2024 (5) TMI 1103 - HC - Indian Laws

Dishonour of Cheque - insufficient funds - legally enforceable debt or not - aquittal of accused - complaint did not produce any document to show that he has money lending authority - failure to rebut the presumption under Section 139 of the Negotiable Instruments Act - HELD THAT - In the present case, the Complainant has sent a demand Notice on the Cheque being dishonoured. And the presumption as per Section 139 N.I. Act is in favour of the Complainant. The accused did not rebut the presumption in any manner whatsoever. The findings of the Learned Magistrate is clearly against the provisions of Section 139 of the N.I. Act and thus not in accordance with law. In Oriental Bank of Commerce vs Prabodh Kumar Tewari, 2022 (9) TMI 264 - SUPREME COURT , the Supreme Court held that ' Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt.' The Respondent No. 2/accused, Raja Dutta is hereby convicted of the offence punishable under Section 138 of the Negotiable Instruments Act and is hereby directed to pay a fine of Rs. 8 lakhs within a period of two months from the date of this order in default to suffer imprisonment for six months and in default, the trial Court shall proceed in accordance with law. Application disposed off.

Summary

Issues Involved:
1. Legally enforceable debt.
2. Money lending authority.
3. Rebuttal of presumption u/s 139 of the Negotiable Instruments Act.

Summary:

Legally Enforceable Debt:
The petitioner claimed that the respondent issued four cheques totaling Rs. 4,90,000/- to discharge his liability for an interest-free accommodation loan. All cheques were dishonored due to "Fund Insufficient," and despite a demand notice, the respondent failed to make the payment, committing an offence u/s 138 of the Negotiable Instruments Act. The trial court acquitted the respondent, stating the debt was not legally enforceable as the complainant did not show the loan in his Income Tax file.

Money Lending Authority:
The trial court also acquitted the respondent on the grounds that the complainant did not produce any document proving his authority to lend money. The complainant argued that the cheques were issued to discharge an enforceable liability, and the respondent failed to rebut the presumption u/s 139 of the Negotiable Instruments Act.

Rebuttal of Presumption u/s 139 of the Negotiable Instruments Act:
The complainant provided evidence including the cheques, return memo, deposit slip, demand notice, postal receipt, and acknowledgment of service. The respondent's wife admitted the loan but claimed it was repaid without providing supporting documents. The trial court dismissed the case, stating the loan amount was unaccounted for and not shown in the Income Tax return, making it difficult to hold the cheques were issued towards a legally enforceable debt.

Conclusion:
The High Court cited several precedents, emphasizing that non-filing of Income Tax returns does not disprove the source of income or the enforceability of the debt. The presumption u/s 139 favors the complainant, and the respondent failed to rebut this presumption. The trial court's findings were against the provisions of Section 139 of the N.I. Act and thus not in accordance with law. The High Court set aside the trial court's judgment, convicted the respondent u/s 138 of the Negotiable Instruments Act, and directed him to pay a fine of Rs. 8 lakhs within two months or face imprisonment for six months.