TaxTMI 
TaxTMI 
2026 (7) TMI 79
X X X X Extracts X X X X
X X X X Extracts X X X X
....olute good faith by the appellant to the respondent. This cheque upon presentation for encashment at Citi Bank N.A., Chowringhee Branch, Kolkata, suffered dishonor owing to insufficiency of funds, a fact verified by the return memo dated May 3, 2010. 3. Subsequent to this fiscal disruption, the appellant, on May 15, 2010, dispatched a formal demand notice through legal Counsel via registered post, which was acknowledged by the respondent on May 17, 2010, as evident from the speed post delivery information report and A/D Card. The complete failure of the respondent to satisfy the statutory demand within the mandated fifteen days compelled the aggrieved appellant to invoke the penal provisions of Section 138 of the Negotiable Instruments Act. The appellant contended that the Trial Court reached its flawed conclusion of acquittal by failing to apply its judicial mind and ignoring the substantive assessment of the evidence presented. The depositions of the primary witness (PW-1), coupled with bank statements and exhibited documents (Exhibits 1 to 5), demonstrated the cheque was genuinely issued by respondent no. 2 and was subsequently returned unpaid due to a deficit of capital in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....97, it was urged that even a signed blank cheque leaf attracted the full rigor of Section 139 of the N.I. Act, unless rebutted by standard, highly persuasive evidence showing that the instrument was not issued in discharge of a debt. The core error committed by the Trial Court lies in its misapplication of the Bengal Money Lenders Act, 1940, to a criminal proceeding governed strictly by the Negotiable Instruments Act. 7. The Learned Counsel brings to light a fatal paradox in the Trial Court's reasoning, pointing out that while the Magistrate correctly observed that the covering letter admitting liability remained unchallenged and that the defence version lacked credibility, the Trial Court still proceeded to acquit the accused solely on the mistaken belief that the debt has been legally unenforceable due to the absence of a money-lending licence. 8. Buttressed by a trilogy of notable judgments - Jupiter Brokerage Services Limited (2016) 1 C Cr LR (Cal) 453, Samarendra Nath Das (2006) 3 CHN 518, and Sajal Guha (2015) SCC OnLine Cal 6204-the Learned Advocate for the appellant demonstrated that liability arising from the dishonour of a cheque rest on a distinct legal pedestal, c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lainant used to manage the bill discounting finance or bill disbursing requirements of his business. According to DW-1, he had indeed taken a loan from the complainant, but he routinely delivered thirty to forty blank signed cheques to him at intervals of six months specifically for book entry purposes, owing to the complainant's professional capacity as his accountant. He vehemently denied any existing legal liability toward the complainant at the time the cheque was presented, asserting had he known the complainant would misuse these instruments to falsely implicate him in multiple criminal cases, he would never have surrendered such blank signed cheques. During his cross-examination, however, DW-1 explicitly admitted that the disputed cheque leaf, as well as the accompanying document marked as Exhibit-1, bore his genuine signature, including the date of its issuance, while maintaining a denial regarding the receipt of the statutory demand notice. 12. The appellate jurisdiction of this Court has been invoked to challenge a judgment and order of acquittal passed by the Learned Metropolitan Magistrate, 17th Court, Calcutta, in connection with a complaint filed under Section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....inary human conduct and commercial practice. By exposing the total absence of primary financial documentation on the part of a Chartered Accountant, the defence has successfully created a cloud of doubt regarding the very existence of the loan transaction, thereby effectively rebutting the statutory presumption and shifting the onus back to the complainant to prove his case beyond a reasonable doubt. 15. It is one of the principles of criminal jurisprudence that an accused is cloaked in a presumption of innocence until proved guilty. 16. The Learned Counsel for the appellant has relied upon a constellation of authoritative judicial precedents, which this Court must dispassionately analyze. First, reference was made to the landmark decisions of the Hon'ble Supreme Court in Hiten P. Dalal v. Bratindranath Banerjee, Rajesh Jain v. Ajay Singh, and K.N. Beena v. Muniyappan, to argue that when the factual basis for the issuance of a cheque is established, it is obligatory for the Court to raise a statutory presumption in favor of the holder, and that a mere bare denial of liability by the drawer is entirely insufficient to displace this heavy burden. Furthermore, the appellant invo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rror in the approach of the court below, this Court declines to disturb the innocence judicially conferred upon the respondent. Consequently, the criminal appeal stands dismissed, and the impugned judgment of acquittal is hereby affirmed. 19. To constitute a valid offence under Section 138 of the Negotiable Instruments Act, 1881, the statutory framework demands the meticulous fulfillment of specific, mandatory conditions: the cheque must be issued by the drawer for the discharge, in whole or in part, of a legally enforceable debt or other liability; it must be presented to the bank within its validity period; it must be returned unpaid due to a deficit of capital or because it exceeds the arrangement made; and a formal demand for payment must be raised in writing within thirty days of the receipt of information regarding the dishonor. Most crucially, the opening words of the provision establish a penal consequence only when the instrument is drawn to satisfy a "legally enforceable debt or other liability". While Section 139 of the N.I. Act shifts the initial burden of proof by introducing a presumption that the holder received the cheque for the discharge of such liability, this....