2024 (12) TMI 1446 - HC - Indian Laws

Dishonour of Cheque - mandatory presumption as provided under Section 139 of the Negotiable Instruments Act drawn in favour of the complainant - whether the accused has succeeded in rebutting the presumption drawn in favour of the complainant? - HELD THAT - A presumption is an inference to the existence of a fact not actually known arising from its connection with another which is known. A presumption is a conclusion drawn from the proof of facts or circumstances and stands as establishing facts until overcome by contrary proof. Analysing the terms proved and disproved as provided in Section 3 of the Evidence Act, a court shall presume a Negotiable Instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. The necessary conclusion is that for rebutting such a presumption, what is needed is to raise a probable defence. All the circumstances, including the evidence adduced on behalf of the complainant, could be relied upon. The rebuttal does not have to be conclusively established, but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of responsibility being that of the prudent man. The admitted case of the complainant is that his wife and the accused had a financial transaction in respect of an immovable property. But, his wife came to the box and denied the entire transactions. She even denied to have acquaintance with the accused - The accused has brought in throwing circumstances that make the case of the complainant suspicious. Unless the holder of the instrument removes such suspicion by tendering a satisfactory explanation, no conviction is legally permissible by invoking the statutory presumption. The accused has successfully discharged his initial onus of proof showing that the existence of consideration was doubtful. The onus now shifted to the complainant who is obliged to prove it as a matter of fact. In the present case, the complainant failed to prove the same. The accused having been acquitted by the trail Court is entitled to the presumption of innocence. The presumption of innocence is further reaffirmed and strengthened by the trial Court. If reasonable conclusions are possible based on the evidence on record, the appellate court should not disturb the finding of fact recorded by the trial Court. In the instant case, the complainant failed to give a satisfactory explanation for the suspicious circumstances brought on record regarding the consideration of Ext.P1 cheque. The view taken by the trial Court cannot be held to be illegal, improper or contrary to law. Therefore, the reasoning recorded by the trial Court for acquitting the accused was possible and plausible and no interference is required. Conclusion - The accused having been acquitted by the trail Court is entitled to the presumption of innocence. The presumption of innocence is further reaffirmed and strengthened by the trial Court. The complainant failed to give a satisfactory explanation for the suspicious circumstances brought on record regarding the consideration of Ext.P1 cheque. Appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the accused issued a cheque to the complainant in discharge of a legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act.
Whether the statutory presumption under Section 139 of the Negotiable Instruments Act, which presumes the existence of a legally enforceable debt or liability, has been rebutted by the accused.
Whether the trial court's judgment of acquittal was justified based on the evidence and arguments presented.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Existence of a Legally Enforceable Debt or Liability

Relevant Legal Framework and Precedents: The case revolves around Section 138 of the Negotiable Instruments Act, which penalizes the dishonor of a cheque for insufficiency of funds, and Section 139, which creates a presumption in favor of the holder that the cheque was issued for a debt or liability. Precedents such as Rangappa v. Mohan and Vasanthakumar v. Vijayakumari were cited to support the presumption of consideration.
Court's Interpretation and Reasoning: The court noted that the complainant established the execution of the cheque, invoking the presumption under Section 139. However, the accused challenged the existence of a financial transaction with the complainant, asserting that the cheque was issued to the complainant's wife in a different context.
Key Evidence and Findings: The complainant presented evidence of a transaction involving an advance payment for property, while the accused provided agreements and testimony suggesting the cheque was issued as security in a separate transaction with the complainant's wife.
Application of Law to Facts: The court examined whether the accused successfully rebutted the presumption of consideration by presenting a probable defense, as allowed by precedents such as Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal.
Treatment of Competing Arguments: The complainant argued for the presumption of consideration, while the accused provided evidence suggesting an alternative explanation for the cheque's issuance. The court evaluated the credibility and plausibility of both parties' evidence.
Conclusions: The court concluded that the accused raised sufficient doubt about the existence of a legally enforceable debt, thereby rebutting the presumption under Section 139.

Issue 2: Justification of the Trial Court's Acquittal

Relevant Legal Framework and Precedents: The appellate court's power to review acquittals was guided by principles set forth in Chandrappa v. State of Karnataka, emphasizing the presumption of innocence and the need for compelling reasons to overturn an acquittal.
Court's Interpretation and Reasoning: The court highlighted the double presumption of innocence in favor of the accused, both from the initial presumption and the trial court's acquittal.
Key Evidence and Findings: The trial court found the complainant's evidence insufficient to remove doubts about the cheque's consideration, and the appellate court agreed with this assessment.
Application of Law to Facts: The appellate court reviewed the evidence and determined that the trial court's findings were reasonable and supported by the record.
Treatment of Competing Arguments: The complainant's arguments for overturning the acquittal were weighed against the accused's defense and the trial court's reasoning.
Conclusions: The appellate court upheld the trial court's acquittal, finding no compelling reason to disturb the judgment.

3. SIGNIFICANT HOLDINGS

Presumption of Consideration: "A negotiable instrument, including the cheque, carries presumption in consideration in terms of Section 118(a) and under Section 139 of the Negotiable Instruments Act."
Rebuttal of Presumption: The court emphasized that "the rebuttal does not have to be conclusively established, but such evidence must be adduced before the court in support of the defense that the court must either believe the defense to exist or consider its existence to be reasonably probable."
Standard of Proof: The accused successfully demonstrated a "reasonable possibility of nonexistence of the consideration," thereby rebutting the statutory presumption.
Final Determination: The appeal was dismissed, affirming the trial court's acquittal of the accused.