2021 (6) TMI 467 - HC - Indian Laws

Dishonor of Cheque - failure to make repayment of loan taken from a friend - rebuttal of presumption - payment of loan was not established - HELD THAT - Since the accused neither overcome the objection raised by the complainant nor could able to demonstrate as to how the said Note book act as an evidence about the alleged clearance of the loan of ₹ 6 lakhs, which is the subject matter of the present case, the said Note book at Ex.D-5 would not enure to the benefit of the accused. Therefore, the accused could not able to demonstrate that she has cleared the loan of ₹ 6 lakhs availed by her from the complainant. By looking at the entries mentioned therein showing several withdrawals, payments, credits etc., it cannot be deduced that any particular sum, on any particular day, was made to the complainant by the accused. Merely by looking at the name of the complainant in those statements, it cannot be inferred that those are the payments made by the accused to the complainant and complainant alone, that too, towards the alleged repayment of the loan transaction in question. Furthermore, admittedly the said document was not confronted to PW-1 in his cross-examination. Had the said document been confronted to PW-1 in his cross-examination, he would have given his explanation about the alleged entries, provided his attention were drawn to those entries in the said statement. Since none of those exercise is done by the accused, merely by production of the said statement, which is not self-explanatory regarding the alleged payment said to have been made in favour of the complainant, it cannot be held that the accused had made substantial repayment of the loan to the complainant. There are no erversity, illegality or irregularity in the said finding of the trial Court and the Sessions Judge's Court. As such, the judgment of conviction does not warrant any interference at the hands of this Court - The trial Court has sentenced the accused to pay a fine of ₹ 7,20,000/-, in default of payment of fine amount, to undergo simple imprisonment for a period of six months. It has further ordered that, out of the said fine amount, the accused shall pay ₹ 7,15,000/- to the complainant as compensation under Section 357 of Cr.P.C. and remaining ₹ 5,000/- to be remitted to the State as fine. The Criminal Revision Petition is partly allowed.

Summary

Issues Involved:
1. Conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Rebuttal of the presumption of legally enforceable debt.
3. Examination of the repayment of the loan amount.
4. Admissibility and relevance of evidence presented.
5. Proportionality of the sentence imposed.

Issue-wise Detailed Analysis:

1. Conviction under Section 138 of the Negotiable Instruments Act, 1881:
The petitioner was convicted by the trial court for the offence under Section 138 of the N.I. Act, which pertains to the dishonour of cheques due to "payment stopped" by the drawer. The trial court's judgment was upheld by the Sessions Judge's Court. The accused issued three cheques amounting to ?6 lakhs, which were dishonoured, leading to the legal proceedings.

2. Rebuttal of the presumption of legally enforceable debt:
The accused admitted to borrowing ?6 lakhs and issuing the cheques in question for repayment. The legal presumption under Section 139 of the N.I. Act favours the complainant, indicating the existence of a legally enforceable debt. However, this presumption is rebuttable. The accused contended that the cheques were issued as security and that the loan had been repaid, but this was not accepted by the court.

3. Examination of the repayment of the loan amount:
The accused claimed to have repaid the loan through various payments, but the complainant asserted these payments were for different transactions. The accused's evidence, including bank passbooks and challans, indicated multiple transactions but did not conclusively prove the repayment of the specific ?6 lakhs loan. The accused's failure to substantiate the repayment claim led the court to uphold the complainant's position.

4. Admissibility and relevance of evidence presented:
The accused presented a Note book (Ex.D-5) purportedly signed by the complainant, indicating loan repayments, but this was disputed and not accepted as credible evidence. The accused also failed to demonstrate that payments made to the complainant's wife were related to the loan in question. The bank account statement (Ex.D-6) was not self-explanatory and was not effectively used to challenge the complainant's claims during cross-examination.

5. Proportionality of the sentence imposed:
The trial court sentenced the accused to pay a fine of ?7,20,000, with ?7,15,000 as compensation to the complainant and ?5,000 as fine to the State. The High Court found this sentence slightly excessive and reduced the fine to ?6,50,000, with ?6,45,000 as compensation to the complainant and ?5,000 as fine to the State. The default sentence of six months' simple imprisonment remained unchanged.

Conclusion:
The High Court confirmed the conviction under Section 138 of the N.I. Act but modified the sentence to reduce the fine amount. The court found no perversity, illegality, or irregularity in the trial court and Sessions Judge's Court's findings, except for the sentence's proportionality. The case highlights the importance of clear evidence and proper rebuttal in cheque dishonour cases under the N.I. Act.