2022 (9) TMI 610 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - existence of legally enforceable debt or not - Acquittal of the accused - rebuttal of statutory presumption - section 138 of NI Act - HELD THAT - As per the case of the complainant, the accused has availed hand-loan of Rs. 1,35,000/- from him and in discharge of the said debt, a cheque under Ex. P1 came to be issued. There is no serious dispute of the fact that the cheque belongs to the accused. Further, the accused has also no disputed his signature on the cheque. Hence, prima facie there is a statutory presumption in favour of the complainant under Sections 118 and 139 of the N.I. Act. However, the said presumptions are rebuttable presumptions. Apart from that, it is also important to note here that the complainant is required to prove his case beyond all reasonable doubt - If the accused is able to create some dent in the case of the complainant, then the statutory presumption stands rebutted and the burden again shifts on the complainant. The offence under Section 138 of the N.I. Act is attracted only if the cheque in dispute is being issued towards legally enforceable debt. In the instant case, though the complainant has asserted that he had advanced hand-loan of Rs. 1,35,000/-, the evidence discloses that, he has failed to establish his financial status to advance such a huge amount to the accused. Further, Ex. D3 discloses that, on behalf of Vajravelu, notice has been issued to the accused for repayment of the hand-loan - it is evident that the complainant has failed to substantiate his contention that Ex. P1 was issued in discharge of legally enforceable debt. Non-reply to the legal notice itself cannot establish the defence or financial status of the complainant. No illegality or infirmity is found in the judgment of acquittal passed by the trial Court. Considering these facts and circumstances, the point under consideration is answered in the negative. Appeal dismissed.

Summary

Issues:
- Appeal challenging acquittal under Section 138 of the Negotiable Instruments Act, 1881.
- Burden of proof on complainant to establish legally enforceable debt.
- Rebuttable presumptions under Sections 118 and 139 of the N.I. Act.
- Examination of evidence and defense raised by the accused.
- Analysis of financial status and credibility of the complainant.
- Consideration of documentary evidence and legal notice non-reply.
- Judgment of the trial court and decision on the appeal.

Detailed Analysis:

1. The appeal challenges the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that the accused failed to repay a hand-loan, leading to the issuance of a dishonored cheque. The trial court acquitted the accused, prompting the appeal.

2. The burden of proof lies on the complainant to establish a legally enforceable debt. The complainant claimed the accused borrowed Rs. 1,35,000, but the defense contended the cheques were issued to the complainant's son-in-law. The complainant must prove the debt beyond reasonable doubt.

3. Statutory presumptions under Sections 118 and 139 of the N.I. Act favor the complainant as the holder of the cheque. However, these presumptions are rebuttable, and the accused can shift the burden by casting doubt on the complainant's case.

4. The accused's defense included issuing cheques to the son-in-law due to a separate transaction and disputed any financial dealings with the complainant. The accused's evidence aimed to discredit the complainant's claims.

5. The examination of the complainant's financial status revealed gaps in evidence. The complainant's retirement and lack of substantial proof of income raised questions about his ability to lend a significant amount without security or interest.

6. Documentary evidence, including a notice from the son-in-law demanding repayment, was not adequately addressed by the complainant. Failure to produce crucial evidence and lack of financial substantiation weakened the complainant's case.

7. The trial court's judgment considered all evidence and concluded the complainant failed to prove a legally enforceable debt. The acquittal was deemed justified, indicating a proper analysis of facts and evidence.

8. The appellate court upheld the trial court's decision, dismissing the appeal and confirming the acquittal of the accused. The judgment was found to be legally sound and devoid of merit for appeal, thus concluding the legal proceedings in favor of the accused.