2022 (2) TMI 402 - HC - Indian Laws

Dishonor of cheque - insufficiency of funds - discharge of legally enforceable debt or not - commission of offence u/s.138 of N.I.Act established or not - invocation of rebuttal of presumption - HELD THAT - On scrutiny of evidence and the reasons assigned by the Trial Court, there are no reason to disturb the findings of Trial Court and the order of acquittal. The judgment is supported by cogent reasons which indicate that the Court has appreciated the evidence. On scrutiny of evidence it is evident that the complainant has not established that the cheque was issued in discharge of legally enforceable debt. The cross-examination of witnesses show that from time to time the accused had deposited the amount. It is not proved beyond doubt that the applicant had liability of ₹ 1,00,000/- towards complainant. There is overwriting in respect of dates in Exhibit-47. In Exhibit-46 after the cheque number, amount is not mentioned. There were discrepancies in the letter issued by the complainant and the evidence of witnesses about the liability of accused which creates doubt - To invoke presumption u/s.139 of N.I.Act, at least foundational facts about the liability have to be established by the complainant. The Trial Court has considered these aspects and by assigning reasons acquitted the accused. The complainant has not proved that the cheque was issued in respect of the legally enforceable liability. Considering the evidence before the Trial Court in the form of depositions of the witnesses and the documentary evidence, there are no reason to take a different view other than Trial Court - appeal dismissed.

Issues Involved:
1. Whether the Trial Court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881.
2. Whether the cheque was issued in discharge of a legally enforceable debt.
3. Whether the demand notice was properly served and proved.
4. Whether the presumption under Section 139 of the N.I. Act was correctly applied.

Detailed Analysis:

1. Whether the Trial Court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881:
The State of Maharashtra appealed against the acquittal of the accused by the Judicial Magistrate, First Class, Solapur. The accused was acquitted of the offence under Section 138 of the N.I. Act, which pertains to the dishonor of cheques due to insufficient funds. The appellant argued that the Trial Court did not appreciate the evidence properly and overlooked the presumption under Section 139 of the N.I. Act.

2. Whether the cheque was issued in discharge of a legally enforceable debt:
The complainant, a dairy manager, alleged that the accused, an agent, owed ?1,00,000 for milk supplied. The accused issued a cheque dated 10th March 2003, which was dishonored. Despite a notice demanding payment, the accused failed to pay. However, the Trial Court found discrepancies in the evidence. The complainant did not file the agreement between the parties, the statement of accounts, or the intimation of stopping milk supply. The accused had made payments from time to time, and there was no clear proof of an outstanding liability of ?1,00,000. The cheque was also not deposited on the date it bore, and there were variations in the ink and handwriting on the cheque.

3. Whether the demand notice was properly served and proved:
The complainant claimed to have issued a notice on 10th April 2003, demanding payment. However, the complainant did not provide the RPAD receipt or prove the notice in evidence. The Trial Court noted that the complainant failed to prove that the notice was served on the accused, a crucial requirement under Section 138 of the N.I. Act.

4. Whether the presumption under Section 139 of the N.I. Act was correctly applied:
Section 139 of the N.I. Act presumes that the cheque was issued for discharging a debt or liability. However, the complainant must establish foundational facts about the liability. The Trial Court found that the complainant did not establish these foundational facts, as there were discrepancies in the evidence and vital documents were missing. The defense argued that the cheque was given as security and not for an outstanding debt. The Trial Court found this defense probable and noted that the complainant did not prove the dishonor of the cheque or the issuance of the notice.

Conclusion:
The High Court upheld the Trial Court's judgment, finding no reason to disturb the acquittal. The complainant failed to prove that the cheque was issued for a legally enforceable debt, that the demand notice was served, and that the presumption under Section 139 was applicable. The appeal was dismissed, and the order of acquittal was affirmed.

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