2020 (2) TMI 1516 - HC - Indian Laws

Dishonor of cheque - admission of signature on the cheque not appreciated by Trial Court - rebuttal of legal presumption of Section 139 of the N.I. Act - legally recoverable debt beyond reasonable doubt - Section 118 of the N.I. Act - HELD THAT - It is to be noted that there is a clear presumption under Section 139 of the N.I. Act that the cheque was drawn for discharge in full or in part of any debt or liability as the said presumption does not relate to the existence of legally enforceable debt or liability. Therefore, before drawing the presumption under Section 139 of the N.I. Act, it is the duty of the Court to see whether or not the complainant has discharged his initial burden as to existence of legally enforceable debt - No doubt as per Section 118 of the N.I. Act, there is a rebuttable presumption that every negotiable instruments made or drawn is for a consideration and such instrument when accepted, it shall presumed that it is accepted for consideration. Accordingly, as per clause (b) of Section 118 there is a presumption that every negotiable instrument bearing a date was made or drawn on such a date. In the present case on hand, though the accused has admitted the signature of cheque and that it belongs to him, but has denied the transaction of there being any legally recoverable debt and any consideration was paid by virtue of the said cheque-Ex.P1. On going through the oral evidence and documents produced by the complainant, it is the case of the complainant that he has borrowed loan from his friend, father, brother and Bank/Society to pay to the accused of a sum of ₹ 14,00,000/- which he has paid at one stretch - it is hard to believe that the complainant has parted with the huge amount of ₹ 14,00,000/- without there being any supportive document or witness to the said parting of the amount. It is also relevant to note here that when the accused raises the plea that there is no transaction and he does not know the accused and places material for closure of the account, the onus shifts on the complainant to prove that he had parted with the amount as loan to the accused and that he had the financial capacity and a legally recoverable debt. On perusal of the entire evidence and the material documents, it is seen that the accused has raised a probable defence and the burden has shifted to the complainant to prove his financial capacity and the issue of there being any legally recoverable debt - the Trial Court has rightly come to a conclusion that the complainant version of parting huge amount of ₹ 14,00,000/- without there being any other materials to support and having not proved in the evidence that he had the source of income to pay to the accused, is fatal and also failed to prove that there is any legally recoverable debt to the accused. Thus, the complainant has not established nor proved legally enforceable debt and the statutory presumption which was in favour of the complainant has been duly rebutted by probable defence by the accused - the complainant has utterly failed to prove the existence of legally enforceable debt against the accused and the order of acquittal passed by the learned Magistrate does not call for any interference and the same is affirmed - appeal dismissed.

Summary

Issues Involved:

1. Legally enforceable debt
2. Presumption under Section 139 of the N.I. Act
3. Financial capacity of the complainant
4. Validity of the cheque and account closure
5. Service of legal notice

Issue-wise Detailed Analysis:

1. Legally Enforceable Debt:
The complainant alleged that a loan of ?14,00,000 was given to the accused for business purposes, which was to be repaid within two months. The complainant presented a cheque (Ex.P-1) issued by the accused, which was dishonored due to account closure. The accused denied any transaction with the complainant, asserting no legally enforceable debt existed. The court noted that the complainant failed to produce any loan-related documents or agreements to substantiate the loan claim, making it hard to believe that such a substantial amount was lent without any written agreement or interest.

2. Presumption under Section 139 of the N.I. Act:
The complainant argued that the trial court failed to appreciate the legal presumption under Section 139 of the N.I. Act, which presumes that a cheque is issued for discharging a debt or liability. The court acknowledged this presumption but emphasized that it is rebuttable. The accused successfully rebutted the presumption by presenting a probable defense, shifting the burden back to the complainant to prove the existence of a legally enforceable debt.

3. Financial Capacity of the Complainant:
The complainant claimed to have sourced the ?14,00,000 from loans obtained from his father, friend, brother, and a co-operative society. However, the court found that the complainant did not produce any corroborative documents or witness testimonies to substantiate these claims. The absence of proof regarding the complainant’s financial capacity to lend such a large amount was a critical factor in the court's decision.

4. Validity of the Cheque and Account Closure:
The accused contended that the account from which the cheque (Ex.P-1) was issued had been closed in 2005, prior to the alleged loan transaction. The court found this defense credible, supported by Ex.D-1, which documented the account closure. This evidence further weakened the complainant's case.

5. Service of Legal Notice:
The accused argued that he did not receive the legal notice, questioning the proper service of notice. However, the court did not find this issue decisive in the overall judgment, focusing more on the lack of evidence for a legally enforceable debt and the complainant's financial capacity.

Conclusion:
After reviewing the evidence and arguments, the court concluded that the complainant failed to prove the existence of a legally enforceable debt. The statutory presumption under Section 139 of the N.I. Act was successfully rebutted by the accused. The complainant's inability to demonstrate financial capacity and the absence of supporting documents or agreements led the court to affirm the trial court's order of acquittal. The appeal was dismissed, upholding the acquittal of the accused.