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2022 (11) TMI 488 - HC - Indian LawsDishonor of Cheque - insufficient funds - admissibility of signatures on the cheque - rebuttal of statutory presumptions - section 139 of NI Act - HELD THAT - Trite it is that once the signatures on the cheque leaf are admitted, presumption under Section 139 of the Act does pitch in. However, the said presumption is rebuttable. At the same time in order to rebut the said presumption, accused is required to raise probable defence. Though in order to substantiate the same, he can either lead evidence in defence or can well rely upon the evidence adduced by the complainant - Thus in order to rebut the statutory presumption accused is required to raise a defence though only probable. When analysed in the light of the settled proposition of law, this Court is of the considered opinion that the accused failed to raise any defence during trial and thus it cannot be held that the presumption enumerated under Section 139 of the Act was validly rebutted by the accused. Appellate Court pittedly erred in relying upon KRISHNA NANARDHAN BHAT VERSUS DATTATRAYA G. HEGDE 2008 (1) TMI 827 - SUPREME COURT to hold that in absence of resources to advance loan, the liability qua the cheque in question can be held to be not illegally enforceable. Complainant was explicit in proving source of fund i.e. the compensation received on account of loan acquisition. Admittedly, such compensation is not amenable to the provisions of Income Tax Act, 1961 and thus there was no occassion for the complainant to prove said source by producing his income tax returns Apart from that the Appellate Court has failed to meet with the reasoning adopted by the trial Court while convicting the respondent-accused and has set aside the judgment of conviction without upsetting the findings recorded by the trial Court. No cogent reasoning has been afforded by the Appellate Court for acquitting the respondent-accused. Consequently, the impugned judgment dated 22.08.2016 cannot be sustained and is, thus, set aside - The impugned order passed by the Lower Appellate Court acquitting the respondent is set aside. The matter is remanded back to the the Appellate Court to decide the matter afresh in accordance with law, after hearing both the parties. Petition allowed.
Issues Involved:
1. Acquittal of the respondent under Section 138 of the Negotiable Instruments Act, 1881. 2. Validity of the complainant's claim regarding the friendly loan and issuance of the cheque. 3. Rebuttal of the statutory presumption under Section 139 of the Negotiable Instruments Act. 4. Evaluation of the Appellate Court's judgment in setting aside the conviction by the Trial Court. Detailed Analysis: 1. Acquittal of the respondent under Section 138 of the Negotiable Instruments Act, 1881: The complainant challenged the judgment of the Additional Sessions Judge, Gurgaon, dated 22.08.2016, which acquitted the respondent in proceedings under Section 138 of the N.I. Act. The Trial Court had earlier found the respondent guilty, but the Appellate Court overturned this decision. 2. Validity of the complainant's claim regarding the friendly loan and issuance of the cheque: The complainant alleged that the respondent took a friendly loan of Rs.14 lakhs between August and October 2012, which was not repaid despite repeated requests. The respondent issued a cheque for Rs.14 lakhs, which was dishonored due to insufficient funds. The complainant served a statutory demand notice dated 08.11.2013, to which the respondent did not respond, leading to the filing of the complaint. 3. Rebuttal of the statutory presumption under Section 139 of the Negotiable Instruments Act: The Trial Court found that the complainant successfully discharged the initial burden of proof. The respondent's signatures on the cheque were not disputed. The respondent's defense was that the cheque was given as security for a Rs.1 lakh loan, which was repaid, but the cheque was misused by the complainant. The Trial Court rejected this defense, noting the lack of any protest or steps taken by the respondent to retrieve the cheque or stop its payment. The presumption under Section 139 was not rebutted by the respondent, who failed to provide cogent evidence. 4. Evaluation of the Appellate Court's judgment in setting aside the conviction by the Trial Court: The Appellate Court set aside the Trial Court's conviction, questioning the plausibility of the complainant's story of providing an interest-free loan of Rs.14 lakhs to a tenant without any documentation. The Appellate Court cited precedents emphasizing the improbability of such a transaction without documentary evidence and the violation of Section 269 SS of the Income Tax Act, 1961. However, the High Court found that the Appellate Court erred in its judgment. The complainant had proven the source of funds as compensation from land acquisition, which is not subject to Income Tax Act provisions, thus negating the need for income tax returns as proof. The Appellate Court failed to address the Trial Court's reasoning adequately and did not provide cogent reasons for acquitting the respondent. Conclusion: The High Court concluded that the Appellate Court erred in its judgment by not properly addressing the Trial Court's findings and the statutory presumption under Section 139 of the N.I. Act. Consequently, the High Court set aside the Appellate Court's judgment and remanded the matter back to the Appellate Court for fresh consideration in accordance with the law, directing the parties to appear before the Lower Appellate Court on 30.11.2022.
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