Aps Forex Services Pvt Ltd vs Shakti International Fashion … on 14 February, 2020


Supreme Court of India

Aps Forex Services Pvt Ltd vs Shakti International Fashion … on 14 February, 2020

Author: M.R. Shah

Bench: Ashok Bhushan, M.R. Shah

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                                                                            REPORTABLE

                                    IN THE SUPREME COURT OF INDIA

                                   CRIMINAL APPELLATE JURISDICTION

                                   CRIMINAL APPEAL NO. 271 OF 2020


         APS FOREX SERVICES PVT. LTD.                                             .. Appellant(s)


                                                     Versus


         SHAKTI INTERNATIONAL FASHION LINKERS & ORS. .. Respondent(s)

         WITH
         CRIMINAL APPEAL NO. 272 OF 2020




                                               JUDGMENT

M. R. Shah, J.

CRIMINAL APPEAL NO. 271 OF 2020

Feeling aggrieved and dissatisfied with the impugned
Signature Not Verified

judgment and order dated 20.04.2018 passed by the High Court of
Digitally signed by
MEENAKSHI KOHLI
Date: 2020.02.14
16:31:41 IST
Reason:

Delhi in Crl. L.P. No.258 of 2018 by which the High Court has
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dismissed the said application for leave to appeal challenging the

judgment and order of acquittal passed by the Learned Trial Court

acquitting the original accused ­ respondents herein for the offence

under Section 138 of the Negotiable Instruments Act (for short, ‘the

N.I. Act’) and thereby confirming the judgment and order of

acquittal passed by the Learned Trial Court, the original

complainant has preferred the present appeal.

CRIMINAL APPEAL NO. 272 OF 2020

Feeling aggrieved and dissatisfied with the impugned

judgment and order dated 20.04.2018 passed by the High Court of

Delhi in Crl. L.P. No.259 of 2018 by which the High Court has

dismissed the said application for leave to appeal challenging the

judgment and order of acquittal passed by the Learned Trial Court

acquitting the original accused ­ respondents herein for the offence

under Section 138 of the Negotiable Instruments Act (for short, ‘the

N.I. Act’) and thereby confirming the judgment and order of

acquittal passed by the Learned Trial Court, the original

complainant has preferred the present appeal.
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CRIMINAL APPEAL NO. 271 OF 2020

2. According to the complainant, the appellant is in the business

of sale and purchase of Foreign Exchange. That the original

accused ­ respondents herein approached the appellant for

issuance of Foreign Exchange Currency/USD Travel Currency

Card. According to the original complainant ­ appellant herein, a

total sum of Rs.19,01,320/­ was paid to the accused through VTM

(Visa Travel Money Card) which came to be withdrawn by the

accused on different days on 10.01.2014, 20.02.2014 and

22.02.2014. According to the complainant, the original accused ­

respondents herein paid Rs.6,45,807/­ only leaving a balance of

Rs.12,55,513/­. According to the complainant, the respondents

accused issued four cheques total amounting Rs.9,55,574/­, which

were issued in favour of the complainant. However, all the

aforesaid cheques when presented, came to be dishonoured.

According to the complainant thereafter the respondents issued one
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another cheque bearing No.374941 of Rs.9,55,574/­ of the

partnership firm namely Shakti International in discharge of the

legal liability. According to the complainant when the same cheque

was presented the same came to be dishonoured due to “STOP

PAYMENT” vide bank memo dated 02.06.2014. Thereafter, the

complainant sent a legal notice upon the original accused under

Section 138 of the N.I. Act vide notice dated 07.06.2014. Despite

the service of the notice, the accused did not make the payment of

the cheque amount. Therefore, the original complainant ­ appellant

herein filed the complaint before the Learned Metropolitan

Magistrate. The Learned Metropolitan Magistrate also believed that

the cheque was issued and the same was returned unpaid with

remarks “STOP PAYMENT”. The Learned Metropolitan Magistrate

believed that the accused Sushil Kumar Sharma admitted his

signature on the cheque. The Learned Metropolitan Magistrate also

believed receipt of the demand notice by the accused persons and

non­payment towards the said cheque. However, thereafter

Learned Metropolitan Magistrate observed and held that there is no

legal liability as the payment through the card is not established
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and proved; that the payments are prior to the issuance of the card.

Resultantly, the Learned Metropolitan Magistrate dismissed the

complaint by judgment and order dated 20.01.2017. Feeling

aggrieved and dissatisfied with the judgment and order of acquittal

passed by the Learned Trial Court acquitting the accused, the

complainant preferred appeal before the Learned Sessions Court.

Learned Sessions Court dismissed the said appeal on the ground

that the same is not maintainable. Thereafter the complainant filed

the appeal before the High Court. By the impugned judgment and

order, the High Court dismissed the appeal and confirmed the order

of acquittal passed by the Learned Trial Court. Hence, the original

complainant has preferred the present appeal.

3. Learned Counsel appearing on behalf of the appellant has

vehemently submitted that in the facts and circumstances of the

case both the Learned Trial Court as well as the High Court have

committed a grave error in acquitting the original accused for the

offence under Section 138 of the N.I. Act.

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3.1 It is further submitted by Learned Counsel appearing on

behalf of the original complainant – appellant herein that both the

Courts below have not appreciated and/or considered the

presumption in favour of the complainant under Section 139 of the

N.I. Act. It is further submitted by Learned Counsel appearing on

behalf of the complainant that both the Courts below have

materially erred in acquitting the accused. It is submitted that the

accused had admitted issuance of the cheque as well as the

signature on the cheque. It is submitted that therefore there is a

presumption under Section 139 of the N.I. Act in favour of the

complainant. It is submitted that thereafter the onus would be

upon the accused to rebut the presumption and for that, the

accused has to lead the evidence. It is submitted that in the

present case no evidence has been led on behalf of the accused to

rebut the presumption. It is submitted that the presumption

mandatory by Section 139 of the N.I. Act includes the presumption

that there exists a legally enforceable debt or liability and therefore

both the Courts below have materially erred in acquitting the

accused. In support of the above, reliance is placed on the
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decisions of this Court in the case of Rangappa vs. Sri Mohan,

(2010) 11 SCC 441 and Kisan Rao vs. Shankargouda, (2018) 8

SCC 165.

3.2 It is further submitted by Learned Counsel appearing on

behalf of the complainant that even at the time of framing of the

charge against the accused and when his statement was recorded,

the accused had admitted that he had taken services of the Foreign

Exchange and Travel Card. It is submitted that he had also

admitted that he had made part payment in discharge of the said

liability and some amount was remaining. It is submitted that

therefore the accused was required to lead the evidence and prove

that the entire amount due and payable has been paid. It is

submitted that therefore in view of the presumption under Section

139 of the N.I. Act, the Learned Trial Court ought to have convicted

the accused for the offence under Section 138 of the N.I. Act. It is

submitted that therefore the High Court has erred in confirming the

acquittal.

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4. The present appeal is vehemently opposed by the learned

counsel appearing on behalf of the accused.

4.1 It is vehemently submitted by Learned Counsel appearing on

behalf of the original accused that in the facts and circumstances of

the case both the courts below have not committed any error in

acquitting the accused.

4.2. It is further submitted that it is true that the cheque was

issued, but the same was issued towards the security. It is

submitted that as such the complainant misused the cheque to

recover the dues of business from Ranger Export of India. It is

submitted that there is a specific finding given by the Learned Trial

Court that the complainant failed to prove the legal liability and/or

the dues of the accused for which the cheque was issued.

4.3 It is submitted by Learned Counsel for the accused that in the

present case the accused has rebutted the presumption under

Section 139 of the N.I. Act and has demonstrated and proved that

there was no legal liability and/or the dues, due and payable to the

complainant.

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4.4. Relying upon the decision of this Court in Basalingappa vs.

Mudibasappa, (2019) 5 SCC 418, it is submitted that as held by

this Court once there is probable defence on behalf of the accused,

thereafter the burden shifts on the complainant to prove his

financial capacity and other facts.

4.5 Making the above submissions and relying upon the cases, it

is prayed to dismiss the present appeal.

5 We have heard the learned counsel appearing on behalf of the

respective parties at great length.

5.1 We have considered minutely the evidence on record, both oral

as well documentary. We have also considered and gone through

the judgment and order passed by the Courts below acquitting the

respondents accused for the offence under Section 138 of the N.I.

Act.

5.2. What is emerging from the material on record is that the

issuance of cheque by the accused and the signature of the accused

on the said cheque are not disputed by the accused. The accused
10

has also not disputed that there were transactions between the

parties. Even as per the statement of the accused, which was

recorded at the time of the framing of the charge, he has admitted

that some amount was due and payable. However, it was the case

on behalf of the accused that the cheque was given by way of

security and the same has been misused by the complainant.

However, nothing is on record that in the reply to the statutory

notice it was the case on behalf of the accused that the cheque was

given by way of security. Be that as it may, however, it is required

to be noted that earlier the accused issued cheques which came to

be dishonoured on the ground of ‘insufficient funds’ and thereafter

a fresh consolidated cheque of Rs. Rs.9,55,574/­ was given which

has been returned unpaid on the ground of “STOP PAYMENT”.

Therefore, the cheque in question was issued for the second time.

Therefore, once the accused has admitted the issuance of cheque

which bears his signature, there is presumption that there exists a

legally enforceable debt or liability under Section 139 of the N.I. Act.

However, such a presumption is rebuttable in nature and the

accused is required to lead the evidence to rebut such presumption.
11

The accused was required to lead evidence that the entire amount

due and payable to the complainant was paid.

6. On the presumption under Section 139 of the N.I. Act few

decisions of this Court are required to be referred to and

considered.

6.1 In the case of K.N. Beena vs. Muniyappan, (2001) 8 SCC 458,

it is observed and held by this Court that under Section 118 of the

N.I. Act, unless the contrary is proved, it is to be presumed that the

negotiable instruments (including a cheque) had been made or

drawn for consideration. It is further observed and held that under

Section 139, the Court has to presume, unless the contrary is

proved, that the holder of the cheque received the cheque for

discharge, in whole or in part, of a debt or liability. It is further

observed that thus in complaints under Section 138, the Court has

to presume that the cheque had been issued for a debt or liability.

This presumption is rebuttable. However, the burden of proving

that the cheque has not been issued for a debt or liability is on the

accused.

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6.2 In the case of Rangappa (supra) again, this Court had an

occasion to consider the presumption of existence of a legally

enforceable debt or liability under Section 139 of the N.I. Act. In

the aforesaid decision, after considering other decisions of this

Court on Section 118(a) and 139 of N.I. Act, it is observed and held

that there exists a presumption which favours the complainant. It

is further observed that the presumption under Section 139 of the

N.I. Act is in the nature of a rebuttable presumption and it is open

to the accused to raise a defence wherein there is existence of

legally enforceable debt or liability can be contested. In Paragraph

27 this Court observed and has held as under:

“27. Section 139 of the Act is an example of a
reverse onus clause that has been included in
furtherance of the legislative 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 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
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interpretation of reverse onus clauses and the
defendant­accused cannot be expected to
discharge an unduly high standard or proof.”

6.3 In the case of Kishan Rao (Supra) after considering the

decision of this Court in the case of Kumar Exports vs. Sharma

Carpets, (2009) 2 SCC 513, it is observed and held that the

accused may adduce evidence to rebut the presumption, but mere

denial regarding existence of debt shall not serve any purpose. This

Court in paragraph 19 of that judgment considered paragraph 14,

15, 18 & 19 of the decision in the case of Kumar Exports (Supra)

as under:

19. This Court in Kumar Exports v. Sharma
Carpets (Supra
), had considered the provisions of
the Negotiable Instruments Act as well the
Evidence Act. Referring to Section 139, this Court
laid down the following in paras 14, 15, 18 and
19:

“14. Section 139 of the Act provides that 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.

15. Presumptions are devices by use of
which the courts are enabled and entitled to
pronounce on an issue notwithstanding that
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there is no evidence or insufficient evidence.

Under the Evidence Act all presumptions
must come under one or the other class of
the three classes mentioned in the Act,
namely, (1) “may presume” (rebuttable), (2)
“shall presume” (rebuttable), and (3)
“conclusive presumptions” (irrebuttable). The
term “presumption” is used to designate an
inference, affirmative or disaffirmative of the
existence of a fact, conveniently called the
“presumed fact” drawn by a judicial tribunal,
by a process of probable reasoning from
some matter of fact, either judicially noticed
or admitted or established by legal evidence
to the satisfaction of the tribunal.

Presumption literally means “taking as true
without examination or proof”.

* * *

18. Applying the definition of the word
“proved” in Section 3 of the Evidence Act to
the provisions of Sections 118 and 139 of the
Act, it becomes evident that in a trial under
Section 138 of the Act a presumption will
have to be made that every negotiable
instrument was made or drawn for
consideration and that it was executed for
discharge of debt or liability once the
execution of negotiable instrument is either
proved or admitted. As soon as the
complainant discharges the burden to prove
that the instrument, say a note, was
executed by the accused, the rules of
presumptions under Sections 118 and 139
of the Act help him shift the burden on the
accused. The presumptions will live, exist
and survive and shall end only when the
contrary is proved by the accused, that is,
the cheque was not issued for consideration
and in discharge of any debt or liability. A
presumption is not in itself evidence, but
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only makes a prima facie case for a party for
whose benefit it exists.

19. The use of the phrase “until the contrary
is proved” in Section 118 of the Act and use
of the words “unless the contrary is proved”
in Section 139 of the Act read with
definitions of “may presume” and “shall
presume” as given in Section 4 of the
Evidence Act, makes it at once clear that
presumptions to be raised under both the
provisions are rebuttable. When a
presumption is rebuttable, it only points out
that the party on whom lies the duty of going
forward with evidence, on the fact presumed
and when that party has produced evidence
fairly and reasonably tending to show that
the real fact is not as presumed, the purpose
of the presumption is over.”

6.4 Now so far as the reliance is placed by Learned Counsel

appearing on behalf of the accused on the decision of this Court in

the case of Basalingappa (supra), on going through the said

decision, we are of the opinion that the said decision shall not be

applicable to the facts of the case on hand and/or the same shall

not be of any assistance to the accused. In that case before this

Court, the defence by the accused was that the cheque amount was

given by the complainant to the accused by way of loan. When the

proceedings were initiated under Section 138 of the N.I. Act the

accused denied the debt liability and the accused raised the defence
16

and questioned the financial capacity of the complainant. To that,

the complainant failed to prove and establish his financial capacity.

Therefore, this Court was satisfied that the accused had a probable

defence and consequently in absence of complainant having failed

to prove his financial capacity, this Court acquitted the accused. In

the present case, the accused never questioned the financial

capacity of the complainant. We are of the view that whenever the

accused has questioned the financial capacity of the complainant in

support of his probable defence, despite the presumption under

Section 139 of the N.I. Act about the presumption of legally

enforceable debt and such presumption is rebuttable, thereafter the

onus shifts again on the complainant to prove his financial capacity

and at that stage the complainant is required to lead the evidence to

prove his financial capacity, more particularly when it is a case of

giving loan by cash and thereafter issuance of a cheque. That is not

a case here.

7. Coming back to the facts in the present case and considering

the fact that the accused has admitted the issuance of the cheques

and his signature on the cheque and that the cheque in question
17

was issued for the second time, after the earlier cheques were

dishonoured and that even according to the accused some amount

was due and payable, there is a presumption under Section 139 of

the N.I. Act that there exists a legally enforceable debt or liability.

Of course such presumption is rebuttable in nature. However, to

rebut the presumption the accused was required to lead the

evidence that full amount due and payable to the complainant has

been paid. In the present case, no such evidence has been led by

the accused. The story put forward by the accused that the

cheques were given by way of security is not believable in absence

of further evidence to rebut the presumption and more particularly

the cheque in question was issued for the second time, after the

earlier cheques were dishonoured. Therefore, both the courts below

have materially erred in not properly appreciating and considering

the presumption in favour of the complainant that there exists

legally enforceable debt or liability as per Section 139 of the N.I.

Act. It appears that both, the Learned Trial Court as well as the

High Court, have committed error in shifting the burden upon the

complainant to prove the debt or liability, without appreciating the
18

presumption under Section 139 of N.I. Act. As observed above,

Section 139 of the Act is an example of reverse onus clause and

therefore once the issuance of the cheque has been admitted and

even the signature on the cheque has been admitted, there is

always a presumption in favour of the complainant that there exists

legally enforceable debt or liability and thereafter it is for the

accused to rebut such presumption by leading evidence.

8. In view of the reasons stated above, the impugned judgment

and order passed by the High Court and that of the Metropolitan

Magistrate acquitting the original accused ­ respondents herein for

the offence under Section 138 of the N.I. Act cannot be sustained

and the same deserves to be quashed and set aside and are

accordingly quashed and set aside. The original accused ­

respondents herein are held guilty for the offence under Section 138

of the N.I. Act. All the original accused ­ respondents herein are

therefore, convicted under Section 138 of the N.I. Act. Original

Accused No.2 to 4 Respondent No.2 to Respondent No.4 herein are

sentenced to undergo three months simple imprisonment with a

fine of Rs.10,000/­ each and in default thereof to undergo further
19

one month simple imprisonment. The original accused ­

respondents herein are also directed to pay a sum of

Rs.19,11,148/­ to the original complainant by way of compensation

to be paid within a period of eight weeks from today.

9. Present appeal is accordingly allowed.

CRIMINAL APPEAL NO. 272 OF 2020

10. Now so far as this appeal arising out of the impugned

judgment and order passed by the High Court in Crl. L.P. No.

259/2018 arising out of the judgment and order passed by the

learned trial Court in Criminal Complaint No. 62/15 (new no.

613738/16) acquitting the original accused for the offence under

Section 138 of the N.I. Act is concerned, the only difference is with

respect to the cheques amount. In the present case, four cheques

each of Rs. 1,00,000/­ were issued which came to be dishonoured.

Except the cheques amount, there is no difference.

11. For the reasons stated in Criminal Appeal No. 271 of 2020

which has been allowed today, this appeal is also allowed. The

impugned judgment and order passed by the High Court as well as
20

that of the trial Court acquitting the original accused – respondents

herein for the offence under Section 138 of the N.I. Act cannot be

sustained and the same deserves to be quashed and set aside and

are accordingly quashed and set aside. The original accused ­

respondents herein are held guilty for the offence under Section 138

of the N.I. Act. All the original accused ­ respondents herein are

therefore, convicted under Section 138 of the N.I. Act. Original

Accused No.2 to 4 ­ Respondent No.2 to Respondent No.4 herein are

sentenced to undergo three months simple imprisonment with a

fine of Rs.10,000/­ each and in default thereof, to undergo further

one month simple imprisonment. The original accused ­

respondents herein are also directed to pay a sum of Rs.8,00,000/­

to the original complainant by way of compensation to be paid

within a period of eight weeks from today.

……..…………………..J.

(ASHOK BHUSHAN)

…………………………..J.

(M. R. SHAH)
New Delhi;

February 14, 2020.



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