2023 (3) TMI 880 - HC - Indian Laws

Dishonour of Cheque - existence of legally enforceable debt or not - judgment of acquittal is reversed - both the parties undertook the burden to prove on their shoulders - whether the Respondent is successful in rebutting the presumption and whether the Appellate Court was right in reversing the findings of the trial Court? HELD THAT - The law on the point of drawing of presumption and rebuttal of presumption is well settled. The presumption under Sections 118 and 139 of the NI Act were incorporated in the Act so as to enhance the reliability of negotiable instrument. On the basis of negotiable instruments, parties transfer the amount. Parties trust negotiable instruments. So, in order to boost it, these presumptions are incorporated in negotiable instrument. On one hand, there is a presumption attached to negotiable instrument and on the other hand, the drawer of the cheque is given liberty to rebut it. It is always a subject matter of challenge whether that presumption is rebutted or not. How it can be rebutted and whether rebuttal of presumption is as onerous as that of complainant are settled by various interpretations. Only question remains on the basis of facts, can it be said that the presumption got rebutted. The presumption can be rebutted by adducing own evidence or it can be rebutted by challenging the complainant s evidence. In this case, the similar question has arisen. The trial Court held that the offence is proved, whereas, First Appellate Court concluded that Accused succeeded in rebutting the presumption. The correctness of these findings are the subject matter of challenge before this Court. It can very well be said that the Respondent has made out a probable defence. Facts is of two kinds. One is positive fact and another is negative fact. It is difficult to prove negative fact. Similarly, it is difficult for the Respondent to prove that he has not received the plywood. As against this, it is easy to prove positive fact. So, it was the duty of the Appellant to prove that the plywood was in fact delivered. He has failed to do the same. The facts of case of M/s. Prajapati Oil Industry 2003 (11) TMI 644 - GUJARAT HIGH COURT can be differentiated. The conviction under Section 138 of NI Act was confirmed upto High Court. Though accused pleaded no receipt of goods as a defence , he could not substantiate it. The accused has not protested for non receipt of goods. Herein, Accused has stopped payment of cheques and also made his stand clear in notice reply. There is no legally recoverable debt or liability which has accrued in his favour. The Appellate Court was right in concluding that the Respondent has rebutted the presumption. Hence, no case for interference is made out - Appeal dismissed.

Summary

Issues involved:
The judgment involves the conviction of the Respondent-Accused under Section 138 of the Negotiable Instruments Act, 1881 by the Metropolitan Magistrate, which was later set aside by the City Civil Court. The key issues are whether the evidence provided by the Respondent-Accused is sufficient to rebut the presumption and whether the findings of the Appellate Court are correct.

Summary of Judgment:

Compensation and Default Sentence:
The trial Court failed to follow the provisions of Sections 357(1) and 357(3) of the Code of Criminal Procedure, 1973 regarding the awarding of compensation and default sentence. The imprisonment in default of fine exceeded the permissible limit, violating Section 30 of the Cr.P.C. These grounds, along with the Respondent-Accused successfully rebutting the presumption, led to the setting aside of the conviction.

Rebuttal of Presumption:
The Respondent-Accused denied the purchase and delivery of goods in 2005 but admitted issuing cheques. The Appellant failed to prove the delivery of plywood despite issuing cheques, leading to the stoppage of payments. The Respondent's defense was supported by evidence from bank witnesses, indicating a lack of legally recoverable debt or liability. The Appellate Court rightly concluded that the presumption was rebutted.

Legal Principles and Findings:
The judgment relied on various legal precedents to establish the principles of presumption and rebuttal in cases under Section 138 of the NI Act. The burden of proof was on the Appellant to demonstrate the delivery of goods, which was not substantiated during the trial. The Respondent's defense, supported by notice replies and bank evidence, successfully challenged the presumption, leading to the dismissal of the Appeal.

Conclusion:
The High Court upheld the findings of the Appellate Court, confirming that the Respondent-Accused effectively rebutted the presumption under Section 138 of the NI Act. The judgment was deemed well-reasoned, and no grounds for interference were found. Consequently, the Appeal was dismissed.