presumptions Under Sections 118(a) and 139 of the Act are rebuttable

IN THE HIGHCOURT OF DELHI AT NEW DELHI
SUBJECT : NEGOTIABLE INSTRUMENTS ACT, 1881
CRL.REV.P. 749/2010
Judgment delivered on: 11.07.2013
JAIPRAKASH SINGH ….. Petitioner
Through: Mr. Himanshu Munshi, Adv.
Versus
RASHMI AGGRAWAL ….. Respondent
Through: Mr. Alok Bansal, Adv.
CORAM:
HON’BLE MR. JUSTICE KAILASH GAMBHIR
KAILASH GAMBHIR, J.
1. This criminal revision petition has been preferred by the
petitioner/accused to challenge the order dated 23.10. 2010 passed by the
learned Additional Sessions Judge-I (Outer) Rohini Courts, Delhi whereby
the learned Appellate Court allowed the appeal filed by the
respondent/complainant.
2. Brief facts relevant for deciding the present revision petition are that
the complainant, Mr. Dinesh Aggarwal was engaged in the business of
stainless steel and gift items under the name and style of M/s Family Gift
Emporium and advanced a loan of Rs. 1,25,000/- in March 2002 to the
petitioner/accused. Towards the discharge of the said loan liability, the
petitioner/accused issued two post-dated cheques bearing nos. 849381 dated
15.05.2003 amounting to Rs. 70000/- and 414683 dated 22.06.2003
amounting to Rs. 75000/- both drawn on Bank of Baroda, New Delhi-
110085. The said cheque amounts included Rs. 20,000/- as interest on the
loan amount. It has been the case of the complainant that when the said
cheques were presented for encashment, the same were returned back
unpaid/dishonoured on the ground of “account closed” and thereafter in
pursuance of the same, a legal demand notice dated 02.07.2003 was issued
to the petitioner/accused but despite the service of the notice, the petitioner/accused failed to clear the said liability and this led the
complainant/respondent to file a complaint u/s 138 of Negotiable
Instruments Act, 1881 against the present petitioner/accused. The
petitioner/accused after summoning was put to trial. Notice under section
251 Cr.P.C was given to the petitioner/accused for the offence under Section
138 of the Negotiable Instruments Act, 1881 vide order dated 8.7.2004 to
which the petitioner/accused pleaded not guilty and claimed trial. The Trial
Court vide judgment dated 9.3.2010 dismissed the complaint primarily on
the ground that there was material alteration in the cheques in question and
that the cheques were not issued in discharge of legally enforceable liability.
The original complainant Mr.Dinesh Aggarwal expired during the trial and
vide order dated 16.11.2009, the appellant was substituted as the
complainant. Aggrieved by the order dated 9.03.2010 the appellant had
preferred an appeal inter-alia on the grounds that the impugned judgment
was bad in law, the testimony of original complainant and statement of J.N
Singh were misconstrued by the learned trial court; there was no material
alteration in the cheques in question etc. The said order passed by the
learned trial court was set aside by the Learned Additional Sessions Judge
vide order dated 23.10.2010and the Learned Additional Sessions Judge
convicted the petitioner/accused u/s 138 of the Negotiable Instruments Act,
1881 and the petitioner/accused was sentenced to rigorous imprisonment for
nine months with a fine of Rs. 2,00,000/- and in default of fine SI forthree
monthsvide order dated 29.10.2010.
3. Assailing the order of the learned Additional Sessions Judge, counsel
for the petitioner, Mr. Himanshu Munshi submitted that the learned
Additional Sessions Judge failed to appreciate that the two cheques in
question bearing Nos. 414683 dated 22.6.2003 and 849381 dated 15.5.2003
were from different cheque books of 10 leaves each and cheques were
encashed sometime in the year 2000 from the said cheque books and
therefore, both the cheques in question could not have been issued by the
petitioner/accused in the year 2003 as per the case set up by the
complainant. Counsel further argued that the five blank cheques and
property papers were given by the petitioner to the complainant as security
but two cheques out of the said five blank cheques were misused by the
complainant after filling in the blanks some times in the year 2003 and
thereafter these two cheques were presented in the bank by the complainant
without the consent of the petitioner/accused. Counsel also argued that once
the petitioner/accused discharged his burden to prove the fact that the said
two dishonored cheques were not issued towards any legally enforceable debt, onus thereafter shifted on the complainant to have proved it otherwise.
Counsel also argued that the complainant did not produce any account book
or lending agreement to show that the amount of Rs. 1,25,000/- was
advanced by him to the petitioner/accused. Counsel also contended that no
agreement to pay interest on the loan amount was proved by the
complainant. Counsel also submitted that the complainant was also not
having any license for lending money and therefore he could not have
advanced loan amount to the petitioner/accused legally also. Counsel also
argued that the learned Appellate Court also did not appreciate the fact that
the said five blank cheques were issued by the petitioner/accused towards
security and as per the settled legal position a security amount cannot be
recovered under Section 138 of the Negotiable Instruments Act. In support
of his arguments counsel for the petitioner/accused placed reliance on the
following judgments:-
1. Kumar Exports v. Sharma Carpets, AIR 2009 SC 1518
2. BPDL Investments (Pvt.) Ltd. v. Maple Leaf Trading International
(Pvt.) Ltd., 129 (2006) DLT 94
3. Kamala S. v. Vidyadharan M.J. and Anr., (2007)(3) CALE 235
4. M.S. Narayana Menon@Mani v. State of Kerela and Anr., AIR 2006
SC 3366
5. Krishna Janardhan Bhat v. Dattatraya G. Hedge, AIR 2008SC 1325
4. Counsel appearing for the respondent/complainant on the other hand
supported the judgment passed by the Learned Additional Sessions Judge.
Counsel submitted that the learned Appellate Court has appreciated the legal
position correctly and there is no infirmity, illegality or perversity in the
order passed by the said Court.
5. I have heard the learned counsel for the parties and also given my
anxious consideration to the arguments advanced by them.
6. In order to determine whether the offence punishable under Section
138 Negotiable Instruments Act, 1881 is made out against the
petitioner/accused in the instant case, it would be necessary to first delve
upon Sections 118 and 139 of the Negotiable Instruments Act, 1881 which
deal with the subject of ‘presumptions’ that are to be raised in deciding the
liability of the accused under Section 138 Negotiable Instruments Act.
Section 118 of the Act deals with the presumption with respect to
consideration to be raised until the contrary is proved. Relevant portion of
Section 118 is read as under:-Section 118 – Presumptions as to negotiable instruments- Until the contrary
is proved, the following presumptionsshall 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;
Section 139 of the Act provides for presumption in favour of the holder and
reads as under
Section 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.
7. While discussing the scope and ambit of the above two provisions, the
Apex Court in Kumar Exports v. Sharma Carpets, AIR 2009 SC 1518
observed in Para 11 as under:
11. 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. 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 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. 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. The
accused has also an option to prove the non-existence of consideration and
debt or liability either by letting in evidence or in some clear and exceptional
cases, from the case set out by the complainant, that is, the averments in the
complaint, the case set out in the statutory notice and evidence adduced by
the complainant during the trial. Once such rebuttal evidence is adduced and
accepted by the court, having regard to all the circumstances of the case and
the preponderance of probabilities, the evidential burden shifts back to the
complainant and, thereafter, the presumptions under Sections 118 and 139 of
the Act will not again come to the complainant’s rescue.
8. The aforesaid legal position has been reiterated by the Apex Court in a
recent case of Vijay v. Laxman and Anr .(2013) 3 SCC 86, wherein the
Hon’ble Division Bench observed as following while appreciating various
judgments on this issue-
19. …We are not unmindful of the fact that there is a presumption that the
issue of a cheque is for consideration. Sections 118 and 139 of the
Negotiable Instruments Act make that abundantly clear. That presumption is,
however, rebuttable in nature. What is most important is that the standard of
proof required for rebutting any such presumption is not as high as that
required of the prosecution. So long as the accused can make his version
reasonably probable, the burden of rebutting the presumption would stand
discharged. Whether or not it is so in a given case depends upon the facts
and circumstances of that case. It is trite that the courts can take into
consideration the circumstances appearing in the evidence to determine
whether the presumption should be held to be sufficiently rebutted. The legal
position regarding the standard of proof required for rebutting a presumption
is fairly well settled by a long line of decisions of this Court.20. In M.S. Narayana Menon v. State of Kerala : (2006) 6 SCC 39, while
dealing with that aspect in a case Under Section 138 of the Negotiable
Instruments Act, 1881, this Court held that the presumptions Under
Sections 118(a) and 139 of the Act are rebuttable and the standard of proof
required for such rebuttal is preponderance of probabilities and not proof
beyond reasonable doubt. The Court observed:
29. In terms of Section 4 of the Evidence Act whenever it is provided by the
Act that the court shall presume a fact, it shall regard such fact as proved
unless and until it is disproved. The words “proved” and “disproved” have
been defined in Section 3 of the Evidence Act (the interpretation clause)…
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.
xxxxxxxx
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.
xxxxxxxx
41. … Therefore, the rebuttal does not have to be conclusively established
but such evidence must be adduced before the court in support of the
defence that the court must either believe the defence to exist or consider its
existence to be reasonably probable, the standard of reasonability being that
of the ‘prudent man’.
21. The decision in M.S. Narayana Menon (supra) was relied upon in K.
Prakashan v. P.K. Surenderan : (2008) 1 SCC 258 where this Court
reiterated the legal position as under:
13. The Act raises two presumptions; firstly, in regard to the passing of
consideration as contained in Section 118 (a)therein and, secondly, a
presumption that the holder of cheque receiving the same of the nature
referred to in Section 139 discharged in whole or in part any debt or other
liability. Presumptions both Under Sections 118 (a) and 139 are rebuttable in
nature.14. It is furthermore not in doubt or dispute that whereas the standard of
proof so far as the prosecution is concerned is proof of guilt beyond all
reasonable doubt; the one on the accused is only mere preponderance of
probability.
22. To the same effect is the decision of this Court in Krishna Janardhan
Bhat v. Dattatraya G. Hegde : (2008) 4 SCC 54 where this Court observed:
32. Standard of proof on the part of an accused and that of the prosecution a
criminal case is different.
xxxxxxxx
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.
xxxxxxxx
45. … Statute mandates raising of presumption but it stops at that. It does not
say how presumption drawn should be held to have rebutted. Other
important principles of legal jurisprudence, namely presumption of
innocence as human rights and the doctrine of reverse burden introduced by
Section 139 should be delicately balanced.
23. Presumptions Under Sections 118(a) and Section 139 were held to be
rebuttable on a preponderance of probabilities in Bharat Barrel and Drum
Manufacturing Co. v. Amin Chand Pyarelal : (1999) 3 SCC 35 also where
the Court observed:
11. Though the evidential burden is initially placed on the Defendant by
virtue of Section 118 it can be rebutted by the Defendant by showing a
preponderance of probabilities that such consideration as stated in the
pronote, or in the suit notice or in the plaint does not exist and once the
presumption is so rebutted, the said presumption ‘disappears’. For the
purpose of rebutting the initial evidential burden, the Defendant can rely on
direct evidence or circumstantial evidence or on presumptions of law or fact.
Once such convincing rebuttal evidence is adduced and accepted by the
Court, having regard to all the circumstances of the case and the
preponderance of probabilities, the evidential burden shifts back to the
Plaintiff who has also the legal burden.
24. In Hiten P. Dalal v. Bratindranath Banerjee : (2001) 6 SCC 16 this
Court compared evidentiary presumptions in favour of the prosecution with
the presumption of innocence in the following terms:
22. … 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 exists, 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. …
25. Decisions in Mahtab Singh and Anr. v. State of Uttar Pradesh : (2009) 13
SCC 670, Subramaniam v. State of Tamil Nadu : (2009) 14 SCC 415 and
Vishnu Dutt Sharma v. Daya Sapra : (2009) 13 SCC 729, take the same line
of reasoning.
9. In the light of the aforesaid legal position, let us see whether the
petitioner/accused in the present case has succeeded to rebut the
presumption arising in favour of the respondent/complainant in terms of
Section 118 read with Section 139 of the Negotiable Instruments Act. The
main defence raised by the petitioner is that the loan amount of Rs.1,00,000
was taken by him in the year 2000 and he had issued five signed blank
cheques towards security to the respondent/complainant. He has also raised
a defence that he had also handed over the original documents of property
bearing No.C1/117 Sector 16, Rohini as additional security for the repayment of the loan amount. He has also raised a defence that he had
returned an amount of Rs. 1,75,000/- to the complainant towards full and
final satisfaction of the said loan amount. He has further explained that an
amount of Rs.25,000 was paid by him to the respondent/complainant in
cash through one Mr.Shukla, Rs. 50,000/- was paid by him vide cheque
bearing No. 633401 dated 23.9.2001 and a sum of Rs. 1 lakh vide cheque
bearing No.256389 dated 8.11.2002. It is also the defence of the petitioner
that he could not have issued the two cheques in question in 2003 as his
bank account came to be closed on 4.3.2002. From the defence raised by the
petitioner it becomes quite manifest that the petitioner has not disputed the
advancement of the loan amount of Rs. 1,00,000/- by
respondent/complainant. Once having admitted the advancement of the loan
amount, the same was not required to be separately proved through any other
documentary evidence. The petitioner has further admitted the fact that he
had issued five blank cheques, which were duly signed by him. This fact
again establishes the fact that two of the cheques, which were dishonoured,
also stand admitted by the petitioner and the question whether in all five
cheques were issued by the petitioner becomes irrelevant more so when the
petitioner failed to prove this fact by leading any cogent evidence. The
petitioner also failed to produce Mr. Shukla through whom the said amount

of Rs. 25,000/- was alleged to have been paid in cash to the complainant.
The petitioner further failed to produce his wife to prove the alleged
payment of Rs. 50,000/- from her bank account in favour of the complainant.
The petitioner also did not adduce any evidence to show that an amount of
Rs. 1 lakh was paid by him vide cheque No. 256389 to the complainant. In
my view, the learned Appellate Court was right in observing that a mere
denial of the averments made by the complainant is not sufficient for
rebutting the presumptions arising in favour of the complainant under
Sections 118 and 139 of the Act. It is for the accused to demonstrate that
there exist preponderance of probabilities that the cheques in question were
not issued towards discharge of any legally enforceable debt/liability. The
learned Appellate Court also found that the defence raised by the petitioner
with regard to deposit of the original documents of the property bearing No.
C1/117 Sector 16, Rohini as security does not inspire any confidence as
during his cross-examination he admitted the fact that the suit property
belongs to his father-in-law and he was not having any authority to deposit
the original documents of the said property with the complainant. The
learned Appellate Court also placed reliance on the judgment of the Apex
Court in K. Bhaskaran Sankaran Vaidhyam Balan and Another reported in
(1999) 7 SCC 510 while holding that once the accused has admitted his
signatures on the cheques then the presumption that the said cheques were
drawn for consideration on the date the cheque bears can be legally inferred.
The learned Appellate Court further placed reliance on the case of Satish
Jayantilal Shah v. Pankaj Mashruwala and Anr. reported in 1996 Crl.L.J.
3099 wherein it was held that the entire body of the cheque need not be
written by the maker or the drawer as the signatures of the drawer on a
cheque is a material fact.
10. Undeniably, as per the settled legal position, to rebut the statutory
presumptions arising in favour of the complainant under Section 118 read
with Section 139 of the Negotiable Instruments Act, the accused is not
expected to prove his defence beyond reasonable doubt as is expected of the
complainant in a criminal trial, yet the accused has to raise a probable
defence and prove on record such facts and circumstances that are sufficient
to rebut the presumptions having arisen in favour of the complainant in
terms of Section 118 read with Section 139 of the Negotiable Instruments
Act. The accused cannot succeed in rebutting the statutory presumptions as
envisaged under Section 118 read with Section 139 of the Negotiable
Instruments Act by mere denials or by raising a weak defence or even by

raising a strong defence but not proving the same through any reliable or
cogent evidence.
11. As already discussed above, it is not the case of the petitioner that no
loan amount was advanced to him or that he had never issued the cheques in
question to the complainant. The argument advanced by the petitioner that
the bank account of the petitioner was closed in the year 2002 would also
not help the case of the petitioner; rather, this very fact raises a noteworthy
question as to why the bank was not informed about the issuance of the
alleged five blank cheques by the petitioner at the time of closure of the
bank account. The petitioner has also failed to prove on record any fact to
show that he had ever raised any demand for the return of the alleged five
cheques or for the return of the original documents of the property bearing
No. C1/117 Sector 16, Rohini after the alleged payment of Rs. 1,75,000/-
being made by him to the complainant. In the light of the said facts, the case
of the petitioner does not fall even in the category of throwing enough
suspicion on the claim of the complainant.
12. This Court, thus, does not find any reason to upset the view taken by
the first Appellate Court. The present revision petition is hereby dismissed.
The petitioner is on bail therefore, his bail bonds are cancelled. The
petitioner is directed to forthwith surrender to the custody of the trial court to
serve out the remaining period of sentence.
13. With the above directions, the revision petition stands disposed of.
Sd/-
KAILASH GAMBHIR J. 

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