2023 (7) TMI 1232 - HC - Indian Laws

Dishonour of Cheque - insufficiency of funds - acquittal of the accused - discharge of liability or not - Burden of rebuttal of presumption - Section 138 of the Negotiable Instruments Act. Burden of rebuttal of presumption - HELD THAT - The presumption mandated by Section 139, does indeed include the existence of a legally enforceable debt or liability. Bare denial of the passing of the consideration and existence of debt, is not enough to rebut the presumption. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complaint in a criminal trial - Apart from adducing direct evidence to prove that the consideration did not exist, or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. In the present case, the accused persons could not/did not discharge their liability under Section 139 of the N.I Act. The complainant has proved the issuance of the cheque by the accused firm by a partner. No evidence otherwise has been adduced. The dishonour of the cheque and the due service of notice has also been duly proved. Thus, the findings of the trial court being not in accordance with the evidence on record and with law is liable to be set aside. The cheque is of the year 2002. More than 20 years have passed. The complainant has proved his case against the accuseds/respondents by way of oral evidence and documents. The accuseds/respondents no. 1 to 3 are found guilty and convicted of offence punishable under Section 138 of the N.I. Act and sentenced to pay compensation of Rs.50 lakhs within one month from the date of this order, in default to suffer simple imprisonment for a period of one year in respect of respondents/accuseds no.2 and 3 and attachment in respect of the respondent/accused no.1 firm. Appeal disposed off.

Summary

Issues Involved:

1. Appeal against acquittal under Section 138 of the Negotiable Instruments Act.
2. Appellant's case regarding dishonored cheque and legal enforceability of debt.
3. Defence case and arguments against the existence of legal liability.
4. Analysis of evidence and legal presumptions under the Negotiable Instruments Act.
5. Conclusion and final judgment.

Summary:

1. Appeal Against Acquittal:
The appeal was filed against the Judgment and Order dated 03.02.2016 by the Judicial Magistrate, Asansol, which acquitted the accused/respondents of the charge under Section 138 of the Negotiable Instruments Act.

2. Appellant's Case:
The appellant, a sole proprietor of M/s. Kuldip Service Station, alleged that the accused, partners of M/s. G. S. Atwal & Co., issued a cheque for Rs.35 lakhs, which was dishonored due to insufficient funds. A notice was sent under Section 138 of the Negotiable Instruments Act, but the payment was not made within the stipulated period. The appellant filed a complaint, and the accused were examined under Section 251 of the Code of Criminal Procedure. The trial court acquitted the accused, leading to the present appeal.

3. Defence Case:
The defence argued that the cheque was part of a forgery case against the appellant, who was discharged from the case. The accused claimed the cheque was not issued against a legally enforceable debt or liability. The trial court concluded that the appellant failed to prove the existence of a partnership and the legal enforceability of the debt.

4. Analysis of Evidence:
The evidence showed that the cheque was issued by the accused firm and signed by a partner. The trial court's finding that the accused raised a probable defense was against the provisions of Section 139 of the N.I. Act, which presumes the existence of a legally enforceable debt unless rebutted by the accused. The Supreme Court's precedents emphasize that the burden of proof lies on the accused to rebut this presumption.

5. Conclusion:
The accused failed to discharge their liability under Section 139 of the N.I. Act. The complainant proved the issuance and dishonor of the cheque, and the due service of notice. The trial court's findings were not in accordance with the evidence and law. The appeal was allowed, and the acquittal was set aside. The accused were found guilty under Section 138 of the N.I. Act and sentenced to pay compensation of Rs.50 lakhs within one month, failing which they would face simple imprisonment for one year and attachment of the respondent firm.

The judgment was sent to the trial court for compliance, and all connected applications were disposed of.