2023 (6) TMI 291 - HC - Indian Laws

Dishonour of Cheque - insufficient funds - discharge of legally enforceable debt or liability or not - acquittal of the accused - rebuttal of statutory presumption - HELD THAT - In the instant case, issuance of cheque in discharge of legally enforceable debt is admitted by the respondent. The presentation of cheque for clearance through banker and its dishonor is also proved. Service of notice is also not denied. The only defence projected by the respondent is that the loan against which the cheque in question was given as security to the appellant stands liquidated but he has not stated anything about demand to return the cheque and if refused what steps have been taken by him for recovery of the cheque. It has also come in the evidence that the vehicle against which the loan was got by the respondent in the year 1997 from the appellant was refinanced in the year 2001-2002. May be for this reason the respondent has not pressed for return of the cheque and agreed to keep the earlier cheque as security against the second loan also. From a bare reading of Section 139 of the N.I. Act, it becomes clear that unless the contrary is proved, it is to be presumed that the holder of the cheque received the cheque for the discharge, in whole or in part, of any debt or other liability. True it is that the presumption contemplated under Section 139 of the Negotiable Instrument Act is rebuttable presumption, however, onus of proving by cogent evidence that cheque was not in discharge of any debt or other liability is on the accused-respondent. The respondent has not taken a plea that he had not issued the cheque rather he had taken a stand it was just a security cheque and that he had repaid the loan and had not raised any subsequent loan. However, during the trial before the Trial Court he could not prove the facts raised by him in his defence as the same were required to be proved by him being onus on him due to presumptions under the Act. So far the issuance of cheque as security cheque is concerned, the same has been authoritatively decided by the Apex Court and also by the High Courts in the judgments referred hereinabove and the same is no defence available to the respondent as an accused - this court is of the opinion that the respondent had failed to raise a probably defence regarding existence of a legally enforceable debt or liability by leading cogent evidence. The complainant by leading cogent evidence that the accused had issued a cheque against a liability to the complainant, which on presentation to the bank of the accused was dishonored for insufficient funds and despite issuance of legal notice; accused failed to make the payment, has proved the ingredients of the offence punishable U/S 138 of N.I. Act. More so coupled with the statutory presumption as discussed hereinabove, which accused failed to repudiate. Thus, it is held that complainant has succeeded to prove against the accused the commission of offence punishable U/S 138 of N.I. Act. The Trial court has, thus, misdirected itself in appreciation of the evidence on record to record his acquittal. The impugned judgment is, thus, liable to be set aside being unsustainable - appeal allowed.

Summary

Issues Involved:
1. Legally enforceable debt or liability.
2. Presumption under Section 118 and 139 of the Negotiable Instruments Act.
3. Issuance and validity of a blank cheque.
4. Appreciation of evidence by the trial court.
5. Defence of the accused regarding loan repayment.

Summary:

1. Legally Enforceable Debt or Liability:
The appellant-complainant alleged that the respondent-accused took a loan for purchasing a vehicle and issued a cheque which was dishonored due to insufficient funds. The trial court dismissed the complaint, holding that the accused raised a probable defense, creating doubt about the existence of a legally enforceable debt or liability.

2. Presumption under Section 118 and 139 of the Negotiable Instruments Act:
The appellant argued that since the respondent admitted issuing the cheque and signing it, the presumption under Section 118 of the Negotiable Instruments Act should be drawn in favor of the appellant. The court noted that Section 139 presumes that the holder of a cheque received it for the discharge of any debt or liability unless proven otherwise. The Supreme Court's rulings in M/S M.M.T.C. Ltd. v. M/S Medchi Chemicals & Pharma (P) Ltd. and Bir Singh v. Mukesh Kumar were cited to support this position.

3. Issuance and Validity of a Blank Cheque:
The trial court's observation that the cheque was a blank cheque and thus not legally enforceable was contested. The court referred to the Supreme Court's judgment in Bir Singh v. Mukesh Kumar, which held that even a signed blank cheque, if voluntarily presented to a payee, can be filled up and does not invalidate the cheque. The Kerala High Court in General Auto Sales v. Vijaylakshmi and the Punjab & Haryana High Court in Amarjit Singh v. Mohinder Singh also supported this view.

4. Appreciation of Evidence by the Trial Court:
The appellant contended that the trial court misdirected itself in appreciating the evidence on record. The court found that the trial court gave undue weightage to the statements of the defense witnesses and failed to properly consider the evidence presented by the complainant.

5. Defence of the Accused Regarding Loan Repayment:
The respondent-accused claimed that the loan was repaid and the cheque was given as security. However, the court noted that the respondent did not provide evidence of demanding the return of the cheque or taking steps to recover it. The court found that the respondent's defense was not substantiated by cogent evidence.

Conclusion:
The court concluded that the complainant successfully proved the commission of the offense under Section 138 of the N.I. Act. The trial court's judgment was set aside, and the respondent was convicted and sentenced to pay a fine of Rs. 1,00,000. The appeal was allowed, and the trial court record was sent down for follow-up action.