Section 138 NI Act - Complainant Not Expected To Initially Give Evidence Of Financial Capacity Unless Accused Disputes It In Reply Notice : Supreme Court

The Supreme Court observed that it cannot be expected of a complainant to initially lead evidence to show that he had financial capacity unless such a case was set up in the reply notice by the accused.However, the accused has the right to demonstrate that the complainant in a particular case did not have the financial capacity by producing independent materials, namely, by examining his witnesses and producing documents, by pointing to the materials produced by the complainant himself, or through the cross examination of the witnesses of the complainant, the bench comprising Justices KM Joseph and Hrishikesh Roy observed.The Court was considering an appeal against concurrent conviction in a cheque bounce case. The main contention raised by the accused-appellant before the Apex Court was that the complainant did not have the financial capacity to to give the hand loan.The Apex Court bench noted that the Trial Court and the First Appellate Court had observed that in the case under Section 138 of the N. I. Act the complainant need not show in the first instance that he had the capacity. In this context, the bench observed:"At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent the Courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross examination of the witnesses of the complainant. Ultimately, it becomes the duty of the Courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence."Perusing the reply notice, the bench noted that the accused admitted that the parties were having a cordial relationship and had not set up any case that the complainant did not have the financial capacity to advance the loan. There is no reference to the loss of the cheque book or signed cheque leaf, the court noted."We would think that in the totality of facts of this case the appellant has not established a case for interference with the finding of the Courts below that the offence under Section 138 N. I. Act stands committed by the appellant", the bench said while dismissing his appeal.The court however directed that sentence of imprisonment of one year shall stand vacated and the appellant-accused shall stand sentenced to fine of Rs.5,000/- which he will deposit within a period of one month in the Trial Court.HeadnotesNegotiable Instruments Act, 1881 ; Sections 138,139 - At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity - However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents, by pointing to the materials produced by the complainant himself, or through the cross examination of the witnesses of the complainant. (Para 9)Negotiable Instruments Act, 1881 ; Sections 138,139 - Theory of 'probable defence' - he accused is not expected to discharge an unduly high standard of proof - All which the accused needs to establish is a probable defence. As to whether a probable defence has been established is a matter to be decided on the facts of each case on the conspectus of evidence and circumstances that exist - It becomes the duty of the Courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence. [Referred to Basalingapa Vs. Mudibasappa (2019) 5 SCC 418] (Para 7, 9)Constitution of India, 1950 ; Article 136 -Supreme Court exercising power under Article 136 of the Constitution may not refuse to interfere in a case where three Courts have gone completely wrong. The jurisdiction generated in an appeal under Article 136 is undoubtedly rare and extraordinary. Article ...

Section 138 NI Act - Complainant Not Expected To Initially Give Evidence Of Financial Capacity Unless Accused Disputes It In Reply Notice : Supreme Court

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