The Kerala High Court has dismissed an appeal against acquittal in a cheque dishonour case, affirming that an accused can successfully rebut the statutory presumption under Section 139 of the Negotiable Instruments Act, 1881, by highlighting serious doubts and contradictions in the complainant’s own evidence. Justice Johnson John held that once the accused establishes a probable defence by casting a “shadow of doubt” on the complainant’s version, the onus shifts back to the complainant to prove their case, which they failed to do in this instance.
The court upheld the judgment of the Judicial Magistrate of First Class, Kodungallur, which had acquitted Sabitha (the accused) in a case filed by Shailappan, the Managing Partner of Poornima Finance (the complainant).
Background of the Case
The complainant, Shailappan, alleged that Sabitha had issued a cheque dated December 19, 2005, for Rs. 1,00,000 towards the discharge of a debt. The cheque was dishonoured upon presentation due to “insufficiency of funds.” Despite a statutory notice being issued, the accused failed to pay the amount, leading to the complaint under Section 138 of the N.I. Act.
The trial court, after evaluating the evidence, found that the complainant had not succeeded in proving the offence and acquitted the accused. The complainant then appealed this decision to the High Court.
Arguments of the Parties
The appellant’s counsel, Sri. Abraham J. Kaniyampady, argued that the accused had not disputed her signature on the cheque (Exhibit P1). Therefore, the trial court’s finding that the statutory presumptions in favour of the complainant had been rebutted was not legally sustainable. The appellant also contended that the accused’s failure to reply to the statutory notice led to an inference of merit in the complainant’s case, placing the burden on the accused to prove the non-existence of a debt, citing the Supreme Court’s decision in M.M.T.C Ltd. v. Medchil Chemicals And Pharma (P) Ltd.
Representing the accused, Sri. Ranjan Suresh argued that the complainant had failed to disclose the date of the cheque’s execution and issuance in either the complaint or the chief affidavit. The counsel pointed to contradictions between the complaint’s averments and the complainant’s testimony during cross-examination. It was also argued that the complainant had failed to produce any document to prove his authority to represent Poornima Finance as its Managing Partner.
Court’s Analysis and Findings
Justice Johnson John, upon a careful re-appreciation of the evidence, found no reason to interfere with the trial court’s verdict.
The court first noted that the cheque was issued in favour of “M/s. Poornima Finance.” However, the complainant (PW1), despite claiming to be the Managing Partner, “produced no document to prove the same,” even after stating he would.
The judgment highlighted significant contradictions in the complainant’s testimony. PW1 claimed the loan was advanced via a promissory note on October 3, 2005, and the cheque was issued on December 19, 2005, at which time he returned the promissory note. He then immediately corrected himself, stating the note was not returned. The court observed, “it is apparent that there existed a contradiction in the complaint moved by the appellant as against his cross examination relatable to the time of execution and issuance of the cheque.”
The defense’s version was that the cheque was not for a loan but was given as a blank security cheque for the purchase of gold ornaments from the complainant’s other business, “Poornima Jewellery.” The accused’s father (DW1) testified that he purchased gold worth Rs. 1,56,208/- on April 15, 2005, paid Rs. 20,000/-, and gave the accused’s blank cheque for the balance. The complainant himself admitted in cross-examination that he also conducted Poornima Jewellery and that an account slip regarding the gold purchase (Ext. D2) was in his handwriting.
The court relied on established legal principles, citing key Supreme Court judgments:
- M.S. Narayana Menon v. State of Kerala (2006): The standard of proof for an accused to rebut the presumption is not “beyond reasonable doubt.” If material is brought on record consistent with innocence which “may reasonably be true,” the accused is entitled to acquittal.
- Basalingappa v. Mudibasappa (2019): The presumption under Section 139 is rebuttable, and the onus on the accused is to raise a “probable defence” based on a “preponderance of probabilities.” The accused can rely on materials submitted by the complainant to do so.
- ANSS Rajashekar v. Augustus Jeba Ananth (2019): When evidence from the complainant’s cross-examination “creates serious doubt about the existence of debt,” the presumption is rebutted.
Applying these principles, the court found that the defense had successfully established a probable case. The evidence of the complainant running a jewellery business, coupled with documents showing a gold purchase transaction (Ext.D1 and D2), was sufficient to rebut the statutory presumptions. The court concluded, “the accused has been able to cast a shadow of doubt on the case presented by the appellant.”
Regarding the appellant’s argument on the failure to reply to the notice, the court, citing Sanjabij Tari v. Kishore S. Borcar, noted that “ultimately it becomes the duty of the courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.”
Decision
The High Court held that the trial court’s finding was correct and that the complainant had failed to prove the execution of the cheque in discharge of a legally enforceable debt.
“On a careful re-appreciation of the entire evidence, I find no reason to interfere with the finding in the impugned judgment that the complainant has not succeeded in proving the offence under Section 138 of the N.I Act against the accused,” the court ordered while dismissing the appeal.
