COMPLAINTS U/S 138 OF
NEGOTIABLE INSTRUMENTS ACT: EFFECTIVE REBUTTAL
A recent judgment rendered by Delhi
High Court in a matter captioned as SP Dua Vs O.P Dewan bearing Crl LP No.
530/2019 (decided in 2024) is a pointer encapsulating the principles when
orders of acquittals in cheque bouncing case may be sustained. The law as
regards rebuttals, preponderance of probabilities and such other ancillary aspects
have been comprehensively dealt with in the above cases. Not only that, even the
parameter of granting leave to appeal to the prosecution in such
cases/complaints are also deliberated. The aforesaid judgment also dealt with
the judicial precedents on the law of criminal complaints, more particularly,
u/s 138 of Negotiable Instruments Act and law for leave to appeal filed u/s 378
of Cr.P.C and corresponding section 419 of Bharitya Nyaya Suraksha Sanhita 2023
(BNSS) appeals u/s 138 Negotiable instruments Act.
FACTS
IN NUTSHELL
For a perspective, in nutshell, it may
be worthwhile to refer to terms and tenor of complaint u/s 138 of Negotiable
instruments Act. The complaint in SP Dua (Supra) relates to alleged loan
transactions. It is alleged that the
petitioner during one visit took away a signed cheque from the office in the
absence of the respondent. The respondent/accused while admitted his signature
on the cheque in dispute, however, it was disputed that any loan was taken from
the petitioner/complainant. In fact, it was pleaded by the respondent in the
defence that he had instead advanced a loan of Rs 5.95 Lakhs to the petitioner
on different occasions. It was also stated in his statement u/s 313 of Cr.P.C
that when the complainant failed to repay the loaned amount, the parties
arrived at a settlement dated 21.08.2011 for Rs 4.25 lakhs. It was further
stated that out of the said amount, the amount of Rs 50,000/- was received on
21.08.2011 and the remaining amount of Rs 3.75 Lakhs was received on 23.08.2011
against a written acknowledgement. It was also contended that after the
settlement the parties maintained cordial relations.
The learned Trial Court,
had acquitted the respondent, of the offence under Section 138 of the
NEGOTIABLE INSTRUMENTS Act, noting that the case of the petitioner was full of
contradictions and inconsistencies and finding the claim of the petitioner that
the second amount on the settlement was merely Rs 375 instead of Rs 3.75 lakhs
was rather absurd. It was also observed that the respondent had been able to
rebut the presumptions under Section 118 (a) and Section 139 of the NEGOTIABLE INSTRUMENTS Act, as
the documents on record and the testimony of DW2 corroborated his defence. The
order of acquittal was thus impugned before the High Court.
REBUTTAL: How
Made
The learned Trial Court noted
that the evidence of the complainant was on a shaky ground due to the
discrepancies in the version of the complainant. A bare perusal of the
petitioner's statement and cross-examination shows that there are evidently
flagrant inconsistencies. In that backdrop, the ld Trial Court had noted that
the petitioner on multiple occasions had contradicted his own stand and that too
in the material aspects of allegations raised in the complaint. For instance, the
complainant, initially claimed that the loan in question of Rs. 4.25 Lacs was
advanced by him on 21.08.2011 and that the document i.e. acknowledgement was
executed on the same date. Though, in
his cross-examination, he admitted that the said document was in fact executed
on 23.08.2011 on which date, the accused claims to have received the remaining
settlement amount. During the course of trial, the complainant introduced a new
story. On the one hand in his reply to the notice sent by the accused,
complainant had claimed that on 22.03.2011, he had visited the house of the
accused and saw two unknown persons demanding Rs. 5 Lacs from the accused on
gun point. He claimed that in order to help the accused, on 23.03.2011, he
advanced the loan in question to the accused. Strangely, during
cross-examination, however, the said date was also disputed by the complainant
and yet again he again contradicted himself and claimed that he had visited the
house of the accused on 22.08.2013 and not on 22.03.2011. He further claimed to have advanced the loan
in question to the accused on 23.08.2013.
The defence witness had
also corroborated the stand of respondent/accused.
In para no. 17 the Delhi High Court has held as under:
“17. It
is trite law that a Court while considering the challenge to an order of
acquittal, in exercise of jurisdiction under Section 378 of the CrPC,
is empowered to reconsider the evidence on record and reach its own
conclusions, however, it is to be kept in mind that there is a double
presumption of innocence in favour of the accused. High Court ought to only
interfere with the finding of acquittal if it finds that the appreciation of
evidence is perverse Ref: Rajaram s/o
Sriramlulu Naidu (since deceased) through LRs:Criminal Appeal No. 1978 of 2013]”.
Similarly, in para
no.18 it is observed as under:
18. The
Hon'ble Apex Court in the case of Chandrappa Vs State of Karnataka: (2007) 4
SCC 415 has expounded upon the powers of the Appellate Court while
dealing with an order of acquittal:
"42. From the above
decisions, in our considered view, the following general principles regarding
powers of the appellate court while dealing with an appeal against an order of
acquittal emerge:
(1) An appellate court
has full power to review, reappreciate and reconsider the evidence upon which
the order of acquittal is founded.
(2) The Code of
Criminal Procedure, 1973 puts no limitation, restriction or condition on
exercise of such power and an appellate court on the evidence before it
may reach its own conclusion, both on questions of fact and of law.
(3) Various expressions,
such as, "substantial and compelling reasons", "good and
sufficient grounds", "very strong circumstances",
"distorted conclusions", "glaring mistakes", etc. are not
intended to curtail extensive powers of an appellate court in an appeal against
acquittal. Such phraseologies are more in the nature of "flourishes of
language" to emphasise the reluctance of an appellate court to interfere
with acquittal than to curtail the power of the court to review the evidence
and to come to its own conclusion.
(4) An appellate court,
however, must bear in mind that in case of acquittal, there is double
presumption in favour of the accused. Firstly, the presumption of innocence is
available to him under the fundamental principle of criminal jurisprudence that
every person shall be presumed to be innocent unless he is proved guilty by a
competent court of law. Secondly, the accused having secured his acquittal, the
presumption of his innocence is further reinforced, reaffirmed and strengthened
by the trial court. (5) If two reasonable conclusions are possible on the basis
of the evidence on record, the appellate court should not disturb the finding
of acquittal recorded by the trial court."
Further, in Para
No.19 it is held as under:
19. The present case
concerns the offence under Section 138 of the NEGOTIABLE INSTRUMENTS Act.
The Hon'ble Apex Court in the case of Rohitbhai Jivanlal Patel v. State of Gujarat : (2019) 18 SCC 106 had observed as
under:
"12.
According to the learned counsel for the appellant-accused, the impugned
judgment is contrary to the principles laid down by this Court in Arulvelu
Vs State (2009) 10 SCC 206 : (2010) 1 SCC (Cri) 288] because the High Court has
set aside the judgment of the trial court without pointing out any perversity
therein. The said case of Arulvelu Vs State (2009) 10 SCC 206 :
(2010) 1 SCC (Cri) 288] related to the offences under Section 304-B
and 498-A IPC. Therein, on the scope of the powers of the appellate
court in an appeal against acquittal, this Court observed as follows :
"36.
Careful scrutiny of all these judgments leads to the a conclusion that the
appellate court should be very slow in setting aside a judgment of acquittal
particularly in a case where two views are possible. The trial court judgment
cannot be set aside because the appellate court's view is more probable. The
appellate court would not be justified in setting aside the trial court
judgment unless it arrives at a clear finding on marshalling the entire
evidence on record that the judgment of the trial court is either perverse or
wholly unsustainable in law."
ANALYSIS
According to Delhi High Court, the
aforesaid principles have stood the test
of time. The appellate court, ordinarily does not upset the judgment of
acquittal, if the view taken by the trial court is one of the possible views of
matter and unless the appellate court arrives at a clear finding that the
judgment of the trial court is perverse i.e. not supported by evidence on
record or contrary to what is regarded as normal or reasonable; or is wholly
unsustainable in law, that the interference could be warranted. Such general
restrictions are essentially to remind the appellate court that an accused is
presumed to be innocent unless proved guilty beyond reasonable doubt and a
judgment of acquittal further strengthens such presumption in favour of the
accused. No doubt such restrictions are to be ascertained in the context of the
particular matter before the appellate court and the nature of inquiry held
therein. There are no reason as to why such rule, albeit, with some rigour
cannot be applied in a matter relating to the offence under Section
138 of the NEGOTIABLE INSTRUMENTS Act, , more so, in the face of
principles of presumption drawn that the holder has received the cheque for the
discharge, wholly or in part, of any debt or liability. No doubt, the accused
shall be entitled to bring out the relevant materials in rebuttal of such
presumption and with a view to show that preponderance of probabilities are in
fact in favour of his defence. It also bears no emphasis that in case, while
examining, if the accused has brought about a probable defence so as to rebut
the presumption, the appellate court is certainly entitled to examine the
evidence on record in order to find if preponderance indeed leans in favour of
the accused.
The Delhi High Court in SP Dua (Supra)
has noted in para 22 as under:
“22. In the present case as well, the respondent
has sought to prove his case on preponderance of probabilities that the cheque
in dispute was not issued in discharge on any legally enforceable debt. The
defence case, in essence, is that the cheque in dispute was taken by the
petitioner from the respondent's office in his absence. Furthermore, the
respondent had not taken any loan from the petitioner. It was argued that the
amount of Rs 4.25 lakhs was paid by the petitioner to the respondent as part of
a settlement dated 21.08.2011 in respect of an earlier loan of Rs 5.95 lakhs
that had been extended by the respondent to the petitioner. It was argued that
the parties had agreed via the settlement that after the payment of the
settlement amount of Rs 4.25 lakhs, the respondent would hand over the
possession of the property rented by him from the petitioner. It was argued
that as the remaining consideration amount of Rs 3.75 lakhs was paid on
23.08.2011, the property was also vacated by him on the said date”.
The
accused shall be entitled to rebut the presumption u/s 138 of the Negotiable
Instruments Act and may adduce direct evidence to that effect. The burden then again
shall shift on the complainant. It is also true that even circumstantial
evidence could be relied upon if it corroborates the version of a party. It is
open for the complainant to also rely upon presumptions of fact, as contained
in Section 118 and such other relevant sections of Indian Evidence Act. The
presumptive clause in section 118 and Section 139 is the same, as the
analogy can be extended and applied in the context of Section 149 as well.
The
settled proposition in law is that a presumption can be controverted by the
accused by raising a probable defence against the existence of a legally
enforceable debt or liability. The accused is not expected to conclusively establish
that there was no debt/liability, so long as plausible rebuttal is shown to
have existed, thereby shifting the onus on the complainant. The Hon'ble Supreme
Court has summarized the law in the case of Rajesh Jain Vs Ajay Singh :
2023 INSC 888 as to how the accused can discharge the burden of the
presumptions. The relevant portion of the judgment is reproduced hereunder:
"40. The standard
of proof to discharge this evidential burden is not as heavy as that usually
seen in situations where the prosecution is required to prove the guilt of an
accused. The accused is not expected to prove the non-existence of the presumed
fact beyond reasonable doubt. The accused must meet the standard of
'preponderance of probabilities', similar to a defendant in a civil proceeding.
[Rangappa Vs Mohan (AIR 2010 SC 1898)]”.
What may thus
be concluded in good measure is that once the accused adduces evidence to the
satisfaction of the Court that on a preponderance of probabilities there exists
no debt/liability in the manner pleaded in the complaint or the demand notice
or the affidavit-evidence, the burden shifts to the complainant and the
presumption 'disappears' and does not haunt the accused any longer. The
complainant is then obliged to prove the existence of a debt/liability as a
matter of fact and in case a complainant fails to do so, the same may result in
dismissal of his complaint case. The presumption under Section 139 of the Negotiable
Instruments Act cannot aid the complainant towards finality, but initial
presumption u/s 118 and 139 of the Negotiable Instruments Act, once rebutted,
the onus shifts on the complainant for proving of his case and Section 139
shall therefore not again come to the complainant's rescue.
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Anil K Khaware
Founder & Senior Associate
Societylawandjustice.com
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