2017 (6) TMI 652 - HC - Indian Laws

Offence under Section 138 of Negotiable Instruments Act, 1881 - Dishonour of cheque for insufficiency, etc., of funds in the account - existence of the consideration - Evidence on record - Held that - The respondent as the accused did not dispute that the cheque in question bears her signatures and that she had handed it over to the complainant. She claimed she had taken only ₹ 30,000/- as loan by cheque drawn on Punjab National Bank and that the cheque in question when given, was signed by her, but was otherwise blank, even the cheque amount having not been filled up. She did not lead any evidence nor confronted CW-1 with any such theory or facts by any documentary proof. There is nothing on record to show that the complainant had extended loan only of ₹ 30,000/- to the respondent by cheque or that the cheque in question was issued against such transaction or that it was blank when handed over. She has not been able to discredit the evidence of CW-1 with regard to the loan of ₹ 5 lakhs initially taken in the sum of ₹ 2 lakhs followed by additional ₹ 3 lakhs. She could not refute the evidence of CW-1 about the acknowledgement of the liability to that extent by document Ex.CW-1/4 or the promissory note (Ex.CW-1/5) contemporaneously prepared and executed. Thus the defence pleaded by the respondent in answer to the notice under Section 251 Cr.P.C. has remained unsubstantiated. Mere admission of the complainant that he was earning only ₹ 12,000 per month from small business or his failure to file income tax returns, or his omission to produce the bank passbook or to examine Chhotu as a witness in corroboration, are inconsequential. The respondent is held guilty and convicted for offence under Section 138 Negotiable Instruments Act, 1881.

Summary

Issues Involved:
1. Prosecution under Section 138 of the Negotiable Instruments Act, 1881.
2. Rebuttal of statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act.
3. Evaluation of evidence and credibility of the complainant’s financial capacity.
4. Legal standards for proving a legally enforceable debt or liability.

Issue-wise Detailed Analysis:

1. Prosecution under Section 138 of the Negotiable Instruments Act, 1881:
The appellant initiated a criminal complaint seeking prosecution of the respondent for the offence under Section 138 of the Negotiable Instruments Act, 1881. The complaint alleged that the respondent issued a cheque for ?5 lakhs, which was dishonoured due to insufficient funds. Despite legal notices, the respondent failed to make the payment, leading to the initiation of the complaint.

2. Rebuttal of statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act:
The trial court acquitted the respondent, holding that the statutory presumption under Section 139 was rebutted, as the facts presented by the complainant were deemed highly improbable. The respondent claimed that the cheque was issued as a blank signed cheque for a loan of ?30,000, which was misused by the complainant. However, the High Court observed that once the execution of the cheque is admitted, presumptions under Sections 118 and 139 arise, which are rebuttable by the accused showing the improbability of the consideration.

3. Evaluation of evidence and credibility of the complainant’s financial capacity:
The trial court questioned the complainant’s financial capacity, noting his monthly income of ?12,000 and dependency on his parents. It found it improbable that he could lend ?5 lakhs. The High Court, however, emphasized that the respondent failed to substantiate her defence with any evidence and did not discredit the complainant’s evidence regarding the loan and the acknowledgment of debt.

4. Legal standards for proving a legally enforceable debt or liability:
The High Court reiterated that the burden to rebut the statutory presumption lies on the accused, who must show by preponderance of probabilities that the consideration was improbable or non-existent. The respondent’s defence remained unsubstantiated as she did not provide any evidence to support her claim of a ?30,000 loan or that the cheque was blank when issued. The complainant’s evidence, including the acknowledgment of debt and promissory note, remained unrefuted.

Conclusion:
The High Court found the trial court’s approach misdirected and held that the statutory presumption under Section 139 was not rebutted by the respondent. The complainant’s evidence sufficiently proved the existence of a legally enforceable debt. Consequently, the High Court set aside the acquittal, convicted the respondent under Section 138 of the Negotiable Instruments Act, and scheduled a hearing for sentencing.