2022 (4) TMI 63 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - failure on the part of the respondent to pay the amount despite demand - existence of legal debt or liability against the respondent - preponderance of probabilities - Section 145 of the Negotiable Instrument Act - HELD THAT - The presumption enshrined under Section 139 of the Negotiable Instrument Act is not absolute and is rather rebuttable presumption. The accused would be discharged of the presumption, the moment an accused raises reasonable suspicion with respect to the due execution of the cheque. It is not incumbent upon an accused to lead evidence and even subjecting the complainant to cross-examination on such aspects can be taken as sufficient grounds to shift the burden upon the complainant to establish that the debt in question was duly advanced to the drawer of the cheque - the burden of proof would thereafter shift upon the complainant to prove that the cheque had been executed in discharge of a pre-existing liability/legally enforceable debt. Existence of legally enforceable debt is a pre-requisite for issuance of a cheque. 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 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 instrument 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 nonexistence 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. It is evident from a perusal of the facts and the position in law noticed above that the respondent-accused had taken a specific plea that there was no transaction ever amongst the complainant and the accused and that the cheque in question had been handed over by her to Priya Kapoor towards a chit fund committee and the same was not in discharge of any liability. The same was rather in the nature of an investment. The said cheque has been misused by Priya Kapoor in connivance with the appellant - Financial capacity of a person to pay would not necessarily mean that the amount in question had been advanced to an accused. The obligation is upon the complainant to establish, when a question is raised about the ability and the fact of having advanced a loan, that not only did the complainant have the financial capacity to advance the amount claimed to have been advanced but also that such an amount was actually advanced. The complainant failed to establish the same by any cogent and convincing evidence. All the material facts already stand examined by the Chief Judicial Magistrate Tarn Taran. It cannot be said that the finding so recorded by the Chief Judicial Magistrate, Tarn Taran is perverse or suffers from legal infirmity or impropriety or that the conclusion so drawn by the Chief Judicial Magistrate, Tarn Taran is not tenable upon reading of such evidence. The appeal is dismissed.

Summary

Issues Involved:
1. Challenge to the judgment of acquittal under Section 138 of the Negotiable Instruments Act.
2. Presumption under Section 139 of the Negotiable Instruments Act.
3. Financial capacity and burden of proof.
4. Scope of interference by the appellate court in an appeal against acquittal.

Detailed Analysis:

1. Challenge to the Judgment of Acquittal under Section 138 of the Negotiable Instruments Act:
The appellant challenged the judgment and order dated 05.07.2019 by the Judicial Magistrate 1st Class, Tarn Taran, which acquitted the accused-respondent under Section 138 of the Negotiable Instruments Act. The appellant claimed that the accused borrowed ?2,40,000 on 13th June 2016, promising repayment by August 2017. An agreement was executed, and a cheque issued by the respondent was dishonored due to insufficient funds. Despite a legal notice, the respondent failed to repay, leading to the complaint under Section 138.

2. Presumption under Section 139 of the Negotiable Instruments Act:
The appellant argued that the trial court misinterpreted the presumption under Section 139 of the Negotiable Instruments Act. The appellant contended that the burden of proof should not have been shifted to him once the signature on the cheque was undisputed. The appellant referenced judgments, including Sukhjinder Singh Vs. Buta Singh and Bir Singh Vs. Mukesh Kumar, to argue that even a blank cheque, if signed, attracts the presumption under Section 139 unless cogent evidence is presented to show it was not issued for debt discharge.

3. Financial Capacity and Burden of Proof:
The trial court found discrepancies in the appellant's case, such as the absence of evidence regarding the exact date of the loan demand, failure to examine key witnesses (Vinod Kumar and Priya Kapoor), and lack of proof of the agreement. The appellant's financial capacity to lend the amount was questioned, and the appellant failed to produce his income tax returns or business records to substantiate the loan. The court emphasized that the presumption under Section 139 is rebuttable, and the accused raised sufficient suspicion regarding the cheque's execution and the alleged debt.

4. Scope of Interference by the Appellate Court in an Appeal Against Acquittal:
The appellate court reiterated that it must be cautious in interfering with an acquittal. The presumption of innocence is strengthened by an acquittal, and interference is justified only for substantial and compelling reasons. The findings of the trial court are generally upheld unless they are perverse or suffer from legal infirmity. The appellate court emphasized that the trial court's findings were based on a thorough appreciation of evidence, and no compelling reasons were found to overturn the acquittal.

Conclusion:
The appellate court found no merit in the appeal. The respondent's specific plea that the cheque was handed over to Priya Kapoor for a chit fund and not for debt discharge was supported by the absence of key witness testimonies and the appellant's failure to prove the financial transaction. The trial court's judgment was not perverse or legally infirm, and the appellate court upheld the acquittal, dismissing the appeal.