Case Note & Summary
The appellant-complainant, Bir Singh, filed a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 against the respondent-accused, Mukesh Kumar, alleging that a cheque of Rs.15 lakhs issued by the respondent towards repayment of a friendly loan was dishonoured due to insufficient funds. The cheque was presented twice, on 11-4-2012 and 23-5-2012, and both times returned unpaid. A legal notice was issued on 15-6-2012, but the respondent failed to pay. The Judicial Magistrate First Class, Palwal convicted the respondent on 9-2-2015, sentencing him to one year imprisonment and compensation of Rs.15 lakhs. The Additional Sessions Judge, Palwal upheld the conviction on 20-2-2016 but reduced the sentence to six months. The respondent filed a revision before the High Court of Punjab and Haryana, which by judgment dated 21-11-2017 reversed the concurrent findings and acquitted the respondent, holding that the fiduciary relationship between the parties (the appellant being an income tax practitioner and the respondent his client) placed a heavy burden on the complainant to prove the loan, and that the presumption under Section 139 did not apply. The appellant appealed to the Supreme Court. The Supreme Court framed two issues: whether the High Court could interfere with concurrent findings in revision without jurisdictional error, and whether a fiduciary relationship disentitles the payee to the presumption under Section 139. The Court held that the revisional court cannot re-analyse evidence and upset concurrent findings in the absence of perversity. It further held that the presumption under Section 139 applies regardless of fiduciary relationship; the burden is on the accused to rebut it. The Court found that the respondent failed to rebut the presumption, as his own admission that taxes were paid in cash contradicted his defence of misuse of a blank cheque. The Supreme Court allowed the appeals, set aside the High Court's order, and restored the conviction and sentence as modified by the Appellate Court.
Headnote
A) Criminal Procedure Code - Revisional Jurisdiction - Section 482 CrPC - Interference with Concurrent Findings - The High Court in revisional jurisdiction cannot re-analyse evidence and upset concurrent factual findings of the courts below in the absence of perversity or jurisdictional error - Held that the revisional court exceeded its jurisdiction by substituting its own view on facts (Paras 16-20). B) Negotiable Instruments Act - Presumption under Section 139 - Fiduciary Relationship - The presumption under Section 139 of the Negotiable Instruments Act, 1881 that a cheque was issued for discharge of a debt or liability applies even if the payee and drawer are in a fiduciary relationship - The burden shifts to the accused to rebut the presumption; mere fiduciary relationship does not disentitle the payee to the benefit of the presumption - Held that the High Court erred in holding otherwise (Paras 16, 21-22). C) Negotiable Instruments Act - Dishonour of Cheque - Second Presentation - Section 138 NI Act - A prosecution based on a second or successive dishonour of the same cheque is not impermissible merely because no statutory notice was issued after the first dishonour - The object of Section 138 is to promote credibility of cheques; there is no qualitative difference between immediate prosecution and deferred prosecution after successive dishonours - Held that the complaint was maintainable (Para 10).
Issue of Consideration
Whether the High Court was right in reversing concurrent factual findings of the Trial Court and Appellate Court in exercise of revisional jurisdiction; Whether a payee in a fiduciary relationship is disentitled to the presumption under Section 139 of the Negotiable Instruments Act, 1881.
Final Decision
The Supreme Court allowed the appeals, set aside the impugned judgment and order of the High Court dated 21-11-2017, and restored the judgment and order of the Appellate Court dated 20-2-2016 convicting the respondent under Section 138 of the Negotiable Instruments Act, 1881 and sentencing him to six months simple imprisonment with compensation of Rs.15 lakhs.
Law Points
- Revisional court cannot interfere with concurrent findings of fact in absence of perversity or jurisdictional error
- Presumption under Section 139 NI Act applies even if parties are in fiduciary relationship
- Second or successive dishonour of cheque permissible without fresh notice if first dishonour not acted upon
