2021 (3) TMI 1461 - HC - Indian Laws

Dishonour of Cheque - legally enforceable debt or liability or not - failure to draw presumption u/s 139 of NI Act, 1881 - cross-examination of complainant - HELD THAT - In the cross-examination of the complainant, the defence was that there was no transaction between the complainant and the accused and all the transactions of the complainant were with his brother Mohan Prasad Purohit and in the absence of his brother Mohan Prasad Purohit, the complainant had taken seven cheques from the shop of his brother. With respect to the cheque-in-question, which was dishonoured, the defence was that the said cheque was amongst the seven cheques, which was misused by the complainant. Under Section 139 of the Act, 1881, once a cheque has been signed and issued in favour of the holder, there is statutory presumption that it is issued in discharge of a legally enforceable debt or liability. However, this presumption is a rebuttable one. In Rangappa vs. Sri Mohan 2010 (5) TMI 391 - SUPREME COURT the Hon ble Supreme Court has held that in view of Section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability. It is for the accused to rebut the said presumption, though accused need not adduce his own evidence and can rely upon the material submitted by the complainant. There was no case in the reply of the accused that the complainant had taken seven cheques from the shop of his brother and the cheque-in- question was amongst the seven cheques, which was misused by the complainant. The statement of the accused under Section 313 of the Code of Criminal Procedure is not a substantive evidence of defence of the accused but only an opportunity to the accused to explain the incriminating circumstances appearing in the prosecution case. Mere statement of the accused may not be sufficient to rebut the presumption. Therefore, this Court does not see any basis in the contention of the learned counsel for the respondent that the respondent-accused has been successful in creating doubt in the mind of the Court with regard to the existence of the legally enforceable debt or liability. Section 141 of the Act, 1881 stipulates the liability for the offence punishable under Section 138 of the Act, 1881 when the person committing such an offence happens to be a company i.e. when the drawer of the cheque happens to be a company. For the purpose of Section 141 of the Act, 1881, a firm comes within the ambit of a company. Thus, it is clear that if the cheque had been issued by the firm which was subsequently dishonoured, a partner of the firm would not be liable for prosecution under Section 138 of the Act, 1881 without the firm being arraigned as an accused. In the present complaint, filed by the appellant-complainant before the learned trial court, the firm is not arraigned as an accused. The present appeal is devoid of merit. The present appeal is liable to be dismissed, the same is dismissed.

Summary

Issues Involved:
1. Whether the respondent-accused was liable under Section 138 of the Negotiable Instruments Act, 1881, without the firm being arraigned as an accused.
2. Whether the cheque was issued in discharge of a legally enforceable debt or liability.
3. Whether the presumption under Section 139 of the Act, 1881, was applicable and if it was rebutted by the respondent-accused.

Issue-wise Detailed Analysis:

1. Liability under Section 138 without Arraigning the Firm:
The primary issue was whether the respondent-accused could be held liable under Section 138 of the Negotiable Instruments Act, 1881, without the firm being arraigned as an accused. The trial court acquitted the respondent-accused based on the precedent set by the Hon'ble Supreme Court in the case of Aneeta Hada vs. Godfather Travels and Tours Pvt. Ltd., which held that without the firm being arraigned as an accused, the accused would not be liable for prosecution under Section 138. The appellant argued that the "Purohit Agency" was a proprietorship, thus not requiring separate arraignment. However, evidence suggested that "Purohit Agency" was a partnership firm, and the absence of the firm as an accused rendered the prosecution of the partner under Section 138 unsustainable.

2. Cheque Issued in Discharge of Debt or Liability:
The appellant-complainant claimed that the cheque was issued by the respondent-accused in discharge of a legally enforceable debt. The cheque was dishonored with the note "exceed agreement," and despite legal notice, no payment was made. The respondent contended that there was no commercial relationship with the complainant, and the transactions were with his brother, Mohan Prasad Purohit. The trial court found no evidence of a direct transaction between the complainant and the accused, and the cheque was allegedly part of seven cheques misused by the complainant. The court concluded that the complainant failed to establish that the cheque was issued for a legally enforceable debt.

3. Presumption under Section 139 and Rebuttal:
Section 139 of the Act presumes that a cheque is issued for the discharge of a debt or liability unless proven otherwise. The appellant argued that the presumption should apply, as the cheque was issued by the respondent. The respondent denied the signature on the cheque and claimed the cheque was misused. The trial court noted that the respondent did not provide evidence to support this claim, but the absence of arraigning the firm as an accused was a critical factor. The presumption under Section 139 was not effectively rebutted by the respondent, but the technicality of not arraigning the firm as an accused led to the acquittal.

Conclusion:
The High Court upheld the trial court's decision, emphasizing the necessity of arraigning the firm as an accused for prosecution under Section 138 when the cheque is issued by a partnership firm. The appeal was dismissed due to the lack of merit, and the respondent was directed to comply with Section 437-A of the Code of Criminal Procedure, 1973. The judgment highlighted the importance of procedural compliance in cases involving negotiable instruments and the liability of partners in a firm.