KRISHNA JANARDHAN BHAT versus DATTATRAYA G. HEGDE

Citation: [2008] 1 S.C.R. 605 · Decided: 11-01-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Case Allowed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2008] 1 S.C.R. 605 
,. 
...(, 
KRISHNA JANARDHAN BHAT 
A 
v. 
DATTATRAYAG. HEGDE 
(Crl. A. No. 518 of 2006) 
JANUARY 11, 2008 
B 
f 
(S.B. SINHA AND H.S. BEDI, JJ.) 
-f 
' 
Negotiable Instruments Act, 1881; Ss. 13(1), 118 (a}, 138 
and 139: 
Dishonour of Cheque - Commission of an offence ul c 
s.138 - Presumption under S.139 rlw S.118 of the Act -
Rebuttal - Burden to prove - Held: S.139 merely raises a 
presumption in favour of holder of Cheque that it has been 
issued in discharge of debt/liability and it could not be 
extended to existence of a debt - Courts below erred in D 
~ 
proceeding on the basis that the accused required to step into 
the witness box to prove his defence - Burden could be 
... 
discharged on the basis of material on record - In a case where 
false implication cannot be ruled out, background facts and 
conduct of parties required to be taken into consideration - In E 
the instant case, four cheques allegedly drawn on the same 
day by business partner of accused from his cheque book 
and allegedly misused in collusion with complainant - Under 
the circumstances, Courts below required to draw an inference 
-1 
as to the probability of respondent-complainant allegedly F 
;. 
advancing a huge sum of Rs.1.5 /akhs to accused by merely 
asking and even without keeping any documentary proof in 
connection thereof and accused issuing the cheque in 
question towards repayment of Joan so advanced, and the 
Cheque could not be realized for insufficiency of funds in the G 
bank - The Courts below also failed to notice that advance 
taken by way of Joan exceeding Rs.20,0001- if not made by 
way of Ale Payee Cheque, it attracts penalty on the drawer of 
the Cheque in terms of s. 271 D of the Income Tax Act- Though 
provisions u/s. 139 has been inserted to regulate trade activities 
605 
H 
606 
SUPREME COURT REPORTS 
[2008) 1 S.C.R. 
A and to safeguard the faith of creditor on the drawer of Cheque 
but the Courts shall not turn a blind· eye to ground realities -
Existence of legally recoverable debt not a matter of 
presumption uls. 139 of the Act - Hence, the Courts below 
acted wrongly in applying legal principles in the fact situation 
B of the case - In view of the peculiar facts and circumstances 
of the case, High Court should have entertained the revision 
application filed by the accused - Income Tax Act, 1961 -
Ss.269 SS and 2710. 
Sections 118 and 139 - Mandatory presumption under 
C - Scope of 
Appellant and his business partner 'R' were jointly · 
running a business. He allegedly handed over four blank 
cheques to 'R' after executing power of attorney in his 
0 favour for meeting the business expenses. Disputes and 
differences having arisen between the appellant and 'R' 
in connection with running of the business, the power of 
attorney granted in his favour was cancelled by the 
appellant and disputes were referred to the Panchayat. 
E The appellant also issued a public notice in a local 
newspaper notifying about cancellation of power of 
attorney. In the meantime, respondent, brother-in-law of 
'R', filed a complaint against the appellant on the premise 
that he advanced a sum of Rs. 1,50,0001- to the appellant, 
who had returned the loan by way of an account payee 
F cheque which was allegedly dishonoured when 
presented in the Bank. The Trial Judge found the appellant 
guilty, convicted and sentenced him to undergo 
imprisonment for six months and further directed 
payment of certain amount of compensation. An appeal 
G preferred thereagainst was dismissed by the first appellate 
Court. Revision Petition filed by appellant before the High 
Court was partly allowed by it by reducing the substantive 
sentence to one week. Hence the present appeal. 
' 
H 
Amicus Curiae submitted that the Trial Judge, the first 
.. 
\ 
J. 
KRISHNA JANARDHAN BHAT v. DATIATRAYA G. HEGDE 
607 
appellate Court as also the High Court committed a serious A 
illegality insofar as it misread and misapplied the 
provisions of Section 139 of the Negotiable Instruments 
Act; that only ingredient No. 2 of Section 138 of the Act is 
a subject matter of presumption under Section 139 of the 
Act and not the first one; and that except the word of B 
mouth of the complainant nothing has been brought on 
record to prove the offence as alleged against him . 
Respondent-complainant submitted that the 
appellant has rightly been found guilty of commission of 
an offence under Section 138 of the Act as bouncing of C 
the cheque i

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