2021 (2) TMI 961 - HC - Indian Laws

Dishonor of Cheque - offence punishable under section 138 of Negotiable Instrument Act 1881 - the complainant-Bank issued demand notice on 30-07- 2007, the accused did not reply the aforesaid notice, nor repaid the amount - HELD THAT - This complaint was filed as if the accused has borrowed the loan and in discharge of the said loan accused issued the Ex.P.1-cheque. Loan borrowed by the father of the accused had admittedly become time barred long back. Without mentioning the true and correct facts and suppressing the true facts this complaint was filed making a false allegation against the accused. Even the contents of the notice are false. Therefore no statutory presumption under N.I Act can be raised in favour of the complainant-Bank when a false contention is taken and true facts are suppressed before the Court. On perusal of the evidence of the complainant and defense evidence of accused it is evident that, the complainant has lodged this complaint by pleading false contention that the accused has borrowed the loan. The statutory legal notice was also issued stating that, accused has borrowed the loan and Ex.P.1-cheque issued in discharge of the said loan was dishonoured. The complainant has also contended in written complaint that, the accused issued the cheque in discharge of his liability of borrowing the loan from complainant-Bank. In fact the evidence of the Manager of the Bank /PW.1 is also to that effect which is admittedly not true. Now complainant Bank has totally given 'U' turn to the contents of the complaint and legal notice, in cross-examination of PW.1 stating that the accused being a Karta of the family has admitted the loan borrowed by his father and for discharge of that loan he has issued the cheque which is not their case at all. The party cannot be permitted to plead one case in complaint evidence and document and try to take shelter in cross-examination taking totally new stand which is not pleaded - The father of the accused died in the year 2004. If at all there was any such loan it has become time barred during his life time only. Defense evidence of accused totally falsify the case of the complainant. The slightest presumption even if any for issuance of cheque, stood clearly rebutted by accused defense evidence apart from rebutting the same though cross-examination of PW.1 and PW.2. The penal provision of Section 138 of the N.I.Act is applicable only to the cheques which are issued for the discharge in whole or in part, of any debt or other liability, which according to Explanation must be a legally enforceable debt or other liability. A cheque given in discharge of a time barred debt will not constitute an unconditional undertaking or promise in writing either expressly or impliedly so as to attract the criminal offence under section 138 of N.I Act. It is settled principle of law that this court being appellate court and as the Judgment under challenge is against the judgment of the acquittal by the trial court, unless there is perversity in the findings and judgment of the trial court, the Appellate court shall not interfere. The Judgment of the trial court clearly indicates that the learned trial court Judge has raised proper points for consideration and discussed the evidence in detail. The trial court has rightly held that mere issuance of cheque without corresponding legally recoverable debt is not an offence. The trial court has rightly come to conclusion that the complainant has not established his case and no presumption arise in his favour. The trial court rightly acquitted the accused - absolutely there is no ground to interfere with the judgment of acquittal passed by the trial court - Appeal dismissed - decided against appellant.

Summary

Issues Involved:

1. Whether the trial court properly appreciated the oral and documentary evidence.
2. Whether the issuance of a cheque for a time-barred debt constitutes a legally enforceable debt under Section 138 of the Negotiable Instrument Act, 1881.
3. The applicability of Section 25(3) of the Indian Contract Act, 1872 in the context of a time-barred debt.
4. The presumption under Sections 118(a) and 139 of the Negotiable Instrument Act, 1881.
5. The validity of the statutory legal notice issued by the complainant.

Issue-wise Detailed Analysis:

1. Proper Appreciation of Evidence by the Trial Court:

The appellant contended that the trial court failed to properly appreciate the evidence, both oral and documentary. The complainant-Bank alleged that the accused issued a cheque for ?3,28,000/- in discharge of a loan. However, during cross-examination, the Bank's Manager (PW.1) admitted that the accused did not have a loan account with the Bank, and the loan was actually availed by the accused's father. The trial court found inconsistencies in the complainant's case, noting that the statutory legal notice and the complaint falsely stated that the accused had borrowed the loan. The trial court concluded that the complainant-Bank failed to prove the accused's liability, leading to the acquittal of the accused.

2. Legally Enforceable Debt Under Section 138 of the Negotiable Instrument Act, 1881:

The trial court held that a cheque issued for a time-barred debt does not constitute a legally enforceable debt under Section 138 of the Negotiable Instrument Act, 1881. The complainant-Bank's claim was based on a loan availed by the accused's father in 2001, which had become time-barred. The trial court noted that the cheque in question could not be considered as issued in discharge of a legally enforceable debt since the debt was time-barred.

3. Applicability of Section 25(3) of the Indian Contract Act, 1872:

The appellant argued that the cheque issued by the accused amounted to a promise to pay a time-barred debt under Section 25(3) of the Indian Contract Act, 1872. The trial court rejected this argument, stating that there was no express promise or document executed by the accused to pay the time-barred debt of his father. The court emphasized that the accused was not the sole legal heir and had not inherited any property from his father. The court concluded that Section 25(3) was not applicable in this case.

4. Presumption Under Sections 118(a) and 139 of the Negotiable Instrument Act, 1881:

The trial court discussed the presumption under Sections 118(a) and 139 of the Negotiable Instrument Act, 1881, which places the initial burden on the complainant to prove the existence of a legally enforceable debt. The court found that the complainant-Bank failed to discharge this burden, as the evidence presented was contradictory and did not establish the accused's liability. The accused successfully rebutted the presumption by providing evidence that the cheque was issued under duress and the loan was time-barred.

5. Validity of the Statutory Legal Notice:

The trial court found that the statutory legal notice issued by the complainant-Bank was invalid as it falsely stated that the accused had borrowed the loan. The notice did not mention the true facts, such as the loan being availed by the accused's father and the time-barred nature of the debt. The court concluded that the notice did not meet the requirements under Section 138 of the Negotiable Instrument Act, 1881.

Conclusion:

The appellate court affirmed the trial court's judgment, holding that the complainant-Bank failed to prove the existence of a legally enforceable debt. The cheque issued for a time-barred debt did not attract the penal provisions of Section 138 of the Negotiable Instrument Act, 1881. The court also held that Section 25(3) of the Indian Contract Act, 1872, was not applicable in this case. The appeal was dismissed, and the judgment of acquittal was confirmed.