2021 (5) TMI 463 - HC - Indian Laws

Dishonor of Cheque - acquittal of the accused - cheques issued towards discharge of legally enforceable debt or not? - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT - The amount spent by the complainant was not shown in his income tax returns. As such, the trial Court had rightly held that it creates a doubt regarding the financial position of the appellant and if he really spent that much amount, there must be record for him for withdrawal of amount from his bank account and spending the same. After receiving the notice, dated 27.10.2016, the complainant had filled up the cheques and presented the same on 01.11.2016. Therefore, the trial Court has rightly held that the accused was successful to rebut the presumption available to her under Section 139 of Negotiable Instruments Act and concluded that the evidence placed on record by the complainant is not sufficient to prove the case against the accused beyond all reasonable doubt and accordingly acquitted her. The trial Court was perfectly justified in acquitting the 1st respondent/accused and the citations relied upon by the learned Counsel for the complainant are not applicable to the facts of the present case - Appeal dismissed.

Summary

Issues Involved:
1. Whether the cheques under Exs. P1 and P2 were issued towards discharge of legally enforceable debt.
2. Whether the accused successfully rebutted the presumption under Section 139 of the Negotiable Instruments Act.
3. Validity of the cheques exceeding the specified amount.
4. Financial capability of the complainant to incur the alleged expenditure.
5. Relevance of the accused's notice and subsequent actions.

Issue-wise Detailed Analysis:

1. Whether the cheques under Exs. P1 and P2 were issued towards discharge of legally enforceable debt:
The appellant/complainant alleged that the accused issued two cheques totaling ?69,50,000/- as part of a settlement agreement. The cheques were dishonored due to "Payment stopped by the drawer." The complainant argued that the cheques were issued to discharge a legally enforceable debt, supported by the presumption under Section 139 of the Negotiable Instruments Act. However, the trial court found that the cheques were issued only as security, as stated in Ex. P6, and not as payment for any enforceable debt.

2. Whether the accused successfully rebutted the presumption under Section 139 of the Negotiable Instruments Act:
The accused contended that the cheques were issued for security purposes, as evident from Ex. P6. The trial court observed that the complainant failed to provide documentary evidence of having incurred ?3.00 Crores for identifying the land for the petrol bunk. The accused presented evidence, including a private complaint against the complainant's father and a notice dated 27.10.2016, asserting that the cheques were issued as security and the complainant violated the settlement agreement. The trial court concluded that the accused successfully rebutted the presumption under Section 139.

3. Validity of the cheques exceeding the specified amount:
The trial court noted that Exs. P1 and P2 cheques were valid only up to ?10.00 lakhs each, but the amounts filled in exceeded this limit. The court found that the signatures on the cheques differed from other writings, suggesting they were blank cheques given for security purposes. Hence, the trial court held that the cheques were invalid.

4. Financial capability of the complainant to incur the alleged expenditure:
The complainant admitted during cross-examination that he did not file any documents or bank statements to show he had incurred ?3.00 Crores for the petrol bunk. The trial court found that the complainant's failure to show this amount in his income tax returns created doubt about his financial capability. Citing the Bombay High Court's decision in Sanjay Mishra Vs. Ms. Kanishka Kappor @ Nikki, the trial court noted that failure to disclose a large amount in income tax returns could rebut the presumption under Section 139.

5. Relevance of the accused's notice and subsequent actions:
The accused issued a notice on 27.10.2016, stating that the complainant violated the settlement agreement and raised an illegal demand. The trial court observed that the complainant presented the cheques after receiving this notice, which supported the accused's claim that the cheques were issued only for security. The trial court concluded that the accused's actions and evidence sufficiently rebutted the presumption of a legally enforceable debt.

Conclusion:
The trial court acquitted the accused, finding that the complainant failed to prove the case beyond reasonable doubt. The court held that the cheques were issued for security purposes, the complainant did not demonstrate financial capability, and the accused successfully rebutted the presumption under Section 139. The High Court upheld the trial court's judgment, dismissing the criminal appeal and confirming the acquittal.