IMPORTANT POINT
The presumption of legally recoverable debt under sections 118 and 139 of the N.I. Act requires the accused to rebut it with evidence, which was not done in this case.

JUDGMENT :

VIJAY KUMAR SHUKLA, J.

1. The present revision is filed under section 397/401 of Cr.P.C. The applicant has been convicted under section 138 of Negotiable Instruments Act (in short ‘the N.I. Act’) and sentenced to undergo RI for 1 year and to deposit Rs. 20,50,730/- as compensation with default stipulation vide judgment dated 9-6-2022 passed by IX ASJ, Ujjain in Criminal Appeal No. 90/2021 affirming the judgment dated 29-9-2021 passed by JMFC, Ujjain in complaint case No. 590/2012.

2. The judgment of conviction and sentence has been challenged mainly on the ground that complainant has failed to prove the transaction between the complainant and the accused. Thus he could not establish existence of legally recoverable debt or other liability in order to establish offence under section 138 of N.I. Act. It is also submitted that in regard to payment of amount, there are material contradictions in the complaint, cross-examination of complainant and other witnesses to establish transaction between the parties. It is also submitted that both the Courts have convicted the applicant only on the ground of presumption under section 139 of N.I. Act without considering that complainant has failed to prove the existence of legally recoverable debt or liability. He argued that though provision of section 118 and 139 of N.I. Act provides for presumption in favour of cheque holder, still the burden is on the complainant to establish the transaction and existence of legally recoverable debt or liability. In support of his submission, he has placed reliance on the following judgments: M.S. Narayana Menon @ Mani vs. State of Kerala and another, AIR 2006 SC 3366, Krishna Janardhan Bhat vs. Dattatraya G. Hegde, (2008) 4 SCC 54, Kumar Exports vs. Sharma Carpets, (2009) 2 SCC 513 and also the judgment passed by this Court in the case of Pankaj vs. Anil Kumar Jain, 2009 (2) DCR 730. He also relied on the judgment passed by Apex Court in the case of Ramdas vs. Krishnanand, 2014 (3) DCR 774. Learned counsel for applicant relying on the judgment of Krishan Janardhan Bhat vs. Dattatraya G. Hegde AIR 2008 SC 1325 contends that section 139 of Negotiable Instrument Act provides for presumption of debt or other liability in favour of holder of a cheque. There is no presumption with regard to existence of legally recoverable debt or other liability, therefore, in order to establish offence under section 138 of Negotiable Instrument Act, the complainant has to prove the existence of legally recoverable debt or liability beyond doubt. He further submits that in case of Kumar Exports vs. Sharma Carpets, (2009) 2 SCC 513 the Supreme Court examined the application of above mentioned statutory presumptions and laid down:

“18. Applying the definition of the word “proved” in section 3 of the Evidence Act to the provisions of sections 118 and 139 of the Act, it becomes evident that in a trial under section 138 of the Act a 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 the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.

19. The use of the phrase “until the contrary is proved” in section 118 of the Act and use of the words “unless the contrary is proved” in section 139 of the Act read with definitions of “may presume” and “shall presume” as given in section 4 of the Evidence Act, makes it at on