{"id":38538,"date":"2003-11-20T00:00:00","date_gmt":"2003-11-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/goa-plast-p-ltd-vs-chico-ursula-dsouza-on-20-november-2003"},"modified":"2016-01-12T18:06:51","modified_gmt":"2016-01-12T12:36:51","slug":"goa-plast-p-ltd-vs-chico-ursula-dsouza-on-20-november-2003","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/goa-plast-p-ltd-vs-chico-ursula-dsouza-on-20-november-2003","title":{"rendered":"Goa Plast (P) Ltd vs Chico Ursula D&#8217;Souza on 20 November, 2003"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Goa Plast (P) Ltd vs Chico Ursula D&#8217;Souza on 20 November, 2003<\/div>\n<div class=\"doc_author\">Author: . A Lakshmanan<\/div>\n<div class=\"doc_bench\">Bench: B.P. Singh, Dr. Ar. Lakshmanan.<\/div>\n<pre>           CASE NO.:\nAppeal (crl.)  1968 of 1996\n\nPETITIONER:\nGoa Plast (P) Ltd.\t\t\t \t\t\t      \n\nRESPONDENT:\nChico Ursula D'Souza\t\t\t\t\t               \n\nDATE OF JUDGMENT: 20\/11\/2003\n\nBENCH:\nB.P. Singh &amp; Dr. AR. Lakshmanan\n\nJUDGMENT:\n<\/pre>\n<p>J U D G M E N T<\/p>\n<p>Dr. AR. Lakshmanan, J.\n<\/p>\n<p>\tThis appeal is preferred by the appellant\/complainant against the order of the<br \/>\nHigh Court of Judicature at Bombay, Panaji Bench in Criminal Appeal No. 37\/1995<br \/>\nwhereby the High Court confirmed the order of acquittal dated 25.08.1995 passed by<br \/>\nthe Judicial Magistrate, First Class in Pvt. N.C. Case No. 149\/93\/8 for offence<br \/>\npunishable under Section 138 of the Negotiable Instruments Act.\n<\/p>\n<p>\tThe brief facts leading to the filing of the present appeal are as follows:\n<\/p>\n<p>\tThe respondent issued 10 post-dated cheques of Rs.40,000\/- each in favour of<br \/>\nthe appellant totalling Rs.4 lakhs for payment towards the liability of the amount<br \/>\nmisappropriated from the funds of the appellant-Company.  The respondent wrote a<br \/>\nletter to the appellant denying liability to pay the aforesaid sum for the reasons given in<br \/>\nthe letter dated 12.02.1993(Annexure P-1).  The appellant deposited the first cheque for<br \/>\nencashment.  The said cheque was dishonoured by the Bank on the ground that the<br \/>\nrespondent had issued instructions to stop payment.  The appellant sent a legal notice<br \/>\nto the respondent regarding the dishonour of the cheque demanding payment of<br \/>\nRs.40,000\/- within 15 days.  As the respondent did not comply with the aforesaid notice,<br \/>\na complaint was filed against the respondent under Section 142 of the Negotiable<br \/>\nInstruments Act (hereinafter referred to as &#8220;the Act&#8221;) for offence punishable under<br \/>\nSection 138 of the Act.  According to the appellant, the respondent\/accused was<br \/>\nworking as Managing Director of the appellant-Company. The services of the<br \/>\nrespondent were discontinued from the month of July, 1992.  The appellant examined<br \/>\nits General Manager on their behalf to prove the complaint.  The respondent in defence<br \/>\ndid not examine any witness.  The respondent also did not step in the witness box so as<br \/>\nto subject himself to the cross-examination.  He only brought on record the letter dated<br \/>\n12.02.1993 written by him to the Company.  True copy of the advice from the Bank<br \/>\ndated 12.04.1993, true copy of the complaint dated 06.03.1996 and true copy of the<br \/>\ndeposition have been marked as Annexures P-2, P-3 and P-4.\n<\/p>\n<p>\tThe learned Judicial Magistrate, First Class vide order dated 25.08.1995<br \/>\nacquitted the respondent holding that the petitioner failed to prove the liability and also<br \/>\nholding that the respondent had rebutted the statutory presumption under Section 139<br \/>\nof the Act.    Aggrieved by the said order, the appellant preferred Criminal Appeal No.<br \/>\n37 of 1995 to the High Court of Judicature at Bombay which also dismissed the appeal<br \/>\nholding that the appellant had failed to prove the liability on the part of the respondent to<br \/>\npay the sum in question.  Aggrieved by the judgment and order dated 12.01.1996 of the<br \/>\nHigh Court of Bombay in Criminal Appeal No. 37\/1995, the present appeal was<br \/>\npreferred by the appellant.\n<\/p>\n<p>\tWe heard Shri Dhruv Mehta, learned counsel appearing for the appellant and<br \/>\nShri A.K. Sanghi, learned counsel appearing for the respondent.\n<\/p>\n<p>\tShri Dhruv Mehta, learned counsel appearing for the appellant, submitted that<br \/>\nthe presumption has to be rebutted by leading evidence and not by mere explanation or<br \/>\nstatement and that mere issuance of a cheque in favour of the appellant-Company is<br \/>\nsufficient to show that the respondent\/accused owes liabilities of the appellant-<br \/>\nCompany.  While construing the provisions of Section 138 of the Act, besides the fact<br \/>\nthat the cheque issued by the respondent was dishonoured, nothing further is required<br \/>\nto be proved by the complainant and it is for the accused to rebut the presumption<br \/>\nunder Section 139 of the Act.  He would further submit that merely by sending a letter or<br \/>\na communication to the appellant-Company is not sufficient unless and until the<br \/>\npresumption is rebutted by leading evidence and that the presumption cannot be said to<br \/>\nbe rebutted.  Shri Dhruv Mehta would further urge that it was incumbent on the<br \/>\nrespondent\/accused to examine Rajan Kinnerkar as the respondent stated in his letter<br \/>\ndated 12.02.1993 that Rajan Kinnerkar was responsible for the financial transactions of<br \/>\nthe Company and, therefore, he is responsible for the unexplained expenditure of the<br \/>\nCompany&#8217;s Accounts.  It was further contended that as soon as the<br \/>\nrespondent\/accused presented or delivered the cheques to the appellant-Company, he<br \/>\nadmitted the liability and the cheque on presentation to the Bank being dishonoured,<br \/>\nthe ingredients of Section 138 of the Act are satisfied and the accused committed an<br \/>\noffence punishable under Section 138 of the Act.\n<\/p>\n<p>\tShri A.K. Sanghi, learned counsel appearing for the respondent\/accused,<br \/>\nsubmitted that the appellant\/complainant scrupulously avoided in the complaint and in<br \/>\nthe examination-in-chief of P.W.1 to state the relationship with the respondent\/accused<br \/>\nand there is also no whisper in the complaint as well as in the evidence led on behalf of<br \/>\nthe appellant regarding the receipt of the letter dated 12.02.1993.  It was further<br \/>\nsubmitted that the appellant has not placed before the trial Court any details or<br \/>\nstatement as to how the respondent is liable for any dues alleged to be against the<br \/>\nrespondent.  Shri A.K. Sanghi would further submit that mere presentation or delivery of<br \/>\nthe cheque, in the instant case, to the appellant by the respondent will not amount to<br \/>\nacceptance of the debt or liability and on the contrary, the respondent has given the<br \/>\nentire history in his letter dated 12.02.1993 before presentation of the cheque in the<br \/>\nmonth of April, 1993 to the Bank.  It was further stated that the very letter was drafted<br \/>\nby Rajan Kinnerkar and it was prepared, as directed by the appellant, as per the draft<br \/>\nand, therefore, the respondent has rightly and specifically disowned the liability of Rs. 4<br \/>\nlakhs much less Rs.40,000\/- involved in the instant appeal.\n<\/p>\n<p>\tBefore we advert to the respective contentions of the learned counsel appearing<br \/>\non either side, it is beneficial to quote Section 138 and Section 139 of the Act as it stood<br \/>\nat the relevant time.  Sections 138 and 139 of the Act read as under:<br \/>\n&#8220;138.  Dishonour of cheque for insufficiency, etc., of funds in the<br \/>\naccount.-  Where any cheque drawn by a person on an account maintained<br \/>\nby him with a banker for payment of any amount of money to another person<br \/>\nfrom out of that account for the discharge, in whole or in part, of any debt or<br \/>\nother liability, is returned by the Bank unpaid, either because of the amount of<br \/>\nmoney standing to the credit of that account is insufficient to honour the<br \/>\ncheque or that it exceeds the amount arranged to be paid from that account<br \/>\nby an agreement made with that bank, such person shall be deemed to have<br \/>\ncommitted an offence and shall, without prejudice to any other provision of<br \/>\nthis Act, be punished with imprisonment for a term which may extend to one<br \/>\nyear, or with fine which may extend to twice the amount of the cheque, or with<br \/>\nboth:\n<\/p>\n<p>\tProvided that nothing contained in this Section shall apply unless\n<\/p>\n<p>(a)\tthe cheque has been presented to the bank within a period of six<br \/>\nmonths from the date on which it is drawn or within the period of its<br \/>\nvalidity, whichever is earlier;\n<\/p>\n<p>(b)\tthe payee or the holder in due course of the cheque, as the case may<br \/>\nbe, makes a demand for the payment of the said amount of money by<br \/>\ngiving a notice, in writing, to the drawer of the cheque, within fifteen<br \/>\ndays of the receipt of information by him from the bank regarding the<br \/>\nreturn of the cheque as unpaid; and<\/p>\n<p>(c)\tthe drawer of such cheque fails to make the payment of the said<br \/>\namount of money to the payee or, as the case may be, to the     holder<br \/>\nin due course of the cheque, within fifteen days of the receipt of the<br \/>\nsaid notice.&#8221;\n<\/p>\n<p>&#8220;139.  Presumption in favour of holder.- It shall be presumed, unless the<br \/>\ncontrary is proved, that the holder of a cheque received the cheque of the<br \/>\nnature referred to in Section 138 for the discharge, in whole or in part, of any<br \/>\ndebt or other liability.&#8221;\n<\/p>\n<p>\tWe have perused the pleadings, annexures, the order passed by the learned<br \/>\nJudicial Magistrate and the judgment rendered by the High Court.  In our view, the High<br \/>\nCourt and the learned Judicial Magistrate failed to give effect to Section 139 of the Act<br \/>\nwhich creates a presumption unless the contrary is proved that the holder of cheque<br \/>\nreceived the cheque for discharge in whole or in part of any debt or other liability.   We<br \/>\nhave perused the contents of the letter dated 12.02.1993.  Neither the said letter is<br \/>\nproved nor its contents nor is the document produced in the proceedings of the Court.<br \/>\nIt is pertinent to note that in the said letter, the respondent\/complainant did not,<br \/>\nhowever, deny the liability as such but merely shifted it on third person.  The veracity of<br \/>\nthe contents of the letter could only be verified if the contents of the letter were proved.<br \/>\nThe High Court and the learned Judicial Magistrate have ignored the admission of the<br \/>\nliability by the respondent who said that the liability did exist but he was not responsible<br \/>\nfor it.  While considering this, the High Court and the learned Magistrate treated the<br \/>\nproof adduced by the respondent, namely, the letter, denying the liability and that some<br \/>\nother person is liable as sufficient to rebut the presumption under Section 139 of the<br \/>\nAct.  As already noticed, the appellant examined its General Manager on his side.  The<br \/>\nrespondent did not examine any witness and also did not step in the witness box so as<br \/>\nto step himself for the cross-examination.  The respondent has brought on record the<br \/>\nletter dated 12.02.1993 written by him to the Company.\n<\/p>\n<p>\tIn our view, the High Court and the learned Judicial Magistrate have clearly<br \/>\nmisunderstood the object behind Section 138 of the Act.  Sections 138 and 139 of the<br \/>\nAct were enacted in view of the fact that cheques were issued for payment of admitted<br \/>\nliability but the drawer used to dishonour the said liability by issuing instructions to the<br \/>\nBank for stop payment.  To avoid the aforesaid and to create an element of credibility<br \/>\nand dependability, the aforesaid Sections were enacted which provide a criminal<br \/>\nremedy of penalty if the ingredients of the Sections are satisfied.  The High Court, in our<br \/>\nview, gave an interpretation which would defeat the very purpose for which the<br \/>\nprovisions were enacted.  The impugned judgment wrongly interpreted Section 139 of<br \/>\nthe Act which is a presumption in favour of the holder.  Reading the judgment with<br \/>\nSection 139 of the Act, it would appear that the High Court has read in to Section 139 of<br \/>\nthe Act what is not contained in the Section.  Many passages of the judgments of the<br \/>\nHigh Court and of the learned Judicial Magistrate are direct off shoot of the wrong<br \/>\ninterpretation placed upon Section 139 of the Act and the High Court and the learned<br \/>\nJudicial Magistrate dwelt on extraneous factors and principles in order to bring the<br \/>\npresent case out of the purview of Section 138 of the Act.\n<\/p>\n<p>\tThe High Court while discussing the object of the Chapter dealing with offences<br \/>\nrelating with dishonour of the cheque and extensively quoting commentary by Author<br \/>\nDr. P.W. Rege, however, has failed to consider the important aspect which is discussed<br \/>\nat paragraph 16 which reads as under:\n<\/p>\n<p>&#8220;It is true that Negotiable Instruments Act has not failed to provide a remedy<br \/>\nfor the aggrieved party; but the foregoing provisions of the Act lay down a<br \/>\nprocedure which is in the first place very elaborate and since the remedy<br \/>\nwould be merely of a civil nature, the process to seek civil justice, in the<br \/>\nsecond place becomes notoriously dilatory.  To ensure promptitude in remedy<br \/>\nagainst defaulters, therefore, was the only way in which the element of<br \/>\ncredibility and dependability could be re-introduced in the practice of issuing<br \/>\nnegotiable instruments in the form of cheques.  The best way to do this was to<br \/>\nprovide a criminal remedy of penalty, which is just the thing that is sought to<br \/>\nbe done by the Amending Act.&#8221;\n<\/p>\n<p>\tTo fulfil the objective, the Legislature while amending the Act has made the<br \/>\nfollowing procedure:\n<\/p>\n<p>&#8220;(i)\tUnder Section 138 a deeming offence is created.\n<\/p>\n<p>(ii)\tIn Section 139, a presumption is ingrained that the holder of the<br \/>\ncheque received it in discharge of liability.\n<\/p>\n<p>(iii)\tDisallowing a defence in Section 140 that drawer has no reason to<br \/>\nbelieve that cheque would be dishonoured.\n<\/p>\n<p>(iv)\tAn explanation is provided to Section 138 to define the words &#8220;debt<br \/>\nor other liability&#8221; to mean a legally enforceable debt or other liability.&#8221;\n<\/p>\n<p>\tIf the aforesaid are borne in mind then the findings of the High Court are legally<br \/>\nperverse, namely, that Section 138 of the Act has application only in the case of<br \/>\ntransactions involving Mercantile relationship and the second being that the appellant<br \/>\nhas failed to prove the liability.  Paragraph 18 of the judgment of the High Court<br \/>\ncontains both the findings which  reads as under:\n<\/p>\n<p>&#8220;In this case no evidence or history being traced to show the relationship<br \/>\nbetween the complainant and respondent accused.  From the cross-<br \/>\nexamination it transpired that the respondent accused was working as the<br \/>\nManager of the Factory.  Thus, relation were Master and Servant or employee<br \/>\nor employer there being no business or commercial or mercantile relation<br \/>\nbetween the parties.&#8221;\n<\/p>\n<p>\tThe High Court, in our opinion, has failed to appreciate that on the facts of the<br \/>\ninstant case, the liability was a legally enforceable debt or liability as per the explanation<br \/>\nto Section 138 of the Act, therefore, the relationship between the appellant and the<br \/>\nrespondent was not at all a factor germane to the proceedings for an offence under<br \/>\nSection 138 of the Act.  The liability was legally enforceable debt is clear from the<br \/>\nfinding of the High Court at paragraph 19 which is quoted below:<br \/>\n &#8220;The Appellant-Company has attempted to short circuit the suit by compelling<br \/>\nthe accused respondent to pay the amount.&#8221;\n<\/p>\n<p>\tBoth the Courts, in our view, failed to consider the important aspect as to the<br \/>\nstop payment instructions issued by the respondent.  Ordinarily, the stop payment<br \/>\ninstructions are issued to the Bank by the account holder when there is no sufficient<br \/>\namount in the account.  In the present case, the reason for stopping the payment,<br \/>\nhowever, can be manifold.  It is essential that to issue stop payment instructions, there<br \/>\nmust be funds in the accounts in the first place.  On this aspect, the Courts below have<br \/>\nfailed to see whether as on the date of signing of the cheque dated 20.07.1992, the<br \/>\ndate of presentation of the cheque dated 10.01.1993, the date of writing of letter dated<br \/>\n12.02.1993 and the date on which stop payment instructions were issued to the Bank,<br \/>\nthe respondent has sufficient funds in the account.  Both the Courts below have held<br \/>\nthat after issuing the letter, the respondent has stopped the payment, therefore, no<br \/>\nmala fide can be attributed.  It is pertinent to notice that the appellant made an<br \/>\napplication to the Bank Manager to ascertain whether or not there was sufficient<br \/>\namount in the account for the payment dated 02.06.1995.  The learned Judicial<br \/>\nMagistrate disallowed the said application without hearing the complainant holding that<br \/>\nthere is no dispute about the dishonour of the cheque by the accused, therefore, no<br \/>\npurpose will be served by the Bank Manager as the dishonour is not in issue.  Had the<br \/>\nBank Manager been examined it would have been clear whether the account had<br \/>\nsufficient amount to pay the amount of the cheque or not.  It would have enabled also to<br \/>\nknow on what date stop payment order was sent by the drawer to the Bank.  The<br \/>\nlearned Magistrate committed a serious mistake in not allowing the application and the<br \/>\nproceedings passed thereon have suffered from serious infirmity going to the root of the<br \/>\nmatter.  The High Court and the learned Judicial Magistrate have also not noticed that<br \/>\nthe respondent was otherwise admitting the liability when the cheques were being<br \/>\nissued.  This was sufficient evidence to prove that there was a liability and as per the<br \/>\npresumption under Section 139 of the Act, the cheques issued, therefore, were towards<br \/>\nthe liability even as per the version of the respondent.  The relevant Section which is<br \/>\nSection 138 of the Act giving the ingredients of the offence.  In the opening words of the<br \/>\nSection it is stated:\n<\/p>\n<p>&#8220;Where any cheques drawn by a person on an account maintained by him<br \/>\nwith a bank for payment of any amount of money to any person from out of<br \/>\nthat account for the discharge in whole or in part, of any debt or other<br \/>\nliability.&#8221;\n<\/p>\n<p>\tBoth the Courts below have ignored the admission of the liability by the<br \/>\nrespondent who stated that the liability did exist but he was not responsible for it.  While<br \/>\nconsidering this, the Courts below treated the proof adduced by the respondent,<br \/>\nnamely, letter denying liability and that some other person is liable for it, as sufficient to<br \/>\nrebut the presumption under   Section 139 of the Act.  The Courts below have also not<br \/>\nconsidered that the accused had admitted that he was the Managing Director of the<br \/>\nappellant-Company when the liability arose.\n<\/p>\n<p>\tAnother reason given by the Courts below to reject the complaint was that the<br \/>\nappellant has suppressed the fact about the letter dated 12.02.1993.  In our view, there<br \/>\nis no obligation on the part of the appellant to reply to such letter as per the scheme of<br \/>\nSection 138 of the Act.\n<\/p>\n<p>\tCertain comments were made by the High Court in regard to the relationship of<br \/>\nthe parties.  For the cases filed under Section 142 of the Act for offence committed<br \/>\nunder the Act the relationship between the drawer and the drawee is not material<br \/>\nbecause the liability admitted is one which can be legally enforced by way of suit.\n<\/p>\n<p> \tWe have perused the complaint also.  On the point of pleadings in the complaint,<br \/>\nthe complainant narrated all the necessary facts required to constitute offence under<br \/>\nSection 138 of the Act, therefore, there was no question of suppression of facts in the<br \/>\ncase as held by the learned Judicial Magistrate and the findings endorsed by the High<br \/>\nCourt.  The complainant narrated that the respondent owed the appellant a sum of<br \/>\nRs.40,000\/-.  The appellant has received post-dated cheque for the said amount.  The<br \/>\ncheque was presented to the Bank and was returned with the remark `stop payment&#8217;.<br \/>\nThe statutory notice was issued and was received by the respondent.  The respondent<br \/>\nnot having complied with the demand made, complaint was filed.<br \/>\n\tWe shall now advert to the rulings cited at the time of hearing.  Learned counsel<br \/>\nrelied upon paragraphs 13 to 16 of the judgment of this Court in the case of Modi<br \/>\nCements Ltd. Versus Kuchil Kumar Nandi, (1998) 3 SCC 249 (three-Judge Bench),<br \/>\nwhich read as under:\n<\/p>\n<p>&#8220;It was, however, contended on behalf of the respondent that the decision in<br \/>\nElectronics Trade &amp; Technology Development Corpn. Ltd.  does not support<br \/>\nthe appellant as far as the facts that emerged in the present cases inasmuch<br \/>\nas the drawer had intimated to the bank on 8-8-1984 to stop the payment<br \/>\nwhereas the cheques were presented for encashment on 9-8-1994 although<br \/>\nthe same were drawn on 23-2-1994, 26-2-1994 and 28-2-1994.  The learned<br \/>\ncounsel for the respondent strongly relied upon the following observations in<br \/>\nElectronics Trade and Technology Development Corpn. Ltd.: (SCC p. 742,<br \/>\npara 6)<br \/>\n&#8220;Suppose after the cheque is issued to the payee or to the holder in<br \/>\ndue course and before it is presented for encashment, notice is issued to him<br \/>\nnot to present the same for encashment and yet the payee or holder in due<br \/>\ncourse presents the cheque to the bank for payment and when it is returned<br \/>\non instructions, Section 138 does not get attracted.&#8221;\n<\/p>\n<p>\t\t\t\t\t\t\t(emphasis supplied)<br \/>\n\tThe learned counsel for the appellant submitted that if the attention of<br \/>\nthe Court was drawn to the provisions of Section 139 of the Act which<br \/>\naccording to him, had an important bearing on the point in issue, the Court<br \/>\nwould certainly not have made the above observations.  The said section<br \/>\nreads as under:\n<\/p>\n<p>\t&#8220;139. Presumption in favour of holder.- It shall be presumed, unless<br \/>\nthe contrary is proved, that the holder of a cheque received the cheque, of the<br \/>\nnature referred to in Section 138 for the discharge, in whole or in part, of any<br \/>\ndebt or other liability.&#8221;\n<\/p>\n<p>\tAccording to the learned counsel if the observations of this Court in<br \/>\nElectronics Trade &amp; Technology Development Corpn. Ltd. to the effect, (SCC<br \/>\np. 742, para 6)<br \/>\n\t&#8220;[s]uppose after the cheque is issued to the payee or to the holder in<br \/>\ndue course and before it is presented for encashment, notice is issued to him<br \/>\nnot to present the same for encashment and yet the payee or holder in due<br \/>\ncourse presents the cheque to the bank for payment and when it is returned<br \/>\non instructions, Section 138 does not get attracted&#8221;\n<\/p>\n<p>is accepted as good law, the very object of introducing Section 138 in the Act<br \/>\nwould be defeated.\n<\/p>\n<p>\tWe see great force in the above submission because once the cheque<br \/>\nis issued by the drawer a presumption under Section 139 must follow and<br \/>\nmerely because the drawer issues a notice to the drawee or to the bank for<br \/>\nstoppage of the payment it will not preclude an action under Section 138 of<br \/>\nthe Act by the drawee or the holder of a cheque in due course.  The object of<br \/>\nChapter XVII, which is intituled as &#8220;OF PENALTIES IN CASE OF<br \/>\nDISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY OF FUNDS<br \/>\nIN THE ACCOUNTS&#8221; and contains Sections 138 to 142, is to promote the<br \/>\nefficacy of banking operations and to ensure credibility in transacting business<br \/>\nthrough cheques.  It is for this reason we are of the considered view that the<br \/>\nobservations of this Court in Electronics Trade &amp; Technology Development<br \/>\nCorpn. Ltd. in para 6 to the effect &#8220;Suppose after the cheque is issued to the<br \/>\npayee or to the holder in due course and before it is presented for<br \/>\nencashment, notice is issued to him not to present the same for encashment<br \/>\nand yet the payee or holder in due course presents the cheque to the bank for<br \/>\npayment and when it is returned on instructions, Section 138 does not get<br \/>\nattracted&#8221;, does not fit in with the object and purpose for which the above<br \/>\nchapter has been brought on the statute-book.&#8221;\n<\/p>\n<p>\tLearned counsel relied on paragraph 38 of the judgment of this Court in the case<br \/>\nof Hiten P. Dalal versus Bratindranath Banerjee, (2001) 6 SCC 16 which reads as<br \/>\nunder:\n<\/p>\n<p>&#8220;The burden was on the appellant to disapprove (sic disprove) the<br \/>\npresumptions under Sections 138 and 139, a burden which he failed to<br \/>\ndischarge at all.  The averment in the written statement of the appellant was<br \/>\nnot enough.  Incidentally, the defence in the written statement that the four<br \/>\ncheques were given for intended transactions was not the answer given by<br \/>\nthe appellant to the notice under Section 138.  Then he had said that the<br \/>\ncheques were given to assist the Bank for restructuring (Ext.H).  It was<br \/>\nnecessary for the appellant at least to show on the basis of acceptable<br \/>\nevidence either that his explanation in the written statement was so probable<br \/>\nthat a prudent man ought to accept it or to establish that the effect of the<br \/>\nmaterial brought on record, in its totality, rendered the existence of the fact<br \/>\npresumed, improbable.  <a href=\"\/doc\/276224\/\">(Vide Trilok Chand Jain vs. State of Delhi,<\/a> (1975) 4<br \/>\nSCC 761).  The appellant has done neither.  In the absence of any such proof<br \/>\nthe presumption under Sections 138 and 139 must prevail.&#8221;\n<\/p>\n<p>\tLearned counsel also relied on paragraph 7 of the judgment of this Court in the<br \/>\ncase of K.N. Beena Versus Muniyappan &amp; Another  (2001) 8 SCC 458 which reads<br \/>\nas under :\n<\/p>\n<p>&#8220;In this case admittedly the Ist respondent has led no evidence except some<br \/>\nformal evidence.  The High Court appears to have proceeded on the basis<br \/>\nthat the denials\/averments in his reply dated 21.5.1993 were sufficient to shift<br \/>\nthe burden of proof on to the appellant complainant to prove that the cheque<br \/>\nwas issued for a debt or liability.  This is an entirely erroneous approach.  The<br \/>\nIst respondent had to prove in the trial, by leading cogent evidence, that there<br \/>\nwas no debt or liability.  The Ist respondent not having led any evidence could<br \/>\nnot be said to have discharged the burden of proving that the cheque was not<br \/>\nissued for a debt or liability, the conviction as awarded by the Magistrate was<br \/>\ncorrect.  The High Court erroneously set aside that conviction.&#8221;\n<\/p>\n<p>Learned counsel placed reliance on paragraph 6 of the judgment of this Court in<br \/>\nthe case of Goaplast (P) Ltd. Versus Chico Ursula D&#8217;Souza &amp; Another, (2003) 3<br \/>\nSCC 232 which reads as under:\n<\/p>\n<p>&#8220;In the present case the issue is very different.  The issue is regarding<br \/>\npayment of a post-dated cheque being countermanded before the date<br \/>\nmentioned on the fact of the cheque.  For the purpose of considering the<br \/>\nissue, it is relevant to see Section 139 of the Act which creates a presumption<br \/>\nin favour of the holder of a cheque.  The said section provides that:<br \/>\n\t&#8220;139.  It shall be presumed, unless the contrary is proved, that the<br \/>\nholder of a cheque received the cheque, of the nature referred to in Section<br \/>\n138 for the discharge, in whole or in part, of any debt or other liability.&#8221;\n<\/p>\n<p>Thus it has to be presumed that a cheque is issued in discharge of any debt<br \/>\nor other liability.  The presumption can be rebutted by adducing evidence and<br \/>\nthe burden of proof is on the person who wants to rebut the presumption.<br \/>\nThis presumption coupled with the object of Chapter XVII of the Act which is<br \/>\nto promote the efficacy of banking operation and to ensure credibility in<br \/>\nbusiness transactions through banks persuades us to take a view that by<br \/>\ncountermanding payment of post-dated cheque, a party should not be allowed<br \/>\nto get away from the penal provision of Section 138 of the Act.  A contrary<br \/>\nview would render Section 138 a dead letter and will provide a handle to<br \/>\npersons trying to avoid payment under legal obligations undertaken by them<br \/>\nthrough their own acts which in other words can be said to be taking<br \/>\nadvantage of one&#8217;s own wrong.  If we hold otherwise, by giving instructions to<br \/>\nbanks to stop payment of a cheque after issuing the same against a debt or<br \/>\nliability, a drawer will easily avoid penal consequences under Section 138.<br \/>\nOnce a cheque is issued by a drawer, a presumption under Section 139 must<br \/>\nfollow and merely because the drawer issued notice to the drawee or to the<br \/>\nbank for stoppage of payment it will not preclude an action under Section 138<br \/>\nof the Act by the drawee or the holder of the cheque in due course.  This was<br \/>\nthe view taken by this Court in <a href=\"\/doc\/975556\/\">Modi Cements Ltd. v. Kuchil Kumar Nandi,<\/a><br \/>\n(1998) 3 SCC 249.  On same facts is the decision of this Court in <a href=\"\/doc\/1693025\/\">Ashok<br \/>\nYeshwant Badave vs. Surendra Madhavrao Nighojakar,<\/a> (2001) 3 SCC 726.<br \/>\nThe decision in Modi case overruled an earlier decision of this Court in<br \/>\n<a href=\"\/doc\/979235\/\">Electronics Trade &amp; Technology Development Corpn. Ltd. v. Indian<br \/>\nTechnologists &amp; Engineers (Electronics) (P) Ltd.,<\/a> (1996) 2 SCC 739 which<br \/>\nhad taken a contrary view.  We are in respectful agreement with the view<br \/>\ntaken in Modi case.  The said view is in consonance with the object of the<br \/>\nlegislation.  On the faith of payment by way of a post-dated cheque, the payee<br \/>\nalters his position by accepting the cheque.  If stoppage of payment before<br \/>\nthe due date of the cheque is allowed to take the transaction out of the<br \/>\npurview of Section 138 of the Act, it will shake the confidence which a cheque<br \/>\nis otherwise intended to inspire regarding payment being available on the due<br \/>\ndate.&#8221;\n<\/p>\n<p>\tReliance was also placed on paragraph 17 of the judgment of this Court in the<br \/>\ncase of M.M.T.C. Ltd. and Another Versus Medchl Chemicals and Pharma (P) Ltd.<br \/>\nand Another, (2002) 1 SCC 234 which reads  as under:\n<\/p>\n<p>&#8220;There is therefore no requirement that the complainant must specifically<br \/>\nallege in the complaint that there was a subsisting liability.  The burden of<br \/>\nproving that there was no existing debt or liability was on the respondents.<br \/>\nThus they have to discharge in the trial.  At this stage, merely on the basis of<br \/>\naverments in the petitions filed by them the High Court could not have<br \/>\nconcluded that there was no existing debt or liability.&#8221;\n<\/p>\n<p>\tWe are unable to agree with the reasonings adopted by the Courts below.  The<br \/>\njudgments of the High Court and the learned Judicial Magistrate are set aside.  We hold<br \/>\nthat Section 138 of the Act will be attracted in the facts of the case and a case for<br \/>\npunishment under the provisions is made out.\n<\/p>\n<p>\tIn the instant case, the cheque issued by the respondent has been stopped for<br \/>\npayment on his instructions and the cheque was returned to the appellant unpaid.  In<br \/>\nview of our discussion in the foregoing paragraphs and on the consideration of the facts<br \/>\nand circumstances of the case and the law on the subject, we hold that the respondent<br \/>\nshall be deemed to have committed an offence.   When the matter was taken up for<br \/>\nfurther hearing on 17.11.2003, learned counsel for the respondent submitted that this<br \/>\nCourt may consider the case of the respondent and the reason for his inability to pay<br \/>\nthe amount and may consider imposing lesser sentence by taking a lenient view.  We<br \/>\nare unable to countenance the said submission for the various reasons stated supra.<br \/>\nWe have no doubt that the respondent has committed an offence punishable under the<br \/>\nprovisions of Section 138 of the Act and is liable to be punished.  The transaction in<br \/>\nquestion took place between the parties in the year 1993, therefore, Section 138, as it<br \/>\nstood at the relevant time, would be applicable to the present case.  Section 138<br \/>\nprovides imprisonment for a term which may extend to one year, or with fine which may<br \/>\nextend to twice the amount of the cheque, or with both.  Section 138 has now been<br \/>\namended and the penalty of imprisonment for a term which may extend to one year has<br \/>\nbeen substituted to two years as provided by the Amending Act of 2002 and the fine<br \/>\nwhich may extend to twice of the amount of the cheque.  This has been prescribed as<br \/>\nthe punishment for the offence under Section 138 of the Act.\n<\/p>\n<p>The object and the ingredients under the provisions, in particular, Sections 138<br \/>\n&amp; 139 of the Act cannot be ignored.  Proper and smooth functioning of all business<br \/>\ntransactions, particularly, of cheques as instruments, primarily depends upon the<br \/>\nintegrity and honesty of the parties.  In our country, in a large number of commercial<br \/>\ntransactions, it was noted that the cheques were issued even merely as a device not<br \/>\nonly to stall but even to defraud the creditors.  The sanctity and credibility of issuance of<br \/>\ncheques in commercial transactions was eroded to a large extent.  Undoubtedly,<br \/>\ndishonour of a cheque by the Bank causes incalculable loss, injury and inconvenience<br \/>\nto the payee and the entire credibility of the business transactions within and outside<br \/>\nthe country suffers a serious set back.  The Parliament, in order to restore the credibility<br \/>\nof cheques as a trustworthy substitute for cash payment enacted the aforesaid<br \/>\nprovisions.  The remedy available in a Civil Court is a long drawn matter and an<br \/>\nunscrupulous drawer normally takes various pleas to defeat the genuine claim of the<br \/>\npayee.\n<\/p>\n<p>\tWe, therefore, grant one month&#8217;s time from this date to the respondent herein to<br \/>\npay a sum of Rs.80,000\/- (twice the amount of the cheque) by way of Demand Draft<br \/>\ndrawn in favour of the appellant and payable at Goa (in the address given in the paper<br \/>\nbook).  In default thereof, the respondent shall suffer simple imprisonment for six<br \/>\nmonths.\n<\/p>\n<p>\t  In the result, the appeal stands disposed of.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Goa Plast (P) Ltd vs Chico Ursula D&#8217;Souza on 20 November, 2003 Author: . A Lakshmanan Bench: B.P. Singh, Dr. Ar. Lakshmanan. CASE NO.: Appeal (crl.) 1968 of 1996 PETITIONER: Goa Plast (P) Ltd. RESPONDENT: Chico Ursula D&#8217;Souza DATE OF JUDGMENT: 20\/11\/2003 BENCH: B.P. Singh &amp; Dr. AR. Lakshmanan JUDGMENT: J [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-38538","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Goa Plast (P) Ltd vs Chico Ursula D&#039;Souza on 20 November, 2003 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/goa-plast-p-ltd-vs-chico-ursula-dsouza-on-20-november-2003\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Goa Plast (P) Ltd vs Chico Ursula D&#039;Souza on 20 November, 2003 - Free Judgements of Supreme Court &amp; 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