Section 138 of the NI Act – Complainant not initially expected to provide proof of financial capacity unless defendant challenges it in response Opinion: Supreme Court

The Supreme Court observed that a plaintiff cannot be expected to initially produce evidence to show that he had financial capacity unless such a case has been established in the Notice of Reply. of the accused.

However, the defendant has the right to demonstrate that the plaintiff in a particular case lacked the financial capacity by producing independent evidence, namely by questioning his witnesses and producing documents, indicating the evidence produced by the plaintiff himself, or in the cross-examination of plaintiff’s witnesses, the bench consisting of Judges KM Joseph and Hrishikesh Roy observed.

The Court was considering an appeal against a concurrent conviction in an NSF check case. The main argument raised by the accused-appellant before the Supreme Court was that the plaintiff did not have the financial capacity to grant the manual loan.

The Supreme Court Headquarters noted that the Magistrate Court and the First Court of Appeal observed that in the case under Section 138 of the NI Act, the plaintiff need not demonstrate in trial that he had the capacity. In this context, the bench observed:

“At the time when the plaintiff testifies, unless it is established in the memorandum in response to the formal notice sent, that the plaintiff did not have the means, the plaintiff cannot be expected to produce in a first time for evidence to show that he had the financial capacity. To that extent, the courts, in our view, were right to rule on these lines. However, the defendant has the right to show that the complainant in a particular case lacked the capacity and therefore the defendant’s case is acceptable, which he can do by producing independent evidence, at find out by questioning its witnesses and producing documents. He is also free to establish the same aspect by indicating the elements produced by the plaintiff himself. He can also, and more importantly, achieve this result through the cross-examination of the complainant’s witnesses. Ultimately, it becomes the duty of the courts to carefully consider and weigh the totality of the evidence and then conclude whether, in the given case, the accused has demonstrated that the plaintiff’s case is in jeopardy for the reason that the accused has established a probable defence. »

In reviewing the notice of reply, the bench noted that the defendant admitted that the parties had a cordial relationship and presented no evidence that the plaintiff did not have the financial capacity to advance the loan. There is no reference to the loss of the checkbook or signed check sheet, the court noted.

“We believe that on the totality of the facts of this case, the appellant has not established a case of interference with the lower courts’ finding that the offense under section 138 of the NI Act is committed by the caller”the bench said in rejecting his appeal.

The court, however, ordered that the one-year term of imprisonment be quashed and that the accused appellant be fined Rs. instance.

Summaries

Negotiable Instruments Act, 1881; Articles 138,139 – At the time the plaintiff testifies, unless it is established in the notice of reply to the formal notice sent, that the plaintiff did not have the means, the plaintiff cannot be expected to first produce evidence to show that he had the financial capacity – However, the defendant has the right to show that the plaintiff in a particular case did not have the capacity and therefore the defendant’s case is acceptable, which he can do by producing independent documents, namely, by questioning his witnesses and by producing documents, by indicating the elements produced by the complainant himself, or by the cross-examination of the complainant’s witnesses. (Paragraph 9)

Negotiable Instruments Act, 1881; Sections 138, 139 – “Probable defence” theory – accused not expected to meet unduly high standard of proof – All the accused has to establish is a probable defence. Whether a probable defense has been established is a question to be determined on the facts of each case taking into account the evidence and the circumstances that exist – It becomes the duty of the courts to carefully consider and to weigh the totality of the evidence, and then come to a conclusion whether, in the particular case, the accused has shown that the plaintiff’s case is in jeopardy by reason of having established a probable defence. [Referred to Basalingapa Vs. Mudibasappa (2019) 5 SCC 418] (Para. 7, 9)

Constitution of India, 1950; Article 136 – The Supreme Court exercising the power provided for in Article 136 of the Constitution cannot refuse to intervene in a case where three courts have made a complete mistake. The jurisdiction generated by a remedy under section 136 is undoubtedly rare and extraordinary. Article 136 of the Constitution confers the right to obtain special leave only in rare and extraordinary cases. (Paragraph 11)

Appeal against concurrent conviction in NSF check case – Partly cleared – Upheld conviction – Ordered that one year’s imprisonment be quashed – Accused appellant sentenced to a fine of Rs 5,000/- that he file within one month with the Court of First Instance.

Case details

Case name | Quote: Tedhi Singh versus Narayan Dass Mahant | 2022 LiveLaw (SC) 275

Case No| date: CrA 362 DE 2022 | March 7, 2022

Coram: Judges KM Joseph and Hrishikesh Roy

Counsel: Adv Sangeeta Bharti for the appellant, Adv Ajay Marwah for the respondent