Case Note & Summary
The Supreme Court allowed the appeal filed by Rohitbhai Jivanlal Patel against the judgment of the Gujarat High Court, which had reversed his acquittal in seven cases under Section 138 of the Negotiable Instruments Act, 1881. The complainant alleged that the accused had taken a loan of Rs. 22,50,000 and issued seven cheques of Rs. 3,00,000 each, which were dishonoured. The Trial Court acquitted the accused, holding that the complainant failed to prove the source of funds and that the accused had rebutted the presumption under Section 139 by raising a probable defence that the cheques and stamp paper were misused by his friend Jagdishbhai. The High Court reversed the acquittal, convicting the accused and sentencing him to one year imprisonment and fine. The Supreme Court held that the High Court exceeded its jurisdiction in reversing the acquittal without finding the Trial Court's view to be perverse. The Court noted that the Trial Court had considered the evidence, including the complainant's failure to explain the source of the loan and the discrepancies in his testimony, and had rightly concluded that the accused had rebutted the presumption. The Supreme Court restored the acquittal, emphasizing that the appellate court should not substitute its view merely because a different conclusion is possible.
Headnote
A) Criminal Law - Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Rebuttal by Accused - The accused can rebut the presumption that the cheque was issued for a legally enforceable debt by raising a probable defence on a preponderance of probabilities. The Trial Court, after considering the evidence, found that the complainant failed to prove the source of funds and that the accused's defence was plausible. The High Court, in appeal against acquittal, ought not to have reversed the finding unless it was perverse. (Paras 6-10)
B) Criminal Law - Appeal against Acquittal - Scope of Interference - The appellate court should not interfere with an acquittal merely because a different view is possible; interference is warranted only if the findings are perverse or unreasonable. The High Court's reversal was set aside as the Trial Court's view was a possible one. (Paras 11-12)
C) Evidence - Burden of Proof - Legally Enforceable Debt - In a complaint under Section 138 NI Act, the initial burden is on the complainant to prove the existence of a legally enforceable debt. After the presumption under Section 139 is drawn, the burden shifts to the accused to rebut it. If the accused successfully raises a probable defence, the burden shifts back to the complainant to prove the debt beyond reasonable doubt. (Paras 6-8)
Issue of Consideration
Whether the High Court was justified in reversing the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881, when the Trial Court had found that the accused had rebutted the presumption under Section 139 by raising a probable defence.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the Trial Court's acquittal of the appellant in all seven cases.
Law Points
- Presumption under Section 139 NI Act is rebuttable
- accused can rebut by preponderance of probabilities
- appellate court's interference with acquittal requires perversity
- existence of legally enforceable debt must be proved by complainant after rebuttal
Case Details
Criminal Appeal No. 508 of 2019 (Arising out of SLP (Crl.) 1883 of 2018)
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Nature of Litigation
Criminal appeal against reversal of acquittal in cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1881.
Remedy Sought
The appellant (accused) sought setting aside of the High Court's judgment convicting him under Section 138 NI Act and restoring the Trial Court's acquittal.
Filing Reason
The appellant was convicted by the High Court for dishonour of seven cheques, which he claimed were fraudulently misused by his friend.
Previous Decisions
The Trial Court acquitted the appellant on 09.06.2017; the High Court reversed the acquittal and convicted him on 08.01.2018.
Issues
Whether the High Court was justified in reversing the acquittal when the Trial Court's findings were plausible and not perverse.
Whether the accused successfully rebutted the presumption under Section 139 of the NI Act by raising a probable defence.
Submissions/Arguments
Appellant argued that the High Court erred in reversing the acquittal without finding perversity, and that the Trial Court correctly held that the complainant failed to prove the debt.
Respondent argued that the High Court correctly applied the presumption under Section 139 and that the accused failed to rebut it.
Ratio Decidendi
In an appeal against acquittal under Section 138 NI Act, the appellate court should not interfere with the Trial Court's findings unless they are perverse or unreasonable. The accused can rebut the presumption under Section 139 by raising a probable defence on a preponderance of probabilities, and if the Trial Court's view is a possible one, it should not be disturbed.
Judgment Excerpts
The Trial Court found several factors in favour of the accused and observed, inter alia, that: (a) there was no documentary evidence to show the source of income for advancing the loan to the accused; (b) the complainant failed to record the transaction in the form of receipts, promissory notes or even kaccha notes; (c) vague and uncertain statement was made by the complainant as compared to the statement of his witness-Shri Jagdishbhai; (d) the complainant had no knowledge about the dates and other particulars of such cheques; (e) the witness of complainant was in know of the facts more than the complainant; (f) the complaint allegedly extended the loan to the tune of Rs. 22,50,000/- but the 7 cheques in these cases were of Rs. 3,00,000/- each and there was no explanation from the complainant as regards the remaining Rs. 1,50,000/-; and (g) the suggestion about washing away of the earlier cheques in rains was also doubtful when the complainant's office was on the 8th floor of Windor Plaza.
The High Court observed that if the transaction in question was not reflected in the accounts and income-tax returns, that would at best hold the assesse or lender liable for action under the income-tax laws but, if the complainant succeeds in showing the lending of amount, the existence of legally enforceable debt cannot be denied.
Procedural History
The complainant filed seven complaint cases in 2008 under Section 138 NI Act. The Trial Court acquitted the accused on 09.06.2017. The complainant appealed to the High Court, which reversed the acquittal and convicted the accused on 08.01.2018. The accused appealed to the Supreme Court, which allowed the appeal and restored the acquittal.
Acts & Sections
- Negotiable Instruments Act, 1881: 138, 139, 118, 119
- Code of Criminal Procedure, 1973: 313
