2022 (8) TMI 606 - HC - Indian Laws

Dishonor of Cheque - preponderance of probabilities - Burden to prove (reverse onus clause) - rebuttal of presumption available under Section 139 of Negotiable Instruments Act 1881 - HELD THAT - It has been held by Hon ble Supreme Court in RANGAPPA VERSUS SRI MOHAN 2010 (5) TMI 391 - SUPREME COURT that Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques the rebuttable presumption under section 139 is a device to prevent undue delay in the course of litigation. In the absence of compelling justifications reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. In the case in hand the petitioner has not disputed cheque in question and signatures found therein. The petitioner admitted that cheque in question belongs to him and they bear his signature. When the drawer has admitted the issuance of cheque as well as the signature present therein the presumption envisaged under Section 118 read with Section 139 of NI Act would operate in favour of the complainant. The said provisions lays down a special rule of evidence applicable to negotiable instruments The trial court after examining all the evidences both oral and documentary concluded that on behalf of the complainant/O.P.No.2 sufficient material has been brought on record to prove that the complainant gave loan amount to the accused and in lieu of the loan amount accused issued cheque Ext.1 in favour of the complainant/O.P.No.2 and on presentation of the said cheque in the bank it was dishonoured. Thereafter legal notice was sent. These factual findings goes to show that all the requirements to establish a case under Section 138 of the N.I. Act has been fulfilled by the complainant. No interference is required so far as judgment of conviction is concerned and the same is hereby sustained. However so far as compensation amount and sentence is concerned the learned Appellate Court has sustained the compensation amount of Rs.9 lakhs and sentenced the petitioner to undergo S.I. for a period of 1 year - Having regard to the facts of the case and looking to the continuity of litigation since the case is of the year 2009 and 13 years have elapsed; interest of justice would be sufficed if the sentence part is modified in lieu of compensation itself. Thus the sentence of one year is hereby modified to the extent that the petitioner shall pay an amount of Rs.1 lakh over and above 9 lakhs compensation and after paying Rs.10 lakhs in total shall be discharged from his liability of bail bond. The instant criminal revision application is disposed of.

Summary

Issues Involved:
1. Validity of the cheque issuance and its purpose.
2. Rebuttal of presumption under Section 139 of the Negotiable Instruments Act.
3. Typographical errors in legal notice and complaint petition.
4. Legality of cash transactions under the Income-tax Act, 1961.
5. Sufficiency of evidence and documents presented.

Detailed Analysis:

1. Validity of the Cheque Issuance and Its Purpose:
The petitioner was convicted for the offence under Section 138 of the Negotiable Instruments Act, sentenced to simple imprisonment for one year, and ordered to pay Rs.9 lakhs as compensation. The complainant alleged that the petitioner received Rs.7,20,000/- through several account payee cheques and cash, and issued a post-dated cheque (No. 891585) which was dishonored due to insufficient funds. The petitioner argued that the cheque was issued as security for a real estate investment, not as repayment of debt.

2. Rebuttal of Presumption under Section 139 of the Negotiable Instruments Act:
The petitioner's counsel argued that the complainant did not approach the court with clean hands and tampered with court papers, including the cheque number. The defense relied on the principle that the standard of proof for rebutting the presumption under Section 139 is "preponderance of probabilities." The petitioner cited Supreme Court judgments to support this contention, arguing that the complainant failed to establish the source of funds and did not produce relevant documents.

3. Typographical Errors in Legal Notice and Complaint Petition:
The complainant's counsel admitted that there was a typographical error in the legal notice and complaint petition, where the cheque number was incorrectly typed as 891584 instead of 891585. However, the original cheque (No. 891585) was marked as Ext. 1, and the petitioner had admitted to issuing this cheque. The court held that such typographical errors do not invalidate the case, as the original cheque and its issuance were undisputed.

4. Legality of Cash Transactions under the Income-tax Act, 1961:
The petitioner contended that the alleged cash payments violated the Income-tax Act, 1961, which bars large cash transactions. The court did not find this argument sufficient to dismiss the case, as the primary issue was the dishonor of the cheque and not the mode of the original transaction.

5. Sufficiency of Evidence and Documents Presented:
The trial court found that the complainant provided sufficient material evidence, including the original cheque, cheque return memos, legal notice, postal receipts, and the reply to the legal notice. The petitioner admitted to issuing the cheque and his signature on it. The court concluded that the requirements to establish a case under Section 138 of the Negotiable Instruments Act were fulfilled by the complainant.

Conclusion:
The court sustained the judgment of conviction but modified the sentence. The petitioner was ordered to pay an additional Rs.1 lakh over the Rs.9 lakhs compensation, totaling Rs.10 lakhs, within ten weeks. The sentence of one year imprisonment was modified to this monetary penalty. The court directed that if the petitioner fails to pay the amount, the trial court shall proceed in accordance with the law. The criminal revision application was disposed of with these modifications and directions.