UTTARAKHAND HIGH COURT
Alok Kumar Verma, J.
Ramesh Nagarkoti —Appellant
versus
Kedar Datt Purohit —Respondent
Criminal Appeal No.426 of 2018
Decided on 3.3.2021

IMPORTANT POINTS
(1) If cheque had been issued by firm which was subsequently dishonoured, a partner of firm would not be liable for prosecution under Section 138 of Act, 1881 without firm being arraigned as an accused.
(2) A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
(3) Dishonour of cheque – 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.

Headnote:

(A) Negotiable Instruments Act, 1881 – Section 118 and 139 – Indian Evidence Act, 1872 – Section 4 – Presumption of legally enforceable debt or liability – In a trial under Section 138 of 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 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 of Act help him shift burden on accused – Presumptions will live, exist and survive and shall end only when contrary is proved by accused, that is, 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 – Presumptions to be raised under both provisions are rebuttable – When a presumption is rebuttable, it only points out that party on whom lies duty of going forward with evidence, on fact presumed and when that party has produced evidence fairly and reasonably tending to show that real fact is not as presumed, purpose of presumption is over. (Paras 18 and 19)

(B) Negotiable Instruments Act, 1881 – Section 138 read with Sections 118 and 139 – Dishonour of cheque – Presumption of legally enforceable debt or liability – Accused in a trial under Section 138 of Act has two options – He can either show that consideration and debt did not exist or that under particular circumstances of case non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed – To rebut statutory presumptions accused is not expected to prove his defence beyond reasonable doubt as is expected of complainant in a criminal trial – Accused may adduce direct evidence to prove that note in question was not supported by consideration and that there was no debt or liability to be discharged by him – 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 – However, 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. (Para 20)

(C) Negotiable Instruments Act, 1881 – Section 138 read with Sections 118 and 139 – Criminal Procedure Code, 1973 – Section 378 – Dishonour of cheque – Offence by company – Appeal against acquittal – If a person who commits offence under Section 138 of Act is a company, company as well as every person in charge of and responsible to company for conduct of business of company at the time of commission of offence is deemed to be guilty of offence – There is a deemed fiction in relation to criminal liability, presumption in favour of holder, and denial of a defence in respect of certain aspects – If cheque had been issued by firm which was subsequently dishonoured, a partner of firm would not be liable for prosecution under Section 138 of Act, 1881 without firm being arraigned as an accused – In present complaint filed by appellant-complainant before trial court, firm is not arraigned as an accused – Appeal dismissed. (Paras 22, 23, 33 and 34)

Result: Appeal dismissed.