Case Note & Summary
The appellant, Pandurang Ramchandra Ghorpade, filed two criminal appeals against the acquittal of respondent No.1, Vijay Gopala Lohar, in two separate cases under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act). The complainant alleged that in June 2001, the accused took a hand loan of Rs.50,000 for family needs. To repay, the accused issued two cheques of Rs.25,000 each, drawn on the State Bank of India, Karad Branch. Both cheques were dishonoured upon presentation with the endorsement 'insufficient funds'. After following statutory notice, the complainant filed two complaints. The trial court acquitted the accused, holding that the complainant failed to prove the source of the loan amount and that the presumption under Section 139 of the N.I. Act was rebutted by the accused's defence that the cheques were given as security for a business transaction. The High Court, in appeal, examined the evidence and found that the accused admitted his signature on the cheques and their issuance. The court held that once these facts are admitted, the presumption under Section 139 operates in favour of the complainant that the cheques were issued for a legally enforceable debt. The burden then shifts to the accused to rebut this presumption on a preponderance of probabilities. The trial court erred by requiring the complainant to prove the source of funds, which is not necessary. The accused's defence was vague and unsupported by evidence. The High Court set aside the acquittal, convicted the accused under Section 138 of the N.I. Act, and sentenced him to simple imprisonment for one year and a fine of Rs.1,00,000, with default sentence.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Presumption under Section 139 - Once the issuance of cheque and signature are admitted, the presumption under Section 139 operates in favour of the complainant that the cheque was issued for a legally enforceable debt. The burden shifts to the accused to rebut this presumption. The trial court erred in requiring the complainant to prove the source of funds or the existence of debt beyond the presumption. (Paras 6-10) B) Criminal Procedure Code - Appeal against Acquittal - Section 378(4) - The appellate court can re-appreciate evidence and interfere with acquittal if the trial court's findings are perverse or based on misappreciation of law. The High Court set aside the acquittal as the trial court failed to apply the legal presumption correctly. (Paras 11-12)
Issue of Consideration
Whether the trial court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881, by not properly applying the presumption under Section 139 of the Act and by placing an undue burden on the complainant to prove the existence of a legally enforceable debt.
Final Decision
The appeals are allowed. The impugned judgments of acquittal are set aside. The accused is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 in both cases. He is sentenced to suffer simple imprisonment for one year and to pay a fine of Rs.1,00,000 (Rs.50,000 in each case). In default of payment of fine, he shall undergo further simple imprisonment for three months. The fine amount, if recovered, shall be paid to the complainant as compensation.
Law Points
- Presumption under Section 139 N.I. Act
- Rebuttal of presumption
- Standard of proof for rebuttal
- Section 138 N.I. Act
- Section 378(4) Cr.P.C.
