Shri Ankit Singh Dabas and anr. Vs. Shri Kuldeep Singh and Another - Court Judgment

Excerpt:
[k.g. balakrishnan; p. sathasivam; j.m. panchal, jj.]negotiable instruments act, 1881 - sections 138, 139, 118(a) - dishonour of cheque for insufficiency, etc., of funds in the account -- in the present case, the trial court had acquitted the appellant-accused in a case related to the dishonour of a cheque under section 138 of the negotiable instruments act, 1881 [hereinafter `act']. the accused had then issued a cheque bearing no. 0886322, post-dated for 8-2-2001 for rs. 45,000 drawn on syndicate bank, kudremukh branch. consequently, on 8-2-2001, the complainant had presented this cheque through karnataka bank, ranebennur for encashment. the complainant had then issued notice to the accused in this regard on 26-2-2001. it was observed that the accused's failure to reply to the notice sent by the complainant did not attract the presumption under section 139 of the act since the complainant had failed to prove that he had given a hand loan to the accused and that the accused had issued a cheque as alleged. however, on appeal against acquittal, the high court reversed the findings and convicted the appellant-accused. this presumption is of a rebuttal nature and the onus is then on the accused to raise a probable defence. with regard to the present facts, the high court found that the defence raised by the accused was not probable. in respect of the accused's stand that he had lost a blank cheque bearing his signature, the high court noted that in the instructions sent by the accused to his bank for stopping payment, there is a reference to cheque no. 0886322, dated 20-7-1999. this is in conflict with the complainant's version wherein the accused had given instructions for stopping payment in respect of the same cheque, albeit one which was dated 8-2-2001. the high court also noted that if the accused had indeed lost a blank cheque bearing his signature, the question of his mentioning the date of the cheque as 20-7-1999 could not arise. furthermore, during the cross-examination of the complainant, it was suggested on behalf of the accused that the complainant had the custody of the cheque since 1998. this suggestion indicates that the accused was aware of the fact that the complainant had the cheque, thereby weakening his claim of having lost a blank cheque. once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under section 139 of the negotiable instruments act has to be raised by the court in favour of the complainant. the presumption referred to in section 139 of the n.i. act is a mandatory presumption and not a general presumption, but the accused is entitled to rebut the said presumption. the defence raised by the accused was that a blank cheque was lost by him, which was made use of by the complainant. presumptions as to negotiable instruments. the purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. existence of legally recoverable debt is not a matter of presumption under section 139 of the act. the courts below, as noticed hereinbefore, proceeded on the basis that section 139 raises a presumption in regard to existence of a debt also. apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability. the appellant engaged the services of the respondent-engineer for supervising the construction of his house. the appellant requested the respondent for a hand loan to meet the construction expenses. in view of the acquaintance, the respondent paid the same by way of cash. the appellant issued a cheque for repayment of the said amount. the respondent presented the cheque for encashment. the bank issued a return memo stating that the payment had been stopped by the drawer. thereafter, the appellant did not honour the cheque within the statutorily prescribed period and also did not reply to the notice u/s. 138 of the negotiable instruments act, 1881. the respondent filed a complaint against the appellant for offence punishable u/s.138 of the act. the trial court acquitted the appellant u/s.138 in view of some discrepancies in the complainant's version. the high court holding that the appellant did not raise a probable defence to rebut the statutory presumption, convicted the appellant for commission of offence u/s. 138 of the act and directed to pay fine of rs. 75,000/-. hence the present appeal. disposing of the appeal, the court held: 1. ordinarily in cheque bouncing cases, what the courts have to consider is whether the ingredients of the offence enumerated in s.138 of the negotiable instruments act, 1881 have been met and if so, whether the accused was able to rebut the statutory presumption contemplated by s.139 of the act. with respect to the facts of the instant case, it must be clarified that contrary to the trial court's finding, s.138 of the act can indeed be attracted when a cheque is dishonoured on account of `stop payment' instructions sent by the accused to his bank in respect of a post- dated cheque, irrespective of insufficiency of funds in the account. [para 9] [518-d-f] goa plast (pvt.) ltd. v. chico ursula d'souza (2003) 3 scc 232, referred to. 2.1. the presumption mandated by s.139 of the act does indeed include the existence of a legally enforceable debt or liability. this is in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. however, there can be no doubt that there is an initial presumption which favours the complainant. section 139 of the act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. while s.138 of the act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption u/s. 139 is a device to prevent undue delay in the course of litigation. however, it must be remembered that the offence made punishable by s.138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. in such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard or proof. in the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. when an accused has to rebut the presumption under s.139, the standard of proof for doing so is that of `preponderance of probabilities'. therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. [para 14] [525-g; 526-a-g] 2.2. the high court's view that the accused did not raise a probable defence is accepted. the defence of the loss of a blank cheque was taken up belatedly and the accused had mentioned a different date in the `stop payment' instructions to his bank. the instructions to `stop payment' had not even mentioned that the cheque had been lost. a perusal of the trial record also shows that the accused appeared to be aware of the fact that the cheque was with the complainant. furthermore, the very fact that the accused had failed to reply to the statutory notice u/s.138 of the act leads to the inference that there was merit in the complainant's version. apart from not raising a probable defence, the appellant-accused was not able to contest the existence of a legally enforceable debt or liability. the fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. as per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction-related expenses or whether the complainant had incurred the said expenditure over a period of time. either way, the complaint discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction-expenses. since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant. thus, there is no reason to interfere with the final order of the high court which recorded a finding of conviction against the appellant. 1. whether reporters of local papers may be allowed to see the judgment? no2. to be referred to the reporter or not? no3. whether the judgment should be reported no in digest?1. this is a suit filed under order 37 of cpc. a perusal of the order of this court dated 8th april 2009 shows that in response to summons for judgment served on defendant no.1, he filed his application seeking leave to contest the suit. however, nobody appeared for defendant no.1 on 10th february 2009, 23rd march 2009 and 8th april 2009. the application, therefore, was dismissed for non-prosecution and consequently a decree for recovery of rs.14 lacs with costs and interest at the rate of 12% per annum w.e.f. 1st august 2003 was passed in favour of the plaintiff and against defendant no.1.2. the case of the applicant/defendant no.1 is that late sh. pramod kumar sharma, advocate whom he had engaged for the purpose of this suit, unfortunately expired on 16th october 2008 and, therefore, could not appear when the matter was listed. it is alleged in the application that the applicant was not aware of the demise of late sh. pramod kumar sharma, advocate and was in a belief that the matter was being looked after. it is further alleged in the application that on receipt of notice for execution of decree, it was revealed that a decree had been passed in the absence of the applicant, who claims to be government employee.3. ia 4377/2010 has been filed for staying the execution of the decree whereas ia 4378/2010 has been filed seeking condonation of delay in filing ia 4376/2010.4. the applications have been opposed by the plaintiff/decree holder. it has been pointed out in the reply that appearance was filed by defendant no.1 through sh. prakash arya, advocate and sh. pramod kumar sharma, advocate was never engaged by the applicant/defendant no.1.5. a perusal of the orders passed by this court from time to time would show that mr. pramod kumar sharma, advocate appeared on behalf of applicant/defendant no.1 on 30th november 2007, 7th april 2008, 8th may 2008, 3rd july 2008 and 3rd october 2008, though no vakalatnama in his favour has been filed. appearance of mr. pramod kumar sharma, on a number of hearings, does support the case setup by the applicant that he was engaged by him for the purpose of this suit. even otherwise, i see no good reason for a defendant to deliberately absent and suffer a decree, after he has not only engaged an advocate, but also put in appearance and applied for leave to contest.6. the applicant/defendant no.1 has filed an affidavit purporting to be sworn by sh. sanjay sharma, brother-in- law of late sh. pramod kumar sharma, advocate. in his affidavit, mr. sanjay sharma has stated that smt. manjula sharma, wife of late sh. pramod kumar sharma had contacted him to help her in returning the briefs/files of the cases which are being handled by the deceased and the file of this case was also lying in the office of late sh. pramod kumar sharma and was being handled by him. he has further stated that defendant no.1/applicant kuldeep singh contacted him on 10th march 2010 to receive the brief/file of the above noted case and the complete file was returned and handed over to him.7. in view of the provisions contained in rule 4 of order xxxvii of cpc, the court may, under special circumstances, set aside the decree and if necessary stay or set aside execution and may also give leave to the defendant to defend the suit. while doing so, the court may impose appropriate term on the defendant.8. the expression special circumstance has neither been defined nor is it capable of a precise definition, since no one can enumerate or even contemplate circumstances which may amount to sufficient cause which could prevent the defendant from appearing and defending the suit filed against him. it is however difficult to say that if an advocate, on account of reasons beyond his control is not able to appear or if there is default in representation of the defendant on account of demise of his advocate, it would not constitute special circumstance within the meaning of rule 4 of order xxxvii of cpc. in rafiq & anr. vs. munshilal & anr. (1981)2 scc 788, while considering an application for restoration of an appeal which had been dismissed in default due to non-appearance of advocate, supreme court inter alia observed as under:- "the disturbing feature of the case is that under our present adversary legal system where the parties generally appear through their advocates, the obligation of the parties is to select his advocate, brief him, pay the fees demanded by him and then trust the learned advocate to do the rest of the things. the party may be a villager or may belong to a rural area and may have no knowledge of the court's procedure. after engaging a lawyer, the party may remain supremely confident that the lawyer will look after his interest. at the time of the hearing of the appeal, the personal appearance of the party is not only not required but hardly useful. therefore, the party having done everything in his power to effectively participate in the proceedings can rest assured that he has neither to go to the high court to inquire as to what is happening in the high court with regard to his appear nor is he to act as a watchdog of the advocate that the latter appears in the matter when it is listed. it is no part of his job.what is the fault of the party who having done everything in his power expected of him would suffer because of the default of his advocate. if we reject this appeal, as mr. a.k. sanghi invited us to do, the only one who would suffer would not be the lawyer who did not appear but the party whose interest he represented. the problem that agitates us is whether it is proper that the party should suffer for the inaction, deliberate omission or misdemeanor of his agent.the answer obviously is the negative."9. taking into consideration all the facts and circumstances of the case, including the affidavit of mr. sanjay sharma, brother-in-law of late sh. pramod kumar sharma, advocate, i am of the view that the judgment and decree passed by this court on 8 th april 2009, needs to be set-aside, though subject to appropriate condition. the judgment and decree dated 8 th april 2009 is accordingly set- aside subject to applicant/defendant no.1 paying cost of rs.5,000/- and also furnishing a bank guarantee of principal amount of rs.14 lacs to the satisfaction of registrar general of this court within eight weeks from today.10. though while considering an application under rule 4 of order xxxvii the court can and should normally consider the application for leave to contest on merits since there is no such prayer in this application and another application has already been filed for this purpose, and there is no request to take up that application along with this application, i do not propose to consider application for leave to contest on merit, at this stage the applications stand disposed of.

Judgment:
1. Whether Reporters of local papers may be allowed to see the judgment? No

2. To be referred to the Reporter or not? No

3. Whether the judgment should be reported No in Digest?

1. This is a suit filed under Order 37 of CPC. A perusal of the order of this Court dated 8th April 2009 shows that in response to summons for judgment served on defendant No.1, he filed his application seeking leave to contest the suit. However, nobody appeared for defendant No.1 on 10th February 2009, 23rd March 2009 and 8th April 2009. The application, therefore, was dismissed for non-prosecution and consequently a decree for recovery of Rs.14 Lacs with costs and interest at the rate of 12% per annum w.e.f. 1st August 2003 was passed in favour of the plaintiff and against defendant No.1.

2. The case of the applicant/defendant No.1 is that late Sh. Pramod Kumar Sharma, Advocate whom he had engaged for the purpose of this suit, unfortunately expired on 16th October 2008 and, therefore, could not appear when the matter was listed. It is alleged in the application that the applicant was not aware of the demise of late Sh. Pramod Kumar Sharma, Advocate and was in a belief that the matter was being looked after. It is further alleged in the application that on receipt of notice for execution of decree, it was revealed that a decree had been passed in the absence of the applicant, who claims to be government employee.

3. IA 4377/2010 has been filed for staying the execution of the decree whereas IA 4378/2010 has been filed seeking condonation of delay in filing IA 4376/2010.

4. The applications have been opposed by the plaintiff/decree holder. It has been pointed out in the reply that appearance was filed by defendant No.1 through Sh. Prakash Arya, Advocate and Sh. Pramod Kumar Sharma, Advocate was never engaged by the applicant/defendant No.1.

5. A perusal of the orders passed by this Court from time to time would show that Mr. Pramod Kumar Sharma, Advocate appeared on behalf of applicant/defendant No.1 on 30th November 2007, 7th April 2008, 8th May 2008, 3rd July 2008 and 3rd October 2008, though no Vakalatnama in his favour has been filed. Appearance of Mr. Pramod Kumar Sharma, on a number of hearings, does support the case setup by the applicant that he was engaged by him for the purpose of this suit. Even otherwise, I see no good reason for a defendant to deliberately absent and suffer a decree, after he has not only engaged an advocate, but also put in appearance and applied for leave to contest.

6. The applicant/defendant No.1 has filed an affidavit purporting to be sworn by Sh. Sanjay Sharma, brother-in- law of late Sh. Pramod Kumar Sharma, Advocate. In his affidavit, Mr. Sanjay Sharma has stated that Smt. Manjula Sharma, wife of late Sh. Pramod Kumar Sharma had contacted him to help her in returning the briefs/files of the cases which are being handled by the deceased and the file of this case was also lying in the office of late Sh. Pramod Kumar Sharma and was being handled by him. He has further stated that defendant No.1/applicant Kuldeep Singh contacted him on 10th March 2010 to receive the brief/file of the above noted case and the complete file was returned and handed over to him.

7. In view of the provisions contained in Rule 4 of Order XXXVII of CPC, the Court may, under special circumstances, set aside the decree and if necessary stay or set aside execution and may also give leave to the defendant to defend the suit. While doing so, the Court may impose appropriate term on the defendant.

8. The expression special circumstance has neither been defined nor is it capable of a precise definition, since no one can enumerate or even contemplate circumstances which may amount to sufficient cause which could prevent the defendant from appearing and defending the suit filed against him. It is however difficult to say that if an advocate, on account of reasons beyond his control is not able to appear or if there is default in representation of the defendant on account of demise of his advocate, it would not constitute special circumstance within the meaning of Rule 4 of Order XXXVII of CPC. In Rafiq & Anr. vs. Munshilal & Anr. (1981)2 SCC 788, while considering an application for restoration of an appeal which had been dismissed in default due to non-appearance of advocate, Supreme Court inter alia observed as under:- "The disturbing feature of the case is that under our present adversary legal system where the parties generally appear through their advocates, the obligation of the parties is to select his advocate, brief him, pay the fees demanded by him and then trust the learned Advocate to do the rest of the things. The party may be a villager or may belong to a rural area and may have no knowledge of the court's procedure. After engaging a lawyer, the party may remain supremely confident that the lawyer will look after his interest. At the time of the hearing of the appeal, the personal appearance of the party is not only not required but hardly useful. Therefore, the party having done everything in his power to effectively participate in the proceedings can rest assured that he has neither to go to the High Court to inquire as to what is happening in the High Court with regard to his appear nor is he to act as a watchdog of the advocate that the latter appears in the matter when it is listed. It is no part of his job.What is the fault of the party who having done everything in his power expected of him would suffer because of the default of his advocate. If we reject this appeal, as Mr. A.K. Sanghi invited us to do, the only one who would suffer would not be the lawyer who did not appear but the party whose interest he represented. The problem that agitates us is whether it is proper that the party should suffer for the inaction, deliberate omission or misdemeanor of his agent.

The answer obviously is the negative."

9. Taking into consideration all the facts and circumstances of the case, including the affidavit of Mr. Sanjay Sharma, brother-in-law of late Sh. Pramod Kumar Sharma, Advocate, I am of the view that the judgment and decree passed by this Court on 8 th April 2009, needs to be set-aside, though subject to appropriate condition. The judgment and decree dated 8 th April 2009 is accordingly set- aside subject to applicant/defendant No.1 paying cost of Rs.5,000/- and also furnishing a bank guarantee of principal amount of Rs.14 Lacs to the satisfaction of Registrar General of this Court within eight weeks from today.

10. Though while considering an application under Rule 4 of Order XXXVII the Court can and should normally consider the application for leave to contest on merits since there is no such prayer in this application and another application has already been filed for this purpose, and there is no request to take up that application along with this application, I do not propose to consider application for leave to contest on merit, at this stage The applications stand disposed of.