[NI Act] Statute Mandates That once Signature Of Accused On Cheque/NI Established, "Reverse Onus" Clause Becomes Operative: Supreme Court
The Supreme Court has held that once the signature of an accused is established on a cheque, the onus to prove otherwise vests with the accused.
A full judge bench of Justice N.V. Ramana, Justice Surya Kant and Justice Aniruddha Bose said, “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.”
Supreme Court dismissed a criminal appeal arising out of a judgment by the Madras High Court on applicability of presumption under Section 118 and Section 139 of the NI Act, 1881.
Appellant 1 and its managing partner, B. Subramanian (appellant 2) had come up in challenge against the judgement dated 09.11.2017, passed by the Madras High Court wherein the order of Judicial Magistrate Tiruppur was reversed and the appellant were convicted under Section 138 of the Negotiable Instruments Act, 1881. Following this, appellant was sentenced to undergo three months of simple imprisonment and a fine of Rupees five thousand.
Issue for consideration before the present Court was, whether the High Court erred in reversing the findings of the Trial Court in exercise of its powers under Section 378 CrPC?
“On a plain reading of its judgment the trial court completely overlooked the provisions and failed to appreciate the statutory presumption drawn under Section 118 and Section 139 of the NI Act. The Statute mandates that once the signature of an accused on the cheque/negotiable instrument are established, then these ‘reverse onus’ clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him.” Reliance was placed on Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106 in this regard. The fact that the second appellant admitted his sign on the cheque and the deed clearly suggests that it was issued as a consideration for a legally enforceable debt. As per the Apex Court, “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.”
Court further placed reliance on Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197, wherein the Supreme Court said, “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.”
With respect to grant of compensation Court observed that since the respondents have neither asked for compensation from the High Court, nor have they challenged the same, therefore claim against it is impliedly overturned. Further, Cheque of Rupee 11.20 lakhs as entitled by the respondent has already been submitted with the Registry.
Case Title: M/s Kalamani Tex v. P.Balasubramanian | Criminal Appeal No. 123 of 2021
Provisions/Statute involved: Section 118, Section 138, Section 139, Negotiable and Instrument Act, 1881.