Supreme courts hold interference in concurrent findings warranted when there is a miscarriage of justice.

In the case of Dattatraya vs Sharanappa, the Supreme Court upheld the concurrent findings of the trial court and the High Court of Karnataka, acquitting the respondent of charges under Section 138 of the Negotiable Instruments Act, 1881. The case revolved around the alleged dishonor of a cheque for an amount of Rs.2,00,000 issued by the respondent to the appellant in a matter U/s 138 of the Negotiable Instruments Act.

The Court, citing Sadanandan Bhadran v. Madhavan Sunil Kumar, reaffirmed that for Section 138 NI Act to apply, the cheque must be presented within its validity, a demand must be made, and payment must be filed within 15 days of the demand.

Presumption U/S 139: Section 139 of the NI Act 1881 creates a rebuttable presumption that a cheque was received to discharge a liability, based on Section 118’s rules of evidence, assuming proper issuance and transfer. And thus, the Court acknowledged the statutory presumption under Section 139 of the NI Act, 1881, which places the burden on the issuer of a dishonored cheque to prove the non-existence of debt or liability. However, the Court emphasized that this presumption is rebuttable.

The court, citing Rajesh Jain v. Ajay Singh, held that the accused can counter this presumption by demonstrating that the cheque was not issued for the presumed debt or presenting circumstantial evidence based on the preponderance of probabilities. The Court had relied on K.N. Beena v. Muniyappan and Another stating that **“Comprehensive reference to the Sections 118, 139 and 140 of the NI Act 1881 gives birth to a deemed fiction which was also articulated by this Court in K.N. Beena v. Muniyappan and Another9 as follows:

"Under section 118, unless the contrary was proved, it is to be presumed that the negotiable instrument (including a cheque) had been made or drawn for consideration. Under section 139 the court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part, of a debt or liability. Thus, in complaints under section 138, the court has to presume that the cheque had been issued for a debtor’s liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused."

Prepondorence Of Probabilities: The court held that although the Appellant proved the Respondent's signature on the cheque, regarding the decision of this Court in Bir Singh vs Mukesh Kumar, a presumption is to ideally arise but failure to prove the details of the loan advanced and contradictory statements the case does not come to the aid of the Appellant.

Reversing Concurrent Findings: Relying on the view in State of Uttar Pradesh vs Dan Singh the Court observed that generally courts do not overturn concurrent acquittal findings when two views are possible. However, if a thorough review of the evidence reveals a serious miscarriage of justice, the Court may intervene despite the concurrent findings.

Emphasising Babu v. State of Kerala, the court stated that interference in concurrent acquittal findings is warranted only if there is a clear failure of justice or if the trial court misframed issues and the appellate court failed to properly evaluate evidence. However, in this case, the concurrent findings are supported by a detailed appraisal of evidence and do not show perversity or lack of evidence. Thus, following principles established in similar cases, such as M/s Rajco Steel Enterprises v. Kavita Saraff, the Court held that, no interference is warranted.

At the backdrop of these observations the Court concluded that the Appellant's contradictory statements and omission of tax returns, created legitimate doubt about the existence of a legally recoverable debt., the Supreme Court concluded that the respondent successfully rebutted the presumption under Section 139 of the NI Act. The contradictions in the appellant's statements, combined with the lack of supporting evidence, created enough doubt about the existence of a legally recoverable debt. Consequently, the Court upheld the concurrent findings of the lower courts and dismissed the appeal.

Coram: B.V. Nagarathna And Augustine George Masih
Between: Sri Dattatraya Vs Sharanappa
DOJ: 07/08/2024