2020 (11) TMI 1121 - HC - Indian Laws

Dishonour of Cheque - ingredients for attracting the provisions of Section 138 of NI Act fulfilled or not - rebuttal of presumption u/s 139 of NI Act - order of acquittal passed by the trial Court is justified or not. HELD THAT - It is necessary for this Court to analyze and reevaluate the evidence adduced by both parties before the trial Court. On careful examination of the evidence adduced by appellant herein, it is noticed that the evidence is verbatim the same as stated in the legal notice got issued by appellant, wherein appellant has clearly stated regarding hand loan having been taken by respondent on 2.4.2007, towards repayment of which respondent got issued the present cheque bearing No.222371 dated 1.6.2007 for Rs. 2,50,000/-. Since complaint is filed for the offence punishable under section 138 of the Act, there is a presumption in favour of the holder of cheque and this presumption is in favour of complainant/appellant. Unless contrary is proved by respondent, it is presumed that holder of cheque has received it in discharge of whole or part of any debt or other liability. Therefore the presumption accorded by the statute under section 139 of the Act is in favour of appellant which will have to be rebutted by respondent with cogent and satisfactory evidence either by documentary or oral evidence to shift the burden of proof on the appellant. On careful understanding of provisions of section 118 of the Act, it is clear that when any negotiable instrument is made, every such instrument is endorsed, negotiated or transferred for consideration. Therefore it is clear that any cheque has been drawn in favour of a holder, there is a presumption in law that such cheque has been made or indorsed for a consideration and that the said consideration is towards discharge in whole or in part of any debt or other liability. When this being the presumption enshrined in the Act, it is no doubt a rebuttable presumption, but such rebuttal of the presumption has to be made by respondent through cogent and believable evidence either oral or documentary to the satisfaction of the Court thereby disproving the theory and case put forward by appellant. In the present facts of case, it is to be seen whether respondent has been able to rebut the presumption cast on him. In order to rebut the presumption in favour of appellant, respondent will have to plead sufficient, satisfactory and cogent evidence either oral or documentary. To such an extent it would create a doubt in the mind of Court which should be a probable defence and not merely suggestions and questions which are not admitted and denied by PW.1 appellant. On a careful examination of Ex.D.4, it also does not reveal whether these alleged so called daily payments have been received by appellant, towards repayment of loan of either Rs. 35,000/- or Rs. 2,50,000/-. Hence in the facts and circumstances of the present case and material evidence of both parties, respondent has not adduced any evidence to raise a probable defence. Therefore the burden has not shifted on appellant to answer such rebuttal of respondent. The appellant has clearly made out the necessary ingredients to attract provisions of Section 138 of the Act and has proved the guilt of accused to be punished for the offence under Section 138 of the Act. As such, the impugned order of acquittal passed by the trial Court deserves to be set aside and respondent/accused is liable to be convicted for the offence punishable under Section 138 of the Act. The Judgment of acquittal passed by the Principal Civil Judge (Jr.Dn) and J.M.F.C., Bhatkal in C.C.No.2039/2007 dated 27.11.2010 is set aside. Respondent/accused is convicted for the offence punishable under Section 138 of the Act - Appeal allowed.

Summary

Issues Involved:

1. Whether the appellant/complainant has fulfilled the ingredients for attracting the provisions of Section 138 of the Negotiable Instruments Act?
2. Whether the respondent has rebutted the presumption cast on him under Section 139 of the Negotiable Instruments Act?
3. Whether the order of acquittal passed by the trial court is justified considering the facts and circumstances of the case?

Issue-wise Analysis:

1. Fulfillment of Ingredients under Section 138 of the NI Act:

The appellant claimed that the respondent borrowed Rs. 2,50,000 and issued a cheque for the same amount, which was dishonored due to "insufficient funds." The appellant issued a legal notice, and upon non-payment, filed a complaint under Section 138 of the NI Act. The court examined whether the appellant fulfilled the statutory requirements, such as presenting the cheque within the validity period and issuing a legal notice within 30 days of cheque dishonor. It was found that these procedural requirements were met, establishing a prima facie case under Section 138.

2. Rebuttal of Presumption under Section 139 of the NI Act:

Section 139 presumes that the holder of a cheque received it for discharge of debt or liability unless proven otherwise. The respondent admitted to issuing the cheque and signing it but contended that it was for a loan of Rs. 35,000, not Rs. 2,50,000. The respondent produced Ex.D.4, a payment receipt book, claiming it documented repayments totaling Rs. 29,000. The court scrutinized Ex.D.4 and found it lacked clarity on the parties involved and the transactions recorded. The appellant denied the authenticity of Ex.D.4, and the court determined that the respondent failed to provide cogent evidence to rebut the statutory presumption under Section 139.

3. Justification of the Trial Court's Acquittal:

The trial court acquitted the respondent, doubting the genuineness of the appellant's claim due to lack of evidence for a legally recoverable debt. However, the appellate court found that the trial court misdirected itself by placing undue reliance on Ex.D.4 without sufficient evidence to rebut the presumption. The appellate court emphasized that the appellant's burden was not to prove the case beyond reasonable doubt but to establish the presumption under Section 139, which the respondent failed to rebut. Consequently, the appellate court concluded that the trial court's acquittal was erroneous and unjustified.

Conclusion:

The appellate court set aside the trial court's acquittal, convicting the respondent under Section 138 of the NI Act. The respondent was sentenced to pay a fine of Rs. 3,05,000, with Rs. 3,00,000 to be paid to the appellant as compensation. The court considered the respondent's age and family responsibilities, imposing a fine rather than imprisonment, unless the fine was not paid. This decision underscores the importance of statutory presumptions under the NI Act and the necessity for defendants to provide substantial evidence to rebut such presumptions.