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2017 (8) TMI 539 - HC - Indian LawsDishonor of cheque - conviction under Section 138 of the Negotiable Instruments Act - failure to discharge the onus to rebut the presumptions against - proof of legally enforceable debt - Held that - From the complaint and the deposition of the complainant/respondent No.1 the factum of giving of loan stands established. The petitioner did not lead any evidence. On the contrary, in his 313 statement he has taken a plea which is not at all convincing. It appears rather strange that he issued a cheque in the name of the complainant/respondent No.1 for the purposes of benefiting his tenant. Thus, the presumption of a legally enforceable debt could not be rebutted by the petitioner. Both the Courts below rightly held that the petitioner could not rebut the presumption under Section 139 of the Negotiable Instruments Act.There is no reason to interfere with the concurrent judgments of the Courts below. From the records of this revision petition, it appears that the petitioner has deposited ₹ 6 lakhs with the Registrar General of this Court for suspension of the sentence during the pendency of the revision petition. This Court deems it appropriate that the sentence of the petitioner be reduced to the period which he has undergone in custody.The amount of ₹ 6 lakhs which has been deposited by the petitioner shall be released in favour of the complainant/respondent No.1 on the respondent No.1 appearing before the Registrar General after 30 days of passing of this order.
Issues Involved:
1. Legally enforceable debt. 2. Presumption under Section 139 of the Negotiable Instruments Act (NI Act). 3. Rebuttal of presumption by the accused. 4. Compliance with Section 269SS of the Income Tax Act. 5. Sentencing and compensation. Detailed Analysis: 1. Legally Enforceable Debt: The respondent advanced a loan of ?4 lakhs to the petitioner with an agreement to repay with 24% interest before May 2012. The cheque issued by the petitioner was dishonoured due to insufficient funds. The petitioner contended that the absence of a written agreement or receipt made the loan transaction implausible. However, the court noted that the advancement of a loan in cash, although not ideal, does not invalidate the transaction under the Income Tax Act, Section 269SS. The Supreme Court in Assistant Director of Inspection vs. A.B. Shanthi clarified that such transactions, though penalized, are not null and void. 2. Presumption under Section 139 of the NI Act: Section 139 presumes that the cheque is issued for the discharge of a debt or liability unless proven otherwise. This presumption is in favor of the complainant. The Supreme Court in Rangappa vs. Sri Mohan confirmed that Section 139 includes the presumption of a legally enforceable debt. 3. Rebuttal of Presumption by the Accused: The petitioner did not provide any evidence to rebut the presumption under Section 139. His defense was that the cheque was issued to bail out his tenant, which the court found unconvincing. The petitioner failed to discharge the onus of proof to rebut the presumption, as required by law. The court emphasized that the standard of proof for rebutting the presumption is based on the "preponderance of probabilities" and not "beyond a shadow of doubt." 4. Compliance with Section 269SS of the Income Tax Act: The court acknowledged that while the loan transaction in cash might breach Section 269SS of the Income Tax Act, it does not invalidate the transaction. The Supreme Court in A.B. Shanthi held that such breaches result in penalties but do not render the transactions illegal or unenforceable. 5. Sentencing and Compensation: The petitioner was initially sentenced to six months of simple imprisonment and ordered to pay ?6 lakhs as compensation. The court noted that the petitioner had deposited ?6 lakhs with the Registrar General during the pendency of the revision petition. Considering this, the court deemed it appropriate to reduce the sentence to the period already undergone in custody and ordered the release of the deposited amount to the complainant after 30 days. Conclusion: The court upheld the concurrent judgments of the lower courts, affirming the petitioner's conviction under Section 138 of the NI Act. The presumption of a legally enforceable debt was not rebutted by the petitioner. The revision petition was partly allowed, reducing the sentence to the period already served and ensuring the complainant received the deposited compensation.
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