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2003 DIGILAW 1159 (BOM)

Girish Kantappa Shetty v. State of Maharashtra

2003-11-11

A.S.AGUIAR

body2003
JUDGMENT - AGUIAR A.S., J.:---The matter was taken up for final hearing as notices were issued to the respondents that the matter would be taken up for final hearing at the admission stage despite the R P not being called for. The parties have produced, by consent the copies of the R P including the testimony of the witnesses on which they have relied. 2.This is an appeal from the judgment and order dated 10th February, 2003 passed by the Vth Joint Judicial Magistrate, First Class, Thane acquitting the accused Suresh S. Shetty of the offence punishable under section 138 of the Negotiable Instruments Act holding that the complainant Girish Shetty had failed to prove his case beyond reasonable doubt. 3.Briefly, the case of the complainant is that the accused who is the proprietor of the Hotel Sairaj at Mulund had approached the complainant and requested him for a friendly loan of Rupees Three Lakhs. The complainant have the said friendly loan of Rupees Three Lakhs to the accused in cash and in repayment of the said loan amount the accused issued Cheque No. 142399 dated 19-11-1998 drawn on Dena Bank, Mulund for Rupees Three Lakhs in favour of the complainant. The complainant deposited the said cheque with his bankers Vijaya Bank but the same was dishonoured and returned with the endorsement "payment stopped". He was informed of this by bank memo dated 23-11-1988. Thereupon, the complainant issued a notice through his Advocate calling upon the accused to pay the sum of Rupees Three Lakhs within 15 days from the date of receipt of the notice. The accused, however, despite receiving the said notice failed to comply with the same and on the contrary sent a reply to the complainant alleging that the said cheque was stolen by the complainant. Thereupon, the complaint came to be filed before the said Judicial Magistrate under section 138 of the Negotiable Instruments Act. The charge was framed against the accused on 21-11-2002, Exh. 60. The charge was read over and explained to the accused. He pleaded not guilty and claimed to be tried. After recording of evidence statement of the accused under section 313 Cri.P.C. was recorded (Exh. 65). The defence of the accused is one of total denial. However, the accused has led no evidence in his defence. 4.The complainant in support of his complaint has examined himself as P.W. 1 (Exh. He pleaded not guilty and claimed to be tried. After recording of evidence statement of the accused under section 313 Cri.P.C. was recorded (Exh. 65). The defence of the accused is one of total denial. However, the accused has led no evidence in his defence. 4.The complainant in support of his complaint has examined himself as P.W. 1 (Exh. 37) and had deposed to the facts stated in his complaint. He was cross-examined by the defence at length. In his cross-examination, various suggestions regarding his income were asked. He was also asked details of the alleged loan given by him to the accused. Questions were also put about the time when the accused gave the complainant the cheque in repayment of the loan amount. The complainant in his examination in chief had stated that the cheque was returned by the bankers for the reason "not arranged for". The complainant also admitted in his cross-examination that he has not sent any rejoinder to the reply of the accused to the notice under section 138 of the Negotiable Instruments Act. 5.The complainant has also examined P.W. 2 as Sudhir Bagaitake an employee of the bank who proved bank memo dated 23-11-1998. Exh. 54, P.W. 2 has also stated that Exh. 38 is his banks cheque and that by memo Exh. 54 they informed the Vijaya Bank Thane that the cheque was dishonoured due to remark "stop payment". P.W. 2 also produced the statement of Current Account No. 126038 of the accused for the period 2-11-1999 to 16-11-1999 and has stated that no amount to the extent of Rupee Three Lakhs was credit to the said account of accused during the said period. The bank statement is on record as Exh. 53. 6.The complainant also examined P.W. 3 Padmanabhan Shetty uncle of the complainant, Exh. 59. However, on the application of Advocate for the accused and with the consent of the complainants Advocate the evidence of P.W. 3 was excluded. 7.It is the case of the complainant that the accused has admitted that cheque drawn on Dena Bank, Mulund Branch is signed by, that the said cheque Exh. 59. However, on the application of Advocate for the accused and with the consent of the complainants Advocate the evidence of P.W. 3 was excluded. 7.It is the case of the complainant that the accused has admitted that cheque drawn on Dena Bank, Mulund Branch is signed by, that the said cheque Exh. 38 was deposited by the complainant in Vijaya Bank account and that after dishonour of the cheque the complainant sent a notice to the accused, that the accused has duly received the said notice and replied to it and that the accused has duly received the said notice and replied to it and that the accused failed to repay the said amount to the complainant. Thus according to the complainant the ingredients of section 138 of the Negotiable Instruments Act are made out. He also pointed out that accused had given undertakings at Exhs. 9, 10, 11 and 18 admitting his liability. It is the contention of the accused that these undertaking were given by the accused under pressure of the complainant. Moreover, it is pointed out that despite the alleged breach of the undertaking, further, no legal action was initiated by the complainant against the accused for breach of the undertakings. 8.Briefly, it is the case of the complainant that the accused having admitted his signature on the alleged cheque Exh. 38 has thereby admitted his liability. Reliance is placed on section 118 of the Negotiable Instruments Act which raises certain presumptions as set out in Clauses (a) to (g) of section 118. We are primarily concerned with the presumption under section 118(a) "that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, indorsed, negotiated or transferred for consideration". It is contended in view of the presumption raised under section 118 that liability of the accused is attracted. If the accused denies his liability then it is for the accused to rebut the presumption by leading cogent evidence. The complainant has also relied on section 139 of the Negotiable Instruments Act which raises a presumption in favour of the holder. If the accused denies his liability then it is for the accused to rebut the presumption by leading cogent evidence. The complainant has also relied on section 139 of the Negotiable Instruments Act which raises a presumption in favour of the holder. Section 139 of the Negotiable Instruments Act reads a follows: "It shall be presumed, unless the contrary is proved, that the holder of the 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." Thus section 118 r/w section 139 of the Negotiable Instruments Act raises a strong presumptions in favour of the complainant and it is for the accused to rebut these presumptions by leading cogent evidence. Reliance has been placed by Advocate for the appellant on following cases: 1. 2002(1) Bom.C.R. (S.C.)342 , (K.N. Beena v. Muniyappan and another)1. 2. 2000(5) Bom.C.R. (S.C.)178 (K. Bhaskaran v. Sankaran Vaidhyan Balan and another)2. 3. 2002(1) Bom.C.R. (S.C.)218 (M/s. M.M.T.C. Ltd. and another v. M/s. Medol Chemicals and Pharma (P.) Ltd. and another)3. 4. 2001(5) Bom.C.R. (S.C.)820 (Hiten P. Dalal v. Bratindranath Banerjee)4. The common conclusion to be drawn from the above said judgment is that in a complaint under section 138 of the Negotiable Instruments Act the Court has to presume that the cheque has been issued for discharge of a debt liability and that this presumption is rebuttable. However, burden to proving that the cheque has not been issued in discharge of a debt or liability is on the accused. In 2000(5) Bom.C.R. (S.C.)178 the Supreme Court in paragraph 9 observed as follows: "As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. Section 139 of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. The burden was on the accused to rebut the aforesaid." 9.In the case of M/s. M.M.T.C. Ltd. and another v. M/s. Medol Chemicals Pharma (P.) Ltd. and another reported in 2002(1) Bom.C.R. (S.C.)218 the Supreme Court has referred with approval the case of (Modi Cement Ltd. v. Kuchil Kumar Nandi)5, reported in 1999(Supp.) Bom.C.R. (S.C.)998 where in it has been held that: "Even though the cheque is dishonoured by reason of stop payment instruction an offence under section 138 could still be made out. It is held that presumption under section 139 is attracted in such a case also. The authority shows that even when the cheque is dishonoured by reason of stoop payment instructions by virtue of section 139 the Court has to presume that the cheque was received by the holder for the discharge in whole or in part of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the "stop payment" instructions was not issued because of insufficiency or paucity of funds. If the accused shows that in his account there was sufficient funds to clear the amount of the cheque for encashment of the drawer bank and that the stop payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus a Court cannot quash a complaint on this ground." Again in the case of Hiten P. Dalal v. Bratindranath Banerjee reported in 2001(5) Bom.C.R. the Supreme Court in paragraph 20 observed as follows: "............The presumption which arises under section 138 provides more specifically that where any cheque drawn by a person on an account for payment of any amount of money for the discharge in whole or in part of any debt or other liability, is returned by the drawee bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque. Such persons shall be deemed to have committed an offence and shall be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of cheque, or with both. The nature of the presumption under section 138 is subject to the three conditions specified relating to presentation, giving of the notice and the non-payment after receipt of notice by the drawer of the cheque. All three conditions have not been denied in this case." In the present case the accused has admitted the relevant facts, namely the presentations of the cheque, receipt of notice and non-payment after receipt of notice by the drawer of the cheque. The Supreme Court has observed in paragraphs 21, 22, 23 and 24 as follows: "(21) The appellants submission that the cheques were not drawn for the discharge in whole or in part of any debt or other liability" is answered by the third presumption available to the bank under section 139 of the Negotiable Instruments Act." This sections provides that: "139. 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". The effect of these presumptions is to place the evidential burden on the appellant of proving that the cheque was not received by the bank towards the discharge of any liability." "(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, as noted in (State of Madras v. A. Vaidyanatha Iyer)6, A.I.R. 1958 S.C. 61 it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of presumption had been established. It introduces an exception to the general Rules as to the burden of proof in criminal cases and shifts the onus on 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. It introduces an exception to the general Rules as to the burden of proof in criminal cases and shifts the onus on 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 possibility of the non-existence of the presumed fact." "(23). In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the Court but to draw the statutory conclusion but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. 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 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 or reasonability being that of the "prudent man". "(24). Judicial statements have differed as to the quantum of rebutting evidence required. In (Kundan Lal Rallaram v. Custodian, Evacuee Property, Bombay)7, A.I.R. 1961 S.C. 1316 this Court held that the presumption of law under section 118 of the Negotiable Instruments Act could be rebutted, in certain circumstances, by a presumption of Act. The decision must be limited to the facts of that case. In (Kundan Lal Rallaram v. Custodian, Evacuee Property, Bombay)7, A.I.R. 1961 S.C. 1316 this Court held that the presumption of law under section 118 of the Negotiable Instruments Act could be rebutted, in certain circumstances, by a presumption of Act. The decision must be limited to the facts of that case. The more authoritative view has been laid down in the subsequent decision of the Constitution Bench in (Dhanvantrai Balwantrai Desai v. State of Maharashtra)8, A.I.R. 1964 S.C. 575 where this Court reiterated the principle enunciated in State of Madras v. Vaidyanatha Iyer and clarified that the distinction between the two kinds of presumption lay not only in the mandate to the Court, but also in the nature of evidence required to rebut the two. In the case of a discretionary presumption, the presumption if drawn may be rebutted by an explanation which "might" reasonably be true and which is consistent with the innocence" of the accused. On the other hand in the case of mandatory presumption. "The burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under section 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words "unless the contrary is proved" which occur in this provision make it clear that the presumption has to be rebutted by "proof" and not by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted." The facts and conditions necessary for drawing presumption under section 138 are in existence. The accused has admitted the presentation of the cheque, the receipt of notice and non-payment after receipt of the notice by the drawer of the cheque. It is thus contended that in view thereof the case against the accused is made out and is therefore liable to be punished under section 138 of the Negotiable Instruments Act. The accused has admitted the presentation of the cheque, the receipt of notice and non-payment after receipt of the notice by the drawer of the cheque. It is thus contended that in view thereof the case against the accused is made out and is therefore liable to be punished under section 138 of the Negotiable Instruments Act. 10.However, the accused claims that the complainant has not proved his case and that the presumption raised against him have been duly rebutted. Although the accused had not led any direct evidence on his own to rebut the presumption, it is however claimed that circumstances and facts have been brought on record in the cross-examination of the complainant which go to show that it cannot be accepted that the complainant could have advanced any loan in favour of accused. It is pointed out that the complainant at the time when the loan is alleged to have been given by him to the accused had no income. He was an articled clerk in a firm of C.A. since 1994 and completed his C.A. only in May, 2001. The loan transaction took place sometime in 1998. During his article ship the complainant had no income. This has been brought out in his cross-examination. The said loan amount is alleged to have been given by the complainant in cash. It has also been brought out in his cross-examination that as a C.A. he is aware that every payment of more than Rs. 25,000/- must be paid by cheque and therefore he could not have advanced this amount to the accused by cash. Complainant has also stated in cross-examination that he has not filed income tax returns for the financial year 1998-99. He has further admitted that in the legal notice issued by him to the accused it was not mentioned in which year he had given the friendly loan of Rupees three lakhs to the accused. The said fact is also not mentioned in the complaint nor has the complainant stated so in his examination in chief. It is also brought out in his cross-examination that he has not mentioned in his notice or complaint or in examination in chief when the accused issued the disputed cheque to him. The said fact is also not mentioned in the complaint nor has the complainant stated so in his examination in chief. It is also brought out in his cross-examination that he has not mentioned in his notice or complaint or in examination in chief when the accused issued the disputed cheque to him. Further he has admitted that the notice has not mentioned when and why he has given Rupees three lakhs as loan to the accused in the presence of his uncle Padmanabhan. Thus from the cross-examination of complainant it is clear that the complainant has failed to show that he has advanced Rupees three lakhs to the accused. Again, in his further cross-examination complainant has admitted that he received reply to the notice from the accused and was therefore aware that the accused had disputed that the cheque was issued in his favour and that the accused had alleged that it was stolen and that the complainant has misused the same. Further, and more pertinently, the complainant has admitted in his cross-examinations that he has not send any rejoinder to the reply sent by the accused to his notice under section 138 of the Negotiable Instruments Act. He further admitted that he did not sent reply to Exh. 47 as he did not feel it necessary. 11.Failure on the part of the complainant to rejoin to the reply sent by the accused wherein the accused has specifically denied having issued the cheque and alleged that the cheques were stolen from his office and misused by the complainant would require adverse inference to be drawn against the complainant. When such serious allegations were made the natural reaction of the complainant would have been to vehemently deny that the cheques were stolen and forged and fabricated by him and to have sent a rejoinder threatening the accused with legal action. Further, it is the case of the accused that when he came to know that the cheques were missing from the cheque book he immediately by letter dated 9-11-1998 informed the Branch Manager of the bank regarding the misplacement of the cheque and requested him to stop payment of the said cheque. These facts have been stated by the accused in his Advocates letter in reply to the complainants statutory notice under section 138 of the Negotiable Instruments Act. These facts have been stated by the accused in his Advocates letter in reply to the complainants statutory notice under section 138 of the Negotiable Instruments Act. In the said reply, the respondent has denied that the complainant had advanced any loan to him. In the said reply he has further alleged that he found two cheques No. 126030. Dena Bank, Mulund Branch missing from his cheque book and on coming to know about the same he immediately wrote a letter dated 9-11-1998 informing the Branch Manager of the said bank in writing regarding misplacement of the said cheques and requesting to stop payment. The letter was duly received by Dena Bank on 9-11-1998 and an endorsement made by the bank that payment has been stopped on 9-11-1998. It must be pointed out this letter has not been brought on record in the evidence of the Bank Manager. However, the Bank Manager has been examined as P.W. 2. In his cross-examination, the Bank Manager has admitted that on receiving instructions on 9-11-1998 payment was stopped. 12.The respondent accused has also in his Advocates apply dated 5-12-1998 alleged that the complainant taking advantage of his acquaintance with him has stolen the said cheques from his office with an intention of fabricating the same. This happened when the accused had gone to his native place in Karnataka State and had left the signed cheques in his office to enable the Manager to use them in day to day business. The complainant in his absence stole the said cheques and misused the same. It is surprising that the complainant despite the said serious allegation has not thought it fit to rejoin and deny the allegation that they had stolen the said cheques and forged and fabricated them. In view of the serious allegation made by the accused, it was expected that the complainant would have initiated proceedings civil and/or criminal against the accused for having made such remarks instead of just keeping quiet. His silence gives scope for drawing an inference against the complainant that the allegations made by the accused are not false and fictitious. The complainant in his evidence has admitted the receipt of reply dated 5-12-1998 and has also admitted that the accused had in the reply alleged that he has stolen the cheques. His silence gives scope for drawing an inference against the complainant that the allegations made by the accused are not false and fictitious. The complainant in his evidence has admitted the receipt of reply dated 5-12-1998 and has also admitted that the accused had in the reply alleged that he has stolen the cheques. 13.Further in his said reply dated 5-12-1998 the accused has called upon the complainant to give particulars and details regarding the loan allegedly advanced by him to the accused. However, since, no rejoinder was sent, no details of the alleged loan transaction were furnished to the accused. In his cross-examination the complainant has also admitted that he has not mentioned in the legal notice when and in which year he had given friendly loan of Rupees three lakhs to the accused. He has also admitted that this fact has not been mentioned by him in the complaint nor in examination in chief. This from the above fact it would be seen that there is serious doubt that the complainant had advanced the loan of Rupees three lakhs to the accused. The complainants in fact being a student doing his articleship of C.A. was not in position to have advanced the loan of Rupees three lakhs as he himself did not have any income. The complainant had admitted that he has not sent any rejoinder to the reply dated 5-12-1998 sent by the accused in response to his notice under section 138. The said reply make serious allegations against the complainant which the complainant chose not to refute or take any action in respect thereof. 14.Thus on an over all view of the matter it is seen that the complainant could not have advanced the loan of Rupees three lakhs in favour of the accused and the question of repayment by accused of the said by issuing cheque did not arise. 15.The facts mentioned by the accused in his reply to the notice which have remained uncontroverted on account of failure of the complainant to deny the allegations are by way of rebuttal to the presumption raised under sections 118 and 139 of the Negotiable Instruments Act. 15.The facts mentioned by the accused in his reply to the notice which have remained uncontroverted on account of failure of the complainant to deny the allegations are by way of rebuttal to the presumption raised under sections 118 and 139 of the Negotiable Instruments Act. The Supreme Court in Hiten Dalal v. Bratindranath Banerjee has held that rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the "prudent man". The Supreme Court also held in Kundan Lal Rallaram v. Custodian that the presumption of law under section 118 of the Negotiable Instruments Act could be rebutted in certain circumstances, by a presumption of fact raised under section 114 of the Evidence Act. In the context of the relationship of the complainant and the accused the allegation of the accused that the cheques were stolen from his office by the complainant and fabricated by the complainant seem to be probable. In the present case the "stop payment" instruction was not on account of paucity of funds had nothing to do with the dishonour of cheque. In fact the stop payment instruction was only on account of the fact that the cheque was not issued by the accused in discharge of any liability or debt to the complainant and that the cheque was a false, fictitious and fabricated instrument. This has been amply demonstrated by the admission in the evidence of complainant. The material brought on record in the cross-examination of complainant is sufficient to rebut the presumption under sections 138 and 139 of the Negotiable Instruments Act, 1881. Hence, the charge under section 138 of the Negotiable Instruments Act fails. -----