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2020 DIGILAW 325 (CAL)

K. Bhoopathy v. Sushanta Saha

2020-03-02

HARISH TANDON

body2020
JUDGMENT Harish Tandon, J. - Both the criminal appeals are taken up together as common question of law is raised therein. Apart from the same both the appeals have been filed by a common appellant against a common respondent under section 138 of the Negotiable Instrument Act, 1881 on dishonour of several cheques issued in discharge of alleged debt of the liabilities. 2. Fundamentally, two legal points have evolved. Firstly, the presumption raised under Section 139 of the Negotiable Instrument Act, 1881 is restricted to the debt or other liability and not on legally enforceable debt or the liability. Secondly, is it obligatory on the part of an accused to lead an evidence of rebuttal which is opposed to the right of innocence provided under the criminal jurisprudence. 3. Both the appeals have a common thread of facts and narration of one would suffice to addressing the issues raised in the instant appeals. Two separate complaint cases were filed by the appellant alleging dishonour of cheque issued by the respondent for the debt duly acknowledged upon execution of a promissory note. The complainant is engaged in a business of pharmaceutical goods and carrying on such business in the name and style 'M/s Shri Krishna Pharmacy'. The accused is running a retail pharmaceutical shop in the name and style of 'M/s Priya Medical Store' and the transaction between the parties ensued as far back as in the year 2005. Because of the long business association, the closeness was developed and the friendship grew which led the complainant/appellant to supply goods on credit. Because of such closeness sometimes the complainant also accommodated the accused/respondent with the loan which were repaid on some of the occasions. However, it was subsequently detected that there is a due, to the tune of Rs. 18,00,000/-, both on account of supply of pharmaceutical goods and the accumulated loan and the demand was raised by the complainant/appellant for repayment thereof. Subsequently, the accused/respondent executed a promissory note before a Notary Public on 17.03.2012 which contemplates the liquidation of the outstanding debt in three instalments. Several cheques were issued as security for due payment of the instalments with an understanding that in the event of default, the same can be realised therefrom. Two such cheques covering an amount of Rs. Subsequently, the accused/respondent executed a promissory note before a Notary Public on 17.03.2012 which contemplates the liquidation of the outstanding debt in three instalments. Several cheques were issued as security for due payment of the instalments with an understanding that in the event of default, the same can be realised therefrom. Two such cheques covering an amount of Rs. 3,00,000/- issued for the first instalment was presented to the bank where the complainant has its account but return un-cashed with the remark 'exceeds arrangement'. The notice was issued in terms of Section 138 of the said Act and on failure to discharge his liability the proceeding was initiated before the Judicial Magistrate. Subsequently, the accused defaulted in payment of the second and third instalments and the cheques issued in this regard were also presented and re- presented, but on each occasion were dishonoured with the remarks 'exceeds arrangements'. The statutory notice though served upon the accused/respondent, was not replied to and it appears that there was a delay of 16 days in presenting the complaint before the learned Judicial Magistrate. There was prayer for condonation of such delay which was, in fact, condoned and the process was initiated in both the matters. 4. The accused/respondent took a defence that he never took a loan from the complainant nor there is any outstanding amount in respect of a transaction entered into between them. It is a specific stand of the accused/respondent that the medicine used to be supplied by the complainant and the payments were made and recorded in a register maintained by him and the moment the objection was raised to the supplied goods which has a shorter expiry date the complainant stopped supplying the goods. It is, thus, stated that the business relation between the accused and the complainant did not resume as the accused is securing the pharmaceutical goods from the other whole sellers. On the factum of the promissory note, the accused stated that the complainant on the alleged date of accusation came with 4/5 people and forcibly taken him in presence of three persons who came for a courtesy visit to the Notary Public and got him signed on the paper without permitting him to peruse the contents thereof. On the factum of the promissory note, the accused stated that the complainant on the alleged date of accusation came with 4/5 people and forcibly taken him in presence of three persons who came for a courtesy visit to the Notary Public and got him signed on the paper without permitting him to peruse the contents thereof. The defence of the accused further proceeds that despite the aforesaid incident persistent requests were made to return the cheques as there was no due, but the complainant did not pay heed to it and to his utter surprise, a notice was received under Section 138 of the Negotiable Instruments Act. 5. On the conspectus of the aforesaid stand taken before the learned Judicial Magistrate both the complainant and the accused deposed in support thereof. Apart from the accused having deposed, two witnesses were also called for to corroborate the fact that the complainant took the accused from his shop and thereafter on return the accused divulged that he was forced to sign on a paper before the Notary Public without knowing the contents thereof. 6. When the complaint ripe for a final decision, the Learned Judicial Magistrate not only dismissed the same disbelieving the case of the complainant, but also granted liberty to the accused/respondent to set in motion a criminal case against him for abduction and user of force in obtaining the signature on the false pro-note. The learned Judicial Magistrate held that the presumption under Section 139 of Act is restricted to a presumption of a debt or other liabilities but it does not raises any presumption of legally enforceable debt on liability by relying upon a judgment of Supreme Court in case of Krishna Janardhan Bhat vs. Dattatrtya G. Hegde , reported in (2008) 4 SCC 54 . It is further held that the non-compliance of the provision contained under Section 190 of the Code of Criminal Procedure is fatal and, therefore, the complaint is not maintainable in the eye of law. The Magistrate, however, found that the stand of accused cannot be disbelieved for the simple reason that a person who was a salesman in a pharmaceutical company cannot built an empire within a short span of time and became a giant supplier and distributor of government order supplies unless he is indulged in use of illegal activities. 7. The Magistrate, however, found that the stand of accused cannot be disbelieved for the simple reason that a person who was a salesman in a pharmaceutical company cannot built an empire within a short span of time and became a giant supplier and distributor of government order supplies unless he is indulged in use of illegal activities. 7. I will deal with the findings recorded on the assimilation of the facts stated in the complaint as well as in response thereto and also the evidence of the respective witnesses, later on but, the point relating to the mandatory compliance of Section 190 of the Cr.P.C and the statutory presumption under section 139 of the Act, that too, to what extent are required to be considered and dealt with, at first. 8. Section 190 of the Cr.P.C. postulates taking of the cognizance of the offences by the Magistrate of First Class upon receiving the complaint of facts, upon police report of such facts and/or upon information received from any person other than the police officer or upon his own knowledge that such offence has been committed. The Chief Judicial Magistrate may also empower any Magistrate of Second Class to take cognizance under the aforesaid provisions as are within his competence to inquire into or try. The cognizance is of indefinite import which means being aware of and once it is used in the Court of law, it can be attributable to the judicial notice or judicial awareness of the facts. There is no prescribed form nor the ritual way of recording that the cognizance has been taken. It can even be presumed or in other way be in existence, the moment, the Magistrate have decided to initiate a proceeding and proceed thereupon. The enlightening observations on concept of cognizance may be recapitulated from a judgment of the Supreme Court rendered in the case of S.K.Sinha Vs. Videocon International Limited and others reported in (2008) 2 SCC 492 , wherein it is held that though the cognizance is sine qua non or condition precedent for holding a valid trial which is not taken of an offender but of an offence, it does not involve any formal action of any kind. It is further held that it occurs as soon as the Magistrate applies his mind to a suspected commission of an offence. It is further held that it occurs as soon as the Magistrate applies his mind to a suspected commission of an offence. It would be relevant to quote the observations made in paragraph 12 of the said judgment which runs thus:- '12. Chapter XV (Sections 200-203) relates to 'Complaints to Magistrates' and covers cases before actual commencement of proceedings in a court or before a Magistrate. Section 200 of the Code requires a Magistrate taking cognizance of an offence to examine the complainant and his witnesses on oath. Section 202, however, enacts that a Magistrate is not bound to issue process against the accused as a matter of course. It enables him before the issue of process either to inquire into the case himself or direct an investigation to be made by a police officer or by such other person as he thinks fit for the purpose of deciding whether there is sufficient ground for proceeding further. The underlying object of the inquiry under Section 202 is to ascertain whether there is prima facie case against the accused. It thus allows a Magistrate to form an opinion whether the process should or should not be issued. The scope of inquiry under Section 202 is, no doubt, extremely limited. At that stage, what a Magistrate is called upon to see is whether there is sufficient ground for proceeding with the matter and not whether there is sufficient ground for conviction of the accused.' 9. I had an occasion to peruse the lower Court records and found that by an order dated 7 th March, 2013, the Magistrate, in express terms, recorded that on perusal of the complaint petition, documents, notice and the initial depositions made by the complainant under section 200 of the Cr.P.C., there are sufficient grounds to proceed against the accused person under section 138 of the Negotiable Instruments Act, 1881. The learned Magistrate appears to have overlooked the order passed by his predecessor and surreptitiously jumped into the conclusion that since there was no ritual form of recording as to taking of cognizance, it acts as deterrent in proceeding with the complaint case. Such finding, in my view, is perverse, inasmuch as, in contradiction with the aforesaid order passed in the said proceeding. Such finding, in my view, is perverse, inasmuch as, in contradiction with the aforesaid order passed in the said proceeding. In view of the aforesaid undisputed facts, I do not want to detain myself any further on such perversity which is patent on the face of the record. 10. There has been a considerable debate on the interpretation of the provision contained under section 139 of the said Act which propels a statutory presumption to be raised on a debt or other liability in favour of the holder of a cheque. The learned Magistrate was emboldened with the judgment of the Supreme Court rendered in case of Krishna Janardhan Bhat (supra) wherein it is held that the presumption under section 139 of the Act is raised for a discharge of the debt of or other liability, but not on legally enforceable debt or other liabilities. 11. The Apex Court also held that the presumption of the innocence is a human right and an accused cannot be compelled to prove his innocence by adducing evidence in support thereof. The learned Magistrate proceeded to dismiss the said application as the burden heavily lies on the complainant to prove the legally enforceable debt which cannot be shifted upon the accused by raising a statutory presumption in this regard. 12. The two Judge Bench decision in Krishna Janardhan Bhat(supra) came up for consideration before the Three Judge Bench in case of Rangappa Vs. Sri Mohan, reported in (2010) 11 SCC 441 , wherein it is held that the presumption under section 139 of the Act is mandatory and the moment the holder of the cheque have complained of a breach of the conditions enshrined under section 138 of the Act, the initial onus is discharged. It, thus, shifts on the accused to rebut the presumption. It is further held that the legislative intent underlying the incorporation of section 139 of the Act is based upon a reverse onus and it would be preposterous to suggest that such statutory presumption is static. Even if the statutes makes a thing of state of thing or facts to be presumed in a mandatory form, yet, it is rebuttable and, such presumption shall get obliterated on the degree of the evidence adduced in support of such rebuttal. Even if the statutes makes a thing of state of thing or facts to be presumed in a mandatory form, yet, it is rebuttable and, such presumption shall get obliterated on the degree of the evidence adduced in support of such rebuttal. The Three Judge Bench further propounded that the offence under section 138 of the Act is largely in the nature of the a civil disputes having a drastic effect on the commercial transactions and, therefore, the basic purpose behind the incorporation of sections 138 to 142 of the Act would get frustrated. While agreeing with the proposition that section 139 of the Act is restricted to a statutory presumption on debt or other liabilities and not on legally enforceable debt or liability, yet, the ordinary concept that the accused owe no responsibility or liability to adduce evidence against himself was not accepted and the Apex Court highlighted the concept of the probability in case of rebuttal in these words:- '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 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. 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 or proof. 28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and 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.' 13. However, in a recent decision delivered in a case of T.P. Murugan vs. Bojan reported in (2018) 8 SCC 469 , the Apex Court succinctly held that the moment the cheque is signed and issued in favour of a holder, under Section 139 of the Act raises a statutory presumption on the discharge of a legally enforceable debt in the following : '21. We have heard the Senior Counsel for both parties, and perused the record. Under Section 139 of the NI Act, once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability. This presumption is a rebuttable one, if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan. This presumption is a rebuttable one, if the issuer of the cheque is able to discharge the burden that it was issued for some other purpose like security for a loan. 22 In the present case, the respondent has failed to produce any credible evidence to rebut the statutory presumption. This would be evident from the following circumstances; 22.1 The respondent-accused issued a pronote for the amount covered by the cheques, which clearly states that it was being issue for a loan; 22.2 The defence of the respondent that he had allegedly issued 10 blank cheques in 1995 for repayment of a loan, has been disbelieved both by the trial court and Session Court , on the ground that the respondent did not ask for return of the cheques for a period of seven years from 1995. This defence was obviously a cover-up, and lacked credibility, and hence was rightly discarded. 22.3. The letter dated 9-11-2002 was addressed by the respondent after he had issued tow cheques on 7-8-2002 for Rs. 37,00,000 and Rs. 14,00,000 knowing fully well that he did not have sufficient funds in his account. The letter dated 9- 11-2002 was an afterthought, and was written to evade liability. This defence also lacked credibility, as the appellants had never asked for return of the alleged cheques for seven years. 22.4. The defence of the respondent that the pronote dated 7-8- 2002 signed by him, was allegedly filled by one Mahesh DW 2, an employee of N.R.R. Finances, was rejected as being false. DW 2 himself admitted in his cross-examination, that he did not file any document to prove that he was employed in N.R.R. Finances. On the contrary, the appellant complainants produced PW 2 and PW 4, Directors of N.R.R. Finance Investment Pvt. Ltd., and PW 3, a Member of N.R.R. Chit funds, who deposed that DW 2 was never employed in N.R.R. Finances. 23. The appellants have proved their case by overwhelming evidence to establish that the two cheques were issued towards the discharge of an existing liability and legally enforceable debt. The respondent having admitted that the cheques and pronote were signed by hi, the presumption under Section 139 would operate. The respondent failed to rebut the presumption by adducing any cogent or credible evidence. Hence, his defence is rejected.' (emphasis supplied) 14. The respondent having admitted that the cheques and pronote were signed by hi, the presumption under Section 139 would operate. The respondent failed to rebut the presumption by adducing any cogent or credible evidence. Hence, his defence is rejected.' (emphasis supplied) 14. In the above report, the fact appears to be somewhat identical to the facts involved in the instant case. In the said report, the promissory note was issued in discharge of a loan and a plea was taken that the same was not issued to the complainant. The Apex Court did not find such defence to be plausible and allowed the application under Section 138 of the Negotiable Instruments Act. 15. What emerged from the aforesaid decision is that Section 139 of the Act raises a statutory presumption in favour of the holder of the negotiable instrument in discharge of the debt or other liability though it may not in all conceivable circumstances be in discharge of the legally enforceable debt or other liability and, therefore, depends upon the special facts involved in the given case. Even if the statutory presumption is raised by use of the word 'shall presume', it does not take away the right of a person against whom the same is presumed to rebut the same. It is, thus, a rebuttable presumption as in a case of an ordinary presumption. 16. However, the degree of evidence in rebuttal varies as in case of a statutory presumption, the accused has to lead the case which appears to be probable, plausible and reasonable from a prudent man which may not be so strict in case of a rebuttal of an ordinary presumption. 17. Furthermore, Section114(1)(a) of the Evidence Act also raises the presumption on the negotiable instrument including the promissory note on consideration and it is, thus, a foremost duty of the person against whom such presumption is raised to lead an evidence in rebuttal. 18. The cases covered under Section 138 of the Act, though attracts a criminal liability as well, but should not be decided on a strict principle of proving the offence beyond the reasonable doubt but should be judged on the preponderance of probability, more particularly, in case of a rebuttal. 19. 18. The cases covered under Section 138 of the Act, though attracts a criminal liability as well, but should not be decided on a strict principle of proving the offence beyond the reasonable doubt but should be judged on the preponderance of probability, more particularly, in case of a rebuttal. 19. On the enunciation of law as stated above, let me see, whether the evidence of the accused in rebuttal successfully rebuts the presumption raised under Section 139 of the said Act. The transactions between the parties are not disputed. It is rather admitted by the accused that he used to buy a pharmaceutical goods from the complainant being a wholesaler/distributor of a pharmaceutical company and used to make payments. It is also undisputed that the price of the goods were paid initially and because of a cordial relationship having developed, such goods were bought on credit. The accused has stated in the deposition that such payments used to be recorded in a register maintained by the complainant. But, there is no document forthcoming that moment the demand for a price of the goods sold and delivered was made by the complainant, any letter or communication was made raising such facts. The plea of the promissory note having obtained by force does not instill any confidence that it has any semblance truth in it. Though the accused has said that he was forced to leave his shop as the complainant came with four or five persons in presence of the two witnesses cited in this regard but there is no follow up action taken by him either by lodging a complaint or otherwise. There was a complete silence on the part of the accused. Even after the service of statutory notice under Section 138 of the Negotiable Instruments Act, the same was admittedly not responded. The accused categorically admitted the signature appearing in the promissory note and also the photograph affixed therein but attempted to get away with it by saying that the same was obtained by force. 20. Per arguendo, the story set up by the accused is believed, one may be forced to sign on the document but the availability of the photograph and affixation thereof in a document appears to be improbable. 20. Per arguendo, the story set up by the accused is believed, one may be forced to sign on the document but the availability of the photograph and affixation thereof in a document appears to be improbable. Apart from the same, the promissory note contains a specific averment that the several cheques are also given to the complainant to secure the default of any of the instalments, if committed, and the signature on each of the cheques have not been denied. If the story of undated cheque in a commercial transaction is disbelieved, it will not bring a confidence in the traders nor shall be conducive for a healthy business in commercial trades. 21. Admittedly, the cheques, on being presented, were dishonoured with the remark 'exceeds arrangement' meaning thereby there were no sufficient balance therein to cover the said amount and, therefore, it satisfies the ingredients of Section 138 of the Act. 22. The evidence of rebuttal is neither probable nor plausible in the perspective of a prudent man and I am, therefore, amazed how the learned Magistrate have found fault into such transactions. 23. The order impugned, therefore, suffers from infirmity and/or illegality and the same is hereby set aside. 24. The accused is found guilty of commission of offence punishable under Section 138 of the Negotiable Instruments Act. The accused is directed to pay a sum of Rs.25,00,000.00 (Rupees Twenty five lakhs only) to the complainant/appellant as fine/compensation within two months from date. In default, he will undergo simple imprisonment for a term of one and half years. 25. The accused shall surrender before the Judicial Magistrate First Class-I, Port Blair within seven days from date of expiry of the period for payment of compensation/fine. In default, the concerned Judicial Magistrate shall take appropriate steps in accordance with law. 26. Both the appeals are, accordingly, allowed. Let the copy of this order be sent to the learned Court below immediately.