2021 (11) TMI 454 - HC - Indian Laws

Dishonor of Cheque - preponderance of probabilities - existence of enforceable debt or not - rebuttal of presumption u/s 118 and Section 139 of the NI Act - HELD THAT - There is no equivocality. It is not required that the accused shall always advance the evidence to disprove the existence of consideration. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which the complainant relies. For the purpose of rebutting the initial evidential burden, the defendant can rely on the direct evidence or the circumstantial evidence or a presumption of law of fact once such convincing rebuttal evidence is adduced and accepted by the Court. On overall appreciation of the evidence, this court finds no infirmity in the finding returned by the trial judge that if those two cheques were not in discharge of the liability of the accused person of his debt as stated by the accused person the respondent then, why those cheques were issued. The complainant did not mention anything about that episode of issuance of two cheques in his complaint petition or during the examination-in-chief. He did not even explain why those two cheques bearing No.610768 and 610772 were given to him by the accused person. His explanation is fragile and amounts to failure in explaining the episode properly. The respondent The accused person has made out a probable case that there was no enforceable debt against him and that he was under no obligation/liability to make payment. It appears more probable that the cheque that has been dishonoured is a security cheque. Therefore, the order of acquittal does not warrant any interference. Appeal dismissed.

Summary

Issues Involved:
1. Validity of the loan transaction and the issuance of the cheque.
2. Dishonour of the cheque and the legal implications under Section 138 of the Negotiable Instruments Act.
3. Rebuttal of the presumption under Section 139 of the Negotiable Instruments Act.
4. Evaluation of evidence and the trial court's findings.

Detailed Analysis:

1. Validity of the Loan Transaction and the Issuance of the Cheque:
The appellant alleged that the respondent borrowed ?2,50,000 on 21.11.2014, which was paid via a cheque. The respondent issued a cheque for repayment, which was dishonoured due to insufficient funds. The respondent claimed the cheque was a security cheque and had repaid the loan with two other cheques for ?60,000 and ?2,80,000. The trial judge found that the respondent had indeed issued the cheque as security and had repaid the loan, thus questioning the validity of the appellant's claim.

2. Dishonour of the Cheque and Legal Implications under Section 138 of the Negotiable Instruments Act:
The appellant argued that the dishonoured cheque constituted an offence under Section 138 of the NI Act. The trial court considered the respondent's defence that the cheque was a security measure and that the loan had been repaid. The court noted that the appellant failed to address the repayment cheques in his complaint, leading to the inference that the cheque was not for a legally enforceable debt.

3. Rebuttal of the Presumption under Section 139 of the Negotiable Instruments Act:
The appellant contended that the presumption under Section 139 should favor him, implying the cheque was for a legally enforceable debt. The trial court, however, found that the respondent successfully rebutted this presumption by providing evidence of repayment and the security nature of the cheque. The court emphasized that the burden of proof on the respondent was to show a probable defence, which he did by demonstrating repayment through other cheques.

4. Evaluation of Evidence and the Trial Court's Findings:
The trial judge examined the evidence, including the respondent's repayment cheques and the appellant's failure to explain these transactions. The court found the appellant's story unconvincing and inferred that the cheque was misused to harass the respondent. The appellant's failure to mention the repayment cheques in his complaint and examination-in-chief weakened his case. The trial court concluded that the respondent had no enforceable debt and acquitted him.

Conclusion:
The High Court upheld the trial court's judgment, agreeing that the respondent had rebutted the presumption under Section 139 and that the cheque was likely a security measure. The appellant's failure to provide a convincing explanation for the repayment cheques led to the dismissal of the appeal. The order of acquittal was affirmed, and the appeal was dismissed.