The Supreme Court of India has upheld the acquittal of the respondent in a case involving the dishonour of a cheque, originally filed by the appellant, Sri Dattatraya. The Court examined the legal provisions under the Negotiable Instruments Act, 1881, specifically Section 138, which deals with cheque dishonour. The judgment reaffirmed that the presumption of liability under Section 139 is rebuttable and highlighted the importance of financial capacity and the circumstances under which the cheque was issued. The High Court's decision to affirm the Trial Court's dismissal of the complaint was maintained, emphasizing procedural requirements and evidentiary standards.

Background:

1. Initial Complaint:

   • The appellant, Sri Dattatraya, claimed the respondent borrowed INR 2,00,000 for family necessities and issued a cheque as a guarantee.
   • The cheque was dishonoured due to insufficient funds.

2. Legal Proceedings:

   • The appellant sent a demand notice to the respondent, alleging intentional cheating.
   • The respondent denied the loan transaction, leading to the appellant filing a private complaint.

Trial Court Proceedings:

1. Trial Court's Findings:
   • The Trial Court observed contradictions in the appellant's statements and noted the absence of the respondent's signature on the agreement.
   • The appellant's failure to declare the loan transaction in his income tax returns was also highlighted.
   • The Trial Court dismissed the complaint and acquitted the respondent.

High Court Appeal:

1. High Court's Decision:
   • The High Court affirmed the Trial Court's decision, emphasizing the rebuttable nature of the presumption under Section 139 of the NI Act.
   • The appellant's financial capacity to grant the loan was questioned.

Supreme Court Judgment:

1. Key Legal Principles:

   • Section 138, NI Act: Addresses dishonour of cheques due to insufficient funds.
   • Section 139, NI Act: Establishes a rebuttable presumption of liability for the drawer.
   • Financial Capacity: The burden of proof regarding the loan transaction lies with the appellant.

2. Supreme Court's Analysis:

   • The Court reviewed precedents and statutory provisions, including Sections 118 and 139 of the NI Act.
   • It was noted that a cheque issued as security could still lead to proceedings under Section 138.
   • The presumption of consideration and other details as per Section 118 were discussed.

3. Conclusion:

   • The Supreme Court upheld the acquittal, confirming the decisions of the lower courts.
   • Emphasis was placed on the procedural and evidentiary requirements under the NI Act and CrPC.

Legal Provisions Discussed:

• Negotiable Instruments Act, 1881: Sections 118, 138, 139, and 142.
• Indian Penal Code, 1860: Section 420.
• Code of Criminal Procedure, 1973: Sections 200, 260-265.