Summary
Two cheques for Rs. 3.5 lakh each were dishonoured with the remark 'account closed'. The drawer's defence was that they were blank cheques given in 1992 as security for his wife's chit subscription. The trial court acquitted him under Section 138 of the NI Act, but the Madras High Court convicted him. The Supreme Court restored the acquittals. Income tax returns and other evidence probabilised his defence that the complainants lacked the means to lend, which rebutted the Section 139 presumption on a preponderance of probabilities. Absent perversity, the acquittal should not have been reversed. The civil decrees on promissory notes, proved only in the civil suits, were upheld but limited to the sums already deposited.
Issues
- Whether the High Court was justified in reversing acquittals under Section 138 of the Negotiable Instruments Act where the accused had probabilised the defence that the complainants lacked the financial capacity to lend.
- Whether decrees on promissory notes could stand despite the acquittals in the cheque cases.
Provisions considered
- Sections 118(a), 138 and 139, Negotiable Instruments Act, 1881Following Basalingappa v. Mudibasappa, the presumption on admitted execution of a cheque is rebuttable by a probable defence on a preponderance of probabilities, which may rest on the complainant's material and the circumstances. (¶¶ 12, 13, 20, 25)
- Appeal against acquittal, Code of Criminal Procedure, 1973The appellate court may interfere with an acquittal only where the trial court's appreciation of evidence is perverse. (¶¶ 14, 21, 27)
Held
- The accused proved through the income tax officer and certified returns that the complainants had declared neither the loans nor agricultural income, and other defence witnesses supported his case; together with the complainants' failure to produce the promissory note, this satisfied the preponderance-of-probabilities standard and rebutted the presumption. (¶¶ 15, 16, 17, 18, 19, 20, 25)
- Since the trial court's findings were not perverse, the High Court was not justified in reversing the acquittals; Bir Singh, Kalamani Tex and Rohitbhai Jivanlal Patel are distinguishable as cases where no probable defence was established. (¶¶ 21, 22, 23, 24, 26, 27)
- Civil suits are decided on preponderance of probabilities, not proof beyond reasonable doubt; the promissory notes were proved in the civil suits, the complainant's financial capacity was found established, and an adverse inference arose from non-examination of the appellant's wife, so the decrees stand, modified to the amounts deposited in this Court with accrued interest. (¶¶ 28, 29, 30, 31)
Result
Criminal Appeal Nos. 1978 and 1990 of 2013 allowed and the Madras High Court's conviction of 28.10.2008 and sentence of 30.10.2008 set aside, restoring the trial court's acquittals; Civil Appeal Nos. 10500 and 10501 of 2013 dismissed, with the decrees restricted to the amounts deposited with interest, each respondent to withdraw 50%; no costs.