Sri Dattatraya v. Sharanappa

Case Title: Sri Dattatraya v. Sharanappa

Date of Order: August 07, 2024

Case Number: Criminal Appeal No. 3257 of 2024 (@ SLP (Criminal) No. 13179 of 2023)

Neutral Citation: 2024 INSC 586

Court: Supreme Court of India

Judge: Hon’ble Justice Augustine George Masih and Hon’ble Justice B.V. Nagarathna

Facts

The appellant, Sri Dattatraya, filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), alleging that the respondent, Sharanappa, had borrowed ₹2,00,000 from him for family necessities and issued a cheque as security for repayment. The cheque was dishonoured due to insufficient funds, and a legal notice was sent to the respondent, but payment was not made. The appellant filed a complaint, and the trial court dismissed the case, acquitting the respondent. The High Court of Karnataka upheld the acquittal. Aggrieved by the decision, the appellant approached the Supreme Court.

Issues

Whether the presumption under Section 139 of the NI Act in favor of the holder of the cheque was rebutted by the respondent.

Whether the High Court erred in upholding the acquittal of the respondent.

Reasoning and Analysis of the Judge

The court analyzed the provisions of the NI Act, particularly Sections 118 and 139, which create a presumption in favor of the cheque holder. However, this presumption is rebuttable. The respondent denied the loan transaction and claimed that the cheque was issued as security in another transaction with a third party. The trial court found contradictions in the appellant’s statements, particularly regarding when the cheque was issued and the absence of financial capacity evidence in the appellant’s income tax returns.

The Supreme Court reaffirmed that the standard of proof for rebutting the presumption is based on the preponderance of probabilities. The respondent successfully raised doubts about the appellant’s claim by highlighting inconsistencies in his version and the absence of supporting financial records. The appellant’s inability to provide clear evidence regarding the loan transaction and the agreement further weakened his case. The court also emphasized that concurrent findings of fact should not be overturned unless there is clear perversity or miscarriage of justice, which was not present in this case.

Decision of the Judge

The Supreme Court dismissed the appeal and upheld the High Court’s judgment, affirming the acquittal of the respondent. The court ruled that the respondent had successfully rebutted the presumption under Section 139 of the NI Act, and the appellant failed to establish the existence of a legally enforceable debt. The appeal was found to be devoid of merit, and all pending applications were disposed of accordingly.