[Cheque Dishonour] Merely Raising Doubt Without Adducing Credible Evidence Not Sufficient To Rebut Presumption U/S 113 Of NI Act: Karnataka High Court

The Karnataka High Court has said that the presumption against an accused under Section 113 of the Negotiable Instruments Act is a rebuttable presumption, but the said rebuttable presumption must be rebutted by adducing credible evidence, and merely raising a doubt is not sufficient.

A single judge bench of Justice Ramachandra D Huddar made the observation while allowing the appeal filed by Parvathamma M and setting aside the order passed by the trial court acquitting accused Chandrakala V, who was charged under Section 138 of the Act.

Accused-Chandrakala V. had approached the complainant in the first week of November 2012 and availed a loan of Rs.4,50,000, to meet her urgent commitments and family necessities. After six months when the complainant approached the accused, in the discharge of the said loan amount, the accused issued a duly filled cheque mentioning the consideration as Rs.4,50,000 drawn on Syndicate Bank.

It is alleged that when the cheque was presented for encashment, it was dishonoured by the Banker with an endorsement `Payment stopped by the Drawer' by issuing a memo dated 31.8.2013. The complainant was issued a legal notice on 5.9.2013 calling upon the accused to pay the cheque amount. Despite the service of notice the accused did not pay the amount or issue any reply to the said notice. Thus, it is alleged that the accused has committed the offence under Section 138 of the NI Act.

The trial court on consideration of the evidence acquitted the accused holding that in view of the facts so brought on record by the accused in the cross-examination and her evidence, a doubt arises in the case of the prosecution with regard to the very transaction stated by the complainant, therefore, the trial Court has passed the impugned judgment of acquittal.

Background:

The bench noted that the respondent appeared before the Court through her counsel and despite giving sufficient opportunities has not appeared before the court.

Appellant submitted that when the accused admitted issuance of the cheque, her signature on the same and receipt of the legal notice, nothing remains to be proved by the complainant. He argued that under the provisions of the NI Act, a presumption is very much available in favour of the complainant with regard to the issuance of the cheque.

It was argued that though the accused led evidence to prove the earlier transaction and the receipt of only Rs.50,000, except her self-serving evidence, there is no evidence placed on record by the accused to prove her defence of issuing the cheque by way of security in lieu of receipt of Rs.50,000. Accused submitted that she had not taken the sum of Rs 4,50,000.

Upon hearing these arguments, the court said “So far as presumption available under the aforesaid Section 139 of NI Act so also Section 118 of the said Act, if these two sections are read together, inter alia they direct that it shall be presumed until the contrary is proved that every negotiable instrument was made or drawn for consideration. This presumption is a presumption of fact which directly relates to one of the ingredients to sustain a conviction for the offence under Section 138 of NI Act.”

Further, it added that once the complainant discharges the burden to prove that the cheque was issued by the accused for discharge of debt, the presumption arises under Section 139 of the NI Act.

"Though the accused set upto a defence of issuing a cheque by way of security for a loan of Rs.50,000/- but, that defence has remained as defence without any proof. That means, evidential burden which was cast on the accused is not properly discharged by her. As it is a rebuttable presumption and to prove the contrary, it was open for the accused to raise a probable defence. In this case, except setting up of a defence of issuing a cheque, by way of security, no other defence has been set up by the accused which in my opinion is not duly proved in accordance with law. No direct evidence has been adduced by the accused. The evidence so adduced by her is not acceptable,” the Court reiterated.

It added, “When she admits her signature on the cheque and issuance of the said cheque, then the presumption definitely arises in favour of the complainant.”

Allowing the appeal the Court said that the trial Court had committed illegality in passing the impugned judgment of acquittal and had committed a fundamental error with regard to the facts of the case and its approach in holding that the complainant is entitled to Rs.50,000, with interest.

Accordingly, in convicting the accused for the offence under Section 138 of the Act, the court imposed on her a fine of twice the cheque amount, failing which, she shall undergo simple imprisonment for one year. The amount is to be deposited within one month.

Appearance: Advocate A V Ramakrishna for Appellant.

Advocate M Mohan Kumar for Respondent.

Citation No: 2024 LiveLaw (Kar) 274

Case Title: Parvathamma M AND Chandrakala V

Case No: CRIMINAL APPEAL NO. 508 OF 2015

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