The presumption in favor of the holder of a cheque shifts the burden to the accused to prove that a cheque was not issued for a debt, which is central to Section 138 of the Negotiable Instruments Act.

JUDGMENT :

ANUP JAIRAM BHAMBHANI J.

1. By way of the present leave petitions filed under section 378(4) of the Criminal Procedure Code 1973 ("Cr.P.C."), the petitioner impugns judgment dated 21.09.2022 passed by the learned Metropolitan Magistrate, Tis Hazari Court, Delhi, whereby the respondent has been acquitted of the offence under section 138 of the Negotiable Instruments Act, 1881 ("NI Act") in criminal complaints bearing CC No. 2477/2017 and CC No. 2479/2017.

2. Delay in filing the leave petitions was condoned and notice on CRL.L.P. No.166/2023 and CRL.L.P. No.241/2023 was issued 28.03.2023 and 08.05.2023 respectively, consequent whereupon replies dated 25.01.2024 have been filed by the respondent.

3. Having heard learned counsel for the parties, leave to appeal is granted and the matters are taken-up as criminal appeals for final disposal today itself.

APPELLANT’S SUBMISSIONS

4. Mr. Mohd. Rashid, learned counsel appearing on behalf of the appellant (complainant in the criminal complaints) submits, that the case concerns 02 cheques bearing No.167953 dated 08.11.1997 for Rs. 20 lacs and No.167954 dated 10.11.1997 for Rs.10 lacs issued by the respondent to the appellant in discharge of certain debts owed against cement that was supplied by the appellant through the respondent, who (latter) was the appellant's Carrying & Forwarding ("C&F") Agent.

5. Mr. Rashid submits, that a perusal of the impugned judgment would show that the learned Magistrate records that the respondent had admitted that they had issued the said cheques; but, after dealing with the various defences raised on behalf of the respondent, the learned Magistrate proceeds to dismiss the complaints on an incorrect application of the principles of law. It is submitted, that having first correctly enunciated the position of law, the learned Magistrate has subsequently proceeded on the basis that it was the appellant who was required to prove that there was a legally recoverable debt from the respondent, and in doing so, the learned Magistrate has completely misinterpreted and misapplied the statutory presumption contained in sections 118 and 139 of the NI Act.

6. Learned counsel draws attention to the following portion of the impugned judgment where the learned Magistrate has correctly articulated the statutory presumption in favour of the appellant :

“16. In the present case, the accused has admitted that the cheque in question (Ex.CW1/13) is his cheque and bears his signature. It was dishonoured for reason “Funds Insufficient” vide cheque returning memo (Ex.CW1/15). As per record, the legal demand notice had been sent to the accused within 15 days from receipt of intimation of dishonor of the cheque in question. The legal demand notice sent by the complainant was duly replied to on behalf of the accused. The same confirms the service of legal demand notice upon the accused. Despite service of notice, payment of cheque amount had not been made by the accused to the complainant within 15 days of receipt of legal demand notice. Hence, all requirements for filing a complaint under Section 138 of NI Act have been complied with in the present case and the complaint has been filed within limitation.

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“18. The Negotiable Instruments Act raises two presumptions in favour of the holder of the cheque i.e. complainant in the present case; firstly, with regard to passing of consideration as contained in Section 118(a) and, secondly, a presumption under Section 139, that the holder of cheque receiving the same of the nature referred to in Section 138 for discharge, in whole or in part, of any debt or other liability. These presump