2019 (7) TMI 1821 - HC - Indian Laws

Appellate Court Confirms Acquittal Due to Flaws in Evidence and Lack of Enforceable Debt Under Negotiable Instruments Act.

The Appellate Court upheld the Trial Court's judgment, dismissing the appeal and maintaining the respondent's acquittal. The respondent effectively ... Dishonor of Cheque - failure to repay despite receipt of legal Notice - acquittal of the accused - rebuttal of presumption - HELD THAT:- It transpires that an amount of ' 4,00,000/- was paid by the complainant to the accused and it was duly acknowledged by the accused by executing Exhibit 19. From the evidence of the appellant/complainant and of Pw2 Dinesh it has been established that the Cheque Exhibit 16 was dishonoured for want of sufficient funds in the account of the respondent/accused as well as the fact of payment of a lump sum amount of ' 4,00,000/- to the complainant. This would lead to a presumption under Sec. 139 of the Negotiable Instruments Act, in favour of the appellant/complainant. On the aspect of presumption under Section 139 of the Negotiable Instruments Act, and on the point of unaccounted money - The Apex Court [2009 (2) TMI 901 - BOMBAY HIGH COURT] specifically held that section 139 merely raises a presumption in favour of holder of cheque that the same has been issued for discharge of any debt or liability. Thus, even if presumption is not rebutted, Act, in order to attract section 138 of the debt has to be a 'legally enforceable debt' as said is clear from the explanation to section 138 which provides that for the purposes of the said section the debt or other liability means a legally enforceable debt or other liability. Though it is observed in para 15 that the same rule with the same rigor cannot be applied in a matter relating to the offences under Sec. 138 of the Negotiable Instruments Act, particularly where a presumption is drawn that the holder has received a cheque for the discharge, wholly or in part, of any debt or liability. However, it is further observed that the accused is entitled to bring on record the relevant material to rebut the presumption and to show that preponderance of probabilities are in favour of his defence then the Appellate Court is certainly entitled to examine the evidence in order to find out if preponderance indeed leans in favour of the accused - In the case at hand, the respondent/accused has succeeded in bringing on record probable defences and has rebutted the presumption; the complainant has not further discharged his burden to indicate that the transaction in question was a legally enforceable debt. It is therefore, needless to take any different view other than the one taken by the Learned J.M.F.C., in the impugned Judgment while acquitting the respondent/accused. Appeal dismissed. Issues Involved:1. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act.2. Credibility of evidence and witnesses.3. Presumption under Section 139 of the Negotiable Instruments Act.4. Rebuttal of presumption by the accused.5. Evaluation of documentary evidence (Exhibit 19).6. Role of Income Tax Returns in proving the transaction.7. Presence of the accused at the time of the alleged transaction.8. Appellate Court's jurisdiction to interfere with the Trial Court's judgment.Issue-Wise Detailed Analysis:1. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act:The appellant filed a complaint under Section 138 of the Negotiable Instruments Act, alleging that the respondent issued a cheque for Rs. 4,00,000, which was dishonored due to insufficient funds. The Trial Court acquitted the respondent, finding that the complainant failed to prove the existence of a legally enforceable debt or liability.2. Credibility of evidence and witnesses:The complainant and Pw2 Dinesh testified that the loan was given in cash and documented in Exhibit 19. However, the Trial Court found inconsistencies and improbabilities in their testimonies. The respondent's defense included allegations of coercion and threats, which were supported by his complaint to the police and the testimony of Ajit Pawaskar, who provided biometric attendance records indicating the respondent's presence at his office during the alleged transaction.3. Presumption under Section 139 of the Negotiable Instruments Act:Section 139 raises a presumption that the cheque was issued for the discharge of a debt or liability. However, this presumption is rebuttable. The Trial Court found that the complainant failed to substantiate the claim that the debt was legally enforceable, as required by Section 138.4. Rebuttal of presumption by the accused:The respondent successfully rebutted the presumption by providing evidence of his presence at his office during the alleged transaction and highlighting the improbabilities in the complainant's story. The respondent's defense included allegations of coercion and threats, supported by the testimony of Ajit Pawaskar and the respondent's complaints to the police.5. Evaluation of documentary evidence (Exhibit 19):The Trial Court scrutinized Exhibit 19 and found it to be dubious. The stamp paper was purchased by Pw2 Dinesh, not the complainant or respondent. Different inks and handwriting were used, and the document's phrasing was unusual. The Court concluded that Exhibit 19 did not appear to be a genuine document indicating a legally enforceable debt.6. Role of Income Tax Returns in proving the transaction:The complainant admitted that the Rs. 4,00,000 transaction was not shown in his Income Tax Returns. The Court referred to the case of Sanjay Mishra Vs. Kanishka Kapoor, which held that failure to disclose a large loan in Income Tax Returns could rebut the presumption under Section 139. The Court found that the complainant's failure to account for the loan in his tax returns weakened his case.7. Presence of the accused at the time of the alleged transaction:The respondent provided biometric attendance records showing his presence at his office on the day of the alleged transaction. The complainant did not provide evidence to counter this, such as a Movement Register entry showing the respondent left the office. This supported the respondent's defense and rebutted the presumption of a legally enforceable debt.8. Appellate Court's jurisdiction to interfere with the Trial Court's judgment:The Appellate Court emphasized that it should not reverse a judgment of acquittal if the Trial Court's view is one of the possible views and not perverse. The Appellate Court found that the Trial Court's judgment was not perverse or unsustainable in law and upheld the acquittal, concluding that the respondent successfully rebutted the presumption and the complainant failed to prove a legally enforceable debt.Conclusion:The appeal was dismissed, and the Trial Court's judgment of acquittal was upheld. The respondent successfully rebutted the presumption under Section 139, and the complainant failed to prove the existence of a legally enforceable debt.