2022 (4) TMI 926 - HC - Indian Laws

Dishonor of Cheque - acquittal of accused - discharge of legally enforceable debt or not - it is contended by petitioner that once it is admitted by the accused that he signed the cheques which were subsequently dishonoured, presumption of a legally enforceable debt or liability arises and the accused can be held guilty under Section 138 NI Act unless it is rebutted by the accused by adducing evidence - whether an accused charged under Section 138 NI Act can be let off on such grounds after it is proved that cheques were issued by him and the same were dishonoured and despite receiving notice he did not refund the cheque amount to the complainant? HELD THAT - In a series of judgments, the Apex Court has held that in view of Section 139 NI Act, it has to be presumed that a cheque duly executed was issued for discharge of a debt or other liability. But the presumption is rebuttable by proving the contrary by adducing evidence. So once the execution of the cheque is admitted, a mandatory presumption arises against the accused that the same was issued in discharge of his debt or other liability towards the complainant. Accused cannot escape by saying that he issued a blank cheque in favour of the complainant and the complainant put the figures therein to implicate the accused in a false case. The Apex Court in BIR SINGH VERSUS MUKESH KUMAR 2019 (2) TMI 547 - SUPREME COURT succinctly held that once a person signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque has been issued for payment of a debt or in discharge of a liability. It has also been held by the apex court by the said judgment that even if a blank cheuqe is voluntarily presented to the payee, towards some payment, the payee may fill up the amount and other particulars which itself would not invalidate the cheque. The cross examination of the complainant PW-1 would demonstrate that accused did not deny execution of the impugned cheque. He did not also deny his transaction with the complainant. Rather during his examination under Section 313 Cr.P.C he stated that he had a business transaction with the complainant for which he issued a blank cheque which was misused by the complainant. Accused did not adduce any evidence at all to establish such defence case in rebuttal of the presumption arising against him under Section 139 NI Act - Once the execution of the cheque is admitted, mere denial regarding existence of debt cannot save the accused. In the given case the accused other than cross examining the complainant PW-1 did not adduce any evidence at all to rebut the statutory presumption arising against him under Section 139 NI Act. Learned trial court as well as the appellate court seems to have overlooked these aspects of the case - this court should interfere with the concurrent findings of the courts below for correcting miscarriage of justice. Accordingly the judgment and order of acquittal of the accused passed by the trial court and the impugned judgment passed by the appellate court affirming the judgment and order of acquittal are hereby set aside. The case is remanded back to the trial court to decide the matter afresh by delivering judgment after re-appreciation of the facts and circumstances of the case and evidence on record as well as the evidence that may be adduced by the accused to rebut the presumptions under Section 139, NI Act, if he so desires - matter disposed off.

Summary

Issues Involved:
1. Whether the accused issued the impugned cheques in favor of the complainant in discharge of an existing debt.
2. Whether the cheques were dishonored due to insufficiency of funds in the account of the accused.
3. Whether the complainant issued a demand notice to the accused and whether the accused failed to refund the money despite receiving the demand notice.

Issue-wise Detailed Analysis:

1. Issuance of Cheques in Discharge of Existing Debt:
The trial court framed the issue of whether the accused issued the impugned cheques in favor of the complainant in discharge of an existing debt. The complainant alleged that the accused borrowed ?1 lakh on 10.08.2014 and another ?1 lakh on 24.08.2014, promising to repay within six months. Despite repeated requests, the accused did not repay the amount. The accused issued two cheques, which were subsequently dishonored due to insufficient funds. The trial court, however, found that the complainant failed to prove that the cheques were issued in discharge of an existing debt. The Sessions Judge noted discrepancies in the complainant's statements regarding the loan transaction and concluded that the presumption under Sections 118 and 139 of the NI Act had been rebutted by the defense. The High Court emphasized that once a cheque is signed and handed over, a presumption arises that it was issued for discharge of a debt or liability, which the accused must rebut by evidence.

2. Dishonor of Cheques Due to Insufficiency of Funds:
The trial court found that the complainant proved the cheques were dishonored due to insufficient funds in the accused's account. Despite this finding, the court ultimately ruled against the complainant, concluding that the cheques were not issued to discharge an existing debt. The High Court reiterated that the dishonor of cheques due to insufficient funds, combined with the accused's admission of signing the cheques, raises a statutory presumption of liability under Section 139 of the NI Act.

3. Issuance and Response to Demand Notice:
The trial court held that the complainant successfully proved that a demand notice was issued to the accused, and the accused failed to refund the money despite receiving the notice. The High Court noted that the accused did not deny the transaction with the complainant during cross-examination and admitted to issuing a blank cheque for facilitating their joint timber business. The High Court emphasized that mere denial of the existence of debt is insufficient to rebut the statutory presumption under Section 139 of the NI Act.

Conclusion:
The High Court concluded that the trial court and the Sessions Judge overlooked the statutory presumption arising under Section 139 of the NI Act. The accused did not provide sufficient evidence to rebut the presumption that the cheques were issued in discharge of a debt. The High Court set aside the judgments of the trial court and the Sessions Judge, remanding the case back to the trial court for re-appreciation of the evidence and delivering a fresh judgment within three months.