2018 (3) TMI 1907 - HC - Indian Laws

Dishonor of Cheque - subsisting debt or not in respect of which the cheque was issued by the accused - legally enforceable debt or not - Section 138 of N.I. Act - HELD THAT - The accused and his family members are carrying on the business of sale of TV grinders and furniture through Manikanta agencies. This evidence leads to the inevitable inference that the cheque in question was issued by the accused to satisfy the debt or liability due by the Manikanta Agencies in respect of the purchase of TVs grinders and furniture from the complainant. This transaction therefore brings the case within the expression other liability . In this context it is also relevant to refer to the suggestion made by the learned counsel for the accused to PW1 in the course of his cross-examination suggesting that the above cheque is issued by the accused in respect of the transaction carried on by Venkataraman Naik - the father of the accused. This evidence is sufficient to hold that the cheque in question was issued by the accused in discharge of other liability. Therefore it cannot be said that the cheque was issued by the accused without any lawful consideration. Section 138 of the N.I. Act does not debar a person from taking up the liability of another person. It is for this reason the explanation to Section 138 of N.I. Act defines the expression debt or other liability as a legally enforceable debt or other liability . Further the presumption under Section 139 of N.I. Act provides that unless the contrary is proved the holder of a cheque received the cheque for the discharge in whole or in part of any debt or other liability . Therefore any debt and other liability would also cover the liability of another person as well. There are no hesitation to hold that in the instant case the complainant has proved that the cheque in question was issued by the accused in discharge of legally enforceable debt. The said cheque is proved to have been dishonoured for insufficiency of funds. The complainant has complied with all the requirements prescribed under Section 138 of N.I. Act thereby rendering the accused liable for conviction under the said provision of law - accused having admitted the issuance of cheque and the complainant having proved the existence of a legally recoverable debt and also having established the circumstances in which the accused issued the said cheque the presumption engrafted under Section 139 of the N.I. Act comes into play. The accused has failed to rebut the said presumption with cogent and acceptable evidence. The impugned judgment is set aside. The accused is convicted for the offence punishable under Section 138 of N.I. Act - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:

1. Whether the accused issued the cheque in discharge of a debt or other liability.
2. Whether the complainant proved the existence of a legally enforceable debt.
3. Whether the trial court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act.

Issue-wise Detailed Analysis:

1. Whether the accused issued the cheque in discharge of a debt or other liability:

The accused admitted to issuing the cheque but claimed it was given as security on behalf of his father. The court noted that under Section 138 of the N.I. Act, the expression "other liability" includes the liability of a third party. The accused's admission in cross-examination that the cheque was issued for his father's debt supports the complainant's claim. The court highlighted the Supreme Court's decision in I.C.D.S. Limited Vs. Beena Shabeer, which clarified that the issuance of a cheque for any debt or other liability, including that of a third party, falls within the ambit of Section 138.

2. Whether the complainant proved the existence of a legally enforceable debt:

The complainant presented evidence including the original cheque, bank memos, legal notice, and unclaimed postal envelope. The trial court had acquitted the accused due to the complainant's failure to produce a credit bill or other document proving the sale of electronic items. However, the appellate court found that the accused's inconsistent statements and the evidence of the cheque being drawn in the complainant's name established the existence of a legally enforceable debt. The court emphasized that the presumption under Section 139 of the N.I. Act shifts the burden of proof to the accused once the issuance of the cheque is admitted.

3. Whether the trial court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act:

The appellate court found that the trial court's judgment was contrary to the provisions of Section 138 of the N.I. Act. The trial court had drawn an adverse inference against the complainant due to the lack of documentary evidence of the sale. However, the appellate court held that the complainant had sufficiently proved the issuance of the cheque and the existence of a legally enforceable debt. The appellate court noted that the accused failed to rebut the presumption under Section 139 with cogent evidence. Consequently, the appellate court set aside the trial court's judgment and convicted the accused under Section 138.

Conclusion:

The appeal was allowed, and the trial court's judgment was set aside. The accused was convicted under Section 138 of the N.I. Act and sentenced to pay a fine of ?3,75,000, with ?3,70,000 to be given as compensation to the complainant and ?5,000 to be remitted to the government.