TEDHI SINGHversusNARAYAN DASS MAHANT

442            SUPREME COURT
                         [2022]REPORTS
                                4 S.C.R. 442               [2022] 4 S.C.R.


A                                TEDHI SINGH
                                        v.
                         NARAYAN DASS MAHANT
                       (Criminal Appeal No. 362 of 2022)
B                              MARCH 07, 2022
              [K. M. JOSEPH AND HRISHIKESH ROY, JJ.]
            Negotiable Instrument Act, 1881: s.139 – Presumption in
      favour of holder – Respondent filed complaint stating that appellant
      was his friend and as he was in urgent need of money, he gave a
C
      sum of Rs.7 lakhs – However, cheque given by the appellant was
      dishonored – Conviction of appellant u/s.138 – Held: s.139 of the
      N.I. Act provides that Court shall presume that the holder of a cheque
      received the cheque of the nature referred to in s.138 for the
      discharge, in whole or in part, of any debt or other liability –
D     However, it is open to the accused to establish that there is no
      consideration received – It is in the context of this provision that
      the theory of ‘probable defence’ has grown – The accused is not
      expected to discharge an unduly high standard of proof – All that
      the accused needs to establish is a probable defence which is a
      matter to be decided on the facts of each case – U/s.138, the
E
      complainant need not show in the first instance that he had the
      financial capacity – At the time, when the complainant gives his
      evidence, unless a case is set up in the reply notice to the statutory
      notice sent that the complainant did not have the wherewithal, it
      cannot be expected of the complainant to initially lead evidence to
F     show that he had the financial capacity – However, the accused
      has a right to demonstrate that the complainant in a particular case
      did not have the capacity which can be done by producing
      independent materials, namely, by examining his witnesses and
      producing documents – It can also be established by pointing to the
      materials produced by the complainant himself and cross
G
      examination of the witnesses of the complainant – In this case, in
      reply notice appellant did not set up that the complainant did not
      have the financial capacity to advance the loan – Moreover, no
      reference was made by the appellant of the complaint of lost cheque
      book or signed cheque leaf – No evidence was led to establish that
H     the appellant had informed the Bank about the loss of cheque book
                                       442
            TEDHI SINGH v. NARAYAN DASS MAHANT                           443


containing blank cheque – In totality of facts, appellant has not        A
been able to establish a case of interference with the finding of
courts below that the offence under s.138 was committed by the
appellant – Thus, conviction u/s.138 N.I Act upheld – However,
sentence of one year imprisonment substituted with fine.
       Constitution of India: Art.136 – Power of Supreme Court to        B
interfere – Art.136 of the Constitution only confers a right to obtain
special leave in rare and extraordinary cases – While exercising
power under Art.136, the Court may not refuse to interfere in a
case where three Courts have gone completely wrong – It is not to
be understood as meaning that it is a clear case of even three Courts
in unison falling into palpable error and thereby causing                C
miscarriage of justice and yet this Court would not interfere.
      Partly allowing the appeal, the Court
       HELD: 1. It is true that this is a case under Section 138 of
the Negotiable Instruments Act. Section 139 of the N.I. Act              D
provides that Court shall presume that the holder of a cheque
received the cheque of the nature referred to in Section 138 for
the discharge, in whole or in part, of any debt or other liability.
This presumption, however, is expressly made subject to the
position being proved to the contrary. In other words, it is open
to the accused to establish that there is no consideration received.     E
It is in the context of this provision that the theory of ‘probable
defence’ has grown. In an earlier judgment, in fact, which has
also been adverted to in Basalingappa, this Court notes that
Section 139 of the N.I. Act is an example of reverse onus. It is
also true that this Court has found that the accused is not expected     F
to discharge an unduly high standard of proof. It is accordingly
that the principle has developed that all which the accused needs
to establish is a probable defence. As to whether a probable
defence has been established is a matter to be decided on the
facts of each case on the conspectus of evidence and circumstances
that exist. [Para 7][449-D-G]                                            G
       2. The Trial Court and the First Appellate Court have noted
that in the case under Section 138 of the N. I. Act, the complainant
need not show in the first instance that he had the capacity. The
proceedings under Section 138 of the N. I. Act is not a civil suit.
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444            SUPREME COURT REPORTS                      [2022] 4 S.C.R.


A     At the time, when the complainant gives his evidence, unless a
      case is set up in the reply notice to the statutory notice sent, that
      the complainant did not have the wherewithal, it cannot be
      expected of the complainant to initially lead evidence to show
      that he had the financial capacity. To that extent the Courts were
      right in holding on those lines. However, the accused has the
B
      right to demonstrate that the complainant in a particular case did
      not have the capacity and therefore, the case of the accused is
      acceptable which he can do by producing independent materials,
      namely, by examining his witnesses and producing documents. It
      is also open to him to establish the very same aspect by pointing
C     to the materials produced by the complainant himself. He can
      further, more importantly, achieve this result through the cross
      examination of the witnesses of the complainant. Ultimately, it
      becomes the duty of the Courts to consider carefully and
      appreciate the totality of the evidence and then come to a
      conclusion whether in the given case, the accused has shown
D
      that the case of the complainant is in peril for the reason that the
      accused has established a probable defence. [Para 9][450-B-E]
            3. In the reply notice the appellant has not set up any case
      that the respondent did not have the financial capacity to advance
      the loan. In fact there is no reference to the loss of the cheque
E     book or signed cheque leaf. No complaint was given of the loss
      of the cheque book or the signed cheque leaf either to the police
      or to the bank. In the evidence of DW5, the son of the appellant,
      the version given is that on 5.10.2011, PW5 had left home with
      the cheque book of the appellant which had a cheque signed by
F     the appellant for withdrawing money, if needed in the absence of
      the appellant. He set up the version that he drove away an
      unowned cow. in the field. Thereafter, while sitting in the bus he
      saw the cheque book was not with him. He further deposed that
      since his father was not at home he could not tell him about the
      incident and got engrossed in his study and forgot the incident.
G     In his statement under Section 313 Cr.PC given on 10.01.2013,
      appellant has taken the stand that he informed the Bank. DW5
      has further deposed that when the appellant received the notice
      he asked him about the cheque book and then he told him about

H
            TEDHI SINGH v. NARAYAN DASS MAHANT                           445


the incident of the loss of cheque book. Still, at the time when the     A
reply notice was sent, the case is not set up about the loss of
cheque book and about the cheque relied upon by the respondent
being one which is brought into existence using the lost signed
cheque leaf. There is no evidence to establish that the appellant
had informed the Bank about the loss of the cheque book
                                                                         B
containing blank cheque. In fact, in the statement under Section
313 Cr.PC. appellant had stated that this cheque book containing
a blank cheque was lost. Appellant has no case that the signature
on the cheque in question was not put by him. [Para 10][450-F-
H; 451-A-D]
       4. This Court even exercising power under Article 136 of          C
the Constitution may not refuse to interfere in a case where three
Courts have gone completely wrong. The jurisdiction generated
in an appeal under Article 136 is undoubtedly rare and
extraordinary. Article 136 of the Constitution only confers a right
to obtain special leave in rare and extraordinary cases. However,        D
this is not to be understood as meaning that it is a clear case of
even three Courts in unison falling into palpable error and thereby
causing miscarriage of justice and yet this Court would not
interfere. [Para 11][451-D-F]
       5. However, in the totality of facts of this case the appellant   E
has not established a case for interference with the finding of the
Courts below that the offence under Section 138 N. I. Act stands
committed by the appellant. The amount of compensation in a
sum of Rs.7 Lakhs which is relatable to the cheque amount has
been deposited already in the Trial Court. However, appellant
should be granted relief in the form of substitution of the sentence     F
of imprisonment of one year with a fine. An amount of Rs.5,000/-
should suffice as substitution for the imprisonment. Apart from
that, a further amount of Rs.15,000/- shall be paid as compensation
to the respondent. [Para 12][451-F-H]
      Basalingapa vs. Mudibasappa (2019) 5 SCC 418 :                     G
      [2019] 6 SCR 555 – relied on.
                       Case Law Reference
[2019] 6 SCR 555                relied on                   Para 3
                                                                         H
446             SUPREME COURT REPORTS                           [2022] 4 S.C.R.


A           CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
      362 of 2022.
            From the Judgment and Order dated 11.09.2018 of the High Court
      of Himachal Pradesh at Shimla in Criminal Revision No.129 of 2018.
            Ms. Sangeeta Bharti, Sushil Kumar Singh, Advs. for the Appellant.
B
           Ajay Marwah, Tapan Masta, Ayush Gupta, Advs. for the
      Respondent.
            The Judgment of the Court was delivered by
            K. M. JOSEPH, J.
C
            1. Leave granted.
             2. The appellant calls in question the judgment of the High Court
      by which it dismissed the Criminal Revision No.129 of 2018 filed under
      Section 397 of the Code of Criminal Procedure, 1898 (for short ‘Cr.P.C.)
      against the order of the Sessions Judge by which the Court in turn affirmed
D
      the order passed by the Chief Judicial Magistrate. The Chief Judicial
      Magistrate found the appellant guilty of having committed the offence
      under Section 138 of the Negotiable Instruments Act, 1881 (for short
      ‘N.I. Act.’). The appellant stands sentenced to simple imprisonment for
      a period of one year. Further, the appellant is called upon to pay a
E     compensation of a sum of Rs.7 Lakhs.
             3. The complaint of the respondent was based on the allegation
      that in the month of August, 2011 the appellant was in urgent need of
      money and out of friendship he gave a sum of Rs.7 Lakhs and the cheque
      given by the appellant was dishonored. In the trial, following the complaint
F     the appellant examined DW-1 to DW-4. They are Officers of four Banks.
      This was done by the appellant in an attempt at putting up what can be
      described in the words of the learned counsel for the appellant ‘a probable
      defence’. It was an attempt by the appellant to show that the version of
      the complainant that he had the financial wherewithal to advance a loan
      of Rs.7 Lakhs was not to be accepted. This is the matter which has
G     been agitated by Ms. Sangeeta Bharti, learned counsel for the appellant.
      She would, in fact, complain that in the impugned judgment, the High
      Court has observed that it is not known as to what is the purpose for
      which DW-1 to DW-4 have been examined. It is appellant’s case that
      the finding would clearly help the appellant advance the contention that
H     this is a case where the High Court as also the two Courts have not
            TEDHI SINGH v. NARAYAN DASS MAHANT                               447
                      [K. M. JOSEPH, J.]

appreciated the law which is laid down in regard to the effect of a          A
‘probable defence’. She drew our attention to the judgment of this Court
in Basalingapa Vs. Mudibasappa reported in (2019) 5 SCC 418.
This Court, inter alia has held as follow:-
      “25. We having noticed the ratio laid down by this Court in the
      above cases on Sections 118(a) and 139, we now summarise the           B
      principles enumerated by this Court in following manner:
      25.1. Once the execution of cheque is admitted Section 139 of
      the Act mandates a presumption that the cheque was for the
      discharge of any debt or other liability.
      25.2. The presumption under Section 139 is a rebuttable                C
      presumption and the onus is on the accused to raise the probable
      defence. The standard of proof for rebutting the presumption is
      that of preponderance of probabilities.
      25.3. To rebut the presumption, it is open for the accused to rely
      on evidence led by him or the accused can also rely on the materials   D
      submitted by the complainant in order to raise a probable defence.
      Inference of preponderance of probabilities can be drawn not
      only from the materials brought on record by the parties but also
      by reference to the circumstances upon which they rely.
      25.5. It is not necessary for the accused to come in the witness       E
      box to support his defence.”
      4. She would therefore, point out in the facts of this case when
the complainant was cross-examined, he had stated that the transaction
took place on a particular date, namely, 5th of August, 2011 and he also
deposed as follows:-                                                         F
      “….. The money was demanded in first week of August on the
      same date only. I had given money in August. I do not remember
      the date. Accused had demanded money from me on 5th August.
      I have my bank accounts in State Bank Kullu, ICICI Kullu, PNB
      Kullu and Gramin Bank Kullu also. I cannot tell from where I had       G
      withdrawn the money. I had withdrawn Rs.2 or 2.5 lacs. The rest
      of the money was with me, which I had given. Accused had given
      me the cheque in the end of August. When he gave me the cheque,
      then also only both of us were there. I have not brought the
      statement of account with me. It is wrong that Accused is not          H
448            SUPREME COURT REPORTS                          [2022] 4 S.C.R.


A           known to me. It is also wrong that Accused has not taken any
            money from me. It is also incorrect that I do not have the financial
            position or capacity to pay such amount of money. It is also
            incorrect that Accused had not demanded any money from me. It
            is also incorrect that I had not given any money to the accused. I
            do not know that the accused had lost his cheque book. Volunteered
B
            that the accused had himself given me the cheque. It is also
            incorrect that I had filled my name and amount in the lost cheque
            with accused had signed and kept for his family members to
            withdraw money in case of need and I had presented the said
            forged cheque. I had received reply to the notice. It is incorrect
C           that I have presented a false case on the basis of a forged cheque.”
             5. She would, therefore, point out that when the evidence adduced
      by the appellant through DW-1 to DW-4 would categorically establish
      that the version of the complainant-respondent that he had withdrawn a
      specific sum of Rs.2 or 2.5 Lakhs from the Bank and gave it the appellant
D     along with the money he had and when this aspect is established to be
      false the entire case of the complainant would collapse and what is
      more important a probable defence has been made out by the accused.
      In such circumstances, the three Courts which held in favour of the
      complainant were entirely wrong and, in fact, the High Court as already
      pointed out has not even appreciated the very purpose of examination of
E
      the defence witnesses in this regard. Learned counsel for the appellant
      also pointed out that this is a case where contrary to the finding of the
      Trial Court a reply notice was in fact given by the appellant as admitted
      by the complainant.
             6. Per-contra, Mr. Ajay Marwah, learned counsel for the
F
      complainant-respondent would draw our attention to the version which
      was sought to be built up by the appellant through DW-5 who incidentally
      happened to be the son of the appellant. He took us through the evidence
      and then made the point that the version of the appellant was that the
      signed cheque in question along with the cheque book was lost while it
G     was being carried by DW-5 but he requests the Court to notice that
      neither DW-5 nor the appellant had made complaint of the loss of the
      signed cheque to either the Bank or to the Police. He points out that a
      perusal of the reply notice sent by the appellant would clearly establish
      that the respondent was known and friendly with the appellant. This
      again bolstered the case of the complainant that the complainant has
H
             TEDHI SINGH v. NARAYAN DASS MAHANT                                  449
                       [K. M. JOSEPH, J.]

helped the appellant in his time of need by giving the hand loan. He             A
further points out that there is no case that the signature on the cheque
is not that of the appellant. In this regard, in fact, the Courts below have
also noted the fact that the appellant has not produced the evidence of
the Official from the bank of the appellant to establish that any notice
was given to the Bank regarding the alleged loss of the signed cheque.
                                                                                 B
He further drew our attention to the statements under Section 313 of the
Cr.P.C. given by the appellant. He would point out that neither in the
reply notice nor in the statement given under Section 313 of the Cr.P.C.,
it is the appellant’s case that the respondent did not have the financial
capacity to give the hand loan. He further ends by saying that the
appellant does not have a case regarding the capacity of the respondent          C
to loan the amount which remained after deducting the amount referable
to the withdrawal from the bank. He further would contend that the
Court may bear in mind that three Courts have held against the appellant
and no case is made out for interference.
         7. It is true that this is a case under Section 138 of the Negotiable   D
Instruments Act. Section 139 of the N.I. Act provides that Court shall
presume that the holder of a cheque received the cheque of the nature
referred to in Section 138 for the discharge, in whole or in part, of any
debt or other liability. This presumption, however, is expressly made
subject to the position being proved to the contrary. In other words, it is
                                                                                 E
open to the accused to establish that there is no consideration received.
It is in the context of this provision that the theory of ‘probable defence’
has grown. In an earlier judgment, in fact, which has also been adverted
to in Basalingappa (supra), this Court notes that Section 139 of the
N.I. Act is an example of reverse onus [see (2010) 11 SCC 441). It is
also true that this Court has found that the accused is not expected to          F
discharge an unduly high standard of proof. It is accordingly that the
principle has developed that all which the accused needs to establish is a
probable defence. As to whether a probable defence has been established
is a matter to be decided on the facts of each case on the conspectus of
evidence and circumstances that exist.                                           G
       8. It is indeed true that there is some merit in the complaint of Ms.
Sangeeta Bharti, learned counsel for the appellant that in the impugned
judgment the High Court has not appreciated the real purpose of
examining DW-1 to DW-4. She is also correct when she drew our
attention to the accounts of the Gramin Bank i.e. Gramin Bank, Kullu to
                                                                                 H
450            SUPREME COURT REPORTS                           [2022] 4 S.C.R.


A     show that before the 5th of August, 2011 the appellant had stopped
      operating the account in the said bank and a very small and ignorable
      amount alone was available in the said account.
             9. The Trial Court and the First Appellate Court have noted that in
      the case under Section 138 of the N. I. Act the complainant need not
B     show in the first instance that he had the capacity. The proceedings
      under Section 138 of the N. I. Act is not a civil suit. At the time, when
      the complainant gives his evidence, unless a case is set up in the reply
      notice to the statutory notice sent, that the complainant did not have the
      wherewithal, it cannot be expected of the complainant to initially lead
      evidence to show that he had the financial capacity. To that extent the
C
      Courts in our view were right in holding on those lines. However, the
      accused has the right to demonstrate that the complainant in a particular
      case did not have the capacity and therefore, the case of the accused is
      acceptable which he can do by producing independent materials, namely,
      by examining his witnesses and producing documents. It is also open to
D     him to establish the very same aspect by pointing to the materials produced
      by the complainant himself. He can further, more importantly, achieve
      this result through the cross examination of the witnesses of the
      complainant. Ultimately, it becomes the duty of the Courts to consider
      carefully and appreciate the totality of the evidence and then come to a
      conclusion whether in the given case, the accused has shown that the
E
      case of the complainant is in peril for the reason that the accused has
      established a probable defence.
             10. We have gone through the nature of the evidence in this case.
      We also bear in mind the fact that three Courts have held in favour of
      the respondent. In this regard we bear in mind that though it is true that
F
      reply notice was sent by the appellant, therein he admits the case of the
      respondent that the parties were having a cordial relationship. In the
      reply notice the appellant has not set up any case that the respondent did
      not have the financial capacity to advance the loan. In fact even we
      notice that there is no reference to the loss of the cheque book or signed
G     cheque leaf. No complaint was given of the loss of the cheque book or
      the signed cheque leaf either to the police or to the bank. In the evidence
      of DW5, the son of the appellant, the version given is that on 5.10.2011,
      PW5 had left home with the cheque book of the appellant which had a
      cheque signed by the appellant for withdrawing money, if needed in the
      absence of the appellant. He set up the version that he drove away an
H
             TEDHI SINGH v. NARAYAN DASS MAHANT                               451
                       [K. M. JOSEPH, J.]

unowned cow. in the field. Thereafter, while sitting in the bus he saw the    A
cheque book was not with him. He further deposed that since his father
was not at home he could not tell him about the incident and got engrossed
in his study and forgot the incident. In his statement under Section 313
Cr.PC given on 10.01.2013, appellant has taken the stand that he informed
the Bank. It is relevant to notice that DW5 has further deposed that
                                                                              B
when the appellant received the notice he asked him about the cheque
book and then he told him about the incident of the loss of cheque book.
Still, at the time when the reply notice was sent, the case is not set up
about the loss of cheque book and about the cheque relied upon by the
respondent being one which is brought into existence using the lost signed
cheque leaf. We have already noticed that there is no evidence to establish   C
that the appellant had informed the Bank about the loss of the cheque
book containing blank cheque. In fact, In the statement under Section
313 Cr.PC. appellant had stated that this cheque book containing a blank
cheque was lost. Appellant has no case that the signature on the cheque
in question was not put by him.
                                                                              D
       11. We must hasten here and observe that this Court even
exercising power under Article 136 of the Constitution may not refuse to
interfere in a case where three Courts have gone completely wrong.
The jurisdiction generated in an appeal under Article 136 is undoubtedly
rare and extraordinary. Article 136 of the Constitution only confers a
right to obtain special leave in rare and extraordinary cases. However,       E
this is not to be understood as meaning that it is a clear case of even
three Courts in unison falling into palpable error and thereby causing
miscarriage of justice and yet this Court would not interfere.
       12. However, we would think that in the totality of facts of this
case the appellant has not established a case for interference with the       F
finding of the Courts below that the offence under Section 138 N. I. Act
stands committed by the appellant. We have been told that the amount
of compensation in a sum of Rs.7 Lakhs which is relatable to the cheque
amount has been deposited already in the Trial Court. However, we
would think that the appellant should be granted relief in the form of        G
substitution of the sentence of imprisonment of one year with a fine. An
amount of Rs.5,000/- (Five thousand) commends itself to us as an amount
which should suffice as substitution for the imprisonment. Apart from
that, we would also direct that a further amount of Rs.15,000/- shall be
paid as compensation to the respondent.
                                                                              H
452              SUPREME COURT REPORTS                        [2022] 4 S.C.R.


A            13. Accordingly, the appeal is partly allowed. While we uphold
      the conviction, we direct that sentence of imprisonment of one year
      shall stand vacated. However, the appellant shall stand sentenced to
      fine of Rs.5,000/- which he will deposit within a period of one month
      from today in the Trial Court. In case of default, the appellant shall
      undergo simple imprisonment for a period of one month. The appellant
B
      shall also deposit a sum of Rs.15,000/- as further compensation which
      can be withdrawn by the respondent. The deposit shall be made in the
      Trial Court within a period of four weeks from today.
             The appeal is partly allowed as above.
C            Pending application(s), if any, stands disposed of.

      Devika Gujral                                          Appeal partly allowed.
      (Assisted by : Shevali Monga, LCRA)



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E




F




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