2023 (12) TMI 162 - HC - Indian Laws

Dishonour of Cheque - challenge to reversal and acquittal passed by the Additional Sessions Judge - discharge of a liability or debt or not - rebuttal of presumption - appellant failed to discharge his burden - HELD THAT - Section 138 of the Negotiable Instruments Act, 1881, has provided for punishment regarding an offence of dishonour of cheque which was delivered in discharge in whole or in part of any debt or other liability and for the reasons of insufficiency etc. of the funds in the account of the drawer. The statutory presumption as enumerated under Section 139 of the said Act in favour of the holder of the cheque is that the holder has received the same in due discharge of the whole or part of any debt or other liability. The Supreme Court in the case of Bir Singh Vs. Mukesh Kumar 2019 (2) TMI 547 - SUPREME COURT has held that presumption is a rule of evidence and do not conflict with the presumption of innocence which requires the prosecution to prove it beyond reasonable doubt. It has been held in a catena of judgment of various constitutional Courts including the Apex Court that the presumption under Section 139 of the Act is rebuttable presumption in nature, since the accused issuing the cheque is at liberty to prove to the contrary. The presumption of law pursuant to the provisions under Section 139 of the Negotiable Instruments Act, 1881, would not release the prosecution from burden of proving the fact that the relevant point of time there existed a legally enforceable debt as against the accused persons, in this case also the Court has to ascertain if such a initial burden is discharged by the prosecution appropriately or not. Only then the Court should apply the presumption as above against the accused persons to expose them for rebuttal of the same. Considering the nature of transaction as shown by the exhibit 1 , I find that the decision of the first appellate Court that money if at all changed hands, was pursuant to the business undertaken by the present appellant and the cheque was handed over as a security in lieu of obtaining the amount. This is more so, when there is no doubt in view of exhibit 1 that the parties have agreed for paying interest over the amount, for over a considerable period of time - the prosecution in this case has not been successful in discharging its initial burden that the cheque was issued by the present respondents in discharge of their legally enforceable debt towards the appellant. The initial burden of prove lied on the appellant himself to come up with the adequate material before the Court to show that on the particular date he had a legally enforceable debt recoverable from the respondents. As elaborately discussed above, the appellant had failed in discharging his such burden. The rest of the questions raised in this appeal would only be unnecessary for discussion any further. This Court finds no irregularity or illegality in the impugned judgment of the first appellate Court - Appeal dismissed.

Summary

Issues Involved:
1. Applicability of Bengal Money Lenders Act, 1940, in a case under Section 138 of the Negotiable Instruments Act, 1881.
2. Legally enforceable debt and issuance of cheque as security.
3. Service of statutory notice.

Summary:

1. Applicability of Bengal Money Lenders Act, 1940:
The appellant argued that the first appellate Court erred in applying the Bengal Money Lenders Act, 1940, to a case under Section 138 of the Negotiable Instruments Act, 1881. The appellant's counsel, Ms. Mitra, contended that the provisions of the Bengal Money Lenders Act, 1940, are not relevant in proceedings under Section 138 of the Negotiable Instruments Act, 1881. She cited judgments in Samarendera Nath Das vs. Supriya Maitra and Sajal Guha vs. Maniklal Ghosh to support that the legality or illegality of the money lending business is not a ground to dismiss a complaint under Section 138.

2. Legally enforceable debt and issuance of cheque as security:
The respondents argued that the cheque in question was issued as security and not against any legally enforceable debt. They cited the judgment in Sudhir Kumar Bhalla vs. Jagdish Chand, which states that dishonour of a cheque issued as security is not prosecutable under Section 138 of the Negotiable Instruments Act, 1881. The first appellate Court held that the appellant failed to prove the existence of a legally enforceable debt, as he could not produce a money lender's license, thus constituting an adverse inference against him. The Court found that the cheque was issued as security, and the appellant did not discharge the initial burden of proving a legally enforceable debt.

3. Service of statutory notice:
The respondents contended that the statutory notice was not properly served. Mr. Dan, representing the respondents, argued that the statutory notice must reach the accused to be valid, as per the judgment in M/s. Harman Electronics (P) Ltd. & Anr. vs. M/s. National Panasonic India Ltd. The Court noted that the service of notice is mandatory and the appellant failed to prove that the notice was duly served.

Conclusion:
The High Court upheld the judgment of the first appellate Court, which reversed the Magistrate's conviction and acquitted the respondents. The Court found no irregularity or illegality in the appellate Court's decision, emphasizing that the appellant failed to prove the existence of a legally enforceable debt and the proper service of statutory notice. The appeal was dismissed.