2022 (11) TMI 788 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - legally enforceable debt or not - failure to establish the case beyond any reasonable doubt to prove his case - rebuttal of statutory presumption - Section 138 of Negotiable Instruments Act - HELD THAT - Admittedly, Exs.P2 to P4 were issued for legally enforceable debt in favour of the respondent. All the cheques were returned by the bank unpaid. Therefore, the respondent clearly fulfilled the basic requirement under Section 138 of Negotiable Instruments Act. The reason stated by the petitioners' bank is clearly attracted for the offence punishable under Section 138 of Negotiable Instruments Act for returning the cheque dishonoured. The first petitioner is the Proprietrix of Arpan Exports. The second petitioner is the Mandate Holder of the said Arpan Exports and he is authorized to run the Proprietrix concern including to operate the account of the first petitioner herein. Therefore, the respondent rightly filed a complaint for the offence punishable under Section 138 of Negotiable Instruments Act as against the Proprietrix and the mandate holder, who signed the cheque. It is not the case of the petitioners that without the consent of the first petitioner, the second petitioner issued cheques. In order to repay the loan which was borrowed by both the accused, they issued cheques in favour of the respondent - it cannot be said that Exs.P8 and P9 is inadmissible evidence. Hence, the respondent proved his case in terms of Sections 118 and 139 of Negotiable Instruments Act. Though, the said presumption is rebuttable in nature, it is the burden of the petitioners to rebut the said presumption. However, in order to rebut the said presumption, the petitioners neither produced any oral nor marked any documentary evidence. In fact, nothing was elicited from P.W.1 to rebut the presumption. Both the Courts below rightly found the petitioners guilty for the offence punishable under Section 138 of Negotiable Instruments Act and this Court finds no infirmity or illegality in the orders passed by the Courts below and this revision is liable to be dismissed - this Criminal Revision case stands dismissed.

Summary

Issues:
Challenge to judgment in C.A.No.32 of 2014 confirming order in C.C.No.5433 of 2004 for offence under Section 138 of Negotiable Instruments Act.

Analysis:
The case involved a challenge to a judgment confirming an order in a complaint lodged under Section 138 of the Negotiable Instruments Act. The respondent alleged that the petitioners borrowed a sum of money for business development, failed to repay it, and issued cheques that were dishonored due to the account being attached by the Provident Fund Commissioner. The Trial Court found the petitioners guilty, sentencing them to imprisonment and compensation. The petitioners contended that no mandatory notice was received, the second petitioner was only a Mandate holder, and the account attachment did not attract the offence under Section 138. However, records showed that the petitioners knowingly issued cheques from an attached account, meeting the requirements of Section 138.

The court examined the provisions under Section 138, emphasizing the dishonor of cheques due to insufficient funds or exceeding arranged amounts. The court found that the cheques issued were for a legally enforceable debt, returned unpaid, fulfilling the Act's basic requirements. The respondent's complaint against the Proprietrix and Mandate Holder was justified as both were involved in issuing the cheques. The petitioners' argument regarding lack of consent or inadmissible evidence of notices was dismissed. The court noted that the petitioners failed to rebut the presumption under Sections 118 and 139 of the Act, as no evidence was produced to counter the respondent's case.

Both lower courts correctly found the petitioners guilty under Section 138, with no identified errors or illegalities in their decisions. As a result, the Criminal Revision case was dismissed, affirming the previous judgments.