2021 (5) TMI 843 - HC - Indian Laws

Dishonor of Cheque - pre-existing liability - Rebuttal of presumption - acquittal of the accused - offence punishable under Section 138 of the Negotiable Instruments Act - merely for the reason that the first respondent has admitted his signature on the Ext.P1 cheque, whether that would automatically invite the invocation of presumptions under Sections 118 and 139 of N.I.Act? - HELD THAT - Once the execution of the cheque is admitted or proved, necessarily it is the legal consequence that the complainant is entitled to draw the presumption under the above said sections. Then only the accused/first respondent is expected to discharge the burden and rebut the presumptions that are drawn against him. Here certainly, the first respondent has denied the execution of the cheque. In other words, he has denied any money transaction with the appellant. Now the remaining question is whether the cheque is proved to have been executed by the first respondent. The prosecution should be able to establish their case on their own. The lapses on the part of the defence cannot be made advantage by the prosecution. Similarly, there is no substance in the contention that the appellant did not state the details of the transaction etc. By numerous authorities, it has been stated that such details are not necessary to be stated in the complaint. If it is proved that the cheque was executed and issued by the first respondent/accused in discharge of a legally enforceable liability, then the appellant is entitled to draw the presumptions. But here, the appellant has inherent weaknesses in his case. All the same, even if there are lapses in the defence version that cannot be taken use of by the appellant. Here the appellant has not established that the cheque was issued in a transaction as alleged by him and therefore, the presumptions under Sections 118 and 139 of the N.I. Act cannot be drawn in favour of the appellant. The facts of the case vis-a-vis the facts of the authorities relied on by the learned counsel for the appellant are clearly distinguishable. Here the very case of the first respondent is that he had not borrowed any amount from the appellant nor the Ext.P1 was given to the appellant - the appellant could not establish that there was long standing acquaintance between them which prompted him to lend so much money to the first respondent. In the circumstances and in the absence of fool proof evidence, he cannot be entitled to draw the presumptions. Appeal dismissed.

Issues Involved:
Appeal challenging judgment under Section 138 of the Negotiable Instruments Act - Dispute over cheque issuance and liability discharge - Presumptions under Sections 118 and 139 of the N.I. Act - Evaluation of prosecution and defense evidence - Admissibility of witness testimony and documentary evidence - Legal reasoning for acquittal - Appellant's financial capacity and transaction details - Inconsistencies in prosecution's case - Absence of witness examination - Lapses in defense's response to lawyer notice - Rebuttal of presumptions under N.I. Act.

Detailed Analysis:

1. Dispute Over Cheque Issuance and Liability Discharge:
The case involves an appeal challenging a judgment under Section 138 of the Negotiable Instruments Act regarding a cheque issued to discharge a pre-existing liability. The appellant alleged that the cheque was dishonored due to insufficient funds, leading to a legal complaint against the first respondent.

2. Presumptions under Sections 118 and 139 of the N.I. Act:
The appellant sought to invoke presumptions under Sections 118 and 139 of the N.I. Act based on the admission of the first respondent's signature on the cheque. However, the first respondent denied the transaction and execution of the cheque, necessitating a thorough evaluation of evidence to establish liability.

3. Evaluation of Prosecution and Defense Evidence:
The trial court acquitted the first respondent, citing the prosecution's failure to prove a legally enforceable liability. The defense highlighted inconsistencies in the appellant's case, including differing versions of the transaction date, and emphasized the absence of a crucial witness, Ajimon, impacting the case's credibility.

4. Admissibility of Witness Testimony and Documentary Evidence:
The court examined the oral testimony of witnesses, including PW1 and DW3, to ascertain the validity of the transaction. However, the lack of direct knowledge in DW3's testimony and the absence of a key witness raised doubts about the prosecution's narrative.

5. Legal Reasoning for Acquittal and Rebuttal of Presumptions:
The judgment emphasized the necessity to establish a clear transaction and enforceable liability to trigger the presumptions under the N.I. Act. Despite lapses in the defense's response and the appellant's case, the court ruled that the appellant failed to prove the issuance of the cheque in the alleged transaction, thereby negating the presumptions.

6. Appellant's Financial Capacity and Transaction Details:
The appellant's financial capacity and the transaction details were scrutinized to assess the credibility of the claim. The court noted inconsistencies in the appellant's account of the transaction, raising doubts about the authenticity of the alleged liability discharge.

7. Inconsistencies in Prosecution's Case and Defense Response:
The prosecution's case faced challenges due to inconsistencies in witness testimonies and the absence of crucial details. While the defense had lapses in responding to the lawyer notice, the court emphasized that such deficiencies do not automatically strengthen the prosecution's case.

8. Conclusion and Legal Analysis:
The court dismissed the appeal, upholding the trial court's decision based on a comprehensive analysis of the evidence. It concluded that the appellant failed to establish a valid transaction and enforceable liability, leading to the rejection of presumptions under the N.I. Act. The judgment underscored the importance of clear evidence to support legal claims and the burden of proof in establishing liability in cheque dishonor cases.

This detailed analysis encapsulates the legal intricacies and key points of the judgment, providing a comprehensive overview of the issues involved and the court's reasoning in arriving at the decision.

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