2021 (3) TMI 284 - HC - Indian Laws

Dishonor of Cheque - undated cheque was given as security - failure of the respondent to pay the amount in spite of the issuance of the notice - whether cheques were issued for discharge of debt or not? - HELD THAT - The respondent as DW1 had stated that he was involved in an NGO which used to undertake various development works in different places of Tripura, and the complainant being a Mechanic was engaged as a Site Manager with that NGO to open a Driving School and two blank cheques were signed by the respondent and handed over to the complainant to run the institution. But, on 21.11.2014, the complainant reported the respondent that those two cheques were missing from his custody for which the respondent reported the same to the police station and also to the bank. DW1, i.e. the respondent also deposed that the complainant had misused the cheques for his illegal gain. The entire scheme of Negotiable Instruments Act, 1881 draws a clear distinction between a check issued for a debt in present but payable in future and second for a debt which may become payable in future upon the occurrence of a contingent event - In the present case, it is aptly clear that the complainant provided loan to the respondent for a sum of ₹ 50,000/- on 20.09.2014 and ₹ 1,00,000/- on 19.10.2014 and on the same date, on providing of such loan to the respondent, he received two cheques(Exbt.1/A and Exbt.1/B) from the respondent. According to the complainant, towards repayment of the said amount, the respondent had issued the said two cheques. Thus, it is apparent that the respondent issued the cheques on the dates of borrowing the loan from the complainant as is revealed from the deposition of the complainant itself that the respondent promised to make repayment of the loan in the month of November, 2014 i.e., the cheque would be effective on a future date. It is trite that in a criminal jurisprudence, the burden to prove that the accused has committed the offence would lie on the complainant. Prosecution must prove the guilt of an accused beyond all reasonable doubt. The standard of proof so as to prove a defence on the part of an accused is preponderance of probabilities . Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which he relies - Thus, even assuming for a moment that the appellant has failed to probabilise the defence of misuse of blank undated cheques, it is found that the complainant has failed to establish by acceptable evidence that indeed the subject cheques were issued in discharge of legally enforceable debt or liability. Thus, as an undated cheque having been given only as a security, the provision of Section 138 of the Negotiable Instruments Act are not at all attracted and hence, the charges framed against the respondent cannot sustain - appeal dismissed.

Summary

Issues Involved:
1. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act.
2. Issuance of cheques as security versus discharge of debt.
3. Burden of proof in criminal jurisprudence.

Issue-wise Detailed Analysis:

1. Legally Enforceable Debt or Liability under Section 138 of the Negotiable Instruments Act:
The case revolves around the alleged issuance of cheques by the respondent to the complainant to repay a loan amounting to ?1,50,000. The complainant claims that the respondent issued two cheques, which were dishonored due to insufficient funds. The complainant issued a statutory notice demanding payment, which the respondent failed to comply with, leading to the filing of a complaint under Section 138 of the Negotiable Instruments Act. The trial court convicted the respondent, but the appellate court reversed this decision, leading to the present appeal.

2. Issuance of Cheques as Security versus Discharge of Debt:
The respondent argued that the cheques were issued as security and not for the repayment of an existing debt. The court noted that the cheques were issued on the same dates as the loans were provided, indicating they were meant as security for future liability rather than for discharging an existing debt. The court referenced the case of M/s. Collage Culture & Ors. v. Apparel Export Promotion Council & Anr., which distinguishes between cheques issued for a debt due and those issued as security. The judgment emphasized that a cheque issued as security does not attract Section 138 of the Negotiable Instruments Act.

3. Burden of Proof in Criminal Jurisprudence:
The court highlighted that in criminal cases, the burden of proof lies on the prosecution to establish the guilt of the accused beyond a reasonable doubt. The standard of proof for the defense is based on the "preponderance of probabilities." The court found that the complainant failed to prove that the cheques were issued in discharge of a legally enforceable debt. The complainant also did not provide evidence of his financial capacity to lend ?1,50,000. Furthermore, the respondent's claim that the cheques were given as security for a potential future debt was considered plausible.

Conclusion:
The court concluded that the cheques were issued as security and not for discharging an existing debt, thus not attracting Section 138 of the Negotiable Instruments Act. The appellate court's judgment acquitting the respondent was upheld, and the appeal was dismissed. The judgment emphasized the importance of distinguishing between cheques issued for current debts and those issued as security for future liabilities.