Case Note & Summary
The appellant-complainant, Sri Krishna Reddy M, filed a criminal appeal under Section 378(4) of the Code of Criminal Procedure, 1973, against the judgment of acquittal dated 20 November 2014 passed by the XXIII Additional Chief Metropolitan Magistrate, Bengaluru, in C.C. No. 46946 of 2010. The trial court had acquitted the respondent-accused, Smt. N. Sharadamma, of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The complainant alleged that in the second week of December 2009, the accused approached him for a financial assistance of Rs. 2,00,000 and executed a promissory note. On 15 March 2010, the accused issued a cheque for Rs. 2,00,000 drawn on Corporation Bank, Jayanagar, Bengaluru, towards repayment of the loan. The cheque was presented for collection but was dishonoured on 16 March 2010 with the endorsement 'Funds Insufficient'. A legal notice dated 26 March 2010 was sent to the accused, which was returned as 'unclaimed'. Despite service, the accused failed to pay the amount within 15 days, leading to the complaint. The trial court acquitted the accused on the ground that the complainant failed to prove the source of funds for the loan and that the accused had rebutted the presumption under Section 139 of the NI Act by showing that the cheque was not issued for a legally enforceable debt. The High Court framed the issue of whether the trial court's judgment was perverse and whether the accused had successfully rebutted the presumption. The appellant argued that the trial court erred in shifting the burden on the complainant after the presumption was raised, and that the accused failed to produce any evidence to rebut the presumption. The respondent contended that the complainant did not prove the loan transaction and that the cheque was issued as security for a different transaction. The High Court analysed the evidence and held that the complainant had proved the execution of the cheque and the signature, which raised the presumption under Section 139 that the cheque was issued for discharge of a debt. The accused did not examine any witness or produce any documentary evidence to rebut this presumption. The mere suggestion in cross-examination that the cheque was given as security was insufficient. The court found that the trial court's reasoning was perverse and not based on evidence. Consequently, the appeal was allowed, the judgment of acquittal was set aside, and the accused was convicted under Section 138 of the NI Act. The accused was sentenced to pay a fine of Rs. 2,50,000, with Rs. 2,40,000 as compensation to the complainant, and in default, simple imprisonment for six months.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Rebuttal - The complainant proved the execution of cheque and signature, raising presumption that cheque was issued for discharge of debt. The accused failed to rebut the presumption by preponderance of probabilities, as no evidence of loan repayment or dispute of debt was produced. Held that the trial court's acquittal was perverse and liable to be set aside (Paras 10-15). B) Negotiable Instruments Act - Section 139 - Presumption in favour of holder - Burden of proof - The initial burden on complainant is to prove execution and signature; thereafter, presumption under Section 139 operates that the cheque was issued for consideration. The accused must rebut this presumption with evidence showing that the debt was not legally enforceable. Held that the accused did not discharge this burden (Paras 12-14).
Issue of Consideration
Whether the trial court erred in acquitting the accused despite the presumption under Section 139 of the Negotiable Instruments Act, 1881, and whether the accused successfully rebutted the presumption that the cheque was issued for discharge of a legally enforceable debt.
Final Decision
The appeal is allowed. The judgment of acquittal dated 20.11.2014 passed by the XXIII ACMM, Bengaluru, in C.C. No. 46946/2010 is set aside. The respondent/accused is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The accused is sentenced to pay a fine of Rs. 2,50,000 (Rupees Two Lakh Fifty Thousand only). Out of the fine amount, Rs. 2,40,000 shall be paid as compensation to the complainant. In default of payment of fine, the accused shall undergo simple imprisonment for a period of six months.
Law Points
- Presumption under Section 139 of NI Act
- Rebuttal of presumption
- Burden of proof on accused
- Standard of proof for rebuttal
- Dishonour of cheque for discharge of debt
