Case Note & Summary
The appeal was filed by the complainant (Smt. Shobha and others) against the acquittal of the respondent/accused (Gajanan Joshi) under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that the accused borrowed Rs.1,00,000 in cash on 19/04/2004 and issued a cheque for Rs.95,000 dated 04/10/2004, which was dishonoured due to insufficient funds. A legal notice was sent and received, but the accused failed to pay. The accused denied the transaction, claiming he had given a blank signed cheque to one Ramesh (AW-2) and that there was no loan. The trial court acquitted the accused, finding his defence probable. The High Court upheld the acquittal, noting that the complainant failed to produce any documentary evidence of the loan, such as an entry in accounts, and the cash transaction of Rs.1,00,000 exceeded the limit of Rs.20,000 under Section 269SS of the Income Tax Act, 1961, making the alleged debt illegal and unenforceable. The court held that the presumption under Section 139 NI Act was rebutted by the accused's probable defence, and the complainant did not prove a legally enforceable debt. The appeal was dismissed.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - Presumption under Section 139 is rebuttable - The accused can raise a probable defence to rebut the presumption - In the present case, the accused successfully rebutted the presumption by showing that the cheque was given as a blank signed cheque to a third party and that the alleged loan of Rs.1,00,000 was paid in cash exceeding the limit under Section 269SS of the Income Tax Act, 1961, rendering the transaction illegal - The complainant failed to produce any documentary evidence to prove the loan - Held that the acquittal was justified as the complainant did not prove a legally enforceable debt (Paras 2-5). B) Income Tax Act - Cash Transaction - Section 269SS - Prohibition on accepting cash loan exceeding Rs.20,000 - The alleged loan of Rs.1,00,000 was paid in cash, which is in violation of Section 269SS of the Income Tax Act, 1961 - Such a transaction is illegal and cannot be the basis for a legally enforceable debt under Section 138 of the Negotiable Instruments Act - Held that the complainant's failure to explain the source of cash and the absence of any entry in accounts further weakened the case (Para 4).
Issue of Consideration
Whether the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 was proper when the complainant failed to prove the existence of a legally enforceable debt and the accused raised a probable defence.
Final Decision
The appeal is dismissed. The judgment and order of acquittal passed by the learned Judicial Magistrate, First Class (Court No.VI), Akola dated 16th April 2008 is confirmed.
Law Points
- Presumption under Section 139 NI Act is rebuttable
- accused can raise probable defence
- burden shifts back to complainant to prove legally enforceable debt
- cash loan exceeding Rs.20
- 000 violates Section 269SS of Income Tax Act
- 1961
- making transaction illegal and unenforceable
