REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO(s).  950-951  OF 2018

(ARISING OUT OF SLP(CRL.) Nos. 10111-10112 of 2014)

T.P. MURUGAN (DEAD) THR. LRS.           APPELLANT(S)

VERSUS

BOJAN  RESPONDENT(S)

AND

POSA NANDHI REP. THR.  POA HOLDER, T.P. MURUGAN            APPELLANT(S)

VERSUS

BOJAN     RESPONDENT(S)

J U D G M E N T

INDU MALHOTRA, J:

(1) The present Special Leave Petitions have been

filed  against  the  common  judgment  and  order

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dated 27.09.2013 passed by the High Court of

Judicature at Madras in Criminal Revision Case

Nos.  1657  and  1658  of  2008.  That  after

issuance  of  notice,  Special  Leave  Petitions

were heard finally.

   Leave granted.

(1.1) These  Appeals  arise  out  of  two

complaints  filed  under  S.138  of  the

Negotiable  Instruments  Act  (“the  N.I.

Act”)  filed  by  the  appellants  against

the  respondent  for  dishonour  of  two

cheques  of  Rs.37,00,000/-  and

Rs.14,00,000/- respectively.

(2) The facts of the case briefly stated are as

under: -

(2.1)  The  appellants  submit  that  they  were

inducted  in  Maanihada  Tea  Produce

Company  Pvt.  Ltd.  being  run  by  the

respondent to infuse capital by way of

deposits and shares.  

(2.2) On 24.11.1998, the appellants resigned

as Directors of the Company after which

the  respondent  and  his  son,  DW-3,

remained incharge of the Company.

The  appellants  submitted  that  the

respondent failed to return their share

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in  the  company.   The  appellants  made

demands for re-payment of their dues.

On 07.08.2002, the respondent issued

a Promissory Note for Rs.51,00,000/- in

favour of K.Posa Nandhi – the appellant

in the Second Appeal.  The Promissory

Note records that it was being issued

against  a  loan.  The  respondent  also

issued two cheques on the same date, one

for Rs.37,00,000/- in favour of K.Posa

Nandhi,  and  the  other  for  Rs.

14,00,000/-  in  favour  of  T.P.Murugan,

towards discharge of their liability for

the investments made in M/s. Maanihada

Tea Produce Company.

(2.3)  The  cheques  were  presented  for

encashment  on  03.02.2003  by  the

appellants, which were dishonoured due

to “Stop Payment” instructions issued by

the respondent.

(2.4) The  appellants  issued  the  statutory

notices  under  S.138  of  the  N.I.  Act

calling upon the respondent to discharge

their  debt/liability  and  clear  their

dues.

(2.5) The  respondent  vide  his  reply  dated

17.02.2003  refuted  the  claim  of  the

appellants.

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(2.6) The  appellants  filed  two  complaints

under S. 138 of the N.I. Act before the

Court  of  Judicial  Magistrate  II,

Coimbatore.  

(2.7) The respondent contended that the signed

blank Promissory Note was issued by him

in favour of N.R.R. Finances Investments

Pvt.  Ltd.  under  a  hire-purchase

agreement for purchasing a lorry on loan

basis.  The said Promissory Note was not

issued  in  favour  of  the  appellant-

complainants.  The  Promissory  Note  was

filled up by DW.2 Mahesh, an employee of

N.R.R. Investments, after the signatures

of the respondent were obtained on the

same.  

With  respect  to  the  two  cheques

which were dishonoured, the respondent

contended  that  these  were  amongst  10

blank cheques signed and handed over to

the appellant-K.Posa Nandhi as security,

when he borrowed Rs.5,00,000/- in 1995.

That even though this loan was re-paid

in 1996 with interest, the cheques were

not  returned.  The  respondent  further

contended that he had issued a letter on

09.11.2002  asking  the  appellants  to

return the 10 blank cheques.

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(3) The Trial Court found that the respondent had

admitted  his  signatures  both  on  the  Pronote

and  also  on  the  two  cheques  for  Rs.

37,00,000/-  and  Rs.14,00,000/-  respectively.

The  respondent  also  admitted  that  the

appellant  had  invested  capital  in  their

concern viz. M/s. Maanihada Tea Factory.  

   The Court disbelieved the version of the

respondent  with  respect  to  the  10  blank

cheques issued to the appellant in 1995. The

respondent  failed  to  place  any  material  on

record  to  show  that  he  had  ever  asked  for

return  of  the  10  blank  cheques,  allegedly

given  by  him  to  the  respondent,  for  seven

years.  

    That after going through the detailed

evidence  adduced  by  the  parties,  the  Trial

Court held that the Cheques and Pronote were

issued  for  repayment/discharge  of  a  lawful

debt. The respondent was found guilty under S.

138  of  the  N.I.  Act,  and  sentenced  him  to

undergo  R.I.  for  six  months  and  Fine  of

Rs.5000/-, failing which, he shall undergo one

month’s R.I.   

(4) Aggrieved  by  the  said  judgment,  the

respondent-accused filed Criminal Appeal Nos.

437-438  of  2006  before  the  District  and

Sessions  Judge,  Fast  Track  Court  No.  III,

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Coimbatore.  The  District  and  Sessions  Judge

held that the presumption under Sections 118

and 139 of the N.I. Act was not rebutted by

the  respondent.   It  was  proved  by  the

complainants  that  there  were  insufficient

funds in the bank account of the respondent at

the  time  of  issuance  of  the  cheques.  The

respondent had with mala fide intention issued

“Stop Payment” instructions.  The respondent

failed to give any explanation as to how the

Pronote came into possession of the appellant.

Furthermore, the Sessions Court discarded the

evidence  adduced  by  the  accused,  of  DW.2

Mahesh,  as  being  an  interested  witness,  who

had falsely stated that he was an employee of

N.R.R.  Finances.  This  was  rebutted  by  two

witnesses  viz.  PW.2  and  PW.4,  who  were

Directors of N.R.R. Finances who deposed that

DW.2 was never employed by this Company. The

District  and  Sessions  Court  affirmed  the

conviction and sentence awarded by the Trial

Court.

(5) Aggrieved  by  the  judgment  and  order  dated

26.11.2008 passed by the District and Sessions

Judge, Fast Track Court No. III, Coimbatore,

the  respondent-accused  filed  two  Criminal

Revision  Nos.  1657-1658  of  2008  before  the

Madras  High  Court.  That  even  though  the

appellants herein- complainants had initially

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participated in the proceedings, the present

appellant was unrepresented during the final

hearing.  The hearing of the Criminal Revision

Petitions proceeded ex parte.  

   The  High  Court  recorded  that  the

respondent-accused had not denied either the

issuance of the cheques, or his signatures on

the Pronote and cheques.  The denial was only

with regard to the circumstances, the manner

and the period during which the cheques were

issued.  The High Court took the view that the

burden cast on the respondent-accused was only

to  raise  a  doubt  in  the  mind  of  the  Court

about the nature of the transaction. The Ld.

Single  Judge  accepted  the  contention  of  the

respondent  that  since  the  cheques  and  the

Pronote were issued on the same date, it could

only be treated as a security, and was not

towards any debt or liability. By raising a

doubt  with  respect  to  the  circumstances  in

which the Pronote and cheques were issued, the

respondent  had  discharged  the  presumption

under S. 139 of the N.I. Act. The High Court

held  that  the  Trial  Court  and  the  Sessions

Court erred in applying the legal principles

of standard of proof for the complainant to

prove their case.

The  High  Court,  while  exercising  its

revisional  jurisdiction,  reversed  the

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concurrent findings of the Courts below, and

set  aside  the  judgment  of  conviction  and

sentence passed against the accused.

(6) Aggrieved  by  the  judgment  and  order  dated

27.09.2013  passed  in  Criminal  Revision  Nos.

1657-1658 of 2008, the appellant-complainants

filed the present Special Leave Petitions.       Mrs. V. Mohana, Sr. Adv. represented the

appellants, and submitted that the respondent-

accused has admitted his signatures on the two

dishonoured  cheques  and  on  the  Pronote.  The

appellants-complainants had adduced sufficient

evidence  to  prove  their  case.  Reliance  was

placed by the Senior Counsel on the decisions

of this Court in Rangappa vs. Shrimohan [(2010)

11 SCC 441], K.N. Beena vs. Muniyappan and Anr.

[(2001)8  SCC  458];  and  T.  Vasanthakumar  vs.

Vijayakumari [(2015)8 SCC 378] in support of

her case.  

(7) Mr. R. Basanth, Sr. Counsel appeared on behalf

of the respondent-accused, and contended inter

alia that the cheques were not issued towards

discharge of a legally enforceable debt, but

as  a  security,  and  that  the  judgment  under

challenge required no interference.

(8) We  have  heard  Senior  Counsel  for  both

parties,  and  perused  the  record.  Under

Section 139 of the N.I. Act, once a cheque

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has been signed and issued in favour of the

holder, there is statutory presumption that

it  is  issued  in  discharge  of  a  legally

enforceable  debt  or  liability1.  This

presumption  is  a  rebuttable  one,  if  the

issuer of the cheque is able to discharge the

burden  that  it  was  issued  for  some  other

purpose like security for a loan.

    In the present case, the respondent has

failed to produce any credible evidence to

rebut the statutory presumption.  This would

be evident from the following circumstances:-   

(i) The respondent-accused issued a Pronote

for the amount covered by the cheques,

which clearly states that it was being

issued for a loan; (ii) The defence of the respondent that he

had allegedly issued 10 blank cheques in

1995 for repayment of a loan, has been

disbelieved both by the Trial Court and

Sessions Court, on the ground that the

respondent did not ask for return of the

cheques for a period of seven years from

1995.  This  defence  was  obviously  a

cover-up,  and  lacked  credibility,  and

hence was rightly discarded. (iii) The letter dated 09.11.2002 was addressed

by the respondent after he had issued two

1 Refer to K.N. Beena Vs. Muniyappan and Another[(2001) 8 SCC 458; para 6] and  Rangappa vs. Shrimohan [(2010) 11 SCC 441; para 26]

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cheques on 07.08.2002 for Rs.37,00,000/-

and  Rs.14,00,000/-  knowing  fully  well

that he did not have sufficient funds in

his account.  The letter dated 09.11.2002

was an after-thought, and was written to

evade liability. This defence also lacked

credibility, as the appellants had never

asked for return of the alleged cheques

for seven years. (iv) The defence of the respondent that the

Pronote dated 07.08.2002 signed by him,

was allegedly filled by one Mahesh-DW.2,

an  employee  of  N.R.R.  Finances,  was

rejected  as  being  false.  DW.2  himself

admitted in his cross-examination, that

he did not file any document to prove

that he was employed in N.R.R. Finances.

On  the  contrary,  the  appellants  -

complainants  produced  PW.2  and  PW.4,

Directors of N.R.R. Finances Investment

Pvt. Ltd., and PW.3, a Member of N.R.R.

Chit funds, who deposed that DW.2 was

never employed in N.R.R. Finances.

9. The appellants have proved their case by over-

whelming  evidence  to  establish  that  the  two

cheques were issued towards the discharge of

an existing liability and legally enforceable

debt.  The respondent having admitted that the

cheques and Pronote were signed by him, the

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presumption  under  S.139  would  operate.   The

respondent failed to rebut the presumption by

adducing  any  cogent  or  credible  evidence.

Hence, his defence is rejected.

10.  In  view  of  the  aforesaid  facts  and

circumstances,  the  impugned  order  dated

27.09.2013  passed  in  Criminal  Revision

Petition Nos. 1657 and 1658 of 2008 is hereby

set  aside,  and  the  order  of  Conviction  and

Fine passed by the Trial Court is restored.  

11. The Appeals are allowed accordingly.

..........................J.  (ROHINTON FALI NARIMAN)

..........................J.  (INDU MALHOTRA)  

New Delhi,  July 31, 2018.

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