2010 (9) TMI 1239 - HC - Indian Laws

Dishonor of Cheque - acquittal of the accused - prove beyond reasonable doubt the debt or liability - preponderance of probablities - Section 138 of the N.I. Act - presumption u/s 139 - HELD THAT - The Trial Court in this case turned a blind eye to the fact that every accused facing trial whether u/s 138 of N.I. Act or under any penal law when charged with the offence pleads not guilty and takes a stand that he has not committed the offence. Even in the cases where loan is taken from a bank and the cheques issued to the bank stand dishonoured the stand taken is same. Mere pleading not guilty and stating that the cheques were issued as security would not give amount to rebutting the presumption raised u/s 139 of N.I. Act. If mere statement u/s 313 Cr. P.C. or u/s 281 Cr. P.C. of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution then every accused has to be acquitted. But it is not the law. In order to rebut the presumption u/s 139 of N.I. Act the accused by cogent evidence has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption u/s 139 N.I. Act. If no loan was given but cheques were retained he immediately would have protested and asked the cheques to be returned and if still cheques were not returned he would have served a notice as complainant. Nothing was proved in this case. In this case no evidence whatsoever was produced by the accused and the Trial Court travelled extra steps not permitted by law to presume that the presumption has stood rebutted. I therefore set aside the judgment of the Trial Court. The accused is convicted u/s 138 of N.I. Act.

Summary

Issues:
Appeal against acquittal under Section 138 of Negotiable Instrument Act based on failure to prove liability.

Analysis:
1. The appeal was filed against the acquittal of the respondent for an offense under Section 138 of the Negotiable Instrument Act on the grounds that the complainant failed to establish that the cheques were issued against a liability, i.e., refund of a loan. The appellant filed a complaint after the respondent's cheques got dishonored, and the respondent failed to pay despite a notice of demand.

2. The appellant testified that the respondent issued three cheques as repayment for a loan of Rs. 2.25 lakh. The dishonored cheques were proven by the bank official. The respondent claimed the cheques were issued as security for a loan that was never advanced, raising doubts about liability. The learned Metropolitan Magistrate (MM) observed that the complainant failed to prove the debt or liability of the accused beyond reasonable doubt.

3. The MM's reasoning was scrutinized, emphasizing that the complainant only needed to prove that the cheques were issued against a liability. The respondent's defense that the cheques were issued as security for a loan not given should have been substantiated with evidence. The accused's statement under Section 281 Cr. P.C. was not considered as evidence, and the burden of proof shifted to the respondent to explain the circumstances of issuing the cheques.

4. The definition of a cheque under Section 6 of the N.I. Act was highlighted to emphasize that the issuance of a cheque implies a debt or liability. The complainant's testimony, supported by cross-examination, established the loan transaction. The MM erred in requiring proof beyond reasonable doubt in a technical offense like Section 138 of the N.I. Act.

5. The accused's failure to provide evidence to support his defense that the cheques were security for a loan was noted. The accused's statement under Section 281 Cr. P.C. was insufficient to rebut the presumption under Section 139 of the N.I. Act. The absence of proof of the reply to the complainant's notice further weakened the respondent's case.

6. The judgment cited a relevant case to emphasize that the accused's plea of not guilty and the claim of issuing cheques as security were insufficient to rebut the legal presumption. The Trial Court's failure to consider the lack of evidence from the accused led to the setting aside of the acquittal and the conviction of the respondent under Section 138 of the Negotiable Instrument Act.

7. The Trial Court's disregard for the legal requirements and its reliance on insufficient defenses by the accused were key factors in overturning the acquittal. The respondent's failure to provide substantial evidence to counter the complainant's claims resulted in the conviction under Section 138 of the N.I. Act. The case was listed for sentencing on a later date.