2022 (1) TMI 804 - HC - Indian Laws

Dishonor of Cheque - funds insufficient - legally enforceable debt or not - rebuttable presumption or not - Section 139 of the Negotiable Instruments Act - HELD THAT - It is a well settled position of law that, once the execution of the cheque is admitted, there is presumption under Section 139 of the Negotiable Instruments Act as to the existence of legally enforceable debt. However, the said presumption is a rebuttable presumption and if the accused is able to show from the evidence that the amount mentioned in the cheque does not reflect the actual amount legally due to the complainant, the said presumption shall stand rebutted. In such event, the burden to establish the existence of a legally enforceable debt shall stand shifted to the complainant. In this case, by virtue of the difference in the amount presumably due to the addition made by the appellant towards interest at the rate of 24%, there is a shifting of burden. In this case, even though the 1st respondent is admitting the business transactions with the complainant, he vehemently denied the existence of a legally enforceable debt by a specific plea that the cheque which was issued by him towards security and the same was used by the petitioner for submitting this complaint. In such circumstances, in the absence of any specific understanding arrived at between the parties enabling the appellant to collect interest at the rate of 24%, it cannot be concluded that the amount mentioned in Ext. P1 cheque reflects the actual amount of legally enforceable debt. In such circumstances, it cannot be safely concluded that the offence under Section 138 of the Negotiable Instruments Act has been made out. There are no merits in the appeal - appeal dismissed.

Summary

Issues:
1. Dismissal of complaint under Section 138 of the Negotiable Instruments Act by the Magistrate.
2. Appeal against the dismissal of the complaint.
3. Legal sustainability of reasons cited for dismissing the complaint.
4. Examination of evidence and documents presented.
5. Dispute over the existence of a legally enforceable debt.
6. Burden of proof on the complainant.
7. Appellate court's jurisdiction to interfere in an order of acquittal.

Analysis:

The appellant filed a complaint against the 1st respondent under Section 138 of the Negotiable Instruments Act for issuing a cheque that bounced due to insufficient funds. The Magistrate acquitted the respondent, leading to the appeal. The appellant argued that the Magistrate's reasons for dismissal were legally unsound, citing documents like ledger extracts and the respondent's acknowledgment of liability. The respondent's counsel contended that the Magistrate's order was reasoned and should not be interfered with.

The Magistrate's dismissal was based on several grounds. Firstly, the Power of Attorney presented was deemed improper, but the appellant challenged this by highlighting the witness's knowledge of the transactions. The legal notice issued was also questioned for lacking transaction details, but precedent showed this was not necessary. The Magistrate also doubted the authenticity of the cheque, but the Supreme Court precedent clarified the liability of the drawer upon signing a cheque.

A significant dispute arose over the existence of a legally enforceable debt. Ledger extracts showed conflicting amounts, raising doubts about the exact sum owed. The burden of proof shifted to the complainant due to discrepancies in interest charges, indicating a lack of clear understanding between the parties. The absence of specific documentation supporting the interest rate led to uncertainty regarding the actual debt owed by the respondent.

Referring to legal principles, the court emphasized the limited scope for interference in cases of acquittal. Exceptional circumstances are required for appellate courts to overturn such decisions. In this instance, the court found no grounds for exceptional interference, leading to the dismissal of the appeal and upholding the Magistrate's decision to acquit the respondent.

In conclusion, the court dismissed the Criminal Appeal, finding no merit to interfere with the Magistrate's order of acquittal, emphasizing the need for exceptional circumstances to reverse such decisions.