Holding

Presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act are rebuttable; the accused need not personally examine witnesses to discharge the burden, which is satisfied by a pre‑ponderance of probability, and an appellate court cannot set aside an acquittal merely because an alternative view is possible.

Summary

The respondent advanced a total of Rs. 3,16,000 to the appellant, who later issued a cheque that was dishonoured, leading to a complaint under Section 138 of the Negotiable Instruments Act. The trial court acquitted the appellant, holding that he had discharged the burden of proof on a pre‑ponderance basis despite not personally examining witnesses. The High Court reversed the acquittal, insisting that the appellant must examine himself to meet the burden under Section 139. The Supreme Court held that the presumptions under Sections 118(a) and 139 are rebuttable, the accused’s burden is merely pre‑ponderance of probability and does not require personal examination, and an appellate court cannot overturn an acquittal when two views are possible. Consequently, the conviction was set aside and the appeal allowed.

Issues considered

The burden of proof under Section 139 of the Negotiable Instruments Act – whether the accused must personally examine witnesses to discharge it.
Whether the presumptions under Sections 118(a) and 139 of the Negotiable Instruments Act are rebuttable and what standard of proof applies to the accused.
Whether an appellate court can interfere with a judgment of acquittal when two reasonable views are possible.
The validity of the conviction under Section 138 of the Negotiable Instruments Act in the facts of the case.

Legislation cited

Code of Criminal Procedure, 1973s. 378
Indian Evidence Act, 1872s. 3
Negotiable Instruments Act, 1881s. 118(a), s. 138, s. 139

Subjects

Negotiable Instruments ActSection 138Section 139PresumptionBurden of proofAcquittalAppellate jurisdictionCriminal lawEvidenceCheque bounce

Judgment

A
K. PRAKASHAN
v.
P.K. SURENDERAN

B OCTOBER 10, 2007

[S.B. SINHA AND H.S. BEDI, JJ.)

Negotiable Instruments Act, 1881--ss. 139 and 118(g)-
C Presumption under-Nature of-Held: Presumptions are rebuttable-
Standard ofproofon prosecution is proofofguilt beyond all reasonable
doubt, and on accused is mere preponderance ofprobability-Its not
necessmy for accused to step into the witness box to discharge burden
ofproof-On facts, trial court holding that though burden ofproofwas
D on accused, in view of the materials on records, he must be held to
have discharged the same, and acquitting him-High Court holding
that accused having not examined himself cannot be said to have
discharged burden ofproofand convicting him, not sustainable.

E Code of Criminal Procedure, 1973-s. 378-Appeal against
acquittal-Power of appellate court-Held: Where two views are
possible, appellate court should not interfere with finding ofacquittal
recorded by court below.

F Respondent advanced a certain sum to the appellant on different
dates. Appellant issued a cheque for the said amount and the cheque
was dishonoured. Respondent filed complaint petition against the
appellant under section 138 of the Negotiable Instruments Act, 1881.
It was appellant's case that his cheque book was stolen. Trial court
G considered the materials brought on record and held that although
the burden of proof was on the appellant, in view of the materials
brought on records, he must be held to have discharged the same,
and acquitted the appellant. High Court convicted the appellant

H 1010
K. PRAKASHAN v. P.K. SURENDERAN 1011

' -./ holding that the appellant having not examined himself cannot be A
said to have discharged the burden of proof cast on him in terms of
section 139 of the Act. Hence the present appeal.

Appellant-accused contended that the High Court erred in
setting aside the acquittal of appellant since for discharging the B
burden of proof it was not necessary for the appellant to examine
himself; and that the materials brought on record were found to be
sufficient for shifting the burden of proof upon the complainant as
the accused had discharged his primary onus.
c
Allowing the appeal, the Court

HELD: 1,1. The Negotiable Instruments Act, 1881 raises two
presumptions; firstly, in regard to the passing of consideration as
contained in section 118 (a) therein and, secondly,a presumption that
the holder of cheque receiving the same of the nature referred to in D
section 139 discharged in whole or in part any debt or other liability.
Presumptions both under sections 118 (a) and 139 are rebuttable in
nature. Having regard to the definition of terms 'proved' and
'disproved' as contained in Section 3 of the Evidence Act as also
E
the nature of the said burden upon the prosecution vis-a-vis an
accused it is not necessary that the accused must step into the
witness box to discharge the burden of proof in terms of the
aforementioned provision. The standard of proof so far as the
prosecution is concerned is proof of guilt beyond all reasonable
F
doubt; the one on the accused is only mere preponderance of
probability [Para 12 and 13]

1.2. If two views are possible, the appellate court shall not
reverse a judgment of acquittal only because another view is possible
'( G
to be taken. The appellate court's jurisdiction to interfere is limited.
[Para 20] [1021-D]

2.1. Trial Judge had passed a detailed judgment upon analysing
the evidences brought on record by the parties in their entirety. The
H
1012 SUPREME COURT REPORTS [2007] 10 S.C.R:--~
A criminal court while appreciating the evidence bro1;1ght on record may
have to weigh the entire pros and cons of the matter which would
include the circumstances which have been brought on record by the
parties. The complainant has been found to be not a man of means.
It is not a case where the appellant paid any amount to the
B respondent towards repayment ofloan. He even did not charge any
interest. He had also not proved that there had been any commercial
or business transactions between himself and the appellant. Why the
appellant required so much amount and why he alone had been
making payments of such large sums of money to the appellant has
C not been disclosed. According to him, he had been maintaining a
diary. A contemporaneous document which was in existence as per
the admission of the complainant, therefore, was required to be
brought on records. He failed to do so. He also did not examine his
father and brothers to show that they were men of means and in fa Ct
D advanced a huge sum to him only for the purpose of grant ofloan by
him to the appellant. Trial Court not only recorded the inconsistent
stand taken by the complainant in regard to the persons from whom
he had allegedly borrowed the amount, it took into consideration the
E deposit of the cheques in the bank.
[Para 14] [1017-C, G; 1018-A]

2.2. Keeping in view the peculiar fact situation it cannot be said
that the judgment passed by Trial Judge was perverse or suffered
F from any legal infirmity. It was not a case where the Trial Judge failed
to consider the evidences brought on record and/ or mis-appreciated
the same. High Court has not met the reasons of the Trial Judge. It
proceeded on the premise that the appellant had not been able to
discharge his burden of proof in terms of Section 139 of the Act
G without posing unto itself a further question as to how the said burden
of proof can be discharged. Furthermore, it did not take into y
consideration the legal principle that the standard of proof upon a
prosecution and upon an accused is different.
[Paras 17 and 20] [1020-B; 1021-E, F]
H
K. PRAKASHAN v. P.K. SURENDERAN [SINHA, J.] 1013

' --f MS. Narayana Menon Alias Mani v. State of Kera/a and Anr., A
[2006] 6 SCC 39; Kamala S. v. Vidhyadharan MJ and Anr., [2007] 5
SCC 264; Goaplast (P) Ltd v. Chico Ursula D 'Souza and Anr., [2003]
3 SCC 232 and Mahadeo Laxman Sarane and Anr. v. State of
Maharashtra, (2007) 7SCALE137, referred to.
B
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
1410of2007.

From the Judgment and Order dated 6.4.2006 of the High Court
ofKerala at Emakulam in Crl. A. No. 176 of2001.
c
Jayanth Muth Raj and Ramesh Babu M.R. for the Appellant.

Bina Madhavan, Nupur and S. Udaya Kumar Sagar (for Lawyer's
Knit & Co.) for the Respondent.
D
The Judgment of the Court was delivered by

S.B. SINHA, J. 1. Leave granted.

2. The impugned judgment is one of reversal of a judgment of
acquittal passed by the learned Trial Judge in favour of the appellant. E

3. Respondent herein allegedly, on diverse dates, advanced a sum
of Rs. 3,16,000/- to the appellant who issued a cheque for the said
amount on 18.12.1995. The said cheque was dishonoured on the ground
of 'insufficient fund'. Allegedly, when the matter was brought to the notice F
of the appellant, he undertook to remit the amount on or before
30.01.1996. The cheque was again presented but the same was not
encashed on the ground "payment stopped by the drawer".

'( 4. On the aforementioned premise, a complaint petition was filed G
by the respondent herein against the appellant under Section 13 8 of the
Negotiable Instruments Act (for short "the Act").

5. The complainant in support of its case led evidence to show that
he had advanced various sums on the following terms:
H
~
1014 SUPREME COURT REPORTS [2007] 10 S.C.R.

A "On 31-1-94 a sum of Rs. One lakh; on 8-6-94, Rs. 86,000/-;
on 12-6-94, Rs. 28,000/-; on 23-4-95, Rs. 50,000/- on 18-6-
95, Rs. 40,000/- and on 7-8-95, Rs. 12,000/-."

6. Defence of the appellant, on the other hand, was that he had issued
B blank cheques for the purpose of purchase of spare parts, tyres, etc. in
connection with the business of transport services run in the name of his
brother. The blank cheques used to be returned by the sellers of spare
parts, etc. when the amounts were paid. According to the appellant, the ~
complainant lifted the impugned cheque book put in the bag and kept in
C his shop. Appellant in support of his case examined the Bank Manager
of the Bank concerned.

7. The learned Trial Judge upon analyzing the materials brought on
records inte:· alia held:

D (i) The complainant himself who had not sufficient funds and used
to borrow the same from his brothers, father and others failed
to show that he had any financial capacity to advance such a
huge amount.

(ii) As all the transactions were admittedly recorded by him in a
E diary which having not been produced, an adverse inference
should be drawn.

(iii) The complainant failed to prove before the Court that there
i_
had been any commercial or business transaction between
F himself and the accused. The complainant had not charged
even any interest although a huge sum was allegedly advanced
on diverse dates.

(iv) From Ext. D 1 the counterfoil of the cheque book issued to
the appellant from the bank it appeared that whereas cheque
G y
No. 782460 was presented before the bank for collection of
the dues on 30.12.1993, cheque No. 782451 of the same
cheque book reached the bank only on 8.01.1996. It was,
therefore, opined that if the last cheque reached the bank for
collection on 30.12.1993, in normal and reasonable course
H
/
K. PRAKASHAN v. P.K. SURENDERAN [SINHA, J.] 1015

1 cheque No. 782451 must have been issued even prior thereto. A
(v) The documentary evidence substantiates the case of the
accused that cheque No. 782451 allegedly given by him on
18.12.1995 was not genuine.
(vi) The complainant contradicted himself insofar as whereas in the B
complaint petition he inter alia alleged that the loan was raised
by him from his father as also from others; in his evidence, he
did not state that he had borrowed any amount from third
parties.
(vii) The cheque dated 18.12.1995 which is said to have been c
handed over to him on 5.10.1995 should have been encashed
immediately after the date of issue as he is said to be in need
of money which was not done.
(viii) Although the burden of proof was on the appellant, he, in view
). of the aforementioned circumstances, must be held to have D
discharged the same.
8. The High Court, however, by reason of the impugned judgment
reversed the said findings of the learned Trial Judge holding inter alia
that the appellant having not examined himself cannot be said to have E
discharged the burden of proof cast on him in terms of Section 139 of
the Act stating:
(i) " ... Virtually, the accused has not adduced any evidence to
establish the specific case set up by him that the cheque leaf
was placed inside a bag and that the above bag was kept in F
the shop of the complainant and that the complainant has lifted
the particular cheque leaf during the period the bag was kept
in his shop. He has also not adduced any evidence to establish
his contention that he, employed as a driver in the K.S.R.T.C.,
'( was also involved in managing the private bus owned by his G
brother and that he used to issue blank cheques for the
purchase of spare parts, tyres, etc. The above are matters that
he could have adduced independent evidence in support. But
he has declined to do so ... "
H
1016 SUPREME COURT REPORTS [2007] 10 S.C.R. '
\

A (ii) No adverse interference could have been drawn by the Trial
Court only because the purported diary was not produced.
(lii) The finding of the Trial Judge that it was difficult to believe
that the complainant has advanced diverse amounts without
any stipulation as to interest is not supported by any evidence.
B
Although, ordinarily a judgment of acquittal should not be reversed
when two views are possible, the High Court opined that the Trial Judge
had proceeded and adjudged the evidence on an incorrect premise that
it was for the complainant to establish the details of the transaction.
C The High Court recorded a judgment of conviction and sentenced
the appellant to undergo imprisonment till the rising of the court and to
pay a sum of Rs. 3,16,000/- by way of compensation.
9. Appellant is, thus, before us.
D 10. Mr. Ramesh Babu M.R., learned counsel appearing on behalf
of the appellant, would submit that the High Court committed a manifest
error in reversing the judgment of acquittal passed by the learned Trial
Judge completely on a wrong premise inasmuch as for discharging the
burden of proof it was not necessary for the appellant to examine himself.
E Materials brought on record, the learned counsel would contend, having
been found to be sufficient for shifting the burden of proof upon the
complainant as the accused had discharge his primary onus, the High Court
committed a serious error in passing the impugned judgment. Strong
reliance in this behalf has been placed on MS Narayana Menon Alias
F Mani V. State of Kerala and Anr., [2006] 6 sec 39].
11. Ms. Rachna Srivastava, learned counsel appearing on behalf of
the complainanat - respondent, on the other hand, would submit that
having regard to the fact that the appellant had raised a specific defence,
viz., theft of the cheque book, it was for him to prove the same and as
G he has not examined himself, the impugned judgment should not be y
interfered with.
12. The Act raises two presumptions; firstly, in regard to the passing
of consideration as contained in Section 118 (a) therein and, secondly, a
H presumption that the holder of cheque receiving the same of the nature
{_.
/ .
K. PRAKASHAN v. P.K. SURENDERAN [SINHA,J.] 1017

\ ~ referred to in Section 139 discharged in whole or in·part any debt or other A
liability. Presumptions both under Sections l 18(a) and 13gare rebuttable
in nature. Having regard to the definition of terms 'proved' and
'disproved' as contained in Section 3 of the Evidence Act as also the
nature of the said burden upon the prosecution vis-a-vis an accused it is
not necessary that the accused must step into the witness box to discharge B
the burden of proof in terms of the aforementioned provision.
13. It is furthennore not in doubt or dispute that whereas the standard
of proof so far as the prosecution is concerned is proof of guilt beyond
all reasonable doubt; the one on the accused is only mere preponderance
of probability. c
14. The learned Trial Judge had passed a detailed judgment upon
analysing the evidences brought on record by the parties in their entirety.
The criminal court while appreciating the evidence brought on record may
have to weigh the entire pros and cons of the matter which would include D
the circumstances which have been brought on record by the parties. The
complainant has been found to be not a man of means. He had allegedly
advanced a sum of Rs. 1 lakh on 13.01.1994. He although had himself
been taking advances either from his father or brother or third parties,
without making any attempt to realize the amount, is said to have advanced E
sums of Rs. 86,000/- on 8.06.1994. Likewise he continued to advance
diverse sums of Rs. 28,000/-, Rs. 50,000/-, Rs. 40,000/- and Rs. 12,000/
- on subsequent dates. It is not a case where the appellant paid any amount
to the respondent towards repayment of loan. He even did not charge
any interest. He had also not proved that there had been any commercial
F
or business transactions between himself and the appellant. Whey the
appellant required so much amount and why he alone had been making
payments of such large sums of money to the appellant has not been
disclosed. According to him, he had been maintaining a diary. A
contemporaneous document which was in existence as per the admission
"-y of the complainant, therefore, was required to be brought on records. He G
failed to do so. He also did not exan1ine his father and brothers to show
that they were men of means and in fact advanced a huge sum to him
only for the purpose of grant ofloan by him to the appellant. The learned
Trial Court not only recorded the inconsistent stand taken by the
H
1018 SUPREME COURT REPORTS [2007] IO S.C.R.

A complainant in regard to the persons from whom he had allegedly 'r y
borrowed the amount, it took into consideration the deposit of the cheques
in the bank commenting:
" ... Ext. D 1 the counterfoil of the cheque book issued to the
accused from that bank, was proved through him. It contains the
B counterfoils of the cheques 782451to782460. Ext. D2 is the pass
book issued to the accused from that bank. SWI is the Branch
Manager of Syndicate Bank, Koyilandy. He would say that in Ext.
P4 ledger extract, cheque No. 782460 reached the bank for
collection on 30.12.93. The net transaction in that account was
c in the year 1996. Cheque No. 782451 reached the bank on
8.1.96. Ext. DI shows that is the first cheque in that book.
782460 is the lost cheque in that book. If the lost cheque i.e.
782460 reached the bank for collection on 30.12.93 in normal
and reasonable course the first cheque i.e. 782451 might have been
D issued even prior to that date. Case of the complainant is that Ext.
Pl cheque was given to him by the accused on 5.10.95 and the
cheque was dated 18.12.95. Ext. P4, DI and D2 substantiate the
case of the accused that the allegation of the complainant that Ext.
Pl cheque was given to him on 18.12.95 is not genuine."
E
15. The High Court, as noticed hereinbefore, on the other hand,
laid great emphasis on the burden of proof on the accused in tem1s of
Section 139 of the Act.
16. The question came up for consideration before a Bench of this
F Court in MS Narayana Menon (supra) wherein it was held:
"38. If for the purpose of a civil litigation, the defendant may not
adduce any evidence to discharge the initial burden placed on him,
a "fortiori" even an accused need not enter into the witness box
and examine other witnesses in support of his defence. He, it will
G bear repetition to state, need not disprove the prosecution case y
in its entirety as has been held by the High Court.
39. A presumption is a legal or factual assumption drawn from
the.existence of certain facts."
H
f K. PRAKASHAN v. P.K. SURENDERAN [SINHA, J.] 1019

\- t It was furthennore opined that if the accused had been able to A
discharge his initial burden, thereafter it shifted to the second respondent
in that case.
The said legal principle has been reiterated by this Court in Kamala
s. V. Vidhyadharan MJ and Anr., [2007] 5 sec 264 wherein it was B
held:
"The Act contains provisions raising presumption as regards
the negotiable instruments under Section 118(a) of the Act as also
under Section 139 thereof. The said presun1ptions are rebuttable
ones. Whether presumption stood rebutted or not would depend C
upon the facts and circumstances of each case.
The nature and extent of such presumption came up for
consideration before this Court in MS. Narayana Menon Alias
Mani v. State of Kera/a and Anr., [(2006) 6 SCC 39] wherein D
it was held:
"30. Applying the said definitions of "proved" or "disproved" to
the principle behind Section 118(a) of the Act, the court shall
presume a negotiable instrument to be for consideration unless and
until after considering the matter before it, it either believes that E
the consideration does not exist or considers the non-existence of
the consideration so probable that a prudent man ought, under the
circumstances of the particular case, to act upon the supposition
that the consideration dos not exist. For rebutting such presumption,
what is needed is to raise a probable defence. Even for the said F
purpose, the evidence adduced on.behalf of the complainant could
be relied upon."
This Court clearly laid down the law that standard of proof in
discharge of the burden in tenns of Section 139 of the Act being
) of preponderance of a probability, the inference therefor can be G
drawn not only from the materials brought on record but also from
the reference to the circumstances upon which the accused relies
upon. Categorically stating that the burden of proof on accused is
not as high as that of the prosecution, it was held;
H
1020 SUPREME COURT REPORTS [2007] 10 S.C.R.

A "33. Presumption drawn under a statute has only an evidentiary
value. Presumptions are raised in terms of the Evidence Act.
Presumption drawn in respect of one fact may be an evidence even
for the purpose of drawing presumption under another.""

B 17. We, therefore, are of the opinion that keeping in view the peculiar
fact situation obtaining in the present case it cannot be said that the
judgment passed by the learned Trial Judge was perverse or suffered from
any legal infirmity. It was not a case where the learned Trial Judge failed
to consider the evidences brought on record and/or mis-appreciated the
same.
c
18. Ms. Srivastava has relied upon a decision of this Court in
Goaplast (P) Ltd v. Chico Ursula D 'Souza and Anr., [2003] 3 SCC
232 wherein this Court opined:
"6 ... The presumption can be rebutted by adducing evidence and
D the burden of proof is on the person who wants to rebut the
presumption. This presumption coupled with the object of Chapter
XVII of the Act which is to promote the efficacy of banking
operation and to ensure credibility in business transactions through
banks persuades us to take a view that by countermanding payment
E of post-dated cheque, a party should not be allowed to get away
from the penal provision of Section 138 of the Act. A contrary
view would render Section 138 a dead letter and will provide a
handle to persons trying to avoid payment under legal obligations
undertaken by them through their own acts which in other words
F can be said to be taking advantage of one's own wrong. Ifwe
hold otherwise, by giving instructions to banks to stop payment of
a cheque after issuing the same against a debt or liability, a drawer
will easily avoid penal consequences under Section 138. Once a
cheque is issued by a drawer, a presumption under Section 139
G must follow and merely because the drawer issued notice to the
drawee or to the bank for stoppage of payment' it will not preclude
an action under Section 138 of the Act by the drawee or the holder
of the cheque in due course. This was the view taken by this Court
in Modi Cements Ltd v. Kuchil Kumar Nandi 2 . On same facts
H is the decision of this Court in Ashok Yeshwant Badave v.
K.PRAKASHANv. P.K.SURENDERAN[SINHA,J.] 1021

Surendra Madhavrao Nighojakar. The decision in Modi case A
-( overruled an earlier decision of this Court in Electronics Trade &
Technology Development Corpn. Ltd v. Indian Technologists
& Engineers (Electronics) (P) Ltd. which had taken a contrary
view. We are in respectful agreement with the view taken in Modi
case. The said view is in consonance with the object of the B
legislation. On the faith of payment by way of a post-dated cheque,
the payee alters his position by accepting the cheque. If stoppage
.>" of payment before the due date of the cheque is allowed to take
the transaction out of the purview of Section 138 of the Act, it
will shake the confidence which a cheque is otherwise intended to c
inspire regarding payment being available on the due date."
19. No exception to the aforementioned legal principle can be
taken. What, however, did not fall for consideration in the aforementioned
case was as to how the said burden can be discharged.
D
) 20. It is now trite that if two views are possible, the appellant court
shall not reverse a judgment of acquittal only because another view is
possible to be taken. The appellate court's jurisdiction to interfere is limited.
[See MS. Narayana Menon (supra) and Mahadeo Laxman Sarane &
Anr. v. State of Maharashtra, (2007) 7 SCALE 13 7] The High Court E
furthermore has not met the reasons of the learned Trial Judge. It
proceeded on the premise that the appellant had not been able to discharge
his burden of proof in terms of Section 139 of the Act without posing
unto itself a further question as to how the said burden of proof can be
~
discharged. It furthermore did not take into consideration the legal principle
F
that the standard of proof upon a prosecution and upon an accused is
different.
21. For the reasons aforementioned, the impugned judgment cannot
be sustained which is set aside accordingly. The appeal is allowed.
G
, ....,. NJ. Appeal allowed.