BIR SINGH v. MUKESH KUMAR

HELD: 1.1 The Trial Court and the Appellate Court arrived at the specific concurrent factual finding that the cheque had admittedly been signed by the respondent-accused. The Trial Court and the Appellate Court rejected the plea of the respondent- accused that the appellant-complainant had misused a blank signed cheque made over by the respondent-accused to the appellant-complainant for deposit of Income Tax, in view of the admission of the respondent-accused that taxes were paid in cash for which the appellant-complainant used to take payment from the respondent in cash. [Para 18][34-G-H, 35-A] 25 A B C D E F G H 26 SUPREME COURT REPORTS [2019] 2 S.C.R. A B C D E F G H

1.2 In exercise of revisional jurisdiction under Section 482 of the Criminal Procedure Code, the High Court does not, in the absence of perversity, upset concurrent factual findings. It is not for the Revisional Court to re-analyse and re-interpret the evidence on record. It is a well established principle of law that the Revisional Court will not interfere even if a wrong order is passed by a court having jurisdiction, in the absence of a jurisdictional error. [Paras 19 and 20][35-B-C] Southern Sales and Services and Others v. Sauermilch Design and Handels GMBH (2008) 14 SCC 457 : [2008] 14 SCR 130 – relied on. 2.1 The object of Chapter XVII of the Negotiable Instruments Act is both punitive as also compensatory and restitutive. It provides a single forum and single proceeding for enforcement of criminal liability by reason of dishonour of cheque and for enforcement of the civil liability for realization of the cheque amount, thereby obviating the need for the creditor to move two different fora for relief. [Para 28][37-C]

2.2 Section 139 of Negotiable Instruments Act, mandates that unless the contrary is proved, it is to be presumed 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. The presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque. Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. Presumption of innocence is undoubtedly a human right. However the guilt may be established by recourse to presumptions in law and presumptions in facts. [Paras 21, 23 and 24][35-D-E, G, 36-A-C] BIR SINGH v. MUKESH KUMAR

2.3 The onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted. [Paras 36 and 37][38-G-H, 39-A-C]

2.4 If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque and would attract presumption under Section 139 of the Negotiable Instruments Act. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. [Paras 38 and 40][39-C-D, E] 2.5 It is not the case of the respondent-accused that he either signed the cheque or parted with it under any threat or coercion. Nor is it the case of the respondent-accused that the unfilled signed cheque had been stolen. The existence of a fiduciary relationship between the payee of a cheque and its drawer, would not disentitle the payee to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, in the absence of evidence of exercise of undue influence or coercion. [Para 39][39-D-E]

2.6 The High Court ought not to have acquitted the respondent-accused of the charge under Section 138 of the Negotiable Instruments Act. The conviction of the respondent under Section 138 of the Negotiable Instruments Act is confirmed. However, the respondent-accused is sentenced only to fine, which is enhanced to Rs.16 lakhs and shall be paid as compensation to the appellant-complainant. [Paras 42 and 44][40-C, E] 27 A B C D E F G H 28 SUPREME COURT REPORTS [2019] 2 S.C.R. Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16 : [2001] 3 SCR 900; State of Madras v. Vaidyanatha Iyer AIR 1958 SC 61 : 1958 SCR 580; Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra and Anr (2005) 5 SCC 294 : [ 2005] 3 SCR 345; Rajesh Ranjan Yadav @ Pappu Yadav v. CBI through its Director (2007) 1 SCC 70 : [2006] 9 Suppl. SCR 40; Laxmi Dyechem v. State of Gujarat & Ors. (2012) 13 SCC 375 : [2012] 11 SCR 466; Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 : [2008] 17 SCR 572; K.N. Beena v. Muniyappan and Another (2001) 8 SCC 458 : [2001] 4 Suppl. SCR 374 ; R.Vijayan v. Baby and Another (2012) 1 SCC 260 : [2012] 14 SCR 712 – relied on. Raj Kumar Khurana v. State of (NCT of Delhi) & Anr. (2009) 6 SCC 72 : [2009] 7 SCR 434 – distinguished. Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008) 4 SCC 54 : [2008] 1 SCR 605 – referred to. 3. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility to negotiable instruments including cheques and to encourage and promote the use of negotiable instruments including cheques in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same. Having regard to the object of Section 138 of the Negotiable Instruments Act, a prosecution based on a second or successive default in payment of the cheque amount is not impermissible simply because no statutory notice had been issued after the first default and no proceeding for prosecution had been initiated. [Paras 9 and 10] MSR Leathers v. S. Palaniappan & Anr (2013) 1 SCC 177 : [2012] 9 SCR 165 – relied on. 4. If two views are possible, this Court, in exercise of its jurisdiction under Article 136 of the Constitution would ordinarily not interfere with a judgment of acquittal, is well settled. [Para 31] A B C D E F G H BIR SINGH v. MUKESH KUMAR John K John v. Tom Varghese & Anr. (2007) 12 SCC 714 : [2007] 11 SCR 287 – relied on. 5. A judgment is a precedent for the issue of law which is raised and decided. It is the ratio decidendi of the case which operates as a binding precedent. What is binding on all courts is what the Supreme Court says under Article 141 of the Constitution, which is declaration of the law and not what it does under Article 142 to do complete justice. [Para 34] State of Punjab & Ors. v. Surinder Kumar & Ors. (1992) 1 SCC 489 : [1991] 3 Suppl. SCR 553 – relied on. “Constitutional Supremacy - A Revisit” by V. Sudhish Pai – referred to. Case Law Reference [2012] 9 SCR 165 [2008] 14 SCR 130 [2001] 3 SCR 900 [1958] SCR 580 [2005] 3 SCR 345 [2006] 9 Suppl. SCR 40 [2012] 11 SCR 466 [2008] 17 SCR 572 [2001] 4 Suppl. SCR 374 [2012] 14 SCR 712 [2009] 7 SCR 434 [2007] 11 SCR 287 [2008] 1 SCR 605 [1991] 3 Suppl. SCR 553 relied on relied on relied on relied on relied on relied on relied on relied on relied on relied on distinguished relied on referred to relied on Para 10 Para 20 Para 22 Para 22 Para 24 Para 24 Para 25 Para 26 Para 27 Para 28 Para 30 Para 31 Para 33 Para 3 CRIMINAL APPELLATE JURISDICTION : Criminal Appeal Nos. 230-231 of 2019. From the Judgment and Order dated 21.11.2017 of the High Court of Punjab & Haryana at Chandigarh in Criminal Revision Petition (CRP) No. 849 of 2016 (O&M) and CRR No. 2017 of 2016 (O&M) Pradeep K. Kaushik, Rajiv Mangla, Advs. for the Appellant. Saju Jakob, C.M. Jaya Kumar, Abhishek Jaiswal, Jessy Kurian, Ms. Lily Isabel Thomas, Advs. for the Respondent. 29 A B C D E F G H 30 SUPREME COURT REPORTS [2019] 2 S.C.R. The Judgment of the Court was delivered by INDIRA BANERJEE, J. 1. Leave granted. 2. These appeals are against a Judgment and order dated 21-11- 2017 passed by the High Court of Punjab and Haryana at Chandigarh allowing the Criminal Revisional Application being Criminal Revision Petition No.849 of 2016 filed by the respondent-accused, challenging a judgment and order dated 20-2-2016 passed by the Additional Sessions Judge, Palwal in Criminal Appeal No.13/2015 filed by the respondent- accused, inter alia, affirming a judgment and order of conviction of the respondent-accused, passed by the Judicial Magistrate, 1st Class, Palwal under Section 138 of the Negotiable Instruments Act, 1881.

#3. It is the case of the appellant-complainant, that the respondent- accused issued a cheque being Cheque No.034212 dated 4-3-2012 drawn on Axis Bank, Branch, Palwal in the name of the appellant towards repayment of a “friendly loan” of Rs.15 lakhs advanced by the appellant- complainant to the respondent-accused.

#4. On 11-4-2012, the appellant-complainant deposited the said cheque in his bank, but the cheque was returned unpaid with the endorsement “Insufficient Fund”.

#5. The appellant-complainant has alleged that, on the assurance of the respondent-accused, that there would be sufficient funds in his bank account to cover the amount of the cheque, the appellant- complainant again presented the cheque to his bank on 23-5-2012, but it was again returned unpaid with the remark “Insufficient Fund”.

#6. On 15-6-2012, the appellant-complainant issued a legal notice to the respondent-accused through his lawyer, calling upon the respondent- accused to pay the cheque amount. The said notice, sent by registered post, was according to the appellant-complainant, duly served on the respondent-accused. The respondent-accused, however, did not reply to the notice. Nor did he pay the cheque amount to the appellant- complainant.

#7. The appellant-complainant filed a Criminal Complaint against the respondent-accused, being Case No.106 of 2012 before the Judicial Magistrate 1st Class, Palwal, under Section 138 of the Negotiable Instruments Act.

#8. Sections 138 and 139 of the Negotiable Instruments Act are set out herein below for convenience:- A B C D E F G H BIR SINGH v. MUKESH KUMAR [INDIRA BANERJEE, J.] “138 Dishonour of cheque for insufficiency, etc., of funds in the account. —Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless— (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.] 139. Presumption in favour of holder.—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.” 31 A B C D E F G H 32 SUPREME COURT REPORTS [2019] 2 S.C.R. A B C D E F G

#9. The object of Section 138 of the Negotiable Instruments Act is to infuse credibility to negotiable instruments including cheques and to encourage and promote the use of negotiable instruments including cheques in financial transactions. The penal provision of Section 138 of the Negotiable Instruments Act is intended to be a deterrent to callous issuance of negotiable instruments such as cheques without serious intention to honour the promise implicit in the issuance of the same.

#10. Having regard to the object of Section 138 of the Negotiable Instruments Act, a prosecution based on a second or successive default in payment of the cheque amount is not impermissible simply because no statutory notice had been issued after the first default and no proceeding for prosecution had been initiated. As held by this Court in MSR Leathers vs. S. Palaniappan & Anr1, there is no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second time or successive times.

#11. By a judgment and order dated 9-2-2015, the Judicial Magistrate I Class, Palwal convicted the respondent-accused under Section 138 of the Negotiable Instruments Act and sentenced him to undergo simple imprisonment for a period of one year and further directed him to pay compensation of Rs.15 lakhs to the appellant-complainant within one month from the date of the said Judgment and order. Being aggrieved, the respondent-accused filed a criminal appeal No.13/2015 dated 9-3- 2015 in the court of Additional Sessions Judge, Palwal.

#12. By a judgment and order dated 20-2-2016, the Appellate Court upheld the conviction of the respondent-accused under Section 138 of the Negotiable Instruments Act and confirmed the compensation of Rs.15 lakhs directed to be paid to the appellant-complainant. The sentence of imprisonment was however reduced to six months from one year.

#13. The respondent-accused filed a Criminal Revision Petition being CRR No.849 of 2016 in the High Court challenging the Judgment and order of the Appellate Court. The appellant- complainant also filed a Criminal Revision Petition being CRR No.2017 of 2016 challenging the reduction of the sentence from one year to six months. H 1 (2013) 1 SCC 177 BIR SINGH v. MUKESH KUMAR [INDIRA BANERJEE, J.]

#14. By a common final Judgment and order dated 21-11-2017 which is impugned before us, the High Court has reversed the concurrent factual findings of the Trial Court and the Appellate Court and acquitted the respondent of the charge under Section 138 of the Negotiable Instruments Act, observing, inter alia, that there was fiduciary relationship between the appellant-complainant, an Income Tax practitioner, and the respondent-accused who was his client.

#15. The High Court observed and held:- “The complainant had fiduciary relationship with the accused-petitioner. Therefore, heavy burden was on the complainant to prove that he had advanced the loan and that blank cheque for the same was given to him. The complainant is an income tax practitioner and he knows that whenever loan is advanced to anybody, receipt has to be obtained and that such heavy amount is to be advanced only through a cheque or demand draft or RTGS. The accused-petitioner was the client of the complainant and they were having professional relationship. The accused petitioner was no so thick and thin with the complainant. There is no reason why the complainant, who is an income tax practitioner, will advance such a heavy loan to his client without any close relationship and without obtaining any writing to this effect. There was heavy burden on the complainant. In such circumstances, the accused-petitioner is successful in raising reasonable doubts that the complainant might have misused one of the blank cheques given to him for payment of income tax for depositing the same in the Treasury. In order to support his case, the accused-petitioner took a risk by stepping himself into the witness box and offered himself for cross-examination. He asserted in his cross examination that the tax return was deposited in cash and the complainant used to take cash from him. His version was also supported by one Praveen Kumar, DW2. From the abovenoted discussions, it is clear that the parties were in fiduciary relationship and heavy burden was on the complainant to prove that he had advanced a loan of Rs.15,00,000/- to his client without obtaining any writing and that he has not misused any blank cheque of his client. 33 A B C D E F G H 34 SUPREME COURT REPORTS [2019] 2 S.C.R. A B C D E F G H Such loan was not shown in the income tax return of the complainant. For the reasons mentioned above, the case of the complainant becomes highly doubtful and is not beyond all reasonable doubts. Therefore, no presumption under Section 138 of the Negotiable Instruments Act, 1881 can be raised. Both the courts below erred in holding the accused- petitioner guilty for the commission of offence punishable under Section 138 of the Negotiable Instruments Act, 1881. In view of the foregoing discussions, CRR No. 849 of 2016 is allowed and CRR No.2017 of 2016 is dismissed. The accused- petitioner stands acquitted of the notice of accusation served upon him.”

#16. The short question before us is whether the High Court was right in reversing the concurrent factual findings of the Trial Court and of the Appellate court in exercise of its revisional jurisdiction. The questions of law which rise in this appeal are, (i) whether a revisional Court can, in exercise of its discretionary jurisdiction, interfere with an order of conviction in the absence of any jurisdictional error or error of law and (ii) whether the payee of a cheque is disentitled to the benefit of the presumption under Section 139 of the Negotiable Instruments Act, of a cheque duly drawn, having been issued in discharge of a debt or other liability, only because he is in a fiduciary relationship with the person who has drawn the cheque.

#17. The Trial Court, on analysis of the evidence adduced by the respective parties arrived at the factual finding that the respondent- accused had duly issued the cheque in question for Rs.15 lakhs in favour of the appellant-complainant, in discharge of a debt or liability, the cheque was presented to the bank for payment within the period of its validity, but the cheque had been returned unpaid for want of sufficient funds in the account of the respondent-accused in the bank on which the cheque was drawn. Statutory Notice of dishonour was duly issued to which there was no response from the respondent-accused.

#18. The Appellate Court affirmed the aforesaid factual findings. The Trial Court and the Appellate Court arrived at the specific concurrent factual finding that the cheque had admittedly been signed by the respondent-accused. The Trial Court and the Appellate Court rejected the plea of the respondent-accused that the appellant-complainant had misused a blank signed cheque made over by the respondent-accused to BIR SINGH v. MUKESH KUMAR [INDIRA BANERJEE, J.] the appellant-complainant for deposit of Income Tax, in view of the admission of the respondent-accused that taxes were paid in cash for which the appellant-complainant used to take payment from the respondent in cash.

#19. It is well settled that in exercise of revisional jurisdiction under Section 482 of the Criminal Procedure Code, the High Court does not, in the absence of perversity, upset concurrent factual findings. It is not for the Revisional Court to re-analyse and re-interpret the evidence on record.

#20. As held by this Court in Southern Sales and Services and Others vs. Sauermilch Design and Handels GMBH2,it is a well established principle of law that the Revisional Court will not interfere even if a wrong order is passed by a court having jurisdiction, in the absence of a jurisdictional error. The answer to the first question is therefore, in the negative.

#21. In passing the impugned judgment and order dated 21-11- 2017, the High Court mis-construed Section 139 of Negotiable Instruments Act, which mandates that unless the contrary is proved, it is to be presumed 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. Needless to mention that the presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque.

#22. In Hiten P. Dalal vs. Bratindranath Banerjee3,this Court held that both Section 138 and 139 require that the Court shall presume the liability of the drawer of the cheques for the amounts for which the cheques are drawn. Following the judgment of this Court in State of Madras vs. Vaidyanatha Iyer4,this Court held that it was obligatory on the Court to raise this presumption.

#23. Section 139 introduces an exception to the general rule as to the burden of proofand shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the