2024 (5) TMI 661 - SC - Indian Laws

Cheque dishonour case dismissed as petitioner failed to prove enforceable debt under NI Act

M/s RAJCO STEEL ENTERPRISES Versus KAVITA SARAFF AND ANOTHER

The SC dismissed a petition in a cheque dishonour case under the NI Act. The HC found that the alleged debt for which cheques were issued did not appear ... Dishonour of Cheque - insufficiency of funds - cheque issued in discharge of a debt or not - rebuttal of presumption in terms of Section 118 read with Section 139 of NI Act - HELD THAT:- The High Court found that the debt/liability, in discharge of which, according to the petitioner, the cheques were issued, did not reflect in the petitioner’s balance-sheet. The other partners of the firm did not depose as prosecution witnesses to establish that the cheque-amounts were advanced to the accused as financial assistance. The respondent no.1/accused has put up a plausible defence as regards the reason for which the petitioner’s funds had come to her account. Both the appellate fora, on going through the evidence did not find existence of any “enforceable debt or other liability”. This strikes at the root of the petitioner’s case. As the impugned decision is primarily based on considering the evidences produced by the respective parties, it is not considered necessary to individually deal with the ratio of the respective decisions relied on by the learned senior counsel representing the parties. The principles emerging from these authorities have been applied in the judgment of the High Court. Petition dismissed. Issues Involved:The judgment involves the appeal against acquittal of the first respondent in respect of offences u/s 138 of the Negotiable Instrument Act, 1881.Details of the Judgment:1. Background and Allegations:The petitioner, a partnership firm, lodged four complaint cases under Section 138 of the 1881 Act, alleging dishonor of cheques issued by the accused/respondent no.1 between 07.11.2008 and 24.11.2008. The petitioner claimed these cheques were drawn on Axis Bank Limited, Burra Bazar in Kolkata.2. Trial Court Proceedings:The Trial Court found the cheques were issued in discharge of a legally enforceable debt, leading to the conviction of the accused/respondent no.1 under Section 138 of the 1881 Act, as she failed to rebut the presumption under Section 118 read with Section 139 of the Act.3. First Appellate Court Decision:The First Appellate Court acquitted the accused/respondent no.1, citing lack of proof of any loan transaction or handing over of cheques. It noted discrepancies in signatures and ink colors on the cheques, concluding the accused successfully rebutted the presumption of guilt.4. High Court Ruling:The High Court upheld the acquittal, finding no valid documentary evidence to substantiate the existence of an enforceable debt. It observed the accused's financial state and lack of proof of consideration, leading to the dismissal of the appeal.5. Arguments Before Supreme Court:The petitioner contended all Section 138 elements were satisfied, shifting the burden of proof to the accused. The defense argued the petitioner failed to establish being a holder in due course, and the presumption under Section 139 read with Section 118 was effectively rebutted.6. Supreme Court Decision:The Supreme Court dismissed the appeal, stating the findings of the lower courts were not based on no evidence or were perverse. It found no point of law warranting interference, as the evidence did not establish an enforceable debt, ultimately upholding the acquittal.Separate Judgment:No separate judgment was delivered by the judges in this case.