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2018 (3) TMI 1968 - HC - Indian LawsDishonor of Cheque - Existence of legally enforceable debt or not - rebuttal of presumption - Jurisdiction of Appellate Tribunal - initial burden to prove existence of legally enforceable debt - assailing/rebuttal of positive proof - amendment made in law in the year 2003 would have applicability to the case of applicant so far as enhancement of punishment is concerned - entitlement to compensation to appellant - Whether the Appellate Court committed any error or illegality which would warrant interference or the view taken by the Appellate Court is a possible view and hence, in appellate jurisdiction deserves no interference? - HELD THAT - The Apex Court in case of C. ANTONY VERSUS KG. RAGHAVAN NAIR 2002 (11) TMI 353 - SUPREME COURT has held that even if the other view is possible, from the very set of evidence, to arrive at, that also is not the ground to interfere by the Appellate Court. Whether appellant-original complainant succeeded in proving the initial burden of existence of legally enforceable debt? - whether the respondent was in a position to assail/rebut that positive proof? - HELD THAT - So far as the question of proving legally enforceable debt by the complainant is concerned, the law has been laid down by the three Judges Bench of the Hon'ble Apex Court in case of RANGAPPA VERSUS SRI MOHAN 2010 (5) TMI 391 - SUPREME COURT wherein it is held that presumption mandated by Section 139 of the Act include the existence of legally enforceable debt or liability and this being a rebuttal presumption, of course, such presumption can be rebutted by the accused by raising the defence and on contesting liability. It of course, is in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, what can be undoubtedly said is that there is an initial presumption that favours the complainant and Section 139 is an example of a reverse onus clause, which has been included in furtherance of the legitimate objection of improving the credibility of the negotiable instruments. To that extent the Apex Court held that the observations made in case of Krishna Janardhan Bhatt Vs. Dattatraya G. Hedge 2008 (1) TMI 827 - SUPREME COURT would not be correct. The provision of section 118 of NI Act, is subject to the rule of evidence is applicable to the matters under the NI Act. The presumption made available is one of law and the Court is obliged to presume that the instrument has been endorsed for consideration. The initial burden, hence, lies on the person to prove that there exists legally enforceable debt and once that is proved by the Payee, it would be upon the other side, i.e. the drawer, to prove non-existence of the consideration, which would lead the Court to believe either from direct evidence or from preponderance and probabilities that the existence of consideration was improbable, doubtful or illegal - Section 139 of the Act would also require reference at this stage. This is also a presumption, which is a rebuttable presumption when unless the accused proves to the contrary, this legal presumption of Section 139 of the NI Act is to the effect that the cheque is issued in discharge of an existing liability and that presumption can be rebutted only by the person, who drew the cheque. Whether proof of existence of legally enforceable debt, could be established by the Appellant? - HELD THAT - In absence of the original promissory note, which the complainant could not produce and in wake of the deposition of the complainant, both examination-in-chief as well as the cross examination, it could be said that the complainant had succeeded in proving the legally enforceable debt. This Court is also aware of the fact that so far as the promissory note is concerned, according to the complainant-appellant, it was given by the respondent herein. However, the original promissory note, at no point of time, was brought on record. At the fag end of trial, a request was made by the appellant before the Court concerned to permit the original promissory note to be brought on record and further allow the affidavit of two persons, viz. Mr. Natvarlal Gandalal and Mr. Jagdishbhai Mafatlal - The trial Court denied such a request on the ground that this being a private complaint, the complainant ought to have shown those persons as his their witnesses. If they had not been shown as witnesses, the permission of the Court ought to have been taken. However, directly no person can be permitted the production of affidavit. It is since mandatory for any party to issue notice as provided under the provisions of the NI Act, before he prosecutes a person for dishonor of the cheque, a notice has been issued within a period of 30 days from the date of receipt of the information from the bank with regard to the return of the cheque, and thus, such requirement has been duly fulfilled by the present applicant - It is also not in dispute that the cheque had returned, as per the Bank memo on account of insufficient balance in the account of the drawer. The cheque bearing No.574147 for the sum of Rs.36 lakh had returned due to insufficient balance. This Court holds firmly that the trial Court committed no error in believing that the complainant succeeded in discharging the burden that there exists a legally enforceable debt or liability, and thereafter, the legal presumption was required to be dislodged or rebutted by the accused-respondent, which he miserably failed to do with preponderance of probabilities, and therefore, findings and the conclusions arrived at by the Sessions Court deserve to be quashed and set aside - The respondent No.2 was required to discharge the burden under Section 118 and 139 of the N.I. Act that the cheque he issued of Rs.36 lakh was not issued towards discharge of legal debt but was issued in view of security or was obtained unlawfully or was issued otherwise, since the appellant succeeded in proving the initial burden reasonably existence of legal debt as was required under the law. None of the matters brought on record either by way of crossexamination or by further statement or otherwise, are such which can make the existence of those facts so probable that their existence would be believed by a prudent man so as to displace and dislodge the positive proof available on record. Appeal allowed.
Issues Involved:
1. Whether the Appellate Court committed any error or illegality which would warrant interference or the view taken by the Appellate Court is a possible view and hence, in appellate jurisdiction deserves no interference? 2. Whether the appellant-original complainant succeeded in proving the initial burden of existence of legally enforceable debt? 3. Whether the amendment made in law in the year 2003 would have applicability to the case of the appellant so far as enhancement of punishment is concerned? 4. Whether the appellant has made out the case to allow him the compensation under the N.I. Act? Issue-wise Detailed Analysis: 1. Power of Appellate Court (Issue No.1): The High Court emphasized that the Appellate Court should not interfere with the findings of the trial court if the view taken by the Appellate Court is a possible view based on the evidence. The Apex Court in C. Antony Versus K.G. Raghavan Nair held that even if another view is possible from the same evidence, it is not a ground for the Appellate Court to interfere. 2. Legally enforceable debt, whether proved (Issue No.2): The High Court cited the case of Rangappa Versus Sri Mohan, which established that the presumption mandated by Section 139 of the NI Act includes the existence of a legally enforceable debt or liability. This presumption is rebuttable, and the burden shifts to the accused to contest the liability. The complainant provided detailed evidence showing the advancement of Rs.36 lakh to the respondent, the issuance of a promissory note, and the subsequent dishonor of the cheque due to insufficient funds. The complainant's oral and documentary evidence, including the details of relatives from whom the amount was collected, established the existence of a legally enforceable debt. The respondent failed to rebut this presumption effectively. 3. Applicability of 2003 Amendment (Issue No.3): The amendment increasing the punishment under Section 138 of the NI Act to two years came into effect on 06.02.2003. Since the transaction and the complaint were from 2002, the maximum punishment applicable was one year. The High Court modified the sentence accordingly, sentencing the respondent to one year of simple imprisonment and a fine of Rs.72 lakh, with Rs.71 lakh to be paid as compensation to the complainant and Rs.1 lakh to the State exchequer. 4. Compensation under the N.I. Act (Issue No.4): The High Court concluded that the complainant had reasonably discharged the burden of proving the existence of a legally enforceable debt. The respondent's failure to reply to the notice of demand and the absence of any complaint about the cheque being stolen further supported the complainant's case. The High Court upheld the trial court's decision to award compensation to the complainant, modifying the amount to Rs.71 lakh. Conclusion: The High Court allowed the appeal, quashing and setting aside the judgment of the Appellate Court. The respondent was sentenced to one year of simple imprisonment and ordered to pay Rs.72 lakh, with Rs.71 lakh as compensation to the complainant. The respondent was given four weeks to deposit the amount, failing which a non-bailable warrant would be issued for his arrest. The judgment and order of the Chief Metropolitan Magistrate were modified to this extent.
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