2021 (3) TMI 907 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt or not - cheques were obtained two years prior to the date of presentation - HELD THAT - The three ingredients to attract the offence under Section 138 of the Negotiable Instruments Act are that there was a legally enforceable debt, that the cheque was drawn from the account of the banker for discharge, in whole or part of any debt or liability which presupposes a legally enforceable debt and that the cheques so issued had been returned due to insufficiency of funds. In order to draw the presumption available in favour of the appellant under Section 118 and 139 of the Negotiable Instruments Act, it must be admitted or proved that the cheques were issued by the first respondent in discharge of a legally enforceable debt or liability. Here, the first respondent has not admitted the allegations. Whether the appellant could prove that Ext.P1 series were issued in discharge of a duly enforceable debt or liability? - HELD THAT - The materials brought out in evidence are sufficient to give an answer in the negative. As noticed earlier, the appellant has admitted that the cheques were issued two years before the date of presentation - Secondly, through the Ext.D1 judgment in S.T.No. 288/2007, the learned Magistrate could very much expose the hollowness of the claims of the appellant. That case related to issuance of cheque Nos. 428897 dated 23.08.2006 and 428896 dated 20.08.2006, both for ₹ 44,200/-. Those cheques were shown dishonored on 12.09.2006. Thus the learned Magistrate has rightly noticed that it is improbable that after dishonoring two such cheques on 12.09.2006, the appellant had accepted, at least two cheques dated 14.09.2006 and 22.09.2006 in Ext. P1 series. Here it has come out in clear terms that the cheques were handed over two years prior to the date of presentation. In other words, it was not presented to the bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier. This aspect cuts the very root of the case of the appellant - Though the learned counsel made a faint prayer for making a remand, in the circumstances that would be an idle exercise. The appellant could not prove that the subject cheques were issued in discharge of a duly enforceable debt or liability. There is no reason to interfere with the finding in question. This appeal is only to be dismissed. Appeal dismissed.

Summary

Issues:
1. Appeal under Section 378(4) of the Criminal Procedure Code regarding offence under Section 138 of the Negotiable Instruments Act.
2. Whether the cheques were supported by consideration.
3. Rebuttal of statutory presumptions in favor of the complainant.
4. Compliance with conditions under Section 138 of the Negotiable Instruments Act.

Issue 1:
The appeal was filed under Section 378(4) of the Criminal Procedure Code concerning an offence under Section 138 of the Negotiable Instruments Act. The complaint alleged that three cheques were issued as security during fish trade transactions, but were returned unpaid with the endorsement 'account closed'. The accused denied the incriminating materials and claimed the cheques were issued as security, not supported by consideration. The Judicial First Class Magistrate acquitted the accused, finding the defense version more probable. The appeal challenged this finding.

Issue 2:
The crucial issue was whether the cheques were supported by consideration. The appellant argued that the statutory presumptions should be drawn in their favor as the execution of the cheques was proven, and the accused failed to rebut the presumption. However, the defense contended that the appellant failed to prove the cheques were issued in discharge of a legally enforceable debt or liability, as the transactions lacked specific details and the cheques were obtained two years before presentation.

Issue 3:
Regarding the rebuttal of statutory presumptions, the appellant proved the execution of the cheques, and the accused did not respond to the lawyer notice or provide oral evidence in defense. However, the first respondent maintained that the cheques were issued as security during fish trade transactions. The court noted discrepancies in the complaint and evidence regarding the transaction particulars, leading to uncertainty about the cheques' purpose and enforceability.

Issue 4:
The compliance with conditions under Section 138 of the Negotiable Instruments Act was analyzed. The judgment highlighted that the cheques were handed over two years before presentation, breaching the requirement of presenting the cheques to the bank within six months from the date of issuance or within their validity period. This non-compliance undermined the appellant's case, indicating a lack of legally enforceable debt or liability associated with the cheques.

In conclusion, the High Court dismissed the appeal, emphasizing that the appellant failed to prove the cheques were issued in discharge of a legally enforceable debt or liability. The court found no reason to interfere with the lower court's decision, as the evidence did not support the appellant's claims. The judgment underscored the importance of compliance with statutory conditions under the Negotiable Instruments Act and upheld the principle of requiring specific evidence to establish the legality of financial transactions.