2023 (8) TMI 461 - HC - Indian Laws

Dishonour of Cheque - insufficiency of funds - failing to discharge his initial burden of proof by the complainant - rebuttal of statutory presumption - HELD THAT - On going through the judgements of the learned Magistrate and the learned Session Judge, it is before this court that there is sufficient evidence to show that the cheque was duly issued and after completion of all formalities the proceedings under section 138 NI act was initiated. The findings of the session judge that respondent No.1/complainant completely failed to discharge his initial burden of proof is totally erroneous and bad in law. The Session Judge totally overlooked the fact that Sec 139 N.I Act clearly includes a presumption that there exists a legally enforceable debt or liability. However the presumption is rebuttable by the accused. There is no such requirement of the complainant to discharge his initial burden of proof as held by the Session Judge. The question of failing to discharge his initial burden of proof by the complainant as held by the session is erroneous and bad in law and the judgement under revision is thus liable to be set aside - The case is of the year 2017. Five years have passed. Accordingly the amount of fine is modified to Rupees 4,00,000/- instead of Rs 5,20,000/- to be paid within two months from the date of this judgement, in default the accused shall serve out his sentence of imprisonment in default of fine. The Judgement is hereby set aside - revision disposed off.

Issues Involved:
1. Legality of the judgment by the Additional District & Sessions Judge setting aside the conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Interpretation and application of Section 139 of the Negotiable Instruments Act regarding the presumption of debt or liability.
3. Adequacy of evidence provided by the complainant and the accused's burden of rebuttal.
4. Appropriateness of the fine imposed by the Magistrate.

Issue-wise Detailed Analysis:

1. Legality of the Judgment by the Additional District & Sessions Judge:
The petitioner/complainant sought to set aside the judgment dated 07/08/2019 by the Additional District & Sessions Judge, which overturned the conviction by the Metropolitan Magistrate under Section 138 of the Negotiable Instruments Act. The Sessions Judge acquitted the accused, finding that the complainant failed to discharge the initial burden of proof. The High Court found this interpretation erroneous and bad in law, emphasizing that the presumption under Section 139 of the Negotiable Instruments Act was not properly considered.

2. Interpretation and Application of Section 139 of the Negotiable Instruments Act:
Section 139 of the Negotiable Instruments Act presumes that the holder of a cheque received it for the discharge of debt or liability unless proven otherwise. The High Court highlighted that the Sessions Judge misinterpreted this provision by incorrectly placing the initial burden of proof on the complainant. The presumption under Section 139 is rebuttable, but the onus lies on the accused to provide cogent evidence to the contrary. The High Court cited several Supreme Court judgments, including Bir Singh vs. Mukesh Kumar and Hiten P. Dalal vs. Bratindranath Banerjee, to reinforce the correct interpretation of Section 139.

3. Adequacy of Evidence Provided by the Complainant and the Accused's Burden of Rebuttal:
The High Court noted that the complainant had presented sufficient evidence, including the dishonored cheque and the promissory note, to support the claim. The Sessions Judge's requirement for additional proof from the complainant was deemed unnecessary. The accused's failure to provide substantial evidence to rebut the presumption of debt or liability was also highlighted. The High Court emphasized that mere denial or rebuttal by the accused was insufficient; the accused needed to prove the non-existence of debt or liability through compelling evidence.

4. Appropriateness of the Fine Imposed by the Magistrate:
The Metropolitan Magistrate had imposed a fine of Rs 5,20,000, which was twice the cheque amount, as per Section 138 of the Negotiable Instruments Act. The High Court found this amount excessive given the passage of time since the case was filed in 2017. Consequently, the fine was reduced to Rs 4,00,000, to be paid within two months, with a default clause of imprisonment.

Conclusion:
The High Court set aside the judgment of the Additional District & Sessions Judge and affirmed the conviction by the Metropolitan Magistrate with a modification in the fine amount. The criminal revisional application was disposed of, and no order as to costs was made. The case diary was returned, and all connected applications were disposed of, with interim orders vacated. A copy of the judgment was directed to be sent to the Trial Court for compliance.

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