2024 (8) TMI 774 - SC - Indian Laws

Dishonour of cheque - legally enforceable liability - rebuttable presumption - burden on the respondent to rebut the presumption by introducing evidence was initially not done for no justifiable/valid reason - plea for adducing additional evidence under Section 391 of the Code, the presumption has not been dislodged as required under law, and still the accused has been acquitted. HELD THAT - This Court in DASHRATH RUPSINGH RATHOD VERSUS STATE OF MAHARASHTRA ANOTHER 2014 (8) TMI 417 - SUPREME COURT held that An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank. The fact that the cheque was issued as a consequence of failure to repay the loan taken by the respondent from the appellant to which the interest was added would more or less settle the issue. However, in the present case, a discrepancy apropos the rate of interest, whether it be 1.8%, 2.4% or 3% per month was not sufficient to disbelieve the claim of the appellant. The reasoning given by the Appellate Court, having taken note of the Tamil Nadu Act, fails to appreciate that even going by what has been written on the pronote i.e., 1.8% per month would lead to the interest being 21.6% per annum, which also is above the cap of 12% per annum prescribed in the Tamil Nadu Act. Thus, if the parties amongst themselves, agreed to a rate which is not in conformity with the Tamil Nadu Act, it was for the respondent to raise an objection or move the appropriate forum for getting the same corrected/taken care of, so that the interest rate did not exceed 1% per month but having agreed to a rate of 1.8% per month, the subsequent amount of interest calculated @ 3% per month does not have much force for it was upon the respondent to challenge the rate of interest. The respondent also cannot be said to be a layman, and being a subscriber to a chitfund company, he is expected to be aware of the laws and also of what is beneficial for him. The Appellate Court s order as also the impugned judgment are set aside. The order of the learned Trial Court stands restored albeit with certain modifications. It is considered appropriate to direct the respondent to pay fine amounting to one and a half (1 ) times the amount mentioned in the cheque - Appeal allowed.

Summary

Issues Involved:
1. Legally enforceable liability under Section 138 of the N.I. Act.
2. Rebuttable presumption under Sections 138, 139, and 118(a) of the N.I. Act.
3. Admissibility and impact of additional evidence under Section 391 of the Code.
4. Applicability of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003.
5. Discrepancy in the rate of interest and its impact on the enforceability of the cheque.
6. Conduct and intent of the respondent in closing the bank account.

Issue-wise Detailed Analysis:

1. Legally Enforceable Liability under Section 138 of the N.I. Act:
The case revolves around the dishonour of a cheque issued by the respondent to the appellant for a sum of Rs.19,00,000/-. The cheque was returned with the endorsement 'Account Closed'. The Trial Court convicted the respondent under Section 138 of the N.I. Act, which was later overturned by the Appellate Court and upheld by the High Court. The Supreme Court emphasized that the issuance of the cheque itself creates a presumption of a legally enforceable debt or liability.

2. Rebuttable Presumption under Sections 138, 139, and 118(a) of the N.I. Act:
The appellant argued that once the issuance of the cheque is admitted, a presumption arises under Sections 138, 139, and 118(a) of the N.I. Act, which the respondent failed to rebut. The Supreme Court noted that the respondent did not discharge the burden of rebutting this presumption, even with the additional evidence allowed under Section 391 of the Code.

3. Admissibility and Impact of Additional Evidence under Section 391 of the Code:
The Appellate Court allowed the respondent to introduce additional evidence under Section 391 of the Code, which included receipts purportedly showing repayment of the loan. The Supreme Court found that the additional evidence did not conclusively prove the total discharge of the loan amount, as it only highlighted discrepancies in the interest rates.

4. Applicability of the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003:
The Appellate Court and the High Court considered the Tamil Nadu Act, which caps the interest rate at 12% per annum. The Supreme Court observed that even if the interest rate was capped at 12%, the principal amount was not disputed. The respondent should have challenged the interest rate in an appropriate forum rather than in the proceedings under the N.I. Act.

5. Discrepancy in the Rate of Interest and Its Impact on the Enforceability of the Cheque:
The Appellate Court and the High Court focused on the discrepancy in the interest rates (1.8% vs. 3% per month). The Supreme Court ruled that this discrepancy was not sufficient to disbelieve the appellant's claim, as the principal amount was not disputed, and the respondent failed to produce all receipts showing total repayment.

6. Conduct and Intent of the Respondent in Closing the Bank Account:
The Supreme Court questioned the respondent's conduct and intent in closing the bank account shortly after issuing the cheque. This action raised doubts about the respondent's bona fides and supported the appellant's claim that the cheque was issued for a legally enforceable liability.

Conclusion:
The Supreme Court set aside the Appellate Court's order and the High Court's judgment, restoring the Trial Court's order with modifications. The respondent was directed to pay a fine amounting to one and a half times the cheque amount (Rs.28,50,000/-) within eight months, failing which the sentence of simple imprisonment for one year would be revived. The appeal was allowed, and parties were left to bear their own costs.