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CHEQUE BOUNS

HOW TO REBUT THE EVIDENCE /PRESUMPTION OF SEC.139-it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of `preponderance of probabilities’. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.

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 REPORTABLE

 IN THE SUPREME COURT OF INDIA

 CRIMINAL APPELLATE JURISDICTION

 CRIMINAL APPEAL NO. 1020 OF 2010
 [Arising out of SLP (Crl.) No. 407 of 2006]

Rangappa ... Appellant

 Versus

Sri Mohan ... Respondent

 JUDGMENT

K.G. Balakrishnan, C.J.I.

1. Leave granted.

2. In the present case, the trial court had acquitted the

appellant-accused in a case related to the dishonour of a

cheque under Section 138 of the Negotiable Instruments Act,

1881 [Hereinafter `Act']. This finding of acquittal had been

made by the Addl. JMFC at Ranebennur, Karnataka in

Criminal Case No. 993/2001, by way of a judgment dated

30-5-2005. On appeal by the respondent-complainant, the

High Court had reversed the trial court's decision and

 1
recorded a finding of conviction while directing that the

appellant-accused should pay a fine of Rs. 75,000, failing

which he would have to undergo three months simple

imprisonment (S.I.). Aggrieved by this final order passed by the

High Court of Karnataka [in Criminal Appeal No. 1367/2005]

dated 26-10-2005, the appellant-accused has approached this

Court by way of a petition seeking special leave to appeal. The

legal question before us pertains to the proper interpretation of

Section 139 of the Act which shifts the burden of proof on to

the accused in respect of cheque bouncing cases. More

specifically, we have been asked to clarify the manner in which

this statutory presumption can be rebutted.

3. Before addressing the legal question, it would be apt to

survey the facts leading up to the present litigation.

Admittedly, both the appellant-accused and the respondent-

claimant are residents of Ranebennur, Karnataka. The

appellant-accused is a mechanic who had engaged the services

of the respondent-complainant who is a Civil Engineer, for the

purpose of supervising the construction of his house in

 2
Ranebennur. The said construction was completed on 20-10-

1998 and this indicates that the parties were well acquainted

with each other.

4. As per the respondent-complainant, the chain of facts

unfolded in the following manner. In October 1998, the

accused had requested him for a hand loan of Rs. 45,000 in

order to meet the construction expenses. In view of their

acquaintance, the complainant had paid Rs. 45,000 by way of

cash. On receiving this amount, the appellant-accused had

initially assured repayment by October 1999 but on the failure

to do so, he sought more time till December 2000. The

accused had then issued a cheque bearing No. 0886322,

post-dated for 8-2-2001 for Rs. 45,000 drawn on Syndicate

Bank, Kudremukh Branch. Consequently, on 8-2-2001, the

complainant had presented this cheque through Karnataka

Bank, Ranebennur for encashment. However, on 16-2-2001

the said Bank issued a return memo stating that the `Payment

has been stopped by the drawer' and this memo was handed

over to the complainant on 21-2-2001. The complainant had

 3
then issued notice to the accused in this regard on 26-2-2001.

On receiving the same, the accused failed to honour the

cheque within the statutorily prescribed period and also did

not reply to the notice sent in the manner contemplated under

Section 138 of the Act. Following these developments, the

complainant had filed a complaint (under Section 200 of the

Code of Criminal Procedure) against the accused for the

offence punishable under Section 138 of the Act.

5. The appellant-accused had raised the defence that the

cheque in question was a blank cheque bearing his signature

which had been lost and that it had come into the hands of

the complainant who had then tried to misuse it. The

accused's case was that there was no legally enforceable debt

or liability between the parties since he had not asked for a

hand loan as alleged by the complainant.

6. The trial judge found in favour of the accused by taking

note of some discrepancies in the complainant's version. As

per the trial judge, in the course of the cross-examination the

 4
complainant was not certain as to when the accused had

actually issued the cheque. It was noted that while the

complaint stated that the cheque had been issued in

December 2000, at a later point it was conceded that the

cheque had been handed over when the accused had met the

complainant to obtain the work completion certificate for his

house in March 2001. Later, it was stated that the cheque had

been with the complainant about 15-20 days prior to the

presentation of the same for encashment, which would place

the date of handing over of the cheque in January 2001.

Furthermore, the trial judge noted that in the complaint it had

been submitted that the complainant had paid Rs. 45,000 in

cash as a hand loan to the accused, whereas during the

cross-examination it appeared that the complainant had spent

this amount during the construction of the accused's house

from time to time and that the complainant had realised the

extent of the liability after auditing the costs on completion of

the construction. Apart from these discrepancies on part of the

complainant, the trial judge also noted that the accused used

to pay the complainant a monthly salary in lieu of his services

 5
as a building supervisor apart from periodically handing over

money which was used for the construction of the house. In

light of these regular payments, the trial judge found it

unlikely that the complainant would have spent his own

money on the construction work. With regard to these

observations, the trial judge held that there was no material to

substantiate that the accused had issued the cheque in

relation to a legally enforceable debt. It was observed that the

accused's failure to reply to the notice sent by the complainant

did not attract the presumption under Section 139 of the Act

since the complainant had failed to prove that he had given a

hand loan to the accused and that the accused had issued a

cheque as alleged. Furthermore, the trial judge erroneously

decided that the offence made punishable by Section 138 of

the Act had not been committed in this case since the alleged

dishonour of cheque was not on account of insufficiency of

funds since the accused had instructed his bank to stop

payment. Accordingly, the trial judge had recorded a finding of

acquittal.

 6
7. However, on appeal against acquittal, the High Court

reversed the findings and convicted the appellant-accused.

The High Court in its order noted that in the course of the trial

proceedings, the accused had admitted that the signature on

the impugned cheque (No. 886322, dated 8-2-2001) was

indeed his own. Once this fact has been acknowledged,

Section 139 of the Act mandates a presumption that the

cheque pertained to a legally enforceable debt or liability. This

presumption is of a rebuttal nature and the onus is then on

the accused to raise a probable defence. With regard to the

present facts, the High Court found that the defence raised by

the accused was not probable. In respect of the accused's

stand that he had lost a blank cheque bearing his signature,

the High Court noted that in the instructions sent by the

accused to his Bank for stopping payment, there is a reference

to cheque No. 0886322, dated 20-7-1999. This is in conflict

with the complainant's version wherein the accused had given

instructions for stopping payment in respect of the same

cheque, albeit one which was dated 8-2-2001. The High Court

also noted that if the accused had indeed lost a blank cheque

 7
bearing his signature, the question of his mentioning the date

of the cheque as 20-7-1999 could not arise. At a later point in

the order, it has been noted that the instructions sent by the

accused to his bank for stopping payment on the cheque do

not mention that the same had been lost. However, the

correspondence does refer to the cheque being dated

20-7-1999. Furthermore, during the cross-examination of the

complainant, it was suggested on behalf of the accused that

the complainant had the custody of the cheque since 1998.

This suggestion indicates that the accused was aware of the

fact that the complainant had the cheque, thereby weakening

his claim of having lost a blank cheque. Furthermore, a

perusal of the record shows that the accused had belatedly

taken up the defence of having lost a blank cheque at the time

of his examination during trial. Prior to the filing of the

complaint, the accused had not even replied to the notice sent

by the complainant since that would have afforded an

opportunity to raise the defence at an earlier stage. All of these

circumstances led the High Court to conclude that the

 8
accused had not raised a probable defence to rebut the

statutory presumption. It was held that:

 `6. Once the cheque relates to the account of the accused
 and he accepts and admits the signatures on the said
 cheque, then initial presumption as contemplated under
 Section 139 of the Negotiable Instruments Act has to be
 raised by the Court in favour of the complainant. The
 presumption referred to in Section 139 of the N.I. Act is a
 mandatory presumption and not a general presumption,
 but the accused is entitled to rebut the said
 presumption. What is required to be established by the
 accused in order to rebut the presumption is different
 from each case under given circumstances. But the fact
 remains that a mere plausible explanation is not
 expected from the accused and it must be more than a
 plausible explanation by way of rebuttal evidence. In
 other words, the defence raised by way of rebuttal
 evidence must be probable and capable of being accepted
 by the Court. The defence raised by the accused was that
 a blank cheque was lost by him, which was made use of
 by the complainant. Unless this barrier is crossed by the
 accused, the other defence raised by him whether the
 cheque was issued towards the hand loan or towards the
 amount spent by the complainant need not be
 considered. ...'

Hence, the High Court concluded that the alleged

discrepancies on part of the complainant which had been

noted by the trial court were not material since the accused

 9
had failed to raise a probable defence to rebut the

presumption placed on him by Section 139 of the Act.

Accordingly, the High Court recorded a finding of conviction.

8. In the course of the proceedings before this Court, the

contentions related to the proper interpretation of Sections

118(a), 138 and 139 of the Act. Before addressing them, it

would be useful to quote the language of the relevant

provisions:

 118. Presumptions as to negotiable instruments. -
 Until the contrary is proved, the following presumptions
 shall be made:
 (a) of consideration: that every negotiable instrument was
 made or drawn for consideration, and that every such
 instrument when it has been accepted, endorsed,
 negotiated or transferred, was accepted, endorsed,
 negotiated or transferred for consideration;
 ...

 138. Dishonour of cheque for insufficiency, etc., of
 funds in the account. - Where any cheque drawn by a
 person on an account maintained by him with a banker
 for payment of any amount of money to another person
 from out of that account for the discharge, in whole or in
 part, of any debt or other liability, is returned by the
 bank unpaid, either because of the amount of money
 standing to the credit of that account is insufficient to
 honour the cheque or that it exceeds the amount

 10
 arranged to be paid from that account by an agreement
 made with that bank, such person shall be deemed to
 have committed an offence and shall, without prejudice
 to any other provision of this Act, be punished with
 imprisonment for a term which may extend to two years,
 or with fine which may extend to twice the amount of the
 cheque, or with both:

 Provided that nothing contained in this section shall
 apply unless-
 (a) the cheque has been presented to the bank within a
 period of six months from the date on which it is drawn
 or within the period of its validity, whichever is earlier.
 (b)the payee or the holder in due course of the cheque, as
 the case may be, makes a demand for the payment of the
 said amount of money by giving a notice, in writing, to
 the drawer of the cheque, within thirty days of the receipt
 of information by him from the bank regarding the return
 of the cheque as unpaid; and
 (c) the drawer of such cheque fails to make the payment of
 the said amount of money to the payee or, as the case
 may be, to the holder in due course of the cheque, within
 fifteen days of the receipt of the said notice.

 Explanation. - For the purposes of this section, `debt or
 other liability' means a legally enforceable debt or other
 liability.

 139. Presumption in favour of holder.- It shall be
 presumed, unless the contrary is proved, that the holder of
 a cheque received the cheque, of the nature referred to in
 Section 138 for the discharge, in whole or in part, of any
 debt, or other liability.

9. Ordinarily in cheque bouncing cases, what the courts have

to consider is whether the ingredients of the offence

 11
enumerated in Section 138 of the Act have been met and if so,

whether the accused was able to rebut the statutory

presumption contemplated by Section 139 of the Act. With

respect to the facts of the present case, it must be clarified

that contrary to the trial court's finding, Section 138 of the Act

can indeed be attracted when a cheque is dishonoured on

account of `stop payment' instructions sent by the accused to

his bank in respect of a post-dated cheque, irrespective of

insufficiency of funds in the account. This position was

clarified by this Court in Goa Plast (Pvt.) Ltd. v. Chico Ursula

D'Souza, (2003) 3 SCC 232, wherein it was held:

 "Chapter XVII containing Sections 138 to 142 was
 introduced in the Act by Act 66 of 1988 with the object of
 inculcating faith in the efficacy of banking operations and
 giving credibility to negotiable instruments in business
 transactions. These provisions were intended to
 discourage people from not honouring their commitments
 by way of payment through cheques. The court should
 lean in favour of an interpretation which serves the object
 of the statute. A post-dated cheque will lose its credibility
 and acceptability if its payment can be stopped routinely.
 The purpose of a post-dated cheque is to provide some
 accommodation to the drawer of the cheque. Therefore, it
 is all the more necessary that the drawer of the cheque
 should not be allowed to abuse the accommodation given
 to him by a creditor by way of acceptance of a post-dated
 cheque. In view of Section 139, it has to be presumed

 12
 that a cheque is issued in discharge of any debt or other
 liability. The presumption can be rebutted by adducing
 evidence and the burden of proof is on the person who
 wants to rebut the presumption. This presumption
 coupled with the object of Chapter XVII of the Act leads
 to the conclusion that by countermanding payment of a
 post-dated cheque, a party should not be allowed to get
 away from the penal provision of Section 138. A contrary
 view would render S. 138 a dead letter and will provide a
 handle to persons trying to avoid payment under legal
 obligations undertaken by them through their own acts
 which in other words can be said to be taking advantage
 of one's own wrong. ..."

10. It has been contended on behalf of the appellant-accused

that the presumption mandated by Section 139 of the Act does

not extend to the existence of a legally enforceable debt or

liability and that the same stood rebutted in this case, keeping

in mind the discrepancies in the complainant's version. It was

reasoned that it is open to the accused to rely on the materials

produced by the complainant for disproving the existence of a

legally enforceable debt or liability. It has been contended that

since the complainant did not conclusively show whether a

debt was owed to him in respect of a hand loan or in relation

to expenditure incurred during the construction of the

accused's house, the existence of a legally enforceable debt or

 13
liability had not been shown, thereby creating a probable

defence for the accused. Counsel appearing for the appellant-

accused has relied on a decision given by a division bench of

this Court in Krishna Janardhan Bhat v. Dattatraya G.

Hegde, (2008) 4 SCC 54, the operative observations from

which are reproduced below (S.B. Sinha, J. at Paras. 29-32,

34 and 45):

 "29. Section 138 of the Act has three ingredients viz.:
 (i) that there is a legally enforceable debt
 (ii) that the cheque was drawn from the account
 of bank for discharge in whole or in part of any
 debt or other liability which presupposes a
 legally enforceable debt; and
 (iii) that the cheque so issued had been returned
 due to insufficiency of funds.

 30. The proviso appended to the said section provides for
 compliance with legal requirements before a complaint
 petition can be acted upon by a court of law. Section 139
 of the Act merely raises a presumption in regard to the
 second aspect of the matter. Existence of legally
 recoverable debt is not a matter of presumption under
 Section 139 of the Act. It merely raises a presumption in
 favour of a holder of the cheque that the same has been
 issued for discharge of any debt or other liability.

 31. The courts below, as noticed hereinbefore, proceeded
 on the basis that Section 139 raises a presumption in
 regard to existence of a debt also. The courts below, in
 our opinion, committed a serious error in proceeding on
 the basis that for proving the defence the accused is
 required to step into the witness box and unless he does

 14
 so he would not be discharging his burden. Such an
 approach on the part of the courts, we feel, is not correct.

 32. An accused for discharging the burden of proof
 placed upon him under a statute need not examine
 himself. He may discharge his burden on the basis of the
 materials already brought on record. An accused has a
 constitutional right to maintain silence. Standard of proof
 on the part of the accused and that of the prosecution in
 a criminal case is different.
 ...
 34. Furthermore, whereas prosecution must prove the
 guilt of an accused beyond all reasonable doubt, the
 standard of proof so as to prove a defence on the part of
 the accused is `preponderance of probabilities'. Inference
 of preponderance of probabilities can be drawn not only
 from the materials brought on record by the parties but
 also by reference to the circumstances upon which he
 relies."
 (emphasis supplied)

Specifically in relation to the nature of the presumption

contemplated by Section 139 of the Act, it was observed;

 "45. We are not oblivious of the fact that the said
 provision has been inserted to regulate the growing
 business, trade, commerce and industrial activities of the
 country and the strict liability to promote greater
 vigilance in financial matters and to safeguard the faith
 of the creditor in the drawer of the cheque which is
 essential to the economic life of a developing country like
 India. This however, shall not mean that the courts shall
 put a blind eye to the ground realities. Statute mandates
 raising of presumption but it stops at that. It does not
 say how presumption drawn should be held to have been

 15
 rebutted. Other important principles of legal
 jurisprudence, namely, presumption of innocence as a
 human right and the doctrine of reverse burden
 introduced by Section 139 should be delicately balanced.
 Such balancing acts, indisputably would largely depend
 upon the factual matrix of each case, the materials
 brought on record and having regard to legal principles
 governing the same."
 (emphasis supplied)

11. With respect to the decision cited above, counsel appearing

for the respondent-claimant has submitted that the

observations to the effect that the `existence of legally

recoverable debt is not a matter of presumption under Section

139 of the Act' and that `it merely raises a presumption in

favour of a holder of the cheque that the same has been issued

for discharge of any debt or other liability' [See Para. 30 in

Krishna Janardhan Bhat (supra)] are in conflict with the

statutory provisions as well as an established line of

precedents of this Court. It will thus be necessary to examine

some of the extracts cited by the respondent-claimant. For

instance, in Hiten P. Dalal v. Bratindranath Banerjee, (2001)

6 SCC 16, it was held (Ruma Pal, J. at Paras. 22-23):

 16
"22. Because both Sections 138 and 139 require that the
Court `shall presume' the liability of the drawer of the
cheques for the amounts for which the cheques are
drawn, ..., it is obligatory on the Court to raise this
presumption in every case where the factual basis for the
raising of the presumption has been established. It
introduces an exception to the general rule as to the
burden of proof in criminal cases and shifts the onus on
to the accused (...). Such a presumption is a presumption
of law, as distinguished from a presumption of fact which
describes provisions by which the court may presume a
certain state of affairs. Presumptions are rules of
evidence and do not conflict with the presumption of
innocence, because by the latter all that is meant is that
the prosecution is obliged to prove the case against the
accused beyond reasonable doubt. The obligation on the
prosecution may be discharged with the help of
presumptions of law or fact unless the accused adduces
evidence showing the reasonable probability of the
non-existence of the presumed fact.

23. In other words, provided the facts required to form
the basis of a presumption of law exists, the discretion is
left with the Court to draw the statutory conclusion, but
this does not preclude the person against whom the
presumption is drawn from rebutting it and proving the
contrary. A fact is said to be proved when, after
considering the matters before it, the Court either
believes it to exist, or considers its existence so probable
that a prudent man ought, under the circumstances of
the particular case, to act upon the supposition that it
exists. Therefore, the rebuttal does not have to be
conclusively established but such evidence must be
adduced before the Court in support of the defence that
the Court must either believe the defence to exist or
consider its existence to be reasonably probable, the
standard of reasonability being that of the prudent man."
 (emphasis supplied)

 17
12. The respondent-claimant has also referred to the decision

reported as Mallavarapu Kasivisweswara Rao v. Thadikonda

Ramulu Firm & Ors., 2008 (8) SCALE 680, wherein it was

observed:

 "Under Section 118(a) of the Negotiable Instruments Act,
 the court is obliged to presume, until the contrary is
 proved, that the promissory note was made for
 consideration. It is also a settled position that the initial
 burden in this regard lies on the defendant to prove the
 non-existence of consideration by bringing on record
 such facts and circumstances which would lead the
 Court to believe the non-existence of the consideration
 either by direct evidence or by preponderance of
 probabilities showing that the existence of consideration
 was improbable, doubtful or illegal. ..."

This decision then proceeded to cite an extract from the earlier

decision in Bharat Barrel & Drum Manufacturing Company

v. Amin Chand Pyarelal, (1993) 3 SCC 35 (Para. 12):

 "Upon consideration of various judgments as noted
 hereinabove, the position of law which emerges is that
 once execution of the promissory note is admitted, the
 presumption under Section 118(a) would arise that it is
 supported by a consideration. Such a presumption is
 rebuttable. The defendant can prove the non-existence of
 a consideration by raising a probable defence. If the
 defendant is proved to have discharged the initial onus of
 proof showing that the existence of consideration was

 18
 improbably or doubtful or the same was illegal, the onus
 would shift to the plaintiff who will be obliged to prove it
 as a matter of fact and upon its failure to prove would
 disentitle him to the grant of relief on the basis of the
 negotiable instrument. The burden upon the defendant of
 proving the non-existence of the consideration can be
 either direct or by bringing on record the preponderance
 of probabilities by reference to the circumstances upon
 which he relies. In such an event, the plaintiff is entitled
 under law to rely upon all the evidence led in the case
 including that of the plaintiff as well. In case, where the
 defendant fails to discharge the initial onus of proof by
 showing the non-existence of the consideration, the
 plaintiff would invariably be held entitled to the benefit of
 presumption arising under Section 118(a) in his favour.
 The court may not insist upon the defendant to disprove
 the existence of consideration by leading direct evidence
 as the existence of negative evidence is neither possible
 nor contemplated and even if led, is to be seen with a
 doubt. The bare denial of the passing of the consideration
 apparently does not appear to be any defence. Something
 which is probable has to be brought on record for getting
 the benefit of shifting the onus of proving to the plaintiff.
 To disprove the presumption, the defendant has to bring
 on record such facts and circumstances upon
 consideration of which the court may either believe that
 the consideration did not exist or its non-existence was
 so probable that a prudent man would, under the
 circumstances of the case, act upon the plea that it did
 not exist."
 (emphasis supplied)

Interestingly, the very same extract has also been approvingly

cited in Krishna Janardhan Bhat (supra).

 19
13. With regard to the facts in the present case, we can also

refer to the following observations in M.M.T.C. Ltd. and Anr.

v. Medchl Chemicals & Pharma (P) Ltd., (2002) 1 SCC 234

(Para. 19):

 "... The authority shows that even when the cheque is
 dishonoured by reason of stop payment instruction, by
 virtue of Section 139 the Court has to presume that the
 cheque was received by the holder for the discharge in
 whole or in part, of any debt or liability. Of course this is
 a rebuttable presumption. The accused can thus show
 that the `stop payment' instructions were not issued
 because of insufficiency or paucity of funds. If the
 accused shows that in his account there was sufficient
 funds to clear the amount of the cheque at the time of
 presentation of the cheque for encashment at the drawer
 bank and that the stop payment notice had been issued
 because of other valid causes including that there was no
 existing debt or liability at the time of presentation of
 cheque for encashment, then offence under Section 138
 would not be made out. The important thing is that the
 burden of so proving would be on the accused. ..."
 (emphasis supplied)

14. In light of these extracts, we are in agreement with the

respondent-claimant that the presumption mandated by

Section 139 of the Act does indeed include the existence of a

legally enforceable debt or liability. To that extent, the

impugned observations in Krishna Janardhan Bhat (supra)

 20
may not be correct. However, this does not in any way cast

doubt on the correctness of the decision in that case since it

was based on the specific facts and circumstances therein. As

noted in the citations, this is of course in the nature of a

rebuttable presumption and it is open to the accused to raise

a defence wherein the existence of a legally enforceable debt or

liability can be contested. However, there can be no doubt that

there is an initial presumption which favours the complainant.

Section 139 of the Act is an example of a reverse onus clause

that has been included in furtherance of the legislative

objective of improving the credibility of negotiable instruments.

While Section 138 of the Act specifies a strong criminal

remedy in relation to the dishonour of cheques, the rebuttable

presumption under Section 139 is a device to prevent undue

delay in the course of litigation. However, it must be

remembered that the offence made punishable by Section 138

can be better described as a regulatory offence since the

bouncing of a cheque is largely in the nature of a civil wrong

whose impact is usually confined to the private parties

involved in commercial transactions. In such a scenario, the

 21
test of proportionality should guide the construction and

interpretation of reverse onus clauses and the

accused/defendant cannot be expected to discharge an unduly

high standard or proof. In the absence of compelling

justifications, reverse onus clauses usually impose an

evidentiary burden and not a persuasive burden. Keeping this

in view, it is a settled position that when an accused has to

rebut the presumption under Section 139, the standard of

proof for doing so is that of `preponderance of probabilities'.

Therefore, if the accused is able to raise a probable defence

which creates doubts about the existence of a legally

enforceable debt or liability, the prosecution can fail. As

clarified in the citations, the accused can rely on the materials

submitted by the complainant in order to raise such a defence

and it is conceivable that in some cases the accused may not

need to adduce evidence of his/her own.

15. Coming back to the facts in the present case, we are in

agreement with the High Court's view that the accused did not

raise a probable defence. As noted earlier, the defence of the

loss of a blank cheque was taken up belatedly and the accused

 22
had mentioned a different date in the `stop payment'

instructions to his bank. Furthermore, the instructions to

`stop payment' had not even mentioned that the cheque had

been lost. A perusal of the trial record also shows that the

accused appeared to be aware of the fact that the cheque was

with the complainant. Furthermore, the very fact that the

accused had failed to reply to the statutory notice under

Section 138 of the Act leads to the inference that there was

merit in the complainant's version. Apart from not raising a

probable defence, the appellant-accused was not able to

contest the existence of a legally enforceable debt or liability.

The fact that the accused had made regular payments to the

complainant in relation to the construction of his house does

not preclude the possibility of the complainant having spent

his own money for the same purpose. As per the record of the

case, there was a slight discrepancy in the complainant's

version, in so far as it was not clear whether the accused had

asked for a hand loan to meet the construction-related

expenses or whether the complainant had incurred the said

expenditure over a period of time. Either way, the complaint

 23
discloses the prima facie existence of a legally enforceable debt

or liability since the complainant has maintained that his

money was used for the construction-expenses. Since the

accused did admit that the signature on the cheque was his,

the statutory presumption comes into play and the same has

not been rebutted even with regard to the materials submitted

by the complainant.

16. In conclusion, we find no reason to interfere with the final

order of the High Court, dated 26-10-2005, which recorded a

finding of conviction against the appellant. The present appeal

is disposed of accordingly.

 ...................................... CJI
 (K.G. BALAKRISHNAN)

 ........................................J.
 (P. SATHASIVAM)

 .......................................J.
 (J.M. PANCHAL)

NEW DELHI
MAY 07, 2010 24
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