2023 (11) TMI 605 - HC - Indian Laws

Dishonour of Cheque - accused is before this Court contending that the findings of both orders are contrary to the well settled principles of law and is liable to be set aside - rebuttal of presumption - HELD THAT - Having regard to the fact that accused admit that the cheque in question is drawn on his account maintained with his banker and it bears his signature, presumption under Sections 118 and 139 of N.I. Act is attracted to the effect that the cheque was issued towards legally recoverable debt or liability. Therefore, the initial burden is on the accused to prove that no consideration has passed i.e, the cheque was not issued towards repayment of any legally recoverable debt or liability and the circumstances in which the cheque has reached the hands of the complainant. Only after the accused rebut the presumption, the burden shifts on the complainant to prove his case, including passing of consideration and his financial capacity to lend such huge sum of money at the relevant point of time. The accused has stepped into the witness box and deposed that the cheque in question as well as the demand Promissory note were given to the son of complainant in connection with the chit fund business run by him and misusing the same, the complainant has filed this complaint. Of course the cross-examination of accused establish the fact that during 2013, he had taken loan of Rs. 16 lakhs from Vijaya Bank and he is repaying the same. Though the demand Promissory Note state and also it is pleaded by the complainant that accused had agreed to repay the said sum along with interest at 2% p.m., there is no explanation for not making any attempts to recover the interest. Both trial Court as well as the Sessions Court has failed to appreciate the oral and documentary evidence placed on record by the complainant in the light of specific defence taken by the accused. Simply on the basis that presumption under Sections 118 and 139 of N.I. Act, they proceeded to convict the accused. The findings of the trial Court as well as the Sessions Court are contrary to the evidence placed on record and as such perverse. It is erroneous and calls for interference by this Court. The Criminal Revision Petition filed under Section 397 r/w 401 Cr.P.C is allowed.

Summary

Issues Involved:
1. Legally enforceable debt under Section 138 of N.I. Act.
2. Financial capacity of the complainant to lend Rs. 5 lakhs.
3. Presumption under Sections 118 and 139 of N.I. Act.
4. Service of legal notice and its implications.
5. Credibility of evidence and witness testimonies.

Summary:

1. Legally Enforceable Debt under Section 138 of N.I. Act:
The accused challenged his conviction and sentence for the offence punishable under Section 138 of the N.I. Act, arguing that there was no legally enforceable debt to attract the provisions of Section 138. The High Court noted that the accused admitted the cheque belonged to him and bore his signature, which attracts the presumption under Sections 118 and 139 of the N.I. Act that the cheque was issued towards a legally recoverable debt or liability. However, the accused successfully rebutted this presumption by preponderance of probabilities, showing that the cheque was not issued for repayment of any legally recoverable debt.

2. Financial Capacity of the Complainant:
The complainant alleged that he lent Rs. 5 lakhs to the accused, but the accused contested the complainant's financial capacity to lend such an amount. The High Court found discrepancies in the complainant's evidence regarding his financial capacity. The complainant failed to produce sufficient evidence to prove he had the financial capacity to lend Rs. 5 lakhs, such as documents showing the sale of agricultural produce or possession of Rs. 1 lakh in cash.

3. Presumption under Sections 118 and 139 of N.I. Act:
The High Court emphasized that while the initial burden of proof lies on the accused to rebut the presumption under Sections 118 and 139, once rebutted, the burden shifts back to the complainant to prove the case beyond reasonable doubt. The complainant failed to discharge this burden, as his evidence was found to be unreliable and lacking credibility.

4. Service of Legal Notice and Its Implications:
The High Court noted that the complainant sent a legal notice to the accused, which was presumed to be served under Section 27 of the General Clauses Act. However, the accused did not reply to the notice, missing an opportunity to explain the circumstances under which the cheque was issued. Despite this, the High Court found that the complainant's case lacked credibility and failed to prove the financial capacity to lend Rs. 5 lakhs.

5. Credibility of Evidence and Witness Testimonies:
The High Court scrutinized the evidence and witness testimonies, finding inconsistencies and lack of corroborative evidence. The complainant's witness, PW-2, did not improve the complainant's case and instead created doubts about its veracity. The High Court concluded that the complainant's evidence was insufficient to prove the financial capacity and the legally enforceable debt.

Conclusion:
The High Court allowed the Criminal Revision Petition, setting aside the judgments and orders of the trial and Sessions Courts. Consequently, the accused was acquitted of the offence punishable under Section 138 of the N.I. Act, and his bail bond was discharged. The Registry was directed to send back the trial Court records along with a copy of this order.