apeal681.06.J.odt 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH, NAGPUR CRIMINAL APPEAL NO.681 OF 2006 [ENTITY], Donduda, Branch at Hinganghat, through its Branch Manager, Shri Sanjay Tanbaji Warbhe, Resident of Hinganghat, Tahsil Hinganghat, District Wardha. APPELLANT V E R S U S [ENTITY] s/o Mohammad Ibrahim Adult, Occupation: Business, Resident of Sant Kabir Ward, Hinganghat, Tahsil Hinganghat, District Wardha. RESPONDENT Shri [ENTITY], Advocate for Appellant. Shri [ENTITY], Advocate for Respondent. CORAM: ROHIT B. DEO, J. DATE: 22 nd FEBRUARY, 2018. ORAL JUDGMENT
1] The original complainant in [CASE NUMBER] instituted under the provisions of the [ACT], 1881 ("Act" for short) is challenging the judgment and order dated 19.07.2006 rendered by Judicial Magistrate First Class, Hinganghat, by and under which, the respondent-original accused is acquitted of offence punishable under [SECTION] of the Act.
2] The complainant is a society registered under the [ACT]. The complaint under [SECTION] of the Act was preferred contending that the accused was sanctioned loan of Rs.40,000/- on 31.01.2003 for business purpose. The accused availed the loan amount after executing the loan documents. The accused defaulted in repayment of loan. The accused issued cheque 045891 dated 15.02.2004 for Rs.17,000/- towards part payment of the outstanding. The said cheque which was drawn on Wana Nagarik Sahakari Bank Ltd., Hinganghat was presented for encashment on 12.03.2004, the cheque was dishonoured, statutory notice was issued and since there was no compliance the complaint was instituted.
3] The complainant examined himself and [ENTITY] (C.W.2) Passing Officer-cum-Loan Officer of Wana Nagri Sahakari Bank and [ENTITY] (C.W.3) the Branch Manager of the Central Co-operative Bank, Wardha. The accused examined one [ENTITY] as D.W.1 to prove that the authorized representative of the complainant society [ENTITY] is engaged in illegal money lending business and the cheque was issued as security and not towards discharge of existing debt or liability.
4] The signature of the accused on the cheque is not in dispute. The dishonour of the cheque for want of sufficient fund is also not in dispute. It is not really necessary to discuss the evidence of complainant witness 2 and complainant witness 3.
The witness in defence states that authorized representative [ENTITY] is engaged in money lending business. No material is placed on record to substantiate the assertion. The witness examined in defence does not take the case of the accused any further. The only material witness from the perspective of the complainant is C.W.1 [ENTITY].
5] The learned counsel for the complainant Shri [ENTITY] submits that the accused failed to rebut the statutory presumption under [SECTION] of the Act. Concededly, the disputed cheque is signed by the accused. The learned counsel submits that the learned Magistrate fell in serious error in holding that existing liability or debt is not proved. In view of the said submission, it would be necessary to consider the evidence on which the finding of the learned Magistrate is predicated.
6] The learned Magistrate has considered the material brought on record in the cross-examination of the complainant.
The learned Magistrate notes that the complainant has admitted that the accused was to return the amount by installments of Rs.20/- per day. In response to a suggestion, the complainant states that he did not remember as to whether agent [ENTITY] was collecting money from the accused. It is admitted by the complainant that the fixed deposits of Rs.14,000/- and Rs.5000/-
of the accused are appropriated against the outstanding loan. It is further noted by the learned Magistrate that the statement of accounts are not produced. The income tax return is not produced. The date of the last payment against the loan account is not revealed. The complainant is not aware as to in whose handwriting are the contents of the cheque filled in. The cheque is not given to the society in the presence of the complainant, is the admission. It is further admitted that the accused paid Rs.25,000/-
(the amount paid is a fact Rs.2500/-) on 30.11.2004, Rs.1000/-
on 13.12.2004, Rs.1000/- on 12.01.2005 as is evident from the receipts Exhibits 38, 39 and 40. The maturity amount of the fixed deposits is Rs.14,000/- and Rs.10,000/- which comes to Rs.24,000/-. Additionally, Rs.2000/- was the security amount and Rs.1101/- is the amount in the daily collection account, is the admission.
7] The evidence will have to be tested on the anvil of the law enunciated by the Apex Court in [PRECEDENT], the Apex Court, while holding that since the signature on the cheque is not disputed, the statutory presumption under [SECTION] of the Act is activated, which the accused could not rebut since the defence of lost cheque was not probable, observed thus :
"27. [SECTION] 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] of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under [SECTION] is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by [SECTION] 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 causes 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], 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."
8] In T. Vasanthakumar vs. Vijayakumari reported in (2015) 8 SCC 378, the Apex Court, relying on the three Judges Bench judgment in [PRECEDENT], on facts, holds that the statutory presumption is not rebutted by the accused.
9] In [PRECEDENT], the Apex Court, refers to Hiten P. Dalal v.
Bratindranath Banerjee and holds, on the factual matrix, that bare denial of the liability in reply notice is not sufficient to shift the burden of proof on the complainant to prove that the cheque was issued for a debt or liability.
10] The Three Judges Bench judgment of the Apex Court in [PRECEDENT] considers the scope and ambit of [SECTION] of the Act thus :
"22. Because both [SECTION] and [SECTION] 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 [PRECEDENT], it is obligatory on the Court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. "It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused" (Ibid. at p.65, para 14). 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 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. 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 a 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 of reasonability being that of the 'prudent man'.
24. Judicial statements have differed as to the quantum of rebutting evidence required. In [PRECEDENT], this Court held that the presumption of law under [SECTION] of [ACT] could be rebutted, in certain circumstances, by a presumption of fact raised under [SECTION] of the [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 [PRECEDENT] where this Court reiterated the principle enunciated in [PRECEDENT] 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 a 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] of the [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. (AIR p.580, para 12)"
[See also [PRECEDENT]; [PRECEDENT] and [PRECEDENT].]"
11] The nature of the initial burden of proof on the accused to rebut the statutory presumption under [SECTION] is explained by the Hon'ble Apex Court in [PRECEDENT] thus :
"29. In terms of [SECTION] of the [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] of the [ACT] (the interpretation clause) to mean:
" 'Proved' - 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 a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists.
'Disproved' - A fact is said to be disproved when, after considering the matters before it the Court either believes that it does not exist, or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist."
30. Applying the said definitions of 'proved' or 'disproved' to principle behind [SECTION] 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.
31. A Division Bench of this Court in [PRECEDENT] albeit in a civil case laid down the law in the following terms:
"12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under [SECTION] would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under [SECTION] in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt.5"
This Court, therefore, clearly opined that it is not necessary for the defendant to disprove the existence of consideration by way of direct evidence.
32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.
38. If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a 'fortiori' even an accused need not enter into the witness box and examine other witnesses in support of his defence. He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court.
45. Two adverse inferences in the instant case are liable to be drawn against the Second Respondent:
(i) He deliberately has not produced his books of accounts.
(ii) He had not been maintaining the statutory books of accounts and other registers in terms of the bye-laws of Cochin Stock Exchange.
Moreover, the onus on an accused is not as heavy as that of the prosecution. It may be compared with a defendant in a civil proceeding."
12] The settled position of law is that if the signature on the cheque is admitted, the statutory presumption under [SECTION] of the Act stands activated and the accused is obligated to rebut the presumption before the burden of proving the existence of debt or liability shifts to the complainant. However, the accused need not adduce direct evidence and is entitled to rely on the material brought on record, during the evidence of the complainant, or otherwise, to rebut the statutory presumption.
The burden on the accused of proving the non-existence of debt or liability is duly discharged if the accused brings on record, on preponderance or probabilities, that the existence of a legally enforceable debt or liability is doubtful.
13] If the evidence is tested on the anvil of enunciation of law by the Apex Court, I do not find any infirmity in the judgment and order impugned. The learned Magistrate has taken a possible view and no perversity or irrationality is demonstrated. No error of law is discernible. In this view of the matter, I am not inclined to interfere in the judgment and order of acquittal.
14] The appeal is sans merit and is rejected.
JUDGE [ENTITY]