2021 (6) TMI 550 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt or the liability or not - rebuttal of presumption - HELD THAT - In a recent decision delivered in a case of T.P. Murugan vs. Bojan 2018 (8) TMI 35 - SUPREME COURT, the Apex Court succinctly held that the moment the cheque is signed and issued in favour of a holder, under Section 139 of the Act raises a statutory presumption on the discharge of a legally enforceable debt. What emerged from the aforesaid decision is that Section 139 of the Act raises a statutory presumption in favour of the holder of the negotiable instrument in discharge of the debt or other liability though it may not in all conceivable circumstances be in discharge of the legally enforceable debt or other liability and, therefore, depends upon the special facts involved in the given case. Even if the statutory presumption is raised by use of the word shall presume , it does not take away the right of a person against whom the same is presumed to rebut the same. It is, thus, a rebuttable presumption as in a case of an ordinary presumption - However, the degree of evidence in rebuttal varies as in case of a statutory presumption, the accused has to lead the case which appears to be probable, plausible and reasonable from a prudent man which may not be so strict in case of a rebuttal of an ordinary presumption. Admittedly, the cheques, on being presented, were dishonoured with the remark exceeds arrangement meaning thereby there were no sufficient balance therein to cover the said amount and, therefore, it satisfies the ingredients of Section 138 of the Act - The evidence of rebuttal is neither probable nor plausible in the perspective of a prudent man and I am, therefore, amazed how the learned Magistrate have found fault into such transactions. Appeal allowed.

Issues Involved:

1. Presumption under Section 139 of the Negotiable Instruments Act, 1881.
2. Obligation of the accused to lead evidence of rebuttal.
3. Compliance with Section 190 of the Code of Criminal Procedure.
4. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act, 1881.

Issue-wise Detailed Analysis:

1. Presumption under Section 139 of the Negotiable Instruments Act, 1881:
The judgment discusses the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881, which presumes the existence of a debt or other liability in favor of the holder of the cheque. The court referenced the Supreme Court's decision in *Krishna Janardhan Bhat vs. Dattatrtya G. Hegde*, which held that the presumption under Section 139 is for a debt or other liability but not necessarily a legally enforceable debt. However, the court also cited the *Rangappa vs. Sri Mohan* case, where it was held that the presumption under Section 139 includes the existence of a legally enforceable debt or liability. This presumption is rebuttable, and the accused can contest the existence of a legally enforceable debt or liability.

2. Obligation of the accused to lead evidence of rebuttal:
The court emphasized that while the presumption under Section 139 is mandatory, it is rebuttable. The accused can raise a defense by creating doubt about the existence of a legally enforceable debt or liability. The standard of proof for rebutting the presumption is the "preponderance of probabilities." The accused does not need to discharge an unduly high standard of proof but must raise a probable defense. The court referred to the *T.P. Murugan vs. Bojan* case, which held that once a cheque is signed and issued, there is a statutory presumption that it is issued in discharge of a legally enforceable debt or liability. The accused must produce credible evidence to rebut this presumption.

3. Compliance with Section 190 of the Code of Criminal Procedure:
The judgment addressed the requirement of taking cognizance under Section 190 of the Code of Criminal Procedure. The court noted that cognizance means being aware of the facts and initiating proceedings. It does not require a formal action or ritual recording. The court found that the Magistrate had recorded sufficient grounds to proceed against the accused under Section 138 of the Negotiable Instruments Act, 1881, based on the complaint, documents, notice, and initial depositions. The court deemed the Magistrate's finding that there was no ritual form of recording as to taking of cognizance as perverse and contradictory to the earlier order in the proceeding.

4. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act, 1881:
The court analyzed whether the evidence of the accused successfully rebutted the presumption under Section 139. The transactions between the parties were not disputed, and the accused admitted to buying pharmaceutical goods from the complainant and making payments. The accused's defense that the promissory note was obtained by force was not credible, as there was no follow-up action or response to the statutory notice under Section 138. The accused admitted to the signatures on the promissory note and the cheques. The court found that the cheques were dishonored due to insufficient balance, satisfying the ingredients of Section 138. The evidence of rebuttal was neither probable nor plausible, and the court set aside the Magistrate's order, finding the accused guilty under Section 138.

Conclusion:
The court found the accused guilty of the offense punishable under Section 138 of the Negotiable Instruments Act, 1881, and directed the accused to pay a sum of ?25,00,000 as fine/compensation to the complainant within two months. In default, the accused would undergo simple imprisonment for one and a half years. The court allowed both appeals and sent a copy of the order to the lower court.

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