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2020 (11) TMI 503 - HC - Indian LawsDishonor of Cheque - commission of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumptions as envisaged by the provisions of Sections 118 and 139 of the N.I.Act - HELD THAT - Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the N.I.Act, it becomes evident that in a trial under Section 138 of the N.I.Act, a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. Needless to say that, as and when the complainant discharges the burden to prove that the cheque was executed by the accused, the rules of presumptions under Sections 118 and 139 of the N.I.Act are very much available to the complainant and the burden shifts on the accused. However, this presumption is rebuttable. Under the circumstances, it is the duty of the accused before the court by adducing evidence to show that the cheque was not supported by consideration and that there was no debt or liability to be discharged as alleged. It is necessary on the part of the accused to set up a probable defence for getting the burden of proof shifted to the complainant. Once such rebuttable evidence is adduced and accepted by the court, the burden shifts back to the complainant. Section 141 of the N.I.Act provides constructive liability on the part of the Directors of the company or other persons responsible for the conduct of the business of the company. Though the heading of Section 141 of the N.I.Act reads Offences by companies , as per the Explanation to that Section company means any body corporate and includes a firm or other association of individuals ; and director in relation to a firm, means a partner in the firm. Their liability is joint and several. Consequently, therefore, when an offence is alleged to have been committed by the partnership firm, every person who, at the time the offence was committed, was in charge of and was responsible to the firm for the conduct of its business as well as the firm shall be deemed to be guilty of the offence and shall be liable to be proceeded under Section 138 of the N.I.Act. The conclusions drawn by the trial court and the appellate court to convict the accused 1 and 2 are perfectly legal. The cheques in question were drawn for consideration and the holder of the cheques received the same in discharge of an existing debt. Thereafter, the onus shifts on the accused to establish a probable defence so as to rebut such presumption, which onus has not been discharged by the accused. Once the cheque is proved to be issued, it carries statutory presumption of consideration under Sections 118 and 139 of the N.I.Act. Then the onus is on the accused to disprove the presumption at which they have not succeeded - It is well settled law that when concurrent findings of facts rendered by the trial court and appellate court are sought to be aside in revision, the High Court does not, in the absence of perversity upset factual findings arrived at by the two courts below. It is not for the revisional court to re-analyse and reinterpret the evidence on record in a case where the trial court has come to a probable conclusion. Unless the contrary is proved, it is presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of the N.I.Act for the discharge, in whole or in part, of any debt or other liability. In the case at hand, the accused has no case that he has not signed the cheque or parted with under any threat or coercion. Both the trial court and the appellate court rightly held that the burden was on the accused to disprove the initial presumption under Section 118 and 139 of the N.I.Act. The burden is not discharged rightly. Hence, the conviction of the accused for the offence under Section 138 of the N.I.Act is only to be upheld. Quantum of sentences - HELD THAT - The appellate court had considered everything in detail and reduced the sentence to one of imprisonment till the rising of the court by maintaining the compensation awarded by the trial court under Section 357(3) of Cr.P.C. The sentence of fine of ₹ 5,000/- imposed against the 1st accused was also maintained. The appellate court had maintained compensation amount for an amount of ₹ 2,60,000/- although the amount covered under the cheques was only ₹ 2,52,009/-. An amount of ₹ 5,000/- was imposed additionally as fine against the 1 st accused. The conviction and sentence imposed by the appellate court is confirmed. In view of the situation prevailing in the country due to the outbreak of Covid-19 Pandemic, this Court is inclined to grant six months' time from today to the revision petitioners/ accused 1 and 2 to deposit the compensation and the fine amount before the trial court, failing which the learned Magistrate shall take necessary steps to execute the sentence against the revision petitioners/accused 1 and 2 in accordance with law - the criminal revision petition is allowed in part.
Issues Involved:
1. Validity of the conviction under Section 138 of the Negotiable Instruments Act, 1881. 2. Applicability of Section 230 of the Indian Contract Act concerning the complainant's status as an agent. 3. Vicarious liability of the managing partner under Section 141 of the Negotiable Instruments Act. 4. Appropriateness of the sentence and compensation awarded. Detailed Analysis: 1. Validity of the Conviction under Section 138 of the Negotiable Instruments Act: The complainant, M/s. Choice Transport & Logistics, alleged that the accused issued two cheques totaling ?2,52,009/- to discharge a debt. These cheques were dishonored with the endorsement "exceeds arrangement." The trial court convicted the accused under Section 138 of the N.I. Act, a decision upheld by the appellate court. The High Court reiterated that once the execution of the cheques is admitted, presumptions under Sections 118 and 139 of the N.I. Act apply, shifting the burden to the accused to prove otherwise. The accused failed to rebut these presumptions effectively, leading to the upholding of the conviction. 2. Applicability of Section 230 of the Indian Contract Act: The defense argued that the complainant, being an agent of M/s. Hyundai Merchant Marine Company Ltd., could not enforce the contract personally under Section 230 of the Indian Contract Act. However, the court found that the cheques were issued directly to the complainant, not the principal. The court noted that the complainant had a direct transaction with the accused and received the cheques in its name, making the technical contention under Section 230 irrelevant. The court emphasized that the accused did not provide any explanation for issuing the cheques to the complainant, thus reinforcing the complainant's right to enforce the contract. 3. Vicarious Liability of the Managing Partner under Section 141 of the Negotiable Instruments Act: The court examined the vicarious liability of the managing partner of the partnership firm under Section 141 of the N.I. Act. It was established that the managing partner was responsible for the conduct of the business and had issued the cheques in question. The court cited the Supreme Court's ruling in M/s. Kusum Ingots & Alloys Ltd. v. M/s. Pennar Peterson Securities Ltd., which outlined the conditions for vicarious liability under Section 141. The court concluded that the managing partner was rightly held liable along with the firm. 4. Appropriateness of the Sentence and Compensation Awarded: The appellate court had reduced the sentence to imprisonment till the rising of the court and maintained the compensation of ?2,60,000/- and a fine of ?5,000/-. The High Court found it just to reduce the compensation amount to ?2,47,009/-, ensuring the total compensation and fine amounted to ?2,52,009/-, equivalent to the amount covered under the cheques. The court granted the accused six months to deposit the compensation and fine due to the Covid-19 pandemic, failing which the trial court was directed to execute the sentence. Conclusion: The High Court upheld the conviction of the accused under Section 138 of the N.I. Act, confirming the applicability of presumptions under Sections 118 and 139. The court dismissed the defense's argument under Section 230 of the Indian Contract Act, affirming the complainant's right to enforce the contract. The managing partner's vicarious liability under Section 141 was also upheld. The sentence and compensation were slightly modified, providing the accused additional time to comply due to the pandemic.
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