2021 (8) TMI 39 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption about the legally enforceable debt or not - cross-examination of witnesses - preponderence of probablities - Section 139 of the N.I. Act - HELD THAT - By making that suggestion, the accused, once again, has re-confirmed of availing a loan from the complainant and also issuing a cheque to the complainant. Therefore, it is not a mere through presentation of the cheque and presumption under Section 139 of the N.I. Act, the inference of existence of a legally enforceable debt in favour of the complainant can be drawn, but, by leading cogent evidence also, the complainant has shown that, there existed a legally enforceable debt in his favour which was payable by the accused and in that regard, the cheque in question was given to him. The accused in the cross-examination of PW-1 has also produced a certified copy of the two documents, one is shown to be an agreement dated 19-04-2012 and another is a cheque for a sum of ₹ 7,00,000/- dated 16-01-2013 shown to have been drawn by him as a proprietor of Athithi Residency in favour of one Sri. Lakshman Naik, to show that, the said person by name Sri. Lakshman Naik had filed cases in the Civil Court and that he was favouring the complainant - the complainant, apart from existence of a presumption of a legally enforceable debt in his favour, could able to prove his case by leading cogent evidence, both oral and documentary, but the accused who failed to take any specific defence in the matter, could not even make out a case on preponderance of probabilities. Since both the Trial Court and the Sessions Judge's Court, after analysing the materials placed before them, have rightly convicted the accused for the offence punishable under Section 138 of the N.I. Act and have passed an order of sentence which is proportionate to the gravity of the proven guilt against the accused, the impugned judgments cannot be called as perverse, illegal or capricious, warranting any interference at the hands of this Court. Criminal Revision Petition stands dismissed as devoid of merits.

Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act.
2. Admissibility and relevance of evidence.
3. Discrepancy in the purpose of the loan.
4. Validity of the Partnership Deed and its impact on the case.
5. Presumption under Section 139 of the N.I. Act and its rebuttal.

Detailed Analysis:

1. Legally Enforceable Debt under Section 138 of the Negotiable Instruments Act:
The accused was tried and convicted for the offence under Section 138 of the N.I. Act by the Trial Court, a decision upheld by the Sessions Judge's Court. The complainant alleged that the accused issued a cheque for ?10,00,000, which was dishonored due to "payment stopped." Despite a legal notice, the accused failed to pay the cheque amount. The courts found that the cheque was issued for a legally enforceable debt, supported by the complainant's evidence and documents, including an On-Demand Promissory Note, Consideration Receipt, and Agreement.

2. Admissibility and Relevance of Evidence:
The complainant provided substantial evidence, including his testimony as PW-1 and documents marked as Exs.P-1 to P-9. The accused's witnesses, DW-1 and DW-2, corroborated the complainant's claims. DW-1 confirmed that he wrote the Promissory Note and Consideration Receipt at the accused's request. DW-2, despite being treated as hostile, supported the loan transaction narrative. The accused's failure to produce the Partnership Deed or any other relevant documents weakened his defense.

3. Discrepancy in the Purpose of the Loan:
The accused argued that there was a discrepancy in the stated purpose of the loan. The legal notice mentioned the loan was for business improvement, while the complainant's cross-examination suggested it was for income-tax issues. The court found this discrepancy minor and insignificant in light of the strong evidence supporting the loan transaction.

4. Validity of the Partnership Deed and Its Impact on the Case:
The accused claimed the cheque was issued as security for a Partnership agreement involving the complainant and another individual. However, the accused failed to produce the Partnership Deed or confront the complainant with it during cross-examination. The court ruled that arguments based on an unproduced document could not be considered. The alleged Partnership Deed's existence and its terms were not substantiated by any evidence in the present case.

5. Presumption under Section 139 of the N.I. Act and Its Rebuttal:
The court noted that under Section 139 of the N.I. Act, there is a presumption in favor of the complainant regarding the existence of a legally enforceable debt. The accused's suggestions during the cross-examination of PW-1 indicated an acknowledgment of the loan transaction and the issuance of the cheque. The accused's failure to provide a coherent and supported defense meant that the presumption was not effectively rebutted.

Conclusion:
Both the Trial Court and the Sessions Judge's Court correctly convicted the accused under Section 138 of the N.I. Act. The judgments were based on substantial evidence and were neither perverse nor illegal. The Criminal Revision Petition was dismissed as devoid of merits, and the order of sentence was deemed proportionate to the gravity of the proven guilt. The Registry was directed to transmit copies of the order to the respective courts along with their records.

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