2017 (1) TMI 1265 - HC - Indian Laws

Case under Section 138 of the Negotiable Instruments Act, 1881 - Burden of Proof - Held that - A perusal of the complaint (filed by the Appellant / Complainant) before the trial court shows that the entire complaint is conspicuously silent as to the quantum of the interest agreed to be paid by the Respondent / Accused. Ordinarily, if a person lends money and that too a higher amount like ₹ 3,00,000/- then, the said amount will carry some percentage of interest, which was agreed to be paid by the Respondent / Accused. However, as stated already, the complaint is silent about any agreement for payment of interest for the loan amount of ₹ 3,00,000/-. When the Respondent / Accused is not a relative of the Appellant / Complainant and also not a close friend, then, the averment made in the complaint that the Respondent / Accused borrowed a sum of ₹ 3,22,511/- from the Appellant / Complainant does not create a favourable circumstances in his favour. In view of the aforesaid detailed qualitative discussions, also this Court taking note of the attendant facts and circumstances of the instant case in a conspectus fashion and also by considering the defence taken on behalf of the Respondent / Accused comes to an inevitable and irresistible conclusion that the Respondent / Accused had raised some probable defences in the present case. In fact, the Appellant / complainant had not established his case under Section 138 of the Negotiable Instruments Act, 1881 against the Respondent / Accused. Looking at from any angle, the Criminal Appeal fails.

Issues Involved:
1. Whether the Appellant/Complainant proved the due execution of the cheque and legally enforceable liability.
2. Whether the trial court erred in dismissing the complaint due to the Appellant not being an Income Tax Assessee.
3. Whether the trial court wrongly shifted the burden of proof to the Appellant/Complainant.
4. Whether the cheque was issued to the Appellant/Complainant or to Ganapathy Finance.
5. Whether the cheque amount, not assessed to Income Tax, constitutes a legally enforceable debt.
6. Whether the Appellant/Complainant had sufficient means to lend the sum of ?3,00,000/-.
7. Whether the presumption under Sections 139 and 118 of the Negotiable Instruments Act was applicable.
8. Whether the Respondent/Accused rebutted the presumption of issuance of the cheque.

Detailed Analysis:

1. Due Execution of the Cheque and Legally Enforceable Liability:
The trial court observed that the Appellant/Complainant failed to prove the due execution of the cheque and the legally enforceable liability on the part of the Respondent/Accused. The court noted that the mere signature of the accused on the cheque does not raise a presumption in favor of the complainant when the due execution of the cheque has not been proved. Additionally, the issuance of the cheque in favor of the complainant was not established, leading to the conclusion that none of the presumptions under Sections 139 and 118 of the Negotiable Instruments Act could be raised.

2. Dismissal of Complaint Due to Non-Assessment to Income Tax:
The Appellant contended that the trial court erred in dismissing the complaint on the ground that he was not an Income Tax Assessee. The trial court's decision was based on the fact that the Appellant did not establish his financial capability to lend ?3,00,000/- to the Respondent/Accused, which was crucial in proving the legally enforceable debt.

3. Shifting Burden of Proof:
The Appellant argued that the trial court wrongly shifted the burden of proof onto him when the Respondent/Accused claimed that the cheque was issued to Ganapathy Finance. The court held that once the signature on the cheque was admitted, the presumption in law is that the cheque was issued by the Respondent/Accused. However, the Respondent/Accused successfully rebutted this presumption by providing evidence to the contrary.

4. Issuance of Cheque to Ganapathy Finance:
The Respondent/Accused claimed that the cheque was issued to Ganapathy Finance and not to the Appellant/Complainant. The court found that the Appellant failed to disprove this claim, as the Respondent/Accused provided sufficient evidence, including testimonies and documents, to support his defense.

5. Legally Enforceable Debt and Income Tax Assessment:
The trial court held that the cheque amount, which was not assessed to Income Tax, did not constitute a legally enforceable debt. The Appellant could not provide evidence of the loan transaction or any agreement for the payment of interest, which cast doubt on the legitimacy of the debt.

6. Appellant's Financial Means:
The Appellant failed to establish that he had the necessary resources to lend ?3,00,000/- to the Respondent/Accused. The court noted that the Appellant did not produce any account documents or other evidence to prove his financial capability, and he admitted to not being an Income Tax Assessee.

7. Presumption under Sections 139 and 118 of the Negotiable Instruments Act:
The presumption under Sections 139 and 118 is rebuttable. The court observed that the Respondent/Accused successfully rebutted the presumption by providing evidence that the cheque was issued to Ganapathy Finance and not to the Appellant. The Appellant failed to provide sufficient evidence to counter this rebuttal.

8. Rebuttal of Presumption by Respondent/Accused:
The Respondent/Accused provided a plausible defense by presenting evidence that the cheque was issued to Ganapathy Finance as security for a loan and not to the Appellant. The court found that the Respondent/Accused raised probable defenses, and the Appellant could not establish his case beyond a reasonable doubt.

Conclusion:
The High Court affirmed the trial court's judgment of acquittal, concluding that the Appellant/Complainant failed to prove the guilt of the Respondent/Accused beyond a reasonable doubt. The Appellant did not establish the due execution of the cheque, the legally enforceable liability, or his financial capability to lend the amount in question. The Criminal Appeal was dismissed.

← Previous Next →