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2017 (9) TMI 1198 - HC - Indian LawsDishonor of cheques - Case for an offence under Section 138 of the Negotiable Instruments Act - proof of legally enforceable debt - Held that - The materials on record would clearly establish that the respondent has raised a probable defence. Once the presumption under Section 139 of Negotiable Instruments is rebutted it is for the complainant to prove that he has lent 4, 00, 000/- on 17.07.2012 as claimed by him. It is true that the respondent has not sent any reply to the legal notice Ex.P5. However that alone is not sufficient to accept the case of the complainant that he has lent 4, 00, 000/- on 17.07.2012 to the respondent. 4, 00, 000/- is not a small amount. It is significant to note that no interest was charged and the cheque was only for 3, 50, 000/-. It is impossible to believe that the complainant lent 4, 00, 000/- without requiring presence of any witness. The Hon ble Supreme Court in KRISHNA JANARDHAN BHAT vs. DATTATRAYA G. HEGDE 2008 (1) TMI 827 - SUPREME COURT has held that Courts have to take notice that ordinarily in terms of Section 269-SS. Income Tax Act any advance taken by way of loan of more than 20, 000/- had to be made by an account payee cheque only. In the light of the observations of the Hon ble Supreme Court it can be safely concluded that the complainant has not proved that the cheque in question was issued for the discharge of legally enforceable debt. The appellant has not proved his case for an offence under Section 138 of the Negotiable Instruments Act. The Trial Court has taken a possible view on the basis of the materials and I do not find any valid reason to differ from the view taken by the Trial Court.
Issues:
1. Dispute over loan amount and repayment terms. 2. Allegation of dishonored cheque under Section 138 of Negotiable Instruments Act. 3. Acceptance of partial payment and subsequent legal action. 4. Defense of borrower regarding loan amount and promissory note. 5. Legal notice and lack of response. 6. Presumption under Section 139 of Negotiable Instruments Act. 7. Compliance with legal requirements for loan transactions. Analysis: 1. The case involves a dispute between the complainant and the respondent regarding a loan amount of ?4,00,000 lent on 17.07.2012 with an agreed interest rate. The complainant alleged that the respondent issued a cheque for partial repayment, which was honored, but a subsequent cheque for the remaining amount was dishonored due to insufficient funds. 2. The respondent contended that the loan amount was only ?1,00,000 borrowed in 2001, and the complainant filled in the promissory note and cheque later. The Trial Court acquitted the respondent based on this defense, leading to the appeal. 3. The complainant argued that the Trial Court erred in accepting the respondent's defense, highlighting the delayed encashment of the cheque and the lack of response to the legal notice. The complainant emphasized that the respondent did not object to the honored cheque and took no action for collection. 4. The complainant presented evidence of the loan agreement, promissory note, and partial repayment through a cheque. However, discrepancies in dates and lack of witness signatures raised doubts about the loan transaction's authenticity, leading to the rebuttal of the presumption under Section 139 of the Negotiable Instruments Act. 5. The absence of interest charges, discrepancies in dates, and the lack of a witness for a significant loan amount cast doubt on the complainant's claim. The court emphasized the need for proper documentation and witness presence for substantial loan transactions, citing legal requirements under the Income Tax Act. 6. Referring to the Supreme Court's decision, the court concluded that the complainant failed to prove the issuance of the cheque for a legally enforceable debt, thus not establishing an offense under Section 138 of the Negotiable Instruments Act. The Trial Court's decision was deemed reasonable based on the evidence presented. 7. Consequently, the Criminal Appeal was dismissed, confirming the judgment of acquittal by the Trial Court in the case, highlighting the importance of complying with legal standards in loan transactions and the burden of proof in cases involving dishonored cheques.
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