2021 (8) TMI 40 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption - debt claim is enforceable or not - onus shifts back on the complainant to lead further evidence and establish his case - Section 139 of the N.I. Act - HELD THAT - Admittedly, except marking the cheque as well as the endorsement issued by the Bank, the office copy of legal notice sent to the accused and acknowledgment for having served the notice, the complainant has not chosen to produce any other documents. PW. 1 has been cross-examined with regard to the specific defence taken by the accused. In the present case, it has come on record that the Ganesh Bank of Kurundwad of whose cheque the complainant has relied upon is merged with the Federal Bank in the year 2005-06 and as such, the possibility of the cheque of the Ganesh Bank of Kurundwad being issued in the year 2010 is not acceptable. It supports the defence taken by the accused that in the year 1993, he had issued the cheque in question by way of security and even though he has repaid the loan, misusing the said cheque, the complainant has chosen to file a false complaint against him. The entire material placed on record, the Trial Court has rightly held that the complainant has failed to establish that it is entitled to recover the amount under the cheque in question and it was issued by the accused towards legally recoverable debt and dismissed the complaint - there is no justification to interfere with the impugned judgment and order and consequently the appeal filed by the complainant fails. Appeal dismissed.

Summary

Issues:
Dismissal of Criminal Case under Section 138 of the Negotiable Instruments Act, 1881 based on defense of time-barred debt and lack of evidence to establish liability.

Analysis:
The appellant filed an appeal under Section 378(4) of the Code of Criminal Procedure, 1973 against the dismissal of the Criminal Case under Section 138 of the Negotiable Instruments Act, 1881. The complaint alleged that the accused, a member of a cooperative society, failed to repay a loan and issued a dishonored cheque. The accused denied borrowing the loan in 2001 and contended the alleged debt was time-barred. The Trial Court dismissed the complaint based on the accused's defense without leading any evidence. The appellant argued that the Trial Court erred in not considering the statutory presumption under the N.I. Act favoring the complainant and the accused's failure to rebut it.

The Trial Court noted that while the accused did not dispute certain facts, the burden was on the complainant to prove the loan availed in 2001 and the issuance of the cheque in 2010. The complainant failed to produce substantial evidence beyond the cheque, legal notice, and acknowledgment. The witness for the complainant admitted the lack of additional documents to prove the loan. The Trial Court emphasized the complainant's failure to produce documents executed by the accused during the loan transaction and the absence of arbitration proceedings or awards for recovery.

Legal precedents were cited regarding the rebuttable presumption under Section 139 of the N.I. Act. The Court highlighted that once the accused rebuts the presumption, the burden shifts back to the complainant to provide further evidence. In this case, the accused's defense regarding the year of the loan and the cheque's security nature was supported by the bank's merger information. The Court found the complainant's reliance on the cheque insufficient to establish the debt's legality.

Additionally, the Trial Court noted discrepancies in the authorization for the witness giving evidence on behalf of the complainant, leading to the exclusion of his testimony. After reviewing all evidence, the Trial Court concluded that the complainant failed to prove the entitlement to recover the amount under the cheque, resulting in the dismissal of the complaint. The High Court found no justification to interfere with the Trial Court's decision, leading to the dismissal of the appeal.