2020 (3) TMI 519 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - section 138 of NI Act - legally enforceable debt or not - HELD THAT - By virtue of Sections 118 and 139 of Negotiable Instruments Act, there is a presumption that the cheque was issued towards the a legally enforceable debt. The contention that a blank cheque was issued to the complainant is not tenable. Merely because a blank cheque was issued, it could not be assumed that the presumption under Section 118 and 139 of Negotiable Instruments Act, is not applicable. Even if a blank cheque was issued as contended by the accused, it is settled principle of law that presumption could be pressed into service. The Court below has rightly applied the presumption under Sections 138 and 139 of the Negotiable Instruments Act and convicted and sentenced the accused. However, considering the amount involved, it is not necessary to incarcerate the accused in prison for the offence under Section 138 of the Negotiable Instruments Act. Instead of sentencing the accused for a jail term, it is just and proper to sentence the accused to pay a fine of ₹ 10,000/- and in default to undergo simple imprisonment for a period of two months more. In case the fine amount is remitted the same shall be paid to the complainant as compensation. Revision allowed in part.

Summary

Issues: Conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881.

Analysis:
The judgment in this case involves the revision petition filed by the accused challenging the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881. The accused was initially convicted by the Judicial First Class Magistrate Court-II and sentenced to two months of simple imprisonment along with a compensation of ?10,000. The accused then appealed to the Sessions Court, which modified the sentence to two weeks of simple imprisonment and the same compensation amount. The complainant alleged that the accused borrowed ?10,000 and issued a cheque which bounced due to insufficient funds. The accused denied involvement in the crime, claiming he borrowed a lesser amount and issued a blank signed cheque. However, the evidence presented, including the dishonored cheque, statutory notice, and acknowledgment of receipt, supported the complainant's case. The Court applied the presumption under Sections 118 and 139 of the Negotiable Instruments Act, stating that even a blank cheque could be considered issued for a legally enforceable debt. Despite the conviction, the Court considered the amount involved and decided to modify the sentence to a fine of ?10,000, with two months of simple imprisonment in default of payment. The fine amount, if paid, would be given to the complainant as compensation.

The judgment highlights the importance of statutory requirements and presumption under the Negotiable Instruments Act in cases of dishonored cheques. It emphasizes that even if a blank cheque is issued, the presumption of it being for a legally enforceable debt applies. The Court's decision to modify the sentence based on the amount involved demonstrates a balanced approach towards enforcing the law while considering practical implications for the accused. The judgment serves as a reminder of the legal consequences of dishonored cheques and the significance of complying with statutory procedures in such cases.