2026 (1) TMI 561 - HC - Indian Laws

Existence of legally enforceable debt for issued cheques questioned; convictions set aside and accused acquitted, deposits withdrawable

Dominant issue: whether a legally enforceable debt existed when the cheques were drawn/presented. The HC held that the complainant failed to prove ... Dishonour of Cheque - respondent/complainant failed to prove the existence of a legally enforceable debt at the time of drawing and presentation of the cheques - petitioners failed to discharge the burden cast upon him to probabilise his defence - HELD THAT:- The evidence of D.W.1 probabilises the loan transaction between Jeeva and the defacto complainant. The FIR allegations lodged by Jeeva disclose that seven persons were required to stand as guarantors for the loan availed by her. However, the defacto complainant failed to adduce any independent evidence to disprove or rebut the said defence. Further, the income tax statements relied upon by the petitioners do not reflect any transaction of alleged loan amounts with the petitioners for the assessment years 2016–2017. Admittedly, the complainant is an unregistered financier and had allegedly advanced money at an exorbitant rate of interest. These facts cast serious doubt on the existence of a legally enforceable debts. The complaint lodged by D.W.1 before the police, along with other rebuttal evidence, clearly establishes that there was no legally enforceable debts subsisting on the date of issuance or presentation of the cheques. On the contrary, the defacto complainant failed to state the specific date on which the cheques were allegedly issued by the petitioners. Further, the evidence on record establishes that there was no cordial relationship between the petitioners and the defacto complainant at the time of the alleged presentation of the cheques, as D.W.1 had already lodged complaints against the defacto complainant alleging threats and misuse of blank cheques obtained from the guarantors. In such circumstances, the averment in the complaints that the petitioners voluntarily approached the complainant and requested representation of the cheques for a second time in August 2018 appears to be highly improbable. The courts below failed to appreciate the rebuttal evidence adduced on the side of the petitioners and erroneously recorded a conviction. The complainant failed to establish that a legally enforceable debt existed between himself and the petitioners on the date of presentation of the cheques. Therefore, the findings rendered by the courts below are liable to be set aside. The authorities relied upon by the respondent are not applicable to the facts of the present cases. All petitioner / accused are acquitted. Any amount deposited by them permitted to withdraw - the Criminal Revision cases are allowed. Issues: (i) Whether the petitioners were liable under Section 138 of the Negotiable Instruments Act, 1881, having regard to whether a legally enforceable debt or liability subsisted between the complainant and the petitioners at the time of presentation of the cheques; (ii) Whether the petitioners stood only as guarantors and thereby successfully rebutted the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881.Analysis: The Court reviewed the evidence on record including complainant's ledger, the testimony of D.W.1 (Jeeva), the FIR and police records, income statements and the sequence of events showing disputes and alleged threats prior to cheque presentation. The Court applied the principle that the presumption under Section 139 is rebuttable and examined whether the defence adduced probable evidence to negate the existence of a subsisting legally enforceable debt at the time of presentation. The Court considered the relevance of part-payments and endorsements under Section 56, the absence of independent evidence proving payment to the petitioners, inconsistencies in dates of issuance and presentation, and evidence that the petitioners had acted as sureties for a loan taken by another (D.W.1). The Court found that the defence evidence probabilised the plea that the petitioners were guarantors and that disputes and allegations in the FIR preceded the presentations, casting doubt on voluntariness and existence of enforceable debt at presentation.Conclusion: The Court concluded that the petitioners successfully rebutted the statutory presumption and that the complainant failed to prove a legally enforceable debt against the petitioners at the time of cheque presentation; the petitioners are acquitted.