UTTAM RAMversusDEVINDER SINGH HUDAN & ANR.

                         [2019] 13 S.C.R. 425                          425


                          UTTAM RAM                                    A
                                 v.
              DEVINDER SINGH HUDAN & ANR.
                (Criminal Appeal No. 1545 of 2019)
                       OCTOBER 17, 2019                                B
    [L. NAGESWARA RAO AND HEMANT GUPTA, JJ.]
       Negotiable Instruments Act, 1881 – s.138 & ss.118, 139 –
Respondent purchased apple crops of various growers which was
carried out through ropeway to the roadhead for further
                                                                       C
transportation – Packing material was procured by the respondent
through his authorised agent on credit basis from the appellant –
Accounts finally settled between the appellant and the respondent’s
authorised agent and Rs.5,38,856/- was found recoverable – Cheque
issued – Dishonoured– Complaint filed by the appellant – Dismissed
– Upheld by the High Court – On appeal, held: Dishonour of cheque      D
carries a statutory presumption of consideration – Holder of cheque
in due course is required to prove that the cheque was issued by the
accused and that when the same presented, it was not honoured –
Since there is statutory presumption of consideration, the burden is
on the accused to rebut the presumption that the cheque was issued
                                                                       E
not for any debt or other liability – In the present case, once the
agent of the respondent admitted the settlement of due amount, in
absence of any other evidence the Trial Court or the High Court
could not dismiss the complaint only on account of discrepancies in
the cartons, packing material or the rate to determine the total
liability, as if the appellant was proving his debt before the Civil   F
Court, when the written document crystalized the amount due –
Respondent failed to lead any evidence to rebut the statutory
presumption, a finding returned by both the Trial Court and the
High Court –Therefore, it is presumed that the cheques in question
were drawn for consideration and the appellant received the same
                                                                       G
in discharge of an existing debt – Respondent guilty of dishonour
of cheque for an offence u/s.138 – Order passed by the High Court,
set aside – Respondent to pay Rs.10,77,712/- as fine i.e. twice of
the amount of cheque of Rs.5,38,856/- and litigation cost of

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                                425
426            SUPREME COURT REPORTS                     [2019] 13 S.C.R.


A     Rs.1,00,000/- within three months – In case of failure to pay the
      same, the respondent to undergo imprisonment for six months – Code
      of Criminal Procedure, 1973 – s.313.
            Allowing the appeal, the Court
             HELD: 1.1 The approach of the Trial Court and that of the
B     High Court is perverse; irrational as well as suffers from material
      illegality and irregularity, which cannot be sustained in complaint
      filed under Section 138 Negotiable Instruments Act, 1881. A
      negotiable instrument including a cheque carries presumption of
      consideration in terms of Section 118(a) and under Section 139
C     of the Act. The Trial Court and the High Court proceeded as if,
      the appellant is to prove a debt before civil court wherein, the
      plaintiff is required to prove his claim on the basis of evidence to
      be laid in support of his claim for the recovery of the amount due.
      A dishonour of cheque carries a statutory presumption of
      consideration. The holder of cheque in due course is required to
D     prove that the cheque was issued by the accused and that when
      the same presented, it was not honoured. Since there is a statutory
      presumption of consideration, the burden is on the accused to
      rebut the presumption that the cheque was issued not for any
      debt or other liability. [Paras 18-20] [432-D, E-H; 433-A-B]
E            1.2 There is the mandate of presumption of consideration
      in terms of the provisions of the Act. The onus shifts to the
      accused on proof of issuance of cheque to rebut the presumption
      that the cheque was issued not for discharge of any debt or liability
      in terms of Section 138 of the Act. Once the agent of the
F     respondent has admitted the settlement of due amount and in
      absence of any other evidence the Trial Court or the High Court
      could not dismiss the complaint only on account of discrepancies
      in the determination of the amount due or oral evidence in the
      amount due when the written document crystalizes the amount
      due for which the cheque was issued. [Paras 21, 27] [433-C;
G     439-B-C]
            1.3 The accused has failed to lead any evidence to rebut
      the statutory presumption, a finding returned by both the Trial
      Court and the High Court. Both Courts not only erred in law but
      also committed perversity when the due amount is said to be
H
     UTTAM RAM v. DEVINDER SINGH HUDAN & ANR.                               427


disputed only on account of discrepancy in the cartons, packing             A
material or the rate to determine the total liability as if the appellant
was proving his debt before the Civil Court. Therefore, it is
presumed that the cheques in question were drawn for
consideration and the holder of the cheques i.e., the appellant
received the same in discharge of an existing debt. Cross-
                                                                            B
examination on the prosecution witness is not sufficient to rebut
the presumption of consideration. Mere discrepancies in the
statement in respect of the cartons, trays or the packing material
or the rate charged will not rebut the statutory presumption which
is proved by CW3. The conclusion drawn by the Trial Court and
the High Court to acquit the respondent is not only illegal but             C
being perverse is totally unsustainable in law. Order passed by
the High Court is set aside. The respondent is held guilty of
dishonour of cheque for an offence under Section 138 of the Act.
and shall pay Rs.10,77,712/- as fine i.e. twice of the amount of
cheque of Rs.5,38,856/- and a cost of litigation of Rs.1,00,000/-
                                                                            D
within three months. If the amount of fine and the costs are not
paid within three months, the respondent shall undergo
imprisonment for a period of six months. [Paras 28, 32-34]
[439-C-E; 440-E-G; 441-A-B]
      Kumar Exports v. Sharma Carpets (2009) 2 SCC 513 :
      [2008] 17 SCR 572 – distinguished.                                    E

      M. S. Narayana Menon v. State of Kerala (2006) 6 SCC
      39 : [2006] 3 Suppl. SCR 124 – held inapplicable.
      Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC
      16 : [2001] 3 SCR 900 ; Rangappa v. Sri Mohan (2010)                  F
      11 441 : [2010] 6 SCR 507 ; Kishan Rao v.
      Shankargouda (2018) 8 SCC 165 : [2018] 5 SCR 69 ;
      Bir Singh v. Mukesh Kumar (2019) 4 SCC 197 : [2019]
      2 SCR 24 ; Rohitbhai Jivanlal Patel v. State of Gujarat
      and Another AIR 2019 SC 1876; Vijay v. Laxman and
      another (2013) 3 SCC 86 : [2013] 4 SCR 80 ; M. S.                     G
      Narayana Menon and K. Prakashan v. P. K. Surenderan
      (2008) 1 SCC 258 : [2007] 10 SCR 1010 ; John K.
      Abraham v. Simon C. Abraham (2014) 2 SCC 236 :
      [2013] 12 SCR 753 – referred to.
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428                SUPREME COURT REPORTS                     [2019] 13 S.C.R.


A                               Case Law Reference
      [2001] 3 SCR 900                  referred to              Para 16
      [2008] 17 SCR 572                 distinguished            Para 16
      [2010] 6 SCR 507                  referred to              Para 16
B     [2018] 5 SCR 69                   referred to              Para 23
      [2019] 2 SCR 24                   referred to              Para 24
      AIR 2019 SC 1876                  referred to              Para 25
      [2006] 3 Suppl. SCR 124           held inapplicable        Para 29
C
      [2013] 4 SCR 80                   referred to              Para 31
      [2007] 10 SCR 1010                referred to              Para 32
      [2013] 12 SCR 753                 referred to              Para 32
            CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
D     No. 1545 of 2019.
            From the Judgment and Order dated 17.12.2018 of the High Court
      of Himachal Pradesh, Shimla in Crl. Appeal No. 431 of 2018.
            B. S. Banthia, Sachin Daga, Rajesh Kandari, Advs. for the
      Appellant.
E
            Abhimanyu Jhamba, Hemlata Ranga, Ms. R.A. Thonanad
      Thangal, Hatneimawi, Ashish Jhamb, Samir Ali Khan, Ms. Ashleen Kaur,
      Saloj Smaji, Advs. for the Respondent.
                Ms. Liz Mathew, Adv.(AC).
F               The Judgment of the Court was delivered by
                HEMANT GUPTA, J.
             1. The appellant is aggrieved against an order passed by the High
      Court of Himachal Pradesh, Shimla on 17.12.2018, whereby, the order
G     of dismissal of complaint under Section 138 of the Negotiable Instruments
      Act, 18811 by the learned Trial Court was not interfered with.
            2. None has put appearance on behalf of respondent No. 1, despite
      service. Therefore, on 16.09.2019, this Court requested Ms. Liz Mathew,
      Advocate to assist the Court on behalf of respondent No.1.
      1
H         for short the “Act”
     UTTAM RAM v. DEVINDER SINGH HUDAN & ANR.                                429
                [HEMANT GUPTA, J.]

       3. The appellant owns apple orchard in District Kullu, Himachal       A
Pradesh. The appellant also used to supply apple cartons, trays and
other packing materials to other apple growers on cash and credit basis.
He also owns commercial ropeway which connects various other apple
orchards with the roadhead as a facility to the growers to carry their
produce from the orchards to the market.
                                                                             B
       4. In the year 2011, respondent No. 1 purchased apple crops of
various growers which was carried out through ropeway to the roadhead
for further transportation. The packing material was procured by the
respondent on credit basis from the appellant through his authorised agent
Prem Chand son of Kumat Ram. In the month of September 2011, the
accounts were finally settled between the appellant and the authorised       C
agent of respondent No. 1 and a sum of Rs.5,38,856/- was found
recoverable. A cheque No. 942816 dated 2.10.2011 was issued for the
said amount, but the said cheque was returned by the bank on 11.10.2011
on presentation with the endorsement “insufficient funds”.
      5. The appellant thereafter served a legal notice on 27.10.2011        D
under registered cover sent to the official and home addresses of
respondent No. 1. But, in spite of receipt of the notice of 27.10.2011, no
payment was made which led to filing of a complaint by the appellant.
      6. The appellant in his complaint stated that total amount of
Rs.7,86,300/- was found payable on account of bags, gunny bags and           E
packing materials and after adjusting the payment of Rs. 2,47,444/-, an
amount of Rs. 5,38,856/- was found to be payable to the appellant. The
appellant has asserted that the said cheque No. 942816 dated 2.10.2011
was issued by the respondent.
      7. In support of the complaint, apart from producing CW1 Dhiraj        F
Kumar who produced the bank record of dishonour of cheque, the
appellant examined himself as CW2 and also produced Prem Chand son
of Kumat Ram, the agent of respondent as CW3. The respondent did
not appear in witness box but examined Head Constable Ranjit Singh
DW1.                                                                         G
       8. Learned Trial Court dismissed the complaint for the reason
that cheque amount was more than the amount alleged on the due date
when cheque was presented. Therefore, the cheque cannot be said to
be drawn towards discharge of whole or in part of any debt.
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430                SUPREME COURT REPORTS                     [2019] 13 S.C.R.


A            9. The appellant in his affidavit reiterated his assertions as were
      given in the complaint. In the cross-examination conducted by the
      respondent, the appellant stated that cheque in Exh.CW1/B was filled
      up by the respondent in October 2011 and that cheque was given by the
      respondent himself to him. Three persons, he himself, accused and the
      agent of the respondent sat together. He deposed that he was given up
B
      a filled-up cheque. He denied the suggestion that the accused did not
      issue the cheque Exh.CW1/B. He also denied the suggestion that Prem
      Chand misused the cheque of the accused because he has stolen the
      signed cheque book of the accused and that he has filled up a blank
      cheque.
C            10. CW3 Prem Chand deposed that the respondent purchased,
      on contract, apple in their area from apple growers including from the
      appellant for further sending them to Shimla, Chandigarh and Delhi. He
      deposed that appellant had to recover an amount of Rs.7,86,300/- and
      after adjustment of Rs.2,47,444/- the balance amount was payable by
D     the respondent for which the settlement was arrived at in his presence
      when cheque No. 942816 was issued for a sum of Rs.5,38,856/- dated
      2.10.2011.
             11. In the cross-examination, he deposed that he used to keep an
      account of all the packing materials. He was suggested that the accused
      has kept cheque with him and he used to give to the growers. However,
E     he categorically deposed that cheque Exh.CW1/B was given in his
      presence by the accused in Kuthwa. The account was settled prior to
      giving of cheque. He denied the suggestion that he lodged a report in
      police about missing cheque book in the year 2011. He deposed that
      the respondent has given cheque book by signing them. He denied the
F     suggestion that the cheque in question was filled up as he colluded with
      the appellant. The respondent in his statement under Section 313 of the
      Code of Criminal Procedure2 denied the prosecution case. The relevant
      question No. 9 and the answer given by the respondent are as under:
             “Q.9 Why the present case has been made out against you
             accused?
G
             Ans. This is a false case. My cheque has been misused.”
             12. DW1-Ranjit, Head Constable examined by the accused, has
      produced an entry dated 09.09.2011 regarding loss of his cheque book
      containing cheque Nos. 942801-942820.
      2
H         for short the “Code”
      UTTAM RAM v. DEVINDER SINGH HUDAN & ANR.                                431
                 [HEMANT GUPTA, J.]

        13. The learned Trial Court returned a finding that mere production   A
of entry Exh. DW1/A is not sufficient to prove that he has not issued the
said cheque as such report could have been made with intention to create
false evidence of the loss of cheque book. The court found that in fact
if the cheque has been lost, the accused had several opportunities to
lodge FIR qua the misuse of said cheque as he has signed
                                                                              B
acknowledgement of notice Exh.CW1/G. The learned Trial Court recorded
the following findings:
       “….Thus, it stands proved beyond reasonable doubt that the cheque
       Ext. CW1/B was issued by the accused in favour of the
       complainant. Further, the dishonor of the cheque has also been
       proved through return memo Ext. CW1/C. Further the legal               C
       demand notice was also issued within a period of 30 days from
       the date of dishnour. Thereafter, the present complaint has been
       filled within the period of limitation.”
      14. Still further, the learned Trial Court held the presumption that
the amount of cheque is legally enforceable debt, has not been rebutted       D
when the following finding was returned:
       “….Neither any meaningful cross-examination of the complainant
       has been done on this point of his financial capacity. Accordingly,
       the aforesaid presumption has not been rebutted by the accused
       by proving that the complainant did not have the requisite financial   E
       capacity. Accordingly, the said defence is rejected.”
       15. However, the learned Trial Court found contradiction in the
number of cartons in the complaint as well as in the statement of the
appellant. It was found that the cheque amount is more than the amount
allegedly due on the date when cheque was presented, therefore, the           F
complaint was dismissed. It held that there are three different versions
as to the number of apple cartons, therefore, the alleged amount would
have been less than the amount claimed by the complainant.
      16. In an appeal, the High Court relied upon judgments reported
as Hiten P. Dalal v. Bratindranath Banerjee 3, Kumar Exports v.               G
Sharma Carpets4 and Rangappa v. Sri Mohan5 to hold that the
cheque shall be presumed to be for consideration unless and until, the
3
  (2001) 6 SCC 16
4
  (2009) 2 SCC 513
5
  (2010) 11 441                                                               H
432            SUPREME COURT REPORTS                          [2019] 13 S.C.R.


A     Court forms a belief that the consideration does not exist or considers
      the non-existence of consideration was so probable that a prudent man
      would under no circumstances of the case, act upon the plea that the
      consideration does not exist. The High Court held as under:
            “21. Now, adverting to the facts of the case, it would be noticed
B           that respondent No. had raised various defences, but, the same
            were turned down by the learned Magistrate. However, it was
            only on the basis of the contradictions that too in the evidence led
            by the appellant himself that respondent No. 1 was ordered to be
            acquitted.”
C            17. The High Court again referred to the contradictions regarding
      empty apple cartons and the rate per carton, to hold that the appellant
      has failed to prove guilt of the respondent beyond reasonable doubt.
             18. We find that the approach of the learned Trial Court and that
      of the High Court is perverse; irrational as well as suffers from material
D     illegality and irregularity, which cannot be sustained in complaint filed
      under Section 138 of the Act.
            19. A negotiable instrument including a cheque carries presumption
      of consideration in terms of Section 118(a) and under Section 139 of the
      Act. Sections 118(a) and 139 read as under:
E           “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
F               transferred, was accepted, indorsed, negotiated or transferred
                for consideration;….
                               xxx               xxx               xxx
            139. Presumption in favour of holder.—It shall be presumed,
            unless the contrary is proved, that the holder of a cheque received
G           the cheque of the nature referred to in section 138 for the discharge,
            in whole or in part, of any debt or other liability.”
            20. The Trial Court and the High Court proceeded as if, the
      appellant is to prove a debt before civil court wherein, the plaintiff is

H
     UTTAM RAM v. DEVINDER SINGH HUDAN & ANR.                                  433
                [HEMANT GUPTA, J.]

required to prove his claim on the basis of evidence to be laid in support     A
of his claim for the recovery of the amount due. A dishonour of cheque
carries a statutory presumption of consideration. The holder of cheque
in due course is required to prove that the cheque was issued by the
accused and that when the same presented, it was not honoured. Since
there is a statutory presumption of consideration, the burden is on the
                                                                               B
accused to rebut the presumption that the cheque was issued not for any
debt or other liability.
       21. There is the mandate of presumption of consideration in terms
of the provisions of the Act. The onus shifts to the accused on proof of
issuance of cheque to rebut the presumption that the cheque was issued
not for discharge of any debt or liability in terms of Section 138 of the      C
Act which reads as under:
      “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           D
      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              E
      person shall be deemed to have committed an offence and
      shall….”
       22. In Kumar Exports, it was held that mere denial of existence
of debt will not serve any purpose but accused may adduce evidence to
rebut the presumption. This Court held as under:                               F
      “20. The accused in a trial under Section 138 of the Act has two
      options. He can either show that consideration and debt did not
      exist or that under the particular circumstances of the case the
      non-existence of consideration and debt is so probable that a
      prudent man ought to suppose that no consideration and debt              G
      existed. To rebut the statutory presumptions an accused is not
      expected to prove his defence beyond reasonable doubt as is
      expected of the complainant in a criminal trial. The accused may
      adduce direct evidence to prove that the note in question was not

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434                SUPREME COURT REPORTS                         [2019] 13 S.C.R.


A              supported by consideration and that there was no debt or liability
               to be discharged by him. However, the court need not insist in
               every case that the accused should disprove the non-existence of
               consideration and debt by leading direct evidence because the
               existence of negative evidence is neither possible nor contemplated.
               At the same time, it is clear that bare denial of the passing of
B
               the consideration and existence of debt, apparently would
               not serve the purpose of the accused. Something which is
               probable has to be brought on record for getting the burden
               of proof shifted to the complainant. To disprove the
               presumptions, the accused should bring on record such facts
C              and circumstances, upon consideration of which, the court
               may either believe that the consideration and debt did not
               exist or their non-existence was so probable that a prudent
               man would under the circumstances of the case, act upon the
               plea that they did not exist. Apart from adducing direct evidence
               to prove that the note in question was not supported by
D
               consideration or that he had not incurred any debt or liability, the
               accused may also rely upon circumstantial evidence and if the
               circumstances so relied upon are compelling, the burden may
               likewise shift again on to the complainant. The accused may also
               rely upon presumptions of fact, for instance, those mentioned in
E              Section 114 of the Evidence Act to rebut the presumptions arising
               under Sections 118 and 139 of the Act.”
                                                             (emphasis supplied)
            23. In a judgment reported as Kishan Rao v. Shankargouda6,
      this Court referring to Kumar Exports and Rangappa returned the
F     following findings:
               “22. Another judgment which needs to be looked into
               is Rangappa v. Sri Mohan [Rangappa v. Sri Mohan, (2010) 11
               SCC 441 : (2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] . A
               three-Judge Bench of this Court had occasion to examine the
G              presumption under Section 139 of the 1881 Act. This Court in the
               aforesaid case has held that in the event the accused is able to
               raise a probable defence which creates doubt with regard to the
               existence of a debt or liability, the presumption may fail. Following
               was laid down in paras 26 and 27: (SCC pp. 453-54)
      6
H         (2018) 8 SCC 165
        UTTAM RAM v. DEVINDER SINGH HUDAN & ANR.                                435
                   [HEMANT GUPTA, J.]

            “26. In light of these extracts, we are in agreement with the       A
            respondent claimant that the presumption mandated by Section
            139 of the Act does indeed include the existence of a legally
            enforceable debt or liability. To that extent, the impugned
            observations in Krishna Janardhan Bhat [Krishna
            Janardhan Bhat v. Dattatraya G. Hegde, (2008) 4 SCC 54 :
                                                                                B
            (2008) 2 SCC (Cri) 166] , may not be correct. However, this
            does not in any way cast doubt on the correctness of the
            decision in that case since it was based on the specific facts
            and circumstances therein. As noted in the citations, this is of
            course in the nature of a rebuttable presumption and it is open
            to the accused to raise a defence wherein the existence of a        C
            legally enforceable debt or liability can be contested. However,
            there can be no doubt that there is an initial presumption which
            favours the complainant.
            27. Section 139 of the Act is an example of a reverse onus
            clause that has been included in furtherance of the legislative     D
            objective of improving the credibility of negotiable instruments.
            While Section 138 of the Act specifies a strong criminal remedy
            in relation to the dishonour of cheques, the rebuttable
            presumption under Section 139 is a device to prevent undue
            delay in the course of litigation. However, it must be
            remembered that the offence made punishable by Section 138          E
            can be better described as a regulatory offence since the
            bouncing of a cheque is largely in the nature of a civil wrong
            whose impact is usually confined to the private parties involved
            in commercial transactions. In such a scenario, the test of
            proportionality should guide the construction and interpretation    F
            of reverse onus clauses and the defendant-accused cannot be
            expected to discharge an unduly high standard of proof.”
      24. In a judgment reported as Bir Singh v. Mukesh Kumar7, this
Court held that presumption under Section 139 of the Act is a presumption
of law. The Court held as under:                                                G
         “20. 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.
7
    (2019) 4 SCC 197                                                            H
436               SUPREME COURT REPORTS                        [2019] 13 S.C.R.


A              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-
B
               existence of the presumed fact as held in Hiten P. Dalal [Hiten
               P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 : 2001
               SCC (Cri) 960] .
                                 xxx              xxx              xxx
C              33. 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
D              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.
                                 xxx              xxx              xxx
E
               36. Even a blank cheque leaf, voluntarily signed and handed over
               by the accused, which is towards some payment, would attract
               presumption under Section 139 of the Negotiable Instruments Act,
               in the absence of any cogent evidence to show that the cheque
               was not issued in discharge of a debt.”
F
             25. In other judgment reported as Rohitbhai Jivanlal Patel v.
      State of Gujarat and Another8 this Court held as under:
               “18. So far the question of existence of basic ingredients for
               drawing of presumption under Sections 118 and 139 the NI Act is
               concerned, apparent it is that the accused-appellant could not deny
G
               his signature on the cheques in question that had been drawn in
               favour of the complainant on a bank account maintained by the
               accused for a sum of Rs. 3 lakhs each. The said cheques were

      8
          AIR 2019 SC 1876
H
UTTAM RAM v. DEVINDER SINGH HUDAN & ANR.                                437
           [HEMANT GUPTA, J.]

presented to the Bank concerned within the period of their validity     A
and were returned unpaid for the reason of either the balance
being insufficient or the account being closed. All the basic
ingredients of Section 138 as also of Sections 118 and 139 are
apparent on the face of the record. The Trial Court had also
consciously taken note of these facts and had drawn the requisite
                                                                        B
presumption. Therefore, it is required to be presumed that the
cheques in question were drawn for consideration and the holder
of the cheques i.e., the complainant received the same in discharge
of an existing debt. The onus, therefore, shifts on the accused-
appellant to establish a probable defence so as to rebut such a
presumption.”                                                           C
          xxx               xxx              xxx
20. On the aspects relating to preponderance of probabilities, the
accused has to bring on record such facts and such circumstances
which may lead the Court to conclude either that the consideration
did not exist or that its nonexistence was so probable that a prudent   D
man would, under the circumstances of the case, act upon the
plea that the consideration did not exist. This Court has, time and
again, emphasized that though there may not be sufficient negative
evidence which could be brought on record by the accused to
discharge his burden, yet mere denial would not fulfil the              E
requirements of rebuttal as envisaged under Section 118 and 139
of the NI Act…..
          xxx               xxx              xxx
32. The result of discussion in the foregoing paragraphs is that
the major considerations on which the Trial Court chose to proceed      F
clearly show its fundamental error of approach where, even after
drawing the presumption, it had proceeded as if the complainant
was to prove his case beyond reasonable doubt. Such being the
fundamental flaw on the part of the Trial Court, the High Court
cannot be said to have acted illegally or having exceeded its           G
jurisdiction in reversing the judgment of acquittal. As noticed
hereinabove, in the present matter, the High Court has
conscientiously and carefully taken into consideration the views
of the Trial Court and after examining the evidence on record as

                                                                        H
438            SUPREME COURT REPORTS                           [2019] 13 S.C.R.


A           a whole, found that the findings of the Trial Court are vitiated by
            perversity. Hence, interference by the High Court was inevitable;
            rather had to be made for just and proper decision of the matter.”
            26. In view of the judgments reported to above, we find that the
      respondent has not rebutted the presumption of consideration in issuing
B     the cheque on 2.10.2011 inter alia for the following reasons:
             1.       Statement of the CW3, that he was not an agent of the
                     respondent, has not been challenged by the respondent
                     in the cross examination.
             2.      The statement of the appellant as CW2 that the cheque
C                    was handed over by the respondent personally remains
                     unchallenged.
             3.       The respondent has not denied even in his statement
                     that the cheque was not issued by him. The cross
                     examination of the witnesses produced by the appellant
D                    also does not show that the signatures on the cheque by
                     him have not been disputed.
             4.       The respondent relies upon entry recorded with the
                     police on 09.09.2011 that the cheque book was lost.
                     However, the respondent has not lodged any FIR in
E                    respect of loss of cheque, even after the notice of
                     dishonour of cheque was received by him on 27.10.2011.
                     The mere entry is not proof of loss of cheque as is found
                     by the learned Trial Court itself as it is self-serving report
                     to create evidence to avoid payment of cheque amount.
F            5.       The respondent has not appeared as witness to prove
                     the fact that the cheque book was lost or that cheque
                     was not issued in discharge of any debt or liability.
             6.       The statement of accused under Section 313 of the Code
                     is only to the effect that the cheque has been misused.
G                    There is no stand in the statement that the cheque book
                     was stolen.
             7.      The statement of accused under Section 313 is not a
                     substantive evidence of defence of the accused but only

H
        UTTAM RAM v. DEVINDER SINGH HUDAN & ANR.                                   439
                   [HEMANT GUPTA, J.]

                      an opportunity to the accused to explain the incriminating   A
                      circumstances appearing in the prosecution case of
                      accused. Therefore, there is no evidence to rebut the
                      presumption that the cheque was issued for
                      consideration.
      27. Once the agent of the respondent has admitted the settlement             B
of due amount and in absence of any other evidence the Trial Court or
the High Court could not dismiss the complaint only on account of
discrepancies in the determination of the amount due or oral evidence in
the amount due when the written document crystalizes the amount due
for which the cheque was issued.
                                                                                   C
        28. The accused has failed to lead any evidence to rebut the
statutory presumption, a finding returned by both the Trial Court and the
High Court. Both Courts not only erred in law but also committed
perversity when the due amount is said to be disputed only on account of
discrepancy in the cartons, packing material or the rate to determine the
total liability as if the appellant was proving his debt before the Civil          D
Court. Therefore, it is presumed that the cheques in question were drawn
for consideration and the holder of the cheques i.e., the appellant received
the same in discharge of an existing debt. The onus, thereafter, shifts on
the accused-appellant to establish a probable defence so as to rebut
such a presumption, which onus has not been discharged by the                      E
respondent.
       29. Learned counsel for the respondent has referred to the
judgment reported in M. S. Narayana Menon v. State of Kerala9 that
evidence adduced by the complainant can be relied upon to rebut the
presumption of consideration. However, said judgment has no applicability          F
to the facts of the present case as the Trial Court has found that the
presumption is not rebutted but still the Trial Court dismissed the complaint
for the reason that the appellant has failed to prove the amount mentioned
in the cheque as due amount. Once the cheque is proved to be issued it
carries statutory presumption of consideration. Then the onus is on the
respondent to disprove the presumption at which the respondent has                 G
miserably failed.
      30. In Kumar Exports evidence to rebut the presumption was
led and accepted by the Court. In these circumstances, it was held that
9
    (2006) 6 SCC 39                                                                H
440             SUPREME COURT REPORTS                        [2019] 13 S.C.R.


A     the burden shifts back to the complainant and the presumption under the
      Act will not again come to his rescue. However, in the present case, the
      presumption of consideration has not been rebutted by the respondent
      even on the basis of the evidence laid by the appellant. The difference in
      the number of cartons supplied or the rate charged is not relevant when
      the accounts were settled in writing to rebut the presumption of
B
      consideration of issuance of a cheque.
             31. In Vijay v. Laxman and another10 this Court found grave
      discrepancies in the case of the complainant and that no case is made
      out for when the High Court had set aside the conviction on the basis of
      clear evidence giving rise to the perverse findings.
C
             32. Learned counsel appearing for the respondent also referred
      to M. S. Narayana Menon and K. Prakashan v. P. K. Surenderan11
      that if two views are possible, the appellate court shall not reverse a
      judgment of acquittal only because another view is possible to be taken.
      Learned counsel also relies upon a judgment reported as John K.
D     Abraham v. Simon C. Abraham 12 that mere fact that the statutory
      notice was not replied cannot prejudice to the case of the respondent.
      We do not find any merit in the arguments raised by the learned counsel
      for the respondent. In fact, the findings recorded by the courts below
      are total misreading of the statutory provisions more so when the
E     respondent has not led any evidence to rebut the presumption of
      consideration. Cross-examination on the prosecution witness is not
      sufficient to rebut the presumption of consideration. Mere discrepancies
      in the statement in respect of the cartons, trays or the packing material
      or the rate charged will not rebut the statutory presumption which is
      proved by CW3 Prem Chand.
F
            33. The conclusion drawn by the Trial Court and the High Court
      to acquit the respondent is not only illegal but being perverse is totally
      unsustainable in law. Before concluding, we would like to put on record
      that Ms. Mathew has ably assisted this Court in canvassing that the
      order passed by the High Court does not warrant any interference in the
G     present appeal against acquittal.


      10
         (2013) 3 SCC 86
      11
         (2008) 1 SCC 258
      12
H        (2014) 2 SCC 236
      UTTAM RAM v. DEVINDER SINGH HUDAN & ANR.                                  441
                 [HEMANT GUPTA, J.]

        34. Consequently, the present appeal is allowed, order passed by        A
the High Court is set aside. The respondent is held guilty of dishonour of
cheque for an offence under Section 138 of the Act. The respondent
shall pay Rs.10,77,712/- as fine i.e. twice of the amount of cheque of
Rs.5,38,856/- and a cost of litigation of Rs.1,00,000/- within three months.
If the amount of fine and the costs are not paid within three months, the
                                                                                B
respondent shall undergo imprisonment for a period of six months.

Divya Pandey                                                  Appeal allowed.



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