2023 (4) TMI 593 - HC - Indian Laws

Dishonour of Cheque - insufficient funds - existence of legally enforceable debt or not - petitioner would submit that the petitioner never borrowed any loan as alleged by the respondent herein - rebuttal of presumption - HELD THAT - The respondent failed to prove that he had lent a sum of Rs.3,00,000/- to the petitioner on 15.09.2013. Further, the respondent caused statutory notice to the petitioner on 20.06.2013 thereby calling upon him to pay a sum of Rs.2,00,000/- for the dishonour of the cheque bearing No.156938. Thereafter, he further had lent a sum of Rs.3,00,000/- on 15.09.2013. No prudent man would lend such a huge sum, that too after dishonouring the cheque which was issued by the person for the previous borrowal. Therefore, the case of the respondent is unbelievable one and the cheque which was issued for security purposes in favour of Shri Balaji Finance was misused by the respondent. In fact while crossexamination of P.W.1, he did not answer properly with regard to the source of income and his financial capacity to lend such a huge sum of Rs.3,00,000/- that too without any security. The evidence on record thus is a probable defence by the petitioner, which shifted the burden on the respondent to prove his financial capacity and other facts. However, the respondent failed to prove the same. Taking into consideration of all the facts and circumstances, it appears that the petitioner sufficiently rebutted the presumption arising under Section 139 of the Negotiable Instruments Act. Hence, Ex.P.1 was not issued for any legally enforceable debt in favour of the respondent in order to attract the offence punishable under Section 138 of the Negotiable Instruments Act. Therefore, the conviction and sentence imposed by the Courts below cannot be sustained against the petitioner and the same is liable to be set aside. The Criminal Revision Case is allowed.

Summary

Issues Involved:
The judgment involves the issue of dishonored cheque under Section 138 of the Negotiable Instruments Act and the subsequent legal proceedings challenging the conviction and sentence imposed on the accused.

Details of the Judgment:

Issue 1: Borrowing and Dishonor of Cheque
The respondent lodged a complaint against the petitioner for dishonoring a cheque issued for a loan of Rs.3,00,000. The petitioner failed to repay the loan, leading to the dishonor of the cheque. The trial court found the petitioner guilty under Section 138 of the Negotiable Instruments Act, sentencing him to imprisonment and a fine.

Issue 2: Defense and Rebuttal
The petitioner denied borrowing the loan and argued that the cheque was not issued for any enforceable debt. He contended that the cheque was given as security while borrowing from a finance company, not to the respondent. The petitioner presented evidence to support his claim, including the testimony of witnesses and financial documents.

Issue 3: Burden of Proof
The respondent claimed that the petitioner's signature on the cheque proved the debt, shifting the burden of proof to the petitioner to rebut the presumption. However, the petitioner provided evidence showing that the cheque was misused by the respondent, who had a close relationship with the finance company from which the loan was borrowed.

Conclusion:
After considering all evidence and arguments, the court found that the petitioner successfully rebutted the presumption under Section 139 of the Negotiable Instruments Act. The conviction and sentence imposed by the lower courts were set aside, and the petitioner was acquitted. Any bail bond executed was canceled, and fines paid were ordered to be refunded.