Accused acquitted due to insufficient evidence, cheque for business, not loan. Conviction quashed under Section 138.

The accused successfully rebutted the presumption under Sections 118 and 139 of the Negotiable Instruments Act by demonstrating that the cheque was issued for business transactions, not a hand loan. Insufficient evidence existed to prove a legally enforceable debt or liability, leading to the quashing of the conviction under Section 138 of the Act. The accused was acquitted, and any fine paid was ordered to be refunded. The court allowed the criminal revision application and made the rule absolute in favor of the accused.

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Issues Involved:
1. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act.
2. Presumption under Section 118 and 139 of the Negotiable Instruments Act.
3. Rebuttal of presumption by the accused.
4. Adequacy of evidence to prove the existence of legally enforceable debt or liability.
5. Withdrawal of deposited amount by the complainant.

Issue-wise Detailed Analysis:

1. Legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act:
The applicant/original accused was convicted under Section 138 of the Negotiable Instruments Act by the 7th Judicial Magistrate First Class, Aurangabad, and the conviction was confirmed by the Ad-hoc Additional Sessions Judge, Aurangabad. The complainant alleged that the accused issued a cheque for Rs. 50,000/- as repayment for a hand loan. The cheque was dishonoured twice due to insufficient funds, leading to the filing of the complaint.

2. Presumption under Section 118 and 139 of the Negotiable Instruments Act:
The courts below drew the presumption under Section 118 and 139 of the Negotiable Instruments Act, which assumes that the cheque was issued for the discharge of a legally enforceable debt or liability. The complainant argued that the accused had obtained the amount as a hand loan and issued the cheque in discharge of that liability.

3. Rebuttal of presumption by the accused:
The accused contended that no loan was taken from the complainant. Instead, the cheque was issued in connection with business transactions between the complainant and the company where the accused was a director. The accused argued that the cheque was issued as a temporary measure until the company could make the payment, which was subsequently done via demand draft. The accused relied on the judgment in Domina De Souza Vs. Kamalkant Sawant, emphasizing that the presumption under Section 118 and 139 is rebuttable.

4. Adequacy of evidence to prove the existence of legally enforceable debt or liability:
The court noted the admissions made by the complainant during cross-examination, which indicated ongoing business relations and payments made by the company to the complainant. The court found it difficult to accept that the complainant would give a substantial hand loan to the accused, who was not the sole proprietor but a director of a company. The court also observed that the complainant had received payments from the company through various means, and the cheque in question was not necessarily issued for a legally enforceable debt or liability.

5. Withdrawal of deposited amount by the complainant:
The court addressed the issue of the Rs. 50,000/- deposited by the accused in the trial court. It was noted that the complainant's application to withdraw the amount was rejected. The court directed that if the amount was still lying in the court, it should be paid to the accused. If the complainant had withdrawn the amount, the accused could execute a bond or undertaking to reclaim it.

Conclusion:
The court concluded that the accused had successfully rebutted the presumption under Section 118 and 139 of the Negotiable Instruments Act. The evidence did not sufficiently prove the existence of a legally enforceable debt or liability at the time of issuing the cheque. Consequently, the judgment and order of conviction were quashed and set aside, and the accused was acquitted of the offence under Section 138 of the Negotiable Instruments Act. The fine amount, if paid, was ordered to be refunded to the accused. The criminal revision application was allowed, and the rule was made absolute in the stated terms.

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