In Criminal Appeal No. 3126 of 2023 -SC- Supreme Court reverses Punjab & Haryana High Court order; holds accused liable for cheque bounce & sets aside acquittal
Justice Aravind Kumar & Justice S.V.N. Bhatti [09-10-2023]

Read Order: Rajesh Jain v. Ajay Singh

Chahat Varma

New Delhi, October 10, 2023: The Supreme Court has set aside the acquittal of an accused in a cheque bounce case, holding that he had failed to discharge his evidential burden.

The brief background of the case was that Mr. Ajay Singh, the respondent-accused, approached Mr. Rajesh Jain, the appellant-complainant, seeking a loan. Mr. Jain lent a total of Rs. 6 lakhs to Mr. Singh and additional sums subsequently, believing that the money would be repaid with interest as agreed. However, Mr. Singh failed to honour the repayment timeline, and Mr. Jain's attempts to recover the money were unsuccessful. Mr. Singh later issued a post-dated check for Rs. 6,95,204 to partially repay the outstanding debt. When the check was presented, it bounced due to insufficient funds. Consequently, Mr. Jain filed a complaint under Section 138 of the Negotiable Instruments Act (NI Act). The Trial Court found the accused not guilty, and upon reevaluating the evidence, the Punjab and Haryana High Court upheld the acquittal. The High Court stated that the accused had successfully rebutted the statutory presumption raised under Section 139 of the NI Act, shifting the burden of proof to the complainant. However, the complainant failed to demonstrate that the cheque had been issued in connection with a legally enforceable debt.

The division bench of Justice Aravind Kumar and Justice S.V.N. Bhatti observed that as soon as the complainant discharges the burden to prove that the instrument, such as a cheque, was issued by the accused for the discharge of a debt, the presumptive device under Section 139 of the NI Act shifts the burden onto the accused. The effect of this presumption is to transfer the evidential burden onto the accused to prove that the cheque was not received by the bank towards the discharge of any liability. Until this evidential burden was discharged by the accused, the presumed fact had to be taken as true, without expecting the complainant to do anything further.

In the present case, the bench stated that the case set up by the accused was thoroughly riddled with contradictions. It was apparent on the face of the record that there was not the slightest credibility perceivable in the defence set up by the accused.

The bench held that other than some minor inconsistencies, the case of the complainant had been consistent throughout. In fact, the signature on the cheque had not been disputed, and the presumption under Section 118 and 139 had taken effect, satisfying every ingredient necessary for sustaining a conviction under Section 138. The case of the defence had been limited only to the issue of whether the cheque had been issued in discharge of a debt/liability. The accused had miserably failed to discharge his evidential burden, and that fact had been taken to be proved by force of the presumption, without requiring anything more from the complainant.

The bench remarked that the fundamental error in the approach lay in the fact that the High Court had questioned the lack of evidence on the part of the complainant to support his allegation of having extended a loan to the accused, when it should have instead concerned itself with the case set up by the accused and whether he had discharged his evidential burden by proving that there existed no debt/liability at the time of issuance of the cheque.

Thus, with the above observations, the court proceeded to allow the appeal by setting aside the judgment of the High Court of Punjab and Haryana and allowed the complaint filed under Section 138 of the NI Act, and convicted the respondent accused with a fine of twice the amount of the cheque, i.e., Rs. 13,90,408, failing which he shall undergo simple imprisonment for one year.