Accused convicted under Section 138 for cheque dishonour after failing to rebut Section 139 presumption

Calcutta HC convicted accused under Section 138 of Negotiable Instruments Act for cheque dishonour due to insufficient funds. Trial court had acquitted accused, but HC found this contrary to Section 139 presumption. Complainant sent demand notice after dishonour, creating legal presumption in their favor. Accused failed to rebut this presumption despite burden being on them. HC relied on SC precedent stating even blank signed cheques attract Section 139 presumption absent cogent contrary evidence. Accused sentenced to pay Rs. 8 lakhs fine within two months, defaulting to six months imprisonment.

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Issues Involved:
1. Legally enforceable debt.
2. Money lending authority.
3. Rebuttal of presumption u/s 139 of the Negotiable Instruments Act.

Summary:

Legally Enforceable Debt:
The petitioner claimed that the respondent issued four cheques totaling Rs. 4,90,000/- to discharge his liability for an interest-free accommodation loan. All cheques were dishonored due to "Fund Insufficient," and despite a demand notice, the respondent failed to make the payment, committing an offence u/s 138 of the Negotiable Instruments Act. The trial court acquitted the respondent, stating the debt was not legally enforceable as the complainant did not show the loan in his Income Tax file.

Money Lending Authority:
The trial court also acquitted the respondent on the grounds that the complainant did not produce any document proving his authority to lend money. The complainant argued that the cheques were issued to discharge an enforceable liability, and the respondent failed to rebut the presumption u/s 139 of the Negotiable Instruments Act.

Rebuttal of Presumption u/s 139 of the Negotiable Instruments Act:
The complainant provided evidence including the cheques, return memo, deposit slip, demand notice, postal receipt, and acknowledgment of service. The respondent's wife admitted the loan but claimed it was repaid without providing supporting documents. The trial court dismissed the case, stating the loan amount was unaccounted for and not shown in the Income Tax return, making it difficult to hold the cheques were issued towards a legally enforceable debt.

Conclusion:
The High Court cited several precedents, emphasizing that non-filing of Income Tax returns does not disprove the source of income or the enforceability of the debt. The presumption u/s 139 favors the complainant, and the respondent failed to rebut this presumption. The trial court's findings were against the provisions of Section 139 of the N.I. Act and thus not in accordance with law. The High Court set aside the trial court's judgment, convicted the respondent u/s 138 of the Negotiable Instruments Act, and directed him to pay a fine of Rs. 8 lakhs within two months or face imprisonment for six months.

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