NI Act envision a single window for criminal liability as well as civil liability: SC

The statutory presumption drawn under Section 118 and Section 139 of NIA mandates that once the signature(s) of an accused on the cheque/negotiable instruments 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. (Para 14)

M/s. Kalamani Tex & Anr V/s P. Balasubramanian

Criminal Appeal No. 123 Of 2021 [Arising Out Of Special Leave Petition (Crl.) No. 1876 Of 2018]

Decided on 10th February, 2021

A Three-Judge Bench of the Supreme Court consisting of Justice N.V. Ramana, Justice Surya Kant and Justice Aniruddha Bose presided over the case where the Appellants challenge to impugn the order of the Madras High Court wherein the order of acquittal of the Judicial Magistrate, Tiruppur was reversed and the appellants have been convicted.

M/s. Kalamani Tex (Appellant No.1) and its managing partner– B. Subramanian (Appellant No.2) are in appeal challenging the judgment dated 09.11.2017 passed by the High Court of Judicature at Madras, whereby the order of acquittal of the Judicial Magistrate, Tiruppur was reversed and the appellants have been convicted under Section 138 of the Negotiable Instruments Act, 1881. Appellant No.1 was engaged in a business arrangement with the Respondent. Certain issues arose regarding delays in shipment and payment from the buyer, due to which, the appellants had to pay the respondent a sum of Rs 11.20 lakhs. To that end, Appellant No.2 issued a cheque on behalf of Appellant No. 1 bearing no.897993 dated 07.11.2000 in favour of the respondent and also executed a Deed of Undertaking. In wake of the cheque being dishonoured, the respondent issued a notice dated 08.01.2001 asking the appellants to pay the amount within 15 days. The appellants denied their liability and claimed that blank cheques and signed blank stamp papers were issued to help the respondent in some debt recovery proceedings, and not because of any legally enforceable debt.

Learned Senior Counsel for the Appellants, nonetheless, desired to argue the case on

merits and contended that (i) There was no legally enforceable liability on the date of issuance of the cheque and that blank stamp papers signed by Appellant No.2 were misused by the respondent to forge the Deed of Undertaking dated 07.11.2000. Placing reliance on Murugesan v. State Through Inspector of Police (2012) 10 SCC 383, ¶ 32, (ii) The view taken by the trial Court was a possible view, and the High Court committed patent illegality and exceeded its jurisdiction in reversing the acquittal. (iii) The High Court did not take notice of the defence raised by the appellants which has caused serious prejudice to them. He passionately put forth that the presumption drawn against an accused under Section 118 and Section 139 of the NIA is rebuttable through a standard of “preponderance of probability”, which has been successfully met by the appellants in the present case.

Learned Counsel for the Respondent maintained that (i) The decision of the High Court is well reasoned and founded upon due consideration of all relevant factors of the case. Laying stress on the undisputed signatures on the cheque and the Deed of Undertaking dated 07.11.2000. (ii) The appellants have admitted their existing liability of Rs.11.20 lakhs. Lastly, while pointing out the financial loss suffered by the respondent and the adverse impact on his business, learned Counsel prayed for suitable compensation.

The short question which falls for our consideration is whether the High Court erred in reversing the findings of the trial Court in exercise of its powers under Section 378 of CrPC?

While answering the above question this Court concluded that

“Once the 2nd Appellant had admitted his signatures on the cheque and the Deed, the trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. 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. Such approach of the trial Court was directly in the teeth of the established legal position as discussed above and amounts to a patent error of law.” (Para 15)

After going through all the cited precedents from both sides this Court observed that “For the reasons stated above, the present appeal is liable to be dismissed. We order accordingly. Ordinarily and as a necessary sequel thereto, Appellant No.2 would be liable to undergo the sentence of simple imprisonment as awarded by the High Court. However, given the peculiar facts and circumstances of the case, namely, that the appellants volunteered and thereafter have deposited the cheque amount with the Registry of this Court in the year 2018, we are inclined to take a lenient view. The impugned judgment of the High Court dated 09.­11.­2017 is thus modified, and it is directed that Appellant No.2 shall not be required to undergo the awarded sentence. The registry of this Court is directed to transfer the amount of Rs.11.20 lakhs along with interest accrued thereupon to the respondent within two weeks.” (Para 22)

The appeal was dismissed. However, the sentence granted to Appellant No.2 was reprieved.

View/Download Judgment: M/s. Kalamani Tex & Anr V/s P. Balasubramanian

Risikesh Dhanaki