Sri Dattatraya vs Sharanappa
Background
The appellant claimed he had lent Rs. 2,00,000 to the respondent, who issued a cheque as security for repayment. When the appellant presented the cheque, it bounced for insufficient funds, and he filed a criminal complaint for cheque dishonour under Section 138 of the Negotiable Instruments Act. The respondent denied borrowing any money, claiming the cheque had instead been given to a third person as security and never returned to him. The trial court acquitted the respondent, finding contradictions in the appellant's evidence, including that he had not declared the loan in his income tax returns; the Karnataka High Court upheld the acquittal.
Decision Breakdown
The Supreme Court reiterated that while the law presumes a cheque was issued for a genuine debt once the signature is admitted, this presumption can be rebutted by the accused on a mere preponderance of probabilities, not proof beyond doubt. The Court found the respondent had successfully raised real doubts (including contradictions about when and how the cheque was issued, and the appellant's own failure to declare the loan to tax authorities) sufficient to rebut the presumption of a legally recoverable debt. Applying the well-settled principle that concurrent findings of acquittal by two courts deserve very strong deference and should not be disturbed unless the findings are perverse, the Court found no such perversity here and declined to interfere.
Lesson Learnt
Signing a cheque creates a legal presumption that money is owed, but that presumption can be broken by pointing to real inconsistencies in the lender's own story, such as not declaring the loan on tax returns, and once two courts have already agreed on acquittal, the Supreme Court will rarely second-guess them.