Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Ker) 57059

IN THE HIGH COURT OF KERALA AT ERNAKULAM
JOHNSON JOHN, J
SREE GOKULAM CHIT AND FINANCE CO. (P) LTD. – Appellant
Versus
ANU THOMAS – Respondent
CRL.A NO. 787 OF 2008 | Crl.A NO.71 OF 2007 | C.C. NO. 723 OF 2006

Advocates:
For the Appellants/Petitioners: SRI.P.VIJAYA BHANU (SR.), SRI.P.M.RAFIQ
For the Respondents: SHRI.T.J.MICHAEL, SRI. ALEX M. THOMBRA, SR. PUBLIC PROSECUTOR

The court affirmed that a cheque must reflect a legally enforceable debt; evidence insufficiency can rebut the statutory presumptions under the Negotiable Instruments Act.

Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Acquittal in a criminal case based on non-existence of liability - The complainant claimed that the accused was liable as a guarantor for the cheque issued to discharge her husband's debt in chitty transactions. The accused argued that insufficient evidence regarding the existence of the debt and liability leads to rebutting the presumption under Section 139 of the Act. (Paras 2, 6, 27)

(B) Presumption under Section 139 - It is held that execution of the cheque is admitted and carries a presumption of debt, but the accused can rebut this by proving non-existence or doubt over the liability based on preponderance of probabilities. Evaluating evidence presented by both sides, the court found contradictions regarding the cheque's issuance and the existent debt.

(C) Issues - The primary question was whether the cheque was issued in discharge of a legally enforceable debt.

Findings of Court:
The trial court's findings were not well substantiated, leading to the acquittal upheld as reasonable. The court emphasized the importance of direct evidence in cheque transactions and liability.

Result: Appeal dismissed.

Judgement Key Points

Key Points: - The cheque presumption under Section 139 can be rebutted by showing non-existence or doubt over the liability based on preponderance of probabilities. (!) - The evidence in this case showed contradictions about the debt and liability, leading to doubt whether the accused issued the cheque for a legally enforceable debt. (!) (!) - The trial court’s findings were not well substantiated; credibility issues with PW1 and PW2; lack of direct knowledge regarding the transaction and cheque issuance. (!) (!) - The complainant did not disclose the date of execution/issuance of the cheque; no satisfactory evidence of the alleged guarantee or debt as of the cheque date. (!) (!) - PW2 admitted that the husband paid the amounts claimed and that collection entries exist in passbooks, introducing doubt about debt obligation. (!) (!) - The court held that credible contradictions existed in the evidence and that the view favoring acquittal is reasonable; appeal dismissed. (!) (!) - The standard of proof for rebutting presumption is preponderance of probabilities, not beyond reasonable doubt. (!) - The decision references Basalingappa framework for presumption and rebuttal under Sections 118 and 139 NI Act. (!) (!) - The court ultimately acquitted the accused; the appeal challenging acquittal was dismissed. (!) (!)

What is the proper standard to rebut the presumption under Section 139 NI Act in a case alleging cheque issued in discharge of debt?

What evidence is necessary to prove or disprove existence of debt and liability in a cheque dishonour under Section 138 NI Act?

What is the appellate court’s conclusion regarding the sufficiency of evidence to sustain acquittal or conviction in a cheque bounce case?

Table of Content
1. complaint regarding cheque dishonor under n.i act. (Para 1 , 2 , 3)
2. arguments about the interpretation of the cheque liability. (Para 8 , 9)
3. court observations on evidence relating to cheque transaction. (Para 10 , 11 , 12 , 13 , 14 , 16 , 26)
4. court's interpretation of presumptions in cheque liability. (Para 18 , 20 , 22 , 24)
5. final decision citing insufficiency of evidence leading to dismissal. (Para 28)

JUDGMENT

This appeal by the complainant is against the acquittal of the accused under Section 138 of the Negotiable Instruments Act, 1881 (‘N.I Act’ for short).

2. As per the complaint, the husband of the accused subscribed two chitties conducted by the Thodupuzha Branch of the complainant company and the accused was the guarantor in both the chitties. The subscriber committed default in payment of the instalments and after issuance of notice to the subscriber and the guarantor, the accused issued cheque dated 21.07.2005 for Rs.2,10,279/- to the complainant company in discharge of the liability.

3. When the complainant company presented the cheque for collection, the same was dishonoured due to insufficiency of funds in the account of the accused and in spite of issuance of statutory notice, the accused failed to pay the cheque amount to the complainant.

4. Before the trial court, PWs 1 and 2 were examined and Exhibits P1 to P11 were marked from the side of the complainant and from the side of the accused, DWs 1 and 2 were examined and Exhibits D1 to D4 were marked.

5. After analyzing the evidence, the trial court found the accused guilty of the offence under Section 138 of the N.I. Act and sentenced to undergo simple imprisonment for one year and to pay compensation of Rs.2,10,279/- to the complainant under Section 357(3) of Cr.P.C. and in default of payment of compensation, to undergo simple imprisonment for three months.

6. The accused challenged the judgment of the trial court in Crl. Appeal No. 71 of 2007 and as per the judgment dated 21.5.2007 of the learned Additional District and Sessions Judge, (Adhoc-II), Thodupuzha, the accused was found not guilty and she was acquitted. The present appeal is filed challenging the above judgment in Crl. Appeal No. 71 of 2007 setting aside the trial court judgment and acquitting the accused.

7. Heard Sri. K. Aravind Menon, the learned counsel representing the learned counsel for the appellant on record, Sri. T.J. Michael, the learned counsel for the accused/first respondent and Sri. Alex M. Thombra, the learned Senior Public Prosecutor for the second respondent.

8. The learned counsel for the appellant argued that the finding of the Sessions Court setting aside the trial court judgment and acquitting the accused is without appreciating the evidence in a proper manner. It is argued that the accused has not disputed the signature in the cheque and that the Sessions Court ought to have found that the complainant is entitled for the benefit of the statutory presumptions.

9. The learned counsel for the accused/first respondent argued that the complainant has not disclosed the date of execution and issuance of the cheque in the complaint or in the chief affidavit of PW1 and that the complainant has also not produced the alleged guarantee agreement executed by the accused and there is no satisfactory evidence regarding the actual liability of the husband of the accused in the chitty transaction as on the date of the cheque. It is also argued that the specific case of the accused is that the complainant company obtained blank cheques of the accused and her husband at the time of giving the prize amount of the chitties to the husband of the accused and the complainant misused the cheque for filing the complaint and no amount was due from the accused to the complainant.

10. PW1 is the Assistant Business Manager of the complainant company, who filed the complaint on the basis of Exhibit P1, power of attorney executed by the Managing Director of the company in favour of PW1

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