MADRAS HIGH COURT
R.S. Ramanathan, J.
P.L. Vairavan —Appellant
versus
A.L. Selvakumar —Respondent
Criminal Appeal Nos. 461 and 474 of 2005
Decided on 10.3.2015

IMPORTANT POINTS
(1) When the drawer takes up the plea that the amount due under the cheques was discharged, he has to prove the same as fact and he cannot rely upon probabilities. He has to plead and prove that the amount was discharged and for that purpose, he cannot rely upon the probabilities as he is not rebutting the presumption regarding consideration but giving evidence towards the discharge.
(2) Once the accused proved discharge by cogent evidence, the accused cannot be convicted by relying upon the presumption drawn in favour of the complainant.

Headnote:Negotiable Instruments Act, 1881—Section 118 and 139—Prosecution for dishonour of cheque—Respondent-accused admitted his liability but claimed settlement of loan amount—Acquittal of accused by trial court Appeal—Burden of proof to rebut the presumption was not so strict on defence and it was enough if he was able to make out a probable defence—However the presumption has to be rebutted by proof and not by a bare explanation which is merely plausible—When the drawer takes up the plea that amount due under the cheque was discharged, he has to prove the same as fact and he cannot rely upon probabilities—Accused proved that he had delivered bank drafts towards the discharge of loan amount of Rs. 11,50,000/- Burden shifted on the complainant to prove that accused was liable to pay amount under the cheques but complainant failed to prove it—Acquittal was not liable to be interference.

       Result: Appeals dismissed.

       Held: According to me, though the burden of proof to rebut the presumption is not so strict on the defence and it is enough if he is able to make out a probable defence, having regard to the judgment rendered in Bharat Barrel and Drum Manufacturing Company v. Amin Chand Payrelal and Hiten P.Dalal Versus Bratindranath Banerjee, the bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist.

       Further as held in AIR 1964 Supreme Court 575 AIR 1964 SC 575 in the matter of Dhanvantrai Balwantrai Desai vs. State of Maharashtra, the presumption has to be rebutted by proof and not by a bare explanation which is merely plausible. As the judgment reported in AIR 1964 Supreme Court 575 supra is by a Constitution Bench and the judgment rendered in Hiten P.Dalal Versus Bratindranath Banerjee [2001 Supreme Court Cases (Cri) 960 by 3 Hon’ble Judges of the Supreme Court, this Court is bound to follow the law laid down in those judgments in preference to the judgments referred to by the learned counsel for the respondents. (Paras 9 & 10)

       According to me, when the drawer takes up the plea that the amount due under the cheques was discharged, he has to prove the same as fact and he cannot rely upon probabilities. He has to plead and prove that the amount was discharged and for that purpose, he cannot rely upon the probabilities as he is not rebutting the presumption regarding consideration but giving evidence towards the discharge.

       As rightly submitted by the learned Senior Counsel, Mr.AR.L.Sundaresan, that when the issuance of a cheque was admitted by the accused, the Court has to draw presumption towards consideration and it is for the accused to rebut the presumption that the cheque was not given towards the legally enforceable liability. In this case, the issuance of cheques was admitted by the accused and according to the accused, he received Rs. 12,50,000/- from the complainant/appellant and as a security for that amount, he issued four cheques, three of which were the subject matter of these Appeals and he discharged the loan of Rs.12,50,000/- through various Demand Drafts. Therefore, as stated supra, when the accused takes up the plea that the cheque was given as a security, it has to be presumed that he owed a sum amount to the complainant and for that, the cheques were issued as security. In that case, in addition to the presumption to be drawn under section 139 of the N.I. Act, it has to be taken for granted that passing of consideration for the cheques has been admitted by the accused. In a case where the accused pleads that he discharged the amount payable under the cheques, then also the burden is heavily on the accused to prove discharge and in that case, it is not sufficient if he makes out a probable defence as held in the other cases as stated above. In this case, the accused pleaded that the cheques were given as a security and he also pleaded that the cheque amounts were discharged and therefore, the burden is heavily on the accused to prove that the cheque amounts were discharged and for that purpose, it is not sufficient if the accused raises a probable defence and he has to prove the factum of discharge by convincing evidence. (Paras 16 & 17)

       We will have to see whether the accused has proved that he discharged the loan. As rightly submitted by the learned counsel appearing as amicus curiae, before the appellant presented the cheques for collection, Ex.P.6 Notice was issued by the accused wherein he has specifically stated that he borrowed Rs.12,50,000/- and issued four cheques giving numbers and the amounts and towards the discharge of that loan, he issued nine Demand Drafts by giving numbers, dates and banks on which the Demand Drafts were drawn and also the amount mentioned in those Demand Drafts. The accused examined DW.1 to DW.6 to prove the discharge of Rs.12,50,000/- through the various Demand Drafts mentioned in Ex.P.6 Notice. It is the specific case of the complainant/appellant that the Demand Drafts mentioned in Ex.P.10 were received by him and contended that those Demand Drafts were given by Muthu Ganesan towards money payable by him and he got back the cheques issued by him and also the documents given as security for that loan and therefore, the accused cannot claim credit of those Demand Drafts towards the amount payable by him. To substantiate the stand taken by the complainant/appellant, he has not examined Muthu Ganesan and he examined only PW.3, the Manager employed in ICICI Bank to prove the same. In the complaint, the appellant did not state that the Demand Drafts mentioned in Ex.P.6 Notice were received in the presence of PW.3 and it was only stated and the Demand Drafts were given by Muthu Veerappan and Muthu Ganesan. PW.3 was not employed by the complainant and according to his evidence, he was contacted by Mr.A.R.Ganapathi, who was related to the accused and asked him to intervene in the dispute between the complainant and the accused to effect settlement and the accused came along with Muthu Ganesan and both of them agreed to settle the dues within a month and on 14.7.2000, Muthu Veerappan, asked him to come to the office of the complainant and Muthu Veerppan, staff of M/s. AMR Nirmala Exports, handed over Demand Draft No.088847 dated 14.7.2000 for Rs.1,25,000/-, drawn on Canara Bank and another Demand Draft No.767268 dated 14.7.2000 drawn on Bank of Madurai for same sum and got back Cheque No.839876 dated 29.6.2000 drawn on Federal Bank, for Rs.2,50,000/- issued by M/s.AMR Nirmala Exports. The xerox copy of the Cheque No.839876 and the endorsement made therein was marked as Ex.P.9. He also deposed that on 18.7.2000, Muthu Ganesan called him to come to the office of the complainant and in the office of the complainant, Muthu Ganesan, gave 10 Demand Drafts for a total sum of Rs.12,00,000/- and received the documents given as collateral security and also 10 cheques issued by M/s.Sylvia Exports, in favour of the complainant and made necessary endorsements in Ex.P.10. Exs.P.9 and 10 were marked subject to objection as they were not marked through the person by whom the endorsements were made in Exs.P.9 and 10. It is not the case of the complainant that PW.3 received those Demand Drafts and was present when the endorsements were made in Exs.P.9 and 10. Therefore, in the absence of examining the person who made the endorsement in Exs.P.9 and 10, namely, Muthu Veerappan and Muthu Ganesan, the documents, namely, Exs.P.9 and 10 cannot be considered in favour of the complainant.

       On the other hand, the accused examined DW.2 to prove that Demand Draft No.088847 dated 14.7.2000 drawn on Canara Bank in favour of the complainant was purchased by M/s. Abirame & Co, the proprietary concern, of which the accused was the proprietor. Similarly, DW.3 was examined to prove that Demand Draft No.767268 dated 14.7.2000 drawn on Bank of Madura for Rs.1,25,000/- in favour of the complainant/appellant was purchased by the accused. The aforesaid two Demand Drafts, namely, Nos. 767268 and 088847 dated 14.7.2000 for Rs.1,25,000/- each, were stated to be given by Muthu Veerappan to the complainant towards the amount payable on behalf of M/s.AMR Nirmala Exports. As stated supra, the said Muthu Veerappan was not examined. On the contrary, through DW.2 and DW.3, the accused proved that those two Demand Drafts mentioned in Ex.P.9 were purchased by the accused in favour of the complainant and therefore, the accused proved the payment of Rs.2,50,000/- through those Demand Drafts towards the discharge. As a matter of fact, the complainant also accepted the receipt of those two Demand Drafts. Therefore, the accused proved that he paid Rs.2,50,000/- through those Demand Drafts. The accused examined DW.5 Muthu Ganesan and he also deposed that he gave the Demand Drafts mentioned in Ex.P.10 to the complainant on behalf of the accused and when he demanded four cheques given by the accused, the complainant informed that there were other transaction between him and the accused and therefore, the cheques were not returned. While examining DW.5, no suggestion was put to DW.5 by the complainant that the endorsement made in Ex.P.10 and the delivery of cheques mentioned therein were not given on behalf of the accused but the loan amount payable by Muthu Ganesan himself. Further, the accused also proved the purchase of some of the Demand Drafts mentioned in Ex.P.10 through DW.3. DW.3 admitted that DD Nos.762315 and 762319 were purchased by the accused. As a matter of fact, PW.2 also admitted that Demand Drafts No.767268, 767315 and 767329 were purchased from the account of the accused. Therefore, out of the nine cheques mentioned in the Notice Ex.P.6, the accused proved the purchase of Demand Draft No.767268, 088847, 767315, 767329 for a total sum of Rs.7,85,000/- (approximately). DW.6 Manager of City Union Bank stated that Demand Draft No.344198 dated 14.7.2000 for a sum of Rs.1,00,000/- was purchased in the name of the complainant by Kasi Electronics. Though he has not deposed that the said amount was purchased by the accused, having regard to the fact that the said Demand Draft was mentioned in Ex.P.6, much before the presentation of the cheques by the complainant, it has to be accepted that the cheque was also purchased by the accused in favour of the complainant. As per the evidence of DW.4, Branch Manager of ICICI Bank, Tanjore, a sum of Rs.3,00,000/- was deposited from the account of the accused for payment to the complainant and that amount has been mentioned as Demand Draft 25 No.259682 for a sum of Rs.3,00,000/-. Therefore, except the payments made through Demand Draft Nos.408964, 408965, 408966 for a sum of Rs.21,524/-, 19,372 and 19,372/- respectively, the accused proved through oral and documentary evidence that he repaid Rs.12.50 lakhs which he borrowed from the complainant. Therefore, having regard to the evidence of DW.1 to DW.6 and Exs.P.9 and 10, in my opinion, the accused has not only rebutted the presumption but also proved that he discharged the entire loan payable to the complainant.

       When the accused rebutted the presumption or proved discharge, the burden shifts on to the complainant to prove that the accused is liable to pay the amount under these cheques. As stated supra, when the accused pleaded that the cheques were given as security or the loan amount were discharged, the payment of consideration can be presumed in favour of the complainant but when the accused proved discharge of the amount payable under the cheques, it cannot be stated that the presumption is in favour of the complainant and the accused is liable to be punished. Only when the accused failed to prove the discharge, then only the presumption can be drawn in favour of the complainant and the accused can be convicted. Once the accused proved discharge by cogent evidence, the accused cannot be convicted by relying upon the presumption drawn in favour of the complainant. In this case, the accused not only rebutted the presumption but also proved the discharge of loan payable to the complainant through Exs.D.1 to D.6 and DW.1 to DW.6 and also Exs.P.6 and 10. Considering all these aspects, the trial Court rightly acquitted the accused and dismissed the complaints. (Paras 18 to 20)