2021 (8) TMI 439 - HC - Indian Laws

Dishonor of Cheque - acquittal of the accused - legally enforceable debt or not - allegation of clerk misusing the cheque - rebuttal of resumption - Section 139 of N.I.Act - HELD THAT - When the respondent/accused has admitted his signature on the cheque and when the cheque belongs to him, admittedly the appellant/complainant is a holder of the cheque in due course under Section 118 of N.I.Act. Hence, the presumption under Section 139 of N.I.Act is in favour of the appellant/complainant and it is for the respondent/accused to rebut the said presumption, which is mandatory and statutory presumption. The respondent/accused did not lead any defence evidence for rebutting the presumption and he can rebut the presumption by available material, but mere denial does not amount to rebuttal of the presumption. The trial court while considering the transaction has dealt it as if a civil case and casted burden on the appellant/complainant to prove the transaction ignoring the presumption under Section 139 of N.I.Act - The trial court committed an error apparent on the face of the records by casting burden on the appellant/complainant against the mandatory requirement under Section 139 of N.I.Act. The learned Magistrate has erred in holding that there is no legally enforceable debt and committed an error in acquitting the respondent/accused. The judgment of acquittal passed by the learned Magistrate is erroneous, illegal and capricious and as such, it calls for interference by this court in this appeal. The impugned order of acquittal passed by the Principal Senior Civil Judge CJM, Gadag is set aside - Appeal allowed.

Issues:
1. Appeal against judgment of acquittal under Section 378(4) of Cr.P.C.
2. Failure to establish legally enforceable debt under Section 138 of Negotiable Instruments Act.
3. Burden of proof on the respondent/accused to rebut presumption under Section 139 of N.I.Act.
4. Inconsistency in trial court's decision compared to previous cases.
5. Error in casting burden on the appellant/complainant against mandatory presumption under Section 139 of N.I.Act.

Analysis:

1. The appeal was filed against the judgment of acquittal under Section 378(4) of Cr.P.C. by the complainant, challenging the decision of the trial court which acquitted the accused/respondent. The case involved allegations under Section 138 of the Negotiable Instruments Act related to a transaction between the parties concerning the supply of greengram and other food grains.

2. The trial court, after a detailed trial and evidence recording, held that there was no legally enforceable debt established by the appellant/complainant. The court accepted the defense put forward by the respondent/accused regarding his clerk misusing the cheques issued for the repayment of the greengram. The appellant/complainant failed to prove the transaction between himself and the respondent/accused, leading to the acquittal.

3. The appellant/complainant argued that the trial court erred in not considering the presumption in his favor under Section 139 of the N.I.Act. It was emphasized that the respondent/accused did not dispute ownership of the cheques or his signature on them. The burden was on the respondent/accused to rebut the presumption, which he failed to do by merely denying the allegations without providing substantial evidence.

4. Notably, the trial court's decision was inconsistent with previous cases arising from the same transaction, where the respondent/accused was convicted. The appellant/complainant highlighted these inconsistencies and sought to set aside the acquittal judgment based on the past legal outcomes related to the transaction.

5. The High Court emphasized that the trial court erred in treating the case as a civil matter and shifting the burden of proof onto the appellant/complainant. Relying on legal precedents, the court clarified that the initial presumption is in favor of the complainant under Section 139 of the N.I.Act. The respondent/accused's defense of clerk misuse of cheques was previously negated in earlier cases, making it imperative for him to establish the absence of a transaction and the non-existence of a legally enforceable debt.

6. Ultimately, the High Court allowed the appeal, setting aside the acquittal order and convicting the respondent/accused under Section 138 of the N.I.Act. A fine was imposed, with a portion allocated as compensation to the appellant/complainant and the remainder directed to the State Treasury. The court emphasized the importance of upholding the statutory presumptions and ensuring justice in cases involving negotiable instruments.

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