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Supreme Court Upholds Acquittal: Burden of Proof Shifts to Accused Only After The Petitioner Establishes Prima Facie Evidence Of The Debt

Supreme Court upholds the acquittal, as the burden of proof shifts to the accused only after the petitioner establishes prima facie evidence of the debt.

The Supreme Court two-judge bench of Justice Aniruddha Bose and Justice Sanjay Kumar was hearing Special Leave Petitions observed that for prosecution under Section 138 of the Negotiable Instruments Act, 1881, the petitioner must establish the existence of a legally enforceable debt. The Bench noted that the burden of proof shifts to the accused only after the petitioner establishes prima facie evidence of the debt. The Supreme Court bench further observed that the lack of documentary evidence or testimony supporting the debt renders the prosecution unsustainable.

The Supreme Court reviewed four petitions for special leave to appeal, all filed by a partnership firm specializing in iron and steel products. These petitions challenged a common judgment by the High Court of Judicature at Calcutta, which dismissed the firm's appeal against the acquittal of the first respondent for offences under Section 138 of the Negotiable Instrument Act, 1881.

The petitioner had lodged four complaint cases against the first respondent after four cheques, allegedly issued by the respondent, were dishonoured due to insufficient funds. These cheques were issued between November 7, 2008, and November 24, 2008, drawn on Axis Bank Limited in Kolkata.

The trial court convicted the first respondent, finding that the cheques were issued in discharge of a legally enforceable debt. However, the first appellate court overturned this decision, acquitting the first respondent due to lack of evidence showing any loan transaction or handing over of the cheques. The High Court upheld this decision, observing that no valid documentary evidence was produced by the petitioner to substantiate the existence of an enforceable debt or liability.

In the Supreme Court, the petitioner argued that all the necessary elements of Section 138 of the 1881 Act were satisfied, and the burden of proof shifted to the respondent to show that the cheques were not issued in the discharge of a valid debt. However, the respondent contended that the petitioner failed to establish itself as a "holder in due course" and did not fulfil the requirements of proving a legally enforceable debt.

After examining the evidence and arguments, the Supreme Court found that both the appellate courts had carefully considered the evidence and ruled against the petitioner. There was no evidence of an enforceable debt or liability, and the petitioner's case lacked support from its balance sheet and other partners' testimonies. Therefore, the Supreme Court dismissed the petitions, finding no grounds for interference.

In conclusion, the Supreme Court upheld the decisions of the lower courts, emphasizing that they were not based on perversity or absence of evidence. The petitions were dismissed, and no costs were awarded.


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