The High Court of Kerala, in a judgment delivered by the Justice Bechu Kurian Thomas, has dismissed a criminal appeal (Crl.A No. 222 of 2015) filed by a complainant against the acquittal of an accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881. The Court affirmed the trial court’s finding, holding that the accused had successfully rebutted the statutory presumption under Section 139 of the Act by demonstrating a “preponderance of probabilities” that the cheque was not issued for the alleged debt, relying significantly on contradictions and admissions within the complainant’s own evidence.
Background of the Case:
The appeal arose from S.T.No.61/2012 on the file of the Judicial First Class Magistrate Court-II, Chalakudy. The appellant (complainant), Jose S/o. Lonappan, had alleged that the first respondent (accused), Jose S/o. Domini, borrowed Rs. 3,00,000/- on 12.06.2011.
According to the complaint, in satisfaction of this amount, the accused issued a cheque (Ext. P1) dated 12.09.2011 for Rs. 3,00,000/-, drawn on the South Indian Bank, Chalakudy Branch. When presented for encashment, the cheque was dishonoured with the endorsement “funds insufficient”.
The complainant issued a statutory notice dated 12.10.2011 demanding repayment. The accused failed to repay the amount and instead issued a reply notice (Ext. P7).
On 30.09.2014, the learned Magistrate acquitted the accused, finding that the complainant had failed to prove the execution and issuance of the cheque (Ext. P1) and holding that the cheque was not supported by consideration. The complainant subsequently filed the present appeal before the High Court of Kerala against this acquittal.
Arguments and Defense Position:
During the trial, the complainant examined himself as PW1 and marked exhibits P1 to P7. The defense marked Ext. D1.
The consistent case of the accused, as reflected in his Exhibit P7 reply notice, was a denial of the Rs. 3,00,000/- loan. The accused specifically averred that on 15.02.2011, at the intervention of the Office Bearers of the Merchants Association, he had handed over Rs. 20,000/- along with a signed document and a blank signed cheque. The accused contended that this blank cheque was not returned and was subsequently misused by the complainant by presenting it for encashment.
Court’s Analysis and Reasoning:
The High Court, presided by Justice Bechu Kurian Thomas, began its analysis by observing that the appeal was against an acquittal where the statute creates a presumption under Section 139 of the NI Act, which presumes the holder received the cheque in discharge of a debt or liability.
The Court noted that this presumption is rebuttable, and the standard of proof for the accused is that of “preponderance of probabilities.” The judgment reviewed several Supreme Court decisions on this principle. It cited Basalingappa v. Mudibasappa [(2019) 5 SCC 418], which established that “to rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.”
The Court also referred to Rajesh Jain v. Ajay Singh [(2023) 10 SCC 148], wherein the Supreme Court observed that an accused has the option to ask the Court to consider the non-existence of the debt/liability as “so probable that a prudent man ought, under the circumstances of the case, to act upon the supposition that debt/liability did not exist.”
Applying these principles, Justice Thomas noted that the accused has two options: first, by leading defense evidence to conclusively establish the cheque was not issued for a debt, or second, “to prove the non-existence of debt/liability by a preponderance of probabilities, referring to the particular circumstances of the case.”
The High Court found that the accused in this case succeeded via the second option, using the complainant’s own testimony. The judgment highlighted crucial admissions made by the complainant (PW1) during cross-examination.
The Court observed: “A reading of Ext.D1 indicates that out of an amount of Rs.1,84,000/- due from the accused to the complainant, he had received Rs.20,000/- on 16.02.2011 and the balance was only Rs.1,64,000/-.” The complainant (PW1) had admitted in cross-examination that Ext. D1 reflected the agreement relating to the transaction. This directly contradicted the complainant’s primary allegation of a Rs. 3,00,000/- loan.
The judgment also noted “various inconsistencies” in the complainant’s statements regarding other persons and transactions, including those between the complainant’s wife and the accused, which “probabilize the defense of the accused that the cheque was issued in connection with another transaction.”
The Court found it significant that the “complainant’s case that he had lent to the accused a sum of Rs.3,00,000/- at a time when the accused owed Rs.1,64,000/- to the wife of the complainant also assumes significance.”
Concluding its analysis, the High Court held that the evidence adduced by the complainant himself supported the defense’s version. In paragraph 16, the Court stated: “The cumulative effect of the nature of evidence adduced by the complainant himself probabilizes the defense version.” It further added: “Thus the evidence of the complainant as PW1 itself renders the defence version more probable.”
Final Decision:
Based on this analysis, the High Court found that the trial court’s decision was justified.
“Under the circumstances, this Court has to act under the belief that the debt or liability as alleged by the complainant did not exist,” Justice Thomas wrote in paragraph 17.
The Court held that the trial court correctly believed the version of the accused to be more probable and found “no reason to interfere with the findings of the trial court.”
Accordingly, the High Court ruled that there was no merit in the appeal, and it was dismissed, thereby upholding the acquittal of the accused.
