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2013 (5) TMI 40 - SC - Indian LawsRepayment of loan advanced - Dishonor of cheque This appeal directed against the judgment and order passed by a learned single Judge of the High Court of Madhya Pradesh Bench, whereby the conviction and sentence of one year alongwith a fine of Rupees One Lakh and Twenty Thousand imposed on the appellant for commission of an offence under Section 138 of The Banking Public Financial Institutions and Negotiable Instruments Act, 1988 has been set aside and the criminal revision was allowed. Held that - The absence of any details of the date on which the loan was advanced as also the absence of any documentary or other evidence to show that any such loan transaction had indeed taken place between the parties is a significant circumstance. So also the fact that the cheque was presented on the day following the altercation between the parties is a circumstance that cannot be brushed away. In the totality of the above circumstances, the High Court was perfectly justified in its conclusion that the prosecution had failed to make out a case against the accused and in acquitting him of the charges. With these observations in elucidation of the conclusion drawn by my worthy colleague, I agree that the appeal fails and be dismissed.
Issues Involved:
1. Legitimacy of the cheque issued by the respondent. 2. Presumption under Sections 118 and 139 of the N.I. Act. 3. Burden of proof on the complainant and the accused. 4. Validity of the High Court's reversal of the lower courts' judgments. Detailed Analysis: 1. Legitimacy of the Cheque Issued by the Respondent: The complainant-appellant alleged that the respondent-accused borrowed Rs. 1,15,000 and issued a cheque dated 14.08.2007 for repayment, which was dishonored due to 'insufficient funds'. The respondent contended that the cheque was issued as security for milk supply and not for repayment of a loan. The High Court found that the cheque was issued as security and not for a loan repayment, leading to the acquittal of the respondent. 2. Presumption under Sections 118 and 139 of the N.I. Act: Sections 118(a) and 139 of the N.I. Act create presumptions in favor of the holder of the cheque, assuming it was issued for consideration and discharge of debt unless proven otherwise. The Supreme Court emphasized that these presumptions are rebuttable. The High Court's judgment considered the respondent's defense that the cheque was for security, not repayment, and found it reasonably probable, thus rebutting the presumption. 3. Burden of Proof on the Complainant and the Accused: The complainant must initially prove the existence of debt or liability. Once the signature on the cheque is admitted, the burden shifts to the accused to prove that the cheque was not for debt repayment but for another purpose, such as security. The Supreme Court cited K.N. Beena v. Muniyappan, emphasizing that the accused must prove the cheque was not for a lawful debt. The High Court found that the respondent successfully discharged this burden by showing the cheque was issued as security. 4. Validity of the High Court's Reversal of the Lower Courts' Judgments: The High Court reversed the lower courts' judgments, which had convicted the respondent based on the complainant's version. The Supreme Court upheld the High Court's decision, noting significant inconsistencies in the complainant's case, such as the absence of the loan date and the immediate presentation of the cheque. The High Court rightly concluded that the complainant failed to prove the cheque was for a lawful debt, and the respondent's defense was reasonably probable. Conclusion: The Supreme Court upheld the High Court's acquittal of the respondent, emphasizing the rebuttable nature of presumptions under Sections 118 and 139 of the N.I. Act and the importance of the accused's burden to prove the cheque was not for debt repayment. The inconsistencies in the complainant's case and the credible defense presented by the respondent justified the High Court's decision to set aside the lower courts' judgments. The appeal was dismissed, affirming the respondent's acquittal.
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