Case Note & Summary
The appellant, Smt. Ranju Batra, proprietor of M/s Admark Incorporated, filed two criminal appeals against the acquittal of respondent no. 1, Bhushan Kriplani, for offences under Section 138 of the Negotiable Instruments Act, 1881. The appellant had proposed to organize a mega event titled 'Career 2007' to educate students about career opportunities. Respondent no. 1, who ran an educational institution called 'Chester Information Archive', approached the appellant to participate as a sponsor. The appellant alleged that respondent no. 1 issued two cheques of Rs. 50,000 each towards repayment of a loan, which were dishonoured upon presentation. Respondent no. 1 contended that the cheques were issued as security for the sponsorship agreement and that no loan was taken. The trial court acquitted respondent no. 1, holding that the appellant failed to prove the existence of a debt or liability. The High Court upheld the acquittal, noting that the presumption under Section 139 of the Negotiable Instruments Act is rebuttable. The accused successfully rebutted the presumption by showing that the cheques were issued as security for future sponsorship, not for any existing debt. The court found that the appellant's evidence was insufficient to establish that the cheques were issued towards repayment of a loan. The appeals were dismissed, and the acquittal was confirmed.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Rebuttal - The accused can rebut the presumption of legally enforceable debt by raising a probable defence. In this case, the accused successfully rebutted the presumption by showing that the cheques were issued as security for future sponsorship, not for any existing debt. The complainant failed to prove the existence of a debt or liability beyond reasonable doubt. (Paras 5-10) B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Security Cheque - A cheque issued as security for future performance of a contract does not attract Section 138 if the underlying debt or liability is not established. The court held that the accused's explanation that the cheques were given as security for sponsorship was plausible and sufficient to rebut the presumption. (Paras 8-10) C) Evidence Act - Burden of Proof - Section 103 - In a complaint under Section 138 of the Negotiable Instruments Act, the initial burden is on the complainant to prove the existence of a debt or liability. Once the accused rebuts the presumption under Section 139, the burden shifts back to the complainant. The appellant failed to discharge this burden. (Paras 7-10)
Issue of Consideration
Whether the acquittal of the accused for offence under Section 138 of the Negotiable Instruments Act, 1881 was proper when the appellant/complainant alleged that the cheques were issued towards repayment of a loan, while the accused claimed they were issued as security for a sponsorship agreement.
Final Decision
Both criminal appeals are dismissed. The judgments and orders of acquittal passed by the trial court are confirmed.
Law Points
- Presumption under Section 139 of Negotiable Instruments Act is rebuttable
- accused can rebut by preponderance of probabilities
- cheque issued as security for future performance does not attract Section 138
- burden of proof shifts to complainant once accused rebuts presumption
