2025 (4) TMI 354 - HC - Indian Laws

Dishonour of cheque - Funds Insufficient - legally enforceable debt or liability at the time of presentation of cheque or not - HELD THAT - The facts that emerge on record is that the loan was taken on 15.10.1998 as per the document produced at exhibit 15 and an amount of 70, 426/- was repaid by Rs. 2, 18, 200/- dated 08.05.2001 from his account with the accused. There is no evidence on record as to whether any interest had to be taken on the amount and if any interest had to be taken at what rate it had to be taken. The amount of Rs. 2, 18, 200/- dated 08.05.2001 from his account with2, 18, 200/- which is the amount of cheque is not reflected in the statement produced at exhibit 24 and if the amount that is repaid is considered an amount of Rs. 2, 18, 200/- dated 08.05.2001 from his account with1, 04, 574/- is outstanding. The accused has stepped into the witness box and it is the defence of the accused that the entire amount has been repaid within a period of two years but no evidence has come on record that the amount of cheque of Rs. 2, 18, 200/- dated 08.05.2001 from his account with 2, 18, 200/- was the legally enforceable due from the accused. As per the observations of the Apex Court in the case of Rangappa 2010 (5) TMI 391 - SUPREME COURT and Basalingappa 2019 (4) TMI 660 - SUPREME COURT in the cross-examination of the complainant the presumption has been rebutted and the accused has raised a probable defence and from the documents by produced by the complainant there is no evidence that the amount of cheque was the legally enforceable due. The learned Trial Court has appreciated all the evidence produced by both the parties and has concluded that the complainant has not proved the legally enforceable debt as the amount mentioned in the cheque in question. The learned Trial Court has concluded that from evidence on record the complainant has failed to prove his case and the amount mentioned in the cheque is more than the loan amount and the accused has successfully rebutted the presumption under Section 139 of the NI Act. The accused had created a reasonable doubt and the complainant has failed to produce reliable and cogent evidence on record about the legally recoverable debt from the accused and has not proved his case beyond reasonable doubt. Conclusion - No interference is warranted as the complainant failed to establish the accused s guilt beyond a reasonable doubt. Appeal dismissed.

ISSUES PRESENTED and CONSIDERED

The primary issue considered in this case was whether the accused was guilty of the offence under Section 138 of the Negotiable Instruments Act, 1881, which deals with the dishonour of a cheque for insufficiency of funds. Specifically, the court examined whether the cheque issued by the accused represented a legally enforceable debt or liability at the time of its presentation.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

Section 138 of the Negotiable Instruments Act mandates that a cheque must represent a legally enforceable debt or liability at the time of its presentation. Section 139 of the Act provides a presumption in favour of the holder of the cheque that it was issued for the discharge of a debt or liability, which is rebuttable by the accused. The standard of proof for rebutting this presumption is the preponderance of probabilities, as established in precedents such as Rangappa vs Sri Mohan and Basalingappa vs. Mudibasappa.

Court's Interpretation and Reasoning

The Court reiterated the principles laid down by the Apex Court regarding the presumption under Section 139, emphasizing that it is a rebuttable presumption and the accused can raise a probable defence. The Court also noted the appellate court's scope of interference in acquittal appeals, as outlined in cases like Babu Sahebagouda Rudragoudar and others v. State of Karnataka, which emphasized that an appellate court should not overturn an acquittal unless the trial court's decision was perverse or based on a misreading of evidence.

Key Evidence and Findings

The complainant alleged that the accused issued a cheque for Rs. 2,18,200/- which was dishonoured due to insufficient funds. The complainant claimed to be the holder in due course and argued that the statutory presumption under Section 139 should be in his favour. The accused, however, contended that the cheque was issued as a blank cheque and had been misused by the complainant. The accused also claimed to have repaid the loan, which was not reflected in the complainant's evidence.

Application of Law to Facts

The Court applied the legal principles regarding the presumption under Section 139 and the standard of proof required to rebut it. The accused successfully raised a probable defence by demonstrating that the cheque did not represent a legally enforceable debt at the time of its presentation, as some amount had already been repaid. The evidence did not conclusively establish that the amount on the cheque was the legally enforceable debt.

Treatment of Competing Arguments

The complainant argued that the presumption under Section 139 was not properly considered by the trial court, and the evidence was misread. However, the Court found that the trial court had appropriately evaluated the evidence and that the accused had sufficiently rebutted the presumption by raising a probable defence. The Court noted that the complainant failed to provide cogent evidence of a legally enforceable debt.

Conclusions

The Court concluded that the trial court's decision to acquit the accused was justified as the complainant failed to prove beyond reasonable doubt that the cheque represented a legally enforceable debt. The accused had successfully rebutted the presumption under Section 139 by demonstrating that the debt was not legally enforceable at the time of the cheque's presentation.

SIGNIFICANT HOLDINGS

The Court emphasized the principles governing the presumption under Section 139, noting that it is rebuttable and that the standard of proof for rebutting it is the preponderance of probabilities. The Court upheld the trial court's acquittal, emphasizing that the complainant failed to prove the existence of a legally enforceable debt beyond reasonable doubt.

Significant quotes from the judgment include: "The presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability... However, it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested."

The Court also highlighted the necessity for the complainant to demonstrate financial capacity when questioned, as noted in Basalingappa vs. Mudibasappa. The decision underscores the importance of the accused's ability to rebut the presumption with a probable defence and the requirement for the complainant to provide clear evidence of a legally enforceable debt.

Ultimately, the Court dismissed the appeal, affirming the trial court's judgment and order of acquittal, and concluded that no interference was warranted as the complainant failed to establish the accused's guilt beyond a reasonable doubt.

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