2022 (11) TMI 1373 - HC - Indian Laws

Dishonour of Cheque - cheque was issued towards some security or not - failure to draw presumption under Section 139 of Negotiable Instrument Act - time limitation - HELD THAT - In cross-examination of respondent No. 1/Dw1, no suggestion was put to him that the cheque amount includes damages/compensation to the tune of ₹ 10,00,000/- over and above ₹ 5,00,000/- paid as advance. Even the receipt at Exh.-9 nowhere mentioned that the amount of ₹ 15,00,000/- is legally due to the appellant including damages. Neither the complainant nor any document justify quantifying such damages to the tune of Rs. 10,00,000/-. No prudent man would agree to pay damages/compensation to an amount of ₹ 10,00,000/- for receipt of advance of ₹ 5,00,000/-. At the most such person may agree to return advance together with interest. Even calculating interest, it would not come to the figure of ₹ 10,00,000/-. No doubt it is not the case of complainant/appellant herein that additional amount of ₹ 10,00,000/- was toward the interest. Thus, from the material produced before the trial Court, it is clear that there is serious doubt in connection with the amount over and above ₹ 5,00,000/- as received by respondent No. 1 towards advance. This aspect has been brought on record from the cross-examination of the appellant and also from the evidence of respondent No. 1 in clear terms - The preponderance of probability clearly shows that no prudent man would agree to pay compensation of ₹ 10,00,000/- in such circumstances. Thus, the amount mentioned in the cheque as ₹ 15,00,000/- cannot be considered as legally recoverable debt from respondent No. 1. Accordingly, respondent No. 1 succeeded on preponderance of probability in discharging the onus and dislodging presumption under Section 139 of Negotiable Instrument Act. In the case of Dr. Sristhi 2022 (10) TMI 260 - BOMBAY HIGH COURT , this Court while relying upon case of Rangappa 2010 (5) TMI 391 - SUPREME COURT observed that presumption under Section 139 of the Negotiable Instrument Act could be rebutted by the cogent and convincing evidence though on preponderance of probabilities. Such observations are in fact support the arguments and contentions raised by respondent No. 1 in the present matter. Thus, the discussion found in the impugned judgment cannot be faulted with as the entire material has been considered and only thereafter the learned Magistrate observed that the presumption under Section 139 of the Negotiable Instrument Act stands rebutted. Whether the complainant proves that the cheque was present within its validity period? - HELD THAT - Record goes to show that the cheque is dated 07th February 2011 drawn on Bank of Baroda in the name of the appellant/complainant. It was presented for encashment with Canara Bank, Vasco on the same date i.e. on 7th February 2011 and it was returned unpaid by Bank of Baroda vide its memo dated 8th February 2011 which is at Exh-6. Thus, it clearly shows that the cheque dated 7th February 2011 was presented on the same day and it was returned unpaid on the next date - cheque was presented within its valid period. The normal validity of an negotiable instrument/cheque is three months from the date of issue of such cheque. Therefore, answering the point in negative is clearly required to be considered as perverse as evidence suggest otherwise. Whether the complainant proves that such cheque was dishonest (to be read as dishonoured) for the reason opening balance sufficient? - HELD THAT - Interestingly the learned Magistrate answered this point also in negative though the memo of return of cheque produced at Exh-6 by the appellant from Bank of Baroda, Panaji, shows reason of return of cheque as opening balance insufficient . Thus, question is answered in negative is against evidence on record and therefore needs to be considered as perverse. Whether the complaint proves that the demand notice was sent within the prescribed period? - HELD THAT - Section 138 of the Negotiable Instrument Act and more specifically clause (b) states that the drawer of cheque or the holder in due course must issue notice in writing demanding the amount mentioned in the cheque to the payee within a period of 30 days from the date of intimation from the bank regarding return of cheque. In this matter, the Bank of Baroda intimated the appellant vide memo dated 8th February 2011 at Exhibit-6 that the cheque is returned for the reasons opening balance insufficient . The legal notice demanding the amount mentioned in the cheque was issued on 19th February 2011 and it was received by respondent No. 1 on 21st February 2011. Thus, the appellant/complainant proved that demand notice was seen within the prescribed period and hence point No. 4 ought to have been answered in affirmative and not in negative. Whether the complainant proves that the complaint is filed within the limitation period? - HELD THAT - The dates mentioned clearly show that respondent No. 1 received notice on 21st February 2011 and from that date he was supposed to make payment within 15 days. Thus considering 8 days of February and 7 days of the month of March 2011 which comes to total of 15 days, the said period of 15 days expired on 7th March 2011. Thus cause of action arose on expiry of 15 days i.e. on 8th March 2011 as mentioned in Section 138(c) of Negotiable Instrument Act. However, Section 142(c) specifically provides that the complaint in writing shall be filed within a period of one month. Therefore, the word within is significant and not to be construed otherwise. The complaint must be filed within a period of one month. Thus, if cause of action arose on 8th March 211, the complaint ought to have been filed within one month i.e. on or before 7th April 2011 as it has to be within a period of one month from the accrual of cause of action. The complaint was admittedly filed on 8th April 2011 and there is no application for condonation of delay. Though the learned Magistrate answered in negative holding that the complaint was beyond the period of limitation, there was no proper discussion while answering such point - Having said so, it is clear that the appellant has miserably failed to prove his case beyond all reasonable doubts as respondent No. 1 succeeded in rebutting presumption under Section 139 of the Negotiable Instrument Act. Secondly, the complaint is found to be time barred and thus appeal must fail. Appeal dismissed.

Summary

Issues Involved:
1. Whether the respondent succeeded in rebutting presumption under Section 139 of the Negotiable Instrument Act?
2. Whether the complaint is within limitation?

Issue-wise Detailed Analysis:

1. Whether the respondent succeeded in rebutting presumption under Section 139 of the Negotiable Instrument Act?

The appellant's case is based on a Memorandum of Understanding (MOU) dated 19th November 2009, wherein the appellant agreed to buy a property from the respondent for Rs. 7,50,000. Due to the respondent's failure to perform his part, he issued a cheque for Rs. 15,00,000 as damages. The cheque was dishonored due to "Opening balance insufficient," leading to a complaint under Section 138 of the Negotiable Instrument Act.

The appellant argued that the Magistrate failed to draw the presumption under Section 139 of the Negotiable Instrument Act, which assumes the cheque was issued for a legally enforceable debt. The appellant claimed the cheque amount included the advance payment and damages for non-performance of the contract.

However, the respondent contended that the cheque was issued as security and not for a legally enforceable debt. The respondent also argued that the amount of Rs. 15,00,000 was not justified and the receipt produced by the appellant was fabricated.

The court observed that the MOU did not mention any damages or compensation for non-performance. The appellant failed to provide a clear calculation of how the amount of Rs. 15,00,000 was arrived at, beyond the Rs. 5,00,000 advance. The court noted that no prudent person would agree to pay Rs. 10,00,000 as damages for a Rs. 5,00,000 advance without clear terms in the MOU.

The court concluded that the respondent successfully rebutted the presumption under Section 139 by showing that the cheque was issued as security and not for a legally enforceable debt. The evidence and cross-examination supported the respondent's claim, and the appellant failed to prove the additional amount was legally recoverable.

2. Whether the complaint is within limitation?

The court examined the relevant dates to determine if the complaint was filed within the limitation period. The cheque was dated 7th February 2011 and was dishonored on 8th February 2011. The appellant issued a demand notice on 19th February 2011, which the respondent received on 21st February 2011. The respondent had 15 days to make the payment, expiring on 7th March 2011. The appellant had one month from this date to file the complaint, which expired on 6th April 2011.

The complaint was filed on 8th April 2011, two days beyond the limitation period. The court noted that there was no application for condonation of delay, and the complaint was time-barred.

Conclusion:

The court upheld the Magistrate's decision, finding that the respondent successfully rebutted the presumption under Section 139 and that the complaint was filed beyond the limitation period. The appeal was rejected, and each party was ordered to bear their own costs.