2011 (5) TMI 1136 - HC - Indian Laws

Summary

Issues Involved:
1. Issuance and dishonor of cheques.
2. Legal liability under Section 138 of the Negotiable Instruments Act.
3. Presumption under Section 139 of the Negotiable Instruments Act.
4. Interpretation of "debt or other liability" under Section 138 of the Act.

Summary:

1. Issuance and Dishonor of Cheques:
The Respondent issued three cheques to the Appellant, which were dishonored due to "insufficient funds." Despite service of demand notice, the Respondent did not pay the amount within the statutory period, leading to the allegation of an offence u/s 138 of the Negotiable Instruments Act.

2. Legal Liability under Section 138 of the Negotiable Instruments Act:
The Trial Court acquitted the Respondent, noting that the cheques were not issued to discharge his personal liability. The court observed that the Respondent had no legal liability towards the complainant, thus not fulfilling the requirements of Section 138.

3. Presumption under Section 139 of the Negotiable Instruments Act:
The High Court noted that once the issuance of the cheque is admitted, a presumption arises in favor of the holder u/s 139 of the Act. This presumption is rebuttable, but the Respondent failed to rebut it. The court emphasized that the Respondent's admission of signing the cheques implies an authority to fill in the blanks, making him liable.

4. Interpretation of "Debt or Other Liability" under Section 138 of the Act:
The High Court clarified that Section 138 applies to cheques issued for discharging any debt or other liability, not necessarily the drawer's personal liability. Citing precedents, the court highlighted that the section covers cheques issued to discharge another's liability. The Trial Court's view was deemed perverse and contrary to settled legal positions, resulting in a miscarriage of justice.

Conclusion:
The High Court set aside the acquittal, convicting the Respondent u/s 138 of the Act. The Respondent was sentenced to six months of simple imprisonment and a fine of Rs. 5,00,000/-, with a default clause of further imprisonment. The Respondent was ordered to surrender before the Trial Court, failing which he would be taken into custody. The appeal was allowed in these terms.