2022 (2) TMI 85 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - rebuttal of presumption - Section 138 of NI Act - HELD THAT - The arguments of the learned counsel for the petitioner to the effect that the loan agreement had not been produced on record and the complainant should have filed a civil suit for recovery, also does not deserve any merit. The factum with respect to the loan having been taken is not disputed. The issuance of cheque and the signatures on the same have also not been disputed. It is not the case of the petitioner that the loan had been repaid and even the Statement of Account Ex.C6 shows that an amount of ₹ 16,48,026.44 was due from the petitioner as on 10.08.2016. Further, once the cheque has been produced on record and outstanding amount has also been proved without there being any rebuttal to the same, then, the presumption under Section 139 of the Act of 1881 would operate in favour of the complainant. There is nothing on record to even remotely rebut the said presumption. The offer to pay 25% of the total amount is not sufficient inasmuch as, on a specific query put by the Court to the counsel for the petitioner, as to whether the petitioner is ready to pay the entire amount, learned counsel for the petitioner has answered the same in the negative. The present Criminal Revision has no merits and is accordingly, dismissed.

Summary

Issues:
Challenge to conviction under Section 138 of the Negotiable Instruments Act, 1881 and sentencing by Chief Judicial Magistrate. Appeal dismissal by Sessions Judge upholding conviction.

Analysis:
The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881 for dishonoring a cheque issued to the respondent-HDFC Bank Limited. The petitioner failed to repay the loan amount due, leading to the legal proceedings. The trial court and the Sessions Judge both found the petitioner guilty as the cheque was issued for a legally enforceable debt, and the petitioner did not dispute the loan or the signatures on the cheque. The legal notice was duly served, and the complaint was filed within the prescribed period.

The petitioner argued that no agreement was produced by the complainant-bank and offered to pay 25% of the cheque amount to settle the matter. However, the courts rejected the argument that the cheque was a security cheque, citing precedents and legal principles. The burden to rebut the presumption under Section 139 of the Act was on the accused, and the petitioner failed to provide evidence to disprove the debt or liability.

The judgments of the Hon'ble Supreme Court and a co-ordinate Bench of the High Court emphasized that even if a cheque is a security cheque, it does not absolve the drawer of liability under the Negotiable Instruments Act. The petitioner's argument regarding the loan agreement and the offer to pay 25% of the amount were deemed insufficient to absolve him of the offense committed. The court held that the presumption under Section 139 operated in favor of the complainant due to the lack of evidence to rebut it.

In light of the legal principles, precedents, and the facts of the case, the court found no merit in the petitioner's arguments and dismissed the Criminal Revision. The application for the suspension of the petitioner's sentence was also rendered infructuous and disposed of accordingly. The court upheld the conviction and sentencing, emphasizing the legal obligations and liabilities under the Negotiable Instruments Act.