2022 (1) TMI 53 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - legally enforceable debt or not - preponderance of probabilities - validity of conviction and sentence of the accused for the offence under Section 255(2) Cr.P.C., and 357(3) Cr.P.C. basing on the materials available on record - HELD THAT - In the case in hand, the petitioner/accused has consistently stated that the complainant did not have sufficient funds and it is not possible or probable to presume that he had lent the huge sum to the accused. Unless the cheques which were returned for 'insufficient funds' were proved to have been issued for legally enforceable debt, the action taken under Section 138 of N.I.Act will fail. Since the complainant did not prove that he had procured funds from his alleged friends and relatives by way of examining them, that would shift the preponderance of probabilities in favour of the accused. So it is unbelievable that the complainant had lent a huge sum in a short span of 40 days and that too to a person like the accused who is his casual acquaintance. Since the Courts below have not properly appreciated the preponderance of probabilities available in favour of the petitioner/accused, from the short falling evidence of the complainant, this case is deemed fit to be interference - the Criminal Revision Case is allowed.

Summary

Issues Involved:
1. Whether the complainant had the financial capacity to lend ?19,00,000.
2. Whether the cheques issued by the accused were for a legally enforceable debt.
3. Whether the presumption under Section 139 of the Negotiable Instruments Act was properly applied and rebutted.

Detailed Analysis:

Issue 1: Financial Capacity of the Complainant
The petitioner challenged the judgment on the grounds that the complainant did not have the financial means to lend ?19,00,000. The complainant, employed at Hindustan Unilever Company with a monthly salary of ?13,000, claimed to have raised the amount by borrowing from friends and relatives. However, the complainant did not produce these individuals as witnesses to corroborate his claim. The court noted that withholding these witnesses amounted to withholding the best evidence, leading to an adverse presumption against the complainant. The complainant admitted that he contributed only ?4,00,000 of his own money, with the rest allegedly borrowed from others, which was not substantiated by any testimony.

Issue 2: Legally Enforceable Debt
The accused contended that the cheques were given as security and were misused by the complainant. The trial court convicted the accused based on the presumption under Section 139 of the Negotiable Instruments Act, which assumes that the cheque was issued for a legally enforceable debt unless rebutted. The appellate court upheld this conviction. However, the High Court found that the complainant failed to prove the legally enforceable debt as he did not establish his financial capacity or the source of the funds lent to the accused. The accused's defense that the complainant did not have sufficient funds was considered probable, shifting the burden back to the complainant, who failed to meet it.

Issue 3: Presumption Under Section 139 of the Negotiable Instruments Act
The presumption under Section 139 is rebuttable. The accused can rebut this presumption by showing that the consideration did not exist or was improbable. The High Court referred to several Supreme Court judgments, including Basalingappa v. Mudibasappa, which stated that the accused need not provide direct evidence but can rely on the complainant's weaknesses. The High Court concluded that the complainant's failure to prove his financial capacity and the improbability of lending such a large amount within 40 days rebutted the presumption under Section 139. Consequently, the High Court found that the lower courts did not properly appreciate the evidence and the preponderance of probabilities favored the accused.

Conclusion:
The High Court allowed the Criminal Revision Case, setting aside the judgment of the Sessions Court. The complainant's inability to prove the financial capacity and the legally enforceable debt led to the acquittal of the accused. The connected Miscellaneous Petition was also closed.