2016 (5) TMI 1551 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt or not - rebuttal of presumption - Sections 138 and 139 of the N.I. Act - HELD THAT - Reading of Sections 138 and 139 of the N.I. Act goes to show that out of the three ingredients comprising Section 138, a presumption is available in favour of holder of a cheque that the same had been issued for discharge of any debt or other liability under Section 139 of the N.I. Act. Section 139 of the N.I. Act does not give rise to a presumption with regard to existence of legally enforceable debt. A complainant has to discharge this burden of existence of a legally enforceable debt and if he fails to do so, merely because he is a holder of a cheque issued by the accused, conviction of the accused will not be warranted. From the evidence on record, it is clear that the complainant came to know the accused/respondent only from the year 2002. It is not in dispute that a sum of ₹ 2,00,000/- in cheque was paid on or about 3(three) months from the date of execution of the Exhibit -1 agreement. Neither in the notice nor in the complaint, the complainant referred to the payment of such amount by the respondent. The appellant had not taken a plea that prior to execution of Exhibit-1 agreement, there had been other previous transactions - Law is well settled that in an appeal against acquittal, the appellate Court has the power to reappraise the evidence on record to come to its own conclusion. While doing so, it has an obligation to consider each and every matter on record having a bearing on the questions of fact and the reasons assigned by the court below in support of the order of acquittal. If two views are reasonably possible on the basis of the evidence on record, the view which is favourable to the accused must be preferred. If the view taken by the trial court while acquitting the accused is a possible and reasonable view, the High Court ought not to interfere with such an order of acquittal only because of the fact that it is possible to take a contrary view. Appeal dismissed.

Summary

Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act.
2. Presumption under Section 139 of the Negotiable Instruments Act.
3. Evidence and burden of proof.
4. Appeal against acquittal and reappraisal of evidence.

Detailed Analysis:

1. Legally Enforceable Debt under Section 138 of the Negotiable Instruments Act:
The appellant filed a complaint under Section 138 of the N.I. Act, alleging that the respondent had issued a cheque for ?1,00,000, which was dishonored due to insufficient funds. The trial court convicted the respondent, but the appellate court acquitted him, leading to this appeal. The appellant argued that the respondent had taken a loan of ?2,00,000 and issued a cheque as part repayment, which was dishonored. The respondent contended that the debt was already repaid and the cheque was given as security.

2. Presumption under Section 139 of the Negotiable Instruments Act:
Section 139 of the N.I. Act presumes that the holder of a cheque received it for the discharge of any debt or liability. However, the presumption does not extend to the existence of a legally enforceable debt. The appellant must prove the existence of such a debt. The court noted that the complainant failed to establish a legally enforceable debt as the respondent had already repaid the amount through cheques and cash.

3. Evidence and Burden of Proof:
The complainant examined three witnesses, including himself, a bank official, and an advocate who drafted the agreement. The respondent examined two witnesses, including himself and a bank manager, to prove repayment of the debt. The court observed that the complainant did not mention the repayment in his complaint or evidence, and the respondent provided sufficient evidence of repayment. The court referred to the Supreme Court's judgment in Krishna Janardhan Bhat vs. Dattatraya G. Hegde, which states that the accused need not step into the witness box to discharge his burden and can rely on the materials already on record.

4. Appeal against Acquittal and Reappraisal of Evidence:
The court emphasized that in an appeal against acquittal, the appellate court must reappraise the evidence and consider the reasons assigned by the lower court. If two views are reasonably possible, the view favorable to the accused must be preferred. The court found that the trial court's view was plausible and supported by evidence, and there was no manifest error or perversity in the findings. Therefore, the court dismissed the appeal, upholding the acquittal.

Conclusion:
The court concluded that the complainant failed to prove the existence of a legally enforceable debt, and the respondent successfully rebutted the presumption under Section 139 of the N.I. Act. The appeal was dismissed, and the judgment of acquittal was upheld.