2022 (11) TMI 851 - HC - Indian Laws

Dishonor of Cheque - insufficient funds - part payment of cheque was claimed to be done - endorsement in the cheque for the part payment - HELD THAT - It is made clear that the provisions under Section 56 r/w Section 15 of the Negotiable Instruments Act, an endorsement may be made by recording the part-payment of the debt in the cheque or in a note appended to the cheque. When such an endorsement is made, the instrument could still be used to negotiate the balance amount. If the endorsed cheque when presented for encashment of the balance amount is dishonoured, then the drawee can take recourse to the provisions of Section 138. Thus, when a part- payment of the debt is made after the cheque was drawn but before the cheque is encashed, such payment must be endorsed on the cheque under Section 56 of the Act. The cheque cannot be presented for encashment without recording the part payment - When the respondent was recalled, he deposed that now, the petitioner was in due of Rs.65,000/- out of Rs.1,00,000/-. Therefore, the petitioner did not make any payment after issuance of the cheque and before the said cheque was presented for encashment. The Statute mandates that once the signature(s) of an accused on the cheque are established, then these 'reverse onus' clauses become operative. In such a situation, the obligation shifts upon the accused to discharge the presumption imposed upon him. Admittedly, the petitioner did not even send any reply and failed to examine any witness to rebut the presumption. Toth the Courts below rightly found the petitioner guilty for the offence punishable under Section 138 of Negotiable Instruments Act and sentenced him to pay the fine amount. Hence, 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:
Petitioner challenging order under Section 138 of Negotiable Instruments Act.

Analysis:
The petitioner borrowed Rs.1,00,000 for family expenses and issued a cheque, which was dishonored due to insufficient funds, leading to a complaint under Section 138 NI Act. The Trial Court found the petitioner guilty, imposing a fine of Rs.65,000 or two months imprisonment. The petitioner's appeal was dismissed, prompting this revision.

The petitioner argued that the respondent admitted receiving part payment but presented the full amount cheque, citing a Supreme Court judgment. However, the respondent clarified that the petitioner still owed Rs.65,000 after making a partial payment of Rs.35,000 while the complaint was pending. The Supreme Court ruling emphasized that for Section 138, the cheque must represent a legally enforceable debt on maturity, and any part payment must be endorsed on the cheque.

The court noted that the petitioner did not make any payment after issuing the cheque and before its presentation for encashment, failing to comply with Section 56 of the Act. The petitioner's failure to rebut the presumption against him due to established signatures on the cheque further strengthened the case. Both lower courts correctly convicted the petitioner under Section 138 NI Act, upholding the fine. Consequently, the revision was dismissed.

In conclusion, the court upheld the lower courts' decisions, finding no errors or illegalities. The dismissal of the Criminal Revision case affirmed the petitioner's conviction under Section 138 of the Negotiable Instruments Act.