2020 (3) TMI 191 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - Section 138 of the Negotiable Instruments Act, 1881 - acquittal of the accused - rebuttal of presumption - HELD THAT - Presumption is rebuttal and respondent may prove that there was no debt to be discharged by him, but he himself did not enter into witness box. The respondent did not give reply to the notice issued to him as per Ex.P/3. It is not a case of respondent that he 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 payee remains liable. Presumption will live, exist and survive and shall end only when contrary is proved by the accused/respondent. From the evidence, it is not a case where source of income is not established. The amount was advanced on the basis of personal relation, therefore, preparation of other documents was not required under the law and cheque issued by the respondent is the best document for showing liability of the respondent - On an overall assessment, it can be said that the finding of the Sessions Court is against weight of the evidence and same is not legal because it is contrary to the provisions of the Act, 1881. In view of the evidence of both sides, argument advanced on behalf of the respondent is not acceptable and the act of the respondent falls within mischief of Section 138 of the Act, 1881. Respondent is convicted under Section 138 of the Negotiable Instruments Act, 1881. The date of issuance of cheque is 8-7-2011. Appellant is entitled to interest @ 6% per annum on the amount advanced by him - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against acquittal under Section 138 of the Negotiable Instruments Act, 1881.

Analysis:
1. The appellant extended a credit facility of ?7,00,000 to the respondent, who issued a cheque that was dishonored due to insufficient funds. The appellant sent a notice for payment, but the respondent failed to comply, leading to a complaint. The trial court convicted the respondent, but the Sessions Court acquitted him.
2. The appellant's evidence, supported by witnesses and documents, established the debt and dishonor of the cheque. The respondent's witnesses failed to rebut the appellant's version, and the appellant's financial status was proven despite the absence of an income tax return.
3. The respondent's defense included claiming the cheque was blank when given, questioning the amount filled in by the appellant, and citing strained relations post a notice issued earlier. The respondent's failure to provide evidence or enter the witness box weakened his defense.
4. The court considered the presumption under Section 139 of the Act, holding the respondent liable as he did not disprove the debt or enter the witness box. The absence of an income tax return did not negate the appellant's evidence, as it was a matter for tax authorities.
5. The court found the Sessions Court's decision against the weight of evidence and contrary to the law. The respondent was convicted under Section 138, with a fine of ?10,50,000 imposed along with interest at 6% per annum on the amount advanced by the appellant.

Overall, the appeal was allowed, the Sessions Court's finding set aside, and the respondent convicted under Section 138. The judgment highlighted the importance of evidence, legal presumptions, and the burden of proof in cases involving dishonored cheques.