Presumption of Liability Under Section 138 of NI Act Requires Corroborative Evidence: Punjab and Haryana High Court

High Court maintains acquittal in cheque bounce case, emphasizing need for concrete proof of debt or liability. In a significant ruling, the Punjab and Haryana High Court has upheld the acquittal of Koushlander Gupta in a cheque bounce case filed by M/s Balaji Trading Company. The bench, presided by Justice Kirti Singh, dismissed the appeal, citing insufficient evidence to establish the delivery of goods and the accused’s liability under Section 138 of the Negotiable Instruments Act, 1881.

M/s Balaji Trading Company, represented by its proprietor Vishal Singla, filed a complaint against Koushlander Gupta, alleging that Gupta had purchased towels worth ₹18,12,400 through invoices dated November 2012. In payment, Gupta issued a post-dated cheque, which was dishonored upon presentation with the remark 'account closed'. Despite a demand notice sent to Gupta, no payment was made, prompting the legal action.

The court observed that the complainant failed to provide any documentary evidence confirming the delivery of the goods to the accused. During cross-examination, Vishal Singla admitted the lack of a written purchase order, proof of delivery, and acknowledgement receipts. The invoices did not bear the signature or acknowledgment from the accused or his representative.

Gupta contended that he never engaged in trading handloom goods and operated a dairy/sweet shop. He denied issuing the cheque, claiming his cheque book was lost and had reported this to the police before the cheque was presented by the complainant. The court noted that Gupta’s police complaint about the lost cheque book, made before the cheque’s presentation, substantiated his defense.

The court emphasized the importance of concrete evidence in criminal cases, particularly under Section 138 of the NI Act. It reiterated that the presumption of liability under this section does not extend to the validity of the debt or liability without corroborative evidence. The court noted, "The guilt of the accused must be proved beyond a reasonable doubt, and in this case, the prosecution has failed to meet this burden."

Justice Kirti Singh stated, "There is no concrete evidence on file which can prove the sale of goods and liability of the accused in respect of the alleged transaction. On the basis of such a concocted story, the accused cannot be weighed down with criminal liability."

The High Court's decision to uphold the trial court’s acquittal underscores the necessity of robust evidence in cheque bounce cases under the NI Act. This judgment reinforces the principle that the presumption of guilt must be supported by clear and convincing proof, impacting how similar cases will be approached in the future.

Date of Decision: 11 July 2024

M/s Balaji Trading Company vs. Koushlander Gupta