2024 (9) TMI 453 - HC - Indian Laws

Dishonour of cheque - legally enforceable debt or not - acquittal of accused - rebuttal of presumption arising in favour of the Petitioner under Sections 118 and 139 of NI Act - HELD THAT - Appellate Court has, no doubt, wide powers to re-appreciate the evidence in an appeal against acquittal and come to a different conclusion, on facts and law, but there is no gainsaying that this power must be exercised with due care and caution since the presumption of innocence at the start of the trial is strengthened by acquittal of the accused by a judicial order. The Supreme Court in GHUREY LAL VERSUS STATE OF U.P 2008 (7) TMI 951 - SUPREME COURT , elucidated and crystallized the principles that the Courts are required to keep in mind as guiding light, when deciding an appeal against a judgment acquitting the accused held that ' The accused is presumed innocent until proven guilty. The accused possessed this presumption when he was before the trial Court. The trial Court's acquittal bolsters the presumption that he is innocent.' It is a settled law that in matters relating to dishonour of cheques, Courts have to consider whether the ingredients of Section 138 of NI Act are made out and whether the accused is able to rebut the statutory presumption under Section 139 of NI Act. In light of the evidence on record, Appellate Court concluded that the defence of the Respondent was a plausible one that he had given the cheque of Rs. 8 lacs for investment and he was able to successfully rebut the presumption under Sections 118 and 139 of NI Act and that no evidence came on record to substantiate that Petitioner had advanced a loan of Rs. 14 lacs to the Respondent. This Court finds no infirmity in this conclusion and in this context, the judgment of the Supreme Court in Kundan Lal Rallaram v. The Custodian, Evacuee Property Bombay, 1961 (3) TMI 100 - SUPREME COURT perused, where the Supreme Court observed that when the creditor failed to produce his account books, the Court can raise a presumption of the fact under Section 114 of the Indian Evidence Act that the evidence if produced would have shown the non-existence of the consideration. Thus, no interference is warranted in the findings and conclusions of the Appellate Court in the impugned judgment dated 09.06.2016, wherein the defence set up by the Respondent was found to be a probable one on the touchstone of preponderance of probabilities and thus no ground for grant of leave to appeal is made out. Petition seeking leave to appeal is hereby dismissed.

Summary

Issues Involved:
1. Whether the cheque was issued for discharge of a legally enforceable debt or liability.
2. Whether the presumption under Sections 118 and 139 of the Negotiable Instruments Act (NI Act) was rebutted by the Respondent.
3. Whether the Appellate Court rightly acquitted the Respondent by setting aside the Trial Court's judgment.

Detailed Analysis:

Issue 1: Whether the cheque was issued for discharge of a legally enforceable debt or liability.
The Petitioner claimed that the Respondent issued a cheque for Rs. 8 lacs to discharge a liability arising from a loan of Rs. 14 lacs. The loan was allegedly extended due to a friendly relationship, and the cheque was dishonored twice. The Petitioner sent a legal notice and subsequently filed a complaint under Sections 138-142 of the NI Act. The Trial Court convicted the Respondent, finding that once the issuance and signature on the cheque were admitted, a presumption arose under Sections 118 and 139 of the NI Act that the cheque was for the discharge of a debt or liability. However, the Appellate Court found that the cheque was issued for investment purposes and not for discharging a loan, as there was no evidence to prove that the Petitioner had advanced any loan to the Respondent.

Issue 2: Whether the presumption under Sections 118 and 139 of the NI Act was rebutted by the Respondent.
The Respondent admitted issuing the cheque but claimed it was for investment purposes, not for repaying a loan. He argued that the cheque was issued due to a property deal and not a loan. The Appellate Court held that the Respondent successfully rebutted the presumption under Sections 118 and 139 of the NI Act. The Petitioner failed to produce evidence such as the alleged cheque/DD or any cash receipt to prove the loan. The Appellate Court also noted contradictions in the Petitioner's statements and the absence of any mention of the loan in his Income Tax Returns or balance sheets.

Issue 3: Whether the Appellate Court rightly acquitted the Respondent by setting aside the Trial Court's judgment.
The Appellate Court acquitted the Respondent, finding that the Petitioner could not prove the advancement of the loan. The Court emphasized that the presumption under Section 139 is rebuttable, and the Respondent only needed to raise a probable defense. The Appellate Court found the Respondent's defense plausible and noted that the Petitioner's evidence was insufficient and contradictory. The High Court upheld the Appellate Court's judgment, stating that the Appellate Court's findings were based on a proper appreciation of evidence and there were no substantial and compelling reasons to interfere with the acquittal.

Conclusion:
The High Court dismissed the petition seeking leave to appeal, affirming the Appellate Court's judgment that the Respondent successfully rebutted the presumption under Sections 118 and 139 of the NI Act and that the Petitioner failed to prove the existence of a legally enforceable debt or liability.