Presumption was rebutted - lack of faninaical capacity of complainant
The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor
contemplated and even if led, is to be seen with a doubt.
The bare denial of the passing of the consideration apparently does not appear to be any defence.
Something which is probable has to be brought on record for getting the benefit
of shifting the onus of proving to the plaintiff.
To disprove the presumption, the defendant has to bring on record such facts
and circumstances upon consideration of which the court may either believe that the
consideration did not exist or its nonexistence was so probable that a prudent
man would, under the circumstances of the case, shall act upon the plea that it did
not exist……
Trail court dismissed the complaint as complainant failed to prove his financial capcity being retd. RTC employee where as admitted the financial postion of the accused well.
High court set aside the acquital and convicted by stating that though Accused need not entered into witness box he not made any suggestions of other source of income of the complainant.
Apex court held that
Such circumstance raises serious doubt on the transaction as claimed by the complainant.
Hon’ble High Court of Karnataka has clearly established that, the accused need not enter the witness box and rebut the presumptions.
I am of the opinion that the whole transaction is at a doubt and the circumstance does not give rise to the lending of loan amount of Rs.6,00,000/- as claimed by the complainant.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.636 of 2019
(arising out of SLP (Crl.) No.8641/2018)
BASALINGAPPA ...APPELLANT(S)
VERSUS
MUDIBASAPPA ...RESPONDENT(S)
J U D G M E N T
ASHOK BHUSHAN,J.
This is an appeal by accused challenging the
judgment of the High Court of Karnataka dated
04.07.2018 by which judgment the Criminal Appeal
filed by the complainant against the acquittal of the
accused has been allowed and the accused has been
convicted under Section 138 of the Negotiable
Instruments Act, 1881 and sentenced to fine of
Rs.8,00,000/-, in default of which to undergo simple
imprisonment for three months.
2. The brief facts of the case for deciding the
appeal are:-
1
2.1 The complainant gave a notice dated
12.03.2012 to the accused, the appellant
stating dishonour of cheque dated
27.02.2012 for an amount of Rs.6,00,000/-
for want of sufficient funds. Thereafter,
on non-payment of the amount, a complaint
dated 25.04.2012 was filed by the
complainant under Section 138 of the
Negotiable Instruments Act, 1881
(hereinafter referred to as “Act, 1881).
2.2 Allegation in the complaint was that the
accused requested the complainant to lend a
hand loan to meet out urgent and family
necessary for a sum of Rs.6,00,000/-.
Complainant lent hand loan of Rs.6,00,000/-
dated 27.02.2012 in favour of the accused.
A cheque dated 27.02.2012 for Rs.6,00,000/-
was given by the accused, but the same was
returned by the bank with the endorsement
“Funds Insufficient” on 01.03.2012.
2
2.3 After notice dated 12.03.2012, which was
served on the accused on 13.03.2012, a
complaint was filed. PW1 filed his
examination-in-chief and was also crossexamined on behalf of the accused. The
complainant in support of the complaint
filed original cheque dated 27.02.2012,
original cheque return memo dated
01.03.2012, office copy of the notice dated
12.03.2012, postal receipt dated
12.03.2012, acknowledgment letter issued by
the Department of Post dated 16.04.2012 and
letter to Head Post Office dated
11.04.2012. The accused in support of his
defence filed Ex.D1 – certified copy of
plaint in O.S. No. 148 of 2011, Ex.D2-
Certified copy of the private complaint
No.119/2012 in CC No. 2298 of 2012 and in
Ext.D3, certified copy of registered sale
agreement.
3
2.4 The trial court framed following two
questions:-
1. Whether the complainant proves beyond
all reasonable doubts that, the
accused had issued a cheque bearing
No.839374 dated 27-02-2012 for
Rs.6,00,000/- of Pragathi Gramin Bank,
Nijalingappa Colony Branch, Raichur in
favour of complainant, towards
discharge of legally enforceable debt
or liability and the same was
dishonored for ‘ Funds Insufficient’
and even after deemed legal notice the
accused has not paid the debt covered
under the above said cheque and
thereby committed an offence
punishable Under Section 138 of
Negotiable Instruments Act?
2. What Order?
2.5 The trial court after considering the
evidence and material on record held that
if the accused is able to raise a probable
defense which creates doubts about the
existence of a legally enforceable debt or
liability, the prosecution can fail. By
judgment dated 20.02.2015, the accused was
acquitted for the offence under Section
138. Complainant aggrieved by said
4
judgment filed a Criminal Appeal under
Section 378(4) of Code of Criminal
Procedure. The High Court set aside the
judgment of the trial court and convicted
the accused for the offence under Section
138. Accused aggrieved by judgment of the
High Court has come up in this appeal.
3. Shri S.N. Bhat, learned counsel for the appellant
submits that accused has successfully rebutted the
presumption under Section 139 and has raised probable
defence, which was accepted by the trial court after
considering the material on record. The High Court
erred in setting aside the acquittal order. The
accused has questioned the financial capacity of the
complainant and without there being any proof of
financial capacity, the High Court erred in observing
that judgment of the trial court is perverse. It is
submitted that burden of proof on accused under
Section 138 is not a heavy burden as is on a
prosecution to prove the offence beyond reasonable
doubt. It is submitted that the complainant being a
5
retired employee of Karnataka State Road Transport
Corporation, who having retired in 1977 and encashed
his retirement benefits of Rs.8,00,000/-, there was
no financial capacity. It is submitted that
complainant has filed cases under Section 138 against
other persons also. Complainant had also made a
payment of Rs.4,50,000/- for the agreement of sale.
The complainant was also a witness of a sale
agreement executed by accused, where he received an
amount of Rs.15 lakhs as consideration. There was
sufficient material on record to discharge the burden
and the High Court erred in setting aside the
acquittal order.
4. Learned counsel for the complainant refuting the
submissions of the learned counsel for the appellant
contends that signature on the cheque having been
admitted by the accused, a presumption has rightly
been raised that cheque was given in discharge of a
debt or liability. The accused has not been able to
prove any probable defence and the High Court has
rightly convicted the accused. No case was taken by
6
the accused that complainant has no other source of
income. Learned counsel for the complainant has
relied on judgment of this Court in Kishan Rao Vs.
Shankargouda, (2018) 8 SCC 165.
5. We have considered the submissions of the counsel
for the parties and have perused the records.
6. To recapitulate facts again, the cheque dated
27.02.2012 was presented for encashment by the
complainant, which was returned on 01.03.2012.
Signature on the cheque is not denied by the accused,
due to which presumption shall be raised that cheque
was issued in discharge of any debt or liability.
The complainant gave his evidence to prove his case.
In the examination-in-chief, he stated that a loan of
Rs.6,00,000/- was a hand loan and in discharge of the
same, the accused had given a cheque dated
27.02.2012. Neither in the complaint nor in
examination-in-chief, complainant stated the date of
giving the loan to the accused, however, in his
cross-examination, he stated that in the month of
November, 2011, accused availed loan of
7
Rs.6,00,000/-. In cross-examination, he further
stated that except accused, he has not lent loan to
any other person. He denied having filed a suit for
recovery of money against one Balana Gouda. However,
he admitted that suit was filed on the basis of
promissory note with interest at the rate of @18% per
month. He further admitted that he has filed a
criminal case under Section 138 of Negotiable
Instruments Act, 1881 against one Siddesh bearing CC
No.2298 of 2012. When a suggestion was given that
the complainant had lent Rs.25,000/- to the accused,
he said that he does not remember the accused has
borrowed Rs.25,000/- from him. In his crossexamination, he has admitted that he has signed as a
witness to the agreement to transfer the lease hold
rights of accused in favour of one M/s. Sri Lakshmi
Narasimha Industries. Further on question, whether
the accused received Rs.15 lakhs from the said
transaction, he showed his ignorance. Suggestion was
also put that a blank cheque was issued at the time
of loan availing of Rs.25,000/-. Suggestion was also
8
put in his cross-examination that he was not having
Rs.6,00,000/- on hand on the date of loan.
7. Now, we look into the facts alleged by the
defence. In the cross-examination, although
complainant denied that he has filed any case under
Section 138 against any person but Ex.D2 is certified
copy of the complaint filed by the complainant
against Shri Siddesh under Section 138 of Act, 1881
for punishing the accused. Further the date of
cheque, which was alleged to be issued by Shri
Siddesh was also 27.02.2012. Ex.D3 was an agreement
of sale dated 07.01.2010, by which the complainant
paid Rs.4,50,000/- to Balana Gouda towards sale
consideration. In document transferring the
leasehold rights by the accused to one M/s. Sri
Lakshmi Narasimha Industries, the complainant was a
witness, who admitted his signature on the deed. In
his cross-examination, accused case was that by
virtue of such transfer of leasehold rights, he
received Rs.15 lakhs. The trial court after
9
marshalling the evidence made following observations
in Paragraph No.17:-
“17. In the instant case the cheque amount
involved is Rs.6,00,000/- and the
complainant is an retired bus conductor and
he had retired from service in the year
1997 and has received the entire retirement
monetary benefits of Rs.8,00,000/- and the
same was deposited in the account of the
complainant and it was encashed by the
complainant. It is observed that the
complainant is silent as to his source of
income at present. He has nowhere specified
as to what is he working and his earning,
to show his position to lend the amount as
specified in the cheque. There is no single
document to show his earning nor has the
complainant executed any document for
having lent such heavy amount of
Rs.6,00,000/- to the accused. Further, it
is the suggestion of the accused to PW-1
that, the accused by transferring his
interest to lease hold to one M/s.
Sri.Lakshmi Narasimha industries has
received a sum of Rs.15,00,000/- and it is
also admitted by PW-1 that he was the
witness to the said transaction. From the
above, it raises doubt on the very cheque
Ex.P-1 held by the complainant and the nonproduction of any document by the
complainant to 18 C.C.NO.2675-2012 show his
earning, and the complainant has not
executed any document before lending such
huge amount to the accused. Such
circumstance raises serious doubt on the
transaction as claimed by the complainant.
Hon’ble High Court of Karnataka has clearly
established that, the accused need not
enter the witness box and rebut the
10
presumptions. I am of the opinion that the
whole transaction is at a doubt and the
circumstance does not give rise to the
lending of loan amount of Rs.6,00,000/- as
claimed by the complainant. Accordingly,
Points No.1 in the Negative.”
8. We having noticed the facts of the case and the
evidence on the record, we need to note the legal
principles regarding nature of presumptions to be
drawn under Section 139 of the Act and the manner in
which it can be rebutted by an accused. We need to
look into the relevant judgments of this Court, where
these aspects have been considered and elaborated.
Chapter XIII of the Act, 1881 contains a heading
“Special Rules of Evidence”. Section 118 provides
for presumptions as to negotiable instruments.
Section 118 is as follows:-
“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, indorsed, negotiated
or transferred, was accepted,
indorsed, negotiated or transferred
for consideration;
11
(b) as to date —that every negotiable
instrument bearing a date was made
or drawn on such date;
XXXXXXXXXXXXXXXXXXXXXXX”
9. Next provision, which needs to be noticed is
Section 139, which provides for presumption in favour
of holder. Section 139 lays down:-
“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.”
10. The complainant being holder of cheque and the
signature on the cheque having not been denied by the
accused, presumption shall be drawn that cheque was
issued for the discharge of any debt or other
liability. The presumption under Section 139 is a
rebuttable presumption. Before we refer to judgments
of this Court considering Sections 118 and 139, it is
relevant to notice the general principles pertaining
to burden of proof on an accused especially in a case
where some statutory presumption regarding guilt of
the accused has to be drawn. A Three-Judge Bench of
12
this Court in Kali Ram Vs. State of Himachal Pradesh,
(1973) 2 SCC 808 laid down following:-
“23. ……………………One of the cardinal principles
which has always to be kept in view in our
system of administration of justice for
criminal cases is that a person arraigned
as an accused is presumed to be innocent
unless that presumption is rebutted by the
prosecution by production of evidence as
may show him to be guilty of the offence
with which he is charged. The burden of
proving the guilt of the accused is upon
the prosecution and unless it relieves
itself of that burden, the courts cannot
record a finding of the guilt of the
accused. There are certain cases in which
statutory presumptions arise regarding the
guilt of the accused, but the burden even
in those cases is upon the prosecution to
prove the existence of facts which have to
be present before the presumption can be
drawn. Once those facts are shown by the
prosecution to exist, the Court can raise
the statutory presumption and it would, in
such an event, be for the accused to rebut
the presumption. The onus even in such
cases upon the accused is not as heavy as
is normally upon the prosecution to prove
the guilt of the accused. If some material
is brought on the record consistent with
the innocence of the accused which may
reasonably be true, even though it is not
positively proved to be true, the accused
would be entitled to acquittal.”
11. This Court in Bharat Barrel & Drum Manufacturing
Company Vs. Amin Chand Pyarelal, (1999) 3 SCC 35 had
occasion to consider Section 118(a) of the Act. This
13
Court held that once execution of the promissory note
is admitted, the presumption under Section 118(a)
would arise that it is supported by a consideration.
Such a presumption is rebuttable and defendant can
prove the non-existence of a consideration by raising
a probable defence. In paragraph No.12 following has
been laid down:-
“12. Upon consideration of various
judgments as noted hereinabove, the
position of law which emerges is that once
execution of the promissory note is
admitted, the presumption under Section
118(a) would arise that it is supported by
a consideration. Such a presumption is
rebuttable. The defendant can prove the
non-existence of a consideration by raising
a probable defence. If the defendant is
proved to have discharged the initial onus
of proof showing that the existence of
consideration was improbable or doubtful or
the same was illegal, the onus would shift
to the plaintiff who will be obliged to
prove it as a matter of fact and upon its
failure to prove would disentitle him to
the grant of relief on the basis of the
negotiable instrument. The burden upon the
defendant of proving the non-existence of
the consideration can be either direct or
by bringing on record the preponderance of
probabilities by reference to the
circumstances upon which he relies. In such
an event, the plaintiff is entitled under
law to rely upon all the evidence led in
the case including that of the plaintiff as
well. In case, where the defendant fails to
discharge the initial onus of proof by
showing the non-existence of the
14
consideration, the plaintiff would
invariably be held entitled to the benefit
of presumption arising under Section 118(a)
in his favour. The court may not insist
upon the defendant to disprove the
existence of consideration by leading
direct evidence as the existence of
negative evidence is neither possible nor
contemplated and even if led, is to be seen
with a doubt. The bare denial of the
passing of the consideration apparently
does not appear to be any defence.
Something which is probable has to be
brought on record for getting the benefit
of shifting the onus of proving to the
plaintiff. To disprove the presumption, the
defendant has to bring on record such facts
and circumstances upon consideration of
which the court may either believe that the
consideration did not exist or its nonexistence was so probable that a prudent
man would, under the circumstances of the
case, shall act upon the plea that it did
not exist……”
12. Justice S.B. Sinha in M.S. Narayana Menon Alias
Mani Vs. State of Kerala and Another, (2006) 6 SCC 39
had considered Sections 118(a), 138 and 139 of the
Act, 1881. It was held that presumptions both under
Sections 118(a) and 139 are rebuttable in nature.
Explaining the expressions “may presume” and “shall
presume” referring to an earlier judgment, following
was held in paragraph No.28:-
“28. What would be the effect of the
expressions “may presume”, ‘shall presume”
15
and “conclusive proof” has been considered
by this Court in Union of India v. Pramod
Gupta, (2005) 12 SCC 1, in the following
terms: (SCC pp. 30-31, para 52)
“It is true that the legislature used
two different phraseologies ‘shall be
presumed’ and ‘may be presumed’ in
Section 42 of the Punjab Land Revenue
Act and furthermore although provided
for the mode and manner of rebuttal
of such presumption as regards the
right to mines and minerals said to
be vested in the Government vis-à-vis
the absence thereof in relation to
the lands presumed to be retained by
the landowners but the same would not
mean that the words ‘shall presume’
would be conclusive. The meaning of
the expressions ‘may presume’ and
‘shall presume’ have been explained
in Section 4 of the Evidence Act,
1872, from a perusal whereof it would
be evident that whenever it is
directed that the court shall presume
a fact it shall regard such fact as
proved unless disproved. In terms of
the said provision, thus, the
expression ‘shall presume’ cannot be
held to be synonymous with
‘conclusive proof’.”
13. It was noted that the expression “shall presume”
cannot be held to be synonymous with conclusive
proof. Referring to definition of words “proved” and
“disproved” under Section 3 of the Evidence Act,
following was laid down in paragraph No.30:
16
“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 raise a probable defence.
Even for the said purpose, the evidence
adduced on behalf of the complainant could
be relied upon.”
14. This Court held that what is needed is to raise a
probable defence, for which it is not necessary for
the accused to disprove the existence of
consideration by way of direct evidence and even the
evidence adduced on behalf of the complainant can be
relied upon. Dealing with standard of proof,
following was observed in paragraph No.32:-
“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.”
17
15. In Krishna Janardhan Bhat Vs. Dattatraya G.
Hegde, (2008) 4 SCC 54, this Court held that 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. Following was
laid down in Paragraph No.32:-
“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 an accused
and that of the prosecution in a criminal
case is different.”
16. This Court again reiterated that 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”. In paragraph
No.34, following was laid down:-
“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”. Inference of preponderance
18
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.”
17. In Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC
513, this Court again examined as to when complainant
discharges the burden to prove that instrument was
executed and when the burden shall be shifted. In
paragraph Nos. 18 to 20, following has been laid
down:-
“18. Applying the definition of the word
“proved” in Section 3 of the Evidence Act
to the provisions of Sections 118 and 139
of the Act, it becomes evident that in a
trial under Section 138 of the Act a
presumption will have to be made that every
negotiable instrument was made or drawn for
consideration and that it was executed for
discharge of debt or liability once the
execution of negotiable instrument is
either proved or admitted. As soon as the
complainant discharges the burden to prove
that the instrument, say a note, was
executed by the accused, the rules of
presumptions under Sections 118 and 139 of
the Act help him shift the burden on the
accused. The presumptions will live, exist
and survive and shall end only when the
contrary is proved by the accused, that is,
the cheque was not issued for consideration
and in discharge of any debt or liability.
A presumption is not in itself evidence,
but only makes a prima facie case for a
party for whose benefit it exists.
19
19. The use of the phrase “until the
contrary is proved” in Section 118 of the
Act and use of the words “unless the
contrary is proved” in Section 139 of the
Act read with definitions of “may presume”
and “shall presume” as given in Section 4
of the Evidence Act, makes it at once clear
that presumptions to be raised under both
the provisions are rebuttable. When a
presumption is rebuttable, it only points
out that the party on whom lies the duty of
going forward with evidence, on the fact
presumed and when that party has produced
evidence fairly and reasonably tending to
show that the real fact is not as presumed,
the purpose of the presumption is over.
20. ……………………The accused may adduce direct
evidence to prove that the note in question
was not supported by consideration and that
there was no debt or liability to be
discharged by him. However, the court need
not insist in every case that the accused
should disprove the non-existence of
consideration and debt by leading direct
evidence because the existence of negative
evidence is neither possible nor
contemplated. At the same time, it is clear
that bare denial of the passing of the
consideration and existence of debt,
apparently would not serve the purpose of
the accused. Something which is probable
has to be brought on record for getting the
burden of proof shifted to the complainant.
To disprove the presumptions, the accused
should bring on record such facts and
circumstances, upon consideration of which,
the court may either believe that the
consideration and debt did not exist or
their non-existence was so probable that a
prudent man would under the circumstances
of the case, act upon the plea that they
did not exist……………”
20
18. A Three-Judge Bench of this Court in Rangappa Vs.
Sri Mohan, (2010) 11 SCC 441 had occasion to
elaborately consider provisions of Sections 138 and
139. In the above case, trial court had acquitted
the accused in a case relating to dishonour of cheque
under Section 138. The High Court had reversed the
judgment of the trial court convicting the accused.
In the above case, the accused had admitted
signatures on the cheque. This Court held that where
the fact of signature on the cheque is acknowledged,
a presumption has to be raised that the cheque
pertained to a legally enforceable debt or liability,
however, this presumption is of a rebuttal nature and
the onus is then on the accused to raise a probable
defence. In Paragraph No.13, following has been laid
down:-
“13. 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. 0886322 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
21
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.”
19. After referring to various other judgments of
this Court, this Court in that case held that the
presumption mandated by Section 139 of the Act does
indeed include the existence of a legally enforceable
debt or liability, which, of course, is in the nature
of a rebuttable presumption. In paragraph No.26,
following was laid down:-
“26. In light of these extracts, we are in
agreement with the respondent claimant that
the presumption mandated by Section 139 of
the Act does indeed include the existence
of a legally enforceable debt or liability.
To that extent, the impugned observations
in Krishna Janardhan Bhat, (2008) 4 SCC 54
may not be correct. However, this does not
in any way cast doubt on the correctness of
the decision in that case since it was
based on the specific facts and
circumstances therein. As noted in the
citations, this is of course 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.”
22
20. Elaborating further, this Court held that Section
139 of the Act is an example of a reverse onus and
the test of proportionality should guide the
construction and interpretation of reverse onus
clauses on the defendant-accused and the defendantaccused cannot be expected to discharge an unduly
high standard of proof. In paragraph Nos. 27 and 28,
following was laid down:-
“27. 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 Section 138
of the Act specifies a strong criminal
remedy in relation to the dishonour of
cheques, the rebuttable presumption under
Section 139 is a device to prevent undue
delay in the course of litigation. However,
it must be remembered that the offence made
punishable by Section 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 defendant-accused
cannot be expected to discharge an unduly
high standard of proof.
28. In the absence of compelling
justifications, reverse onus clauses
usually impose an evidentiary burden and
23
not a persuasive burden. Keeping this in
view, it is a settled position that when an
accused has to rebut the presumption under
Section 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. As clarified in the
citations, 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.”
21. We may now notice judgment relied by the learned
counsel for the complainant, i.e., judgment of this
Court in Kishan Rao Vs. Shankargouda, (2018) 8 SCC
165. This Court in the above case has examined
Section 139 of the Act. In the above case, the only
defence which was taken by the accused was that
cheque was stolen by the appellant. The said defence
was rejected by the trial court. In paragraph Nos.
21 to 23, following was laid down:-
“21. In the present case, the trial court
as well as the appellate court having found
that cheque contained the signatures of the
accused and it was given to the appellant
to present in the Bank, the presumption
under Section 139 was rightly raised which
was not rebutted by the accused. The
accused had not led any evidence to rebut
24
the aforesaid presumption. The accused even
did not come in the witness box to support
his case. In the reply to the notice which
was given by the appellant, the accused
took the defence that the cheque was stolen
by the appellant. The said defence was
rejected by the trial court after
considering the evidence on record with
regard to which no contrary view has also
been expressed by the High Court.
22. Another judgment which needs to be
looked into is Rangappa v. Sri Mohan (2010)
11 SCC 441. A three-Judge Bench of this
Court had occasion to examine the
presumption under Section 139 of the 1881
Act. This Court in the aforesaid case has
held that in the event the accused is able
to raise a probable defence which creates
doubt with regard to the existence of a
debt or liability, the presumption may
fail. Following was laid down in paras 26
and 27: (SCC pp. 453-54)
“26. In light of these extracts, we
are in agreement with the respondent
claimant that the presumption
mandated by Section 139 of the Act
does indeed include the existence of
a legally enforceable debt or
liability. To that extent, the
impugned observations in Krishna
Janardhan Bhat, may not be correct.
However, this does not in any way
cast doubt on the correctness of the
decision in that case since it was
based on the specific facts and
circumstances therein. As noted in
the citations, this is of course in
the nature of a rebuttable
presumption and it is open to the
accused to raise a defence wherein
the existence of a legally
25
enforceable debt or liability can be
contested. However, there can be no
doubt that there is an initial
presumption which favours the
complainant.
27. 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 Section
138 of the Act specifies a strong
criminal remedy in relation to the
dishonour of cheques, the rebuttable
presumption under Section 139 is a
device to prevent undue delay in the
course of litigation. However, it
must be remembered that the offence
made punishable by Section 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
defendant-accused cannot be expected
to discharge an unduly high standard
of proof.”
23. No evidence was led by the accused. The
defence taken in the reply to the notice
that cheque was stolen having been rejected
by the two courts below, we do not see any
basis for the High Court coming to the
conclusion that the accused has been
successful in creating doubt in the mind of
the Court with regard to the existence of
the debt or liability. How the presumption
26
under Section 139 can be rebutted on the
evidence of PW 1, himself has not been
explained by the High Court.
22. The above case was a case where this Court did
not find the defence raised by the accused probable.
The only defence raised was that cheque was stolen
having been rejected by the trial court and no
contrary opinion having been expressed by the High
Court, this Court reversed the judgment of the High
Court restoring the conviction. The respondent
cannot take any benefit of the said judgment, which
was on its own facts.
23. We having noticed the ratio laid down by this
Court in above cases on Sections 118(a) and 139, we
now summarise the principles enumerated by this Court
in following manner:-
(i) Once the execution of cheque is
admitted Section 139 of the Act
mandates a presumption that the
cheque was for the discharge of any
debt or other liability.
27
(ii) The presumption under Section 139 is
a rebuttable presumption and the
onus is on the accused to raise the
probable defence. The standard of
proof for rebutting the presumption
is that of preponderance of
probabilities.
(iii) To rebut the presumption, it is open
for the accused to rely on evidence
led by him or accused can also rely
on the materials submitted by the
complainant in order to raise a
probable defence. 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 they rely.
(iv) That it is not necessary for the
accused to come in the witness box
in support of his defence, Section
28
139 imposed an evidentiary burden
and not a persuasive burden.
(v) It is not necessary for the accused
to come in the witness box to
support his defence.
24. Applying the preposition of law as noted above,
in facts of the present case, it is clear that
signature on cheque having been admitted, a
presumption shall be raised under Section 139 that
cheque was issued in discharge of debt or liability.
The question to be looked into is as to whether any
probable defence was raised by the accused. In
cross-examination of the PW1, when the specific
question was put that cheque was issued in relation
to loan of Rs.25,000/- taken by the accused, the PW1
said that he does not remember. PW1 in his evidence
admitted that he retired in 1997 on which date he
received monetary benefit of Rs. 8 lakhs, which was
encashed by the complainant. It was also brought in
the evidence that in the year 2010, the complainant
entered into a sale agreement for which he paid an
29
amount of Rs.4,50,000/- to Balana Gouda towards sale
consideration. Payment of Rs.4,50,000/- being
admitted in the year 2010 and further payment of loan
of Rs.50,000/- with regard to which complaint No.119
of 2012 was filed by the complainant, copy of which
complaint was also filed as Ex.D2, there was burden
on the complainant to prove his financial capacity.
In the year 2010-2011, as per own case of the
complainant, he made payment of Rs.18 lakhs. During
his cross-examination, when financial capacity to pay
Rs.6 lakhs to the accused was questioned, there was
no satisfactory reply given by the complainant. The
evidence on record, thus, is a probable defence on
behalf of the accused, which shifted the burden on
the complainant to prove his financial capacity and
other facts.
25. There was another evidence on the record, i.e.,
copy of plaint in O.S. No. 148 of 2011 filed by the
complainant for recovery of loan of Rs. 7 lakhs given
to one Balana Gouda in December, 2009. Thus, there
was evidence on record to indicate that in December,
2009, he gave Rs.7 lakhs in sale agreement, in 2010,
30
he made payment of Rs.4,50,000/- towards sale
consideration and further he gave a loan of
Rs.50,000/- for which complaint was filed in 2012 and
further loan of Rs.6 lakhs in November, 2011. Thus,
during the period from 2009 to November, 2011, amount
of Rs.18 lakhs was given by the complainant to
different persons including the accused, which put a
heavy burden to prove the financial capacity when it
was questioned on behalf of the accused, the accused
being a retired employee of State Transport
Corporation, who retired in 1997 and total retirement
benefits, which were encashed were Rs.8 lakhs only.
The High Court observed that though the complainant
is retired employee, the accused did not even suggest
that pension is the only means for survival of the
complainant. Following observations were made in
Paragraph 16 of the judgment of the High Court:-
“16. Though the complainant is retired
employee, the accused did not even suggest
that pension is the only means for survival
of the complainant. Under these
circumstances, the Trial Court’s finding
that the complainant failed to discharge
his initial burden of proof of lending
capacity is perverse.”
31
26. There is one more aspect of the matter which also
needs to be noticed. In the complaint filed by the
complainant as well as in examination-in-chief the
complainant has not mentioned as to on which date,
the loan of Rs.6 lakhs was given to the accused. It
was during cross-examination, he gave the date as
November, 2011. Under Section 118(b), a presumption
shall be made as to date that every negotiable
instrument was made or drawn on such date.
Admittedly, the cheque is dated 27.02.2012, there is
not even a suggestion by the complainant that a post
dated cheque was given to him in November, 2011
bearing dated 27.02.2012. Giving of a cheque on
27.02.2012, which was deposited on 01.03.2012 is not
compatible with the case of the complainant when we
read the complaint submitted by the complainant
especially Para 1 of the complaint, which is
extracted as below:-
“1. The accused is a very good friend of
the complainant. The accused requested the
Complainant a hand loan to meet out urgent
and family necessary a sum of Rs.6,00,000/-
(Rupees Six Lakh) and on account of long
standing friendship and knowing the
difficulties, which is being faced by the
32
accused the complainant agreed to lend hand
loan to meet out the financial difficulties
of the accused and accordingly the
Complainant lend hand loan Rs.6,00,000/-
(Rupees Six Lakh) dated 27.02.2012 in favour
of the Complainant stating that on its
presentation it will be honored. But to the
surprise of the Complainant on presentation
of the same for collection through his Bank
the Cheque was returned by the Bank with an
endorsement “Funds Insufficient” on 01-03-
2012.”
27. Thus, there is a contradiction in what was
initially stated by the complainant in the complaint
and in his examination-in-chief regarding date on
which loan was given on one side and what was said in
cross-examination in other side, which has not been
satisfactorily explained. The High Court was unduly
influenced by the fact that the accused did not reply
the notice denying the execution of cheque or legal
liability. Even before the trial court, appellantaccused has not denied his signature on the cheque.
28. We are of the view that when evidence was led
before the Court to indicate that apart from loan of
Rs.6 lakhs given to the accused, within 02 years,
amount of Rs.18 lakhs have been given out by the
33
complainant and his financial capacity being
questioned, it was incumbent on the complainant to
have explained his financial capacity. Court cannot
insist on a person to lead negative evidence. The
observation of the High Court that trial court’s
finding that the complainant failed to prove his
financial capacity of lending money is perverse
cannot be supported. We fail to see that how the
trial court’s findings can be termed as perverse by
the High Court when it was based on consideration of
the evidence, which was led on behalf of the defence.
This Court had occasion to consider the expression
“perverse” in Gamini Bala Koteswara Rao and others
Vs. State of Andhra Pradesh through Secretary, (2009)
10 SCC 636, this Court held that although High Court
can reappraise the evidence and conclusions drawn by
the trial court but judgment of acquittal can be
interfered with only judgment is against the weight
of evidence. In Paragraph No.14 following has been
held:-
“14. We have considered the arguments
advanced and heard the matter at great
length. It is true, as contended by Mr Rao,
that interference in an appeal against an
34
acquittal recorded by the trial court
should be rare and in exceptional
circumstances. It is, however, well settled
by now that it is open to the High Court to
reappraise the evidence and conclusions
drawn by the trial court but only in a case
when the judgment of the trial court is
stated to be perverse. The word “perverse”
in terms as understood in law has been
defined to mean “against the weight of
evidence”. We have to see accordingly as to
whether the judgment of the trial court
which has been found perverse by the High
Court was in fact so.”
29. High Court without discarding the evidence, which
was led by defence could not have held that finding
of trial court regarding financial capacity of the
complainant is perverse. We are, thus, satisfied
that accused has raised a probable defence and the
findings of the trial court that complainant failed
to prove his financial capacity are based on evidence
led by the defence. The observations of the High
Court that findings of the trial court are perverse
are unsustainable. We, thus, are of the view that
judgment of the High Court is unsustainable.
35
30. In result, the appeal is allowed and the judgment
of the High Court is set aside and that of the trial
court is restored.
......................J.
(ASHOK BHUSHAN )
......................J.
(K.M. JOSEPH )
New Delhi,
April 09, 2019.
36
The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor
contemplated and even if led, is to be seen with a doubt.
The bare denial of the passing of the consideration apparently does not appear to be any defence.
Something which is probable has to be brought on record for getting the benefit
of shifting the onus of proving to the plaintiff.
To disprove the presumption, the defendant has to bring on record such facts
and circumstances upon consideration of which the court may either believe that the
consideration did not exist or its nonexistence was so probable that a prudent
man would, under the circumstances of the case, shall act upon the plea that it did
not exist……
Trail court dismissed the complaint as complainant failed to prove his financial capcity being retd. RTC employee where as admitted the financial postion of the accused well.
High court set aside the acquital and convicted by stating that though Accused need not entered into witness box he not made any suggestions of other source of income of the complainant.
Apex court held that
- In the instant case the cheque amount involved is Rs.6,00,000/- and
- the complainant is an retired bus conductor and he had retired from service in the year 1997 and has received the entire retirement monetary benefits of Rs.8,00,000/- and the same was deposited in the account of the complainant and it was encashed by the complainant.
- It is observed that the complainant is silent as to his source of income at present.
- He has nowhere specified as to what is he working and his earning, to show his position to lend the amount as specified in the cheque.
- There is no single document to show his earning nor has the complainant executed any document for having lent such heavy amount of Rs.6,00,000/- to the accused.
- Further, it is the suggestion of the accused to PW-1 that, the accused by transferring his interest to lease hold to one M/s. Sri.Lakshmi Narasimha industries has received a sum of Rs.15,00,000/- and
- it is also admitted by PW-1 that he was the witness to the said transaction.
- From the above, it raises doubt on the very cheque Ex.P-1 held by the complainant and the nonproduction of any document by the complainant to show his earning, and the complainant has not executed any document before lending such huge amount to the accused.
Such circumstance raises serious doubt on the transaction as claimed by the complainant.
Hon’ble High Court of Karnataka has clearly established that, the accused need not enter the witness box and rebut the presumptions.
I am of the opinion that the whole transaction is at a doubt and the circumstance does not give rise to the lending of loan amount of Rs.6,00,000/- as claimed by the complainant.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.636 of 2019
(arising out of SLP (Crl.) No.8641/2018)
BASALINGAPPA ...APPELLANT(S)
VERSUS
MUDIBASAPPA ...RESPONDENT(S)
J U D G M E N T
ASHOK BHUSHAN,J.
This is an appeal by accused challenging the
judgment of the High Court of Karnataka dated
04.07.2018 by which judgment the Criminal Appeal
filed by the complainant against the acquittal of the
accused has been allowed and the accused has been
convicted under Section 138 of the Negotiable
Instruments Act, 1881 and sentenced to fine of
Rs.8,00,000/-, in default of which to undergo simple
imprisonment for three months.
2. The brief facts of the case for deciding the
appeal are:-
1
2.1 The complainant gave a notice dated
12.03.2012 to the accused, the appellant
stating dishonour of cheque dated
27.02.2012 for an amount of Rs.6,00,000/-
for want of sufficient funds. Thereafter,
on non-payment of the amount, a complaint
dated 25.04.2012 was filed by the
complainant under Section 138 of the
Negotiable Instruments Act, 1881
(hereinafter referred to as “Act, 1881).
2.2 Allegation in the complaint was that the
accused requested the complainant to lend a
hand loan to meet out urgent and family
necessary for a sum of Rs.6,00,000/-.
Complainant lent hand loan of Rs.6,00,000/-
dated 27.02.2012 in favour of the accused.
A cheque dated 27.02.2012 for Rs.6,00,000/-
was given by the accused, but the same was
returned by the bank with the endorsement
“Funds Insufficient” on 01.03.2012.
2
2.3 After notice dated 12.03.2012, which was
served on the accused on 13.03.2012, a
complaint was filed. PW1 filed his
examination-in-chief and was also crossexamined on behalf of the accused. The
complainant in support of the complaint
filed original cheque dated 27.02.2012,
original cheque return memo dated
01.03.2012, office copy of the notice dated
12.03.2012, postal receipt dated
12.03.2012, acknowledgment letter issued by
the Department of Post dated 16.04.2012 and
letter to Head Post Office dated
11.04.2012. The accused in support of his
defence filed Ex.D1 – certified copy of
plaint in O.S. No. 148 of 2011, Ex.D2-
Certified copy of the private complaint
No.119/2012 in CC No. 2298 of 2012 and in
Ext.D3, certified copy of registered sale
agreement.
3
2.4 The trial court framed following two
questions:-
1. Whether the complainant proves beyond
all reasonable doubts that, the
accused had issued a cheque bearing
No.839374 dated 27-02-2012 for
Rs.6,00,000/- of Pragathi Gramin Bank,
Nijalingappa Colony Branch, Raichur in
favour of complainant, towards
discharge of legally enforceable debt
or liability and the same was
dishonored for ‘ Funds Insufficient’
and even after deemed legal notice the
accused has not paid the debt covered
under the above said cheque and
thereby committed an offence
punishable Under Section 138 of
Negotiable Instruments Act?
2. What Order?
2.5 The trial court after considering the
evidence and material on record held that
if the accused is able to raise a probable
defense which creates doubts about the
existence of a legally enforceable debt or
liability, the prosecution can fail. By
judgment dated 20.02.2015, the accused was
acquitted for the offence under Section
138. Complainant aggrieved by said
4
judgment filed a Criminal Appeal under
Section 378(4) of Code of Criminal
Procedure. The High Court set aside the
judgment of the trial court and convicted
the accused for the offence under Section
138. Accused aggrieved by judgment of the
High Court has come up in this appeal.
3. Shri S.N. Bhat, learned counsel for the appellant
submits that accused has successfully rebutted the
presumption under Section 139 and has raised probable
defence, which was accepted by the trial court after
considering the material on record. The High Court
erred in setting aside the acquittal order. The
accused has questioned the financial capacity of the
complainant and without there being any proof of
financial capacity, the High Court erred in observing
that judgment of the trial court is perverse. It is
submitted that burden of proof on accused under
Section 138 is not a heavy burden as is on a
prosecution to prove the offence beyond reasonable
doubt. It is submitted that the complainant being a
5
retired employee of Karnataka State Road Transport
Corporation, who having retired in 1977 and encashed
his retirement benefits of Rs.8,00,000/-, there was
no financial capacity. It is submitted that
complainant has filed cases under Section 138 against
other persons also. Complainant had also made a
payment of Rs.4,50,000/- for the agreement of sale.
The complainant was also a witness of a sale
agreement executed by accused, where he received an
amount of Rs.15 lakhs as consideration. There was
sufficient material on record to discharge the burden
and the High Court erred in setting aside the
acquittal order.
4. Learned counsel for the complainant refuting the
submissions of the learned counsel for the appellant
contends that signature on the cheque having been
admitted by the accused, a presumption has rightly
been raised that cheque was given in discharge of a
debt or liability. The accused has not been able to
prove any probable defence and the High Court has
rightly convicted the accused. No case was taken by
6
the accused that complainant has no other source of
income. Learned counsel for the complainant has
relied on judgment of this Court in Kishan Rao Vs.
Shankargouda, (2018) 8 SCC 165.
5. We have considered the submissions of the counsel
for the parties and have perused the records.
6. To recapitulate facts again, the cheque dated
27.02.2012 was presented for encashment by the
complainant, which was returned on 01.03.2012.
Signature on the cheque is not denied by the accused,
due to which presumption shall be raised that cheque
was issued in discharge of any debt or liability.
The complainant gave his evidence to prove his case.
In the examination-in-chief, he stated that a loan of
Rs.6,00,000/- was a hand loan and in discharge of the
same, the accused had given a cheque dated
27.02.2012. Neither in the complaint nor in
examination-in-chief, complainant stated the date of
giving the loan to the accused, however, in his
cross-examination, he stated that in the month of
November, 2011, accused availed loan of
7
Rs.6,00,000/-. In cross-examination, he further
stated that except accused, he has not lent loan to
any other person. He denied having filed a suit for
recovery of money against one Balana Gouda. However,
he admitted that suit was filed on the basis of
promissory note with interest at the rate of @18% per
month. He further admitted that he has filed a
criminal case under Section 138 of Negotiable
Instruments Act, 1881 against one Siddesh bearing CC
No.2298 of 2012. When a suggestion was given that
the complainant had lent Rs.25,000/- to the accused,
he said that he does not remember the accused has
borrowed Rs.25,000/- from him. In his crossexamination, he has admitted that he has signed as a
witness to the agreement to transfer the lease hold
rights of accused in favour of one M/s. Sri Lakshmi
Narasimha Industries. Further on question, whether
the accused received Rs.15 lakhs from the said
transaction, he showed his ignorance. Suggestion was
also put that a blank cheque was issued at the time
of loan availing of Rs.25,000/-. Suggestion was also
8
put in his cross-examination that he was not having
Rs.6,00,000/- on hand on the date of loan.
7. Now, we look into the facts alleged by the
defence. In the cross-examination, although
complainant denied that he has filed any case under
Section 138 against any person but Ex.D2 is certified
copy of the complaint filed by the complainant
against Shri Siddesh under Section 138 of Act, 1881
for punishing the accused. Further the date of
cheque, which was alleged to be issued by Shri
Siddesh was also 27.02.2012. Ex.D3 was an agreement
of sale dated 07.01.2010, by which the complainant
paid Rs.4,50,000/- to Balana Gouda towards sale
consideration. In document transferring the
leasehold rights by the accused to one M/s. Sri
Lakshmi Narasimha Industries, the complainant was a
witness, who admitted his signature on the deed. In
his cross-examination, accused case was that by
virtue of such transfer of leasehold rights, he
received Rs.15 lakhs. The trial court after
9
marshalling the evidence made following observations
in Paragraph No.17:-
“17. In the instant case the cheque amount
involved is Rs.6,00,000/- and the
complainant is an retired bus conductor and
he had retired from service in the year
1997 and has received the entire retirement
monetary benefits of Rs.8,00,000/- and the
same was deposited in the account of the
complainant and it was encashed by the
complainant. It is observed that the
complainant is silent as to his source of
income at present. He has nowhere specified
as to what is he working and his earning,
to show his position to lend the amount as
specified in the cheque. There is no single
document to show his earning nor has the
complainant executed any document for
having lent such heavy amount of
Rs.6,00,000/- to the accused. Further, it
is the suggestion of the accused to PW-1
that, the accused by transferring his
interest to lease hold to one M/s.
Sri.Lakshmi Narasimha industries has
received a sum of Rs.15,00,000/- and it is
also admitted by PW-1 that he was the
witness to the said transaction. From the
above, it raises doubt on the very cheque
Ex.P-1 held by the complainant and the nonproduction of any document by the
complainant to 18 C.C.NO.2675-2012 show his
earning, and the complainant has not
executed any document before lending such
huge amount to the accused. Such
circumstance raises serious doubt on the
transaction as claimed by the complainant.
Hon’ble High Court of Karnataka has clearly
established that, the accused need not
enter the witness box and rebut the
10
presumptions. I am of the opinion that the
whole transaction is at a doubt and the
circumstance does not give rise to the
lending of loan amount of Rs.6,00,000/- as
claimed by the complainant. Accordingly,
Points No.1 in the Negative.”
8. We having noticed the facts of the case and the
evidence on the record, we need to note the legal
principles regarding nature of presumptions to be
drawn under Section 139 of the Act and the manner in
which it can be rebutted by an accused. We need to
look into the relevant judgments of this Court, where
these aspects have been considered and elaborated.
Chapter XIII of the Act, 1881 contains a heading
“Special Rules of Evidence”. Section 118 provides
for presumptions as to negotiable instruments.
Section 118 is as follows:-
“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, indorsed, negotiated
or transferred, was accepted,
indorsed, negotiated or transferred
for consideration;
11
(b) as to date —that every negotiable
instrument bearing a date was made
or drawn on such date;
XXXXXXXXXXXXXXXXXXXXXXX”
9. Next provision, which needs to be noticed is
Section 139, which provides for presumption in favour
of holder. Section 139 lays down:-
“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.”
10. The complainant being holder of cheque and the
signature on the cheque having not been denied by the
accused, presumption shall be drawn that cheque was
issued for the discharge of any debt or other
liability. The presumption under Section 139 is a
rebuttable presumption. Before we refer to judgments
of this Court considering Sections 118 and 139, it is
relevant to notice the general principles pertaining
to burden of proof on an accused especially in a case
where some statutory presumption regarding guilt of
the accused has to be drawn. A Three-Judge Bench of
12
this Court in Kali Ram Vs. State of Himachal Pradesh,
(1973) 2 SCC 808 laid down following:-
“23. ……………………One of the cardinal principles
which has always to be kept in view in our
system of administration of justice for
criminal cases is that a person arraigned
as an accused is presumed to be innocent
unless that presumption is rebutted by the
prosecution by production of evidence as
may show him to be guilty of the offence
with which he is charged. The burden of
proving the guilt of the accused is upon
the prosecution and unless it relieves
itself of that burden, the courts cannot
record a finding of the guilt of the
accused. There are certain cases in which
statutory presumptions arise regarding the
guilt of the accused, but the burden even
in those cases is upon the prosecution to
prove the existence of facts which have to
be present before the presumption can be
drawn. Once those facts are shown by the
prosecution to exist, the Court can raise
the statutory presumption and it would, in
such an event, be for the accused to rebut
the presumption. The onus even in such
cases upon the accused is not as heavy as
is normally upon the prosecution to prove
the guilt of the accused. If some material
is brought on the record consistent with
the innocence of the accused which may
reasonably be true, even though it is not
positively proved to be true, the accused
would be entitled to acquittal.”
11. This Court in Bharat Barrel & Drum Manufacturing
Company Vs. Amin Chand Pyarelal, (1999) 3 SCC 35 had
occasion to consider Section 118(a) of the Act. This
13
Court held that once execution of the promissory note
is admitted, the presumption under Section 118(a)
would arise that it is supported by a consideration.
Such a presumption is rebuttable and defendant can
prove the non-existence of a consideration by raising
a probable defence. In paragraph No.12 following has
been laid down:-
“12. Upon consideration of various
judgments as noted hereinabove, the
position of law which emerges is that once
execution of the promissory note is
admitted, the presumption under Section
118(a) would arise that it is supported by
a consideration. Such a presumption is
rebuttable. The defendant can prove the
non-existence of a consideration by raising
a probable defence. If the defendant is
proved to have discharged the initial onus
of proof showing that the existence of
consideration was improbable or doubtful or
the same was illegal, the onus would shift
to the plaintiff who will be obliged to
prove it as a matter of fact and upon its
failure to prove would disentitle him to
the grant of relief on the basis of the
negotiable instrument. The burden upon the
defendant of proving the non-existence of
the consideration can be either direct or
by bringing on record the preponderance of
probabilities by reference to the
circumstances upon which he relies. In such
an event, the plaintiff is entitled under
law to rely upon all the evidence led in
the case including that of the plaintiff as
well. In case, where the defendant fails to
discharge the initial onus of proof by
showing the non-existence of the
14
consideration, the plaintiff would
invariably be held entitled to the benefit
of presumption arising under Section 118(a)
in his favour. The court may not insist
upon the defendant to disprove the
existence of consideration by leading
direct evidence as the existence of
negative evidence is neither possible nor
contemplated and even if led, is to be seen
with a doubt. The bare denial of the
passing of the consideration apparently
does not appear to be any defence.
Something which is probable has to be
brought on record for getting the benefit
of shifting the onus of proving to the
plaintiff. To disprove the presumption, the
defendant has to bring on record such facts
and circumstances upon consideration of
which the court may either believe that the
consideration did not exist or its nonexistence was so probable that a prudent
man would, under the circumstances of the
case, shall act upon the plea that it did
not exist……”
12. Justice S.B. Sinha in M.S. Narayana Menon Alias
Mani Vs. State of Kerala and Another, (2006) 6 SCC 39
had considered Sections 118(a), 138 and 139 of the
Act, 1881. It was held that presumptions both under
Sections 118(a) and 139 are rebuttable in nature.
Explaining the expressions “may presume” and “shall
presume” referring to an earlier judgment, following
was held in paragraph No.28:-
“28. What would be the effect of the
expressions “may presume”, ‘shall presume”
15
and “conclusive proof” has been considered
by this Court in Union of India v. Pramod
Gupta, (2005) 12 SCC 1, in the following
terms: (SCC pp. 30-31, para 52)
“It is true that the legislature used
two different phraseologies ‘shall be
presumed’ and ‘may be presumed’ in
Section 42 of the Punjab Land Revenue
Act and furthermore although provided
for the mode and manner of rebuttal
of such presumption as regards the
right to mines and minerals said to
be vested in the Government vis-à-vis
the absence thereof in relation to
the lands presumed to be retained by
the landowners but the same would not
mean that the words ‘shall presume’
would be conclusive. The meaning of
the expressions ‘may presume’ and
‘shall presume’ have been explained
in Section 4 of the Evidence Act,
1872, from a perusal whereof it would
be evident that whenever it is
directed that the court shall presume
a fact it shall regard such fact as
proved unless disproved. In terms of
the said provision, thus, the
expression ‘shall presume’ cannot be
held to be synonymous with
‘conclusive proof’.”
13. It was noted that the expression “shall presume”
cannot be held to be synonymous with conclusive
proof. Referring to definition of words “proved” and
“disproved” under Section 3 of the Evidence Act,
following was laid down in paragraph No.30:
16
“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 raise a probable defence.
Even for the said purpose, the evidence
adduced on behalf of the complainant could
be relied upon.”
14. This Court held that what is needed is to raise a
probable defence, for which it is not necessary for
the accused to disprove the existence of
consideration by way of direct evidence and even the
evidence adduced on behalf of the complainant can be
relied upon. Dealing with standard of proof,
following was observed in paragraph No.32:-
“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.”
17
15. In Krishna Janardhan Bhat Vs. Dattatraya G.
Hegde, (2008) 4 SCC 54, this Court held that 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. Following was
laid down in Paragraph No.32:-
“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 an accused
and that of the prosecution in a criminal
case is different.”
16. This Court again reiterated that 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”. In paragraph
No.34, following was laid down:-
“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”. Inference of preponderance
18
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.”
17. In Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC
513, this Court again examined as to when complainant
discharges the burden to prove that instrument was
executed and when the burden shall be shifted. In
paragraph Nos. 18 to 20, following has been laid
down:-
“18. Applying the definition of the word
“proved” in Section 3 of the Evidence Act
to the provisions of Sections 118 and 139
of the Act, it becomes evident that in a
trial under Section 138 of the Act a
presumption will have to be made that every
negotiable instrument was made or drawn for
consideration and that it was executed for
discharge of debt or liability once the
execution of negotiable instrument is
either proved or admitted. As soon as the
complainant discharges the burden to prove
that the instrument, say a note, was
executed by the accused, the rules of
presumptions under Sections 118 and 139 of
the Act help him shift the burden on the
accused. The presumptions will live, exist
and survive and shall end only when the
contrary is proved by the accused, that is,
the cheque was not issued for consideration
and in discharge of any debt or liability.
A presumption is not in itself evidence,
but only makes a prima facie case for a
party for whose benefit it exists.
19
19. The use of the phrase “until the
contrary is proved” in Section 118 of the
Act and use of the words “unless the
contrary is proved” in Section 139 of the
Act read with definitions of “may presume”
and “shall presume” as given in Section 4
of the Evidence Act, makes it at once clear
that presumptions to be raised under both
the provisions are rebuttable. When a
presumption is rebuttable, it only points
out that the party on whom lies the duty of
going forward with evidence, on the fact
presumed and when that party has produced
evidence fairly and reasonably tending to
show that the real fact is not as presumed,
the purpose of the presumption is over.
20. ……………………The accused may adduce direct
evidence to prove that the note in question
was not supported by consideration and that
there was no debt or liability to be
discharged by him. However, the court need
not insist in every case that the accused
should disprove the non-existence of
consideration and debt by leading direct
evidence because the existence of negative
evidence is neither possible nor
contemplated. At the same time, it is clear
that bare denial of the passing of the
consideration and existence of debt,
apparently would not serve the purpose of
the accused. Something which is probable
has to be brought on record for getting the
burden of proof shifted to the complainant.
To disprove the presumptions, the accused
should bring on record such facts and
circumstances, upon consideration of which,
the court may either believe that the
consideration and debt did not exist or
their non-existence was so probable that a
prudent man would under the circumstances
of the case, act upon the plea that they
did not exist……………”
20
18. A Three-Judge Bench of this Court in Rangappa Vs.
Sri Mohan, (2010) 11 SCC 441 had occasion to
elaborately consider provisions of Sections 138 and
139. In the above case, trial court had acquitted
the accused in a case relating to dishonour of cheque
under Section 138. The High Court had reversed the
judgment of the trial court convicting the accused.
In the above case, the accused had admitted
signatures on the cheque. This Court held that where
the fact of signature on the cheque is acknowledged,
a presumption has to be raised that the cheque
pertained to a legally enforceable debt or liability,
however, this presumption is of a rebuttal nature and
the onus is then on the accused to raise a probable
defence. In Paragraph No.13, following has been laid
down:-
“13. 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. 0886322 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
21
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.”
19. After referring to various other judgments of
this Court, this Court in that case held that the
presumption mandated by Section 139 of the Act does
indeed include the existence of a legally enforceable
debt or liability, which, of course, is in the nature
of a rebuttable presumption. In paragraph No.26,
following was laid down:-
“26. In light of these extracts, we are in
agreement with the respondent claimant that
the presumption mandated by Section 139 of
the Act does indeed include the existence
of a legally enforceable debt or liability.
To that extent, the impugned observations
in Krishna Janardhan Bhat, (2008) 4 SCC 54
may not be correct. However, this does not
in any way cast doubt on the correctness of
the decision in that case since it was
based on the specific facts and
circumstances therein. As noted in the
citations, this is of course 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.”
22
20. Elaborating further, this Court held that Section
139 of the Act is an example of a reverse onus and
the test of proportionality should guide the
construction and interpretation of reverse onus
clauses on the defendant-accused and the defendantaccused cannot be expected to discharge an unduly
high standard of proof. In paragraph Nos. 27 and 28,
following was laid down:-
“27. 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 Section 138
of the Act specifies a strong criminal
remedy in relation to the dishonour of
cheques, the rebuttable presumption under
Section 139 is a device to prevent undue
delay in the course of litigation. However,
it must be remembered that the offence made
punishable by Section 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 defendant-accused
cannot be expected to discharge an unduly
high standard of proof.
28. In the absence of compelling
justifications, reverse onus clauses
usually impose an evidentiary burden and
23
not a persuasive burden. Keeping this in
view, it is a settled position that when an
accused has to rebut the presumption under
Section 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. As clarified in the
citations, 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.”
21. We may now notice judgment relied by the learned
counsel for the complainant, i.e., judgment of this
Court in Kishan Rao Vs. Shankargouda, (2018) 8 SCC
165. This Court in the above case has examined
Section 139 of the Act. In the above case, the only
defence which was taken by the accused was that
cheque was stolen by the appellant. The said defence
was rejected by the trial court. In paragraph Nos.
21 to 23, following was laid down:-
“21. In the present case, the trial court
as well as the appellate court having found
that cheque contained the signatures of the
accused and it was given to the appellant
to present in the Bank, the presumption
under Section 139 was rightly raised which
was not rebutted by the accused. The
accused had not led any evidence to rebut
24
the aforesaid presumption. The accused even
did not come in the witness box to support
his case. In the reply to the notice which
was given by the appellant, the accused
took the defence that the cheque was stolen
by the appellant. The said defence was
rejected by the trial court after
considering the evidence on record with
regard to which no contrary view has also
been expressed by the High Court.
22. Another judgment which needs to be
looked into is Rangappa v. Sri Mohan (2010)
11 SCC 441. A three-Judge Bench of this
Court had occasion to examine the
presumption under Section 139 of the 1881
Act. This Court in the aforesaid case has
held that in the event the accused is able
to raise a probable defence which creates
doubt with regard to the existence of a
debt or liability, the presumption may
fail. Following was laid down in paras 26
and 27: (SCC pp. 453-54)
“26. In light of these extracts, we
are in agreement with the respondent
claimant that the presumption
mandated by Section 139 of the Act
does indeed include the existence of
a legally enforceable debt or
liability. To that extent, the
impugned observations in Krishna
Janardhan Bhat, may not be correct.
However, this does not in any way
cast doubt on the correctness of the
decision in that case since it was
based on the specific facts and
circumstances therein. As noted in
the citations, this is of course in
the nature of a rebuttable
presumption and it is open to the
accused to raise a defence wherein
the existence of a legally
25
enforceable debt or liability can be
contested. However, there can be no
doubt that there is an initial
presumption which favours the
complainant.
27. 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 Section
138 of the Act specifies a strong
criminal remedy in relation to the
dishonour of cheques, the rebuttable
presumption under Section 139 is a
device to prevent undue delay in the
course of litigation. However, it
must be remembered that the offence
made punishable by Section 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
defendant-accused cannot be expected
to discharge an unduly high standard
of proof.”
23. No evidence was led by the accused. The
defence taken in the reply to the notice
that cheque was stolen having been rejected
by the two courts below, we do not see any
basis for the High Court coming to the
conclusion that the accused has been
successful in creating doubt in the mind of
the Court with regard to the existence of
the debt or liability. How the presumption
26
under Section 139 can be rebutted on the
evidence of PW 1, himself has not been
explained by the High Court.
22. The above case was a case where this Court did
not find the defence raised by the accused probable.
The only defence raised was that cheque was stolen
having been rejected by the trial court and no
contrary opinion having been expressed by the High
Court, this Court reversed the judgment of the High
Court restoring the conviction. The respondent
cannot take any benefit of the said judgment, which
was on its own facts.
23. We having noticed the ratio laid down by this
Court in above cases on Sections 118(a) and 139, we
now summarise the principles enumerated by this Court
in following manner:-
(i) Once the execution of cheque is
admitted Section 139 of the Act
mandates a presumption that the
cheque was for the discharge of any
debt or other liability.
27
(ii) The presumption under Section 139 is
a rebuttable presumption and the
onus is on the accused to raise the
probable defence. The standard of
proof for rebutting the presumption
is that of preponderance of
probabilities.
(iii) To rebut the presumption, it is open
for the accused to rely on evidence
led by him or accused can also rely
on the materials submitted by the
complainant in order to raise a
probable defence. 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 they rely.
(iv) That it is not necessary for the
accused to come in the witness box
in support of his defence, Section
28
139 imposed an evidentiary burden
and not a persuasive burden.
(v) It is not necessary for the accused
to come in the witness box to
support his defence.
24. Applying the preposition of law as noted above,
in facts of the present case, it is clear that
signature on cheque having been admitted, a
presumption shall be raised under Section 139 that
cheque was issued in discharge of debt or liability.
The question to be looked into is as to whether any
probable defence was raised by the accused. In
cross-examination of the PW1, when the specific
question was put that cheque was issued in relation
to loan of Rs.25,000/- taken by the accused, the PW1
said that he does not remember. PW1 in his evidence
admitted that he retired in 1997 on which date he
received monetary benefit of Rs. 8 lakhs, which was
encashed by the complainant. It was also brought in
the evidence that in the year 2010, the complainant
entered into a sale agreement for which he paid an
29
amount of Rs.4,50,000/- to Balana Gouda towards sale
consideration. Payment of Rs.4,50,000/- being
admitted in the year 2010 and further payment of loan
of Rs.50,000/- with regard to which complaint No.119
of 2012 was filed by the complainant, copy of which
complaint was also filed as Ex.D2, there was burden
on the complainant to prove his financial capacity.
In the year 2010-2011, as per own case of the
complainant, he made payment of Rs.18 lakhs. During
his cross-examination, when financial capacity to pay
Rs.6 lakhs to the accused was questioned, there was
no satisfactory reply given by the complainant. The
evidence on record, thus, is a probable defence on
behalf of the accused, which shifted the burden on
the complainant to prove his financial capacity and
other facts.
25. There was another evidence on the record, i.e.,
copy of plaint in O.S. No. 148 of 2011 filed by the
complainant for recovery of loan of Rs. 7 lakhs given
to one Balana Gouda in December, 2009. Thus, there
was evidence on record to indicate that in December,
2009, he gave Rs.7 lakhs in sale agreement, in 2010,
30
he made payment of Rs.4,50,000/- towards sale
consideration and further he gave a loan of
Rs.50,000/- for which complaint was filed in 2012 and
further loan of Rs.6 lakhs in November, 2011. Thus,
during the period from 2009 to November, 2011, amount
of Rs.18 lakhs was given by the complainant to
different persons including the accused, which put a
heavy burden to prove the financial capacity when it
was questioned on behalf of the accused, the accused
being a retired employee of State Transport
Corporation, who retired in 1997 and total retirement
benefits, which were encashed were Rs.8 lakhs only.
The High Court observed that though the complainant
is retired employee, the accused did not even suggest
that pension is the only means for survival of the
complainant. Following observations were made in
Paragraph 16 of the judgment of the High Court:-
“16. Though the complainant is retired
employee, the accused did not even suggest
that pension is the only means for survival
of the complainant. Under these
circumstances, the Trial Court’s finding
that the complainant failed to discharge
his initial burden of proof of lending
capacity is perverse.”
31
26. There is one more aspect of the matter which also
needs to be noticed. In the complaint filed by the
complainant as well as in examination-in-chief the
complainant has not mentioned as to on which date,
the loan of Rs.6 lakhs was given to the accused. It
was during cross-examination, he gave the date as
November, 2011. Under Section 118(b), a presumption
shall be made as to date that every negotiable
instrument was made or drawn on such date.
Admittedly, the cheque is dated 27.02.2012, there is
not even a suggestion by the complainant that a post
dated cheque was given to him in November, 2011
bearing dated 27.02.2012. Giving of a cheque on
27.02.2012, which was deposited on 01.03.2012 is not
compatible with the case of the complainant when we
read the complaint submitted by the complainant
especially Para 1 of the complaint, which is
extracted as below:-
“1. The accused is a very good friend of
the complainant. The accused requested the
Complainant a hand loan to meet out urgent
and family necessary a sum of Rs.6,00,000/-
(Rupees Six Lakh) and on account of long
standing friendship and knowing the
difficulties, which is being faced by the
32
accused the complainant agreed to lend hand
loan to meet out the financial difficulties
of the accused and accordingly the
Complainant lend hand loan Rs.6,00,000/-
(Rupees Six Lakh) dated 27.02.2012 in favour
of the Complainant stating that on its
presentation it will be honored. But to the
surprise of the Complainant on presentation
of the same for collection through his Bank
the Cheque was returned by the Bank with an
endorsement “Funds Insufficient” on 01-03-
2012.”
27. Thus, there is a contradiction in what was
initially stated by the complainant in the complaint
and in his examination-in-chief regarding date on
which loan was given on one side and what was said in
cross-examination in other side, which has not been
satisfactorily explained. The High Court was unduly
influenced by the fact that the accused did not reply
the notice denying the execution of cheque or legal
liability. Even before the trial court, appellantaccused has not denied his signature on the cheque.
28. We are of the view that when evidence was led
before the Court to indicate that apart from loan of
Rs.6 lakhs given to the accused, within 02 years,
amount of Rs.18 lakhs have been given out by the
33
complainant and his financial capacity being
questioned, it was incumbent on the complainant to
have explained his financial capacity. Court cannot
insist on a person to lead negative evidence. The
observation of the High Court that trial court’s
finding that the complainant failed to prove his
financial capacity of lending money is perverse
cannot be supported. We fail to see that how the
trial court’s findings can be termed as perverse by
the High Court when it was based on consideration of
the evidence, which was led on behalf of the defence.
This Court had occasion to consider the expression
“perverse” in Gamini Bala Koteswara Rao and others
Vs. State of Andhra Pradesh through Secretary, (2009)
10 SCC 636, this Court held that although High Court
can reappraise the evidence and conclusions drawn by
the trial court but judgment of acquittal can be
interfered with only judgment is against the weight
of evidence. In Paragraph No.14 following has been
held:-
“14. We have considered the arguments
advanced and heard the matter at great
length. It is true, as contended by Mr Rao,
that interference in an appeal against an
34
acquittal recorded by the trial court
should be rare and in exceptional
circumstances. It is, however, well settled
by now that it is open to the High Court to
reappraise the evidence and conclusions
drawn by the trial court but only in a case
when the judgment of the trial court is
stated to be perverse. The word “perverse”
in terms as understood in law has been
defined to mean “against the weight of
evidence”. We have to see accordingly as to
whether the judgment of the trial court
which has been found perverse by the High
Court was in fact so.”
29. High Court without discarding the evidence, which
was led by defence could not have held that finding
of trial court regarding financial capacity of the
complainant is perverse. We are, thus, satisfied
that accused has raised a probable defence and the
findings of the trial court that complainant failed
to prove his financial capacity are based on evidence
led by the defence. The observations of the High
Court that findings of the trial court are perverse
are unsustainable. We, thus, are of the view that
judgment of the High Court is unsustainable.
35
30. In result, the appeal is allowed and the judgment
of the High Court is set aside and that of the trial
court is restored.
......................J.
(ASHOK BHUSHAN )
......................J.
(K.M. JOSEPH )
New Delhi,
April 09, 2019.
36
