[Cheque Dishonour] Accused Must Raise 'Probable Defence' To Rebut Presumption U/S 139 NI Act & Meet The 'Test Of Proportionality': Calcutta HC

The Calcutta High Court on Monday held that rebuttal of the presumption in favour of cheque holder under Section 139 of the Negotiable Instruments Act is guided by the 'Test of Proportionality'.The Single Judge Bench of Justice Tirthankar Ghosh thus held that to rebut the presumption, the person accused must raise a "probable defence" before the Court, to shift the burden on the complainant. It clarified that mere denial is not sufficient and the accused must set up an initial defence by a reply notice or by examining its witnesses.The observations were made while allowing a criminal appeal and setting aside the order of lower appellate court which acquitted the Respondent herein in respect of a proceeding under S. 138 of the NI Act.The High Court noted that no materials were produced by the Respondent-accused to show as to how the cheque was in possession of the complainant, Appellant herein. Further, there was no allegation of lost cheque or that the signature in the cheque was forged."Although it is permitted in a case of such nature to raise a probable defence from the available materials in the cross-examination of the prosecution witness only, but the nature of the cross-examination and the probable defence raised by the accused do not qualify as a rebuttal to the provisions under Section 139 of the N.I. Act...The test of proportionality in such cases must guide the determination of the issue of rebuttal. As such what is required for the accused to do in such case is to raise a probable defence," the Court observed.The instant proceedings arose out of a complaint filed by the instant Appellant against the respondent before the Additional Chief Judicial Magistrate under Section 138 of the NI Act for dishonouring of cheque. The appellant was engaged in a commercial agreement with the respondent for the telecasting of serials in a television channel, arising wherefrom an account payee cheque for a sum of Rs, 9,70,000 was drawn by the respondent in favour of the appellant which was dishonoured on five separate occasions bearing the endorsement "funds insufficient". Thereafter, the appellant had issued a notice demanding payment of the aforesaid due and payable amount within 15 days hence which was returned by the postal service provider with the remarks "absence" or "refused".Aggrieved, the instant appellant moved the trial court, which in view of the presumption under Section 139 held that while the complainant had produced several documents to satisfy the requirements of the NI Act, the defence's case was one of mere denial and not rebuttal.Subsequently, the Respondent's appeal before the Additional Sessions Judge came to be allowed and he was acquitted on the basis of finding that no agreement for telecasting of any television programme, trade license or income tax return was produced by the instant appellant. The ASJ also pointed out insufficiencies in the cross-examination of the appellant and technical infirmities encountered by the court in evaluating the evidence produced by the appellant. The High Court set aside this acquittal order on the finding that the inference of the first appellate court was arrived at solely on the basis of insufficiencies in the cross-examination of the appellant and technical infirmities in respect of evidence and not on the merits of the defence mounted by the respondent to rebut the presumption under S. 139 of the Act. As such, it was held that the inference drawn by the first appellate court was arrived upon appreciation of evidence which was beyond the scope of Section 138 of the NI Act. "The aforesaid observations of the appellate Court are beyond the scope of appreciating evidence in respect of provisions relating to adjudication of offence under Section 138 of the N.I. Act. Section 139 of the N.I. Act is a statutory presumption which carries with it an expression "unless the contrary is proved". The test of proportionality in such cases must guide the determination of the issue of rebuttal. As such what is required for the accused to do in such case is to raise a probable defence. It cannot be a probable defence that the complainant has no capacity to pay the money until and unless an initial defence is set up by a reply notice or the accused examines his witnesses and relies upon documentary evidence." Accordingly, the order of acquittal passed by the first appellate court was set aside and the order of the trial court convicting the respondent under S. 138 of the NI Act was restored. Case: Subrata Bose v. Mithu Ghosh, CRA 658 of 2018 Date: 07.11.2022Citation: 2022 LiveLaw (Cal) 334 Click Here To Read/Download Judgment

[Cheque Dishonour] Accused Must Raise 'Probable Defence' To Rebut Presumption U/S 139 NI Act & Meet The 'Test Of Proportionality': Calcutta HC

SAMRIDDHA SEN

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