Statutory Presumption Under Section 139 NI Act Rebutted Where Complainant Fails to Prove Financial Capacity and Transactional Details.

The Appellant-complainant alleged that based on a close friendship, he advanced a loan of ₹7,00,000 to Respondent No. 2 (accused) in installments through an Angadiya service (K. Ratanlal) for business needs in Ahmedabad

The accused allegedly issued a cheque for the same amount dated 01.04.2012, which was dishonored for "Funds Insufficient"

While the Trial Court convicted the accused, the Appellate Court reversed this, acquitting the accused on the grounds that the complainant failed to prove the existence of a legally enforceable debt

The complainant appealed to the High Court, contending that since the signature on the cheque was admitted, statutory presumptions under the NI Act must apply

1. Whether the Appellate Court was justified in reversing the conviction and passing an order of acquittal

2. Whether the complainant established the existence of a "legally enforceable debt" given the inconsistencies regarding the delivery of funds and the refusal to undergo handwriting expert examination

3. Whether there was any perversity or manifest illegality in the Appellate Court's appreciation of evidence

The Court applied Section 138 of the Negotiable Instruments Act, 1881, requiring the existence of a legally enforceable debt

It relied on Sections 118 and 139 of the NI Act, noting that while presumptions exist in favor of the holder, they are rebuttable by a "preponderance of probabilities"

The Court followed Chandrappa v. State of Karnataka (2007) and Rajesh Prasad v. State of Bihar (2022), which establish that in appeals against acquittal, there is a "double presumption" of innocence, and the Appellate Court should not interfere unless the lower court’s view is perverse or suffers from manifest illegality

The High Court found that the complainant failed to prove the foundational fact of the debt. Specifically, the complainant claimed money was sent through an Angadiya service to a third party named "Bharatbhai," but Bharatbhai was neither mentioned in the notice/complaint nor examined as a witness

the complainant admitted in cross-examination that he had no receipts for the Angadiya transactions and categorically refused to have the cheque examined by a handwriting expert to verify who filled the particulars

The Court reasoned that since the complainant could not explain the source of funds or provide documentary proof of the cash transfer, the accused successfully rebutted the statutory presumption

Under the scope of acquittal appeals, the Court held that the Appellate Court's view was a "reasonable conclusion" based on the evidence

The Court held that the prosecution miserably failed to prove the charges beyond a reasonable doubt as the existence of a legally enforceable debt was not established

The bail bond of the respondent was ordered cancelled