.

        11. The trial deemed to have been commenced upon a police report instituted  by the police in a warrant case after framing of charges.  Therefore, after filing of the police report under Section 170 Cr.P.C. and before commencement of trial, the interregnum period can safely be called as inquiry.  In such a case, Section 309 Cr.P.C. empowers the Court during enquiry to remand the accused for a term not exceeding 15 days.  Simply because, the Investigating Agency has not filed any sanction orders from the competent authority, that does not mean, the accused is entitled for bail automatically or as a matter of right. This aspect of the case has been completely overlooked by the trial Court.  It is surprising to note that without there being any bail application and without hearing the counsel for CBI, bail was granted. In the facts and circumstances of the case, the learned Judge ought to have considered the case for grant of bail on merits. Therefore, the order under challenge is a perverse one and the same is liable to be set aside.

12. Accordingly, the Criminal Petition is allowed setting aside the docket order, dated 16-03-2012 on the file of Special Judge for CBI Cases, Hyderabad.  The respondent herein (A1) is directed to surrender before the concerned Court forthwith, failing which, the petitioner (CBI) is at liberty to arrest and produce him before the concerned CBI Court.

----------------------

K.C.BHANU, J

DATED: 27-03-2012

Note: L.R. copy to be marked

B/o

Hsd

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[1] (1978) 1 SCC 118

[2] AIR 1980 SC 962