2017 (6) TMI 1375 - HC - Indian Laws

Dishonor of Cheque - rebuttal of statutory presumption - discharge of burden to prove - acquittal of accused - main contention of the revision petitioner is that there was a business transaction between him and the respondent/complainant and he has given a signed blank cheque to the respondent for the business transaction and the same has been misused by the complainant and filed a false case against him - HELD THAT - The signature of the cheque was not in dispute. The letters written in words figures and date of the cheque were written in bold letters whereas the name of the complainant was written in different hand writing. This fact also create serious doubt about the transaction. If really the accused has issued the cheque in the name of the complainant on the same day the style of handwriting must be one and the same in all aspects. Whereas the accused has written the complainant name in different hand writing and filling up other columns in other hand writing also highly improbable and in fact the same creates serious doubt about the issuance of the cheque by the accused to the complainant at the relevant time. When these materials more than probable from the admission of P.W. 1 and materials the burden is shifted on the complainant to establish that the cheque is supported by valid consideration. But the material documents and the cross examination of the complainant clearly indicates that she has not discharged her burden as prescribed in law. This Court after scanning the entire evidence of P.W. 1 as discussed above have serious doubt about the legally enforceable debt. From the admissions of P.W. 1 in the cross examination the legal presumption attached to the cheque has been dislodged by the accused. The burden shifted on the complainant to establish the consideration has not been proved in the manner known to law. Therefore the legally enforceable debt cannot be inferred merely on the cheque. Hence this Court is of the view that the findings of the Court below has to be interfered with and the same is interfered. The revision case is allowed - the revision petitioner/accused is acquitted from the charges.

Summary

Issues Involved:
1. Whether the revision petitioner has committed any offence punishable under Section 138 of the Negotiable Instruments Act.
2. Whether the revision petitioner brought out any material to dislodge the legal position attached to the cheque.

Issue-Wise Detailed Analysis:

1. Offence under Section 138 of the Negotiable Instruments Act:

The complainant, engaged in the textile business, alleged that the accused borrowed Rs. 10,00,000/- for his chit fund business and issued a cheque (Ex. P.1) as repayment. The cheque was dishonored due to 'Exceeds Arrangement', leading to the filing of a complaint under Section 138 of the Negotiable Instruments Act. The trial court convicted the accused, sentencing him to six months of simple imprisonment and a fine of Rs. 3,000/-. The appellate court reduced the sentence to three months but upheld the conviction and fine. The accused contended that the cheque was given as a blank signed cheque for business transactions and was misused by the complainant. The court had to determine whether the cheque issuance was for a legally enforceable debt.

2. Dislodging the Legal Position Attached to the Cheque:

The accused argued that there was no direct money transaction with the complainant, suggesting that the cheque was given to the complainant's son and misused. The complainant admitted in cross-examination that the accused was neither a relative nor from her village and that the amount was given as a hand loan, not for chit fund business. This contradicted the complaint's initial claim. The complainant's bank statement (Ex. R6) did not show sufficient funds to support the loan claim, and the specific period when the cheque was issued was not provided, raising doubts about the transaction. The court noted discrepancies in the handwriting on the cheque, further questioning its legitimacy.

Judgment and Legal Reasoning:

The court emphasized that the initial burden of proving cheque execution lies with the complainant. Once established, the burden shifts to the accused to rebut the presumption of legal debt under Sections 118(a) and 139 of the Negotiable Instruments Act. The accused can discharge this burden through preponderance of probabilities, relying on the complainant's admissions and evidence. The court found that the complainant's evidence and the withheld bank statement created significant doubt about the alleged debt. The accused successfully rebutted the presumption of a legally enforceable debt, shifting the burden back to the complainant, who failed to prove the debt.

Citations and Precedents:

The court referred to the Supreme Court judgments in *Bharat Barrel and Drum Manufacturing Company v. Amin Chand Payrelal* and *Rangappa v. Sri Mohan*. These cases established that the presumption of consideration under Section 118(a) is rebuttable and that the accused can rely on the complainant's evidence to raise a probable defense. The court concluded that the complainant failed to prove the legally enforceable debt, and the accused's defense created sufficient doubt to dislodge the presumption.

Conclusion:

The court set aside the lower courts' judgments, acquitted the accused of the charges under Section 138 of the Negotiable Instruments Act, and ordered the return of the fine amount to the accused. The judgment highlighted the importance of proving a legally enforceable debt and the ability of the accused to rebut presumptions through preponderance of probabilities.