What we have to find out is whether the partnership was legal, because the suit was for accounts of that dissolved partnership. If the partnership was illegal or was for an unlawful purpose, then the Court will give no assistance to a plaintiff In such a case. It is obvious that the partnership was not licensed as a partnership. Therefore, the partnership could not deal in food-grains in Central Provinces and Berar. The licence in the name of the appellant was not one in favour of the partnership, and the whole of the transaction by the partnership was in contravention of the Food Grains Control Order. A Court would not enforce any claim arising from this illegal partnership ..... The suit was not for the enforcement of any money claim against the respondents, but was one for accounts of the dissolved firm, which we have already shown, was an illegal firm. The suit was, therefore, rightly\dismissed."
 It will be observed that Section 3(1) of the C.P. and Berar Food-Grains Control Order is substantially similar in relevant particulars to Clause 4 of the M.C.D.C. Order. There is some difference Between the two provisions but it is not material for the purpose of this case. Both are in agreement on the material feature that no person shall deal in the concerned article as a dealer except under and in accordance with the terms and conditions of a licence duly granted. The definition of 'dealer' in Clause 3(c) of the M.C.D.C. Order is substantially in agreement in relevant particulars with the definition of the phrase 'deal in food-grains' and the indication in it as to how the word 'dealer' was to be construed on that basis in the C.P. and Berar Food Grains Control Order. Their lordships came to the conclusion that the partnership was illegal on the following grounds:-


V. Basavayya vs N. Kottayya on 5 July, 1963

(1) The word 'person' in Section 3 (i), corresponding to Clause 4 of the M.C.D.C. Order, included a firm of partners.
 (2) The licence in the name of one of the partners did not amount to a licence in favour of the partnership so as to authorise a partnership to deal lawfully as 'dealer' under that licence.
 (3) Therefore, the object of the partnership namely, dealing by the partnership in food-grains under the licence, which was in the name of one-partner (Plaintiff) alone was illegal as the partnership was not licensed as a partnership. So the dealing by the partnership in food-grains was in contravention or the C.P. and Berar Food-grains Control Order and was illegal.
 (4) Suit for accounts of such a dissolved partnership was not maintainable.


(4) Suit for accounts of such a dissolved partnership was not maintainable.
 All the above grounds apply to the present case on the basis of the provisions of the M.C.D.C. Order which are substantially similar to the corresponding provisions of the C.P. and Berar Food-Grains Control Order on which those grounds are based by the Supreme Court. Consequently the decision of the Supreme Court applies directly to the present case and is sufficient to decide it, being ample authority of the highest court in the land, in particular, the decision of the Supreme Court does not rely upon any express prohibition of transfer such as contained in Section 13 and Section 16 of the Madras Rationing Order 1943. The decision shows that the illegality of the partnership does not depend on there being an express prohibition such as contemplated in Sections 13 and 16. That question, as to whether the absence of such express term affected the illegality of a partnership such as concerns in the present case was bereft of direct authority cf this Court when our learned brother, Seshachalapathl, J., made the reference on 3-8-1961, But, subsequently, direct authority of the highest Court has come into existence on this question when the Supreme Court passed judgment on 11-4-1962.


Their Lordships of the Supreme Court did not consider the question as to whether the C.P. and Berar Food-Grains Control Order and the prohibition of dealing without a licence under that order was merely to protect the, revenue or whether the object was the furtherance of public policy or the question as to whether the partnership would be illegal if the object of the C.P. and Berar Food-Grains Control Order had been only for the protection of the revenue and not in furtherance of public policy. But, we find that it does not affect the present case in view of the substantial similarity of the relevant provisions of the M.C.D.C. Order with the relevant provisions of the C.P. and Berar Food-Grains Control Order. The principle of the decision of the Supreme Court directly applies to the present case and the position mains unaffected by the decision of the Calcutta High Court in (S) . It is clear that the partnership was illegal and that the suit was not maintainable.
 29. Though the decision of the Supreme Court is direct authority which is sufficient and ample to decide the present case, we have dealt with the various other decisions as they were cited and relied upon by the learned Advocates in the course of their arguments.
 30. We, therefore, hold that the suit partnership is void and that the suit is not maintainable. Consequently, we uphold the judgment of the Court below and dismiss the second appeal with costs.


Majety Balakrishna Rao vs Mooke Devassy Ouseph And Sons on 3 December, 1957

JUDGMENT Umamaheswaram, J.


1. This is an appeal brought by the plaintiff as against the judgment and decree at the District Judge of West Godavari at Eluru dismissing his suit for recovery of damages for breach, of a contract dated 29th September 1950. According to the plaintiff, the defendant gave an order for a wagon load of black gingelly by a telegram dated 29-9-1959 and that the price was fixed at Rs. 84-3-0 per bag of 164 Lbs. F. O. R, Eluru.
 The plaintiff, who accepted the order, on the same day applied to the M. and S. M. Railway for a wagon and a railway wagon was allotted on 15th October. The goods, viz., 251 bags of gingelly were loaded in the wagon on the same day. The railway receipt was obtained in the name of the plaintiff and endorsed to the Central Bank, Eluru. He also drew a hundi for the amount of the price on the defendant and delivered it to the Bank.
 After the plaintiff sent a telegram intimating the dispatch of the goods, the defendant by an ante-dated postcard informed the plaintiff that the latter may not book the goods if not already despatched. Another ante-dated post card was sent by the defendant stating that the goods would not be accepted as the plaintiff had delayed in sending the consignment. The wagon reached Cochin on 26th October and the defendant refused to pay the hundi and toke delivery of the goods.
 Further correspondence passed between the parties and the plaintiff through P. W. 1 arranged for the resale of the goods. The suit was instituted by the plaintiff for recovery of Rs. 4144-8-9 as damages on the basis of the prices fetched at the resale. He claimed the freight charges, demurrage, commission and brokerage paid at the time of resales.


2. The defendant resisted the suit on the ground that the plaintiff alone committed default inasmuch as he did not consign the goods immediately after the order was placed on him. He contended that the contract was validly terminated by him and that he was consequently not liable to pay any damages. He further pleaded that even assuming that he had committed the breach of the contract, he was not liable to pay damages on the basis of the prices realised at the resales held by P. W. 1.
 3. Seven issues were framed by the District Judge. He found in paragraph 6 of the judgment that the case of the defendant that the goods should be immediately booked and delivered was not true, that the plaintiff took all the necessary steps to fulfil his part of the contract and that the contract was not validly terminated by the defendant.
 In paragraph 7, he found that the plaintiff had no right "to resell the goods either under the contract or under law", that on the date of the breach viz., 16-10-1950, the market price was higher than the contract price and that the plaintiff was consequently not entitled to any damages. He overruled the plea of the defendant that the Court had no jurisdiction to entertain the suit. In the result, he dismissed the plaintiffs suit. The appeal has consequently been preferred by the plaintiff to this Court.
 4. The questions that arise for decision are those covered by issues 4 and 5. Sri K. Ramachandra Rao, the learned advocate for the respondent, stated at the opening that he was not challenging the findings of the District Judge in regard to issues 1 to 3 viz., that the respondent had committed the breach of the contract. So, the only question that has to be decided is whether the plaintiff has established his claim to recover damages, railway freight, demurrage, commission and other expenses of resale.


5. Sri Sankara Sastri, the learned advocate for the appellant, strenuously contended that the contract dated 29-9-1950 related to a sale of specific foods, that the title to the goods passed to the defendant on the plaintiff accepting his order and that the plaintiff was entitled to exercise a right of resale on the defendant committing the breach of contract. In order to appreciate his argument it is necessary to set out a few relevant facts. On 29-9-1950, the defendant sent a telegram Ex. A-20 to the plaintiff in the following terms :
 "Received. If immediately bookable despatch one wagon Kumppellu cheaply eighty four eight."
 He confirmed the telegram by a letter and directed the plaintiff to wire the result after booking. The plaintiff thereupon sent a wire thus :
  "Received.    Purchased     Wagon     Karupapillu Eighty Four Eight Booking.........."


By his letter marked as Ex. A-22, he wrote in the following terms :
  "We have purchased for you black gingelly at Rs.  84-8-0 per hag of  164 Lbs.  to he booked to rail   at  Eluru   and  came  to this  village.  We  have intended  for  a  wagon.    As  soon   as   it is  allotted we will book the goods and send them.........."


Though according to the correspondence set out above, the plaintiff states that he had purchased the goods and despatched them in the wagon, but the Managing Partner of the plaintiff's firm, who was examined as P. W. 2, deposed that on 29-9-1950 the plaintiff's firm had 281 bags of gingelly and that they supplied 251 bags out of that quantity. He stated that on the date of loading, they had more than 281 bags of gingelly.
 In the course of the cross-examination, he stated that the plaintiff did not purchase any goods on 29-9-1950 as they had sufficient stock with them and that the expression "purchased" used by them in the correspondence was only a business term. It is therefore clear from his evidence which I accept, that the subject-matter of the contract was not specified goods as defined in Section 2 (14) of the Indian Sale of Goods Act, hereinafter referred to as the Act.
 According to the definition, "specific goods" means goods identified and agreed upon at the time a contract of sale is made. I have no doubt that the goods, which were despatched in the wagon, were not actually identified. The mere fact that they were capable of identification does not bring it within the terms of the definition. As the goods were not identified and agreed upon at the time when the contract was made viz.,. 29-9-1950, they are generic or unascertained goods within the meaning of the Act.


In this view, I am unable to accept the contention of the learned Advocate for the appellant that the terms of Section 20 or Section 21 of the Act apply to the case. I am clearly of opinion that as the contract was for the sale of unascertained goods, section 23 is attracted. The question for consideration is whether there was an unconditional appropriation within the meaning of Sections 23 (2) and 25 (1) of the Act. Section 23 (2) runs as follows :
 "Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the rights of disposal, he is deemed to have unconditionally appropriated the goods to the contract,"
 Section 25 (1) is as follows :
 ''Where there is a contract for the sale of specific goods or where goods are subsequently appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve the right of disposal of the goods until certain conditions are fulfilled. In such cases, notwithstanding the delivery of the goods to a buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled."


6. The Point for consideration in the appeal is whether, when the plaintiff delivered the goods to the carrier, i.e., railway company, for the purpose of transmission to the buyer, he reserved the right of disposal and consequently there was no unconditional appropriation of goods to the contract. As stated supra, the plaintiff had obtained the railway receipt in respect of the goods in his own name. Ho endorsed the railway receipt in favour of the Central Bank, Eluru and delivered the hundi with a direction that the railway receipt should be delivered to the buyer only when the hundi was honoured and the price of the goods was paid.
 According to Sri K. Ramachandra Rao, the learned advocate for the respondent, the fact that the railway receipt was taken in the name of the seller himself is Prima facie evidence that he intended to reserve the right of disposal of the goods and that the title would pass to the buyer only when he honoured the hundi and paid the price of the goods.
 In support of his contention he strongly relied upon a decision of the Division Bench of this Court in State of Madras v. Venkataramaniah and Sons, (A). The learned Judges held that the fact that the goods had undergone the selective process, weighed and were delivered to the common carrier for transport did not show that there was an unconditional appropriation.
 They further held that the question whether the appropriation was unconditional turned upon the construction of Section 25 of the Sale of Goods Act i.e., whether the seller reserved the jus disponendi. They observed that as the railway receipt, which is a document of title, was taken out in the name of the seller, he must be deemed to have manifested an intention to remain the owner and to retain control over the goods till the buyer made the payment through the bank. They added ;


"If on the other hand the seller books the goods to self the appropriation can be said to have been affected only when full payment is made to the seller."
 I am inclined to hold that the facts if this case are directly governed by the Bench decision.
 7. The learned advocate for the respondent further relied on a decision of the Bombay High Court reported in Ford Automobiles v. Delhi Motor Co., AIR 1923 Bom 125 (B). This decision was no doubt delivered prior to the passing of the Indian Sale of Goods Act. The learned Judge discussed the principles of English law and held that the railway receipts stand on the same footing as bills of lading and that the fact that the railway receipt was taken in the name of the seller was prima facie evidence that he intended to reserve the right of disposal.
 He referred to the decision in Mirabita v. Imperial Ottoman Bank, (1878) 3 Ex. D 164 at p. 172 (C). The second rule extracted by the learned Judge from the judgment of Cotton L. J. in Mirabita v. Imperial Ottoman bank (C) (supra) is as follows :
 "If, however, the vendor, when shipping the articles which he intends to deliver under the contract, takes the bill of lading to his own order and does so not as agent, or on behalf of the purchaser, but on his own behalf, it is held that he thereby reserves to himself a power of disposing of the property, and that consequently there is no final appropriation, and the property does not on shipment pass to the purchasers.''


8. The question as to when the seller is deemed to reserve the right of disposal is discussed by Mr. Benjamin in his treatise on the Law of Sale of Personal Property, 5th Edition, at p. 359. The learned author states as follows :
 "The cases which illustrate the reservation of the right of disposal arise chiefly where parties at a distance from each other contract by correspondence, and where the seller wishes to secure himself against the insolvency or default of the buyer."
 He points out that although the seller might write to the buyer and specify the packages and marks identifying the goods and although he may accompany this with an invoice, stating that the specific goods are shipped for buyer's account and in accordance with the buyer's order, mating his election final and determinate, the property in the goods will nevertheless remain in the seller till the bill of lading has been endorsed and delivered to the buyer.
 9. In The Prinz Adalbert, 1917 AC 586 (D), Lord Sumner dealt with the general law where the seller pledged the bill of lading with a banker. The relevant observations are at pages 589 and 590 and are as follows ;
 "Possession of the indorsed bill of lading enables the acceptor to get possession of the goods on th& ship's arrival. If the shipper, being then owner of the goods, authorises and directs the banker, to whom he is himself liable and whose interest it is to continue to hold the bill of lading till the draft is accepted, to surrender the bill of lading against acceptance of the draft, it is natural to infer that he intends to transfer the ownership when this is done, but intends also to remain the owner until this has been done. Particular arrangements made between shipper and consignee may modify or rebut these inferences ........"


This decision was followed by the Supreme Court in Commr. of Income-tax, Madras v. Mysore Chromite Ltd., (E). Das, J. {as he then was) held that the property in the goods passed in London where the bill of lading was handed over to the buyer's bank against the acceptance of the relative bill of exchange. It was pointed out that the payment by the Eastern Bank Limited, Madras, was nothing but an advance made by them to their own customer on the security of the goods covered by the bill of lading.
 10. That the rule applicable to delivery of goods by carriers by sea is equally applicable to delivery of goods by carriers by land and to Canal Boat Companies is pointed out by Mulla, J. at page 129 in AIR 1923 Bombay 125 (B) by reference to the decisions in Dutton v, Solomonson, (1803) 3 B and P 582 : 127 E. R. 314 (F) and Fragano v. Long, (1825) 4 B and C 219 : 107 E. R. 1040 (G).
 According to the learned Judge, there is no difference in principle between taking the bill of lading and the railway receipt in the name of the seller. The same view was taken by the Lahore High Court in Sundar Singh v. Gulab Singh, AIR 1927 Lah 269 (H).
 11. The identical question came up for decision before the Patna High Court after the passing of the Indian Sale of Goods Act in Governor General of India in Council v. Joynarain, AIR 1948 Pat 36 (I). Referring to Section 25 (2) of the Act, Meredith, J. observed as follows at p. 37 :


"Though this provision is expressed as relating to the shipment of goods, the same principle will apply to their transmission by rail; see Firm Ugarchand Gajanand v. Firm Motiram Ghanshamdas, AIR 1938 Sind 18 (J); AIR 1923 Bombay 125 (B) and AIR 1927 Lah 269 (H). In the last mentioned case it was held that where goods are sent by railway, the railway receipt being addressed to self to be delivered to the purchaser only on receipt of the price of the goods, the property in the goods does not pass to the purchaser till the price is paid."
 The same view was taken by the Allahabad High Court in Ram Karan Das v. Sardar Singh, 1950 All L. J. 145 (K) and by the Assam High Court in Ramniwas v. Commr. of Taxes, Assam, AIR 1952 Assam 178 (L). The decisions are all uniform that the rule which applies to the bills of lading is equally applicable to railway receipts.
 The actual difference between delivery to a common carrier and delivery on board a vessel is however pointed out by Mr. Benjamin in his treatise on Sale, which is extracted at page 114 of the Indian Sale of Goods Act and Partnership Act by Pollock and Mulla, Second edition, in the following words :
 "Where goods are delivered, by the seller in pursuance of an order to a common carrier for delivery to the buyer, the delivery to the carried passes the property, he being the agent of the buyer to receive it, and the delivery to him being equivalent to a delivery to the buyer."


"Where goods are delivered on board a vessel to be carried, and a bill of lading is taken the delivery by the seller is not a delivery to the buyer, but to the captain as bailee for delivery to the person indicated by the bill of lading, as the one for whom they are to be carried."


But, if the railway receipt or the hill of lading is
taken in the name of the seller,     it is regarded in
English law as prima facie reservation of the right
of disposal of the goods by the seller.    Sri Sankara
Sastri, the  learned advocate  for the appellant, has
not pointed out a single decision to show that there
I is any  distinction  in  principle   in   regard to   reservation  of  title  in  respect of  a  bill  of lading  and
a railway receipt.


12. Sri Sankara Sastri invited my attention to the decision reported in Siddique and Co. v. Rangiah Chettiar, 1947-2 Mad LJ 79 : (AIR 1948 Mad 122) (M). It has no bearing on the facts of this case inasmuch as the contract therein related to the sale of specific goods in a deliverable state and the goods were not entrusted to any common carrier or a railway company. The next decision cited by him, Madras State v. Ramalingam and Co. AIR 1956 Madras 695 (N), has also no bearing on the facts of this case.
 It was held by the learned Judges on an interpretation of Section 25 (2) and (3) of the Act that the title to the goods passed in the Madras State inasmuch as the price was paid by the negotiating bankers on the receipt of the shipping documents, the bill of lading and the bill of exchange as the agent of the buyer.
 13. Sri Sankara Sastri, however, raised an interesting and difficult question of law based on the specific language of Section 25 (2) of the Act. He contended that inasmuch as the Legislature specifically enacted Sub-sees. (2) and (3) only in regard la bills of lading and not railway receipts and provided that if the goods are deliverable to the order of the seller or his agent, the seller is prima facie deemed to have reserved the right of disposal, no such presumption or prima facie reservation of the right of disposal would arise in the case of a seller taking the railway receipt in his own name.


There is considerable force in this contention. This argument has not been noticed in the several decisions decided after the passing of the Act except by the Assam High Court in AIR 1952 Assam 178 (L). The answer furnished at page 183 is not very convincing. As I am bound by the decision of the Division Bench of this Court in (A) and as the several decisions referred to supra take the same view I hold that the title in the goods did not pass to the buyer as contended by the appellant, I, therefore, agree with the District Judge that the appellant was not entitled to resell the goods I under the terms of Section 54 (2) of the Act.
 14. Following the decision in Motilal v. Mool Chand, (O), I hold that the appellant is only entitled to claim the difference between the contract rate and the rate prevailing on the date of the breach by way of damages.
 15. The finding arrived at by the learned District Judge that the goods sold by P. W. 1 between 8-11-1950 and 30-11-1950 were not the goods of the plaintiff is however, in my opinion, erroneous. The correspondence shows that when the defendant refused to take delivery of the goods, he instructed Chakola Lonappan Paul of Cochin to dear the goods from the wagon and dispose of them.
 Intimation was given to the defendant under Ex. A-39 D/- 4-11-1950 that the plaintiff had given orders to Chakola Lonappan Paul of Cochin to sell the goods in open market. Exhibit A-55 is the letter sent by the plaintiff to Messrs. Chakola Lonappan Paul firm. P. W. 1 was examined on behalf of the plaintiff to show that the sales were accordingly held as evidenced by Exs. A-l to A-16.


The mere fact that Exs. A-3, A-9, A-11 and A-12 did not disclose the name of the plaintiff, does not lead to the conclusion that the goods of others, were sold under those documents. P. W. 1 is quite specific that all the 251 hags cleared from the wagon were separately stocked and were sold under exhibits A-l to A-16. I accept his evidence and hold that what was sold under Exhibits A-l to A-16 were the goods of the plaintiff despatched under the suit contract.
 There is no satisfactory evidence on behalf of the respondent to show that the sales were not duly conducted by P. W. 1 or that the price realised did not represent the market rates on the dates of those sales.
 16. Sri Sankara Sastri next contended that ' even assuming that the appellant was not entitled to resell the goods under Section 54 (2) of the Act, the prices realised at those sales might be taken as representing the market, rates on those dates and damages awarded on that footing. In support of this argument. he relied upon the decision of the Madras High Court in Muthukrishna Reddiar and Sons v. Madhavji Devichand and Co. Ltd., (P).
 It was held by the learned Judges that the price realised at the resale might be taken as the true value of the damaged goods if there was no unreasonable delay on the part of the purchaser in selling the goods. It was further held that the damages must be assessed on the basis of the market-value prevailing at the place of delivery.


The question to be considered in the present case is whether there was no unreasonable delay on the part of the plaintiff in selling the goods and the market rate prevailing on the date of resale represents the market rate as on the date of the breach. As the goods were resold only on and after 8-11-1950 after the market had considerably fallen, I am inclined to agree with the District Judge that those rates should not be adopted as representing the market rate as on the date of the breach of the contract.
 17. I however do not agree with him that the date of the breach was 16-10-1950 and that the market price was higher than the contract price. He proceeded on the erroneous view that the market rate prevailing at Eluru as on the date of the breach should be taken into account.
 He ought not to have relied on the terms of the telegram Exhibit B-4 in which the plaintiff wrote that the market rate for black gingelly at Eluru as on 17-10-1950 was Rs. 85/8/0 or Rs. 86/-. He ought to have determined, as held in (P), the market rate of the goods as at the place of delivery on the date of the breach.
 18. Before dealing with the question as to the date of the breach, it is necessary to dispose of a preliminary objection raised by Sri K. Ramachandra Rao, learned advocate for the respondent, based on the decision in Angulliah and Co. v. Sassoon and Co.. ILR 39 Cal 568 (Q). At p. 579, Sir Lawrence Jenkins held as the plaintiffs claim for damages rested on resale, the Court should not have awarded damages on a totally different basis.


He expressed the opinion that if the defendant challenged the plaintiff's right to claim damages on the basis of resale, he should immediately apply for amendment of the plaint and claim damages on the difference between the contract price and the market price on the date of the breach. This decision was not followed by the Bombay High Court in Narsinggirji Manufacturing Co. v. Budansaheb, AIR 1924 Bom 390 (R). Macleod, C J. observed at p. 391 as follows :
 "In the next place, the fact that the plaintiff claimed as the measure of damages the difference between the price, which he realised on the resale of goods and the contract price, would, in my opinion, be no reason for the Court to refuse to award damages according to the correct measure. With all due respect to the Judges who decided ILR 39 Cal 568 (Q), it seems to us that it, is going too far to hold that when a plaintiff has made a mistake in demanding damages on a wrong basis, the Court must refuse to set right the mistake by directing the damages to be calculated in the proper way unless the plaint i; amended,"
 I am inclined to follow the liberal view of the Bombay High Court in preference to that of the Calcutta High Court. Out of abundant caution, Sri Sankara Sastri made an oral application to permit him to amend the plaint if I was inclined to accept the Calcutta view. But, as I am in agreement with the Bombay view that even without an amendment the Court is entitled to award the proper measure of damages if there is sufficient evidence on record, I think it is unnecessary to direct the amendment of the plaint.


19. The next question which has to be determined is one of fact as to when the breach of the contract took place. The learned District Judge found that the breach took place on 16-10-1950 when the defendant intimated to the plaintiff that he need not send the goods. Having carefully perused the evidence, I am not inclined to agree that the breach took place on that day and that the market rate of the goods as on that date should be taken into account.
 The correspondence makes it clear that the defendant ordered one wagon kumpellu and that the plaintiff immediately applied for a wagon. After the wagon was allotted on 15th October, the goods were loaded and sent to Cochin. The goods were received at Cochin on 26th October. The intimation given by the defendant under Exs. A-28 and A-29 that he would not receive the goods was before the due date of performance.
 It was open to the plaintiff either to accept the intimation given by the defendant or to keep open the contract till the date of performance. On 26th October, the plaintiff sent a wire to the defendant under Ex. B-5 requesting the defendant to pay the price of the goods and honour the hundi. On 28-10-1950, he wrote to the defendant to accept the delivery. A further telegram was sent on 29th October, that the wagon was not cancelled and that the defendant should take delivery without hesitation. The defendant sent a reply wire marked as Ex. A-37 on 31st October in the following terms :


"Your letter addressed Trichur reached Cochin camp yesterday as desired and authorised examined both files arrived decision follows up to demurrage about five hundred despatch delay loss three rupees per bag comes seven hundred and fifty altogether one thousand two hundred fifty from that you suffer five hundred ourselves seven hundred fifty hence instructed Bank receive less five hundred this decision only considering our future relationship please note this without prejudice to the legal rights of either side."
 As the plaintiff was not agreeable to the new terms proposed in Ex. A-37 he requested Chakola Lonappa Paul of Cochin to clear the goods and sell them. Reading the correspondence as a whole, I am inclined to take the view that the breach of the contract had taken place only after the goods reached Cochin and the defendant refused to take delivery and sent Ex. A-37 i.e. on or after 31st October. The date of Exhibit A-28 or Exhibit A-29 under which the defendant intimated that he would not accept the goods should not be taken as the date' of breach inasmuch as the plaintiff-seller had not accepted the rescission of the contract by the defendant. The facts of this case are directly governed by the decision in Phillpotts v. Evans, (1839) 5 M and W 475 : 151 E. R. 200 (S), which is given as second illustration at page 243 in Pollock and Mulla's Indian Sale of Goods Act and Indian Partnership Act, second edition, The headuote in (1839) 151 E. R. 200 (S) correctly sets out the decision and is in the following terms :


Where A contracted for the purchase of wheat, to be delivered at Birmingham as soon as vessels could be obtained for the carriage thereof; 'and subsequently (the market having fallen) gave the seller notice that he would not accept it if it were delivered, the wheat being then on its transit to Birmingham.' Held, in an action against A for not accepting the wheat, that the proper measure of damages was the difference between the contract price and the market price on the day when the wheat was tendered to him for acceptance at Birmingham and refused; and not on the day when the notice was received by the seller."
 At page 823, Mr. Benjamin in his treatise on the Law of Sale of Personal Property, 8th edition, refers to this case and states as follows :
 "Lord Campbell said, in relation to (1839) 151 E.R. 200 (S) that it had been properly decided, but that the Exchequer of Pleas had not determined in that case that the seller would not have had the right of treating the bargain as broken, if he had chosen to do so, as soon as the buyer gave him notice that he would not accept the goods, without being compelled afterwards to make a tinder of them; and that the true point, decided in Ripley v. M'Clure, (1849) 4 Ex. 345 (T) was that a refusal' by the buyer to accept in advance of the arrival of the cargo he had agreed to purchase was not necessarily a breach of contract, but that, if unretracted down to the time when the delivery was to be made, it showed a continuing refusal, dispensing the seller from the necessity of making tender."
 Following this decision, I hold that the time for ascertaining the damages for non-acceptance is the date when the goods were finally refused to be taken delivery of by the defendant.


20. Sri K. Ramachandra Rao, the learned advocate for the respondent, contended that as no specific date of delivery had been fixed under the terms of the contract, it was not open to the plaintiff to avail himself of the terms of Section 60 of the Act and wait till the date of delivery and that the date of reptidiation under Exhibit A-28 should he taken as the date of the breach of the contract. He referred in this connection to the decision in Millett v. Van Heek and Co. (1921) 2 KB 369 (U).
 What was held by the Divisional Court (Bray and Sankey JJ.) in that case was that when a contract provided for delivery within a reasonable time after a future date, it was not a contract for delivery at a fixed time within the meaning of Section 51, Sub-section (3) of the Sale of Goods Act, 1893. The learned Judges of the Court of Appeal reserved their opinion on that question. Atkin L. J., however observed at p. 378 that it was difficult to see why it should he said that the contract for delivery at times which could be determined by a Jury was not a contract for delivery at fixed times. He added:
 "It seems to me that a meaning could be given to the words, "if no time was fixed," by reading them as referring to a contract such as to deliver goods on demand or to deliver goods as required by the purchaser."


The expression used in Section 60 of the Act is not exactly the same as that contained in Section 51(3) of the Act. The expression employed is the "date of delivery". I am inclined to take the view on the facts of this case that the terms of Section 60 apply inasmuch as the defendant repudiated the contract before the date of delivery i.e., the wagon of goods reached Cochin. I am not inclined to agree with Sri Ramchandrarao's contention that as no specific or definite date of delivery was fixed the terms of Section 60 do not apply.
 21. Even assuming that the terms of Section 60 do not apply and that the contract should he regarded has one to be performed within a reasonable time. I am inclined to apply the decision in (1921) 2 KB 369 (U) and hold that the damages are to be fired in reference to the time for performance of the contract subject to questions of mitigation. At p. 377, Atkin L. J. observed as follows:
 "But it is said that, if no times have been expressed in the contract, and the contract would e construed by law as one for delivery by reasonable instalments over a reasonable time, even though those tunes might be ascertained as a question of fact by the jury, the plaintiff suing may not merely have an option, but is compelled, to fix his damages in reference to the market price at the time when the repudiation takes place.


That, it seems to me, would introduce an anomaly entirely without any kind of principle to justify it. I am satisfied that the code never intended to make that distinction or to vary what was the rule of law at the time when it was passed, a rule which has been recorded in countless decisions since the doctrine of repudiation of contract has received its development in Frost v. Knight, (1872) 7 Ex. 111. (V), namely, that the damages are to be fixed in reference to the time for performance of the contract subject to questions of mitigation."
 The Court of Appeal confirmed the view of the Divisional Court as to the measure of damages. When the defendant refused to accept delivery except on the terms mentioned in Exhibit A-37 dated 31st October, the plaintiff had requested Chakola Lonappa Paul to take delivery and sell the goods. It appears from the telegram sent by Chakola Lonappa Paul marked as Exhibit A-7 that the market rate of gingelly as on 2-11-1950 was Rs. 80/- per bag.
 I am inclined to adopt that figure as the market rate on the date of the breach. The defendant has not adduced any evidence to show that the plaintiff could have mitigated those damages. Calculating the damages on that footing, the plaintiff would be entitled to recover 251x Rs. 4-8-0 per bag i.e., Rs. 1129-8-0.
 22. The next question which has to he determined is whether the plaintiff is entitled to the railway freight incurred by him as special damage under Section 61 of the Act. Sri K. Ramachandra Rao contended that there was no pleading in regard to the railway freight. 1 am not inclined to accept his contention as the sum of Rs. 4144-8-9 claimed in the plaint includes this amount.


The mere fact that the plaintiff had not claimed this sum under the specific head of "special damages" does not, in my opinion, preclude him from claiming that amount. There is no doubt that the contract was F. O. R. and the defendant was bound to pay these charges at the time of taking delivery. The damages are such which the parties knew when they made the contract to be likely to result from breach of it, and are special damages within the meaning of Section 61 of the Act.
 In Ramalingam Chettiar v. Gokuldas Madavji and Co., AIR 1926 Mad 1021 (W), the cartage charges for taking the goods from Virudupatti to Tuticorin were allowed. Similarly, in Madhusudan Koer v. Badridas, AIR 1920 Cal 426 (X), the cost of freight and bags was allowed. Following these decisions, I am inclined to allow the plaintiff's claim in repard to the railway freight i.e., a sum of Rs. 758-4-0.
 23. In regard to demurrage charges paid by the plaintiff, I am inclined to agree with the contention of Sri K. Ramachandra Rao that they cannot be allowed inasmuch as the plaintiff was bound to clear the goods when the defendant refused to take delivery. Similarly, in regard to the commission and brokerage paid by the plaintiff at the time of resale, I hold that the plaintiff cannot claim those charges as I have found that he was not entitled to exercise the right of re-sale under Section 54(2) of the Act. In the result, I hold that the defendant would be liable to pay Rs. 1129-8-0 and Rs. 758-4-0 with interest from the date of plaint upto the date of payment.


24. The decree of the lower Court is set aside, and there will be a decree in favour of the plaintiff as indicated above. As the appeal is partly allowed, the parties will receive and pay proportionate costs throughout.


The Matter Of Collage Culture & ... vs . Apparel Export Promotion ... on 22 October, 2011

IN THE COURT OF SH. HARVINDER SINGH,
                       SPECIAL METROPOLITAN MAGISTRATE - 05,
                             DWARKA COURTS, NEW DELHI.

M/s Fullerton India Credit Co. Ltd.

through its Authorized Representative

Sh. Salman Hameed                           ....................Complainant

Versus

Lokesh Kumar                                ....................Accused

                                            C.C.NO.18900/10 dated 18.05.2010
                                            PS  ANAND VIHAR
                                            Under Section 138 of N. I. Act, 1881

a)       Sl. No. of the case                : 18900/10

b)       Date of commission of offence      : 01.05.2010 Approximately

c)       Name of the complainant            : M/s Fullerton India Credit Co. Ltd.

d)       Name of the accused, and his       : Lokesh Kumar
                                              S/o Late Sh. Sewa Dass,
                                              R/o 5297, Bharat Nagar, Basant Lane,
                                              Paharganj, New Delhi - 110 055.

e)       Offence complained of              : Under Section 138 of N. I. Act, 1881

f)       Plea of accused                    : Pleaded not guilty

g)       Final order                        : Convicted

h)       Date of such order                 : 22.10.2011

i)        Brief
                  statement of the reasons for the decision :


i)        Brief
                  statement of the reasons for the decision :

1. By way of this judgment, I shall dispose of complaint under Section 138 .....................Contd/ Negotiable Instruments Act, 1881 filed by the complainant i.e. M/s Fullerton India Credit Co. Ltd. through its authorized representative Sh. Salman Hameed against the accused Lokesh Kumar S/o Late Sh. Sewa Dass, R/o 5297, Bharat Nagar, Basant Lane, Paharganj, New Delhi

- 110 055.


2. The brief facts of this case as per allegations of the complaint are that the complainant i.e. M/s Fullerton India Credit Co. Ltd. (Earlier known as First India Credit Co. Ltd.) is a NonBanking Financial Company duly incorporated under the provisions of Companies Act, 1956 and the complainant is engaged in the business of loans including personal loans, mortgage loans, vehicle loans etc. As per the para no.04 of the complaint, it is alleged by the complainant that the accused was sanctioned and granted a personal loan to the tune of Rs.1,15,000/ vide loan agreement no.6825000021890. It is further alleged by the complainant that the accused in partial discharge of his liability, issued three cheques bearing nos.166558, 166559 and 166560 each dated 06.03.2010 for a sum of Rs.57,500/, Rs. 28,750/ and Rs.11,322/ respectively and each drawn on ICICI Bank Limited in favour of the complainant. It is further alleged in the complaint that complainant presented the above said cheques to its banker which were returned dishonored vide cheques returning memos each dated 23.03.2010 with the remarks ''Funds Insufficient''. It is further alleged in the complaint that complainant served upon the accused a Legal Demand Notice dated .....................Contd/ 13.04.2010 dispatched on 13.04.2010 through its advocate thereby demanding the payment of above said cheques amount in question within 15 days of the receipt of the said notice. It is further alleged in the complaint that accused failed to comply with the notice and to make the payment against abovesaid cheques within 15 days of receipt of Legal Demand Notice. Accordingly, this complaint was filed by the complainant on 18.05.2010.


3. After filing of complaint, authorized representative of the complainant namely Sh. Salman Hameed led his presummoning evidence by way of affidavit and after hearing Ld. Counsel for complainant, summoning order was passed against the accused vide order dated 29.05.2010 and after the appearance of accused, a separate notice under Section 251 of Cr. P.C was put to the accused on 06.08.2010 to which accused pleaded not guilty and claimed trial, thereafter the matter was fixed for CE and crossexamination.


4. To prove the case of complainant, Sh. Salman Hameed, AR of the complainant got examined himself as complainant witness and tendered his post summoning evidence by way of affidavit Ex.CW1/A1 and relied on the documents already exhibited in presummoning evidence i.e. Ex.CW1/1 to Ex.CW1/8 and further reiterated the contents of the complaint on oath before this Court. The power of attorney of Sh. Salman Hameed is exhibited as Ex.CW1/2, original cheques as Ex.CW1/3 (Collectively), cheques returning ....................Contd/ memos as Ex.CW1/4 (Collectively), Legal Demand Notice as Ex.CW1/5, original postal receipt as Ex.CW1/6, original POD as Ex.CW1/7 and loan repayment schedule as Ex.CW1/8. Thereafter, the witness of the complainant was cross examined by Sh. S. S. Draal, Ld. Counsel for the accused in length. CW2 Sh. S. S. Pandey, Public Relation Inspector, Postal Department was examined as witness by the complainant to prove the delivery of notice to the accused person. CW2 exhibited Booking Slip as Ex.CW2/A and Delivery Slip as Ex.CW2/B. The said witness was also crossexamined by the Ld. Counsel for the accused. After that, complainant's evidence was closed on the statement of the Ld. Counsel for the complainant on 13.01.2011.


5. After that the statement of the accused was recorded under Section 313 of Cr. P.C. r/w 281 of Cr. P.C. on 08.04.2011 in which all incriminating evidence alongwith exhibited documents were put to the accused Lokesh Kumar in which he admitted that he had availed loan from the complainant bank vide loan agreement no.6825000021890. It was further admitted by the accused person that all the cheques in question bear his signatures, but, stated that the signatures on the cuttings on the cheque bearning no.166560 dated 06.03.2010 are not his signatures. Accused person further stated that the cheques in question are security cheques and all the particulars except signatures have been filled by the complainant. In answer to another question, whether the cheques were dishonored vide .....................Contd/ returning memos Ex.CW1/4 (Collectively) with the reasons "Funds Insufficient", the accused admitted that the cheques were returned dishonored due to abovesaid reason vide abovesaid returning memos, but, further stated that the cheques were presented without intimation to him. The accused further submitted that neither he had received Legal Demand Notice nor AD card is signed by him. In answer to another question in his statement under Section 313 of Cr. P.C. r/w Section 281 of Cr. P.C., the accused stated that he wants to lead defence evidence.


6. In defence, accused examined Sh. Ramji Lal, Parcel Supervisor, posted at Parcel Office, New Delhi Railway Station as DW1 on 28.07.2011. The DW1 exhibited leave record of the accused person as Ex.DW1/A and deposed before this Court on oath that accused was on duty on 15.04.2010 from 08:00 am to 04:00 pm. The DW1 was cross examined by Sh. A. K. Singh, Ld. Counsel for the complainant. The accused closed his defence evidence on 28.07.2011 and thereafter, the matter was fixed for final arguments.

7. I have heard Ld. Counsels for both the parties and I have also perused the record of the case file and evidence on record.

8. Following Points arise for determination by this court :
 ....................Contd/ (1) Whether complainant has proved on record the essential ingredients of offence under Section 138 of Negotiable Instruments Act, 1881 against the accused.

 (2) Final order.

9. Point No. (1) - To decide this point lets analyze the main ingredients of Section 138 of Negotiable Instrument Act, 1881 and the evidence on record regarding these ingredients :

 (a) Whether the cheque was drawn/issued by the accused person to the complainant on an account maintained by him with the bank for discharge, in whole or in part, of any debt or other liability?


AR of the complainant has deposed in para no.04 of his affidavit Ex.CW1/1A that the complainant granted and sanctioned personal loan to the accused to the tune of Rs. 1,15,000/ vide loan agreement number 6825000021890 dated 28.07.2009 and that the accused in partial discharge of his liability, issued three post dated cheques bearing nos. 166558, 166559 and 166560 each dated 06.03.2010 for a sum of Rs.57,500/, Rs.28,750/ and Rs.11,322/ respectively and all drawn on ICICI Bank Limited respectively in favour of the complainant. On this point, the main contentions of the accused person are :  .....................Contd/

 1. That the accused had settled the matter with the complainant on 30.04.2010 in the sum of Rs.1,14,197/ and had made a payment of Rs.30,000/ on 30.04.2010 itself and the complainant has filed this complaint even after settlement of the loan account.

 2. That the cheques in question are security cheques which were given as blank signed cheques at the time of grant of loan and all the particulars except signatures have been filled by the complainant.

 3. That the signatures on the cuttings on cheque no.166560 are not the signatures of the accused person and are forged and fabricated one.


I have carefully considered the contentions of the accused person and I have also gone through the evidence on record. It is pertinent to mention here that the accused person has not disputed his liability towards the complainant and has in fact admitted in his statement under Section 313 of Cr. P.C. r/w 281 Cr. P.C. that he has availed loan from the complainant as alleged by the complainant.

 Now, this Court is dealing with the 1st defence of the accused that since the accused person had settled the matter with the complainant on 30.04.2010 and had made a payment of Rs.30,000/ on 30.04.2010 i.e. before expiry of 15 days from the receipt of notice as alleged by the complainant and before filing of this complaint, therefore, this complaint is not maintainable.

 Admittedly, the accused person had made payment on 30.04.2010 vide .....................Contd/ Ex.CW1/D2 against offer for settlement of loan account, the same being exhibited as Ex.CW1/D3. On this issue, the law as per Section 59 and 60 of Indian Contract Act, 1881 which can be helpful is as under : Section 59 : Application of payment where debt to be discharged is indicated : "Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly."


Section 60 : Application of payment where debt to be discharged is not indicated : "Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits."

 In view of the abovesaid law provided in Section 59 and 60 of Indian Contract Act, 1881 and of the fact that the payment was admittedly made against the offer for settlement of loan account and not against the cheques amount in question demanded through legal demand notice, therefore, the contention of the accused person that this complaint is not maintainable is hereby rejected.

 Now, this Court is dealing with the 2nd defence of the accused person that the cheques in question were security cheques which were taken by the complainant at the time of grant of loan as blank signed cheques and all the particulars have been filled by the complainant.

 .....................Contd/ The relevant law in this regard is :  Section 46 of Negotiable Instruments Act, 1881 : "Delivery The making, acceptance or indorsement of a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive."

 Section 118 of Negotiable Instruments Act, 1881 "Section 118 : Presumptions as to negotiable instruments : Until the contrary is proved, the following presumptions shall 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, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;


(b) as to date  that every negotiable instrument bearing a date was made or drawn on such date;
 (c) as to time of acceptance  that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity."

 Section 139 of Negotiable Instrument Act, 1881 "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."

 In view of presumptions provided by the Section 118 and Section 139 of Negotiable Instrument Act, 1881, presumption is that the cheques were issued/drawn for consideration and further the cheques were drawn or made on date which they bear. So, the onus was on the accused to rebutt these presumptions. In this case, the accused person has not brought any evidence to substantiate his defence, but, has relied upon the admission of the AR of the complainant that the mode of payment of EMIs in this case was through ECS, .....................Contd/ therefore, it supports the case of the accused that the cheques in question were security cheques given by the accused person as blank signed cheques at the time of grant of loan.

 First of all, lets discuss the law on security cheques. On security cheques in the matter of Collage Culture & Ors. Vs. Apparel Export Promotion Counsil reported 2007 (99) DRJ 251 in Crl. M. C. No. 3011/2004, Hon'ble High Court of Delhi has held as under :


"It is urged that no actionable cause exists in favour of the complainant to make out the offence under Section 138 of Negotiable Instruments Act, 1881. It is urged that the sine qua non for the applicability of Section 138 of Negotiable Instrument Act, 1881 is the issuance of cheque for a debt which is due towards discharge of a liability. It is urged that a cheque given as a collateral security or as a security for payment of an amount which may become payable at a future date upon the happening or the nonhappening of an event i.e. towards a contingency can not be the foundation of an action under Section 138 of Negotiable Instruments Act, 1881."

 "It would be relevant to note that the statute does not refer to the debt being payable, meaning thereby, a post dated cheque for a debt due, but payment postponed at a future date would attract Section 138 of the Negotiable Instruments Act, 1881. But, the cheque issued not for an existing due, but issued by way of a secuirty, would not attract Section 138 of the Negotiable Instruments Act, 1881, for it has not been issued for a debt which has come into in existence."

 The abovesaid law has been reiterated by Hon'ble High Court of Delhi in the matter of "Ravi Kumar D......... Vs. State of Delhi & Anr." passed on 01.03.2011.


I have gone through the evidence of the accused and crossexamination of the AR of the complainant and the case of the accused is that the accused issued 03 blank signed .....................Contd/ cheques to the complainant at the time of grant of loan for the purpose of security. Since, in this case, the case of the accused person is not that the cheques were issued before his liability has actually become due and further since, no evidence has been brought by the accused person to substantiate his defence, so, the law laid down by the Hon'ble High Court of Delhi in the matters of Collage Culture & Ors. Vs. Apparel Export Promotion Counsil reported 2007 (99) DRJ 251 in Crl. M. C. No. 3011/2004 and "Ravi Kumar D......... Vs. State of Delhi & Anr." is not applicable to the present facts and circumstances of this case and we have to fall back on the presumption provided under Section 118 of N. I. Act, 1881 as to date. In view of the law and reasons discussed above, the accused has not being able to rebutt the presumption as to date provided under Section 118 Negotiable Instrument Act, 1881, therefore, the defence of the accused that the cheques in question were given by the accused at the time of grant of loan is hereby rejected.


The law on blank signed cheques as laid down by Hon'ble High Court of Delhi in the matter of "Ravi Chopra Vs. State & Anr." decided on 13.03.2008 in paragraphs number 15 to 21 is as under :  Para 15 :  "What appears to be clear from the above definitions that an essential feature of a cheque is that it has to be signed by the maker..............................But what about the other material particulars? Can the word "cheque" occurring in Section 138 NI Act include a blank cheque which is signed by the drawer but the material particulars of which are left unfilled at the time it was handed over to the payee? .............................."

 .....................Contd/ Para 16 :  "..............................Section 87 - Effect of material alteration :  ..............................The provisions of this section are subject to those of Sections 20, 49, 86 and

125."

Para 17 :  "While it is correct that in terms of the above provision, any material alteration to a cheque without the consent of the drawer unless it is made to carry out the common intention of the original parties thereto renders the cheque void, the expression "material alteration" has not been defined. Significantly, Section 87 has been made subject to Sections 20, 49, 86 and 125 NI Act.............................."

Para 18 :  "Section 20 NI Act talks of "inchoate stamped instruments" and states that if a person signs and delivers a paper stamped in accordance with the law and "either wholly blank or have written thereon an incomplete negotiable instrument" such person thereby gives prima facie authority to the holder thereof "to make or complete as the case may be upon it, a negotiable instrument for any amount specified therein and not exceeding the amount covered by the stamp." Section 49.............................."


Para 19 :  "The above provisions have to be read together with Section 118 NI Act which sets out various presumptions as to negotiable instruments. The presumption is of consideration, as to date, as to time of acceptance, as to transfer, as to endorsement, as to stamp. The only exception to this is provided in proviso to Section 118 which reads as under :

 Provided .............................."

Para 20 :  "A collective reading of the above provisions shows that even under the scheme of the NI Act it is possible for the drawer of a cheque to give a blank cheque signed by him to the payee and consent either impliedly or expressly to the said cheque being filled up at a subsequent point in time and presented for payment by the drawee.............................." Para 21 :  "The position in law has been explained in the judgment of the Division Bench of the Kerala High Court in Lillykutty v. Lawrance 2003 (2) DCR 610 in the following words:

 ..............................We are of the view, by putting the amount and the name there is ....................Contd/ no material alteration on the cheque under Section 87 of the Negotiable Instruments Act. In fact there is no alteration but only adding the amount and the date.............................."

 So, in the light of the abovesaid law, even if, for the sake of arguments, we may presume that the cheques in question were given by the accused to the complainant as blank signed cheques, even then, it is no defence in the eyes of law.


Now, this Court is dealing with the defence of the accused that since the mode of payment of the EMIs was through ECS, therefore, there was no occasion for issuance of cheques in question by the accused. I have considered this contention of the accused. The AR of the complainant has deposed in the para no.04 of affidavit exhibited as Ex.CW1/1A that the accused issued cheques in question in favour of the complainant towards partial discharge of his liability. In the opinion of this Court, there is no bar on payment through cheques, even in cases, where the mode of payment of EMI is through ECS and the accused has also not brought any evidence on record to prove that payment through cheques could not have been accepted by the complainant bank in this case, therefore, this contention of the accused is also rejected.

 Now, this Court is dealing with the last defence of the accused person that the signatures on the cuttings on the cheque number 166560 are not his signatures and are false and fabricated signatures. Perusal of the cheques in question exhibited as Ex.CW1/3 (Collectively) reveal that the earlier amount mentioned in words and figures on cheque .....................Contd/ bearing number 166560 was of Rs.10,926/ and the later amount mentioned in words and figures after altering is of Rs.11,322/, so, there is a little difference between the two amounts i.e. of Rs.396/ only. In these circumstances, this Court sees no reason why the complainant would forge the signatures of the accused person after altering the amount of the cheque to increase it in the sum of Rs.396/ only.


Furthermore, bare perusal of signatures on the cuttings by naked eye shows that they are apparently similar to the admitted signatures of the accused on two other cheques and on the cheque number 166560. Since, two signatures can never be identical and can only be similar, therefore, the contention of the accused that the signatures on the cuttings on cheque number 166560 are not his signatures is hereby rejected.

 In view of abovesaid discussions, I am of the opinion that the complainant has proved on record that cheques were drawn/issued by the accused on dates mentioned on the cheques in question to the complainant on an account maintained by him with the banker for discharge of his partial debt and liability towards the complainant.

 (b) Whether the cheques were presented to the bank within a period of six months or within period of its validity?

 The AR of the complainant deposed in his examination in chief in para no.05 of the affidavit Ex.CW1/A1 that the complainant presented the cheques in question for .....................Contd/ encashment to its banker, but, were returned dishonored by its banker vide return memos Ex.CW1/4 (Collectively) with remarks "Insufficient Funds".

 Perusal of record reveals that cheques in question Ex.CW1/3 (Collectively) are dated 06.03.2010 which got dishonored vide returning memos Ex.CW1/4 (Collectively) dated 23.03.2010. The accused person chose not to crossexamine the complainant witness on this point. In view of the fact that evidence of the complainant has gone uncontroverted to this factum, so, it is proved on record that the cheques were presented and within six months from the date of issuance of cheques and within period of their validity.


(c)      Whether   the   cheques   so   presented   for   encashment   were

dishonored?

 In this case, AR of the complainant who appeared as a witness on behalf of complainant has exhibited the cheques returning memos as Ex.CW1/4 (Collectively). This factum of dishonourment is also not controverted by the accused person and he chose not to crossexamine the complainant witness on this point and has further admitted in his statement under Section 313 of Cr. P.C. r/w 281 of Cr. P.C. that the cheques were dishonored vide return memos as alleged, but, submitted that the cheques were presented without intimation to him. Therefore, in view of the evidence of the AR of the complainant ....................Contd/ and of the fact that the evidence of the complainant witness is not controverted by the accused person, it is proved on record that the cheques in question were dishonored vide cheques returning memos Ex.CW1/4 (Collectively) dated 23.03.2010 with the reason ''Funds Insufficient''.

 (d) Whether the payee/complainant of the cheques issued a Legal Demand Notice within 30 days from the receipt of information from the bank regarding dishonourment of the cheques?


On this fact, the complainant witness has stated in his examination in chief that the complainant got issued a Legal Demand Notice dated 13.04.2010 which is exhibited as Ex.CW1/5 through its counsel and was sent to the accused on 13.04.2010 vide registered post, UPC and AD and the receipt and UPC being exhibited as Ex.CW1/6 (Collectively) and AD card being exhibited as Ex.CW1/7. Perusal of the case file reveals that return memos exhibited as Ex.CW1/4 (Collectively) are dated 23.03.2010, the Legal Demand Notice exhibited as Ex.CW1/5 is dated 13.04.2010 and the postal receipt and UPC being exhibited as Ex.CW1/6 (Collectively) are dated 13.04.2010. The accused person chose not to cross examine the complainant witness on this point and has stated in his statement under Section 313 of Cr. P.C. r/w 281 of Cr. P.C. that he had not received any such Legal Demand Notice.

 .....................Contd/ Now, as far as this factum that the legal demand notice was issued and dispatched within 30 days from the receipt of return memos is concerned, there is no dispute about this fact and the accused chose not to crossexamination the complainant witness on this point. So, it is proved on record that complainant issued legal demand notice within 30 days from the receipt of information from the bank regarding dishonourment of the cheques.

 (e) Whether drawer of the cheques failed to make the payment within 15 days of receipt of aforesaid Legal Demand Notice?


In this case, AR of the complainant has deposed in para no.06 of his affidavit exhibited as Ex.CW1/A1 in his examination in chief that the accused failed to pay the cheques amount in question within stipulated time despite service of legal demand notice exhibited as Ex.CW1/5 and the AD card exhibited as Ex.CW1/7 is proof of service of legal demand notice on the accused. The CW2, Sh. S. S. Pandey, Public Relation Inspector, Postal Department has exhibited Booking Slip as Ex.CW2/A and Delivery Slip Ex.CW2/B. The CW2 has further deposed on oath before this Court that as per Delivery Slip, the post in question was delivered by Sh. Satya Prakash, Postman, Beat No.05, Batch No.01 on 15.04.2010. On this issue, the accused person has taken the defence that he has not received the legal demand notice as alleged by the complainant and the signatures of the accused .......................Contd/ person on AD card Ex.CW1/7 and the Delivery Slip Ex.CW2/B are forged one. The accused person has brought a witness namely Sh. Ramji Lal, Parcel Supervisor, presently posted at Parcel Office, New Delhi Railway Station as DW1 to substantiate his defence. The DW1 has deposed in his examinationinchief that the accused Lokesh Kumar is working under him and was on duty on 15.04.2010 from 08:00 am to 04:00 pm and has exhibited the Leave Record as Ex.DW1/A.

 It is pertinent to mention here that the accused has not disputed the address mentioned on the legal demand notice, therefore, it can be safely presumed that the notice was dispatched to the correct address of the accused person.


Now, as far as the contention of the accused is concerned that he had not received any Legal Demand Notice, this Court sees no substance in the plea of accused, particularly in view of AD card Ex.CW1/7 and Delivery Slip Ex.CW2/B. The Ld. Counsel for the accused person submitted that since the accused person was on duty till 04:00 pm on 15.04.2010, therefore, there was no occasion for the accused to receive the post and sign the acknowledgment card Ex.CW1/7. Perusal of the case file reveals that the address of the accused is of Paharganj, New Delhi which is adjacent to New Delhi Railway Station where the accused person is employed. So, the accused person could have easily reached his home before 05:00 pm and would have received the post at his home on 15.04.2010 itself. Moreover, this Court sees no reason why the postal department would forge the records ......................Contd/ regarding delivery of the legal demand notice to the accused person.

 In view of abovesaid reasons, the contention of the accused that he has not received the legal demand notice and that his signatures on the document Ex.CW1/7 and document Ex.CW2/B are forged one is hereby rejected as being false and bogus defence only taken for the purpose of taking defence.


Moreover, it is pertinent to mention here the judgment passed by the Hon'ble Supreme Court of India in the matter of "C. C. Alavi Haji Vs. Palapetty Mohammed & Anr." passed on 18.05.2007. In this judgment, the Hon'ble Supreme Court of India has held that "Any drawer who claims that he did not received the notice sent by post, can, within 15 days of receipt of summons from the court in respect of complaint Under Section 138 of the Act, make the payment of the cheque amount and submit to the court that he had made the payment within 15 days of the receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complainant is liable to be rejected. A person who does not pay within 15 days of receipt of summons from the court alongwith the copy of complaint Under Section 138 of the Act, can not obviously contend that there was no proper service of notice as required Under Section 138, by ignoring statutory presumption to the contrary Under Section 27 of G. C. Act and 114 of the Evidence Act."

 In view of the law and reasons discussed in the above paragraphs, it is proved on record that the notice was duly served upon the accused person on 15.04.2010. In view of the discussions in para no.09(a) and of the evidence of the AR of the complainant that accused failed to pay the amount of dishonored cheques within stipulated time, it is proved ......................Contd/ on record that the accused has not made the payment qua cheques amount in question within 15 days of receipt of legal demand notice.


10. (ii) Final order :
 In view of abovesaid discussions, I am of the considered opinion that complainant has proved against the accused all ingredients of the offence under Section 138 of Negotiable Instruments Act, 1881 beyond shadow of any reasonable doubt. Accordingly, accused Lokesh Kumar S/o Late Sh. Sewa Dass, R/o 5297, Bharat Nagar, Basant Lane, Paharganj, New Delhi - 110 055 stands convicted for the offence under Section 138 of Negotiable Instruments Act, 1881.

 Copy of the judgment be supplied to the accused free of cost.
Announced in the open Court on this day of October 22, 2011.

 (HARVINDER SINGH) Spl. M.M.05/Dwarka Courts, New Delhi/22.10.2011


Supreme Court In Rangappa vs . S.Mohan Arising Out Of Slp (Crl) ... on 24 December, 2011

IN THE COURT OF VIPLAV DABAS
                METROPOLITAN MAGISTRATE
         DISTRICT-NORTH, TIS HAZARI COURTS, DELHI

M/s Narang Leasing & Finance            Date of institution of case: 20.01.2004
VS                                      Date of decision of case : 24.12.2011
Mr. Sanjay Samrat

                                                Unique ID No.02401R5323162004
                                                CC.NO.151/A/2010
                                                P.S.-Daryaganj
                                                U/S 138 Negotiable Instrument Act

JUDGMENT
1. Date of the commission of offence    :       20.01.2004

2. Name & address of the complainant    :       M/s Narang Leasing & Finance
                                                having Regd. Office at
                                                3728, Netaji Subhash Marg,
                                                3rd Floor, Daryaganj,
                                                New Delhi

3. Name & address of the accused        :       Sh. Sanjay Samrat
                                                S/o Sh.Dharmpal Singh
                                                R/o H.No.57, Sector-5,
                                                Pushp Vihar,
                                                New Delhi

4. Offence complained of                :       U/s.138 of Negotiable Instruments Act

5. Plea of accused & examination if any :       Pleaded not guilty.
                                                Examination u/s.313 Cr.PC
                                                Examination u/s 315 Cr.P.C
                                                No other defence evidence was led.

6. Final order                              :   Acquitted

7. Date of such order                       :   24.12.2011

 BRIEF FACTS AND REASONS FOR DECISION OF THE CASE


BRIEF FACTS AND REASONS FOR DECISION OF THE CASE

1. By way of the present judgment, this court shall decide the complaint case under section 138 Negotiable Instruments Act, 1881 (as amended upto date) filed by the partner of the complainant Sh. Dinesh Narang M/s Narang Leasing & Finance against the accused Sh. Sanjay Samrat.


2. Brief facts necessary for the disposal of the present case as per the allegations in the complaint, are as follows :-
 The complainant is a registered partnership firm and engaged in the business of finance and use to give vehicles on hire-purchase and lease basis. On 11.11.2000, the accused Sh. Sanjay Samrat along with Ms. Anita Singh and Smt. Ramwati approached the complainant for taking a Maruti Zen Car on hire-purchase basis. The complainant gave vehicle Maruti Zen car of 1999 Model bearing Engine number 0364431 chasis number 0371241 with Registration No. DL-6CE- 8842 on hire purchase basis in terms of Hire Purchase Agreement executed by the accused on 11.11.2000. Under the aforesaid Hire Purchase Agreement accused agreed to pay the total Hire money of Rs. 2,59,000/- payable in 36 monthly installments and the interest on late payment of the installments. The above mentioned two persons namely Ms. Anita Singh and Smt. Ramwati stood as Guarantors and they signed the Hire Purchase Agreement dated 11.11.2000 for due performance of the Agreement on the part of the accused. The accused did not adhere to the schedule of payment and defaulted in payment of monthly installments and interest and as on 30.062002 a sum of Rs. 89,433/- towards unpaid hire installments, Rs. 21,244/- for additional hire purchase for late payment and expenses and a sum of Rs. 89,433/- towards installments still to fall, was due and in all Rs. 2,00110/- was due against the accused.


The complainant reported the matter to Sh. D.L. Bhargava, Advocate for his sole adjudication of disputes in terms of arbitration clause contained in the hire purchase agreement. After giving notice of the arbitral proceedings, the Ld. Arbitrator gave his Award dated 24.05.2003 directing the accused and his guarantors to pay a sum of Rs. 1,10,677/- towards unpaid hire installmnets and incidental charges besides return of the vehicle or to pay Rs. 1,00,000/- in lieu thereof.

 That the accused failed to pay the above amount but on the warning given by the complainant, the accused issued nine cheques of Rs. 7,194/- each for a total amount of Rs 64,746/- drawn on Oriental Bank of Commerce, Panchsheel Park, New Delhi towards discharging the above liability of abritral award. However, on presentation of the same, the cheques were dishonoured vide cheque returning memo dated 13.12.2003, 15.12.2003 and 17.12.2003 with remarks " INSUFFICIENT FUNDS". The complainant has thereafter given legal notice of demand dated 02.01.2004 to the accused which was sent by Registered Post & UPC thereby calling upon the accused to make the payment of the cheques. It is alleged that accused has failed to pay any sum in response to the legal notice of demand. As a result of which the complainant filed the instant complaint for prosecution of the accused u/s 138 of the Negotiable Instruments Act, 1881.


3. After considering the entire material and documents on record, summons were issued my Ld. Predecessor against the accused vide order dated 27.01.2005 for the offence u/s 138 of the Negotiable Instruments Act, 1881. On appearance of the accused, a separate notice u/s.251 of the Code of Criminal Procedure, 1973 was served upon the accused on 20.04.2007 to which accused pleaded not guilty and claimed trial.

4. In order to prove the case, Sh. Dinesh Narang, Partner of complainant M/s Narang Leasing & Finance got himself examined as CW1 and reiterated the contents of the complaint on oath before this court by filing an affidavit in evidence which is EX.CW-1/A, wherein the documents relied upon by the complainant were exhibited as EX.CW-1/1 to EX.CW-1/29 respectively.

 Sh. Dinesh Narang, Partner of the complainant was cross examined by learned counsel for the accused and discharged. Thereafter, the complainant evidence was closed on statement of Ld. Counsel for complainant.


5. After that the statement of accused was recorded u/s 313 of the Code of Criminal Procedure, 1973 in which all the incriminating evidence alongwith exhibited documents were put to the accused Sh. Sanjay Samrat. The accused admitted that the aforesaid cheques Ex.CW1/5 to Ex.CW1/13 were issued and signed by him which were undated. Accused stated that he had already paid the amount in cheques to the complainant in 2001. It was further stated by the accused that the complainant had filed arbitration proceedings against him and proceeded ex-parte against him without issuing any notice and filed execution proceedings against him. The accused denied the receiving of legal notice and submitted that the complainant has misused the cheques and filed false complaint.

6. Opportunity for leading the defence evidence was given to accused. The accused got himself examined u/s. 315 Code of Criminal Procedure, 1973 after the application u/s.315 Code of Criminal Procedure, 1973 was allowed by this court on 17.03.2011. Accused was examined, cross examined and discharged. Opportunity for examining other witness if any, was granted to the accused, which the accused did not avail and defence evidence was closed on statement of accused. Thereafter, the case was fixed for final arguments.

7. The court heard the arguments advanced by the learned counsels for both the parties at length and perused the entire record of the case file as well as evidence on record. Written arguments filed on behalf of the complainant were also perused.

Legal Discussion
8. Before proceeding further, it would be appropriate to quote the Hon'ble Supreme Court in Rangappa Vs. S.Mohan arising out of SLP (Crl) No.407/2006 (2010) NSC 373 decided on 07.05.2010.


"Ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in section 138 of the Act have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by section 139 of the Act."

8.1. In order to bring home the conviction of the accused, the complainant has to prove the ingredients of the offence complained of. The main ingredient of Section 138 of the Negotiable Instruments Act, 1881 are as follows:
 (a) The accused issued cheque on an account maintained by him with a bank.

 (b) The said cheque has been issued in discharge of any legal debt or other liability.

 (c) The cheque has been presented to the bank within the period of six months from the date of the cheque or within the period of its validity.

 (d) When the aforesaid cheques were presented for encashment, the same were returned unpaid/dishonoured.

 (e) The payee of the cheque issued a legal notice of demand within 30 days from the receipt of information by him from the bank regarding the return of the cheque.

 (f) The drawer of the cheque failed to make the payment within 15 days of the receipt of the aforesaid legal notice of demand. If the aforesaid ingredients are satisfied then the drawer of the cheque shall be deemed to have committed an offence punishable u/s. 138 of the Negotiable Instruments Act, 1881.

 Offence u/s 138 of Negotiable Instrument Act involves a reverse onus clause and the reverse onus can be rebutted by raising a mere preponderance of probability.


8.2. Nature and Extent of Rebuttal
a) A three judges bench of Hon'ble Supreme Court while dealing with presumptions under Prevention of Corruption Act has observed in Trilok Chand Jain vs State Of Delhi 1977 AIR 666 as under:
 "The presumption however, is not absolute. It is rebuttable. The accused can prove the contrary. The quantum and the nature of proof required to displace this presumption may vary according to the circumstances of each case. Such proof may partake the shape of defence evidence led by the accused, or it may consist of circumstances appearing in the prosecution evidence itself, as a result of cross-examination or otherwise. But the degree and the character of the burden of proof which s. 4(1) casts on an accused person to rebut the presumption raised thereunder, cannot be equated with the degree and character of proof which under s. 101, Evidence Act rests on the prosecution.. While the mere plausibility of an explanation given by the accused in his examination under s. 342, Cr.P.C. may not be enough, the burden on him to negate the presumption may stand discharged, if the effect of the material brought on the record, in its totality, renders the existence of the fact presumed, improbable. In other words, the accused may rebut the presumption by showing a mere preponderance of probability in his favour; it is not necessary for him lo establish his case beyond a reasonable doubt- see Mahesh Prasad Gupta v. State of Rajasthan.


Another aspect of the matter which has to be borne in mind is that the sole purpose of the presumption under s. 4(1) is to relieve the prosecution of the burden of proving a fact which is an essential ingredient of the offences under s. S (1) (2) of the Prevention of Corruption Act and s. 161, Penal Code. The presumption therefore can be used in furtherance of the prosecution case and not in derogation of it. If the story set up by the prosecution inherently militates against or is inconsistent with the fact presumed, the presumption will be rendered sterile from its very inception, if out of judicial courtesy it cannot be rejected out of hand as still born."


b) To what extent a mere reliance upon the presumptions of law can help the complainant is the question is being discussed in the following paragraphs:-
 Hon'ble High Court of Bombay in Peter Mascarenhas Vs. Monsabre Ashley Oswald Dias, CCC X-2010(4) 234 has dealt with the above aspect in great detail. This was also a case of friendly loan of Rs. 12 lakhs which the complainant had lent to the accused after collecting the same from several other persons. Complainant had examined the persons from who he collected the amount. There was also an agreement executed by the accused person. However, after a detailed factual and legal discussion, Hon'ble High Court has acquitted the accused primarily on the ground that complainant has failed to discharge his onus to establish accumulation of money. It has been observed therein that:
 "In juxtaposition though the Complainant was faced with the aforesaid material which has come through the cross examination of Cw.2, Cw.3 and Cw.4, the Complainant did not choose to lead any further evidence to discharge the burden of proving the existence of the liability when the burden again shifted to him. Applying the principles that the Complainant has to prove the offence beyond reasonable doubt but the Accused has to only probabilise his defence, in my view, the test has been satisfied by the Accused then the Complainant. The Complainant as can be seen has not led any further cogent evidence to prove the factum of the lending of the money to the Accused and thereby has not discharged the burden which had shifted to him on account of the evidence which has come in cross examination of the Complainant and his witnesses."


c) Hon'ble Supreme Court in K. Prakashan vs P.K. Surenderan decided on 10 October, 2007 has also dealt with the aspect of friendly loan and scope of presumptions of law. The facts of the case were:
 "3. Respondent herein allegedly, on diverse dates, advanced a sum of Rs. 3,16,000/- to the appellant who issued a cheque for the said amount on 18.12.1995. The said cheque was dishonored on the ground of insufficient fund. Allegedly, when the matter was brought to the notice of the appellant, he undertook to remit the amount on or before 30.01.1996. The cheque was again presented but the same was not enchased on the ground payment stopped by the drawer.

 5. The complainant in support of its case led evidence to show that he had advanced various sums on the following terms: On 31-1-94 a sum of Rs. One lakh; on 8-6-94, Rs. 86,000/-; on 12-6-94, Rs. 28,000/-; on 23-4-95, Rs. 50,000/- on 18-6-95, Rs. 40,000/- and on 7-8-95, Rs. 12,000/-.


6. Defence of the appellant, on the other hand, was that he had issued blank cheques for the purpose of purchase of spare parts, tyres, etc. in connection with the business of transport services run in the name of his brother. The blank cheques used to be returned by the sellers of spare parts, etc. when the amounts were paid. According to the appellant, the complainant lifted the impugned cheque book put in the bag and kept in his shop. Appellant in support of his case examined the Bank Manager of the Bank concerned. " Hon'ble High Court having reversed the judgment of acquittal, accused approached the Hon'ble Supreme Court. Hon'ble Supreme Court has observed therein that:


"14. The learned Trial Judge had passed a detailed judgment upon analysing the evidences brought on record by the parties in their entirety. The criminal court while appreciating the evidence brought on record may have to weigh the entire pros and cons of the matter which would include the circumstances which have been brought on record by the parties. The complainant has been found to be not man of means. He had allegedly advanced a sum of Rs. 1 lakh on 13.01.1994. He although had himself been taking advances either from his father or brother or third parties, without making any attempt to realize the amount, is said to have advanced sums of Rs. 86,000/- on 8.06.1994. Likewise he continued to advance diverse sums of Rs. 28,000/-, Rs. 50,000/-, Rs. 40,000/- and Rs. 12,000/- on subsequent dates. It is not a case where the appellant paid any amount to the respondent towards repayment of loan. He even did not charge any interest. He had also not proved that there had been any commercial or business transactions between himself and the appellant. Whey the appellant required so much amount and why he alone had been making payments of such large sums of money to the appellant has not been disclosed. According to him, he had been maintaining a diary. A contemporaneous document which was in existence as per the admission of the complainant, therefore, was required to be brought on records. He failed to do so. He also did not examine his father and brothers to show that they were men of means and in fact advanced a huge sum to him only for the purpose of grant of loan by him to the appellant. The learned Trial Court not only recorded the inconsistent stand taken by the complainant in regard to the persons from whom he had allegedly borrowed the amount, it took into consideration the deposit of the cheques in the bank commenting: Ext.


the amount, it took into consideration the deposit of the cheques in the bank commenting: Ext. D1 the counterfoil of the cheque book issued to the accused from that bank, was proved through him. It contains the counterfoils of the cheques 782451 to 782460. Ext. D2 is the pass book issued to the accused from that bank. SW1 is the Branch Manager of Syndicate Bank,Koyilandy. He would say that in Ext. P4 ledger extract, cheque No. 782460 reached the bank for collection on 30.12.93. The net transaction in that account was in the year 1996. Cheque No. 782451 reached the bank on 8.1.96. Ext. D1 shows that is the first cheque in that book. 782460 is the lost cheque in that book. If the lost cheque i.e. 782460 reached the bank for collection on 30.12.93 in normal and reasonable course the first cheque i.e. 782451 might have been issued even prior to that date. Case of the complainant is that Ext. P1 cheque was given to him by the accused on 5.10.95 and the cheque was dated 18.12.95. Ext. P4, D1 and D2 substantiate the case of the accused that the allegation of the complainant that Ext. P1 cheque was given to him on 18.12.95 is not genuine."


Hon'ble Supreme Court has observed therein that: The High Court, as noticed herein before, on the other hand, laid great emphasis on the burden of proof on the accused in terms of Section 139 of the Act.

 The question came up for consideration before a Bench of this Court in M.S.

Narayana Menon (supra) wherein it was held:
 "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."

 A presumption is a legal or factual assumption drawn from the existence of certain facts. It was furthermore opined that if the accused had been able to discharge his initial burden, thereafter it shifted to the second respondent in that case.

 The said legal principle has been reiterated by this Court in Kamala S. v.


The said legal principle has been reiterated by this Court in Kamala S. v.

Vidhyadharan M.J. and Another [(2007) 5 SCC 264] wherein it was held:
 "The Act contains provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case." The nature and extent of such presumption came up for consideration before this Court in M.S. Narayana Menon Alias Mani V. State of Kerala and Anr. [(2006) 6 SCC 39] wherein it was held :
 "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 dos 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.


"This Court clearly laid down the law that standard of proof in discharge of the burden in terms of Section 139 of the Act being of preponderance of a probability, the inference therefore can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon. Categorically stating that the burden of proof on accused is not as high as that of the prosecution, it was held; Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another. "

 Reliance is also placed upon a decision of this Court in Goaplast (P) Ltd. v.


Chico Ursula DSouza and Another [(2003) 3 SCC 232] wherein this Court opined:
 "The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operation and to ensure credibility in business transactions through banks persuades us to take a view that by countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said to be taking advantage of ones own wrong. If we hold otherwise, by giving instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under Section


138. Once a cheque is issued by a drawer, a presumption under Section 139 must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of the cheque in due course. This was the view taken by this Court in Modi Cements Ltd. v. Kuchil Kumar Nandi. On same facts is the decision of this Court in Ashok Yeshwant Badave v. Surendra Madhavrao Nighojakar. The decision in Modi case overruled an earlier decision of this Court in Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd. which had taken a contrary view. We are in respectful agreement with the view taken in Modi case. The said view is in consonance with the object of the legislation. On the faith of payment by way of a post-dated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date. " No exception to the aforementioned legal principle can be taken. What, however, did not fall for consideration in the aforementioned case was as to how the said burden can be discharged.


It is now trite that if two views are possible, the appellant court shall not reverse a judgment of acquittal only because another view is possible to be taken. The appellate courts jurisdiction to interfere is limited. [See M.S. Narayana Menon (supra) and Mahadeo Laxman Sarane & Anr. v. State of Maharashtra, 2007 (7) SCALE 137]. The High Court furthermore has not met the reasons of the learned Trial Judge. It proceeded on the premise that the appellant had not been able to discharge his burden of proof in terms of Section 139 of the Act without posing unto itself a further question as to how the said burden of proof can be discharged. It furthermore did not take into consideration the legal principle that the standard of proof upon a prosecution and upon an accused is different. "

 Hon'ble Supreme Court in Kamala S vs Vidyadharan M.J. & Anr Appeal (crl.) 233 of 2007, decided on 20.02.2007 observed that :
 "The Act contains provisions raising presumption as regards the negotiable instruments under Section 118(a) of the Act as also under Section 139 thereof. The said presumptions are rebuttable ones. Whether presumption stood rebutted or not would depend upon the facts and circumstances of each case.

 This Court clearly laid down the law that standard of proof in discharge of the burden in terms of Section 139 of the Act being of preponderance of a probability, the inference therefor can be drawn not only from the materials brought on record but also from the reference to the circumstances upon which the accused relies upon......."


Hon'ble Supreme Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde 2008 AIR SCW 738 has observed that:
 "30. The proviso appended to the said section provides for compliance with 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.

 31. The courts below, as noticed herein before, 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 not correct.

 32. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on record. An accused has a constitutional right to maintain silence. Standard of proof on the part of the accused and that of the prosecution in a criminal case is different.

 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 the accused is 'preponderance of probabilities'. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies.