2011 (3) TMI 19 - HC - Central Excise

Cheque Bounced - Section 139 of Negotiable instrument act - Demand officers of the respondent had conducted a raid they took in their possession certain documents and cheque, as on that date, no liability towards the excise duty - on the basis of the documents so collected, respondent had quantified towards the excise duty - liability of the firm to pay this amount had not attainted finality - cheque in question had not been issued by the petitioner in discharge of the part liability towards the excise duty as has been claimed by the respondent - Since section 138 of the Act not applicable - petition allowed and criminal complaint under section 138/142 of the Act titled Central Excise v. Ms. Veena Ahuja, quashed

Summary

Issues:
Petition seeking quashing of complaint case under section 138/142 of the Negotiable Instruments Act, 1881.

Analysis:
1. Legally Enforceable Debt: To attract penal consequences under section 138 of the Act, three essential ingredients must be met: a legally enforceable debt, issuance of the cheque for discharge of any debt or liability, and the cheque being returned due to insufficient funds. The presumption under section 139 of the Act can be rebutted by the accused during the trial without stepping into the witness box.

2. Presumption and Burden of Proof: Section 139 raises a presumption that the cheque was issued for a legally enforceable liability, but this presumption is rebuttable. The accused can rebut this presumption from the material already on record. The burden of proof on the accused differs from that of the prosecution in a criminal case, allowing the accused to prove their defense based on a "preponderance of probability."

3. Case Specific Details: In this case, the petitioner argued that no legally enforceable liability existed when the cheque was issued or presented for payment. The respondent contended that the trial court had framed charges, and the presumption under section 139 applies. However, the court found that the liability towards excise duty was not finalized even after the cheque was issued, as evident from the show-cause notice issued later. The liability had not attained finality even after six months of the cheque issuance, indicating that the essential ingredient of a legally enforceable debt was not met.

4. Conclusion: The court concluded that since the cheque was not issued for a legally enforceable liability, the prosecution of the petitioner under section 138/142 of the Act was unsustainable in law. Therefore, the petition seeking the quashing of the criminal complaint was allowed, and the complaint titled Central Excise v. Ms. Veena Ahuja was quashed.