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2025 (2) TMI 795 - HC - Indian LawsDishonour of Cheque - legally enforceable debt under Section 138 of the Negotiable Instruments Act 1881 - discharge of rebuttal of presumption of consideration under Sections 118(a) and 139 of the NI Act - HELD THAT - In the present case learned Trial Court has categorically observed that the petitioner herein failed to prove its case beyond reasonable doubt and the respondent has created reasonable doubt over the veracity of the story of the petitioner. It is pertinent here to discuss the law regarding the nature and extent of legal presumption in favour of complainant under NI Act and the possibility and manner of rebuttal of the same by the accused while balancing reverse onus of proof under the NI Act and presumption of innocence of accused under normal criminal jurisprudence. The Hon ble Supreme Court in Kumar Exports v. Sharma Carpets 2008 (12) TMI 682 - SUPREME COURT has held that where the complainant (respondent therein) did not produce any books of account or stock register maintained in the course of regular business or any acknowledgement for delivery of goods to establish that as a matter of fact woolen carpets were sold to the appellant therein (accused) it was opined that the complainant has failed to establish its case under section 138 of NI Act as required under law. This Hon ble Court in Pine Product Industries Another v. R.P. Gupta Sons Another 2006 (12) TMI 553 - DELHI HIGH COURT has held that if the complaint itself is vague about the nature of liability in discharge of which the cheques were issued and no details as to how the amount in question was arrived at mere liability of the respondent to pay her dues towards purchase of goods is not enough to proceed under section 138 of NI Act. It is now well settled that the accused can always rely upon the material and circumstances brought on record by the complainant. It is also well settled law that the accused is not required to prove innocence by establishing the defence beyond all reasonable doubts as accused can always prove his innocence on basis of preponderance of probabilities - in the instant nature of the particular case in hand the mandatory presumption under sections 118 (a) read with section 139 of NI Act does not relieve the petitioner from establishing the foundational facts. From a perusal of the testimonies it is clear that the petitioner did not lead any evidence regarding transaction supply of materials against which the cheques in question were issued. Further the bills have neither been placed on record nor proved by the complainant/petitioner - the witnesses of the petitioner cannot be treated as credible witnesses and neither the sale tax forms nor the statement of account can be relied upon safely due to various inconsistencies and contradictions. Hence the learned Trial Court has correctly acquitted the respondent. Conclusion - The respondents have successfully rebutted the statutory presumption under section 118 (a) read with 139 of NI Act. Once the respondent has successfully rebutted the presumption the petitioner is not able to prove its case beyond reasonable doubt. The impugned judgment passed by the learned Trial Court is well reasoned based upon the evidences and materials and documents placed on record. The leave to appeals are dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Issue 1: Legally Enforceable Debt under Section 138 of NI Act - Relevant Legal Framework and Precedents: Section 138 of the NI Act mandates that a cheque must be issued for the discharge of a legally enforceable debt or liability. The presumption under Section 118(a) and Section 139 supports the holder of the cheque, assuming it was issued for consideration. - Court's Interpretation and Reasoning: The Court noted that the petitioner failed to establish that the cheques were issued for a legally enforceable debt. The evidence presented did not substantiate the claim of goods being delivered against the cheques. - Key Evidence and Findings: The petitioner's witnesses, including the Managing Director and Accounts Officer, could not provide concrete evidence of goods being delivered. No delivery receipts or purchase orders were presented. The discrepancies in the company's financial records, particularly the absence of the specific debt in the balance sheet, further weakened the petitioner's case. - Application of Law to Facts: The Court applied the presumption under Sections 118(a) and 139, but found it rebutted by the respondent's evidence and the petitioner's failure to establish foundational facts. - Treatment of Competing Arguments: The petitioner argued that the cheques were issued for a debt, but the respondent successfully demonstrated that no goods were received, and the cheques were given as advance security. - Conclusions: The Court concluded that the petitioner did not prove the existence of a legally enforceable debt, leading to the acquittal of the respondent under Section 138 of the NI Act. Issue 2: Rebuttal of Presumption under Sections 118(a) and 139 of NI Act - Relevant Legal Framework and Precedents: The presumption under Sections 118(a) and 139 is rebuttable. The accused must demonstrate that the cheque was not issued for a legally enforceable debt. - Court's Interpretation and Reasoning: The Court found that the respondent successfully rebutted the presumption by showing inconsistencies in the petitioner's evidence and documentation. - Key Evidence and Findings: The respondent highlighted the absence of delivery receipts and discrepancies in sales tax forms. The VAT Inspector's testimony confirmed that the sales tax form was not issued to the respondent. - Application of Law to Facts: The Court noted that the respondent's evidence created a reasonable doubt about the petitioner's claims, shifting the burden back to the petitioner, who failed to meet it. - Treatment of Competing Arguments: The petitioner relied on statutory presumptions, but the respondent's evidence and the petitioner's lack of credible evidence led the Court to favor the respondent's version. - Conclusions: The Court concluded that the respondent rebutted the presumption, and the petitioner failed to prove its case beyond reasonable doubt. Issue 3: Dismissal of Application under Section 311 of CrPC - Relevant Legal Framework and Precedents: Section 311 of the CrPC allows the Court to summon any person as a witness if it is essential to the just decision of the case. - Court's Interpretation and Reasoning: The Court upheld the Trial Court's decision to dismiss the application, noting that the petitioner had ample opportunity to present evidence earlier. - Key Evidence and Findings: The application was filed at a late stage without satisfactory reasons for the delay. - Application of Law to Facts: The Court found no error in the Trial Court's decision, as the petitioner failed to justify the necessity of examining the Sales Tax Officer at that stage. - Treatment of Competing Arguments: The petitioner's argument for the necessity of the witness was not convincing, given the procedural history and available evidence. - Conclusions: The Court found no reason to interfere with the Trial Court's dismissal of the application under Section 311 of CrPC. SIGNIFICANT HOLDINGS - Presumption under NI Act: The Court emphasized that the presumption under Sections 118(a) and 139 is rebuttable, and the accused need only raise a probable defense to shift the burden back to the complainant. - Burden of Proof: The Court reiterated that the complainant must establish foundational facts to support the presumption of consideration. - Final Determinations: The Court dismissed the petitioner's appeals, affirming the Trial Court's judgment of acquittal for the respondent under Section 138 of the NI Act.
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