2019 (4) TMI 2049 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - acquittal of the accused - discharge of liability or debt or not - HELD THAT - The findings of both the Courts below that the initiation of proceeding is bad in law because the notice sent upon the respondent No.2 was bad in law due to absence of signature of learned Advocate in the said notice is erroneous in law and is liable to be set aside. None of the findings of the learned Trial Court as well as the lower Appellate Court as discreetly mentioned in the preceding paragraphs that the petitioner nowhere has stated the exact date on which he gave the alleged loan or there is no specification of denomination of the currency note used in the loan transaction and the absence of endorsement of the advocate are bad in law - the plea of the respondent No.2 that he lost three cheques leading him to make G.D. entry with the police station is not believable story and the both the learned Courts below had committed serious error in appreciating the evidence of the petitioner as well as the respondent No.2. It cannot be said that merely because the amount advanced was not paid in accordance with the provisions of Section 269-SS of Income Tax Act will make the proceeding under Section 138 of the N.I. Act bad in law. In case in hand it is found that the respondent No.2 in course of trial has tried to give a plausible explanation that he lost the aforestated cheques and he also made a missing diary but his that effort has failed to persuade this Court and his explanations in this regard are far from plausible explanation which is required to rebut the evidence and the initial presumption that the cheques were issued by him. So the explanation given by respondent No.2 in course of trial appears to be difficult to accept in the fact of the case - In the present case according to Trial Court the demand notice did not contain the signature of leanred Advocate which created a question mark about the validity of said demand notice served upon the accused. Here the Ext-B contains signature of the complainant himself so it is valid notice according to section 94 of N.I. Act and over and above the accused actually had received that. The explanation appended to Section 138 explains the meaning of the expression debt or other liability . The provision includes not only debt but other liability as well. The word liability denotes the state of being liable. The debt or other liabilities for the purpose of attracting the provision are to be legally enforceable. Section 138 treats dishonored cheque as an offence if the cheque has been issued in discharge of any debt or other liability. In the trial the accused had admitted that the signature on the impugned Cheques were indeed his own. Once this fact is acknowledged Section 139 read with Section 118 of the N.I. Act mandates a presumption that the cheques pertained to a legally enforceable debt or liability. This presumption is of a rebuttal nature and onus is then on the accused to raise a probable defence. The complainant has successfully made out a case of dishonour of cheques as his legally enforceable debt arises the conviction is to be recorded against the respondent No.2. i.e. Sri Subrata Chowdhury and accordingly said Sri Subrata Chowdhury is hereby convicted for commission of offence under Section 138 of the Negotiable Instruments Act - It is made clear that if the payment as directed is not paid within the said stipulated period of six months then the respondent No.2 i.e. Sri Subrata Chowdhury has to surrender before the Officer-in-charge West Agartala police station just on the date of expiry of the said six months otherwise the petitioner-complainant may approach the appropriate police authority to ensure the arrest of the respondent No.2 to suffer the sentence. The instant revision petition is allowed.

Summary

Issues Involved:
1. Whether the cheques were dishonoured when presented for encashment.
2. Whether the payee made a demand for payment of ?3,60,000/- to the accused person within 30 days of dishonor of the three cheques.
3. Whether the accused person received the demand notice issued by the payee.
4. Whether the accused person had issued the cheques for discharge of liability or debt, in whole or in part.

Issue-Wise Detailed Analysis:

1. Whether the cheques were dishonoured when presented for encashment:
The trial court found that the cheques in question were indeed dishonoured due to "insufficient funds" in the account of the respondent No.2. The petitioner submitted the cheques to his bank, and they were returned unpaid. The respondent No.2 admitted to signing the cheques but claimed they were lost and reported missing to the police. However, the court found this explanation implausible and noted that the respondent failed to substantiate his defense adequately.

2. Whether the payee made a demand for payment of ?3,60,000/- to the accused person within 30 days of dishonor of the three cheques:
The petitioner issued a statutory demand notice on 23.07.2012, which was within the stipulated period after the cheques were dishonoured. The notice contained the cheque numbers, amounts, and reasons for dishonour. The court found that the notice met the requirements of Section 138 of the Negotiable Instruments Act, 1881, and was valid despite the respondent's argument that it lacked the advocate's signature.

3. Whether the accused person received the demand notice issued by the payee:
The respondent No.2 admitted receiving the demand notice in his deposition. The court noted that the notice was properly addressed and sent via registered post, fulfilling the legal requirements. The respondent's claim that the notice was invalid due to the absence of the advocate's signature was dismissed, as the law does not mandate that the notice must be sent through an advocate.

4. Whether the accused person had issued the cheques for discharge of liability or debt, in whole or in part:
The petitioner provided evidence, including testimonies from his mother-in-law and brother, that he had lent ?3,60,000/- to the respondent No.2, who issued the cheques as repayment. The court found the respondent's defense—that the cheques were lost and reported missing—unconvincing. The court concluded that the cheques were issued for the discharge of a legally enforceable debt.

Judgment:
The court found that the trial court and the appellate court had erred in their judgments by not properly considering the evidence and the legal provisions. The judgments and orders of the lower courts were set aside. The respondent No.2 was convicted under Section 138 of the Negotiable Instruments Act and sentenced to pay a fine of ?3,60,000/-, failing which he would face six months of simple imprisonment. The fine amount was to be paid to the petitioner as compensation. If the fine was not paid within six months, the respondent was required to surrender to the police, failing which the petitioner could seek the respondent's arrest.

Conclusion:
The High Court allowed the revision petition, set aside the lower courts' judgments, and convicted the respondent No.2, emphasizing the enforceability of the debt and the validity of the demand notice under Section 138 of the Negotiable Instruments Act.