Delhi High Court Sets Aside Acquittal in Rs. 85 Lakh Cheque Dishonor Case: Respondent’s Security Cheque Defense Unconvincing, Presumption Under Section 139 Negotiable Instrument Act Not Rebutted

Delhi High Court Sets Aside Acquittal in Rs. 85 Lakh Cheque Dishonor Case: Respondent’s Security Cheque Defense Unconvincing, Presumption Under Section 139 Negotiable Instrument Act Not Rebutted

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Court’s Decision:
The petitions were filed seeking leave to appeal against two judgments from the trial court which acquitted the respondent under Section 138 of the Negotiable Instruments Act. The High Court granted leave to appeal, set aside the trial court’s acquittal, and ordered the respondent to be present for further directions on the scheduled date.

Facts:
The petitioners, legal heirs of the original complainant, filed complaints under Section 138 of the Negotiable Instruments Act for the dishonor of three cheques, totaling Rs. 85 lakhs. The cheques were issued in connection with a Memorandum of Understanding (MoU) regarding a loan of Rs. 2 crores, provided to the respondent for a business transaction. Despite partial payment, three cheques were dishonored on account of “stop payment” instructions.

Issues:
The key issue in this case was whether the cheques issued by the respondent were meant to discharge a legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act.

Petitioner’s Arguments:
The petitioner argued that the MoU, which was signed and executed by both parties, clearly showed the respondent’s commitment to repay the principal loan amount with an additional profit margin of Rs. 60 lakhs. The dishonored cheques were issued to settle the remaining liability of Rs. 85 lakhs, and the respondent had admitted to the issuance of these cheques.

Respondent’s Arguments:
The respondent claimed that the transactions between the parties were merely trade advances, with the complainant receiving various materials in return. The respondent contended that the cheques were issued as a form of security, not for discharging any enforceable liability, and that the complainant had already received payments exceeding Rs. 2 crores, leaving no further amounts due.

Analysis of the Law:
The court noted that under Section 139 of the Negotiable Instruments Act, there exists a presumption in favor of the holder of the cheque that it was issued for the discharge of debt or liability. The respondent’s failure to provide defense evidence weakened their claim that the cheques were issued merely as security. Moreover, the absence of any valid explanation for the issuance of cheques totaling Rs. 2.6 crores indicated that they were meant for discharging a legally enforceable debt.

Precedent Analysis:
The court referred to several judgments emphasizing that the burden of disproving the presumption under Section 139 lies with the accused. In cases where cheques were issued, they should not be treated casually, as they carry serious legal consequences.

Court’s Reasoning:
The court found the respondent’s explanation unconvincing, as the assertion that the cheques were provided merely as security contradicted the facts. The execution of the MoU, the issuance of cheques totaling Rs. 2.6 crores, and the absence of witnesses during the agreement were insufficient defenses. The statutory presumption under Section 139 had not been successfully rebutted.

Conclusion:
The court set aside the trial court’s order of acquittal, finding that the cheques were issued to discharge a legally enforceable liability. The matter was scheduled for further directions, and the respondent was ordered to be present.

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