Cheque dishonour case is very common dispute and case in our courts in respect of business transactions and other monetary disputes. Sections 138 to 141 of the Negotiable Instrument (NI) Act of 1881 deal with the provisions of cheque dishonour issues. The long established rule was the burden of proof is on the cheque holder about the veracity and transaction between the parties though sections 43 and 118 of NI Act provide the burden of consideration upon the claimant. The complaint was to prove the cheque, Signature of holder and grounds of dishonour in the court. For such legal proposition, a number of people were victimized due to fraudulent transaction, blank cheques, security cheques for business, loan and other transactions among the litigant people.
Recently honourable Appellate Division (AD) has published the said milestone judgment of Criminal Appeal nos 63-66 of 2017 in the case of ‘Md. Abul Kaher Shahin Vs Emran Rashid and another’ on the Supreme Court website. Honourable Justice Hasan Foez Siddique is the author judge in favour of full bench. In this judgment, Appellate Division (AD) focuses on the legal action of consideration for cheque transaction between the Parties. The AD deliberately emphases on the implication of sections 43, 118 and 141 of the Negotiable Instrument Act, 1881.
The short fact of this cases was that the complainant, in all the petitions of complaint, stated that the respondent, in order to pay the demand pursuant to the agreement no.1897 of 2012 of Gulshan Sub-Registry Office, issued 4 Cheques on 01.07.2013 in favour of the complainant for a sum of tk.4, 50, 00,000/- (four crore and fifty lac) vide separate four cheques. The complainant presented those 4 cheques in the bank for encashment but all those cheques were dishonoured by the bank with endorsement that, “Payment stopped by drawer”. Thereafter, the complainant appellant observing all legal formalities as contemplated under the Act had filed four separate complaint cases. The trial Court convicted and sentenced the respondent under section 138 of the Act and sentenced him as aforesaid. Then the respondent filed appeals in the High Court Division (HCD) claiming that the appellant did not fulfill the consideration as per agreement between the parties. The HCD disposed of all the appeals analogously and acquitted the respondent of all the charges by the impugned judgment and order dated 31.08.2016.
This landmark decision is upon the analysis and burden of proof of consideration between the parties. For such reason sections 43 and 118(a) of NI Act are very vital for legal recourse and understanding. Section 43 of the Act of 1881 states that “a negotiable instrument made, drawn, accepted, indorsed or transferred without consideration, or for a consideration which fails, creates no obligation of payment between the parties to the transaction.........”
Section 118 of NI Act postulates that “Until the contrary is proved, the following presumptions shall be made: (a) that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration.” The foregoing sections 43 and 118 clearly established consideration as precondition for negotiable instruments. According to the Contract Act 1872, the type of monetary transaction is contract and every contract obviously has consideration. Without consideration there is no contract.
The honourable AD expounded in the judgment about primary burden of consideration that “Once there is admission of the execution of the cheque or the same is proved to have been executed, the presumption under section 118(a) of the Act is raised that it is supported by consideration. The category of ‘stop payment cheque’ would be subject to rebuttal and hence it would be an offence only if the drawer of the cheque fails to discharge the burden of rebuttal.”
The honourable AD also explicitly explained about the burden and shifting of burden on consideration in this paragraph that “the accused person can prove the non-existence of a consideration by raising a probable defence. If the accused discharges the initial onus of prove showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the complainant. He will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him of grant of relied on the basis of negotiable instrument. Where the accused person fails to discharge the onus of proof by showing the non-existence of the consideration, the complainant would invariably be held entitled to the benefit of presumption under section 118(a) of the Act in his favor.”
Lastly the AD also set the responsibility of the accused to establish the plea of defense that “to disprove the presumption, the accused person 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, shall not act upon the plea that it did not exist.”
The Apex Court points out about the operation of burden of proof in the trial of NI Act cases that “the burden of proof of the accused to disprove the presumption under sections 118 and 138 of the Act is not so heavy. The preponderance of probability though direct or substantial evidence is sufficient enough to shift the onus to the complainant. Inference of preponderance of probabilities can be drawn from the materials on record and also by reference to the circumstances upon which the party relies.”
This landmark judgment is now followed as precedent in the HCD and Subordinate courts in conducting trial of NI Act cases. The consideration of cheque is core point of the case to prove or disprove the claim of the complainant. Recently honour Justice Jafor Ahmed delivered a judgment on this principle citing the case reference of ‘Md. Abul Kaher Shahin vs. Emran Rashid and another (Criminal Appeal Nos. 63-66 of 2017)’ in the case of Mahmudul Hasan Vs The State and another (Criminal Appeal No. 10468 of 2017). The HCD relied on this decision and held that “a Court should not be unmindful of the fundamental principle of criminal administration of justice that in a criminal proceeding the initial burden of proof lies upon the prosecution. Thus, in a proceeding under Section 138 of the N.I. Act, the prosecution has to prove beyond reasonable doubt as to facts regarding dishonour of cheque, issuing legal notice etc. which are mandatory requirements to initiate the criminal proceeding under the section. However, the N.I. Act being a special law providing rebuttable presumption against the accused under section 118 by using the word ‘shall’ that the cheque was drawn for consideration, the prosecution has to state facts, purpose being to assist the Court, from which it shall make presumption as to consideration in as much as a presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.”
There is misunderstanding about agreement on consideration. From the above analysis, it is crystal clear that consideration can be verbal or written. The presumption of consideration about cheque transaction can be varied case to case. The court will consider the basis of transaction and shifting of burden of proof between contesting parties.
The honourable HCD has recently taken a decision on security cheques against the loan of the Bank and financial institutions. The HCD invariably pointed out that the concern Bank firstly will file Artho Rin Case in the Court. Upon exhausted the Artho Rin Case, the Bank can file NI Act case for outstanding claim. The HCD held in the case of ‘Nure Alam Siddique (Tulu) Vs State and another’ (71 DLR 2019 HCD 570) that “the legislature intended to realize the borrowed money from a defaulter primarily by exhausting the Artha Rin Adalat through selling the property on auction under the mortgage deed and thereafter for the remaining amount of the borrowed money thereafter, a schedule bank would be allowed to use the collateral security of a cheque issued for realization of the remaining amount of the borrowed money.”
In another decision, recently a bench of HCD fixed Joint Sessions Court as the trial court of NI Act cases for addressing the unique forum of Appeal. The concern Bench directed to issue circular to maintain this order. Upon considering about discussions, it is clear that our apex court takes a key role to establish rule of law and ends of justice. The recent development on NI Act cases can reduce a number of litigant people sufferings from false claims, fraudulent transaction and other harassment filing baseless cases through cheques.
The Writer is Senior Judicial Magistrate, Chief Judicial Magistrate Court of Feni.