- Facts of the Case
- Allowing the appeal, the Apex Court held that
- Pre-ponderance of probabilities
The Supreme Court of India in M.S. Narayana Menon @ Mani Vs. State of Kerala, AIR 2006 SC 3366 : (2006) 6 SCC 39 : 2006 (3) Suppl. SCR 124 : 2006 (6) SCALE 393 : JT 2006 (6) SC 72 : III (2006) BC 433 :  132 CompCas 450 : (2006) 6 CompLJ 39 : 2006 CriLJ 4607: 2006 (3) CTC 730 : 2006 (3) KLT 404 : 2006 (5) MhLj 676 : RLW 2006 (4) SC 2945 held that the Court shall presume a negotiable instrument to be for 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 upon the supposition that the consideration does not exist.
A bench comprising of S.B. Sinha and P.P. Naolekar, JJ. observed that 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. It is not necessary for the defendant to disprove the existence of consideration by way of direct evidence.
the judgment said.
# Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal,  3 SCC 35, relied on.
Trial Court found accused share-broker guilty of committing offence under Section 138 of the Act. It is reversed by the first Appellate Court. Appeal against allowed by High Court.
On appeal to the Supreme Court it was held that a member of Stock Exchange is required to maintain books of accounts in a particular manner. The accused did not maintain statutory books of account in terms of bye-laws of the Stock Exchange and also did not produce the same before the Court.
The Cheque in question was allegedly issued by the accused in discharge of his debt. Thus, liability arose in terms of that transaction. Under the circumstances, accused required only to discharge initial onus of proof, he need not require to disprove the case of the prosecution. Onus on the accused is not as heavy as that on the prosecution.
Evidence adduced by the parties before the trial Court concludes that the accused had discharged his initial burden but the complainant had not been able to prove his case.
The accused clearly stated that the Cheque was issued by him by way of security and not in discharge of debt. The statement accepted as probable. Thus the Cheque in question cannot be held to have been issued in discharge of the debt. Hence, provisions of Section 138 of the Act not attracted.
# Facts of the Case
The Appellant used to carry on transactions in shares through the Second Respondent, a member of Stock Exchange. They have been on business terms for some time. Allegedly, a sum of Rs. 3,00,033/-was due to the second respondent from the Appellant in relation to the said transactions.
The Appellant allegedly paid a sum of Rs. 5000/- in cash and issued another Cheque drawn on Vijaya Bank for the balance amount. When the Cheque was presented for encashment through the same banker, it was dishonoured as the funds in the account of the Appellant were found to be insufficient.
A complaint petition was filed by the Second Respondent against the Appellant purported to be for commission of an offence under Section 138 of the Negotiable Instruments Act. A notice was issued to him. His defence was that the first Cheque was a blank Cheque given by him to Respondent No. 2 by way of security.
The second Cheque was issued later and the same had been given for the purpose of discounting. The Trial Court held that the Appellant had failed to discharge the onus placed on him in terms of Section 139 of the Act. A verdict of guilt was recorded against the Appellant. He was sentenced to undergo rigorous imprisonment for one year.
On an appeal preferred thereagainst by the Appellant, the judgment of conviction and sentence was set aside by the appellate Court. However, appeal against the order of the appellate Court was allowed by the High Court. Hence the present appeal.
Appellant contended that the Trial Court and the High Court misconstrued and misinterpreted Section 139 of the Act and furthermore failed to take into consideration the principle of law that once the accused discharges the initial burden placed on him, the burden of proof would revert back to the prosecution; and that the High Court acted illegally and without jurisdiction in arriving at the finding that it was for the accused to prove his innocence by adducing positive evidence for rebutting the statutory presumption that he had not received the Cheque of the nature referred to under Section 138 of the Act for the discharge, in whole or in part, of any debt or other liability.
Respondent submitted that the Appellant did not dispute the statement of accounts in relation to the transactions and he had also acknowledged his liability in relation to some of the transactions and the dispute being only in relation to the quantum of debt; and that statutory presumption in terms of Section 139 of the Act although is a rebuttable one, the question will have to be determined upon taking into consideration another presumption drawn in terms of Section 118(a) thereof.
# Allowing the appeal, the Apex Court held that
The High Court, in view of the findings of fact arrived at by the appellate court committed a manifest error in reversing the judgment of the first appellate Court. The Second Respondent evidently had not been able to explain the discrepancies in his books of accounts.
If except putting a suggestion to the witness, the Second Respondent has not been able to bring on records any material to show that the parties had any transactions other than those which had been entered into through the Stock Exchange, the explanation of the accused could not have been thrown over board.
The High Court has furthermore committed a manifest error of record in arriving at a finding that the Appellant himself or through his agent has acknowledged as correct the statements of accounts. Admittedly there had been no acknowledgement in respect of five statements of accounts.
In view of the said error of record, the findings of the High Court to the effect that the Appellant had not been able to substantiate his contention as regard the correctness of the accounts, must be rejected.
# Pre-ponderance of probabilities
- The standard of proof evidently is pre-ponderance of probabilities. Inference of pre-ponderance of probabilities can be drawn not only from the materials on records but also by reference to the circumstances upon which he relies.
- Presumption drawn under a statute has only an evidentiary value. Presumptions are raised in terms of the Evidence Act. Presumption drawn in respect of one fact may be an evidence even for the purpose of drawing presumption under another.
The complainant was a member of a Stock Exchange. The transactions in relation to the Stock Exchange are regulated by the statutes and statutory rules. If in terms of the provisions of a statute, a member of a Stock Exchange is required to maintain books of accounts in a particular manner, he would be required to do so, as non-compliance of the mandatory provisions of the Rules may entail punishment.
Both parties would have to rely upon one another. For the said purpose, the courts of law may also take judicial notice of the practice prevailing in such business. The Appellate Judge rightly did so.
The definite case of the complainant was that the Cheque was issued by the accused in discharge of his debt. The said liability by way of debt arose in terms of the transactions. For proving these transactions, the Second Respondent filed books of accounts. The books of accounts maintained by the complainant were found to be not reflecting the correct state of affairs.
Two adverse inferences in the instant case liable to be drawn against the complainant are:
(i) He deliberately has not produced his books of accounts.
(ii) He had not been maintaining the statutory books of accounts and other registers in terms of the bye-laws of Cochin Stock Exchange.
Moreover, the onus on an accused is not as heavy as that of the prosecution. It may be compared with a defendant in a civil proceeding.
- Hiten P. Dalal v. Bratindranath Banerjee,  6 SCC 16
- Goaplast (P) Ltd. v. Chico Ursula D’Souza and Anr.,  3 SCC 232
- Harbhajan Singh v. State of Punjab and Anr., AIR (1966) SC 97
- V.D. Jhingan v. State of Uttar Pradesh, AIR (1966) SC 1762
- State of Maharashtra v. Wasudeo Ramchandra Kaidalwar, AIR (1981) SC 1186
- The State through the Delhi Administration v. Sanjay Gandhi, AIR (1978) SC 961
It was for the accused only to discharge initial onus of proof. He was not necessarily required to disprove the prosecution case. Whether in the given facts and circumstances of a case, the initial burden has been discharged by an accused would be a question of fact. It was matter relating to appreciation of evidence. The High Court in its impugned judgment did not point out any error on the part of the appellate court in that behalf.
# G. Vasu v. Syed Yaseen Sifuddin Quadri, AIR (1987) AP 139, referred to.
- If for the purpose of a civil litigation, the defendant may not adduce any evidence to discharge the initial burden placed on him, a `fortiori’ even an accused need not enter into the witness box and examine other witnesses in support of his defence.
- He, it will bear repetition to state, need not disprove the prosecution case in its entirety as has been held by the High Court. A presumption is a legal or factual assumption drawn from the existence of certain facts.
# Advanced Law Lexicon, 3rd edition, at page 3697 by P. Ramanatha Aiyar, referred to.
The evidences adduced by the parties before the trial court lead to one conclusion that the accused had been able to discharge his initial burden. The burden thereafter shifted to the complainant to prove his case. He failed to do so.
The submission of the complainant that the accused had not denied his entire responsibility and the dispute relating only to the quantum of debt cannot be accepted. The accused clearly said that nothing is due and the Cheque was issued by way of security.
The defence has been accepted as probable. If the defence is acceptable as probable the Cheque therefor cannot be held to have been issued in discharge of the debt and the same would not come within the purview of Section 138 of the Act.
In any event the High Court entertained an appeal treating it to be an appeal against acquittal, it was in fact exercising the revisional jurisdiction. Even while exercising an appellate power against a judgment of acquittal, the High Court should have borne in mind the well-settled principles of law that where two views are possible, the appellate Court should not interfere with the finding of acquittal recorded by the Court below.
L. Nageswara Rao and C.K. Sasi for the Appellant. E.M.S. Anam, M.K. Sreegesh and K.R. Sasiprabhu for the Respondents.