2018 (1) TMI 1556 - HC - Indian Laws

High Court reverses acquittal, convicts accused under Section 138 NI Act; emphasizes statutory presumptions.

Datta Sonaji Doiphode Versus Deepak Walmik Meshram

The High Court overturned the trial court's acquittal of the accused under Section 138 of the Negotiable Instruments Act. The accused failed to rebut the ... Dishonor of Cheque - repayment of loan not made - legally enforceable debt or not - offence punishable under Section 138 of NI Act - Acquittal of accused - HELD THAT:- It is manifest that the accused has failed to rebut the statutory presumptions under Sections 118 and 139 of the Act. The learned Magistrate was pleased to hold, and the finding is unexceptionable, that the defence of the accused that he issued the four cheques as donation, is not believable - It is true that the defence need not be conclusively established. However, the Court must be satisfied on the basis of the evidence adduced that the defence is reasonably probable. Ii is satisfying that even if the test of preponderance of probabilities is applied, the accused failed to raise a defence which creates doubt about the existence of legally enforceable debt. The nature of the initial burden of proof on the accused to rebut the statutory presumption under Section 139 is explained by the Hon'ble Apex Court in MS NARAYANA MENON @ MANI VERSUS STATE OF KERALA & ANR. [2006 (7) TMI 576 - SUPREME COURT] - The learned Magistrate has committed a serious error of law in not correctly appreciating the import and implication of statutory presumptions on the anvil of the position of law settled by the Hon'ble Apex Court. The accused is convicted for offence punishable under Section 138 of the Act and is sentenced to payment of fine of ₹ 1,59,000/- and in default to undergo simple imprisonment for period of six months. Issues Involved:1. Validity of the acquittal of the accused under Section 138 of the Negotiable Instruments Act.2. Evaluation of the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act.3. The adequacy of the defense provided by the accused.4. The standard of proof required to rebut the statutory presumptions.Detailed Analysis:1. Validity of the Acquittal of the Accused under Section 138 of the Negotiable Instruments Act:The appellant, the original complainant, challenged the judgment and order dated 10-4-2006 by the Judicial Magistrate First Class, Buldana, which acquitted the respondent/accused of the offence under Section 138 of the Negotiable Instruments Act. The complaint's gist was that the accused requested a hand loan of Rs. 80,000/- and issued four cheques totaling Rs. 79,500/- for repayment, which were dishonored due to insufficient funds.2. Evaluation of the Statutory Presumptions under Sections 118 and 139 of the Negotiable Instruments Act:The trial court was aware of the statutory presumptions under Sections 118 and 139 of the Act, which presume the existence of a legally enforceable debt when a cheque is issued. However, the trial court held that the statutory presumptions were rebutted due to the complainant's inability to explain why the cheques totaled Rs. 79,500/- instead of Rs. 80,000/-.3. The Adequacy of the Defense Provided by the Accused:The accused claimed the cheques were given as a donation for digging a well due to drought and were blank when handed over. He denied receiving the statutory notice and argued that the complainant filled in the cheque details. The trial court disbelieved the donation defense but acquitted the accused based on the Rs. 500/- discrepancy.4. The Standard of Proof Required to Rebut the Statutory Presumptions:The High Court referred to several Supreme Court judgments to clarify the standard of proof. In Rangappa vs. Sri Mohan, it was held that the presumption under Section 139 is activated if the signature on the cheque is not disputed, and the accused must rebut it by raising a probable defense. In K.N. Beena vs. Muniyappan, it was established that a bare denial of liability is insufficient to shift the burden of proof back to the complainant. The Three Judges Bench in Hiten P. Dalal vs. Bratindranath Banerjee emphasized that the presumption under Section 139 is mandatory, and the accused must provide evidence to rebut it.The High Court concluded that the accused failed to rebut the statutory presumptions under Sections 118 and 139. The defense that the cheques were donations was not believable, and the accused's inconsistent statements further weakened his case. The High Court found that the trial court erred in its judgment by not correctly appreciating the statutory presumptions and the legal standards set by the Supreme Court.Conclusion:The High Court set aside the trial court's judgment and convicted the accused under Section 138 of the Negotiable Instruments Act. The accused was sentenced to pay a fine of Rs. 1,59,000/- and, in default, to undergo simple imprisonment for six months. If the fine is recovered, it shall be paid to the complainant as compensation.