2018 (1) TMI 1714 - HC - Indian Laws

Dishonor of Cheque - rebuttal of statutory presumption under section 118(a) and 139 of NI Act - preponderance of probabilities - HELD THAT - In RANGAPPA VERSUS SRI MOHAN 2010 (5) TMI 391 - SUPREME COURT , the Hon'ble Apex Court, while holding that since the signature on the cheque is not disputed, the statutory presumption under Section 139 of the Act is activated, which the accused could not rebut since the defence of lost cheque was not probable, observed that Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant. Whether the accused has brought on record material which would persuade this Court to believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the prudent man - If the conscious of this Court is satisfied that the accused has discharged the initial onus of proof by demonstrating that the existence of consideration was improbable or doubtful, it is axiomatic that the onus would shift to the complainant to prove the existence of legally enforceable debt or liability, as a matter of fact. In such a scenario, the accused would have rebutted the statutory presumption under section 118(a) and 139 of the Act and the burden of proving the existence of legally enforceable debt or liability would shift on the complainant. It is the case of the complainant that the loan was extended for a short duration of a month. The admission that the complainant did not maintain accounts of the transaction and the inference drawn by the learned Magistrate that the transaction was not reflected in the income tax returns, in the factual matrix, is not sufficient to render the existence of legally enforceable debt or liability doubtful - since the statutory rebuttal which concededly is activated, is not rebutted by the accused by evidence showing that the existence of defence is probable, the evidence must be appreciated on the anvil of the statutory presumption in favour of the complainant that the cheque was issued towards discharge of an existing debt or liability which is legally enforceable. The judgment and order impugned suffers from an error of law in appreciating the import and implication of the statutory presumption under section 139 of the Act - accused is convicted for offence punishable under section 138 of Negotiable Instruments Act and is sentenced to suffer simple imprisonment for three months and to pay compensation of Rs. 2,00,000/- to the complainant under section 357(3) of the Code of Criminal Procedure - Appeal allowed.

Summary

Issues Involved:
1. Whether the accused rebutted the statutory presumption under sections 118(a) and 139 of the Negotiable Instruments Act, 1881.
2. Whether the cheque was issued towards the discharge of a legally enforceable debt or liability.
3. Evaluation of the evidence presented by both parties.
4. Applicability of legal precedents and statutory presumptions.
5. Justification for interference with the judgment of acquittal.

Issue-wise Detailed Analysis:

1. Whether the accused rebutted the statutory presumption under sections 118(a) and 139 of the Negotiable Instruments Act, 1881:
The appellant argued that the accused failed to rebut the statutory presumption under sections 118(a) and 139 of the Act. The defense claimed that the cheque was given as part of an oral agreement to purchase a plot, which did not materialize, and thus, the cheque was misused. However, the accused did not step into the witness box, and the defense was primarily based on the testimony of the accused's father, who admitted to having no personal knowledge of the transaction. The court noted that the statutory presumption under section 139 is activated since the signature on the cheque was not disputed, and the accused could not provide sufficient evidence to rebut this presumption.

2. Whether the cheque was issued towards the discharge of a legally enforceable debt or liability:
The complainant asserted that a hand loan of Rs. 2 lacs was extended to the accused, and the cheque was issued towards its repayment. The accused contended that the cheque was issued as part of an earnest payment for a plot purchase, which did not proceed due to the plot being encumbered. The court found the defense improbable, noting that a prudent person would not issue a blank signed cheque without verifying the documents of the plot. The accused's failure to provide evidence of the oral agreement or the encumbrance on the plot further weakened the defense.

3. Evaluation of the evidence presented by both parties:
The complainant's evidence was consistent with the complaint, and the cross-examination did not significantly undermine the claim. The defense's evidence, primarily through the accused's father, lacked direct knowledge and documentary support. The court emphasized that the accused's failure to respond to the statutory notice and not stepping into the witness box were critical factors. The defense's narrative was not sufficiently probable to rebut the statutory presumption.

4. Applicability of legal precedents and statutory presumptions:
The court referenced several judgments to elucidate the statutory presumptions under sections 118(a) and 139. It emphasized that these presumptions are rebuttable, but the burden lies on the accused to provide evidence that creates a reasonable doubt about the existence of a debt or liability. The court noted that the standard of proof for rebutting the presumption is the preponderance of probabilities, which the accused failed to meet. The reliance on precedents like Rangappa vs. Sri Mohan and Hiten P. Dalal v. Bratindranath Banerjee helped reinforce the legal framework guiding the court's decision.

5. Justification for interference with the judgment of acquittal:
The court found the judgment of acquittal by the Judicial Magistrate First Class to be vitiated by a serious error of law, particularly in appreciating the statutory presumption under section 139 of the Act. The failure of the accused to rebut the presumption and the improbability of the defense led the court to overturn the acquittal. The court sentenced the accused to three months of simple imprisonment and ordered the payment of Rs. 2,00,000/- as compensation to the complainant, with an additional three months of simple imprisonment in default of payment.

Conclusion:
The appeal was allowed, and the judgment and order of acquittal were set aside. The accused was convicted under section 138 of the Negotiable Instruments Act and sentenced accordingly. The court's decision was guided by the statutory presumptions, the improbability of the defense, and the need to correct the legal error in the initial judgment.