Holding

The presumption under Section 139 is rebuttable; the High Court correctly concluded that the cheques were not issued in discharge of any debt, and the Supreme Court will not interfere with the acquittal.

Summary

John K. John filed criminal complaints under Section 138 of the Negotiable Instruments Act alleging that Tom Vargheese issued two cheques which were dishonoured for insufficient funds. The trial court and the appellate court held that the respondent was guilty, but the Kerala High Court, on revision, acquitted him, finding that the cheques were not issued in discharge of any debt and that the presumption under Section 139 was rebutted. The appellant contended that the High Court erred in rejecting the presumption. The Supreme Court, exercising its discretionary jurisdiction under Article 136, held that the presumption under Section 139 is rebuttable and that the High Court’s factual finding was not perverse, therefore there was no ground to interfere with the acquittal. Consequently, the appeals were dismissed.

Issues considered

Whether the presumption under Section 139 of the Negotiable Instruments Act is rebuttable in the facts of the case.
Whether the High Court’s finding that the cheques were not issued in discharge of any debt warrants interference under Article 136 of the Constitution.
Whether the Supreme Court should set aside the High Court’s acquittal on the basis of the presumption.

Legislation cited

Constitution of Indias. 136
Negotiable Instruments Acts. 138, s. 139

Subjects

Negotiable Instruments ActSection 138Section 139presumptioncheque bounceacquittalArticle 136discretionary jurisdictioncriminal appealchitty

Judgment

JOHN K. JOHN A
v.
TOM VARGHESE AND ANR.

OCTOBER 12, 2007
B
[S.B. SINHA AND HARJIT SINGH BEDI, JJ.]

Negotiable Instruments Act; Ss. I 38 and I 39/Constitution of
India, 1950; Article 136:
Dishonour ofcheques-Cheques allegedly issued by respondent C
in discharge of existing debt-Notice-No payment made by
respondent-Complaints-Trial Court found that respondent
committed an offence punishable u/s. I 38 of the Act and sente11:ced
him accordingly-Upheld byfirst appellate Court-Reversed by Single
Judge of the High Court acquitting respondent-On appeal, Held: D
Presumption raised in terms ofSection 139 ofthe Act rebuttable-ln
the instant case, a finding offact has been arrived at by the High Court
that cheques in question has not been issued by the respondent in
discharge ofany debt--Taking notice of the conduct ofcomplainant,
High Court found as offact that complainant did not approach this E
Court with clean hands-View ofthe High Court cannot be said to be
perverse warranting inte1ference by the Supreme Court in exercise of
its discretionary jurisdiction under Article I 36 of the Constitution.
Exercise of discretionary jurisdiction by Supreme Court under
Article 136 ofthe Constitution-Judgment ofacquittal-Interference F
with-Held: Ordinarily not interfere with.
. Respondent allegedly issued two cheques in favour of the
appellant. These cheques, when presented to the Bank, were
dishonoured for want ofinsufficient funds. It was alleged that despite
service of notice, the respondent did not make any payment, G
therefore, two complaint petitions were filed against him by the
appellant. Appellant, who used to run chitties, further alleged that
despite the fact that the respondent was a defaulted subscriber of
two prized chitties, who took personal loan from him. Trial Court
287 H

\
288 SUPREME COURT REPORTS [2007] 11 S.C.R.

A proceeded on the basis that as admittedly cheques have been issued
by the respondent which on presentation were not honoured, he
committed an offence under Section 138 of the Negotiable
Instruments Act. The finding of the trial Court was upheld in appeal
by the Additional Sessions Judge. The High Court, however, in the
B revision application filed by the respondent held that the appellant
did not succeed in proving that the respondent had borrowed any
sum for which the cheques were issued. Hence, the present appeal.
Appellant contended that the High Court was not correct in
reversing the findings of the trial Court as also the first appellate
C Court in exercise of its revisional jurisdiction; that there was no
reason as to why a presumption in terms of Section 139 of the Act
could not have been raised against the accused as admittedly the
cheques were issued by him which, on presentation, were
dishonoured.
D Dismissing the appeals, the Court
HELD: 1.1. Presumption raised in terms of Section 139 of the
Negotiable Instruments Act is rebuttable. If, upon analysis of the
evidence brought on records by the parties, in a fact situation
obtaining in the instant case, a finding of fact has been arrived at by
E the High Court that the cheques had not been issued by the
respondent in discharge of any debt, the view of the High Court
cannot be said to be perverse warranting interference by this Court
in exercise of the discretionary jurisdiction under Article 136 of the
Constitution oflndia. The High Court was entitled to take notice of
F the conduct of the parties. It has been found by the High Court as of
fact that the complainant did not approach the Court with clean
hands. His conduct was not that of prudent man. Why no instrument
was executed although a huge sum of money was allegedly paid to
the respondent was a relevant question which could be posed in the
G matter. It was open to the High Court to draw its own conclusion
therein. Not only no document had been execut~d, even no interest
had been charged. It would be absurd to form an opinion that despite
knowing that the respondent even was not in a position to discharge
his burden to pay instalments in respect of the prized amount, an
H advance would be made to him and that too even after institution of

(
t
JOHNK.JOHNv. TOMVARGHESE[SINHA,J.] 289

three civil suits. The amount advanced even did not car.ry any A
interest. Ifin a.situation of this nature, the High Court has arrived
at a finding that the respondent has discharged his burden of proof
cast on him under Section 139 of the Act, no exception thereto can
be taken. (Para 10) (291-F, G, H; 292-A, B, C]
1.2. It is now a well-settled principle of law that this Court in B
exercise of its jurisdiction under Article 136 of the Constitution of
India would ordinarily not interfere with the judgment of acquittal,
if two views are possible. [Para 11) (292-D]
MS. Narayana Menon Alias Mani v. State of Kera/a and Anr.,
[2006] 6 SCC 39 and Mahadeo Laxman Sarane & Anr. v. State of C
Maharashtra, (2007) 7SCALE137, relied on.
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal Nos.
1433-34 of 2007.
From the Judgment and final Order dated 24.8.2005 of the High D
Court ofKerala at Emakulam in Crl. R.P. Nos. 2255 & 2256 of2004
(B).
B.V. Deepak, Ajay K. Jain and M.P. Vinod for the Appellant.
R. Sathish, M.T. George and P.S. Sudheer for the Respondents.
E
The Judgment of the Court \Vas delivered by
S.B. SINHA, J. 1. Leave granted.
2. The complainant is before us being aggrieved by and dissatisfied
with a judgment and order dated 24.08.2005 passed by a learned Single
Judge of the High Court of Kerala in Crl. RP. Nos. 2255 and 2256 of F
y' 2004 whereby and whereunder the judgment of conviction and sentence
.. passed by the learned Trial Judge and affirmed by the Appellate Court,
was set aside.
3. Respondent allegedly issued two cheques in favour of the appellant
herein. The said cheques when presented were dishonoured for want of G
insufficient funds. As despite service of notice, the respondent did not
-·,.__, make any payment, two complaint petitions were filed against him.
4. The question which arose for consideration before the learned
Trial Judge and consequently before the Court of Appeal as also the
H
290 SUPREME COURT REPORTS [2007] 11 S.C.R.
>· ~.
A Revisional Court was as to whether the said cheques had been issued
towards discharge of any existing debt.
5. Relationship between the parties is not in dispute. The complainant
used to run chitties. Respondent was a subscriber to three chitties
conducted by the firm of the appellant. In respect of one of the chitties,
B the bid was held on 7.10.1997 for a sum of Rs. 1,00,000/-. The amount
was paid on 3.11.1997. Bid was again made by the respondent in relation
to another chitty on 7.04.1998, for a sum of Rs. 1,00,000/-. The amount
was paid on 25.06.1998. Allegedly, Respondent committed defaults in
payment of the instalments in relation thereto with effect from 7.04.1998.
c Indisputably, a suit for realization of the said amount was filed by
the appellant against the respondent in the Court ofthe Subordinate Court,
Kottayam which was marked as O.S. No. 1 of2000. Another suit being
O.S. No. 168 of 2000 was instituted before the Munsiff Court,
Changancherry claiming a sum of Rs. 55,900/-. Respondent, apart from
D the aforementioned two chitties, was a subscriber to another chitty for a
sum of Rs. 50,000/-. It was not prized by the respondent. On an allegation
that the respondent along with three others had borrowed a sum of Rs.
1,00,000/- from him on 26.03.1998 wherefor he executed a demand
promissory note and as despite demand, the said amount was not paid
E to him, the appellant instituted another suit being O.S. No. 362 of 1999
in the Subordinate Court, Kottayam for recovery of a sum of Rs.
1,00,000/- with interest.
6. Appellant herein admittedly was conducting chitty transactions in
the name of a firm known as 'Karappara Chitty Funds'. He is a partner
F of the said firm. The suits were instituted by him representing the said firm.
Appellant contended that despite the fact that the respondent herein was
a defaulted subscriber of two prized chitties, he took personal loan from
him in his personal capacity.
G 7. Before the learned Trial Judge, the respondent examined two
witnesses who proved the aforementioned fact. The learned Trial Judge,
in its judgment, took notice of the pendency of the several civil litigations
by and between the parties hereto. It, however, proceeded on the basis
that as admittedly cheques have been issued by the respondent which on
presentation were not honoured, he committed an offence under Section
H
JOHN K. JOHN v. TOM VARGHESE [SINHA, J.] 291
..£..
,.,..~-.

f
r
'
~
138 of the Negotiable Instruments Act (for short "the Act"). The said A
' findings of the learned Trial Judge was upheld in appeal by Shri K.
Ramakrishnan, learned Additional Sessions Judge by a judgment and
order dated 17.03.2004.
8. The High Court, however, in the revision application filed by tqe
respondent herein opined that the learned Trial Judge as also the Appellate B
Court could not have rejected the evidence adduced by the respondeQ.t
~
and in particular those ofDWs 1 and 2 in view of the fact that admitted
..
t and proved facts strengthened their versions or at least probabilised the
same. Holding that the respondent herein has successfully rebutted the
presumption arising under Section 139 of the Act, it was held that the c
appellant did not succeed in proving that the respondent had borrowed
any sum for which the said cheques were issued.
9. Mr. B.V. Deepak, learned counsel appearing on behalf of the
appellant, submitted that the High Court 'Yas not correct in reversing the
findings of the learned Trial Judge as also the Court of Appeal in exercise D
of its revisional jurisdiction. There was no reason, the learned counsel
contended, as to why a presumption in terms of Section 139 of the Act
could not have been raised against the accused as admittedly the cheques
were issued by him which, on presentation, were dishonoured.
10. Relationship between the parties is not in dispute. The E
complainant is a partner of a finn which is in the business of running chitty
fund. TI1e fact that the respondent subscribed three chitties and that he
could not pay the instalments of the prized amount is not in dispute.
Pendency of three civil suits filed by the firm through the appellant against
the respondent is also not in dispute. The High Court upon analyzing the F
\·
~· materials brought on records by the parties had arrived at a finding of
fact that in view of the conduct of the parties it would not be prudent to
hold that the respondent borrowed a huge sum despite the fact that the
suits had already been filed against him by the appellant. Presumption
raised in terms of Section 13 9 of the Act is rebuttable. If, upon analysis G
· of the evidence brought on records by the parties, in a fact situation
-r obtaining in the instant case, a finding of fact has been arrived at by the
High Court that the cheques had not been issued by the respondent in
discharge of any debt, in our opinion, the view of the High Court cannot
be said to be perverse warranting interference by us in exercise of our H
~·

292 SUPREME COURT REPORTS [2007] 11 S.C.R.

A discretionary jurisdiction under Article 136 of the Constitution of India.
.~: ·-·
"
,,
II

The High Court was entitled to take notice of the conduct of the parties.
It has been found by the High Court as of fact that the complainant did
not approach the court with clean hands. His conduct was not that of a
prudent man. Why no instrument was executed although a huge sum of
B money was allegedly paid to the respondent was a relevant question which
could be posed in the matter. It was open to the High Court to draw its
own conclusion therein. Not only no document had been executed, even ~

no interest had been charged. It would be absurd to form an opinion that -··
despite knowing that the respondent even was not in a position to
c discharge his burden to pay instalments in respect of the prized amount,
an advance would be made to him and that too even after institution of
three civil suits. The amount advanced even did not carry any interest. If
in a situation of this nature, the High Court has arrived at a finding that
the respondent has discharged his burden of proof cast on him under
D Section 139 of the Act, no exception thereto can be taken.
11. It is now a well-settled principle oflaw that this Court in exercise
..i,
of its jurisdiction under Article 136 of the Constitution of India would
ordinarily not interfere with the judgme~t of acquittal, if two views are
possible.
E In MS. Narayana Menon Alias Mani v. State ofKerala and Anr.,
[2006] 6 SCC 39, this Court held:
"54. In any event the High Court entertained an appeal treating to
be an appeal against acquittal, it was in fact exercising the revisional
jurisdiction. Even while exercising an appellate power against a
F judgment of acquittal, the High Court should have borne in mind
the well-settled principles oflaw that where two views are possible, "\
the appellate court should not interfere with the finding of acquittal
recorded by the court below."
[See also Mahadeo Laxman Sarane & Anr. v. State of
G
Maharashtra, (2007) 7 SCALE 137]
12. For the reasons aforementioned.
'

appeals which are dismissed accordingly.
there is no merit in these
,
·)
. ;- --
S.K.S. Appeals dismissed.
H