2023 (3) TMI 1531 - HC - Indian Laws

Dishonour of Cheque - legally enforceable debt - rebuttal of presumption - Section 139 of the NI Act - HELD THAT - Under Section 138 of the NI Act, where a cheque is issued by the drawer in the discharge of any debt or any other liability is returned by the bank unpaid, because the amount standing to the credit of that account is insufficient to honour the cheque, the said person is deemed to have committed an offence, subject to proviso to Section 138 which provides that the cheque should have been presented to the bank within the period of six months from the date of which it is drawn or within the period of its validity, whichever is earlier. The payee must also make a demand for the payment of the said amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by him from the bank regarding the return of the cheque unpaid, despite this demand, the drawer fails to make the payment within fifteen days of the receipt of the notice, a cause of action arises for prosecuting him for the offence punishable under Section 138 of the Act. Section 142 provides that the court shall take cognizance of an offence punishable under Section 138 of the Act upon receipt of a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque. Such complaint must be made within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138. However, discretion is given to the court to take cognizance of the complaint even after the prescribed period, if the complainant satisfies the court that he had sufficient cause for not making the complaint within such period. What is emerging from the materials on record is that the signatures of the petitioner, Pradip Patangia on the cheque cheque bearing No. 305949, dated 16.08.2016, drawn on SBI, and Gul Kumar Kalita on cheque cheque bearing No. 000014 dated 16.08.2016, drawn on the HDFC Bank, Tezpur Branch are not disputed by the petitioners. The petitioners have also not disputed that there are transactions between the parties. Therefore, once the petitioners have admitted that the cheques bear their signature there is presumption that there exists a legally enforceable debt or liability under Section 139 of the N.I. Act. However, such a presumption is rebuttable in nature and the accused is required to lead the evidence to rebut such presumption. Coming back to the facts in the present case and considering that the petitioners have not denied their signatures on the cheques in question and that even according to the petitioners, agreement was made between the parties for cancellation of execution of deed for sale of land, there is a presumption under Section 139 of the NI Act that there exists a legally enforceable debt or liability. Of course, such presumption is rebuttable in nature and the same could only be done by adducing evidence at trial, but at this stage as the minute appreciation of evidence is not to be done complaint could not be quashed on this score. Therefore, at this stage of trial, the respondent/complainant is entitled for the presumption as provided under Section 139 of the NI Act. This Court does not find any merit in this petition. Thus, the criminal petitions being Criminal Petition No. 156 of 2018 and Criminal Petition No. 242 of 2018 are dismissed.

Issues Involved:

1. Quashing of proceedings under Section 482 CrPC for alleged offences under Section 138 and 142 of the Negotiable Instruments Act.
2. Presumption of legally enforceable debt under Section 139 of the NI Act.
3. Validity of agreements and their enforceability in the context of the NI Act.
4. Abuse of process of law and securing the ends of justice.
5. Admissibility of evidence and statutory presumptions under the NI Act.

Issue-wise Detailed Analysis:

1. Quashing of proceedings under Section 482 CrPC for alleged offences under Section 138 and 142 of the Negotiable Instruments Act:

The petitioners sought to quash the criminal proceedings against them under Section 482 CrPC, arguing that the complaints filed under Section 138 of the NI Act were based on void agreements and unauthorized settlements. The court examined whether the proceedings constituted an abuse of process and whether the statutory requirements under Section 138 were met. The court emphasized that the issuance of cheques and their dishonor due to insufficient funds or "Cheque Stop Instruction" constituted prima facie evidence of an offence under Section 138, thus justifying the continuation of proceedings.

2. Presumption of legally enforceable debt under Section 139 of the NI Act:

The court highlighted the presumption under Section 139 of the NI Act, which assumes that a cheque was issued for a legally enforceable debt or liability unless proven otherwise. The petitioners admitted their signatures on the cheques, thereby triggering this presumption. The court cited precedents, including Rangappa vs. Sri Mohan, to affirm that the burden of rebutting this presumption lies with the accused, who must provide evidence to counter the claim of a legally enforceable debt.

3. Validity of agreements and their enforceability in the context of the NI Act:

The petitioners argued that the agreements related to the land transactions were void and unenforceable, thus invalidating the cheques issued. However, the court noted that the validity of these agreements was a matter of factual dispute, which could not be resolved in a petition under Section 482 CrPC. The court stated that such issues should be addressed during the trial, where evidence could be presented and examined.

4. Abuse of process of law and securing the ends of justice:

The petitioners contended that the proceedings were an abuse of process, as the cheques were procured through unauthorized agreements. The court, however, found that the statutory conditions for initiating proceedings under Section 138 were fulfilled, and the presumption of a legally enforceable debt was not adequately rebutted by the petitioners. Therefore, the continuation of the proceedings was deemed necessary to secure the ends of justice.

5. Admissibility of evidence and statutory presumptions under the NI Act:

The court addressed the admissibility of evidence related to the agreements and the cheques. It reiterated that the presumption under Section 139 is rebuttable, and the accused must present evidence to challenge the presumption of a legally enforceable debt. The court emphasized that mere denial of the existence of debt is insufficient to rebut the presumption, as established in Kisan Rao vs. Shankargouda.

Conclusion:

The court dismissed the criminal petitions, finding no merit in the arguments for quashing the proceedings. It directed the trial court to proceed with the cases in accordance with the law, allowing the parties to present evidence and arguments. The court clarified that its observations were not to be construed as opinions on the merits of the case, leaving the trial court to reach its conclusions based on the evidence presented. The stay order, if any, was vacated accordingly.

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