2015 (2) TMI 1390 - HC - Indian Laws

Dishonour of Cheque - Failure of rebuttal of presumption - section 139 of NI Act - HELD THAT - Admittedly, the cheque has been signed by the accused. The complainant had sent statutory notice dated 14/08/2007 to the accused wherein it was specifically mentioned that the accused had borrowed the said amount of ₹ 22,500/- and towards the repayment of the said amount, had issued the said cheque for the amount of ₹ 22,500/-. The accused was called upon to pay the cheque amount within the period of 15 days from the date of receipt of notice. There is a copy of legal notice and the A.D. Card on record. Mere denial that such a notice was received by the accused, is not sufficient to prove that the notice was not received by him. The accused did not send any reply to the said notice thereby denying the averments made therein. Hence, adverse inference is bound to be drawn as against the accused. In his cross-examination, PW1 specifically stated that the details in the cheque were recorded by the accused. In the case of Avon Organics Ltd. 2003 (7) TMI 745 - ANDHRA HIGH COURT admittedly, the accused had issued a blank cheque without mentioning the date and amount to the appellant. Therefore, there was absolutely no dispute that a blank cheque was given by the accused to the complainant. The High Court held that filling up the amount portion in words and figures and put date of his own choice by the complainant amounts to alteration and such alteration cannot be done without the consent of the accused. The above judgment is not applicable to the present case. In the case of HITEN P. DALAL VERSUS BRATINDRANATH BANERJEE 2001 (7) TMI 1172 - SUPREME COURT , the Apex Court has held that it is obligatory upon the Court in terms of Sections 138 and 139 of the N.I. Act, to raise the presumption in every case where the factual basis of the raising of presumption has been established. Thus, it can be said that once the execution of the cheque was admitted by the accused, it was for him to first rebut the presumption arising out of Section 139 of the N.I. Act. It was for him to prove that the contents of the cheque, except the signature, were filled in by the complainant without his consent. In the present case, the accused has not taken any probable defence which could rebut the said presumption. As has been rightly observed by the learned C.J.M., the accused, during the cross-examination of PW1, has only resorted to denial of the statements made by the complainant in his affidavit in evidence. Mere denial was not sufficient to rebut the presumption that had arisen in favour of the complainant. The Lower Courts have rightly dealt with the matter and have held the accused guilty of the offence punishable under Section 138 of the N.I. Act - there are no jurisdictional error committed by the Lower Courts - the Revision Application is dismissed.

Summary

Issues Involved:
1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881.
2. Presumption under Sections 118 and 139 of the N.I. Act.
3. Admissibility of evidence and burden of proof.
4. Validity of cheque and its execution.
5. Relevance of unaccounted cash transactions.

Issue-wise Detailed Analysis:

1. Legally enforceable debt under Section 138 of the Negotiable Instruments Act, 1881:
The complainant alleged that the accused issued a cheque for Rs. 22,500/- towards repayment of a borrowed amount, which was dishonored due to insufficient funds. The accused contended that the cheque was given as a blank cheque for a business transaction that never materialized, and thus there was no legally enforceable debt. The court held that once the execution of the cheque is admitted, the presumption under Section 139 of the N.I. Act arises, indicating the cheque was issued for discharging a debt or liability.

2. Presumption under Sections 118 and 139 of the N.I. Act:
The court emphasized that under Sections 118 and 139 of the N.I. Act, it is obligatory to raise the presumption that the cheque was issued for consideration. The accused failed to rebut this presumption with any substantial evidence. The court cited multiple judgments, including "Hiten P. Dalal Vs. Bratindranath Banerjee" and "K. Bhaskaran Vs. Sankaram Balan," to reinforce that the presumption of a legally enforceable debt stands unless the accused can prove otherwise.

3. Admissibility of evidence and burden of proof:
The complainant provided the cheque, cheque return memo, and legal notice as evidence. The accused did not produce any witnesses or evidence to counter the presumption. The court noted that mere denial by the accused is insufficient to rebut the presumption. The court referred to "K.N. Beena Vs. Muniyappan" to highlight that the burden of proof lies on the accused to show that there was no debt or liability.

4. Validity of cheque and its execution:
The accused admitted to signing the cheque but claimed it was a blank cheque. The court found no evidence to support the accused's claim that the details were filled in by the complainant without consent. The court referred to "Prabhakar Xembhu Vs. Surendra V. Pai," stating that a cheque can be filled by anyone as long as it is signed by the account holder. The court dismissed the accused's argument by stating that the suggestion itself indicated the accused's knowledge of the cheque details.

5. Relevance of unaccounted cash transactions:
The accused argued that the loan was given in cash and was unaccounted for, thus not enforceable under Section 138 of the N.I. Act. The court dismissed this argument, stating that there was no evidence to prove the cash was unaccounted for. The court referred to "Rangappa Vs. Shri Mohan," where the Supreme Court upheld the conviction despite the advance being in cash. The court concluded that the provisions of Section 138 of the N.I. Act apply to the present transaction irrespective of the cash nature of the loan.

Conclusion:
The court upheld the judgments of the lower courts, finding the accused guilty under Section 138 of the N.I. Act. The revision application was dismissed, and the rule was discharged. The court found no jurisdictional error in the lower courts' decisions and emphasized the importance of the statutory presumptions under the N.I. Act in ensuring the efficacy of the legal framework governing negotiable instruments.