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2022 (5) TMI 304 - HC - Indian Laws


Issues Involved:
1. Legality of the conviction under Section 138 of the Negotiable Instruments Act.
2. Nature of the cheque as a security instrument.
3. Validity of the agreement dated 5th March 2013.
4. Sufficiency of evidence regarding the dishonor of the cheque.

Detailed Analysis:

1. Legality of the Conviction under Section 138 of the Negotiable Instruments Act:
The petitioner challenged the judgment dated 21.06.2017 by the Judicial Magistrate 1st Class (Forest Magistrate), Srinagar, and the judgment dated 20.03.2019 by the Appellate Court (2nd Additional Sessions Judge, Srinagar), which upheld the Magistrate's decision. The petitioner was convicted under Section 138 of the Negotiable Instruments Act and sentenced to one year of simple imprisonment and a fine of Rs. 13.00 lacs, which was reduced to six months by the Appellate Court while maintaining the fine. The court held that the cheque issued by the petitioner was in discharge of a legally enforceable debt, thus attracting the provisions of Section 138.

2. Nature of the Cheque as a Security Instrument:
The petitioner argued that the cheque was issued as security and not meant for encashment, as per the agreement dated 5th March 2013. The court referred to various Supreme Court judgments, including *Sampelly Satyanarayna Rao v. Indian Renewable Energy Development Agency Ltd.* and *Sripati Singh vs. State of Jharkhand and Ors.*, which clarified that a cheque issued as security could still be presented for encashment if a legally enforceable debt existed at the time of its presentation. The court concluded that the nomenclature of the cheque as 'security' would not negate its enforceability under Section 138 if the debt was due.

3. Validity of the Agreement Dated 5th March 2013:
The petitioner contended that the agreement was void under Section 29 of the Contract Act due to contradictory covenants. The court rejected this argument, stating that the agreement clearly indicated the petitioner's liability to pay Rs. 9.50 lacs to the respondent. The court emphasized that the covenants should be interpreted to give effect to the agreement's purpose, noting that the petitioner had acknowledged his debt and agreed to pay it. The clause stating the cheque would not be presented for encashment was deemed unenforceable to uphold the agreement's intent.

4. Sufficiency of Evidence Regarding the Dishonor of the Cheque:
The petitioner argued that the bank manager's testimony, stating he had not seen the petitioner's account, undermined the memo indicating the cheque was dishonored due to insufficient funds. The court dismissed this argument, noting that modern internet banking allows bank officials to verify account balances online without physically accessing the account. The court held that the petitioner failed to produce any evidence to contradict the memo, implying the memo's correctness.

Conclusion:
The court found no merit in the petitioner's arguments and dismissed the petition. The trial court was directed to proceed with executing the sentence as modified by the Appellate Court. A copy of the order was sent to the trial court for compliance.

 

 

 

 

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