2021 (2) TMI 962 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption arising under Section 139 of the N.I.Act - burden to prove - legally recoverable debt or other liability - HELD THAT - In perusing the oral evidence of PW.1 with reference to his written complaint and his evidence in examination-in-chief, it is evident that nowhere he has stated the date when he has given loan amount. Only for the first time in the cross-examination he states on 18.08.2009 he has given loan amount in cash and he himself went to the house of the accused and paid that amount which is not a natural course of conduct of a person in such situation. The two witnesses Mohd.Mukthar and Mohd.Rafi who were stated to be present at the time of giving loan amount, were not examined. Admittedly, the said amount was not withdrawn from any Bank or from his account. PW.1 states that the amount was received by him in respect of the plot sold by him at Solapur. But no records were produced in this regard. Complainant- PW.1 simply states that as himself and accused were doing business, he know accused. There is no separate close relationship or friendship between them. Complainant-PW.1 also admits about giving of ₹ 5.00 lakh loan to one Sagir Ahmed, who is son of sister of accused, and it is Sagir Ahamed was looks after business of the accused. Complainant-PW.1 also admits that accused has paid a sum of ₹ 1,20,000/- through cheque and against he paid a sum of ₹ 1,92,000/- in March 2008 and April 2008 to his wife. If at all the accused had barrowed the amount in August 2009, then what was the necessity for the accused to give the cheques in the name of wife of the complainant? for what purpose he has given the said cheques?. The initial burden is on the complainant to prove that there is existence of legally recoverable debt or other liability for which said Ex.P1-cheuqe was issued. Simply because a cheque is issued, the accused cannot be automatically held guilt of offence under Section 138 of the N.I.Act. The presumption arises under Section 139 of the Act regarding issue of cheque, is only in respect of holder of cheque that same has been issued for recovery of debt or other liability. There is no dispute about it. But initial burden is on the complainant to prove it. Accused can rebut such presumption by preponderance of probabilities either by cross-examination of PW.1 and also by leading his defence evidence. The complainant has stated that he has got other six cheques belonging to accused with him, that aspect assumes importance as to why he has kept still six cheques belonging to accused. Why the accused gave money through cheque on different dates to the wife of the complainant. All these circumstances, which are not explained creates doubt about genuiness of the contents of the complaint. PW.1 also admits that sister's son of accused was barrowing of loan amount and he has repaid the said amount. But PW.1 denies that he has misused the cheque given as security for the said loan, though the loan amount was already repaid. It is not that both the appellant and accused were very close friends or relatives or very much acquainted each other. Both are business men. Then how complainant could have advanced such huge amount without any interest to the person who is not acquainted with him is also one of the circumstance goes against the complainant's case. It is to be remembered that the burden to prove the consideration for the cheque lies on the accused. If not rebutted, the presumption is that the cheque was issued for consideration. It is for the accused to prove that the cheque was not issued towards a debt or liability. Accused has to lead credible evidence for rebuttal of this presumption. The presumption that the cheque was issued for valid consideration under Section 118 can be raised only when the proceedings are initiated after complying with the statutory requirement of service of notice on the drawer. The presumption under Section 139 of the Act is a presumption of law, it is not a presumption of fact. This presumption has to be raised by the Court in all the cases once the factum of dishonour of cheque is established, the onus of proof to rebut this presumption lies on the accused. The standard of such rebuttal evidence depends on the facts and circumstances of each of case. It is settled principles of law that the accused can rebut the presumption by two modes First is by cross examining the complainant or his witnesses and elicit in their evidence such evidence to show that presumption in favour of PW.1-complainant is not tenable and his defence is probable; The second mode is accused entering the witness box and giving his own defence evidence so as to rebut the presumption ofcourse by preponderance of probabilities. The proof by accused is not beyond reasonable doubt - to rebut the evidence of complainant the accused entered the witness box and has given his own evidence as DW.1. The accused in his evidence states that he is not acquainted with the complainant nor he has given any cheque to complainant. But when his nephew Sagir Ahmed was looking after his transport business, at that time, he had made certain transactions and whenever he came to Gulbarga, the complainant used to visit Sagir Ahmed house. The said cheque was given to Sagir Ahmed by accused as security for the loan borrowed from the complainant. The said amount of ₹ 4.00 lakh was returned, but inspite of that the complainant did not return the cheque. The preponderance of probabilities is tilting in favour of the accused. The accused has also brought on record such facts, material and circumstances in the cross-examination of PW.1 which could be reasonably said as accused proved a probable defence. Therefore, the burden to rebut the evidence of complainant and presumption in favour of complainant had been discharged by the accused to prove that the cheque was not issued in discharge of any legally recoverable debt or other liability or there exist any debt or liability by the accused to pay the said amount mentioned in the cheque to the complainant. The trial Court is justified in acquitting the accused. The trial Court has raised proper points for consideration by considering the relevant provisions under the N.I.Act and also decisions stated thereon and also discussed oral and documentary evidence in detail and came to conclusion that the accused has rebutted presumption and there is no legally recoverable debt or liability in existence. It is settled principles of law, that while considering the judgment of acquittal, the First Appellate Court or High Court normally should not set aside the judgment of acquittal or interfere, unless the judgment of the trial Court is perverse and not based sound principles regarding appreciation of evidence in N.I.Act cases - the well reasoned finding of the trial Court need not be interfered - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Capacity and factum of payment of ?21.00 lakh by the complainant.
2. Presumption under Section 139 of the N.I. Act.
3. Rebuttal of presumption by the accused.
4. Issuance of cheque by the firm/company and non-impleadment of the firm.
5. Evidence to disbelieve the complainant's statement.
6. Legally recoverable debt or liability.

Issue-wise Detailed Analysis:

1. Capacity and Factum of Payment of ?21.00 Lakh by the Complainant:
The trial court observed that the complainant failed to prove his capacity to lend ?21.00 lakh. The complainant did not produce any bank documents or other evidence to show he had such a large amount. He claimed the amount was given in cash, but no credible evidence supported this claim. The complainant's admission that he did not withdraw the amount from a bank and his failure to provide any documentation of the transaction further weakened his case.

2. Presumption under Section 139 of the N.I. Act:
The complainant argued that once the issuance of the cheque and signature on it were admitted, there was a statutory presumption under Section 139 in his favor. However, the court noted that this presumption is rebuttable and the accused can challenge it by preponderance of probabilities. The court emphasized that the initial burden is on the complainant to prove the existence of a legally enforceable debt or liability.

3. Rebuttal of Presumption by the Accused:
The accused successfully rebutted the presumption by providing plausible evidence and cross-examining the complainant. The accused demonstrated that the cheque was given as security for a loan taken by his relative, which was repaid. The complainant's admission of holding six other cheques from the accused and the lack of any interest or security documents for such a large loan further supported the accused's defense. The court found the accused's explanation credible and consistent with the evidence presented.

4. Issuance of Cheque by the Firm/Company and Non-impleadment of the Firm:
The cheque in question was issued by the accused as a proprietor of ADAL Audio & Visual. However, the firm was not made a party to the complaint. The court noted that without making the firm a party, the complaint could not be maintained. This procedural lapse significantly impacted the complainant's case.

5. Evidence to Disbelieve the Complainant's Statement:
The complainant's failure to produce witnesses who allegedly were present during the transaction and his inconsistent statements raised doubts about his credibility. The court also noted discrepancies in the complainant's legal notice and the lack of any inquiry into why the payment was stopped by the drawer.

6. Legally Recoverable Debt or Liability:
The court emphasized that the complainant must prove the existence of a legally recoverable debt or liability. The complainant's inability to provide substantial evidence of the loan transaction and the accused's successful rebuttal of the presumption led the court to conclude that there was no legally enforceable debt or liability.

Conclusion:
The court found that the complainant failed to discharge the initial burden of proving the existence of a legally recoverable debt. The accused successfully rebutted the presumption under Section 139 by providing credible evidence and demonstrating the improbability of the complainant's claims. The procedural lapse of not impleading the firm further weakened the complainant's case. Consequently, the court upheld the trial court's judgment of acquittal, confirming that the accused was not guilty of the offence under Section 138 of the N.I. Act. The appeal was dismissed, and the trial court's order was confirmed.