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2017 (1) TMI 1702 - HC - Indian LawsDishonor of Cheque - insufficient funds - legally enforceable debt or not - offence under Sections 138 to 142 of the Negotiable Instruments Act, 1881 - HELD THAT - It is to be remembered that a mere admission of signing a blank cheque would not amount to admission of due execution of cheque. By means of the Complainant's material admissions, contradictions, an Accused in a given case can probablise his defence. No wonder, it is for the Drawer to establish that a cheque was not drawn for consideration. Besides these, an existence of Legally Recoverable Debt is not a matter of presumption under Section 139 of the Negotiable Instruments Act. It merely raises a presumption in favour of a Holder of a Cheque that the same was issued for discharge of any debt or other liability. It is to be noted that a cheque must be issued either in respect of past or existing debt or other subsisting liability. A salient feature in respect of an offence under Section 138 of the Negotiable Instruments Act is that the cheque in question was drawn for discharge for entirety or part of liability. If this aspect is not mentioned in the complaint, then, it is a fatal one - In fact, as per definition Section2(n) of the Criminal Procedure Code, the term 'offence' includes not only the doing of possible act, but by omitting to do something as well. Undoubtedly, the burden is on the Appellant/Complainant's side to prove that the cheque was signed by 'Drawee' in discharge of Legally Enforceable Debt. Also that, the 'cause of action' under the Negotiable Instruments Act, 1881 will arise not on mere presentation of a cheque nor just dishonour of cheque alone. The real cause of action is the non payment of sum cheque or non compliance of demand through notice by a 'Drawer' within the statutory period. The entire subject matter in issue is remanded back to the trial Court for fresh disposal in the manner known to Law and in accordance with Law. Liberty is granted to the respective parties to raise all factual and legal pleas as per Law. The trial Court is to provide adequate opportunities to the Appellant/Complainant to examine further witnesses on its side and to file necessary documents - Appeal allowed by way of remand.
Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act. 2. Admissibility and sufficiency of evidence. 3. Presumption under Section 139 of the Negotiable Instruments Act. 4. Material alteration of cheques. 5. Non-examination of key witnesses. 6. Compliance with procedural requirements. Detailed Analysis: 1. Legally Enforceable Debt Under Section 138 of the Negotiable Instruments Act: The trial court initially found the Respondent/Accused guilty under Section 138 of the Negotiable Instruments Act, concluding that the cheques were issued for a legally enforceable debt. The cheques were dishonored due to insufficient funds, and the Respondent failed to pay the amount within the stipulated time after receiving a notice. The trial court imposed a simple imprisonment of one year and directed the Respondent to pay compensation of ?10,00,000/- under Section 357(3) Cr.P.C. However, the First Appellate Court overturned this decision, noting that the Appellant/Complainant failed to establish the reasons for issuing the cheques and whether they were given for a loan taken from the Appellant/Company. 2. Admissibility and Sufficiency of Evidence: The First Appellate Court observed that the Appellant/Complainant did not file the Contract Note or the Account List of the Respondent/Accused. It also noted the absence of the HDFC Bank Manager's testimony to prove insufficient funds in the Respondent's account. The Appellant argued that the cheques were issued pursuant to an agreement and that the Statement of Account (Ex.P4) reflected an outstanding sum of ?15,47,440.90/-. However, Ex.P4 lacked the Respondent's signature, reducing its evidentiary value. 3. Presumption Under Section 139 of the Negotiable Instruments Act: The Appellant contended that the Respondent/Accused failed to rebut the presumption under Section 139 of the N.I. Act, which assumes that the cheque was issued for the discharge of a legally enforceable debt. The Appellant argued that the trial court failed to consider this presumption properly. The First Appellate Court, however, found that the Appellant did not provide sufficient evidence to support the claim of a legally enforceable debt. 4. Material Alteration of Cheques: The First Appellate Court noted that there was a correction in the date on one of the cheques from '21.1.2000' to '21.1.2008'. The Appellant argued that this correction did not constitute a material alteration under Section 87 of the Negotiable Instruments Act, as it did not affect the rights or liabilities of the parties. The court, however, found this alteration significant and indicative of potential issues with the cheques. 5. Non-Examination of Key Witnesses: The First Appellate Court highlighted the non-examination of the HDFC Bank Manager, which could have substantiated the claim of insufficient funds in the Respondent's account. The Appellant argued that under Section 146 of the Negotiable Instruments Act, the bank's memo was sufficient to prove dishonor of the cheques, but the court found the absence of the bank manager's testimony problematic. 6. Compliance with Procedural Requirements: The First Appellate Court found procedural lapses in the Appellant's case, including the non-filing of the Contract Note and the absence of the Respondent's signature on the Statement of Account. The Appellant argued that these documents were not required to be filed before the Company Law Board, but the court emphasized the importance of these documents in establishing the transaction's legitimacy. Disposition: The High Court set aside the judgments of both the trial court and the First Appellate Court, remanding the matter back to the trial court for fresh disposal. The court directed the trial court to provide adequate opportunities for both parties to present additional evidence and witnesses. The trial court was instructed to dispose of the case within four months, ensuring a fair and unbiased adjudication.
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