2021 (5) TMI 975 - HC - Indian Laws

Dishonor of Cheque - legally enforceable debt - financial incapacity to repay the debt - Whether the judgments under revision are perverse, illegal and erroneous warranting interference at the hands of this Court? - service of notice - HELD THAT - In the instant case, the notice has been sent to the correct address of the accused and since he has refused the same, the Registered Post Acknowledgement Due was returned to the sender and also since the accused did not come forward to make good the amount of the cheque immediately after he coming to know about the institution of the criminal case, the argument of the learned counsel for the petitioner that there is no service of notice upon the accused under Section 138 of N.I. Act, is not acceptable. The financial capacity of the complainant to lend money to the accused also can be gathered from the evidence. As such, the other point of argument of learned counsel for the petitioner on that aspect is not convincing - the entire defence of the accused about denial of the loan transaction has just confined to a mere oral denial made to PW-1. However, the same is not sufficient to rebut the presumption which has been formed in favour of the complainant under Section 139 of N.I. Act regarding the existence of legally enforceable debt. The trial Court for the proven guilt of the accused for the offence punishable under Section 138 of N.I. Act, had sentenced the accused to undergo simple imprisonment for a period of six months and to pay a fine of ₹ 5,19,300/-, in default of payment of fine, to undergo simple imprisonment for a period of six months, in which, a sum of ₹ 5,14,300/- was ordered to be paid to the complainant. The Sessions Judge's Court in Criminal Appeal No. 69/2013 has confirmed the order on sentence. Criminal Revision Petition is partly allowed.

Issues Involved:
1. Validity of the conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Adequacy and service of legal notice under Section 138 of the N.I. Act.
3. Financial capacity of the complainant to lend money.
4. Allegation of breach of trust and misuse of the cheque by the complainant.
5. Appropriateness of the sentence imposed by the trial court and confirmed by the Sessions Judge's Court.

Detailed Analysis:

1. Validity of the Conviction under Section 138 of the Negotiable Instruments Act, 1881:
The trial court convicted the accused for the offence punishable under Section 138 of the N.I. Act, which was upheld by the Sessions Judge's Court. The accused issued a cheque for ?3,70,000, which was dishonored due to "funds insufficient." The complainant followed up with a legal notice, and upon non-payment, initiated a criminal case. The courts found sufficient evidence to support the conviction, including the dishonored cheque and the legal notice.

2. Adequacy and Service of Legal Notice under Section 138 of the N.I. Act:
The complainant sent a legal notice to the accused, which was refused and returned. The accused claimed he did not receive the notice and contested the address used. However, the court found that the notice was sent to the correct business address of the accused, "Adi Constructions," and deemed it served based on postal shara "Refused - returned to the sender." The court cited the Supreme Court's judgment in C.C. Alavi Haji vs. Palapetty Muhammed, emphasizing that refusal of notice is considered valid service.

3. Financial Capacity of the Complainant to Lend Money:
The accused raised the issue of the complainant's financial capacity for the first time in the revision petition. The court noted that the complainant had not been cross-examined on this point earlier, and his testimony indicated he was financially capable, being an Income-tax assessee and licensed contractor. The court found no reason to doubt the complainant's financial capacity.

4. Allegation of Breach of Trust and Misuse of the Cheque:
The accused alleged that the cheque was misused by the complainant. However, this defense was not substantiated with evidence. The accused's mere oral denial was insufficient to rebut the presumption under Section 139 of the N.I. Act. The court held that the complainant's evidence was credible and supported the existence of a legally enforceable debt.

5. Appropriateness of the Sentence Imposed:
The trial court sentenced the accused to six months of simple imprisonment and a fine of ?5,19,300, which was confirmed by the Sessions Judge's Court. The High Court found the sentence of imprisonment disproportionate to the gravity of the offence. The court modified the sentence, reducing the fine to ?4,05,000, with ?4,00,000 payable to the complainant as compensation and ?5,000 to the State. The default sentence of six months' imprisonment for non-payment of the fine remained unaltered.

Conclusion:
The High Court confirmed the conviction of the accused under Section 138 of the N.I. Act but modified the sentence, reducing the fine while maintaining the default imprisonment clause. The court also acknowledged the service of the Amicus Curiae and recommended an honorarium for her.

Order:
The Criminal Revision Petition is partly allowed. The conviction is confirmed, but the sentence is modified to a fine of ?4,05,000, with ?4,00,000 payable to the complainant and ?5,000 to the State. The default sentence of six months' imprisonment remains unaltered. The Registry is directed to transmit a copy of this order to the trial court and the Sessions Judge's Court along with their respective records.

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