2022 (7) TMI 1026 - HC - Indian Laws

Dishonor of Cheque - acquittal of the accused from the charges - legally enforceable debt or not - raising of presumptions - rebuttal of presumptions - Onus to prove - Section 138 of Negotiable Instruments Act - HELD THAT - In the present case the accused has admitted signature on the cheque in question. As per the scheme of the NI Act once the accused admits signature on the cheque in question certain presumptions are drawn which result in shifting of onus. Section 118 of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Another presumption is enumerated in Section 139 of NI Act. The provision lays down the presumption that the holder of the cheque received it for the discharge in whole or part of any debt or other liability. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression shall which makes it imperative for the court to raise the presumptions once the foundational facts required for the same are proved. It has been held by a three-judge bench of the Hon ble Apex Court in the case of RANGAPPA VERSUS SRI MOHAN 2010 (5) TMI 391 - SUPREME COURT that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised it is for the accused to rebut the same by establishing a probable defence. In the present case the complainant examined himself as the sole witness. To raise the presumption of cheque having been issued in discharge of legally recoverable debt and drawn for lawful consideration arising by virtue of Section 118(a) and Section 139 of NI Act the testimony of the complainant must be of such a character as to be believed as gospel truth because the complainant has accepted that there was no witness to the transaction. The perusal of oral as well as documentary evidence produced by the complainant shows that there is no mention in the notice sent to the accused that the alleged amount of money was given to the accused as a loan - the presumption of existence of a legally enforceable debt can not be drawn as it has been rebutted by the circumstances itself. The learned trial court has rightly hold that the cheque in question was not issued by the accused for the discharge of his legal liability as the presumption stood rebutted by the circumstances itself. Consequently it can be said that no legal liability exists in favour of the complainant thus the second ingredient to the offence under section 139 of NI Act does not stand proved. Cogent evidence is required to be proved beyond reasonable doubt to secure conviction in a criminal trial which lacks in the present case. Appeal dismissed.

Summary

Issues:
- Appeal against acquittal under Section 138 of Negotiable Instruments Act

Analysis:
1. Factual Background: The case involves an appeal against the acquittal of the accused from charges under Section 138 of the Negotiable Instruments Act. The complainant alleged that the accused issued a cheque that was dishonored, leading to the legal proceedings.

2. Legal Standards: To establish an offence under Section 138 of the NI Act, certain essential ingredients must be fulfilled. These include the issuance of a cheque for a legally enforceable debt, its dishonor by the bank, and the failure to make payment after receiving a notice of dishonor. The burden of proof lies on the prosecution to establish these elements beyond reasonable doubt.

3. Presumptions and Burden of Proof: Sections 118 and 139 of the NI Act create presumptions regarding the issuance of a cheque for consideration and discharge of a debt. Once foundational facts are proven, the court must raise these presumptions. However, the accused can rebut these presumptions by providing a probable defense.

4. Witness Testimonies: In this case, the complainant was the sole witness. The complainant's testimony lacked credibility as there was no mention of the alleged loan in the notice or complaint. The complainant's financial capacity to lend a substantial amount was also not proven, casting doubt on the existence of a legally enforceable debt.

5. Legal Precedents: The court referred to legal precedents emphasizing that the accused has the right to maintain silence and can discharge the burden of proof based on existing evidence. The court must balance the statutory presumptions with the presumption of innocence and the burden of proof in criminal cases.

6. Court's Decision: Considering the evidence and legal principles, the court held that the presumption of a legally enforceable debt was rebutted by the circumstances. As a result, the second ingredient of the offence under Section 139 of the NI Act was not proven beyond reasonable doubt. The court concluded that the appeal lacked merit and upheld the acquittal of the accused.

In summary, the judgment analyzed the legal and factual aspects of the case, emphasizing the importance of proving essential ingredients of the offence under the NI Act. The court's decision was based on the lack of cogent evidence to establish the existence of a legally enforceable debt, leading to the dismissal of the appeal against the accused's acquittal.