Case: Krishna Janardhan Bhat Vs. Dattatraya G. Hegde

1. Appellant and one R.G. Bhat were jointly running a business in the name and style of Vinaya Enterprises at Hubli together. Appellant executed a Power of Attorney in his favour.2. Allegedly, he had handed over four blank cheques to the said constituted attorney for meeting the expenses of the business. The counter foil of the cheque books was also allegedly filled in by Shri R.G. Bhat. The cheque bearing No. 044483 was shown to have been a self drawn one for a sum of Rs. 1500/-.3. Disputes and differences having arisen between the appellant and the said R.G. Bhat in connection with running of the said business, the power of attorney granted in his favour was cancelled by the appellant. Disputes and differences between the parties were referred to the Panchayat. In the meeting of the Panchayat held on 02.10.1996, complainant/respondent who is the brother-in-law of the said R.G. Bhat was admittedly present. He participated therein. The result of the said meeting of the Panchayat is not known but it is not in dispute that the appellant herein issued a public notice through his advocate in a local newspaper on 3.10.1996 to the followingclient Sh. Krishna Janardhana Bhat, Proprietor of Vinaya Enterprises, Tarihal Hubli has given authority to give notice as follows.My client appointed Shri Raghavendra Ganapati Bhat as his power of Attorney Holder on 21.8.1993 to run Vinay Enterprises as agent. He has started misusing the terms and conditions of the Power of Attorney. Hence my client cancelled the Power of Attorney on 21.8.96 by giving notice. If at all anybody deals with him on the Power of Attorney my client is not responsible in future.On the premise that the respondent advanced a sum of Rs. 1,50,000/- to the appellant on 14.6.1998 and the latter on his own went to his house on 20.7.1998 to return the loan by an account payee cheque which having been dishonoured when presented; a complaint petition was filed.6. Prior thereto, a notice was sent on 27.8.1998 which was allegedly served on the appellant on 5.9.1998. He on that day itself sent a reply alleging in substance that the complainant had been colluding with R.G. Bhat in regard thereto,client D.G. Hegde Goddalamane is husband of sister of my power of attorney holder R.G. Bhat (Proprietor Prasad Enterprises Tarihal Industrial Estate) of Hubli. I do not have any dealing with him as alleged in your letter. Knowing that the power of attorney holder R.G. Bhat has lost faith and having acted illegally and in anticipation of his committing further illegal acts I have legally cancelled my power of attorney and published the notice in a famous Kannada daily Samyukta Karnataka on 3.10.96. From that date I do not have any relation with him or any of his relatives including your client. Please verify the handwriting and signature on the cheque and advice your client not to do such (illegalities) colluding with his brother-in-law.The learned Trial Judge convicted the appellant and sentenced him to undergo imprisonment for six months and further directed payment of compensation for a sum of Rs. 1,50,000/-. An appeal preferred thereagainst was dismissed by the Sessions Judge by a judgment and order dated 28.7.2004.8. The High Court in exercise of its revisional jurisdiction, however, on a revision petition filed by the appellant, partly allowed the same by reducing the substantive sentence to one week.9. The Special Leave Petition was filed by the appellant in person.

Court's reasoning:
19. The courts below failed to notice that ordinarily in terms of Section 269SS of the Income Tax Act, any advance taken by way of any loan of more than Rs. 20,000/- was to be made by way of an account payee cheque only.Indisputably, a mandatory presumption is required to be raised in terms of Section 118(b) and Section 139 of the Act.The proviso appended to the said section provides for compliance of legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.22. The courts below, as noticed hereinbefore, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is notcourts below proceeded to hold that the defence raised by the appellant has not been proved, which, in our opinion, is not correct. He did not know that the said cheque had not been encashed. He replied to the notice thinking that one of the cheque has been misused. There is nothing on record to show that he knew that one of the cheques was still with R.G. Bhat.We are not oblivious of the fact that the said provision has been inserted to regulate the growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters and to safeguard the faith of the creditor in the drawer of the cheque which is essential to the economic life of a developing country like India. This, however, shall not mean that the courts shall put a blind eye to the ground realities. 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. Such balancing acts, indisputably would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same.35. Keeping in view the peculiar facts and circumstances of this case, we are of the opinion that the courts below approached the case from a wholly wrong angle, viz., wrong application of the legal principles in the fact situation of the case. In view of the legal position as has been enunciated by this Court in M.S. Narayana Menon (supra) and later cases, we are of the opinion that the High Court should have entertained the revision application.