2017 (8) TMI 82 - HC - Indian Laws

Proof of legally enforceable liability - offence under Section 138 of the Negotiable Instrument Act - Held that - The petitioner has rebutted the presumption under Section 139 of the Negotiable Instrument Act by raising a probable defence which creates a doubt about the existence of a legally enforceable debt or liability. On the other hand the respondent failed to prove the existence of the legally enforceable debt by acceptable evidence both the Courts below without considering the case in a proper perspective has convicted the petitioner. In the above circumstances the judgment of the Courts below are liable to be set aside. and the petitioner is entitled for acquittal. In the result the criminal revision case is allowed. The conviction and sentence imposed on the petitioner by the Principal District Court confirming the Judgment passed by the learned Judicial Magistrate is hereby set aside and the petitioner is entitled for acquittal and bail bond if any executed by him shall stand cancelled and the fine amount paid by him is ordered to be refunded forthwith.

Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act.
2. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act.
3. Admissibility of evidence.
4. Burden of proof and standard of proof for rebutting presumption.

Issue-wise Detailed Analysis:

1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act:
The respondent/complainant alleged that the petitioner borrowed ?9,50,000 as a hand loan and issued a cheque to discharge this debt. The cheque was dishonored due to insufficient funds, leading to the complaint under Section 138 of the Negotiable Instruments Act. The trial court convicted the petitioner, sentencing him to one year of simple imprisonment and a fine of ?9,50,000 as compensation. The appellate court upheld this conviction.

2. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act:
The petitioner argued that the cheque was issued as a blank cheque in 2002 for a different loan of ?2,25,000, which he had already repaid with interest totaling ?7,28,000. He claimed that the respondent misused one of the blank cheques issued in 2002 to file the current complaint. The petitioner presented various documents (Ex.D1 to Ex.D8) to support his defense, including statements of account and a complaint against the respondent for demanding exorbitant interest.

3. Admissibility of evidence:
The respondent's counsel contended that the statements of account (Ex.D5 and Ex.D6) provided by the petitioner were not admissible as their authenticity was not proven. However, the court noted that objections regarding the admissibility of documents should be raised at the trial stage. Since no such objection was raised then, it could not be contested at this stage.

4. Burden of proof and standard of proof for rebutting presumption:
The court emphasized that once a cheque is admitted, there is a presumption under Section 139 that it was issued for a legally enforceable debt. However, this presumption is rebuttable. The petitioner successfully raised a probable defense, creating doubt about the existence of a legally enforceable debt. The burden then shifted to the respondent to prove the debt's existence. The respondent failed to provide sufficient evidence, such as account books or receipts, to substantiate the loan claim.

Conclusion:
The court concluded that the petitioner had effectively rebutted the presumption under Section 139 by raising a probable defense. The respondent failed to prove the existence of a legally enforceable debt. Consequently, the judgments of the lower courts were set aside, and the petitioner was acquitted. The fine amount paid by the petitioner was ordered to be refunded.

← Previous Next →