S.138 NI Act | Supreme Court Refuses To Interfere With Concurrent Findings That Cheque Wasn't Issued Towards Legally Enforceable Debt, Upholds Acquittal

Recently, the Supreme Court upheld the acquittal of an accused in a 16-year-old cheque dishonor case since the complainant failed to prove that there exists a legally enforceable debt against the accused.

“On the question as to whether the sum involved in the cheques was advanced in discharge of a legally enforceable debt or not, the petitioner has failed to show if any sum was advanced towards financial assistance. The High Court found that the debt/liability, in discharge of which, according to the petitioner, the cheques were issued, did not reflect in the petitioner's balance-sheet.”, the Bench comprising Justices Aniruddha Bose and Sanjay Kumar observed.

The case relates to the initiation of the cheque dishonor proceedings against the accused. It was contended by the complainant/petitioner that the cheque was issued by the accused against the legally enforceable debt towards the complainant. Thus, the presumption contained in Section 118 read with Section 139 of the Negotiable Instruments Act, 1881 lies with the accused to rebut the said presumption.

Denying the complainant's version, the accused rebutted the presumption stating that there exists no legally enforceable debt towards the complainant. According to the accused, the transaction through which the money was credited to her bank account by the complainant was for the purpose of trading in the stock market by the complainant through the accused bank account, as the complainant did not want his family members to know about the stock market trading.

The accused conviction by the trial court was reversed to acquittal by the First Appellate Court and the same was upheld by the High Court.

Against the High Court's decision to acquit the accused, the complainant approached the Supreme Court under Article 136 of the Constitution by filing the Special Leave Petition.

At the outset, the court found that the accused has rebutted the presumption lies against her by putting up a plausible defence as regards the reason for which the complainant's funds had come to her account.

Supreme Court's Interference Under Article 136 of the Constitution Warranted Only When Impugned Findings Were Perverse, Or Based On No Evidence

The court clarified that the interference of the Supreme Court would not be warranted under Article 136 when the impugned findings are not perverse or based on evidence.

The court found that there exists no perversity in the High Court's and First Appellate Court's decision to warrant the court's interference under Article 136 as both the Courts have examined the evidence threadbare held against the complainant/petitioner.

“Both the appellate fora, on going through the evidence did not find existence of any “enforceable debt or other liability… We are of the opinion that there is no perversity in the finding of the High Court, and prior to that, in the finding of the First Appellate Court, that went against the complainant/petitioner. It cannot be held that these findings were perverse, or based on no evidence. No point of law is involved in this set of cases, that would warrant our interference.”, the court observed.

Accordingly, the Special Leave Petition was dismissed.

Counsels For Petitioner(s) Mr. Raju Ramchandran, Sr. Adv. Mrs. Aparajita Singh, Sr. Adv. Mr. Amit Kumar Singh, Adv. Mr. Avnish Pandey, AOR

Counsels For Respondent(s) Mr. S. Nagamuthu, Sr. Adv. Mr. Mohit D. Ram, AOR Ms. Monisha Handa, Adv. Mr. Rajul Shrivastav, Adv. 2 Mr. Anubhav Sharma, Adv. Mr. Bhagirath N. Patel, Adv. Ms. Mantika Haryani, Adv. Ms. Muskan Surana, Adv. Ms. Astha Sharma, AOR

Case Title: M/S RAJCO STEEL ENTERPRISES VERSUS KAVITA SARAFF & ANR.

Citation : 2024 LiveLaw (SC) 306
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