2021 (10) TMI 1066 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - legally enforceabe debt or not - acquittal of respondent/accused of the charge under Section 138 of the Negotiable Instruments Act, 1881 - rebuttal of presumption - HELD THAT - It is quite clear that presumption under Section 139 of the Act, 1881 covers legally enforceable debt or liability, in other words the law of aforesaid presumption as it stands now after the judgment of Supreme Court in the matter of Rangappa 2010 (5) TMI 391 - SUPREME COURT is that once the issuance of the cheque is admitted or proved, the trial Court is duty bound to raise presumption that the dishonoured cheque placed before it was indeed issued in discharge of legally enforceable debt or liability of the amount mentioned therein, although the presumption in this regard is a rebuttable one. Looking to the provisions contained in Section 139 of the Act, 1881 the learned trial Magistrate ought to have presumed that cheque (Ex.P-2) was issued by respondent/accused for the discharge of loan amount/legally enforceable debt as has been stated by Mahendra Kumar Sahu (PW-1) because the accused has not examined himself or adduce any evidence to rebut the aforesaid presumption. Although, in the statement recorded under Section 313 of the CrPC, respondent/accused has stated that he has not given any cheque to the complainant but the statement of the accused recorded under Section 313 of the CrPC is not a substantive evidence of defence, but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case of the accused. Mahendra Kumar Sahu (PW-1) has proved in this case that cheque (Ex.P-2) amounting of ₹ 4,72,366/- had been issued by the respondent/accused in favour of appellant/complainant, which was dishonoured and after receiving intimation (Ex.P-3) in this regard, notice (Ex.P-4) was sent to the accused for payment of cheque amount but despite service of notice, respondent/accused did not pay the cheque amount to the complainant and thereby complainant has complied with the necessary provisions of Section 138 of the Act, 1881, which is well supported by aforesaid documents also, therefore, on the basis of legal presumption under Sections 139 and 118 of the Act, 1881, it is proved that the cheque was issued by the respondent/accused to discharge loan amount/legally enforceable debt. The finding arrived at by the trial Magistrate is unsustainable in law. The appellant/complainant is entitled to get the cheque amount of ₹ 4,72,366/- and in addition to that since the transaction is of the year, 2012, he is entitled to get ₹ 2 lakhs more on account of expenses and interest. The respondent/accused is convicted for offence under Section 138 of the Negotiable Instruments Act, 1881 and awarded sentence of fine to the tune of ₹ 6,72,366/-, in default thereof, to undergo simple imprisonment of four months - the appeal is allowed reversing the acquittal.

Summary

Issues:
Acquittal appeal against judgment under Section 138 of the Negotiable Instruments Act, 1881.

Analysis:
The appellant/complainant filed an appeal against the acquittal judgment by the trial court in a case involving a cheque issued by the respondent/accused for a loan repayment. The appellant contended that the trial court erred in not considering the legal presumption under Section 139 of the Act, 1881, which shifts the burden of proof to the accused once the issuance of the cheque is established. The appellant argued that the respondent failed to rebut this presumption by not providing any evidence. The appellant relied on the legal principle established in the case of Rangappa v. Sri Mohan, emphasizing the existence of a legally enforceable debt or liability when a cheque is issued. The appellant also highlighted the necessity for the trial court to raise the presumption that the dishonored cheque was issued to discharge a debt, which is a rebuttable presumption.

The court examined the evidence presented by the appellant/complainant, particularly the testimony of Mahendra Kumar Sahu (PW-1), who provided details regarding the loan agreement, the dishonored cheque, and the legal notice served to the respondent. The court noted that the respondent did not present any evidence to counter the presumption under Section 139 of the Act, 1881. The court emphasized that the statement made by the accused under Section 313 of the CrPC is not substantive evidence but an opportunity to explain incriminating circumstances. The court referenced the case of Sumeti Vij v. M/s. Paramount Tech Fab Industries to support the legal presumption regarding the issuance of a cheque for a legally enforceable debt. The court concluded that the trial court's failure to apply the legal presumptions correctly rendered its decision unsustainable in law.

As a result, the court allowed the appeal, reversed the acquittal, and convicted the respondent/accused under Section 138 of the Negotiable Instruments Act, 1881. The respondent was ordered to pay a fine of ?6,72,366, comprising the cheque amount and additional expenses and interest. Failure to pay the fine would result in four months of simple imprisonment. The court directed the respondent to deposit the amount within three months for payment to the appellant/complainant.