2020 (9) TMI 215 - HC - Indian Laws

Dishonor of Cheque - Offence u/s 138 of NI Act - complaint was dismissed on the ground that the return memo of the banker with endorsement has not been proved in accordance with Section 67 of the Evidence Act - HELD THAT - It is no more res integra that the provisions of Section 146 of the N.I. Act unambiguously and expressly override the principles of the Indian Evidence Act and making such a major departure from the application of the Evidence Act provides that the bank slip or memo with the official mark showing that the cheque was dishonoured would by itself give rise to the presumption of the dishonour of the cheque, unless and until the contrary to the said fact was disproved. In view of insertion of Section 146 in the N.I. Act, Section 67 of the Evidence Act as relied upon by the learned Trial Judge has no manner of application to prove or disprove the document relating to bank note/slip/return memo. Furthermore, Section 143 of the N.I. Act fortifies the complaint under Section 138 of the N.I. Act to be tried in summary manner - Having held so, the findings that the contents of the bank notes were not proved in accordance with Section 67 of the Evidence Act and thus bad in law, has no force in the eye of law and contrary to Section 146 of the N.I. Act. The accused- respondent has not preferred any appeal in regard to the findings of the learned Trial Court while deciding the point No.1 as quoted herein-above that the cheque was issued by the accused-respondent in favour of the complainant-appellant in discharge of his liability and debt to pay the sum of ₹ 7,95,000/- - the instant appeal merits consideration, the complainant-appellant has been able to prove the fact of the accused s liability to pay the entire amount of ₹ 7,95,000/- as fine. The same should be paid to the complainant within a period of three months from the date of receipt of this order, otherwise, in default, the accused-respondent shall be sent to jail to suffer simple imprisonment for six month. Appeal disposed off.

Summary

Issues Involved:
1. Compliance with statutory requirements under Section 138 of the Negotiable Instruments Act, 1881.
2. Validity of the return memo as evidence under Section 67 of the Evidence Act versus Section 146 of the Negotiable Instruments Act.
3. Admission of liability by the accused.

Issue-wise Detailed Analysis:

1. Compliance with statutory requirements under Section 138 of the Negotiable Instruments Act, 1881:
The complainant, owner of M/s Joy Ram Traders, alleged that the accused purchased iron rods worth ?7,95,000/- and issued a cheque dated 30.11.2014 for the same amount. The cheque was presented for encashment but was returned with the endorsement "closure of account." The complainant complied with the statutory requirements by issuing a demand notice, and upon non-payment, lodged a complaint under Sections 138, 141, and 142 of the N.I. Act. The trial court initially dismissed the complaint, but the High Court found that the complainant had adequately proven the debt and the issuance of the cheque by the accused.

2. Validity of the return memo as evidence under Section 67 of the Evidence Act versus Section 146 of the Negotiable Instruments Act:
The trial court dismissed the complaint on the grounds that the return memo was not proved as per Section 67 of the Evidence Act. However, the High Court held that Section 67 of the Evidence Act has no relevance in light of Section 146 of the N.I. Act, which provides that the bank's slip or memo with the official mark showing dishonour of the cheque gives rise to the presumption of dishonour unless disproved. This principle was supported by the Supreme Court's decision in Mandvi Cooperative Bank Ltd. Vs. Nimesh B. Thakore, which emphasized that provisions of the N.I. Act override those of the Evidence Act. Consequently, the High Court set aside the trial court's findings, affirming that the return memo was valid evidence under Section 146 of the N.I. Act.

3. Admission of liability by the accused:
During the proceedings, the accused did not challenge the trial court's findings that he had issued the cheque in discharge of his liability. Moreover, an order dated 24.11.2017 revealed the accused's willingness to repay the debt, further indicating an admission of liability. The High Court noted that the accused had not appealed against the trial court's finding on this point, reinforcing the complainant's position.

Conclusion:
The High Court concluded that the complainant had proven the accused's liability to pay ?7,95,000/-. The judgment of the trial court was set aside, and the accused was directed to pay the amount within three months. In default, the accused would face simple imprisonment for six months. The appeal was thus disposed of in favor of the complainant.