Ker HC | Dishonour of cheque shall be proved to the hilt; Adverse inference cannot be drawn under S. 138 of NI Act merely because evidence is not adduced to prove a negative fact

Kerala High Court: K. Haripal, J., addressed the instant complaint instituted by the appellant alleging offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The Bench remarked,

“The degree of proof expected from the accused is not as rigorous as that of the complainant. He can discharge his onus by making dents in the case of the complainant.”

 The appellant alleged that, in consideration of a sum of Rs.1,75,000 lend by him to the respondent, a cheque for Rs.1,75,000 dated 25-06-2009 was drawn on Bayar Service Co-operative Bank by the respondent. When the cheque was represented for collection, it got dishonoured due to insufficiency of funds. Although the matter was duly intimated to the respondent, he neither paid the amount nor replied to the notice, aggrieved by the same, he moved the complaint u/s 138 of NI Act. The respondent denied the allegation that he had borrowed Rs.1,75,000 and issued the cheque in consideration of the same. However, he admitted to have borrowed Rs.30,000 from the complainant but denied the other handwritings on the cheque. According to him, he had given a signed blank cheque to the appellant, which had been misused by incorporating a huge amount as consideration; he argued that there was no legally enforceable liability to pay Rs.1,75,000. Considering the above mentioned, the Trial Court acquitted the respondent finding him not guilty.

Noticing that the respondent had disputed the financial capacity of the appellant to lend that much money, the Bench observed that the monthly income of the appellant was Rs.2,000. He had to take care of his family with two children for whom he had to earmark Rs.750/- from the monthly income. Even though he had 3 acres and 5 cents of land, there was no yield from the property. The Bench further expressed, “It is a  matter of common knowledge that, as far as rubber plant is concerned, initial years are very tough for the planter; he has to incur huge expenses for nourishing and nursing the plants. He will start to get earnings only when the trees are tapped after six or seven years.”

Further, the Bench stated that though the appellant had submitted that he had arranged the amount by availing a loan from a bank and also by pledging gold ornaments, unless the presumption was rebutted, it could not be taken that the cheque was issued in discharge of a legally enforceable liability. While relying on Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, the Bench said, it must be stated, “even if a signed blank cheque is issued towards a payment, the payee is entitled to fill up the amount and other particulars that will not invalidate the cheque.”

The question before the Bench was whether, the reason that the appellant did not respond the lawyer notice nor did enter the box, should an adverse inference be drawn against him. Relying on Basalingappa v. Mudibasappa, (2019) 5 SCC 418, the Bench quoted,

“(ii) Presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.  

(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. 

(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.”

Lastly, the Bench said once execution of the promissory note was admitted, or proved, the presumption under Section 118(a) of the Act would arise that it was supported by consideration. However,

Merely for the reason that the respondent did not adduce any evidence to prove a negative fact, no adverse inference could be drawn against him. The degree of proof expected from the accused was not as rigorous as that of the complainant. He could discharge his onus by making dents in the case of the complainant.

Consequently, the Bench held that the appellant had not taken care in adducing evidence to support his ability to pay that much money. The complainant was expected to prove his case to the hilt and he could not take advantage of the failure on the part of the accused respondent. Hence, the appeal was dismissed.[Ramakrishna B.K. v. Narayana Bhat, 2021 SCC OnLine Ker 1151, decided on 09-03-2021]

Appearance before the Court by:

For Appellant: Senior Adv. V.V.ASOKAN, Adv. P.P.Ramachandran and Adv. M. Ramanya Gayathri

For Respondents: Adv. M. Sasindran and Sr. Public Prosecutor M. S. Breez

Kamini Sharma, Editorial Assistant has reported this brief.

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