VIJAYversusLAXMAN AND ANR.

                           [2013] 4 S.C.R. 80


A                               VIJAY
                                  v.
                         LAXMAN AND ANR.
                  (Criminal Appeal No.261 of 2013)
                         FEBRUARY 7, 2013
B
         [T.S. THAKUR AND GYAN SUDHA MISRA, JJ.]

          Negotiable Instruments Act, 1881 - ss. 118(a), 138 and
     139 - Cheque issued by respondent in favour of appellant -
C    Dishonoured on account of insufficiency of funds - Complaint
     by appellant uls. 138 alleging that the cheque represented
    repayment of personal loan granted for two months - D(Jfence
     version of accused-respondent that the cheque was given
     merely as a security deposit in terms of a prevailing trade
o   practice and not towards repayment of any loan; that even
    after eventual settlement of accounts between the parties, the
    cheque was not returned to the respondent, which resulted in,
    altercation between the parties and that subsequently as a
                                                                       1
    counter blast the· appellant presented the cheque for
E   encashment - Conviction of appellant by trial Court - High
    Court set aside the conviction - Justification - Held: Justified
    - Appellant failed to establish that the cheque in fact had been
    issued by the respondent towards repayment of personal Joan
    - Absence of any documentary or other evidence in that
F   regard - If the che_que was issued towards repayment of loan
    which was meant to be encashed within two months, it is
    beyond comprehension as to why the cheque was presented
    by the appellant on the same date it was issued - Respondent
    would have had no reason to ask for a loan from the appellant
G   if he had the capacity to discharge the loan amount on the
    date when the cheque had been issued - Besides, the cheque
    was presented on the day following altercation between the
    parties - Also, the complaint lodged does not specify the date
    on which the loan amount was advanced - Nor does the

H                                 80
                  VIJAY v. LAXMAN                        81

complaint indicate the date of its lodgment - Defence          A
succeeded in dislodging the complainant-appellant's case on
the strength of convincing evidence of rebuttal and thus
discharged the burden envisaged u/ss. 118 (a) and 139 of the
N. I. Act - Appellant's case in the realm of grave doubt -
Acquittal of respondent confirmed - The Banking Public         B
Financial Institutions and Negotiable Instruments Laws
(Amendment) Act, 1988.

     The respondent supplied milk to the father of the
appellant who ran a· dairy farm. The appellant lodged C
complaint under Section 138 of the Negotiable
Instruments Act, 1881 contending that the respondent had
borrowed from him a sum of Rs.1, 15,000/- for his personal
requirement and towards repayment of the same had
issued a cheque for an equal amount, but the cheque
when presented to the bank was dishonoured for D
'insufficient funds'.

    The respondent admitted the handing over of the
cheque in favour of the appellant but denied that the same
was towards repayment of any loan. The respondent              E
claimed that according to the prevailing practice the
appellant took security cheques from all the milk
suppliers; that it is on this count that the respondent had
issued the cheque in favour of the appellant which was
merely by way of amount towards security; that in course       F
of settlement of accounts, when respondent asked for
return of his security cheque, the cheque was not given
back to the respondent as a result of which an altercation
took place between the parties due to which the
respondent lodged a report at the police station on            G
                                                                   /
13.8.2007 and that subsequently as a counter blast, the
appellant presented the cheque for encashment merely
to settle scores with the respondent/milk supplier.

    The trial court convicted the respondent under
Section 138 of the Negotiable Instruments Act, 1981 and        H
    82       SUPREME COURT REPORTS            [2013] 4 S.C.R.


A sentenced him to undergo imprisonment for one year
  besides imposing upon him a fine of Rs.1,20,000/-. The
  order was upheld by the first appellate court. In criminal
  revision, the High Court accepted the version given by
  the accused-respondent and set aside the order of
s conviction and sentence of the respondent holding that
  the order suffered from grave miscarriage of justice due
  to non-consideration of the defence evidence of rebuttal
  which demolished the complainant-appellant's case.

         Dismissing the appeal, the Court
c
         HE.LO;
    Per Gyan Sudha Misra. J .. ·

       1~1. When ~ cheque is issued by ~ person who has .
D signed on the cheque and the ·compl~inant reasonably .·
  discharges the burden that the cheque had been issued
  towards a lzwful payment, it is for the accused to
  discharge the burden under Section ·11~ and 139 of the
  Negotiable Instruments Act, 1881 tha.t the cheque had
E not been issued towards discharge· of a legal debt but was
  issued by way of security or any other reason ori account
  of some business transaction or was o.btained
  unlawfully. [Para 10] (92-C-D].

F      1.2. In the instant case, altho.ugh ·the accused·-
  respondent might have failed to discharge the burden
  that the cheque which the respondent had issued was
  not signed by him, yet there appears to be a glaring
  loophole in the case of the a·ppellant-complainant who
G failed to establish that the cheque .in fact had been issued
  by the respondent towards repayment of personal loan
  since the complaint was lodged by the appellant without
  even specifying the date on which the loan was
  advanced nor the complaint indicates the date of its
H lodgement as the date column indicates 'nil' although as
                   VIJAY v. LAXMAN                        83

  per the appellant's own story, the respondent had A
  assured the appellant that he will return the money within
 two months for which he had issued a. post-dated cheque
  dated· 14.8.2007 amounting to Rs.1, 15,000/-. The
  respondent-accused is alleged to have issued a post-
  dated cheque dated 14.8.2007 but the complainant/ B
  appellant has conveniently omitted to mention the date
  on which the loan was advanced which is fatal to the
  appellant's case as from this vital omissio·n it can
  reasonably be inferred that the cheque was isslJed on
  14.8.2007 and was meant to be encashed at a later date c
  within two months from the date of issuance which was
  14.8.2007. But it is evident that the cheque was presented
  before the bank on the date of issuance itself which was
  14][2007 and on the same date i.e. 14.8.2007, a written
  memo was received by the appellant indicating
                                                                 0
  insufficient fund. In the first place if the cheque was
  towards repayment of the loan amount, the same was
  clearly meant to be encashed at a later date within two
  months or at Jeast a little later than the date on which the
  cheque was issued: If the cheque was issued towards E
  repayment of loan it is beyond compre_hension as to why
  the cheque was presente~ by the appellant on the same.
  date when it was issued and the complaint_ was also
  lodged without-specifying on which ·date the amount of
  loan was advanced as ~lso the date on which complaint .
· was lodged as the date is conveniently missing. Under F
  the background that just o·ne day prior to 14.8.2007
  i.e.13.8.2007 an altercation had taken _place between the
  respondent-accused and the complainant-dairy owner for
  which a case also had been lodged by the respondent-
   accused against the compla·inarit's father/dairy owner, G
   missing of the date on which loan was advanced and the
  date on which complaint was lodged, casts a serious
   doubt on the complainant-appellant's ·plea. It is, therefore,
  difficult to appreciate as to why the cheque which even
   as per the case of the appellant was towards repayment H
    84       SUPREME COURT REPORTS           [2013] 4 S.C.R.

A of loan which was meant to be encashed within two
   months, was deposited on the date of issuance itself. The
  appellant thus has miserably failed to prove his case that
  the cheque was issued towards discharge of a lawful
  debt and it was meant to be encashed on the same date
B when it was issued specially when the appellant has
  failed to disclose the date on which the alleged amount
  was advanced to the Respondent/Accused. There are
  thus glaring inconsistencies indicating gaping hole in the
  appellant's version that the cheque although had been
c issued, the same was also meant to be encashed
  instantly on the same date when it was issued. [Para 13)
  [94-A-H; 95-A-F]
       1.3. Although the cheque might have been duly
  obtained from its lawful owner i.e. the respondent-accused,
D it was used for unlawful reason as it appears to have been
  submitted for encashment on a date when it was not meant
  to be presented as in that event the respondent would
  have had no reason to ask for a loan from the appellant if
  he had the capacity to discharge the loan amount on the
E date when the cheque had been issued. In any event, it
  leaves the complainant's case in the realm of grave doubt
  on which the case of conviction and sentence cannot be
  sustained. [Para 14] [95-F-H; 96-A]
      1.4. The High Court has rightly set aside the findings
F recorded by the Courts below since there were glaring
  inconsistencies in the appellant's case giving rise to
  perverse findings resulting into unwarranted conviction
  and sentence of the respondent. In fact, the trial court as
  also the first appellate court of facts seems to have
G missed the important ingredients of Sections 118 (a) and
  139 of the Negotiable Instruments Act w'1ich made it
  incumbent on the courts below to examine the defence
  evidence of ,rebuttal as to whether the respondent/
  accused discharged his burden to disprove the
H complainant's case and recorded the finding only on the
                  VIJAY v. LAXMAN                       85

  basis of the complainant's version. The High Court has A
  rightly overruled the decision of the courts below which
 were under challenge as the trial court as also the 1st
  Appellate Court misdirected itself by ignoring the defence
  version which succeeded in dislodging the complainant's
  case on the strength of convincing evidence and thus B
  discharged the burden envisaged under Sections 118 (a)
  and 139 of the N.I. Act which although speaks of
  presumption in favour of the holder of the cheque, it has
  included the provisos by incorporating the expressions
  "until the contrary is proved" and "unless the contrary C
  is proved" which are the riders imposed by the
  Legislature under Sections 118 and 139 of the N.I. Act as
  the Legislature chooses to provide adequate safeguards
  in the Act to protect honest drawers from unnecessary
  harassment but this does not preclude the person
  against whom presumption is drawn from rebutting it and D
   proving to the contrary. Consequen.tJ.y, the judgment and
   order of acquittal of the respond~t passed by the High
· Court is upheld. [Para 15, 16] [96:8-H; 97 -A]

     K.N. f3eena vs. Muniyappan And Anr. 2001 (7) Scale 331   E
 and P. Venugopal vs. Madan P. Sa[afhi (2009) 1 SCC 492:
 2008 (15) SCR 25 - referred to. ;
                                   :

                     Case Law Reference:
     2001 (7) SCALE 331      referred to         Para 9       F
     2008 (15) SCR 25        referred~o          Para 12
 Per T.S. Thakur, J. (Supplementing)

     HELD:1. The High Court has rightly accepted the G
 version gjven by the accused-respondent. In the first
 place, the story of the complainant that he advanced a
 loan to the respondent-accused is unsupported by any
 material, leave alone any documentary evidence that any
 such loan transaction had ever taken place. So much so, H
    86       SUPREME COURT REPORTS            [2013] 4 S.C.R.


A the complaint does not even indicate the date on which
   the loan was demanded and advanced. It is blissfully
   silent about these aspects thereby making the entire
   story suspect. There is a presumption that the issue of a
   cheque is for consideration. Sections 118 and 139 of the
8  Negotiable  Instruments Act make that abundantly clear.
  That presumption is, however, rebuttable in nature. What
  is most important is that the standard of proof required
  for rebutting any such presumption is not as high as that
  required of the prosecution. So long as the accused c~n
C make his version reasonably probable, the burden of
  rebutting the presumption would stand discharged.
  Whether or not it is so in a given case depends upon the·
  facts and circumstances of that case. It Is trite that the
  courts can take into consideration the circumstances
  appearing in the evidence to· determine whether the.
D presumption should be held to be sufficiently rebutted.
  [Para 3] [98-D-H; 99-A]

        2. In the present case, the a~sence of any details of.
    the date on which the loan was .advanced as also the
i; absence of any. documentary or other evidence to show
   that any such 1.oan transaction had indeed taken place
   between the parties is a significant circumstance. So also
   the fact that the cheque was presented on the day
   following the altercation between the parties is a
F circumstance that cannot be brushed away. The version
   of the respondent that the cheque was not returned to
   him and the complainant presented the same to wreak
   vengeance against him is a circumstance that cannot be
   easily rejected. Super added to all this is the testimony
G of DW1, according to whom the accounts were settled
   between the father of the complainant and the accused
   in his presence and upon settlement the accused had
   demanded return of this cheque given in lieu of the
   advance. It wa~ further stated by the witness that the
H appellant's father had avoided to· return the cheque and
                  VIJAY v. LAXMAN                        87

promised to do so on some other day. There is no reason A
much less a cogent one for rejecting the deposition of
this witness who has testified that after the incident of
altercation between the two parties the accused has
been supplying milk to the witness as he is also in the
same business. Non-examination of the father of the B
appellant who was said to be present outside the Court
hall on the date the complainant's statement was
recorded also assumes importance. It gives rise to an
inference that the non-examination was a deliberate
attempt of the prosecution to keep him away from the c
court for otherwise he would have to accept that the
accused was actually supplying milk to him and that the
accused was given the price of the milk in advance as
per the trade practice in acknowledgement and by way
of security for which amount the accused had issued a D
cheque in question. In the totality of the above
 circumstances, the High Court was perfectly justified in
 its conclusion that the prosecution had failed to make out
 a case against the accused-respondent and in acquitting
 him of the charges. [Paras 10, 11] [102-E-H; 103-A-E]
                                                            E
      CRIMINAL APPELLA.TE JURISDICTION : Criminal Appeal
 No. 261 of 2013.

      From the Judgment & Order dated 29.01.2010 of the High
Court of Madhya Pradesh bench at Indore in Criminal Revision    F
Petition No. 926 of 2009.

    Arpit Gupta, Anupam Lal Das for the Appellant. .

    Shashibhushan P. Adgaonkar, Naresh Kumar for the
Respondents.                                                    G
    The Judgment of the Court were delivered by

    GYAN SUDHA MISRA, J. 1. Leave granted.

    2. This appeal by special leave which was heard at length   H
    88        SUPREME COURT REPORTS                [2013] 4 S.C.R.


A   at the admission stage itself is directed against the judgment
    and order dated 29.1.2010 passed by a learned single Judge
    of the High Court of Madhya Pradesh Bench at Indore, in
    Criminal Revision No. 926/2009, whereby the conviction and
    sentence of one year alongwith a fine of Rupees One Lakh and
B   Twenty Thousand imposed on the appellant for commission of
    an offence under Section 138 of The Banking Public Financial
    Institutions and Negotiable Instruments (Amendment) Act, 1988
    ( For short the 'N.I. Act' ) has been set aside and the criminal
    revision was allowed. The complainant-appellant, therefore, has
c   assailed the judgment and order of the High Court which
    reversed the concurrent findings of fact recorded by the trial
    court and set aside the order of conviction and sentence of the
    respondent.

        3. In order to appreciate the merit of this appeal, the
D essential factual details as per the version of the complainant-
  appellant is that the respondent-accused (since acquitted) had
  borrowed a sum of Rs.1, 15,000/- from the complainant-
  appellant for his personal requirement which was given to him
  as the relationship between the two was cordial. By way of
E repayment, the respondent issued a cheque dated 14.08.2007
  bearing No.119682 amounting to Rs.1, 15,000/- drawn on
  Vikramaditya Nagrik Sahkari Bank Ltd. Fazalapura, Ujjain in
  favour of the appellant. The complainant-appellant alleged that
  on 14.8.2007 when the cheque was presented to the bank for
F encashment the. same was dishonoured by the bank on account
  of 'insufficient funds'. The complainant-appellant, therefore,
  issued a legal notice after a few days on 17.8.2007 to the
  accused-respondent which was not responded as the
  respondent neither replied to the notice nor paid the said
G amount.

          4. It is an admitted fact that the respondent-accused is a
    villager who supplied milk at the dairy of the complainant's
    father in the morning and evening and his father made payment
    for the supply in the evening. Beyond this part, the case of the
H   respondent-accused is that the complainant took security
      VIJAY v. LAXMAN [GYAN SUDHA MISRA, J.]                 89


 cheques from all the milk suppliers and used to pay the amount A
 for one year in advance for which the milk had to be supplied.
 It is on this count that the respondent had issued the cheque in
 favour of the complainant which was merely by way of amount
 towards security which was meant to be encashed only if milk
 was not supplied. Explaining this part of the defence story, one B
  of the witnesses for the defence Jeevan Guru deposed that
  when any person entered into contract to purchase milk from
  any person in the village, the dairy owner i.e. the complainant's
  side made payment of one year in advance and in return the
  milk supplier like the respondent issued cheques of the said c
  amount by way of security. In view of this arrangement, the
  accused Laxman started supplying milk to the complainant's
  father. In course of settlement of accounts, when accused
  Laxman asked for return of his security cheque, since he had
  already supplied milk for that amount to the complainant's father 0
  Shyam Sunder, he was directed to take back the cheque later
  on. The accused insisted for return of the security cheque since
  the account had been settled but the cheque was not given
  back to the respondent as a result of which an altercation took
  place between the respondent/accused and th.e milk supplier
  due to which the accused lodged a report at the police station
                                                                    E
  on 13.8.2007, since the complainant's father Shyam Sunder
. also assaulted the respondent-accused and abused him who
  had refused to return the cheque to the;respondent-accused
  which had been issued by him only by ~ay of security. As a
   co_unter blast, the complainant presented the cheque for F
   encashment merely to settle scores wit~ the Respondent/milk
   supplier.

      5. The complaint-appellant, however, filed a complaint
 under Section 138 of the N.I. Act before the Judicial Magistrate   G
 1st Class, Ujjain, who while conducting the summary trial
 prescribed under the Act considered the material evidence on
 record and held the Respondent guilty of offence under Section
 138 of the N.I. Act and hence recorded an order of conviction
 of the respondent-accused due to which ·:he was sentenced to       H
    90       SUPREME COURT REPORTS               (2013] 4 S.C.R.


A undergo rigorous imprisonment for one year and a fine of
  Rs.1,20,000/- was also imposed. The respondent-accused
  feeling aggrieved of the order preferred an appeal before the
  IXth Additional Sessions Judge, Ujjain, M.P. who also was
  pleased to uphold the order of conviction and hence dismissed
B the appeal.

       6. The respondent-accused, thereafter, filed a criminal
  revision in the High Court against the concurrent judgment and
  orders of the courts below but the High Court was pleased to
  set aside the judgment and orders of the courts below as it
C was held that the impugned order of conviction and sentence
  suffered from grave miscarriage of justice due to non-
  consideration of the defence evidence of rebuttal which
  demolished the complainant's case.

o       7. Assailing the judgment and order of reversal passed
   by the High Court" in favour of the respondent-accused
   acquitting him of the offence under Section 138 of the Act,
   learned counsel appearing for the complainant-appellant
  submitted that the learned single Judge of the High Court ought
E not to have interfered with the concurrent findings of fact
   recorded by the courts below by setting aside the judgment and
  order recording conviction of the respondent and sentencing
  him as already indicated hereinbefore. The High Court had
  wrongly appreciated the material evidence on record and held
F that the respondent-accused appeared to be an illiterate
  person who can hardly sign and took notice of some dispute
  affecting the complainant's case since an incident had taken
  place on 13.8.2007, while the alleged cheque was pre.sented
  on 14.8.2007 for encashment towards discharge. of the loan
G of Rs.1, 15,000/-. Learned counsel also assailed the finding of
  the High Court which recorded that the cheque was issued by
  way of security of some transaction of milk which took place
  between the respondent-accused and father of the
  complainant-appellant and thus dispelled the complainant-
  appellant's case.
H
       VIJAY v. LAXMAN [GYAN SUDHA MISRA, J,]                   91

                                                  ;



      8. Learned counsel representing the respondent-accused           A
 however refuted the complainant's version and submitted that
 the case lodged by the complainant-appellant against the
 respondent was clearly with an ulterior motive to harass the
 respondent keeping in view the grudge in mind by lodging a
 false case alleging that personal loan of Rs.1, 15,000/- was          B
 granted to the respondent and the answering respondent had
 issued cheque towards the repayment of said loan which could
 not stand the test of scrutiny of the High Court as it noticed the
 weakness in the evidence led by the complainant.

       9. Having heard the learned counsels for the contesting         C
 parties in the light of the evidence led by them, we find
 substance in the plea urged on behalf of the complainant~
 appellant to the extent that in spite of the admitted signature
  of the respondent-accused on the cheque, it was not available
  to the respondent-accused. to deny the fact that he had not          D
  issued the cheql:Je in favour of the complainant for once the
  signature on the cheque is admitted and the same had been
  returned on account of insufficient funds, the offence under
  Section 138 of the Act will clearly be held to have been made
_ out and it was not open for the respondent-accused to urge           E'
  that although the cheque had been dishonoured, no offence
  under the Act is made out. Reliance placed by learned counsel
  for the complainant-appellant on the authority of this Court in
  the matter of K.N. Beena vs. Muniyappan And Anr1. adds
  sufficient weight to the plea of the complainant-appellant that      F
  the burden of proving the consideration for dishonour of the
  cheque is not on the complainant-appellant, but the burden of
  proving that a cheque had not been issued for discharge of a
  lawful debt or a liability is on the accused and if he fails to
  discharge such burden, he is liable to be convicted for the          G
   offence under the Act. Thus, the contention of the counsel for
   the appellant that it is the respondent-accused (since acquitted)
   who should have discharged the burden that the cheque was
   given merely by way of security, lay upon the Respondent/
 1.   2001 (7) Scale 331.                                              H
    92        SUPREME COURT REPORTS               [2013] 4 S.C.R.

A accused to establish that the cheque was not meant to be
  encashed by the complainant since respondent had already
  supplied the milk towards the amount. But then the question
  remains whether the High Court was justified in holding that the
  respondent had succeeded in proving his case that the cheque
B was merely by way of security deposit which should not have
  been encashed in the facts and circumstances of the case
  since inaction to do so was bound to result into conviction and
  sentence of the Respondent/Accused.

C       10. It is undoubtedly true that when a cheque is issued by
  a person who has signed on the cheque and the complainant
  reasonably discharges the burden that the cheque had been
  issued towards a lawful payment, it is for the accused to
  discharge the burden under Section 118 and 139 of the N.I. Act
  that the cheque had not been issued towards discharge of a
D legal debt but was issued by way of security or any other reason
  on account of some business transaction or was obtained
  unlawfully. The purpose of the N.I. Act is clearly to provide a
  speedy remedy to curb and to keep check on the economic
  offence of duping or cheating a person to whom a cheque is
E issued towards discharge of a debt and if the complainant
  reasonably discharges the burden that the payment was
  towards a lawful debt, it is not open for the accused/signatory
  of the cheque to set up a defence that although the cheque had
  been signed by him, which had bounced, the same would not
F constitute an offence.

       11. However, the Negotiable Instruments Act incorporates
  two presumptions in this regard: one containing in Section 118
  of the Act and other in Section 139 thereof. Section 118 (a)
G reads as under:-
         "118. Presumption as to negotiable instruments.-Until
         the contrary is proved, the following presumptions shall be
         made-

H        (a) of consideration: that every negotiable instrument was
     VIJAY v. LAXMAN [GYAN SUDHA MISRA, J.]                    93


     made or drawn for consideration, and that every such            A·
     instrument when it has been accepted, indorsed,
     negotiated or transferred, was accepted, indorsed,
     negotiated or transferred for consideration;"

Section 139 of the Act reads as under:-                              B
     "139. Presumption in favour of holder. -It shall be
     presumed, unless the contrary is proved, that the holder
     of a cheque received the cheque, of the nature referred to
     in Section 138 for the discharge, in whole or in part, of any
     debt or other liability."                                       C

       12. While dealing with the aforesaid two presumptions,
learned Judges of this Court in the matter of P. Venugopa/ vs.
Madah P. Sarathi2 had been pleased to hold that under
Sectio.ns 1,39, 118 (a) and 138 of the N.I. Act existence of debt o
or other liabilities has to be proved in the first instance by the
complainant but thereafter the burden of proving to the contrary
shifts to the accused. Thus, the plea that the instrument/cheque
had been obtained from its lawful owner or from any person in
lawful custody thereof by means of an offence or fraud or had E
been obtained from the maker or acceptor thereof by means
of an offence or fraud or for unlawful consideration, the burden
of disproving that the holder is a holder in due course lies upon
him. Hence, this Court observed therein, that indisputably, the
 initial burden was on the complainant but the presumption
                                                                     F
 raised in favour of the holder of the cheque must be kept
 confined to the matters covered thereby. Thereafter, the
 presumption raised does not extend to the extent that the
 cheque was not issued for the discharge of any debt or liability
 which is not required to be proved by the complainant as_ this
 is essentially a question of fact and it is the defence which has · G
 to prove that the cheque was not issued towards discharge of
  a lawful debt.


2.   (2009) 1 sec 492.                                                H
    94        SUPREME COURT REPORTS                [2013] 4 S.C.R.


A        13. Applying the ratio of the aforesaid case as also the
    case of K.N. Beena vs. Muniyappan And Anr. (supra), when
   we examine the facts of this case, we have noticed that
   although the respondent might have failed to discharge the
   burden that the cheque which the respondent had issued was
B not signed by him, yet there appears to be a glaring loophole
   in the case of the complainant who failed to establish that the
   cheque in fact had been issued by the respondent towards
   repayment of personal loan since the complaint was lodged by
   the complainant without even specifying the date on which the
c  loan was advanced nor the complaint indicates the date of its
   lodgement as the date column indicates 'nil' although as per
   the complainant's own story, the respondent had assured the
   complainant that he will return the money within two months for
   which he had issued a post-dated cheque No.119582 dated
   14.8.2007 amounting to Rs.1, 15,000/- drawn on Vikramaditya
0
   Nagrik Sahkari Bank Ltd., Ujjain. Further case of the
   complainant is that when the cheque was presented in the bank
   on 14.8.2007 for getting it deposited in his savings account
   No.1368 in Vikarmaditya Nagrik Sahkari Bank Ltd. Fazalpura,
   Ujjain, the said cheque was returned being dishonoured by the
E bank with a note 'insufficient amount' on 14.8.2007. In the first
   place, the respondent-accused is alleged to have issued a
  post-dated cheque dated 14.8.2007 but the complainant/
  appellant has conveniently omitted to mention the date on which
  the loan was advanced which is fatal to the complainant's case
F as from this vital omission it can reasonably be inferred that
  the cheque was issu~d on 14.8.2007 and was meant to be
  encashed at a later date within two months from the date of
  issuance which was 14.8.2007. But it is evident that the cheque
  was presented before the bank on the date of issuance itself
G which was 14.8.2007 and on the same date i.e. 14.8.2007, a
  written memo was received by the complainant indicating
  insufficient fund. In the first place if the cheque was towards
  repayment of the loan amount, the same was clearly meant to
  be encashed at a later date within two months or at least a little
H later than the date on which the cheque was issued: If the
     VIJAY v. LAXMAN [GYAN SUDHA MISRA, J.]                  95


cheque was issued towards repayment of loan it is beyond A
comprehension as to why the cheque was presented by the
complainant on the same date when it was issued and the
complainant was also lodged without specifying on which date
the amount of loan was advanced as also the date on which
compliant was lodged as the date is conveniently missing. B
Under the background that just one day prior to 14.8.2007 i.e.
13.8.2007 ari altercation had taken place between the
respondent-accused and the complainant-dairy owner for which
a case also had been lodged by the respondent-accused
against the complainant's father/dairy owner, missing of the       c
date on which loan was advanced and the date on which
complaint was lodged, casts a serious doubt on the
complainant's plea. It is, therefore, difficult to appreciate as to
why the cheque which even as per the case of the complainant
was towards repayment of loan which was meant to be
                                                                    0
encashed within two months, was deposited on the date of
 issuance itself. The complainant thus has miserably failed to
prove his case that the cheque was issued towards discharge
of a lawful debt and it was meant to be encashed on the same
date when it was issued specially when the complainant has E
failed to disclose the date oo which the alleged amount was
advanced to the RespondenUAccused. There are thus glaring
 inconsistencies indicating gaping hole in the complainant's
version that the cheque although had been issued, the same
was also meant to be encashed instantly on the same date
when it was issued.                                                 F

     14. Thus, we are of the view that although the cheque might
have been duly obtained from its lawful owner i.e. the
respondent-accused, it was used for unlawful reason as it
appears to have been submitted for encashment on a date            G
when it was not meant to be presented as in that event the
respondent would have had no reason to ask for a loan from
the complainant if he had the capacity to discharge the loan
amount on the date when the cheque had been issued. In any
event, it leaves the complainant's case in the realm of grave      H
    96        SUPREME COURT REPORTS                 [2013] 4 S.C.R.


A doubt on which the case of conviction and sentence cannot be
  sustained.

           15. Thus, in the light of the evidence on record indicating
    grave weaknesses in the complainant's case, we are of the
    view that the High Court has rightly set aside the findings
8
    recorded by the Courts below and consequently set aside the
    conviction and sentence since there were glaring
    inconsistencies in the complainant's case giving rise to
    perverse findings resulting into unwarranted conviction and
    sentence of the respondent. In fact, the trial court as also the
C   first appellate court of facts seems to have missed the important
    ingredients of Sections 118 (a) and 139 of the N.I. Act which
    made it incumbent on the courts below to examine the defence
    evidence of rebuttal as to whether the respondent/accused
    discharged his burden to disprove the complainant's case and
D   recorded the finding only on the basis of the complainant's
    version. On scrutiny of the evidence which we did to avoid
    unwarranted conviction and miscarriage of justice, we have
    found that the High Court has rightly overruled the decision of
    the courts below which were under challenge as the trial court
E   as also the 1st Appellate Court misdirected itself by ignoring
    the defence version which succeeded in dislodging the
    complainant's case on the strength of convincing evidence and
    thus discharged the burden envisaged under Sections 118 (a)
    and 139 of the N.I. Act which although speaks of presumption
F   in favour of the holder of the cheque, it has included the provisos
    by incorporating the expressions "until the contrary is proved"
    and "unless the contrary is proved" which are the riders
    imposed by the Legislature under the aforesaid provisions of
    Sections 118 and 139 of the N. I. Act as the Legislature chooses
G   to provide adequate safeguards in the Act to protect honest
    drawers from unnecessary harassment but this does not
    preclude the person against whom presumption is drawn from
    rebutting it and proving to the contrary.

         16. Consequently, we uphold the judgment and order of
H
                     VIJAY v. LAXMAN                               97


 acquittal of the respondent passed by the High Court and               A
 hence dismissed this appeal.

        T.S. THAKUR, J. 1. I have 1had the advantage of going
. through the judgment and order proposed by my esteemed
  colleague Gyan Sudha Misra, J. I entirely agree with the              8
  conclusion drawn by Her Ladyship that the respondent has
  been rightly acquitted of the charge framed against him under
  Section 138 of the Negotiable Instruments Act, 1881 and that
  the present appeal ought to be dismissed. I, however, would
  like to add a few words of my own in support of that conclusion.      C

         2. The factual matrix in which the complaint under Section
   138 of the Negotiable Instruments Act was filed· against the
   respondent has been set out in the order proposed by my
   esteemed sister Misra J. It is, therefore, unnecessary for me
   to state the facts over again. All that need be mentioned is that    D
   according to the complainant the accused had borrowed a sum
   of Rs.1, 15,000/- from the former for repayment whereof the
   latter is said to have issued a cheque for an equal amount
 . payable on the Vikramaditya Nagrik Sahkari Bank Ltd.
   Fazalapura, Ujjain. The cheque when presented to ttie bank           E
   was dishonoured for 'insufficient funds'. The accused having
   failed to make any payment despite statutory notice being
   served upon him was tried for the offence punishable under the
. provision mentioned above. Both the courts below found the
   accused guilty and sentenced him to undergo imprisonment for         F-
   a period of one year besides payment of Rs.1,20,000/- towards
   fine.
                                              ,                -
      3. The case set up by the accused in defence is that he is
 a Milk Vendor Who supplied milk to the father of the complainant       G
 who runs a dairy farm. The accused claimed that according to
 the prevailing practice he received an advance towards the
 supply of milk for a period of one year and furnished security
 by way of a cheque for a sum of Rs.1, 15,000/-. When the annual
 accounts between the accused-respondent and the dairy owner-
                                                                        H
    98        SUPREME COURT REPORTS                 [2013] 4 S.C.R.


A father of the complainant was settled, the accused demanded
  the return of the cheque to him. The dairy owner, however,
  avoided return of cheque promising to do so some other day.
  Since the cheque was not r,eturned to the accused despite
  demand even on a subsequent occasion, an altercation took
B place between the two leading to the registration of a first
  information report against the father of the complainant with the
  jurisdictional police. On the very following day after the said
  altercation, the cheque which the respondent was demanding
  back from the father of the complainant was presented for
c encashment to the bank by tlie complainant followed by a notice
  demanding payment of the amount and eventually a complaint
  under Section 138 against the accused . The case of the
  accused, thus, admitted the issue and handing over of the
  cheque in favour of the complainant but denied that the same
  was towards repayment of any loan. The High Court has rightly
0
  accepted the version given by the accused-respondent herein.
  We say so for reasons more than one. In the first place the story.
  of the complainant that he advanced a loan to the respondent-
  accused is unsupported by any material leave alone any
  documentary evidence that any such loan transaction had ever
E taken place. So much so, the com.plaint does not even indicate
  the date on which the loan was demanded and advanced. It is
  blissfully silent about these aspects thereby making the entire
  story suspect. We are not unmindful of the fact that there is a
  presumption that the issue of a cheque is for consideration.
F Sections 118 and 139 of the Negotiable Instruments Act make
  that abundantly clear. That presumption is, however, rebuttable
  in nature. What is most important is that the standard of proof
  required for rebutting any such presumption is not as high as
  that required of the prosecution. So long as the accused can
G make his version reasonably probable, the burden of rebutting
  the presumption would stand discharged. Whether or not it is
  so in a given case depends upon the facts and circumstances
  of that case. It is trite that the courts can take into consideration
  th~ circumstances appearing in the evidence to determine
H whether the presumption should be held to be sufficiently
         VIJAY v. LAXMAN [T.S. THAKUR, J.]                    99


rebutted. The legal position regarding the standard of proof        A
required for rebutting a presumption is fairly well settled by a
long line of decis.ions of this Court.

    4. In M.S. Narayana Menon v. State of Kera/a (2006) 6
sec 39, while dealing with that aspect in a case under Section      B
138 of the Negotiable Instruments Act, 1881, this Court held
that the presumptions under Sections 118(a) and 139 of the
Act are rebuttable and the standard of proof required for such
rebuttal is preponderance of probabilities and not proof beyond
reasonable doubt. The Court observed:
                                                                    c
    ''29. In terms of Section 4 of the Evidence Act whenever
    it is provided by the Act that the court shall presume a
    fact, it shall regard such fact as proved ·unless and until
    it is disproved. The words "proved" and "disproved" have
    been defined in Section 3 of the Evidence Act (the              D
    interpretation clause) ...

    30. Applying the said definitions of "proved" or "disproved"
    to the principle behind Section 11 B(a) of the Act, the court
    shall presume a negotiable instrument to be for                 E
    consideration unless and until after considering the
    matter before it, it either believes that the consideration
    does not exist or considers the non-existence of the
    consideration so probable that a prudent man ought,
    under the circumstances of the particular case, to act          F
    upon the supposition that the consideration does not
    e~ist. For rebutting such presumption. what is needed is
    to raise a probable defence. Even for the said purpose,
    the evidence adduced on behalf of the complainant could
    be relied upon.
                                                                    G
    xx xx xx xx

    32. The standard of proof evidently is preponderance of
    probabilities. Inference of preponderance of probabilities
    can be drawn not only from the materials on re~ord but          H
    100       SUPREME COURT REPORTS                [2013) 4 S.C.R.


A         also by reference to the circumstances upon which he
          relies.

          xx xx xx xx

          41 .. ·.Therefore. the rebuttal does not have to be
B         conculsivelv 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 reasonabilitv being that of the 'prudent man'."
c
         5. The decision in M.S. Narayana Menon (supra) was
    relied upon in K. Prakashan v. P.K. Surenderan (2008) 1 SCC
    258 where this Court reiterated the legal position as under:

          "13. The Act raises two presumptions; firstly, in regard to
D         the passing of consideration as contained in Section 118
          (a) therein and, secondly, a presumption that the holder
          of cheque receiving the same of the nature referred to in
          Section 139 discharged in whole or in part any debt or
          other liability. Presumptions both under Sections 118 (a)
E         and 139 are rebuttable in nature.
          14. It is furthermore not in doubt or dispute that whereas
          the standard of proof so far as the prosecution is
          concerned is proof of guilt beyond all reasonable doubt;
F         the one on the accused is only mere preponderance of
          probability."
         6. To the same effect is the decision of this Court in
    Krishna Janardhan Bhat v. Dattatraya G. Hegde (2008) 4
    SCC 54 where this Court observed:
G
          "32... Standard of proof on the part of an accused and
          that of the prosecution a criminal case is different.
          xx xx xx xx
H         34. Furthermore. whereas prosecution must prove the
        VIJAY v. LAXMAN [T.S. THAKUR, J.]               101


    guilt of an accused bevond all reasonable doubt. the A
    standard of proof so As to prove a defence on the part of
    an accused is preponderance of probabilities.

    xx xx xx xx
    45 ... Statute mandates raising of presumption but it stops B
    at that. It does not say how presumption drawn should
    be held to have rebutted. Other important pnnciples of
    legal jurisprupence, namely presumption of innocence
    as human rights and the doctrine of reverse burden
    introduced py Section139 should be delicately C
    balanced."

    7. Presumptions under Sections 11 B(a) and Section 139
were held to be rebuttable on a preponderance of probabilities
in Bharat Barrel & Drum Manufacturing Company v. Amin
                                                               0
Chand Pyarelal (1999) 3 SCC 35 also where the Court
observed:

    "11 ... Though the evidential burden is initially placed on
    the defendant by virtue of S.118 it can be rebutted by the
    defendant by showing a preponderance of probabilities E
    that such consideration as stated in the pronote, or in the
    suit notice or in the plaint does not exist and once the
    presumption is so rebutted, the said presumption
    'disappears'. For the purpose of rebutting the initial
    evidential burden, the defendant can rely on direct F
    evidence or circumstantial evidence or on presumptions
    of Jaw or fact. Once such convincing rebuttal evidence
    is adduced and accepted by the Court, having regard to
    all the circumstances of the case and the preponderance
    of probabilities, the evidential burden shifts back to the G
    plaintiff who has also the legal burden."

     8. In Hiten P. Dalal v. Bratindranath Banerjee (2001) 6
SCC 16 this Court compared evidentiary presumptions in
favour of the prosecution with the presumption of innocence in   H
thP. followina terms:
     102        SUPREME COURT REPORTS                 [2013] 4·s.c.R.


A          "22 ... Presumptions are rules of evidence and do not
           conflict with the presumption of innocence, because by
           the latter all that is meant is that the prosecution is
           obliged to prove the case against the accused beyond
           reasonable doubt. The obligation on the prosecution
B          may be discharged with the help of presumptions of law
           or fact unless the accused adduces evidence.· showing the
           reasonable possibility of the non-existence of the
           presumed fact.

           23. In other words, provided the facts required to form the
c          basis of a presumption of law exists, no discretion is left
           with the Court but to draw the statutory conclusion, but this
           does not preclude the person against whom the
           presumption is drawn from rebutting it and proving the
           contrary. . .. "                              ·
D
        9. Decisions in Mahtab Singh & Anr. v. State of Uttar
    Pradesh (2009) 13 SCC 670, Subramaniam v. State of Tamil
    Nadu (2009) 14 SCC 415 and Vishnu Dutt Sharma v. Daya
    Sapra (2009) 13 sec 729, take the same line .of reasoning.
E       10. Coming then to the present case, the absence of any
  details of the date on which the loan was advanced as also the
  absence of any documentary or other evidence to show that
  any such loan transaction had indeed taken place between the
  parties is a significant circumstance. So also the fact that the
F cheque was presented on the day following the altercation
  between the parties is a circumstance that cannot be brushed
  away. The version of the respondent that the cheque was not
  returned to him and the complainant presented the same to
  wreak vengeance against him is a circumstance that cannot be
G easily rejected. Super added to all this is the testimony of DW1,
  Jeevan Guru according to whom the accounts were settled
  between the father of the complainant and the accused in his
  presence and upon settlement the accused had demanded
  return of this cheque given in lieu of the advance. It was further
H
          VIJAY v. LAXMAN [T.S. THAKUR, J.]                 103


stated by the witness that the complainant's father had avoided A
to return the cheque and promised to do so on some other day.
There is no reason much less a cogent one suggested to us
for rejecting the deposition of this witness who has testified that
after the incident of altercation between the two parties the
accused has been supplying milk to the witness as he is also B
 in the same business. Non-examination of the father of the
complainant who was said to be present outside the Court hall
 on the date the complainant's statement was recorded also
 assumes importance. It gives rise to an inference that the non-
 examination was a deliberate attempt of the prosecution to        c
 keep him away from the court for otherwise he would have to
  accept that the accused was actually supplying milk to him and
  that the accused was given the price of the milk in advance as
  per the trade practice in acknowledgement and by way of
  security for which amount the accused had issued a cheque in
                                                                    0
  question.

     11. In the totality of the above circumstances, the High
Court was perfectly justified in its conclusion that the
prosecution had failed to make out a case against the accused
and in acquitting him of the charges. With these observations      E
in elucidation of the conclusion drawn by my worthy colleague,
I agree that the appeal fails and be dismissed.

 B.B.B.                                      Appeal dismissed.