2020 (2) TMI 1584 - SC - Indian Laws

Dishonor of Cheque - existence of legally enforceable debt or not - rebuttal of presumption u/s 139 of NI Act - HELD THAT - It is well settled that the rebuttal can be made with reference to the evidence of the Prosecution as well as of Defence. Appeal dismissed.

Summary

Issues Involved:
Appeal against dismissal of Criminal Revision filed by Appellant challenging Order of Sessions Judge dismissing Criminal Revision against Order of Judicial Magistrate taking cognizance of offence under Section 138 of NI Act based on dishonoured cheque for ?7.8 Crores issued by Appellant in favor of Respondent.

Analysis:

1. Taking Cognizance of Offence:
The Appellant argued that there was no legally enforceable debt, hence no basis for taking cognizance of the offence. The High Court, in Paragraphs 23 & 32 of its judgment, emphasized that the presumption under Section 139 of the NI Act needs to be rebutted through evidence, and this rebuttal cannot be considered at the stage of taking cognizance. The High Court found that the Respondent had established a prima facie case meeting the conditions under Section 138 of the NI Act. The Court held that the initial presumption is in favor of the Complainant, and the Appellant can raise defenses, including the existence of a legally enforceable debt, during the trial.

2. Rebuttal of Presumption:
The Supreme Court agreed with the High Court's opinion that the rebuttal of the presumption can be made based on both Prosecution and Defense evidence. The Court found no error in the High Court's judgment dismissing the Criminal Miscellaneous Petition. The Appellant was given the opportunity to present all defenses before the Trial Court.

3. Dismissal of Appeal:
The Supreme Court dismissed the Appeal against the High Court's judgment, upholding the decision that there was a prima facie case for taking cognizance of the offence under Section 138 of the NI Act. The Court affirmed that the Appellant could raise all defenses during the trial, but at the stage of filing the Complaint, the initial presumption favored the Complainant.

In conclusion, the Supreme Court upheld the High Court's decision, emphasizing the importance of establishing a prima facie case under Section 138 of the NI Act before taking cognizance of the offence related to a dishonored cheque. The Court reiterated the opportunity for the Appellant to present defenses during the trial proceedings, allowing for a comprehensive examination of the legal issues involved in the case.