Cheque bounce case – burden of proof – mere non mentioning in the complaint that towards credit of grossary the accused issued empty cheques – can not be burshed aside the evidence of the Pw1 – burden of proof lies on the accused .

  1. In the present case, by examining himself as PW-1, the

complainant has discharged the initial burden cast upon him

that the cheques were issued for the rice bags purchased on

credit. With the examination of PW-1, the statutory

presumption under Section 139 of the Act arises that the

cheques were issued by the respondent-accused for the

discharge of any debt or other liability in whole or in part. The

courts below disbelieved the evidence of the complainant on

the ground that there are no averments in the complaint that

the commodities were sold for cash and that the rice bags were

sold on credit and the cheques were issued for the goods sold

on credit. Though the complaint contains no specific

averments that the cheques were issued for the purchase

made on credit, in his evidence, PW-1 clearly stated that the

cheques were issued for the commodities purchased on credit.

The courts below erred in brushing aside the evidence of PW-1

on the ground that there were no averments in the complaint as

to the purchases made by cash and purchase. The courts

below also erred in not raising the statutory presumption under

Section 139 of the Act that the complainant received the

cheques to discharge the debt or other liability in whole or in

part.

  1. It is for the respondent-accused to adduce evidence to

prove that the cheques were not supported by consideration

and that there was no debt or liability to be discharged by him.

The receipts-Ex.-22/C (colly) relied upon by the respondentaccused do not create doubt about the purchases made on

credit and the existence of a legally enforceable debt for which

the cheques were issued. The courts below erred in saying

that by the receipts-Ex.22/C (colly), the respondent-accused

has rebutted the statutory presumption raised under Section

139 of the Negotiable Instruments Act. The oral and the

documentary evidence adduced by the complainant are

sufficient to prove that it was a legally enforceable debt and that

the cheques were issued to discharge the legally enforceable

17

debt. With the evidence adduced by the complainant, the

courts below ought to have raised the presumption under

Section 139 of the Act. The evidence adduced by the

respondent-accused is not sufficient to rebut the presumption

raised under Section 139 of the Act. The defence of the

respondent that though he made payment for the

commodities/rice bags, the blank cheques were not returned by

the appellant-complainant is quite unbelievable and

unacceptable. The impugned judgment of the High Court

cannot be sustained and is liable to be set aside. The

respondent-accused is convicted under Section 138 of the

Negotiable Instruments Act in both the complaints; however,

considering that the cheque transaction was of the year 2003,

at this distant point of time, we do not deem it appropriate to

impose any sentence of imprisonment on the accused.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.61-62 OF 2011

M/S SHREE DANESHWARI TRADERS …..Appellant

VERSUS

SANJAY JAIN AND ANOTHER ….Respondents

J U D G M E N T

R. BANUMATHI, J.

These appeals arise out of the judgment dated

28.07.2008 in Criminal Appeal Nos.53 and 54 of 2006 passed

by the High Court of Bombay in and by which the High Court

dismissed the appeals filed by the appellant-complainant

thereby upholding the acquittal of the respondent-accused

Sanjay Jain under Section 138 of the Negotiable

Instruments Act.

  1. Brief facts which led to filing of these appeals are as

under:-

1

The appellant-complainant had been supplying the

commodities and rice bags to the respondent-accused on his

request. In this regard, the respondent-accused issued various

cheques which when presented for collection were

dishonoured. The appellant had filed two complaints under

Section 138 of the Negotiable Instruments Act – complaint

No.339/OA/NI/2004/A and complaint No.499/OA/NI/2004/A

against the respondent-accused alleging that the cheques

issued by the respondent-accused in lieu of payment owed to

the appellant were dishonoured on presentation. It was

averred that despite issuance of legal notice, the respondent

did not make payments.

  1. In case No.339/OA/NI/2004/A, the respondent-accused

issued three cheques drawn on UTI Bank details of which are

as under:-


Date Number Amount


  1. 08.08.2003 002497 Rs.17,540.00
  2. 18.08.2003 002463 Rs.17,871.00
  3. 25.08.2003 002480 Rs.17,760.00

Total = Rs.53,171.00

2

  1. In case No.499/OA/NI/2004/A, the respondent-accused

issued nine cheques, details of which are as under:-

Date Number Amount


  1. 01.09.2003 002481 Rs.18,000.00
  2. 15.09.2003 633427 Rs.20,000.00
  3. 22.09.2003 633428 Rs.20,000.00
  4. 29.09.2003 633429 Rs.20,000.00
  5. 03.10.2003 531977 Rs.25,000.00
  6. 06.10.2003 633430 Rs.20,979.00
  7. 13.10.2003 531975 Rs.20,000.00
  8. 27.10.2003 531976 Rs.25,000.00
  9. 10.11.2003 531978 Rs.25,000.00

Total = Rs.1,93,979.00

  1. When the above said cheques were presented to United

Western Bank, Margao Branch for encashment, cheques were

returned by the bank unpaid on 04.02.2004 and 20.02.2004

with the endorsement “not arranged for/funds insufficient” and

“funds insufficient”. The appellant thereafter issued legal

notices to the respondent-accused dated 05.02.2004 and

23.02.2004 respectively making a demand for the payment of

the cheque amount. The said notices were received by the

respondent-accused; though respondent acknowledged the

3

receipt of the notices, he did not make the payment nor

arranged that amount in satisfaction of the cheques issued by

him. Hence, the complainant filed two complaints under

Section 138 of the Negotiable Instruments Act as noted above.

  1. Taking into account the receipts produced by the

respondent-accused, the trial court acquitted the respondentaccused in both the cases. The trial court rejected the case of

the appellant that the respondent sometimes used to purchase

rice bags on credit and sometimes used to purchase rice bags

on payment of cash and the same being inconsistent with the

documents produced by the appellant. The trial court held that

in the written complaint, the appellant-complainant has not

alleged anywhere that the respondent used to make credit as

well as cash purchases. The trial court held that the

respondent left blank cheques with the appellant as security

whenever he used to make credit purchases and therefore, the

presumption under Section 139 of the Act is not available to the

appellant.

  1. In appeal, the High Court affirmed the acquittal of the

respondent-accused and held that the respondent had taken

4

the defence that the subject cheques were issued as security

towards the goods supplied for which payment was

subsequently made by cash. The High Court held that by

producing the relevant receipts, the respondent has rebutted

the presumption and that the respondent was able to prove that

the cheques were issued by way of security towards the goods

supplied to him for which he made the payment by cash. The

High Court further held that it was incumbent upon the

complainant to have explained in the complaint that the cash

payments made by the respondent were related to other

commodities and the cheques were made for payment of rice

bags. Holding that the case of the appellant was not consistent,

the High Court affirmed the order of acquittal and dismissed the

appeals filed by the complainant-appellant.

  1. The learned counsel for the appellant submitted that the

transaction between the parties was a mercantile transaction

and during the course of the business, running accounts were

maintained when purchases were made at different times and

payments were made by both modes i.e. cash and cheques. It

was submitted that both the courts below overlooked the fact

5

that the transactions were mercantile transactions mixed up

with cash payments and also payments made by cheques. It

was submitted that the courts below erred in not keeping in

view the statutory presumption available under Section 139 of

the Negotiable Instruments Act to the appellant and that the

respondent-accused failed to rebut the presumption by leading

cogent and consistent evidence. The learned counsel urged

that the impugned judgment is contrary to the object of Section

138 and Section 139 of the Negotiable Instruments Act and is

liable to be set aside.

  1. The learned counsel appearing for the respondent

submitted that the respondent used to leave the cheques with

the complainant when he purchased the commodities – rice

bags and used to make cash payment towards those

commodities for which complainant issued receipts. It was

submitted that even though the complainant received the

money for the rice bags, he failed to return the cheques and

had misused those cheques and filed false complaints against

the respondent. It was submitted that the respondent has

rebutted the statutory presumption by producing twenty

6

receipts-Ex.-22/C (colly) ranging from 02.09.2003 to

17.11.2003 as also receipts-Ex.16/C (colly). The total amount

of the receipts issued by the complainant is Rs.1,94,000/- and

taking into consideration that the amount has been paid, the

courts below rightly held that the presumption under Section

139 of the Negotiable Instruments Act was rebutted by the

respondent-accused.

  1. We have carefully considered the submissions and

perused the impugned judgment and other materials on record.

The point falling for consideration is whether the courts below

were right in acquitting the respondent-accused by holding that

the appellant-complainant has failed to prove that the

respondent owed him debt and that the cheques were issued

for the discharge of the said debt.

  1. The appellant is a commission agent/merchant

conducting his business and he used to supply rice bags to the

respondent-accused on his request. Admittedly, the transaction

between the appellant-complainant and the respondentaccused was a mercantile transaction. During the course of

business, running accounts were maintained by the parties.

7

Case of the appellant is that the respondent used to purchase

rice bags sometimes on credit and sometimes on cash. In his

evidence, PW-1-complainant stated that the cheques were

issued for the credit transaction payable to the appellant by the

respondent. Per contra, case of the respondent is that Ex.-

16/C (colly) and Ex.-22/C (colly) were issued against the cash

payment made by the respondent-accused and though the

payments were made, the cheques issued by the respondentaccused were not returned to him. The respondent-accused

relies upon the various receipts-Ex.-22/C (colly) which are as

under:-

Sr.No. Receipt No. Date Amount

  1. 1276 02.09.2003 Rs.16,000/-
  2. 1291 04.09.2003 Rs.2,000/-
  3. 1340 08.09.2003 Rs.16,000/-
  4. 1489 27.09.2003 Rs.20,000/-
  5. 1556 03.10.2003 Rs.20,000/-
  6. 1615 06.10.2003 Rs.14,500/-
  7. 1621 08.10.2003 Rs.5,000/-
  8. 1682 13.10.2003 Rs.15,500/-
  9. 1689 13.10.2003 Rs.3,300/-
  10. 1746 20.10.2003 Rs.17,000/-
  11. 1763 23.10.2003 Rs.1,500/-
  12. 1760 23.10.2003 Rs.2,300/-
  13. 1808 27.10.2003 Rs.16,000/-
  14. 1828 01.11.2003 Rs.3,000/-
  15. 1882 05.11.2003 Rs.20,000/-
  16. 1942 11.11.2003 Rs.15,000/-
  17. 1941 11.11.2003 Rs.3,000/-
  18. 1953 15.11.2003 Rs.3,000/-
  19. 1958 17.11.2003 Rs.12,000/-
  20. 2001 17.11.2003 Rs.3,000/-

8

  1. Case of the complainant is that whenever the respondent

used to make cash purchases, cash memos/receipts were

issued to the respondent and the above twenty receipts Ex.-

22/C (colly) pertain to cash sale. Complainant-PW-1 further

stated that the cheques issued by the respondent-accused are

subject matter of the complaints and pertain to the credit

purchases made by the respondent-accused and the

respondent has not made the payment or cleared the dues of

the purchases made by him on credit. On the other hand, case

of the respondent is that he always used to make credit

purchase and used to leave blank cheques with the

complainant-appellant and thereafter, he used to make

payment for which the complainant used to issue receipts to

the respondent; however, the appellant did not return the blank

cheques left by the respondent with the appellant though the

respondent made the payments and those cheques were

misused by the appellant-complainant.

  1. As seen from the receipts-Ex.-16/C (colly) and Ex.-22/C

(colly), though the amount said to have been credited to the

account of the respondent, the receipts contain the expression

9

“cheques are subject to realisation”. The format of the receiptEx.-16 (colly) is as under:-

M (CST) 4265 dt 4.9.91 Tel: ………

M (ST) 6104 dt 4.9.91 Res: ……..

M/s SHREE DANESHWARI TRADERS

General Merchant & Commission Agent

Shop No.8, Masjid Building

Malbhar, MARGAO-GOA

No.1145 Date: 18.8.03

RECEIPT

Credited to the account of M/s Shantadurga Stores, Margao, the amount

of Rs. Fifteen Thousand only, by Cash/Cheque/Draft Rs.15,000/-.

For M/s. Shree Daneshwari Traders

L/F ________________

Cheques are subject to realisation.

Case of the appellant is that the receipts-Ex.-22/C (colly) were

issued by the appellant to the respondent towards cash

payment made by the respondent during the course of

business. The courts below failed to consider that Ex.-22/C

(colly) were issued by the appellant to the respondent as

against the cash payment made by respondent. Whereas the

cheques were issued towards the credit purchases of

10

commodities from the complainant which is a legally

enforceable debt.

  1. DW-2 is the father of respondent-accused. In his

evidence, DW-2 stated that the respondent used to leave blank

cheques with him in order to carry out the business transaction.

DW-2 has stated that they used to purchase rice bags from the

complainant and had left the cheques with the complainant.

Admittedly, the cheques are in the handwriting of DW-2. In his

evidence, DW-2 stated that though the amount pertaining to the

purchase of rice has already paid, the complainant did not

return the cheques in spite of having received the amount

pertaining to the purchase of rice. It is quite unbelievable that in

a business/mercantile transaction, the accused even after

making payment towards the purchase of rice bags, did not

insist for the return of the cheques. It is quite improbable that

the respondent-accused did not take any steps to get back the

cheques and continued with the business transaction even

though the complainant has not returned the cheques after

payment of the money.

11

  1. The trial court in its judgment referred to the three

cheques and observed that the three cheques bearing

Nos.2463, dated 18.08.2003; 2480 dated 25.08.2003 and 2497

dated 08.08.2003 go to suggest that the later cheque bearing

No.2497 was given much more earlier to 18.08.2003 or

25.08.2003 which seems inconsistent and it would not have

been in the normal course of business. The trial court held that

the date of issuance of the three cheques suggests that the

cheques were already with the complainant and they were

utilised by the complainant thereafter. On this aspect, PW-1

was cross-examined as to why cheque bearing No.2497 was

issued on 08.08.2003 while it ought to have been issued after

25.08.2003 to which PW-1 stated that he does not know about

the same. After referring to the above three cheques, the trial

court held that in view of inconsistency, the presumption

available under Section 139 of the Negotiable Instruments Act

is not available to the complainant which was affirmed by the

High Court. It was further held that the blank cheques left by

the accused were with the complainant and they have been

used to file the complaint. The courts below did not keep in

12

view that the appellant has no control over the manner of

issuance of cheques by the respondent and how it was issued.

Merely because, later cheque No.2497 was said to have been

issued by the respondent at an earlier date i.e. 08.08.2003, it

cannot be held that the complainant had used the blank

cheques issued by the respondent.

  1. Under Section 138 of the Negotiable Instruments Act,

once the cheque is issued by the drawer, a presumption under

Section 139 of the Negotiable Instruments Act in favour of the

holder would be attracted. Section 139 creates a statutory

presumption that a cheque received in the nature referred to

under Section 138 of the Negotiable Instruments Act is for the

discharge in whole or in part of any debt or other liability. The

initial burden lies upon the complainant to prove the

circumstances under which the cheque was issued in his

favour and that the same was issued in discharge of a legally

enforceable debt.

  1. It is for the accused to adduce evidence of such facts and

circumstances to rebut the presumption that such debt does

not exist or that the cheques are not supported by

13

consideration. Considering the scope of the presumption to be

raised under Section 139 of the Act and the nature of evidence

to be adduced by the accused to rebut the presumption, in

Kumar Exports v. Sharma Carpets (2009) 2 SCC 513, the

Supreme Court in paras (14-15) and paras (18-20) held as

under:-

“14. Section 139 of the Act provides that 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.

  1. Presumptions are devices by use of which the courts are

enabled and entitled to pronounce on an issue notwithstanding

that there is no evidence or insufficient evidence. Under the

Evidence Act all presumptions must come under one or the other

class of the three classes mentioned in the Act, namely, (1) “may

presume” (rebuttable), (2) “shall presume” (rebuttable), and (3)

“conclusive presumptions” (irrebuttable). The term “presumption”

is used to designate an inference, affirmative or disaffirmative of

the existence of a fact, conveniently called the “presumed fact”

drawn by a judicial tribunal, by a process of probable reasoning

from some matter of fact, either judicially noticed or admitted or

established by legal evidence to the satisfaction of the tribunal.

Presumption literally means “taking as true without examination

or proof”.

……..

  1. 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

14

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.

  1. 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.

  1. The accused in a trial under Section 138 of the Act has two

options. He can either show that consideration and debt did not

exist or that under the particular circumstances of the case the

non-existence of consideration and debt is so probable that a

prudent man ought to suppose that no consideration and debt

existed. To rebut the statutory presumptions an accused is not

expected to prove his defence beyond reasonable doubt as is

expected of the complainant in a criminal trial. 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 nonexistence 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

15

that they did not exist. Apart from adducing direct evidence to

prove that the note in question was not supported by

consideration or that he had not incurred any debt or liability, the

accused may also rely upon circumstantial evidence and if the

circumstances so relied upon are compelling, the burden may

likewise shift again on to the complainant. The accused may also

rely upon presumptions of fact, for instance, those mentioned in

Section 114 of the Evidence Act to rebut the presumptions

arising under Sections 118 and 139 of the Act.” [underlining

added].

  1. In the present case, by examining himself as PW-1, the

complainant has discharged the initial burden cast upon him

that the cheques were issued for the rice bags purchased on

credit. With the examination of PW-1, the statutory

presumption under Section 139 of the Act arises that the

cheques were issued by the respondent-accused for the

discharge of any debt or other liability in whole or in part. The

courts below disbelieved the evidence of the complainant on

the ground that there are no averments in the complaint that

the commodities were sold for cash and that the rice bags were

sold on credit and the cheques were issued for the goods sold

on credit. Though the complaint contains no specific

averments that the cheques were issued for the purchase

made on credit, in his evidence, PW-1 clearly stated that the

cheques were issued for the commodities purchased on credit.

16

The courts below erred in brushing aside the evidence of PW-1

on the ground that there were no averments in the complaint as

to the purchases made by cash and purchase. The courts

below also erred in not raising the statutory presumption under

Section 139 of the Act that the complainant received the

cheques to discharge the debt or other liability in whole or in

part.

  1. It is for the respondent-accused to adduce evidence to

prove that the cheques were not supported by consideration

and that there was no debt or liability to be discharged by him.

The receipts-Ex.-22/C (colly) relied upon by the respondentaccused do not create doubt about the purchases made on

credit and the existence of a legally enforceable debt for which

the cheques were issued. The courts below erred in saying

that by the receipts-Ex.22/C (colly), the respondent-accused

has rebutted the statutory presumption raised under Section

139 of the Negotiable Instruments Act. The oral and the

documentary evidence adduced by the complainant are

sufficient to prove that it was a legally enforceable debt and that

the cheques were issued to discharge the legally enforceable

17

debt. With the evidence adduced by the complainant, the

courts below ought to have raised the presumption under

Section 139 of the Act. The evidence adduced by the

respondent-accused is not sufficient to rebut the presumption

raised under Section 139 of the Act. The defence of the

respondent that though he made payment for the

commodities/rice bags, the blank cheques were not returned by

the appellant-complainant is quite unbelievable and

unacceptable. The impugned judgment of the High Court

cannot be sustained and is liable to be set aside. The

respondent-accused is convicted under Section 138 of the

Negotiable Instruments Act in both the complaints; however,

considering that the cheque transaction was of the year 2003,

at this distant point of time, we do not deem it appropriate to

impose any sentence of imprisonment on the accused.

  1. In the result, the impugned judgment of the High Court in

Criminal Appeal Nos.53 and 54 of 2006 is set aside and these

appeals are allowed. The respondent-accused is convicted

under Section 138 of Negotiable Instruments Act and a fine of

Rs.2,97,150/- (Rs.53,171/- + Rs.1,93,979/- + compensation of

18

Rs.50,000/-) is imposed on the respondent in default of which,

the respondent shall undergo imprisonment for six months. The

fine amount of Rs.2,97,150/- is to be deposited before the trial

court within twelve weeks from today, failing which the

respondent shall be taken into custody to serve the default

sentence. On deposit of fine amount, the amount of

Rs.2,97,150/- shall be paid to the appellant-complainant.

………………………….J.

[R. BANUMATHI]

………………………….J.

[A.S. BOPANNA]

New Delhi;

August 21, 2019.

19