2018 (11) TMI 237 - HC - Indian Laws

Dishonor of Cheque - recovery of loan - Section 138 of Negotiable Instruments Act - acquittal of accused - Held that - The issuance of Ex.P1-cheque by the accused and his signature therein are admitted by him. When the accused pleaded that he had not issued the cheque (Ex.P1) for repayment of the loan amount borrowed, it is the bounden duty of the accused to prove the same by way of preponderance of evidence - In this case, the initial burden lies on the accused, however, he has failed to do so. As recorded by the trial Court, the accused has not examined himself as witness. It is settled that Sections 138 and 139 of the N.I. Act introduced exceptions to the general rule as to the burden of proof in criminal cases and shifted the onus on the accused. Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the Court may presume a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt - It is also settled that the accused had to prove in the trial by leading cogent evidence that there was no debt or liability and that the accused not having led any evidence could not be said to have discharged the burden cast on him. Existence of legally recoverable debt or liability is a matter of presumption under Section 139 of the N.I. Act. Since issuance of Ex.P1-cheque by the accused and his signature therein are admitted by the accused and the complainant has proved his case by way of preponderance of evidence to show that Ex.P1-cheque returned with an endorsement funds insufficient, it is to be held that the complainant has proved his case and that the lower appellate Court went wrong in setting aside the judgment of the trial Court, which is a well founded - the acquittal of the accused by the lower appellate Court deserves interference. The judgment of the trial Court in C.C.No.715 of 2005, dated 03.7.2007 on the file of the learned Judicial Magistrate No.II, Salem is restored - appeal allowed.

Summary

Issues:
Appeal against judgment convicting under Section 138 of NI Act, reversal of judgment by lower appellate court, burden of proof on accused, presumption under Sections 138 and 139 of NI Act, evidentiary value of documents, legal principles in cheque bouncing cases.

Analysis:
The case involved an appeal seeking to set aside a judgment convicting the accused under Section 138 of the Negotiable Instruments Act (NI Act) for dishonoring a cheque issued to repay a loan. The complainant alleged that the accused borrowed a sum and issued a cheque which bounced due to insufficient funds. The trial court convicted the accused, but the lower appellate court acquitted him based on the evidence of a witness and a letter. The High Court noted that the accused did not prove his defense and failed to discharge the burden of proof. The court emphasized that in cheque bouncing cases, the burden shifts to the accused to prove absence of debt or liability, which the accused failed to do by not presenting evidence. The court referred to legal provisions under Sections 138, 139, and 118 of the NI Act, highlighting the presumption in favor of the holder of a cheque and the obligation on the accused to rebut this presumption.

The High Court discussed the evidentiary value of documents, emphasizing that the accused admitted to issuing the cheque, and the complainant proved the debt through various documents and witness testimony. The court also cited precedent establishing that once the execution of a cheque is admitted, the presumption under Section 138 of the NI Act covers the debt as well. The court criticized the lower appellate court's reasoning for acquittal, noting that the accused's defense was not substantiated and the complainant's case was supported by sufficient evidence. The court reiterated that in such cases, the accused must produce evidence to show the complainant's claim is false, which the accused failed to do.

Ultimately, the High Court allowed the appeal, setting aside the acquittal and restoring the trial court's judgment. The court directed the accused to deposit the cheque amount and compensation to the complainant by a specified date, failing which the court would issue a warrant for the accused's imprisonment. The court highlighted the quasi-civil nature of proceedings under Section 138 of the NI Act and the provision for compounding the offense. The judgment emphasized the importance of proving the absence of debt or liability in defense against a charge of dishonoring a cheque, underscoring the legal principles governing such cases.