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2017 (4) TMI 1566 - HC - Indian LawsDishonor of cheque - insufficiency of funds - preponderance of probability - initial presumption arising under Sections 118 and 139 of NI Act - Standard of proof to prove defence on the part of accused - HELD THAT - There is no corresponding provision under the N.I. Act, which would vitiate the entire loan transaction for dealing with cash amount above ₹ 20,000/-. The culpability of offence under Section 138 of the Act will not freeze for the reason of violation of Section 269SS of the I.T.Act and nothing prevents the operation of the statutory presumption under Sections 118 and 139 of the Act. The accused in his attempt to dislodge the initial presumption arising out of the evidence of complainant produced the order sheet pertaining to the proceedings under Section 13-B of the Hindu Marriage Act filed by the complainant and her husband and also the copy of the joint petition filed therein. The petition for divorce by mutual consent was filed on 30.5.2005 and it was disposed of on 12.9.2006, since the complainant was not willing for divorce by mutual consent. It stands clear that the accused failed to dislodge the statutory presumption under Section 118(a) of the Act that he had issued the cheque for consideration; further, the presumption under Section 139 of the Act that the cheque was issued towards discharge of legally recoverable debt could not be shaken. Petition dismissed.
Issues Involved:
1. Financial capacity of the complainant to lend ?3,50,000. 2. Improbability of lending a large sum without collateral or documentation. 3. Alleged tampering of the cheque. 4. Applicability of Section 269SS of the Income Tax Act. 5. Rebuttal of statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act. Detailed Analysis: Financial Capacity of the Complainant: The complainant issued a demand notice to the accused for a loan of ?3,50,000, supported by a post-dated cheque. The accused argued that the complainant failed to establish her financial capacity to lend such an amount. However, the complainant provided a registered sale deed (Ex.P7) showing she and her husband sold property for ?5,75,000 in May 2005, which was close in time to the alleged loan in January 2006. The courts accepted this as sufficient evidence of her financial capacity. Improbability of Lending Without Collateral: The accused contended that it was improbable for such a large sum to be lent without collateral or documentary proof. Despite this argument, the courts noted the intimate relationship between the parties, which could explain the lack of formal documentation. The complainant's financial capacity was deemed sufficient to justify the loan. Alleged Tampering of the Cheque: The accused claimed the cheque was tampered with, specifically that the number '3' was added before '50,000' to make it ?3,50,000. The courts observed that while the '3' appeared different, the accused did not seek scientific examination to prove tampering. The courts found no substantial evidence to support the tampering claim and upheld the cheque as valid. Applicability of Section 269SS of the Income Tax Act: The accused argued that the cash transaction above ?20,000 violated Section 269SS of the Income Tax Act, which mandates such transactions be made via cheque or bank draft. The court clarified that while Section 269SS imposes a penalty for cash transactions above ?20,000, it does not invalidate the loan transaction under the Negotiable Instruments Act. The violation of Section 269SS does not affect the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act. Rebuttal of Statutory Presumptions: The accused attempted to rebut the presumptions under Sections 118 and 139 of the Negotiable Instruments Act by presenting various defences, including the claim that the cheque was issued for a different purpose and was stolen. However, the courts found these defences inconsistent and insufficient to dislodge the statutory presumptions. The courts emphasized that the presumption under Section 139 includes the existence of a legally enforceable debt, and the accused failed to provide a probable defence to counter this presumption. Conclusion: The High Court upheld the trial court's judgment, confirming the conviction and sentence of one year of simple imprisonment and a fine of ?5,000, along with compensation of ?4,00,000 to the complainant. The revision petition was rejected, as the accused failed to disprove the statutory presumptions and the complainant successfully established her financial capacity and the validity of the loan transaction.
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