2022 (7) TMI 709 - HC - Indian Laws

Dishonor of Cheque - discharge of legal liability towards complainant or not - accused has failed to to rebut the onus of proof and statutory presumption or not - preponderance of probabilities - privity of contract - HELD THAT - In the case under NI Act, the cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability. Further, explanation to this section defines the debt and other liability to mean a legally enforceable debt or other liability. In this context, after due appreciation and evaluation of the evidence on record, the learned trial Judge has come to a conclusion that the debt in question cannot be said to be legally enforceable debt and the complainant has failed to prove otherwise. It is observed by the learned trial Judge that in the present case, the complainant has not produced any documentary evidence to prove his case and hence, it cannot be believed that the complainant had a legal dues from the respondent accused. As admitted by the complainant himself, it is clear that there was no privity of contract between the company and the accused. Further, it is also an admitted fact that the contract/agreement was made by Pankajbhai Dhirajlal Varia in his personal capacity and not by the company. Besides, there is nothing on record to show as to how and as to why for the so-called affairs of the company, Pankajbhai Dhirajlal Varia acted in personal capacity. If at all it is believed that the cheques were issued by accused to the company, in that case also, there is not an iota of evidence to show that the cheques were issued for the debt in question inasmuch as no details of transaction, books of accounts or any other document is produced on record to show the privity of contract between the parties. Thus, the presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities - the presumption under Section 139 of the NI Act merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability and existence of legally recoverable debt is not matter of presumption under the said section. In the instant case, from the cross-examination of Pankajbhai Dhirajlal Varia by the accused, it has come on record that there was no contract and/or agreement between the company and the accused but the same was in the personal capacity by Pankajbhai Dhirajlal Varia. Further, Pankajbhai Dhirajlal Varia has not produced original contract/agreement on record. Moreover, as said earlier, the complainant has not produced any books of account and/or any details of transaction between them - when the complainant has failed to fulfill the initial burden of proving the legally enforceable debt, the presumption against the respondent accused is justifiably rebutted. In the considered opinion of this Court, in fleri the complainant has failed to bring home the charge against accused for want of sufficient material. The findings recorded by the learned trial Judge do not call for any interference - Appeal dismissed.

Summary

Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881.
2. Authorization to file the complaint.
3. Presumption under Sections 118(a) and 139 of the NI Act.
4. Evaluation of evidence and standard of proof.
5. Appellate court's scope of interference in acquittal appeals.

Detailed Analysis:

1. Legally Enforceable Debt under Section 138 of the NI Act:
The appellant, engaged in the hotel business, rented out a place to the respondent for hospital activities. Cheques issued by the respondent were dishonored with the endorsement "Account Closed." The trial court concluded that the appellant failed to prove the debt as legally enforceable, a sine qua non for invoking Section 138. The appellant did not produce documentary evidence or books of accounts to substantiate the claim of a legal debt.

2. Authorization to File the Complaint:
The trial court found that the appellant failed to demonstrate proper authorization for filing the complaints. The complaints were filed on behalf of the company by Pankajbhai Dhirajlal Varia, who admitted in cross-examination that the contract was entered in his personal capacity, not by the company. No authorization letter from the company was produced, leading to the conclusion that the complaints were improperly filed.

3. Presumption under Sections 118(a) and 139 of the NI Act:
Sections 118(a) and 139 create a rebuttable presumption that the cheque was issued for the discharge of debt. The trial court noted that the presumption is rebuttable and the respondent successfully raised a probable defense. The appellant failed to prove the existence of a legally enforceable debt, thus the presumption under Section 139 was effectively rebutted.

4. Evaluation of Evidence and Standard of Proof:
The trial court meticulously evaluated the evidence, concluding that the appellant failed to prove the case beyond reasonable doubt. The appellant did not produce any written agreement, books of accounts, or other documentary evidence to substantiate the claim. The court found contradictions in the appellant's statements and lack of evidence to show the privity of contract between the company and the respondent.

5. Appellate Court's Scope of Interference in Acquittal Appeals:
The appellate court emphasized that it has full power to review and re-appreciate evidence but must bear in mind the presumption of innocence and the double presumption favoring the accused. The court noted that interference is warranted only if the trial court's approach is vitiated by manifest illegality or if the conclusions are perverse. The appellate court found that the trial court's judgment was well-reasoned and based on a thorough evaluation of evidence, thus no interference was required.

Conclusion:
The appeals were dismissed, confirming the trial court's judgments acquitting the accused. The trial court's findings were upheld, noting that the appellant failed to prove the existence of a legally enforceable debt and lacked proper authorization to file the complaints. The presumption under Section 139 was rebutted by the respondent, and the trial court's meticulous evaluation of evidence did not warrant interference by the appellate court.