SRI DATTATRAYAversusSHARANAPPA

                  [2024] 8 S.C.R. 121 : 2024 INSC 586

                                 Sri Dattatraya
                                       v.
                                  Sharanappa
                     (Criminal Appeal No. 3257 of 2024)
                                 07 August 2024
      [B.V. Nagarathna and Augustine George Masih,* JJ.]

                            Issue for Consideration
       Whether the High Court had rightly affirmed the acquittal of the
       respondent in a complaint case moved for the offence punishable
       u/s. 138 of the Negotiable Instruments Act, 1881 by its judgment
       dated 03.03.2023.

                                    Headnotes†
       Negotiable Instruments Act, 1881 – ss.118, 138, 139 –
       Complainant-appellant case was that respondent had
       borrowed rupees two lakhs from him – Against the said loan
       the respondent issued a cheque, as a guarantee against
       repayment – Since the respondent failed to repay the loan
       despite repeated requests, the appellant presented the
       concerned cheque for encashment, as per the Bank Memo,
       the cheque was dishonoured on account of “insufficient
       funds” – A demand notice sent by the appellant – In reply
       to the demand notice, the respondent claimed that the
       accusations made by the appellant were false – Appellant filed
       a complaint case – The Trial Court adjudicated in favour of the
       respondent – The decision was affirmed by the High Court –
       Interference required or not:
       Held: Applying the settled legal position to the present factual matrix,
       it is apparent that there existed a contradiction in the complaint
       moved by the appellant as against his cross-examination relatable
       to the time of presentation of the cheque by the respondent as per
       the statements of the appellant – This is to the effect that while the
       appellant claimed the cheque to have been issued at the time of
       advancing of the loan as a security, however, as per his statement
       during the cross-examination it was revealed that the same was
       presented when an alleged demand for repayment of alleged loan
       amount was raised before the respondent, after a period of six
* Author
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       months of advancement – Furthermore, there was no financial
       capacity or acknowledgement in his Income Tax Returns by the
       appellant to the effect of having advanced a loan to the respondent –
       Even further the appellant has not been able to showcase as to
       when the said loan was advanced in favour of the respondent
       nor has he been able to explain as to how a cheque issued by
       the respondent allegedly in favour of one M landed in the hands
       of the instant holder, that is, the appellant – The Trial Court had
       rightly observed that the appellant was not able to plead even a
       valid existence of a legally recoverable debt as the very issuance
       of cheque is dubious based on the fallacies and contradictions
       in the evidence adduced by the parties – Furthermore, the fact
       that the respondent had inscribed his signature on the agreement
       drawn on a white paper and not on a stamp paper as presented
       by the appellant, creates another set of doubt in the case – Since
       the accused has been able to cast a shadow of doubt on the case
       presented by the appellant, he has therefore successfully rebutted
       the presumption stipulated by Section 139 of the NI Act 1881 – The
       instant case pertains to challenge against concurrent findings of
       fact favouring the acquittal of the respondent, it is settled that this
       Court would ordinarily not interfere with such view considering the
       principle of liberty enshrined in Article 21 of the Constitution of India,
       unless perversity is blatantly forthcoming and there are compelling
       reasons – Thus, the present challenge to the aforesaid impugned
       judgment dated 03.03.2023 by the High Court is bereft of any merits
       and does not call for any interference. [Paras 27, 29, 31(ii), 33]
       Negotiable Instruments Act, 1881 – Three essential conditions
       for invoking proceedings u/s.138:
       Held: The NI Act 1881 enlists three essential conditions that ought
       to be fulfilled before the said provision of law can be invoked –
       Firstly, the cheque ought to have been presented within the period
       of its validity – Secondly, a demand of payment ought to have been
       made by the presenter of the cheque to the issuer, and lastly, the
       drawer ought to have had failed to pay the amount within a period
       of 15 days of the receipt of the demand. [Para 14]
       Negotiable Instruments Act, 1881 – s.138 – Period of limitation:
       Held: While referring to the period of limitation of one month of
       filing a complaint for the purpose of Section 138 of the NI Act
       1881, the same is to begin after the drawer of the cheque has
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                        Sri Dattatraya v. Sharanappa


     failed to discharge his liability to the presenter within the prescribed
     period of 15 days as per the Proviso (c) to Section 138 of the NI
     Act 1881 – A cojoint reading of Sections 138 and 142 of the NI
     Act 1881 makes it clear that the cause of action only arises after
     the failure of the drawer to pay, subsequent to the receipt of the
     notice, and the complainant is restricted from initiating multiple
     complaints against the concerned drawer at different stages
     contemplated prior. [Para 16]
     Negotiable Instruments Act, 1881 – s. 143 – Summary Trial –
     Attendance of accused – Non-bailable warrant:
     Held: In light of such object encapsulated in the Amendment to
     Chapter VIII, the Parliament by virtue of Section 143 of the NI Act
     1881 prescribed procedure of summary trial enlisted in provisions
     of Sections 260 to 265 of the CrPC 1973 to be adopted during
     proceedings under Section 138 of the NI Act 1881 – Therefore, it
     can be observed that the court shall adopt a liberal approach with
     regard to attendance of an accused person and until an accused’s
     presence is indispensable, a court can allow for an exemption, in
     case of existence of any exceptional circumstances – Moreover,
     issuance of a non-bailable warrant in case of absence of the
     accused, at the first instance, shall, due to any circumstance, be
     avoided. [Para 17]
     Negotiable Instruments Act, 1881 – s.139 – Presumption in
     favour of holder:
     Held: The aforesaid presumption entails an obligation on the court
     conducting the trial for an offence under Section 138 of the NI Act
     1881 to presume that the cheque in question was issued by the
     drawer or accused for the discharge of a particular liability – The use
     of expression “shall presume” ameliorates the conundrum pertaining
     to the right of the accused to present evidence for the purpose of
     rebutting the said presumption – Furthermore, the effect of such
     presumption is that, upon filing of the complaint along with relevant
     documents, thereby prima facie establishing the case against the
     drawer, the onus of proof shifts on the drawer or accused to adduce
     cogent material and evidence for rebutting the said presumption, and
     as established in Laxmi Dyechem v. State of Gujarat and others,
     based on preponderance of probabilities. [Para 19]
     Jurisprudence – Criminal Jurisprudence – Essence of liberty –
     Presumption of innocence:
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       Held: Criminal jurisprudence emphasises on the fundamental
       essence of liberty and presumption of innocence unless proven
       guilty – This presumption gets emboldened by virtue of concurrent
       findings of acquittal – Therefore, this court must be extra
       cautious while dealing with a challenge against acquittal as the
       said presumption gets reinforced by virtue of a well-reasoned
       favourable outcome – Consequently, the onus on the prosecution
       side becomes more burdensome pursuant to the said double
       presumption. [Para 31(i)]
       Criminal Law – Where two views are possible – Concurrent
       findings of acquittal:
       Held: Where two views are possible, then this Court would not
       ordinarily interfere and reverse the concurrent findings of acquittal –
       However, where the situation is such that the only conclusion which
       could be arrived at from a comprehensive appraisal of evidence,
       shows that there has been a grave miscarriage of justice, then,
       notwithstanding such concurrent view, this Court would not restrict
       itself to adopt an oppugnant view. [State of Uttar Pradesh v. Dan
       Singh]. [Para 31(iii)]
       Criminal Law – Concurrent findings favoring accused – When
       interference required:
       Held: In situations of concurrent findings favoring accused,
       interference is required where the trial court adopted an incorrect
       approach in framing of an issue of fact and the appellate court
       whilst affirming the view of the trial court, lacked in appreciating the
       evidence produced by the accused in rebutting a legal presumption.
       [Rajesh Jain v. Ajay Singh] – Furthermore, such interference is
       necessitated to safeguard interests of justice when the acquittal
       is based on some irrelevant grounds or fallacies in re-appreciation
       of any fundamental evidentiary material or a manifest error of law
       or in cases of non-adherence to the principles of natural justice
       or the decision is manifestly unjust or where an acquittal which
       is fundamentally based on an exaggerated adherence to the
       principle of granting benefit of doubt to the accused, is liable to be
       set aside – Say in cases where the court severed the connection
       between accused and criminality committed by him upon a cursory
       examination of evidences. [State of Punjab v. Gurpreet Singh and
       Others and Rajesh Prasad v. State of Bihar]. [Para 31 (v)(vi)]
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                              Case Law Cited
     Hiten P. Dalal v. Bratindranath Banerjee [2001] 3 SCR 900 : (2001)
     6 SCC 16; K.N. Beena v. Muniyappan and Another [2001] Supp.
     4 SCR 374 : (2001) 8 SCC 458; Babu v. State of Kerala [2010]
     9 SCR 1039 : (2010) 9 SCC 189 – relied on.
     Rangappa v. Sri Mohan [2010] 6 SCR 507 : (2010) 11 SCC 441;
     ICDS Ltd. v. Beena Shabeer and Another [2002] Supp. 1 SCR
     488 : (2002) 6 SCC 426; Sadanandan Bhadran v. Madhavan Sunil
     Kumar [1998] Supp. 1 SCR 178 : (1998) 6 SCC 514; K. Bhaskaran
     v. Sankaran Vaidhyan Balan and Another [1999] Supp. 3 SCR
     271 : (1999) 7 SCC 510; Laxmi Dyechem v. State of Gujarat and
     Others [2012] 11 SCR 466 : (2012) 13 SCC 375; Rajesh Jain v.
     Ajay Singh [2023] 13 SCR 788 : (2023) 10 SCC 148; Bir Singh
     v. Mukesh Kumar [2019] 2 SCR 24 : (2019) 4 SCC 197; State of
     Uttar Pradesh v. Dan Singh [1997] 1 SCR 764 : (1997) 3 SCC
     747; State of Punjab v. Gurpreet Singh and Others [2024] 2 SCR
     1039 : (2024) 4 SCC 469; Rajesh Prasad v. State of Bihar [2022]
     3 SCR 1046 : (2022) 3 SCC 471; M/s Rajco Steel Enterprises v.
     Kavita Saraff and Another [2024] 4 SCR 255 : (2024) SCC OnLine
     SC 518 – referred to.
                                 List of Acts
     Negotiable Instruments Act, 1881; Constitution of India; Penal
     Code, 1860; Code of Criminal Procedure, 1973.
                              List of Keywords
     Negotiable Instruments; Section 138 of the Negotiable Instruments
     Act, 1881; Section 118 of the Negotiable Instruments Act, 1881;
     Section 139 of the Negotiable Instruments Act, 1881; Presumption
     in favour of holder of a cheque; Summary Trial; Attendance of
     accused; Non-bailable warrant; Discharge of a particular liability;
     Rebutting the presumption; Cogent material and evidence;
     Preponderance of probabilities; Failure of the drawer to pay;
     Receipt of demand notice; Financial capacity; Legally recoverable
     debt; Issuance of cheque; Fallacies and contradictions in the
     evidence; Concurrent findings of fact; Article 21 of the Constitution.
                             Case Arising From
     CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 3257
     of 2024
     From the Judgment and Order dated 03.03.2023 of the High Court of
     Karnataka at Kalaburagi in CRLA No. 200139 of 2019
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                          Appearances for Parties
       Anand Sanjay M Nuli, Sr. Adv., M/s. Nuli & Nuli, Ms. Akhila Wali,
       Suraj Kaushik, Agam Sharma, Advs. for theAppellant.
       Ms. Supreeta Sharanagouda, Sharanagouda Patil, Jyotish Pandey,
       Advs. for the Respondent.
                 Judgment / Order of the Supreme Court

                                 Judgment
       Augustine George Masih, J.
1.     Leave granted.
2.     The instant appeal was originally preferred as a petition before
       this Court, which is moved against the impugned Judgment dated
       03.03.2023 in Criminal Appeal No. 200139 of 2019 by the High
       Court of Karnataka at Kalaburagi whereby the learned Single Judge
       affirmed the acquittal of the Respondent in Complaint Case No.
       468 of 2014 moved for the offence punishable under Section 138
       of the Negotiable Instruments Act, 1881 (hereinafter referred to as
       “NI Act 1881”).
3.     The factual backdrop giving rise to the present challenge is that the
       Appellant is the original complainant who claims to know the sole
       Respondent for the last six years and that he had borrowed INR
       2,00,000/- (Rupees Two Lakhs only) from the Appellant on account
       of family necessities and accommodation. Against the said loan the
       Respondent issued a cheque bearing No. 015639 which was drawn
       on the Bank of India, as a guarantee against repayment. He was to
       repay the said loan amount within a period of six months thereof.
       An agreement to this effect was also signed between the parties.
4.     However, since the Respondent failed to repay the loan despite
       repeated requests, the Appellant presented the concerned cheque
       for encashment on 22.10.2013, but nevertheless, as per the Bank
       Memo dated 24.10.2013, the cheque was dishonoured on account
       of “insufficient funds”.
5.     Aggrieved from the said dishonour of cheque, a Demand Notice
       dated 31.10.2013 was sent by the Appellant to the Respondent,
       whereby, the Counsel on behalf of the Appellant alleged that the
       Respondent had intentionally cheated him and had not made any
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     efforts to discharge his liability. Accordingly, the Respondent was
     said to have committed offences punishable under Section 138 of
     the NI Act 1881 and Section 420 of the Indian Penal Code, 1860
     (hereinafter referred to as “IPC 1860”).
6.   Thereupon, the Respondent moved a Reply Notice dated 11.11.2013
     whereby he claimed that the accusations made by the Appellant
     are false and bereft of pertinent details of the loan transaction, inter
     alia, the date and time of advancement of the said debt, which as
     claimed, was never advanced.
7.   Unsatisfied with the response of the Respondent through the said
     Reply Notice, Appellant moved a Private Complaint No. 991 of
     2013 under Section 200 of the Code of Criminal Procedure, 1973
     (hereinafter referred to as “CrPC 1973”). The said complaint came
     to be registered as CC/468/2014 before Judicial Magistrate First
     Class at Gulbarga. As part of the proceedings before the Trial Court,
     the Appellant examined himself as PW-01, while the Respondent
     examined himself as DW-01. However, the latter did not mark any
     documents from his side. It was the Respondent’s plea that the
     concerned cheque was issued in favour of one Mr Mallikarjun in
     the year 2012 for security purposes, however, he did not return the
     same to the Respondent, and instead had left the village. While
     dealing with the said contention, the Trial Court observed that the
     Respondent had failed to explain as to how the cheque landed in
     the hands of the Appellant, and for what purpose was the cheque
     issued to Mr Mallikarjun.
8.   It was also revealed as part of the statement during cross-examination
     of the Appellant that the cheque was originally, not given to the
     Appellant as security cheque. Instead, the same was allegedly
     given to the Appellant after the Respondent had thereby failed to
     repay his liability as existing against the Appellant after a period of
     six months. The Court further observed that the Agreement marked
     by the Appellant to assist his case does not include signature of the
     Respondent as against the terms of the agreement, but a signature
     is made by the Respondent on the stamp paper itself, and the
     same is not sustainable in the eyes of law. The Court also went on
     to scrutinize the Income Tax Returns of the Appellant, from where
     it was revealed that the Appellant failed to declare the alleged loan
     transaction as part of his returns to the Income Tax Department.
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       Accordingly, vide its Judgment dated 18.10.2019, the Trial Court
       adjudicated in favour of the Respondent, resultantly dismissing the
       complaint moved by the Appellant and acquitting the Respondent.
9.     Aggrieved by the decision of Trial Court, the Appellant moved the
       High Court of Karnataka in Criminal Appeal No. 200139 of 2019,
       which went on to observe that, admittedly, there was a contradiction
       in the statement of the Appellant as to when the cheque was issued
       in his favour. Furthermore, as was laid down in the decision of this
       Court in Rangappa v. Sri Mohan,1 the presumption under Section
       139 of the NI Act 1881 is a rebuttable one. The contention of the
       Respondent as to the financial capacity of the Appellant to grant a
       loan in his favour was to be discharged by him, and being unable
       to do so, it shall be presumed that a loan transaction had not taken
       place. Accordingly, the findings of the Trial Court were affirmed in
       the impugned Judgment dated 03.03.2023.
10. The Appellant has thereupon moved this Court in challenge to the
    said impugned judgment on the grounds that as the signature on the
    concerned cheque was admitted by the Respondent, the Appellant
    was able to successfully raise a presumption under Section 139 of
    the NI Act 1881 and as per the submissions of the Respondent, he
    had failed to rebut the said presumption. He also put forth that the
    reliance on the decision in Rangappa (supra) by the High Court
    was misplaced, and even going by the standard of preponderance
    of probabilities, the Respondent failed to discharge his onus.
11. Having heard the learned Senior Advocate for the Appellant as well as
    the learned Counsel on behalf of the Respondent, it is imperative to
    deliberate over the position of law apropos the applicable provisions
    of the NI Act 1881, and others, if any.
12. Earlier, a case of dishonour of a cheque was dealt through provisions
    of Section 420 read with Section 415 of the IPC 1860. To enhance
    the acceptability of cheques as well as to provide for adequate
    safeguards to prevent harassment of honest drawers through painting
    the liability arising out of dishonour of a cheque with a punitive brush,
    an amendment to the NI Act 1881 was brought about by introducing
    Chapter VIII. Thence, seeking to promote credibility in transactions


1    [2010] 6 SCR 507 : (2010) 11 SCC 441.
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     through the medium of banking channels and operations as well as
     their efficacy. Section 138 of the NI Act 1881 is reproduced below as:
           “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 provision 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 of
           other liability” means a legally enforceable debt or other
           liability.”
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13. This Court in ICDS Ltd. v. Beena Shabeer and Another,2 has
    held that proceedings under Section 138 of the NI Act 1881 can be
    initiated even if the cheque was originally issued as security and was
    subsequently dishonoured owing to insufficient funds. The failure to
    honour the concerned cheque is per se deemed as a commission
    of an offence under Section 138 of the NI Act 1881.
14. The NI Act 1881 enlists three essential conditions that ought to be
    fulfilled before the said provision of law can be invoked. Firstly, the
    cheque ought to have been presented within the period of its validity.
    Secondly, a demand of payment ought to have been made by the
    presenter of the cheque to the issuer, and lastly, the drawer ought
    to have had failed to pay the amount within a period of 15 days of
    the receipt of the demand. These principles and pre-requisites stand
    well established through Judgment of this Court in Sadanandan
    Bhadran v. Madhavan Sunil Kumar.3 There is an explicit limitation
    of 30 days, beginning from period when the cause of action arose,
    prescribed by the statute vide Section 142(b) of the NI Act 1881 to
    initiate proceedings under Section 138 of the NI Act 1881.
15. Furthermore, this Court expounded that the issuance of cheque
    towards a liability, the presentation of the cheque within the prescribed
    period, its return on account of dishonour, notice to the accused, and
    failure to pay within 15 days thereof, stand as sine qua non for an
    offence under Section 138 of the NI Act 1881 as per the decision
    in K. Bhaskaran v. Sankaran Vaidhyan Balan and Another.4 The
    same was subsequently reiterated in numerous judgments of this
    Court as well as that of the High Courts.
16. While referring to the period of limitation of one month of filing a
    complaint for the purpose of Section 138 of the NI Act 1881, the same
    is to begin after the drawer of the cheque has failed to discharge
    his liability to the presenter within the prescribed period of 15 days
    as per the Proviso (c) to Section 138 of the NI Act 1881. A co-joint
    reading of Sections 138 and 142 of the NI Act 1881 makes it clear
    that the cause of action only arises after the failure of the drawer to
    pay, subsequent to the receipt of the notice, and the complainant is


2   [2002] Supp. 1 SCR 488 : (2002) 6 SCC 426.
3   [1998] Supp. 1 SCR 178 : (1998) 6 SCC 514.
4   [1999] Supp. 3 SCR 271 : (1999) 7 SCC 510.
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     restricted from initiating multiple complaints against the concerned
     drawer at different stages contemplated prior.
17. Furthermore, in light of such object encapsulated in the Amendment
    to Chapter VIII, the Parliament by virtue of Section 143 of the NI Act
    1881 prescribed procedure of summary trial enlisted in provisions
    of Sections 260 to 265 of the CrPC 1973 to be adopted during
    proceedings under Section 138 of the NI Act 1881. Therefore, it
    can be observed that the court shall adopt a liberal approach with
    regard to attendance of an accused person and until an accused’s
    presence is indispensable, a court can allow for an exemption, in case
    of existence of any exceptional circumstances. Moreover, issuance
    of a non-bailable warrant in case of absence of the accused, at the
    first instance, shall, due to any circumstance, be avoided.
18. As the presumption contemplated by virtue of Section 118 of the NI
    Act 1881 entails, Section 139 was similarly introduced to provide
    for a presumption that the holder of cheque had received the
    concerned issued cheque towards discharging of the liability of the
    drawer, either in whole or in part. Therefore, at this juncture, it is
    ideal to make a reference to Section 118 of the NI Act 1881, which
    is reproduced as:
           “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,
                 indorsed, negotiated or transferred, was accepted,
                 indorsed, 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;
           (d)   as to time of transfer:—that every transfer of a
                 negotiable instrument was made before its maturity;
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            (e)   as to order of indorsements:—that the indorsements
                  appearing upon a negotiable instrument were made
                  in the order in which they appear then on;
            (f)   as to stamp:— that a lost promissory note, bill of
                  exchange or cheque was duly stamped;
            (g)   that holder is a holder in due course:—that the
                  holder of a negotiable instrument is a holder in due
                  course: provided that, where the instrument has been
                  obtained from its lawful owner, or from any person
                  in lawful custody thereof, by means of an offence
                  or fraud, or has been obtained from the maker or
                  acceptor thereof by means of an offence or fraud, or
                  for unlawful consideration, the burden of proving that
                  the holder is a holder in due course lies upon him.”
       Chapter XIII of the NI Act 1881, of which Section 118 is a part, lays
       down special rules for evidence to be adduced within the scheme of
       the Act herein. As the text of the said provision showcases, it raises
       a rebuttable presumption as against the drawer to the extent that
       the concerned negotiable instrument was drawn and subsequently
       accepted, indorsed, negotiated, or transferred for an existing
       consideration, and the date so designated on such an instrument
       is the date when the concerned negotiable instrument was drawn.
       It is also further presumed that the same was transferred before its
       maturity and that the order in which multiple indorsements appear
       on such an instrument, that is the deemed order thereon. Lastly, the
       holder of a negotiable instrument is one in its due course, subject to
       a situation where the concerned instrument while being obtained from
       a lawful owner and from his or her lawful custody thereof through
       undertaking of an offence as contemplated under any statute or
       through the means of fraud, the burden to prove him or her being a
       holder in due course, instead, lies upon such a holder.
19. Accordingly, to begin with, the bare provision of Section 139 of the
    NI Act 1881 is reproduced herein below:
            “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 section138 for the discharge, in whole or in part, of
            any debt or other liability.”
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     The aforesaid presumption entails an obligation on the court
     conducting the trial for an offence under Section 138 of the NI Act
     1881 to presume that the cheque in question was issued by the
     drawer or accused for the discharge of a particular liability. The use
     of expression “shall presume” ameliorates the conundrum pertaining
     to the right of the accused to present evidence for the purpose of
     rebutting the said presumption. Furthermore, the effect of such
     presumption is that, upon filing of the complaint along with relevant
     documents, thereby prima facie establishing the case against the
     drawer, the onus of proof shifts on the drawer or accused to adduce
     cogent material and evidence for rebutting the said presumption, and
     as established in Laxmi Dyechem v. State of Gujarat and Others,5
     based on preponderance of probabilities.
20. While describing the offence envisaged under Section 138 of the NI
    Act 1881 as a regulatory offence for largely being in the nature of a
    civil wrong with its impact confined to private parties within commercial
    transactions, the 3-Judge Bench in the decision of Rangappa (supra)
    highlighted Section 139 of the NI Act 1881 to be an example of a
    reverse onus clause. This is done so, as the Court expounds, in the
    light of Parliament’s intent, which can be culled out from the peculiar
    placing of act of dishonour of cheque in a statute having criminal
    overtones. The underlying object of such deliberate placement is to
    inject and enhance credibility of negotiable instruments. Additionally,
    the reverse onus clause serves as an indispensable “device to prevent
    undue delay in the course of litigation”. While acknowledging the test
    of proportionality and having laid the interpretation of Section 139 of
    the NI Act 1881 hereof, it was further held that an accused cannot
    be obligated to rebut the said presumption through an unduly high
    standard of proof. This is in light of the observations laid down by
    a co-ordinate Bench in Hiten P. Dalal v. Bratindranath Banerjee,6
    whereby it was clarified that the rebuttal ought not to be undertaken
    conclusively by an accused, which is reiterated as follows:
             “23. In other words, provided the facts required to form
             the basis of a presumption of law exist, no discretion is
             left with the court but to draw the statutory conclusion,


5   [2012] 11 SCR 466 : (2012) 13 SCC 375.
6   [2001] 3 SCR 900 : (2001) 6 SCC 16.
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             but this does not preclude the person against whom the
             presumption is drawn from rebutting it and proving the
             contrary. A fact is said to be proved when,
                    ‘after considering the matters before it, the court
                    either believes it to exist, or considers its existence
                    so probable that a prudent man ought, under the
                    circumstances of the particular case, to act upon the
                    supposition that it exists’ [Section 3, Evidence Act].
                    Therefore, the rebuttal does not have to be conclusively
                    established but such evidence must be adduced
                    before the court in support of the defence that the court
                    must either believe the defence to exist or consider its
                    existence to be reasonably probable, the standard of
                    reasonability being that of the ‘prudent man’.”
       Therefore, it may be said that the liability of the defence in cases
       under Section 138 of the NI Act 1881 is not that of proving its case
       beyond reasonable doubt.
21. In light of the aforesaid discussion, and as underscored by this Court
    recently in the decision of Rajesh Jain v. Ajay Singh,7 an accused may
    establish non-existence of a debt or liability either through conclusive
    evidence that the concerned cheque was not issued towards the
    presumed debt or liability, or through adduction of circumstantial
    evidence vide standard of preponderance of probabilities.
22. Since a presumption only enables the holder to show a prima facie
    case, it can only survive before a court of law subject to contrary
    not having been proved to the effect that a cheque or negotiable
    instrument was not issued for a consideration or for discharge of
    any existing or future debt or liability. In this backdrop, it is pertinent
    to make a reference to a decision of 3-Judge Bench in Bir Singh
    v. Mukesh Kumar,8 which went on to hold that if a signature on a
    blank cheque stands admitted to having been inscribed voluntarily,
    it is sufficient to trigger a presumption under Section 139 of the NI
    Act 1881, even if there is no admission to the effect of execution of
    entire contents in the cheque.


7   [2023] 13 SCR 788 : (2023) 10 SCC 148.
8   [2019] 2 SCR 24 : (2019) 4 SCC 197.
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23. It is therefore apposite to make a reference to the provision of
    Section 140 of the NI Act 1881, which ruminates mens rea to be
    immaterial while dealing with proceedings under Section 138 of the
    NI Act 1881. The said legislative wisdom of the Parliament which
    is imbibed in the bare text of the provision is reproduced as below:
            “140. Defence which may not be allowed in any
            prosecution under section 138—It shall not be a defence
            in a prosecution for an offence under section 138 that the
            drawer had no reason to believe when he issued the cheque
            that the cheque may be dishonoured on presentment for
            the reasons stated in that section.”
24. Through this legal fiction adopted by the legislature vide Amendment
    Act of 1988 to the NI Act 1881 it has barred the drawer of a
    cheque, which was dishonoured, to take a defence that at the time
    of issuance of the cheque in question he or she had no reason to
    believe that the same will be dishonoured upon being presented
    by the holder of such a cheque, especially and specifically for the
    reasons underlined in Section 138 of the NI Act 1881.
25. A comprehensive reference to the Sections 118, 139 and 140 of the
    NI Act 1881 gives birth to a deemed fiction which was also articulated
    by this Court in K.N. Beena v. Muniyappan and Another 9 as follows:
            “Under section 118, unless the contrary was proved, it is
            to be presumed that the negotiable instrument (including
            a cheque) had been made or drawn for consideration.
            Under section 139 the court has to presume, unless the
            contrary was proved, that the holder of the cheque received
            the cheque for discharge, in whole or in part, of a debt or
            liability. Thus, in complaints under section 138, the court
            has to presume that the cheque had been issued for a
            debtor’s liability. This presumption is rebuttable. However,
            the burden of proving that a cheque had not been issued
            for a debt or liability is on the accused. The Supreme Court
            in the case of Hiten P. Dalal v. Bratindranath Banerjee has
            also taken an identical view.”



9   [2001] Supp. 4 SCR 374 : (2001) 8 SCC 458.
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26. Furthermore, on the aspect of adducing evidence for rebuttal of the
    aforesaid statutory presumption, it is pertinent to cumulatively read the
    decisions of this Court in Rangappa (supra) and Rajesh Jain (supra)
    which would go on to clarify that accused can undoubtedly place
    reliance on the materials adduced by the complainant, which would
    include not only the complainant’s version in the original complaint, but
    also the case in the legal or demand notice, complainant’s case at the
    trial, as also the plea of the accused in the reply notice, his Section
    313 CrPC 1973 statement or at the trial as to the circumstances under
    which the promissory note or cheque was executed. The accused
    ought not to adduce any further or new evidence from his end in said
    circumstances to rebut the concerned statutory presumption.
27. Applying the aforementioned legal position to the present factual
    matrix, it is apparent that there existed a contradiction in the complaint
    moved by the Appellant as against his cross-examination relatable
    to the time of presentation of the cheque by the Respondent as per
    the statements of the Appellant. This is to the effect that while the
    Appellant claimed the cheque to have been issued at the time of
    advancing of the loan as a security, however, as per his statement
    during the cross-examination it was revealed that the same was
    presented when an alleged demand for repayment of alleged loan
    amount was raised before the Respondent, after a period of six months
    of advancement. Furthermore, there was no financial capacity or
    acknowledgement in his Income Tax Returns by the Appellant to the
    effect of having advanced a loan to the Respondent. Even further the
    Appellant has not been able to showcase as to when the said loan
    was advanced in favour of the Respondent nor has he been able
    to explain as to how a cheque issued by the Respondent allegedly
    in favour of Mr Mallikarjun landed in the hands of the instant holder,
    that is, the Appellant.
28. Admittedly, the Appellant was able to establish that the signature
    on the cheque in question was of the Respondent and in regard to
    the decision of this Court in Bir Singh (supra), a presumption is to
    ideally arise. However, in the above referred context of the factual
    matrix, the inability of the Appellant to put forth the details of the
    loan advanced, and his contradictory statements, the ratio therein
    would not impact the present case to the effect of giving rise to the
    statutory presumption under Section 139 of the NI Act 1881. The
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                      Sri Dattatraya v. Sharanappa


     Respondent has been able to shift the weight of the scales of justice
     in his favour through the preponderance of probabilities.
29. The Trial Court had rightly observed that the Appellant was not able
    to plead even a valid existence of a legally recoverable debt as
    the very issuance of cheque is dubious based on the fallacies and
    contradictions in the evidence adduced by the parties. Furthermore,
    the fact that the Respondent had inscribed his signature on the
    agreement drawn on a white paper and not on a stamp paper as
    presented by the Appellant, creates another set of doubt in the case.
    Since the accused has been able to cast a shadow of doubt on
    the case presented by the Appellant, he has therefore successfully
    rebutted the presumption stipulated by Section 139 of the NI Act 1881.
30. Moreover, affirming the findings of the Trial Court, the High Court
    observed that while the signature of the Respondent on the cheque
    drawn by him as well as on the agreement between the parties herein
    stands admitted, in case where the concern of financial capacity of
    the creditor is raised on behalf of an accused, the same is to be
    discharged by the complainant through leading of cogent evidence.
31. The instant case pertains to challenge against concurrent findings
    of fact favouring the acquittal of the respondent, it would be cogent
    to delve into an analysis of the principles underlining the exercise
    of power to adjudicate a challenge against acquittal bolstered by
    concurrent findings. The following broad principles can be culled out
    after a comprehensive analysis of judicial pronouncements:
     i)    Criminal jurisprudence emphasises on the fundamental essence
           of liberty and presumption of innocence unless proven guilty.
           This presumption gets emboldened by virtue of concurrent
           findings of acquittal. Therefore, this court must be extra-
           cautious while dealing with a challenge against acquittal as the
           said presumption gets reinforced by virtue of a well-reasoned
           favourable outcome. Consequently, the onus on the prosecution
           side becomes more burdensome pursuant to the said double
           presumption.
     ii)   In case of concurrent findings of acquittal, this Court would
           ordinarily not interfere with such view considering the principle
           of liberty enshrined in Article 21 of the Constitution of India
           1950, unless perversity is blatantly forthcoming and there are
           compelling reasons.
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       iii)   Where two views are possible, then this Court would not
              ordinarily interfere and reverse the concurrent findings of
              acquittal. However, where the situation is such that the only
              conclusion which could be arrived at from a comprehensive
              appraisal of evidence, shows that there has been a grave
              miscarriage of justice, then, notwithstanding such concurrent
              view, this Court would not restrict itself to adopt an oppugnant
              view. [Vide State of Uttar Pradesh v. Dan Singh10]
       iv)    To adjudge whether the concurrent findings of acquittal are
              ‘perverse’ it is to be seen whether there has been failure of
              justice. This Court in Babu v. State of Kerala11 clarified the
              ambit of the term ‘perversity’ as
                    “if the findings have been arrived at by ignoring
                    or excluding relevant material or by taking into
                    consideration irrelevant/admissible material. The
                    finding may also be said to be perverse if it is
                    ‘against the weight of evidence’, or if the finding so
                    outrageously defies logic as to suffer from the vice
                    of irrationality.”
       v)     In situations of concurrent findings favoring accused, interference
              is required where the trial court adopted an incorrect approach in
              framing of an issue of fact and the appellate court whilst affirming
              the view of the trial court, lacked in appreciating the evidence
              produced by the accused in rebutting a legal presumption. [Vide
              Rajesh Jain v. Ajay Singh12]
       vi)    Furthermore, such interference is necessitated to safeguard
              interests of justice when the acquittal is based on some irrelevant
              grounds or fallacies in re-appreciation of any fundamental
              evidentiary material or a manifest error of law or in cases of
              non-adherence to the principles of natural justice or the decision
              is manifestly unjust or where an acquittal which is fundamentally
              based on an exaggerated adherence to the principle of granting
              benefit of doubt to the accused, is liable to be set aside. Say in



10   [1997] 1 SCR 764 : (1997) 3 SCC 747
11   [2010] 9 SCR 1039 : (2010) 9 SCC 189
12   [2023] 13 SCR 788 : (2023) 10 SCC 148
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                             Sri Dattatraya v. Sharanappa


              cases where the court severed the connection between accused
              and criminality committed by him upon a cursory examination
              of evidences. [Vide State of Punjab v. Gurpreet Singh and
              Others13 and Rajesh Prasad v. State of Bihar14]
32. Upon perusal of the aforementioned principles and applying them
    to the facts and circumstances of the present matter, it is evident
    that there is no perversity and lack of evidence in the case of the
    respondent-accused. The concurrent findings have backing of
    detailed appraisal of evidences and facts, therefore, do not warrant
    interference in light of above enlisted principles. In a similar set of
    facts as in the present case, involving criminal liability arising out of
    dishonour of cheque, this Court in M/s Rajco Steel Enterprises v.
    Kavita Saraff and Another15 dejected from reversing the concurrent
    findings of acquittal of accused therein and underscored the principle
    of non-interference, unless such findings are perverse or bereft of
    evidentiary corroboration or lacks question of law.
33. In furtherance of the aforesaid principles and the reasons ascribed
    thereof, the present challenge to the aforesaid impugned judgment
    dated 03.03.2023 by the High Court of Karnataka at Kalaburagi is
    bereft of any merits and does not call for any interference of this court.
34. The instant appeal is dismissed and the findings of the High Court
    in the impugned judgment dated 03.03.2023 are affirmed.
35. Pending applications, if any, also stand disposed of.

      Result of the case: Appeal dismissed.



      †
          Headnotes prepared by: Ankit Gyan




13   [2024] 2 SCR 1039 : (2024) 4 SCC 469.
14   [2022] 3 SCR 1046 : (2022) 3 SCC 471.
15   [2024] 4 SCR 255 : 2024 SCC OnLine SC 518.