2021 (3) TMI 569 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption - offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT - Once execution of the promissory note is admitted, or proved, the presumption under Section 118(a) of the Act would arise that it is supported by consideration. It is a rebuttable presumption. The accused can prove non-existence of consideration by raising a probable defence. If he proves to have discharged the initial onus of proof that the existence of consideration was improbable or doubtful, the onus shifts back to the complainant, who will be obliged to prove it as a matter of fact, and on his failure to discharge the burden, he will be disentitled to get a relief. The trial court is required to start with statutory presumption until the contrary is proved that the cheque was issued or drawn for consideration and that the complainant had received it for the discharge of existing debt or liability. Then the burden is on the accused, in view of the statutory presumption, to rebut the presumption by leading an adequate and satisfactory evidence to substantiate his contention in defence to the prosecution. Although it is not necessary for the accused to enter the witness box, the burden of proof is required to be discharged by adducing satisfactory evidence to prove that the cheque in question was not issued for discharge of any legally enforceable debt. Merely for the reason that he did not adduce any evidence to prove a negative fact, no adverse inference can be drawn against him. The degree of proof expected from the accused is not as rigorous as that of the complainant. He can discharge his onus by making dents in the case of the complainant. Here, it seems that that has been attempted by the 1st respondent. Even though the financial capacity of the appellant stands disputed by the 1st respondent, the appellant has not taken care in adducing evidence supporting his ability to pay so much money. The complainant is expected to prove his case to the hilt. He cannot take advantage of the failure on the part of the accused respondent. This Court is not persuaded to interfere with the finding of the trial court, which is liable to be confirmed - Appeal dismissed.

Summary

Issues:
Complaint alleging offence under Section 138 of the Negotiable Instruments Act, 1881 - Appeal against acquittal of the respondent by the trial court - Disputed issuance of cheque for &8377; 1,75,000 - Capacity of the appellant to lend money - Presumption under Sections 20, 87, and 139 of the Act - Burden of proof on the accused to rebut presumption - Admissibility of evidence supporting financial capacity - Request for remand to adduce additional evidence - Dismissal of appeal.

Analysis:

1. The appellant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, alleging that the respondent issued a cheque for &8377; 1,75,000 which was dishonoured due to insufficient funds. The respondent denied borrowing the full amount and claimed the cheque was a signed blank cheque misused by the appellant. The trial court acquitted the respondent, leading to this appeal.

2. The appellant argued that the respondent's failure to respond to the lawyer notice and dispute the financial capacity of the appellant without evidence should not negate the presumption in the appellant's favor. The appellant cited legal precedents to support the presumption of discharge of a legally enforceable liability by the issuance of the cheque.

3. The respondent contended that the appellant lacked the financial capacity to lend the claimed amount, citing the appellant's modest income as a tailor. The respondent emphasized the absence of evidence supporting the appellant's financial capability and relied on legal decisions to support his defense.

4. The court noted that the complaint was based on the issuance of the cheque in consideration of a loan, with the appellant's evidence and documents supporting the claim. However, the respondent's defense centered on challenging the appellant's financial capacity and the circumstances surrounding the cheque issuance.

5. The court highlighted the statutory presumptions under the Act regarding the issuance of cheques for discharge of liabilities and the burden on the accused to rebut these presumptions. It emphasized the need for the accused to present adequate evidence to counter the statutory presumptions.

6. Despite the appellant's attempts to provide additional evidence, the court found the lack of concrete proof supporting the appellant's financial capacity to lend the amount in question. The court concluded that the appellant failed to sufficiently prove his case, leading to the dismissal of the appeal against the trial court's decision to acquit the respondent.

7. The court's decision underscored the importance of meeting the burden of proof in cases involving disputed financial transactions and the necessity of presenting compelling evidence to support claims made under the Negotiable Instruments Act.