2008 (7) TMI 1073 - HC - Indian Laws

Summary

Issues Involved:
1. Legality and correctness of the conviction under Section 138 of the Negotiable Instruments Act.
2. Presumption under Section 139 of the Negotiable Instruments Act and its extent.
3. Proof of legally enforceable debt or liability.
4. Financial capacity of the complainant to lend the amount in question.

Detailed Analysis:

1. Legality and Correctness of the Conviction under Section 138 of the Negotiable Instruments Act:
The petitioner challenged the judgment of the Fast Track Court-II, Mandya, which affirmed the conviction and sentence by the Additional Civil Judge & JMFC, Srirangapatna, under Section 138 of the Negotiable Instruments Act. The petitioner was sentenced to six months of imprisonment, a fine of Rs. 2,000, and compensation of Rs. 75,000 to the complainant.

2. Presumption under Section 139 of the Negotiable Instruments Act and Its Extent:
The defense argued that the presumption under Section 139 of the N.I. Act does not extend to the existence of a legally enforceable debt or liability, but only to the issuance of the cheque for discharge of debt or liability. The court referred to the Supreme Court's decision in Krishna Janardhan Bhat v. Dattatraya G. Hegde, which clarified that the presumption under Section 139 is limited to the cheque being issued for discharge of debt or liability and does not cover the existence of the debt itself.

3. Proof of Legally Enforceable Debt or Liability:
The complainant alleged that the accused borrowed Rs. 75,000 and issued a post-dated cheque, which was dishonored due to "payment stopped by the drawer" and "insufficient funds." The accused contended that the cheque was issued as a blank cheque to Mahaveer Financiers and was stolen by an ex-employee, who then misused it. The court emphasized that the complainant must prove the existence of a legally enforceable debt before the presumption under Section 139 can be invoked.

4. Financial Capacity of the Complainant to Lend the Amount in Question:
The accused questioned the financial capacity of the complainant to lend Rs. 75,000. The complainant's income was stated to be Rs. 9,000 annually, and he was below the poverty line, as evidenced by documents such as Ex. D.9 (income certificate), Ex. D.10 (mortgage deed), and Ex. D.11 (allotment order under Ashreya Housing Scheme). The court found that the complainant did not satisfactorily explain how he could lend such a substantial amount, given his financial status.

Conclusion:
The court held that the complainant failed to prove the existence of a legally enforceable debt or liability. The presumption under Section 139 could not be drawn without such proof. The judgments of the lower courts were set aside, and the accused was acquitted of the charges under Section 138 of the N.I. Act. The complaint was dismissed, and the bail and surety bonds of the accused were discharged. The amount deposited by the petitioner was ordered to be returned.

Order:
The Criminal Revision Petition was allowed, and the judgment of conviction and sentence were set aside. The accused was acquitted, and the complaint was dismissed. The bail and surety bonds were discharged, and the deposited amount was ordered to be returned to the petitioner.