Libertatem Magazine

Admitted Signature on Blank Check Attracts Presumption Under Section 139 of Negotiable Instruments Act: Supreme Court

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This case concerns whether the High Court erred in reversing the findings of the trial Court in exercise of its powers under Section 378 of Cr. P.C. 

Brief Facts

In the instant proceedings, a cheque was issued by the Appellant- M/s. Kalamani Tex & Anr. because of a certain delay in shipment and payment from the buyer, to whom both the Appellant and Respondent (P. Balasubramanian) decided to jointly export garment. However, the cheque was dishonoured due to insufficient funds in the account of the Appellants.  

On the cheque being dishonoured, the Respondents issued a 15 days’ notice to the Appellant to pay the amount, but they denied their liability. thus, a private complaint was registered under Section 138 and 142 of the NIA read with Section 200 of the CrPC before the Judicial Magistrate, Trippur. 

The trial Court disbelieved the Respondent’s claimed and observed that he had failed to establish legally enforceable liability on the date of issue of the cheque. The Court held that basic ingredients of Section 138 of the NIA were not satisfied, the complaint was dismissed. The Respondent preferred a criminal appeal before the High Court, where the decision was given against the Appellant as the Appellant’s liability was acknowledged. Thus, the Appellant approached the Supreme Court

Arguments of the Appellants

The Counsel for the Appellant contended that there was no legally enforceable liability on the date of issuance of cheque and the blank stamp papers signed were misused by the Respondent to forge the Deed of the undertaking. 

Relying on the Murugesan v. State Through Inspector of Police, it was urged that the view of the trial Court was a possible view, and High Court committed patent illegality and exceeded its jurisdiction in reversing the acquittal. 

Further, Reena Hazarika vs. the State of Assam was cited to argue that High did not take notice of the defence raised by the Appellants which had caused serious prejudice to the. He, further, submitted that the presumption drawn against an accused under Section 118 and 139 of the NIA is rebuttable through a standard “preponderance of probability”, which had been met by the Appellants in the present case. 

Arguments of the Respondents 

The Counsel for the Respondent argued that the decision of the High Court was well reasoned and founded upon the consideration of all relevant factors.  He emphasized the undisputed signatures on the cheque and deed of the undertaking and asserted that Appellants have admitted their existing liability of ₹ 11.20 lakhs. 

Observation by the Court 

It was observed that the High Court would not reverse an Order of acquittal merely on the formation of an opinion different from the trial Court and should have compelling reasons to tinker with an Order of acquittal. However, there are numerous decisions of the Supreme Court, that justify the invocation of the powers of the High Court under Section 378 CrPC, if the trial courts had committed a patent error of law or grave miscarriage of justice or it arrived at a perverse finding of the fact. 

Similarly, Article 136 of the Constitution also does not encompass the re-appreciation of the entirety of record merely on the ground that High Court has convicted the Appellants for the first time in the exercise of its Appellate jurisdiction. 

The Supreme Court in the case of Ram Jag vs. State of UP, Rohtas vs. State of Haryana, and Raveen Kumar vs. State of Himachal Pradesh, evolved the limitations on the exercise of the powers under Article 136 of the Constitution and reiterated that while entertaining an appeal by way of special leave, there shall not ordinarily be an attempt to re-appreciate the evidence of record unless the decisions under challenge are shown to have committed an error of law or procedure or the conclusion reached is ex-facie perverse. 

Referring to the case in hand, the trial Court completely overlooked the provisions and failed to appreciate the statutory presumption under Section 118 and 139 of NIA. The Statute mandates that once the signature(s)of an accused on the cheque/negotiable instrument is established, then ‘reverse onus’ clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him, as crystallized in the case of Rohitbhai Jivanlal Patel vs. the State of Gujarat

Even if only a bank cheque and signed bank stamp papers were given to the Respondent, then also the statutory presumption cannot be obliterated as cited in the case of Bir Singh vs. Mukesh Kumar

There was an admitted business relationship between the parties, the defence raised by the Appellants does not attract confidence or meet the standard of ‘preponderance of probability’.  In the absence of any relevant material, the High Court did not err in discarding the Appellants’ defence and upholding the onus imposed upon them in Section 118 and 139 of the Negotiable Instruments Act. 

The decision of the Court

The present appeal was liable to be dismissed. The impugned judgment of the High Court, awarding three months simple imprisonment with a fine of ₹5000, was modified, and it was directed that the Appellant shall not be required to undergo the awarded sentence.

The registry of the Court was directed to transfer the amount of Rs.11.20 lakhs along with interest accrued thereupon to the Respondent within two weeks.

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