2020 (3) TMI 432 - HC - Indian Laws

Dishonor of Cheque - offence under Section 138 of the N.I. Act - rebuttal of presumptions - HELD THAT - We need to note the legal principles regarding nature of presumptions to be drawn under Section 139 of the Act and the manner in which it can be rebutted by the accused. The accused had not led any evidence to rebut the aforesaid presumption. It was also stated that in the event the accused is able to raise a probable defence which creates doubt with regard to the existence of a debt or liability the presumption may fail. The complainant being holder of cheque and the signature on the cheque having not been denied by the accused presumption shall be drawn that cheque was issued for the discharge of any debt or other liability. The presumption under Section 139 is a rebuttable presumption. It is relevant to notice the general principles pertaining to burden of proof on an accused especially in a case where some statutory presumption regarding guilt of the accused has to be drawn. When the cheque is returned by a bank with an endorsement account closed it would amount to returning the cheque unpaid because the amount of money standing to the credit of that account is insufficient to honour the cheque as envisaged in Section 138 of the Act. In the present case when the complainant presented the cheque for encashment it was returned unpaid with an endorsement that account of the applicant has been closed - The complainant issued notice to the applicant which was refused by the applicant and ultimately a complaint case was filed in which the applicant was convicted and sentenced to pay compensation for a sum of 50, 000/- which was confirmed by the judgment of the appellate court. This Court does not find even any illegality or perversity in the orders passed by the Courts below - Petition not maintainable - revision dismissed.

Summary

Issues:
Conviction and sentence under Section 138 of the Negotiable Instrument Act based on dishonored cheque leading to a complaint case, presumption under Section 139 of the Act, burden of proof on the accused to rebut the presumption, legality of the judgment, and arguments regarding non-service of notice and lack of evidence.

Analysis:

Conviction and Sentence under Section 138 of the Negotiable Instrument Act:
The revision arose from a judgment convicting the applicant under Section 138 of the Negotiable Instrument Act for issuing a dishonored cheque. The applicant was sentenced to six months of simple imprisonment and ordered to pay compensation of &8377; 50,000. The conviction was confirmed by the appellate court, leading to the revision before the High Court.

Presumption under Section 139 of the Act and Burden of Proof:
The Court discussed the legal principles regarding the presumption under Section 139, which states that unless proven otherwise, it is presumed that the holder of a cheque received it for the discharge of a debt or liability. The accused failed to rebut this presumption by providing evidence to the contrary. The Court emphasized that the accused must raise a probable defense to create doubt regarding the existence of the debt or liability to rebut the presumption effectively.

Legality of the Judgment and Arguments Raised:
The applicant's counsel argued that the lower courts erred in convicting the applicant, highlighting issues such as non-service of notice and lack of evidence regarding the dishonored cheque. However, the Court noted that the complainant, as the holder of the cheque, proved the legally enforceable debt, and the accused failed to dislodge this proof. The Court reiterated that the presumption under Section 139 is a rebuttable presumption, and the accused must establish a probable defense to counter it effectively.

Judicial Precedents and Interpretation of Legal Provisions:
The Court referred to judicial precedents, such as the case of Rohitbhai Jivanlal Patel, to emphasize the importance of the presumption under Sections 118 and 139 of the Act. These sections create a reverse onus clause, shifting the burden of proof to the accused to contest the existence of a legally enforceable debt or liability. The Court clarified that the offense under Section 138 is a regulatory offense, and the defendant-accused cannot be held to an unduly high standard of proof.

Conclusion:
In light of the evidence, legal principles, and precedents discussed, the High Court found no illegality or perversity in the orders passed by the lower courts. The Court dismissed the revision petition, upholding the conviction and sentence imposed on the applicant under Section 138 of the Negotiable Instrument Act for issuing a dishonored cheque.