2021 (2) TMI 798 - HC - Indian Laws

Dishonor of Cheque - burden of proof on complainant to establish his case - rebuttal of presumption - fulfilment of requirements under section 138 of Negotiable Instruments Act - HELD THAT - No doubt the said presumption is a rebuttable presumption. It is for accused to rebut the presumption cast in favour of complainant to prove to the contrary that there never existed any legally recoverable debt or liability. This rebuttal of presumption has to be made by accused not by merely putting vague suggestions and denials in cross-examination. Accused will have to do something more than just mere denials either by producing cogent material evidence or by eliciting in cross-examination of PW.1 with regard to loan amount having been repaid or non-existence of any legally recoverable debt. It is only when such rebuttal is made, with cogent material evidence to the satisfaction of Court, burden would shift to complainant to satisfy such rebuttal. Unless such cogent evidence is produced, or elicited in cross-examination of complainant/PW.1, burden would not shift to complainant and thereby the presumption would act in favour of complainant. In the present case on hand, apart from mere denial and suggestions in cross-examination, no worthwhile evidence has been adduced and no cogent material has been produced or confronted to PW.1 complainant. Therefore the rebuttal as made by accused is no rebuttal in law or on facts of the case and presumption of law in favour of complainant has not been proved to the contrary by accused. It is seen from the judgment of trial Court that trial Court is impressed by arguments of accused with regard to non service of notice which is erroneous in law and facts of the case as stated in detail in the above paragraph. Further, trial Court has laid entire burden of proof on complainant to prove advancement of loan and issuance of cheque. In the evidence of PW.1, it is clearly stated that on several dates on which complainant advanced loan, right from April 2003 till March 2004 and for repayment of which accused has got issued Ex.P.1 cheque, complainant has also produced Ex.P.7 which is prior in time than issuance of cheque. Ex.P.7 is dated 30.3.2004 and this document has stated in detail the amount of loan having been received by accused on several dates and this has been duly signed by accused. Signature in Ex.P.1 and in Ex.P.7 has been admitted by accused. No cogent evidence has been adduced by accused to disprove either the document Ex.P.1 or his signatures in Ex.P.1(a) and P.7(a). A mere denial of the same, would not disprove the case of, complainant. Therefore, mere denial of signatures will not help accused to prove contrary to the presumption laid in section 139 of Negotiable Instruments Act as section 139 says that holder of cheque has received the cheque of nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. In the present case non filing or production of books of accounts and income tax returns would not be fatal to the case of complainant as no rebuttal is made by accused, shifting the burden necessitating the complainant to produce these documents to prove the case. Therefore there cannot be any adverse inference drawn on complainant for non production of these documents of books of accounts and income tax returns. Even otherwise non production of income tax returns or even non mentioning of same in the said income tax returns would not by itself prove that there was no loan advanced for which accused has issued the cheque in question for the transaction in existence. Therefore in the present case when complainant has proved necessary ingredients as contemplated under section 138 of Negotiable Instruments Act and accused having not rebutted the presumption, question of creating any suspicious circumstances and giving benefit of doubt to accused would not arise. In the case of Section 138 of Negotiable Instruments Act, burden of proof is not on complainant as there is a presumption under section 139 of existence of debt which is issued in the nature of cheque towards the discharge, in whole or in part of the said debt. In the present case, accused has not produced any material to show preponderance of probabilities and has not made out any case for showing any suspicious circumstances and has not raised any reasonable doubt by way of any probable defence. Under these circumstances, the order of acquittal passed by trial Court is contrary to materials both oral and documentary and the same is required to be reversed. It is seen that cheque is dated 21.7.2004 and in view of enormous delay in non payment of cheque amount, it is suitable in the present case to award compensation double the cheque amount to reasonably compensate the complainant. Appeal allowed.

Summary

Issues Involved:
1. Compliance with Section 138 of the Negotiable Instruments Act.
2. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act.
3. Validity of the trial court's judgment of acquittal.

Issue-wise Detailed Analysis:

1. Compliance with Section 138 of the Negotiable Instruments Act:
The complainant alleged that the accused issued a cheque for ?3,60,000, which was dishonored due to insufficient funds. A legal notice was sent to the accused, but no payment was made. The trial court concluded that the complainant did not prove his case beyond a reasonable doubt, citing non-compliance with Section 138(b) of the N.I. Act, as the accused allegedly did not reside at the address where the notice was sent. However, the appellate court found that the notice was properly addressed and sent via registered post and certificate of posting, fulfilling the requirements of Section 27 of the General Clauses Act. The court held that service of notice is deemed complete, thus meeting the requirements under Section 138 of the N.I. Act.

2. Rebuttal of Presumption Under Section 139 of the Negotiable Instruments Act:
The trial court failed to consider the presumption in favor of the complainant under Section 139 of the N.I. Act, which assumes that the holder of the cheque received it for the discharge of debt or liability unless proven otherwise. The accused did not provide any cogent evidence to rebut this presumption, merely denying the transaction. The appellate court emphasized that rebuttal requires more than mere denials; it necessitates producing material evidence or eliciting contradictions during cross-examination. Since the accused did not meet this burden, the presumption in favor of the complainant stood.

3. Validity of the Trial Court's Judgment of Acquittal:
The trial court's judgment was based on the perceived non-service of the legal notice and the complainant's alleged failure to prove the loan transaction. The appellate court found this reasoning flawed, noting that the complainant provided sufficient documentary evidence (Ex.P.1 and Ex.P.7) and that the accused did not disprove these documents or their signatures. The appellate court criticized the trial court for misinterpreting the burden of proof, which should have shifted to the accused once the complainant established the prima facie case under Section 138 and 139 of the N.I. Act. Consequently, the appellate court reversed the trial court's judgment of acquittal.

Conclusion:
The appellate court allowed the appeal, set aside the trial court's judgment of acquittal, and convicted the accused under Section 138 of the N.I. Act. The accused was sentenced to pay a fine double the cheque amount (?7,20,000) within eight weeks, with a default sentence of one year of simple imprisonment. Out of the fine amount, ?5,000 was to be credited to the state, and the remaining amount was to be paid to the complainant as compensation.