2022 (1) TMI 707 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - discharge of legally enforceable debt or not - rebuttal of statutory presumption - HELD THAT - Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable probability of the non-existence of the presumed fact. During cross-examination, it is noticed by this court that the complainant did not make any attempt to deny about the said factual aspects, as surfaced from the chief-examination of DW-2. During cross-examination, it has further come to light that the said amount of ₹ 14 lakh was paid to the complainant out of the liability of the entire partnership firm. Both DW- 1 and DW-2 have affirmed that though the payment of ₹ 14 lakh to the complainant was out of the liability of the partnership firm, but, since there was no sufficient fund in the account of the partnership firm, the respondent no. 1 had issued a cheque of ₹ 14 lakh to the complainant from his personal account - during examination under Section 313 Cr.P.C., the respondent no. 1 has specifically stated that he had issued two cheques to the complainant on good faith and the complainant had returned the cheque being no. 648413, but, he did not return the cheque being no. 648416. Moreso, this plea of the respondent no. 1 has been proved when he adduced evidence to support his plea. In the instant case, the respondent no. 1 came forward to adduce evidence and in the opinion of this court, the respondent no. 1 had successfully rebutted the presumption of law, which is supposed to be drawn in favour of the appellant-complainant - Since this court is satisfied that the view taken by the learned trial court is a probable one, then, this court is not inclined to disturb or dislodge the findings of the learned trial court. It is settled proposition of law that when there are two probable views, the view favourable to the accused should be accepted by the court. Appeal dismissed.

Summary

Issues Involved:
1. Legally enforceable debt.
2. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act.
3. Evaluation of evidence and business relationship.
4. Probable view and acquittal.

Issue-wise Detailed Analysis:

1. Legally enforceable debt:
The primary issue in this case revolves around whether the complainant has a legally enforceable debt to the respondent. The complainant alleged that he loaned ?14,00,000 to the respondent, who issued a cheque (No. 648416 dated 04.02.2015) in discharge of this liability. The cheque was dishonored due to insufficient funds, and despite a statutory notice, the respondent failed to repay the amount, leading to the complaint under Section 138 of the Negotiable Instruments Act.

2. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act:
The complainant argued that the respondent's failure to respond to the statutory demand notice should lead to a presumption of indebtedness under Section 139 of the Negotiable Instruments Act. The complainant relied on precedents like *Rangappa vs. Sri Mohan* and *APS Forex Services Pvt. Ltd. vs. Shakti International Fashion Linkers*, which establish that the burden of proof shifts to the accused to rebut the presumption of a legally enforceable debt. However, the respondent contended that the cheque was issued in the context of a partnership business and provided evidence, including an agreement dated 03.01.2015, to support this claim.

3. Evaluation of evidence and business relationship:
The court examined the evidence presented by both parties. The complainant's case lacked details about the loan transaction, such as the date and terms of repayment. In contrast, the respondent produced witnesses and documents, including an agreement (Exhibit A-2), showing that the cheque was related to a partnership business and not a personal loan. The respondent also demonstrated partial repayment through cash and materials, which the complainant did not effectively dispute during cross-examination.

4. Probable view and acquittal:
The court emphasized the principle that when two probable views exist, the one favoring the accused should be accepted. The respondent successfully rebutted the presumption of a legally enforceable debt by providing credible evidence of the business context and partial repayment. The trial court's view was deemed probable, and thus, the High Court found no merit in the appeal. The appeal was dismissed, upholding the trial court's judgment of acquittal.

Conclusion:
The High Court dismissed the appeal, concluding that the respondent had successfully rebutted the presumption of a legally enforceable debt, and the trial court's judgment of acquittal was based on a probable view supported by evidence.