2021 (6) TMI 995 - HC - Indian Laws

Dishonor of Cheque - acquittal of the accused - legally enforceable liability or not - rebuttal of presumption - Sections 118 and 139 of the Act - HELD THAT - It is trite that merely for the reason that the accused had admitted his signature on a negotiable instrument, its execution cannot be assumed. In order to draw the presumptions under Sections 118 and 139 of the Act, either the execution of the cheque should be admitted or it has to be proved that it was executed and issued in discharge of a legally enforceable liability. Here the first respondent does not admit the execution of the cheque. A perusal of Ext. P9 shows that the actual consideration of the vehicle was ₹ 33,900/-. It is evident from Ext. P10 also. The margin money was ₹ 6,800/-. The loan amount, that is the amount actually lent by the appellant, was ₹ 27,100/-. So the total amount found payable by the first respondent was ₹ 39,295/- which includes FC amount, may be financial credit amount, of ₹ 12,195/-. The first respondent was liable to pay a total amount of ₹ 39,295/- in 36 instalments at the rate of ₹ 1092/-. The documents produced by the parties indicate that the first respondent was never regular in repayment of the amount. However, at least in alternate months he has paid amounts. Till 17.07.2007, though intermittently, he paid an amount of ₹ 16,433/-, which includes the defaulted instalment interest. But the last remittance has not been reckoned by the appellant. Secondly, ₹ 12,195/- shown payable by the first respondent includes interest for the entire period of 36 months, during the period of the entire hire purchase agreement. There is substance in the finding of the trial court that it was not supported by consideration and therefore the appellant is not entitled to draw the presumptions under Sections 118 and 139 of the Act - it is obvious that sufficient reasons are not made out by the appellant to interfere with the judgment under attack - Appeal dismissed.

Issues:
1. Challenge to the legality and correctness of the judgment of the Judicial First Class Magistrate-IV (Mobile Court), Thiruvananthapuram under Section 138 of the Negotiable Instruments Act.
2. Dispute over the issuance of a cheque for a loan repayment and subsequent dishonor.
3. Examination of evidence regarding the repayment of the loan amount and the legality of the cheque issuance.
4. Discrepancies in the statement of accounts and the amount due from the accused.
5. Dispute over the consideration behind the issuance of the cheque and the genuineness of the transaction.
6. Analysis of the evidence presented by both parties regarding the loan repayment and the disputed cheque.
7. Evaluation of the legal principles under Sections 118 and 139 of the Negotiable Instruments Act.
8. Examination of the impact of re-possession of the vehicle on the cheque issuance and loan repayment.
9. Consideration of the evidence presented by the appellant and the respondent regarding the loan agreement and repayment history.
10. Final decision on the appeal and dismissal based on the lack of merit in challenging the trial court's judgment.

Detailed Analysis:
1. The appeal challenges the judgment of the Judicial First Class Magistrate-IV, Thiruvananthapuram, under Section 138 of the Negotiable Instruments Act, concerning the legality and correctness of the complaint and subsequent acquittal of the accused.
2. The case revolves around a loan repayment dispute where a cheque issued by the accused for loan repayment was dishonored, leading to legal proceedings initiated by the complainant, a company registered under the Companies Act.
3. The trial involved examination of evidence regarding the loan agreement, repayment history, and the circumstances surrounding the issuance of the dishonored cheque, with the accused denying the execution of the cheque in discharge of a legally enforceable liability.
4. Discrepancies in the statement of accounts, repayment amounts, and the total due from the accused raised questions about the actual amount owed and the validity of the cheque issued for repayment.
5. The dispute focused on the consideration behind the cheque issuance, with the appellant claiming non-repayment of the loan amount and reliance on legal precedents to support their case.
6. Both parties presented evidence to support their claims, with the appellant emphasizing the default in repayment and the subsequent dishonor of the cheque, while the respondent contested the legality and consideration behind the cheque issuance.
7. The legal principles under Sections 118 and 139 of the Negotiable Instruments Act were crucial in determining the validity of the cheque issuance and the burden of proof regarding its execution and discharge of liability.
8. The re-possession of the vehicle and its impact on the cheque issuance and loan repayment added complexity to the case, raising doubts about the genuineness of the transaction and the subsequent legal actions taken.
9. Evidence regarding the loan agreement, repayment history, and discrepancies in the statement of accounts were carefully evaluated to determine the actual amount due and the validity of the cheque issued for repayment.
10. The final decision dismissed the appeal, citing lack of merit in challenging the trial court's judgment due to insufficient evidence and doubts regarding the genuineness of the transaction, statement of accounts, and the consideration behind the cheque issuance.

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