In the Supreme Court of India, Criminal Appellate Jurisdiction

Criminal Appeal Nos. 849850 of 2011

TRIYAMBAK S. HEGDE …………Appellant(s)

Vs

SRIPAD …….….                       Respondent(s)

On 23rd September 2021, a three Judge bench comprising Chief Justice of India NV Ramana, Justices Surya Kant and AS Bopanna ruled that if a signature on the cheque is admitted, a presumption shall be raised under section 139 that the cheque was issued in discharge of the debt or liability.  

A look at the highlights of the case / judgment that has a bearing on everybody.

FACTS

1. The appellant (“Triyambak”) and the respondent (“Sripad”) were known to each other. Due to his financial difficulties, Sripad approached Triyambak seeking to sell his house situated in Sirsi town in Karnataka. Triyambak agreed to purchase the house from Sripad for a sum of Rs. 4 lakhs. An agreement was executed in June 1996 by Sripad while receiving an advance amount of Rs. 3,50,000. The entire transaction including registration was to be completed within 6 months.
2. When Triyambak made enquiries regarding the house, he came to know that the house was in the name of Sripad’s father. Sripad did not have authority to sell the house.
3. Thereafter, Triyambak demanded the return of Rs. 3,50,000 which he paid as advance from Sripad. Instead of repaying the entire advance amount, Sripad issued a cheque in May 1998 for a sum of Rs. 1,50,000 (being part payment of the advance received). When Triyambak presented the cheque for realization, it was dishonoured due to “insufficient funds”. Triyambak issued a notice to Sripad demanding payment of the cheque amount. Sripad failed to respond to the same.
4. Consequently, in July 1998, Triyambak filed a complaint u/s 200 of the CrPC with the Judicial Magistrate, First Class (“JMFC”) in Sirsi. After hearing both parties, in 2005, the JMFC convicted Sripad u/s 138 of the Negotiable Instruments Act 1881 (“NI Act”) to six months imprisonment and fine of Rs. 2 lakhs. Of the said amount, Rs. 1,95,000 was to be paid as compensation to Triyambak.
5. Aggrieved by the judgment of the JMFC, in 2006, Sripad filed an appeal before the District and Sessions Court against the sentence handed to him. Simultaneously, Triyambak also filed an appeal in the District and Sessions Court against the compensation amount (Rs. 1.95 lakhs) granted to him. Both the appeals were dismissed by the District & Sessions Court.
   
6. Sripad filed a criminal review petition before the High Court (HC), Karnataka. The learned single Judge of the HC set aside the conviction order passed by the JMFC (which was confirmed by the District sessions Judge). Consequently, Triyambak filed an appeal before the Hon’ble Supreme Court.

CONTENTIONS

Respondent (Sripad)

1. In the criminal review petition filed before the HC, Sripad (for the first time) raised the contention that Triyambak had not discharged the burden of proving that he paid Rs. 3,50,000 to Sripad and that the cheque had been issued towards part payment of the same.
2. Sripad contended that Triymbak did not pay the amount, but his signature was secured on the cheque under peculiar circumstances. He stated that he (Sripad) was party to a case in the City Civil court, Sirsi when he hired the services of an advocate. The said advocate’s junior was related to Triyambak. Being in a dominant position, Sripad’s signature was secured on the agreement and Triyambak’s signature on the cheque, though the amount was not paid by Triyambak.
3. The JMFC and the District Sessions court jumped to the conclusion of raising a presumption merely because of the presence of the signature on the cheque, though there was no evidence to show that Triyambak possessed the funds and actually paid to Sripad. Hence it does not constitute a legally coverable debt. Therefore, the HC was justified in examining this and setting aside the order of the JMFC which was upheld by the District Sessions court. There was no need to call for interference on this contention.

Appellant (Triyambak)

1. The signature on the cheque which was accepted as exhibit /evidence was not disputed by Sripad at the time the case was admitted before the JMFC. Hence the JMFC was justified in raising a presumption against Sripad and convicting him as there was neither a rebuttal by Sripad or any other evidence or contrary material whatsoever.
2. The cheque and the signature on it indicated a transaction entered into between the parties towards which the payment was made but the manner in which the HC has adverted to the document is beyond the scope of requirement in a proceeding u/s 138 NI Act proceeding. It is contended that the learned single judge of the HC proceeded at a tangent and set aside the concurrent judgments of the lower courts, though limited scope was available in a review petition.

ISSUE

If a signature on the cheque is admitted, will it give rise to a presumption under section 139 of the NI Act? 

ANALYSIS

Section 139 of the NI Act states that unless the contrary is proved, it shall be presumed that the holder of the cheque, received the cheque referred to u/s 138 for the discharge in whole or part of any debt or other liability. The Hon’ble Supreme Court took note of the ratio laid down in the judgment passed in the Basalingappa vs. Mudibasappa (2019) 5 SCC 418.

In the present case, the Supreme court observed that:

• Presumption would remain till such time it has been rebutted. The question to be ascertained was whether the presumption was rebutted by Sripad. The Apex court examined the contention of Sripad – his signature on the agreement and Triyambak’s signature on the cheque (while no payment was made) was procured due to Triyambak being in a dominant position as his relative was working with an advocate who represented Sripad in another case. The Apex court did not find favour with this rebuttal. Even when the appellant (Triyambak) acknowledged that the advocates junior was his relative, there was nothing objective to establish use of dominance. There was no necessity for him to do so. The case Sripad was referring to was earlier than the present case.
• Further the Apex court observed that the said rebuttal from Sripad was submitted at a much later stage – after the JMFC passed the conviction order and the District Sessions court upheld it. The rebuttal was submitted by Sripad for the first time in the High Court where he submitted a review petition. The rebuttal was not done at the first stage or first opportunity when the case was admitted before the JMFC. It was done as an afterthought.
• The HC while reviewing the case, referred to details such as discrepancies in the property description in the agreement, Triyambak’s limited knowledge of the property, incomplete enquiry etc. This was not in the scope of the HC to do so.

Based on the above, the Supreme Court set aside the order of the HC and upheld the order of the District sessions court and the JMFC in convicting Sripad. Taking into consideration the passage of more than 2 decades since the case began, the Hon’ble Supreme Court revised the penalty to be paid by Sripad to Rs. 2,50,000 and the compensation amount to Rs. 2,40,000 to be paid to Triyambak.     

Full text of the Judgment:

https://main.sci.gov.in/supremecourt/2010/10571/10571_2010_13_1503_30224_Judgement_23-Sep-2021.pdf