2021 (10) TMI 525 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - misuse of cheque issued as security for older transaction - acquittal of the accused - rebuttal of statutory presumption under Section 139 of the Negotiable Instruments Act - legally enforceable debt or not - HELD THAT - The fact that there was an earlier transaction in the year 1995 and that liability had been settled by repayment is a factor which would lend credence to the case of the 2nd respondent/accused that Ext.P1 cheque was one issued as security in the discharge of that liability and such cheque was misused by the appellant/complainant to make it appear that there was a subsequent transaction. In the totality of the facts and circumstance of this case, this Court should not interfere with the findings rendered by the trial court. The 2nd respondent/accused has succeeded in showing that the statutory presumption under Section 139 of the Negotiable Instruments Act should not be applied. In other words the 2nd respondent/accused has been able to rebut the statutory presumption. The appellant/complainant has not thereafter been able to bring in any evidence suggesting the existence of a transaction resulting in a legally enforceable debt payable by 2nd respondent/accused. The prosecution of the 2nd respondent/accused under Section 138 of the Negotiable Instruments Act must necessarily fail - this Court is of the view that the 2nd respondent/accused has succeeded in rebutting the statutory presumption under Section 139 of the Negotiable Instruments Act - Appeal dismissed.

Summary

Issues:
Challenge to acquittal under Section 138 of the Negotiable Instruments Act based on insufficiency of evidence.

Analysis:
1. The appellant challenged the acquittal of the accused under Section 138 of the Negotiable Instruments Act. The complaint alleged that the accused issued a cheque that bounced due to insufficient funds. The appellant was examined, and various documents were presented.

2. The learned Magistrate acquitted the accused, finding the complainant failed to prove the case. The appellant argued that the cheque in question could not have been issued for the loan availed earlier. The appellant contended that the loan was given in a personal capacity, not as security.

3. The appellant relied on Supreme Court judgments to support their case, emphasizing the importance of the presumption under the Negotiable Instruments Act. The defense argued that the accused successfully rebutted the presumption, shifting the burden to the complainant to prove consideration.

4. The court examined the evidence and found that the cheque in question was not issued in discharge of the alleged liability. The court also noted discrepancies in the appellant's documents and the timing of the transactions, supporting the accused's defense.

5. The court upheld the Magistrate's findings, stating that the accused rebutted the statutory presumption effectively. As the complainant failed to prove the existence of a legally enforceable debt, the prosecution under Section 138 of the Negotiable Instruments Act was deemed to fail. The appeal was dismissed based on the successful rebuttal of the presumption by the accused.