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BOMBAY HIGH COURT
Dama Seshadri Naidu, J.
Doshi Brothers —Appellant
versus
State of Maharashtra —Respondent
Criminal Appeal No.657 of 2018
Decided on 23.7.2019
(A) Negotiable Instruments Act, 1881 – Section 138 – Dishonour of cheque – Dishonour of a cheque is a contractual breach – It involves civil consequences under common law, besides Negotiable Instruments Act and Contract Act – But Parliament, through Section 138 of NI Act, made it a criminal offence – A civil breach has been transformed into a penal offence – For this reason, courts regard offences under Section 138 of NI Act as quasi-criminal – NI Act contains certain non-obstante provisions barring Code of Criminal Procedure from applying in its entirety – If conflict occurs, NI Act prevails – But standards applied for bringing accused’s guilt home have not been drastically varied, save the statutory presumption under Sections 118 and 139 of NI Act – Still guilt must be established beyond reasonable doubt. (Paras 14 and 15)
(B) Negotiable Instruments Act, 1881 – Section 138 – Criminal Procedure Code, 1973 – Section 200 – Dishonour of cheque – While taking cognizance of an offence, Magistrate examines complaint on oath and witnesses present – Then, Magistrate reduces to writing only substance of such examination – This substance aids Magistrate to form a prima facie opinion about the case – It is to discover truth or otherwise of allegations made – It is for deciding question purely from complainant’s viewpoint, with no reference to possible defence – Procedure under Section 200 Cr PC is non-adversarial – What is recorded is not complainant’s verbatim statement, only substance or gist – It is not a piece of substantial evidence to be used to contradict or discredit complainant. (Para 26)
(C) Negotiable Instruments Act, 1881 – Sections 139 – Dishonour of cheque – Presumption of debt – Existence of legally recoverable debt is not a matter of presumption under Section 139 of Act – It merely raises presumption in favour of a holder of cheque that same has been issued for discharge of any debt or other liability – Prosecution must prove guilt of accused beyond all reasonable doubt – Standard of proof to prove accused’s defence is preponderance of probabilities – This is a rebuttable presumption and it is open to accused to raise a defence, contesting that presumption – Inference of preponderance of probabilities can be drawn not only from materials brought on record by parties but also by reference to circumstances upon which he relies – If accused can raise a probable defence which creates doubts about existence of a legally enforceable debt or liability, prosecution will fail – Accused can rely on materials submitted by complainant to raise such defence and it is conceivable that sometimes accused may not need to adduce evidence of his own. (Paras 52, 53, 54 and 55)
Result: Appeal allowed.
JUDGMENT
Dama Seshadri Naidu, J.—Introduction:
Appellant Doshi Brothers is a proprietary concern. Through its proprietor, BC Doshi, it filed a private complaint against M/s. Sai Wire Products (“the Company”) and its director Mustafa Mohammadhussain Sial (“Sial”), the 2nd and 3rd respondents respectively. Sial, as the co-signatory of the cheque, is said to be looking after the Company’s day-to-day affairs.
2. Doshi, the sole proprietor, claims to have business relations with the Company. He further claims that, as part of their continued business transactions, he supplied goods to the Company and received cheques, signed by Sial and another, for the partial discharge of the Company’s debt. The cheques dishonoured, Doshi filed CC No. 806/SS/2010 before the Metropolitan Magistrate’s Court, Bandra, Mumbai. Eventually, on merits, the trial Court, through its judgement dated 21 August 2014, dismissed the case and acquitted the Company and Sial. Aggrieved, the proprietary concern, through Doshi as its proprietor, filed this appeal.
Submissions:
3. Shri Jatin Shah, the learned counsel for the appellant, has submitted that Doshi and the Company have had business relations for more than a decade, with a continuing account. In those business transactions, the Company acknowledged its liability and confirmed the statement of account prepared by Doshi, showing Rs.6,18,437/- as outstanding. Then the Company issued three cheques, signed by M.M. Sial and another, on 16 January 2010, for an aggregate of Rs.6 lakh, towards partial discharge of the debt.
4. When the cheques were dishonoured, though Doshi issued a statutory notice, dated 18th February 2010, neither the Company nor Sial replied, despite their receiving the notices. To underline the authenticity of the business transaction, Shri Shah has drawn my attention to Exhibit P6 to P8 invoices and Exhibit P9 to P 11delivery challans. He has also drawn my attention to Exhibit P13 to P15- cheques to stress they were signed by two directors and neither disputed the signature.
5. Shri Shah has informed the Court that though initially Doshi filed the case against the Company and the two signatories, he could not trace the other person’s whereabouts. So he maintained the prosecution only against Sial, besides the Company.
6. Shri Shah asserts that the cheques were dishonoured for want of funds. After taking me through Doshi’s evidence in chief and cross, he stresses that the defence could elicit little from Doshi to detract from the merits of his claim. Then, he has also taken me to Sial’s statement under Section 313 of Cr.P.C. According to him, Sial admitted there were business transactions between the Company and Doshi and that the Company ordered steel from Doshi. His only defence, Shri Shah maintains, is that the goods were not supplied. Given the conduct of the Company and Sial’s admissions, that defence, submits Shri Shah, remains untrue.
7. Finally, Shri Shah has taken me through the entire judgement to highlight, what he calls, the infirmities in the trial Court’s reasoning. According to him, it has failed to consider the vital documentary evidence, besides the oral evidence, Doshi has placed on the record. He also argues that the trial Court has made sweeping observations as if Doshi had filed no documents to support his claim. In this context, Shri Shah also underlines that Doshi enjoyed statutory presumption, but the trial Court has entirely forgotten that aspect.
8. To bolster his contentions, Shri Shah has relied on a few judgments. I will refer to them only if I need a precedential prop to buttress any proposition of law.
Respondents 2 and 3:
9. To begin with, Shri Ram Mani Upadhyay, the learned counsel for the respondents 2 & 3, insists this Court should have had before it the entire lower Court record (R&P) to let him examine all the proceedings and documents. In its absence, the rights of the accused might suffer.
10. To illustrate the need of R&P, Shri Upadhyay cited two example
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