2021 (10) TMI 289 - HC - Indian Laws

Dishonor of Cheque - acquittal of the accused - rebuttal of presumption - legally enforceable debt or not - whether the first accused is the wife of the second accused is liable under Section 138 of the Negotiable Instruments Act? - HELD THAT - Once the drawer admits the signature of the cheque, it is presumed that the drawer had given the cheque for discharging a legally enforceable debt or liability. The drawer is given an option to rebut the statutory presumption by adducing positive evidence in the form of proof. The respondent was admitted a signatory in the covering letter (Ex. P1) issued along with her postdated cheque (Ex. P2). The signature and execution of the cheque by the respondent herein is not disputed and clear in view of the legal notice (Ex. P3) issued by the respondent herein just prior to the due date of the cheque - The trial Court has rightly come to the conclusion that the private complainant is entitled for presumption under Section 138 of the Negotiable Instruments Act and the respondent having failed to rebut the presumption has laid the conviction. On perusal of Ex. P1 has categorically stated that their pre-existing legally enforceable debt against the accused for the said amount of ₹ 2,30,400/- Ex. P2 was issued and hence in the absence of any suggestive case being probabilized by the respondent, the lower Appellate Court has wrongly construed and allowed the appeal and committed in error in setting aside the well considered judgment of the trial Court and hence, all the findings rendered by the lower Appellate Court are hereby stands vacated and that of the trial Court is restored. This Court holds that the conviction laid by the trial Court is restored. The order passed by the lower Appellate Court dated 10.11.2014 is set aside - Appeal allowed.

Summary

Issues:
1. Impugning the acquittal judgment of the learned XVI Additional Sessions Judge regarding an offence under Section 138 of the Negotiable Instruments Act.
2. Liability of the wife under Section 138 of the Negotiable Instruments Act for a cheque issued for the debt of her husband.

Analysis:
1. The appellant, a distributor of food products, had paid an advance deposit to the respondent's husband for goods. When the cheque issued by the respondent's wife (first accused) towards refund was dishonored, the appellant initiated legal proceedings. The trial Court convicted both accused. However, the Additional Sessions Judge acquitted the first accused, stating the cheque was issued as a mandate holder. The High Court analyzed the evidence and legal precedents to determine the liability of the wife under Section 138. The Court found that the first accused issued the cheque in her individual capacity, not as a mandate holder, and was liable under the Act.

2. The High Court examined the cheque (Ex. P2) and noted it was issued by the first accused personally for her husband's debt. Referring to a legal precedent, the Court clarified that a mandate holder is not liable under Section 138 as the drawer. In this case, the first accused's signature on the cheque was admitted, establishing her liability. The Court emphasized that the cheque was not issued on behalf of a company but in the first accused's personal capacity. The judgment highlighted the importance of the first accused's admission of signing the cheque and the legal notice issued, reinforcing her liability.

3. The Court reviewed the evidence presented by the appellant, including the covering letter, legal notice, and the respondent's admission of being a signatory. The judgment emphasized the establishment of a business transaction, outstanding dues, voluntary issuance of the cheque by the first accused, and assurances made regarding clearing the dues. The Court concluded that the trial Court's decision to convict the first accused was correct, as she failed to rebut the presumption under Section 138. The High Court set aside the Additional Sessions Judge's order and upheld the trial Court's conviction, reinstating the appellant's entitlement to the presumption under the Act.

4. In the final analysis, the High Court allowed the Criminal Appeal, restoring the conviction laid by the trial Court and overturning the acquittal judgment of the Additional Sessions Judge. The judgment emphasized the legal principles governing liability under Section 138 of the Negotiable Instruments Act and the importance of evidence and admissions in establishing liability for dishonored cheques.