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RAJASTHAN HIGH COURT
R.C. Chauhan, J.
Ashok Leyland Finance Limited —Appellant
versus
The State of Rajasthan and Anr. —Respondent
S.B. Criminal Leave to Appeal No. 222/2011
Decided on 15.02. 2012
(B) Negotiable Instruments Act, 1881—Sections 138 read with Sections 118 and 139—Evidence Act, 1872—Sections 3 and 4—Dishonour of cheque—Presumption of debt—Presumption is a matter of principle to facilitate negotiability as well as trade—In a trial under Section 138 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 execution of negotiable instrument is either proved or admitted—As soon as complainant discharges burden to prove that instrument was executed by accused, rules of presumptions under Sections 118 and 139 help him shift burden on accused—Presumptions will live, exist and survive and shall end only when contrary is proved by accused that cheque was not issued for consideration and in discharge of any debt or liability—Presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists. (Para 9)
(C) Negotiable Instruments Act, 1881—Sections 138 read with Sections 118 and 139—Criminal Procedure Code, 1973—Section 378—Dishonour of cheque—Acquittal—Court need not insist in every case that accused should disprove non-existence of consideration and debt by leading direct evidence because existence of negative evidence is neither possible nor contemplated—Bare denial of passing of consideration and existence of debt, would not serve purpose of accused—Something which is probable has to be brought on record for getting burden of proof shifted to complainant—To disprove presumptions, accused should bring on record such facts and circumstances, upon consideration of which court may either believe that consideration and debt did not exist or their non-existence was so probable that a prudent man would act upon plea that they did not exist—Accused has also option to prove non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from case set out by complainant in complaint, case set out in statutory notice and evidence adduced by complainant during trial—Once such rebuttal evidence is adduced and accepted by court, evidential burden shifts back to complainant and thereafter, presumptions under Sections 118 and 139 will not again come to complainant’s rescue—Appellant miserably failed to produce loan agreement and account statements—Since appellant failed to produce material and essential documentary evidence, presumption against respondent stands rebutted—Trial Judge has given cogent and convincing reasons for acquitting respondent accused. (Paras 9 to 12)
R.C. Chauhan, J.—The appellant, Ashok Leyland Finance Limited, is aggrieved by the judgment dated 10.8.2011 passed by Special Judicial Magistrate, N.I. Act Cases, No.2, Udaipur, whereby the learned Magistrate has acquitted Pratap Singh, respondent No.2, of offence under Section 138 of the N.I. Act (‘the Act’ for short).
2. Briefly, the facts of the case are that the appellant-company, was registered as financial institution to provide loan for buying vehicles. According to it, the accused-respondent took a loan of Rs, 8,60,000/- for buying a vehicle, registered as RJ- 27 -G-7121. The accused-respondent was required to pay a total amount of Rs. 10,89,630/- in thirty-five installments. However, as the accused-respondent failed to pay the said amount, the vehicle was repossessed by the appellant; subsequently, it was sold in auction. According to the appellant, the accused-respondent had given a cheque, cheque no. 743389 dated 9.2.2006 for amount of Rs. 2,84,521/-. But when the said cheque was submitted for encashment, it was dishonoured. Therefore, the appellant sent a registered notice to the accused respondent. However, the said notice was returned with the noting that the accused-respondent no longer lives at the address. According to him, the cheque amount was never repaid by the accused-respondent. Therefore, the complaint under Section 138 of the Act.
3. In order to buttress its case, the appellant examined K. Shriniwasan (P.W.1), and submitted nine documents. Although the accused-respondent did not examine any witness, but he did submit four documents. After going through the oral and documentary evidence, vide judgment dated 10.8.2011 the learned Magistrate acquitted the accused respondent. Hence, this criminal leave to appeal before this Court.
4. Mr. Davendra Mahlana, the learned counsel for the appellant, has vehemently contended that the learned Judge has failed to see the difference between a wind-up of a company, and a merger of the company. Although, Ashok Leyland Finance Limited had merged with the Indusind Bank, as the division of the bank, but the finding given by the learned Magistrate that after its merger in Indusind Bank, it stopped existing as a legal entity, is misplaced. Moreover, the power of attorney was given as far back as in 1998. K. Sriniwasan (P.W.1) was an authorised person to file the complaint against the accused respondent. Hence, the conclusion drawn by the Magistrate that K. Sriniwasan (P.W.1) was not a duly authorised person is without any basis. Furthermore, even if the company had not submitted its statement of account, it was obvious from the testimony of K. Sriniwasan (P.W.1) that the cheque amount was with regard to the discharge of the loan taken by the accused respondent. Lastly, learned Magistrate has failed to invoke the presumption under Section 139 of the Act against the accused respondent. Hence, the learned Magistrate has committed grave illegality in acquitting the accused respondent.
5. Heard the learned counsel for the appellant, and perused the impugned judgment.
6. The first contention raised by the learned counsel is highly misplaced. Since it was the case of the appellant itself that the Ashok Leyland Finance Ltd had merged with the Indusind Bank, there was no need for the learned judge to distinguish between winding up of a company, and an amalgamation of a company. Moreover, in the cases of General Radio and Appliances Co. Ltd. v. M.A. Khader1 and in Saraswati Industrial Syndicate Ltd. v. CIT2 the Hon’ble Supreme Court has held that “The true effect and character of the amalgamation largely depends on the terms of the scheme of merger. But there cannot be any doubt that when two companies amalgamate and merge into one the transferor company loses its entity as it ceases to have its business. However, their respective rights or liabilities are determined under the scheme of amalgamation but the corporate entity of the transferor company ceases to exist with effe
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