2016 (9) TMI 866 - HC - Indian Laws

Dishonor of cheques - complaints under Section 138 of the Negotiable Instruments Act - Held that - Admission made by the accused, there was no question of there being merely a presumption in favour of the complainant about the existence of debt or other liability in respect whereof the said 61 cheques had been issued. There was no question of the said presumption being discharged by the accused. There was absolutely no basis to conclude that the said 61 cheques had been given towards security. These findings returned by the learned Magistrate are completely contrary to the stand taken by the accused in the response to the statutory notice under Section 138 of the NI Act and, therefore, contrary to the evidence brought on record. The complainant had specifically disclosed in the complaints itself that as desired by the accused, the security deposit of ₹ 1.35 lacs against 12 specific cheques, details whereof are also set out in the complaint itself. This being the position, there was no question of there being any doubt arising in the mind of the court with regard to the outstanding debt and liability of the accused qua the 61 cheques in question. For all the aforesaid reasons the impugned judgment borders on perversity and they are, accordingly, set aside. The complainant had been able to establish that the cheques in question had been issued against specific debts incurred by the accused against supplies of tyres, tubes and flaps, and that the said cheques were dishonoured upon presentation and despite issuance of statutory notice, the amount covered by the said 61 cheques had not been paid. It is established beyond all reasonable doubt that the accused are guilty of commission of the offences under Section 138 of NI Act in each of these cases. They are, accordingly, stand convicted of the said offence in each of these cases.

Issues Involved:
1. Admissibility and validity of 61 dishonoured cheques under Section 138 of the Negotiable Instruments Act.
2. Existence and adjustment of alleged security deposit by the accused.
3. Rebuttal of presumption under Sections 118 and 139 of the Negotiable Instruments Act.
4. Evidentiary requirements and burden of proof.

Issue-wise Detailed Analysis:

1. Admissibility and Validity of 61 Dishonoured Cheques:
The appellant/complainant filed 17 complaints under Section 138 of the Negotiable Instruments Act against the respondent/accused concerning 61 dishonoured cheques. The cheques were issued as payment for goods (tyres, tubes, and flaps) supplied by the appellant. The cheques were dishonoured upon presentation, leading to the issuance of a statutory notice of demand dated 02.05.2000. The accused admitted the receipt of goods and issuance of cheques but claimed these were security cheques, not for discharge of any debt.

2. Existence and Adjustment of Alleged Security Deposit:
The accused claimed a security deposit of ?12.58 lacs with the appellant, which should be adjusted against the dishonoured cheques. However, the appellant denied this claim and acknowledged only a security deposit of ?1.35 lacs, which had been adjusted against 12 specific cheques. The accused failed to provide documentary proof of the alleged security deposit, and the court found no evidence supporting the accused's claim.

3. Rebuttal of Presumption under Sections 118 and 139 of the Negotiable Instruments Act:
The Trial Court initially acquitted the accused, holding that they had successfully rebutted the presumption against them under Sections 118 and 139 of the Act. However, the High Court found this conclusion misplaced. The accused admitted the issuance of cheques for the goods supplied, creating a presumption of debt. The accused's claim of the cheques being for security purposes was not substantiated with evidence, and the court found no basis for the Trial Court's conclusion.

4. Evidentiary Requirements and Burden of Proof:
The appellant led evidence through CW-1, Sanjay Jain, who confirmed the adjustment of the security deposit against 12 cheques and stated that no complaint was filed for these cheques. The accused, represented by DW-1, failed to provide evidence supporting their claims of security deposits or misuse of cheques. The High Court noted that the Trial Court's requirement for the appellant to produce invoices and account statements was unnecessary, given the accused's admissions in their reply to the statutory notice.

Conclusion:
The High Court found the Trial Court's judgment to be perverse and misdirected. The appellant had established that the cheques were issued against specific debts incurred by the accused for the supply of goods. The accused's claims of security deposits were unsubstantiated. The High Court set aside the Trial Court's judgment, convicting the accused under Section 138 of the Negotiable Instruments Act and scheduled a hearing for sentencing. The accused were ordered to remain present in court on the next date.

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