2020 (2) TMI 1245 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - rebuttal of presumptions - whether cheque for ₹ 2 lakh was drawn by the respondent in favour of the appellant for discharge of debt, whether the cheque deposited in the bank for clearance was returned unpaid on account of insufficiency of fund in the account of the respondent and whether after legal notice the respondent has not returned the amount of cheque to the appellant? HELD THAT - As per Section 139 of the Negotiable Instruments Act,1881, it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability - Presumption is rebuttable, but there is nothing on record to rebut the presumption. It is not a case where the respondent has not signed the cheque. A meaningful reading of the provisions of the Act, 1881 makes it ample clear that the person signed the cheque over to a payee remains liable and he may adduce any evidence to rebut presumption. Presumption will live, exist and survive and shall end only when contrary is proved by the accused/respondent. Finding of the trial Court is clearly against the provisions of Section 139 of the Act, 1881. When legal presumption is not rebutted no corroboration is required. When the amount was advanced on the basis of personal relation, preparation of document is not required and cheque issued by the respondent shows the liability of the respondent - On an overall assessment, it can be said that the finding of the trial Court is against the weight of the evidence and the same is not legal and contrary to the provisions of the Act, 1881. therefore, argument advanced on behalf of the respondent is not sustainable. The act of the respondent falls within mischief of Section 138 of the Act, 1881. The respondent is convicted under Section 138 of the Act, 1881. The date of issuance of cheque is 20.9.2015. The appellant is entitled to interest 6% to the amount advanced by him - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against acquittal under Section 138 of the Negotiable Instruments Act, 1881
- Evaluation of evidence and legal aspects by the trial court
- Presumption under Section 139 of the Act
- Rebuttal of presumption and liability of the respondent

Analysis:

The judgment by the High Court of Chhattisgarh involved an appeal against the acquittal of the respondent under Section 138 of the Negotiable Instruments Act, 1881. The appellant contended that the issuance of the cheque was not disputed, and the trial court's finding was contrary to the factual and legal aspects of the matter. The respondent argued that the trial court's decision was based on a proper evaluation of evidence and should not be interfered with.

The key issue before the Court was whether the cheque for ?2 lakh was issued by the respondent to the appellant for the discharge of debt, subsequently dishonored due to insufficient funds, and not repaid despite legal notices. Witnesses and documents supported the appellant's version, establishing the liability of the respondent.

The Court noted that the presumption under Section 139 of the Act, unless rebutted, holds that a cheque is received for the discharge of debt. In this case, the respondent failed to rebut this presumption, and the liability remained. The judgment emphasized that the respondent's signature on the cheque made him liable, and the burden to prove otherwise was on him.

Regarding the trial court's finding on the absence of a written document at the time of loan advancement, the High Court held it as against the provisions of Section 139 of the Act. Legal presumption, when unchallenged, does not require further corroboration. The respondent's act fell within the purview of Section 138 of the Act, justifying the appeal's allowance and convicting the respondent.

Consequently, the Court set aside the trial court's finding, convicted the respondent under Section 138 of the Act, and imposed a fine of ?2,70,000. The judgment directed the respondent to pay interest on the amount, clarifying that jail detention for non-recovery did not discharge the liability. Failure to pay within fifteen days would incur additional interest until full realization, with the entire fine amount to be paid to the appellant for debt discharge.