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Supreme Court of India
M/S Kalamani Tex vs P. Balasubramanian on 10 February, 2021Author: Surya Kant
Bench: N.V. Ramana, Surya Kant, Aniruddha Bose
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 123 of 2021
[Arising out of Special Leave Petition (Crl.) No. 1876 of 2018]
M/s. Kalamani Tex & Anr ….. Appellant(s)
VERSUS
P. Balasubramanian ….. Respondent
JUDGEMENT
Surya Kant, J:
Leave Granted.
2. M/s. Kalamani Tex (Appellant No.1) and its managing partner–
B. Subramanian (Appellant No.2) are in appeal challenging the
judgment dated 09.11.2017 passed by the High Court of Judicature at
Madras, whereby the order of acquittal of the Judicial Magistrate,
Tiruppur was reversed and the appellants have been convicted under
Section 138 of the Negotiable Instruments Act, 1881 (in short, ‘NIA’).
Signature Not Verified
Digitally signed by
Vishal Anand
Date: 2021.02.10
16:51:39 IST
Reason:
Consequently, Appellant No.2 has been sentenced to undergo three
months Simple Imprisonment and a fine of Rs. 5,000/.
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Facts
3. The instant proceedings have originated out of a complaint
preferred by P. Balasubramanian (ComplainantRespondent) against
the appellants. The respondent is the proprietor of a garment company
named and styled as ‘Growell International’, which along with
Appellant No.1 was engaged in a business arrangement, whereby they
agreed to jointly export garments to France. Certain issues arose
regarding delays in shipment and payment from the buyer, due to
which, the appellants had to pay the respondent a sum of Rs 11.20
lakhs. To that end, Appellant No.2 issued a cheque on behalf of
Appellant No. 1 bearing no.897993 dated 07.11.2000 in favour of the
respondent and also executed a Deed of Undertaking on the same day
wherein Appellant No.2 personally undertook to pay the respondent in
lieu of the initial expenditure incurred by the latter. The respondent
presented the said cheque to the bank on 29.12.2000 for collection
but it was returned with an endorsement that there were insufficient
funds in the account of appellants. In wake of the cheque being
dishonoured, the respondent issued a notice dated 08.01.2001 asking
the appellants to pay the amount within 15 days. The appellants in
their reply dated 27.01.2001 denied their liability and claimed that
blank cheques and signed blank stamp papers were issued to help the
respondent in some debt recovery proceedings, and not because of any
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legally enforceable debt.
4. The respondent then lodged a private complaint under section
138 and 142 of the NIA read with Section 200 of the Code of Criminal
Procedure, 1973 (in short ‘CrPC’) before the Judicial Magistrate,
Tiruppur. In order to substantiate his claim, the respondent himself
entered the witness box and produced documentary evidence such as
the cheque issued by Appellant No.2. The respondent in his chief
examination initially contended that the subject amount had been
received by the appellants from the foreign buyer. However, when
recalled on a later date, the respondent produced the Deed of
Undertaking dated 07.11.2000, whereunder, the 2nd Appellant had
acknowledged the liability towards respondent. One PS Shanmugham
(PW2) who was working as Manager in State Bank of India, Tiruppur
Overseas Branch, was also examined by the respondent.
5. Appellant No.2 in his statement under Section 313 CrPC plainly
denied the allegations and disputed the existence of any liability
towards the respondent. The appellants also examined one V.
Rajagopal (DW1) who at the relevant time was working as Assistant
Manager in State Bank of India, Tiruppur Overseas Branch. DW1
mainly deposed on the inability of the respondent to pay back the
credit that was advanced to him, and the subsequent debt recovery
proceedings initiated against him. The appellants did not lead any
documentary evidence in their defence.
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6. The trial Court disbelieved the respondent’s claim and observed
that he had failed to establish a legally enforceable liability on the date
of issue of cheque. The Court held that since the basic ingredients of
an offence under Section 138 of the NIA were not satisfied, the
complaint was liable to be dismissed.
7. Discontented with the order of the trial Court, the respondent
preferred a criminal appeal before the High Court, wherein, the Court
noted that Appellant No.2 had admitted his signatures on both the
Cheque and the Deed of Undertaking and had thus acknowledged the
appellants’ liability. The High Court therefore vide impugned judgment
allowed the criminal appeal and convicted both the appellants under
Section 138 of NIA. Appellant No. 2 was awarded a sentence of three
months simple imprisonment with a fine of Rs. 5,000/ (or 20 days
simple imprisonment in lieu thereof). Additionally, Appellant No.1 was
directed to pay a fine of Rs. 5,000/, in default of which, Appellant
No. 2 would undergo another onemonth simple imprisonment.
8. The aggrieved appellants are now before this Court. It may be
mentioned at the outset that when the SLP came up for hearing on
12.03.2018, their learned Counsel agreed to deposit the entire amount
in dispute and in deference thereto, the appellants have on
11.04.2018 deposited a sum of Rs. 11.20 lakhs with the Registry of
this Court.
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CONTENTIONS
9. Learned Senior Counsel for the appellants, nonetheless, desired
to argue the case on merits and contended that there was no legally
enforceable liability on the date of issuance of the cheque and that
blank stamp papers signed by Appellant No.2 were misused by the
respondent to forge the Deed of Undertaking dated 07.11.2000.
Placing reliance on Murugesan v. State Through Inspector of
Police1, he urged that the view taken by the trial Court was a possible
view, and the High Court committed patent illegality and exceeded its
jurisdiction in reversing the acquittal. Learned Senior Counsel also
cited Reena Hazarika v. State of Assam2 to argue that the High
Court did not take notice of the defence raised by the appellants which
has caused serious prejudice to them. He passionately put forth the
principles laid down in Basalingappa v. Mudibasapp3 and Kumar
Exports v. Sharma Carpets4, and submitted that the presumption
drawn against an accused under Section 118 and Section 139 of the
NIA is rebuttable through a standard of “preponderance of probability”,
which has been successfully met by the appellants in the present
case.
10. On the other hand, learned Counsel for the respondent
1
(2012) 10 SCC 383, ¶ 32.
2
(2019) 13 SCC 289, ¶ 20.
3
(2019) 5 SCC 418.
4
(2009) 2 SCC 513.
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maintained that the decision of the High Court is well reasoned and
founded upon due consideration of all relevant factors of the case.
Laying stress on the undisputed signatures on the cheque and the
Deed of Undertaking dated 07.11.2000, he asserted that the
appellants have admitted their existing liability of Rs.11.20 lakhs.
Lastly, while pointing out the financial loss suffered by the respondent
and the adverse impact on his business, learned Counsel prayed for
suitable compensation.
ANALYSIS
11. The short question which falls for our consideration is whether
the High Court erred in reversing the findings of the trial Court in
exercise of its powers under Section 378 of CrPC?
12. Having given our thoughtful consideration to the rival
submissions, we do not find any valid ground to interfere with the
impugned judgment. It is true that the High Court would not reverse
an order of acquittal merely on formation of an opinion different than
that of the trial Court. It is also trite in law that the High Court ought
to have compelling reasons to tinker with an order of acquittal and no
such interference would be warranted when there were to be two
possible conclusions.5 Nonetheless, there are numerous decisions of
this Court, justifying the invocation of powers by the High Court under
Section 378 CrPC, if the trial Court had, inter alia, committed a patent
5
CK Dasegowda and Others v. State of Karnatak, (2014) 13 SCC 119 ¶14.
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error of law or grave miscarriage of justice or it arrived at a perverse
finding of fact.6
13. On a similar analogy, the powers of this Court under Article 136
of the Constitution also do not encompass the reappreciation of
entirety of record merely on the premise that the High Court has
convicted the appellants for the first time in exercise of its appellate
jurisdiction. This Court in Ram Jag v. State of UP7, Rohtas v. State
of Haryana8 and Raveen Kumar v. State of Himachal Pradesh 9,
evolved its own limitations on the exercise of powers under Article 136
of the Constitution and has reiterated that while entertaining an
appeal by way of special leave, there shall not ordinarily be an attempt
to reappreciate the evidence on record unless the decision(s) under
challenge are shown to have committed a manifest error of law or
procedure or the conclusion reached is exfacie perverse.
14. Adverting to the case in hand, we find on a plain reading of its
judgment that the trial Court completely overlooked the provisions
and failed to appreciate the statutory presumption drawn under
Section 118 and Section 139 of NIA. The Statute mandates that once
the signature(s) of an accused on the cheque/negotiable instrument
are established, then these ‘reverse onus’ clauses become operative. In
6
State of UP v. Banne, (2009) 4 SCC 271,¶ 27; Ghurey Lal v. State of U.P.,
(2008) 10 SCC 450, ¶70.
7
(1974) 4 SCC 201, ¶ 14.
8
(2019) 10 SCC 554, ¶ 12.
9
2020 SCC Online SC 869, ¶ 14.
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such a situation, the obligation shifts upon the accused to discharge
the presumption imposed upon him. This point of law has been
crystalized by this Court in Rohitbhai Jivanlal Patel v. State of
Gujarat10 in the following words:
“In the case at hand, even after purportedly drawing the
presumption under Section 139 of the NI Act, the trial court
proceeded to question the want of evidence on the part of the
complainant as regards the source of funds for advancing loan
to the accused and want of examination of relevant witnesses
who allegedly extended him money for advancing it to the
accused. This approach of the trial court had been at variance
with the principles of presumption in law. After such
presumption, the onus shifted to the accused and unless the
accused had discharged the onus by bringing on record such
facts and circumstances as to show the preponderance of
probabilities tilting in his favour, any doubt on the
complainant’s case could not have been raised for want of
evidence regarding the source of funds for advancing loan to
the appellantaccused…..”
15. Once the 2nd Appellant had admitted his signatures on the
cheque and the Deed, the trial Court ought to have presumed that the
cheque was issued as consideration for a legally enforceable debt. The
trial Court fell in error when it called upon the Complainant
Respondent to explain the circumstances under which the appellants
were liable to pay. Such approach of the trial Court was directly in the
10
(2019) 18 SCC 106, ¶ 18.
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teeth of the established legal position as discussed above, and
amounts to a patent error of law.
16. No doubt, and as correctly argued by senior counsel for the
appellants, the presumptions raised under Section 118 and Section
139 are rebuttable in nature. As held in MS Narayana Menon v.
State of Kerela11, which was relied upon in Basalingappa (supra), a
probable defence needs to be raised, which must meet the standard of
“preponderance of probability”, and not mere possibility. These
principles were also affirmed in the case of Kumar Exports (supra),
wherein it was further held that a bare denial of passing of
consideration would not aid the case of accused.
17. The appellants have banked upon the evidence of DW1 to
dispute the existence of any recoverable debt. However, his deposition
merely highlights that the respondent had an overextended credit
facility with the bank and his failure to update his account led to debt
recovery proceedings. Such evidence does not disprove the appellants’
liability and has a little bearing on the merits of the respondent’s
complaint. Similarly, the appellants’ mere bald denial regarding
genuineness of the Deed of Undertaking dated 07.11.2000, despite
admitting the signatures of Appellant No. 2 thereupon, does not cast
any doubt on the genuineness of the said document.
18. Even if we take the arguments raised by the appellants at face
11
(2006) 6 SCC 39, ¶ 32.
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value that only a blank cheque and signed blank stamp papers were
given to the respondent, yet the statutory presumption cannot be
obliterated. It is useful to cite Bir Singh v. Mukesh Kumar12, where
this court held that:
“Even a blank cheque leaf, voluntarily signed and handed over
by the accused, which is towards some payment, would attract
presumption under Section 139 of the Negotiable Instruments
Act, in the absence of any cogent evidence to show that the
cheque was not issued in discharge of a debt.”
19. Considering the fact that there has been an admitted business
relationship between the parties, we are of the opinion that the
defence raised by the appellants does not inspire confidence or meet
the standard of ‘preponderance of probability’. In the absence of any
other relevant material, it appears to us that the High Court did not
err in discarding the appellants’ defence and upholding the onus
imposed upon them in terms of Section 118 and Section 139 of the
NIA.
20. As regard to the claim of compensation raised on behalf of the
respondent, we are conscious of the settled principles that the object
of Chapter XVII of the NIA is not only punitive but also compensatory
and restitutive. The provisions of NIA envision a single window for
criminal liability for dishonour of cheque as well as civil liability for
realisation of the cheque amount. It is also well settled that there
12
(2019) 4 SCC 197, ¶ 36.
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needs to be a consistent approach towards awarding compensation
and unless there exist special circumstances, the Courts should
uniformly levy fine up to twice the cheque amount along with simple
interest at the rate of 9% per annum.13
21. The respondent, nevertheless, cannot take advantage of the
above cited principles so as to seek compensation. The record
indicates that neither did the respondent ask for compensation before
the High Court nor has he chosen to challenge the High Court’s
judgment. Since, he has accepted the High Court’s verdict, his claim
for compensation stands impliedly overturned. The respondent, in any
case, is entitled to receive the cheque amount of Rs.11.20 lakhs which
the appellant has already deposited with the Registry of this Court.
CONCLUSION:
22. For the reasons stated above, the present appeal is liable to be
dismissed. We order accordingly. Ordinarily and as a necessary sequel
thereto, Appellant No.2 would be liable to undergo the sentence of
simple imprisonment as awarded by the High Court. However, given
the peculiar facts and circumstances of the case, namely, that the
appellants volunteered and thereafter have deposited the cheque
amount with the Registry of this Court in the year 2018, we are
inclined to take a lenient view. The impugned judgment of the High
Court dated 09112017 is thus modified, and it is directed that
13
R. Vijian v. Baby, (2012) 1 SCC 260 ¶20.
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Appellant No.2 shall not be required to undergo the awarded sentence.
The registry of this Court is directed to transfer the amount of
Rs.11.20 lakhs along with interest accrued thereupon to the
respondent within two weeks.
………………………….. J.
(N.V. RAMANA)
………..………………… J.
(SURYA KANT)
……………………………J.
(ANIRUDDHA BOSE)
NEW DELHI
DATED :10.02.2021
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