2018 (10) TMI 479 - HC - Indian Laws

Challenge to Conviction Reversed: Burden of Proof & Presumption under Negotiable Instruments Act Sections 138 & 139

The Criminal Appeal involved a challenge against a conviction under Section 138 of the Negotiable Instruments Act, which was reversed by the Principal ... Dishonor of Cheque - recovery of loan amount - Section 138 of Negotiable Instruments Act - the signature found in the cheque was admitted by the accused - presumption under Section 139 of N.I.Act - Held that:- It is an admitted fact that in 2003 itself, the bank authorities who have lent the loan to the accused company issued a notice under Section 132 of SARFAESI Act for taking symbolic possession. But, as per the case of the complainant, only in the year 2006, the loan of ₹ 25,00,000/- was given to the accused - No doubt, the amount of Rs,25,00,000/- is not a small amount. The accused and complainant did not have any business relationship prior to the present one. Furthermore, the complainant was doing his business in Namakkal District. On the other hand, the accused was running a company in Mumbai. In the said circumstances, it is unbelievable that any prudent person would lend an amount of ₹ 25,00,000/- without obtaining any collateral security. Even assuming that Section 139 of NI Act is in favour of the complainant, it is necessary to analyze the other circumstances also. In the evidence given by PW1 during cross examination, he clearly admitted that he had not received any pro note from the accused - Further, he deposed that he had not verified about the properties which stand in the name of the accused. It is obligatory on the Court to raise the presumption in every where all the factual aspects have been established. In the present case, the facts as shown above clearly reveal that the complainant has miserably failed to prove his case beyond all reasonable doubt - this Court comes to the conclusion that the judgement rendered by the First Appellate Court on the above fact is justified and there is no need to interfere with the findings arrived by the First Appellate Court. Criminal appeal dismissed. Issues:Appeal against conviction under Section 138 of the Negotiable Instruments Act - Reversal of judgment by Principal Sessions Judge - Appellant's challenge to set aside the judgment - Burden of proof on accused to rebut presumption under Section 139 of NI Act - Defence of stolen cheque - Analysis of evidence and documents - Lack of collateral security for loan - Prima facie evidence of financial capacity - Preponderance of probabilities in defense - Failure to prove consideration - Burden of proof on complainant - Admissibility of evidence and circumstances - Applicability of legal precedents - Sufficiency of evidence for conviction - Justification of First Appellate Court's decision.Analysis:The case involves a Criminal Appeal against a judgment convicting the accused under Section 138 of the Negotiable Instruments Act, which was reversed by the Principal Sessions Judge, leading to the current challenge by the appellant. The crux of the matter lies in the burden of proof on the accused to rebut the presumption under Section 139 of the NI Act. The defense of the stolen cheque was raised, emphasizing the need for a probable defense to counter the presumption. The trial court's conviction was based on the lack of proof regarding the cheque's handling and the accused's financial capacity to provide a substantial loan without collateral security. The First Appellate Court's decision highlighted the complainant's failure to establish the source of the loan amount, questioning the lack of documentation and verification of the accused's financial status.The appellant's argument centered on the accused's duty to present a plausible defense against the admitted signature on the cheque. The reliance on legal precedents, including judgments emphasizing the burden of proof on the accused to disprove consideration, was crucial in the analysis. The examination of evidence, such as the accused's financial records and the absence of collateral security, played a pivotal role in determining the sufficiency of proof for conviction. The Court scrutinized the circumstances, including the complainant's business relationship with the accused, the timing of the loan, and the absence of formal documentation, to assess the credibility of the prosecution's case.The Court emphasized the importance of preponderance of probabilities in the defense, highlighting the need for the accused to establish a credible defense against the presumption of liability. The failure to prove consideration and the lack of documentation supporting the loan transaction raised doubts about the complainant's claims. The judgment underscored the complainant's obligation to provide convincing evidence of the loan transaction, including the accused's financial capacity and the absence of formal agreements. Ultimately, the Court upheld the First Appellate Court's decision, concluding that the prosecution failed to prove its case beyond a reasonable doubt, justifying the dismissal of the appeal and confirmation of the appellate judgment.