2022 (3) TMI 979 - HC - Indian Laws

Dishonor of Cheque - discharge of legally enforceable debt or not - rebuttal of accused - control of cases under the Negotiable Instruments Act - HELD THAT - On perusal of the lower Court record it is found that the complainant produced the challans and invoices issued in the name of M/s. Sangeeta Construction which were marked as exhibit-2 collectively. On perusal of the cross-examination of the complainant who deposed during trial as P.W. 1. It is found that no suggestion was even put to the P.W. 1 to the effect that the cheques in question were issued by the respondent No. 2 as security deposit. On the contrary, it is specifically asked on behalf of the defence to P.W. 1 through his cross-examination as to whether he had documents in support of his claim that ₹ 3,45,781/- was issued from the accused. The witness replied to the said question in the affirmative - The learned Magistrate also did not consider the legality, validity, sufficiency and service of demand notice issued by the complainant before the filing of the case. This Court is of the view that the learned Magistrate failed to consider the basic tenets of control of cases under the Negotiable Instruments Act. Therefore, this Court is of the view that the learned Magistrate should undergo a training in the State Judicial Academy on the control of cases under Negotiable Instruments Act. In view of the fact that the learned Magistrate did not discuss the validity and service of demand notice in the impugned judgment, while setting aside the judgment, this Court is of the view that the complaint case should be remitted back to the trial Court for delivery of judgment within one month from the date of receipt of the lower Court record and communication of the judgment passed by this Court. Appeal allowed.

Summary

Issues:
1. Dismissal of complaint under Section 138 of the Negotiable Instruments Act by the Magistrate.
2. Failure to consider legal presumptions under Section 139 of the N.I. Act.
3. Lack of consideration of legality, validity, sufficiency, and service of demand notice.
4. Lack of adherence to basic tenets in controlling cases under the Negotiable Instruments Act.

Analysis:
1. The complainant, a partnership firm, filed a complaint under Section 138 of the N.I. Act against the respondent, alleging dishonor of three cheques issued to discharge a debt. The Magistrate acquitted the respondent, stating the cheques were security deposits and lack of proof of existing debt. However, the Magistrate's judgment was found lacking as it did not consider crucial evidence, challans, and invoices proving the debt, leading to the High Court setting aside the judgment and remitting the case for a fresh decision.

2. The High Court highlighted the legal presumption under Section 139 of the N.I. Act, stating that unless disproved, the holder of a dishonored cheque is presumed to have received it against a debt. The Magistrate's failure to apply this presumption and shift the burden of proof to the respondent was a critical oversight. The Court emphasized that the presumption under this section discharges the complainant's burden to prove the debt, which the Magistrate failed to recognize, necessitating a reevaluation of the case.

3. Another significant issue was the Magistrate's neglect of the legality, validity, sufficiency, and service of the demand notice before the complaint filing. The Court pointed out that the Magistrate's oversight in assessing the demand notice's compliance with legal requirements was a serious lapse, indicating a lack of thorough consideration of essential procedural aspects in cases under the N.I. Act.

4. The High Court criticized the Magistrate for not adhering to the fundamental principles governing cases under the Negotiable Instruments Act. It emphasized the importance of proper training for Magistrates in handling such cases effectively. The Court directed the Magistrate to undergo training at the State Judicial Academy on the control of cases under the N.I. Act, highlighting the necessity for judicial officers to have a comprehensive understanding of the legal framework and procedures governing negotiable instruments cases.

In conclusion, the High Court allowed the appeal, set aside the Magistrate's judgment, and ordered the case to be remitted back for a fresh decision, emphasizing the importance of adherence to legal presumptions, procedural requirements, and fundamental principles in cases involving negotiable instruments.