2021 (12) TMI 786 - HC - Indian Laws

Dishonor of Cheque - rebuttal of presumption - discharge of any debt or other liability - preponderance of probability - Section 139 of the N.I. Act - HELD THAT - Section 139 raises a reverse presumption against the accused by providing that the holder of a cheque shall be presumed to have received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability - The Explanation to Section 138 provides that, for the purposes of the said Section, debt or other liability means a legally enforceable debt or other liability. If the evidence-on-record in the instant case is taken into consideration, it is the test of preponderance of probability that has to be applied to the case made out by the accused/respondent no.1 for the purpose of rebuttal of the presumption under Section 139 of the N.I. Act. Further, the materials submitted by the complainant can be relied on by the accused in order to raise such a defence, in some cases not requiring adducing evidence of his/her own - the prosecution case is that the independent seizure of other cheques from the same cheque book, details of which were separately given in several items of the Seizure List, indicates that the CBI merely seized the empty, or partially empty, cheque book which might not have contained the leaves of the incriminating cheques, thereby lending credence to the possibility of the accused having issued the dishonoured cheques. Equal weight can very well be attached to either of such theories for the purpose of preponderance of probabilities. In the present case, no valid documentary evidence could be produced by the complainant and/or the prosecution for substantiating the legality and/or existence of any enforceable debt or other liability on the part of the accused and the Court has to resort to a balance of probabilities between the contentions of the parties - A plausible case has been made out by the defence as regards the non-existence of any such legally enforceable debt or other liability, also because the said debt/liability is not reflected from the relevant balance-sheet which was produced as evidence. Thus, illegal share transactions, which were the premise of such alleged liability, could not be construed, even as per the prosecution case, to be legally enforceable . From the evidence adduced by the prosecution itself, several questions arise as regards the veracity of the chain of events sought to be projected by the prosecution. Upon a perusal of the judgment and order impugned in the appeal, it is evident that the Trial Judge took sufficient pains to discuss all the relevant facets of the matter and the governing law and, upon comprehensive consideration of the materials-on-record and the law applicable, arrived at the findings and the final decision assailed in the present appeal. Merely because of a second opinion is possible, it is not for this court, sitting in appeal, to reverse the said decision of the Trial Court, in the absence of any infirmity and/or illegality in the Trial Court s judgment - Appeal dismissed.

Summary

Issues Involved:
1. Legally enforceable debt or liability under Section 138 of the Negotiable Instrument Act (N.I. Act).
2. Presumption under Sections 118(a) and 139 of the N.I. Act.
3. Evidence and burden of proof.
4. Seizure of cheques by CBI.
5. Appellate court’s jurisdiction in reversing acquittal judgments.

Detailed Analysis:

1. Legally enforceable debt or liability under Section 138 of the N.I. Act:
The complainant, a partnership firm, alleged that the accused issued cheques in discharge of financial assistance granted to her. The cheques were dishonored due to "Funds Insufficient". The accused contended that the cheques were issued for speculative trading in the share market and not for any legally enforceable debt. The court noted that no valid documentary evidence was produced by the complainant to substantiate the existence of any legally enforceable debt or liability.

2. Presumption under Sections 118(a) and 139 of the N.I. Act:
Section 118(a) raises a rebuttable presumption that every negotiable instrument was made or drawn for consideration. Section 139 presumes that the holder of a cheque received it for discharge of any debt or liability. The appellant argued that the presumption under these sections should prevail unless the contrary is proved by the accused. The court highlighted that the accused can rebut this presumption by raising a probable defense, which creates doubt about the existence of a legally enforceable debt or liability.

3. Evidence and burden of proof:
The appellant relied on the judgment of Uttam Ram Vs. Devindar Singh Hudan and others to argue that the burden of proof lies on the accused to disprove the existence of any legally recoverable debt or liability. The accused argued that the complainant failed to establish the existence of a legally enforceable debt. The court observed that the accused successfully raised a probable defense by pointing out inconsistencies in the complainant's case, such as the absence of any agreement or document supporting the financial assistance claim and the failure to disclose the amount and timing of the alleged financial assistance.

4. Seizure of cheques by CBI:
The accused contended that the cheques were seized by the CBI from her husband's office, as evidenced by the Seizure List. The complainant argued that the seized items were only counterfoils, not the cheques themselves. The court found that the Seizure List indicated the entire cheque book, including the incriminating cheques, was seized, creating a reasonable doubt about the complainant's case.

5. Appellate court’s jurisdiction in reversing acquittal judgments:
The court emphasized that while exercising appellate power against a judgment of acquittal, it should bear in mind the principle that where two views are possible, the appellate court should not interfere with the finding of acquittal. The court noted that the trial judge had comprehensively considered the evidence and applicable law, arriving at a decision within the domain of preponderance of probability.

Conclusion:
The court dismissed the appeals, affirming the trial court's judgments of acquittal. It concluded that the accused had successfully rebutted the presumption under Section 139 of the N.I. Act by raising a probable defense, creating reasonable doubt about the existence of a legally enforceable debt. The appellate court found no infirmity or illegality in the trial court's judgment, thus upholding the acquittal.