Case Note & Summary
The appellant, M/s. IVY Jewellery Pvt Ltd, a company dealing in diamond jewellery, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 against the respondent, Shri Chandresh Sampat, alleging dishonour of a cheque for Rs.10,02,980/-. The appellant claimed that the respondent, who was the brother-in-law of Mr Dhaval Bhatt (proprietor of M/s D. B. Diamonds), took over the liability of Mr Dhaval Bhatt to pay the outstanding amount for diamond jewellery supplied. In pursuance of this arrangement, the respondent issued a post-dated cheque dated 18 November 2009, which was dishonoured with the remark 'stop payment'. The appellant issued a legal notice and thereafter filed a complaint. The trial court acquitted the respondent, holding that the appellant failed to prove that the cheque was issued for a legally enforceable debt or liability. The appellant appealed against the acquittal. The High Court examined the evidence and found that the appellant had not produced any agreement or consideration for the alleged takeover of liability by the respondent. The court noted that the respondent had successfully rebutted the presumption under Section 139 of the NI Act by showing that the cheque was issued as a security or for a different purpose. The court held that the trial court's findings were not perverse and dismissed the appeal, upholding the acquittal.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - The appellant/complainant failed to prove that the cheque was issued for a legally enforceable debt or liability, as the liability taken over by the accused was not supported by consideration or any written agreement. The court held that the presumption under Section 139 is rebuttable and the accused successfully rebutted it by showing that the cheque was issued as a security or for a different purpose. (Paras 1-11) B) Negotiable Instruments Act - Presumption under Section 139 - Rebuttal - Standard of Proof - The accused can rebut the presumption under Section 139 by raising a probable defence on a preponderance of probabilities. The court held that the accused had discharged his burden by demonstrating that the liability of the original debtor was not legally enforceable against him. (Paras 12-15) C) Criminal Procedure Code - Appeal against Acquittal - Section 378 - Scope of Interference - The High Court in an appeal against acquittal will not interfere unless the findings are perverse or unreasonable. The court found that the trial court's findings were based on evidence and not perverse, hence no interference was warranted. (Paras 16-18)
Issue of Consideration
Whether the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 was proper when the appellant failed to prove that the cheque was issued for a legally enforceable debt or liability.
Final Decision
The appeal is dismissed. The judgment and order of acquittal dated 25 August 2011 passed by the learned Metropolitan Magistrate, 48th Court, Andheri, Mumbai, in Criminal Case No.512/SS/2010 is confirmed.
Law Points
- Presumption under Section 139 of NI Act is rebuttable
- burden shifts to accused to prove absence of liability
- standard of proof for rebuttal is preponderance of probabilities
- failure to prove legally enforceable debt leads to acquittal
