2022 (3) TMI 448 - HC - Indian Laws

Dishonor of cheque - legally enforceable debt or not - acquittal of the accused - rebuttal of presumption - Whether the judgment of acquittal passed by the trial Court is perverse, capricious and arbitrary so as to call for interference by this Court? - HELD THAT - It is mandatory for drawing presumption under Section 139 of N.I. Act regarding existence of legally enforceable debt and onus to rebut the same is on the accused. But, admittedly, in the instant case, except giving some explanation, no attempt has been made by accused to rebut the said presumption. Further, admittedly accused has admitted his signature on the cheque and that the cheque belongs to him. His defence regarding cheque issued towards security to one Balu is not established. Under these circumstances, the ingredients of Section 138 of N.I. Act have been established by the complainant. The learned Magistrate was carried-away by making unnecessary observation without there being any specific defence and hence approach of the learned Magistrate is perverse, erroneous and arbitrary, and it has led to miscarriage of justice. The learned Magistrate has not considered the materials placed before the Court properly, while acquitting the accused and has also not considered the statutory presumption in favour of the complainant under Sections 118 and 139 of N.I. Act. As such, the trial Court has erred in acquitting the accused and the same requires to be interfered by this Court. This is a fit case to reverse the finding of the trial Court - the point under consideration is answered in the affirmative - Appeal allowed.

Summary

Issues Involved:
Appeal challenging judgment of acquittal under Section 138 of Negotiable Instruments Act.

Detailed Analysis:

1. Background and Facts:
The appellant filed an appeal challenging the judgment of acquittal passed by the trial Court under Section 138 of the Negotiable Instruments Act. The case involved a hand-loan of ?1,75,000 given by the complainant to the accused for his hotel business expansion, with a cheque issued by the accused towards repayment, which was dishonored due to insufficient funds.

2. Legal Presumptions and Burden of Proof:
The appellant contended that the trial Court failed to draw a presumption under Section 139 of the N.I. Act in favor of the complainant despite the accused admitting his signature on the cheque. The legal presumption under Section 139 is rebuttable, and the burden to rebut lies on the accused by providing material evidence.

3. Rebuttal Evidence by Accused:
The accused claimed that the cheque was issued as security to another individual for a smaller amount, not to the complainant. However, the accused failed to produce substantial evidence to support this claim, and the cheque itself was made out to the complainant for the larger amount.

4. Notice and Lack of Response:
The complainant issued a legal notice after the cheque bounced, which the accused received but did not respond to adequately. The accused's failure to respond promptly or provide a valid defense contributed to the presumption in favor of the complainant.

5. Judicial Precedents and Legal Interpretation:
Citing legal precedents, the appellant argued that the trial Court erred in not considering the statutory presumptions under the N.I. Act, leading to a flawed judgment. The appellant highlighted the obligation on the accused to rebut the presumption of a legally enforceable debt, which was not effectively done in this case.

6. Judgment and Decision:
After a detailed analysis of the evidence and legal arguments, the High Court allowed the appeal, setting aside the judgment of acquittal. The accused was convicted under Section 138 of the N.I. Act and sentenced to pay a fine of ?3,00,000, with a provision for imprisonment in default. A portion of the fine was directed to be paid as compensation to the complainant.

This comprehensive analysis outlines the key legal issues, evidentiary considerations, and the reasoning behind the High Court's decision to reverse the trial Court's judgment of acquittal in the case.