2021 (10) TMI 1025 - HC - Indian Laws

Dishonor of Cheques - legally enforceable debt or not - Rebuttal of presumption - whether complainant alone is having the duty to prove that the cheques were issued for discharging the liability? - HELD THAT - Primarily, in respect of filing of 4 cases by the complainant, he deposed before the trial Court that, all the cases were filed within the time stipulated under Section 138 of the Negotiable Instruments Act. Further, it is not in dispute on the side of the accused that the complainant has filed four cases after violating the limitations narrated in Section 138 of the Negotiable Instruments Act. Therefore, it was concluded that all the cases were filed within the limitation as contemplated under Section 138 of the Negotiable Instruments Act - It is another thing that the accused has not disputed the signature found in the cheques in dispute. Therefore, being the reason that the signatures found in the cheques were admitted by the accused, the statutory presumption comes into play. It should be presumed that being the reason that the signatures found in the cheques were admitted by the accused, this Court is in a position to presume that the said cheques have been issued to discharge the debt or liability - however, there can be no doubt that there is an initial presumption, which favours the complainant. Section 139 of the Negotiable Instruments Act is an example reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. Therefore, it is for the accused to rebut the presumption by adducing credible evidence that the cheques were issued as a guarantee or for some other reasons. After seeing the accounts maintained by the accused and after seeing the rejection orders given by J.J.M. Company, Chennai, this Court comes to the conclusion that due to belated delivery of the goods, the accused alone incurred loss and therefore, the cheques issued by him are not for discharging his liability - It is well settled legal position that the presumption under Section 139 of the Negotiable Instruments Act is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for doing so is that, on preponderance of probability. Therefore, to rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. The cheques pertain to these 4 cases, have been issued by the accused only to discharge the legally enforceable debt and being the reason, the same were dishonoured, it should be held that the accused had committed an offence under Section 138 of the Negotiable Instruments Act. The first appellate Court without appreciating the same in proper perspective, particularly, without understanding the onus of proof, has held that the accused is not guilty under Section 138 of the Negotiable Instruments Act and the said finding is not in accordance with law. Therefore, all these appeals are liable to be allowed.

Issues Involved:
1. Legality of the cheques issued under Section 138 of the Negotiable Instruments Act.
2. Admissibility and credibility of evidence presented by both parties.
3. Interpretation and application of statutory presumptions under the Negotiable Instruments Act.
4. Quantum of sentence for the accused.

Detailed Analysis:

1. Legality of the Cheques Issued under Section 138 of the Negotiable Instruments Act:
The complainant filed four private complaints against the accused under Section 138 of the Negotiable Instruments Act, alleging that the accused issued eight cheques to discharge a liability of ?3,02,572.10. The cheques were dishonoured due to insufficient funds. The trial court found the accused guilty and sentenced him to two years of simple imprisonment and a fine of ?5,000/- for each case. The Sessions Court reversed this decision, acquitting the accused. The High Court, upon appeal, held that the cheques were issued to discharge a legally enforceable debt, thus confirming the accused's guilt under Section 138.

2. Admissibility and Credibility of Evidence Presented by Both Parties:
The complainant presented evidence, including the cheques and statutory notices, while the accused argued that the cheques were issued conditionally and that the complainant failed to deliver goods within the stipulated time, causing a loss. The trial court accepted the complainant's evidence, but the Sessions Court found the accused's version credible. The High Court, however, noted that the accused failed to produce relevant documents such as rejection orders from J.J.M. Company, Chennai, and concluded that the accused's evidence was not credible without these documents.

3. Interpretation and Application of Statutory Presumptions under the Negotiable Instruments Act:
The High Court emphasized the statutory presumption under Section 139 of the Negotiable Instruments Act, which presumes that the cheque was issued for the discharge of a debt or liability unless rebutted by the accused. The court referenced the Supreme Court's rulings in Rangappa vs. Sri Mohan and M.M.T.C. Limited vs. Medchl Chemicals and Pharma (P) Limited, which support the presumption of liability when the signature on the cheque is admitted. The accused's failure to substantiate his claims with credible evidence led the High Court to uphold the presumption in favor of the complainant.

4. Quantum of Sentence for the Accused:
While the trial court sentenced the accused to two years of simple imprisonment, the High Court deemed this excessive considering the value of the cheques. The sentence was reduced to three months of simple imprisonment with a fine of ?5,000/- for each case, maintaining the fine amount imposed by the trial court. This adjustment balanced the need for punishment with the proportionality of the offence.

Conclusion:
The High Court allowed the appeals, setting aside the Sessions Court's judgments and reinstating the trial court's findings of guilt under Section 138 of the Negotiable Instruments Act. The sentences were modified to three months of simple imprisonment and a fine of ?5,000/-, reflecting a more proportionate response to the offence.

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