The main legal point established is the correct interpretation of the presumption mandated by Section 139 of the NI Act and the burden of proof on the accused in cases of dishonour of cheques.

JUDGMENT

Tarlok Singh Chauhan, J. - Since, I do not intend to go into the comparative merits of the case and would like to concentrate only on legal issues, therefore, it is not at all necessary to go into the factual matrix of the case.

2. The appellant is the complainant whose complaint under Section 138 of the Negotiable Instrument Act (for short ''NI Act'') has been dismissed primarily on the following grounds:-

(i) section 139 of the NI Act does not lay down any presumption with regard to existence of the legally enforceable debt and presumption is merely in favour of the holder of the cheque and the complainant has to establish the existence of legally enforceable debt against the accused.

(ii) The friends from whom the complainant allegedly borrowed Rs. 50,000/- each and thereafter advanced to the accused not examined.

(iii) Advancement of loan in violation of section 269 SS of the Income Tax Act (for short ''IT Act''), therefore, not recoverable.

(iv) Loan not shown in Income Tax Return furnished by the complainant, entitled the accused for acquittal.

3. The interpretation given under section 139 of the NI Act by the learned trial Magistrate is based upon the view expressed by two Hon''ble Judges Bench of Hon''ble Supreme Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde, 2008 (4) SCC 54 . However, the learned Magistrate has failed to take note of the fact that the aforesaid view was subsequently to the extent of presumption mandated by section 139 of the NI Act held not to be the correct view, by three judges Bench of the Hon''ble Supreme Court in Rangappa v. Sri Mohan (2010) 11 SCC 441 , wherein it was observed as under:-

19. It has been contended on behalf of the appellant-accused that the presumption mandated by Section 139 of the Act does not extend to the existence of a legally enforceable debt or liability and that the same stood rebutted in this case, keeping in mind the discrepancies in the complainant''s version. It was reasoned that it is open to the accused to rely on the materials produced by the complainant for disproving the existence of a legally enforceable debt or liability. It has been contended that since the complainant did not conclusively show whether a debt was owed to him in respect of a hand loan or in relation to expenditure incurred during the construction of the accused''s house, the existence of a legally enforceable debt or liability had not been shown, thereby creating a probable defence for the accused.

20. Counsel appearing for the appellant-accused has relied on a decision given by a division bench of this Court in Krishna Janardhan Bhat v. Dattatraya G. Hegde, 2008 (4) SCC 54 , the operative observations from which are reproduced below (S.B. Sinha, J. at Paras. 29-32, 34 and 45):

"29. Section 138 of the Act has three ingredients viz.:

(i) that there is a legally enforceable debt

(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and

(iii) that the cheque so issued had been returned due to insufficiency of funds.

30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.

31. The courts below, as noticed hereinbefore, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his bur