2022 (7) TMI 973 - HC - Indian Laws

Dishonor of Cheque - Funds Insufficient - application for grant of leave to appeal against the order of acquittal - acquittal of accused - rebuttal of presumption - respondent from the charges under Section 138 of the Negotiable Instruments Act, 1881 - primary argument of appellant is that once the execution of the cheque was admitted, a presumption arose in favour of the complainant and the said presumption could not be rebutted by the accused and thus, the judgment of acquittal ought to be set aside - situation in case of possibility of two reasonable conclusions. HELD THAT - The Hon ble Supreme Court has dealt with the issue of statutory presumptions and rebuttal thereof in a number of judgments - In M.S. Narayana Menon @ Mani Versus State of Kerala, 2006 (7) TMI 576 - SUPREME COURT , while dealing with the issue of statutory presumptions and rebuttal thereof the Hon'ble Supreme Court held that the accused has discharged the onus of proving that the cheques were not received by the holder for discharge of a debt or liability. Under the circumstances the defence of the appellant that blank cheques were obtained by the respondent as advance payment also becomes probable and the onus of burden would shift on the complainant. The complainant did not produce any books of account or stock register maintained by him in the course of his regular business or any acknowledgement for delivery of goods, to establish that as a matter of fact woolen carpets were sold by him to the appellant on August 6, 1994 for a sum of Rs. 1,90,348.39. Having regard to the materials on record, this Court is of the opinion that the respondent failed to establish his case under Section 138 of the Act as required by law and, therefore, the impugned judgment of the High Court is liable to be set aside. Thus it can be inferred that the presumption under the provisions of the Negotiable Instruments Act is a rebuttable one and the onus is on the accused to raise a probable defence. He can either show that the consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent ought to suppose that no consideration and debt existed. Further, specific defence in this regard may not have to be led by the accused but he can rely on the cross-examination of the complainant and his witnesses to rebut the said presumption. The standard of proof for rebutting the presumption is that of preponderance of probabilities. In the present case, firstly, no date of the advancement of the loan has been mentioned in the complaint or in the testimony of the complainant-CW4 only the month and year being April, 2017 is mentioned. In the cross-examination, there is an improvement and the complainant states that the loan was advanced on 09.04.2017. This makes the case of the complainant doubtful - Secondly, the complainant has not been able to show as to how he was able to generate and save a sum of Rs.90,000/- and provide the same to the accused as a loan. As per the complainant, he was an employee of a Karyana Shop when he was being paid Rs.13000/- per month and also did repair work of electric appliances. The Karyana Shop was owned by one Murari Lal, who was also not examined by the complainant. In fact, the complainant did not even mention the name and style of the Karyana Shop. He also did not provide any details of his income from repairing electrical appliances. Thus, it is strange that a person with a meagre income would lend such a huge amount to someone and that too without getting any writing executed at the time of advancing of the loan - Thirdly, the complainant was unable to tell as to what amount was left with him after he had given the amount of Rs.90,000/- to the accused - Fourthly, in the Income Tax Return of the complainant, there is no reference that an amount of Rs.90,000/- was to be paid by the accused to the complainant and neither was there any balance-sheet attached to the Income Tax Return Ex.C7. Thus, it is apparent that the accused has been able to rebut the presumption of there being a legally enforceable debt. As regards the legal position in an appeal against acquittal and the scope of interference called for by the Court, the Hon'ble Supreme Court in the matter of State of Rajasthan Versus Mohan Lal 2009 (4) TMI 559 - SUPREME COURT has held that If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court. The judgments of the Hon'ble Supreme Court and this Court are to the effect that while an Appellate Court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded, it is equally true that there is a double presumption in favour of the innocence of the accused, firstly on account of the presumption of innocence available to an accused and secondly on account of the fact that the competent Court has acquitted the accused and therefore, if two reasonable conclusions were possible on the basis of the evidence on record, the Appellate Court should not disturb the finding of acquittal recorded by the Trial Court, merely, because the Appellate Court could have arrived at a different conclusion than that of the Trial Court - However, where the judgment appealed against is totally perverse and the findings have been arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant or inadmissible material, then the Appellate Court would be well within its powers to interfere with the said findings and set them aside. The respondentaccused has been able to rebut the presumption that the cheque was issued in the discharge of a legally enforceable debt and the view taken by the Trial Court while acquitting the accused is a reasonable view based on the evidence on the record cannot be said to be perverse and as such is not required to be interfered with - leave to appeal dismissed.

Summary

Issues Involved:
1. Grant of leave to appeal against the order of acquittal under Section 138 of the Negotiable Instruments Act, 1881.
2. Evaluation of evidence and rebuttal of presumption under Sections 118(a) and 139 of the Negotiable Instruments Act.
3. Legal principles regarding the scope of interference by appellate courts in cases of acquittal.

Issue-wise Detailed Analysis:

1. Grant of Leave to Appeal Against the Order of Acquittal Under Section 138 of the Negotiable Instruments Act, 1881:
The applicant/appellant sought leave to appeal against the acquittal order dated 28.01.2020, where the Judicial Magistrate acquitted the accused of charges under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that the accused had taken a cash loan of Rs.90,000/- and issued a post-dated cheque which was dishonored due to insufficient funds. The trial court, however, found no evidence of the loan's advancement and doubted the complainant's financial capacity to lend such an amount, leading to the acquittal of the accused.

2. Evaluation of Evidence and Rebuttal of Presumption Under Sections 118(a) and 139 of the Negotiable Instruments Act:
The appellant argued that under Section 139 of the Negotiable Instruments Act, there is a presumption in favor of the holder that the cheque was received in discharge of some debt or liability. The accused admitted the cheque bore his signatures but claimed it was one of several blank cheques given to a company, C.C. and Company, from which he had taken a loan. The accused asserted that the complainant, an employee of a related entity, misused the blank cheque. The trial court found that the complainant failed to prove the loan's advancement and his financial capacity. The complainant's inability to provide details about his savings and the absence of the loan in his income tax return further weakened his case. The accused successfully rebutted the presumption by raising a probable defense, shifting the burden back to the complainant, who failed to prove the loan's existence.

3. Legal Principles Regarding the Scope of Interference by Appellate Courts in Cases of Acquittal:
The judgment extensively discussed the principles governing appellate interference in acquittal cases. The appellate court must bear in mind the double presumption of innocence in favor of the accused and should not interfere unless the trial court's judgment is perverse or based on irrelevant or inadmissible material. The Hon'ble Supreme Court has held that while the appellate court has full power to reappreciate evidence, it should exercise caution and only interfere in cases of substantial and compelling reasons. The trial court's advantage in observing witness demeanor and the presumption of innocence reinforced by acquittal should guide the appellate court's approach.

Conclusion:
The appellate court found no reason to interfere with the trial court's well-reasoned judgment. The accused successfully rebutted the presumption of a legally enforceable debt, and the trial court's findings were reasonable and not perverse. Consequently, the leave to appeal was dismissed, upholding the acquittal.