TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 838
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....89/- was due to the petitioner. It is alleged that Respondent No. 1 through its managing director being Respondent No. 2, in discharge of the liability, issued two cheques bearing nos. 465680 and 465681 for a sum of Rs. 50,000/- each duly signed by Respondent No. 2. It is alleged that the subject cheques, on presentation, got dishonoured and returned unpaid vide return memo dated 05.01.2009 with the remarks "payment stopped." Subsequently, when the respondents failed to make the payment within the stipulated period despite the issuance of the legal demand notice, the petitioner instituted the subject complaint under Section 138 of the NI Act. 3. By the impugned judgment, the learned MM dismissed the complaint filed by the petitioner and acquitted the respondents of the offence under Section 138 of the NI Act. It was noted that the petitioner failed to file a valid legal notice in terms of Section 138 of the NI Act; the petitioner failed to make a demand for the amount that was to be paid by the respondents; the petitioner failed to specify or raise a demand for the amount in the subject cheques; while the legal demand notice raised the issue that a sum of Rs. 2,64,689/- was outsta....
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....failed to raise a probable defence to dislodge the presumptions raised against them, the present petition be allowed. 7. The learned counsel for the respondent submitted that the learned MM rightly acquitted the respondent of the offence under Section 138 of the NI Act. She submitted that the legal demand notice was invalid, and the said ground alone is sufficient for the complaint to be dismissed. She submitted that the respondents raised a probable defence by pointing towards the contradictions in the account maintained by the petitioner, and the amount claimed in the legal notice. She consequently submitted that since the respondent had raised a probable defence by pointing towards the loopholes in the version of the petitioner, the burden inasmuch as Section 139 of the NI Act was concerned stood discharged. ANALYSIS 8. The present case relates to acquittal of an accused in a complaint under Section 138 of the NI Act. The restriction on the power of Appellate Court in a petition seeking leave to appeal against order of acquittal in regard to other offence does not apply with same vigor in the offence under NI Act which entails presumption against the accused. The Hon'ble Apex....
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...., wholly or in part, of any debt or liability. Of course, the accused is entitled to bring on record the relevant material to rebut such presumption and to show that preponderance of probabilities are in favour of his defence but while examining if the accused has brought about a probable defence so as to rebut the presumption, the appellate court is certainly entitled to examine the evidence on record in order to find if preponderance indeed leans in favour of the accused." (emphasis supplied) 9. It is well settled that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque/ respondent received the cheque in discharge of a legally enforceable debt or liability are raised against the accused [Ref. Rangappa v. Sri Mohan:(2010) 11 SCC 441]. 10. The Hon'ble Apex Court in Rajesh Jain v. Ajay Singh : (2023) 10 SCC 148, while discussing the appropriate approach in dealing with presumption under Section 139 of the NI Act, observed the following : "54. .... Once the presumption under Section 139 was given e....
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....his allegation of having extended loan to the accused, when it ought to have instead concerned itself with the case set up by the accused and whether he had discharged his evidential burden by proving that there existed no debt/liability at the time of issuance of cheque." (emphasis supplied) 11. It is relevant to note that the presumption under Section 139 of the NI Act is not absolute, and may be controverted by the accused. In doing so, the accused only ought to raise a probable defence on a preponderance of probabilities to show that there existed no debt in the manner so pleaded by the complainant in his complaint/ demand notice or the evidence. Once the accused successfully raises a probable defence to the satisfaction of the Court, his burden is discharged, and the presumption 'disappears.' The burden then shifts upon the complainant, who then has to prove the existence of such debt as a matter of fact. The Hon'ble Apex Court in Rajesh Jain v. Ajay Singh (supra), in this regard has observed as under: "41. In order to rebut the presumption and prove to the contrary, it is open to the accused to raise a probable defence wherein the existence of a legally enforceable deb....
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....ce, the Court has to consider the same and the burden of proof loses all its importance. [Basalingappa vs. Mudibasappa, AIR 2019 SC 1983; See also, Rangappa vs. Sri Mohan (2010) 11 SCC 441]" (emphasis supplied) 12. The short point of determination by this Court is thus whether the learned MM rightly acquitted the respondents of the offence under Section 138 of the NI Act. 13. The learned MM, in the impugned judgment, noted that the petitioner failed to raise a valid legal demand notice. For this reason, before delving into the correctness of the impugned judgment, it becomes imperative to examine the contours of Section 138 of the NI Act. Section 138 (b) of the NI Act in relation to the contents of legal demand notice provides as under: "Provided that nothing contained in this section shall apply unless- (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid;" 14. It is pertinent to note that the Hon'ble Apex Court ....
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.... term "the said amount of money" as occurring in Section 138 of the NI Act refers to the cheque amount. [Ref : Suman Sethi v. Ajay K. Churiwal : (2000) 2 SCC 380]. While Section 138 of the NI Act does not mandate that a demand notice can only represent the amount unpaid under the cheque and no other expenses, however, the same should be severable from the cheque amount failing which the demand notice would be invalid. 17. The present case relates to the dishonour of two cheques for a sum of Rs. 50,000/- each thereby amounting to a total of Rs. 1,00,000/-. Accordingly, as per the mandate of Section 138 of the NI Act, the petitioner was required to a make a demand for a sum of Rs. 1,00,000/- from the respondents. However, upon a perusal of the record, it is apparent that the legal demand notice failed to make a demand for the payment of cheque amount. The legal notice sent by the petitioner though mentions that the subject cheques were issued towards part payment of the total dues, however, the demand is made for the entire outstanding amount mentioned in the notice in the following words: "you are called upon to clear all the dues of my client within 15 days of this notice ....