Case Note & Summary
The matter arose from a complaint under Section 138 of the Negotiable Instruments Act, 1881 filed by the appellant-complainant against the respondent-accused, who were relatives. The complainant alleged that on 30.08.2008, she advanced a hand loan of Rs.3 lakhs to the accused on his promise to repay within two months. In discharge of this liability, the accused issued cheque bearing No.478395 dated 30.10.2008, drawn on HDFC Bank. Upon presentation, the cheque was dishonoured on 27.11.2008 with the endorsement ‘account closed’. Despite a legal notice dated 23.12.2008 sent by RPAD and UCP, the accused neither replied nor paid. The trial court in C.C. No.17243/2009 acquitted the accused on 15.03.2013. The complainant’s initial appeal to the Sessions Court was allowed, but a revision petition by the accused to the High Court resulted in the order being set aside on jurisdictional grounds, holding that an appeal against acquittal lies directly before the High Court under Section 378(4) Cr.P.C. Hence, this appeal. The primary legal issue was whether the accused had successfully rebutted the presumption under Sections 118 and 139 of the NI Act, which favours the complainant once the issuance of a cheque and the signature are admitted. The complainant argued that the accused issued an account payee cheque with his signature, thus triggering the presumption of a legally enforceable debt. She contended that the accused failed to rebut this presumption and that the trial court erred in observing that she had not proved her source of income. She relied on the Supreme Court’s decision in Rohitbhai Jivanlal Patel v. State of Gujarat. The accused’s defence was that the cheque was given only as security when he introduced his friend Shivakumar to the complainant’s husband for a loan of Rs.1 lakh. The friend repaid the loan, but the cheque was not returned and was misused. He examined himself as DW-1 and two witnesses, DW-2 and DW-3, who supported this version. Documentary evidence included a later loan agreement and a legal notice concerning a separate Rs.1 lakh transaction, which created a doubt on the complainant’s narrative. The High Court analysed the evidence and found that the accused had successfully rebutted the presumption on a preponderance of probabilities. The testimony of DW-2 and DW-3 remained largely unchallenged in cross-examination, and the complainant’s own suggestions indicated that the money passed to the third party. Moreover, the existence of a subsequent loan of Rs.1 lakh after the cheque dishonour seemed inconsistent with the complainant’s claim. The court noted that while the trial court’s observation on source of funds was not entirely justified given the presumption, the overall defence evidence was sufficient to shift the burden back to the complainant, who failed to prove the debt. The appeal was therefore dismissed, and the acquittal upheld.
Headnote
A) Negotiable Instruments Act, 1881 - Dishonour of Cheque - Sections 118, 139 - Presumptions as to Consideration - Held that once issuance of cheque and signature are admitted, a presumption arises that it was issued in discharge of a debt or liability. However, this presumption is rebuttable, and the accused may rebut it by adducing evidence to show a probable defence. (Paras 4, 5, 11) B) Negotiable Instruments Act, 1881 - Dishonour of Cheque - Section 138 - Rebuttal of Presumption - Defence Evidence - Held that the accused successfully rebutted the statutory presumption by examining witnesses DW-2 and DW-3, who corroborated the defence that the cheque was given as security for a loan to a third party and that the loan was repaid. The complainant’s failure to effectively cross-examine and the existence of a later loan transaction raised serious doubt on the complainant’s case, tilting the preponderance in favour of the accused. (Paras 8, 9, 11) C) Code of Criminal Procedure, 1973 - Appeal Against Acquittal - Section 378(4) - Scope of Interference - Held that the trial court’s judgment of acquittal was based on proper appreciation of evidence, and the accused had rebutted the presumption in the complainant’s favour. No perversity or fundamental error was found, warranting interference. The appeal was therefore dismissed. (Paras 10, 11)
Issue of Consideration
Whether the accused successfully rebutted the presumption under Sections 118 and 139 of the Negotiable Instruments Act, 1881, thereby justifying his acquittal under Section 138
Final Decision
The High Court dismissed the appeal, holding that the accused successfully rebutted the presumption under Sections 118 and 139 of the Negotiable Instruments Act by adducing cogent defence evidence, including testimony of DW-2 and DW-3, which showed that the cheque was issued as security for a third-party loan that was repaid, and the complainant’s failure to cross-examine effectively created doubt. The judgment of acquittal by the trial court was upheld.
Law Points
- Presumption under Sections 118 and 139 of Negotiable Instruments Act in favour of complainant
- rebuttal of presumption by accused through defence evidence
- burden of proof shifts to accused to rebut
- when accused successfully rebuts presumption
- acquittal justified
- appellate court not to interfere with acquittal unless perverse
