2022 (3) TMI 683 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt or not - rebuttal of statutory presumption under Section 139 of the Negotiable Instruments Act, 1881 - petitioner had been convicted for offences u/s 138 - HELD THAT - It is a settled proposition of law that presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from a presumption of fact, such a presumption is a rebuttable presumption and the drawer of the cheque may dispel the same. The aforesaid position in law stands settled in the judgment of the Hon'ble Supreme Court in the matter of Hiten P. Dalal Vs. Bratindranath Banerjee 2001 (7) TMI 1172 - SUPREME COURT . It was, thus, held that the obligation on the prosecution may be discharged with the help of presumption of law or fact, unless, the accused adduces evidence showing reasonable possibility of the non-existence of the presumed fact. Thus, to say that if the facts required to form the basis of a presumption of law exist, there is no discretion left with the Court but to draw the statutory conclusion, but the same does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. The rebuttal does not have to be conclusively established, but such evidence must be adduced in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the 'prudent man'. The law is thus well settled that in order to rebut the statutory presumption, an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. The Court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated - To disprove the presumption, an accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or that their non-existence was so probable that a prudent man, would under the circumstances of the case, act upon the plea that they did not exist. The petitioner having denied issuance of the cheque and having denied receipt of any money from the complainant or having any transaction with him coupled with the circumstances, the presumption of law under Section 139 of the Negotiable Instruments Act would not continue to exist against the accused-petitioner and the burden would shift upon the complainant to establish that the transaction in question had duly taken place and that the cheque had been issued to him in discharge of a legally enforceable debt - The failure to display prudence of an ordinary person and to establish his capacity to advance the sum to the petitioner give rise to a suspicion against presence of an enforceable debt against the petitioner and thus tilting the balance in favour of the accused. The burden lies on the complainant to prove his case against the accused, in whose favour, there is a presumption of innocence. The judgment passed by the Courts below are conjectural and are not based upon objective assessment of the material adduced on record. The Courts below have failed to take account of the shift of onus on the complainant to establish having advanced the money and that the cheque in question had been duly issued to him in discharge of the liability and to have proceeded solely on the basis of presumption under Section 139 of the Negotiable Instruments Act, 1881 ignoring all other circumstances. Petition allowed.

Issues Involved:
1. Challenge to the judgment of conviction and sentence under Section 138 of the Negotiable Instruments Act.
2. Presumption under Section 139 of the Negotiable Instruments Act.
3. Financial capacity of the complainant to advance the loan.
4. Failure of the accused to respond to the legal notice.
5. Burden of proof and rebuttal of presumption by the accused.
6. Evaluation of evidence and cross-examination of both parties.

Issue-wise Detailed Analysis:

1. Challenge to the Judgment of Conviction and Sentence under Section 138 of the Negotiable Instruments Act:
The petitioner challenged the impugned judgment dated 04.03.2021 by the Additional Sessions Judge, Panipat, and the judgment of conviction dated 17.12.2019 and order of sentence dated 19.12.2019 by the Judicial Magistrate 1st Class, Panipat. The petitioner was convicted for offenses under Section 138 of the Negotiable Instruments Act and sentenced to six months imprisonment and ordered to pay ?2,02,500 as compensation to the complainant.

2. Presumption under Section 139 of the Negotiable Instruments Act:
Section 139 of the Negotiable Instruments Act raises a statutory presumption in favor of the holder of a cheque. The court must presume the cheque was issued for the discharge of any debt or liability unless the contrary is proved. This presumption is a rebuttable presumption, and the burden shifts to the accused to dispel it.

3. Financial Capacity of the Complainant to Advance the Loan:
The complainant alleged that he advanced ?1,35,000 to the accused without any written endorsement. However, during cross-examination, the complainant admitted he had no proof of income or any written receipt for the transaction. The complainant's monthly income was ?15,000, and he lived in rented accommodation, raising doubts about his financial capacity to lend such an amount.

4. Failure of the Accused to Respond to the Legal Notice:
The accused did not respond to the mandatory legal notice issued by the complainant, which was argued to be an indication of acceptance of liability. However, the accused contended that the cheque was stolen and misused by the complainant, and he had no dealings with the complainant.

5. Burden of Proof and Rebuttal of Presumption by the Accused:
The accused argued that the statutory presumption under Section 139 of the Act was rebuttable and that the complainant failed to prove the cheque was issued in discharge of a legally enforceable debt. The accused presented an affidavit stating the cheque was stolen from his shop, and the complainant failed to provide any evidence to the contrary.

6. Evaluation of Evidence and Cross-examination of Both Parties:
The complainant failed to provide any concrete evidence or witnesses to support the alleged loan transaction. The accused's affidavit and cross-examination revealed inconsistencies in the complainant's statements. The trial court's judgment was found to be mechanical and not based on an objective assessment of the evidence.

Conclusion:
The court concluded that the petitioner successfully rebutted the presumption under Section 139 of the Negotiable Instruments Act. The complainant failed to prove the existence of a legally enforceable debt and his financial capacity to lend the amount. The judgments of the lower courts were set aside, and the petitioner was acquitted. The petition was allowed.

← Previous Next →