Financial incapacity and undocumented cash transactions rebut the statutory presumption of legally enforceable debt.

The appellant/complainant filed two complaints under Section 138 of the Negotiable Instruments (NI) Act, alleging he paid ₹35,00,000 in cash to the respondent/accused as an advance for a land purchase.

When the transaction failed, the respondent allegedly issued two cheques (₹15,00,000 and ₹20,00,000) which were subsequently dishonored due to "insufficient funds".

The Judicial Magistrate First Class, Raipur, convicted the respondent, sentencing him to six months’ imprisonment and a compensation of ₹35,00,000.

On appeal, the Additional Sessions Judge, Raipur, set aside the conviction and acquitted the respondent, leading the complainant to file the present acquittal appeals.

The respondent contended that the cheques were obtained under threat and that he had issued "stop payment" instructions to the bank prior to their presentation.

1. Whether the complainant successfully established the existence of a legally enforceable debt or liability as required under Section 138 of the NI Act.

2. Whether the respondent successfully rebutted the statutory presumptions under Sections 118 and 139 of the NI Act through a "probable defense".

3. Whether the High Court should interfere with an order of acquittal when the view taken by the lower appellate court is a plausible one.

The Court applied Sections 118 and 139 of the NI Act, 1881, which create rebuttable presumptions that a cheque is issued for consideration and in discharge of a debt.

Citing Kamla S. v. Vidhyadharan M.J., the court noted that the accused’s burden of proof is based on the "preponderance of probabilities".

Regarding acquittal appeals, the court relied on Jafarudheen v. State of Kerala and Mallappa v. State of Karnataka, which establish that if two views are possible, the one favoring the accused must prevail, and interference is only permitted in cases of perversity or illegality.

Furthermore, D. Vinod Shivappa v. Nanda Belliappa was cited regarding the presumption of service of notice sent to the correct address.

The Court found that while the respondent admitted his signatures on the cheques, the complainant failed to prove the underlying financial transaction.

During cross-examination, the complainant admitted his annual income was only ₹3,50,000 and failed to produce income tax returns or bank records to prove the source of the alleged ₹35,00,000 cash advance.

The absence of a written agreement, witnesses, or specific details regarding the land (e.g., Khasra numbers) cast serious doubt on the complainant's case.

Conversely, the respondent probablised his defense by producing documentary evidence (Ex. D-1 to D-3) showing he had issued "stop payment" instructions to his bank on 29.08.2012, prior to the cheques being presented for encashment.

The Court reasoned that the financial incapacity of the complainant and the lack of documentary evidence for a large cash transaction were sufficient to rebut the statutory presumptions.

It held that the complainant failed to establish a legally enforceable debt and that the respondent had successfully raised a probable defense to rebut the presumptions under Sections 118 and 139 of the NI Act.

The Court concluded that the lower appellate court’s findings were plausible and did not suffer from perversity or illegality, thereby warranting no interference.