2021 (7) TMI 739 - HC - Indian Laws

Dishonor of Cheque - funds insufficient - presumption about the existence of legally enforceable debt - rebuttal presumption or not - preponderance of probability - material contradictions in the case of the complainant - HELD THAT - The complainant in his complaint, as well in his examination-in-chief as PW-1 has stated that the loan was given by him to the accused in the month of July 2012. He has not given any specific day of the month as to the date on which the alleged loan was given. The month is also stated to be July of the year 2012. However, the very same witness in his cross-examination has stated that he lent the money to the accused on 06.08.2012. That means, the complainant was clearly aware the exact date on which the loan is said to have been given by him to the accused. However, for the reasons best known to him, neither in his complaint nor in his evidence as PW-1 in his examination-in-chief has mentioned the exact date of the alleged loan - regarding the date of alleged loan transaction, the complainant has shown a greater variation in his complaint and in his evidence. No doubt, a presumption regarding legally enforceable debt is formed in favour of the accused as observed above. However, the said presumption is rebuttable. For rebutting the said presumption, it is not necessary for the accused either to enter the witness box and to lead his evidence or examine any witness or even to produce any documentary proof in his support. Suffice for him to make a case of preponderance of probabilities in his favour to rebut the presumption formed in favour of the complainant under Section 139 of N.I. Act - The material contradiction that has been brought out in the case of the complainant would dilute the case of the complainant, at the same time, make out a preponderance of probabilities in favour of the accused. This aspect both the trial Court, as well as the Sessions Judge's Court have failed to observe. The impugned judgments to be considered as perverse and suffering with infirmity - Petition allowed.

Summary

Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881.
2. Financial capacity of the complainant to lend money.
3. Variations in the complainant's statements regarding the date and mode of loan payment.
4. Presumption under Section 139 of the N.I. Act and its rebuttal.

Issue-wise Detailed Analysis:

1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881:
The trial court convicted the accused for the offence punishable under Section 138 of the N.I. Act, which was upheld by the Sessions Judge's Court. The complainant alleged that the accused borrowed ?1,25,000/- and issued a post-dated cheque, which was dishonored due to "funds insufficient." The complainant issued a legal notice, but the accused neither paid the amount nor replied, leading to the criminal case. The High Court acknowledged that the cheque's issuance and dishonor create a presumption of a legally enforceable debt under Section 139 of the N.I. Act, citing precedents from the Hon'ble Apex Court.

2. Financial capacity of the complainant to lend money:
The accused contested the complainant's financial capacity to lend the sum for the first time during the revision petition. The High Court noted that this argument was not raised in the trial or sessions courts and relied on the complainant's undisputed testimony about his financial status as an agriculturist and coffee planter. The court found no evidence to suggest the complainant lacked the financial capacity to lend ?1,25,000/-.

3. Variations in the complainant's statements regarding the date and mode of loan payment:
The High Court observed significant contradictions in the complainant's statements. The complainant initially stated the loan was given in July 2012 but later mentioned August 2012 during cross-examination. Additionally, the complainant's statements varied regarding the mode of loan payment—initially stating it was in cash, then suggesting it was through a cheque. These inconsistencies were deemed material, affecting the credibility of the complainant's case, especially in the absence of corroborative evidence.

4. Presumption under Section 139 of the N.I. Act and its rebuttal:
The court emphasized that the presumption of a legally enforceable debt under Section 139 is rebuttable. The accused does not need to provide direct evidence but can create a preponderance of probabilities to rebut the presumption. The accused's defense that the cheque was given to a third party, who then handed it to the complainant, along with the material contradictions in the complainant's testimony, were sufficient to cast doubt on the complainant's case. The High Court found that both the trial and sessions courts failed to consider these aspects, rendering their judgments perverse and infirm.

Conclusion:
The High Court allowed the criminal revision petition, setting aside the conviction and sentence passed by the trial court and confirmed by the sessions court. The accused was acquitted of the offence under Section 138 of the N.I. Act. The registry was directed to transmit a copy of the order to both lower courts along with their respective records.