2021 (8) TMI 476 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt or not - alleged acquaintance of the accused with the complainant - rebuttal of presumption - Sections 138 and 139 of the N.I. Act - HELD THAT - The complainant has failed to mention as to when the alleged loan was given and when the cheque in question is said to have been given by the accused to her. Admittedly there are no documents with respect to the alleged loan. She has not even stated as to why no documentation of the alleged loan was made by the parties. Admittedly the accused was not a person well known to her rather as stated by the complainant herself, he was introduced to her only from the alleged sister of the accused. On the other hand the accused as D.W.1 has stated that the cheque in question was given to his cousin sister by name Anitha with whom his relationship has been strained. Further P.W.1 in her cross examination also could not identify the accused. Admittedly the complainant could not able to reveal the name of said alleged sister of the accused who according to her introduced the accused to her. According to the complainant, the loan was given to the accused for construction of a building complex by name 'Gajanana Tower'. The accused as D.W.1 has stated in his evidence that the construction of the said building Gajanana Tower had been completed in the year 2001 and he had sold the said building in the year 2005 itself - the question of he availing loan from the complainant to put up a construction does not arise. The complainant upon whose shoulder the burden of proving the alleged existence of legally enforceable debt was reverted, could not able to discharge the same. This aspect both the Trial Court and the Sessions Judge's Court failed to notice. On the other hand they were carried away by the fact that the accused was the drawer of the cheques in question which came to be returned unpaid when presented for realization and proceeded to hold that accused is guilty of the alleged offence. The revision petition is allowed.

Issues Involved:
1. Existence of a legally enforceable debt.
2. Rebuttal of the presumption under Sections 138 and 139 of the Negotiable Instruments Act.
3. Adequacy of documentation and evidence for the alleged loan transaction.
4. Acquaintance and credibility of the complainant's testimony.
5. Validity of the judgments by the Trial Court and Sessions Judge's Court.

Detailed Analysis:

1. Existence of a Legally Enforceable Debt:
The primary contention revolves around whether there existed a legally enforceable debt between the complainant and the accused. The complainant alleged that the accused borrowed ?5,00,000 for constructing a building named "Gajanana Tower" and issued two cheques, which were dishonored due to the account being closed. However, the complainant failed to specify when the loan was given and did not provide any documentation to support the loan transaction. The accused denied borrowing any money and claimed that the cheques were given to his cousin, which somehow reached the complainant.

2. Rebuttal of the Presumption under Sections 138 and 139 of the N.I. Act:
The court noted that although the dishonored cheques create a presumption of a legally enforceable debt, this presumption is rebuttable. The accused successfully rebutted this presumption by questioning the acquaintance between the parties and the lack of documentation for the loan. The court referred to precedents like Basalingappa Vs. Mudibasappa and Vijay Vs. Laxman, which emphasize that the standard of proof for rebutting the presumption is based on the preponderance of probabilities, not beyond a reasonable doubt.

3. Adequacy of Documentation and Evidence for the Alleged Loan Transaction:
The complainant admitted that no documents were taken at the time of the alleged loan. This lack of documentation, coupled with the complainant's inability to provide details about the loan, raised significant doubts about the transaction's authenticity. The court found it implausible that a housewife would lend such a substantial amount without any formal documentation, especially to someone not well-known to her.

4. Acquaintance and Credibility of the Complainant's Testimony:
The complainant's testimony was inconsistent and lacked credibility. She could not recall the name of the accused's sister, who allegedly introduced them, and failed to provide specific details about the loan transaction. The accused's testimony that he had already sold the building in question in 2005 further weakened the complainant's case, as there would be no need for a loan for construction purposes in subsequent years.

5. Validity of the Judgments by the Trial Court and Sessions Judge's Court:
The court found that both the Trial Court and the Sessions Judge's Court erred in their judgments by focusing solely on the dishonored cheques and not adequately considering the lack of evidence for a legally enforceable debt. The judgments were deemed perverse and were set aside.

Conclusion:
The revision petition was allowed, and the accused was acquitted of the offence punishable under Section 138 of the N.I. Act. The court emphasized the importance of substantial evidence and credible testimony in proving the existence of a legally enforceable debt. The judgments of the Trial Court and Sessions Judge's Court were overturned due to their failure to recognize the lack of documentation and the inconsistencies in the complainant's case.

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