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2024 (8) TMI 1046 - HC - Indian LawsDishonour of Cheque - burden of proof to rebut the presumption - presumption under Sections 118(a) and 139, NI Act - Section 313 of CrPC - HELD THAT - When presumption under Section 139 was raised, Trial Court ought to have conducted proceedings basis that the cheque was issued in discharge of a debt or liability towards the complainant. At this juncture, the onus was on the accused to rebut the presumption under Section 139. Had the accused been successful in rebutting said presumption, the onus would have then shifted onto the complainant/appellant. The fundamental flaw on part of Trial Court was failing to note effect of the presumption under Section 139 NI Act. As a result, Trial Court erroneously proceeded to deliberate upon want of evidence on part of appellant/complainant i.e. no interest was charged, friendly relations between the parties were not proved, financial capacity not established, and most importantly, guilt of the accused was not proved beyond reasonable doubt. Supreme Court in Sumeti Vij v. Paramount Tech Fab Industries 2021 (3) TMI 383 - SUPREME COURT observed that statement under Section 313 CrPC is not substantive evidence of defence by accused, and hence, same is insufficient for the purpose of rebuttal of presumption under Section 139 NI Act. Much like the present case, in Sumeti Vij accused had not replied to legal notices sent, nor had made any payments thereafter. Furthermore, while accused gave a statement under Section 313 CrPC, defence evidence was not led therein even though accused pleaded not guilty and claimed trial. Presumption under Section 139 read with Section 118 of the NI Act is essentially based on pure common sense. Instead of having the accused prove to the contrary, the accused is acquitted, as in this case, without having led any defence evidence and purely relying upon the inconsistencies in the affirmative proof provided by the complainant. The law and its application, is therefore turned on its head. This Court is of the view that there was a fundamental error in the approach taken by the Trial Court whereby it went on to dissect the case put up by the appellant, instead of first examining whether the respondents had rebutted the presumption under Section 139 of NI Act. The impugned order is set aside - appeal allowed.
Issues Involved:
1. Whether the Trial Court erred in acquitting the respondent under Section 138 of the Negotiable Instruments Act, 1888 (NI Act). 2. Whether the presumption under Sections 118(a) and 139 of the NI Act was correctly applied. 3. Whether the respondent successfully rebutted the presumption under Section 139 of the NI Act. 4. Whether the appellant's evidence was sufficient to prove the existence of a debt or liability. Issue-wise Detailed Analysis: 1. Whether the Trial Court erred in acquitting the respondent under Section 138 of the Negotiable Instruments Act, 1888 (NI Act): The High Court found that the Trial Court erred in its analysis and conclusion. The Trial Court failed to properly apply the presumption under Sections 118(a) and 139 of the NI Act, which assumes that the cheque was issued for the discharge of a debt or liability once the signature on the cheque is admitted. The Trial Court incorrectly focused on the appellant's inability to provide documentary evidence of the loan rather than on whether the respondent had rebutted the presumption under Section 139. 2. Whether the presumption under Sections 118(a) and 139 of the NI Act was correctly applied: The High Court emphasized that once the respondent admitted to the signature on the cheque, the presumption under Sections 118(a) and 139 NI Act came into effect. The presumption under Section 139 is that the holder of the cheque received it for the discharge of any debt or liability. The Supreme Court in Basalingappa v. Mudibasappa (2019) and other cases has clarified that this presumption is rebuttable and the onus is on the accused to raise a probable defense. 3. Whether the respondent successfully rebutted the presumption under Section 139 of the NI Act: The High Court noted that the respondent did not lead any defense evidence to rebut the presumption under Section 139. The respondent's statement under Section 313 CrPC, where he denied issuing the cheque for any debt or liability, was not sufficient to rebut the presumption. The Court cited several cases, including Sumeti Vij v. Paramount Tech Fab Industries (2022) and Kumar Exports v. Sharma Carpets (2009), to illustrate that mere denials or statements under Section 313 CrPC are insufficient to rebut the presumption under Section 139. 4. Whether the appellant's evidence was sufficient to prove the existence of a debt or liability: The High Court found that the Trial Court wrongly placed the burden of proving the existence of the debt on the appellant, contrary to the presumption under Section 139 NI Act. The appellant had presented the cheque and the bank's return memo indicating "funds insufficient," which should have been sufficient to raise the presumption of a debt or liability. The High Court reiterated that the presumption under Section 139 is based on common sense and should not be easily dismissed without the accused providing a cogent and rational explanation. Conclusion: The High Court allowed the appeal and set aside the impugned order of the Trial Court. The appellant is at liberty to approach the Trial Court for further proceedings. The judgment was ordered to be uploaded on the website of the Court.
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