2016 (2) TMI 1336 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - leading of evidence - cross-examination of witnesses - section 313 of the Cr.P. C. - HELD THAT - It appears that if a person commits an offence under Section 138 of the NI Act, then the court has the power to punish him with imprisonment for a term which may extend to 2 years or with fine which may extend twice to the amount of the cheque or with both. In the instant case, the accused petitioner did not deny that he had issued the cheque of ₹ 4,50,000/- in favour of the complainant respondent and the said cheque was dishonoured for insufficiency of fund in his account. His only plea was that he had taken a loan of ₹ 5000/- from the complaint-respondent and repaid the same by signing a blank cheque. Now question arises, if the convict petitioner did not take any loan from the respondent complainant, then why he had issued the cheque for an amount of ₹ 4,50,000/-. It is also not the case of the petitioner that the complainant respondent did not comply with the statutory requirements before lodging the complaint. In the instant case, admittedly the cheque amount is ₹ 4,50,000/-. The learned trial Court found the convict petitioner guilty for the offence under Section 138 of the N.I. Act and sentenced him to suffer R.I. for six months and to pay a fine of ₹ 4,50,000/-, i.d. to suffer for further one month. The instant criminal revision petition is dismissed.

Summary

Issues Involved:
1. Validity of the cheque issued by the convict petitioner.
2. Compliance with statutory requirements under Section 138 of the Negotiable Instruments Act, 1881.
3. The presumption of debt or liability under Section 139 of the N.I. Act.
4. Alleged violation of Section 269SS of the Income Tax Act, 1961.
5. Adequacy of evidence and legal reasoning by the trial and appellate courts.

Detailed Analysis:

1. Validity of the Cheque Issued by the Convict Petitioner:
The complainant respondent alleged that the convict petitioner issued a cheque for Rs. 4,50,000 to discharge his debts and liabilities, which was dishonored due to insufficient funds. The convict petitioner contested this, claiming he had only borrowed Rs. 5000 and returned it by signing a blank cheque, which the complainant allegedly filled out fraudulently. The trial court framed two issues: whether the convict borrowed Rs. 4,50,000 and whether the cheque issued was dishonored. Evidence from PW-1, the bank manager, confirmed the dishonor due to insufficient funds, and PW-2, the complainant, corroborated the claim of debt and issuance of the cheque.

2. Compliance with Statutory Requirements under Section 138 of the N.I. Act:
The complainant met the statutory requirements by presenting the cheque within the validity period, issuing a demand notice within 30 days of the cheque's dishonor, and filing a complaint after the convict petitioner failed to pay within 15 days of receiving the notice. The trial court found that these procedural requirements were duly followed, leading to the conviction under Section 138.

3. Presumption of Debt or Liability under Section 139 of the N.I. Act:
Section 139 of the N.I. Act presumes that the cheque was issued for discharging a debt or liability. The convict petitioner failed to rebut this presumption effectively. The court noted that the petitioner admitted to issuing the cheque but claimed it was for a smaller loan, which was not credible given the cheque's amount. The court emphasized that the burden was on the petitioner to disprove the presumption, which he failed to do.

4. Alleged Violation of Section 269SS of the Income Tax Act, 1961:
The convict petitioner argued that the alleged loan of Rs. 4,50,000 violated Section 269SS of the Income Tax Act, which prohibits cash transactions above Rs. 20,000. The court dismissed this argument, noting that the primary issue was the dishonor of the cheque and the statutory presumption under the N.I. Act, not the mode of the loan transaction.

5. Adequacy of Evidence and Legal Reasoning by the Trial and Appellate Courts:
The trial court's judgment was based on the evidence presented, including the dishonored cheque, bank statements, and testimonies. The appellate court upheld this decision, finding no merit in the petitioner's appeal. The High Court reviewed the lower courts' judgments and found them consistent with legal standards and evidence, dismissing the revision petition.

The High Court concluded that the trial and appellate courts correctly applied the law and assessed the evidence, affirming the conviction and sentence of six months' rigorous imprisonment and a fine of Rs. 4,50,000 under Section 138 of the N.I. Act. The petitioner's arguments were insufficient to overturn the lower courts' decisions, leading to the dismissal of the revision petition and vacating the interim bail.