Kumar Exports v. Sharma Carpets
Supreme Court of India, 16 December 2008, 2 judges
The presumptions under Sections 118 and 139 of the Negotiable Instruments Act are rebuttable on a preponderance of probabilities; the drawer rebutted them here, so his acquittal under Section 138 was restored.
Facts
The complainant firm said it sold woollen carpets to the appellant firm in August 1994 and received two cheques, which were dishonoured for insufficient funds, also on re-presentation. After a statutory notice went unanswered it filed a complaint under Section 138. The appellant admitted signing the cheques but said they were blank cheques given as advance for carpets never supplied. A Sales Tax Department official proved the complainant's return and affidavit stating that no sale of woollen carpets took place in 1994-95. The Magistrate acquitted. The High Court, relying on the presumption under Section 139, convicted the appellant and remitted the matter to the Magistrate for sentence.
Questions before the Court
- What is the nature and scope of the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, and how may the accused rebut them?
- Whether the appellant had rebutted the presumptions on the evidence.
- Whether an appellate court reversing an acquittal may remit the case to the trial court for sentence.
What the Court held
- Once execution of a cheque is proved or admitted, Sections 118 and 139 require the court to presume that it was drawn for consideration and in discharge of a debt or liability. The presumptions are rebuttable and shift the burden to the accused.
- The accused need not prove his defence beyond reasonable doubt. A bare denial is not enough; he must bring on record facts or circumstances, by direct or circumstantial evidence, presumptions of fact or the complainant's own case, showing that consideration and debt did not exist or that their non-existence is so probable that a prudent man would act on it.
- Once rebuttal evidence is accepted on a preponderance of probabilities, the evidential burden shifts back to the complainant and the presumptions do not again help him.
- The sales tax evidence showed no sale had taken place, so there was no existing debt; the complainant produced no account books or proof of delivery. He failed to establish the offence.
- An appellate court reversing an acquittal under Section 386(a) CrPC must itself impose sentence; remitting the matter to the Magistrate for sentence is unknown to law.
Why it matters
The judgment sets out how the statutory presumptions in cheque dishonour cases operate and the standard by which an accused can rebut them: the preponderance of probabilities, not proof beyond reasonable doubt, though a bare denial will not do. It also holds that an appellate court that convicts on reversing an acquittal cannot leave sentencing to the trial court.
In the Court's words
Copied from the official judgment; each passage links to its page.
“The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial.”
“At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist.”
“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.”
“This course, adopted by the learned Single Judge, is unknown to law. The learned Single Judge was hearing an appeal from an order of acquittal. The powers of the Appellate Court, in an appeal from an order of acquittal, are enumerated in Section 386(a) of the Code of Criminal Procedure, 1973. Those powers do not contemplate that an Appellate Court, after recording conviction, can remit the matter to the trial court for passing appropriate order of sentence.”
Provisions interpreted
Case and bench
- Parties
- M/s. Kumar Exports v. M/s. Sharma Carpets
- Case
- Criminal Appeal No. 2045 of 2008 (arising out of Special Leave Petition (Criminal) No. 955 of 2007)
- Decided
- 16 December 2008
- Bench
- R.V. Raveendran, J.M. Panchal
- Opinions
- Unanimous. Judgment of the Court written by J.M. Panchal, J.
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