Rebuttal of statutory presumption via preponderance of probabilities justifies acquittal under Section 138 Negotiable Instruments Act.

The appellant/complainant alleged that he advanced three loan installments to Respondent No. 1 totaling ₹50,000 (₹20,000, ₹15,000, and ₹15,000) for domestic purposes.

In discharge of this debt, Respondent No. 1 issued three cheques dated 06.11.2011, 21.11.2011, and 02.12.2011, which were subsequently dishonored due to insufficient funds on 27.02.2012.

The Judicial Magistrate First Class (JMFC), Durg, convicted Respondent No. 1 on 28.09.2015, sentencing him to six months’ RI and compensation of ₹55,000.

However, on appeal, the Additional Sessions Judge, Durg, reversed this decision on 01.02.2016 and acquitted the respondent.

The appellant challenged this acquittal before the High Court of Chhattisgarh.

1. Whether the Appellate Court was justified in reversing the conviction and acquitting Respondent No. 1 of the charge under Section 138 of the NI Act.

2. What is the scope of interference by an appellate court in an appeal against an order of acquittal under Section 378 of the Cr.P.C.

Section 138 of the Negotiable Instruments Act, 1881, regarding the dishonor of cheques for insufficiency of funds.

Statutory presumptions under Sections 118 and 139 of the NI Act, which assume a cheque was issued for consideration and in discharge of a debt unless the contrary is proved.

Jafarudheen v. State of Kerala (2022), which holds that acquittal strengthens the presumption of innocence and should only be disturbed upon thorough scrutiny of legal parameters.

Mallappa v. State of Karnataka (2024), stipulating that if two views are possible, the view favoring the accused must be followed, and acquittal should only be reversed if the Trial Court's decision is perverse or legally implausible.

The High Court scrutinized the evidence of the complainant (C.W.1), noting several inconsistencies that rendered his version doubtful. Although the complainant claimed to have advanced ₹50,000 in three installments, he could not recall the specific dates of these transactions during cross-examination, despite recalling a different transaction from 2008.

Crucially, the complainant admitted to filling in the particulars of the cheques himself, and the court observed a visible difference in ink between the signatures and the body of the instruments.

While the admission of signatures triggered the presumptions under Sections 118 and 139 of the NI Act, the court found that the accused successfully rebutted these presumptions through the standard of "preponderance of probabilities" by highlighting the lack of evidence for a legally enforceable debt.

The court determined that the complainant failed to provide cogent evidence to prove the circumstances of the alleged loans once the defense raised a probable doubt.

Finding no patent illegality or perversity in the judgment of acquittal, the Court declined to interfere with the lower court's findings.

The appeal was dismissed, and the judgment dated 01.02.2016, acquitting Respondent No. 1, was affirmed.