2015 (2) TMI 866 - SC - Indian Laws

Cheque dishonoured - Section 138 of the Negotiable Instrument Act - Legally enforceable debt or liability - Held that - In the present case the complainant and the accused were working as Lecturers in a Government college at the relevant time and the alleged loan of ₹ 14 lakhs is claimed to have been paid by cash and it is disputed. Both of them were governed by the Government Servants Conduct Rules which prescribes the mode of lending and borrowing. There is nothing on record to show that the prescribed mode was followed. The source claimed by the complainant is savings from his salary and an amount of ₹ 5 lakhs derived by him from sale of site No.45 belonging to him. Neither in the complaint nor in the chief-examination of the complainant, there is any averment with regard to the sale price of site No.45. The concerned sale deed was also not produced. Though the complainant was an income-tax assessee he had admitted in his evidence that he had not shown the sale of site No.45 in his income-tax return. On the contrary the complainant has admitted in his evidence that in the year 1997 he had obtained a loan of ₹ 1,49,205/- from L.I.C. It is pertinent to note that the alleged loan of ₹ 14 lakhs is claimed to have been disbursed in the year 1997 to the accused. Further the complainant did not produce bank statement to substantiate his claim. The trial court took into account the testimony of the wife of the complaint in another criminal case arising under Section 138 of the N.I. Act in which she has stated that the present appellant/accused had not taken any loan from her husband. On a consideration of entire oral and documentary evidence the trial court came to the conclusion that the complainant had no source of income to lend a sum of ₹ 14 lakhs to the accused and he failed to prove that there is legally recoverable debt payable by the accused to him. In our view the said conclusion of the trial court has been arrived at on proper appreciation of material evidence on record. The impugned judgment of remand made by the High Court in this case is unsustainable and liable to be set aside. Appeal allowed and judgment of acquittal passed by trial court is restored.

Summary

Issues involved:
Appeal against judgment setting aside acquittal and remanding case for retrial in a cheque dishonor case; Legal issues on financial capacity to lend money and presumption under Section 139 of N.I. Act.

Analysis:
1. The case involved a dispute where the complainant alleged that the accused, both working as lecturers, borrowed a loan of Rs. 14 lakhs in cash to start a granite business. The accused issued post-dated cheques for repayment, but the final cheque was dishonored, leading to a complaint under Section 138 of the Negotiable Instrument Act.
2. The trial court acquitted the accused citing lack of proof of a legally recoverable debt and the complainant's capacity to lend the amount. The High Court, relying on the Rangappa case, held that the presumption under Section 139 of the N.I. Act includes a legally enforceable debt, and it is rebuttable by the accused. It set aside the acquittal and remanded the case for retrial.
3. The appellant argued that the trial court correctly found the absence of a legally recoverable debt, and the High Court erred in remanding the case without considering individual merits. The respondent supported the High Court's decision.
4. The Supreme Court held that the trial court's conclusion was based on proper evidence evaluation. It found the High Court's remand judgment unsustainable and set it aside, restoring the trial court's acquittal judgment.

This detailed analysis covers the legal issues, the factual background, trial court's decision, High Court's ruling, arguments presented, and the Supreme Court's final decision, providing a comprehensive overview of the judgment.