2024 (9) TMI 102 - HC - Indian Laws

Dishonour of cheque - insufficient funds - failure to rebut the presumption contained in Section 139 of the NI Act - HELD THAT - It was laid down by the Hon ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, 2022 (7) TMI 1455 - SUPREME COURT that the revisional court is not an appellate jurisdiction and it can only rectify the patent defect, errors of jurisdiction or the law. The Court has to start with the presumption that the cheque was issued in discharge of legal liability and the burden is upon the accused to prove the contrary. It was laid down by the Hon'ble Supreme Court in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd. 2016 (9) TMI 867 - SUPREME COURT that issuing a cheque toward security will also attract the liability for the commission of an offence punishable under Section 138 of N.I. Act. This position was reiterated in Sripati Singh v. State of Jharkhand, 2021 (11) TMI 66 - SUPREME COURT it was held that a cheque issued as security is not a waste paper and complaint under Section 138 of the N.I. Act can be filed on its dishonour. The accused admitted that she had received a notice and claimed that she came to know about the dishonour after the receipt of the notice. Therefore, the receipt of the notice is not disputed - it was duly proved on record that the accused had issued a cheque in discharge of her legal liability and the cheque was dishonoured due to insufficient funds and the accused failed to repay the amount despite the receipt of valid notice of demand. Therefore, all the ingredients of Section 138 of the NI Act were duly satisfied. The amount of compensation of ₹2,40,000/- is not excessive and no interference is required with the same. The present revision fails and the same is dismissed.

Issues Involved:
1. Validity of the judgment by the learned Trial Court and First Appellate Court.
2. Dispute regarding the payment and discharge of liability under Section 138 of the Negotiable Instruments Act (NI Act).
3. Admissibility and reliability of the evidence presented by the accused.
4. Applicability of legal presumptions under Sections 118 and 139 of the NI Act.
5. Validity of the cheque issued as security.
6. Quantum of sentence and compensation awarded.

Detailed Analysis:

1. Validity of the Judgment by the Learned Trial Court and First Appellate Court:
The revision petition was directed against the judgment dated 2.5.2022, by the Additional Sessions Judge, Kinnaur at Rampur Bushahr, which upheld the judgment and order of the Chief Judicial Magistrate, Kinnaur at Rampur. The judgments were challenged on the grounds of being based on conjectures and surmises, and for ignoring cogent and convincing evidence.

2. Dispute Regarding the Payment and Discharge of Liability:
The complainant, a transporter, alleged that the accused borrowed Rs. 3,05,000 in January 2016 and issued a cheque for Rs. 2,40,000, which was dishonored due to insufficient funds. The accused admitted borrowing the money and issuing the cheque but claimed to have repaid the amount. The Trial Court and Appellate Court found that the accused failed to establish repayment and thus upheld the conviction under Section 138 of the NI Act.

3. Admissibility and Reliability of Evidence Presented by the Accused:
The accused presented receipts (Ex. D1 to D4) and testimonies from defense witnesses to claim repayment. However, the Trial Court found the defense witnesses unreliable and noted inconsistencies in their statements. The accused's claim of repayment was not corroborated by credible evidence, and the Trial Court rightly discarded the defense evidence.

4. Applicability of Legal Presumptions Under Sections 118 and 139 of the NI Act:
The courts applied the presumption under Section 139 of the NI Act, which states that the cheque is presumed to be issued for the discharge of a debt unless proven otherwise. The accused admitted to issuing the cheque and borrowing the money, thus triggering the presumption. The burden shifted to the accused to rebut this presumption, which she failed to do convincingly.

5. Validity of the Cheque Issued as Security:
The accused argued that the cheque was issued as security. The courts held that even a cheque issued as security attracts liability under Section 138 of the NI Act. The Supreme Court rulings in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd. and Sripati Singh v. State of Jharkhand were cited to support this position.

6. Quantum of Sentence and Compensation Awarded:
The Trial Court sentenced the accused to one year of simple imprisonment and ordered compensation of Rs. 2,40,000. The Supreme Court in M/S Kalamani Tex and another Versus P. Balasubramanian emphasized that courts should uniformly levy a fine up to twice the cheque amount along with simple interest at 9% per annum. The compensation awarded was deemed appropriate and not excessive.

Conclusion:
The judgments by the learned Trial Court and First Appellate Court were found to be fully sustainable. The revision petition was dismissed, and the sentence and compensation awarded were upheld. The courts correctly applied the legal presumptions under Sections 118 and 139 of the NI Act and found the defense evidence unreliable. The issuance of the cheque as security did not absolve the accused of liability under Section 138 of the NI Act.

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