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Issues Involved:
1. Applicability of Section 138 of the N.I. Act to cheques issued after the closure of the account. 2. Whether the cheque was issued for the discharge of a legally enforceable debt/liability. 3. Interpretation of the term "an account maintained by him" under Section 138 of the N.I. Act. 4. The burden of proof on the accused to rebut the presumption under Section 139 of the N.I. Act. 5. Appropriate sentencing under Section 138 of the N.I. Act. Detailed Analysis: 1. Applicability of Section 138 of the N.I. Act to Cheques Issued After Closure of the Account: The primary legal question was whether a cheque issued after the account had been closed falls within the scope of Section 138 of the N.I. Act. The trial court found all elements of the offense under Section 138 established, but the appellate court acquitted the accused, holding that Section 138 does not apply to cheques issued after the account closure. The High Court disagreed, emphasizing that the legislative intent of Section 138 is to ensure the credibility of cheques in financial transactions. The court referenced the ruling in NEPC Micon Ltd. v. Magma Leasing Ltd. to support its interpretation that Section 138 aims to prevent misuse of cheques and maintain the efficacy of banking transactions. 2. Whether the Cheque was Issued for the Discharge of a Legally Enforceable Debt/Liability: The accused contended that the cheque was not issued for a legally enforceable debt but was given to another person named Vijayan as security, which was misused by the complainant. The High Court found that the accused had not sufficiently rebutted the presumption under Section 139 of the N.I. Act, which assumes that the cheque was issued for a legally enforceable debt. The court noted the absence of tangible evidence and the failure to examine Vijayan or take action against him, which weakened the accused's defense. 3. Interpretation of the Term "an Account Maintained by Him" under Section 138 of the N.I. Act: The High Court interpreted the term "an account maintained by him" to include accounts that were previously maintained by the accused, even if closed before the cheque was issued. The court reasoned that allowing individuals to escape liability by closing accounts before issuing cheques would defeat the legislative purpose of Section 138. The court cited the Goaplast (P.) Ltd. v. Chico Ursula D'Souza decision, supporting a broader interpretation to prevent fraudulent practices. 4. The Burden of Proof on the Accused to Rebut the Presumption under Section 139 of the N.I. Act: The court emphasized that while the burden on the accused to rebut the presumption under Section 139 is not as onerous as the prosecution's burden, it must still be met by a preponderance of probabilities. The accused's failure to provide convincing evidence or take action against Vijayan led the court to conclude that the burden was not discharged. The court highlighted that fanciful doubts and suggestions were insufficient to rebut the presumption. 5. Appropriate Sentencing under Section 138 of the N.I. Act: The court considered the principles of sentencing under Section 138, noting the need for a balance between deterrence and leniency. Given the cheque amount and the date, the court opted for a lenient substantive sentence of imprisonment till the rising of the court, coupled with a compensation order. The accused was directed to pay Rs. 17,500 as compensation, with a default sentence of three months' simple imprisonment. Conclusion: The High Court allowed the appeal, setting aside the appellate court's acquittal and restoring the trial court's verdict of guilty. The accused was sentenced to imprisonment till the rising of the court and directed to pay compensation, with specific instructions for enforcement by the Magistrate. The judgment underscores the broad interpretation of Section 138 to include cheques issued on previously maintained accounts and the necessity for the accused to substantiate defenses against the statutory presumption of debt/liability.
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